VIETNAM – POWER DEVELOPMENT PLAN 8 PUBLISHED – LATEST CONTENT OF THE DRAFT NATIONAL POWER PLAN 8

On 26 April 2022, Deputy Prime Minister Le Van Thanh chaired a meeting of the Appraisal Council to appraise the draft National Power Development Plan 8. The Appraisal Council approved the Draft. The Ministry of Industry and Trade is working with relevant government agencies to submit the final draft for the Prime Minister’s approval in May 2022.

By 2025, the total capacity of power plants is about 93,862-98,394 MW (excluding rooftop solar power and cogeneration sources), of which:
-hydroelectricity reaches 25,779-26,795 MW, accounting for 27.2-27.5%;
-coal-fired power plants 28,867 MW, accounting for 29.3-30.8%;
-gas thermal power (including LNG) 14,947 MW, accounting for 15.2-15.9%;
-renewable energy sources other than hydroelectricity (wind power, solar power, biomass power, …) 20,416-23,332 MW accounting for 21.8-23.7%; and
-electricity imports 3,853-4,453 MW, accounting for 3.4-4.1%.

The PDP 8 encourages the development of wind power, self-sufficient solar power for loads (on-site consumption, not generating electricity on the national grid) and promotes the production of new forms of energy such as hydrogen, green ammonia, etc.. Such forms are developed without capacity limit, not limited by the source structure in the plan, and supplemented with the planning when there is a feasible proposal.

• Solar power development:

Regarding development of solar power sources, including concentrated sources installed on the ground, lake surface and distributed sources installed on the roof: The total capacity of solar power sources is about 16,491 MW in 2025 and will remain unchanged until 2030 and about 74,741-96,666 MW in 2045. Electricity produced from solar power is expected to reach a proportion of about 6.8- 7.0% in 2025, about 4.5-4.8% in 2030 and 11.1-12.1% in 2045.

• Wind power development:

Total onshore and nearshore wind power capacity is about 10,700-13,616 MW by 2025, about 11,700-16,121 MW by 2030 and about 36,170-55,950 MW by 2045. Total offshore wind power capacity is about 7,000 MW or possibly higher when economic and technical conditions allow in 2030 and about 30,000- 64,500 MW in 2045. Total electricity produced from wind power types is expected to account for about 14.4-15.7% in in 2025, about 10.3-15.6% in 2030 and about 31.2-43.2% in 2045.

• LNG power development:

Projects in Hai Phong were removed from the Planning.

Thermal power using domestically produced gas (including gas turbine thermal power plant) and LNG (excluding flexible gas turbine power sources using LNG): By 2030, the total installed capacity will be about 29,730-38,830 MW, producing 133.1-172.3 billion kWh, accounting for 24.1-28.9% of total electricity production; in 2045, the total installed capacity will be about 43,330- 46,330 MW, producing 233.6-246.0 billion kWh, accounting for 20.1-23.9% of total electricity production.

List of LNG thermal power plants;

• Coal-fired power development:

PDP 8 has considered the replacement of coal-fired power projects in light of Vietnam’s commitments under COP26. Planning for coal-fired power projects which are approved in the National Power Development Plan but are not supported by the locality or are not eligible for development has been ceased consideration.
Some projects proposed to convert into LNG such as: Vung Ang III, Quang Trach II, Quynh Lap I, II; Long Phu II, III were canceled. However, Nam Dinh 1 and Quang Tri I BOT projects remain in the Planning.

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.

VIETNAM – NATIONAL POWER MASTER PLAN 8 TO BE FINALIZED IN MAY 2022

On 26 April 2022, Deputy Prime Minister Le Van Thanh chaired a meeting of the Appraisal Council to appraise the draft National Power Development Plan 8. The Appraisal Council approved the Draft. The Ministry of Industry and Trade is working with relevant government agencies to submit the final draft for the Prime Minister’s approval in May 2022.

The latest draft is the sixth draft of the Power Master Plan 8. Under which, the total capacity of power sources is expected to reach 146,000 MW by 2030, a decrease of about 35,000 MW compared to the previous plan. This latest draft overcame the shortcomings of the power source structure, reduce coal power, increase renewable energy (especially offshore wind energy), and postpone the development of inter-regional transmission system until 2030.

Duane Morris provides you with in-time updates on the Power Master Plan 8.

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.

Mergers & Acquisitions in Vietnam – 2022 edition

1. What are the key rules/laws relevant to M&A and who are the key regulatory authorities?
There is no single document regulating M&A activities in Vietnam. The relevant rules are contained in several laws and regulations governing general corporate and investment issues. These laws and regulations include:
• Investment Law No. 61/2020/QH14 and Enterprise Law No. 59/2020/QH14 issued by the National Assembly on 17 June 2020, and their guiding documents, namely Decree No. 01/2021/ND-CP and Decree No. 01/2021/ND-CP. These laws set out the general legal framework, conditional sectors and investment procedures. The authorities responsible for enforcing these laws are the:
• Prime Minister;
• local People’s Committee;
• Ministry of Planning and Investment;
• Ministry of Industry and Trade;
• Ministry of Health; and
• Other ministries depending on the business activities of the target companies.
• Law on Securities No. 54/2019/QH14 issued by the National Assembly on 26 November 2019, and its implementing documents, in particular Decree No. 155/2020/ND-CP issued by the Government on 31 December 2020. This Law regulates the acquisition of shares in public and private companies in Vietnam, including public tender offers. The authorities responsible for enforcing the Law include the:
• State Securities Commission (SSC);
• Vietnam Securities Depository Centre; and
• Ministry of Planning and Investment.
• Competition Law No. 23/2018/QH14 issued by the National Assembly on 12 June 2018, which is enforced by the Vietnam Competition Authority (VCA). Under this Law, any M&A transaction that causes or may likely cause substantial anti-competitive effects on the Vietnamese market will be prohibited.
• Foreign exchange regulations. An investment capital account in Vietnamese dong is a condition, among others, for capital contribution/share purchase or subscription. These regulations are enforced by banks and the State Bank of Vietnam.
• Vietnam’s WTO Schedule of Specific Commitments on Services. This sets outs the ratio of shares that can be owned by foreign investors in various specific sectors.
• Other specific regulations for the acquisition of shares in Vietnamese companies operating in special sectors, such as banking and finance, insurance, and so on. These sectors are highly regulated by the relevant authorities.

