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The Government has implemented principles and measures in order to create favorable economic environment for enterprises through the issuance of Resolution 35/2016/NQ-CP dated 16 May 2016. These principles include, among others:

  • The State shall ensure the stability, consistency and predictability of relevant policies.
  • Regulations on business shall be clear, transparent and achievable, and the State shall issue reasonable route maps for removal of unreasonable sub-licenses, fees and charges.
  • Competent authorities shall be in charge of examining regulations on tax, tax administration and customs and proposing adjustments to simplify process and save time and business costs.

Continue reading Lawyer in Vietnam Dr. Oliver Massmann UNNECESSARY TAX AND CUSTOMS RELATED BURDENS ON INVESTORS

Lawyer in Vietnam Dr. Oliver Massmann Public Mergers and Acquisitions: Market Analysis Overview

Largest / most noteworthy public M&A transactions in the past 12 months

Oil gas & Chemicals

In May 2017, Earth Chemical bought 100% stake in A My Gia Joint Stock Company at about USD79.2 million.


In July 2017, Vietnam International Joint Stock Commercial Bank bought 100% business of Commonwealth Bank of Australia (Ho Chi Minh Branch).



  • Thai group Singha bought 25% and 33% stake in Masan Consumer Holdings and Masan Brewery respectively at a total of USD1.1 billion.
  • VinGroup bought Maximark at an undisclosed value.
  • In April 2017, Shinhan Vietnam Bank bought the retail business of ANZ at an undisclosed value.
  • In May 2017, Bien Hoa Sugar Company and Thanh Thanh Cong Tay Ninh Sugar Company bought 100% charter capital of HAGL Sugar at about USD58.52 million.


  • In December 2016, Fraser & Neave (a Singaporean beverage company) bought 5.4% of Vinamilk’s shares at USD500 million.
  • In late 2016, Deasang Corp bought 99.99% stake in Duc Viet Food Joint Stock Company.
  • In November 2016, Kido Corporation bought 65% stake in Tuong An Vegetable Oil Company at about USD44.52.
  • In late March 2017, CJ Cheiljedang Corporation bought 20% stake in Saigon Trading Corporation at USD8.2 million, bringing its total ownership in Cau Tre Export Products Processing Joint Stock Company to 71.6%.
  • In May 2017, Kido Corporation bought 27% stake in Vietnam Vegetable Oil Industry Corporation, bringing its total ownership in the company to 51%.

Real estate

  • In June 2016, Mapletree Investments acquired Kumho Asiana Plaza project through the joint venture between Kumho Industrial and Asiana Airlines at USD215 million.
  • In July 2016, Mitsubishi bought the Manor Central Park project from Bitexco Group at an undisclosed deal value.
  • Also in July 2016, VinaCapital bought International Centre Building from Keppel Land Ltd. At USD13.8 million.
  • In September 2016, CapitalLand Vietnam bought Ho Chi Minh Cau Kho Land Plot project from River View Company Limited at USD51.9 million.
  • In the first quarter of 2017, Sulyna Hospitality bought 70% stake in a 4-start resort in Phu Quoc from Berjaya Land at USD14.65 million.
  • In the first quarter of 2017, An Gia Investment Corporation and its partner Creed Group bought 5 apartment blocks of La Casa Project of Van Phat Hung Corporation at about USD40 million.
  • In the same period, CapitaLand announced the purchase of 90% stake in CapitaLand Thanh Nien.


  • In June 2016, FWD insurance company, a branch of Pacific Century, started the process of acquiring Great Eastern Vietnam after receiving the licence for this acquisition.
  • In June 2016, New Life RE bought Duxton Hotel from Low Keng Huat at USD49.2 million.
  • In April 2017, Aviva Insurance Corporation bought 50% stake of VietinBank Aviva Joint Venture Company from Vietnam Joint Stock Commercial Bank for Industry and Trade.

The major trends in the structuring of public M&A transactions

In Vietnam, M&A transactions usually take the form of either share or asset acquisitions, with share acquisition transactions outnumbering asset acquisition transactions.

Share acquisitions by foreign purchasers are commonly structured as offshore direct investments. The new investor can:

  • Acquire shares or capital contributions from an existing shareholder in the target (for example, a joint stock company, limited liability company, and so on).
  • Subscribe for newly issued shares of the target (for a joint stock company).
  • Make further capital contributions to the target (for a limited liability company).

In the case of an asset deal, a foreign purchaser must generally establish a new subsidiary in Vietnam.

In addition, M&A transactions can also take the form of a merger. One or more companies of the same type can be merged into another company by transferring all assets, rights, obligations and interests to the merged company, terminating the existence of the merging company.

The 2014 Enterprise Law sets out the types of business structuring that can be used by investors as a result of M&A transactions. In addition, the 2014 Investment Law is the first law that regulates M&A transactions and clearly provides that such transactions do not require an investment registration certificate. Now, the foreign investors must seek approval from the local Department of Planning and Investment of the transaction if the:

  • Target company operates in conditional business sectors applicable for foreign investors.
  • Investment leading to foreign ownership of the target company is 51% or more (in particular, from below 51% to more than 51% and from 51% to above 51%).

In other cases, the target company only needs to register a change of membership/shareholding at the Business Registration Division. This change has ended years of uncertainty and frustration faced by foreign investors seeking entry into the Vietnam market or expansion through M&A transactions.

The level/extent of private equity-backed bids in the past 12 months

Investment in the form of M&A transactions is still the most popular form compared with private equity investment. In recent months, private equity funds have been following the securities market in Vietnam, especially companies carrying out value chain operations. Consumer goods and infrastructure are the sectors that attract the most attention. However, due to limited publicly available information, it is not possible to fully assess the level of private equity-backed bids.

The approach of the competition regulator(s) in the past 12 months

The Vietnam Competition Authority under the Ministry of Industry and Trade (VCA) must be notified of the transaction if participating companies have a combined market share in the relevant market of 30% up to 50%. The VCA will then examine whether the calculation of the combined market share is correct and whether the transaction is prohibited (that is, whether the combined market share exceeds 50%, except in certain cases). The transaction can be conducted when the VCA issues a written confirmation that the transaction is not prohibited under competition law.

