Duane Morris Vietnam

I. Investment and Doing Business in Vietnam – What are the current issues?
REGARDING FOREIGN INVESTMENT
1. Uncertain requirement to amend Investment Registration Certificate (‘IRC’) to conduct on-the-spot importation
Under Article 3.3 of Decree 09/2018/ND-CP and interpretation of the Ministry of Industry and Trade (‘MOIT’), foreign invested enterprises (‘FIE’) cannot conduct on-spot import activities. Also, the regulation on on-spot export and import under Circular 04/2007/TT-BTM has expired and no further guidance on this has been issued so far. Thus, it is currently impossible for FIE to import on the spot.
We recommend the Government to issue guidance allowing FIEs with trading activities to conduct on-spot importation right.
2. Granting investment incentives
Some competent authorities were hesitant about granting incentives to foreign investors due to concern about their fulfillment of the conditions to enjoy the applicable incentives. There are also cases that the incentives granted have been adversely affected by the revision of laws and regulations, such as setting higher criteria for enterprises.
We recommend that: (i) the laws and regulations must clearly describe the conditions to be eligible for incentives; and (ii) investors shall continue to enjoy the granted incentives during their operation term or the period provided by the law when there are changes in laws and regulations or policies after the grant.
3. Market entry conditions applicable to foreign investors
Annex I to Decree 31/2021/ND-CP lists out conditional investment sectors applicable to foreign investors. Other than the listed sectors, foreign investors should enjoy the same market conditions as domestic investors. However, under specialized documents, foreign investment in unlisted sectors has faced certain restrictions on market access, which is a clear conflict with the mentioned rule in Article 17.1 of Decree 31/2021/ND-CP.
We suggest to carefully identify business sectors prohibited under specialized regulations and to update Decree 31/2021/ND-CP accordingly, as well as to open the market to foreign investors, especially in sectors where Vietnam has not committed to impose any restrictions in international treaties.
4. Requirement for obtaining the IRC for business locations, branches of FIEs
The current laws on enterprise and investment do not set out a proper guidance for FIEs to establish business locations or branches. This leads to inconsistencies in implementation among provinces in terms of whether a separate IRC is required for each branch or business location.
We recommend that new legislations should be adopted soon to address this issue and we suggest that the investors/companies should have the right to decide whether to amend the investment capital shown on the issued IRC, or to apply for a new IRC for each new location.
5. Inconsistency in regulating FIEs
Currently, an FIE is established via green-field investment or via an M&A. Whether an FIE is established under green-field investment or via an M&A, there should be no difference between these FIEs as to investment term and limitation on loan capital.
6. Government guarantee under the Investment Law
Many investors tend to obtain the permits for large-scale infrastructure projects under the scheme of the Investment Law instead of in the form of a PPP project due to the prolonged investment process under the PPP regulations.
The government guarantee of ensuring bankability to ensure the loans from international financial institutions for large-scale projects under the Investment Law should also be granted for the eligible investors in PPP projects.
7. Continuous use of land after the expiry of land lease by industrial zone developers
There is no clear guidance on the rights and obligations of FIEs in the form of joint venture operating within industrial zones whose land lease agreement with the State is going to expire.
We recommend the Government to extend the terms of foreign investment projects in these industrial zones, including continuous use of their land use rights and the factories after the expiry of the term of the joint ventures.
8. All FIEs are required to submit report on investment while the reporting obligation is only required for certain types of companies
Under the Investment Law, an FIE must file the quarterly and annual reports on the National Portal on Business Registration. For amendment of the IRC, only reports per Form A.I. 12 is required. However, in practice, during the application for IRC amendment, the local DPIs have required to complete other reports for all kinds of investment projects (even small-scaled projects) other than reports under Form A.I. 12. This has caused certain delay in the IRC amendment process.
REGARDING LICENSING PROCEDURE
1. Legalized document in corporate licensing
In practice, foreign investors must prepare and submit many legalized copies of one type of document in one transaction. Local authorities have had different request on the validity term of these legalized copies, ranging from 3- 6 months.
We propose that (i) the local authorities should accept certified true copies instead of requesting the original legalized document; and (ii) the local authorities should not impose a strict limitation on validity term of legalized and certified documents as long as their contents remain unchanged.
