COUNTRY UPDATE-Vietnam: Securities & Banking

The State Bank of Vietnam (Ngan hang Nha nuoc Viet Nam, SBV) is the central bank of Vietnam. It is a ministry-level body under the administration of the government. The SBV governor is a member of the cabinet. The prime minister and the parliament of Vietnam (National Assembly) act jointly to nominate the governor of the SBV. The SBV’s principal roles are to:
Support monetary stability and implement monetary policies.
Support institutions’ stability and supervise financial institutions.
Support banking facilities and recommend economic policies to the government.
Support banking facilities for financial institutions.
Manage the country’s foreign exchange reserves.
Manage foreign exchange and gold trading activities.
Manage the borrowing and repayment of foreign loans, the provision of loans to foreign parties and recovery of foreign debts.
Print and issue bank notes.
Supervise all commercial banks’ activities in Vietnam.
Lend State money to commercial banks
Join the Ministry of Finance in issuing government bonds and government-guaranteed bonds.
Act as an agent for the State Treasury in organizing bids and in issuing, depositing and making payment for treasury bonds and bills.
Be in charge of other roles in monetary management and foreign exchange rates.
In 1990 the bank system was reorganized. This process led to a separation of the SBV from other commercial banks and was the start of the establishment of the private banking sector. A small number of major state-owned commercial banks still dominate Vietnam’s banking sector.

However, today a process of privatization is underway and the goal is to reduce the state’s share of ownership step-by-step to at least 65 percent during 2018 – 2020, and 51 percent during 2021 – 2025 under Decision No. 986/QĐ-TTg dated August 8, 2018 of the Prime Minister approving the plan for development of Vietnamese banks up to 2025, vision to 2030.

As of 31 March 2021, the State’s ownership ratios in 4 largest state-owned commercial banks are as follows: (i) 80.99 percent in BIDV, (ii) 74.8 percent in Vietcombank, (iii) 64.46 percent in Vietinbank, and (iv) 100 percent in Agribank.

Foreign ownership restrictions for Vietnamese Credit Institutions

On January 3, 2014, the government-adopted Decree 01/2014/ND-CP on purchase by foreign investors of shareholding in Vietnamese credit institutions. Decree 01 became effective on February 20, 2014 and replaced Decree 69/2007/ND-CP on purchase by foreign investors of shareholding in Vietnamese commercial banks.

In Decree 01, Vietnamese credit institutions, which may offer shares, include:

shareholding credit institutions (i.e., a credit institution established and organized in the form of a shareholding company and include shareholding commercial banks, shareholding finance companies and shareholding finance leasing companies); and
credit institution currently converting its legal form from a credit institution operating in the form of a limited liability company to become a credit institution operating in the form of a shareholding company.
Foreign investor includes foreign organizations [institutions] and foreign individuals. Foreign organizations include:

Organizations established and operating under the laws of a foreign country and any branch of such institutions overseas or in Vietnam; and
an organization, closed-ended fund, members’ fund or securities investment company established and operating in Vietnam with foreign capital contribution ratio above 49 percent. Foreign individual means any person who does not hold Vietnamese nationality.

Decree 01 defines that shareholding ownership [shareholding] includes direct and indirect ownership. However, Decree 01 does not explain clearly the scope of direct and indirect ownership.

In a case of purchase of shareholding by a foreign investor in a Vietnamese credit institution resulting in such foreign investor’s ownership of shares below 5 percent charter capital of the Vietnamese credit institution, a prior approval of the SBV is not required. In other cases, any acquisition by foreign investors of shareholdings in a Vietnamese credit institution requires the prior approval of the SBV.

The shareholding ratio of any one foreign individual must not exceed 5 percent of the charter capital of one Vietnamese credit institution. The shareholding ratio of any one foreign organization must not exceed 15 percent of the charter capital of one Vietnamese credit institution.

Any foreign investor being an organization owning 10 percent or more of the charter capital of any one Vietnamese credit institution is not permitted to assign the shareholding it owns to any other organization or individual within a minimum three year period as from the date of ownership of 10 percent or more of the charter capital in such credit institution.

The shareholding ratio of any one strategic foreign investor must not exceed 20 percent of the charter capital of one Vietnamese credit institution. The investor may not transfer its shares in the Vietnamese credit institution within five years after becoming the foreign strategic investor in the Vietnamese credit institution.

A strategic investor is defined as a foreign organization with financial capacity and whose authorized person provides a written undertaking to have a close connection regarding long-term interests with the Vietnamese credit institution and to assist the latter to transfer to modern technology, to develop banking products and services, and to raise its financial, managerial and operational capacity.

The shareholding ratio of any one foreign investor and its affiliates must not exceed 20 percent of the charter capital of one Vietnamese credit institution. The total shareholding ownership of [all] foreign investors must not exceed 30 percent of the charter capital of any one Vietnamese commercial bank.

The total shareholding ownership of [all] foreign investors in any one Vietnamese non-banking credit institution shall be implemented in accordance with the law applicable to public companies and listed. When there are none specific regulations on the rate of foreign ownership, the maximum rate of foreign ownership will be 49% of charter capital of such institution.

In a special case in order to implement restructuring of a credit institution which is weak [and/or] facing difficulties, in order to ensure safety of the credit institution system, the Prime Minister may, on a case-by-case basis, make a decision on the total shareholding ratio of any one foreign organization [or] any one foreign strategic investor, and the total level of shareholding of foreign investors in any weak shareholding credit institution which is restructured, in excess of the limits described above.

