Duane Morris Vietnam

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

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

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

Government procurement

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

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

Investment Dispute Settlement

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

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

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

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

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

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

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

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

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

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

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

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

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

Work Permit application process;

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

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

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

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

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

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

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

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

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

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

EVFTA:

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

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

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

CPTPP

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

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

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

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

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

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

Key points in the Notice include:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Vietnam has a favourable geological and geographical position for the formation and development of minerals; some types of minerals have significant reserves. According to statistics of the Ministry of Natural Resources and Environment, Vietnam’s mineral resources are quite diverse and rich with over 5,000 mines and ore points of about 60 different types of minerals. Some localities have mineral reserves of various types that are licensed to exploit such as: Thai Nguyen (with 19 types of solid minerals), Son La (14 types), Quang Binh, Quang Tri, Gia Lai, Hai Phong , Yen Bai… In addition, there are 18 areas with scattered minerals on a total area of 182.7 ha distributed in the provinces of Lao Cai, Cao Bang, Bac Kan, Lang Son, Phu Tho, Hai Duong, Nghe An, Quang Nam. However, only a fraction of Vietnam’s rich mineral resources has been discovered to date, due to the country having never been systematically explored using updated technologies and methods.

Investors eyeing the mining sphere in Vietnam must make use of its entitled benefits under the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA). The CPTPP came into force on 14 January 2019 for Vietnam, and as of March 2022, the UK has submitted its application to join this agreement. The EVFTA came into force on 1 August 2020 and its sister – the EU-Vietnam Investment Protection Agreement is expected to come into force in 2023.

CPTPP, Chapter 9 – Investment:

1. Vietnam’s requirements on mining:

Foreign investment in exploitation of minerals shall not be accepted unless the Vietnamese competent authorities advise the applicant that the investment is likely to be of net benefit to Viet Nam. In making this determination, the competent authority may consider the following factors:
(a) the effect of the investment on the level and nature of economic activity in Viet Nam, including the effect on employment, on the use of parts, components and services produced in Viet Nam and on exports from Viet Nam;
(b) the degree and significance of participation by Vietnamese in the investment;
(c) the effect of the investment on productivity, industrial efficiency, technological development and product innovation in Viet Nam;
(d) the effect of the investment on competition within an industry or industries in Viet Nam;
(e) the compatibility of the investment with national industrial, economic and cultural policies, taking into consideration industrial, economic and cultural policy objectives enunciated by the government or legislature of any province likely to be significantly affected by the investment; and
(f) the contribution of the investment to Viet Nam’s ability to compete in world markets.
Foreign investors do not have to comply with all the above criteria to obtain the mining licence.

2. Eligibility:

CPTPP investor is understood as an investor (State, enterprise or citizen) of another CPTPP country that is or has made an investment in the territory of Vietnam. However, CPTPP investors who fall into the following cases will be excluded from enjoying the rights under CPTPP:
+ is owned or controlled by a State, organization or individual of a country that is not a member of the CPTPP
+ owned or controlled by Vietnamese organizations or individuals
+ has no significant business activity in any of the CPTPP countries except Vietnam

Investment of a CPTPP investor is understood as any asset that a CPTPP investor owns or controls, directly or indirectly, of an investment nature (including characteristics such as a commitment to a capital, for the purpose of profit and presumption of risk) in Vietnam.

3. Forms of investment:

• an enterprise;
• shares, stock and other forms of equity participation in an enterprise;
• bonds, debentures, other debt instruments and loans;
• futures, options and other derivatives;
• turnkey, construction, management, production, concession, revenue-sharing and other similar contracts;
• intellectual property rights;
• licenses, authorizations, permits and similar rights conferred pursuant to the Party’s law; and
• other tangible or intangible, movable or immovable property, and related property rights, such as leases, mortgages, liens and pledges.

4. Market access principles
1. National Treatment: trading partners shall not discriminate against each other’s investors to favor their own investors.
2. Most-Favored-Nation Treatment: trading partners should not discriminate against each other’s investors to favor investors from any other country.
3. Performance Requirements: Vietnam must not promulgate requirements on the establishment, acquisition, expansion, management, operation of the investment (e.g. requirement to ensure a specific rario between export value and transferred foreign currency) or use it to decide to grant licenses to foreign investors. Vietnam has the right to promulgate requirement on the use of domestic labor.
4. Senior Management and Boards of Directors: Foreign investors have the freedom to appoint senior management positions regardless of nationality and prevent a party from a requirement of the same which might materially impair the ability of the investor to exercise control over its investment.

EVFTA – Chapter 8: Liberation of Investment and Trade

1. The principle of Most-Favoured-Nation Treatment does not apply to mining
2. For EU investors: Unbound (no requirements) for juridical persons controlled by natural or juridical persons of a non-Union country which accounts for more than 5 % of the Union’s oil or natural gas imports. Unbound for direct branching (incorporation is required). Unbound for extraction of crude petroleum and natural gas.

