Duane Morris Vietnam

1. What opportunities are there in wastewater for international players in Vietnam?
• The process of urbanization and industrialization in Vietnam is happening very fast. Meanwhile, the treatment of domestic wastewater in urban areas reaches only about 13%.
• The Government is in need of funds to upgrade and expand the construction of the wastewater treatment system.

2. What have been the challenges with wastewater PPPs in Vietnam?
• Investors have to use their own equity and borrowed capital to implement the project at the beginning. Meanwhile, current regulations related to disbursement of capital have led to inadequacies, are not attractive to investors.
• There are no clear and detailed regulations on the responsibility of the State in case of delay in disbursement according to schedule.
• The provisions in the current PPP legislation (laws, decrees, circulars, decisions) are mainly related to BOT contracts as a specific type of PPP project contract. Other project contracts such as BTO, BOO, O&M, BLT, BTL do not receive as much attention as they deserve.
• There is no regulation on which competent authority shall settle disputes arising in the process of handling the increase or decrease in revenue.
• The participation of all economic sectors in wastewater treatment activities mainly relies on ODA capital and state budget. However, this source of capital is increasingly limited and cannot meet the demand.
• The investment mechanism for the wastewater treatment sector is to provide the basic services to the society. Meanwhile, there are not many preferential policies on finance and operations to attract and encourage the private sector to participate in the sector. The fee schedule is not suitable, the unit price of clean water and wastewater treatment is still low, which make the recovery of construction investment costs low, while the cost of operating and maintaining the wastewater treatment system requires high and continuous funding.
• The preferential conditions and procedures are not synchronized, so investors still face many difficulties in accessing opportunities and organizing project implementation.
• Some localities have not yet established a one-stop mechanism in the project appraisal process. There is still lack of specific commitments and support to create a favorable and safe investment environment for investors.
• The planning on water supply and drainage has many shortcomings, causing many challenges and difficulties for businesses.
• The infrastructure for wastewater treatment is not keeping up with the process of urbanization and industrialization.

3. We are aware of the North Saigon 1 WWTP being the first PPP wastewater project since the new PPP law of 2020. What kind of structure is this project likely to take within a PPP framework?
There is no official information yet but we expect it to be in the form of Build – Transfer – Operate.

4. Are other WWTPs in the City likely to change to a PPP framework in the near future, if so, which projects specifically?
Yes, the HCM authorities plan to change the following projects to new framework: Binh Hung Hoa (a combination of West Saigon – Tan Hoa – Lo Gom projects), North Saigon 2, Cau Dua, Northwest, West Saigon and Suoi Nhum.

5. Is the HCMC government serious about bringing international investment in, and do you think the new PPP law will protect investors to a greater extent than before? If so, in what ways?
Ho Chi Minh City strives that by 2025, about 80% of the city’s total wastewater (nearly 2.6 million m3/day) will be collected and treated up to standards before being discharged into the environment.

According to Deputy Director of Ho Chi Minh City Department of Construction Dang Phu Thanh, the current obstacle is that the investment cost of the drainage and wastewater treatment system is quite large. Ho Chi Minh City has also called for ODA capital from the Japan

International Cooperation Agency, the World Bank, the Asian Development Bank; promoted the socialization of investment in drainage and wastewater treatment works, called for investment in the form of public-private partnership to receive more capital.

Regarding the protection of investors, we are afraid that the new PPP Law does not reach the investors’ expectation. In reality, the current legal system on PPP has many very basic limitations, such as only one PPP Law, two implementing decrees and a number of related decrees and circulars. These documents have very sketchy and brief content, so they are not enough to comprehensively adjust the problems arising in PPP investment practice. In addition, a core issue that investors and project businesses are very interested in has not yet been resolved: whether they own the project works they make and if not, what rights do they have over the property? The specific protection mechanism of the State for the right to operate construction works of investors and project enterprises has not been clarified. In particular, one of the property rights that investors and project enterprises have is the right to operate the project. Failure to exercise this right will be considered as an investor or project enterprise failing to achieve its goals. Although provided for by law, in practice this right has been violated on a regular basis.

In conclusion, we believe that the intention of the lawmakers was very good. However, there is still lack of strong political will to fully implement PPP projects regularly and on large scale. This needs to be improved; otherwise, we cannot achieve the set targets of the PPP Law.

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.

