Tag Archives: vietnam


With the EVFTA coming into effect, Vietnam will eliminate import duties on 91.8% of tariff lines, equivalent to 97.1% of EU exports.

Some notable provisions of the EVFTA are as follows:

Vietnam commits to eliminate import duties on 48.5% of tariff lines, equivalent to 64.5% of EU exports immediately after the Agreement came into effect.

After 7 years, import taxes on 91.8% of tariff lines (equivalent to 97.1% of EU exports) will be removed from Vietnam. After 10 years, the abolition rate will be 98.3% of the total tariff lines, equal to 99.8% of the EU’s exports respectively.

Vietnam pled to favorably consider allowing EU credit institutions to raise foreign ownership to 49% of charter capital in two Vietnamese joint stock commercial banks. This commitment will be valid for 5 years only (after the expiry of 5 years Vietnam will not be bound by this commitment) and is not applicable to 4 banks where the State is holding a large sum of shares (i.e. BIDV, Vietinbank, Vietcombank and Agribank).

Market access:
For the sectors listed in the Specific Schedule of Commitments, except where there is a specific reservation, the two parties undertake to not apply restrictions related to: (i) the number of businesses enterprises are allowed to participate in the market, (ii) the transaction value, (iii) the number of activities, (iv) foreign capital contribution, (v) the form of legal entities, (vi) the number of natural persons recruitment.

Public procurement packages:
Under EVFTA, Vietnam commits to allow EU contractors to participate in bidding packages that simultaneously meet the three conditions regarding Value of bidding package; Shopping agency; Goods and services need shopping.

Distribution service:
Vietnam has agreed to abolish the requirement of economic needs test five years after the date of entry into force of the Agreement, but Vietnam reserves the right to implement the distribution system planning on a non-discriminatory basis. Vietnam also agrees not to discriminate in the production, import and distribution of alcohol, allowing EU businesses to reserve their operating conditions under current licenses and only need one license to carry out import, distribution, wholesale and retail activities.

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


The State Bank of Vietnam (Ngan hang Nha nuoc Viet Nam, SBV) is the central bank of Vietnam. It is a ministry-level body under the administration of the government. The SBV governor is a member of the cabinet. The prime minister and the parliament of Vietnam (National Assembly) act jointly to nominate the governor of the SBV. The SBV’s principal roles are to:
· Support monetary stability and implement monetary policies.
· Support institutions’ stability and supervise financial institutions.
· Support banking facilities and recommend economic policies to the government.
· Support banking facilities for financial institutions.
· Manage the country’s foreign exchange reserves.
· Manage foreign exchange and gold trading activities.
· Manage the borrowing and repayment of foreign loans, the provision of loans to foreign parties and recovery of foreign debts.
· Print and issue bank notes.
· Supervise all commercial banks’ activities in Vietnam.
· Lend State money to commercial banks
· Join the Ministry of Finance in issuing government bonds and government-guaranteed bonds.
· Act as an agent for the State Treasury in organising bids and in issuing, depositing and making payment for treasury bonds and bills.
· Be in charge of other roles in monetary management and foreign exchange rates.

In 1990 the bank system was reorganised. This process led to a separation of the SBV from other commercial banks and was the start of the establishment of the private banking sector. A small number of major state-owned commercial banks still dominate Vietnam’s banking sector.

However, today a process of privatisation is underway and the goal is to reduce the state’s share of ownership step-by-step to at least 65 percent during 2018 – 2020, and 51 percent during 2021 – 2025 under Decision No. 986/QĐ-TTg dated August 8, 2018 of the Prime Minister approving the plan for development of Vietnamese banks up to 2025, vision to 2030.
Until May 8, 2020, the State’s ownership ratios in 4 largest state-owned commercial banks are as follows: (i) 80.99 percent in BIDV, (ii) 74.8 percent in Vietcombank, (iii) 64.46 percent in Vietinbank, and (iv) 100 percent in Agribank.

Foreign ownership restrictions for Vietnamese Credit Institutions

On January 3, 2014, the government-adopted Decree 01/2014/ND-CP on purchase by foreign investors of shareholding in Vietnamese credit institutions. Decree 01 became effective on February 20, 2014 and replaced Decree 69/2007/ND-CP on purchase by foreign investors of shareholding in Vietnamese commercial banks.

In Decree 01, Vietnamese credit institutions, which may offer shares, include:
· shareholding credit institutions (i.e., a credit institution established and organised in the form of a shareholding company and include shareholding commercial banks, shareholding finance companies and shareholding finance leasing companies); and
· credit institution currently converting its legal form from a credit institution operating in the form of a limited liability company to become a credit institution operating in the form of a shareholding company.
Foreign investor includes foreign organisations [institutions] and foreign individuals. Foreign organisations include:
· organisations established and operating under the laws of a foreign country and any branch of such institutions overseas or in Vietnam; and
· an organisation, closed-ended fund, members’ fund or securities investment company established and operating in Vietnam with foreign capital contribution ratio above 49 percent.

Foreign individual means any person who does not hold Vietnamese nationality.

Decree 01 defines that shareholding ownership [shareholding] includes direct and indirect ownership. However, Decree 01 does not explain clearly the scope of direct and indirect ownership.
In a case of purchase of shareholding by a foreign investor in a Vietnamese credit institution resulting in such foreign investor’s ownership of shares below 5 percent charter capital of the Vietnamese credit institution, a prior approval of the SBV is not required. In other cases, any acquisition by foreign investors of shareholdings in a Vietnamese credit institution requires the prior approval of the SBV.

The shareholding ratio of any one foreign individual must not exceed 5 percent of the charter capital of one Vietnamese credit institution. The shareholding ratio of any one foreign organisation must not exceed 15 percent of the charter capital of one Vietnamese credit institution.

Any foreign investor being an organisation owning 10 percent or more of the charter capital of any one Vietnamese credit institution is not permitted to assign the shareholding it owns to any other organisation or individual within a minimum three year period as from the date of ownership of 10 percent or more of the charter capital in such credit institution.

The shareholding ratio of any one strategic foreign investor must not exceed 20 percent of the charter capital of one Vietnamese credit institution. The investor may not transfer its shares in the Vietnamese credit institution within five years after becoming the foreign strategic investor in the Vietnamese credit institution.

A strategic investor is defined as a foreign organisation with financial capacity and whose authorised person provides a written undertaking to have a close connection regarding long-term interests with the Vietnamese credit institution and to assist the latter to transfer to modern technology, to develop banking products and services, and to raise its financial, managerial and operational capacity.