Under the Government’s instruction in 2018, the MoF is required to draft a Government’s decree to allow foreign ownership ratio in commercial banks in Vietnam up to 50 percent. However, this decree would only be finalized and adopted in the fourth quarter of 2019. However, at the time of writing, the Government has not published any decrees allowing for the 50% rate that is foreign investors consider very attractive. Nevertheless, a point worth noting is that Vietnam committed in EU-Vietnam Free Trade Agreement and the EU-Vietnam Investment Protection Agreement to: (i) increase the share ownership ratio of European investors to 49% in two Vietnamese banks (except the aforementioned 4 largest State-owned banks) in the next 5 years; and (ii) after 5 years, there will be no limitation on foreign ownership ratio in Vietnamese commercial banks for European financial institutions. The Agreements were signed in June 2019 and the EU-Vietnam Free Trade Agreement came into force on 1 August 2020. The EU-Vietnam Investment Protection Agreement is pending ratification by EU Member States.

Foreign exchange regulations

The Ordinance on Foreign Exchange, which was enacted by the Standing Committee of the National Assembly in December 2005 and became effective in June 2006, and amended on March 18, 2013, regulates currency exchange activities in Vietnam. The government has promulgated Decree No. 70/2014/ND-CP to provide guidelines for both the Ordinance on Foreign Exchange and its amendments on March 18, 2013.

Decree 70 became effective on September 5, 2014 and replaced Decree No. 160/2006/ND-CP dated December 28, 2006 to provide detailed implementation of the ordinance.

Decree 70 governs the foreign exchange activities of residents and non-residents in current transactions, capital transactions, foreign loan borrowing, use of foreign currency and provision of foreign exchange services, the foreign currency market and rates of exchange, and the management of import and export of gold in Vietnam.

With regards to foreign loan borrowing, the government has also promulgated Decree No. 219/2013/ND-CP dated December 26, 2013 on the management and repayment of offshore loans that are not guaranteed by the government. Decree 219 became effective on February 15, 2014 and replaced Decree 134/2005/ND-CP on the same subject.

Decree 219 governs all businesses that are incorporated under the Enterprises Law, credit institution and foreign bank branches under the Law on Credit Institution, and cooperatives and unions of cooperatives established and operating under the Law on Cooperatives.

Offshore loans under Decree 219 include loans from non-residents under loan agreements, deferred payment commodities sale and purchase agreements, entrusted loan agreements and debt instruments issuance agreements that are not guaranteed by the government. In general, foreign borrowing must comply with the regulations of, and is subject to, registration with the SBV.
However, Decree 219 does not state clearly that requirements and types of loans should be registered, or any licensing/registration procedures. These issues have been addressed by the SBV’s guidelines i.e., Circular 03/2016/TT-NHNN dated February 26, 2016 providing certain guidelines on foreign exchange control in relation to foreign borrowing activities (as amended by Circular 05/2016/TT-NHNN dated April 15, 2014 and Circular No. 05/2017/TT-NHNN dated 30 June 2017). Circular 03 has helped to improve the legal framework for management of the borrowing and repayment of enterprises in general and enterprises not guaranteed by the government. Some highlights of the Circular 03 are:

Loans made in the form of deferred payment for import of goods no longer requires registration with the SBV. However, the opening and use of bank accounts and remittance activities must comply with the requirements of Circular 03.
Loans subject to registration with the State Bank include: (i) mid-term and long-term foreign loans, (ii) short-term foreign loans which are renewed to have loan terms to be more than 01 (one) year; and (iii) short-term foreign loans which are not renewed but loans’ outstanding principal amounts have not been fully repaid prior to or within 10 days after 1 year from the date of first loan withdrawal.
A borrower which is not a foreign invested enterprise must open a bank account for the purposes of the foreign loan at the authorized banks in Vietnam. For foreign invested enterprises, their direct investment capital bank accounts may be used for this purpose.
If the schedule of loan disbursement, repayment or interest payment changes by less than 10 days from the schedule already registered with the SBV, the borrower must only notify its bank, and does not need to register the changes with the SBV. However, if the schedule changes by more than 10 days, then reregistration with the SBV is required.
Circular 03 also allows notification to SBV (instead of change registration) with regards to certain corporate changes of information that has been registered with SBV such as change of address of the borrower within the province/city where it has head quarter, or change of trade names of the relevant banks who provide account services, etc.

The government issued Decree No.88/2019/ND-CP on November 14, 2019 on sanctions of administrative violations in the field of monetary and banking operations. Decree 88 became effective on December 31, 2019 and replaced (i) Decree No.96/2014/ND-CP dated December 12,2014, (ii) Decree No. 95/2011/ND- CP dated December 20, 2011, and (iii) Decree No. 202/2004/ND-CP dated December 10, 2004 on sanctions of administrative violations in the field of monetary and banking operations.

This decree was said to loosen forex and gold trading and relevant activities in Vietnam. According to this decree, monetary penalties in relation to gold and forex trading, price listing/payment/advertising in forex/gold, etc. were significantly reduced i.e., from VND 600 million (approximately $26,000) to VND 250 million (approximately $11,000). For instance, the possible penalty for violations re: trading on gold bars without license is only warning for the first-time getting caught or a possible penalty for violations re: forex activities conducted by credit organizations without licenses may be up to VND 250 million (approximately $11,000) which is about 3 times lesser than the amount stated in Decree 96. On another note, forex/gold relevant to trading violations may be confiscated and certificate of registration for forex agent and business operation license of gold of relevant parties may be also suspended or revoked.

Developments in securities regulation

In early 2007 the first Securities Law of Vietnam (No. 70/2006/QH11, 2007) came into effect, which consisted of 11 chapters and 136 articles (as amended on November 24, 2010). The Securities Law primarily covers domestic issues of Vietnam dong- denominated securities and is, therefore, limited to public issues of securities and does not apply to the private placement of unlisted securities. The term “securities” covers a wide range of valuable instruments, including:
Put and call options.
Futures contracts, irrespective of their form.
Investment capital contribution contracts.

Specifically, the Securities Law governs:
Public offerings of securities.
Investment in securities.
Securities services.

