Category: Vietnam – General

1. How do you assess Vietnam’s general economic performance? Besides manufacturing, are there any other sectors worth investing in or have huge potential?

Vietnam’s economic performance has been impressive. In 2020, while major global economies suffer from the Covid-19 pandemic, Vietnam posed the highest GDP growth in South East Asia, higher than China, Singapore, and Japan. In 2021, when Covid-19 resulted in almost nation-wide lockdown for almost the whole year, the country still posed a positive GDP growth of 2,68%.
Sectors with huge potential: water and waste treatment, clean energy development (biomass, LNG, offshore wind…), agriculture products processing, healthcare equipment

2. How have CPTPP and other major trade agreements benefited Vietnam? What difference will RCEP make?

The CPTPP and the EVFTA have made trading between Vietnam and the signatory countries cheaper and more efficient thanks to the reduced tariff schedule as well as administrative procedures. During the worst period of the Covid-19 pandemic, Vietnam’s export remains outstanding thanks to these free trade agreement. Vietnam foresee similar benefits coming from the RCEP. Additionally, the RCEP brings about a huge political benefit of strengthening ties between Vietnam and other countries in the region, which can result in a more stable and connected political scene in the region.

3. When Vietnam went into lockdown in the third quarter of last years, some productions moved back to China. Was this just temporary and moving manufacture out of China has become an irreversible trend?

In my opinion, the move is temporary. As in a supply chain, it is usually more cost effective for business to move production, as long as production still going on, rather than to stop production for any reason. So it’s not a surprise that when businesses in Vietnam were suspended in the last year for Covid-19 protection, companies had to seek solution elsewhere.

I think that once China recovers from the current Covid situation and issues more policies favorable for foreign investors, the flow may be reversed.

4. Do you think the structure of China-Vietnam trade is more complementary or more competitive? How do you see their positions in the global supply chain?

I see the structure is more complementary, where both countries export to the other products that they need. China closed its border last years due to Covid-19, the global supply chain suffered heavily. I think that’s enough to describe the importance of China in the world’s supply chain. If the flow of business moving production from China to Vietnam continues, Vietnam will very soon become a key player in the global supply chain.

5. Have you seen a major increase in foreign investment recently? Where are they mainly from and which sectors they are investing in?

In 2021, despite the complicated development of the Covid-19 epidemic, FDI inflows into Vietnam reached 31.15 billion USD, up 9.2% compared to 2020. Total foreign investment capital registered in Vietnam as of March 20, 2022 reached US$8.91 billion.
Among 35 countries and territories with newly licensed investment projects in Vietnam in the first three months of 2022, Denmark is the largest investor with $ 1.32 billion, accounting for 41.1% of the total capital. new level registration; followed by Singapore with 626.6 million USD, accounting for 19.5%; China $ 379.5 million, accounting for 11.8%; Taiwan 219.9 million USD, accounting for 6.8%; Hong Kong Special Administrative Region (China) $ 191.7 million, accounting for 6%. Sectors: processing and manufacturing industry, real estate

6. Is Vietnam ready to be the next world’s factory?

Yes. Vietnam now has the human resources, technology, government support, foreign investment to become the next world’s factory. Vietnam has grown so fast, economically and politically, in the last 5 years, that in 5 years to come, we may see something we wouldn’t even be able to foresee from today.

Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.comif you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Am 26. April 2022 leitete der stellvertretende Premierminister Le Van Thanh eine Sitzung des Bewertungsrats zur Beurteilung des Entwurfs des Nationalen Energieentwicklungsplans 8, wobei der Entwurf gebilligt wurde. Das Industrie- und Handelsministerium arbeitet nun mit den zuständigen Regierungsstellen zusammen, um den endgültigen Entwurf im Mai 2022 dem Premierminister zur Genehmigung vorzulegen.

Laut dem Plan soll im Jahr 2025 die Gesamtkapazität der Kraftwerke etwa 93.862 – 98.394 MW (ohne Energie durch Solaranlagen auf Dächern und Kraft-Wärme-Kopplung) betragen. Diese Kapazität setzt sich zusammen aus:

-Wasserkraft 25.779 – 26.795 MW, was einem Anteil von 27,2 – 27,5% entspricht;

-Kohlekraftwerke 28.867 MW, was einem Anteil von 29,3 – 30,8% entspricht;

-Gas-Wärmekraftwerke (einschließlich LNG) 14.947 MW, was einem Anteil von 15,2 – 15,9% entspricht;

-erneuerbare Energiequellen außer Wasserkraft (Windkraft, Solarenergie, Biomasse, etc.) 20.416 – 23.332 MW, was einem Anteil von 21,8 – 23,7% entspricht; und

-Stromimporte 3.853 – 4.453 MW, was einem Anteil von 3,4 – 4,1% entspricht.