The shareholding ratio of any one foreign investor and its affiliates must not exceed 20 percent of the charter capital of one Vietnamese credit institution. The total shareholding ownership of [all] foreign investors must not exceed 30 percent of the charter capital of any one Vietnamese commercial bank.

The total shareholding ownership of [all] foreign investors in any one Vietnamese non-banking credit institution shall be implemented in accordance with the law applicable to public companies and listed companies (i.e., 49 percent of charter capital of such institution).

In a special case in order to implement restructuring of a credit institution which is weak [and/or] facing difficulties, in order to ensure safety of the credit institution system, the Prime Minister may, on a case-by-case basis, make a decision on the total shareholding ratio of any one foreign organisation [or] any one foreign strategic investor, and the total level of shareholding of foreign investors in any weak shareholding credit institution which is restructured, in excess of the limits described above.

At the time of writing, Vietnam’s banking sector is looking forwards to the adoption of the EU-Vietnam Investment Protection Agreement (EVFTA) to resolve capital shortage bottleneck in domestic banks. Under EVFTA, within 5 years from the effective date of EVFTA, Vietnam committed to allow European investors to own up to 49% in 2 commercial banks of Vietnam banks (except the aforementioned 4 largest State-owned banks: Vietcombank, Vietinbank, Agribank and BIDV). The Agreements were signed in June 2019 and are expected to be approved by Vietnam’s National Assembly by June 2020.

Foreign exchange regulations

The Ordinance on Foreign Exchange, which was enacted by the Standing Committee of the National Assembly in December 2005 and became effective in June 2006, and amended on March 18, 2013, regulates currency exchange activities in Vietnam. The government has promulgated Decree No. 70/2014/ND-CP to provide guidelines for both the Ordinance on Foreign Exchange and its amendments on March 18, 2013.

Decree 70 became effective on September 5, 2014 and replaced Decree No. 160/2006/ND-CP dated December 28, 2006 to provide detailed implementation of the ordinance.

Decree 70 governs the foreign exchange activities of residents and non-residents in current transactions, capital transactions, foreign loan borrowing, use of foreign currency and provision of foreign exchange services, the foreign currency market and rates of exchange, and the management of import and export of gold in Vietnam.

With regards to foreign loan borrowing, the government has also promulgated Decree No. 219/2013/ND-CP dated December 26, 2013 on the management and repayment of offshore loans that are not guaranteed by the government. Decree 219 became effective on February 15, 2014 and replaced Decree 134/2005/ND-CP on the same subject.

Decree 219 governs all businesses that are incorporated under the Enterprises Law, credit institution and foreign bank branches under the Law on Credit Institution, and cooperatives and unions of cooperatives established and operating under the Law on Cooperatives.

Offshore loans under Decree 219 include loans from non-residents under loan agreements, deferred payment commodities sale and purchase agreements, entrusted loan agreements and debt instruments issuance agreements that are not guaranteed by the government. In general, foreign borrowing must comply with the regulations of, and is subject to, registration with the SBV.

However, Decree 219 does not state clearly that requirements and types of loans should be registered, or any licensing/registration procedures. These issues have been addressed by the SBV’s guidelines i.e., Circular 03/2016/TT-NHNN dated February 26, 2016 providing certain guidelines on foreign exchange control in relation to foreign borrowing activities (as amended by Circular 05/2016/TT-NHNN dated April 15, 2014 and Circular No. 05/2017/TT-NHNN dated 30 June 2017). Circular 03 is expected to improve the legal framework for management of the borrowing and repayment of enterprises in general and enterprises not guaranteed by the government. Some highlights of the Circular 03 are as follows:
· Loans made in the form of deferred payment for import of goods no longer requires registration with the SBV. However, the opening and use of bank accounts and remittance activities must comply with the requirements of Circular 03.
· Loans subject to registration with the State Bank include: (i) mid-term and long-term foreign loans, (ii) short-term foreign loans which are renewed to have loan terms to be more than 01 (one) year; and (iii) short-term foreign loans which are
· not renewed but loans’ outstanding principal amounts have not been fully repaid prior to or within 10 days after 1 year from the date of first loan withdrawal.
· A borrower which is not a foreign invested enterprise must open a bank account for the purposes of the foreign loan at the authorized banks in Vietnam. For foreign invested enterprises, their direct investment capital bank accounts may be used for this purpose.
· If the schedule of loan disbursement, repayment or interest payment changes by less than 10 days from the schedule already registered with the SBV, the borrower must only notify its bank, and does not need to register the changes with the SBV. However, if the schedule changes by more than 10 days, then reregistration with the SBV is required.
· Circular 03 also allows notification to SBV (instead of change registration) with regards to certain corporate changes of information that has been registered with SBV such as change of address of the borrower within the province/city where it has head quarter, or change of trade names of the relevant banks who provide account services, etc.

The government issued Decree No.88/2019/ND-CP on November 14, 2019 on sanctions of administrative violations in the field of monetary and banking operations. Decree 88 became effective on December 31, 2019 and replaced (i) Decree No.96/2014/ND-CP dated December 12,2014, (ii) Decree No. 95/2011/ND- CP dated December 20, 2011, and (iii) Decree No. 202/2004/ND-CP dated December 10, 2004 on sanctions of administrative violations in the field of monetary and banking operations.

According to this decree, penalties in relation to gold and forex trading, price listing/payment/advertising in forex/gold, etc. range from a warning to VND400 million (approximately $17,000). For instance, the slightest penalty, warning, is applied to exchanging foreign currency of the value under $1,000 between individuals or unlicensed organizations. However, the maximum penalty relating to foreign exchange activities (VND250 million, approximately $10,700) could be imposed to any violations in trading and supplying foreign exchange derivative products, violations in exporting and importing foreign currency or VND cash, or conduct foreign exchange activities without license. The maximum penalty relating to gold trading (VND400 million, approximately $17,000) could be imposed to any trading of gold bars or gold raw materials without a license. On another note, forex/gold relevant to trading violations may be confiscated and certificate of registration for forex agent and business operation license of gold of relevant parties may be also suspended or revoked.