2. What is the current state of the market?
Vietnam has remained an attractive destination for foreign investors: In 2021, the total registered FDI capital to Vietnam was USD31,15 billion, an increase of 9,2% compared to 2020 despite continuous waves of different Covid-19 variants. Investment in the form of capital increasement is increased dramatically by 40,5% compared to 2020, suggesting the continuing satisfaction of current foreign investors who have been doing business in Vietnam. Foreign investors contributed capital to domestic enterprises mainly in the field of processing technology and manufacturing (USD 18,q billion) as well as water and energy sector (USD 5,7 billion), real estate (USD 2,6 billion), retail and wholesale (USD 1,4 billion). Main investors still come from Japan, Korea, Singapore, and China.
The main drivers of Vietnam’s M&A market are:
• Privatization of state-owned enterprises (SOE). According to Resolution No. 01/NQ-CP issued by the Government in 2021, one of the key tasks in 2021 was to continue strengthening the restructuring, equitisation and divestment of SOEs. The government also aims to publicize equitized enterprises that are eligible but are not listed nor registered for trading on the stock market.
• Trade liberalization as a result of CPTPP, EU- Vietnam FTA, and so on.
• Resolution No. 42 on pilot program of handling bad debts of credit institutions is also the main driving force of M&A in real estate sector as bad debts in real estate sectors accounts for a high percentage of the total bad debts in Vietnam’s market.
Major deals:
• On 28 October 2021, Sumimoto Mitsui group (Japan) bought 49% shares in FE Credit, a subsidiary of VPBank.
• In June 2021, Alibaba and Baring Private Equity Asia invested USD400 millions into The CrownX, acquiring 5,5% stake.
• On 9 October 2021, Thaco Group (Vietnam) acquired 100% stake in Emart supermarket chain in Vietnam of Emart Group (Korea)

3. Which market sectors have been particularly active recently?
• Processing technology and manufacturing
• Renewable energy
• Water and waste treatment
• Pharmaceuticals
• Consumer retails
• Real estate

4. What do you believe will be the three most significant factors influencing M&A activity over the next 2 years?
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 came into force on 1 August 2020.
Encouraging signs for foreign investment include:
• Reformed policies to allow wider access to foreign investors.
• ASEAN Economic Community single market and production base.
• The conclusion of free trade agreements (FTAs), including the EU – Vietnam FTA and The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).
• 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.
Investment Law, Enterprise Law, Resolution No. 42 on handling bad debts and other laws and policies have created a transparent 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 Korean, Japanese and Thai investment in Vietnam through M&A transactions.
• Reform of SoEs.

5. What are the key means of effecting the acquisition of a publicly traded company?
In Vietnam, the term public company refers to a joint stock company that meets one of the following conditions:
a) The company has a contributed charter capital of at least VND 30 billion and at least 10% of the voting shares are being held by at least 100 non-major shareholders; or
b) The company has successfully made its IPO by registration with SSC.

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 2020 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 (for example, 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 organisation 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).

6. What information relating to a target company will be publicly available and to what extent is a target company obliged to disclose diligence related information to a potential acquirer?
There is no legal requirement that a bidder must keep information about the bid a secret until the bid is made. However, this can be considered a contractual violation if the parties to the transaction have committed to secrecy in writing. Leaking information before the finalisation of the bid can lead to:
• An increase of the target’s shares price.
• Difficulties in negotiating the terms of the transaction.
• Competition in the market.
7. To what level of detail is due diligence customarily undertaken?
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.

8. What are the key decision-making organs of a target company and what approval rights do shareholders have?
It is necessary to obtain the approval of the general meeting of shareholders to carry out a tender offer if the acquisition is conducted by way of a transfer of shares from an existing shareholder and results in a 25% ownership or more of the voting shares in a public company. Such approval is also required when there is a share transfer of a founding shareholder of a joint stock company within three years from the issuance of the Enterprise Registration Certificate. The approval normally includes the:
• Number of shares offered.
• Price of the offer.
• Conditions of the offer.
There is no statutory requirement that prohibits a target board from soliciting or recommending other offers before completion of a transaction. However, in practice, the parties can agree on such restrictions.

9. What are the duties of the directors and controlling shareholders of a target company?
Shareholders of a public company shall:
a) Have the right to equal treatment;
b) Have accessibility to information periodically and irregularly published by the company as prescribed by law;
c) Have their the lawful rights and interests protected; have the right to request suspension or cancellation of a Resolution or decision of the General Meeting of Shareholders or Board of Directors as prescribed by the Law on Enterprises;
d) Not take advantage of the major shareholder’s status to influence rights and interests of the company and other shareholders as prescribed by law and the company’s charter; disclose information as prescribed by law;
dd) Have other rights and obligations prescribed by law and the company’s charter.

10. Do employees/other stakeholders have any specific approval, consultation or other rights?
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.

11. To what degree is conditionality an accepted market feature on acquisitions?

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.

