Tag Archives: vietnam

Lawyer in Vietnam Dr. Oliver Massmann PUBLIC MERGERS AND ACQUISITIONS

Vietnam has remained an attractive destination for foreign investors. In 2017, the total FDI capital to Vietnam is USD35.88 billion, an increase of 44.4% compared to last year. Out of USD35.88 billion FDI, USD6.19 billion came from 5,002 M&A deals, up 45.1% against last year.
Real estate continues being a very attractive sector, with USD1.5 billion being poured into the market via M&A, setting the record this year. Residential remains one of the most attractive segments and more interest is also put on commercial segment, especially Grade A offices. Main investors still come from Japan, Korea, Singapore, and China. The retail, consumer goods, and industrial goods are also very active, and investors tend to focus on leading companies as they have a big market share and strong brand value.
Main drivers of Vietnam’s M&A market are:
• Privatization of state-owned enterprises. It is forecast that there will be around 8-10 big privatization deals in 2018, including the sale of 24.86% shares of Petrolimex, 20% shares of Aviation Corporation of Vietnam, 53.48% state shares in Vietnam Textile Group, 57.92% state shares in Vietnam Steel Corporation and 49% of PV Oil. Hanel, Viglacera, Lilama are also in the list for privatization.
• Trade liberalization as a result of CPTPP, EU- Vietnam FTA, etc.
• 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.
Notable deals in 2017 include the following:
• The market in 2017 sees several M&A deals in state-owned enterprises where the privatization is pushed hard by the Government. Vietnam Beverage – a company of a Thai billionaire managing ThaiBev buying more than 53% shares in Sabeco – a company owned by the Ministry of Industry and Trade at USD 5 billion, is the most notable and successful privatization deal this year.
• In December 2017, Shinhan Bank Vietnam Ltd. (“Shinhan Bank Vietnam”) acquired ANZ Bank (Vietnam) Limited’s retail business. This successful transaction has been considered as a big step for Shinhan Bank Vietnam’s development in Vietnam market, as well as a rapid growth for Vietnam retail banking in the upcoming time.
• In mid- November 2017, Jardine Cycle & Carriage Limited (JC&C), via Platinum Victory Pte. Ltd bought 5.53% shares of Vinamilk at USD616.6 million.
• In June 2017, Alibaba Group additionally bought shares of Lazada at USD1 billion, thus increasing its shares in Lazada to 83%
• In July 2017, Sea Limited (Singapore) bought 82% shares of Foody Corporation at USD64 million
• In November 2017, JD.com bought shares in Tiki JSC at USD 44 million
• In January 2018, Creador (a private Kula Lumpur-based investment fund) bought 35% shares of Mobile World Investment JSC at USD43 million.
• Synnex Technology International bought 30% shares of FPT Retail and 47% shares of FPT Trading from FPT Corporation at around USD 41 million.
• Shinhan cooperated with Vinacapital to invest USD100 million in Novaland.
How to obtain control of a public company
The most common means of obtaining control over a public company are as follows:
o The acquisition of shares/charter capital through:
o buying shares/charter capital from the existing shareholders of the company;
o buying shares/charter capital of a listed company on the stock exchange; and
o public share purchase offer.
o Through a merger. The 2014 Law on Enterprises sets out the procedures for company mergers by way of a transfer of all lawful assets, rights, obligations and interests to the merged company, and for the simultaneous termination of the merging companies.
o Through the acquisition of assets.
There are restrictions on the purchase of shares/charter capital of local companies by foreign investors in certain sensitive sectors. In addition, the law is silent on merger or assets acquisition (e.g., business spin-off) transactions where a foreign investor is a party. Regarding other assets acquisition transactions, if the asset is a real property, foreign ownership right will be restricted according to real estate laws.
Securities of public companies must be registered and deposited at the Vietnam Securities Depository Centre before being traded.
Depending on the numbers of shares purchased, an investor can become a controlling shareholder. Under the Vietnam Law on Securities, a shareholder that directly or indirectly owns 5% or more of the voting shares of an issuing organization is a major shareholder. Any transactions that result in more than 10% ownership of the paid-up charter capital of the securities company must seek approval of the State Securities Commission (SSC).
What a bidder generally questions before making a bid
Before officially contacting the potential target, the bidder conducts a preliminary assessment based on publicly available information. The bidder then contacts the target, expresses its intention of buying shares/subscribing for its shares and the parties sign a confidentiality agreement before the due diligence process. The confidentiality agreement basically includes confidentiality obligations in performing the transaction. The enforcement of confidentiality agreements by courts in Vietnam remains untested.
A bidder’s legal due diligence usually covers the following matters:
• Corporate details of the target and its subsidiaries, affiliates and other companies that form part of the target.
• Contingent liabilities (from past or pending litigation).
• Employment matters.
• Contractual agreements of the target.
• Statutory approvals and permits regarding the business activities of the target.
• Insurance, tax, intellectual property, debts, and land-related issues.
• Anti-trust, corruption and other regulatory issues.
Restrictions on shares transfer of key shareholders
Founding shareholders can only transfer their shares to other founding shareholders of the company within three years from the issuance of the Enterprise Registration Certificate. After then, the shares can be transferred freely. An internal approval of the general meeting of shareholders is always required if:
• The company increases its capital by issuing new shares.
• There is any share transfer of the founding shareholders within the above three-year period.
If the sale and purchase is a direct agreement between the company and the seller in relation to an issuance of shares, the selling price must be lower than the market price at the time of selling, or in the absence of a market price, the book value of the shares at the time of the approval plan to sell the shares. In addition, the selling price to foreign and domestic buyers must be the same.
When a tender offer is required
A tender offer is required in the following cases:
• Purchase of a company’s circulating shares that results in a purchaser, with no shareholding or less than a 25% shareholding, acquiring a 25% shareholding or more.
• Purchase of a company’s circulating shares that results in a purchaser (and affiliated persons of the purchaser), with a 25% or more shareholding, acquiring a further 10% or more of circulating shares of the company.
• Purchase of a company’s circulating shares that results in a purchaser (and affiliated persons of the purchaser), with a 25% shareholding or more, acquiring a further 5% up to 10% of currently circulating shares of the company within less than one year from the date of completion of a previous offer.
There is no guidance on building a stake by using derivatives. In addition, the bidder cannot purchase shares or share purchase rights outside the offer process during the tender offer period.
The bidder must publicly announce the tender offer in three consecutive editions of one electronic newspaper or one written newspaper and (for a listed company only) on the relevant stock exchange within seven days from the receipt of the State Securities Commission’s (SSC’s) opinion regarding the registration of the tender offer. The tender offer can only be implemented after the SSC has provided its opinion, and following the public announcement by the bidder.
Making the bid public
The offer timetable is as follows:
• The bidder prepares registration documents for its public bid to purchase shares.
• The bidder sends the bid registration documents to the SSC for approval and, at the same time, sends the registration documents to the target.
• The SSC reviews the tender documents within seven days.
• The board of the target must send its opinions regarding the offer to the SSC and the shareholders of the target within 14 days from receipt of the tender documents.
• The bid is announced in the mass media (although this is not a legal requirement).
• The length of the offer period is between 30 and 60 days.
• The bidder reports the results of the tender to the SSC within 10 days of completion.
Companies operating in specific sectors (such as banking, insurance, and so on) can be subject to a different timetable.
Offer conditions
A takeover offer usually contains the following conditions:
• The terms and conditions of the offer apply equally to all shareholders of the target.
• The relevant parties are allowed full access to the tender information.
• The shareholders have full rights to sell the shares.
• Applicable laws are fully respected.
An offer can also be subject to conditions precedent. Conditions precedent are set out in the share sale and purchase agreement or the capital contribution transfer agreement. There is no specific restriction on conditions precedent other than the requirement that they cannot be contrary to law and conflict with social ethics (although the legal definition of social ethics is unclear). The most common conditions precedent are:
• Amendments to the charter/relevant licence of the target.
• Obtaining necessary approvals to conduct the transaction.
• Changes to the target’s management body.
Payment of the contract price will only be made after the conditions precedent are met.
Employee consultation
There is no requirement under Vietnamese law that the employees must be consulted about the offer. However, if a layoff is to be conducted, the employer must:
• Prepare a labour usage plan.
• Consult with the employee representative.
• Notify the competent labour authority on the implementation of the labour usage plan.
When a tender offer is required?
A tender offer is required in the following cases:
• Purchase of a company’s circulating shares that results in a purchaser, with no shareholding, or less than a 25% shareholding, acquiring a 25% shareholding.
• Purchase of a company’s circulating shares that results in a purchaser (and affiliated persons of the purchaser), with a 25% or more shareholding, acquiring a further 10% or more of circulating shares of the company.
• Purchase of a company’s circulating shares that results in a purchaser (and affiliated persons of the purchaser), with a 25% shareholding or more, acquiring a further 5% up to 10% of currently circulating shares of the company within less than one year from the date of completion of the previous offer.
Form of consideration and minimum level of consideration
Under Vietnamese law, shares can be purchased by offering cash, gold, land use rights, intellectual property rights, technology, technical know-how or other assets. In practice, acquisitions are most commonly made for cash consideration.
In cases of full acquisition of state-owned enterprises, the first payment for the share purchase must not be less than 70% of the value of such shares, with the remaining amount being paid within 12 months.
In transactions involving auctions of shares by state-owned enterprises, the purchaser must make a deposit of 10% of the value of the shares registered for subscription based on the reserve price at least five working days before the auction date included in the target company’s rule. Additionally, the purchaser must transfer the entire consideration for the shares into the bank account of the body conducting the auction within ten working days of the announcement of the auction results.
In the case of a public tender offer, the payment and transfer of shares via a securities agent company appointed to act as an agent for the public tender offer must comply with Decree 58/2012/ND-CP.
Delisting a company
If a company seeks voluntarily de-listing, it must submit an application for de-listing that includes the following documents:
• A request for de-listing.
• For a joint stock company:
o the shareholders’ general meeting approval of de-listing of the stock;
o the board of directors’ approval of de-listing of bonds; and
o the shareholders’ general meeting approval of de-listing of convertible bonds.
• The members’ council (for a multi-member limited liability company) or the company’s owner (for a single member limited liability company) approval of de-listing of bonds.
• For a securities investment fund, the investors’ congress approval of de-listing of the fund’s certificate.
• For a public securities investment company, the shareholders’ general meeting approval of stock de-listing.
A listed company can only de-list its securities if de-listing is approved by a decision of the general meeting of shareholders passed by more than 50% of the voting shareholders who are not major shareholders.
If a company voluntarily de-lists from the Hanoi Stock Exchange or Ho Chi Minh Stock Exchange, the application for de-listing must also include a plan to deal with the interests of shareholders and investors. The Hanoi Stock Exchange or Ho Chi Minh Stock Exchange must consider the request for de-listing within ten and 15 days from the receipt of a valid application, respectively.
Transfer duties payable on the sale of shares in a company
Depending on whether the seller is an individual or a corporate entity, the following taxes will apply:
• Capital gains tax. Capital gains tax is a form of income tax that is payable on any premium on the original investor’s actual contribution to capital or its costs to purchase such capital. Foreign companies and local corporate entities are subject to a corporate income tax of 20%. However, if the assets transferred are securities, a foreign corporate seller is subject to corporate income tax of 0.1% on the gross transfer price.
• Personal income tax. If the seller is an individual resident, personal income tax will be imposed at the rate of 20% of the gains made, and 0.1% on the sales price if the transferred assets are securities. An individual tax resident is defined as a person who:
o stays in Vietnam for 183 days or longer within a calendar year;
o stays in Vietnam for a period of 12 consecutive months from his arrival in Vietnam;
o has a registered permanent residence in Vietnam; or
o rents a house in Vietnam under a lease contract of a term of at least 90 days in a tax year.
If the seller is an individual non-resident, he is subject to personal income tax at 0.1% on the gross transfer price, regardless of whether there is any capital gain.
Payment of the above transfer taxes is mandatory in Vietnam.
Regulatory approvals
The investor will need to register the capital contribution and purchase of shares if either:
• The target is operating in one of the 267 conditional sectors referred to in the 2015 Investment Law.
• The capital contribution and purchase of shares results in foreign investors owning 51% or more of the target’s charter capital (in particular, from below 51% to more than 51% and from 51% to above 51%).
The local Department of Planning and Investment where the target is located must issue its final approval within 15 days from the receipt of a valid registration application. However, in practice, this procedure can take several months due to the workload of certain central authorities and the lack of clear guidance documents. Therefore, the registration requirement can cause substantial delays to the whole M&A process.
In other cases, the target company only needs to register change of membership / shareholders at the Business Registration Division.
Restrictions on repatriation of profits and/ or foreign exchange rules for foreign companies
If the target company in Vietnam already has an investment registration certificate, it must open a direct investment capital account at a licensed bank in Vietnam. Payment for a share purchase by a foreign investor must be conducted through this account. The account can be denominated in Vietnamese dong or a foreign currency. In addition, if the foreign investor is an offshore investor, it will also need to open a capital account at a commercial bank operating in Vietnam to carry out the payment on the seller’s account and receive profits.
If the target company in Vietnam does not have an investment registration certificate, the foreign investor will need to open an indirect investment capital account for payment to the seller and remittance of profits.
Please do contact the author Dr. Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Lawyer in Vietnam Dr. Oliver Massmann Public Mergers and Acquisitions: market analysis overview 2018