2. Licensing authority’s request for documents not required under laws
The current regulations (i.e., Article 9.2 of Decree 01/2021/ND-CP and Article 6.1(b) of Decree 31/2021/ND-CP) prohibit local authorities from requesting additional documents for licensing purpose other than those prescribed by laws. In practice, it is contrary.
We recommend a direction to be issued to require licensing authorities not to ask for any additional documents other than those prescribed by law and such direction should be published on the website of the Ministry of Planning and Investment.
3. Guidance on “other contents” of enterprise and investment registration documents to be notified to local authorities
Article 31.1 of the Enterprise Law and Article 63.2 of the Investment Law set out circumstances where changes to IRC and ERC application dossiers require notification to the licensing authorities. However, given the broad interpretation of “other contents” in these Articles, foreign investors are confused about whether the unlisted changes to contents of their IRC and ERC application dossiers are not subject to notification to the licensing authorities.
We recommend further guidance on Article 31.1(c) of the Enterprise Law and Article 63.2 of the Investment Law in this regard.
4. Inconsistency in licensing procedure regarding capital/ share transfer
In the applications for (a) ERC amendment of multi-member limited liability company on changes of capital contributing members due to capital transfer and (b) notification on the changes of foreign shareholders of joint stock company, one of the required items is “transfer agreement or documents evidencing the completion of the transfer”. However, in practice, some DPIs further requires “documents evidencing the completion of the transfer” even though the transfer agreement has already been submitted.
We recommend a detailed guidance on what “documents evidencing the completion of the transfer” should include and consistent implementation by DPIs.
5. Amending certain details of the ERC
Article 30.1 of the Enterprise Law requires registration of changes to the ERC be made within 10 days from the change. However, in certain cases such as changes to information of foreign investors, due to the licensing process abroad as well as the legalization process, foreign investors cannot meet the above timeline. Therefore, we recommend the licensing authorities allow more flexibility for foreign investors in case of material changes to the ERC.
6. Necessity of information of chief accountant/person in-charge of accounting when establishing a new company online
According to the prescribed forms (e.g., Appendices 1-2, 1-3 and 1-4) for establishment of a new company under Circular 01/2021/TT-BKHDT, information regarding chief accountant or person in-charge of accounting is optional. However, in practice, when submitting the application dossier online, such information is mandatory. We suggest MPI should remove such requirement from the current online registration system and instruct the DPI to follow the same.
7. Time of entitlement of members’/shareholders’ rights and obligations
Based on the current regulations, foreign investors are uncertain about when they can officially be considered as the members/shareholders of the target company, whether it is upon completion of procedures for changing members/shareholders under Article 66.5 of Decree 31/2021/ND-CP or when its information is fully recorded in the registry under Articles 28.3, 30.1, 47.5, 52.2, 124.4 and 127.6 of the Enterprise Law.
We suggest MPI revise Article 66.5 of Decree 31/2021/ND-CP to make it consistent with the relevant provisions in the Enterprise Law in relation to a joint stock company.
8. Charter capital shown on the ERC
There should be explicit regulations to distinguish between charter capital shown on the ERC and contributed capital for implementation of the investment project shown on the IRC.
In case an FIE has multiple investment projects, it is not clear whether it must include the contributed capital of all such projects as the total charter capital of the FIE.
Contributed capital can be either (a) additionally contributed by the investor/ owner, or (b) generated from the retained profit of the company. It is unclear whether case b) considered as additional charter capital of the company.
9. Non-acceptance of application to amend Construction Operation License of foreign contractor
Currently, there is no detailed procedure to amend the construction operation license of foreign contractors under Decree No. 15/2021/ND-CP. The Draft Decree amending Decree 15 is still pending for issuance.
We recommend the Government finalize and issue the Decree amending the Decree 15 soon so that there is a clear procedure to amend the construction operation license of foreign contractors.
10. Prolonged MOIT’s approval for retail outlet licenses due to internal restructuring
Under Decree 96/2022/ND-CP, MOIT’s prior Department of Planning and Department of Finance and Enterprise Innovation has been merged into one new Department of Planning and Finance. Due to the merge, the previous retail outlet license in-charge Department of Planning now no longer has the authority to grant retail outlet licenses and it is still unclear now who is in charge. This has significantly delayed the process for retail outlet license application beyond the statutory limit of 23 workings days.