12. What steps can an acquirer of a target company take to secure deal exclusivity?
The acquirer can enter into an exclusivity agreement, terms sheet or letter of intent or MOU that includes a legally binding exclusivity clause. The acquirer can also make use of deal protection mechanisms such as:
• No Shop Provision: included in an agreement between the seller and the buyer that prevents the latter from seeking purchase proposals from third parties in a time frame after the signing of the Letter of Intent
• Termination or Breakup Fees: if the seller accepts a bid from a third party, then they will have to pay the original buyer a fee equivalent to the breakup fee
• Lock-ups: seller is given part-ownership of stock or important assets in the target company
• Stock options: allow the buyer to purchase a number of shares in the target company if a particular pre-agreed event occurs

13. What other deal protection and costs coverage mechanisms are most frequently used by acquirers?
Besides the aforementioned, a deal protection mechanism an acquirer can make use of is matching or topping rights where the seller has to notify the bidder of any third party proposal, and the seller is entitled to match or better such a proposal.
Cost coverage mechanisms include:
• Locked Box mechanism: where the seller and buyer agree on a net purchase price upfront in the Sales Purchase Agreement and this price remains effective until the financial closing/completion date of the transaction – recommended for fast-growing target companies
• Completion Account mechanism: base purchase price, plus cash, less debt, plus excess or less shortfall in working capital

14. Which forms of consideration are most commonly used?
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.

15. At what ownership levels by an acquiror is public disclosure required (whether acquiring a target company as a whole or a minority stake)?
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 State Securities Commission (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 bidder must publicly announce the tender offer within seven days from receipt of the State Securities Commission’s opinion regarding the registration of the tender offer
• 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.

16. At what stage of negotiation is public disclosure required or customary?

The bidder must publicly announce the tender offer within seven days from receipt of the State Securities Commission’s opinion regarding the registration of the tender offer

17. Is there any maximum time period for negotiations or due diligence?
There are no limitations (maximum or minimum) under Vietnam law on the time period in which the parties are required to conduct negotiations and/or due diligence.

18. Are there any circumstances where a minimum price may be set for the shares in a target company?
There are no general requirements under Vietnam law that set certain minimum price for shares in a target company.

19. Is it possible for target companies to provide financial assistance?
There is no general prohibition under Vietnam law on target companies providing financial assistance to acquirers. However, such provision of financial assistance to acquirers may result in breach of fiduciary duties of directors of the target company. In this regard, the directors of the target company should be mindful of their duties to the target company because, providing financial assistance to an acquirer may be considered to be harming the target company while benefiting the majority shareholders of the target company or the acquirer, depending on the nature of such assistance.

20. Which governing law is customarily used on acquisitions?

Buyer and sellers are free to decide on the governing law of the transaction agreements. Nevertheless, in deals that involve a Vietnamese target company, the governing law is customarily Vietnam laws.

21. What public-facing documentation must a buyer produce in connection with the acquisition of a listed company?
Shares can be bought before the bid announcement provided that the number of shares sold does not exceed the thresholds requiring a tender offer. A tender offer is required in the following cases:
• Purchase of a company’s circulating shares that result 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.

22. What formalities are required in order to document a transfer of shares, including any local transfer taxes or duties?
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.

23. Are hostile acquisitions a common feature?
Hostile bids are neither defined nor regulated under Vietnamese law. There is also no express prohibition on this type of transaction. Recommended bids often outnumber hostile bids due to limited publicly available information about the target and reluctance to disclose information.
However, the number of hostile bids in Vietnam has been increasing since 2011, for example:
• Singapore-based Platinum Victory Ptl Ltd became Refrigeration Electrical Engineering Corp (REE)’s largest shareholder, accumulating a 10.2% interest in the company.
• Chile’s CFR International Spa acquired a 46% stake in healthcare equipment company Domesco Medical Import-Export Co (DMC), making it the first foreign deal in the pharma sector.
During 2010 and 2011, there were two takeover deals in Vietnam:
• The acquisition of Ha Tay Pharmacy in 2010.
• The acquisition of Descon, a construction company, in 2011. Binh Thien An Company acquired a 35% shareholding in Descon, officially took over Descon and made significant changes to its management body.
The Government’s Decree No. 155/2020/ND-CP lifted the foreign equity cap regarding public companies, with some exceptions (a 49% cap was previously in force). Specifically, the rules on foreign ownership in a listed company can be generally classified into the five following groups:
• If Vietnamese law, including international treaties, provides for a specific ownership cap, the maximum foreign ownership (MFO) must not exceed such a cap (group 1).
• If Vietnamese law treats a business activity as conditional on foreign investment (pursuant to the list of conditional sectors under the Investment Law) but does not yet provide any ownership limit, MFO must not exceed 50% (group 2).
• In cases that do not fall within group 1 and group 2, MFO can be up to 100% (group 3).
• In case a public company operates in multiple industries and trades with different regulations on the foreign ownership rate, the foreign ownership rate must not exceed the lowest level in the industries and trades with determined foreign ownership rates (group 4).
• Where a public company decides on the maximum foreign ownership ratio lower than the rate specified above, the specific rate must be approved by the General Meeting of Shareholders and included in the company’s charter.
This lift of the foreign equity cap can introduce more hostile bids in Vietnam.

24. What protections do directors of a target company have against a hostile approach?
There are no provisions regulating hostile bids under Vietnamese law.

25. Are there circumstances where a buyer may have to make a mandatory or compulsory offer for a target company?
A tender offer is required in the following cases:
• Purchase of a company’s circulating shares that result 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.

