VIETNAM – New rules on Electricity Pricing and Power Purchase Agreements from MOIT

On 30 December 2023, the Ministry of Industry and Trade (the “MOIT”) issued the draft Circular on the method to determine the electricity generation price and Power Purchase Agreements (the “PPAs”) to replace Circular No. 57/2020/TT-BCT dated 31 December 2020 (the “Draft Circular”). Overall, the Draft Circular regulates the methods for determining the electricity price and PPAs alongside the procedures for the inspection of PPAs.

In further details, the Draft Circular provides some of the notable provisions as follows:

1. To determine the electricity generation price, the reasonable costs of the investor and an internal rate of return not exceeding 12% must be considered. The electricity price encompasses many elements, including the particular connection bidding price and the PPA price, which are determined and agreed upon using the procedures outlined in the Draft Circular. Also, according to the Draft Circular, fees, and payments such as value-added tax, water resource tax, and environmental service fees are not included in the price of energy (except from those that are already included in the electricity pricing plan).
2. During the negotiation process for electricity price for the signing of the PPA, the parties are allowed to agree to a temporary price to use until the parties can mutually decide on a price to submit to the MOIT for its inspection, provided that the temporary price is not higher than the price bracket regulated by the MOIT.
3. To inspect PPAs, it is regulated that the parties entering into a PPA must submit the finalized PPA alongside with relevant application documents to the Electricity Regulatory Authority of Vietnam (the “ERAV”) for the ERAV to check and provide relevant opinions related to the PPA. Within 30 days from the date the ERAV opines on the PPA, the parties are responsible to duly execute the PPA.
4. The electricity generation price under the current PPA will be applied to power plants for the next years until the end of their economic life, provided that the PPA has expired but the plant has not yet reached the end of its economic life. The economic life of each type of power plant is clearly detailed in the Draft Circular.
5. The fixed price of power plants that have reached the end of their economic life is determined based on the principle of making sure the plant recovers costs associated with producing electricity and conducting business. Additionally, the time to calculate the price of electricity generation is determined by taking into account the major equipment repair cycle and a reasonable profit margin agreement. Apply the written consent from the governmental functional units if there is a document from those units authorizing the price calculation time.

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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.

Anwalt in Vietnam Dr. Oliver Massmann – VOM EHEMALIGEN FEIND ZUM STRATEGISCHEN PARTNER DER USA

Seit der Aufnahme offizieller bilateraler Beziehungen im Jahr 1995 haben sich die USA und Vietnam zu verlässlichen Partnern entwickelt, die eine von gegenseitigem Respekt geprägte Freundschaft verbindet. Die ehemaligen Feinde haben inzwischen ihre zunehmend aktive und umfassende Kooperationsbeziehung zu einer soliden Partnerschaft in den Bereichen Politik, Wirtschaft, Sicherheit und interpersoneller Austausch ausgebaut.

1993 – Aufhebung des Handelsembargos

Seit dem Sieg des kommunistischen Nordens über Südvietnam im Jahr 1975 hatten die USA ein Handelsembargo gegen Vietnam verhängt, das erhebliche negative Auswirkungen auf den Handel in Vietnam hatte. Im Rahmen des Handelsembargos war es allen US-Bürgern und -Unternehmen untersagt, Waren aus Vietnam aus- oder einzuführen sowie Finanz- und Handelsgeschäfte zu tätigen.

Im Jahr 1993 wurde das Handelsembargo schließlich aufgehoben und damit der Grundstein für die Förderung der Zusammenarbeit und Annäherung zwischen den beiden Staaten gelegt, was auch weitere Fortschritte bei der Aufarbeitug der gemeinsamen Geschichte ermöglichte. Auch wenn die Vereinigten Staaten noch keine uneingeschränkten Beziehungen zu Vietnam aufgenommen haben, so wurden doch rechtliche Beschränkungen abgebaut. Multilaterale Organisationen und die meisten anderen Länder außer den USA haben ihre Beziehungen zu Vietnam wieder uneingeschränkt aufgenommen. US-Vertreter des Privatsektors, einschließlich Unternehmen, Nichtregierungsorganisationen, aber auch vietnamesischstämmige US-Bürger haben sukzessive Beziehungen zu Vietnam aufgebaut. Optimistische Veränderungen in der vietnamesischen Außen- und Innenpolitik haben ebenfalls zu einer breiteren Akzeptanz Vietnams in der internationalen Gemeinschaft beigetragen. Dies schuf letztlich die Grundlage für weitere Reformen und eine positive wirtschaftliche Entwicklung Vietnams.

1995 – Aufnahme diplomatischer Beziehungen durch den ersten US-Botschafter Pete Peterson und seine vietnamesische Ehefrau Vy

Weitere Schritte zur Normalisierung der Beziehungen zwischen den USA und Vietnam wurden mit der im Januar 1995 angekündigten Eröffnung von – in der Folge zu Botschaften aufgewerteten – Verbindungsbüros in den Hauptstädten beider Länder eingeleitet. 1997 wurde Pete Peterson zum ersten US-Botschafter in Vietnam seit 1975 ernannt und damit die Normalisierung der diplomatischen Beziehungen zwischen Vietnam und den USA offiziell besiegelt.

Beide Länder akzeptierten die gemeinsame Vergangenheit und schlugen ein neues Kapitel in der Geschichte ihrer bilateralen Beziehungen auf, um die Schaffung günstiger Rahmenbedingungen für die Erhaltung des Friedens und den Ausbau ihrer Wirtschaften voranzutreiben.

Die Strategie der Normalisierung jener Beziehungen und der Förderung der Zusammenarbeit mit Vietnam entspringt – aus US-amerikanischer Sicht – zum einen den innenpolitischen Bedürfnissen der USA und ist zum anderen Teil der Anpassung ihrer globalen Strategie nach dem Kalten Krieg im Allgemeinen und in Bezug auf den asiatisch-pazifischen Raum sowie Südostasien im Besonderen.

