Dr. Oliver Massmann – Page 50 – Duane Morris Vietnam

March 26, 2015March 26, 2015 by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann Government’s Strong Efforts to Improve Business Environment

On March 12, 2015, the Government has just issued the new Resolution 19/NQ-CP/2015 on key duties and solutions to improve business environment and national competitiveness in 2015 – 2016 (“Resolution 19”).

Resolution 19 provides several measures / objectives including decreasing administration procedure time (tax declaration, custom / port clearance, social insurance declaration, establishment of new companies, bankruptcy, etc.), removing some procedures, conditions such as legal / criminal records of foreign investors acquiring shares / equity in Vietnam, revising regulations / law to promote the business, procuring relevant State authorities to act and prepare action plans to do before 30 April 2015, report to the Government on a quarterly basis, etc.

The new Resolution also lays out strong commitments and positive changes to be made by Government bodies, which are expected to have the business environment targets of Vietnam reaching ASEAN-6 and ASEAN-4 averages in 2015 and 2016 respectively.

The new Resolution prioritizes the following:
1. In 2015, approaching and exceeding ASEAN-6 averages, notable targets are:
• Lower tax payment period to 121.5 hours/year as maximum, develop and disclose the database on tax refund;
• Rapidly decrease processing time for clearance of exports and imports of goods to 13 and 14 days respectively;
• Processing time for business establishment procedures is 6 days as maximum;
• Processing time for bankruptcy procedures is decreased from 60 months to no more than 30 months
2. In 2016, Vietnamese business environment index to approach ASEAN-4 averages on certain areas, notable areas are:
• Business establishment and investor protection to be in Top 60 and 50 countries respectively, processing time for tax payment and compulsory insurance is 168 hours/year.
• Simplify the procedure and reduce processing time for registration of property ownership and use rights to 14 days as maximum
• Access to credit index reach Top 30 countries of the World Economic Forum.
• Simplify the procedures and reduce processing time for commercial disputes to 200 days as maximum (400 days currently) and 24 months (60 months currently), especially for cases involving SMEs through court method.

Resolution 19 also calls for more active participation of business associations and professional bodies in policy review and valuations as well as closer coordination with Government bodies to support business development and resolve business issues.

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Please do not hesitate to contact Mr. Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

INTERESTED IN DOING BUSINESS IN VIETNAM? VISIT: www.vietnamlaws.xyz

THANK YOU VERY MUCH!

March 19, 2015 by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann – The New Wave of M&A in Vietnam