Investor-State Dispute Settlement (ISDS)

To protect interests of foreign investors, CPTPP allows foreign investors to initiate a lawsuit in International Arbitration centre in case interests of foreign investors are infringed by one member country (for example, expropriation, nationalization, minimum standard of treatment…), except in case disputes arising from the implementation of commitments or obligations of investment agreements and investment authorization.

This is also covered in the EU-Vietnam Investment Protection Agreement. The EVIPA is pending ratification by EU member states before it can come to force, expectedly by 2023. In disputes regarding investment (for example, expropriation without compensation or discrimination of investment), an investor is allowed to bring the dispute to the Investment Tribunal for settlement. To ensure the fairness and independence of the dispute settlement, a permanent Tribunal will be comprised of nine members: three nationals each appointed from the EU and Vietnam, together with three nationals appointed from third countries. Cases will be heard by a three-member Tribunal selected by the Chairman of the Tribunal in a random manner. This is also to ensure consistent rulings in similar cases, thus making the dispute settlement more predictable. The EVIPA also allows a sole Tribunal member where the claimant is a small or medium-sized enterprise, or the compensation of damaged claims is relatively low. This is a flexible approach considering that Vietnam is still a developing country.

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

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

Please 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.

Das Freihandelsabkommen der EU und Vietnam (EVFTA) und das umfassende und fortschrittliche Abkommen für transpazifische Partnerschaft (CPTPP) bieten enorme Vorteile für ausländische Investoren, die in oder mit Vietnam handeln. Diese reichen von den Marktzugangsvoraussetzungen bis zur Möglichkeit der Vollstreckung ausländischer Urteile in Vietnam .

Die Vorschriften für Investitionen und Handel sind im Kapitel 9 und 10 des CPTPP und Kapitel 8 des EVTFA normiert. Beide Abkommen stellen die Prinzipien der Inländerbehandlung (ausländische Investoren sollen wie Einheimische behandelt werden), des Marktzugangs (Beseitigung spezifischer Beschränkungen für ausländische Unternehmen), der Lokalen Präsenz (ausländische Unternehmen müssen keine lokale Präsenz aufbauen, um grenzüberschreitende Dienstleistungen erbringen zu können), usw. in den Fokus.

Wir fassen die wichtigsten Aspekte für ausländische Investoren zusammen, die in Vietnam handeln möchten:

Verkehrsreduzierung:

Beide Abkommen sehen vor, dass die meisten Zolltarifstellen nach Inkrafttreten und nach einem vereinbarten Zeitplan abgeschafft werden sollen. Zum Beispiel werden Einfuhrzölle im Rahmen des CPTPP für sehr empfindliche Waren wie Bier, Wein, Hähnchen, Metall, Stahl und Autos mit einer Größe unter 3.000 Cc ab 2029 beseitigt. Vietnam hat bereits zu bevorzugende Ausfuhrzolltarife und besondere zu bevorzugende Einfuhrzolltarife für Produkte im Rahmen der EVFTA (Erlass Nr. 111/2020/ND-CP) und im Rahmen des CPTPP (Erlass Nr. 21/2022/ND-CP und Erlass 57/2019/ND-CP) veröffentlicht. Bitte beachten Sie, dass die genannten Dekrete nach 2022 nicht mehr gelten. Wir erwarten, dass die Tarifpläne für den Zeitraum 2023 – 2025 bis Ende dieses Jahres vorliegen werden.

EVFTA:

Bankdienstleistungen:

Vietnam verpflichtet sich europäischen Kreditinstituten zu erlauben, sich bis zu 49 % des Grundkapitals an zwei vietnamesischen Geschäftsbanken auf Aktienbasis anzueignen. Allerdings ist diese Übereinkunft auf 5 Jahre beschränkt (nach diesen 5 Jahren ist Vietnam nicht länger an die Übereinkunft gebunden) und sie ist nicht auf die vier Geschäftsbanken auf Aktienbasis anwendbar, bei denen die Regierung die Hauptanteile innehat, namentlich BIVD, Vietinbank, Vietcombank und Agribank. Darüber hinaus werden bei der Umsetzung dieser Verpflichtung alle Vorschriften über Fusions- und Übernahmeverfahren sowie sichere und wettbewerbsfähige Bedingungen eingehalten, einschließlich der Begrenzung des Anteilsbesitzverhältnisses für jeden Investor, der als Einzelperson oder Organisation auf der Grundlage der Inländerbehandlung gemäß den Bestimmungen des vietnamesischen Rechts auftritt.