Largest / most noteworthy public M&A transactions in the past 12 months
Oil gas and chemicals
In May 2017, Earth Chemical bought 100% stake in A My Gia Joint Stock Company at about USD79.2 million.
In July 2017, Vietnam International Joint Stock Commercial Bank bought 100% business of Commonwealth Bank of Australia (Ho Chi Minh Branch).
In December 2017, Shinhan Bank Vietnam Ltd. (“Shinhan Bank Vietnam”) acquired ANZ Bank (Vietnam) Limited’s retail business. This successful transaction has been considered as a big step for Shinhan Bank Vietnam’s development in Vietnam market, as well as a rapid growth for Vietnam retail banking in the upcoming time.
Retail. Noteworthy public M&A deals include the following:
• In January 2018, Creador (a private Kula Lumpur-based investment fund) bought 35% shares of Mobile World Investment JSC at USD43 million.
• ThaiBev buying more than 53% shares in Sabeco – a company owned by the Ministry of Industry and Trade at USD 5 billion.
• In November 2017, JD.com bought shares in Tiki JSC at USD 44 million.
• In June 2017, Alibaba Group additionally bought shares of Lazada at USD1 billion, thus increasing its shares in Lazada to 83%.
• In July 2017, Sea Limited (Singapore) bought 82% shares of Foody Corporatio at USD64 million.
• In April 2017, Shinhan Vietnam Bank bought the retail business of ANZ at an undisclosed value.
• In May 2017, Bien Hoa Sugar Company and Thanh Thanh Cong Tay Ninh Sugar Company bought 100% charter capital of HAGL Sugar at about USD58.52 million.
• Synnex Technology International bought 30% shares of FPT Retail and 47% shares of FPT Trading from FPT Corporation at around USD 41 million.
Food. Noteworthy deals include the following:
• In mid- November 2017, Jardine Cycle & Carriage Limited (JC&C), via Platinum Victory Pte. Ltd bought 5.53% shares of Vinamilk at USD616.6 million.
• In late March 2017, CJ Cheiljedang Corporation bought 20% stake in Saigon Trading Corporation at USD8.2 million, bringing its total ownership in Cau Tre Export Products Processing Joint Stock Company to 71.6%.
• In May 2017, Kido Corporation bought 27% stake in Vietnam Vegetable Oil Industry Corporation, bringing its total ownership in the company to 51%.
Real estate. Noteworthy deals include the following:
• Warburg Pincus in joint venture with VinaCapital bought 50% shares in Sofitel Legend Metropole Hanoi at about USD100 million.
• Warburg also established a joint venture with Becamex Industrial Development Corporation to invest in industrial real estate and logistics services with a capital of USD200 million.
• In May 2017, Elite Capital Resources Limited bought 100% shares of VinaLand Fund (VinaCapital) in Thang Long Limited Company (project owner of Times Square Hanoi) at USD41 million.
• In the first quarter of 2017, Sulyna Hospitality bought 70% stake in a 4-start resort in Phu Quoc from Berjaya Land at USD14.65 million.
• In the first quarter of 2017, An Gia Investment Corporation and its partner Creed Group bought 5 apartment blocks of La Casa Project of Van Phat Hung Corporation at about USD40 million.
• In March 2017, Keppel Corporation increased its shares in Saigon Centre project ato 16% at USD37 million.
• In January 2017, CapitaLand announced the purchase of 90% stake in CapitaLand Thanh Nien.
• Shinhan cooperated with Vinacapital to invest USD100 million in Novaland
Insurance. Noteworthy deals include the following:
• In April 2017, Aviva Insurance Corporation bought 50% stake of VietinBank Aviva Joint Venture Company from Vietnam Joint Stock Commercial Bank for Industry and Trade.
The major trends in the structuring of public M&A transactions
In Vietnam, M&A transactions usually take the form of either share or asset acquisitions, with share acquisition transactions outnumbering asset acquisition transactions.
Share acquisitions by foreign purchasers are commonly structured as offshore direct investments. The new investor can:
• Acquire shares or capital contributions from an existing shareholder in the target (for example, a joint stock company, limited liability company, and so on).
• Subscribe for newly issued shares of the target (for a joint stock company).
• Make further capital contributions to the target (for a limited liability company).
In the case of an asset deal, a foreign purchaser must generally establish a new subsidiary in Vietnam.
In addition, M&A transactions can also take the form of a merger. One or more companies of the same type can be merged into another company by transferring all assets, rights, obligations and interests to the merged company, terminating the existence of the merging company.
The 2014 Enterprise Law sets out the types of business structuring that can be used by investors as a result of M&A transactions. In addition, the 2014 Investment Law is the first law that regulates M&A transactions and clearly provides that such transactions do not require an investment registration certificate. Now, the foreign investors must seek approval from the local Department of Planning and Investment of the transaction if the:
• Target company operates in conditional business sectors applicable for foreign investors.
• Investment leading to foreign ownership of the target company is 51% or more (in particular, from below 51% to more than 51% and from 51% to above 51%).
In other cases, the target company only needs to register a change of membership/shareholding at the Business Registration Division. This change has ended years of uncertainty and frustration faced by foreign investors seeking entry into the Vietnam market or expansion through M&A transactions.
The level/extent of private equity-backed bids in the past 12 months
Investment in the form of M&A transactions is still the most popular form compared with private equity investment. In recent months, private equity funds have been following the securities market in Vietnam, especially companies carrying out value chain operations. Consumer goods and infrastructure are the sectors that attract the most attention. However, due to limited publicly available information, it is not possible to fully assess the level of private equity-backed bids.
The approach of the competition regulator(s) in the past 12 months
The Vietnam Competition Authority under the Ministry of Industry and Trade (VCA) must be notified of the transaction if participating companies have a combined market share in the relevant market of 30% up to 50%. The VCA will then examine whether the calculation of the combined market share is correct and whether the transaction is prohibited (that is, whether the combined market share exceeds 50%, except in certain cases). The transaction can be conducted when the VCA issues a written confirmation that the transaction is not prohibited under competition law.
In recent Grab buying Uber case in South East Asia, the VCA has started its investigation of possible violation of Vietnam’s Competition Law. The case is still at the examination stage.
For more information on the VCA, see www.vca.gov.vn/Default.aspx?lg=2.
Main factors affecting the public M&A market over the next 12 months
The country’s deeper and wider integration into the world’s economy is offering new opportunities for M&A activities.
Another factor includes the high pressure faced by the government to privatise state-owned enterprises to meet requirements under signed trade pacts, especially the EU – Vietnam Free Trade Agreement, which is expected to come into force in 2019.
Encouraging signs for foreign investment include:
• Reformed policies to allow wider access to foreign investors.
• 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.
The introduction of the new Investment Law, Enterprise Law, Resolution No. 42 on handling bad debts and other laws and policies are creating an improved legal environment for investment and trade in general, and the M&A market in particular. However, the following factors also affect M&A transactions:
• Divergent interpretations and implementations by local licensing authorities of international treaties such as Vietnam’s WTO Commitments.
• Different licensing procedures applied to different types of transactions (for example, for foreign invested companies and domestic companies, public companies and private companies, and for buying state-owned shares or private shares).
Although legal and governance barriers, along with macro instability and the lack of market transparency are still the greatest concerns for investors, M&A deals in Vietnam are still expected to be one of the key, effective channels for market entry.
The major expected trends in the Vietnam M&A market include:
• Bank restructurings.
• Acquisitions and anti-acquisitions, particularly in the real estate sector.
• Growing Japanese and Thai investment in Vietnam through M&A transactions.
• Reform of SoEs.
Please do contact the author Dr. Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam.

Land speculation clouds Vietnam’s renewable energy projects

Vietnam’s southern province of Ninh Thuan continues to see growth in its renewable energy resources, with Spain’s Siemens Gamesa Renewable Energy (SGRE) winning in its bid for the second phase of the existing 39MW Dam Nai wind farm.


According to the plan, the company will supply 12 turbines by October this year. SGRE will also handle the management and maintenance of the facility over the course of the next ten years for Dam Nai’s operator, independent power producer Blue Circle.


