Category: Vietnam – General

To replace Resolution No. 54/2017/QH14 of the National Assembly dated 24 November 2017 (“Resolution 54”), Resolution No. 98/2023/QH15 was recently passed by the National Assembly on 24 June 2023 with effectiveness from 1 August 2023 (“Resolution 98”). At a glance, Resolution 98 sets out several breakthrough mechanisms for the development of Ho Chi Minh City on a wide variety of aspects. It is expected that, should the mechanisms be implemented properly in practice, Ho Chi Minh City will be “unleashed” and its development in the future will be worth watching. We would like to point out some notable mechanisms of the Resolution 98 as follows:

Overview
Compared to Resolution 54, the number of mechanism offered by Resolution 98 is relatively more than its precedessor. In total, there are 44 mechanisms menionted in Resolution 98 in 7 sectors being (i) investment management; (ii) State finance and budget; (iii) urban and natural resources and environment management; (iv) attracting strategic investors; (v) science and technology management and innovation; (vi) organizational structure of the City; and (vii) organizational structure of Thu Duc City.

Investment management
According to Article 4.1 of Resolution 98, public investment capital is piloting to be allocated to support poverty reduction and create jobs. The lending policy for this mechanism is assigned by the People’s Committee to the Bank for Social Policies – Ho Chi Minh City branch to implement to support poor households, near-poor households, and households that have just escaped poverty, and to create jobs.

On another note, Ho Chi Minh City will implement a pilot program of urban planning and transit-oriented development (TOD) to utilize the open spaces along the Ring Road 3. To implement this program, local budget will be used to implement compensate, support and resettle for investment projects under a separate urban design plan, urban planning project in the vicinity of railway stations as approved by competent authorities, in the vicinity of intersections along the Ring Road 3 in the territory of the city for land recovery, urban embellishment and development, resettlement, creation of land fund for auction and selection of investors in development investment projects of urban, commerce and services in accordance with the law.

Regarding the public-private partnership investment projects (“PPP projects”), Ho Chi Minh City is set to apply the PPP form for the projects in sports and culture sector. Moreover, BOT contracts can be used by the City to upgrade, expand and modernize any existing road works in accordance with the approved planning for the main urban streets, elevated roads. BT Contracts are also brought back in Resolution 98 as a mean to utilize public investment capital

State finance and budget
With respect to the budget of the City, Resolution 98 provides that there will be an amount of 2% to 4% of the toal budget expenditure of districts for prevention, combat and overcoming of consequences of natural disasters and epidemics, incidents, disasters, hunger relief, important tasks for national defense and security and other necessary tasks. The Chairman of the People’s Committee of urban district is assigned to decide to spend from the unallocated amount and is obliged to periodically report to the City People’s Committee. Meanwhile, for the implementation of regional and inter-regional road traffic projects and works located within the administrative boundaries between the City and other locality, the City People’s Council will decide the use of the City’s budget for such projects.

To manage the City’s budget, Ho Chi Minh City Finance and Investment State-Owned Company (“HFIC”) – a wholly state-owned company – is assigned to implement the function of a local investment fund. It is provided under Resolution 98 that revenue from the equitization of 100% State-owned companies represented by the City People’s Committee will be arranged by the City People’s Council to increase the charter capital of HFIC. HCMC is also allowed to allocate public investment capital to provide interest rates support to projects that receive loans from the HFIC in the priority sectors for socio-economic development in the City.

Resolution 98 introduces the pilot financial mechanism for implementation of measures to reduce greenhouse gas emissions under the carbon credit exchange and offset mechanisms with the following rules (i) Carbon credits generated from programs and projects under the exchange and offset mechanism of carbon credits invested from the capital of the City’s budget are traded with domestic and international investors; (ii) revenue from carbon credit transactions is a source of revenue wholly enjoyed by the City’s budget; (iii) the City People’s Council decides to use the revenue from carbon credit transactions for programs and projects to respond to climate change, develop green economy, digital economy, circular economy in the City.

As for the energy-related issue of the headquarters of administrative agencies, public administrative units, offices of agencies and units, the City People’s Committee retains the right to decide to install rooftop solar power systems to provide electricity for the operation of the headquarters. The City People’s Committee will organize the installation and management of the solar power system to ensure the appropriate elements in terms of aesthetics, architecture and regulations of relevant laws.