Developments in securities regulation

In early 2007 the first Securities Law of Vietnam (No. 70/2006/QH11, 2007) came into effect, which consisted of 11 chapters and 136 articles (as amended on November 24, 2010). The Securities Law primarily covers domestic issues of Vietnam dong- denominated securities and is, therefore, limited to public issues of securities and does not apply to the private placement of unlisted securities. The term “securities” covers a wide range of valuable instruments, including:
· Stocks.
· Bonds.
· Warrants.
· Certificates.
· Put and call options.
· Futures contracts, irrespective of their form.
· Investment capital contribution contracts.
Specifically, the Securities Law governs:
· Public offerings of securities.
· Listings.
· Dealing.
· Trading.
· Investment in securities.
· Securities services.

The establishment and regulation of securities companies and investment funds

The Securities Law’s area of application considers two types of domestic securities trading market — the Securities Trading Centre and the Stock Exchange. The local regulator, the State Securities Commission, controls and supervises both markets; however, they are independent legal entities. The SSC is a State body that the Ministry of Finance oversees.

The government and the MoF have issued several decrees, decisions and circulars to implement the Securities Law. Under the Securities Law, publicly offered securities in Vietnam have to be denominated in VND. The par value of a listed share offered to the public for the first time is VND 10,000; the minimum par value of a publicly offered loan is VND 100,000.

On January 10, 2012, the MoF issued Decision No. 62/QD-BTC re: approval of project plan for restructuring of securities companies. This decision was known as a key in the master plan to renovate the stock market/sector, insurance market and securities companies which have been submitted to the Party Politburo by the MoF. According to this decision, securities companies shall be evaluated based on available capital/risk/accumulated losses index and categorised into three groups (normal, control and special control).

The decision does not provide any clear restructuring plan but promulgates certain controlling methods and penalties applicable to securities companies not satisfying the required available capital/risk index such as disclosure/report requirements, supervising or license withdrawal..

Dated July 20, 2012, Decree No. 58/2012/ND-CP was issued to provide guidelines for the Securities Law and the Law amending certain articles of the Securities Laws on offers for sale of securities, listing, trading, business and investment in securities, and services in relation to securities and securities market. This decree abolished Decree No. 14/2007/ND-CP dated January 19, 2007, Decree 84/2010/ND-CP dated August 2, 2010 and Decree 01/2010/ND-CP dated January 4, 2010 and Decree No. 58/2012/ND-CP.

On June 26, 2015, the government promulgated Decree No. 60/2015/ND-CP amending certain articles of Decree 58 and providing guidelines for Securities Laws. Decree 60 became effective on September 1, 2015 and abolish Decision No. 55/QD- TTg dated April 15, 2009 of the Prime Minister on foreign ownership ratio in Vietnamese stock exchanges.

Decree 60 does not limit foreign ownership applicable to companies engaging in non-conditional businesses in Vietnam, and allow foreign companies to invest in government’s and companies’ bonds in Vietnam.

Public offerings

With the promulgation of the Securities Law and its amendments, guidelines, rules, procedures and restrictions were set down for the issuance of public shares and bonds. According to Article 12.1 of the Securities Law and its amendments, an issuer must have already deposited nominal capital amounting to at least VND10 billion at the time of registration of the offer. In addition, an applicant for quotation has to prove profit was made in the year before the offering.

The establishment of a fund stipulates a minimum capital of VND50 billion. Other types of enterprise may have to apply to additional conditions e.g., a public company registering a public offer of securities must provide an undertaking, passed by its general meeting of shareholders, to place the shares for trading on an organised trading market within one year from the date of completion of the offer tranche (Law amending certain articles of the Securities Law dated November 24, 2010 and Decree No. 58/2012/ND-CP dated July 20, 2012 guiding Securities Law and Law amending certain Article of the Securities Law).

To open the procedure for public offering it is necessary to file an application in the form of a registration statement, which includes:
· The prospectus.
· The audited financial statements for the preceding two fiscal years.
· The issuer’s constitutional documents and relevant corporate resolutions.

The main contents of a prospectus are prescribed in Circular No. 29/2017/TT-BTC dated April 12, 2017 of the MoF providing guidance on listing of securities on stock exchanges. Before the Law on Securities 2019 comes into effect (01/01/2021), foreign investors should be aware of the lack of fixed standards for financial statements and accounting in Vietnam, which can result in inconsistencies in financial reporting and quality levels.

Private placements

A private placement is defined in the Securities Law and its amendment as an arrangement for offering securities to less than one hundred investors, not professional securities investors, without using mass media or the internet. Decree 58/2012/ND-CP dated July 20, 2012 (as amended by Decree 60/2015/ND-CP dated June 26, 2015) and Securities Law provide conditions for a private placement made by public companies as follows:
· Resolution of the general meeting of shareholders approving the plan for a private placement of shares / convertible bonds and utilisation of proceeds earned from the offer tranche; and this plan must specify the objective, target investors and criteria for selection of target investors, the number of investors and proposed offering scale;
· The lock-up period on transfer of the private placed shares or convertible bonds is a minimum one year from the date of completion of the offer trance, except for certain cases such as a private placement pursuant to a plan selecting employees, etc.;
· The issuing company is not the parent company of the company which purchasing private placed shares; or neither of companies are subsidiary companies of a parent company;
· There must be a minimum interval of six months between tranches of private placements of shares or convertible loans; and
· Other conditions set out by the applicable law.

If an application file is incomplete and invalid, the competent State authority shall, within five days from the date of receipt of the application file for registration of a private placement of shares, provide its opinion in writing requesting the issuing organisation to amend the file. The date of receipt of the valid and complete file shall be the date on which the issuing organisation completes amendment and addition to the file.

Within 15 days from the date of receipt of the valid and compete file for registration, the State authority provides notification to the registering organisation and publish on its website the private placement of shares of the registering organisation. The issuing organisation shall, within 10 days from the selling tranche completion date, submit a report on the results of the private placement to the competent State authority on the standard form annexed to Decree 58 (as amended).