The establishment and regulation of securities companies and investment funds

The Securities Law 2019’s area of application considers the systems for trading of listed securities and the systems for trading of unlisted securities, organized and run by Vietnam Stock Exchange (VSE) and its subsidiaries. The local regulator, the State Securities Commission, controls and supervises these systems; however, they are independent legal entities. The SSC is a State body that the Ministry of Finance oversees.
The government and the MoF have issued several decrees, decisions and circulars to implement the Securities Law. Under the Securities Law, publicly offered securities in Vietnam have to be denominated in VND. A joint-stock company must satisfy the following requirements to offer its shares publicly for the first time, among others:
a) The contributed charter capital is at least 30 billion VND on the offering date according to the accounting books;
b) The company has profit over the last 02 years and has no accumulated loss on the offering date;
c) There is a plan for issuance and use of capital generated by the offering ratified by the General Meeting of Shareholders;
d) At least 15% of its voting shares have been sold to at least 100 non-major shareholders. If the issuer’s charter capital is 1.000 billion VND or above, the ratio shall be 10%.
dd) Before the offering date, the major shareholders have made a commitment to hold at least 20% of the issuer’s charter capital for at least 01 year from the end of the offering.

On January 10, 2012, the MoF issued Decision No. 62/QD-BTC re: approval of project plan for restructuring of securities companies. This decision was known as a key in the master plan to renovate the stock market/sector, insurance market and securities companies which have been submitted to the Party Politburo by the MoF. According to this decision, securities companies shall be evaluated based on available capital/risk/accumulated losses index and categorized into three groups (normal, control and special control).

The decision does not provide any clear restructuring plan but promulgates certain controlling methods and penalties applicable to securities companies not satisfying the required available capital/risk index such as disclosure/report requirements, supervising or license withdrawal.. On 28 February 2019, the Prime Minister issued Decision No.242/QD-TTg, approving the plan for restructuring.

Decree No. 155/2020/ND-CP was issued on 31 December 2020 to provide guidelines for Securities Law 2019 and the Law amending certain articles of the Securities Laws on offers for sale of securities, listing, trading, business and investment in securities, and services in relation to securities and securities market. This decree abolished Decree No. 58/2012/ND-CP dated July 20, 2012 and Decree No. 60/2015/ND-CP dated 26 June 2015.

Decree 155 does not limit foreign ownership applicable to public companies engaging in business lines that don’t have foreign-ownership threshold in Vietnam, and allow foreign companies to invest in government’s and companies’ bonds in Vietnam.

Public offerings

To open the procedure for public offering it is necessary to file an application in the form of a registration statement, which includes:
The prospectus.
The audited financial statements for the preceding two fiscal years.
The issuer’s constitutional documents and relevant corporate resolutions.
The main contents of a prospectus are prescribed in Circular No. 120/2020/TT-BTC dated 31 December 2020 of the MoF providing guidance on listing of securities on stock exchanges. Foreign investors should be aware of the lack of fixed standards for financial statements and accounting in Vietnam, which can result in inconsistencies in financial reporting and quality levels.

Private placements

A private placement is defined in the Securities Law 2019 as an arrangement for offering securities to less than one hundred investors, not including professional securities investors or for offering to professional investors only.

Securities Law 2019 provides conditions for a private placement made by public companies as follows:

a) There is a decision of the General Meeting of Shareholders to ratify the plan for issuance and the plan for use of capital generated by the private placement with specific criteria and quantity of investors;
b) The private placement is only available to strategic investors and professional investors;
c) The transfer of privately placed shares, convertible bonds and warrant-linked bonds is limited to 03 years for strategic investors and 01 year for professional investors from the ending date of the private placement, except for transfer between professional investors, transfer under an effective court judgment or decision, arbitral decision, and transfer due to inheritance as prescribed by law;
d) There is an interval of at least 06 months between two private placements of shares, convertible bonds, warrant-linked bonds;
dd) The ratio of holding of shares, conversion of bonds into shares and execution of warrants by foreign investors is conformable with law.

If an application file is incomplete and invalid, the competent State authority shall, within five days from the date of receipt of the application file for registration of a private placement of shares, provide its opinion in writing requesting the issuing organization to amend the file. The date of receipt of the valid and complete file shall be the date on which the issuing organization completes amendment and addition to the file.

Within 15 days from the date of receipt of the valid and compete file for registration, the State authority provides notification to the registering organization and publish on its website the private placement of shares of the registering organization. The issuing organization shall, within 10 days from the selling tranche completion date, submit a report on the results of the private placement to the competent State authority on the standard form annexed to Decree 155/2020/ND-CP.

Conditions for listing on Vietnam Stock Exchange (which has two subsidiaries being Hanoi Stock Exchange and Ho Chi Minh Stock Exchange)

A company may have its shares listed if:
a) It is a joint stock company whose contributed charter capital at the time of listing application is at least 30 billion VND according to the latest audited financial statement and its net worth is at least 30 billion VND according to weighted mean of buying price of shares in the latest public offering as prescribed by this Decree, or the average reference price of shares traded on UPCOM over the last 30 sessions before the application is submitted or the weighted mean of buying price in the first offering of the equitized enterprise.
b) The GMS has approved the listed; shares have been traded on UPCOM for at least 02 years unless the applicant has made public securities offering or equitized;
c) ROE of the year preceding the application year shall be at least 5% and the business performance of 02 years preceding the application year is profitable; there are no debts that have been overdue for more than 01 year up to the application date; there is not accumulated loss according to the latest audited annual financial statement or examined mid-year financial statement in case the application is submitted after ending date of the period covered by the mid-year financial statement;
d) Unless the enterprise is equitized, the applying organization shall have at least 15% of voting shares being held by at least 100 shareholders other than major shareholders; in case the organization’s charter capital is at 1000 billion VND or over, the ratio shall be 10%;
dd) Shareholders that are individuals, organizations represented by President of the Board of Directors, members of the Board of Directors, Chief Controller, Controllers, General Director/Director, Deputy Director/Deputy General Director, chief accountant, Financial Director and people holding equivalent managerial positions shall have commitment to keep holding 100% of the shares they are holding for 06 months from the first trading date of on the Stock Exchange and 50% of these shares for the next 06 months, not including the state-owned shares owned by these individuals;
e) The company and its legal representative have not face penalties for 02 years before the application date for the violations specified in Article 12 of the Law on Securities;
g) There is a securities company that provides listing advisory services, unless the applying organization is a securities company.