26. If an acquirer does not obtain full control of a target company, what rights do minority shareholders enjoy?
Minority shareholders continue to enjoy full rights as shareholders, such as voting rights and rights to receive distributions of dividends. However, as shareholders may only participate in the management of a company indirectly through a shareholders’ resolution, minority shareholders have limited right to affect the management of the company.
Under Enterprise Law 2020, a shareholder or group of shareholders that holds at least 5% of the ordinary shares (or a smaller ratio specified in the company’s charter) shall have the rights to:
a) Access, extract the minutes of meetings, resolutions and decisions of the Board of Directors, mid-year and annual financial statements, reports of the Board of Controllers, contracts and transactions subject to approval by the Board of Directors and other documents except those that involve the company’s business secrets;
b) Demand that a GMS be convened in case
• the Board of Directors seriously violates the shareholders’ rights, obligations of executives or issues decisions ultra vires;
• other cases prescribed by the company’s charter.

c) Request the Board of Controllers to investigate into specific matters relevant to the company’s administration where necessary

27. Is a mechanism available to compulsorily acquire minority stakes?
If the bidder acquires 80% or more of the shares of a public company, it must buy the remaining shares of the same type of other shareholders (if they so request) at the bid price within 30 days. However, there are no “squeeze-out” rights that can force the remaining shareholders to sell their shares.

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

VIETNAM WILL MOVE ON – Dr. Oliver Massmann in interview with Vietnam Economic Times

As of the end of October, total newly-registered, additional, and paid-in capital for share purchases by foreign investors in Vietnam stood at $23.74 billion; up against the same period last year. What are your thoughts on these figures given the pandemic’s effect on the country?
Global foreign investment flows in 2021 recovered better than expected. These impressive increases are due to the fact that, in the past ten months, three major projects have been granted new investment certificates or added capital: the Long An LNG Power Project ($3.1 billion) in the Mekong Delta’s Long An province, LG Display Hai Phong in northern Hai Phong city, which increased its capital by $2.15 billion, and the O Mon II Thermal Power Plant ($1.31 billion) in the Mekong Delta’s Can Tho city, so both newly-registered and additional capital rose sharply year-on-year.
In addition, as of June, the EU had 2,221 valid projects in Vietnam, an increase of 142 over the same period of 2020, from 26 of the 27 members of the bloc, with capital totaling $22.216 billion, an increase of $449 million against the same period of 2020 and accounting for 5.58 per cent of investment into Vietnam and 6.57 per cent of projects.
Commitments on transparent governance under international agreements and commitments from the Vietnamese Government creating an open and favorable trade and investment environment have contributed to such increases.

Having been in Vietnam for many years, what do you think about the country’s business environment now that lockdowns have ended and a “new normal” appears in trade and investment post-pandemic?
A “new normal” is a necessity, and the government understands that the country cannot and should not wait to resume business only once there are no Covid-19 cases. Companies are operating on the basis of the Ministry of Health’s 5K rules, to ensure safe distancing and hygiene practices among workers and customers. The “new normal” can be seen most clearly through the tourism and hospitality industry, which has suffered more than others since the coronavirus appeared in early 2020. Vietnam has opened up its tourism sector to domestic and foreign travelers alike. One common travel safety rule will be that all tourists and tourism staff must have been fully vaccinated or can furnish a certificate showing they had contracted and recovered from Covid-19. Travel companies will only be allowed to organize tours to “green zones” – those deemed at low risk of spreading the virus. They should also have contingency plans in place in case a visitor contracts the virus.

In a recent interview with a local newspaper, you said “Vietnam will regain its position as one of the most ideal investment locations in Southeast Asia.” Why do you believe so?
First, the government has introduced policies combining fiscal policy, monetary policy, and other sectoral or social security support policies, which include a group of short-term solutions and mechanisms in a number of specific industries and fields and groups of fundamental and long-term solutions to remove difficulties facing economic growth, and supported people and businesses that suffered from the pandemic.
Second, disease control measures have been taken seriously. In a very short period of time, most of Vietnam’s population received two doses of vaccine and the country has begun to vaccinate people under 18 years of age.
Third, Vietnam has conducted intensive institutional reform to ensure its adherence to commitments made under international pacts like the EU – Vietnam Free Trade Agreement (EUVFTA).

What issues must be addressed if Vietnam is to reach its full potential in trade and investment post-pandemic?
Among other things, Vietnam must be more selective in approving foreign investment projects, with an increase in quality and a decline in quantity, in order to eliminate small-scale projects with little added value. Equally important, disease control measures must be clearly available to businesses, for them to prepare their business plans.

What do you foresee for FDI into Vietnam next year?
The government has been trying to perfect the legal framework to implement commitments made under international agreements and to reform and simplify investment and business conditions. A number of legal documents have been promulgated or amended to be consistent with existing commitments, like the Law on Intellectual Property and the Labor Code. The Ministry of Industry and Trade (MoIT) has also cut 205 business investment conditions applicable to foreign investors.
In the 2021-2025 period, the MoIT will continue to review and develop a roadmap of plans to cut business investment conditions, administrative procedures, and specialized inspections, which will help foreign investors reduce the time and cost spent on compliance. Vietnam has been making visible efforts to meet high international standards in all sectors. With a vaccine program being carried out nationwide and the country expecting to fully resume business operations by the beginning of 2022, we expect to see an increase in FDI into Vietnam in 2022.

Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, a Member of the Supervisory Board of the PetroVietnam Insurance JSC, and the only foreign lawyer to address members of the National Assembly in the Vietnamese language.

VIETNAM – PRIME MINISTER TO REVIEW THE FINAL DRAFT POWER MASTER PLAN 8 THIS WEEKEND

The Appraisal Council approved the National Electricity Development Plan for the period of 2021-2030, with a vision to 2045 (Power Master Plan VIII) in a meeting held on 3 October 2021.

Immediately after receiving the results from the Appraisal Council, the Ministry of Industry and Trade has embarked on the finalization of the Draft Power Master Plan 8 with the goal of submitting the final draft to the Prime Minister this weekend for consideration and approval.