For more information on the VCA, see www.vca.gov.vn/Default.aspx?lg=2.

Main factors affecting the public M&A market over the next 12 months

The country’s deeper and wider integration into the world’s economy is offering new opportunities for M&A activities.

Another factor includes the high pressure faced by the government to privatise state-owned enterprises to meet requirements under signed trade pacts, especially the EU – Vietnam Free Trade Agreement, which is expected to come into force in 2019.

Encouraging signs for foreign investment include:

  • Reformed policies to allow wider access to foreign investors.
  • Formation of the ASEAN Economic Community at the end of 2015.
  • The conclusion of free trade agreements (FTAs).
  • Vietnam’s super rich population is growing faster than anywhere else and is on track to continue leading the growth in the next decade.
  • Equitization of state-owned enterprises will speed up.

The introduction of the new Investment Law, Enterprise Law and other laws and policies are creating an improved legal environment for investment and trade in general, and the M&A market in particular. However, the following factors also affect M&A transactions:

  • Divergent interpretations and implementations by local licensing authorities of international treaties such as Vietnam’s WTO Commitments.
  • Different licensing procedures applied to different types of transactions (for example, for foreign invested companies and domestic companies, public companies and private companies, and for buying state-owned shares or private shares).

Although legal and governance barriers, along with macro instability and the lack of market transparency are still the greatest concerns for investors, M&A deals in Vietnam are still expected to be one of the key, effective channels for market entry.

The major expected trends in the Vietnam M&A market include:

  • Bank restructurings.
  • Acquisitions and anti-acquisitions, particularly in the real estate sector.
  • Growing Japanese and Thai investment in Vietnam through M&A transactions.
  • Reform of SoEs.


Please do contact the author 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.


Lawyer in Vietnam Dr. Oliver Massmann PUBLIC MERGERS AND ACQUISITIONS

FDI capital has been rising in the past few years. In the first 6 months of 2017, the total FDI capital to Vietnam is USD19.2 billion, an increase of 54.8% compared to the same period last year. Vietnam’s M&A market continues to be active in 2017 after reaching a record-breaking deal value of USD5.8 billion in 2016. The number of M&A deals amounts to 2,062 deals worth USD1.8 billion from January – May 2017, up 116.2% compared with the statistics last year.

Real estate continues to be the most attractive sector, with hundreds of millions of USD waiting to be poured into the market via M&A, especially in residential, offices, retail, hotel and industrial park segments. Main investors still come from Japan, Korea, Singapore, and particularly a rising number of investors from China recently. The retail, consumer goods, and industrial goods are also very active, with M&A deals accounting for 53% of total deals in 2016. This is partly due to an attractive market of about 93 million people with high purchasing power.

Notable deals in 2016 and first half of 2017 include the following:

  • Central Group (Thai Group) bought BigC Vietnam at USD1.1 billion
  • TTC Holdings (Thailand) bought Metro Vietnam at USD710 million
  • In March 2017, Siam City Centre bought 65% of Holcim Vietnam from LafargeHolcim at USD524 million
  • In April 2016, Mirae Asset (a Korean securities company) together with AON BGN Investment Company (an UK company) bought Keangnam Hanoi Landmark Tower at USD350 million
  • In December 2016, Fraser & Neave ( a Singaporean beverage company) bought 5.4% of Vinamilk’s shares at USD500 million

Note: Owner of Fraser & Neave is also owner of TTC Holdings

  • In January 2016, Mobifone bought 95% of AVG’s shares at USD400 million

Leading companies in the sectors are main target of foreign investors. They have the advantage of holding strong brands, strong market share or controlling significant natural resources.

We hope that the M&A will continue its trend when the Government speeds up the equitization of many state-owned enterprises, especially in power, infrastructure and telecommunication sectors. Experts forecast the total value of M&A deals in 2017 will reach up to USD6.2 -6.5 billion.

How to obtain control of a public company

The most common means of obtaining control over a public company are as follows:

  • The acquisition of shares/charter capital through:
  • buying shares/charter capital from the existing shareholders of the company;
  • buying shares/charter capital of a listed company on the stock exchange; and
  • public share purchase offer.
  • Through a merger. The 2014 Law on Enterprises sets out the procedures for company mergers by way of a transfer of all lawful assets, rights, obligations and interests to the merged company, and for the simultaneous termination of the merging companies.
  • Through the acquisition of assets.

There are restrictions on the purchase of shares/charter capital of local companies by foreign investors in certain sensitive sectors. In addition, the law is silent on merger or assets acquisition (e.g., business spin-off) transactions where a foreign investor is a party. Regarding other assets acquisition transactions, if the asset is a real property, foreign ownership right will be restricted according to real estate laws.

Securities of public companies must be registered and deposited at the Vietnam Securities Depository Centre before being traded.

Depending on the numbers of shares purchased, an investor can become a controlling shareholder. Under the Vietnam Law on Securities, a shareholder that directly or indirectly owns 5% or more of the voting shares of an issuing organization is a major shareholder. Any transactions that result in more than 10% ownership of the paid-up charter capital of the securities company must seek approval of the State Securities Commission (SSC).

What a bidder generally questions before making a bid

Before officially contacting the potential target, the bidder conducts a preliminary assessment based on publicly available information. The bidder then contacts the target, expresses its intention of buying shares/subscribing for its shares and the parties sign a confidentiality agreement before the due diligence process. The confidentiality agreement basically includes confidentiality obligations in performing the transaction. The enforcement of confidentiality agreements by courts in Vietnam remains untested.

A bidder’s legal due diligence usually covers the following matters:

  • Corporate details of the target and its subsidiaries, affiliates and other companies that form part of the target.
  • Contingent liabilities (from past or pending litigation).
  • Employment matters.
  • Contractual agreements of the target.
  • Statutory approvals and permits regarding the business activities of the target.
  • Insurance, tax, intellectual property, debts, and land-related issues.
  • Anti-trust, corruption and other regulatory issues.

