VIETNAM – COVID 19 – IMPLEMENTATION OF LAWS NOT UNIFIED IN ALL PROVINCES – On the continuity of business during COVID-19 pandemic

The COVID-19 outbreak has been declared a public health emergency of international concern by the World Health Organization, causing huge impact on people’s lives, families and communities. Organizations are under certain concerns about the continuity of their business as how long the pandemic lasts for, a possible suspension order, unwanted contract terminations, force majeure issues, reduction of price, etc.

We understand your concerns and we trust the latest update on the Government’s instruction on the business continuity might provide you with some useful information at this stage.

1. The businesses entitled to continue operation

(“Directive 2061”) to instruct on the business that can continue operating during social distancing period i.e. until 15 April 2020 (and a possible extension to 30 April 2020 as recommended by the Ministry of Health of Vietnam), which includes:
• Factories, manufacturing units;
• Transport works, construction;
• Businesses providing essential services and essential goods, i.e. foods, medicine, petrol, oil, electricity, water, fuel, etc.);
• Education units, banks, treasury, services directly connecting to banks and auxiliary to businesses (i.e. notary offices, lawyers,registry of secured transactions, etc.), post, telecommunications, auxiliary services for transportation, import and export, health examinations and treatmenst, funeral, etc.
The above “etc.” phrase literally indicates that the list units permitted to operate is not exhaustive.
Directive 2061 allows each province in Vietnam to implement the PM’s instruction in their own way by saying the chairman of each province shall further instruct on this. Unfortunately, the implementation of the Directive is not unified across Vietnam territory.

2. The implementation of Directive 2061 in some areas

2.1. Hanoi City
Hanoi took a strict approach from the start of the pandemic prevention in its Directive 05 on 31 March 2020. Hanoi PC ordered non-essential shops and service-providers to suspend their activities.
On April 2020, the Department of Justice of Hanoi issued Document 925/STP-PBGDPL clarifying a number of measures to cement the social distancing requests. So far, Hanoi mainly focus on resitricting operations of the restaurants, consumers’ goods or other public places only.

2.2. Ho Chi Minh City
Ho Chi Minh took a totally different approach, that it issued a Scoring System under Decision no.1203/QD-BCD. The Score System comprises a set of sub-indexes which does not base on the business lines, but based on the quantity of workers, the density in workshop, workers using sanitizers and wearing masks, etc. If the score of an entity is low or average, its operation can carry on, otherwise it must suspend.

2.3. Hai Duong Province

Hai Duong province takes a similar approach as Hanoi City. However, it has more regulation that factories do not carry out 3rd shifts. Hai Duong PC also requires a submission of a written commitment from all businesses in the province.

3. Required measures for businesses continuing its operation

Although the approach is different in each area, the required measures to ensure the safety and prevent the epidemic seems unified. The fortunate business which falls within the scope of being permitted to continue must implement the follows:
• Requiring employees to wear masks and equipping enough facility to prevent and control the epidemic as advised and recommended by health authorities;
• Requiring employees to conduct health report and comply with restrictions on moving, contact and communication;
• Suspension of unurgent activities, reduction of the concentration of employees;
• Organization and management of the transportation for employees to and from work (if any) must ensure the prevention of infection.
In case of incapable to ensure the above measures, business must suspend.
We trust some of the above info is useful for you at this stage. If you are not clear if your business in your respective Province can be affected by any of the above measures and requirements, please do not hesitate to contact us.

Please do not hesitate to contact the author Dr. Oliver Massmann under or any other lawyer in our office listing 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!


1. It’s been observed that corruption in the non-state sector “has been growing rampantly and with complexity, especially in the areas of loaning, bidding, contracting, and in unofficial costs like gifts, tours, or job generation”. Will this law prevent or stop these various modes of corruption?

OM: Whether the law can prevent or stop these various modes of corruption depends on how well the law is enforced. Even if the law is written perfectly, without effective enforcement of said laws, they will only remain meaningless words on paper. Therefore, whether a law has a preventative or deterrent effect depends on how well the law is enforced. However it must be stated clearly that it is not possible for a law to stop all acts that it forbids – that is not possible in any country, for any law.
“Modes of corruptions” mentioned above can be classified into three categories: activities within one non-state actor, activities between two or more non-state actors, and activities between non-state actors and state actors.