* Overview of the semiconductor production industry in Vietnam

According to market research released by Technavio, the world’s leading technology research and consulting company, the semiconductor market in Vietnam is expected to grow by $1.65 billion at a compound annual growth rate, about 6.52% in the period of 2021 – 2025.

In fact, over the past 10 years, there have been many foreign enterprises investing in the field of microelectronics such as Intel Corporation, Jabil, Sonion, Datalogic, GES… in Ho Chi Minh City High-Tech Park.

The case of Intel:
In 2006: Intel invested USD 1 billion to build a state-of-the-art chip assembly and test production facility in Ho Chi Minh City’s Hi-Tech Park.

By the end of 2020, Intel Products Vietnam has brought more than 2 billion products to customers around the world.

In January 2021: Intel Corporation invested an additional USD 475 million in Intel Products Vietnam for phase 1 of the largest cleanroom assembly and testing (ATM) factory in the global Intel system.

May 2022: Intel Group CEO Patrick Gelsinger was invited by the Prime Minister to visit the Government Office. Intel Group confirmed that during the investment process in Vietnam, the group realized that Vietnam has an industrious and innovative workforce and strong support and facilitation from the Government. Therefore, Intel decided to continue to further invest in Vietnam in the future.

These show the confidence of Intel in the domestic human resources as well as the stable investment environment of Vietnam.

Corporations like Microchip, Renesas, Applied Micro (AMCC), Marvell, Arrive Technologies, eSilicon, Sigma Designs, Uniquify… also operating in Vietnam and specializing in outsourcing and designing semiconductor and embedded software in the area. Most of the big corporations moved their production from China or Malaysia to Vietnam due to the country’s low labor costs and government’s support.

Domestically, Vietnam has Saigon Industry Corporation is in the process of preparing to invest in a chip factory project or Viet My Quantum Optical Research and Development Company Limited is manufacturing and exporting power semiconductor products (wafer FRED 200V, wafer Schottky Diode…) to foreign partners.

With the permission of Ho Chi Minh City People’s Committee, Ho Chi Minh City Semiconductor Circuit Technology Association was established in 2013. HSIA operates in the field of research, training, dissemination, application, production, sales and service of semiconductor industry in Ho Chi Minh City

* Legal Framework re Semiconductor

Decision No. 439/QD-TTg dated April 16, 2012 approving the “List of national products implemented from 2012 under the National Product Development Program to 2020”, which identifies and specifies “semiconductor” as one of the 9 key development products of the country.

The Government also issued Decision No. 66/2014/QD-TTg on “List of high technologies prioritized for development investment” and “List of high-tech products encouraged for development”, in which specifies technologies for designing and manufacturing semiconductor and semiconductor devices on the list of hi-tech prioritized for development investment and the list of hi-tech products encouraged for development.

In addition, the Government adopts key State-level programs like the National Science and Technology Program, the National Science and Technology Development Funds and the National Fund for Technology Innovation, chaired by the Ministry of Science and Technology, to support many research activities and trial production of semiconductor products.

Ho Chi Minh City is the leading and only locality that has issued a complete semiconductor industry development program. The People’s Committee of Ho Chi Minh City has approved the Microchip Industry Development Program, period 2013 – 2020 including 10 projects/component projects under Decision No. 6358/QD-UBND dated December 14, 2012 and Decision No. 1780/QD-UBND dated 17/04/2015.

However, up to now, Vietnam still does not have a true microchip (electronic chip) factory. Foreign-invested enterprises mostly carry out the outsourcing and designing (outsourcing) stages of microchips or assembling – testing (back-end).

* Why Vietnam?

As time passed by, more international organizations shifted their production to Vietnam due to its strategic location and advantages in shipping, competitive labor and production costs. Most recent of all, it is because enterprises in Vietnam can reap various benefits under 13 free trade agreements that Vietnam is a signatory. Vietnam has one of the most number of FTAs in the world – and most in the region. Singapore has only 6 FTAs, Malaysia has only 7.

Most recently and notably, the EU-Vietnam Free Trade Agreement (EVFTA) and the CPTPP grant favorable market access and investment conditions for foreign investors wishing to do business in Vietnam. For example, under the Agreements’ tariff schedule, base rate is 0% for almost all products in the semiconductor manufacturing sector.

Based on all the facts stated above, it is apparent that Vietnam is an ideal destination to carry out semiconductor manufacturing.