Ho Chi Minh Stock Exchange (HOSE)

Decree 58/2012/ND-CP provides conditions for listing shares in HOSE as follows, among other things:
· The company has its paid-up charter capital of one hundred and 120 billion dong or more at the time of registration for listing;
· The company has operated for at least two years in the form of a shareholding company calculated up to the time of registration for listing; the ratio of equity over after-tax profit (ROE) in the most recent year was a minimum five percent and the business operation in the two consecutive years immediately preceding the year of registration for listing must have been profitable; it does not have debts payable which are overdue for more than one year; it does not have accumulated losses calculated to the year of registration for listing; and it complies with the provisions of law on accounting and financial statements;
· Any member of the board of management or board of controllers, the director (general director), deputy director (deputy general director), chief accountant, a major shareholder and affiliated persons must make public disclosure of any debts they owe to the company;
· At least 20 percent of the voting shares in the company must be held by at least 300 shareholders who are not major shareholders; and
· Certain shareholders such as members of the board of management or board of controllers, etc. must undertake to hold 100 percent of the shares they own for six months from the date of listing and 50 percent of this number of shares for the following six months.
Hanoi Stock Exchange (HNX)
Decree 58/2012/ND-CP provides conditions for listing shares in HNX as follows, among other things:
· The company has its paid-up charter capital of 30 billion dong or more at the time of registration for listing;
· The company has operated for at least one year in the form of a shareholding company calculated up to the time of registration for listing; the ratio of equity over after-tax profit (ROE) in the most recent year was a minimum five percent; it does not have debts payable which are overdue for more than one year; it does not have accumulated losses calculated to the year of registration for listing; and it complies with the provisions of law on accounting and financial statements;
· At least 15 percent of the voting shares in the company must be held by at least 100 shareholders who are not major shareholders; and
· Certain shareholders such as members of the board of management or board of controllers, etc. must undertake to hold 100 percent of the shares they own for six months from the date of listing and 50 percent of this number of shares for the following six months.
Registration at HOSE and HNX
Companies wishing to register to list securities must lodge an application file for registration for listing with the HOSE/HNX. An application file for registration to list shares shall comprise the following key documents, among other things:
· General meeting of shareholders’ approval;
· Register of shareholders, as entered one month prior to the date of lodging the application;
· Prospectus;

Undertaking of certain shareholders such as members of the board of management or board of controllers, the director (general director), deputy director (deputy general director) and the chief accountant of the company, etc. to hold 100 percent of the shares they own for six months from the date of listing and 50 percent of this number of shares for the following six months;

Certificate from the Securities Depository Centre confirming registration by the institution and deposit of the shares at such Centre; and

Written consent from the State Bank in the case of a shareholding credit institution.

The HOSE/HNX shall approve or refuse to approve an application for registration for listing within 30 days from the date of receipt of a complete and valid application file, and in a case of refusal shall specify its reasons in writing.

Decree No. 60/2015/ND-CP dated September 1, 2015 on foreign ownership in stock market

In April 2009, the Prime Minister issued Decision 55/2009/QD-TTg governing the purchase and sale of “securities in Vietnam’s stock market”. It stipulates the difference between local investors and foreign investors, in accordance with foreign-invested local investment funds. It also states the 49 percent rule. This means that local investment funds and local securities investment companies are considered foreign investors if foreigners hold more than 49 percent of the interest of a corporation.

The above limitation of 49 percent was removed on September 1, 2015 under Decree No. 60/2015/ND-CP, i.e., generally there is no limitation on foreign ownership ratio except for “conditional” sectors. In particular, the new limitation will now be subject to the WTO commitments or other specific domestic law (e.g., the 30 percent cap in the banking sector).

If there is a conditional business that specific foreign ownership restriction under domestic law has yet to be specified, then the limitation is 49 percent. If there is no restriction and the sector is not a conditional business under domestic law (e.g., distribution companies), then there is no limit for the foreign shareholding ratio.

This rule also applies to equitized state-owned enterprises in order to attract more foreign investments. Decree 60 also removes all restrictions to foreign investors to invest in bonds. With respect to securities investment certificates or derivative products of stocks of public companies, the restriction will be also removed.

Circular 123/2015/BTC

At the end of 2008, two years after the first Securities Law, the SSC and the MoF enacted Decision 121/2008/QD-BTC to make the market more interesting for foreign investment as well as to penalise those who disobey the Securities Law. Decision 121 governed the activities of foreign investors in the Vietnamese securities market.

On December 6, 2012, the MoF adopted Circular 213/2012/TT-BTC governing foreign investors’ activities in Vietnamese securities market. Circular 213 became effective on February 15, 2013 and replaced Decision 121.

On August 18, 2015, the MoF issued Circular 123/2015/TT-BTC governing foreign investment activities in Vietnamese securities market (became effective on October 1, 2015), to guide Decree 60 and replace Circular 213.

Circular 123 provides detailed documents and procedure for foreign investors to operate in the Vietnam’s stock exchanges. The circular streamlines the procedures for market participation of foreign investors in the Vietnam’s stock market by reducing the amount of necessary documentation and simplify the procedure. For example, the circular removes the need to translate documents into Vietnamese by allowing them to be submitted in English.

The circular sets out that domestic business organizations with foreign ownership of 51 percent or more, are required to apply for the Securities Trading Code (STC) before trading shares, bonds or other types of securities under the securities market regulations.

Notification procedure on foreign ownership limits (FOL)

Circular 123 requires that public companies are responsible for determining the applicable FOL. Following the determination of the FOL which is applicable to them, companies not subject to any limit are obliged to file a notification dossier with the State Securities Commission (SSC). This dossier includes: (i) extracted information on business lines as uploaded on the National Business Registration Portal and the electronic address linking to such information; and (ii) Minutes of Meeting and the Resolution of the Board of Management approving the unrestricted FOL (if the company does not wish to maintain an FOL) or Minutes of Meeting and the Resolution of the General Shareholders’ Meeting approving and the charter providing for the specific FOL (if the company wishes to maintain FOL).

The SSC will have 10 working days to acknowledge in writing the notification on FOL. Within one working day of the receipt of SSC’s acknowledgement on the applicable FOL, public companies are required to publish this information on their website, which gives effect to the published FOL.

Circular 123 provides that foreign ownership in securities companies is unlimited. However, foreign investors must satisfy certain qualification and conditions provided by the applicable law. A qualified foreign investor who wishes to own more than 51 percent in a securities company must obtain the SSC’s prior approval, which may be issued within 15 days from the date when the SSC receives the application and the transaction resulting in the change of ownership must occur within six months from the date of SSC approval. If this does not occur then SSC approval will be revoked automatically.

Law on Security 2019

The new Law on Securities 2019 has been issued and will come into effect on January 01, 2021. Although the current Law on Securities 2006 and its guidance are relatively complete and comprehensive, the robust economic development and the need to equitize state-owned enterprises require the law to be amended and supplemented. In the spirit of Resolution no. 83/NQ-CP dated August 31st, 2017, the Law on Securities 2019 is expected to bring many significant changes to consolidate and improve the security market with the expectation to raise fund for and develop the economy.