Registration at Vietnam Stock Exchange (VNX):

Companies wishing to register to list securities must lodge an application file for registration for listing with the VNX. An application file for registration to list shares shall comprise the following key documents, among other things:
General meeting of shareholders’ approval;
Register of shareholders, as entered one month prior to the date of lodging the application;
Undertaking of certain shareholders such as members of the board of management or board of controllers, the director (general director), deputy director (deputy general director) and the chief accountant of the company, etc. to hold 100 percent of the shares they own for six months from the date of listing and 50 percent of this number of shares for the following six months;
Certificate from the Securities Depository Centre confirming registration by the institution and deposit of the shares at such Centre; and
Written consent from the State Bank in the case of a shareholding credit institution.
The VNX/HOSE/HNX shall approve or refuse to approve an application for registration for listing within 30 days from the date of receipt of a complete and valid application file, and in a case of refusal shall specify its reasons in writing.

Decree No. 155/2020/ND-CP dated 31 December 2020 on foreign ownership in stock market

In April 2009, the Prime Minister issued Decision 55/2009/QD-TTg governing the purchase and sale of “securities in Vietnam’s stock market”. It stipulates the difference between local investors and foreign investors, in accordance with foreign-invested local investment funds. It also states the 49 percent rule. This means that local investment funds and local securities investment companies are considered foreign investors if foreigners hold more than 49 percent of the interest of a corporation.

The above limitation of 49 percent was removed on September 1, 2015 under Decree No. 60/2015/ND-CP, i.e., generally there is no limitation on foreign ownership ratio except for “conditional” sectors. In particular, the limitation would be subject to the WTO commitments or other specific domestic law (e.g., the 30 percent cap in the banking sector). Under Decree 155, the above limitation is elaborated as follows:

Maximum foreign ownership ratio in a public company:
a) If the business lines of the public company are regulated by a treaty to which Vietnam is a signatory, the treaty shall apply;
b) If the business lines of the public company is regulated by regulations of law which specify foreign ownership ratio, these regulations shall apply;
c) If the business lines of the public company are on the list of restricted market access, regulations on foreign ownership ratio of each category shall apply. If foreign ownership ratio limits are not specified in such regulations, the maximum foreign ownership ratio in the company shall be 50% of charter capital;
d) If the public company does not fall into any of the cases specified in Points a, b, c, there is no maximum limit for foreign ownership ratio;
d) In case the public company has multiple business lines that are subject to different foreign ownership ratio limits, the foreign ownership ratio must not exceed the lowest limit among them;
e) In case the public company imposes a foreign ownership ratio limit that is lower than that specified in Point a, b, ,c d, dd, it must be approved by the GMS and specified in its charter.
Foreign investors may invest without limits into debt instruments of the Government, government-backed bonds, municipal bonds, corporate bonds, fund certificates, shares of investment companies, derivative securities, DRs and secured warrants, unless otherwise prescribed by relevant laws.

Circular51/2021/BTC dated 30 June 2021

At the end of 2008, two years after the first Securities Law, the SSC and the MoF enacted Decision 121/2008/QD-BTC to make the market more interesting for foreign investment as well as to penalize those who disobey the Securities Law. Decision 121 governed the activities of foreign investors in the Vietnamese securities market.

On December 6, 2012, the MoF adopted Circular 213/2012/TT-BTC governing foreign investors’ activities in Vietnamese securities market. Circular 213 became effective on February 15, 2013 and replaced Decision 121.

On August 18, 2015, the MoF issued Circular 123/2015/TT-BTC governing foreign investment activities in Vietnamese securities market (became effective on October 1, 2015), to guide Decree 60 and replace Circular 213. On 16 August 2021, Circular 123 was replaced by Circular 51 of 2021.

Circular 51 provides detailed documents and procedure for foreign investors to operate in the Vietnam’s stock exchanges. The circular streamlines the procedures for market participation of foreign investors in the Vietnam’s stock market by reducing the amount of necessary documentation and simplify the procedure. For example, the circular removes the need to translate documents into Vietnamese by allowing them to be submitted in English.
The circular sets out that foreign investors are required to apply for the Securities Trading Code (STC) before trading shares, bonds or other types of securities under the securities market regulations.

Notification procedure on foreign ownership limits (FOL)

Circular 155 requires that public companies are responsible for determining the applicable FOL. Following the determination of the FOL which is applicable to them, companies must file a notification dossier with the State Securities Commission (SSC). This dossier includes: (i) extracted information on business lines as uploaded on the National Business Registration Portal and the electronic address linking to such information; and (ii) Minutes of Meeting and the Resolution of the Board of Management approving the unrestricted FOL (if the company does not wish to maintain an FOL) or Minutes of Meeting and the Resolution of the General Shareholders’ Meeting approving and the charter providing for the specific FOL (if the company wishes to maintain FOL). The SSC will have 07 working days to acknowledge in writing the notification on FOL.

If you have any question on the above, please do not hesitate to contact Dr. Oliver Massmann under Dr. Oliver Massmann is the general director of Duane Morris Vietnam LLC.


1. Is the new PPP law that came into effect earlier this year likely to help encourage foreign investment in these projects?

Yes, the 2020 PPP Law and its guiding Decrees contain various provisions that benefit foreign investors. Among others, for example:

Provision on lenders’ step-in right highlight the importance of bankable PPP contracts: PPP Law sets forth that in case of termination of PPP project contract ahead of the deadline and it is required to select a replacement contractor to ensure the progress of the project, the lender must coordinate with the State to select the alternative investor.