Urban and natural resources and environment management
According to Article 6 of Resolution 98 on the regulations on social housing, detailed planning tasks are regulated to be formulated concurrently with detailed planning projects; social housing land fund can be arranged withint the cope of commercial housing project or have the planning approved, arrange the social housing land fund in another location of equivalent size, outside the scope of the commercial housing project; specific types of land for social housing development are also regulated.

Attracting strategic investors
The list of prioritized business lines for attracting strategic investors to the City includes (i) investment in construction of innovation centers, research and development (R&D) centers; investment in research and support of high technology transfer in the fields of information technology, biotechnology, automation technology, new material technology, clean energy with an investment capital from VND 3,000 billion; (ii) investment in projects in the field of semiconductor integrated circuit industry, design technology, component manufacturing, integrated electronic circuit (IC), flexible electronics (PE), chip, new battery technology, new materials, clean energy industry with an investment capital from VND 30,000 billion VND; (iii) investment in the construction project of Can Gio international transshipment port according to the master plan with an investment capital from VND 50,000 billion.

Meanwhile, a strategic investor must satisfy one of the following conditions (a) having a charter capital of VND 500 billion or more when implementing an investment project specified at point (i) above and having investment experience in projects in a similar sector with a total investment capital of VND 2,000 billion or more; (b) having a charter capital of VND 5,000 billion or more or having total assets of VND 25,000 billion or more when implementing an investment project specified point (ii) above and having investment experience in projects in a similar sector with a total investment capital of 10,000 billion VND or more; (c) having a charter capital of VND 9,000 billion or more when implementing an investment project specified at point (iii) above and having investment experience in a similar sector with a total investment capital of VND 25,000 billion or more. Further, the strategic investor must have a written commitment to training and developing human resources, meeting the conditions for ensuring national defense, security and environmental protection as prescribed by Vietnamese law.

In case a prioritized project is registered and a strategic investor is chosen, such strategic investor is entitled to include in deductible expenses to determine taxable income for research and development (R&D) activities equal to 150% of the actual cost of this activity when calculating corporate income tax and to enjoy the priority regime for customs procedures in accordance with the relevant laws.

Science and technology management and innovation
To support innovation and start-up activities, innovative start-ups, according to Resolution 98, is exempted from corporate income tax (CIT) for a period of 05 years from the time of arising of payable income tax. Further, individuals and organizations implementing business in relation to the transfer of contributed capital or the right to contribute capital to innovative start-up enterprises in the City are also exempted from personal income tax (PIT) and CIT for such business. It is also regulated in Resolution 98 that, During the implementation of the Resolution, experts, scientists, people with special talents, creative start-up individuals working at innovative start-up enterprises, science and technology organizations, innovation hubs and intermediary organizations supporting innovative start-ups in the city are exempt from PIT for a period of 05 years for incomes from salaries and wages

Organizational structure of the City
To improve the living standard of its citizen, the City People’s Council decided to establish Department of Food Safety, which is a specialized agency under the City People’s Committee with its functions, tasks, powers and organizational structure being defined on the basis of transferring the function of state management of food safety, inspection, examination and handling of administrative violations on food safety, the issuance of certificates of quarantine of animal products out of the city from the Department of Health, the Department of Agriculture and Rural Development, the Department of Industry and Trade to the Department of Food Safety.

According to Resolution 98, the People’s Committee of districts in HCMC; and wards, communes, and towns with a population of 50,000 and above will have no more than three Vice Chairpersons.

Organizational structure of Thu Duc City
To bring the concept of “city within city” to life, Resolution 98 sets out regulations on the structre and operation of the People’s Committee of Thu Duc City. The People’s Council of Thu Duc City will establish the Urban Committee under the People’s Council of Thu Duc City and will have no more than 02 Vice Presidents and no more than 08 full-time delegates. People’s Committee of Thu Duc City has no more than 04 Vice Chairmans.