Some of the main changes include:
· Regarding public offer, the new regulations are more stringent.
For first public offers, the condition on charter capital increases from VND10 billion (approximately USD430,000) to VND30 billion (approximately USD1.3 million), and the business of the last two years must be profitable, no accumulated losses, and no overdue liabilities over one year.
Besides, there are more conditions for public offers such as: major shareholders must commit to hold at least 20% of the issuer’s charter capital for at least 01 year from the end of the offering, at least 15% of the voting shares must be issued to non-major shareholders and this ratio is 10% for the issuers having charter capital of more than VND 1,000 billion (approximately USD430,000), the issuer is not undergoing criminal prosecution and does not have any unspent conviction for economic crimes, etc.
A new significant point is the requirement that shares and/or bonds must be listed on the securities trading system after the end of the offering.
Moreover, the new law provides more conditions and requirements to follow-on offering to make it as stringent as the first offering to ensure the quality of the offering share. Regulations on private placement is added as well.
· Regarding licensing for securities companies, the new law requires securities companies to carry out enterprise registration. Before this, securities companies are only licensed by the SSC.
· Regarding information transparency, the Law on Securities 2019 supplements more objects to comply with information disclosure: organizations that publicly offer corporate bonds, organizations that have corporate bonds listed, etc. There are more requirements to enhance information disclosure. Significantly, financial reports for public offer must be audited by an accredited audit organization for public interest entities operating in security sector.
· Regarding securities market, there shall be only one securities market namely Stock Exchange and its subsidiaries. The Securities Trading Centre shall no longer exist; and many other changes. This is a step to the unification of the management and administration, technology platform, standardization of listing criteria, reporting regime, information disclosure, membership and transaction standards, etc to replace for the current dual system.

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


Dr. Oliver Massmann’s speech:

The number of successfully implemented PPP projects in Vietnam is very limited, to be frank, too low.
Số lượng các dự án PPP được thực hiện thành công tại Việt Nam rất hạn chế, phải thẳng thắn, quá thấp.

Having worked on many legal PPP reform projects in the last 20 years in Vietnam, I conclude that there are three critical issues the Vietnamese Government has to confront and they are not legal issues at all.
Đã làm việc trong nhiều dự án cải cách PPP hợp pháp trong 20 năm qua tại Việt Nam, tôi kết luận rằng có ba vấn đề quan trọng mà Chính phủ Việt Nam phải đối mặt và chúng hoàn toàn không phải là vấn đề pháp lý.

Vietnam needs PPP laws. But these laws are only as good as the Political Will to enforce them.
Việt Nam cần luật PPP. Nhưng những luật này chỉ tốt như ý chí chính trị để thực thi chúng.

The Political Will to implement PPP projects in Vietnam is lacking!
Ý chí chính trị để thực hiện các dự án PPP tại Việt Nam còn thiếu!

The first issue is Political Will. So what is Political Will?
Vấn đề đầu tiên là ý chí chính trị, vậy ý chí chính trị là gì?

Political Will is Collective Will. Collective Will is essential for the supervision and successful implementation of PPP projects in Vietnam.
Ý chí chính trị là ý chí tập thể. Ý chí tập thể là điều cần thiết cho việc giám sát và thực hiện thành công các dự án PPP tại Việt Nam.

For example, clean water is an asset. It has to be paid for. Vietnam is lacking funds. Thus Vietnam needs successful foreign-financed BOT water projects, and the collective will of the Vietnamese people to pay for clean water.
Ví dụ, nước sạch là một tài sản. Nó phải được trả tiền cho. Việt Nam đang thiếu vốn. Do đó, Việt Nam cần các dự án tài trợ nước ngoài BOT thành công, và ý chí tập thể của người dân Việt Nam về việc phải trả tiền cho nguồn nước sạch.

Energy has to be paid for and Vietnam cannot pay for all the amount of energy it needs. Thus there have to be successful foreign-financed Energy PPP projects, and the collective will of the Vietnamese people to pay for energy.
Năng lượng phải được mua và Việt Nam không thể trả cho tất cả những gì chúng ta cần. Do đó, phải có các dự án năng lượng PPP tài trợ nước ngoài thành công, và ý chí tập thể của người dân Việt Nam về việc phải trả tiền để có năng lượng.

The second issue is Bankability of PPP contracts.
Vấn đề thứ hai là Khả năng thanh toán của các hợp đồng PPP.

What foreign investors care about most is financial closure.
Điều mà các nhà đầu tư nước ngoài quan tâm nhất là việc hoàn tất các thủ tục tài chính.

Lenders will carry out detailed due diligence on the project before handing out money, and investors must be able to show bankable PPP contracts.
Người cho vay sẽ thực hiện thẩm định chi tiết về dự án trước khi giao tiền cho nhà đầu tư, và nhà đầu tư phải xuất trình được hợp đồng PPP có thể giao dịch được.

A positive point of the Draft PPP Law is it includes boilerplate clauses on lender step-in right and international arbitration. However, the clause on Government Guarantee on Revenue Risk Sharing Mechanism must be further examined.
Một điểm tích cực của dự thảo luật PPP là nó bao gồm các điều khoản tiêu chuẩn về quyền của bên cho vay và việc giải quyết các tranh chấp trên trường quốc tế. Tuy nhiên, điều khoản về Bảo đảm của Chính phủ về Cơ chế chia sẻ rủi ro doanh thu phải được xem xét thêm.

The Government of Vietnam has very limited foreign exchange reserve compared to what’s needed for construction of infrastructure. If a project reports a loss of 5 billion USD, how will the government repay the investor?
Chính phủ Việt Nam có dự trữ ngoại hối rất hạn chế so với những gì mà chúng ta cần để xây dựng cơ sở hạ tầng. Nếu một dự án báo lỗ 5 tỷ USD, chính phủ sẽ trả nợ cho nhà đầu tư như thế nào?

In order to achieve the goal of sustainable PPP development, the private sector and government should create win-win solutions and share loss equally.
Để đạt được mục tiêu phát triển PPP bền vững, khu vực tư nhân và chính phủ nên tạo ra các giải pháp cùng có lợi khi chia sẻ thua lỗ và chia sẻ thua lỗ bằng nhau.

The third issue is Systemic issues.
Vấn đề thứ ba là Các vấn đề về hệ thống.