Corruption in the areas of bidding, lending, contracting occur between non-state actors or between non-state and state actors. The regulation of commercial activities between non-state actors should be left to the realm of civil and contract law, and potentially criminal law for very serious offences to define what is legal and what is not, rather than corruption law, as these transactions are conducted purely in the private sector.

As for corruption between a non-state and state actor, including official costs, it is more efficient and realistic to target the corruption within the state actor rather than the non-state actor. Corruption in this situation can only happen if the state actor is susceptible and willing to receiving bribes, embezzlement or can be easily “bought”. Anti-corruption law should ensure that state actors are deterred from receiving bribes and unofficial costs, and criminal law should ensure the punishment of non-state actors for carrying out such activities. On top of that, private companies are profit-driven. No business would like to increase their costs unless absolutely necessary. Unfortunately without such unofficial costs, the private businesses are unlikely to be able to get anything done at all, as the authorities and state actors may purposefully hinder or create difficulties for the non-state actors. Thus, many non-state actors, especially SMEs, must make the sacrifice of engaging in corruption and bearing the costs in order to keep their businesses going. The prevention of such various modes of corruption must begin with the state sector.

2. The law also states that government officials cannot consult individuals and organizations in both state and non-state sectors in tasks that are related to state secrets, secret work, and work in which they have the authorization in or have part of the authorization in (Article 20)
Will this create difficulty in how businesses function well without government experts’ advice? The law forbids consultation but does not imply to forbid meetings or restrict communications. Will this be a loophole?

OM: It is reasonable to forbid government officials to consult other individuals and organizations in the non-state sector on information related to state secrets, secret work and work in which they have the authorization in or have part of the authorization in, as this may affect national security and public order. As for consultation with state actors, it should be clear what purpose of the consultation is, the position and security clearance of both parties sharing and receiving the information, and whether the consultation is necessary.
However, in order for this provision to be effective, there must be a clear definition as to what constitutes “state secret” or “secret work”, to avoid abuse of the law such as state actors unreasonably withholding information from non-state actors. On top of that, the inclusion of only consultation is also potentially a loophole, unless the law is left open on purpose. Therefore a clear definition for “consultation” is also needed to clarify which acts constitute consultation and is thus forbidden.

3. How would this affect FDI and foreign businesses in Vietnam and their needs to remain “private” as they call themselves?
Nguyen Quang Vu, a business lawyer from Venture North Law Limited, told local press that the provisions are “irrational”. He also said that private firms have their own regulations about asset transparency and control and supervision over all activities of their heads. Thus the state should not interfere in their activities. Private firms often have many stakeholders, whose interests are protected by the law and the firms’ regulations. The stakeholders are responsible for their assets, not the state.
Do you agree with him? Why/why not?

OM: Private firms may have their own regulations about asset transparency and control supervision over the activities of their employees and executives. I agree with the fact that laws should not interfere with businesses’ activities. The firms may have internal motivations to do this, for example to prevent embezzlement and abuse of corporate funds, ensure business efficiency and trust.

Having said that, some external motivations can also be useful. Providing clear laws on the illegality of such acts can also incentivize businesses to create internal regulations that comply with laws, but also give the businesses a legal recourse in the event that an individual within their company does abuse the regulations. Without legal consequences, the only recourse for a business in such situations may be to dismiss and civil action against the individuals. The additional severity from legal consequences can be both a deterrent and correctional mechanism.

The key point here is that the law-makers must find a balance between upholding the benefits of anti-corruption whilst not overly impeding upon the business’ interests, and also comply with the provisions of international agreements of which Vietnam is a member.

4. What’s your comment on the expansion of Vietnam’s anti-corruption fight to private sector? Considering the existing Criminal Law also covers these entities with specific punishments? What else can the government do? Do you foresee any chilling effect this law would have on legitimate private business?

OM: As mentioned in question 3, corruption within the non-state actor can be classified into three categories: corruption within one non-state actor, corruption between two or more non-state actors, and corruption between non-state actors and state actors.