2001 – Das bilaterale Handelsabkommen als Wegbereiter für den Beitritt Vietnams zur Welthandelsorganisation

Am 13. Juli 2000 unterzeichneten die USA und Vietnam ein bilaterales Handelsabkommen (das sog. U.S.-Vietnam Bilateral Trade Agreement, „BTA”). Das BTA markiert einen wichtigen Schritt auf dem Weg zur vollständigen Normalisierung der Handelsbeziehungen zwischen den USA und Vietnam, da es die gegenseitige Meistbegünstigung zwischen den beiden Ländern wiederherstellt und Vietnam dazu verpflichtet, eine breite Palette marktorientierter Wirtschaftsreformen durchzuführen. Im Rahmen des Abkommens verlängern die USA den vorübergehenden Meistbegünstigungsstatus Vietnams. Im Gegenzug führt Vietnam eine Reihe von Maßnahmen zur Marktliberalisierung und zur Reform des bestehenden Handels- und Investitionssystems durch, um gleiche und faire Wettbewerbsbedingungen für US-Unternehmen und -Produkte in Vietnam zu schaffen.

Das BTA gilt zugleich als Sprungbrett für den Beitritt Vietnams zur Welthandelsorganisation („WTO”), da es bereits viele ihrer Grundprinzipien aufgreift, darunter das Meistbegünstigungsprinzip, das Inländerbehandlungs- und das Transparenzprinzip, den Abbau von Handelshemmnissen mittels Verhandlungen, die Förderung eines fairen Wettbewerbs sowie die Förderung von Entwicklung und Wirtschaftsreformen. Mit dem anschließenden Beitritt Vietnams zur WTO im Jahr 2006 gewährten die USA Vietnam einen dauerhaften Meistbegünstigungsstatus. Dies verschaffte Vietnam Zugang zum US- Markt und brachte erhebliche wirtschaftliche Vorteile mit sich, bedingt durch die damit einhergehende Verbesserung der Handelsbedingungen und die effizientere Ressourcenallokation im Land.

Das BTA beinhaltet sieben umfassende Kapitel, die sich mit dem Handel mit Waren und Dienstleistungen, den Rechten an geistigem Eigentum, der Entwicklung von Investitionsbeziehungen, der Erleichterung des Geschäftsverkehrs sowie mit Bestimmungen über Öffentlichkeit und Transparenz befassen und ein eigens dafür vorgesehenes Rechtsbehelfsregime umfassen. Im Zuge der Umsetzung des BTA verzeichneten beide Länder ein bemerkenswertes Wachstum ihrer Ausfuhrumsätze. Im Jahr 2002, kurz nach der Unterzeichnung des BTA, öffnete sich der US-amerikanische Markt für vietnamesische Waren, was einen Ausfuhrumsatz von 16,5 Milliarden US-Dollar generierte und einem Anstieg von fast 10 Prozent im Vergleich zum Vorjahr entsprach. Im Zeitraum von 2001 bis 2008 stiegen die vietnamesischen Exporte in die Vereinigten Staaten kontinuierlich an und erreichten im Jahr 2008 – trotz der Unterbrechung infolge der Finanzkrise 2007 – einen Spitzenwert von fast 12,610 Millionen US-Dollar. Zwischen 2010 und 2018 blieb der Handel zwischen den beiden Ländern beständig und verzeichnete eine durchschnittliche Wachstumsdynamik von 116 %. Das BTA spielte auch eine Schlüsselrolle bei der Förderung von US-Investitionen in Vietnam, wobei sich das registrierte, aus den USA einfließende ausländische Direktinvestitionskapital bei Inkrafttreten des BTA im Jahr 2002 auf 200,1 Millionen US-Dollar belief. Somit hat das BTA die Handels- und Investitionsbeziehungen zwischen Vietnam und den Vereinigten Staaten insgesamt spürbar intensiviert.

September 2023 – Ausbau der Beziehungen zwischen den USA und Vietnam zu einer umfassenden strategischen Partnerschaft

Unlängst, am 10. September 2023, unterzeichneten die Staats- und Regierungschefs beider Länder während des Besuchs von US-Präsident Joe Biden in Vietnam eine Gemeinsame Erklärung zum Aufbau einer umfassenden strategischen Partnerschaft. Sie deckt ein breites Spektrum an Kooperationsbereichen ab, darunter Wirtschaft, Handel und Investitionen. Während der zehnjährigen Umsetzungsphase der umfassenden Partnerschaft haben Vietnam und die USA wiederholt die Bedeutung der Stärkung des bilateralen Handels sowie der Zusammenarbeit bei wichtigen Themen wie Werbung für Finanzdienstleistungen, Informationssicherheitsprodukte sowie Handelsangelegenheiten im Zusammenhang mit weißen Schlachtnebenerzeugnissen und Maisrückstandspulver hervorgehoben.

Die Beziehungen zwischen den USA und Vietnam – Blick in die Zukunft

In Anbetracht der jüngst erfolgten Aufwertung der Beziehungen zwischen Vietnam und den USA zu einer umfassenden strategischen Partnerschaft werden die Handelsbeziehungen zwischen den beiden Nationen die Öffnung eines rechtlichen Korridors erleben. Erstens werden weitere zusätzliche Dialogmechanismen – einschließlich solcher für den politischen Dialog zwecks weiterer Festigung der bilateralen Handelsbeziehungen, ermöglicht durch den vietnamesisch-US-amerikanischen Handels- und Investitionsrat (Vietnam-US Trade and Investment Council – „TIFA”) – eingerichtet. Zweitens streben beide Länder eine – auf Energiewende, Umweltschutz und nachhaltige Entwicklung ausgerichtete – Politik im Geiste einer Entwicklungszusammenarbeit an. Dieser Ansatz erfordert einen behutsamen Transfer moderner Technologien unter genauer Einhaltung der Transparenzvorschriften auf Grundlage des BTA. Im Energiesektor sollen die USA Vietnam bei der Durchführung einer erfolgreichen Energiewende unterstützen. Dabei geht es in erster Linie um – u.a. politisch-strategische – Beratung, die Vietnam bei der Entwicklung geeigneter Strategien für die zukünftige Entwicklung erneuerbarer und sauberer Energien voranbringen soll. Im Fadenkreuz der Initiative stehen darüber hinaus die Unterstützung und Zusammenarbeit mit vietnamesischen Unternehmen. Im Hinblick auf den Handel beabsichtigen beide Staaten, gemäß Artikel 4 des BTA verstärkt Handelsförderungsinitiativen sowie Ausstellungen zu organisieren und Verbindungen zwischen den jeweils zuständigen Institutionen herzustellen. Auch diese konzentrierten Bemühungen haben die Erleichterung des Zugangs vietnamesischer Unternehmen zum US-Markt zum Ziel.