One of the most prominent systemic issues is lengthy government procedures. There are none one-stop-for-all laws or regulations on all the approvals that investors need to acquire in order to execute a project.
Một trong những vấn đề về hệ thống nổi bật nhất là thủ tục hành chính rườm rà. Không có luật pháp nào liệt kê một lúc tất cả các phê duyệt mà nhà đầu tư cần có để thực hiện dự án của mình.

Also, under the draft PPP law, the foreign currency balance scheme is only applicable to projects subject to decision on investment policy granted by the National Assembly and the Prime Minister, with a ceiling of 30%. Mostly very large-scale energy projects fall under this requirement. Government should extend the scope of projects eligible for foreign currency balance in order to attract more private investors.
Ngoài ra, theo dự thảo luật PPP, kế hoạch cân bằng ngoại tệ chỉ được áp dụng cho các dự án có quyết định về chính sách đầu tư do Quốc hội và Thủ tướng ban hành, với mức trần 30%. Như vậy chủ yếu các dự án năng lượng có quy mô rất lớn mới đủ điều kiện. Chính phủ nên mở rộng phạm vi các dự án đủ điều kiện cân bằng ngoại tệ để thu hút thêm các nhà đầu tư tư nhân.

In my opinion, these are the three most critical issues concerning the Draft PPP Law at the moment. Government must make effort to balance their interest with that of foreign investors in order to create a sustainable PPP development environment in Vietnam.
Theo tôi, đây là ba vấn đề quan trọng nhất liên quan đến luật dự thảo PPP tại thời điểm này. Chính phủ phải nỗ lực để cân bằng lợi ích của họ với các nhà đầu tư nước ngoài để tạo ra một môi trường phát triển PPP bền vững tại Việt Nam.


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


On 8 May 2020, the Ministry of Industry and Trade issued Official Letter No.3299/BCT-DL (“the Letter”) on supplementation of wind power projects into the Power Development Planning.

Notable provisions of the Letter:

1. EVN records a 8,6% increase in electricity demand each year, and suspect the possibility of power shortage, especially in 2023, if the Government doesn’t immediately implement measures such as increase development in the renewable energy sector, increase electricity import from countries in the area, etc.;

2. Most thermal power sources are 1-2 years behind schedule, even some projects are delayed by 4-5 years;

3. As solutions for the possible power shortage issue, EVN suggests that the Government promote the development of renewable energy sources and increase electricity import from China;

4. MOIT is reviewing the possibility of supplementing the Power Development Planning VII adjusted to the ability to release and balance supply and demand to report to the Prime Minister;

5. MOIT is expecting to develop renewable energy centers in areas with good wind potential and are capable of releasing capacity (when new transmission capacity is added);

6. The current FiT rate expires on November 2021; MOIT proposes to extend this deadline to 31 December 2023;

7. After 2023, MOIT proposes wind energy projects to apply auction, bidding methods;

8. MOIT to assume the responsibility of calculating new FiT rate for wind power projects, applicable from 1 November 2021 to 31 December 2023 in case the Prime Minister doesn’t agree to extend the current FiT rate.

It can be seen that the Government has continuously encouraged the development of wind and solar power projects – the most recent is the issuance of Decision No.13/2020/QD-TTg that published the new, attractive FiT rate for solar power plants. In other words, there are a lot of rooms for investors looking to participate in renewable energy development

To promote the development of renewable energy sources is a feasible and effective solutions to counter power shortage issue because renewable energy projects can be constructed quickly and promptly for operation in the period of 2021-2023, while taking advantage of the country’s natural potential without relying on imported fuels and is eco-friendly.

The need to extend the deadline for current FiT rate is essential because the projects waiting to be included in the Revised PDP VIII is unlikely to have commercial operation date before November 2021, because:

1. The supplement into PDP for new wind power sources was suspended for more than 1 year (from October 2018) because there were no guidelines to implement the Planning Law;

2. The construction of wind power projects takes more time than that of solar power projects. For feasibility study reports, investors must carry out wind measurement for at least 12 months. Moreover, wind turbines are mostly imported from abroad, which costs investor extra time, especially there is unexpected delay of equipment delivery.


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


1. Positive:

– Eligible Sectors (Art. 5): business sectors, which are qualified for investment in PPP form, have been selectively considered and proposed, not as broad as the those under Decree 63/2018/ND-CP (“Decree 63”). This would help to concentrate the valuable resources and finance on efficient and necessary sectors. However, please refer to our notes on incompletion of this clause in the Negative Section as below.

– Language (Art. 34): language for selection of international investor may be in both Vietnamese and English.

– Step-in rights of lenders (Art. 55): Lenders have rights to take over the project and propose another investor to continue the project. This provision has addressed the constraints that inhibit cross-border financing will be essential for diversifying sources of funding for energy-sector investments. International financing can provide for both the electricity and midstream gas sectors in terms of longer tenors and fixed-interest rates, which domestic capital market cannot satisfy.

– Guarantee on Foreign Currency Conversion (Art. 82): it is positive that the PPP Draft still remains this guarantee regime, as the one under Decree 63. However, the scope and conditions to enjoy this are very limited and do not meet the expectation from the investors as discussed in the Negative Section as below.

– Revenue risk sharing (Art. 83): it is indeed a very bold proposal in the PPP Draft that enabling the State to share the revenue loss of investors, subject to certain conditions and qualifications. Though we have few comments on the scope of this mechanism as below. We highly appreciate that the drafter has tried to address one of current issues of PPP form, i.e., non bankability and high risk.

– Dispute Resolution (Art. 104): the relevant provision on dispute resolutions have been improved in comparison with those of Decree 63. In brief, it is crystal clear now disputes between investors involving at least a foreign investor and / or disputes between investors / PPP project company with foreign parties could be resolved by either local courts / arbitration and / or foreign or international arbitration. In terms of disputes between the state and investors / project company, the PPP Draft has in-principle required local courts / arbitration but enabled other agreement between the parties in the project contracts and / or otherwise provided by international treaties of Vietnam. This is a significant improvement as Vietnam has signed several major international treaties such as CPTPP and EVFTA. We give to your attention the advantage of some international treaties as below:

“The CPTPP and the EVFTA make it possible that foreign investors could sue Vietnam Government for its decisions according to the dispute settlement by arbitration rules. The violating party must take all necessary measures to promptly comply with the arbitral decision. In case of non-compliance, as in the WTO, the CPTPP and the EVFTA allow temporary remedies (compensation) at the request of the complaining party. The final arbitral award is binding and enforceable without any question from the local courts regarding its validity. This is an advantage for investors considering the fact that the percentage of annulled foreign arbitral awards in Vietnam remains relatively high for different reasons. It is crucial that foreign investors now could take advantage of the requirements under the CPTPP and the EVFTA (as also recognized by the PPP Draft) to enhance functionality of their PPP projects in Vietnam. In case these entities make wrongful decisions, foreign investors could take recourse to arbitration proceedings and have the arbitral awards fully enforced in Vietnam.”

