Duane Morris Vietnam

June 23, 2023June 24, 2023 by Dr. Oliver Massmann

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

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

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

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

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

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

June 20, 2023 by Dr. Oliver Massmann

VIETNAM – POWER PROJECTS BIDDING PROCESS – Legal Alert on the draft decree on bidding process to select investors for power projects

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

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

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

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

June 12, 2023 by Dr. Oliver Massmann

Vietnam – Power Development Plan 8 – Update on the implementation of the PDP 8

Following the issuance of the Power Development Plan VIII under Decision No. 500/QD-TTg of the Prime Minister dated 15 May 2023 (PDP 8), on 7 June 2023, the People’s Committee of Ca Mau Province (Ca Mau PC) issues Official Letter No. 4201/UBND-KT on the proposal to recognize the list of projects under PDP 8 (Official Letter 4201). The submission of Official Letter 4201 is due to the fact that, since the PDP 8 has not specified the renewable projects in the power planning, it is the provincial authorities’ obligation to submit the list of potential renewable projects for the evaluation of the Ministry of Industry and Trade (MOIT) and the Prime Minister.

According to Official Letter 4201, the Ca Mau PC expressly proposes to prioritize the development of renewable sources of energy, especially offshore wind and LNG. As for the detailed renewable projects, Ca Mau PC proposes the total capacity for renewable energy of 13,582 MW, including 34 wind power projects (13,068 MW), 2 biomass projects (48 MW), 3 waste to energy projects (16 MW), 1 LNG project (1,500 MW). Additionally, 16,000 MW of off-grid solar and wind power projects are expected to be used for production of green hydrogen and electricity export.

June 7, 2023June 7, 2023 by Dr. Oliver Massmann

Vietnam – Latest draft of the Cybersecurity Administrative Sanctions Decree – what you must know

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

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

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

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

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

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

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

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

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

May 19, 2023May 19, 2023 by Dr. Oliver Massmann

Vietnam – Hanoi Times interviewing Dr. Oliver Massmann on adoption of Global Minimum taxation rate

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Posted on May 18, 2023May 18, 2023 by Dr. Oliver Massmann
VIETNAM- LEGAL ALERT ON THE POWER DEVELOPMENT PLAN VIII – PDP 8 – WHAT YOU MUST KNOW:

The Power Development Plan VIII (PDP8) has finally been approved on 15 May 2023 by Deputy Prime Minister Tran Hong Ha under Decision No. 500/QD-TTg. The approval of PDP8 will heavily influence the development of green energies in Vietnam and guide Vietnam toward the objective of reaching net-zero emissions by 2050. PDP8 will also have an impact on the adoption of the use of green energy technologies for both industrial and non-industrial applications. The key takeaways from the PDP8 are as follows:

Primary goal

PDP8 sets out the goal of ensuring national energy security for Vietnam by 2050 to meet the target of socio-economic development with an average GDP growth rate of about 7%/year in the period of 2021-2030; 6.5%-7.5%/year for the period 2031-2050.

Regarding the priority in development of renewable energy sources, renewable energy is aimed to account for 30.9 – 39.2% by 2030. The goal is to achieve a renewable energy ratio of 47% according to the commitment on equitable energy transition with Vietnam (JETP). With an orientation to 2050, the ratio of renewable energy is expected to be up to 67.5 – 71.5%. Hydropower, onshore and offshore wind power, self-consumption wind and solar energy are all encouraged for growth in the energy sector.

Estimated Capacity for 2030 – 2050

According to the PDP8, by 2030, the planned energy resource for local consumption shall reach 150,489 MW consisting of: (i) Hydro energy: 19.5% (29,346MW); (ii) Coal-fired power: 20% (30,127MW), (iii) Domestic gas: 9.9% (14,930MW); (iv) LNG: 14.9% (22,400MW); (v) onshore wind power 14.5% (21,880MW); (vi) offshore wind power: 4% (6,000MW); (vii) solar power: 8.5% (12,836MW); (viii) biomass and WTE 1.5% (2,270MW), (ix) storage battery energy around 0.2% (3,00MW) and (x) foreign imported power 3.3% (5,000MW). Meanwhile, the capacity for exporting is 5,000 – 10,000 MW.