Der Nationale Energieentwicklungsplan 8 fördert die Entwicklung von Windenergie, autarker Solarenergie. Dies bezieht sich nur auf den Verbrauch vor Ort, nicht die Stromerzeugung im nationalen Netz. Zudem wird die Produktion neuer Energieformen wie die von Wasserstoff, grünen Ammoniak usw. unterstützt. Solche Formen werden ohne Kapazitätsbegrenzung entwickelt, nicht durch die Quellenstruktur im Plan begrenzt und mit der Planung ergänzt, wenn es einen umsetzbaren Vorschlag gibt.

– Entwicklung der Solarenergie

Hinsichtlich der Entwicklung von Solarenergiequellen, einschließlich konzentrierter Quellen, die auf dem Boden und Seeoberflächen installiert sind, und verteilter Quellen, die auf dem Dach installiert sind soll die Gesamtkapazität der Solarenergiequellen 2025 etwa 16.491 MW betragen und bis 2030 unverändert bleiben. 2045 soll sie etwa 74.741 – 96.666 MW betragen. Es wird erwartet, dass die aus Solarenergie erzeugte Elektrizität im Jahr 2025 einen Anteil von etwa 6,8 bis 7,0 %, im Jahr 2030 etwa 4,5 bis 4,8 % und im Jahr 2045 11,1 bis 12,1 % haben wird.

– Entwicklung der Windenergie

Die Gesamtkapazität der Onshore- und Nearshore-Windenergie soll bis 2025 etwa 10.700 – 13.616 MW, bis 2030 etwa 11.700-16.121 MW und bis 2045 etwa 36.170 – 55.950 MW betragen. Die Gesamtkapazität der Offshore-Windenergie ist 2030 mit 7.000 MW oder möglicherweise mehr angesetzt, wenn die wirtschaftlichen und technischen Bedingungen es erlauben. Im Jahr 2045 soll diese Kapazität bei 30.000 – 64.500 MW liegen. Es wird erwartet, dass die gesamte Stromerzeugung aus Windenergie im Jahr 2025 etwa 14,4 – 15,7%, im Jahr 2030 etwa 10,3 – 15,6% und im Jahr 2045 etwa 31,2 – 43,2% betragen wird.

– Entwicklung von LNG-Strom

Projekte in Hai Phong wurden aus der Planung gestrichen.

Für Wärmekraft unter Verwendung von im Inland erzeugtem Gas (dies umfasst Gasturbinen-Wärmekraftwerke) und LNG (ohne flexible Gasturbinen-Kraftwerke, die LNG verwenden) wurde festgelegt, dass bis 2030 die installierte Gesamtkapazität etwa 29.730 – 38.830 MW betragen wird. Es sollen 133,1 – 172,3 Mrd. kWh erzeugt werden, was 24,1 – 28,9% der gesamten Stromerzeugung entspricht. 2045 wird die installierte Gesamtkapazität etwa 43.330 – 46.330 MW betragen und 233,6 – 246,0 Mrd. kWh erzeugen, was 20,1 – 23,9% der gesamten Stromerzeugung entspricht.

Liste der LNG-Wärmekraftwerke

– Entwicklung der Kohlekraftwerke

Im Nationalen Entwicklungsplan 8 wurde die Ersetzung von Kohlekraftwerksprojekten angesichts der Verpflichtungen Vietnams im Rahmen der UN-Klimakonferenz 2021 geprüft. Die Planung von Kohlekraftwerksprojekten, die im Nationalen Energieentwicklungsplan genehmigt sind, aber von der Gemeinde nicht unterstützt werden oder nicht für die Entwicklung in Frage kommen, wurde nicht mehr berücksichtigt.

Einige Projekte, die für die Umstellung auf LNG vorgeschlagen wurden, wie z.B.: Vung Ang III, Quang Trach II, Quynh Lap I, II, und Long Phu II, III wurden gestrichen. Die BOT-Projekte Nam Dinh 1 und Quang Tri I bleiben jedoch in der Planung.