The 2005 Law on Investment and Law on Enterprises laid a foundation for establishing a new Vietnamese investment regime in general and creating a level playing field for foreign and local investors in particular. The legal framework for the M&A sector in Vietnam has since been developing at a rapid pace. Currently, with some limitations under both Vietnamese law and Vietnam’s WTO commitments, foreign investors can freely acquire shares in Vietnamese enterprises. The new wave of M&A sets to hit Vietnam, as Vietnam is once again perceived as an attractive investment market. The primary investors have been from Japan, Korea, Taiwan and recently from the ASEAN countries, particularly Singapore and Thailand. Once the Trans-Pacific Partnership (“TPP”) and Free Trade Agreement between EU and Vietnam (“EVFTA”), which currently enter their final rounds of negotiation, are concluded, they may also drive more interest in M&A activities in Vietnam.
We much appreciate that the recent development of the Investment Law and Enterprise Law highlighted endeavors of the Government of Vietnam on easing the procedures of M&A activity in Vietnam. The Government of Vietnam by introducing the new Investment Law and Enterprise Law at the end of 2014 has made stronger commitment on the improvement of M&A regulatory framework to re-ignite M&A activity in Vietnam.
Recent M&A deals
M&A activities in Vietnam witnessed a steady growth after Vietnam officially became a member of the World Trade Organization in 2007. Vietnam saw the first M&A wave in the period of 2008 – 2013 with a reported total value of US$15 billion when the Japanese investors kept rushing to Vietnam and made about US$1.2 billion worth deals in 2012. Japan leads the nation that bring M&A deals in Vietnam in terms of both quantity and value. This helps the M&A market in Vietnam reach of peak of US$5.1 billion in that year. According to statistics from Capital IQ, there were 92 successful M&A deals in 2008, 308 deals in 2012 and 182 deals in 2013. Fast-moving consumer goods is considered as the most attractive sector, with the total M&A transaction value up to US$1 billion, accounting for 25% of the total M&A value in Vietnam while the retail and real property have always been robust in M&A with big deal value.
Vietnam’s M&A market saw a strong recovery in 2014 when six deals are reportedly made every week. The total M&A deals in 2014 was 313 with value of US$2.5 billion, a 15% increase compared with the previous year. Notable deals in 2014 include the acquisition of all 19 supermarkets of Cash & Carry and their related real property of Metro by Berli Jucker with a deal value of US$ 879 million; Vingroup, one of the biggest local private companies in Vietnam, bought 70% of Ocean Retail Company’s capital; Mondelez International acquired 80% of Kinh Do Joint Stock Company’s capital in sweets manufacturing section at US$370 million; and Standard Chartered Private Equity acquired a significant minority stake in An Giang Plant Protection Joint Stock Company at US$90 million. The business community highly hope that total value of M&A deals could reach US$20 billion in the second wave (2014-2018).
Good news for M&A in Vietnam
Starting from 01 July 2015, foreign investors will not need to undergo lengthy investment certificate procedures when buying stakes in Vietnamese target companies. While this remains to be seen, the change, introduced by the new Investment Law, will hopefully end years of uncertainty and frustration faced by foreign investors eyeing Vietnam market entry or expansion via M&A.
We have seen a strong increase of interest from international investors, especially in the last months of 2014 continuing into 2015. The TPP (which includes the U.S. and Japan), the EVFTA as well as tariff reductions under the AFTA are all scheduled for this year. These will increase market access for foreign investors in Vietnam and lower barriers to trade in goods and services.
Why is the investment certificate question so important?
Under current law, Vietnam has different licensing procedures for foreign and domestic investors. The Investment Certificate (“IC”) serves as business registration for foreign investors. In practice, despite a 45 day maximum statutory time limit, the IC process can take 4 to 6 months or longer, while domestic business can be registered within a day.
Under the new Investment Law, the IC is replaced by an “investment registration certificate” (“IRC”) and an enterprise registration certificate (“ERC”). Obtaining ERCs should be straightforward, as they only contain basic business info and also apply to domestic investors. The IC process now statutorily takes 15 days while ERCs are issued within 3 working days. The process may be longer in practice but it is better than before in terms of clear application of time frame.
Explicitly, no IRC for M&A activity!
Foreign ownership in public companies, including listed companies or companies with 100 shareholders or more with contributed equity of VND 10 billion or more, cannot exceed 49%. Although in principle enterprises with foreign ownership of up to 49% are entitled to the same treatment as local companies, such rules appear to be disregarded in practice. For example, the Department of Planning and Investment (DPI) of Ho Chi Minh City refused to register the distribution of pharmaceutical products of a local company on the ground that 4.3% of its shares were then held by foreign investors. It is therefore very difficult for foreign investors to conclude an M&A deal.
Now, the new Investment Law expressly provides that no IRCs will be required for acquisitions of target companies. As a result, the time needed to complete purchase of stakes in Vietnamese entities is expected to be reduced tremendously. Buying into public companies listed on the Vietnamese stock exchanges will not require IRC either, but foreign ownership of listed companies is still capped at 49% (and max. 30% for financial institutions). Rumors have long abounded that the caps will soon be raised but, until that day, investors will need to buy unlisted companies to take control.
Provincial Departments of Planning and Investment (DPI) will still have to “register” (read: “approve”) plans to acquire a majority of a target or stakes in a company that is active in a “conditional” sector. Conditional sectors for foreign investors include construction, urban planning and education (Annex 4, new Investment Law). In practice, DPI officials have broad discretion to approve applications, but they should need much less paperwork then for an IRC application.
In addition, the business registration office will have to update ERCs to reflect changes in a unlisted company’s ownership, statutorily, in 3 working days.
New waves of M&A?
With positive changes that the new Investment Law brought, together with a significant equitization target of about 368 state-owned enterprises in 2015, the conclusion of the TPP and EU-Vietnam FTA as well as the formation of ASEAN Economic Community by the end of this year, Vietnam will witness another wave of M&A. Banking and finance will attract main foreign investment as the number of commercial banks are required to be reduced to 13-15 in 2017 and smaller banks under the pressure of competition and capital requirements will look for new foreign investors to achieve expansive. In addition, consumer goods and real estate also remain attractive sectors.

ABOUT THE AUTHOR
Mr. Oliver Massmann is General Director of Duane Morris Vietnam LLC, a subsidiary of Duane Morris LLP (US). He has been practicing law in Vietnam for 20 years and is influent in English, German and Vietnamese. He has been long regarded by Legal 500 and other reputable professional magazines as one of leading individuals who has been at the center of some of the most notable M&A transactions in recent years in Vietnam.
Mr. Oliver Massmann can be reached at OMassmann@duanemorris.com for any questions relating to M&A activities in Vietnam in general and this article in particular.

INTERESTED IN DOING BUSINESS IN VIETNAM? VISIT: www.vietnamlaws.xyz

THANK YOU VERY MUCH!

March 19, 2015March 19, 2015 by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann Retention of Title under Vietnamese Law

Introduction

Retention of title is first mentioned in the Civil Code of Vietnam. The Civil Code of Vietnam was introduced in 1995 and it is the first Civil Code of Social Republic of Vietnam (“Civil Code”). However this issue has not yet developed into a separate concept and is regulated spread. Regulations on retention of title/reservation of ownership can be found in purchase and sale, contract for the sale and purchase of house, goods delivery.

In addition, the retention of title is also regulated in commercial laws. The Commercial Law of Vietnam was passed two years after the Civil Code (10 May 1997). It is also a landmark legal document and plays an important role in regulating commercial activities in Vietnam.

Establishment of ownership rights

According to the Civil Code, the ownership is established under many foundations. For example, establishment of ownership with respect to revenue gained from labor and legal business, in accordance with an agreement, in cases of merger or under a statute of limitations, etc.

In case of establishment of ownership in accordance with agreement, a person to whom a property has been transferred through a contract for the purchase and sale, gift, exchange or loan shall have the right to own such property as from the time of receipt of the property, if not otherwise agreed or the law does not otherwise provide.

Time of ownership transfer

According to the Civil Code, in case of sale and purchase agreement, the moment at which the ownership is transferred is defined in the following cases:

• the moment at which the buyer receives the property;
• the completion of the procedures for registering of ownership rights of such property;

However, except where the laws otherwise provide, the two parties are free to negotiate on the time of ownership transfer, provided that the agreement does not violate the law.