The first phase of the Dam Nai wind farm kicked off in April last year, with total investment capital of US$15 million. During the first phase SGRE installed three turbines, which are already operational. Siemens Gamesa has said it expects “significant growth” in Vietnam over the coming years as the country “begins to utilise some of the best wind resources in Southeast Asia.”


As of April 2018, the country had 197MW of installed wind power capacity, split between 98MW onshore and 99MW offshore.


On top of turbines, the province of Ninh Thuan has also been targeted by firms for solar power development, thanks to its status as one of the driest areas of the country. A number of companies have already signed up to develop projects in the province. However, despite excellent solar conditions, a growing economy and a strong manufacturing base, Vietnam’s solar ambitions have been relatively modest compared to its near-neighbors in the region.


Not all blue skies


Vietnam is among the most promising renewable energy markets in Southeast Asia, offering significant opportunities for investment in clean energy, especially wind and solar power. With a population touching 92 million and energy demand forecast to grow by 13 percent annually over the next four years, the country is eyeing an energy policy that includes a substantial mix of renewables.


According to the government’s revised Power Development Master Plan VII, Vietnam needs investment in the power sector amounting to US$150 billion for the period up to 2030 in order to keep pace with the nation’s projected annual growth of 10-12 percent. The renewable energy sector is considered a priority for investment with contributions set at 7 percent by 2020 and 10 percent by 2030.


A large number of firms have already been lured to take advantage of the market’s huge potential. A recent report by USAID (United States Agency for International Development) found that in the solar power sector, as of 2017, more than 100 new projects had been planned, including 70 in the province of Binh Thuan.


There are, however, issues hindering the sustainable development of the sector. These include poor administration and low transparency, leading to corruption among investors and officials. The major risks are related to programming and licensing of investors and access to land. The rosy picture of deals hides a more problematic truth.


Many investors registering projects don’t intend to join the market immediately, but instead are snapping up advantageous plots of land. For wind and solar power projects in particular, location is everything. Areas with strong and consistent natural wind or intense sunshine will inevitably bring better returns for firms who set up shop with their panels or turbines.


One expert said that nearly all land plots in advantageous positions are now occupied, though the renewable power plants remain on paper, and may never be developed. This speculation over land poses a risk of harming the market, and slowing the much-needed transformation of Vietnam’s energy sector.


As the top spots get booked up, real investors will have to stump up a premium for their projects, or shell out fees for intermediaries. Transparency in development programming, licensing procedures and project execution supervision is a must for the market to run effectively.


Coupled with relatively low feed-in tariffs (FiT) and arduous legislative hurdles to overcome, the added headache of a premium on land may cause investors to look elsewhere when considering locations for their renewable power projects.


A recent StoxPlus report has identified 245 renewable energy projects currently in Vietnam, including wind and solar power as well as biomass, which are being deployed at different stages. Obviously, if all planned projects begin operation the country’s targets would be met overnight. However, of the total projects, only 19 percent have reached the construction phase and 8 percent have begun operation. Most projects are still in the preparatory stages.


Investors are also struggling with a lack of clear information about the market. Even though information about renewable energy projects in Vietnam has been floating around, there is no clear details on the number of projects or their development status, creating confusion and uncertainty among developers and other stakeholders.


Joint ventures between foreign and domestic enterprises may help to address some of these bottlenecks – with local firms providing some much-needed information and international players adding the technical know-how that is lacking from the domestic market. This is, unfortunately, only a partial solution. In the long term, a stronger legislative framework will be needed to support to sustainable development of the renewable power sector in Vietnam, and help the country to meet its targets and support its booming energy needs.


For more information about Vietnam’s renewable energy sector, please contact Giles at GTCooper@duanemorris.com or any of the lawyers in our office listing. Giles is co-General Director of Duane Morris Vietnam LLC and branch director of Duane Morris’ HCMC office.

Hanoi has long road ahead to become a ‘smart city’

Wirelessly managing streetlights to cut the cost of energy. Sensors providing real-time alerts on water leaks and air pollution. Intelligent management of public transport and road networks to avoid congestion. These are just some of the benefits a ‘smart city’ could provide, and if authorities and investors succeed, these advancements could be coming to Hanoi in the near future.


Plans are already in place to turn Vietnam’s capital into a smart city by 2030, with priority areas identified as health, education, transport and tourism. Taken together, the application of technology in these areas will bring significant improvements to residents’ quality of life and boost the city’s tourism potential.


Hanoi has already applied smart systems to monitor car parking in some districts, and an anticipated roll-out of this technology across the whole city aims to provide information on traffic status and better manage public passenger transport.


Similar implementations are planned for other sectors. With input and investment from major foreign players, the city sees the deployment of modern IT infrastructure utilising the Internet of Things (IoT). Citizens will be connected to their homes and primary services, as well as traffic infrastructure and vital information about their environment. For this to happen successfully, work is needed to set up modern infrastructure in transport, healthcare and education.


In order for these systems to be implemented and managed effectively, foreign know-how will be needed.


Intelligent implementation


According to local authorities, the process of transforming Hanoi into a smart city will take place over three phases. The first, from 2016 to 2020, will consist of building the foundations and infrastructure needed, as well as implementing smart applications in traffic, tourism, environmental management and security.


The second phase, from 2020 to 2025, smart city solutions will be put into operation and a digital economy will be formed. In the third phase, from 2025 to 2030, the different parts of the project will be connected and Hanoi will become a functioning smart city.


The capital city is not alone. According to the Ministry of Information and Communications, the government has set a target of creating five smart cities by 2020, and is designing

criteria for such projects, making it more convenient for foreign investors to jump in.


The southern hub, Ho Chi Minh City, has its own plans to get ‘smart’ in the near future. Tran Vinh Tuyen, deputy chairman of the city People’s Committee and head of the smart city management board plans “a comfortable, positive, healthy and safe living environment with convenient public transportation, good healthcare, less crime and clean water and environment.”


In addition to these benefits, smart cities will bring sustainable economic growth, and help develop a digital, knowledge-based economy. Such moves are sure to generate interest and attract investment.


Not all plain sailing


Domestic firms like Viettel, VNPT, FPT, and CMC are keen to get involved with the development of smart cities in Vietnam. Various countries with experience in smart cities have also expressed a desire to cooperate with Hanoi in this endeavour. In particular, leaders from Singapore have shown a willingness to partner with Vietnam on hi-tech parks and software industrial zones, as well as working together on the smart city project. In addition to funding, Singapore is ready to provide training and support to implement and manage smart city technology and software.


With Vietnam continuing to grow rapidly, concerns over rising energy demands are high on the agenda. As a key component of a smart city, a greater focus will be needed on green and sustainable energy if the country is to successfully fuel onward growth.


There is clearly a lot of potential in this sector, however, energy is just one challenge standing in the way. Specifically, Hanoi faces problems in ICT infrastructure, traffic congestion, water shortages, wastewater treatment and increasing environmental pollution. A dearth of qualified human resources will also present difficulties in implementing some of the proposed solutions.


However, for many sites, construction has yet to begin. A lack of clear regulations is proving to be a major roadblock for the development of smart cities, with the implementation of a US$37.3 billion smart city in Hanoi’s Dong Anh district struggling to get off the ground. More than 20 large Japanese firms, including Sumitomo, Mitsubishi, Panasonic and Tokyo Metro have signed up to provide various services but are yet to begin work.


The 310 hectare project will be designed by Nikken Sekkei Group and is expected to be completed in 2023, if they get the green light.


In this case it is authorities lagging behind in the provision of clear criteria. The novelty of such projects is one issue, with city leaders unsure on how these new developments will fit into existing city-planning norms.


If the target of five smart cities by 2020 is to be met, the government will need to come up with some clear and detailed legislation soon, so that both investors and authorities are happy with the planned projects. Of course, updating regulations in Vietnam can prove to be a drawn-out affair and investors may be waiting some time before ground is broken on the cities of the future.


For more information about investment in Vietnam, please contact Giles at GTCooper@duanemorris.com or any of the lawyers in our office listing. Giles is co-General Director of Duane Morris Vietnam LLC and branch director of Duane Morris’ HCMC office.

Amazon wades in to Vietnam’s e-commerce jungle

Vietnamese media was abuzz with news that US giant Amazon is set to join the country’s fast-growing retail market this month, with representatives stating that the company will open its platforms to domestic small- and medium-sized enterprises.  Despite the buzz, softly, softly is order of the day with the e-commerce giant aware that there’s plenty of regulation in the pipeline that will affect development of the e-commerce sector in Vietnam.


Amazon signed a deal with the Vietnam E-Commerce Association (VECOM) at the Vietnam Online Business Forum in Hanoi on March 14. The deal was discussed at a meeting late last year between the association and Amazon, according to Brand Finance Global Ranking.


With a young, hyper-connected population of nearly 100 million, Vietnam is a prime target for e-commerce development in Southeast Asia. Unfortunately for shopaholics, the representative from Amazon denied the company had intentions to trade in Vietnam at this time.


Instead, Amazon has agreed to provide e-commerce services for VECOM, which is a group of 140 local online businesses, marking the first time the association has collaborated with an e-commerce player. The Amazon deal will allow Vietnamese firms to sell and export goods through its ecosystem. In return, The Vietnamese market holds strong growth potential for Amazon in the future.


Prime target


On the bright side, it may not be long before Amazon and other online retailers change their tune. Partnering with third-party merchants, like in the agreement with Vietnam, is likely a precursor to Amazon entering the market with its full slate of offerings. Similar steps were taken by the firm in Australia and Brazil.


Such deals can be considered a way for Amazon to get its foot in the door and build familiarity with consumers before introducing its full line-up of services. This could mean that Vietnam is the next target in the company’s Southeast Asian strategy, after rolling out in Singapore last year. As subscribers dwindle, expanding from saturated markets like the US and EU would be a good bet, and Southeast Asia as a whole provides a promising future for e-commerce.


In particular, Vietnam’s e-commerce market grew by 25 percent last year, and the growth trend is expected to continue. Revenue from online retail is forecast to hit US$10 billion by 2020, accounting for 5 percent of the country’s total retail market.


As it stands, Lazada dominates a third of the country’s online shopping market. Head of Chinese giant Alibaba, Jack Ma, stumped up US$1 billion to buy stakes in Lazada and enter the Southeast Asian market, including Vietnam. This move allowed deeper penetration into Vietnam’s e-commerce and brought products directly to Vietnamese consumers through the B2C (business to consumer) model.


It is this model that Amazon will seek to emulate. The Chinese firm is positioned primarily as an intermediary – connecting sellers to buyers, and operating a delivery network.


Amazon clearly sees the potential. The country has the ingredients for a thriving e-commerce economy thanks to a young population, rising incomes and growing internet and mobile adoption. This last point, the ubiquity of mobile phones, will prove crucial if online platforms are to succeed. The importance of mobile commerce in generating traffic is far greater in Southeast Asia than in other Western economies, so a mobile strategy will make or break a venture.