The justification for expanding corruption to include the non-state sector is that such corruption reduces competition in the market, negatively affects the businesses’ operations and in turn hampers the country’s economy as a whole. Expansion of corruption to the non-state sector will also be consistent with Criminal Code 2015 regulating the responsibilities of individuals within private businesses for acts of embezzlement and bribery.[1]

It is clear that the intention behind including non-state actors in the new Anti-corruption law is to target corrupt acts of individuals in a non-state actor, especially those that operate on a large scale such as public companies, commercial banks and investment funds which handle extremely large sums of money and can potentially impact the rights and benefits of many other individuals and businesses. Although many of such acts are also already covered by the Criminal Code 2015, nevertheless the duplication in the Anti-Corruption Law may hold a symbolic significance, to clearly signify the severity and also moral and political implications of such acts.

The law also needs to find a balance between regulating and preventing corruption in the private sector, but also a law not too intrusive that it over-burdens legitimate private businesses, especially SMEs where they are less likely to have the resources to bear the costs.Thus the current inclusion of the whole private sector in anti-corruption law is too expansive. The law should not be all-inclusive, but perhaps include only certain private sector actors to avoid over-burdening the private sector because the Criminal Code 2015 covers large parts already. Overlapping regulations do serve nobody.

Please do contact Dr. Oliver Massmann under or any other lawyers in our office listing if you have any questions on the above. Dr. Oliver Massmann is the General Director or Duane Morris Vietnam LLC.


Under Vietnamese jurisdiction, competition sector is generally governed by Law on Competition No. 27/2004/QH11 issued by National Assembly dated 3 December 2004 (“Competition Law”).
Nevertheless, Penal Code No. 100/2015/QH13 dated 27 November 2015, as amended and supplemented in 2017 (“Penal Code”) which has just come into effect on 1 July 2017 is also to cover competition-related crimes by creating potentially severe penalties for both individuals and institutions including monetary fines and imprisonment.
At the time of this alert, it is not purely clear when to apply administrative sanction under Competition Law and when the violation is serious enough to be deemed as a crime under Penal Code. Another query would be how to determine if a crime is conducted by an individual or by a company, given that such individual is working for the company in question. In other words, whether the penalty will impose on the individual offender or on the company for which he/she is working is still arguable.
While awaiting further guidance on how these new offences will be interpreted as well as their full implications in light of the competition scheme in Vietnam, we have outlined the basic information in this legal alert, mainly focusing on the penalties applicable to a violating company.

On the one hand, agreements in restraint of competition are addressed under Article 8 of the Competition Law as below:
(i) Agreements either directly or indirectly fixing the price of goods and services;
(ii) Agreements to share consumer markets or sources of supply of goods and services;

(iii) Agreements to restrain or control the quantity or volume of goods and services produced purchased or sold;

(iv) Agreements to restrain technical or technological developments or to restrain investment;

(v) Agreements to impose on other enterprise conditions for signing contracts for the purchase and sale of goods and services or to force other enterprise to accept obligations which are not directly related to the subject matter of the contract;

(vi) Agreements which prevent, impede or do not allow other enterprises to participate in the market or to develop business;

(vii) Agreements which exclude from the market other enterprises which are not parties to the agreement; or

(viii) Conclusion in order for one or more parties to win a tender for supply of good and services (bid-rigging).

Following to this, Article 9 of Competition Law prohibits all agreements that fall under foresaid items (vi), (vii) and (viii); whereas agreements falling under items from (i) to (v) are only prohibited where the combined market shares of the parties to the agreement is at least thirty per cent (30%), subject to certain potential exemptions under Article 10 of Competition Law.
More specifically, Article 118 of the Competition Law provides a fine of up to ten per cent (10%) of the previous year’s turnover of the offender in case of breaches under Article 9.
On the other hand, the new Penal Code now drastically alter the regime for regulations on anti-competitive agreements, especially for a legal entity being a company.
Pursuant to Article 217 of the Penal Code, a monetary fine of up to VND 3 billion (equivalent to US$ 132,000) will apply for the company that directly participate in or carry out certain acts in violation of the regulations on competition where (a) such conduct results in illegal profits of up to VND 3 billion (equivalent to US$ 132,000) or (b) losses to others of up to VND 5 billion (equivalent to US$ 220,000). The prohibited subject matters for these agreements would comprise:
• Preventing participation or development of other businesses in a market;

• Removing a non-party from a market; and

• Where the parties to the agreement have a combined market share of at least 30%:

• Price fixing, directly or indirectly;

• Allocating markets or supplies;

• Limiting or controlling volumes;

• Limiting technology development or investment; and

Imposing obligations not directly related to the subject matter of the contract.