Detailed investment incentives that foreign investors can enjoy: Article 80 of PPP Law specifies that investors are provided with security regarding land access rights, right to use land and other public properties, property mortgage right, right to trade the project and its infrastructure system. PPP project enterprises are also given priority to utilize public services for implementation of the project, and competent agencies must assist investors in carrying out necessary procedures in order to optimize this priority.

Foreign currency balance-ensuring scheme is applicable to projects subject to the National Assembly or the Prime Minister’s issuance of decision on investment policy. The latter applied for projects with total invested capital of at least VND 5000 billions, suggesting that all power projects eligible for PPP investment are automatically eligible for this foreign currency scheme. In addition, there is a ceiling of 30% to be imposed for all PPP projects.

Revenue risk sharing mechanism

When the actual revenue reaches more than 125% of the revenue in the financial plan of the PPP project contract, investor to share with the State 50% of the increase between actual revenue and committed revenue in the contract.

When the actual revenue reaches less than 75% of the revenue in the financial plan of the PPP project contract, the State to share with investor 50% of the decrease between actual revenue and committed revenue in the contract. This revenue reduction sharing mechanism is applied when the following conditions are met:

1. Type of contract: BOT, BTO or BOO;
2. The cause of loss is change in laws and policies;
3. Measures to adjust product and public service prices and contract terms have been implemented but the total revenue is still less than 75%; and
4. The State Audit has audited the revenue reduction.

2. Have these wastewater projects been driven by the November 2020 changes to the environmental protection law and are we likely to see further such projects?

Yes, it can be said that the revision to environmental protection law is a pushing factor for more environmental-friendly projects such as wastewater treatment. However, I think the most important factor is consumers’ needs and the lack of domestic funding for these projects. Wastewater treatment projects tend to require a lot of funding in the beginning and investors can only receive profits after around 10 years that is quiet late. With rapidly growing population and not enough treatment plants, and those with advanced technology, in sight to accommodate more than 3 millions cubic metric of wastewater per day, Vietnam calls for more wastewater projects with funding from foreign investors. We will definitely see more of such projects in the future, albeit with better technology.

3. Do we know what model PPP these projects are likely to use and has that been influenced by the new PPP law?

The model of these projects will depend on discussion and agreement between foreign investors and the Vietnamese authorities. Most of big projects in the past follow either BT or BOT route.

4. Is it likely these projects will be publicly procured, and if so, when?

Yes, it is highly likely that these projects will be publicly procured. The timing of such public procurement depends on provincial authorities.

Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, a Member of the Supervisory Board of the PetroVietnam Insurance JSC, and the only foreign lawyer to address members of the National Assembly in the Vietnamese language.

VIETNAM WILL MOVE ON – Dr. Oliver Massmann in interview with Vietnam Economic Times

As of the end of October, total newly-registered, additional, and paid-in capital for share purchases by foreign investors in Vietnam stood at $23.74 billion; up against the same period last year. What are your thoughts on these figures given the pandemic’s effect on the country?
Global foreign investment flows in 2021 recovered better than expected. These impressive increases are due to the fact that, in the past ten months, three major projects have been granted new investment certificates or added capital: the Long An LNG Power Project ($3.1 billion) in the Mekong Delta’s Long An province, LG Display Hai Phong in northern Hai Phong city, which increased its capital by $2.15 billion, and the O Mon II Thermal Power Plant ($1.31 billion) in the Mekong Delta’s Can Tho city, so both newly-registered and additional capital rose sharply year-on-year.
In addition, as of June, the EU had 2,221 valid projects in Vietnam, an increase of 142 over the same period of 2020, from 26 of the 27 members of the bloc, with capital totaling $22.216 billion, an increase of $449 million against the same period of 2020 and accounting for 5.58 per cent of investment into Vietnam and 6.57 per cent of projects.
Commitments on transparent governance under international agreements and commitments from the Vietnamese Government creating an open and favorable trade and investment environment have contributed to such increases.

Having been in Vietnam for many years, what do you think about the country’s business environment now that lockdowns have ended and a “new normal” appears in trade and investment post-pandemic?
A “new normal” is a necessity, and the government understands that the country cannot and should not wait to resume business only once there are no Covid-19 cases. Companies are operating on the basis of the Ministry of Health’s 5K rules, to ensure safe distancing and hygiene practices among workers and customers. The “new normal” can be seen most clearly through the tourism and hospitality industry, which has suffered more than others since the coronavirus appeared in early 2020. Vietnam has opened up its tourism sector to domestic and foreign travelers alike. One common travel safety rule will be that all tourists and tourism staff must have been fully vaccinated or can furnish a certificate showing they had contracted and recovered from Covid-19. Travel companies will only be allowed to organize tours to “green zones” – those deemed at low risk of spreading the virus. They should also have contingency plans in place in case a visitor contracts the virus.

In a recent interview with a local newspaper, you said “Vietnam will regain its position as one of the most ideal investment locations in Southeast Asia.” Why do you believe so?
First, the government has introduced policies combining fiscal policy, monetary policy, and other sectoral or social security support policies, which include a group of short-term solutions and mechanisms in a number of specific industries and fields and groups of fundamental and long-term solutions to remove difficulties facing economic growth, and supported people and businesses that suffered from the pandemic.
Second, disease control measures have been taken seriously. In a very short period of time, most of Vietnam’s population received two doses of vaccine and the country has begun to vaccinate people under 18 years of age.
Third, Vietnam has conducted intensive institutional reform to ensure its adherence to commitments made under international pacts like the EU – Vietnam Free Trade Agreement (EUVFTA).

What issues must be addressed if Vietnam is to reach its full potential in trade and investment post-pandemic?
Among other things, Vietnam must be more selective in approving foreign investment projects, with an increase in quality and a decline in quantity, in order to eliminate small-scale projects with little added value. Equally important, disease control measures must be clearly available to businesses, for them to prepare their business plans.