By 2050, Vietnam’s total installed power capacity will amount to approximately 490,529 MW – 573,129MW, consisting of: (i) coal-fired: coal is no longer used for power generation (0%); (ii) LNG to power projects converted to fully use hydrogen: 16,400MW – 20,900MW (3.3-3.6%); (iii) LNG to power projects which jointly use hydrogen: 4,500MW – 9,000MW (0.8-1.8%); (iv) domestic gas-fired power projects converted to fully use hydrogen: 7,030MW (1.2-1.4); (v) domestic gas-fired power projects and converted to jointly use LNG: 7,900MW (1.4-1.6%); (vi) offshore wind power: 70,000MW – 91,500MW (14.3-16%); (vii) onshore wind power: 60,050MW – 77,050MW (12.2-13.4%); (viii) solar power: 168,594MW – 189,294MW (33-34.4%); (ix) hydropower: 36,016MW (6.3-7.3%); (x) foreign imported power: 11,042MW (1.9-2.3%); (xi) waste to energy/bio and ammoniac: 25,632MW – 32.432 (4.5-6.6%); and (xii) battery storage: 30,650MW – 45,550MW (6.2-7.9%).

Estimated Investment Demand

From 2021 to 2030, investment for power generation and transmission systems is estimated to be $134.7 billion, including $119.8 billion for power generation and $14.9 billion for transmission systems. From 2031 to 2050, investment for power generation and transmission systems is estimated to be $399.2 – $523.1 billion, including $364.3 – $511.2 billion for power generation and $34.8 – $38.6 billion for transmission systems.

Regarding land use for the development of the energy sector as a whole, 89.9-93.36 thousand ha is required for the 2021-2030 period while 169.8-195.15 thousand ha is the number for the 2031-2050 period.

Approved LNG Projects and Analysis on Potential Projects

As gas is expected to be the main source of energy for the country by 2030, including domestic gas and liquefied natural gas (LNG). PDP8 clarifies List of proposed LNG projects that have been approved for development with a targeted commercial operation (COD) date by 2030 under PDP8 includes: (i) Quang Ninh (1,500MW); (ii) Thai Binh (1,500MW); (iii) Nghi Son (1,500MW); (iv) Quang Trach 2 (1,500MW); (v) Quynh Lap/Nghi Son (1,500MW); (vi) Hai Lang Phase 1 (1,500MW); (vii) Ca Na (1,500MW); (viii) Son My 2 (2,250MW); (ix) Son My 1 (2,250MW); (x) Nhon Trach 3 & 4 (1,624MW); (xi) Hiep Phuoc Phase 1 (1,200MW); (xii) Long An 1 (1,500MW); (xiii) Bac Lieu (3,200MW). Long Son (1,500MW) and Long An 2 (1,500MW) will however have a targeted COD by 2035.

PDP8 states that the priority of Vietnam is to focus on domestic gas sources (i.e., Block B, Blue Whale and Bao Vang). LNG imports may be considered to conduct in order to ensure the demand in case of insufficient domestic gas supply. Vietnam will consider carefully to develop LNG-fired power projects, where possible, to reduce reliance on imported LNG, gradually converting to hydrogen by 2050.

Several location names are also referred in Annex 2 of PDP8 as Thai Binh, Nam Dinh, Nghi Son, Quynh Lap, Vung Ang, Chan May, Mui Ke Ga, Hiep Phuoc 2, Tan Phuoc, Ben Tre, Ca Mau. At this stage, we assume those are potential locations and backups for implementation of LNG projects but only in case other approved LNG Projects cannot be implemented and/or delayed. In other words, those names are not approved LNG Projects but the Government still opens a chance for investors to pursue until 2030 to address the power shortage in case other approved LNG Projects cannot be implemented and/ or delayed. The same also applies to other projects for stored hydropower plants listed in the PDP8. After the issuance of the Plan for Implementation by June 2023, this topic can be further discussed.