Putting that aside, we note that the sanction for a company may increase to VND 5 billion (equivalent to US$ 220,000) or the operation suspension of up to 2 years once any of the statutory aggravating circumstances appears. Further, penalized companies, in addition to potential fines, may be prohibited to carry out certain business activities as well as to raise capital for the up-to 3-year duration.

As addressed at the very beginning, it is being expected form the law-making team that there would be clarifications on (i) whether conduct will be subject to administrative penalties under the Competition Law or to criminal prosecution under the Penal Code and (ii) the proposed scope of activity that may bring on liability for individuals conducting the prohibited agreement.

Bottom line, a company should consider thoroughly reviewing its business practices to ensure not to fall under the scope of sanctions from both Competition Law and Penal Code perspectives.

Also important, there exists a legal risk where the conduct of company’s employees is somehow attributed to the company. With a view to minimizing such risk, it is strongly recommended that the company, in its internal policies, including without limitation to the Internal Labor Regulations (“ILR”), should expressly addressed its employee’s independent and separate obligations, i.e. not in connection with those of the company in light of competition violations, assuming that such employee’s breaches are not employment-related assignments. On this basis, Company would very unlikely to bear the penal liability for what its employee does outside the contractual job description.

If you have any question on the above, please do not hesitate to contact Dr. Oliver Massmann under Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
Thank you very much!

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 Dr. Oliver Massmann is General Director of Duane Morris Vietnam LLC.

Thank you very much!








At the time of this article, the Law on Amendment and Supplementation is presumably in the technical correction phase at the National Assembly and the final official version will take some weeks or even months to be passed. But based on the latest draft submitted for the National Assembly’s approval dated 10 March 2017, we understand that some of the key changes in the Law on Amendment and Supplementation in light of related-employment crimes are as follows.

  1.            Crime of illegal dismissal of employees is still existing!

First and foremost, it is worth noting that crime of illegal dismissal of employees shall be subject IMPRISONMENT/ JAIL of up to one (1) year.

Strictly speaking, it is most likely that the law-makers of Vietnam do not have any intension to lighten the statutory penalties for this crime. Therefore, for avoidance of legal risks, all and every employers and/or their persons-in-charge are strongly recommended to stay as cautious as possible whenever conducting any behaviors (including but not limited to illegal dismissal acts) that may make the dismissed employees or their families fall into difficult situations or go on strike.

  1. Clearer description of crime on employment of under 16 employees

With respect to this crime, Law on Amendment and Supplementation expressly introduces a formal checklist of (a) hard, harmful or dangerous works and (b) extremely hard, harmful or dangerous works for the purpose of determination of the crime.

In addition, one more additional penalty has just been supplemented where the offender in question might be forbidden from practicing his/her profession or doing certain jobs for up to five (5) years.

  1. Violations against regulations of law on occupational safety and hygiene

Under Law on Amendment and Supplementation, any person who violates regulations of law on occupational safety and hygiene, as the case may be, shall be subject to:

(i)            a fine of up to VND 100 million (equivalent to US$4,444);

(ii)           up to three-year non-custodial reform; or

(iii)          up to twelve-year imprisonment.

Please be noted that prohibition of the offender from holding certain positions or doing certain jobs for up to five (5) years may also be applied as an additional penalty.

ACTION RECOMMENDED: Finally, what we advise you to carry out right this second would be:

  • to update your Internal Labour Rules with a Vietnam-law fully-compliant dismissal procedure; and
  • to keep your managing team informed of these new stipulations soonest possible.

We are fully qualified and very pleased to assist you with your implementation of these necessary actions.


Please do not hesitate to contact Oliver Massmann under 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.






 Following the issuance of the Investment Law (2014), the Government of Vietnam is speeding up the drafting of a new decree (the Draft Decree) guiding trading and distribution of foreign invested economic organizations (FIEOs) in Vietnam.  The Draft Decree, once issued, will replace Decree 23 on trading and distribution of foreign invested enterprises dated 12 December 2007 (Decree 23).

What is new in the Draft Decree?