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Please do not hesitate to contact Dr. Oliver Massmann at omassmann@duanemorris.com in case you need more analysis on Resolution 98. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

On 17 June 2023, the Energy Institute (EI) delivered Official Letter No. 0975/VNL-P8 (OL) to the Ministry of Industry and Trade (MOIT) to report on the development of the Implementation Plan for the PDP 8 in responses to Letter No. 3748/BCT-DL from the MOIT. The OL contains the following notable contents:

• The PDP8 sets out only the quantitative targets for the final year of the planning period (2030) and the final year of the vision period (2050);
• According to relevant laws, the Implementation Plan for the PDP 8 is required to include the specific goals of the PDP 8 with detailed scale/progress of the projects/power capacity of the required electricity sources and the coordinated growth of the power grid over the planning period.
• To conduct the calculation for the specific goals, the collection of local data such as electricity demand, the potential for development of power sources, evaluation of status and investment plans for power sources and grid infrastructure plays a pivotal role. To properly carry out such works, the consulting agency requires a significant amount of high-quality human resources.
• For the above reasons, it is concluded by the EI that the issuance of the Implementation Plan for PDP 8 within this June is impossible. Thus, it is recommended that the MOIT allocate a more reasonable timeline for the EI to prepare for the Implementation Plan. Funding for EI is also mentioned in the OL as a way to support EI to carry out its works.

It is expected that the Implementation Plan for PDP 8 could be issued in August or October this year.

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Please do not hesitate to contact Dr. Oliver Massmann at omassmann@duanemorris.com in case you need more analysis on the PDP 8. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC

1. What are the three central/federal government entities that have conducted the largest procurements by volume in Vietnam in the last three years? Please, list the three procuring entities in the order of importance.
This information is not published by the government.
2. Please provide a list of laws, regulations, and other binding materials (including guidelines and manuals) that regulate public procurement in Vietnam.
• Law No. 43/2013/QH13 on Bidding (Law on Bidding)
• Law No. 49/2014/QH13 on Public Investment
• Law No. 64/2020/QH14 on Investment in the form of Public – Private Partnership
• Law No. 03/2022/QH15 amending and supplementing some of articles of Law on Public Investment, Law on Investment in the form of public-private partnership, Law on Investment, Law on Housing, Law on Bidding, Law on Electricity, Law on Enterprises, Law on Consumption Tax Special and the Law on Execution of Civil Judgments.
• Decree No. 95/2020/ND-CP guiding the procurement under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership
• Decree No. 09/2022 ND-CP amending and supplementing some articles of Decree No. 95/2020/ND-CP guiding the implementation of procurement under the CPTPP, the EVFTA and the UKVFTA
• Decree No. 63/2014/ND-CP detailing the implementation of several provisions of the Bidding Law on the selection of contractor
• Decree No. 25/2020/ND-CP detailing the implementation of several provisions of the Bidding Law on the selection of investors
• Decree No. 21/2022/TT-BKHDT detailing the preparation of bidding documents for non-consulting services for bidding packages within the scope of the CPTPP, the EVFTA and the UKVFTA
• Decree No. 20/2022/TT-BKHDT detailing the preparation of bidding documents for consulting services for bidding packages within the scope of the CPTPP, the EVFTA and the UKVFTA
• Circular 09/2022/TT-BYT detailing the sample invitation to bid for procurement of herbal ingredients and traditional medicines at public health facilities
• Circular 12/2022/TT-BKHDT detailing the preparation of bidding documents for the procurement of goods for bidding packages within the scope of the CPTPP, the EVFTA and the UKVFTA
• Circular No. 15/2022/TT-BKHDT detailing the preparation of bidding documents for construction and installation for bidding packages within the scope of the CPTPP, the EVFTA and the UKVFTA
• Circular 08/2022/TT-BKHDT detailing the provision and posting of information on bidding and contractor selection on the National Procurement Network System
• Circular No. 09/2022/TT-BGTVT guiding some contents on methods and criteria for evaluating bids for investor selection under the public-private partnership method and the form of a build-operate-transfer contract in the transport sector
• Circular No. 23/2021/TT-BGTVT guiding the formulation, approval and publication of the list of projects; methods and criteria for evaluating bids and bidding for selection of investors in specialized aviation service works at airports and aerodromes
• Circular 22/2021/TT-BGTVT detailing methods and criteria for evaluating bids to select investors to implement projects on dredging seaport waters and inland waterways in combination with product recovery
• Circular No. 06/2020/TT-BKHDT guiding the implementation of Decree No. 25/2020/ND-CP detailing the implementation of a number of articles of the Law on Bidding on investor selection
• Circular 15/2020/TT-BYT promulgating the List of drugs for bidding, the List of drugs for concentrated bidding, and the List of drugs eligible for price negotiation.
• Circular No. 14/2020/TT-BYT promulgating some contents in bidding for medical equipment at public medical facilities
• Circular 15/2019/TT-BYT regulating on drug bidding at public health facilities
• Circular No. 10/2015/TT-BKHDT detailing the contractor selection plan
• Circular No. 19/2015/TT-BKHDT detailing the preparation of appraisal report during the contractor selection period
• Circular No. 23/2015/TT-BKHDT detailing the preparation of evaluation report of bid dossier
• Circular No. 16/2016/TT-BKHDT guiding the preparation of pre-qualification dossier, bidding dossier for the investor carrying land use projects
3. Specific instruments applicable to a sector (goods, services or works):
• Decree No. 21/2022/TT-BKHDT detailing the preparation of bidding documents for non-consulting services for bidding packages within the scope of the CPTPP, the EVFTA and the UKVFTA
• Decree No. 20/2022/TT-BKHDT detailing the preparation of bidding documents for consulting services for bidding packages within the scope of the CPTPP, the EVFTA and the UKVFTA
• Circular 09/2022/TT-BYT detailing the sample invitation to bid for procurement of herbal ingredients and traditional medicines at public health facilities
• Circular 12/2022/TT-BKHDT detailing the preparation of bidding documents for the procurement of goods for bidding packages within the scope of the CPTPP, the EVFTA and the UKVFTA
• Circular No. 15/2022/TT-BKHDT detailing the preparation of bidding documents for construction and installation for bidding packages within the scope of the CPTPP, the EVFTA and the UKVFTA
• Circular No. 23/2021/TT-BGTVT guiding the formulation, approval and publication of the list of projects; methods and criteria for evaluating bids and bidding for selection of investors in specialized aviation service works at airports and aerodromes
• Circular 22/2021/TT-BGTVT regulating on methods and criteria for evaluating bids to select investors to implement projects on dredging seaport waters and inland waterways in combination with product recovery
• Circular 15/2020/TT-BYT promulgating the List of drugs for bidding, the List of drugs for concentrated bidding, and the List of drugs eligible for price negotiation.
• Circular No. 14/2020/TT-BYT promulgating a Circular stipulating a number of contents in bidding for medical equipment at public medical facilities
• Circular 15/2019/TT-BYT regulating on drug bidding at public health facilities
4. Does the regulatory framework establish value thresholds for determining procedural or regulatory aspects of the procurement process?
Yes (Articles 2.2 and 3.2, Law on Bidding)
5. Is there an operational central electronic public procurement (e-procurement) portal in Vietnam?
Yes (https://muasamcong.mpi.gov.vn)
6. Is the central e-procurement portal used by all the procuring entities?
Yes
7. Please complete the table below based on the features available in the central electronic public procurement portal
Yes, fully digitized Yes, but hard copy
documents must be
submitted No

Registering as a vendor
X
Accessing notices on procurement opportunities x
Accessing bidding documents
x
Asking a procuring entity for clarifications
x
Submitting tenders x
Submitting bid security with electronic validation
x
Bid opening
x
Virtual workspace to manage tender procedures (including operative tools for members of the evaluation committee)
x
Notification of decisions (clarifications, awards, contract signing, etc.) x
Accessing award decisions (including their rationale)
x
Submitting performance guarantee with electronic validation x
Contract signing x
Accessing contracts x
Accessing contract amendments x
Submitting invoices to the procuring entity x
Module for framework agreement management x
E-catalogue of approved suppliers x
Green catalogue x
E-reverse auction module x
E-contract management and implementation module x
Receiving payments from the procuring entity
x
Applying for vendor eco-certifications/eco-labels x
Access to specifications, standards, or criteria for eco-labels and environmentally preferable goods and services x