Restrictions on shares transfer of key shareholders

Founding shareholders can only transfer their shares to other founding shareholders of the company within three years from the issuance of the Enterprise Registration Certificate. After then, the shares can be transferred freely. An internal approval of the general meeting of shareholders is always required if:

  • The company increases its capital by issuing new shares.
  • There is any share transfer of the founding shareholders within the above three-year period.

If the sale and purchase is a direct agreement between the company and the seller in relation to an issuance of shares, the selling price must be lower than the market price at the time of selling, or in the absence of a market price, the book value of the shares at the time of the approval plan to sell the shares. In addition, the selling price to foreign and domestic buyers must be the same.

When a tender offer is required

A tender offer is required in the following cases:

  • Purchase of a company’s circulating shares that results in a purchaser, with no shareholding or less than a 25% shareholding, acquiring a 25% shareholding or more.
  • Purchase of a company’s circulating shares that results in a purchaser (and affiliated persons of the purchaser), with a 25% or more shareholding, acquiring a further 10% or more of circulating shares of the company.
  • Purchase of a company’s circulating shares that results in a purchaser (and affiliated persons of the purchaser), with a 25% shareholding or more, acquiring a further 5% up to 10% of currently circulating shares of the company within less than one year from the date of completion of a previous offer.

There is no guidance on building a stake by using derivatives. In addition, the bidder cannot purchase shares or share purchase rights outside the offer process during the tender offer period.

The bidder must publicly announce the tender offer in three consecutive editions of one electronic newspaper or one written newspaper and (for a listed company only) on the relevant stock exchange within seven days from the receipt of the State Securities Commission’s (SSC’s) opinion regarding the registration of the tender offer. The tender offer can only be implemented after the SSC has provided its opinion, and following the public announcement by the bidder.

Making the bid public

The offer timetable is as follows:

  • The bidder prepares registration documents for its public bid to purchase shares.
  • The bidder sends the bid registration documents to the SSC for approval and, at the same time, sends the registration documents to the target.
  • The SSC reviews the tender documents within seven days.
  • The board of the target must send its opinions regarding the offer to the SSC and the shareholders of the target within 14 days from receipt of the tender documents.
  • The bid is announced in the mass media (although this is not a legal requirement).
  • The length of the offer period is between 30 and 60 days.
  • The bidder reports the results of the tender to the SSC within 10 days of completion.

Companies operating in specific sectors (such as banking, insurance, and so on) can be subject to a different timetable.

Offer conditions

A takeover offer usually contains the following conditions:

  • The terms and conditions of the offer apply equally to all shareholders of the target.
  • The relevant parties are allowed full access to the tender information.
  • The shareholders have full rights to sell the shares.
  • Applicable laws are fully respected.

An offer can also be subject to conditions precedent. Conditions precedent are set out in the share sale and purchase agreement or the capital contribution transfer agreement. There is no specific restriction on conditions precedent other than the requirement that they cannot be contrary to law and conflict with social ethics (although the legal definition of social ethics is unclear). The most common conditions precedent are:

  • Amendments to the charter/relevant licence of the target.
  • Obtaining necessary approvals to conduct the transaction.
  • Changes to the target’s management body.

Payment of the contract price will only be made after the conditions precedent are met.

Employee consultation

There is no requirement under Vietnamese law that the employees must be consulted about the offer. However, if a layoff is to be conducted, the employer must:

  • Prepare a labour usage plan.
  • Consult with the employee representative.
  • Notify the competent labour authority on the implementation of the labour usage plan.

When a tender offer is required?

A tender offer is required in the following cases:

  • Purchase of a company’s circulating shares that results in a purchaser, with no shareholding, or less than a 25% shareholding, acquiring a 25% shareholding.
  • Purchase of a company’s circulating shares that results in a purchaser (and affiliated persons of the purchaser), with a 25% or more shareholding, acquiring a further 10% or more of circulating shares of the company.
  • Purchase of a company’s circulating shares that results in a purchaser (and affiliated persons of the purchaser), with a 25% shareholding or more, acquiring a further 5% up to 10% of currently circulating shares of the company within less than one year from the date of completion of the previous offer.

Form of consideration and minimum level of consideration

Under Vietnamese law, shares can be purchased by offering cash, gold, land use rights, intellectual property rights, technology, technical know-how or other assets. In practice, acquisitions are most commonly made for cash consideration.

In cases of full acquisition of state-owned enterprises, the first payment for the share purchase must not be less than 70% of the value of such shares, with the remaining amount being paid within 12 months.

In transactions involving auctions of shares by state-owned enterprises, the purchaser must make a deposit of 10% of the value of the shares registered for subscription based on the reserve price at least five working days before the auction date included in the target company’s rule. Additionally, the purchaser must transfer the entire consideration for the shares into the bank account of the body conducting the auction within ten working days of the announcement of the auction results.

In the case of a public tender offer, the payment and transfer of shares via a securities agent company appointed to act as an agent for the public tender offer must comply with Decree 58/2012/ND-CP.

Delisting a company

If a company seeks voluntarily de-listing, it must submit an application for de-listing that includes the following documents:

  • A request for de-listing.
  • For a joint stock company:
    • the shareholders’ general meeting approval of de-listing of the stock;
    • the board of directors’ approval of de-listing of bonds; and
    • the shareholders’ general meeting approval of de-listing of convertible bonds.
  • The members’ council (for a multi-member limited liability company) or the company’s owner (for a single member limited liability company) approval of de-listing of bonds.
  • For a securities investment fund, the investors’ congress approval of de-listing of the fund’s certificate.
  • For a public securities investment company, the shareholders’ general meeting approval of stock de-listing.

A listed company can only de-list its securities if de-listing is approved by a decision of the general meeting of shareholders passed by more than 50% of the voting shareholders who are not major shareholders.

If a company voluntarily de-lists from the Hanoi Stock Exchange or Ho Chi Minh Stock Exchange, the application for de-listing must also include a plan to deal with the interests of shareholders and investors. The Hanoi Stock Exchange or Ho Chi Minh Stock Exchange must consider the request for de-listing within ten and 15 days from the receipt of a valid application, respectively.