Fazit

Insgesamt hat die Entwicklung der Beziehungen zwischen Vietnam und den USA zu einer Ausweitung und Vertiefung der Umsetzung des BTA geführt, die verschiedene neue Aspekte wie Umweltschutz und nachhaltige Entwicklung, die Einhaltung von Standards für eine “grüne Produktion”, die Schaffung “sauberer und nachhaltiger” Lieferketten und die Stärkung von Handelsförderungsmaßnahmen umfasst. Unter den Bereichen, die in der Gemeinsamen Erklärung hervorgehoben werden, nimmt der Handels- und Investitionssektor zweifellos eine besondere Stellung ein.
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Bei Fragen können Sie gerne Dr. Oliver Massmann unter omassmann@duanemorris.com kontaktieren. Dr. Oliver Massmann ist geschäftsführender Direktor von Duane Morris Vietnam LLC.

VIETNAM – FORMER ENEMY TO STRATEGIC PARTNER OF THE U.S.

After establishing formal bilateral relations in 1995, the U.S. and Vietnam have become reliable partners with a friendship based on mutual respect. From former enemy into partners, the U.S. and Vietnam have an increasingly active and comprehensive cooperative relationship, and have developed into a solid partnership in the fields of politics, economy, security, and people-to-people exchanges.

1993 – lifting trade embargo

The US had imposed a trade embargo on Vietnam since the communist victory over South Vietnam in 1975, leaving a detrimental impact on trade in Vietnam. Under the trade embargo, all U.S. citizens and businesses were barred from exporting or importing any goods from Vietnam, and financial and commercial dealings were also prohibited.

In 1993, the trade embargo was finally lifted, setting a basis to promote cooperation and familiarity between the U.S. and Vietnam, also allowing further advances in resolving matters in the past. Although the United States has not established full relations with Vietnam, legal restrictions have lessened. Multilateral organizations and most countries other than the United States have re-established full relations with Vietnam. U.S. private sector interests, including businesses, NGOs, and Vietnamese-Americans, had established growing ties with Vietnam. Optimistic changes in Vietnam’s foreign and domestic policies have also led to broader acceptance of Vietnam by the international community. This set up a foundation for ongoing reforms and positive economic trends in Vietnam.

1995 – establishing diplomatic relations with first U.S. Ambassador Pete Peterson and his Vietnamese wife Ms Vy

Additional steps toward normalizing U.S – Vietnam relations have continued through the January 1995 announcement as the U.S. and Vietnam were opening liaison offices in each other’s capitals, which was then upgraded to embassy status. In 1997, Pete Peterson was appointed as the first U.S. Ambassador to Vietnam since 1975.

This set an official normalized diplomatic relations between Vietnam and the U.S. The countries accept the past and open a new chapter in the history of the bilateral relationship, aiming to create favorable conditions to focus on maintaining peace and developing the economy.

Looking from the U.S. perspective, the strategy of normalization of relations and promotion of cooperation with Vietnam both stem from the internal needs of the U.S. and is a part of the adjustment of global strategy after the Cold War in general, with the Asia-Pacific and Southeast Asia region in particular.

2001 – the Bilateral Trade agreement which paved the way to Vietnam’s accession to the WTO

The U.S. and Vietnam signed a bilateral trade agreement (BTA) on July 13, 2000, which went into force on December 10, 2001. The BTA is a major step forward in fully normalizing U.S. – Vietnam commercial relations, as it restores reciprocal MFN treatment between the two countries, and commits Vietnam to undertake a wide range of market-oriented economic reforms.

Under the agreement, the U.S. extends temporary MFN status to Vietnam. In return, Vietnam undertakes a wide range of market-liberalization measures, committed to reform its trade and investment regime to provide a much more level and fair “playing field” for U.S. companies and products in Vietnam.

The BTA is also considered a stepping stone towards Vietnam’s accession to the WTO as the Vietnam-U.S. BTA already contains many fundamental principles of the WTO, which cover MFN treatment, national treatment, transparency, lowering trade barriers through negotiations, promoting fair competition, and encourage development and economic reform. When Vietnam joined the WTO in 2006, the U.S. granted Vietnam permanent MFN status. The US granting MFN status to Vietnam gives Vietnam access to the U.S. market and gains economic benefits from improving Vietnam’s terms of trade and the efficiency of resource allocation in the country.

The BTA encompasses seven comprehensive chapters that address Trade in Goods, Trade in Services, Intellectual Property Rights, Development of Investment Relations, Business Facilitation, Regulations on Publicity and Transparency, and Right to appeal. Throughout the BTA’s implementation, both countries experienced remarkable growth in export turnover. In 2002, upon the BTA’s signing, the US market commenced accepting Vietnamese goods, resulting in an export turnover of US$16.5 billion, indicating an almost 10% surge from 2001. From 2001 to 2008, Vietnam’s exports to the United States consistently increased, peaking at nearly US$12.610 million 2008, despite the interruption caused by the 2007 financial crisis. In the period of 2010 to 2018, trade between the two nations remained stable, sustaining growth momentum at an average rate of 116%. The BTA also played a significant role in attracting investment from the United States to Vietnam, with registered US FDI capital amounting to US$200.1 million when the BTA first took effect in 2002. Overall, the BTA has notably bolstered trade and investment ties between Vietnam and the United States.

September 2023 – elevating U.S – Vietnam relations to a Comprehensive Strategic Partnership

Recently, on September 10, 2023, during the visit of US President Joe Biden to Vietnam, the leaders from two countries have signed the Joint Statement on Elevating U.S – Vietnam Relations to a Comprehensive Strategic Partnership. The Joint Statement covers a wide range of cooperation fields, including economic – trade – investment.

Throughout the 10-year period of implementing the Comprehensive Partnership, Vietnam and the United States have reiterated the significance of bolstering bilateral trade, and collaborating to address key concerns, including financial services advertising, information security products, as well as trade matters related to white offal and corn residue powder.