Therefore, the responsibility of bearing risks shall still belong to the seller until the property is handed over to the buyer; whereas the buyer shall bear the risk to the property in question as from the receipt of that property, if not agreed otherwise.

Similarly, in case of property that must be registered of the ownership rights, the seller shall bear the risks until the completion of the registration procedures; meanwhile the buyer shall bear the risk as from the completion of the registration procedures, even when the buyer has not received the property. However, it is noteworthy that the buyer and the seller have their freewill to agree upon the moment for bearing risk.

The Commercial Law also has similar regulation on the moment of transfer of ownership rights (Article 62, the Commercial Law), i.e. the moment when the seller delivers the goods to the buyer unless otherwise agreed upon by the two parties or provided by law. However, the Commercial Law also regulates that, in case where obligatory conditions are agreed upon in the sale and purchase agreement without which the seller shall be unable to deliver the goods, or the buyer shall be unable to receive the same, then the ownership of the goods in question shall be transferred from the seller to the buyer only when such conditions are met (Article 62, Commercial Law).

The obligatory conditions under Vietnam law may be understood as conditions for the transaction to become effective including the conditions on the person participating in the transaction, its purpose, content and the form, and the voluntary of the involving person.

Agreement and Retention of Title/Reservation of Ownership

Ownership is a very developed concept in the civil law branch of Vietnam, however retention of title is regulated scattered. Purchase by deferred payment or payment in installments is the most evident example for retention of title in Vietnam law.

Article 461 of the Civil Code provided that,

“…The seller is entitled to reserve his/her ownership rights to the sold object until the purchaser has made full payment, except in circumstances where otherwise agreed”.

Therefore, in case of deferred payment or payment in installments, the seller is entitled to reserve his/her ownership to sold object until the purchaser has made full payment, except otherwise agreed. The purchaser shall only be entitled to use the object purchased by deferred payment or by payment in installments and must bear the risk during the use period, except otherwise agreed.

Besides, the parties may agree upon the trial use of purchased object by the buyer for a period referred to as the trial use period. In the trial use period, the object shall still remain under the seller’s ownership. The seller shall bear all risks with respect to the object. Within the trial use period, the seller is not permitted to sell, give as gift, lease, exchange, mortgage or pledge of the property or offer it as a guarantee, while the purchaser has not yet replied.

Conclusion

In conclusion, according to Vietnam law, the ownership can be reserved in the following cases:

• the agreement of the related parties;
• the type of the agreement; and
• the prescribed law.

—o0o—
Please do not hesitate to contact Mr. Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

INTERESTED IN DOING BUSINESS IN VIETNAM? VISIT: www.vietnamlaws.xyz

THANK YOU VERY MUCH!

March 17, 2015March 17, 2015 by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann – Vietnam a future International Competitor in Wind Energy ? Oliver Massmann – Ho Gia Le Hoang