From street to screen


The changing tastes of the country’s young consumers is pushing traditional brick-and-mortar stores to rethink their strategies. Big retailers like Vincom, Lotte, AEON and Saigon Co.op have launched online shops with alluring promotions to attract buyers.


However, the market is still at an early stage of development, meaning challenges such as high cash-on-delivery rates, lack of customer trust and poor logistics infrastructure. Meanwhile, e-commerce companies are spending aggressively to gain market share, resulting in fierce competition.


Difficulties in turning a profit have led to a number of failures. VNG Corp reported a loss of over US$5.3 million from its investment in e-commerce firm Tiki.vn in 2017. Other local e-commerce companies like Lingo.vn, Deca.vn and Beyeu.com have been forced to shut down due to prolonged losses.


The blame for these failures has been placed on high logistics costs. According to experts, companies need to allocate enormous expenses for their e-commerce business, from sales and marketing to warehousing and logistics, easily eating into profits. Many platforms also overspend on promotions and discounts in early months to lure customers and increase their market share in a crowded environment.


However, the challenges don’t seem to have dampened enthusiasm and foreign players continue to pump money into the online retail sector. Undeterred, Lazada is investing in the growth of its first mile, last mile and fulfillment capabilities to keep up with the growth of e-commerce in Vietnam. In addition to developing automated sorting centres to speed up delivery, the company also cut commissions by 50 per cent to lure in more online retailers.


Online retail makes up just 1 percent of the total retail market in Vietnam, compared to 14 percent in the US and China. As such, there is plenty of room still to grow. The ongoing expansion of the marketplace, and continued investment pouring in, will help Vietnam to develop an e-commerce ecosystem, allowing for opportunities in logistics, warehousing, and online payments.


For more information about e-commerce in Vietnam, please contact Giles at GTCooper@duanemorris.com or any of the lawyers in our office listing. Giles is co-General Director of Duane Morris Vietnam LLC and branch director of Duane Morris’ HCMC office.


Das Unternehmensgesetz von 1999 führte die ersten rechtlichen Rahmenbedingungen der Unternehmensführung in Vietnam ein. Seitdem wurden eine Reihe weiterer gesetzlicher Vorschriften erlassen, einschließlich dem Wertpapiergesetz von 2006, dem Unternehmensführungskodex von 2007, in der Fassung von 2012, und die Offenlegungsvorschriften von 2012, 2015 (für börsennotierte Unternehmen). Zuletzt wurden das Unternehmensgesetz 2014, Decree No.71/2017/ND-CP, das Richtlinien zur Unternehmensführung von börsennotierten Unternehmen enthält, und Circular 95/2017/TT-BTC herausgegeben, um die rechtlichen Rahmenbedingungen für Unternehmensführung und die Anforderungen an die Offenlegung von Informationen und Transparenz der Wertpapiermärkte weiter zu verbessern. Ziel ist es, den Anforderungen an die Entwicklung der Kapitalmärkte und der internationalen Integration gerecht zu werden. Es wird erwartet, dass das neue Wertpapiergesetz in der Nationalversammlung von Vietnam, in der 6. Sitzung, XIV im Oktober 2018, vorgelegt und diskutiert wird.
Im Folgenden stellen wir einige wichtige Fortschritte und bevorstehende Änderungen der Unternehmensführungs- und Rechnungslegungsvorschriften Vietnams dar:
Unternehmensführung fördert Investitionen
Gute Unternehmensführung verringert die Anfälligkeit von einem Wachstumsmarkt, wie Vietnam, für Finanzkrisen, schützt Eigentumsrechte, reduziert Transaktions- und Kapitalkosten und fördert die Kapitalmarktentwicklung. Mit anderen Worten, eine schwache Unternehmensführung verringert das Anlegervertrauen und entmutigt Investitionen von außen.
– In 2016 veröffentlichte die International Finance Corporation (IFC) eine Untersuchung mit dem Titel “Corporate Governance Success Stories in Vietnam” (Unternehmensfuehrungserfolgsgeschichten in Vietnam), welche ausdrücklich Vietnams Verbesserung in der Unternehmensführung lobte. Basierend auf der jüngsten, von der Asian Development Bank (Asiatischen Entwicklungsbank), im Jahr 2013 durchgeführten Unternehmensbewertung ist der Unternehmensfuehrungswert für Vietnam in 2013 im Vergleich zu 2012 um 19,2% gestiegen.
– Dieser Erfolg bestätigt die andauernden Bemühungen Vietnams Finanzministeriums, welches eng mit der staatlichen Wertpapierkommisssion von Vietnam (engl. State Securities Commission “SSC”) und anderen staatlichen Institutionen an der Verbesserung der Unternehmensführung in Aktiengesellschaften arbeitet.
Das neue Decree 71 und Circular 95 foerdern stetig gute Unternehmensfuehrung boersennotierter Unternehmen.
Am 6. Juni 2017 erlies die Regierung Decree No. 71/2017/ND-CP, das Richtlinien fuer die Unternehmensfuehrung von boersennotierten Unternehmen enthaelt (“Decree 71”).
Decree 71 trat am 1. August 2017 in Kraft und ersetzte das am 26. Juli 2012 vom Finanzminsterium herausgegebene Circular No. 121/2012/TT-BTC (“Circular 121”).
Am 22. September 2017 gab das Finanzminsterium Circular No. 95/2017/TT-BTC (“Circular 95”), das die Umsetzung einiger Artikel des Decree 71 ueber die Unternehmensverwaltung von boersennotierten Unternehmen leitet, heraus.

Wir heben die wichtigsten Bestimmungen des Decree 71 wie folgt vor:
1. es praezisiert und sieht detaillierte Einschraenkungen von zwischenbertieblichen Darlehen und Buergschaften der Aktiengesellschaft gegenueber den Aktionaeren und ihnen nahestehenden Personen vor;
2. es bietet zwei Moeglichkeiten fuer die Organisation von Aktiengesellschaften: (x) Hauptversammlung, Vorstand, Kontrollgremium und Generaldirektoren oder (y) Hauptversammlung, Vorstand und Generaldirektoren;
3. es bietet neue Voraussetzungen und Qualifikationen für ein unabhängiges Vorstandsmitglied;
4. es bietet strengere Qualifikationen und Bedingungen zur Vermeidung von Interessenkonflikten in Aktiengesellschaften wie (x) der Vorstandsvorsitzende kann nicht der Generaldirektor sein (wirksam ab 1. August 2020), (y) Vorstandsmitglieder einer Aktiengesellschaft können nicht in mehr als 5 anderen Unternehmen Vorstandsmitglieder sein (wirksam ab 1. August 2019) und (z) Transaktionen zwischen einer Aktiengesellschaft und ihren Kontrolleuren, etwaigen Führungskräften und deren nahestehenden Personen sind von der Hauptversammlung oder dem Vorstand zu genehmigen;
5. es bietet detailliertere Offenlegungsanforderungen: zum Beispiel, die Vergütung des Generaldirektors und anderer Führungskräfte muss in den Jahresabschlüssen der Gesellschaft separat angegeben und auf der Jahreshauptversammlung mitgeteilt werden; und
6. es bietet eine neue Charta-Vorlage für Aktiengesellschaften. Es ist nicht ausdrücklich vorgeschrieben, dass die Aktiengesellschaften die Muster-Charta oder die internen Mustervorschriften verwenden müssen, aber sie werden zur Wahrung der Einhaltung der Unternehmensfuehrungsanforderungen gemäß dem Decree 71, dem Wertpapiergesetz und dem Unternehmensgesetz dazu ermutigt.
Entwurf eines neuen Wertpapiergesetzes über die Restrukturierung des Wertpapiermarkts
Am 11. Januar 2017 veröffentlichte das Finanzministerium von Vietnam einen Entwurf eines neuen Wertpapiergesetzes mit dem Ziel, öffentliche Meinungen und Kommentare zu sammeln (“Gesetzesentwurf”). Es wird erwartet, dass der Gesetzesentwurf in der Nationalversammlung von Vietnam, in der 6. Sitzung, NA XIV im Oktober 2018, fertiggestellt, vorgelegt und diskutiert wird.
Der Gesetzesentwurf zielt auf (i) die Schaffung eines effizienteren Rahmens fuer die Regulierung der Wertpapiere und des Wertpapiermarktes, (ii) die Entwicklung des vietnamesischen Wertpapiermarktes im Einklang mit internationalen Bestimmungen, Praktiken und Normen, um den vietnamesischen Wertpapiermarkt von einem Grenz- zu einem Schwellenmarkt voranzubringen und (iii) die Veränderung von Wertpapierprodukten und die Verfahrensverbesserung um Investoren anzuziehen.
Wir heben die wichtigsten Veränderungen des neuen Gesetzesentwurfs wie folgt vor:
1. Die Stärkung der Befugnisse der Staatlichen Wertpapierkommission von Vietnam zur wirksamen Regulierung des Wertpapiermarktes und zur unverzüglichen Behebung von Fehlverhalten: zum Beispiel wird der SSC ermächtigt, von Personen zu verlangen, dass sie Informationen/ Dokumente in Bezug auf Fehlverhalten zur Verfügung stellen; von Kreditinstituten zu verlangen, dass sie relevante Informationen über Banktransaktionen zur Verfügung stellen und die entsprechenden Parteien dazu aufzufordern, sich mit dem SSC zu treffen und mit ihm zusammenzuarbeiten.
2. Die Ermöglichung der Verfügbarkeit von qualifizierteren Waren für den Wertpapiermarkt: zum Beispiel, durch die Verbesserung und detaillierte Bestimmung wie sich mittelständische und große börsennotierte Unternehmen aufzustellen haben, können diese Derivate auf dem Wertpapiermarkt anbieten, wobei die Regularien des Außerbörslichen Handels (engl. Over-the-Counter “OTC”) übernommen werden.
3. Die Restrukturierung des Wertpapiermarktes: zum Beispiel, Hanois und Ho Chi Minhs Wertpapierbörse werden zusammengelegt, um die nationale Wertpapierbörse in Form einer einzigen staatseigenen Gesellschaft mit beschränkter Haftung, die den gesamten nationalen Wertpapiermarkt kontrolliert und reguliert, aufzubauen;
4. Die Restrukturierung von Vietnams Wertpapierdepot: zum Beispiel, Stärkung der Befugnisse und Aktivitäten von Vietnams Wertpapierdepot, wie zum Beispiel die Registrierung von Wertpapierverrechnungen, Hypotheken und Verpfändungen, etc.;
5. Die Überarbeitung der derzeitigen Politik, um den Wertpapiermarkt für ausländische Investitionen attraktiver zu machen: zum Beispiel, Aufhebung der Beschränkung des maximalen Verhältnisses von 49% des ausländischen investierten Kapitals, das für bestimmte Branchen gilt (nicht im Rahmen des WTO-Leistungsplans von Vietnam festgelegt); und
6. Die Verbesserung der Qualität und Zeit der Informationspflichten, die Erhöhung der Transparenz des Wertpapiermarktes.
Vietnams Übernahme von internationalen Rechnungslegungsvorschriften
Derzeit haben 93 % (133 von 143 Rechtsordnungen) weltweit die Übernahme und Umsetzung der International Financial Reporting Standards (IFRS) öffentlich bestätigt und 83% (119 von 143 Rechtsordnungen) verlangen von allen oder fast allen inländischen börsennotierten Unternehmen die Einhaltung der IFRS. Die umfassende Übernahme der IFRS benötigt oft 5 bis 10 Jahre, abhängig von den Bedingungen und Fähigkeiten jedes Landes.
Vertreter des vietnamesischen Finanzministeriums berichteten über die jüngsten Änderungen der Rechnungslegungsstandards, wie sie Circular 200/2014/TT-BTC (in der geänderten Fassung), was groessenteils aktuell, praktisch und in steigender Übereinstimmung mit internationalen Standards war, enthielt.
Die weitere Verfahrensweise Vietnams betreffend, planen die staatlichen Behörden, dass in den Jahren 2018 – 2020, 10 bis 20 einfache IFRS zur praktischen Umsetzung ausgewählt und ab dem Jahr 2020 offiziell auf alle börsennotierten Unternehmen angewendet werden.
Alle anderen Unternehmen, die über ausreichende Bedingungen verfügen und die IFRS anwenden möchten, werden ebenfalls dazu ermutigt. Aber von 2023 bis 2025 müssen alle Firmen im Land ihren Umwandlungsprozess abschließen.
Wenngleich die Unternehmensführung in Vietnam einen gewissen Fortschritt gemacht hat, bleibt sie dennoch niedriger als die guten regionalen und internationalen Standards und Praktiken. Wir sind der festen Überzeugung, dass unsere langfristige Zusammenarbeit und Koordination mit internationalen Organisationen und staatlichen Behörden bei der Reformierung und Entwicklung der Unternehmensführung und anderen Investitions- und Compliance-Regeln Investoren helfen wird, den vietnamesischen Wertpapiermarkt besser zu verstehen und ihre Handelsstrategien dahingehend zu planen.
Bitte zögern Sie nicht, Herrn Dr. Oliver Massmann unter omassmann@duanemorris.com zu kontaktieren, wenn Sie Fragen haben oder mehr darüber erfahren wollen. Dr. Oliver Massmann ist der Generaldirektor bei Duane Morris Vietnam LLC.
Vielen Dank!