U.S – Vietnam relations – The path ahead

In light of the recent elevation to a Comprehensive Strategic Partnership between Vietnam and the US, trade relations between the two nations will witness the opening of a legal corridor. Firstly, more additional dialogue mechanisms will be established, including policy dialogues facilitated through the Vietnam-US Trade and Investment Council (“TIFA”) to reinforce bilateral trade relations. Secondly, both countries are orienting toward a policy focused on energy transition, environmental conservation, and sustainable development, following the trend of cooperative development. This approach requires the careful transfer of modern technology, adhering meticulously to regulations promoting transparency based on the BTA. Within the energy sector, the U.S will assist Vietnam in executing a successful energy transition. Primarily, this entails guidance and policy advice to enable Vietnam in formulating suitable policies for the development of renewable and clean energy for the future. Additionally, support or collaboration with Vietnamese businesses is sought after as part of this initiative. Regarding commerce, both states intend to arrange increased trade promotion initiatives, exhibitions, and establish connections with pertinent agencies in accordance with Article 4 of the BTA. This concerted effort aims to facilitate Vietnamese businesses’ access to the U.S market.

Conclusion

In general, the advancement of Vietnam-US relations has led to the broadening and deepening of the BTA’s implementation, encompassing various new aspects such as environmental conservation, sustainable development, adherence to “green production” standards, the establishment of a “clean and sustainable” supply chain, and bolstering trade promotion efforts. Among the fields highlighted in the Joint Statement, the trade and investment sector holds particular significance, receiving heightened attention.

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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.

Plan for Implementation of PDP8 will likely be adopted within December 2023

On 26 November 2023, the Government’s Office has issued official letter No. 9305/VPCP-CN to provide Deputy Prime Minister’s instruction and comments on the 3rd draft of the Plan for Implementation of National Power Development Plan (PDP8). In brief, the Deputy Prime Minister urged the Ministry of Industry and Trade (MOIT) again to double check and update the final Plan in line with Prime Minister’s instructions and relevant energy policy and resubmit the final draft to the Prime Minister by 30 November 2023. It is expected that the final Plan will be adopted within December 2023.

FYI, on 24 November 2023, the MOIT had submitted official letter No. 8356 re: draft Plan for Implementation of PDP8 and explanation to address the below requirements from the Prime Minister:

1. The draft Plan shall fully address all key issues and requirements on adequate power supply and national energy security;
2. The draft Plan shall include feasible solutions for implementation;
3. The draft Plan shall forecast relevant risks and create a plan for managing risks; and
4. The draft Plan shall address action plan for adoption of relevant policies and mechanisms for implementation of projects.

We will keep you informed with the updated progress on this Plan for Implementation of PDP8.

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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.

NEW DECREE ON PERSONAL DATA PROTECTION AND CROSS-BORDER PROVISION OF DATA THE BASICS AND GUIDANCE ON PRACTICAL HANDLING

The issue of personal data processing is getting hotter than ever in this digital age with increasing cases where large conglomerate or even national governments being accused of utilizing citizen’s personal data without consent. This trend makes no exception in Vietnam.

On 17 April 2023, Decree No. 13/2023/ND-CP on personal data protection (PDPD) was officially issued by the Vietnamese Government. The long-awaited and controversial decree is set to be the first ever legal document with comprehensive regulations on both personal data and its protection in Vietnam. With an exception being the grace period of 2 years for SMEs, after 1 July 2023, the PDPD will be applicable to all entities located in Vietnam and/or outside Vietnam but directly conducting activities in relation to the processing of personal data in Vietnam. We outline below some key terms and foundation of the PDPD:

I. The Basic: New Decree on Personal Data Protection and Cross-Border Provision of Data

1. Definition

Personal data means data about an individual under all forms (symbol, letter, number, image, etc.), or relating to the identification or possible identification of a particular individual. Personal data is comprised of two tranches: (i) Basic personal data includes name, date of birth, blood type, marriage status and most notably, data that reflects activity or history of activity of an individual on cyberspace; and (ii) Sensitive personal data concerning political opinion, health, financial details (credit history, income level…), social relationships and data considered by laws as specific and require necessary security measures.

Personal data processing is broadly defined as one or more acts having an impact on personal data, including collection, record, analysis, storage, change, disclosure, access right, extraction, withdrawal, encryption, decryption, delivery, deletion, cancelation and other related acts.

Automatic personal data processing is defined as a form of personal data processing carried out by electronic means to evaluate, analyze and predict the activities of a specific person, such as habits, preferences, level of trust, behavior, location, trends, capacity and other circumstances.

Similar to the famous EU’s General Data Protection Regulation, the PDPD introduces the concept of “Personal data controller” and “Personal data processor” and a whole new concept of “Personal data controlling and processing entity” (Entities).

Personal data controller refers to an organization or individual that decides purposes and means of processing personal data. Personal data processor refers to an organization or individual that processes data on behalf of the Personal data controller via a contract or agreement with the Personal data controller. Meanwhile, Personal data controlling and processing entity refers to an organization or individual that jointly decides purposes and means, and directly processes personal data.

2. Consent and Exception

Generally, the PDPD strictly regulates that a data owner must give his/ her consent prior to any processing and disclosing such data, except for the five following limited cases:
• Under emergency situations to protect life and health of the data owner or others;
• Lawful disclosures;
• Processing by competent state authorities for national defense and security, disasters, fatal disease;
• Contractual obligations; and
• Activities of state authorities as stipulated under specified laws.

When requesting to process personal data, the data owner’s silence or unresponsiveness does not constitute approval. The data owner can agree only to a part of the request or approve the request with attached conditions. The data owner’s consent must be displayed in a format that is printable and copy-able in writing. Also, consent is only valid in case the data subject clearly and voluntarily knows (i) the type of personal data to be processed; (ii) the purpose of data processing; (iii) the allowed entities to process personal data; and (iv) their rights and obligations.

With regard to sensitive personal data, the data owner must be fully informed of the nature of the data to be processed. In case of dispute, the burden of proof lies on the data processor.

3. Prior to any processing activity regarding sensitive personal data, the data owner must be notified, except when:

• The data owner knows and fully consents to the contents;
• The personal data is processed by the competent state agency with a view to serving operations by such agency as prescribed by law;
• The personal data shall be processed to protect the life and health of the data subject or others in an emergency situation;
• Disclosure of personal data is in accordance with the law;
• Processing of personal data by competent regulatory authorities in the event of a state of emergency regarding national defense, security, social order and safety, major disasters, or dangerous epidemics; when there is a threat to security and national defense but not to the extent of declaring a state of emergency; to prevent and fight riots and terrorism, crimes and law violations according to the provisions of law ;
• The personal data shall be processed to fulfill obligations under contracts the data subjects with relevant agencies, organizations and individuals as prescribed by law;
• The personal data shall be processed to serve operations by regulatory authorities as prescribed by relevant laws;
• Competent agencies and organizations making audio and video recording and process personal data obtained from audio or video recording activities in public places in order to protect national security, social order and safety, legitimate rights and interests of organizations and individuals as prescribed by law.