Potential of Wind Energy Industry in Vietnam
Vietnam has a significant potential for wind energy with an average wind speed of more than 6m/s, surpassing that of all neighbouring Southeast Asian countries. With more than 3,000km coastline and plenty of islands, the total potential of wind energy in Vietnam is estimated to be as high as 713,000MW – 510,000 MW on land and 203,000 MW in islands. In comparison, this is 200 times more than the production volume of the largest hydropower plant, Son La (Vietnam), in Southeast Asia and 10 times larger than the projected total capacity of the electricity industry in 2020.
Since the electricity demand in Vietnam is forecasted to increase by up to 14.2 pct. annually for the 2011-2015 period and 11.4 pct. for the 2016-2020 period , and the electricity demand is expected to increase 7 times to 800 billion Kwh in 2030, Vietnam will then have to invest in energy sources to meet this big demand. Such investment is vital given Vietnam’s expected dependence on imported coal, one of their primary resources for electricity production, by 2015. Additionally, hydroelectric energy is quite abundant in Vietnam but poses certain underlying risks. Therefore, Vietnam will have no choice for power development other than renewable energy in general and wind energy in particular.
Government’s Policy On Development Of Renewable Energy
The important role of renewable energy in general and wind energy in particular is recognized by Vietnamese government and reflected in the Master plan VII about energy development in Vietnam. The renewable energy is increasingly accounting for power sources (4.5% in 2020 and 6.0% in 2030 of the total power supply). The Master plan VII sets the renewable energy target rate at 5.6 pct. of total primary energy consumption by 2020 and 9.4 pct. by 2030. The Government’s target is to increase the wind power to 1,000 MW (0.7 pct. of electricity production) by 2020 and 6,200 MW (2.4 pct.) by 2030.
Moreover, as the energy prices in Vietnam are not very high, there are many incentives and preferential treatment offered by the Vietnamese Government to the wind power industry. Decision 37 offers the following incentives and preferential treatment in terms of funding, tax and fee to wind energy project as follows:
i. Funding: The investor can raise funds in different forms permitted by relevant lawsfrom individuals and organizations in and out of the country and may have access to State credit for investment pursuant to the laws.
ii. Tariff: The investor is exempted from tariff on goods imported to create fixed assets and goods used as raw materials, input or semi-finished products that are not available at home for the project’s operation in line with the Law on Import and Export Duties , Law on Tax Mangagement and other relevant regulations on export and import duties.
iii. Corporate income tax: Wind power projects enjoy the same preferential treatment in investment in terms of exemption and reduction of corporate income tax as for other projects in line with the Law on Investment , Law on Corporate Income Tax and other documents guiding the enforcement of these laws : Perferential corporate income tax rate of 10% applies to newly-established enterprises for 15 years.
If the given project is classified as a large scale project, a project using high or new technology and in special need of investment, the above preferential tax rate may be extended to less than 30 years following a decision of the Prime Minister.
In addition, other preferential treatments in infrastructure for wind energy projects are available as follows:
i. Projects on installing wind powers, lines and transformer stations connected to the national grids enjoy the same exemptions and reductions in land rental as projects being entitled to special investment treatment.
ii. In line with the approved power development plan, the provincial people’s committee allocates land to the investor to implement wind power projects. The compensation for existing land users and support for site clearance complies with the provisions of land law in force.
In addition, in accordance with Decision 37, Electricity of Vietnam (“EVN”) is to buy all of the plant’s wind energy outputand the Vietnam Environment Protect Fund will accordingly subsidize to EVN with the current subsidized tariff of 204 VND/kWh (about 01 UScent).
Market Access Of Foreign Investor
Currently, there is no foreign ownership restriction in energy sector in Vietnam. The foreign investor may choose among permitted investment forms: 100% foreign invested company, joint venture or public private partnership (“PPP”) in the form of BOT contract.
Wind energy projects require high investment rates, while the electricity production costs are always high. Though the Government agrees to buy wind energy at high price, the investors still do not dare to pour their money into the sector for fear of the risks resulting from unstable policies.
In such circumstances, PPP is the most reasonable solution. Recently on 14 February 2015, the Government issued a long-awaited Decree on PPP models, Decree 15/2015/ND-CP which will replace previous legal regulations on PPP or BOT with the intention of promoting private investment in infrastructure to boost economic growth in Vietnam. The PPP model can help ease the burden on capital arrangement, share and minimize risks, take full advantage of the management resources and improve the policies’ transparency, thus bringing the highest possible effectiveness of the projects. For its great advantages, PPP has been applied in many countries in the world.
In Vietnam, BOT is the best investment form for energy projects since it is easier to negotiate more favorable electricity rates and obtain more government guarantees, especially in the context that EVN – a state-owned electricity company, is obliged to purchase all electricity from the projects. Moreover, the investor can receive more fiscal and financial incentives.
Wind energy will be an interesting sector in Vietnam for a foreign investor in the middle and long term, especially at the stage of fully competitive retail market. Despite the main obstacles to foreign investors such as high production cost, time taken for investors for investment capital recovery, and the lack of a competitive sale price, foreign investors still receive many preferential policies and incentives. When Vietnam energy market becomes a fully competitive retail market, the wind energy project will play a more important role and the investor will gain higher actual profits.
Starting Up A Wind Energy Project
Generally speaking, the start-up process in Vietnam is now still pretty complicated with the involvement of many licensing authorities and state agencies that make time-consuming and costly for developers. However, with the recent promulgation of new Investment Law and Enterprises Law which will take effect from 01 July 2015, the Government of Vietnam has showed the sign on improvement of bussiness and investment enviroment and both new laws are aimed at reducing licensing complexity and granting easier market access.
Currently there has yet been any national plan for wind energy and consequently, there is no specific procedure for investment in wind energy project. Thus, until such a plan is finalized, the investment procedure remains uncertain. Wind energy projects must be in alignment with the national energy sector’s development and priorities will be given to those with high economic and financial efficiency, as well as plans to connect with national or regional grids.
Acording to Decision 37 , until the planning is completed and approved, the Prime Minister will have to decide on any wind energy project. Moreover, under Circular 32 , the investor can only invest in the wind energy project included in the list of wind energy projects approved by the Ministry of Industry and Trade (“MOIT”). The MOIT requires project owners follow its guidelines and stipulates that capital investment from a project owner must exceed 20 percent of the project total investment capital. The provincial people’s committees will be the sole authorities to grant licenses after getting approval from the MOIT.
In order to commence the construction, the investor must satisfy many requirements, including but not limited to obtaining the investment certificate, having signed the power purchase agreement and electricity integration agreement. Gerally speaking, the start-up process involve many state authorities from local level to the central level.
For reference, according to the GIZ/MOIT Wind Energy Project , to set up a wind energy project, the developer must take the following steps:
Step 1: Site selection – Due to the absence of a national wind power plan, site selection is based on relevant past data such as wind data, wind energy atlas, etc. Permission from the provincial people’s committee (PPC) and provincial Department of Industry and Trade (DoIT) is needed for site surveying and resource assessment is needed for a feasibility study.
Step 2: Assessment of wind resources at the selected site – Wind measuring poles are installed (if not available at the selected site) and wind is measured for at least 1 year.
Step 3: Pre-feasibility study and request for inclusion in the power development plan – If the project area has wind resources, a pre-feasibility study for investment in the area is prepared and submitted to the MOIT together with a request to include the project in the power development plan. The MOIT shall consider and submit it to the Prime Minister for approval (as wind power is still new in Vietnam and there is a missing protocol for it, all wind power projects larger than 50 MW need approval by the Prime Minister. After the Prime Minister approval, the project documents are to be submitted to the DoIT for approval.
Step 4: Investment report (Feasibility study) – After the DoIT approval of the pre-feasibility study, an investment report (feasibility study) is prepared and submitted to the MOIT for appraisal.
Step 5: Signing of power sale contract with the EVN – In accordance with Decision 37, EVN is to buy all of the plant’s wind power output. Contracts on power sale, grid connection and electric measurement system design must be signed.
Step 6: Project implementation – The project will not start until the approval of the technical design and investment report by the related agencies such as DoIT, Department of Construction, Department of Natural Resources and Environment and others.
Step 7: Building – Building starts.
Above steps are the technical approval process that a wind power developer needs to comply with to be approved for project implementation. However, the developer needs also to work with the licensing authorities (i.e. the Department of Planning and Investment of the province where the project is located and the Ministry of Planning and Investment) in line with the investment procedure under the Investment Law. In Vietnam, the investment certificate is an official legal document issued by the State authority to certify the rights and obligations of the project developer and also the incentives that the developer may enjoy from the project implementation.
The developer needs to perform the procedures for obtaining investment certificate in parallel with the technical approval since the beginning of the site selection steps . The current Investment Law provides for a 45-day time frame for issuance of an investment certificate (while the New Investment Law which takes effect from 01 July 2015 shortens this time frame to 15 days), starting from the date of receipt of a ‘complete’ application dossier. Our experience in dealing with typical investment projects indicates that you should anticipate this process to take longer than the statutory time limit, even from 6 to 8 months at least.
Vietnam – Future International Competitor In Wind Energy?
Theoritically speaking, Vietnam can be seen as an international competitor in wind energy because it has a significant potential for wind energy, an increase of electricity demand and Government’s preferential policies and incentives to facilitate renewable energy in general and wind energy in particular. According to World Bank research to build wind power potential map for Vietnam, Thailand, Laos and Cambodia, Vietnam has higher wind power than other South East Asia countries with 8.6 percent of Vietnam’s territory having wind energy development potential (in comparison with 2.9% in Laos, and just 0.2% in Cambodia and Thailand). In practice, there are increasing interest and new projects in wind energy from Vietnamese and foreign investors. According to the website of GIZ Wind Energy Project: http://www.renewableenergy.org.vn/, until May 2012, there are 67 wind energy projects in Vietnam which are developing at different stages and this number is expected to increase in the upcoming time.
Although Vietnam possesses considerable potential for the development of wind power, an energy sector which has attracted strong interest from domestic and foreign investors, the current wind energy project development has only tapped into a small portion of Vietnam’s wind potential, and there are still many things Vietnam needs to change and take stronger action. Otherwise, Vietnam can hardly become an international competitor in wind energy.
Up to now, the total potential of wind energy in Vietnam is only an estimate while a final issue for the bankability of a wind energy project is the wind speed feasibilty studies for that the investors need reliable wind speed studies and wind speed towers to measure. In practice, the standard requirements of foreign banks are such feasibility studies involve about 2 years of measurement. However, the “reliable” studies in Vietnam’s wind energy are still lacking to our best knowledge.
At present, Vietnam still features the “Single Buyer Model” with EVN who is the only offtaker, except for power generation projects under 3 MW. The EVN monopoly in power sector should be removed and EVN must be restructured by splitting up into many corporations with separate powers and duties (i.e, operation, transmion, distribution).
In the meantime, Vietnam needs to highly prioritie the application of more transparent policies and mechanisms. Under Circular No. 32/2012/TT-BCT, Vietnam provides a standard power purpose agreement (“PPA”) form for all wind energy projects on power sale, grid connection and electric measurement system design. This standard PPA is a good start but still needs to be improved to make wind energy projects bankable. However, the negotiation process of the PPA signing with EVN is very time consuming and it is almost impossible to predict how long it will take to negotiate the relevant PPA with EVN, even it has taken up to 6 years in some cases to negotiate a PPA for a coal fired power plant with EVN in the past. That is a deterrent for foreign investors if they cannot calculate that into the development costs. Meanwhile with such red-tape hurdle, the operation costs for wind energy projects in Vietnam are still much more an overal “estimate” than a “real and realistic calculation”.
The low power purchasing price is also a big barrier to wind energy projects. The Government should also adopt a feed-in tariff (“FIT”) for wind energy in particular and renewable energy in general. The basics of a FIT mechanism is that additional costs for production of energy will be divided among electricity users to assure a stable cash flow for renewable energy developers. Under Decision 37, EVN has the responsibility for buying the whole electric output from wind power projects with the electric buying price at the point of electricity receipt is 1,614 dong/kwh (excluding VAT, equivalent to 7.8 UScents/kwh). This current subsidized tariff is too low in comparison with that in other ASEAN countries (19 UScents/kWh in Thailand and 21.8 UScents/kWh in Philippines ). In practice, the wind energy producers in Vietnam keep complaing about very low purchasing price while the current cost of electricity generated from wind power plants is still quite high due to large technical investment.
Recently, Vietnam’s Prime Minister issued Decision 31/2014/QD-TTg on solid waste-to-energy projects to provide a ground-breaking feed-in tariff for power suppliers of up to “VND 2,114/kWh (equivalent to 10.05 US cents/kWh)”, whichis more than 25 percent higher than the 7.8 cent applicable to wind energy projects. From the internet, we have also been told that the MOIT proposed to the Government to approve for an FIT increase of up to 12 UScents/kwh to make the wind energy projects become more financially feasible. With this trend of development, the Goverment showsan effort to pave the way for the development of more wind power projects in Vietnam.
If the FIT is not increased to region levels and until there is no clear roadmap for negotiating the PPA, it will be very difficult to attract foreign investors. The foreign investors have the choice in which country they will invest and if the FIT, for example, in the Phillipines is about TRIPLE more than that in Vietnam, then the investors will not think twice whether to come to Vietnam or invest in the Phillipines
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Please do not hesitate to contact Mr. Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