Key Legislation for Implementation of PDP8

To implement the PDP8, a plan for implementation of PDP8 shall be drafted by MOIT and submitted to the Prime Minister for approval by June 2023 (Plan for Implementation). The main instruments for bringing the PDP8 into life being the amended Electricity Law and the Law on Renewable Energy will be prepared by MOIT and it is expected that the draft for the mentioned laws will be submitted for the National Assembly’s approval by 2024. Regarding the DPPA mechanism to be in line with PDP8, the regulations on DPPA will be finalized by MOIT and submitted to the Government for approval within this year. MOIT is also tasked to coordinate and work with local authorities to review and address issues under existing regulations, agreements to address issues of projects and report to the Prime Minister for instruction/ legislation if required.

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Please do not hesitate to contact Dr. Oliver Massmann at omassmann@duanemorris.com in case you need more analysis on the PDP8. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

DECISION No. 500/QD-TTg – Approving the national power development plan for the period of 2021 -2030, with a vision to 2050:
Decision No.500_QD-TTg_E;

Posted on May 16, 2023May 16, 2023 by Dr. Oliver Massmann
VIETNAM – BREAKING NEWS – PDP8 Published! THE POWER DEVELOPMENT PLAN VIII IS FINALLY HERE

After more than 2 years of consultation, the long-awaited Power Development Plan VIII (PDP8) has finally been approved on 15 May 2023 by Deputy Prime Minister Tran Hong Ha under Decision No. 500/QD-TTg. The approval of PDP8 will heavily influence the development of green energies in Vietnam and guide Vietnam toward the objective of reaching net-zero emissions by 2050. PDP8 will also have an impact on the adoption of the use of green energy technologies for both industrial and non-industrial applications. At a glance, USD134.7 billion is the total investment for the development of energy plans for the period from 2021 to 2030.

Currently, we are conducting in-depth research and analysis on the PDP8 and more detailed information of the PDP8 will be updated by us in the coming day to keep you informed.

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Please do not hesitate to contact Dr. Oliver Massmann at omassmann@duanemorris.com in case you need more analysis on the PDP8. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Posted on May 9, 2023May 9, 2023 by Dr. Oliver Massmann
Vietnam – Power Development Plan 8 – Estimated Issuance Date

Following the Brief Report on the review of the Power Development Plan VIII (PDP8) on 25 April 2023, the Ministry of Industry and Trade of Vietnam (MOIT) officially delivered Report No. 2575/TTr-BCT dated 2 May 2023 (Report) to the Appraisal Council for its final approval. The notable points of the Report are as follows:

Overall goal

Generally, the primary goal of the PDP8 is to ensure that, until 2050, Vietnam has adequate access to reliable, high-quality power at a reasonable price. This goal, under the Report, is set to be achieved by optimizing power sources, upgrading the system for distribution of electricity, promoting the use of renewable energies and exporting of power, and utilizing the cutting-edge technologies into the power systems.

Specific goals

According to the Report, by 2030, the planned energy resource for local consumption shall reach 158,244 MW consisting of: (i) Hydro energy: 18.5% (29,346MW); (ii) Coal power: 19% (30,127MW), (iii) Domestic gas: 9.4% (14,930MW); (iv) LNG: 14.2% (22,400MW); (v) onshore wind power 13.8% (21,880MW); (vi) offshore wind power 3.8% (21,880MW); (vii) solar power 13% (20,591MW); (viii) biomass and WTE 1.4% (2,270MW), (ix) storage battery energy around 2% (around 3,000MW) and (x) foreign imported power 3.2% (5,000MW). Meanwhile, the capacity for exporting is 3,000 – 4,000 MW.