Duane Morris will keep our readers updated of any progress on the finalization of the Draft Power Master Plan 8.

For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.

VIETNAM – LOCAL REGULATION COULD LEAD TO EU-VIETNAM TRADE HINDRANCE

Under Circular No.28/2012/TT-BKHCN dated 12/12/2012, before the products are circulated on the market, the manufacturer must declare the products’ standard conformity (Declaration of Standard Conformity). A component of the application dossier for the Declaration is the assessment result of standard conformity (“Assessment”). Under Circular 28, this Assessment can be carried out either by the manufacturer themselves or a third party registered certifying organization.

On 31 December 2019, the Ministry of Science and Technology issued Document No. QCVN 19:2019/NKHCN on National Technical Regulation on LED lighting products (Document 19). Article 3.4 of Document 19, the Declaration of Standard Conformity must be based on the assessment results issued by a certification body that has registered its field of operation as prescribed in local regulations.

It has been brought to our attention that these certification bodies charge around USD 700 for each model testing. From 2022, under Decision No. 1383/QD-BKHCN dated 22/05/2020, there will be two additional tests required for the Assessment, thus it is expected that the price payable by manufacturers/distributors will increase to USD 1500 for each model of product.

Importers of LED lamps have been furious with the new Regulation, as they believe local certifying organizations do not have the capacity to assess EU-imported products, assuming that such products have not yet been certified in accordance with EU standards. Importers also feel that the Regulation has resulted in importers have to incur unreasonable additional fees. We examine this instance in light of the EU-Vietnam Free Trade Agreement (EVFTA) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

EU-Vietnam Free Trade Agreement

Under Article 5.3.2 of the EVFTA, Vietnam has the right to prepare, adopt and apply standards, technical regulations and conformity assessment procedures in accordance with the EVFTA and the TBT Agreement.

Article 5.5 (Standards) reads that With a view to harmonizing standards on as wide a basis as possible, the Parties shall encourage their standardizing bodies as well as the regional standardizing bodies of which they or their standardizing bodies are members to avoid duplication of, or overlap with, the work of international standardizing bodies. Some exported products may already undergo Assessment of standard conformity in their origin country. As a result, requiring imported products to undergo another local one may be considered as repeating the work.

In addition, under the EVFTA, Vietnam also affirmed its obligation that fees imposed for mandatory conformity assessment of imported products shall be equitable in relation to any fees chargeable for assessing the conformity of like products of domestic origin or originating in any other country, considering communication, transportation and other costs arising from differences between location of facilities of the applicant and the conformity assessment body. Importers of LED lamps could make a case if it could be established that the charges applicable to imported products are higher than those manufactured locally.

In general, it could be said that Document No. QCVN 19:2019/NKHCN on National Technical Regulation on LED lighting products does not comply with provisions under the EVFTA in the sense that it constituted a Technical Barrier to Trade upon Vietnamese importers. Consequently, it would hinder LED lighting products export from EU countries.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership

Under the CPTPP, Vietnam has the right to apply the same or equivalent procedures, criteria, and other conditions to accredit, approve, license, or otherwise recognize conformity assessment bodies located in the territory of another CPTPP Party that it might apply to conformity assessment bodies in its own territory. Moreover, the CPTPP also explicitly does not preclude Vietnam from verifying the result of conformity assessment procedures undertaken by bodies located outside its territory.
As a result, it could be said that under the CPTPP, the provisions applicable to LED lighting importers allow for local regulations like Document 19.

Both the EVFTA and the CPTPP require Vietnam and other parties to the agreements to establish local Contact Points for matters arising under their chapters. It is recommended that importers or traders that are negatively affected by Document 19 should voice their concern to such Contact Points, who have the responsibility to handle your matter by working with the relevant governments in light of the EVFTA and the CPTPP.

For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.

VIETNAM – NEW PRICING FRAMEWORK FOR SOLAR AND WIND POWER PROJECTS

In a press conference on 30 September 2021, the Ministry of Industry and Trade (“MOIT”) confirmed that there would be NO FIT extension for wind energy projects after 31 October 2021.

The Ministry of Industry and Trade recently issued a new draft Circular on regulations on methods of building electricity generation price brackets and determining electricity generation prices, power purchase agreement for solar and wind energy projects. This Circular will apply to solar energy projects that have not met the COD deadline of 1 January 2021 or wind energy projects that have not met the COD deadline of 1 November 2021. Though it is only at draft stage, it is expected that the Circular will come into force soon and give developers as well as investors clarity on renewable power projects development and related transactions.

According to the Draft, this Circular will apply to:
i) Ground-mounted solar energy projects, floating solar power projects
ii) Rooftop solar energy projects
iii) Onshore wind energy projects and
iv) Offshore wind energy projects.

The electricity generation price bracket is the range of values from 0 (zero) to the ceiling price of the type of solar and wind power plants corresponding to each type of solar power plant (floating, ground mounted) and wind power plant (onshore, offshore). The ceiling price is the electricity generation price of a standard solar and wind power plant. Standard solar and wind power plants are plants that have operated, are under negotiation or are selected during the year (N-1).

Electricity generation price of newly built solar and wind power plants is determined based on:

a) Reasonable expenses of the Investor in the whole economic life of the project;
b) The financial internal rate of return (IRR) is 12%.

The electricity generation price of a solar and wind power plant includes the following components:

a) Power purchase and sale contract price: To be agreed upon by the two parties and determined according to the formula specified in Article 11 of this Circular;
b) Specific connection price: To be agreed upon by both parties and determined according to formula specified in Article 14 of this Circular.

Electricity generation price of solar and wind power plant is exclusive of value-added tax and other taxes, fees and cash receipts according to the State’s regulations (except for taxes and fees already paid) included in the electricity generation price plan.