Wenn Sie Fragen haben oder weitere Einzelheiten zu den oben genannten Punkten erfahren möchten, zögern Sie bitte nicht, sich mit Dr. Oliver Massmann unter omassmann@duanemorris.com in Verbindung zu setzen.
Dr. Oliver Massmann ist General Director bei Duane Morris Vietnam LLC.

Despite complicated Covid-19 situation in Vietnam that resulted in almost nation-wide lockdown, foreign direct investment in Vietnam reached USD 31,15 billion, an increase of 9.2% compared to 2020 (figures from the General Department of Statistics). This 2022, with all Covid-19 restrictions removed, Vietnam is ready to fully welcome foreign investors. As of March 2022, the processing and manufacturing industry leads the chart of attracting the most foreign direct investment. Other investment fields offering investment opportunities to foreign investors include generation and distribution of electricity, mining, logistics and textile.

Beside government-issued incentives like reduced land levy, tax, allowance for 100% ownership… foreign investors must make use of benefits available for them under bilateral and multilateral agreements. As of now, Vietnam has concluded 15 free trade agreements, the most recent being the CPTPP and the EVFTA.

Some notable provisions under the CPTPP and EVFTA that foreign investors should know:

Government procurement

Vietnam has one of the highest ratios of public investment-to-GDP in the world (39 per cent annually from 1995). However, until the enforcement of the EVFTA, Vietnam has not agreed to its government procurement being covered by the Government Procurement Agreement (GPA) of the WTO.

Vietnam’s commitments on Government procurement mainly deal with the obligation to treat EU bidders, or domestic bidders with EU investment capital, equally with Vietnamese bidders when the Government purchases goods or requests a service worth over the specified threshold. Vietnam undertakes to follow the general principles of National Treatment and Non-discrimination. The EVFTA also requires its parties to assess bids based on fair and objective principles, evaluate and award bids only based on criteria set out in notices and tender documentation and create an effective regime for complaints and settling disputes. These rules require parties to ensure that their bidding procedures match the commitments and protect their own interests, thus helping Vietnam to solve its problem of bids being won by cheap but low-quality service providers.

Investment Dispute Settlement

In disputes regarding investment (for example, expropriation without compensation or discrimination of investment), an investor is allowed to bring the dispute to the Investment Tribunal for settlement. To ensure the fairness and independence of the dispute settlement, a permanent Tribunal will be comprised of nine members: three nationals each appointed from the EU and Vietnam, together with three nationals appointed from third countries. Cases will be heard by a three-member Tribunal selected by the Chairman of the Tribunal in a random manner. This is also to ensure consistent rulings in similar cases, thus making the dispute settlement more predictable.

In case either of the disputing parties disagrees with the decision of the Tribunal, it can appeal to the Appeal Tribunal. While this is different from the common arbitration proceeding, it is quite similar to the two-level dispute settlement mechanism in the WTO (Panel and Appellate Body). We believe that this mechanism could save time and costs for the whole proceedings.

The final settlement is binding and enforceable from the local courts regarding its validity, except for a five-year period following the entry into force of the EVIPA.

Vietnam’s obligations on Trade in Services and Investment under CPTPP

– Minimum standard of treatment: Each Party shall accord to covered investments treatment in accordance with applicable customary international law principles, including fair and equitable treatment and full protection and security.

– Expropriation: When necessary, for example, for a public purpose, government of one country has the right to expropriate foreign investors. Nonetheless, such right must be applied on a non-discriminatory manner and on payment of prompt, adequate and effective compensation in accordance with due process of law and provisions of CPTPP.

– Transfer: Foreign investors have the rights to freely transfer their capital contributions or profit of investment. Nonetheless, in some cases, governments of CPTPP member countries can prevent or delay such transfers of foreign investors for the purpose of control capital in case of balance of payment crisis or economic crisis.

– Not impose “performance requirement” (PR): One country shall not maintain performance requirements as a condition for investors to gain investment licenses or other preferential investment treatment.

– Not impose requirement on appointing senior management position (SMB): One country shall not require an enterprise to appoint to a senior management position a natural person of any particular nationality.

Free Trade Agreements create sustainable growth and mutual benefits for parties involved, and foreign investors should understand what they are entitled to under the Agreements to achieve the maximum level of legal certainty when investing in Vietnam.

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

As you may know, the Work Permit application process often appears as time consuming and cumbersome. Nevertheless, appropriate scheduling and thoughtful preparation of the required documents will make the licensing procedure smoother and ultimately successful.