What do you foresee for FDI into Vietnam next year?
The government has been trying to perfect the legal framework to implement commitments made under international agreements and to reform and simplify investment and business conditions. A number of legal documents have been promulgated or amended to be consistent with existing commitments, like the Law on Intellectual Property and the Labor Code. The Ministry of Industry and Trade (MoIT) has also cut 205 business investment conditions applicable to foreign investors.
In the 2021-2025 period, the MoIT will continue to review and develop a roadmap of plans to cut business investment conditions, administrative procedures, and specialized inspections, which will help foreign investors reduce the time and cost spent on compliance. Vietnam has been making visible efforts to meet high international standards in all sectors. With a vaccine program being carried out nationwide and the country expecting to fully resume business operations by the beginning of 2022, we expect to see an increase in FDI into Vietnam in 2022.

Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, a Member of the Supervisory Board of the PetroVietnam Insurance JSC, and the only foreign lawyer to address members of the National Assembly in the Vietnamese language.


1. What do you think about recent rumors that factories of foreign corporations intend to move their production from HCMC to other countries due to the impact of Covid-19?

In 2020, thanks to its outstanding Covid-19 prevention, Vietnam became one of the most attractive destinations for foreign investors looking to move its production out of pandemic-ridden China. Coupled with the enforcement of the EVFTA, Vietnam was set to be the new manufacturing hub of South East Asia. However, since May 2021, the Covid-19 situation in Vietnam, especially Ho Chi Minh City, took a rapid U-turn that led to nationwide lockdown for 4 months. Factories that wished to continue production must have their employee work and live onsite, while office workers worked from home mostly. Other issues include shortage in material supply, contact restriction between enterprises and customers, expats unable to enter Vietnam,… With the sudden disruption to operation and increased costs to ensure workers’ safety and needs onsite, enterprises found themselves having to find a more efficient working way. Some started transferring part of their orders to China, some suspended their process from moving from China to Vietnam and some are looking at alternative countries like Philippines.

2. In your opinion, what major factors will likely cause these corporations’ move?

In a survey of foreign enterprises in Vietnam, to return to operation, 51% of businesses said they need at least 6 months to return to normal operations. 62% of businesses said they would stop operating if the situation did not improve in the next 12 months. 65% of them will stop working immediately if in the next 3 months the situation has not improved.
So the most important factors that will cause these corporations’ move in the near future is if the Covid-19 situation in Vietnam does not become well-controlled soon. The government should let foreign businesses clearly see the anti-epidemic plans and measures in each phase, as it can greatly support the business’s plan.

3. What factors make the remaining large brands like Néstle, Samsung, or Tetra Pak, LG continue to invest in Vietnam?

First of all, it is not easy to immediately move a production to another country. Companies may look to other alternative destinations but will keep an eye on the existing location to see if there’re any considerable new improvements. Second, the Covid-19 situation in Vietnam has greatly improved with most of the population got at least the first jab of vaccination. Third, the Government has been issuing favourable policies on tax and fees for businesses suffering from the consequence of the corona virus pandemic. It is aimed that by the end of 2021, at least 01 million businesses will have access to favourable credit policies, reduction or termination of payment of tax, land fees as well as electricity, water, telecommunication charges.

For example, the latest draft of the Ministry of Planning and Investment on this matter covered the following points to support to cut costs, remove difficulties in cash flow for businesses:
_ Propose policies suspending or reducing the social insurance premiums in 2021 for businesses until June 2022.
_ Develop a plan to support air transport enterprises, and report to the Prime Minister in September 2021.
– Requesting shipping companies to publicly and transparently list shipping rates to eliminate unreasonable increase in freight rates that lead to cost burden for enterprises
_ Reduce of electricity prices for goods warehouses of logistics and processing enterprises in the agriculture, forestry, fishery and a number of commodity industries with export turnover of over USD 1 billion USD. Continue to reduce electricity prices for tourist accommodation establishments.
– Expeditiously implement the issued policies on relaxation and reduction of taxes, fees, charges and land rents; implement preferential tax policies for imported goods to finance COVID-19 prevention and control after being approved by the Government.
– Extend the deadline for paying excise tax on automobiles manufactured or assembled in Vietnam. Continue to reduce registration fees for domestically manufactured or assembled cars for an additional period of time in line with the COVID-19 pandemic.
_ Research to allow travel businesses to temporarily withdraw deposits for domestic and international travel and tourism services; reduce deposit withdrawal settlement time from 60 days to 30 days; continue to extend the reduction of the license fee for travel service business and issue tourist guide cards until the end of 2021.
_ Continue to administer monetary policy to control inflation, contributing to stabilizing the macro-economy; encourage credit institutions to continue reducing lending interest rates for existing loans and new loans to support production and business.
_ Supplement policies on debt rescheduling, exemption and reduction of interest and fees, keeping the same debt group for customers affected by the Covid-19 epidemic
_ Research and consider the exemption of trade union fees for members of businesses affected by the COVID-19 pandemic in 2021 and 2022

4. What production shift scenarios do you predict may happen in the near future?

If Vietnam can effectively control the corona-virus pandemic in the next 6 months, I believe Vietnam will regain its position as one of the most ideal investment locations in South East Asia.

5. What should the Vietnamese government do to make production and business of foreign corporations stable?

The government must always listen to enterprises’ difficulties and guide them on how to solve it. It is imperative to reopen the economy as soon as possible while ensuring that businesses are conducted safely to prevent the spread of Covid-19. Vietnam has started to apply vaccination cards that allows people to move freely after they have had 2 vaccine injections. Policies that assist foreign enterprises to overcome issues caused by the pandemic as well as policies that assist them to reopen operation and achieve target growth are always welcome.


For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.


The Appraisal Council approved the National Electricity Development Plan for the period of 2021-2030, with a vision to 2045 (Power Master Plan VIII) in a meeting held on 3 October 2021.

Immediately after receiving the results from the Appraisal Council, the Ministry of Industry and Trade has embarked on the finalization of the Draft Power Master Plan 8 with the goal of submitting the final draft to the Prime Minister this weekend for consideration and approval.