The draft Circular also provide a new Power Purchase Agreement (“PPA”) template to be used for solar and wind energy projects , including detailed procedure for PPA negotiation and checklist of documents to request for PPA negotiation.

For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.

VIETNAM – CYBERSECURITY – COMPARING VIETNAM’S CYBERSECURITY LAW WITH ITS COMMITMENTS UNDER THE CPTPP, EVFTA

Vietnam’s latest Law on Cybersecurity came into force on 1 January 2019. The law sets out rights and obligations on domestic and foreign companies providing services to customers in Vietnam over telecom networks or the Internet. The two provisions of the Law that are the most controversial are arguably Data Localization (offshore and onshore online service providers are required to store Vietnamese users’ information within the country for a period of time) and Commercial Presence (the same companies must establish a commercial presence in Vietnam either in the form of a branch or representative office). It has been questioned whether these provisions are contradicting international treaties that Vietnam is a signatory to, including the CPTPP and the EVFTA. In answering this question, we shall examine Vietnam’s commitments under each Agreement.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP):

No import tax to be imposed on e-commerce transactions. However, Vietnam has the right to impose local taxes, fees and charges on “electronically transmitted content”, provided that such taxes, fees or charges are in accordance with provisions of the Agreement.

Cross-border transfer of information by electronic means is allowed. The cross-border transfer of information, data by electronic means is only for business activities or a legal entity. Vietnam has the right to have separate requirements for data transfer by electronic means and take necessary measures to implement legitimate public policies, but on the condition that the policies does not create disguised barriers to trade or are applied in a discriminatory or arbitrary manner.

Data localization requirement is not mandatory. Vietnam is not allowed to require the use or location of servers in the host country as a business condition. However, Vietnam has the right to make specific management requirements regarding the use or location of servers, including requirements to ensure communications security and confidentiality; and take necessary measures to implement legitimate public policies, but on the condition that the policies does not create disguised barriers to trade or are applied in a discriminatory or arbitrary manner.

CPTPP countries agreed not to sue Vietnam if its cybersecurity regulations are deemed to be inconsistent with the CPTPP Agreement (specifically, two obligations of free cross-border information flow and server localization in the E-Commerce Chapter) within 2 years after the date of entry into force of the CPTPP Agreement.

Reserving measures related to national security and defense, public order and privacy. Vietnam has the right to have separate management requirements for cross-border transfer of data or information by electronic means, using or locating servers (including requirements to ensure communications security and confidentiality); Vietnam has the right to take necessary measures to implement legitimate public policies, but on the condition that they do not create a disguised trade barrier or are applied in a discriminatory or arbitrary manner.

The validity of electronic authentication and electronic signatures must not be denied. However, Vietnam may require that, for a particular category of transactions, the method of authentication meets certain performance standards or is certified by an authority accredited in accordance with its law. In practice, though not stated in the law, all application dossiers to the local Department of Planning and Investment still require wet ink signature, even if the investor is abroad.

EU-Vietnam Free Trade Agreement (EVFTA):

The issue of Cybersecurity could be found in Chapter 8 of the EVFTA, Section F of which states that “the Parties, recognizing that electronic commerce increases trade opportunities in many sectors, shall promote the development of electronic commerce between them, in particular by cooperating on the issues raised by electronic commerce under the provisions of this Chapter of EVFTA”.

As committed under the EVFTA, Vietnam and EU shall maintain dialogues on regulatory issues raised by electronic commerce, which shall, inter alia, address the following issues:

•the recognition of certificates of electronic signatures issued to the public and the facilitation of cross-border certification services;
•the liability of intermediary service providers with respect to the transmission or storage of information;
•the treatment of unsolicited electronic commercial communications;
•the protection of consumers in the ambit of electronic commerce; and
•any other issue relevant for the development of electronic commerce.

This dialogue may take the form of exchange of information on the EVFTA’s Parties’ respective laws and regulations on the issues referred to above issues as well as on the implementation of such laws and regulations.

From the above, it could be seen that the international treaties leave a lot of room for Vietnam to develop its own regulations. In other words, due to their vague language and absent of further guidance, the provisions are open to the discretion of the local authorities. As such, to answer the question at the beginning, the Law on Cybersecurity and accompanying legal documents stipulating that foreign enterprises operating commercially in cyberspace must set up a representative office and store data in Vietnam for a period of time is not contrary to international practice outlined in the CPTPP and EVFTA.

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Please do not hesitate to contact the author Dr. Oliver Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.

VIETNAM – Power Development Planning VIII (“PDP8”) – Vietnam Government’s plan to De-carbonize the Country – what you must know:

Question#1. What impact is PDP8 likely to have on the country’s efforts to decarbonize the economy?

Answer#1:
The draft Power Development Planning VIII (“PDP8”) reinforces the Vietnam Government’s current view on prioritizing renewable energy sources to minimize negative impacts caused by electricity production on the environment. Importation of fuels (coal, LNG) are encouraged as a way to diversify the country’s primary energy sources, and the same goes for the establishment of transmission and distribution grid links with China, Laos and Cambodia in order to maximize each country’s energy potential. Imported electricity sources from neighboring countries are to be considered as prioritized projects because imported electricity will reduce environmental impact compared to domestic production.

As of 2020, the country’s total generation capacity is about 69.3 gigawatt (GW), including 16.5 GW of solar power (approx. 24% of the total capacity) and 0.6 GW of wind power. More than 50% Vietnam’s electricity generation came from coal in 2020. Vietnam’s reliance on coal-fired power remains heavily to meet rapidly increasing electricity demand. Hydroelectric generation is also significant as the country is home to a number of large rivers. Non-hydro renewable sources such as wind and solar made up 5% of Vietnam’s electricity generation in 2020. Under the draft PDP 8, Vietnam plans to increase solar capacity to 18.6 GW and wind capacity to 18 GW by 2030.