Transfer duties payable on the sale of shares in a company

Depending on whether the seller is an individual or a corporate entity, the following taxes will apply:

  • Capital gains tax. Capital gains tax is a form of income tax that is payable on any premium on the original investor’s actual contribution to capital or its costs to purchase such capital. Foreign companies and local corporate entities are subject to a corporate income tax of 20%. However, if the assets transferred are securities, a foreign corporate seller is subject to corporate income tax of 0.1% on the gross transfer price.
  • Personal income tax. If the seller is an individual resident, personal income tax will be imposed at the rate of 20% of the gains made, and 0.1% on the sales price if the transferred assets are securities. An individual tax resident is defined as a person who:
    • stays in Vietnam for 183 days or longer within a calendar year;
    • stays in Vietnam for a period of 12 consecutive months from his arrival in Vietnam;
    • has a registered permanent residence in Vietnam; or
    • rents a house in Vietnam under a lease contract of a term of at least 90 days in a tax year.

If the seller is an individual non-resident, he is subject to personal income tax at 0.1% on the gross transfer price, regardless of whether there is any capital gain.

Payment of the above transfer taxes is mandatory in Vietnam.

Regulatory approvals

The investor will need to register the capital contribution and purchase of shares if either:

  • The target is operating in one of the 267 conditional sectors referred to in the 2015 Investment Law.
  • The capital contribution and purchase of shares results in foreign investors owning 51% or more of the target’s charter capital (in particular, from below 51% to more than 51% and from 51% to above 51%).

The local Department of Planning and Investment where the target is located must issue its final approval within 15 days from the receipt of a valid registration application. However, in practice, this procedure can take several months due to the workload of certain central authorities and the lack of clear guidance documents. Therefore, the registration requirement can cause substantial delays to the whole M&A process.

In other cases, the target company only needs to register change of membership / shareholders at the Business Registration Division.

Restrictions on repatriation of profits and/ or foreign exchange rules for foreign companies

If the target company in Vietnam already has an investment registration certificate, it must open a direct investment capital account at a licensed bank in Vietnam. Payment for a share purchase by a foreign investor must be conducted through this account. The account can be denominated in Vietnamese dong or a foreign currency. In addition, if the foreign investor is an offshore investor, it will also need to open a capital account at a commercial bank operating in Vietnam to carry out the payment on the seller’s account and receive profits.

If the target company in Vietnam does not have an investment registration certificate, the foreign investor will need to open an indirect investment capital account for payment to the seller and remittance of profits.


Please do contact the author 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.




Renewable Energy Vietnam – Duane Morris – We get deals done:

  1. Describe the role of yourself/company/department within renewable energy in Vietnam. 

Duane Morris, as both advisor and advocate, guides clients through the complex legal, financial and political issues that pervade the energy industry. For both producers and policy-makers, as well as industry participants and consumers, Duane Morris attorneys help manage the dynamic challenges of the energy market. Our attorneys counsel our clients on regulations, transactions, litigation, project development, facility construction, financing, government relations and policy matters concerning energy. Our attorneys draw upon legal and industry experience with fossil fuels, nuclear power and renewable sources to find creative solutions to meet our clients’ needs. We have been involved in several renewable energy deals in Vietnam until successful close of the respective deal. We can get bankable deals done.

  1. Describe those individuals/companies/government departments with whom you operate mostly with?

Electricity Regulatory Authority of Vietnam, Institute of Energy, General Department of Energy, EVN, Ministry of Planning and Investment.

  1. Explain the purpose of each of these connections whether they be formal, contracted relationships or informal relationships

They are formal relationships, where I either acted as the Chairman of the Legal Sector Committee of EuroCham, or work on behalf of our clients to connect with the authorities to get better understanding of the regulations in the sector and propose necessary changes.

  1. Describe any customs or habits that are features of doing business in the renewable energy industry? Likewise describe any customs or habits that are features of doing business in Vietnam. Explain how these customs or habits are used?

Build and maintain relationship with Government officials at all levels (central, provincial) is a must. Meetings can be formal or sometimes invite them out for lunch/ dinner. Do not go into too much details of your project or investment plan in the initial meeting. Save it for the next meetings. The first one should only be for “getting to know each other” purpose.

Vietnam has a consensus-driven system, meaning everyone has to say something. Any person has veto right. Thus, to make sure that a decision in favor of your investment is made, you have to gain support of every person who has the decision-making right.

In addition, decision making process in Vietnam has to go through many levels and thus takes quite long. Be patient then.

You should always set up a meeting some weeks in advance. Although some officials are able to communicate in English, it is advised to have a translator/ interpreter.

  1. In your opinion, who are the ‘big players’ within the renewable energy industry within Vietnam? This applies to private companies, national companies, government departments etc. 

EVN as the sole off-taker and its generation companies are the main players in the sector. Besides, the General Department of Energy, the Electricity Regulatory of Vietnam (both under the Ministry of Industry and Trade) play an important role in setting regulatory framework.

  1. Explain any rules or laws that dictate how you must operate within the renewable energy industry and within Vietnam. 

Wind: Decision No. 37/2011/QD-TTg, Circular No. 32/2012/TT-BCT

Biomass: Decision 24/2014/QD-TTg, Circular 44/2015/TT-BCT

Solid-waste power: Decision 31/2014/QD-TTg, Circular 32/2015/TT-BCT

Solar: Decision 11/2017/QD-TTg, Circular guiding the Decision and promulgating the PPA is being drafted

There are a number of laws and documents regulating an investment in Vietnam. I just name some major laws: Investment Law, Enterprise Law, Labor Law, Commercial Law, Civil Code, etc.

  1. In your opinion, to what extent does a hierarchy exist within the renewable energy industry in Vietnam? 

The development of renewable energy industry does not catch up with economic development speed. Although the Government has set out the increasing role of this sector in the energy development plan, I am afraid that the Government may fail to meet its target due to lack of support policies and bankable PPAs.