8. Are the features supported by the central e-procurement portal available for procurements of goods, works, and services?
Yes
9. For the following types of data, please select if there is a data portal that provides open access to such information in machine readable format:
Yes No
Data on tenders (including description, dates, category of spending, estimated value, contracting authority, and identification of bidders) x
Data on tenders (including description, dates, category of spending, estimated value, contracting authority, and identification of bidders) x
Data on suppliers x
10. Link to the webpage with data
https://muasamcong.mpi.gov.vn/web/guest/contractor-selection?render=index
11. Are there any main procuring entities for which data on contracts and tenders is not published on the open access data portal?
No.
12. Are gender-disaggregated data on firms that have participated in tenders collected by the central e-procurement portal?
No.
13. Does the regulatory framework require procuring entities to use standard bidding/tender documents when preparing a tender?
Yes, but with some exception.
14. Circumstances the use of model bidding/tender documents is not required.
Based on sector of procurement (Article 4, Circular No. 08/2022/TT-BKHDT)
15. Do these standard bidding documents contain sustainability clauses?
Yes, in all model documents
16. Does the regulatory framework define minimum content requirements for procurement plans?
Yes. (Article 35, Law on Bidding)
17. Do the minimum content requirements for procurement plans include a gender dimension?
No.
18. According to the regulatory framework, which of the following tools must be used when a procuring entity prepares to estimate the contract value of the new procurement opportunity?
Regulations are silent on this matter
19. Is there a legal mandate for the development and implementation of special programs to engage innovative and emerging suppliers?
No.
20. Does the regulatory framework establish open procurement as a default method for tendering a contract?
Yes, but with some exception.
21. Circumstances exceptions to the general rule of using open procurement are provided in the regulatory framework.
Based on the value of procurement and based on the entity conducting the procurement (Articles 21, 22, 23, 24, 26, 26, Law on Bidding)
22. Does the regulatory framework designate specific tendering procedures for innovation procurement?
No
23. Does the regulatory framework provide incentives for preparing bids with environmentally-friendly components?
No.
24. Does the regulatory framework impose any participation or award restrictions on foreign firms?
Yes, in some public tenders
25. If the restrictions apply only in some public tenders, please identify the parameter in which these restrictions are applicable:
Sector (Article 15, Law on Bidding).
26. Does the regulatory framework require foreign firms to have partnerships with domestic firms to be eligible to participate in a tender?
Yes, in some public tenders (Article 5.1(h), Law on Bidding)
27. Does the regulatory framework require foreign firms to own (fully or partially) subsidiaries in the domestic economy to be eligible to participate in a tender?
No. (Article 5.1, Law on Bidding)
28. Does the regulatory framework prohibit splitting contracts for the purpose of circumventing thresholds for open tendering?
Yes (Article 89.6(k), Law on Bidding)
29. According to the regulatory framework, which of the following documents need to be made publicly available?

Yes, for all contracts Yes, except for low value contracts No
Procurement plans x
Tender notices x
Tender documents (project specific) x
Award decisions Yes x
Contracts x
Contract amendments x
Subcontractors x