Question#2. Does PDP8 target specific regions of the country? Are these regions that are more likely to be impacted by the transition to a low carbon economy?

Answer#2:
Yes, one of the most notable differences between the Draft PDP 8 and Revised PDP 7 (the latest official national power development planning) is the level of power demand between the North and the South. According to PDP8, the proportion of commercial electricity in the North will gradually increase from 42.4% in 2020 to 45.8% in 2045, while the South will decrease its proportion from 47.4% in 2020 to 43.6% by 2045. By 2040, the North’s commercial electricity demand will start to exceed that of the South. As a result, this will significantly affect the strategy in PDP8 to develop the transmission grid and generation sources (including RE sources) to meet the demand.

The draft PDP 8 is oriented to focus on the development of transmission grid of at least 220KV to solve overcapacity issues that has been occurring in recent years. As to grid development, in the period of 2021-2030, MOIT sees the need to build 86 GVA with a capacity of 500kV per station and nearly 13,000 km of DLZ. From 2031-2045, an additional construction of 103 GVA with capacity of 500kV and nearly 6000 stations is required. The 220kV power grid needs construction of 95 GVA, nearly 21,000 km DMZ and 108 GVA, more than 4000 km NE. Total investment capital for electricity development in the period 2021-2030 is roughly USD 128.3 billion USD, of which: USD 95.4 billion for the power sources, USD 32.9 billion for the grids. The average structure of capital investment shall be 74% / 26%.

The draft PDP8 appears to concern a surging oversupply of solar power in 2030 in many regions, such as the Central Highlands (estimated 1,500 MW but registered 5,500 MW), the South Central (estimated 5,200 MW but registered 11,600 MW), or the Southern (estimated 9,200 MW but registered 14,800 MW). The wind power shares the same situation as the registered capacity exceeds normal estimated capacity in Central Highlands (estimated 4,000 MW but registered 10,000 MW) and Southern (estimated 6800 MW but registered 17,000 MW). Accordingly, the draft PDP8 must solve this unbalance to ensure the sustainable development of the renewable energy sources in Vietnam. It is expected that future policy on renewable energy will base on auction rather than FIT.

For example, below is the draft policy for solar power projects. In late January 2021, the Ministry of Industry and Trade (“MOIT”) issued the draft Decision of the Prime Minister guiding the selection of investors implementing solar power projects under the bidding mechanism (“the Draft”). According to the Draft, the Decision would be applicable to projects with grids connected directly to the national power network. The Ministry of Industry and Trade shall coordinate with the Electricity of Vietnam and the People’s Committees of localities to organize the formulation and approval of the renewable energy power source development plan for a period of 5 years and every 2 years to serve as a basis for the bidding system. In addition, every 02 years, the Ministry of Industry and Trade shall issue a Price Framework for electricity generation in order to determine the ceiling price for bidding to select investors of solar power projects with COD in the next 02 years. The plan for development of renewable energy power sources for a period of 5 years shall include the total capacity scale for each renewable energy power source in the 5-year period, the total capacity scale for each renewable energy power source for each load region (8 regions) and a list of transmission lines and substations (220 kV at least) to be put into operation for a period of 5 years. The 02-year plan shall have similar content but for a 2-year period only and shall be more provincial specific.

Question#3. Were issues of economic, racial, and gender equity considered in the development of PDP8?

Answer#3:
Yes, any policy of the Government must consider these issues but it is very challenging to identify whether they are well reflected into the policy including PDP8. This is a very broad and difficult question.

Question#4. Was there a debate amongst political leaders about the costs and benefits of PDP8?

Answer#4: Yes, of course. It appears that the new Government now has different views and priorities than the former and as a result the PDP8 must be revised to reflect such priorities.

As you may know, in late March 2021, the very first draft of PDP8 PM Decision (“Draft Decision”) has been published through unofficial sources (i.e. not through the Ministry of Industry and Trade (MOIT)’s website). Such PM Draft Decision was planned to be signed off at the end of March during the last days of Prime Minister Nguyen Xuan Phuc’s administration, but it was delayed as the hand-over to new administration was already under way. It appeared that the investors and LNG-to-power projects in this first PM Draft Decision were scaled down comparing to those in the PDP8 proposal published by Ministry of Industry and Trade (MOIT) earlier.

On 23 April 2021, the Deputy Prime Minister (DPM) Le Van Thanh directed a Government’s meeting on the PDP8 and concluded that, among others, PDP8 must be (i) updated with qualifications for prioritized projects, and (ii) revised to reasonably review and allocate development of power sources, especially LNG-to-power projects in PDP8 in order to ensure the competition, optimization on development of power system. DPM asked the MOIT to careful review and digest opinion from EVN in its official letter No. 1645/EVN-KH dated 2 April 2021. Finally, the DPM required the MOIT to submit the updated PDP8 proposal prior to 15 June 2021.

Unfortunately, due to Covid-19 situation and heavy workload on updating the PDP8 proposal, MOIT failed to submit a revised proposal to the Government for consideration. On 17 June 2021, the MOIT Minister arranged a press meeting to update the PDP8 progress and planned to submit the revised PDP8 proposal to the Government within June 2021. So far, based on our intel, the MOIT is still reworking its draft and PDP8 is expected to be approved COB this year ideally.

Question#5. What role did various stakeholders (e.g., business, not-for-profits) take in advocating for or against PDP8 or trying to influence its development?