  1. Describe the main changes that have occurred to the renewable energy industry in Vietnam in the last 10 years. 

The renewable industry in Vietnam is very young. Indeed, it only started developing since the adoption of the Wind Decision in 2011. Following that Decision, the Prime Minister continued completing the legal framework for the sector by introducing Biomass Decision and Solid-Waste Decision in 2014, and the latest Decision being the Solar Decision issued in April 2017. The adoption of these policies was the joint effort of many relevant ministries, including the General Director of Energy under the Ministry of Industry and Trade, which was established at the end of 2011 to improve state management in the sector.

In 2009,  the first factory producing solar panels with total investment of USD10 million came into operation in Vietnam. Later in 2010, GE Energy invested USD61 million to establish the first factory producing wind turbines in Hai Duong. This was considered as a boost for the renewable energy market. However, by 2015, renewable energy only accounted for 5% in the total energy output, in which there is no wind and solar power but only small hydro power.

FYI, the first wind power plant came into operation in 2012 in Binh Thuan with a capacity of 30 MW. Recently, the first solar plant in Dong Thap also commenced its operation.
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.

Thank you!

Investment Registration in Vietnam – Are we ready for the EU – Vietnam Free Trade Agreement?

The EU-Vietnam Free Trade Agreement (EVFTA) is expected to be ratified by all member countries by 2018 and take effect from 2019. It will create more opportunities and have a massive impact on the Vietnamese economy. In order to ensure full compliance with the EVFTA provisions, Vietnam’s legal system faces certain challenges. To shape the future and prepare for the fourth industrial revolution, it is vital for Vietnam to make reforms. This will prepare the way for transformation and to fully grasp the new opportunities that are coming their way.

What has been done?

Regarding the mechanism in dealing with the licensing process for a foreign invested company, different Chambers of Commerce in Vietnam have recognized significant improvement in the implementation of business and investment regulations since the effectiveness of the Enterprise Law No 68/2014/QH13 (Enterprise Law) and the Investment Law No 67/2014/QH13 (Investment law) on 1 July 2015.

In general, the Enterprise Law and Investment Law guarantee the principle of freedom of business. The licensing authority also fully complies with the prescribed time limit for the issuance of an Investment Registration Certificate (IRC) and an Enterprise Registration Certificate (ERC). These improvements have indeed improved the business and investment environment.

New laws applied in an ambiguous way?

Although there have been significant improvement in the implementation of the Investment Law, Enterprise Law and their guiding documents, there remain concerns about inconsistencies between implementation and enforcement of the current laws in certain aspects. The new laws are still holding back potential foreign investment due to many uncertainties. For example the business registration process contains issues as below:

  • Overlapping investment approvals and documents. – The procedures for investment registration are overlapped in terms of formalities and documents which are time consuming. The Investment Law and Enterprise Law set a timeline for the licensing authorities to provide the IRC (15 working days) and the ERC (3 working days). However there are many cases where authorities miss such deadlines. In addition, Decree No. 23 requires a trading license for foreign invested enterprises doing trading activities but it is not certain when such license will be issued from the application date (could be from two to several months).
  • Time limit for capital contribution. – The time limit for capital contribution regulated by law is too short (90 days). This timeline is not feasible especially for projects whose total investment capital is of high value.
  • Procedure for purchase of shares by foreign investors .- According to Article 46.2 of Decree No. 118/2015, a foreign investor is only required to obtain an approval from the Ministry of Planning and Investment under limited circumstances listed by law (e.g., purchasing 51% or more shares in a local company). However, due to the lack of specific guidelines, many foreign investors have been required to obtain an approval whenever they acquire new shares, even in a company not operating in a conditional sector.
  • Payments for transfer of shares/stakes. – According Article 36.3 of the Enterprise Law, payments for transfer of shares and receipt of dividends of foreign investors must be made through their capital accounts opened at banks in Vietnam. Furthermore, the State Bank of Vietnam requires different regulations for foreign direct investment (FDI) and indirect investment (FII). For instance, FDI payments are made to the project company’s direct capital account. Meanwhile, FII payments are made to the investor’s VND account. In fact, local banks have adopted different interpretations to these regulations, thus creating confusion for the investors.
  • Share Swaps. – The Enterprise Law does not provide for share swaps.

Calling to action

As analyzed above, the current system for an investment registration in some cases makes it difficult to enforce current laws. Accordingly, administrative reforms should be conducted to simplify procedures, namely:

Ø To require only 1 or 2 approvals for the investment registration. In doing so, electronic submission should be allowed and overlapping documents must be removed.

Ø To allow shareholders to decide the time limit for capital contribution, except for certain projects.

Ø To ensure that approval of share acquisition complies with the requirements listed by law only.

Ø The State Bank of Vietnam should provide a guidance on transfer of payments among banks.

Ø To adopt provisions relating to share swaps.


The EU-Vietnam economic relationship is a mutual cooperation. The EVFTA is among tools to facilitate investment and trade between the parties. With the EVFTA, each party aims at guaranteeing non-discrimination treatment. However, if the current laws continue being enforced as they are now, it may trigger possible violations of that principle. In order to avoid this, it is vital not only to determine the incompatible regulations and institutions in the local legal framework but also to adopt appropriate solutions. For example, the Government should enhance information exchange among state agencies to prevent overlapping documents and time consuming process, and improve a single window and inter-agency regime. The Government should also ensure that licensing authorities operate more efficiently according to the regulation.


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 General Director of Duane Morris Vietnam LLC.

Thank you!




Vietnam – Top Five Issues Affecting Real Estate Market

According to recent statistics, the property sector was behind the manufacturing and processing industry, which has so far attracted a total of USD12.84 billion, equaling 72.9 per cent of the total foreign direct investment (FDI) inflow to Vietnam.1

Laws governing real estate sector, including the Law on Real Estate Business 2014 (LREB) and the Law on Residential Housing 2014 (LRH) coming into effect on 1 July 2015. There are also other documents, for example, Decree No. 01/2017/ND-C P in effect on 3 March 2017 guiding the Land Law 2013 (Land Law). These new legislations set a legal framework for real estate industry. They have introduced breakthrough improvements by reducing investment barriers and expanding the scope of real estate business. Nevertheless, there are some remaining issues as analyzed below.