INTERESTED IN DOING BUSINESS IN VIETNAM? VISIT: www.vietnamlaws.xyz

THANK YOU VERY MUCH!

March 16, 2015 by Dr. Oliver Massmann

Rechtsanwalt in Vietnam Oliver Massmann Verbesserter Zugang zur Auslandsbeteiligung

Im Sommer steht in Vietnam ein neuer Liberalisierungsschritt an. Mit Inkrafttreten des neuen Investitionsgesetzes und des Unternehmensgesetzes öffnet sich das Land weiter für ausländische Investoren. Und versucht, ihnen den Einstieg in den Markt zu vereinfachen. So reduziert das Investitionsgesetz die Anzahl der verbotenen und beschränkten Geschäftszweige von zuvor 51 auf nunmehr sechs. Auch die Anzahl der beschränkten Wirtschaftszweige wurde herabgesetzt: von 386 auf 267. Generell erlaubt das neue Gesetz den Investoren nun ein Engagement in allen Branchen, die nicht ausdrücklich davon ausgeschlossen sind. Das ist im Vergleich zum alten Gesetz, das Investitionen nur in ausdrücklich erlaubten Branchen genehmigte, ein Fortschritt. Folglich besteht mehr Transparenz und Investoren steht eine größere Bandbreite an Investitionsmöglichkeiten zur Verfügung.

Begriffsdefinition des ausländischen Investors
Darüber hinaus definiert das Investitionsgesetz den Begriff des ausländischen Investors neu. Bisher wurde ein ausländischer Investor als jede Art von juristischer oder natürlicher ausländischer Person definiert, die Mittel aufwendet, um in Vietnam zu investieren. Diese Definition hat in den vergangenen Jahren viel Verwirrung darüber gestiftet, ob von einem ausländischen Investor zu sprechen ist, wenn ein Ausländer 1 %, 49 % oder 51 % der Firmenanteile hält. In diesem Punkt schafft das Investitionsgesetz Klarheit. Denn es führt eine einfachere Definition ein. Den Begriff des „ausländisch-finanzierten Unternehmens“ ersetzt es durch die Formulierung „Wirtschaftsunternehmen mit ausländischem Kapital“. Ein ausländischer Investor ist demnach nun jede ausländische Rechtsperson nach ausländischem Recht.
Allerdings erhellt das neue Leitbild vom „ ausländisch beherrschten Unternehmen“ – eine Entsprechung zum früheren „Unternehmen mit ausländischem Kapital“ – nicht die Bedeutung des vorherigen Begriffs. Ein „ausländisch beherrschtes Unternehmen“ ist als Wirtschaftsunternehmen definiert, das einen Gesellschafter oder Anteilseigner hat, der ausländischer Investor ist. Welches Beteiligungsverhältnis dafür nötig ist, ist nicht definiert.

Projekte werden nach Zweck eingestuft
Einstweilen wird durch das Investitionsgesetz aus dem Jahr 2014 das Beteiligungsverhältnis über die Zulassung zu Investmentvorhaben ausländischer Investoren bestimmen. Sofern das nicht ausreichend in den Durchführungsbestimmungen dargelegt sein wird, werden Schwierigkeiten bei Investitionsanträgen unvermeidbar zunehmen. Weiterhin unterscheidet das Investitionsgesetz nicht mehr zwischen direkten oder indirekten Investitionen. Stattdessen werden Projekte nach ihrem Zweck eingestuft:

• Gründung eines neuen Unternehmens für ein Investi¬tionsvorhaben,
• Investition als öffentlich-private Partnerschaft (PPP),
• Investition als Kooperationsvertrag,
• Kapitaleinlage, Kauf von Anteilen oder Einzahlung von Einlagen in ein Unternehmen.

Gewisse Änderungen ergeben sich dadurch auch auf die Ausgestaltung von Investitionenin Vietnam. Noch wichtiger ist, dass das Gesetz Abschreibungsrichtlinien für Fusionen und Übernahmen enthält.

Getrennte Anträge bei IRC und ERC
Ein bei Neugründungen interessanter Punk ist die Abschaffung des Investitionsanmeldungsnachweises (IRC) für Investitionsvorhaben inländischer Investoren. Das gilt unabhängig von der Höhe der Investitionssumme. Ferner findet die Zulassung – zuvor in Form von Investitionsanmeldung und Wertermittlung – nicht mehr zweistufig statt. Wenn ausländische Investoren ein Unternehmen in Vietnam gründen möchten, müssen sie anstelle der gleichzeitigen Beantragung von IRC und Unternehmensanmeldung (ERC) nun zwei unterschiedliche Anträge stellen: für das IRC und das ERC. Das könnte hinsichtlich der Kosten und der Zeit für ausländische Investoren schwieriger sein.
Ändern wird sich durch das Investitionsgesetz auch der Umgang mit Kapitaleinlagen. Sie können nun folgendermaßen abgewickelt werden:

• Kapitaleinlage, die zum ersten Mal oder von Aktiengesellschaften ausgegeben wird
• Kapitaleinlagen in Gesellschaften mit beschränkter Haftung oder Partnerschaftsgesellschaften
• Kapitaleinlagen in Unternehmen, die nicht in die beiden erstgenannten Kategorien fallen.