We would like to summarize below the step by step action plan for obtaining a Work Permit for an expat to legally work in Vietnam together with our ‘DO and DON’T’ notes, for your kind reference.

Work Permit application process;

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

Public-Private Partnership (PPP) has been the cornerstone for infrastructure development and has been utilized in the past in Vietnam with varying degrees of success. Those agreements were often legally cumbersome and were put together largely on faith that both the government and investor would live up to their end of the agreement. With the implementation of the CPTPP and EVFTA/IPA and the new Law on Investment in the form of PPP 2020, the regulatory environment has shifted towards favorable conditions for PPP to become a bedrock of Vietnam’s development.

The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) came into force on 14 January 2019 for Vietnam and currently include the following signatories: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. In addition, China, Ecuador, Taiwan and United Kingdom applied and awaiting result on their accession to the CPTPP. The EU-Vietnam Free Trade Agreement (EVFTA) came into force on 1 August 2020 between the European Union countries and Vietnam.

Public Procurement:
Vietnam has one of the highest ratios of public investment-to-GDP in the world (39 per cent annually from 1995). However, Vietnam did not agree to its Government procurement being covered by the Government Procurement Agreement (GPA) of the WTO until the EVFTA
The FTA commitments on Government Procurement mainly deal with the requirement to treat EU bidders, or domestic bidders with EU investment capital, equally with Vietnamese bidders when the Government purchases goods or requests a service worth over the specified threshold. Vietnam undertakes to follow the general principles of National Treatment and Non-discrimination. It will publish information on intended procurement and post-award information in Bao Dau Thau (Public Procurement Newspaper) and information on the procurement system at muasamcong.mpi.gov.vn and the official gazette in a timely manner. It will also allow sufficient time for suppliers to prepare and submit requests for participation in responsive tenders and maintain the confidentiality of bidders
The FTA also requires its parties to assess bids based on fair and objective principles, evaluate and award bids only based on criteria set out in notices and tender documentation, and create an effective regime for complaints and settling disputes. These rules require parties to ensure that their bidding procedures match the commitments and protect their own interests, thus helping Vietnam to solve its problem of bids being won by cheap but low-quality service providers.
Dispute Resolution:
An often overlooked but critical aspect from the investor’s perspective has been the dispute resolution process before these trade agreements were in-force. Generally speaking, before CPTPP and EVFTA/IPA, most foreign investors only had the Vietnamese courts to address any dispute.
To protect interests of foreign investors, CPTPP allows foreign investors to initiate a lawsuit in International Arbitration center in case interests of foreign investors are infringed by one member country (for example, expropriation, nationalization, minimum standard of treatment…), except in case disputes arising from the implementation of commitments or obligations of investment agreements and investment authorization.
This is also covered in the EU-Vietnam Investment Protection Agreement (EVIPA). The EVIPA is a sister agreement of the EVFTA and is pending ratification by EU member states before it can come to force, expectedly by 2023. In disputes regarding investment (for example, expropriation without compensation or discrimination of investment), an investor is allowed to bring the dispute to the Investment Tribunal for settlement. To ensure the fairness and independence of the dispute settlement, a permanent Tribunal will be comprised of nine members: three nationals each appointed from the EU and Vietnam, together with three nationals appointed from third countries. Cases will be heard by a three-member Tribunal selected by the Chairman of the Tribunal in a random manner. This is also to ensure consistent rulings in similar cases, thus making the dispute settlement more predictable. The EVIPA also allows a sole Tribunal member where the claimant is a small or medium-sized enterprise, or the compensation of damaged claims is relatively low. This is a flexible approach considering that Vietnam is still a developing country.
In case either of the disputing parties disagrees with the decision of the Tribunal, it can appeal to the Appeal Tribunal. While this is different from the common arbitration proceeding, it is quite similar to the two-level dispute settlement mechanism in the WTO (Panel and Appellate Body). We believe that this mechanism could save time and costs for the whole proceedings.
The final settlement is binding and enforceable from the local courts regarding its validity, except for a five-year period following the entry into force of the EVIPA (please refer to further comments in the Legal Sector Committee’s chapter on Judicial and Arbitral Recourse).
Vietnam’s other specific commitments under the CPTPP:
Regarding telecommunication services: Allow CPTPP countries to set up joint ventures with a capital contribution of not more than 49% for basic telecommunications services attached to the network infrastructure. With value-added telecommunication services attached to the network infrastructure, we agree to allow the establishment of a joint venture with a capital contribution not exceeding 65% after 5 years after the date of entry into force of the Agreement. With services not attached to the network infrastructure, open to CPTPP countries to invest and set up enterprises with 100% foreign capital after 5 years from the date of entry into force of the Agreement.