Below are some new features introduced by the Draft Decree

  1. [Effective] expansion of business lines to be subject to baby permits;
  1. Demerger of baby permits from the investment registration certificate (IRC);
  1. Delegation of the licensing authority with respect to issuance of the baby permits to provincial department of industry and trade (DOIT);
  1. Setting out circumstances where FIEOs are exempt from baby permits;
  1. Clarification of criteria for establishing retail outlets including economic needs test (ENT);
  1. More detailed licensing process.

Detailed comments on the Draft Decree

  1. General understanding of baby permit requirements

For a general understanding, for some specific business sectors, the Investment Law requires foreign investor and their local companies to satisfy 02 layers of conditions before officially entering the market.  The first one is investment conditions (điều kiện đầu tư) and the second being business investment conditions (also know as business condition or baby permit), (điều kiện đầu tư kinh doanh).  Their major differences are presented in the below table:

Criteria Investment Conditions Business Conditions
Function Market access conditions applicable to foreign investment Professional conditions in order to actually conduct business or investment activities
Time of application Before investment in Vietnam After investment in Vietnam
Applicable Entities Foreign investors and FIEOs with 51% or more foreign ownership (if acting as an investor in another entity) Basically, all FIEOs and local companies.
Forms Investment registration certificates or ‘approval’ of the DPI in case of formation of new entities or acquiring existing local companies respectively Sub-licenses such as licenses, certificates, etc.  In case of trading and distribution by FIEOs, it is the approval for sale and purchase of goods of the DOIT.
Relevant  Authority DPI/industrial zone authorities at provincial levels. State bodies of many levels. In case of trading and distribution, the DOIT
  1. Expanded coverage of baby permit requirements

The Draft Decree makes a specific list of ‘purchase and sale of goods’ and ‘activities directly related to the purchase and sale of goods’ by FIEOs, namely:

  1. Trading (import and export) rights;
  2. Distribution;
  3. Commercial promotion services
  4. Commercial intermediary services
  5. Goods leasing services
  6. E-commerce services
  7. Logistics services;
  8. Commercial assessment services
  9. Goods auction services
  10. Goods and service bidding services
  11. Commodity exchange
  12. Other activities directly related to the purchase and sale of goods’.

For the purpose of this note, the above services/activities are collectively referred to as ‘Conditional Businesses’

Comparing with Decree 23, albeit referring to a variety of trading related activities (e.g. – advertisement, promotion, etc.), mainly subjects trading and distribution by FIEOs to baby permits.  Hence, with activities being specified as above, it is more likely that licensing authorities would request all Conditional Businesses to be subject to baby permits.  If this is the case, this fact can be seen as a ‘one step back’ in terms of relaxing licensing process for foreign investment.  Specifically, licensing authorities will be given discretion in granting baby permits for Conditional Businesses which are in fact fully opened to foreign investment.

  1. Demerger of baby permits from the investment registration certificate (IRC); 

Previously, investors applying to setup a trading/distribution FIE need only to obtain an IRC which simultaneously serves as a baby permit.  However, with the delegation of the IRC licensing authority from the provincial people’s committees to DPIs under the Investment Law, it is still unclear as to licensing process for issuance of baby permit.

The Draft Decree gives the answer.  DPIs and the DOITs are responsible for the IRCs and baby permits respectively.  DOITs are required to obtain approvals of the MOIT and, under some circumstances, relevant State bodies.  This new licensing process, when implemented, will effectively create a 03-layer approval for FIEs which are (i) IRCs at DPI; (ii) baby permits at DOIT and actually approvals at MOIT.  This is even more critical because in order for the DPI to issue IRCs including Conditional Businesses they, as a matter of practice, often seek the DOIT/MOIT’s greenlight.  As such, 04 rounds for approvals would be required for some service sectors that Vietnam has been open to foreign investors for years under its respective international treaties.

Issuance of a decree on trading rights and distribution activities of foreign invested economic organizations (FIEOs) in Vietnam.

  1. Delegation of the licensing authority with respect to the baby permits to provincial department of industry and trade (DOIT);

As said, the DOIT will be responsible for issuing baby permits.  In doing so, it must first seek greenlights of the MOIT.

  1. Baby Permit Exemption

There are roughly 04 possible scenarios where FIEOs are exempt from baby permits

a.FIEOs import/export/process or dispose products in accordance with its registered businesses or in combination with their registered services;

b.FIEOs already licensed to conduct trading and distribution rights;

c.FIEOs already licensed to provide logistics and commercial assessment services; and

d.FIEOs with foreign owner holding not more than 35% voting shares (in case of joint stock companies) or 35% charter capital or a lower voting ratio stipulated in charter (in case of limited liability companies).