Ausländische Investoren, die Kapitaleinlagen, Beteiligungs- oder Anteilskäufe vornehmen, müssen dies beim lokalen Ministerium für Industrie und Handel melden. Dazu zählt, wenn sie in Unternehmen, die zu für ausländische Investoren beschränkten Wirtschaftszweige gehören, Kapital einlegen, Beteiligungen oder Anteile kaufen. Auch wenn die Investition im Ergebnis auf einen Anteil von 51% des Stammkapitals oder mehr abzielt, muss sie angemeldet werden. Davon betroffen sind auch Unternehmen, an denen ein ausländischer Investor 51% oder mehr des Stammkapitals hält oder die Mehrheit der Partner ausländische Personen sind.

Bitte kontaktieren Sie den Autor Oliver Massmann direkt unter omassmann@duanemorris.com wenn Sie Fragen haben. Oliver Massmann ist der Generaldirektor von Duane Morris Vietnam LLC.

INTERESSE AN VIETNAM? Besuchen Sie: www.vietnamlaws.xyz

VIELEN DANK!

March 6, 2015March 8, 2015 by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann Online Gaming and Gambling in Vietnam

Technically, “online gaming” [business] in Vietnam may cover: (i) “online game”, a game played over some form of computer network;[1] or (ii) “online gambling”, a term for gambling using the Internet.

In the latter case, Vietnamese law does not treat online gambling as a full-fledged, independent and separate branch of gambling industry.[2] Rather it deals with major branches of gambling activities which are (i) lottery; (ii) casino/prized electronic machines; (iii) horse and greyhound race and (iv) sports betting,[3] etc. and sets forth specific conditions and restrictions on the same. Except for online lottery, other forms of gambling using Internet-based have been so far strictly prohibited or at least not officially permitted.

It also bears noting that market access to such gambling branches varies by investment forms, legal entity of the investors and capacity thereof, etc. For example, while lottery business is solely reserved for State owned enterprises, foreign investment in casinos is permissible. By the same token, depending on characteristics of specific gambling business, the scope of activities can be either limited to a specific approved location in a major city of Vietnam (e.g. – dog/greyhound race or traditional lottery) or nationwide (online lottery).

As gambling is a sensitive activity which requires a high level of surveillance, a gambling investor must essentially follow a general principle of “doing exactly what your license states”. To make it clearer, if an investor is permitted to open a casino at a specific resort only, it will not have the natural right to offer casino products through the Internet. Similarly, besides 63 State-owned lottery enterprises in each province, a lottery corporation was established in 2013 (i.e. – Vietlott) to offer online lottery lotto games, digits games and fast drawing games nationwide. However, it can be broadly argued, though not absolutely guaranteed, that if an investor is licensed to carry out a specific [and conventional] “gambling” activities, it may have a good position to apply for the same business but operated on an Internet-based platform.[4]

Generally, an investment project in gambling must be first granted with an investment certificate issued by the people’s committee at provincial level. For such purposes, the investors must obtain in-principal of the Prime Minister on an ad-hoc basis. In fact, the Ministry of Finance (the “MOF”) is expected to play a crucial role in deciding whether a Project will be accepted. Subsequently, the project’s owner may have to obtain a special business license from the MOF upon its fulfilment of post-establishment conditions (i.e. – completion of construction works, installment of equipment and facilities, etc.).

In principle, gambling, other than lottery and betting at licensed sport center(s), is strictly prohibited in Vietnam and individuals involved in gambling activities may face criminal charge. Vietnamese law on gambling business is therefore still in its infantry stage though initial ideas date back to early 2000s. Gambling licenses have granted to selected investors mainly on a piloting scheme and with strict requirements (i.e. – not letting Vietnamese nationals in). Draft laws on sport betting, casinos, which serve as key guidance on gambling business, have been discussed from time to time but not yet been issued.

In late 2013, two major draft decrees on gambling activities (i.e. – betting[5] and casinos), content of which is not made public, were submitted by the Ministry of Finance, as the draftsperson, to the National Assembly of Vietnam for the latter opinions. It appears however that little progress has been since made due to conflicting opinions among the Government and divisions belonging to the National Assembly on these sensitive issues.[6]

To date, Vietnam has 01 national online lottery company (i.e. – Vietlott) and 63 [traditional] lottery companies operating at provincial level. 07 casino licenses have been granted to investors as a part of their resort complexes but only 6 of which have commenced their operations. A number of 5-star hotels in major cities of Vietnam are permitted to run prized electronic machines. The only house race ground which was open to public was closed in 2013. Another greyhound race ground is still active in Ba Ria – Vung Tau Province, Vietnam.

In light of the above, a foreign investor wishing to invest in this sector may consider different channels to access Vietnam online gaming market. For example, it may cooperate with licensed vendors in Vietnam as a supplier of equipment, machinery or materials or provider of technical assistance services relating to the same.[7] Or else, it may actively approach the MOF to initiate a proposed plan.

Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

INTERESTED IN DOING BUSINESS IN VIETNAM? VISIT: www.vietnamlaws.xyz

THANK YOU VERY MUCH!