The Law on Enterprise in 1999 introduced the first legal framework on corporate governance in Vietnam. Since then, a number of other legal regulations have been issued, including the Law on Securities in 2006, the Corporate Governance Code in 2007, as amended in 2012, and Disclosure Rules in 2012, 2015 (for listed companies). Most recently, Law on Enterprise 2014, Decree No.71/2017/ND-CP providing guidelines on corporate governance of public companies and Circular 95/2017/TT-BTC, issued in order to further improve the legal framework for corporate governance and requirements on disclosure of information and transparency of securities markets to satisfy requirements for the development of capital markets and international integration. New Securities Law are expected to be submitted and discussed in the National Assembly of Vietnam at 6th Session, XIV by October 2018.
We outline below certain key progress and upcoming changes in corporate governance and accounting rules of Vietnam:
Corporate Governance encouraging investments
Good corporate governance reduces emerging market such as Vietnam vulnerability to financial crises, protects property rights, reduces transaction costs and the cost of capital, and promotes capital market development. Other words, weak corporate governance reduces investor confidence and discourages outside investment.
I. 2016, International Finance Corporation (IFC) published a research named Corporate Governance Success Stories in Vietnam, which expressly praised Vietnam’s improvements on corporate governance. Based on the latest corporate governance assessment conducted by Asian Development Bank in 2013, the corporate governance score for Vietnam in 2013 has risen 19.2%, compared to that scored in 2012.
I. confirmed its ongoing effort to raise greater awareness of merits of corporate governance through several programs working and coordinating with Ministry of Finance of Vietnam, State Securities Commission of Vietnam (“SSC”) and other state authorities to improve corporate governance (especially for public companies) in Vietnam.
New Decree 71 and Circular 95 continuously promoting good Corporate Governance for Public Companies
On 6 June 2017, the Government issued Decree No. 71/2017/ND-CP providing guidelines on corporate governance applicable to public companies (“Decree 71”). Decree 71 became effective on 1 August 2017 and replaced Circular No. 121/2012/TT-BTC issued by the Ministry of Finance on 26 July 2012 (“Circular 121”).
On 22 September 2017, the Ministry of Finance issued Circular No. 95/2017/TT-BTC (“Circular 95”) guiding the implementation of some articles of Decree 71 on corporate administration of public companies.
We highlight the key provisions of Decree 71 as follows:
1. it clarifies and provides detail restriction on intercompany loans and guarantees from the public company to the company’s shareholders and shareholders’ related persons;
2. it provides 2 options for organization of the public companies: (x) General Meeting of Shareholders, Board of Management, Board of Controllers, and General Directors, or (y) General Meeting of Shareholders, Board of Management and General Directors;
3. it provides new conditions and qualification of an independent member of the Board of Management;
4. it provides stricter qualifications and conditions to prevent conflict of interest in public companies such as (x) chairman of Board of Management cannot be the General Director (effective 1 August 2020), (y) members of Board of Management of a public company cannot be member of board of management of more than other 5 companies (effective 1 August 2019), and (z) transactions between a public company and its controllers, any management personnel and their related persons to be approved by the General Meeting of Shareholders or the Board of Management;
5. it provides more detail disclosure requirements: for example, salary of general director and other management members are required to be separately stated on annual financial statements of the company and reported to the General Meetings of Shareholders at the annual meeting; and
6. it and Circular 95 provide a new template of charter for public companies. It is not expressly compulsory for public companies to use the sample charter or the sample internal regulations but they are encouraged to use them for the purpose of ensuring compliance with the corporate governance requirements provided for under Decree 71, the Law on Securities and the Law on Enterprises.
Draft New Securities Law on Restructuring Securities Market
On 11 January 2017, the Ministry of Finance of Vietnam published a draft new Securities Law for collecting public opinions and comments (“Draft Law”). The Draft Law is expected to be finalized, submitted and discussed in the National Assembly of Vietnam at 6th Session, NA XIV by October 2018.
The Draft Law aims at (i) creating more efficient framework for regulating securities and securities market, (ii) developing Vietnamese securities market in line with international regulations, practice and norms in order to promote Vietnam’s securities market from a frontier to an emerging market, and (iii) diversifying securities products and reforming procedures for attracting investors.
We highlight the key changes of the new Draft Law as follows:
1. Increasing powers for State Securities Commission of Vietnam to effectively govern the securities market and address promptly the wrongdoings: for example, SSC will be authorized to require persons to provide information / documents in relation to wrongdoings; require the credit institutions to provide relevant information about transactions made via banks; and summon the relevant parties to meet and work with the SSC;
2. Enabling more qualified goods to be available for the securities market: for example, qualifications for determining public companies will be improved to target medium and large size enterprises (not including small size enterprises), more securities products such as derivatives will be available for trading in the securities market, OTC regulations will be adopted, etc.;
3. Restructuring the securities market: for example, Hanoi Securities Stock Exchange and Ho Chi Minh Securities Stock Exchange will be merged to establish the national securities stock exchange in the form of a single member state-owned limited liability company to control and regulate the whole national securities market;
4. Restructuring the Vietnam Securities Depository: for example, increasing the powers and activities of Vietnam Securities Depository such as registration of securities offsetting, mortgage and pledge, etc.;
5. Revising current policy to attract foreign investments in securities market: for example, removing restriction of maximum ratio of 49% foreign invested capital applicable to conditional sectors (not committed under WTO services schedule of Vietnam); and
6. Improving the quality and time of information disclosure obligations, increasing the transparency of the securities market.
Notable comments on Vietnam’s adoption of international accounting rules
Currently, 93 per cent (133 of 143 jurisdictions) around the world have publicly confirmed International Financial Reporting Standards (IFRS) adoption and implementation, and 83 per cent (119 of 143 jurisdictions) require all or most domestic public companies to comply with IFRS. Adopting IFRS standards in a comprehensive way often takes 5 to 10 years depending on the conditions and ability of each country.
Vietnamese Ministry of Finance representative reported the latest changes in accounting standards as contained in Circular 200/2014/TT-BTC (as amended), which was mostly up-to-date, practical and in increased accordance with international standards.
Regarding the roadmap for Vietnam, it is planned by the state authorities that during 2018 – 2020, 10 to 20 simple IFRS standards will be selected to be put into practice, and officially applied for all the firms listed on the stock market from 2020.
All other businesses that have sufficient conditions and wish to apply IFRS are also encouraged to. But from 2023 to 2025, all firms within the country will have to complete their conversion process.
Although corporate governance in Vietnam has made a certain progress, however, it remains lower than the good regional and international standards and practices. We strongly believe that our long-term cooperation and coordination with international organizations and State authorities on reforming and developing corporate governance and other investment and compliance rules will help investors to understand and plan properly their strategy in Vietnam’s securities market.
Please do not hesitate to contact Dr. Oliver Massmann and Tran Minh Thanh 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 and Tran Minh Thanh is Vietnamese lawyer of Duane Morris Vietnam LLC.