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

In einer Welt ständiger wirtschaftlicher Unsicherheiten scheinen ausländische Investoren Vietnam als ein vielversprechendes Land zu betrachten. Das gilt insbesondere im Franchise-Bereich. Vietnam genießt ein beispielloses Maß an Aufmerksamkeit seitens der internationalen Franchisebranche, insbesondere seit der Öffnung seines Einzelhandelsmarktes für ausländische Investoren seit dem 1. Januar 2008 im Zusammenhang mit den WTO-Verpflichtungen des Staates. Ein weiterer Grund ist das schnelle Wirtschaftswachstum des Landes, das laut dem Vietnam Food and Drink Bericht weiterhin das Wachstum der meisten südostasiatischen Volkswirtschaften in den Schatten stellt. Geschätzt wird Vietnam auch von potenziellen internationalen und lokalen Franchisegebern vor dem Hintergrund einer stabilen politischen Lage und seiner stark wachsenden konsumorientierten jungen Bevölkerung, deren Durchschnittsalter bei 30 Jahren liegt. Die aufstrebende städtische Mittelschicht hat ein steigendes verfügbares Einkommen und ein unstillbares Bedürfnis nach Qualitätsprodukten und westlichen Marken.

Ein weiterer Grund ist die verzögerte Entwicklung des Franchisings in Vietnam. Franchising, zum Beispiel, ist ein Geschäftsmodell, das im Wesentlichen auf geistigem Eigentum basiert, wobei Vietnam historisch gesehen eine ziemlich unterentwickelte Justiz hat und einen unzureichenden Schutz des geistigen Eigentums bietet, um die Rechte von Franchisegebern und Franchisenehmern zu schützen. Während das nicht mehr gültige Gesetz über geistiges Eigentum von 2005 (überarbeitet 2009) und das Dekret Nr. 35/2006/ND-CP über Franchiserechte den rechtlichen Rahmen für den Schutz von geistigem Eigentum und Franchiserechten erweitert haben, bleiben der Schutz und die Durchsetzung der Rechte des geistigen Eigentums für Franchisegeber kritisch und herausfordernd. Das kürzlich in Kraft getretene Gesetz über geistiges Eigentum 2022 (Intellectual Property Law) hat sich in gewisser Weise mit herausfordernden und offenen Fragen auf dem Franchising-Markt befasst. Um jedoch sowohl von ihren eigenen geistigen Eigentumswerten als auch vom potenziellen vietnamesischen Markt zu profitieren, müssen Franchisegeber sicher sein, dass sie eine solide Strategie haben, die darauf abzielt, gleichermaßen angemessen zu schützen und durchzusetzen.Der expandierende inländische Franchisemarkt, der führende lokale Marken wie Trung Nguyen Coffee, Highlands Coffee, Pho 24 sowie internationale Marken wie KFC, Lotteria, Starbucks und McDonald’s umfasst, legt nahe, dass mit angemessener Sorgfalt, professioneller Beratung und Beharrlichkeit die Herausforderungen nicht unüberwindbarsind.

Eine Strategie für einen Franchisegeber sollte Folgendes beinhalten:

1 Registrierung von geistigem Eigentum und verwandten Rechten. Die Rechte müssen im Hinblick auf das First-to-File-Prinzip frühzeitig eingetragen werden.

2. Warenzeichen. Alle Franchise-Marken müssen beim Büro des Landesamts für Geistiges Eigentum registriert werden. Die Eintragung einer Marke bildet die Grundlage, um gegen Franchise-Fälscher vorzugehen.

3. Urheberrecht. Urheberrechte entstehen ursprünglich aus der Schaffung eines Werkes. Es ist zwar nicht zwingend erforderlich, das Urheberrecht an einem Werk anzumelden, aber der Antrag beim Urheberrechtsamt erleichtert dem Franchisegeber den Nachweis des Eigentums und ermöglicht etwaige direkte Durchsetzung von Rechten.

4. Firmenname. Ein Firmenname ist ein Name, unter dem ein Unternehmen oder eine Einzelperson Geschäfte tätigt. Obwohl eine Registrierung des Namens nicht erforderlich ist, da Rechte direkt durch die rechtmäßige Verwendung eines Firmennamens begründet werden können, wird die Registrierung des Namens als Marke empfohlen, wenn dies angemessen erscheint.