Hydropower, onshore and offshore wind power, self-consumption wind and solar energy are all encouraged for growth in the energy sector. With the prolongation of the schedule for LNG Long Son (1,500 MW), the coal power projects are restricted for those projects subject to PDP7, and the development of LNG power is constrained. As for ground mount solar power, the DPPA pilot is accepted for an approximately 1000MW solar system and 12 projects with a combined capacity of 1,634 MW that are in the licensing process for execution beyond 2030 are postponed. On another hand, rooftop solar energy is promoted for the personal use, rather than the use for the national grid.

Investment figure

The total investment for the development of energy plans for the years 2021 to 2030 is approximately USD 134.7 billion, which includes (i) the cost of the energy source investment, which is approximately USD 119.8 billion (with an annual investment of approximately USD 12 billion), and (ii) the cost of the transmission grid investment, which is approximately USD 15 billion (with an annual investment of approximately USD 1.5 billion).

PDP8 – When will it be issued?

As per recent consultations with the MOIT and other competent authorities, it is expected that the PDP8 will be issued soon, and the issuance date could be within this year. According to some optimistic sources, the issuance may even be this May.

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Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com or any other lawyer listed in our office list if you have any questions on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Posted on May 4, 2023 by Dr. Oliver Massmann
Vietnam – Power Development Plan 8 – Latest Update

Regarding the issuance of the long-awaited Power Development Plan VIII (PDP8), on 25 April 2023, the Ministry of Industry and Trade of Vietnam (MOIT) delivered a Brief Report on the review of the PDP8 with some proposal to the Permanent Government (Report). The notable points of the Report are as follows:

Renewable energy sources
Firstly, the Report presents the maximization of hydropower, the cheapest source of electricity, to a capacity of about 40,000 MW on the basis of environmental protection. On a separate note, according to the Report, the storage power resource will be developed with the goal of having storage hydroelectric power plants with a capacity of roughly 2,400 MW and having storage batteries be distributed with a capacity of 300MW, when the cost is affordable, all by 2030. Forwarding to 2050, the storage power capacity will reach between 30,650 and 51,850 MW.
Solar and wind energy sources, as a global trend, are prioritized to be developed for on-site use, without connecting to the national grid. Also, regarding the solar power development orientations, the aim is to connect the solar power with the storage batteries when the cost is lower. Rooftop solar are also prioritized to be developed for self-consumption with the capacity of around 10,355 MW by 2030, producing roughly 15.5 billion kWh. Since the development of this kind of power source which has (i) no capacity restrictions; (ii) affordable costs; (iii) the instant use for current power system without needing to be upgraded; and (iv) the requirement for the issuance of ground-breaking policies, solar power is given special emphasis in the Report. The Direct Power Purchase Agreement mechanism is also mentioned in the Report as a mean to test out about 1,000 MW of solar power. Regarding the current 27 solar power projects with a combined capacity of 4,136.25 MW that were included in Power Development Plan VII (PDP7) without being assigned to investors, it is advised in the Report that they will not be implemented until 2030.
When it comes to wind energy, the MOIT focuses on substantial development of offshore wind power for export, without connecting to the national grid system, to fully utilize the potential of offshore wind power (approximately 600,000 MW within 200 km from coast) to provide electricity and new forms of energy. According to the Report, the capacity will be between 3,000 and 4,000 MW by 2030.