Applicable Legal Framework and Reforms Update
1. Which is the entity that conducts procurement for the authority that owns the majority of roads in Vietnam ?
The Ministry of Transport
2. Are you aware of any change (in practice or in laws/regulations/procedures) related to public procurement between June 1, 2017 and May 1, 2018? For example: amendments to applicable public procurement laws, enactment and/or implementation of new regulations, implementation or improvement of e-procurement platforms, changes to the bid security and performance guarantee framework, etc.
Yes. Law on supporting small and medium enterprise issued by the National Assembly on 12 June 2017, taking effect from 01 January 2018
3. Please provide a list of the laws, regulations and other binding materials (including mandatory standard procurement documents and contracts) that regulate public procurement in Vietnam. Please include legislation or other binding materials promulgated at the national/federal level as well as any additional legislation that is applicable to the procuring entity described in Section 1.
The Civil Code of Vietnam No. 91/2015/QH13 by the National Assembly of Vietnam dated 24 November 2015 (“Civil Code”);
Construction Law No. 50/2014/QH13 by the National Assembly dated 18 June 2014 (“Construction Law”);
Law on Bidding No. 43/2013/QH13 by National Assembly dated 26 November 2013 (“Bidding Law”);
Law on Public Investment No. 49/2014/QH13 of the National Assembly dated 18 June 2014 (“Law on Public Investment”);
Commercial Law No. 36/2005/Qh11 by the National Assembly dated 14 June 2005 (“Commercial Law”);
Decree No. 63/2014/ND-CP by the Government dated 26 June 2014 guiding Law on Bidding (“Decree No. 63/2014/ND-CP”);
Decree No. 37/2015/ND-CP by the Government dated 22 April 2015 on detailing construction contracts (“Decree No. 37/2015/ND-CP”);
Decree No. 46/2015/ND-CP by the Government dated on 12 May 2015 on managing the quality and maintenance of construction works (“Decree No. 46/2015/ND-CP”);
Decree No. 30/2015/ND-CP by the Government dated 17 March 2015 on detailing certain provisions of the Law on Bidding on selection of bidders (“Decree No. 30/2015/ND-CP”);
Decree No. 15/2015/ND-CP by the Government dated 14 February 2015 on public-private partnership investment (“Decree No. 15/2015/ND-CP”);
Circular No. 04/2017/TT-BKHDT by the Ministry of Planning and Investment dated 15 November 2017 on detailing the selection of bidders via the national biding portal (“Circular No. 04/2017/TT-BKHDT”);
Circular No. 26/2016/TT-BXD by the Ministry of Construction dated 26 October 2016 on detailing certain provisions on management of quality and maintenance of construction works (“Circular No. 26/2016/TT-BXD”);
Circular No. 10/2016/TT-BKHDT of the Ministry of Planning and Investment on detailing the supervision, following up and examination of bidding activities (“Circular No. 10/2016/TT-BKHDT”);
– Circular No. 23/2015/TT_BKHDT by the Ministry of Planning and Investment dated 21 December 2015 on detailing the making the evaluation report on bidding documents (“Circular No. 23/2015/TT-BKHDDT”);
– Circular No. 10/2015/TT-BKHDT of the Ministry of Planning and Investment dated 26 October 2015 on detailing the plan for bidder selection (“Circular No. 10/2015/TT-BKHDT”);
– Circular No. 01/2015/TT-BKHDT by the Ministry of Planning and Investment dated 14 February 2015 on detailing the preparation of Invitation dossier for Concern, Invitation Dossier for Bidding, and Request dossider for consultancy services (“Circular No. 01/2015/TT-BKHDT”);
– Circular No. 17/2010/TT-BKH by the Ministry of Planning and Investment dated 22 July 2010 detailing a pilot online bidding program (“Circular No. 17/2010/TT-BKH”);
– Official Letter No. 5356/BKHDT-QLDT by the Ministry of Planning and Investment dated 18 August 2014 on registration of bidder’s information on national bidding network system;
– Official Letter No. 4962/BKHDT-QLDT by the Ministry of Planning and Investment dated 31 July 2014 on the implementation of Law on Bidding No. 43/2013/QH13 regarding investors selection;
– Official Letter No. 4054/BKHDT-QLDT by the Ministry of Planning and Investment dated 7 June 2014 on implementation of Law on Bidding No. 43/2013/QH13 and Decree No. 63/2014/ND-CP;
– Official Letter No. 5186/BKHDT-QLDT by the Ministry of Planning and Investment dated 11 August 2014 guiding to carry out to provide and publish bidding information in the transitional period.
E-procurement Platforms
4. If one or several electronic procurement portal(s) (i.e., an official website(s) specifically and exclusively dedicated to public procurement) are in operation in Vietnam, please mark at which level such portals are available.
National level – Link: www.muasamcong.mpi.gov.vn
5. If multiple electronic procurement platforms are available, which one would most likely be used for a tender like the one describled in Sections 1?
6. If a procurement portal is used by the procuring entity, how many works contracts are procured through the portal?
Less than 25%
7. If electronic procurement portals are available, please indicate which of the following actions can be performed through each portal:
Accessing notices on procurement opportunities: Procuring entity and bidders
Accessing tender documentation: Procuring entity and bidders
Accessing tender documentation: Procuring entity and bidders
Asking the procuring entity for clarifications: Bidders
Submitting tenders: Bidders
Submitting bid security: Bidders
Opening bids: Procuring entity
Notifying decisions (clarification, award,etc.): Procuring entity
Accessing award decisions: Procuring entity and bidders
Accessing explanations of award decisions: Procuring entity and bidders
Submitting performance guarantees: Bidders
Signing the contract: Procuring entity and bidders
Phases of the Procurement Process
The rest of this questionnaire follows the chronological evolution of a procurement cycle, starting with the process the procuring entity undertakes to assess its needs and secure the budget. The questionnaire then explores the steps that a local company would have to undertake in order to: (i) secure a government contract; (ii) deliver the agreed-upon works; and (iii) obtain payment. The following section focuses on planning and budget.
Phase 1: Budgeting and Needs Assessment
For the definition of “procuring entity”, please refer to Section 1.
8. When the procuring entity prepares to advertise a new procurement opportunity, does it estimate the contract value?
Yes. Article 35 of the Bidding Law
a. How is the contract value estimated for the case like the one described in Section 1:
It is determined based on the total invested capital or estimated budget (if any) for project. All expenses are included, including reserve expenses, charges, fees and taxes.
b. Who prepares these estimates?
The procuring entity or the investor of the project
c. Is the estimated contract value published in the tender notice / tender documents?
Yes. Article 35 of the Bidding Law
9. Is the procuring entity required to have already allocated budget to a specific project before tendering?
Yes. Article 35 of the Bidding Law
Phase 2: from Advertisement to Bid Submission
The following questions relate to the initial phase of the procurement process, focusing on how the procurement method is chosen, how the tender is published, and how bids are collected from the private sector. For the definition of “procuring entity”, please refer to Section 1.
Procurement Method
10. According to the legal framework, would open tendering (i.e., the process in which any business can submit a bid) be the default method of procurement in Vietnam for a contract like the one described in Section 1?
No, Section 1, Chapter 2 of the Bidding Law
11. In practice, what is the most common method of procurement for a contract like the one described in Section 1?
Open tendering is not the default, but remains the most common for a case comparable to the case study.
12. Does the legal framework define the situations in which open tendering must be used (including thresholds)? If the legal framework regulates exceptions to open tendering, please list them.
Yes. Article 20 of the Bidding Law. Exceptions to open tendering are cases under restrictive tendering, direct award, competitive dialogue, direct procurement, self implementation, community’s and participation selection of bidders in some special cases (Articles 21¬27 of the Bidding Law)
13. Does the legal framework prohibit dividing contracts to circumvent thresholds for open tendering?
Yes. Article 89.6 (k) of the Bidding Law
a. In practice, how often does this happen?
Very rarely (< 10% of cases)
14. What are the commonly used strategies to circumvent the rules and thresholds on open procurement?
The procuring entity sets out very high technical specifications
15. Which of the following materials need to be made publicly available by the procuring entity?
By law and Publicly available in practice
Procurement plans: Article 8.1 of the Bidding Law
Tender notices: Article 8.1 of the Bidding Law
Tender documents and technical specifications: Article 8.1 of the Bidding Law
Notices of award / bidding results: Article 8.1 of the Bidding Law
16. Where are the above materials published?
Internet – Link: http://muasamcong.mpi.gov.vn/
Other: websites of ministries, local sectors, provinces or other public mass media
Tender Notices & Tender Documents
17. According to the legal framework, is there a minimum time limit between the advertisement of the tender notice and the submission deadline for an open tendering procedure like the one described in Section 1?
Yes. Article 12.1 of the Bidding Law
a. In practice, how many days would pass between the advertisement of the tender notice and the submission deadline for a case like the one described in Section 1?
30 -40 days
18. Does the legal framework establish the minimum content of the tender notice and tender documents? If "Yes", please list the requirements.
Yes. Articles 218- 219 of the Commercial Law. The tender notice must include: a/ Name and address of the procuring entity; b/ Brief description of bidding contents; c/ Time limit, place and procedures for receipt of bid documents; d/ Time limit, place and procedures for submission of bid documents; e/ Guidance on seeking clarification of the tender documents.
Tender documents must include: a/ Tender notice; b/ Requirements on procuring goods or services; c/ Methods of evaluation, comparison, ranking and selection of bidders; d/ Other instructions related to bidding.
a. In practice, which of the following are NOT usually included in the tender notice and/or tender documents?
– Grounds for exclusion of bidders
– Main terms and conditions of the contract
– Payment schedule under the procurement contract
19. Does the legal framework regulate subcontracting?
Yes. Article 128.2 of Decree No. 63/2014/ND-CP
20. According to the legal framework, is the procuring entity allowed to establish that a share of the contract must be performed by the original contractor and cannot be subcontracted? For example, 25% of the contract must be performed by the company that is awarded the bid.
Yes. There is no requirement on a specific share.
21. According to the legal framework, are bidders required to disclose their intent to subcontract portions of the contract when submitting their bid?
Yes. Article 4.36 of the Bidding Law, Article 128.2 (b) of Decree No. 63/2014/ND-CP
22. If the intent to subcontract was not disclosed in the bid, what is the contractor who decides to subcontract after the contract is signed required to do?
None of the above
23. Can the subcontractor be held liable by the procuring entity for low work quality? If the subcontractor can only be held liable in certain circumstances, please list them.
No. Article 128.2(a) of Decree No. 63/2014/ND-CP
24. When a potential bidder seeks clarifications on the tender documents from the procuring entity, what is the most common way of addressing them?
The procuring entity addresses all clarifications in a public meeting
The procuring entity will answer, and it is always required to communicate the answer to all other bidders too – Legal basis: Article 14.2 (c) of Decree No. 63/2014/ND-CP