With respect to FIEOs in item (b) and (c) above, it is not clear as to whether such exemption applies to FIEOs established before or after the effective date of the Draft Decree.

  1. Retail Outlet Criteria 

Retail outlets by FIEs are still subject to ENT criteria except for:

a.The first retail outlet;

b. A retail outlet other than the first one having area of less than 500m2 in commercial centers; or

c.Retail outlets other than the first one having total area of less than 500m2 in the same commercial centers.

The Draft Decree introduces more specific metrics to measure ENT criteria including geographic size of the relevant area, number of existing retail outlets, possible impacts of retail outlet to be applied on the stability of market, population density and possible contribution of the retail outlets to the socio-economic developments of the area.

  1. Licensing Process 

FIEOs send the application file to the licensing authority for issuance of baby permits per post, online or direct submission.

The licensing period varies by nationalities of the investors/FIEOs.  For example, investors from jurisdictions which have entered into international treaties with Vietnam on market access, the period for the MOIT and other State bodies to give opinions will be 07 working days only.  Other investors (e.g. – investors from BVI or other tax heavens) may suffer a 15-day licensing period.  The direct licensing authority (e.g. – the DOIT) will issue baby permits within 05 days from the date of receipt of greenlights of the MOIT and other relevant State bodies, if any.  In case of refusal, explanations must be given to the applying entities.


Please contact Oliver Massmann under; in case you have questions on the above. Oliver Massmann is General Director of Duane Morris Vietnam LLC.

Lawyer in Vietnam Oliver Massmann Casino Laws – Latest Update

The final draft of the casino decree (‘Casino Decree’) has been passed by the Ministry of Justice and Government’s Office. It is now on the table of the Politburo for their comments, which are as always, the most important. It is expected that the Casino Decree would be issued on 1 July 2016. Nevertheless, there is no absolute guarantee on this prospect. This is because in order for a decree to become effective, it must be publicized on Official Gazette first and waits for a 15-day period from the first publication on the Official Gazette.
For many reasons, the text of the Casino Decree has not been made public. The Ministry of Finance has been successful in keeping the draft Casino Decree under secrecy. Again, whether Vietnamese residents are permitted to enter casinos in Vietnam is a big question that may wait for decision of the highest level of Vietnam’s political system.
Recently, the Ministry of Public Security (MPS) has proposed a draft decree that lists casino as a conditional business which is subject to license of the MPS with respect to social orders. A very interesting point is that the draft decree only prohibits Vietnamese from playing on gaming machines. It is important to note that no such prohibition is mentioned with respect to Vietnamese’s playing in casinos. This may give a hint that Vietnamese may enter casinos if they are ‘permitted’. This fact corresponds to provisions of the new Penal Code that makes it very clear that only ‘illegal’ gambling is punished.
So, though not 100% sure, more likely that Vietnamese may enter casinos and gamble but with specific conditions.
At present, pending the issuance of the Casino Decree, all projects on casino are put on hold. we will follow up and keep you updated.
Please do contact the author Oliver Massmann under if you have any questions on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Lawyer in Vietnam Oliver Massmann New Decree guiding the Law on Investment What you must know:

On 12 November 2015, after months of delay, the Government has finally issued Decree No. 118/2015/ND-CP (“New Decree”) on detailing and guiding the implementation of certain provisions of the Law on Investment.
Set out below are major worth-noting points in this New Decree:
Investment conditions for foreign investors
Investment conditions for foreign investors are defined as conditions that foreign investors must satisfy when investing in conditional business sectors applicable for foreign investors pursuant to Vietnam’s laws, ordinances, decrees and international treaties on investment.
These conditions include:
– Conditions on foreign ownership of charter capital in an economic organization;
– Conditions on investment form;
– Conditions on scope of investment activities;
– Conditions on a Vietnamese partner participating in investment activities; and
– Other conditions pursuant to laws, ordinances, decrees and international treaties on investment.
The above conditions must be satisfied when foreign investors:
– Making investment to establish an economic organization;
– Contributing capital, purchasing shares, capital contribution portion in an economic organization;
– Investing in the form of business cooperation contract;
– Receiving investment projects transferred from another investor or other cases of receiving transferred investment projects; or
– Amending or supplementing investment business lines or sectors of foreign invested economic organizations.
Conditional business sectors applicable for foreign investors as well as the corresponding conditions are not included in the New Decree but will be published on the National information gate on foreign investment. For business sectors whose conditions are not specified anywhere in Vietnam’s WTO Commitments and other international treaties on investment or not yet committed (“Uncommitted Sectors”), the investment registration authority must seek approval of the Ministry of Planning and Investment and other specialized ministries on the foreign investment.
It is worth noting that the New Decree recognizes ‘licensing precedent’, meaning where foreign investment in Uncommitted Sectors has been approved and such Uncommitted Sectors have been published on the National information gate on foreign investment, any later foreign investors making investment in the same Uncommitted Sectors will no longer need the approval of the specialized managing ministry.
Licensing procedures on investment registration and enterprise registration by foreign investors
Instead of go through 2 different steps, namely (1) applying for issuance of an Investment Registration Certificate; and (2) applying for issuance of an Enterprise Registration Certificate when establishing an enterprise in Vietnam, foreign investors now can apply for these two certificates at the same time. Specifically:
– Foreign investors submit the applications for issuance of an Investment Registration Certificate and an Enterprise Registration Certificate to the investment registration authority;
– Within 01 working day from the receipt of the applications, the investment registration authority sends the application for enterprise establishment registration to the Business Registration authority for review and notifying the investment registration authority of its decision;
– If there is any request for amendments or supplements to either the application for investment registration or enterprise establishment, the investment registration authority will provide the investors a single response within 5 working days from the receipt of the applications.
The coordination regime between the investment registration authority and the business registration authority will be detailed by the Ministry of Planning and Investment later.
Securing the implementation of an investment project
Investors that are granted, or leased land by the Government, or allowed by the Government to change the land use purpose, with certain exceptions, must make a deposit from 1-3% of the total investment capital recorded in a document approving the investment plan or in the Investment Registration Certificate based on a progressive basis, in particular:
– For capital part of up to VND300 billion, the deposit rate is 3%;
– For capital part from VND300 billion to VND1,000 billion, the deposit rate is 2%;
– For capital part from VND1,000 billion, the deposit rate is 1%.
M&A procedures

There is explicitly no requirement of application for Investment Registration Certificate in acquisitions of target companies by foreign investors.
However, foreign investors must register its acquisition of the target company if:
– They contribute capital to, purchase shares or capital contribution portion of an economic organization doing business in conditional sectors which are applicable for foreign investors;
– The capital contribution, shares and capital contribution portion result in F1, F2 and F2’ mentioned in the graph above holding 51% or more of the target company:
o Increasing foreign ownership rate from below 51% to more than 51%; and
o Increasing the existing foreign ownership rate of 51% to a higher ownership rate.
After completion of the acquisition, the target company must carry out procedures to change its members or shareholders at the business registration authority.
For investment of foreign investors other than F1, F2 and F2’, the target company only needs to carry out procedures to change its members or shareholders at the business registration authority without the foreign investors having to register the acquisition transaction with the investment authority.

Please do not hesitate to contact Oliver Massmann under 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 Core Features of new Investment Law for Investors

1) In your opinion, what are the most important features of the new investment law from an investor’s perspective?

It is considered as the most-investor friendly investment law ever in Vietnam. It provides clearer investment procedure timeline, consolidated conditional business sectors, defined capital ratio to be qualified as foreign investors which determines which licensing procedure applies. Notably, it explicitly states that there would be no investment registration certificate required for M&A transaction.

2) What impact do you expect these to have? How effective do you think this law will be?

The investment environment will become more attractive. Investors would face less burdens and unexpected statutory requirements. A new wave of M&A is expected to come. However, the real effectiveness of this law would need to be assessed at a later stage when the implementing decrees are issued. As long as these documents have not been adopted, positive changes that the new investment law is said to bring are just theoretical.

3) How does this law fit in with the current investment climate of Vietnam, and the growth and development path the country is taking?