  1. Delay in issuing land use right certificate (LURC) for foreigners

Under Decree 99/2015, foreigners are not allowed to own houses in national defense and security areas indicated by the Ministry of National Defense and the Ministry of Public Security. Based on such list of areas, the provincial People’s Committee will direct local Departments of Construction to publish a list of commercial housing projects where foreign entities are not permitted to own houses (Foreign Ownership Prohibited Projects List). To date, such list has not been issued. Therefore, the provincial Department of Natural Resources and Environment has delayed the issuance of LURCs. This serious issue has caused confusion for buyers. Indeed, while the Government seems to have made a positive move in allowing foreigners to own a house in Vietnam, the lack of important guidance has shed doubts among foreigners who want to get in Vietnam’s real estate market.

  1. Uncertainties in the required approvals for residential developments

It is not clear in what circumstances a transfer of land is covered by allocation and lease by the State. In accordance with Article 32 of the Law on Investment (LOI), the in-principle investment decision (IDD) applies to projects which the State allocates or leases out land without auction, tendering or transfer. In contrast, the Land Law specifies that the only way an investment project receives land be by allocation or lease. It is uncertain under which circumstances a project can receive land by way of transfer. The absence of detailed guidelines continues to affect the normal business operations.

  1. Lengthy investment approval processes

A foreign invested company engaging in residential developments is required to obtain an IID or an in-principle investment approval (IIA) as well as an Investment Registration Certificate (IRC). If an IID is required, the IRC will be issued within 5 working days from the issuance of the IID. As the contents of both the IDD and IRC are related, the IRC requirement, in this case, is not relevant. On the other hand, for projects which require the IIA, the investor shall first obtain the IRC, set up a company and then apply for the IIA. There are circumstances where the investor has already set up the company but still not managed to get the IIA. This makes the investor unable to develop the project. In addition, the application process is complex, onerous in a sense that it takes at least 153 days. In particular, after the IRC is issued, the next step is to obtain an enterprise registration certificate, then a decision on selection of developer, the 1/500 planning approval and finally the IIA. Since the issuance of the IIA and IRC is based on the 1/500 planning approval, the requirement of an IRC it is unnecessary in case an IIA is already required.

  1. Restrictions on sources of capital

Under Article 69 of the LRH, developers of residential housing can only raise capital from sources such as loans granted by credit institutions, or financial institutions running business in Vietnam, capital contribution, investment cooperation, business cooperation, joint business, and association of organizations or individuals. It means that developers are no longer allowed to obtain capital from offshore credit and non-credit institutions. We think that there is no reason to limit the scope of residential investors to raise capital from legitimate sources. This issue, if remains existing, will affect the competitiveness of investors and their investment plan.

  1. The absence of detailed explanation of “foreign invested enterprise (FIE)”

There is inconsistency in the interpretation of an FIE among main laws governing real estate sector. The Land Law stipulates that FIEs are joint venture enterprises, 100% foreign invested enterprises, and domestic enterprises in which the foreign investor has invested via share purchase, merger, or acquisition. This regulation does not provide any ownership percentage. Meanwhile, the LOI states that, an economic organization with a foreign investment capital means an economic organization with a foreign investor being a member or shareholder, and enterprises with a foreign ownership of less than 51% will be treated the same as local ones. Different from the LOI and the Land Law, the LREB does not define a foreign invested enterprise. This inconsistency and lack of guidance result in confusion about which threshold defines a foreign invested enterprise in the LREB and create unnecessary obstacles for foreign projects.


Unfortunately, there are inconsistencies in the laws, which have caused confusion for buyers. In addition, the enforcement of current laws has been challenging due to the lack of specific guidelines. In fact, the restrictions provided in the legislations have limited the rights of investors and created barriers to foreign investment in the sector. Therefore, it is necessary to adopt consistent guidelines to avoid any delays. Vietnam should also continue to take steps to reduce administrative burdens, remove onerous requirements, and simplify complex processes. This is to ensure a bright future for Vietnam’s real estate industry.


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.

Thank you!





VIETNAM – Gaming and casino laws – Where does Vietnam stand now?

On 20 January 2017, the Government issued a long-awaiting casino business Decree No. 03/2017/ND-CP. This Casino Decree for the first time allows local Vietnamese to gamble at specific casinos approved by competent authority on a 3-year trial basis. According to public media, only 02 casinos are open to Vietnamese individuals on a 3-year pilot scheme, which are located within complex resorts in Phu Quoc District, Kien Giang Province (South Vietnam) and Van Don District, Quang Ninh Province (North Vietnam). A small likelihood that Ho Tram Resort would join the list.

Four days later, the Government issued Decree No. 06/2017/ND-CP, which also for the first time legalizesinternational soccer betting in addition to horse racing betting and greyhound racing betting. This Betting Decree together with the Casino Decree have fully opened the door for gaming business in Vietnam.

The issuance of these Decrees is the Government’s attempt to retain tax revenue resulting from casino activities and limit foreign currency loss to other neighboring countries. According to a survey, Vietnam loses about USD800 million in tax revenue annually from gamblers who cross the border to Cambodia. The loss may continue rising if the restrictions applied to local Vietnamese are not fully lifted in the future, as Vietnam’s ultra-rich population has been growing faster than any economy in the world (320% from 2006 -2016. The highest growth is expected to continue during 2016- 2026 (about 170%).

These Decrees take effect in the midst of rising tourists, especially mid- and high- income ones to Vietnam. In July 2017, the United Nations World Tourism Organization ranks Vietnam as the 7th country with highest tourism development speed, only after Nepal and Korea in the region. The General Statistics of Vietnam also announced that in the first six months of 2017, international tourists to Vietnam increase by 30.2% compared with the same period last year. Tourists from Asia mainly account for those visiting Vietnam, followed by European visitors. We expect an increasing number of gamblers from Macau, Hong Kong and China will visit Phu Quoc this year.