4. Personal data processors have an obligation to notify the data owner prior to their processing, except for the following:

• The data owner has fully agreed with the contents and activities of processing personal data;
• The personal data shall be processed to protect the life and health of the data subject or others in an emergency situation;
• Disclosure of personal data in accordance with the law.
• Processing of personal data by competent regulatory authorities in the event of a state of emergency regarding national defense, security, social order and safety, major disasters, or dangerous epidemics; when there is a threat to security and national defense but not to the extent of declaring a state of emergency; to prevent and fight riots and terrorism, crimes and law violations according to the provisions of law ;
• The personal data shall be processed to fulfill obligations under contracts the data subjects with relevant agencies, organizations and individuals as prescribed by law;
• The personal data shall be processed to serve operations by regulatory authorities as prescribed by relevant laws;

5. Cross-border transfer of personal data of Vietnamese citizens must satisfy all following three conditions:

• The data owner consented the transfer;
• Original data is stored in Vietnam;
• A personal data transfer impact assessment records shall be provided by the Parties transferring data abroad (including Personal data controllers, Personal data processors and controllers, Personal data processors, third parties).

The PDPD requires the Entities to make available and submit the dossier on personal data protection impact to the Department of Cyber Security and High-Tech Crime Prevention in case of processing personal data and transferring personal data abroad within a timeframe of 60 days from the processing date. While it is clearly a new obligation applicable to the Entities, the implementation of such obligation is anticipated to be time-consuming for both organizations and relevant state authorities.

6. Penalties for violation of personal data protection rules:

• Monetary fines range from VND 50 million to VND 100 million;
• Penalties under Criminal Code;
• Additional penalties: Suspend the processing of personal data up to 3 months, deprive the right to use written consent issued by the Personal Data Protection Committee to process sensitive personal data and cross-border transfer of data, forcible payment of money gained from committing acts of violation.

Multiple violations of personal data protection regulations by a personal data processor in Vietnam can result in a maximum penalty of 5% of total revenue of the data processor in addition to the aforementioned penalties.

II. Vietnam’s Commitments under the EVFTA and the CPTPP

Data protection and relevant issues play an important part in shaping digital economy. The PDPD is one of several legal instruments that have been developed in Vietnam so that it can be more aligned with international standards. The PDPD is the first consolidated set of regulations concerning personal data protection.

Vietnam’s commitments on data privacy under the CPTPP is mainly discussed under Chapter 14 (E-commerce). Article 14.11 provides that data must be allowed to be transferred cross-border except in cases where to prevent such would serve a legitimate public policy objective, provided that the measure “is not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade; and does not impose restrictions on transfers of information greater than are required to achieve the objective.”. Article 14.13 imposes the same conditions on data localization on each party to the agreement.

While Chapter 8 of the EVFTA covers issues of trade, services, and e-commerce, it does not contain any immediate commitments on issues of e-commerce, data protection, or data localization other than that it calls for the formation of a committee to develop unified principles and regulatory regimes as far as these are concerned.

III. Preliminary Guidance on Practical Handling

The PDPD provides several obligations of the party processing and disclosing personal data, thus it is critical for employers/ enterprises (the “Employer” or “Enterprise”) to consider and adopt all those obligations into its internal rules and contracts/ agreements with third parties.

1. Internal Labor Rules and Labor Contracts

It is required for the Employer to adapt all relevant obligations in relation to personal data over its employees, staff, directors, etc. as well as those in relation to the Employer’s customers, members and their staff into the Employer’s internal labor rules/ codes and collective labor agreement (if any). This is to ensure that its employees and staff shall comply with those personal data related obligations.

Otherwise, there is a very high risk that the Employer shall be fully responsible for the unpermitted processing and disclosing made by its employees without necessary tools to address such violations. In addition, it is advisable to state clearly in the labor contracts with the employees that they must comply with requirements on personal data protection promulgated by the Employer and the applicable law.

In addition, it is advisable to negotiate and agree with the employees in the relevant labor contracts about the possible data processing made by the Employer again such employees’ personal data for the purpose of employment such as tax information, CVs, health information, etc. This would very likely prevent the future claims from the Employer’s employees over unpermitted processing of employees’ personal data. We will advise in detail if desired subject to the final Decree.

2. Contract/ Agreement with Customers/ Members

It is advisable for the Enterprise and Employer to consider, renegotiate and update all current and future contracts/ agreements between the Enterprise and its customers/ members that the Enterprise and Employer is entitled to disclose/ process a specific list of personal data and the customers/ members agree to give consents for such disclosure/ processing. The Enterprise should, with our support if desired, build a clear list and procedure for collecting, storing, disclosing and otherwise processing personal data of customers/ members.

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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.

PUBLIC PROCUREMENT IN VIETNAM – WHAT YOU SHOULD KNOW:

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.
In my experience, the three largest procuring entites are Ministry of Health, Ministry of Industry and Trade, Ministry of Transport

Procuring Entity Sector – Ministry of Health
1.1 Please identify the most common sector purchased by the procuring entity
Goods

Procuring Entity Sector – Ministry of Industry and Trade
1.1 Please identify the most common sector purchased by the procuring entity
Goods

Procuring Entity Sector – Ministry Transport
1.1 Please identify the most common sector purchased by the procuring entity
Works

1.2 Is any of the three procuring entities that you have selected a State-Owned Enterprise or an Independent Authority?
Yes

1.3 Does any of these SOEs or Independent Authorities have a specific public procurement regulatory frame work compared to the other centralized/federal procuring entities?
Yes

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 (Article 12, Decree 63; 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 (Articles 91 and 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)

***

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.