5. Domainnamen. Ein Domainname identifiziert eine Internetadresse. Franchisegeber sollten ihre Domainnamen beim staatlichen Internetzentrum Vietnams registrieren, um eine unbefugte Nutzung im Internet zu verhindern.

6. Geschäftsgeheimnis/Fachwissen
Ein Geschäftsgeheimnis (z.B das Rezept für Coca Cola) ist jedes geschäftliche oder technische Wissen, das der Öffentlichkeit nicht zugänglich ist. Geschäftsgeheimnisse werden in Vietnam geschützt, solange sie von wirtschaftlichem Wert sind, nicht allgemein bekannt oder leicht nachvollziehbar sind und der Eigentümer bemüht sich, sie geheim zu halten. Da der Franchisegeber die Beweislast für die Geheimhaltung des Geschäftsgeheimnisses trägt, sind diese regelmäßig schwer zu schützen. Geheimhaltungsvereinbarungen und die Gestaltung von Zugangsbeschränkungen für Mitarbeiter dienen gleichermaßen als Nachweis der Vertraulichkeit und Berechtigung.

7. Sorgfaltspflicht. Eine Analyse eines potenziellen Franchisenehmers durch den Franchisegeber vor Vertragsabschluss zahlt sich aus. Ordnungsgemäße Rechnungsprüfungen sind obligatorisch, um die strikte Einhaltung des Franchisevertrags sicherzustellen.

8. Franchiseverträge
Vor Unterzeichnung des Franchisevertrages sollte der Franchisegeber darauf bestehen, dass die Vertragsverhandlungen durch eine Geheimhaltungsvereinbarung begleitet werden. Der Franchisevertrag muss schriftlich und in vietnamesischer Sprache abgeschlossen werden. Diese Sprachbeschränkung gilt jedoch nicht für einen Franchisevertrag, bei dem ein vietnamesischer Franchisegeber ein Franchise im Ausland gewährt. Der Franchisevertrag sollte alle Aspekte der Verpflichtungen abdecken und einen wasserdichten Schutz der Rechte an geistigem Eigentum bieten, einschließlich der Grenzen der Nutzungsrechte, die auf den Franchisenehmer übertragen werden. Es wäre auch ratsam, eine Klausel aufzunehmen, die im Falle einer Meinungsverschiedenheit eine Schlichtung oder ein Schiedsverfahren vorsieht, anstatt sich an die örtliche allgemeine Gerichtsbarkeit zu wenden.

9. Registrierung von Franchisegeschäften
Ein Franchisevertrag muss zu seiner Wirksamkeit nicht registriert werden. Allerdings müssen Franchisenehmer aus dem Ausland, aus einer Exportzone, einem nichttarifären Gebiet oder aus einem separaten Zollgebiet beim Ministerium für Industrie und Handel (MOIT) registriert werden, bevor sie gelten. Ein ausländischer Franchisegeber muss sein Franchisegeschäft nur einmal registrieren.
Der Franchisevertrag selbst muss nicht in die Registrierungsakte aufgenommen werden, es sei denn, dies ist erforderlich, um die Lizenzierung von Rechten des geistigen Eigentums zu registrieren, die mit einem Franchiseunternehmen verbunden sind und unter die Vorschriften über geistiges Eigentum fallen.
Der Franchisegeber muss dem potenziellen Franchisenehmer das Franchise-Beschreibungsdokument in der vom MOIT vorgeschriebenen Form und eine Kopie des Franchisevertragsformulars mindestens 15 Arbeitstage vor Abschluss eines Franchisevertrags zur Verfügung stellen, sofern die Parteien nichts anderes vereinbaren. Das Franchise-Beschreibungsdokument ist Teil der Registrierungsakte für die Registrierung des Franchise-Geschäfts beim MOIT.

10. Personalwesen
In jedem Fall sollte eine vernünftige Personalpolitik dafür sorgen, dass die Nutzung von geistigem Eigentum durch Mitarbeiter nach ihrem Ausscheiden aus dem Unternehmen ausgeschlossen ist. Vietnamesische Arbeitsverträge, die von Franchisegebern oder Franchisenehmern ausgestellt werden, sollten restriktive Vereinbarungen in Bezug auf geistiges Eigentum sowie Geschäftsgeheimnisse und vertrauliche Informationen enthalten. Die Bedeutung der Marke soll durch die Schulung der Mitarbeiter vermittelt werden.