30. Please provide the legal basis for all the key materials listed in the table above:
Article 8, Law on Bidding; Article 9, Law on Investment in the form of Public – Private Partnership
31. Does the regulatory framework set a minimum timeframe between advertisement of a tender notice and a submission deadline?
Yes, for all procurement procedures (Article 12.1(b), Law on Bidding)
32. According to the regulatory framework, how should clarification requests from potential bidders be communicated?
Required to communicate answers to all bidders (Article 77.1, Law on Bidding; Article 51.4, Decree No. 35/2021/ND-CP; Article 14.2(c), Decree No. 63/2014/ND-CP)
33. In practice, how many days would usually pass between bid opening, and contract signing (i.e., the time in which all tenderers, participants and relevant parties are notified of the award decision and the awardee can start implementing the contract) for the following scenarios:
Days to complete a procurement of a works contract in an open procedure valued above the threshold for international procurement: 210
Days to complete the procurement of a services contract in a restricted procedure with limited competition, valued below the threshold for international procurement: 210
Days to complete the prequalification of supplier: 0
Days to complete an electronic auction: 45
Days to complete a Framework agreement with a competitive second stage: 0
34. Does the regulatory framework establish criteria for identifying abnormally low bids?
Yes, but only in some procurement procedures (Articles 117.6 and 117.9, Decree No. 63/2014/ND-CP)
35. According to the regulatory framework, which award criteria must be used in bid evaluations for high-value procurement?
Lowest price, Project life cycle cost, Total cost of ownership, Value for money, Most economically advantageous tender, Sustainability (Articles 39 – 41, Law on Bidding)
36. Please indicate whether Lowest price must be used for some or all procurement sectors.
No, applicable to some.
37. Please indicate whether Project life cycle cost must be used for some or all procurement sectors.
No, applicable to some.
38. Please indicate whether Total cost of ownership must be used for some or all procurement sectors.
No, applicable to some.
39. Does the regulatory framework explicitly recommend the preference to use Most Economically Advantageous tender criteria over lowest price criteria?
Yes, but only in some procurement procedures.
40. According to the regulatory framework, should the procuring entity provide a reference price in tender documents?
Yes, but only in some procurement procedures.
41. Does the regulatory framework include gender-specific provisions that promote gender equality in public procurement?
Yes (Article 14.3, Law on Bidding)
42. Does the regulatory framework outline a designated procedure for awarding contracts based on a framework agreement where contracts are awarded following a competitive two-stage process?
No, only one stage is competitive (Article 65, Law on Bidding)
43. Which of the small and medium-sized enterprise preferential treatment approaches are included in the regulatory framework?
None (Article 6 Decree No. 63/2014/ND-CP, Article 14.2.c Bidding Law)
44. Does the regulatory framework mandate communication of an award decision?
Yes, to all bidders (•Articles 42.3, 43.2, 11.8(d), 11.8(dd), Law on Bidding)
45. Is there a mandatory standstill period between the public notice of award and contract signing to allow unsuccessful bidders challenge the decision?
No.
46. Does the regulatory framework establish a timeframe within which a procuring entity must process a payment once an invoice is received?
Yes, for all contracts (Articles 94, 95, 96, 97, 98, Decree No. 63/2014/ND-CP)
47. Does the regulatory framework allow firms to claim interest on late payments (or any similar contractual penalty) if the government does not pay within the legally established timeframe?
Yes (Article 94.1, Decree No. 63/2014/ND-CP)
48. How often does the government pay late payment interest (or any similar contractual penalty) in the event that it fails to meet the payment deadline?
Government often pays late payment interest.
49. Does the regulatory framework designate a specialized and independent authority to receive procurement challenges filed by firms on decisions issued by the procuring entities?
Yes, specialized (Article 92, Law on Bidding)
50. Does an aggrieved bidder have the right to appeal decisions on challenges made by the authority that receives procurement challenges?
Yes (Articles 92.1(c), 92.2(c), 92.3(c), 92.4(c), Law on Bidding)
51. Are there any legally binding time limits to resolve a procurement challenge?
Yes, for all types of challenges (Article 92, Law on Bidding)
52. Is there a legal recourse for an aggrieved bidder experiencing delays in either challenge or review processes?
Yes, for all types of challenges (Articles 91.1(b) and 91.2, Law on Bidding)

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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.

Recently, the Government has released the draft decree on the bidding process to select investors for power projects (“Draft Decree”). Under this Draft Decree, the “power projects” consist of “power grid projects” and “power generation projects” whereby (i) power grid projects mean the construction and development projects of power transmission lines, transformers and auxiliary equipment for power transmission while (ii) power generation projects mean the projects for wind power, hydroelectricity, thermal power, solar power, biomass, geothermal, and the other new energy sources. As for the scope of application, it is also important to note that power projects being funded by public-private partnerships (PPPs), official development assistance (ODA), and concessional loans from foreign sponsors are not covered by this Draft Decree. Other notable points of the Draft Decree are as follows:
Regarding the bidding process, under the Draft Decree, the process of bidding will be implemented by the following steps (i) assessment of pre-feasibility study, issuance of in-principle investment decision and announcement of project; (ii) investors’ selection; (iii) execution of project contracts between the bid winning investor and the competent authority; (iv) assessment of feasibility study; (v) negotiation, finalization and execution of PPA between the bid winning investor and EVN: (vi) implementation of project. According to the Draft Decree, there will be a total of four (4) forms of selection process being (i) open bid; (ii) competitive bid; (iii) direct appointment; and (iv) selection in specified cases.

It is worth noting that the Draft Decree established a rather strict process to select investors implementing the projects in terms of technical experiences and financial ability. The selected investors are also aimed to support EVN in purchasing the most affordable energy generated/power grid from the investors.