VIETNAM – Asia Business Law Journal interviewing Dr. Oliver Massmann – IMPACT OF NEW LAWS AND REGULATIONS ON DOING BUSINESS

1. What new domestic law or regulation enacted in 2023 has been the most impactful on clients?
By the first half of 2023, the Vietnam National Assembly has passed several laws. These include the Law on Protection of Consumers’ Rights (LPCR), the Revised Law on Bidding, the Law on E-transactions, the Law on Prices, and the Cooperative Law. These legal instruments have had a substantial impact in strengthening Vietnam’s legal framework. Notably, two key instruments, the LPCR and the Law on Bidding, are anticipated to notably affect our clients. The LPCR, which was enacted on June 20th, 2023, and is set to be effective from July 1st, 2024, includes new protective measures for vulnerable consumers, and an expanded list of prohibited acts. Therefore, clients should pay more attention when entering into contracts with their customers. This might involve incorporating the new regulations of the LPCR into contracts or undertaking a comprehensive review and revision of the company’s model contracts accordingly. Meanwhile, the Revised Law on Bidding is expected to shed more light on international bidding and criteria for accessing bids and selecting winning bidders. Thanks to more bidding transparent procedures in the new Bidding Law, bidding in Vietnam is more predictable and attractive to foreign investors.

2. What Asia-Pacific issues, such as China’s economic recovery, supply chain tensions, monetary policy, productivity, geopolitical issues, etc., have been the most significant?
By the end of 2022, China’s Zero Covid was lifted, resulting in its economic recovery and thus having a significant impact on Vietnam’s economy. The primary impact is reestablishment of the supply chain between Vietnam’s retailers and those in China. This reconnection includes the import of input materials from China, such as technology linkages, textile linkages. Furthermore, Vietnamese tourism will recover thanks to the Chinese tourist flow into Vietnam. For your information, Chinese tourists accounted for one third of international travelers to Vietnam before COVID-19 pandemic took place. China’s new policy may also impact Vietnam’s regulatory framework, resulting in a shift towards more stringent regulations concerning e-transactions and cross-border trade.

3. What international law or regulatory change has had the most impact?
In recent time, Vietnam has signed numerous new generation Free Trade Agreements (FTAs) such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the EU – Vietnam Free Trade Agreement (EVFTA), etc. These new-generation FTAs contain Vietnam’s unprecedented commitments. They have encouraged and accelerated the institutional reforms in order to improve the legal environment in compliance with Vietnam’s commitments. As a result, they help Vietnam become a competitive economy, attract foreign investments, technology and other important resources for development. With regards to investment-related dispute settlement mechanism, under the EVFTA, an investor is allowed to bring such dispute to the Investment Court for settlement (Investor-state dispute settlement mechanism- ISDS). The final arbitration award is binding and enforceable without the local courts’ review of its validity. This is an advantage for European investors as the fact shows that the percentage of applications for enforcement of foreign arbitral awards being rejected by the Vietnamese courts is notably high for various reasons. Under the CPTPP, for the first time investors of a party may sue the Government of the other party for its violation of investment-related commitments when the investors make investment in that party. It covers new provisions compared with existing agreements such as transparency in arbitral proceedings, disclosure of filings and arbitral awards, and participation of interested non-disputing parties to make amicus curiae submissions to a tribunal. Arbitral awards are final, binding and fully enforceable in CPTPP countries.
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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.

VIETNAM – MINING AND MINERAL RESOURCES – HOW THE CPTPP AND THE EUVNFTA CAN ASSIST TO MODERNIZE AND UPGRADE FOREIGN DIRECT INVESTMENT IN THE MINING SECTOR