We request the MOIT (i) take necessary and urgent action to solve the issue, and (ii) comprehensively review the regulatory framework for retail outlet licenses for foreign investors.
11. Unclear definition and inconsistent understanding of M&A Approval Process
Apart from circumstanced listed in Article 26 of the Investment Law, an M&A Approval will not be required. However, (i) in practice, an M&A Approval is still required in case of change in the nationality of foreign investors (but no change in foreign ownership ratio); (ii) the definition of “security areas’’ is too broad and normally the state secret; (iii) it is unclear who is in charge of applying for an M&A Approval due to the inconsistency between Article 26 of the Investment Law and Article 66 of Decree 31/2021/ND-CP.
Thus, we request that an M&A Approval be not required in (i) above and further clarifications to cases (ii) and (iii).
12. Lengthy procedure for M&A Approval issuance as responsible local authorities lack consistency
Pursuant to the Investment Law 2020, with respect to companies located in industrial zones, export processing zones, high-tech zones, or economic zones, the Management Authorities of such zones have the power to issue the M&A Approval. However, there are cases that the Management Authority of an industrial zone requested the local DPI to give opinions on the application for an M&A Approval, which has caused delay for the approval process.
ISSUES ON LAND, HOUSING AND REAL ESTATE
1. Confusion due to the issuance of the new Law on Investment
According to the new Law on Investment, there are provisions on approval and investor selection whereby different level of authorities (e.g. National Assembly, the Prime Minister, and the Provincial People’s Committee) are authorized to grant the approval for different level of projects involving land use. At the same time, the Law on land provides regulations on land allocation, land lease and alteration of land use purpose whereby different level of authorities are also mentioned for specific use or change of land use. As a result, confusion for investors existed since these provisions can both directly regulate their investments even though such provisions regulated different aspects of land use and investment.
With respect to the Law on Real Estate Business, the newly issued Decree 02/2022/ND-CP failed to provide clarity on the mix-up between the Law on Real Estate Business and the Law on Investment. According to Article 9 of the said Decree, there are two cases where investment regulations prevail over real estate regulations being (i) Real estate projects in which the investor has been approved under [Article 29] of the 2020 Law on Investment; and (ii) Real estate projects in which the investor has received the Investment Registration Certificate in accordance with the 2020 Investment Law. This provision created confusion for developers with real estate project approved under the previous law (i.e. the Law on Investment 2014 or before). As a side note, the draft (amended) Law on Real Estate Business, as published, did not much more guidance on this issue.
2. Foreign-invested-enterprise (FIE) under relevant laws
Since the relevant regulations on land, housing and real estate business do not explicitly provide any definition for “foreign-invested-enterprise”, it is generally understood that a company with any portion of foreign investment under any form will be treated as a FIE with imposed restrictions. As a result, as a way to avoid being treated as a FIE, it is observed that enterprises often set up multiple layer of ownership to mitigate this uncertainty.
Further, according to the most updated draft of the Law on Real Estate Business, the right for a FIE to implement its business of construction of properties for real estate business (e.g. logistics, warehouse leasing) within industrial zones, industrial clusters and hi-tech zones is no longer provided. As a large number of FIE is currently implementing this business in different industrial zones, the new provision, should it be officially issued, will create legal uncertainties on the investment into the real estate sector of Vietnam.
3. Access to land
As regulated under relevant regulations on land, it is widely understood that, outside of industrial parks, FIEs are only permitted to lease land directly from the State or use land under the form of contribution of capital from a Vietnamese enterprise. These methods, as a whole, do not meet the requirements for most of the FIEs since they usually do not fit commercial purpose. Under Article 153.3 of the Law on Land, FIEs are allowed to lease commercial land and non-agricultural production land from economic organization. However, in practice, there has been no clear case whereby a FIE is permitted to lease the land from a local land owner as a basis for an investment project. The most common and feasible option for FIEs to be approved with investment projects are lease of assets attached to the land (i.e. office, factory etc.).