2. Negative:

1. Art. 5 The scope of sectors eligible for PPP investment form is not crystal clear and need further guidance from the Government and Ministries. For example, in terms of power projects, in practice some major profile thermal power projects have been implemented in cooperation with the Government under the Build – Operate – Transfer (BOT) umbrella (a form of public private partnership (PPP), it appears that the Government would not offer this kind of treatment for renewable energy projects at large (except, perhaps in theory, for very large and prominent ones).

Foreign investors (most of them engaging small scale projects) do not prefer PPP structure for their power plant projects, due to complexity of this structure and the lack of clear guidance, especially feed-in-tariff and consequently bankability. However, on the contrary, BOT seems to be suitable for larger scale projects and often give investors a better position to negotiate with the Government on key project indicators at the outset, which may not be available in other investment platforms.

Recommendation: Consider clarification on the scope and scale of power projects eligible for PPP form. In addition, for large scale power projects, it is crucial to enable all sub-projects of a mega power project could be together invested in the PPP form. For example, a LNG-to-power project could only be efficiently invested with other sub-projects such as terminal, FSRU, pipelines, etc.

2. Art. 47 Lack of clear and bankable terms of PPP contract. It is critical that an international form of bankable PPP contract is provided in the PPP Draft. Other related transaction agreements could be further developed as agreed by the parties but bankable templates should be drafted and attached to the guideline for implementation of PPP Draft.

Recommendation Terms and conditions of PPP contract are too general and vague.

Considering to provide a bankable PPP contract template in the PPP Draft or in the guiding decree / circular for PPP Draft.

3. Art. 57 It is not reasonable for forcing governing law to be the Vietnamese law. Especially, Vietnam has signed several international treaties and in principle allowed rules of such international treaties to be applied in PPP projects.

It is an international norm and feasible for a foreign related transactions to be governed by foreign law of a third country (not Vietnam or investor’s country) to the extent certain specific areas / agreements must be in compliance with Vietnamese law such as land regime, taxes, etc.

Recommendation: Considering for the parties to agree on the governing law of a third country (not Vietnam or investor’s country, e.g., Singapore law) to the extent certain specific areas / agreements must be in compliance with Vietnamese law such as land regime, taxes, etc.

4. Art. 80 The investment incentives are underdeveloped and quite similar as those provided under Decree 63. This is a safe approach but it would confuse the investors on the incentives and how to enjoy them under the PPP Draft.

Recommendation: Considering not referring to other laws and regulations on determination of investment, land and tax incentives for PPP forms.

For example, at least the PPP Draft should determine whether the PPP project could enjoy incentives such as an encouraged investment project or special encouraged investment project, etc.

5. Art.82 The conditions for foreign currency balance is very limited. As discussed above, only large scale projects prefer and may satisfy conditions of PPP investment forms. Thus, the scope for application of this foreign currency balance would need to be extended to all PPP projects, or at least for power projects and grid projects.

Foreign currency balance ensuring scheme is only applicable to projects subject to investment policy decision of the Nation Assembly and Prime Minister. In addition, there is a ceiling of 30% to be imposed.

In practice, several projects could not reach financial closure as scheduled because they cannot agree with the government about the convertibility of profits earned in local currency into foreign exchange for repatriation and payment for input commodities (coal, gas).

The demand for foreign currency associated with BOT projects and associated tariff revenues to be covered in the energy sector could escalate dramatically through 2030, up to US$23 billion/annually by 2030.

Recommendation: Considering to extend the scope eligible for foreign currency balance.

Foreign exchange convertibility has been a concern among investors. In the absence of such government convertibility guarantees, there is limited availability of currency hedging instruments that would allow private investors to cover currency risks through the market. The assurance on the availability of foreign currency shall definitely facilitate investment procedures. The ceiling of 30% should be removed as well.

Government guarantees for other obligations such as off-taker obligations and obligations towards infrastructure, payment obligations (including deemed commissioning and termination payments), etc. depending on projects.

6. Art. 83 Revenue risk sharing mechanism: (i) the investors, PPP project enterprises shall share with the State 50% of the increase between actual revenue and committed revenue in the contract; and (ii) the State shall share with the investors, the PPP project enterprises 50% of the decrease between actual revenue and committed revenue in the contract if, inter alia, the project does not use state’s budget and the cause of the loss is the change of policies, laws.

Recommendation: The risk sharing mechanism should be further developed to cover all other risks that may arise during the implementation of the PPP project (e.g., force majeure, change in law, price fluctuation, low selling price, etc.)

7. N/A Long negotiation process: it is due to several issues: (i) no clear list of approvals for the Project to be ready-to-build and / or operation, (ii) land site clearance and compensation process is still very challenging, (iii) not all decisions / procedures having a clear time-limit.

Recommendation: Recommending to provide all time-limits for all decisions / procedures and it is deemed to be provided if the state authority fails to issue such decisions. In addition, it is recommended to have a basic ready-to-build approval list for the investors to pursue and operate the PPP projects.

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


(“FIT”) scheme for wind power may be extended until the end of 2023 if it is approved by the Prime Minister. On April 09th, 2020, MoIT sent the Government Office the Official Letter no. 2491/BCT-DL to propose to extend FIT scheme for wind power. The proposed content is as follows:

1. Extending FIT scheme for wind power until 31/12/2023.

2. Assigning MoIT to calculate and propose a new FIT price for the projects COD after 01 November 2021 until 31 December 2023.

3. Competitive tender and auction scheme shall be applied after 2023.

The reason for this proposal is the predicted shortage of power for Southern Vietnam from 2021 to 2025 because many thermal projects are behind schedule, thus the need for wind power from 2021 to 2025 is predicted from 6,030 MW to 11,630 MW.

This extended FIT scheme, if approved by the Prime Minister, shall be a lucrative opportunity for investors in the following years.

Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com or any other lawyer in our office listing if you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
Thank you!