Vietnam is rich in mineral resources but only a fraction of these have been discovered to date due to lack of modern technologies and methods. With the increasing flow of FDI under the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), Vietnam can enjoy many advantages to modernize the mining sector. However, some challenges hinder Vietnam from seeking the benefits under the two agreements, such as lack of coordination and communication among Vietnamese authorities, shortcomings in the Vietnam Mineral Law itself and excessively high taxes and royalties compared to other countries.
1. VIETNAM’S COMMITMENTS IN THE MINING SECTOR UNDER CPTPP AND EVFTA
Vietnam has opened its mining investment regime under both CPTPP and EVFTA. The CPTPP outlines several conditions for foreign investment in the mining sector in Vietnam. In particular, approval for foreign investment will only be granted if the investment project is proved to bring net benefits to Vietnam. In making this evaluation, the competent authority may take into account various factors, including the project’s impact on economic activity, job creation, equipment and services made in and exported from Vietnam, competition, and the compatibility of the project with other national policies, etc. Meanwhile, the EVFTA offers a great opportunity for market access in the mining sector as it allows for the establishment of joint ventures with maximum 51% of foreign capital contribution or 100% foreign-owned enterprises.
With regard to tariff, the CPTPP targets to remove custom duties for all mining-related goods imported from member states and the EVFTA shall reduce almost all tariffs by up to 99%, which can attract the FDI flows to the mining industry in Vietnam, especially mining equipment services and technologies and oilfield service providers.
The EVFTA, which adopts core labor standard of the International Labor Organization, also provides better working conditions for workers, which is a key aspect for laborers working on mining projects.
With the above commitments of Vietnam under the CPTPP and EVFTA, it is expected that new mining methods and better technologies will be introduced to the mining sector in Vietnam, which will later bring benefits in the exploration, mining, and processing of minerals.
2. BENEFITS OF TECHNOLOGICALLY MODERN EXPLORATION AND MINING IN VIETNAM
By using modern technology, Vietnam can discover and develop many minerals in deeper surface deposits. Having these metals sourced and available instead of importing them can help Vietnam develop downstream high-tech manufacturing industries and establish itself as a dominant regional and global hub. This is in line with the MPI Foreign Investment Agency’s emphasis on capacity building of manufacturing and supporting industries in Vietnam and partnership with Vietnamese enterprises where possible.
Modern technological exploration and mining can also help Vietnam meet the Vietnamese Government’s commitments under COP26, aiming for environmental sustainability in the mining sector, as state-of-the-art technologies in process, cycling, and refining base metal resources will reduce carbon dioxide emissions. It also contributes to meeting the challenges of the Government’s strategy for its Socio-Economic Development Goals (SDGs), particularly in mountainous areas with dominantly ethnic minorities, where the mining projects are mostly located. Responsible mining can help alleviate poverty in these remote areas by creating strong employment opportunities and enhancing local goods and services. In addition, it can also improve physical infrastructure since mining has long been recognized to be one of the most effective drivers of physical infrastructure improvement around the world.
Modern sustainable mining in Vietnam would therefore also meet two of the World Bank’s stated key objectives of its Country Partnership Framework in Vietnam, which are to (a) deliver infrastructure and (b) broaden the economic participation of ethnic minorities.
3. CHALLENGES AND ISSUES
• Consultation and clarification
Foreign investors require Vietnamese authorities seek detailed industry consultation on the key components of the draft amended Vietnam Mineral Law, together with its guiding documents. For example, key mining taxes require transparency on how minerals are valued. Since mineral grade is not an acceptable methodology, a revenue-based system is recommended. In addition, since the last annual VBF in February 2022, the MOIT has issued a draft nickel sulfide concentrate standard. However, consultation before the draft standard was limited to Vietnamese nickel producers only, which led to limited exposure to the international commercial realities, input from international experts, and evaluation of other countries regulating nickel mining and processing. Foreign investors have also been confused about the purpose of the adopted standard, i.e., whether the standard is used to restrict import or export, to be a part of a review of royalties or duties, related to future approval, or any other specific purposes.
• Mining industry long term investment and risk
Investment in the mining sector takes time and significant upfront investment in exploration and development. Therefore, in order to attract quality direct foreign investment in the sector, the Government should: (i) benchmark Vietnam’s fiscal regime against peer countries and provide a competitive fiscal regime with those offered by other jurisdictions; (ii) simplify the current fiscal regime for ease of explanation to investors; (iii) provide fiscal stability and reduce frequency of policy changes; and (iv) continue improving internal standards and consider recognizing and adopting international mineral resource standards (e.g. JORC).
Because there are many risks in mining exploration, the Government must ensure that exploration and mine planning, the formulation of investment projects, and the development of mechanisms and policies will encourage exploitation rationally and with best efficacy. Companies that have a proven track record of conducting technically advanced and environmentally responsible exploration programs should be granted with priority in their future applications.
• Scientific research and technological development
In October 2021 at a series of ASEAN Ministerial Meetings on Minerals, it was suggested that the minerals industry must take the lead in digital transformation, scientific research, technology development, and investment in all stages of the mineral value chain.
However, foreign investors and foreign-invested mining companies have been hindered from testing and applying new technologies due to restrictions on temporary import into Vietnam of research piloting equipment. Furthermore, detailed studies of various ores at world-class research facilities are limited due to the inability to export samples out of Vietnam for study purposes.
To address this issue, the Government should increase funding for Vietnam research facilities and ease the import-export restrictions.
• Amending the Vietnam Mineral Law and reducing mineral taxes
High natural resource tax and the fee for granting mining rights prevent large mining companies from operating in Vietnam. Therefore, Vietnam needs to introduce a more competitive fiscal regime.
4. CONCLUSION
The review and revision of Vietnam’s 2010 Mineral Law must be open and consultative, allowing the opportunity for input from Vietnamese and FDI mining companies and experts. This is to ensure a clean and environmentally sustainable mining and to take advantage of the EVFTA as well as the CPTPP, and to further contribute to Vietnam’s impressive economic growth in the upcoming years.
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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.

VIETNAM – NEW WORK PERMIT RULES – LEGAL UPDATE ON NEW DECREE AMENDING THE CURRENT REGULATIONS ON WORK PERMIT

On 18 September 2023, the Government issued Decree No. 70/2023/ND-CP on amendments and supplementations to Decree No. 152/2020/ND-CP on foreign workers working in Vietnam, and recruitment and management of Vietnamese workers working for foreign employers in Vietnam (“Decree 70”). At a glance, the key points to note of Decree 70 are as follows:

1. Adjustments to relax the conditions and requirements of Expert, CEO and Technical labor (i.e. more relaxed conditions for the mentioned positions, clearer definition for the job position of “business managers”, etc.) to match the common practice of these positions;

2. Removal of the exemption of Work Permit’s waiver application to foreign employees with Vietnamese spouses. In other words, expats with Vietnamese spouse, after the effective date of Decree 70, will have to implement the waiver application to be allowed to work in Vietnam;

3. From 1 January 2024, employers will be required to, at least 15 days before submitting the application for the approval of foreign labor use, publish notice on job application for Vietnamese employees with regard to positions of which foreign employees are expected to take. Such notice will be published on the electronic portal of the Occupational Department of the Ministry of Labor, Invalids and Social Affairs (MOLISA) or a qualified job service center.

4. Amendments to the forms for the application for Work Permit (i.e. working location(s));

5. Clearer guidance of authority for issuance of Work Permit between the MOLISA and the Department of Labor, Invalids and Social Affairs (DOLISA) whereby the MOLIA will issue the Work Permit for foreign employees who work for organizations permitted to be established by the Government, Prime Minister, Ministries, Ministry-level agencies or agencies of the Government while the DOLISA will handle the Work Permit in other cases not falling into the governing authority of the MOLISA. Further, the industrial zone authority, according to Decree 70, no longer has the authority to issue Work Permit/Work Permit exemption certificate to foreign employee working in such industrial zone.

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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.

VIETNAM – AGRICULTURE BUSINESS 4.0 – HOW THE EVFTA AND THE CPTTPP SUPPORT AGRICULTURE BUSINESS

Participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) has opened up many opportunities for Vietnam in the agriculture sector as it creates favorable conditions for local enterprises to access international markets. While the global economy is still recovering after the COVID-19 pandemic, the agriculture sector in Vietnam has been benefiting a lot from these two FTAs.

The tariff reduction in the CPTPP and the EVFTA has increased demand and boosted exports from Vietnam to the international market. With the CPTPP, most of Vietnam’s key agricultural exports will enjoy a tax rate of 0% immediately after the CPTPP takes effect or after 3-5 years, for example, some types of seafood (fish, shrimp), fresh and processed vegetables, rice,… when exported to large markets such as Canada, Japan and Mexico. With the EVFTA, tax rates on a series of agricultural products exported to the EU will gradually decrease to 0% after a short period from the effective date of the EVFTA. Tax rate on many Vietnamese products will fall to 0-4% such as pepper (currently 0-11%); rice and grain products. For fisheries, about 50% of tariff lines will be eliminated, and the remaining 50% will be eliminated within a 3-7 year roadmap. This is a potential opportunity for Vietnamese businesses to grow exports in potential markets as well as contribute to diversifying exports of agricultural, forestry and fishery products, which are the strength of Vietnam. In 2022, the sector’s export turnover reached 53 billion USD with a trade surplus of 8.5 billion USD, up 30% from 2021. The export of agricultural, forestry and fishery products also achieved new records. In particular, the domestic fishery industry exports to the CPTPP markets expanded by 30% to 27% of the country’s total fishery export value. In 2022, rice exports in Vietnam hit a record 7 million tons, up 13.8 percent in volume and 5.1 percent in turnover in 2021. In 2023, Vietnam expects further opportunities for export growth of agricultural products by diversifying markets and target production to satisfy export market requirements on food safety, and effectively complete post-harvest activities.