Versicherungsdienstleistungen:

Vietnam verpflichtet sich, die grenzüberschreitende Abtretung von Rückversicherungsleistungen und freiwilligen Krankenversicherungsleistungen nach innerstaatlichem Recht zuzulassen. Bezüglich der Verpflichtung, die Gründung einer Zweigniederlassung einer Rückversicherungsgesellschaft zuzulassen, so erlaubt Vietnam dies erst nach einer Übergangszeit.

Telekommunikationsdienstleistungen:

Vietnam ist verpflichtet sich in gleicher Weise wie beim CPTPP Abkommen. Insbesondere für Telekommunikationsdienstleistungen ohne Netzwerkstruktur, erlaubt Vietnam europäischen Investoren nach einer Übergangszeit vollständig im ausländischen Eigentum stehende Unternehmen zu gründen.

Transportdienstleistungen:

Direkt nach Inkrafttreten des Abkommens erlaubt Vietnam europäischen Schiffereien für leere Konsolidierungen und Containertransporte die Quy Nhon-Cai Mep Route zu benutzen; nach fünf Jahren wird Vietnam alle Routen für leere Containertransporte bereitstellen. Bezüglich Baggerdienstleistungen erlaubt Vietnam EU-Unternehmen die Gründung von Joint Ventures mit ausländischem Kapitalanteil von bis zu 51 %, um Dienstleistungen in Vietnam zu erbringen. Für Dienstleistungen am Boden bei Flughäfen erlaubt das Ministerium für Transport, dass europäische Unternehmen fünf Jahre nach der Erschließung des Privatsektors Joint Ventures mit vietnamesischen Partnern gründen dürfen, um sich für die Umsetzung des Projekts zu bewerben, soweit das ausländische Kapital nicht 49 % übersteigt. Nach drei Jahren wird das ausländische Kapital auf 51 % limitiert.

Verteilungsdienstleistungen:

Vietnam stimmt der Abschaffung des Erfordernisses der wirtschaftlichen Bedarfsprüfung fünf Jahre nach Inkrafttreten des Abkommens zu. Vietnam behält sich jedoch das Recht vor, die Planung des Verteilernetzes auf nichtdiskriminierender Basis durchzuführen. Vietnam stimmte auch einer diskriminierungsfreien Behandlung für die Herstellung, die Einfuhr und den Vertrieb von alkoholischen Getränken zu, so dass EU-Unternehmen ihre Betriebsbedingungen im Rahmen der geltenden Lizenzen beibehalten können und nur eine Lizenz für die Einfuhr, den Vertrieb, den Groß- und Einzelhandel benötigen.

CPTPP

Das Kapitel für Handel mit Dienstleistungen und das Kapitel für Investitionen nach dem CPTPP enthält folgende Hauptverpflichtungen:
– Mindeststandard der Behandlung: Jede Vertragspartei sollte bezüglich der erfassten Investitionen die geltenden Grundsätzen des Völkergewohnheitsrechts, einschließlich einer fairen und gerechten Behandlung und eines umfassenden Schutzes und einer umfassenden Sicherheit, wahren.
– Enteignung: Soweit es beispielsweise für öffentliche Zwecke notwendig ist, hat die Regierung eines Landes die Möglichkeit ausländische Investoren zu enteignen. Nichtsdestotrotz muss ein solches Recht auf diskriminierungsfreien Gründen beruhen und einen sofortigen, adäquaten und effektiven Ausgleich im Einklang mit einem ordnungsgemäßen Rechtsverfahren und den Vorschriften des CPTPP nach sich ziehen.
– Transfer: Ausländische Investoren haben das Recht frei über ihre Kapitalanlagen und ihre Gewinne zu verfügen. Nichtsdestotrotz können die Mitgliedsregierungen des CPTPP in manchen Fällen Transfers von ausländischen Investoren verhindern oder verzögern, soweit sie der Kapitalkontrolle im Falle einer Zahlungsbilanz- oder Wirtschaftskrise dienen.
– Keine Leistungsanforderungen (PR) auferlegen: Ein Land darf keine Leistungsanforderungen als Bedingung für Investitionen aufrechterhalten, um Investitionslizenzen oder andere bevorzugte Investitionsbehandlungen zu erhalten.
– Keine Anforderungen an die Besetzung von Führungspositionen (SMB) stellen: Ein Land darf von einem Unternehmen nicht verlangen, dass es eine natürliche Person mit einer bestimmten Staatsangehörigkeit in eine Position der oberen Führungsebene beruft.