Vor dem Hintergrund des fortschreitenden gewerblichen Rechtsschutzes und des von Branchenexperten prognostizierten Wachstums des lokalen und internationalen Franchisemarktes von jährlich 20-30 % scheint der Zeitpunkt für Unternehmen und Unternehmer ideal, in diesen dynamischen, aber vergleichsweise unterentwickelten Markt zu investieren.

Bei Fragen wenden Sie sich bitte an Dr. Oliver Massmann unter omass@duanemorris.com. Dr. Oliver Massmann ist Generaldirektor von Duane Morris Vietnam LLC.

1. Key Legal framework governing online gaming:

The current policy is Decree No. 27/2018/ND-CP of the Government dated 1 March 2018 (which amended Decree No. 72/2013/ND-CP 2013 regulating social networks, electronic information, and electronic gaming).

The Law on Cybersecurity came into effect as from 1 January 2019 (Law on Cybersecurity). On 15 August 2022, the Government issued Decree 53 which will become effective on 1 October 2022, which will have significant impact upon the business operations of both local and foreign entities in the specific sectors, including mobile gaming.

2. Online Game Classification and License/Certificate

Online Game Classification and License-Certificate;

3. Virtual Goods/Items

Virtual items are not recognized as assets under Vietnamese laws. Virtual items, as well as bonus points, are not allowed to be exchanged into money, game cards, coupons or other items having transaction value outside of the game.

Game providers must not adopt the designs of virtual items, virtual currency, game points for game unless they conform with the ones approved by competent authority. Players may use game points or virtual currency in his/her account’s budget to exchange for virtual items designed by the game providers.

4. Data must be stored and Commercial Presence

Data: personal information of users in Vietnam, data created by users in Vietnam and data of users’ relation in Vietnam.

Sectors: Foreign enterprises having business operation in Vietnam in online games and other certain sectors (e.g., telecommunications services; storage and sharing of data in cyberspace; provision of national or international domain names for service users in Vietnam; e-commerce; online payment; payment intermediaries; services of connection and transportation in cyberspace; social media and social communication; other services related to the provision, management, or operation of information in cyberspace in the form of messages, calls, video calls, emails, online chat).

Conditions: (i) having received a written notice of the Department of Cybersecurity under the Ministry of Public Security requesting to coordinate, prevent, investigate or enforce any cybersecurity measure and (ii) having failed to comply with such request or inadequately complied with such request, or prevent, obstruct, invalidate any cybersecurity measure.

Foreign entities as above will be required to store the Data in Vietnam for a period of at least 24 months.

Foreign entities as above shall establish a representative office or branch in Vietnam within 12 months as from the date of the Request.

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

In a world of constant economic uncertainty, foreign investors seem to view Vietnam as a promising land. This is particularly true in the franchise sector. Vietnam is enjoying an unprecedented level of attention from the international franchise industry, especially from the opening of its retail market to foreign investors since January 1, 2008, in connection with the state’s WTO commitments. Another reason is the country’s rapid economic growth, which according to the Viet Nam Food and Drink Report continues to eclipse the growth of most Southeast Asian economies. Vietnam is also valued by potential international and local franchisors against the background of a stable political situation and its rapidly growing consumption-oriented young population, of which the average age is 30 years old. The emerging urban middle class has a rising disposable income and an insatiable hunger for quality products and Western brands.

The delayed development of franchising in Vietnam is another reason. Franchising, for example, is a business model based essentially on intellectual property, with Vietnam historically having a fairly underdeveloped judiciary and providing inadequate intellectual property protection to protect the rights of franchisors and franchisees. While the no-longer in-effect Intellectual Property Law 2005 (revised 2009) and Decree No. 35/2006/ND-CP Governing Franchises have expanded the legal framework for safeguarding intellectual property and franchise rights, the protection and enforcement of intellectual rights remains property is critical and challenging for franchisors. The recently effective Intellectual Proper Law 2022 has somewhat dealt with challenging and outstanding issues in franchising market. However, in order to capitalize on both their own intellectual property values and the potential Vietnamese market, franchisors need to be sure of a sound strategy that aims to protect and enforce equally adequately. The expanding domestic franchise market, which includes leading local brands such as Trung Nguyen Coffee, Highlands Coffee, Pho 24, as well as international brands such as KFC, Lotteria, Starbucks, McDonald’s suggests that with proper due diligence, professional advice and persistence, the challenges are not insurmountable.