Vietnam’s participation in the CPTPP and in the EVFTA also increases connectivity between businesses through participating in regional and global supply chains. Through these two FTAs, Vietnamese agricultural products have the opportunity to access 37 large markets including Japan, Canada, and Australia. The participation will help raise the level of development of the economy in general and Vietnam’s agriculture in particular, at the same time increasing competitiveness compared to other competitors who do not have FTAs with the EU or other CPTPP member states, for example, India and Thailand. With regard to production, businesses can participate in production stages with higher value added by investing in domestic production and chain development while reducing export of raw materials and preliminary processing. This creates motivation for domestic enterprises and income opportunities for workers in rural areas. Vietnam’s commitments on import- export related rules and procedures create conditions to attract more domestic and foreign investment to improve the business environment in general and in agriculture sector in particular. Overall, this is a great opportunity to upgrade Vietnam’s agriculture in the next 5 – 10 years.

As the growth in Vietnam’s agricultural sector continues to flourish with new opportunities for trade, so are the need for further clarity in Vietnam’s regulations or stricter requirements from each partner’s market. There are challenges coming from regulations on animal and plant quarantine and safety (SPS), regulations on product labeling (TBT) or related regulations on social responsibility, labor standards and high requirements on intellectual property protection and environmental protection, especially for markets with strict standards such as the EU and Canada. For instance, Vietnamese businesses might fail to meet the regulations on traceability, rules of origin and maximum residue levels (MRLs) for pesticides in foods, which are prerequisites for access to the EU market. Although there are many shortcomings regarding management, quality control and production process, Vietnam’s agriculture sector is shifting to adapt to growing diversity, especially which of highly demanding markets. This drives the requirements for improved product quality and enhances food safety with an emphasis on environmental responsibility and management. Under competition pressure, Vietnamese agriculture will need to absorb new science and technology through transnational investment activities accompanied by science and technology and improving labor skills, thereby changing the traditional agriculture and improving production efficiency and product quality. With stricter requirements of the export markets, the agriculture sector needs to be more innovative and adaptable, which requires building a sustainable agricultural industry and focusing on automation and digital transformation in the sector.

As part of aiming for sustainable development, Vietnam has made specific actions such as committing at the 26th United Nations Climate Change Conference (COP 26) and endorsing the UN Sustainable Development Goals (SDGs), which can help build sustainable agriculture, join the global value and food chains and improve living conditions. In 2023, Vietnam will focus on the rural economy with activities of cooperatives, OCOP (One Commune One Product) development, and agriculture-based tourism. Vietnam also set some priorities to focus on the development of circular agriculture:

• Efficient water use and wastewater management;
• Minimisation of waterway and wetlands salination (notably Mekong delta);
• Monitoring of Climate Change and its effect on weather patterns;
• Development of smart agriculture systems through digital transformation;
• Tracking and traceability of clean and hygienic food;
• Development of opportunities to join the global agriculture supply chain, and;
• The need for FDI companies to be more environmentally and socially responsible and concentrate on sustainable agricultural operations.

Agriculture is one of the priority sectors of Vietnam’s plan for digital transformation. One of Vietnam’s development orientations for 2021-2030 is to develop agriculture based on digital transformation and linkage of domestic and international markets. The application of technology and digital in production and business in the agriculture sector will create a turning point in agricultural production, moving from a traditional agrarian economy to an agricultural economy. Therefore, Vietnam needs to re-invent the agriculture sector with new ideas and concepts, new farming models, innovation, digitization, more efficient logistics, and a greater focus on circular agriculture and environmental responsibility.

Vietnam is in the direction of restructuring the agricultural sector, reorganizing production, and piloting a number of models for advanced production, promoting the application of science and technology, supporting businesses and farmers in agricultural production and business activities to improve productivity and quality of agricultural products, thereby being able to compete at home and reach the world market. The arrival of 4.0 smart agriculture in Vietnam signals the end of an exclusive dependence on water, fertilizers, and pesticides. Instead, farmers will acess data, GPS technology and moisture sensors to break down traditional challenges into crop selection, market access, and innovation. New applications in agriculture such as advanced breeding techniques, robotization and precision farming using satellite data and drones will play a big role in the farms as it helps to produce more with fewer resources.

Although the technological level of agriculture in Vietnam is low, there are still good prospects for the application of technology 4.0 in this sector. This is evident by the increasing, although modest, number of enterprises providing digital and technical solutions for farming. Currently, many large Vietnamese corporations are interested in investing in the agricultural sector with advanced production and management technologies, such as Nextfarm and AgriConnect. In addition, agriculture enterprises remain active in applying innovative solutions for leading farmers toward digitalization. From the demand side, there is a new wave of private investment in agriculture for medium and large-scale farms.

CONCLUSION

The ongoing transformation of the agriculture sector to a sustainable and innovative way is important for Vietnam to maximize the benefits of CPTPP and EVFTA. We do hope that Vietnamese agricultural, forestry and aquaculture products from local and foreign-invested companies will be more competitive in the international market and be able to satisfy stringent phyto-sanitary and other quality standards, including traceability and packaging.

To achieve this, we have some recommendations as follow: (i) there is a need for further movement to larger-scale farming operations away from smallholdings and also to improve quality management, minimal pollution, energy savings and effective disease control; (ii) it is also necessary to accelerate digital transformation process by bringing with it Smart Agriculture which allows for better water, feed, fertilizer, traceability and waste management; and (iii) logistics and supply chain management needs to be improved, which will allow Vietnam to join global supply chains and have efficient movement of goods within the country between provinces and distribution hubs and centers.

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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.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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