Duane Morris will keep our readers updated of any progress on the finalization of the Draft Power Master Plan 8.

For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.


Under Circular No.28/2012/TT-BKHCN dated 12/12/2012, before the products are circulated on the market, the manufacturer must declare the products’ standard conformity (Declaration of Standard Conformity). A component of the application dossier for the Declaration is the assessment result of standard conformity (“Assessment”). Under Circular 28, this Assessment can be carried out either by the manufacturer themselves or a third party registered certifying organization.

On 31 December 2019, the Ministry of Science and Technology issued Document No. QCVN 19:2019/NKHCN on National Technical Regulation on LED lighting products (Document 19). Article 3.4 of Document 19, the Declaration of Standard Conformity must be based on the assessment results issued by a certification body that has registered its field of operation as prescribed in local regulations.

It has been brought to our attention that these certification bodies charge around USD 700 for each model testing. From 2022, under Decision No. 1383/QD-BKHCN dated 22/05/2020, there will be two additional tests required for the Assessment, thus it is expected that the price payable by manufacturers/distributors will increase to USD 1500 for each model of product.

Importers of LED lamps have been furious with the new Regulation, as they believe local certifying organizations do not have the capacity to assess EU-imported products, assuming that such products have not yet been certified in accordance with EU standards. Importers also feel that the Regulation has resulted in importers have to incur unreasonable additional fees. We examine this instance in light of the EU-Vietnam Free Trade Agreement (EVFTA) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

EU-Vietnam Free Trade Agreement

Under Article 5.3.2 of the EVFTA, Vietnam has the right to prepare, adopt and apply standards, technical regulations and conformity assessment procedures in accordance with the EVFTA and the TBT Agreement.

Article 5.5 (Standards) reads that With a view to harmonizing standards on as wide a basis as possible, the Parties shall encourage their standardizing bodies as well as the regional standardizing bodies of which they or their standardizing bodies are members to avoid duplication of, or overlap with, the work of international standardizing bodies. Some exported products may already undergo Assessment of standard conformity in their origin country. As a result, requiring imported products to undergo another local one may be considered as repeating the work.

In addition, under the EVFTA, Vietnam also affirmed its obligation that fees imposed for mandatory conformity assessment of imported products shall be equitable in relation to any fees chargeable for assessing the conformity of like products of domestic origin or originating in any other country, considering communication, transportation and other costs arising from differences between location of facilities of the applicant and the conformity assessment body. Importers of LED lamps could make a case if it could be established that the charges applicable to imported products are higher than those manufactured locally.

In general, it could be said that Document No. QCVN 19:2019/NKHCN on National Technical Regulation on LED lighting products does not comply with provisions under the EVFTA in the sense that it constituted a Technical Barrier to Trade upon Vietnamese importers. Consequently, it would hinder LED lighting products export from EU countries.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership

Under the CPTPP, Vietnam has the right to apply the same or equivalent procedures, criteria, and other conditions to accredit, approve, license, or otherwise recognize conformity assessment bodies located in the territory of another CPTPP Party that it might apply to conformity assessment bodies in its own territory. Moreover, the CPTPP also explicitly does not preclude Vietnam from verifying the result of conformity assessment procedures undertaken by bodies located outside its territory.
As a result, it could be said that under the CPTPP, the provisions applicable to LED lighting importers allow for local regulations like Document 19.

Both the EVFTA and the CPTPP require Vietnam and other parties to the agreements to establish local Contact Points for matters arising under their chapters. It is recommended that importers or traders that are negatively affected by Document 19 should voice their concern to such Contact Points, who have the responsibility to handle your matter by working with the relevant governments in light of the EVFTA and the CPTPP.

For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.


In a press conference on 30 September 2021, the Ministry of Industry and Trade (“MOIT”) confirmed that there would be NO FIT extension for wind energy projects after 31 October 2021.

The Ministry of Industry and Trade recently issued a new draft Circular on regulations on methods of building electricity generation price brackets and determining electricity generation prices, power purchase agreement for solar and wind energy projects. This Circular will apply to solar energy projects that have not met the COD deadline of 1 January 2021 or wind energy projects that have not met the COD deadline of 1 November 2021. Though it is only at draft stage, it is expected that the Circular will come into force soon and give developers as well as investors clarity on renewable power projects development and related transactions.

According to the Draft, this Circular will apply to:
i) Ground-mounted solar energy projects, floating solar power projects
ii) Rooftop solar energy projects
iii) Onshore wind energy projects and
iv) Offshore wind energy projects.

The electricity generation price bracket is the range of values from 0 (zero) to the ceiling price of the type of solar and wind power plants corresponding to each type of solar power plant (floating, ground mounted) and wind power plant (onshore, offshore). The ceiling price is the electricity generation price of a standard solar and wind power plant. Standard solar and wind power plants are plants that have operated, are under negotiation or are selected during the year (N-1).

Electricity generation price of newly built solar and wind power plants is determined based on:

a) Reasonable expenses of the Investor in the whole economic life of the project;
b) The financial internal rate of return (IRR) is 12%.

The electricity generation price of a solar and wind power plant includes the following components:

a) Power purchase and sale contract price: To be agreed upon by the two parties and determined according to the formula specified in Article 11 of this Circular;
b) Specific connection price: To be agreed upon by both parties and determined according to formula specified in Article 14 of this Circular.

Electricity generation price of solar and wind power plant is exclusive of value-added tax and other taxes, fees and cash receipts according to the State’s regulations (except for taxes and fees already paid) included in the electricity generation price plan.

The draft Circular also provide a new Power Purchase Agreement (“PPA”) template to be used for solar and wind energy projects , including detailed procedure for PPA negotiation and checklist of documents to request for PPA negotiation.

For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.