As for the ceiling price for electricity in the bidding process, the proposed electricity selling price of the selected investor must be within the price bracket for electricity generation at the issuance date of the bidding documents as specified in Vietnamese dongs (VND/kWh), and the investor’s bid price will not be higher than the ceiling price under this price bracket. In the further process of negotiating the PPA with EVN, the electricity selling price will not exceed the price of the winning bid.

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Please do not hesitate to contact Dr. Oliver Massmann at omassmann@duanemorris.com in case you need more analysis on the Draft Decree. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

After the official issuance of Decree No. 13/2023/ND-CP on personal data protection on 17 April 2023 and Decree No. 53/2022/ND-CP guiding the Cybersecurity Law on 15 August 2022, the Cybersecurity Administrative Sanctions Decree (CASD) is expected to be the final piece of the puzzle to enforce the said Decrees and to form a comprehensive set of laws on cybersecurity in Vietnam.

For that reason, the first draft of the CASD for public consultation in September 2021, following by workshop organized in 2022 by the Ministry of Public Security (MPS) in Hanoi to collect public opinions on the second version of the CASD where repeated offenders are subject to a monetary fine of up to 5% of such offender’s annual revenue.

Recently, on 31 May 2023, the MPS released the third draft of the CASD for consultations. The notable issues of the newly released draft of the CASD are as follows:

The latest draft of the CASD provides that its scope of application will cover both domestic and foreign entities, including foreign entities providing telecommunications, internet, content services on the internet, IT, cybersecurity, and cybersecurity information services (as well as their lawful legal presence in Vietnam).

Regarding the monetary penalties, the fine of up to 5% of the offender’s total revenue is applicable in the following circumstances:

(i) Repeated violations regarding personal data protection when providing marketing and advertising services under certain cases;

(ii) Repeated violations in case of enterprises/individuals (a) failing to apply proper measures to protect personal data to prevent the unauthorized collection of personal data from their systems, equipment, and services; (b) implementing transfer of personal data that is not permitted by law or is contrary to the principles of personal data protection; (c) illegally buying and selling personal data.

(iii) Illegal acts of disclosing and/or losing the personal data of 5 million Vietnamese citizens or more.

(iv) Illegal acts of transferring the personal data of 5 million Vietnamese citizens or more overseas.
While the deadline for submission of consultations to the MPS on the latest draft CASD is 20 June 2023. The CASD might be officially issued on 1 December 2023.

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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.

1. Vietnam is urged to soon apply the global minimum tax to ensure its benefits of finance and competitiveness advantages in foreign investment attraction. Do you agree with this view? Would the global minimum tax rule be a key role to affect Vietnam’s economic prospects and budget revenues like that of most countries? And why?

DM: Yes, we fully agree with the view that Vietnam must promptly adopt and apply (i) the global minimum tax and (ii) feasible and legal mechanisms to ensure its benefits of finance and competitiveness advantages in foreign investment attraction (ideally in Q1 of 2024 or earlier).

In term of your question about “would the global minimum tax rule be a key role to affect Vietnam’s economic prospects and budget revenues like that of most countries? And why?”: Yes, this must be one of key policies to affect Vietnam’s economic prospects and budget revenues. According to the latest report of OECD General Secretary to G20 Finance Ministers and Central Bank Governors in July 2022, most countries are planning to adopt Pillar 2 by 2024 – one year behind the OECD’s proposition of 2023. However, we do note that Vietnam, being a developing country, focuses on attracting foreign investment and thus is in a different position comparing with the developed countries who would benefit from this policy. For example, in the developed countries, arguably, the Global Minimum Tax would lead to investment shifting of the multinational corporations from the developing countries because the developed countries investment and business environment inherently have many advantages such as simplified administrative procedures, innovation capabilities, technology potentials, non-tax incentives, etc. For developing countries such as Vietnam, currently, compensatory measures, such as monetary subsidies, are being discussed. However, final decisions on compensatory measure to be applied is not an easy task, considering the impact of many factors such as investment guarantees, fairness among investors as well as the conformity with international commitments, risks of violating OECD principles in the Pillar 2 solution, national budget utilization, etc. Of course, without sufficient finance resources and mechanisms to address promptly those disadvantages, Vietnam could face the negative consequence of foreign investment in the medium term as multinational corporations must take time to shift their businesses. To put it another way, in case Vietnam fails to properly adopt the global minimum tax and mechanism as soon as possible in 2024, the foreign investors enjoying tax incentives in Vietnam will be obliged to carry its tax obligation in its host country, making it a lose-lose situation for both Vietnam and such investors.