Thermal power resources
It is the aim of the MOIT to build and develop thermal power facilities to provide an ongoing source of electricity and putting in place a conversion to achieve net zero emissions by 2050. For that reason, only the projects listed in the revised PDP7 that are currently being built will be continued until 2030, with an emphasis on switching to biomass/ammonia fuel for projects that have been in operation for 20 years when the prices are affordable. The operations for projects that have been in operation for more than 40 years will also be terminated. Orientation to 2050, entirely transition to biomass/ammonia for the generation of electricity is expected instead of using coal. As for LNG, the MOIT prioritizes domestic gas usage for power generation and then the import of natural gas/LNG when there is a shortfall, alongside creating LNG power projects with synchronous LNG import infrastructure and switching to fuel use. Hydrogen technology is also on the wish list when it becomes commercialized, and the price is right.

Import/export of electricity
About 5,000 MW of electricity will be imported in 2030, with a goal toward 11,042 MW in 2050. The process of importing power may be scaled up and sped up if the conditions are good and the price is fair.

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

Posted on April 26, 2023April 26, 2023 by Dr. Oliver Massmann
VIETNAM – POWER ENERGY – TRANSITION AND PDP8 – HOW THE EVFTA AND THE EVIPA AND THE CPTPP CONTRIBUTE TO BANKABILITY OF ENERGY PROJECTS – WHAT YOU MUST KNOW:

Recent developments and the importance of the power and energy sectors in Vietnam

Vietnam’s GDP grew by 8.02% in 2022 as opposed to merely 2.58% due to COVID-19 in 2021, which is the fastest yearly growth rate since 1997. 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. Considering the unpredictability and instability of the global situation, this is a remarkable result and anticipation. And, to cement the steady growth of Vietnam, it is important to speed up the energy transition to match the global trend.

The rapid economic expansion, urbanization, and industrialization of Vietnam are all related to the energy transformation. The strong desire of the leaders of Vietnam has been recognized in terms of the acceleration of the energy transition while also achieving the needs of economic growth and the target of becoming a high-income nation by 2045. In order to increase support for renewable energy, the energy transition is increasingly viewed as a possible engine of employment. Regarding this mater, currently, fossil energy sources remain the primary sources of energy but they are slowly replaced by green energy sources. And, when it comes to green energy, Vietnam is one of the first nations to renew its nationally determined contribution to the UNFCCC in 2020, pledging to cut greenhouse gas emissions. Vietnam requires energy security that is cheap for the general populace and sustainable for its social and economic development, with a goal of going carbon-free by 2050.

Moreover, according to the World Economic Forum’s Energy Transition Index in 2021, Vietnam ranked 65th out of 115 nations in terms of its preparation for the energy transition, with a score of 54, which is at the worldwide average. This demonstrates the chances for Vietnam’s energy transformation that should be taken. Energy security as well as the socioeconomic development objectives of the master plans across industries and sectors will need to be guaranteed by the roadmap for the nation’s transition process towards green and sustainable development. It is believed that more developed countries are of help by providing both financial and technical help.

To accelerate the transition, Vietnam has established the four goals focused on the reduction of coal-fired power and the increment of renewable energy for the energy transition by the year 2030, and the Power and Energy Working Group is prepared to cooperate with the Government to support this effort. Vietnam’s ambitious climate ambitions and a significant increase in renewable energies by 2030 are supported by the signature of the Just Energy Transition Partnership (JETP) between International Partners Group and Vietnam in December 2022, building on the promises made at COP26. This further underlined the consensus among governments, multilaterals, the private sector, banks, and all other significant institutions with an interest in the energy sector that the short-term economic benefits of energy production are far outweighed by its detrimental effects on the environment, and that there are sufficient, more sustainable alternatives to pursue. These JETP targets can be found in the draft Power Development Plan VIII (PDP VIII), a recent draft of which was released in December 2022 and estimates an investment cost of US$142 billion for the years 2021– 2030 (US$126 billion for power generation/sources and US$16 billion for the power transmission grid), the vast majority of which must come from the private sector. With the reform of the Law on Electricity, a framework for enticing greater private investment to aid in the transition will be established.