A strategy for a franchisor should include:

1 Registration of Intellectual Property and Related Rights. The rights must be entered early in view of the first-to-file principle.

2 Trademarks. All franchised trademarks must be registered with the State Intellectual Property Office. Registering a trademark provides the basis for taking action against franchise counterfeiters.

3 Copyright. Copyrights arise originally from the creation of a work. While it is not necessary to register copyright in a work, filing with the Copyright Office makes it easier for the franchiser to establish proof of ownership and allows for any direct enforcement of rights.

4 Company name. A company name is a name under which a company or individual conducts business. Although registration of the name is not required as rights can be directly established through the lawful use of a company name, registration of the name as a trademark is recommended when deemed appropriate.

5 Domain names. A domain name identifies an Internet address. Franchisers should register their domain names with Vietnam’s state Internet Center to avoid unauthorized use on the Internet.

6 Business Secrets/ Know-How

A trade secret (such as the recipe for Coca Cola) is any business or technical knowledge that is not available to the public. Trade secrets are protected in Vietnam as long as they are of economic value, are not common knowledge or are easily traceable and the owner tries to keep them secret. Given that the franchiser bears the burden of proving that the trade secret has been kept under wraps, they are regularly difficult to protect. Confidentiality agreements and the design of access restrictions for employees serve equally as proof of confidentiality and authorization.

7 Due diligence. An analysis of a potential franchisee by the franchisor before an agreement is entered into pays off. Proper audits are mandatory to ensure strict compliance with the franchise agreement.

8 Franchise agreements

Before signing the franchise contract, the franchisor should insist that the contract negotiations be flanked by a non-disclosure agreement. The franchise agreement must be made in writing and in the Vietnamese language. This language restriction, however, does not apply to a franchise agreement under which a Vietnamese franchisor grants a franchise in a foreign country. The franchise agreement should cover all aspects of the obligations and provide watertight protection of intellectual property rights, including the limits of the rights of use that are transferred to the franchisee. It would also be advisable to include a clause providing for mediation or arbitration in the event of a disagreement rather than recourse to local general jurisdiction.

9 Registration of Franchising Business

A franchise agreement need not be registered to be effective. However, franchises from overseas, from an export processing zone, a non-tariff area, or a separate customs area need to be registered with the Ministry of Industry and Trade (“MOIT”) before becoming active. An offshore franchisor has only to register its franchising business once.

The franchising agreement itself need not be included in the registration dossier, except if necessary to register the licensing of intellectual property rights that are associated with a franchised business and fall within the regulations on intellectual property.

The franchisor must provide the prospective franchisee with the Franchise Description Document in the prescribed form by the MOIT and a copy of the form of the franchise agreement at least 15 working days prior to the execution of a franchise agreement, unless the parties agree otherwise. The Franchise Description Document is a part of the registration dossier for registering franchising business with the MOIT.

10 Workers

In any case, a reasonable personnel policy should ensure that the use of intellectual property by employees after they have left the company is excluded. Vietnamese employment contracts provided by franchisors or franchisees should contain restrictive covenants regarding intellectual property as well as trade secrets and confidential information. The importance of the brand should be conveyed through the training of the staff.

Against the background of developing commercial legal protection and the growth of the local and international franchise market of 20-30% annually expected by industry experts, the time seems ideal for companies and entrepreneurs to invest in this dynamic but comparatively underdeveloped market.

***
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.

LNG as a desirable transition fuel?

The Vietnamese Government views LNG as a desirable transition fuel changing. However, it is not due to high prices and market turmoil of recent months but to comply with zero emission objective in 2050 and development of cleaner power sources as Vietnam committed in COP26.

In particular, the draft Power Development Plan (PDP8) sets out a plan of imported LNG being 23,900 MW, equivalent to 16.4% of the total power sources in 2030. This leads to a higher demand of imported LNG than that set out in Resolution No. 55 of the Politburo (import of 8 billion m3 in 2030 and 15 billion m3 in 2045 vs. 14-18 m3 in 2030 and 13-16 billion m3 in 2045). However, the MOIT explained that due to technical determination for adoption of Resolution No. 55, coal-fired power sources still reach 55GW while LNG reaches 22GW. In the draft PDP8, the MOIT has taken into account external expenses to determine the capacity of these sources. Thus, in 2030, the total capacity of coal-fired sources is only 37GW. The 18GW difference has been replaced by 14GW LNG and the rest by renewable energy sources.