Vietnam is making great efforts to integrate into the world’s economy. The EU-Vietnam FTA is at the final stage whereas the TPP is also expected to be concluded soon. The Government of Vietnam is fiercely improving the business and investment environment and making great attempts to achieve key economic indicators of top regional countries until 2016. Resolution No. 19/NQ-CP/2015 of the Government dated 12 March 2015 has set out the Government’s strong commitments and positive changes to improve the business environment and strengthen the economy’s ability to compete in 2015 and 2016 by pushing for reforms to reduce time-consuming and burdensome administrative procedures; enhancing governmental offices’ transparency and accountability; and adopting international standards. These positive changes could be seen clearly in the tax, insurance and customs related sectors.

Please do not hesitate to contact Oliver Massmann under 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 New Vietnam investment law won’t help public sector

“As only a minority of the shares is offered for sale, the investors are not quite interested.” Oliver Massmann, General Director, Duane Morris Vietnam LLC
A new investment law that took effect in July is likely to keep investment flowing to Vietnam’s private sector but won’t help Prime Minister Nguyen Tan Dung achieve this year’s target for selling minority stakes in several hundred public-sector firms.
Prime Minister Nguyen Tan Dung’s push to sell minority stakes and reduce bloat in nearly 300 Vietnamese state-owned firms by the end of the year is unlikely to be successful despite recent reforms in business laws implemented in July that make it easier for foreign investors to acquire companies.
“This seems to be an ambitious target as the number of privatized enterprises is only 61 in the first six months of 2015,” Oliver Massmann, general director at the Hanoi office of corporate law firm Duane Morris LLP, tells MGO via email. “Moreover, as only a minority of the shares is offered for sale, the investors are not quite interested in the transaction, especially when they would not have any decision-making power or their involvement in the management of the enterprise is very limited.”
Public sector firms account for 30 percent of Vietnam’s GDP, and the country has been seeking to privatize and restructure them in order to reduce their debt, confine spending to core business activities, and help them acquire strategic foreign partnerships. According to a piece Mr. Massmann wrote for industry magazine The Asia Miner last year, state enterprises own 70 percent of property in Vietnam and account for 60 percent of commercial bank credit.
But despite initiating the process of restructuring and reforming public firms several years ago, Vietnam has been unable so far to address a number of factors that are hampering the divestment process.
Vietnam law continues to cap foreign ownership at 49 percent in listed firms, which many public sector enterprises are. And in most cases Vietnam is not selling stakes anywhere near the 49 percent limit — or even large enough to give investors decision-blocking powers.
In addition, it remains difficult for investors to value the shares that are being offered, given the lack of adequate audit reports. As a result, the Vietnamese Ministry of Finance is carrying out valuations of each firm. As recently as last month, Asian Development Bank’s chief economist Aaron Batten noted that only 8 percent of state firms publish financial reports on their websites, according to a report in the English-language daily Viet Nam News.
Due to these unresolved factors, Vietnam also fell short of its disinvestment target in 2014. Now, with stock markets in the region wobbly, public sector firms are likely to have an even harder time than they did last year, when as many as 143 firms were able to privatize some shares, according to Vietnamese media reports.
Mr. Massmann clarified, however, that the lack of investor interest in public enterprises comes against the backdrop of an improved overall investment and business climate in the country.
The 2014 Investment Law, which went into effect July 1, does away with something called an investment certificate, a business registration for foreign investors that was supposed to be approved in 45 days but in practice took four to six months to process, according to Mr. Massmann’s firm.
The law has also reduced the number of “conditional” business activities, areas of the economy in which investors have to seek approval with provincial planning departments. Construction, urban planning and education continue to remain conditional activities, but even in these sectors, acquisitions should become much easier, business analysts say.
Meanwhile, earlier tax law changes have also drastically cut the hours businesses spend on tax preparation and filing,
Vietnam has made “positive changes to improve the business environment and strengthen the economy’s ability to compete in 2015 and 2016,” Mr. Massmann tells MGO.
The apparel and textile manufacturing sector has drawn a large share of investment this year and is likely to continue to do so. Seafood processing, electronics manufacturing and retail and banking are also likely to attract investment into next year.
Mr. Massmann also foresees that the government will try to make investing in state firms more attractive by increasing the share of equity for sale, something that has so far been resisted by the management of many state firms, who perhaps fear that equity shares that allow for closer scrutiny of corporate governance could expose poor management or even corruption.


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

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

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