Until now, the finalization of PDP VIII remains slow-going, especially when it comes to the handling of newly emerging and difficult issues in the energy transition process. According to the leaders of the Ministry of Industry and Trade (MOIT), the MOIT will finalize the PDP VIII to be in line with the socio-economic development of Vietnam and to address the transition of renewable energy properly. Also, it is anticipated that the finalized PDP VIII will not be issued until the MOIT can settle the price dispute with the current investors on the Feed-In Tariffs (FIT) for solar and wind energy.
Renewable under the EVFTA, the EVIPA and the CPTPP

Both the Comprehensive and Progressive Trans Pacific Partnership Agreement (CPTPP) (Chapter 20) and the European Union—Vietnam Free Trade Agreement (EVFTA) (Chapter 13), whereby Vietnam is a member, impose obligations on its members to reduce any environmental harm caused by their business activities. Accordingly, under the CTPPP and the EVFTA, Vietnam must replace its existing coal-fired power stations with cleaner or renewable energy sources because it and the other signatories to the EVFTA and CPTPP are also signatories to the 2015 Paris Climate Agreement. Renewable energy is clearly alluded to as the preferable option in the EVFTA and CPTPP, and all parties undertake to encourage trade in that direction. Furthermore, the European Union—Vietnam Investment Protection Agreement (EVIPA) grants specific safeguards for investors regarding the free transfer of capital based on foreign exchange convertibility as well as dispute resolution governed by international arbitration rules. Vietnam also agrees to promote, develop, and increase the generation of energy from renewable and sustainable sources, including via facilitating trade and investment, under Chapter 7 on Non-tariff barriers to trade and investment in renewable energy generation of the EVFTA. According to Chapter 7, Vietnam committed to 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. Moreover, at least 20% of managers, executives, and experts for all service and non-service energy lines must be Vietnamese nationals, unless Vietnamese nationals cannot fill those jobs. However, each enterprise is only permitted to employ a maximum of three non-Vietnamese managers, executives, and specialists.

The bankability of power and energy projects in Vietnam

While the corporate sector generally supports the mentioned initiatives on the increment of renewable energy, more might be done to attract the money required to shift away from coal. In other words, to facilitate the shift to renewable energy, Vietnam will require financially sound and commercially viable energy projects. However, at the same time, Vietnam must also secure a baseload adequate to replace coal in order to sustain grid strength and development. This indicates that in order to transition to renewable energy, hydrogen, wind, and solar with storage, there will need to be a flexible gas/LNG and eventually a large amount of hydrogen as a baseload, scalable behind-the-meter renewables solutions, and significant energy efficiency initiatives. Additionally, it is reasonable to expect Vietnamese government’s consideration of a bankable legal framework, as committed in the EVFTA and the CPTPP, for high-quality energy projects to get finance from the global financial market advance.

Evidence has demonstrated how regulations, such as the subsidized FIT, might boost investment in renewables. However, a number of GWs of these projects that miss the requirements for the Commercial Operation Date are awaiting a price structure that, given the existing legal landscape, makes sense for both investors and purchasers. It still takes time for EVN and investors to reach an agreement on a specific rate for each power plant, even though the MOIT just released the maximum prices for these transitional projects. The sector has been dealing with delays and extension of rooftop solar system and wind and solar power plant development due to the worldwide pandemic and its effects. As a result, investors may have little influence over delays in commercial operations and commissioning. In light of the current situation, a prompt resolution is more important than ever to take care of this problem as we wait for new tariff regulations for renewable energy projects.

It will be necessary to change present laws in order to address the finance issues mentioned by EVN. There is still green financing available that provides private investors with advantageous rates to decrease CO2, but it is crucial to enhance the legislative environment around green financing operations to provide more clarity on the requirements for issuing green finance. In the context where off-grid power projects are expanding, particularly rooftop solar systems with onsite corporate PPAs and private sector self-investment. These should be examined to enable EVN to work out price for accessing the national grid because off-grid models have demonstrated that producers and consumers are capable of creating long-term, sustainable arrangements.