Almost right after the issuance of the Casino Decree, many foreign investors have looked at Vietnam’s casino market such as Las Vegas Sands, Banyan Tree, Crown, Chow Tai Fook and Sun City. Although the Casino Decree sets out a 3-year trial period, investors should not wait until such period lapses. The casino Decree is the best opportunity ever for them until now and they have been waiting for this for too long already (about 8 years). It could be risky to invest as no one knows what might happen after these three years. However, as said, the opportunity is out there and investors should rush to meet the 3-year deadline. The Casino Decree sets out very strict conditions for foreign investors to be qualified for the Certificate of registration of investment in casino-included entertainment complex, including the requirement that the project contain at least hotels, service, tourism, commercial and entertaining areas and conference centers. The minimum investment capital must be USD2 billion. Thus, for new investors, it will take them around two years to apply for the license and build the complex. For existing investors in Vietnam, they will need at least one year to expand the project to meet requirements in the Casino Decree.

History shows that casino establishments are often located in difficult economic-socio areas or areas where national security must be balanced. Thus, investors should consider these factors in addition to the investment project’s level of contribution to local tourism development and budget. Currently, there are seven licensed casinos in Lao Cai, Mong Cai, Do Son, Bac Ninh, Ha Long and Da Nang. Four complex resorts are now at the development stage, namely Van Don (Quang Ninh), Nam Hoi An (Quang Nam), Phu Quoc (Kien Giang) and Ho Tram (Vung Tau).

Casino business, as defined by the Casino Decree, means prize winning games on (i) electronic gaming machine with prizes (i.e. – men vs. machine) and (ii) gaming table with prizes (i.e. – men vs. men).

There are 2 types of gaming machines:

  1. Gaming machines used for prize-winning business for foreigners. These are defined as gaming machines with prizing programs and special equipment for casino games. Prize-winning electronic gaming machine means a specialized electronic device to play prize-winning games installed therein. The playing process between players and machines is entirely automatic.

Prize-winning electronic games are lottery games played on prize-winning electronic game machines by players who pay money and may win money.

  1. Gaming machines which the players receive prize not to be converted into cash or kind any form, or to be converted in small things such as toys, candies, etc. and not being gaming machines for prize-winning business for foreigners.

If an investor wants to do business in gaming machines Type 1 (import, distribute or do prize-winning business), they must have a Certificate of satisfaction of conditions for business issued by the Ministry of Finance. One of the conditions to get such certificate is they must have a “tourism residential establishment which has been classified as five star or higher by the competent authority”. An investor then needs to cooperate with such hotels in Vietnam on a BCC contract basis.

If an investor wants to do business in gaming machines Type 2, there is no restriction on foreign ownership. However, the machines must satisfy certain technical requirements and if they intend to open a gaming shop, such shop must also comply with conditions in law.

Meanwhile, casino business is also treated as a conditional business sector the satisfaction of which is evidenced by a certificate of satisfaction of casino business conditions (“Casino Business License”). A casino must be located inside a larger resort complex or the like. Local Vietnamese will be permitted to gamble at specific casinos approved by competent authority on a 3-year trial basis (i.e. – calculating from the first day opening of the authorized integrated resorts) if they are 21 year-old or above and has monthly salary of VND10 million (about US$440) or more, just to name a few conditions. Number of gaming tables and gaming machines depends on investment size. That is, for each US$10 million lot that the investor actually releases, a package of one gaming table and ten gaming machines are permitted.

Growing mid to high income people will have more demand for high class integrated resorts. If the Vietnamese are allowed to gamble, development in integrated resorts with casino is a smart decision to make profit in Vietnam. In addition, the government will benefit from tax payments from these resorts and casino businesses.


If you have any question on the above, please do not hesitate to contact Dr. Oliver Massmann underomassmann@duanemorris.com. Dr. Oliver Massmann is General Director of Duane Morris Vietnam LLC.

Thank you very much!






Vietnam Solar Power  – Taking stock of Vietnam’s solar energy potential – What you must know:

With the latest official issuance of a Solar Decision, Vietnam has made steady progress on its solar energy potential. The FIT is introduced in the Solar Decision to be 9.35 UScents/ kWh for grid-connected solar projects. The draft solar Power Purchase Agreement has also been recently introduced in a draft Circular guiding the Solar Decision by the Ministry of Industry and Trade.

This webinar offers valuable insights into the newly formulated framework for Solar PV in the country and covers:

  • The roles and obligations for EVN carried forward by the draft
  • The bankability of the draft solar PPA, its guarantee scheme and room for negotiation
  • Insights how to make most of the opportunity for PV in the market – the 30MW off-grid rule – Getting Solar Power Project done in reasonable time:

More information of the webinar can be found here: https://www.pvtrademissionvietnam.com/webinar;

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








On 11 April 2017, the Prime Minister officially approved the issuance of Decision No. 11/2017/QD-TTg on supporting regime for the development of solar power projects in Vietnam.

We note below some major points in this Decision:

Feed-in-tariff (FIT) rate

EVN is responsible for buying the whole electric output from on-grid solar power projects with the electric buying price at the point of electricity receipt to be 2,086 Vietnamese dong/kWh (equivalent to 9.35 UScents/kWh) (VAT excluded). This FIT only applies for on-grid projects with capacity of solar cell being over 16% or of solar module being over 15%.

There is no FIT for rooftoop solar power projects if such projects are not grid-connected. This is one of the differences compared with the previous Draft Solar Decision which sets a seperate FIT for rooftop projects when they are connected to the grid.

The FIT is based on the VND/USD exchange rate issued by the State Bank of Vietnam on 10 April 2017 (USD 1 = VND22,316). This FIT will be adjusted according to the fluctuation of the VND/USD exchange rate as specified in the standard Power Purchase Agreement (PPA) to be issued by the Ministry of Industry and Trade. We note that the solar PPA will have a term of 20 years from the commercial operation date of the solar plant and can be extended/ renewed based on regulations in effect at that time.

Investment incentives

Investment capital: Investors may mobilize capital from domestic or overseas organizations and individuals to invest in solar power projects.

Import duty: Solar power projects are exempted from import duty on goods imported to create fixed assets of the projects; components, materials and semi-finished products which are not available at home for the project’s operation.

Corporate income tax: solar power projects will also enjoy the same corporate income tax exemption and reduction as projects in sectors receiving investment incentives according to the current regulations on taxation. For example, corporate income tax rate of 10% will be applied for 15 years, tax exemptions within 4 years and tax reduction by 50% in the next 9 years.