25. In practice, are clarifications used as an opportunity to negotiate with the procuring entity?
26. Does the legal framework prohibit informal meetings between the procuring entity and a bidder during the tendering process?
No. Article 89 of the Bidding Law
a. In practice, how often do these meetings happen?
Rarely (between 10-25%)
Bid Security
27. Does the legal framework require BidCo to provide a form of bid guarantee?
Yes. Article 11.1 of the Bidding Law
28. In practice, which instrument would BidCo most commonly use as a bid guarantee?
Bid security deposit – Please specify the amount: VND 55 million – VND 170 million
29. If BidCo is required, what is the most common instrument of bid security deposit?
Bank guarantee / letter of credit
Phase 3: from Bid Opening to Contract Signing
The following questions relate to bid opening, bid evaluation, exclusions and contract signing. When answering these questions, please continue to refer to the case study assumptions outlined in Section 1. For the definition of “procuring entity", please refer to Section 1.
Time (calendar days)
30. Does the legal framework establish a timeframe for the procuring entity to proceed to bid opening once the deadline for bid submission has been reached?
Yes. Article 14.3(b) of Decree No. 63/2014/ND-CP
a. In practice, does the procuring entity proceed to bid opening immediately (i.e., at the precise day and time of the deadline for bid submission)?
b. If not immediately, how many calendar days after the deadline on average?
Time: Main reasons for delay
31. In practice, in a case comparable to the case study scenario, how many days would pass between bid opening and public notice of award (i.e., the moment in which all tenderers, participants and relevant parties are notified of the award decision), considering that no complaints/challenges/protests have been filed? In this estimate, please include the time to evaluate the bids, notify all bidders of the decision and notify the winner of the award. If there is no public notice, please indicate the time until notification of BidCo.
Time: 45 – 60 days. Main reasons for delay: The bidder selection result must be verified or there needs some amendments to the bidding dossiers/ documents.
32. Is there a standstill (or pause) period between public notice of award and contract signing to allow unsuccessful bidders to challenge the award decision?
Yes. Length: 10 days
33. In practice, in a case comparable to the case study scenario, how many days would pass on average between public notice of award and contract signing? Please include the time for the winner to submit relevant documents and the time to sign the contract.
Time: 20 – 25 days. Main reasons for delay
34. In practice, how many days would pass on average between contract signing and receipt of a notice to proceed with the works?
Time: 0 days or upon receipt of the performance security by the procuring entity.
Main reasons for delay: No receipt of the performance security
35. If works permits or other administrative authorizations are required to begin the works, how long does it take on average to obtain them once the contract has been signed? Please indicate “0 days" if the permits and authorizations are automatically granted to the contractor or not required.
Time: 0 days
Main reasons for delay
Evaluation & Award
36. Does the legal framework regulate how members of the selection committee are chosen?
Yes. Article 116, Decree No. 63/2014/ND-CP
37. Are employees of the procuring entity required to follow a mandatory code of conduct or ethics that includes topics like screening procedures, conflict of interest, training requirements, etc.?
No. Not mentioned in the laws
38. According to the legal framework, what would be the award criterion considering a case like the one described in Section 1?
Price – Legal basis: Article 39.1 of the Bidding Law
Price and other qualitative elements (i.e., best value for money or the most advantageous combination of cost, time to completion, quality and sustainability, or the most economically advantageous tender) – Legal basis: Article 39.2 of the Bidding Law
Other, please explain: Combination of technical and price assessment (Article 39.3 of the Bidding Law)
39. Does the legal framework require all non-price evaluation criteria to be objective and quantifiable?
No. Not mentioned in the laws
40. In practice, in which order would the selection (technical, financial, procedural, etc.) criteria and award criteria be evaluated in a tender like the one described in Section 1?
The company's compliance with the selection criteria is checked first (perhaps even during a pre-qualification procedure) and, only if satisfactory, the tender is evaluated based on the award criteria
41. In practice, how often is the award decision based solely on price and not on best value for money?
Rarely (between 10-25%)
42. In practice, how often do the tender documents contain an evaluation criteria granting preference to companies that have already worked with the procuring entity?
Very rarely (< 10% of cases)
43. In practice, how often is a bid disqualified solely because of an error/formality (for example, a missing document, formatting of the bidding documents, etc.)?
Rarely (between 10-25%)
44. In practice, in these cases would the bidder be given the opportunity to rectify such error before disqualification?
Yes. Article 14.3 (c) of Decree No. 63/2014/ND-CP
45. According to the legal framework, can the procuring entity unilaterally change some of the tendering requirements after the bid is opened, but before the contract is siqned? If "Yes", please specify under which conditions the procuring entity can do so.
a. In practice, how often do such changes occur?

Very rarely (90%)
47. When a bidder is unsuccessful (either because of exclusion or loss), is it provided with an explanation of the reasons for the exclusion/loss in writing?
Yes, by law the bidder must always be provided with an explanation in writing – Legal basis and timeframe: Article 20.6 (b) of Decree No. 63/2014/ND-CP; within 5 workings days from the time the bidding result is approved.
a. If “Yes”, is the bidder usually told early enough so that it can challenge the exclusion/loss in a timely manner?
Phase 4: Contract Management
The following questions relate to performance guarantee, contract renegotiation, underperformance and termination. When answering these auestions, please continue to refer to the case study assumptions outlined in Section 1. For the definition of “procuring entity”, please refer to Section 1.
Performance Guarantee
48. According to the legal framework, is BidCo required to provide a performance guarantee deposit that ensures a source of compensation in case of failure to perform its contractual obligations?
Yes. Amount: 2%- 10% of the bid winning price.
Articles 66 & 72 of the Bidding Law.
49. If BidCo is required, what is the most common instrument of performance guarantee?
Certificate of deposit
Bank Guarantee / Letter of Credit
Payment retention until satisfactory completion of the contract
50. In practice, how long does it usually take for the procuring entity to return the performance guarantee in full once the certificate of completion of works is issued?
5-10 days
Contract Renegotiations / Amendments
51. Does the legal framework regulate contract renegotiation? If “Yes”, please indicate the relevant provisions.
Yes. Article 67 of the Bidding Law and Article 93 of Decree No. 63/2014/ND-CP
a. If “Yes”, what are the limits to renegotiate each of the aspects below without the need to re-tender?
– Price (for example because of initial underestimation of cost or poor project design): The price is only adjusted in case of contract based on fixed unit price, contract based on modifiable unit price and time-based contract.
– Scope (length, size, etc.): Size of the contract cannot be changed if the increase amount of work is due to the contractor’s subjective fault. Delivery timeline will only be adjusted in case of force majeure, change in scope of work, design, implementation method due to objective reasons, and hand over of ground.
– Technical specifications (materials, etc.): Change of subcontractor (if the subcontractor is not listed in the bididng documents) must be subject to the investor’s approval.
– Delivery timeline
– Contractor/subcontractor
52. How often would a contract like the one described in Section 1 be renegotiated?
Occasionally (between 25-50%)
53. If the contract described in Section 1 were more complex (i.e., lengthier and/or more costly execution, more complex scope or object, etc.), how often would it be renegotiated?
Often (between 50-90%)
54. How often do bidders submit unrealistically low bids to win the contract confident of having a possibility to renegotiate at a later stage?
Rarely (between 10-25%)
55. How often are “emergencies” used as an excuse to renegotiate?
Rarely (between 10-25%)
56. According to the legal framework, is there a percentage of price increase below which the procuring entity is not required to provide a reason for the renegotiation? If “Yes”, please provide the percentage and the relevant legal basis.
57. According to the legal framework, is there a percentage of price increase above which the procuring entity is not allowed to renegotiate and is always required to re-tender? If”Yes”, please provide the percentage and the relevant legal basis.
58. If limits on price renegotiation exist, do they apply to each renegotiation or to all renegotiations combined (for example, if the legal framework imposes that any increase in price shall not exceed 50%, will this limit apply to each modification if several successive modifications occur)?
All renegotiations. Article 67.4 of the Bidding Law
59. Are the results of contract renegotiations made publicly available?
No. Not addressed by law but practically No
60. In practice, what are the commonly used strategies to circumvent the renegotiation rules in the context of re-tendering?
61. Does the legal framework regulate unilateral termination of the contract by the procuring entity (i.e., the termination at will by the procuring entity, including for no reason)? If “Yes”, please indicate the relevant provisions.
Yes. Article 117.11 of Decree No. 63/2014/ND-CP; Article 428 of the Civil Code of Vietnam.
a. In practice, how often would the procuring entity unilaterally terminate the contract despite the contractor properly performing its contractual duties?
Very rarely (< 10% of cases)
62. How often would the contractor bring a case (in court or through alternative dispute resolution) against the procuring entity for damages resulting from unilateral termination not due to the contractor's default?
Very rarely (< 10% of cases)
Phase 5: Payment, Delays and Quality Assessment
The following questions relate to payment and inspections. When answering these questions, please continue to refer to the case study assumptions outlined in Section 1. For the definition of “procuring entity", please refer to Section 1.
63. According to the legal framework, is there a limit to how much the procuring entity can pay upfront for the contractor to hire workers, buy materials, and start operations, in a contract like the one described in Section 1?
a. In practice, how much would usually be paid upfront for a contract like the one described in Section 1?
Minimum 10% of the contract value, maximum 50% of the contract value.
64. During the execution of the contract, does the legal framework establish a timeframe within which the procuring entity must process the payment once an invoice is received?
Yes. Article 19 of Decree No. 37/2015/ND-CP
a. In practice, how many calendar days will be necessary on average for BidCo to receive payment once the invoice has been delivered to the relevant authority?
Maximum 14 days
b. In practice, how many people would need to authorize payment within the procuring entity before payment is made?


c. Does the procuring entity set minimum standards about the completed works that the company must meet to receive payment? If so, please specify what these standards are.
Yes. Standards: Based on the actual completed amount of work by the contractor
d. In practice, how often will BidCo receive payment within the timeframe established by the legal framework?
Often (between 50-90%)
e. If rarely, what are the main reasons for delay?
f. Are payments usually spread out equally throughout the course of the work?
No. Articles 95-98 of Decree No. 63/2014/ND-CP Based on the actual completed amount of work by the contractor.
g. According to the legal framework, is the company entitled to claim interest on late payments if the procuring entity does not pay within the legally – established timeframe?
Yes. Article 94 of Decree No. 63/2014/ND-CP
h. If so, in practice how often would such interest be paid to the company?
Often (between 50-90%)
65. Assuming that BidCo delivers works complying with the quality standards agreed-upon in the contract, within budget and on time, what strategies, if any, does the procuring entity use to delay or avoid payment?
The procuring entity has certain financial difficulties
a. In practice, how often does the procuring entity not pay?
Very rarely (< 10% of cases)
b. If non-payment is common, how often would BidCo resort to informal payments to obtain payment?
Very rarely ( 90%)
68. Upon completion of the works, does the legal framework require BidCo to guarantee the works for a certain period of time?
Yes. Articles 35-36 of Decree No. 46/2015/ND-CP
69. If BidCo is required, what is the most common instrument of post-completion guarantee?
Bank guarantee / Letter of credit
Payment retention
70. In practice, how long after completion of the works is BidCo required to maintain the instrument that guarantees them?
12- 18 months
Delays & Overruns
71. In practice, how often are the works delivered within the original deadline?
Often (between 50-90%)
72. In practice, if delays are common, what are the main reasons for them?
Burdensome administrative processes within the procuring entity
Capacity of the procuring entity (staff/skills/budgetary constraints)
Capacity of the contractor (technical/financial/managerial/human capital constraints)
Poor planning on the procuring entity’s side (poorly designed project specifications, etc.)
Poor planning on the contractor’s side
73. In practice, how often are the works delivered within the original budget?
Occasionally (between 25-50%)
74. In practice, if cost overruns are common, what are the main reasons for them?
Market conditions (changes in input prices, fluctuations in exchange rate, etc.)
Burdensome administrative processes within the procuring entity
Capacity of the contractor (technical/financial/managerial/human capital constraints)
Poor planning on the procuring entity’s side (poorly designed project specifications, etc.)
Poor planning on the contractor’s side
Research – Criticalities of the Procurement Process
75. How often are the following strategies used by the procuring entity to circumvent public procurement rules?
Not advertise procurement opportunities long enough to minimize competition: 10-25%
Prioritize projects without sufficient motivation just to benefit a particular bidder. : 10-25%
Prioritize non-competitive tenders to restrict market entry. : 10-25%
Define technical specifications to benefit a specific bidder. : 10-25%
Irregularities during the bidding process. : 10-25%
Biased interpretation of the selection criteria.: 25-50%
Add specific obligations in the contract that were not previously incorporated in the tender documents, and by doing so impose unnecessary burdens on the contractor.:<10% of cases
Delay payments to the contractor to request other works not included in the tender documents. .:<10% of cases
Delay the certification of completion of the contract to obtain other works/goods/services not previously included in the tender documents. .:<10% of cases
Unilaterally and arbitrarily terminate the contract. .:<10% of cases
76/ How often are the following strategies used by private sector companies to circumvent public procurement rules?
Collusion between bidders (cover bidding, bid suppression, bid rotation, market allocation). .:<10% of cases
Collusion with the procuring entity, to negate market entry to other competitors: 10-25%
Submission of recklessly low bids to win the tender. 10-25%
Falsification of documents or failure to disclose essential information in the bidder's offer. 10-25%
Informally paying public officials: 50-90%
Abuse the renegotiation process to increase the price or the scope of the project without another competitive process. .: 50-90%
Delay the execution of the contract to coerce the procuring entity to award other contracts to the same company. 10-25%
Execute the contract with less quality or with different technical specifications than were submitted during the tender process. .: 50-90%