Streitbeilegung zwischen Investor und Staat (ISDS)

Zum Schutz der Interessen ausländischer Investoren erlaubt CPTPP diesen einen Rechtsstreit in einer internationalen Schlichtungsstelle anzustreben soweit die Interessen ausländischer Investoren von einem Mitgliedsstaat (beispielsweise Enteignung, Nationalismus, Mindeststandard der Behandlung) verletzt wurden. Eine Ausnahme gilt für solche Streitigkeiten, die sich aus der Umsetzung von Zusagen oder Verpflichtungen aus Investitionsabkommen und Investitionsgenehmigungen ergeben.

Dies ist zusätzlich im europäisch-vietnamesischen Investitionsschutzabkommen abgesichert. Das Inkrafttreten des EVIPA hängt von der Ratifizierung der europäischen Mitgliedstaaten ab und wird 2023 erwartet. Bei Streitigkeiten im Zusammenhang mit Investitionen (z. B. entschädigungslose Enteignung oder Diskriminierung von Investoren) kann ein Investor den Streitfall zur Beilegung vor das Investitionstribunal bringen. Um die Gleichberechtigung und Unabhängigkeit der Streitbeilegung zu gewährleisten, wird ein ständiges Gericht aus neun Mitgliedern bestehen: je drei Staatsangehörige aus der EU und Vietnam und drei Staatsangehörige aus Drittländern. Die Fälle werden von einem dreiköpfigen Gericht, welches zufällig durch den Vorsitzenden des Gerichts ausgewählt wird, gehört. So wird gewährleistet, dass in ähnlichen Fällen eine gleiche Entscheidung ergeht, was die Streitschlichtung vorhersehbarer macht. Das EVIPA gesteht auch eine Entscheidung durch nur ein Gerichtsmitglied zu, soweit der Antragsteller nur eine kleines oder mittleres Unternehmen oder die Entschädigung für die streitgegenständliche Forderung verhältnismäßig gering ist. Angesichts dessen, dass Vietnam noch immer ein Entwicklungsland ist, ist dies ein flexibler Ansatz.

Für den Fall, dass beide Parteien der Gerichtsentscheidung nicht zustimmen, kann Beschwerde bei einem Beschwerdegericht eingelegt werden. Dies unterscheidet sich zwar von dem üblichen Schiedsverfahren, ist aber mit dem zweistufigen Streitbeilegungsverfahren der WTO vergleichbar. Wir glauben, dieser Mechanismus könnte für das gesamte Verfahren zeit- und kostensparend sein.

Die endgültige Beilegung ist bindend und kann von den örtlichen Gerichten vollstreckt werden. Dies gilt mit Ausnahme eines Zeitraums von fünf Jahren nach Inkrafttreten des EVIPA (siehe weitere Anmerkungen im Kapital des Ausschusses für den Rechtssektor über gerichtliche und schiedsgerichtliche Rechtsmittel).

Vietnam’s participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) has expanded international destinations for Vietnam’s strategic produces while creating leverage in such markets due to reduced tariff duties. During 2020-2021 period, when the global economy was suffering financial consequences from the Covid-19 pandemic, Vietnam ranked number 1 in GDP in Southeast Asia due to increase in export of agricultural products.

On a more micro level, the domestic consumers have benefited from an increase in product quality. This is because farmers now have access to foreign advanced technology and farming procedures must dramatically change for the better to satisfy SPS and TBT requirements under the Free Trade Agreements.

Most exported products include aquatic products, vegetables and fruits, rice, and tea. Official data showed that the agriculture sector expanded by 2.74% during the January-September period and contributed significantly to Vietnam’s overall economic growth, affirming its role as a supporting pillar of the Vietnamese economy. To further its competitiveness on the global market, the Vietnam government has issued many measures to promote digital transformation in the agriculture sector, making it one of the priorities for the period 2021-2030.

A comparison between EVFTA and CPTPP commitments

As of March 2022, the UK has submitted its application to join the CPTPP.

EVFTA:

_ Under Chapter 2 (National Treatment and Market Access for Goods), each Party is required to reduce tariffs for goods originating from the other Party. Vietnam complied to this commitment by issuing Decree 111/2020/ND-CP of 18.09.2020 on Preferential export tariff schedule, special preferential import tariff schedule of Vietnam to implement the Free Trade Agreement between the Socialist Republic of Vietnam and the European Union in the 2020 – 2022 period.

_ The EU’s preferential tax rate under the EVFTA shall in no case be higher than the normal EU tax rate applicable to goods originating from Vietnam on the day before the effective date of the EVFTA. This obligation applies from that date to the 7th year after the entry into force of this Agreement.

CPTPP:

_ Rule of Origin: Apply “De Minimis” (Latin term) principle: the insignificant proportion of raw materials that have not undergone the process of code conversion but are still considered to be originating. This regulation was introduced by the negotiating countries with the aim of reducing difficulties in meeting the CTC origin criteria and diversifying to enjoy preferential tariffs in FTAs.

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.