Answer#5:
Yes, there are many stakeholders here, e.g., EVN, local developers, business communities (such as Chambers and VBF) and state authorities. However, please kindly note that the draft PDP8 is mainly drafted by the Energy Institution (NB: an institution under EVN until it was taken over by MOIT since 2010). The MOIT was collecting opinion from all stakeholders for the draft PDP8 made by the Energy Institution. It is worth noting that the opinion from EVN is always critically important as it (including its affiliates and subsidiaries) still remains the position of a monopoly wholesaler in the market. The new Government requested the MOIT to revisit EVN’s opinion for revising the current draft PDP8.

Question#6. Which key stakeholders were in favour of PDP8? How did they organize and influence decision making?

Answer#6:
Yes, it is very challenging to answer black or white on this question. PDP8 is the prioritized policy of the Government for the energy sector. Thus, there is always a favorable trend for this policy to come out soon. We however do note that there are different views on the contents of the PDP8, but not an issue of support or opposition.

Question#7. Which key stakeholders were against PDP8? How did they organize and influence decision making? Were there specific measures to address their concerns?

Answer#7:
Yes, it is very challenging to answer a black or white question. PDP8 is the prioritized policy of the Government for the energy sector. Thus, there is always a favorable trend for this policy to come out soon. We however do note that there are different views on the contents of the PDP8, but not an issue of support or opposition.

Question#8. Has PDP8 been well-received by the public?

Answer#8:
Yes, it has been well received by the public. However, the foreign invested business communities still have some concerns, among others, over the current PDP8:
• No clear plan for variable renewable energy in the technology mix. PDP8 must ensure Vietnam planning remains cutting-edge to include full representation of variability and assessing power system reliability.
• No plan for nuclear power.
• Need to construct a regulatory and permitting environment that attracts private sector investment in clean energy generation and energy efficiency.
• Need a clear policy to ensure EVN to share the market risks: e.g., a bankable (take or pay) power purchase agreement with generators.
• Need to halt further development of coal based projects: it is recommended to suspend the approval of any new coal thermal power plants and conducting a strategic review of those that are already approved but which do not have financing or power purchase agreements.
• Need to develop a flexible transmission network in view of the market orientation and increased variable renewable energy.
• Need to build schemes to address the uncertainties: from fuel prices to demand growth and oversupply and curtailment.

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For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.

VIETNAM – THE GOVERNMENT ISSUES FAVORABLE POLICIES ON TAX AND FEES FOR BUSINESSES AMID THE WORST COVID-19 OUTBREAK

Recently, the Ministry of Planning and Investment issued the Draft Decree on the Government’s incentives for businesses suffering from the consequence of the corona virus pandemic. It is aimed that by the end of 2021, at least 01 million businesses will have access to favorable credit policies, reduction or termination of payment of tax, land fees as well as electricity, water, telecommunication charges. The Draft Decree is pending the Prime Minister’s approval.

Under the Draft Decree, there are four key groups of tasks for government agencies.

Group 1: Implement flexible and effective measures to prevent and control the COVID-19 pandemic, creating conditions for enterprises to stabilize and maintain production and business activities.

Group 2: Ensure stable production, smooth and efficient circulation of goods, overcome supply chain disruptions

_ Apply fast-track customs clearance for aid or donation from abroad for the healthcare sector to deal with the pandemic
_ Allow enterprises to submit scanned copies certified by digital signatures for documents that must be submitted as originals in the form of paper/notarized/certified original to resolve bottlenecks of customs clearance of goods

Group 3: Support to cut costs, remove difficulties in cash flow for businesses

_ Propose policies suspending or reducing the social insurance premiums in 2021 for businesses until June 2022.
_ Develop a plan to support air transport enterprises, and report to the Prime Minister in September 2021.
– Requesting shipping companies to publicly and transparently list shipping rates to eliminate unreasonable increase in freight rates that lead to cost burden for enterprises
_ Reduce of electricity prices for goods warehouses of logistics and processing enterprises in the agriculture, forestry, fishery and a number of commodity industries with export turnover of over USD 1 billion USD. Continue to reduce electricity prices for tourist accommodation establishments.
– Expeditiously implement the issued policies on relaxation and reduction of taxes, fees, charges and land rents; implement preferential tax policies for imported goods to finance COVID-19 prevention and control after being approved by the Government.
– Extend the deadline for paying excise tax on automobiles manufactured or assembled in Vietnam. Continue to reduce registration fees for domestically manufactured or assembled cars for an additional period of time in line with the COVID-19 pandemic.
_ Research to allow travel businesses to temporarily withdraw deposits for domestic and international travel and tourism services; reduce deposit withdrawal settlement time from 60 days to 30 days; continue to extend the reduction of the license fee for travel service business and issue tourist guide cards until the end of 2021.
_ Continue to administer monetary policy to control inflation, contributing to stabilizing the macro-economy; encourage credit institutions to continue reducing lending interest rates for existing loans and new loans to support production and business.
_ Supplement policies on debt rescheduling, exemption and reduction of interest and fees, keeping the same debt group for customers affected by the Covid-19 epidemic
_ Research and consider the exemption of trade union fees for members of businesses affected by the COVID-19 pandemic in 2021 and 2022

Group 4: Regarding labor issues, experts

_ Propose policies to flexibly apply and relax regulations and conditions on the grant and extension of work permits for foreign experts working in Vietnam
_ Adjust regulations on tax finalization and bad debt and for borrowing capital to pay wages to employees when restoring production and business.

This is the second Draft Decree issued by the Ministry of Planning and Investment upon collection and investigation of opinions from Deputy Prime Minister Vu Duc Dam, Deputy Prime Minister Le Van Thanh and opinions of 15 ministries. As such, it has reflected the current situations as well as takes into consideration the cities’ and provinces’ proposals. The Vietnam Government has continuously proved that it accompanies the business community to immediately implementing measures to remove difficulties and bottlenecks in production and business with the motto “soonest – most effective” in order to minimize damage and negative impacts on the business sector.

For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.

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

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

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