Vietnam’s other specific commitments under the EVFTA:
Regarding Engineering services (CPC 8672) and Integrated Engineering Services (CPC 8673): for commercial presence, the supply of services related to topo¬ graphical, geotechnical, hydro geological and environmental surveys and technical surveys for urban-rural development planning, sectoral development planning are subject to the authorization of the Government of Viet Nam.

Regarding Construction and related engineering services (CPC 514-518): cross border supply of services is fully open and foreign investors can open their branched in Vietnam, though the chief the each branch must be a resident in Vietnam.

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

Vietnam’s GDP growth for 2021-2030 is forecasted to reach an average of 6.6%/year and an average of 5.7% for 2031-2045. Correspondingly, the Institute of Energy has calculated that commercial electricity will reach 491 billion kWh by 2030, and 877 billion kWh by 2045. By 2030, the total installed capacity of Vietnam’s electricity sources is predicted to be at 137.2 GW (of which coal-fired power: 27%, gas thermal power: 21%, hydroelectricity: 18%, renewable energy: 29%, imported energy about 4%, pumped hydroelectricity and other energy storage devices about 1%).

Foreign investors should take advantage of the booming energy sector in Vietnam and understand their benefits, and limitations, under free trade agreements that may affect them. In this article, we examine Vietnam’s commitments with regard to energy development under the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA).

The CPTPP came into force on 14 January 2019 for Vietnam and currently include the following signatories: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. In addition, China, Ecuador, Taiwan and United Kingdom applied and awaiting result on their accession to the CPTPP. The EVFTA came into force on 1 August 2020 between the European Union countries and Vietnam.

EVFTA:

Under Chapter 7 on Non-tariff barriers to trade and investment in renewable energy generation, Vietnam commits to promoting, developing and increasing the generation of energy from renewable and sustainable sources, particularly through facilitating trade and investment. Specific commitments include:
(a) refrain from adopting measures providing for local content requirements or any other offset affecting the other Party’s products, service suppliers, investors or enterprises;
(b) refrain from adopting measures requiring to form a partnership with local companies, unless those partnerships are deemed necessary for technical reasons and that Vietnam can demonstrate those reasons upon request of the other Party;
(c) ensure that any measures concerning the authorization, certification and licensing procedures that are applied, in particular, to equipment, plants and associated transmission network infrastructures, are objective, transparent, non-arbitrary and do not discriminate among applicants from the Parties;
(d) ensure that administrative fees and charges are transparent and non-discriminating

Vietnam has not made any commitments in the EVFTA on:
• production, transmission and distribution of electricity on private-owned line;
• production of gas and transmission of gas through a private-owned tube; and
• production of hot water and steam, distribution of hot water and steam through private-owned line.

For all service and non-service lines related to energy, at least 20% of managers, executives and specialists must be Vietnamese citizens, unless those positions cannot be replaced by Vietnamese citizens. However, a minimum of three non-Vietnamese managers, executives and experts are allowed per business.

CPTPP

Under the CPTPP, Vietnam commits its transition to a low emissions and resilient economy. Vietnam shall cooperate with other CPTPPP countries to address energy efficiency, development of cost-effective, low emissions technologies and alternative, clean and renewable energy sources; sustainable transport and sustainable urban infrastructure development; addressing deforestation and forest degradation; emissions monitoring; market and nonmarket mechanisms; low emissions, resilient development and sharing of information and experiences.

Regarding Power development, foreign investment to own or operate power transmission facilities in Vietnam may not be permitted. Vietnam Electricity Corporation (EVN) is currently the sole authorized owner and operator of power transmission facilities in Vietnam.

In addition, Vietnam reserves the right to adopt or maintain any measure with respect to investment in hydroelectricity and nuclear power.

Regarding Services incidental to energy distribution (CPC 887), Vietnam does not allow foreign services suppliers to supply such services cross-border and Vietnam also does not allow foreign investment in this sector.

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

On 31 March 2022, the Government Office issued Notice No. 92/TB-VPCP on the conclusion of the Cabinet at the meeting on finalizing the National Power Development Plan for the 2021 – 2030 period, with a vision to 2045 (PDP VIII). Deputy Prime Minister Le Van Thanh is in charge of directing the Ministry of Industry and Trade to finalize Power Planning VIII to soon organize a conference with localities on its content and implement the next procedures in April 2022.