In the context of the JETP which provides important finance to operationalize Vietnam’s net-zero targets, the early approval of the pilot program for the offsite corporate direct PPA (DPPA) would be much welcomed. Such a pilot program is an important mechanism to attract investors and private investments, not only in the energy sector but also in other sectors where companies are looking for clarity in the ability to source affordable green energy when making investment decisions. The clock is ticking for a lot of critical commitments in the space of renewable energy that our members have made. In order to ultimately establish and operate the offsite corporate DPPA pilot program in the first quarter of 2023, we expect to have the government’s cooperation.

Recently, investors have expressed that offshore wind has a high potential in Vietnam and in the future contributing as a baseload for the national grid. Recently, many foreign investors are interested in developing large offshore wind farms in Vietnam. However, to develop a large offshore infrastructure project such as offshore wind farms, Vietnam must address the current legal uncertainties. One of the significant issues to be addressed is the new draft Decree amending Decree No. 11/2021/ND-CP on assignment of certain sea areas to organizations and individuals for exploitation and use marine resources (Decree 11) and the Sea Law. Since the project developer might not be able to mortgage the sea area (as part of the security package) to the project lenders if there is no property right over the designated sea area, the amendment of Decree 11 should resolve this issue. If the conditions are right, Vietnam can draw in billions of dollars in funding for projects and the supply chain, generate thousands of employment, and establish offshore wind as a reliable engine of economic growth. Additionally, there is potential for locally produced iron/saltwater batteries and competitively priced, environmentally safe rare earths for batteries and energy generation, both of which is believed to be advantageous for Vietnam over the long term.

Another crucial component of the long-term fix is hydrogen. Although it is now too expensive for use in power plants, it is cost-effective for industrial and agricultural application. Development, research, and international funding should eventually lower prices. Vietnam should make sure that initiatives like offshore wind and LNG to power are developed with hydrogen in mind. From the economic perspective of developing the Vietnamese private sector, the Government must ensure that new power projects are helping to drive up Vietnamese private sector capacity. Such large-scale foreign investments have enormous potential for expanding the tax base and supplying the vitality required for economic growth, as well as for preparing entire Vietnamese generations of future Vietnamese businesses with the requisite technical and management leaders.

Summary

With the signings of the EVFTA, the EVIPA and the CPTPP, investors from more developed countries now can bring their technology and know-how, especially those from countries with high level of development in renewable sectors to Vietnam with less market access barriers and being more secured. This can bring a great deal of help for Vietnam to facilitate the transition to renewable energy from 2023 to 2030, given that Vietnam itself adopts the initiatives of the mentioned international instruments into its legal system. Moreover, under the CPTPP and the EVFTA, it is possible for foreign investors to sue Vietnam’s Government for its investment related decisions according to the dispute settlement by arbitration rules. The final arbitral award is binding and enforceable without any question from the local courts regarding its validity. This is an advantage for investors considering the fact that the percentage of annulled foreign arbitral awards in Vietnam remains relatively high for different reasons.

The regulatory environment has traditionally been one of the major hindrances to private investors in infrastructure development. Although there is always a certain amount of uncertainty in any project of this nature, both the public and private sectors would serve their communities greatly by coming to a reasoned solution that suits both. There has been notable progress by Vietnam on this regulatory-front, such as the draft PDP VIII and the revised FIT and DPPA. However, works are expected to be done from 2023 regarding the finalization of the PDP VIII, the settlement of the FIT with the investors and new regulations for Vietnam to achieve its goal in energy and power sector. The CPTPP and EVFTA agreements have been (and will be) a major factor in Vietnam’s infrastructure development goals. Utilizing those agreements and advice and input from the private sector, Vietnam’s power and energy situation will be poised to efficiently and effectively capitalize on its enormous potential—especially with renewables.

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Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com or any other lawyer listed in our office list if you have any questions on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

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