Employ subcontractors that were neither properly selected nor disclosed during the tender process. 10-25%

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.

Thank you very much!

Lawyer in Vietnam Dr. Oliver Massmann New Comprehensive and Progressive Agreement for the Trans-Pacific Partnership signed by Members States – WHAT IS IN FOR YOU?

Overview on the Trans Pacific Partnership Agreement (TPP) – now the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP)
The TPP was originally known as the Trans- Pacific Strategic Economic Partnership concluded in 2006 among Singapore, New Zealand, Chile and Brunei (P-4 agreement) as a means to promote trade liberalization in the Asia- Pacific Region. As its name indicates, the original purpose of the agreement was only to address economic issues. As the number of participating countries in the P-4 agreement increased, starting with the United States in September 2008 and other countries to follow being Australia, Peru, Vietnam, Malaysia, Canada, Mexico and Japan until July 2013, the agreement is agreed to be “a comprehensive, next-generation regional agreement that liberalizes trade and investment and addresses new and traditional trade issues and 21st-century challenges” by TPP Trade ministers. In June 2015, the United States approved the trade promotion authority for President Obama. The Agreement finally becomes as it is today through tough negotiation rounds, while the last round in Atlanta in September 2015 was considered the most intensive one. The TPP was already concluded on 06 October 2015. However, in January 2017, right after President Trump took his office, the United States formally expressed its withdrawal from the agreement, leaving other 11 parties with the decision to continue the agreement without the United States or not. In November 2017, during APEC meeting in Da Nang, Vietnam, ministers from 11 countries decided to push ahead with the TPP with its new name – CPTPP with only 20 items suspended out of an around 5000-page document, mainly in the Intellectual Property chapter. On 8 March 2018, the CPTPP was finally signed in Chile. The CPTPP accounts for 495 million people representing 13.5 percent of the world total economic output – worth a total of $10 trillion.
The CPTTP will help Vietnam make good use of international cooperation opportunities, balance relationships with key markets, approach larger markets including Japan and Canada, boost import-export, reduce import deficit, and attract foreign investment. In addition, CPTTP will also help Vietnam’s economy allocate its resources more effectively, enabling active supports to the processes of restructuring, innovation and improving regulations, and improve administrative reforms.
What makes CPTPP the template for next-generations trade agreements – What commitments are beyond the WTO commitments ?
Freer trade zone
Commitments in Trade in goods
Tariff and non-tariff barriers are reduced and removed substantially across all trade in services and goods under the CPTPP. Import tariffs are reduced for 100% goods traded among member states, with more than 90% being eliminated immediately when the Agreement takes effect. The CPTPP also covers issues which have never been addressed in the WTO, including export duties, import duties for re-manufactured goods, market access for re-furbished goods, stricter regulations on import and export licensing, monopolies and goods in transit.
Lower tariff barriers from the CPTPP will give Vietnam greater access to large consumer markets in Japan, Canada and Australia. The potential positive effect on trade could be transformative, with estimates that the CPTPP will boost Vietnam’s exports by over 37% until 2025.
Commitments in Trade in services and Investment
All 11 member states give consent to a liberalized trade in this area. More sectors are opened in the CPTPP compared with the WTO, such as telecommunications, distribution and manufacturing sectors.
In addition, besides incorporating basic WTO principles (national treatment (NT), most-favored nation treatment (MFN), market access, and local presence), the CPTPP takes a negative approach, meaning that their markets are fully open to service suppliers from other CPTPP Parties, except otherwise indicated in their commitments (i.e, non-conforming measures). In order to make such reservations, the member state must prove the necessity of such preservation and negotiate with other member states. If approved, the non-conforming measures are only limited to such list, except for measures in certain sensitive sectors which are included in a separate list. Member states are only allowed to adopt policies that are better than what they commit (ratchet principle). The CPTPP also includes obligations on removal of performance requirements (i.e., no conditions on local content requirements, export conditions, use of certain technology, location of the investment project, etc.) and reasonable requirements on senior management and board of directors. Notably, the CPTPP Chapter on Investment for the first time makes it very clear and transparent concerning the MFN principle, that countries operating in multi-state regime must give foreign investors the best investment conditions of all states, regardless of the state where the investment takes place. Investors are also allowed to petition against the Government from the investment registration stage.
Textiles are among Vietnam’s core negotiating sectors. According to suggestions by the United States, negotiations on textiles were conducted separately from negotiations on market access for other goods. To be qualified for CPTPP preferential tariff treatment, the CPTPP applies the yarn-forward principle, meaning textile products must be produced in CPTPP countries from yarn forward. However, the CPTPP includes exceptions that allow (i) certain materials to be sourced from outside CPTPP (“Short supply list”), (ii) certain manufacturing phases (for example, dying, weaving, etc.) to be conducted outside CPTPP; and (iii) one country to be able to use non-CPTPP materials in exchange for its export of certain textile goods to another country.
Government procurement
The CPTPP makes a list of government entities and agencies whose procurement of particular̉ goods and services at a particular amount must be subject to public tender. Any negotiation to expand coverage of the Government Procurement chapter, particularly in relation to state government and local government contracts, will be delayed. Parties will only initiate talks on this issue at least five years after the date of entry into force of the CPTPP.
This chapter includes NT and MFN principles, removes tender conditions favoring local tenders such as using local goods or local suppliers, conditions on technology transfer or two-way trade and investment, etc. These rules require all parties, to reform their bidding procedures and protect their own interests by disqualifying tenders with poor performance and low capacity.
Investor-State Dispute Settlement
The CPTPP aims at protecting investors and their investment in the host country by introducing requirements on non-discrimination; fair and equitable treatment; full protection and security; the prohibition of expropriation that is not for public purpose, without due process, or without compensation; the free transfer of funds related to investments; and the freedom to appoint senior management positions regardless of nationality.
For the first time investors of a party may sue the Government of the other party for its violation of investment-related commitments when the investors make investment in that party. However, please note that under the CPTPP, investors will not be able to sue the Government using ISDS clauses if there is any dispute in connection with an investment agreement. An investment agreement means a written agreement that is concluded and takes effect after the date of entry into force of the CPTPP between an authority at the central level of government of a Party and a covered investment or an investor of another Party and that creates an exchange of rights and obligations, binding on both parties under the applicable law. Investment agreement refers to an agreement in writing, negotiated and executed by both parties, whether in a single instrument or in multiple instruments. A unilateral act of an administrative or judicial authority, such as a permit, licence, authorisation, certificate, approval, etc. and an administrative or judicial consent decree or order will not be considered a written agreement.
CPTPP also includes procedures for arbitration as means of settling disputes between investors and the host state. It covers new provisions compared with existing agreements such as transparency in arbitral proceedings, disclosure of filings and arbitral awards, and participation of interested non-disputing parties to make amicus curiae submissions to a tribunal. Arbitral awards are final, binding and fully enforceable in CPTPP countries.
Application of the CPTPP and older/ existing agreements
Member states of the CPTPP acknowledge existing rights and obligations of each member under existing international agreements to which all CPTPP member states are parties (for example, the WTO Agreement, NAFTA, or bilateral agreements) or at least two member states are parties. In case there is any consistency between a provision of the CPTPP and a provision of another agreement to which at least two CPTPP member states are parties, these parties will consult with each other to reach a mutually satisfactory solution. Please note that the case where an agreement provides more favourable treatment of goods, services, investments or persons than that provided for under the CPTPP is not considered as an inconsistency.
Implementation deadline of the CPTPP
The CPTPP provides that “at least six or at least 50 percent” of the accord’s signatories must ratify for the deal to entry into force, and indicates that the threshold which applies will be “whichever is smaller.” Once such threshold is met, the CPTPP will take effect for this group 60 days after they have all notified New Zealand, the accord’s depositary.
Any signatory which ratifies the CPTPP after it comes into force will have to wait 60 days from the date when they notified their ratification for it to take effect for such signatory.

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

Navigating Blockchain Law – Presentation at Vietnam Blockchain Week – 8 Mar 2018

7-8 March 2018, Vietnam Blockchain Week organized by Infinity Blockchain Labs — probably the first big, international blockchain event in Vietnam. Reportedly, more than 2,000 registered visitors and 50 speakers.

My speech and slides on “Navigating Blockchain Law” covered multiple jurisdictions and blockchain topics, including cryptocurrencies, exchanges, ICOs, AML/KYC, personal data protection, regulatory sandboxes and innovation space. The message is that  innovators and big investments go to places that have clear and “friendly” regulations for them to thrive.

Unregulated - what does it mean?

Every day is different though, and we constantly receive new statements from regulators and other authorities. Technology moves much faster than the law. The information in my slides is already old by the time they are uploaded. Likewise, the heat map below is very subjective and  represents only a momentary snapshot.

Blockchain Legal Heat Map

For more information, please contact Manfred Otto at MOtto@duanemorris.com or any other lawyer you are regularly communicating with at Duane Morris.

Disclaimer: This post has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. Each case should be analyzed individually with the support of competent legal counsel. For more information, please see the firm’s full disclaimer.