Notwithstanding above, compared to most countries, in the short period, the application of the global minimum tax rate should not negatively affect Vietnam’s budget revenues since Vietnam, has currently implemented many tax incentives for foreign investors and utilized it as an instrument for investment attraction. Of note, as regulated, the typical CIT in Vietnam is 20% which is higher than the Global Minimum Tax (15%).

2. Many said Vietnam should proactively gain the right to tax, so what should Vietnam’s policy makers respond to the impact from the global minimum corporate tax?

DM: Yes, as analyzed above, to avoid a lose-lose situation for both Vietnam and multinational foreign investors currently enjoying tax incentives, Vietnam’s policy makers should quickly adapt to the current circumstance and issue appropriate policies to ensure Vietnam’s right to tax in relation to multinational companies so that it could have the financial resources for adopting compensation mechanisms. It is advisable that all of the relevant legal documents (Law on Investment, Law on Corporate Income Tax, Law on Land, etc.) be appropriately amended but pilot policy to share the difficulties of multinational companies should be adopted within 2023 (such as land related costs, environmental costs, social and insurance related costs, etc.).

3. The application of the global minimum tax rate would make Vietnam adjust current investment regulations which takes a long time. What are your suggestions about the big adjustments to meet Vietnam’s dual goals of ensuring foreign investors’ interests and international commitments? What has been done and what has not been urgently done?

DM: As the process for amendments of relevant legal documents can take a long time, it is important that the process be taken at the soonest possible time to ensure the shift to global minimum tax rate. In the middle of the process, as suggested, pilot programs from the Government and/ or the Standing Committee of National Assembly can be taken for consideration to meet the dual goals. As also mentioned above, the adjustments must meet certain conditions to ensure investment guarantees, fairness among investors as well as the conformity with international commitments, risks of violating OECD principles in the Pillar 2 solution, national budget utilization, etc.

As Vietnam is not alone in this tax transition, it is important that we observe and learn from others to determine the best solutions. It can be seen from the government that discussions and meetings are being held more often recently to discuss the impacts of the global minimum tax. The government is also really active in receiving suggestions from different organizations and investors in Vietnam through seminars and meetings. Recently, a special task force was formed by the Government to study the impact of global minimum tax and to propose workable solutions to deal with such matter. It is important that first solutions be concluded soon by the task force for formal discussions to be held between investors and the State to figure out the best solution. Moreover, experiences from other countries must be obtained and studied at this stage as well.

4. What should be Vietnam’s new policies in attracting foreign investment? such as cash support or direct offset against tax obligations

DM: It is the fact that, during the recent discussions between the government and the foreign organizations in Vietnam. The policies involving direct cash support and direct offset against tax obligations were proposed by organizations. However, it would take time to assess should these cash-involved policies be accepted by the OECD as a way of getting around the tax rate as the second pillar has not yet been officially implemented. Also, the risk remains high for Vietnam should cash be involved in such compensation mechanisms since it can heavily damage the budget in the long term should the foreign investors with tax incentives refuse to alter their tax obligations in Vietnam to meet the global minimum tax rate.

Apart from tax incentives, affordable cost is one of Vietnam’s advantages in terms of foreign investment attraction. In the past, we have observed non-cash incentives under the form of on-the-job training and assistance on human resources that can account for a large amount of total investment for one foreign company. To propose a new policy at this time might be too soon given that we have not yet to observe and assess other countries’ solutions in relation to this matter. Further, new policies can also be established under the form of innovative administrative procedures, better infrastructure, housing support for labor, etc.

5. What are your forecasts of Vietnam’s foreign investment outlook next year?

DM: To my perspective, with the newly issuance of the Power Development Plan VIII with the net zero emission target and the current affordable cost of labor, Vietnam remains an attractive destination for foreign investors. However, as mentioned, the failure to adopt new policies in relation to the global minimum tax might heavily affect the Vietnam’s position in foreign investment in the medium or long term period and it is important that actions be taken in the next year.

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