February 24, 2015March 8, 2015 by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann Transformation of the Financial Market Management

Introduction

Vietnam is one of the most dynamic markets of Asia. Since the financial institutions and authorities are a part of the general economic system, they are not only strongly involved in the changes, but also have a more solid financial basis for the competitiveness of the country. The financial sector in Vietnam is subject to substantial structural changes. It occurs at a huge speed. These changes entail great challenges for the financial managers – for instance due to the pressure on the currency with regard to the exchange rate, the inflation and the daily stock exchange fluctuations between huge profits and losses.

At the same time, the foreign capital market is still underdeveloped. Consequently, it requires the attention of authorities and managers in order to foster the system and to deal with new developments. The most important challenges consist in the transformation of the state-owned banking sector and the development of a subnational foreign capital system.

Continue reading “Lawyer in Vietnam Oliver Massmann Transformation of the Financial Market Management”

February 24, 2015February 25, 2015 by Dr. Oliver Massmann

Rechtsanwalt Vietnam Oliver Massmann Kapitalmarkt

Vietnams Finanzsystem bleibt schwach und schlecht reguliert. Der Mangel an finanzieller Transparenz und die Nichteinhaltung international akzeptierter Standards seitens vietnamesischer Firmen gehören zu den vielen Herausforderungen, denen der Plan der GVN begegnet, den inländischen Aktien- und Wertpapiermarkt als Platz für Firmen zur Kapitalbeschaffung im Inland zu erweitern. Der Banksektor ist unterentwickelt, momentan ist er Ziel einer nationalen Restrukturierungsinitiative für hohe notleidende Kredite (non-performing loans, NPL) und andere strukturelle Probleme. Ende März 2012 hatten nur 20% der in Vietnam Ansässigen ein Bankkonto. Die meisten inländischen Banken sind unterkapitalisiert und halten Berichten zufolge eine große Anzahl von NPLs. Nach vietnamesischen Rechnungslegungsgrundsätzen lag die offizielle NPL-Rate am 30. September 2012 bei 8,82%. Die staatlich gelenkte Kreditvergabe von Handelsbanken in Staatsbesitz und Kreditvergabe an nahestehende Parteien nach handelsfremden Kriterien bleiben bei ausländischen Investoren und sonstigen finanziellen Analysten ein Grund zur Sorge.

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February 24, 2015February 25, 2015 by Dr. Oliver Massmann

Rechtsanwalt in Vietnam Oliver Massmann Auswirkungen des Doppelbesteuerungs¬abkommens

Das am 16. November 1995 zwischen Deutschland und Vietnam abgeschlossene Doppelbesteuerungsabkommen(DBA)1 gilt ohne Rücksicht auf die Art der Erhebung für Steuern vom Einkommen und vom Vermögen2. Insbesondere erfolgt keine Doppelbesteuerung im Hinblick auf die deutsche Körperschaftsteuer, Einkommensteuer und Gewerbesteuer, sowie auf die vietnamesische Körperschaftsteuer, Einkommensteuer. Das Doppelbesteuerungsabkommen gilt bislang nicht für die Mehrwert-, bzw. Umsatzsteuer.
Das Abkommen gilt für Personen, die in einem oder beiden der Vertragsstaaten ansässig sind. Die Anwendbarkeit des Abkommens hängt also nicht von der Staatsangehörigkeit ab. „Personen“ bedeutet in diesem Zusammenhang natürliche und juristische Personen.
Nach dem Doppelbesteuerungsabkommen werden Unternehmen grundsätzlich im Land des Firmensitzes mit ihrem ganzen Welteinkommen besteuert. Wenn ein deutsches Unternehmen aber in Vietnam eine Betriebsstätte, das heißt eine feste Geschäftseinrichtung unterhält, durch die seine Tätigkeit ganz oder teilweise ausgeübt wird (mit Ausnahmen) oder bestimmte, vom Doppelbesteuerungsabkommen definierte Einkünfte aus Vietnam erzielt, wird dieses Unternehmen in Vietnam besteuert. Dies jedoch nur in dem Umfang, in welchem das Unternehmen mittels seiner Betriebsstätte Gewinne erzielt hat. Continue reading “Rechtsanwalt in Vietnam Oliver Massmann Auswirkungen des Doppelbesteuerungs¬abkommens”

February 24, 2015February 25, 2015 by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann SEAPORT DEVELOPMENT – Vietnam’s new Master Plan for seaport system development 2020-2030

I. Main content

Vinamarine has been assigned by Vietnam’s Government to prepare a new Master Plan for ports for the period 2020-2030. Three reports have been produced so far and, after completion, the plan will be subject to Prime Minister’s approval and then promulgated. The master plan focuses on development of seaports in order to foster Vietnam’s economic growth. It should be regarded as a significant progress as the development of seaports played a secondary role to industrial development. The master plan stipulates six port groups. It must be underlined that comments and recommendation of various companies and of the VBF subgroup were taken into consideration and incorporated. More emphasis was put on enhancing the infrastructure and development of channels, access roads and connection of regional ports.

Management and administration mechanisms that are applied in Vietnam considerably differ from those in other countries. In other parts of the world, local governments take responsibility to manage and control local ports, in Vietnam however, it falls within the scope of responsibility of the central Government. Therefore, the connection of different terminals into a big port seems to be practically challenging and will take some time before relevant legal framework is ready.

Continue reading “Lawyer in Vietnam Oliver Massmann SEAPORT DEVELOPMENT – Vietnam’s new Master Plan for seaport system development 2020-2030”