Land: Solar power projects, lines and transformer stations connected to the national grid enjoy the same exemptions and reductions in land use, land rental as projects being entitled for preferential investment treatment. Such incentives, among other things, include exemption of land rental within 3 years from the operation date of the project.

Projects included in the Power Master Plan

The Power Master Plan, whether it is national or provincial, only applies for on-grid solar projects.

Projects of 50MW or below will be approved by the Ministry of Industry and Trade to be included in the Power Master Plan, while those of more than 50MW will be approved by the Prime Minister.

Thus, it could be understood that off-grid and rooftop projects do not have to be included in the Power Master Plan. This will save the investors the hassle of negotiating the PPA with EVN.

The Decision has effect from 01 June 2017 to 30 June 2019.


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



Lawyer in Vietnam Oliver Massmann – First time in history – Government Procurement Tender Decisions will be subject to International Arbitration and Investments subject to Investor State Dispute Settlement And Enforcement

Vietnam is one of the countries with the highest ratio of public investment to GDP on the world (i.e., 39% annually from 1995). However, Vietnam has not agreed to coverage of their government procurement by the Government Procurement Agreement of the WTO (GPA). Indeed, Vietnam for the first time has undertaken to do so in a recent Free Trade Agreement with the EU (EVFTA).

Currently Chinese companies profit the most from Vietnam’s procurement market. 90% of power, mining, manufacturing, ferrous and chemical projects of state-owned companies in Vietnam are awarded to Chinese contractors. China State Construction Engineering Corp (CSCEC) keeps winning important contracts although it has a poor track record and has even been blacklisted by the World Bank due to bribery charges. With the EVFTA that attractive market would be open to European companies which probably would be welcomed.

How is government procurement addressed under the EVFTA?

The EVFTA on Government Procurement mainly deals with the requirement to treat EU bidders or domestic bidders with EU investment capital and Vietnamese bidders equally when a government buys goods or requests for a service worth over the specified threshold. Vietnam undertakes to timely publish information on tender, allow sufficient time for bidders to prepare for and submit bids, maintain confidentiality of tenders. The EVFTA also requires its Parties assess bids based on fair and objective principles, evaluate and award bids only based on criteria set out in notices and tender documentation, create an effective regime for complaints and settling disputes, etc. These rules require all Parties, especially Vietnam, in the context of China’s bidders predominantly win the bids with cheap offer price but low-quality services, to reform their bidding procedures and protect their own interests by disqualifying tenders with poor performance and low capacity.

What is the covered procurement?

Government procurement of goods or services or any combination thereof that satisfy the following criteria falls within the scope of the EVFTA Government Procurement rules:

Criteria EVFTA
Monetary values that determine whether procurement by central government is covered under an agreement 130,000 Special Drawing Rights (SDRs) (US$191,000) after 15 years from the entry into force of the agreement


Initial transitional threshold: 1.5 million SDRs (US$2.23 million)

Procurement of construction services by central government entities Initial threshold: 40 million SDRs (US$58.77 million)

After 15 years, 5 million SDRs (US$7.35 million)

Entities covered 22 central government bodies


42 other entities (including 2 utility-related state-owned enterprises, 2 universities, 2 research institutes and 34 public hospitals under the control of the Ministry of Health


Sub-central government coverage: including Hanoi and Ho Chi Minh

Exclusion of preferences for SMEs Broad exclusion
Application of offsets Based on value of a contract

Currently the EU investors are expressing great interest in Long Thanh Airport project, whose total investment amount is approximately USD16 billion. This project is located in Dong Nai, 40km East from Ho Chi Minh City. When it is completed in 2025, it will become the biggest airport in Vietnam. The project is now at the feasibility study stage. Its result will be submitted to relevant authorities for approval in Q3 2017. It is expected that in 2019, the investor – Aviation Corporation of Vietnam will select the main constructor for the project. Selection form and requirements are not available at the moment. This is a great opportunity for European investors, considering that the next phase of the project will start when the EVFTA is already in effect.

How to appeal Government tender decision?

EVFTA makes it possible that the EU could sue Vietnam (or vice versa) for its tender decisions according to the dispute settlement by arbitration rules in a separate chapter of the EVFTA. The violating party must take all necessary measures to promptly comply with the arbitral decision. In case of non-compliance, as in the WTO, the EVFTA allows temporary remedies (compensation) at the request of the complaining party.

Enforcement of arbitral awards

In disputes regarding investment (for example, expropriation without compensation, discrimination of investment), an investor is allowed to bring the dispute to the Investment Tribunal for settlement (Investor-to- State dispute settlement mechanism – ISDS). The final arbitral award is binding and enforceable without any question from the local courts regarding its validity. This is an advantage for European investors considering the fact that the percentage of annulled foreign arbitral awards in Vietnam remains relatively high for different  reasons. According to report of the Supreme Court of Vietnam, the biggest reason lies in the relevant courts which are responsible for implementing the procedures for recognition and enforcement of foreign arbitration bodies. Specifically, in-charge judges do not fully understand nature of Vietnam’s commitments to New York Convention 1958, wrongly apply Vietnamese proceeding rules and, in some cases, are simply corrupted by the losing parties, often the local defendants.

Different from investment related disputes, disputes over a Government tender decision must be brought to the arbitration panel by a Government against the other Government.  It is not clear whether local courts could annul arbitral awards of the arbitration panel regarding a wrongful tender decision.  However, it is gradually becoming a less significant issue as over time, the number of rejected enforcement of arbitral wards in Vietnam is substantially on decline. The recognition and enforcement process is also shortened and is getting more straightforward and transparent. This is thank to efforts of the Supreme Court of Vietnam in training courts of lower levels, voices raised by foreign business communities and drastic changes in Vietnam’s proceeding laws recently.

We believe that the procedural and legal changes regarding government procurement will enable EU exporters to reach markets that were closed before and compete more effectively.


If you have any question on the above, please do not hesitate to contact Mr. Oliver Massmann under omassmann@duanemorris.com . Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Thank you very much!