Vietnam’s latest Law on Cybersecurity came into force on 1 January 2019. The law sets out rights and obligations on domestic and foreign companies providing services to customers in Vietnam over telecom networks or the Internet. The two provisions of the Law that are the most controversial are arguably Data Localization (offshore and onshore online service providers are required to store Vietnamese users’ information within the country for a period of time) and Commercial Presence (the same companies must establish a commercial presence in Vietnam either in the form of a branch or representative office). It has been questioned whether these provisions are contradicting international treaties that Vietnam is a signatory to, including the CPTPP and the EVFTA. In answering this question, we shall examine Vietnam’s commitments under each Agreement.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP):

No import tax to be imposed on e-commerce transactions. However, Vietnam has the right to impose local taxes, fees and charges on “electronically transmitted content”, provided that such taxes, fees or charges are in accordance with provisions of the Agreement.

Cross-border transfer of information by electronic means is allowed. The cross-border transfer of information, data by electronic means is only for business activities or a legal entity. Vietnam has the right to have separate requirements for data transfer by electronic means and take necessary measures to implement legitimate public policies, but on the condition that the policies does not create disguised barriers to trade or are applied in a discriminatory or arbitrary manner.

Data localization requirement is not mandatory. Vietnam is not allowed to require the use or location of servers in the host country as a business condition. However, Vietnam has the right to make specific management requirements regarding the use or location of servers, including requirements to ensure communications security and confidentiality; and take necessary measures to implement legitimate public policies, but on the condition that the policies does not create disguised barriers to trade or are applied in a discriminatory or arbitrary manner.

CPTPP countries agreed not to sue Vietnam if its cybersecurity regulations are deemed to be inconsistent with the CPTPP Agreement (specifically, two obligations of free cross-border information flow and server localization in the E-Commerce Chapter) within 2 years after the date of entry into force of the CPTPP Agreement.

Reserving measures related to national security and defense, public order and privacy. Vietnam has the right to have separate management requirements for cross-border transfer of data or information by electronic means, using or locating servers (including requirements to ensure communications security and confidentiality); Vietnam has the right to take necessary measures to implement legitimate public policies, but on the condition that they do not create a disguised trade barrier or are applied in a discriminatory or arbitrary manner.

The validity of electronic authentication and electronic signatures must not be denied. However, Vietnam may require that, for a particular category of transactions, the method of authentication meets certain performance standards or is certified by an authority accredited in accordance with its law. In practice, though not stated in the law, all application dossiers to the local Department of Planning and Investment still require wet ink signature, even if the investor is abroad.

EU-Vietnam Free Trade Agreement (EVFTA):

The issue of Cybersecurity could be found in Chapter 8 of the EVFTA, Section F of which states that “the Parties, recognizing that electronic commerce increases trade opportunities in many sectors, shall promote the development of electronic commerce between them, in particular by cooperating on the issues raised by electronic commerce under the provisions of this Chapter of EVFTA”.

As committed under the EVFTA, Vietnam and EU shall maintain dialogues on regulatory issues raised by electronic commerce, which shall, inter alia, address the following issues:

•the recognition of certificates of electronic signatures issued to the public and the facilitation of cross-border certification services;
•the liability of intermediary service providers with respect to the transmission or storage of information;
•the treatment of unsolicited electronic commercial communications;
•the protection of consumers in the ambit of electronic commerce; and
•any other issue relevant for the development of electronic commerce.

This dialogue may take the form of exchange of information on the EVFTA’s Parties’ respective laws and regulations on the issues referred to above issues as well as on the implementation of such laws and regulations.

From the above, it could be seen that the international treaties leave a lot of room for Vietnam to develop its own regulations. In other words, due to their vague language and absent of further guidance, the provisions are open to the discretion of the local authorities. As such, to answer the question at the beginning, the Law on Cybersecurity and accompanying legal documents stipulating that foreign enterprises operating commercially in cyberspace must set up a representative office and store data in Vietnam for a period of time is not contrary to international practice outlined in the CPTPP and EVFTA.


Please do not hesitate to contact the author Dr. Oliver Massmann under Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.


Recently, the Government Office has received proposals from several provincial People’s Committees on extending the current wind FiTs because many projects are being delayed due to the Covid-19 pandemic, especially the forth wave of Covid-19 since May 2021 that resulted in (almost) nationwide lockdown. Under Decision 39/2018/QD-TTg of the Prime Minister regarding development of wind power projects in Vietnam, the current wind FiTs end on 1 November 2021.

The current FiTs are as follows:

With regard to onshore wind power projects: The purchase price at the delivery point is VND 1,928 per kWh, excluding VAT and equivalent to 8.5 UScents/kWh according to the USD/VND exchange rate quoted by the State Bank of Vietnam on 30 August 2018 – USD 1 = VND 22,683. The electricity purchase price shall be adjusted according to the VND/USD exchange rate.

With regard to offshore wind power projects: The purchase price at the delivery point is VND 2,223 per kWh, excluding VAT and equivalent to 9.8 UScents/kWh according to the USD/VND exchange rate quoted by the State Bank of Vietnam on 30 August 2018 – USD 1 = VND 22,683. The purchase price shall be adjusted according to the VND/USD exchange rate.

Upon the provincial People’s Committees’ proposals, the Government Office has instructed the Ministry of Industry and Trade (MOIT) to review these proposals and report back by 30 September 2021.

Since 2020, MOIT has proposed to extend the current FiT deadline to 31 December 2023. After 2023, MOIT proposes wind energy projects to apply auction, bidding methods. MOIT also proposed to assume the responsibility of calculating new FiT rate for wind power projects, applicable from 1 November 2021 to 31 December 2023 in case the Prime Minister doesn’t agree to extend the current FiT rate.

The need to extend the deadline for current FiT rates is essential because the projects waiting to be included in the PDP VIII is unlikely to have commercial operation date before November 2021, because the construction of wind power projects takes a long time – For feasibility study reports, investors must carry out wind measurement for at least 12 months. Moreover, wind turbines are mostly imported from abroad, which costs investor extra time, especially when there has been unexpected delay of equipment delivery due to the global pandemic.


Please do not hesitate to contact the author Dr. Oliver Massmann under Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.