Please note that 17,900MW out of 23,900MW of LNG in the draft PDP8 is from approved projects in the amended PDP7. There is 6,000 MW LNG to develop further in the Northern region to ensure the power foundation of the Northern power system.

How to track any shift in Government sentiment in terms of LNG as a transition fuel?

We could check this through all PDP8 drafts and any communication among the Government and the relevant ministries on these draft. Notable documents are Official Letter No. 182/LDCP, and the response from the MOIT (Official Letter No. 3787/BCT-DL).

These letters, especially Official Letter No. 3787 in response to Letter No. 182, explain that the plan for imported LNG complies with Resolution 55. In the short and midterm, Vietnam could import LNG from Australia, US, Russia and Qatar as these are countries with the most LNG exporting volume and also have a plan to increase their export volume. In the long term, it is necessary to consider importing LNG from Mozambique, Turkmenistan and Iran. With such variety in supply, it is possible to import LNG for power plants with a total capacity of 23,900MW in 2030.

Regarding the risk of LNG price increase in world market, it should still be acceptable in terms of the average power production price.

Has the amount of LNG-to-power plants in PDP8 drafts been changing?

In the latest MOIT’s response, the LNG-to-power plants in the draft PDP8 are still unchanged.

Have any planned LNG-to-power plants been cancelled? Or have any plans for LNG re gas/terminal infrastructure been cancelled or delayed?

No, there has been no LNG-to-power plants having been cancelled. There are some delays in certain projects, mainly due to difficulties in financing arrangement in addition to change in investment priority target by the investors.
FYI, there are two LNG Projects (total 750 MWx2 – Kien Giang 1 and Kien Giang 2 of PVN expected to operate during 2021-2022) approved in the amended PDP7 but not yet provided in PDP8 draft. The MOIT has explained in Official Letter No. 4967 that these two projects have not found suitable sources (LNG or domestic gas in O Mon) and thus not being considered to be included in the PDP8 draft.

Outlook on the PDP8

On 6 September 2022, the Government Office releases a Notification that described what happened in the Government’s meeting on 20 August 2022. That was a meeting chaired by the Prime Minister Pham Minh Chinh and joined by several cabinet members such as Ministers of Ministry of Planning and Investment, Ministry of Industry and Trade, Ministry of Justice, Ministry of Finance, Ministry of Agriculture and Rural Development, Ministry of Construction, Ministry of Natural Resources and Environment. The Prime Minister has not yet satisfied with PDP8 draft and required MOIT to carefully review and revise the PDP 8 with the fundament principle to ensure the national interest and security.

The latest PDP8 draft is attached with the Official Letter No. 4967/TTr-BCT dated 18 August 2022. So far, it is not clear when PDP8 will be adopted/finalized. Hopefully, it could be adopted within this year.

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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.

Nationales und internationales Wirtschafts- und Steuerrecht

Vietnamesischer Investitionsführer und Richtlinien für ausländische Lieferanten

2nd Buch
STEUERN UND ZÖLLE
Oliver Massmann – Rechtsanwalt

Nationales und internationales Wirtschafts- und Steuerrecht

© Dr. Oliver Massmann
Dieses Dokument und alle seine Teile sind urheberrechtlich geschützt, insbesondere die Vervielfältigung seiner Teile, die fotomechanische Wiedergabe und die Speicherung auf elektronischen Datenträgern. Unerlaubte Vervielfältigung, Übersetzung, Mikroverfilmung, Verarbeitung bzw. Übertragung in elektronischer Form sind verboten. Jede Verwertung außerhalb der engen Grenzen des Urheberrechtsgesetzes ist ohne Zustimmung des Herausgebers und des Autors unzulässig und strafbar.
Weder der Herausgeber noch der Autor übernehmen die Verantwortung für die Richtigkeit der hierin enthaltenen Informationen. © by Dr. Oliver Massmann

Vietnam Energy Future – Power Development Plan 8 – How to get deals done

by

DR. OLIVER MASSMANN – Partner, General Director – DUANE MORRIS VIETNAM LLC

Omass – Vietnam Energy Future – PDP 8 – 082022;

Erfolgreich investieren in Vietnam

Massmanns Investitionsfrüher in Vietnam

Nationales und internationales Wirtschafts;

© Dr. Oliver Massmann

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