Further, as a practical issue, international investors in the industrial and logistics sectors often find it hard to access land in Vietnam due to high prices from local vendors since it is believed that a number of local enterprises in Vietnam are indeed land speculators. Currently, the government appears to have little regulations and tools to control these local vendors/speculators. There are now draft suggestions to limit independent property brokers by requiring them to work for a firm and subjecting them to more difficult certification examinations. This may raise the bar for brokerage and discourage speculation, but it just forms a portion of the whole. If local businesses postpone their timelines and schedules for implementing land use projects, there should be more explicit and forceful actions used to ensure that the property is returned to the State. When assessing the qualifications of investors, local governments themselves should adopt a more skeptical stance.
On a side note, as Vietnamese entities are not allowed to mortgage their land use right and attached assets (i.e. factory) to foreign lenders. Vietnamese entities often find it hard to get offshore financing resources.
Relevant procedures
(i) Proposal on land use:
For an investor to apply for its investment project with land use and allocation/lease of land from the competent authorities, such investor is required to submit the (i) proposal for investment project to competent investment authority with contents on land use demand and (ii) land use demand document to be prepared on the basis of land allocation and land lease dossier which comes after the investment policy is approved to competent land authority. Thus, principally, relevant authorities would be required to appraise the land use proposals of the investor twice.
(ii) Extension of project’s duration and land use term:
According to the Law on Investment and the Law on Land, an investor must extend the land use term and the duration of its investment project at least 6 months before their expiring date. However, the term to be extended first between the two remains unclear.
According to the guidance document of the Law on Land, in case the investment project must be extended, the investor must apply for the extension at least 6 months before the expiring date and must first obtain the competent investment authorities’ approval regarding the extension of the project duration. At the same time, according to the guidance document of the Law on Investment, the investor must apply to extend the project’s duration (again) at least 6 months before its expiring date. As a result, in case the investor applies to extend the project’s duration at least 6 months before its expiry, then there would not enough time to extend the land use term. As a practical issue, the authorities do not allow either procedure to be carried out too soon. There were also cases where the investment authority requires that the investor obtain an approval to extend the land use term. However, by law, it is impossible to extend the land use term prior to extending the project’s duration.
(iii) Land compensation and clearance
According to the Law on Land, the land will be handed to the designated company after all of the payment for compensation, support and re-settlement are done. However, as the procedure for land compensation and clearance is conducted by the land authorities. The investors, in such case, are not in the driving seat and, in most cases, the investors are required to deal with the applicable households first before the land can be recovered. With respect to this issue, foreign investors face many difficulties in implementation of their projects in Vietnam due to (i) lack of experience in dealing with local households; and (ii) other options (i.e. leasing the land directly from households) are not available, by law, for foreign investors.
4. Second-home market
It is widely believed that a legal framework on second home built on non-residential land should be developed for further investment into the sector to address the following issues:
(i) Pink Book: To provide a definition understanding on the Pink Book regarding the term (i.e. 50 years) and the possibility for foreign owners to receive 50-year Pink Books.
(ii) Business line: To provide proper requirement on whether companies established under the law of Vietnam must be licensed with the appropriate real estate business lines when engaging in long-term lease or sub-lease of non-residential units, or participating in the rental pool program under the Law on Real Estate Business.
(iii) Management of second-homes: For second-homes to be built on branded residence projects implemented on residential land, it is important that the legal framework clarifies whether such second-homes can be leased out on a daily basis for at least 10 – 20 years without contravening the Law on Housing.
Main issues of the new Draft Law on Land and Draft Law on Real Estate Business
(i) Land user under the current Draft Law on Land: Although “foreign-invested economic organizations” and “foreign organizations with diplomatic functions” are defined as land user in the Draft Law on Land, it remains unclear whether foreigners are allowed to use land in Vietnam. It is also worth noting that, under the Law on Housing, foreigners are allowed to own houses in Vietnam whereby the purchase/sale of houses must be associated with land use rights. Thus, the Draft Law on Land, without defining foreigners as land users, might cause difficulties for foreigners to exercise their rights in Vietnam in relation to their ownership of houses. Further, a more consistent legal framework will attract foreign individuals to trade and own new types of real estate such as condotels, tourism villas, resort villas, bungalows, officetels, shophouses. To increase the consistency between the regulations on housing and regulations on land, it is suggested that “foreigner” be added as a group of land user into the new Law on Land.
Compared to the current Law on Land, the Draft Law on Land purely provides that foreign-invested economic organization is a group of land user without any explanations in detail as in the current Law on Land. This causes the legal uncertainty regarding the definition of “foreign-invested economic organization” as there remains no clear definition for such group since the issuance of the current Law on Land. It is recommended that further elaborations are made to the definition of “foreign-invested economic organization” to solidify the consistency with the regulations on housing/investment/real estate business.