Key points in the Notice include:

– PDP VIII must make an important contribution to the implementation of Vietnam’s commitment to bring net emissions to “zero” by 2050, closely following the development of a green and circular economy

– For solar power projects already included in the revised Power Master Plan VII but not yet implemented: MOIT must provide the criteria and conditions for electricity purchase price, economic efficiency, stability of the national power system, etc. and report to the Government Standing Committee for consideration and decision but must ensure consistency with the criteria and principles of the new PDP.

MOIT to thoroughly review the transfer of solar power capacity already included in the revised Power Master Plan VII but have not yet been implemented and do not meet the economic efficiency targets, especially the electricity purchase price, to consider adjusting the planning.

– For rooftop solar power that has been invested, if it is in accordance with regulations, for the right purposes, and does not take advantage of the mechanism for profit: MOIT, EVN and the Committee for Management of State Capital at Enterprises to calculate the balance for electricity consumption (not including the capacity of 7,755 MW of rooftop solar power into the data of total power capacity in the planning).

– For the policy of nuclear power development to ensure long-term energy security and ensure the energy conversion process, MOIT to continue research and report to the competent authorities for consideration and comments – this shall not be included in the calculation in the PDP VIII.

– Development must gears towards an independent and self-sufficient economy, improving the autonomy of the energy industry, minimizing dependence on foreign countries. This is directly related to the duty of maximizing and rationally exploiting primary energy resources in the country for electricity production such as natural gas, wind energy, solar energy, ocean waves…; at the same time, balance the use of imported LNG sources reasonably.

– To reduce long-distance power transmission and reduce investment in interregional transmission grids.

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

In 2020, when most sectors suffer major reductions due to impacts of the Covid-19 pandemic, the education sector stood out with an increase of 58% in foreign-direct investment.

Investors eyeing investment in the education sector in Vietnam must be aware of their benefits, and limitation, under the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA). The CPTPP came into force on 14 January 2019 for Vietnam and currently include the following signatories: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. In addition, China, Ecuador, Taiwan and United Kingdom applied and awaiting result on their accession to the CPTPP. The EVFTA came into force on 1 August 2020 between the European Union countries and Vietnam.

CPTPP:
Vietnam welcomes the opportunity to formulate policies with other CPTPP countries on initiatives that enhance and promote growth and investment in education. Specific commitments of Vietnam under the CPTPP with regards to education services include:
• Vietnam reserves the right to adopt and maintain any measure related to investment in secondary education services.

• Foreign investor is prohibited to provide educational services in the following subjects: security, national defense, politics, religion, Vietnamese culture and other subjects necessary to protect Vietnamese social morality. This limitation does not prevent the provision of educational services in subjects to which Vietnam has committed in other trade agreements.

• No foreign investor is allowed to provide primary education or secondary education services except through:
– Pre-school educational institutions implementing foreign educational programs for children who are foreigners;
– General education institutions implementing foreign educational programs, granting foreign degrees, for foreign students and a part of Vietnamese students in need.

• General education institutions are allowed to accept Vietnamese students, but the number of Vietnamese students in primary and secondary schools shall not exceed 10% of the total number of students in the school, in high schools not more than 20% of the total number of students in the school.

The establishment of foreign educational institutions in Vietnam will automatically lead to increase in education-related travel services and a variety of education tools advancement (e.g. online courses), contributing to the trading activities between investor countries and Vietnam.

EVFTA:
Vietnam’s commitments in educational services are only in technical, natural sciences and technology, business administration and business studies, economics, accounting, international law and language training fields.
• For secondary education service, cross-border supply and foreign investor’s commercial presence in Vietnam are fully open.
• For higher education services, adult education and other education services (including foreign language training), Vietnam has not made any commitments under the EVFTA and the education content under such services must be approved by Vietnam’s Ministry of Education and Training.
• Foreign teachers who wish to work in foreign-invested schools in Vietnam shall have at least 5 years if teaching experience, and their qualifications shall be recognized by the competent authority.

Vietnam welcomes foreign capital to further increase the quality and quantity in the education sector. With the number of middle-class growing rapidly, citizens require much higher living standards. This includes parents sending children to study abroad or at least, enjoy world-class education domestically. An increase in the number of expats also contribute to the need for more advanced and tailored education system. Foreign investors should grasp the opportunity to invest in this growing market sector.

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