(ii) One-off rental payment for land lease: According to the Draft Law on Land, two cases are provided whereby one-off rental payment is allowed being (ii1) Agricultural production, forestry, aquaculture or salt-making projects; and (ii2) Land in industrial zone, industrial clusters, processing zones, and hi-tech zones. For all other cases, annually payment is applicable for rental payment. Thus, for one to be able to mortgage the land use right, such transaction is only permitted in the two cases as mentioned above. For this reason, the new projects not entitled for one-off rental payment will face financial difficulties since they are not able to mortgage their land use right and/or transfer of land use right. Additionally, this clause conflicts with the proposed amendment to the Law on Real Estate Business, which states that among other requirements, a developer must be leasing land from the State with one-off land rental payment in order to sell properties (such as condotels, officetels, etc.) that will be formed in the future.
(iii) Relevant right of foreign-invested enterprises: According to the Draft Law on Real Estate Business, a foreign-invested enterprise is no longer permitted to make investment to sub-lease land inside of IPs, industrial clusters, hi-tech zones and economic zones. From the issuance of the Law on Real Estate Business, such right given to foreign-invested enterprises was the basis for investment in projects for the lease of warehouses, factories, etc. Thus, the removal of such right will immensely impact the business. At the same time, for current and active investors, Draft Law on Real Estate Business does not contain any explicit transitional provisions. Moreover, the removal of subleasing right also conflicts with the right to “lease assets under their ownership attached to land” provided to foreign investors under the Draft Law on Land.
TAX ISSUE
1. VAT treatment for exported services
The definition for services being used outside of Vietnam is not specifically stated in the law and is thus ambiguous. When taxpayers assert their right to apply 0% VAT for exported services, this causes the tax authorities to interpret the law at their discretion. The way tax authorities now interpret the law discourages taxpayers from applying 0% VAT on exported services, which eventually reduces Vietnamese service providers’ price competitiveness on the global market if they are forced to apply 10% VAT instead of 0% VAT. It is advised that the MOF update the rules to provide a precise description of exported services. For simpler tax administration, exported services should instead be based on the status of the overseas client and the foreign source of the service price.
II. How the Comprehensive and Progressive Trans-Pacific Partnership (‘CPTPP’) Foreign Direct Investment Chapter and the EU – Vietnam Investment Protection Agreement (‘EVFTA’) and the EU – Vietnam Investment Protection Agreement (‘EVIPA’) Can Support Legal Certainty and Bankability of Your Projects?
For any investment-related dispute (i.e. expropriation without compensation, investment discrimination), an investor of a party is allowed to bring such dispute against the Government of the other party to the Investment Court for settlement. In case either of the disputing parties disagrees with the decision of the Tribunal, it can appeal it to the Appeal Tribunal. While this is different from the common arbitration proceeding, it is quite similar to the 2-level dispute settlement mechanism in the WTO (Panel and Appellate Body). We believe that this mechanism could save time and cost for the whole proceedings. The final arbitration award is binding and enforceable without the local courts’ review of its validity. The Government of Vietnam has to fully implement this commitment within five years from the entry into force of the EVIPA. For your information, as of February 2023, there have been 11 out of 27 EU members having ratified the EVIPA. It means we need to wait until the remaining 16 EU members have ratified the agreement for it to take effect and trigger the deadline for direct enforcement of arbitral award by the Government of Vietnam.
While the CPTPP allows the same mechanism for an investor of a party to challenge the Government of the other party, it does not include the 5-year transitional period as in the EVIPA. In other words, the enforcement of arbitral award under the CPTPP would follow the NYC rules. However, we believe that the Government of Vietnam will soon revise the current local arbitration regulations to ensure its commitment under the EVIPA. Investors under the CPTPP could then take advantage of such improvement.
We believe that the investor-to-state dispute settlement (“ISDS”) under both the EVIPA and the CPTPP brings the highest level of enforceability and bankability when they are well designed in commercial contracts in Vietnam.
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Please do not hesitate to contact Dr. Oliver Massmann at omassmann@duanemorris.com if you have any questions. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

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.