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

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

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

1. The businesses entitled to continue operation

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

2. The implementation of Directive 2061 in some areas

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

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

2.3. Hai Duong Province

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

3. Required measures for businesses continuing its operation

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

Please do not hesitate to contact the author Dr. Oliver Massmann under omassmann@duanemorris.com or any other lawyer in our office listing if you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
Thank you!

3 Things About Vietnam’s Updated Legal Framework for Biomass Power Projects

Despite abundantly available biomass feedstock of agricultural origin, ranging from sugar bagasse, wood chip to rice husks and stalks, biomass as a source of renewable energy does not seem to have received the same amount of attention from the government of Vietnam as solar or wind power. It took the government more than six years to acknowledge the modest results of the current incentives package and adopt measures to give a new push to the development of biomass power plants. This was done on 5 March 2020 when the Prime Minister issued Decision No. 08/2020/QD-TTg (“Decision 08“) amending Decision No. 24/2014/QD-TTg dated 24 March 2014 (“Decision 24“) on support mechanisms for the development of biomass power projects in Vietnam. Decision 08 introduces a number of important changes which will take effect on 25 April 2020.

Increase of the Feed-in-Tariffs (“FiT”)

The FiT for electricity produced by combined heat and power (“CHP”) biomass power plants will increase from USD 5.8 cents per kWh to USD 7.03 cents (VND 1,634) per kWh.

The government has also abandoned the use of avoided cost schedules (calculated based on the cost of electricity produced by coal-fired power plants) published annually for determination of the electricity purchase price from non-CHP biomass electricity producers. The FiT for these projects is set at USD 8.47 cents (VND 1,968).

The FiTs are exclusive of value-added tax and are adjusted according to USD/VND exchange rate. The new FiTs will be also benefit the biomass power projects which have started operating before 5 March 2020 for the remaining terms of their power purchase agreements (“PPAs”).

Technical standards for electricity generation equipment

Decision 08 introduces a new requirement to comply with technical standards applicable to biomass electricity generation equipment and quality norms applicable to electricity produced by biomass power plants. Similar requirements already exist in recent regulations applicable to solar and wind power projects. The technical standards and norms will be elaborated by the Ministry of Industry and Trade (“MOIT”) which is also responsible for the issuance of a new model PPA for biomass projects.

Possibility of alternative off-takers

Under Decision 08 Electricity of Vietnam (“EVN”) (directly or through its authorised group entities) remains the sole off-taker of the electricity generated using biomass. However, the new decision also opens the door to “organisations assuming the rights and obligations” of EVN (or its relevant group entities) to become biomass electricity off-takers. This new development is in line with the government’s road-map for the liberalisation of Vietnam’s electricity markets (wholesale and then retail) by 2025. It is not clear whether this would improve the bankability of biomass PPAs, since EVN, as a State-owned enterprise, still enjoys strong government support while such backing may not be available to other off-takers in the future.

The possibility of selling electricity produced by biomass power plants directly to end users is not contemplated by the government at this stage. A recently published draft regulation on pilot Direct PPAs does not seem to include biomass power projects.

The hope is that above changes will make biomass power projects more attractive for investors. Whether the government’s target to increase the share of electricity produced from biomass to 2.1 percent of the total generated electricity by 2030 set out in the Revised Power Development Master Plan VII is achievable still depends a great deal on the new biomass PPA and technical requirements for biomass power projects to be issued by the MOIT in the coming months.









On the 2nd of December 2015, after almost three years and 14 rounds of negotiation, President Donald Tusk, President Jean-Claude Juncker and Prime Minister of Vietnam Nguyen Tan Dung announced the conclusion of the negotiations on the EU-Vietnam Free Trade Agreement (EVFTA). The EVFTA is a new-generation free trade agreement between Vietnam and the EU. On the 26th of June 2018, the EVFTA was split into two separate agreements: the Free Trade Agreement (EVFTA) and the Investment Protection Agreement (EVIPA). In August 2018, the EU and Vietnam completed the legal review of the EVFTA and the EVFTA requires ratification by the European Council as well as the consent of the European Parliament, while the EVIPA required additional ratification by parliaments of each individual EU Member State.

On the 30th of June 2019, EU Commissioner for Trade Mrs. Cecilia Malmstrom, together with the Romanian Minister for Business Mr. Stefan-Radu Oprea, representing the EU, signed the EVFTA and EVIPA in Hanoi, together with H.E. Prime Minister Nguyen Xuan Phuc and Vietnamese Government leaders. The Prime Minister expressed his belief that the European Parliament, parliaments of EU Member States, and the Vietnamese National Assembly will soon ratify the EVFTA and EVIPA. Both Trade and Investment agreements were endorsed by the European Parliament on the 12th of February. The EVFTA was approved by the EU Council on 30th of March 2020, thus the implementation of the EVFTA is therefore imminent if the Vietnamese National Assembly gives its approval at its May session, meaning that an entry into force early this summer is possible for the EVFTA. It will take more time for the EVIPA to enter into force because this agreement is subject to the endorsement of the Member States’ parliaments.

Both agreements are expected to bring significant advantages for enterprises, employees, and consumers in both the EU and Vietnam. Vietnam’s GDP is set to increase by 10-15 percent while exports are predicted to rise by 30-40 percent over the next 10 years. Meanwhile, the real wages of skilled labourers could rise by up to 12 percent, with salaries of common workers increasing by 13 percent. Once the EVFTA has entered into force, and once Government policies and institutional reforms begin to take effect, Vietnam’s business activities will boom. However, challenges still remain. In this chapter, EuroCham’s Legal Sector Committee will raise the issues relevant to their particular industries and make specific recommendations in order to address these concerns.


1. General market access for goods and services

The EVFTA is the most comprehensive and ambitious trade and investment agreement that the EU has ever concluded with a developing country in Asia. It is the second agreement in the ASEAN region, after Singapore, and it will intensify bilateral relations between Vietnam and the EU. Vietnam will have access to a potential market of approximately 446 million people and a total GDP of US$13,918 billion.

Meanwhile, exporters and investors from the EU will have further opportunities to access to one of the largest and fastest-growing countries in the region. According to a report released in early 2017 covering 134 cities worldwide, Hanoi and Ho Chi Minh City are ranked among the top 10 most dynamic cities due to their low costs, rapid consumer market expansion, strong population growth and transition towards activities attracting significant amounts of FDI. According to the World Bank, Vietnam has one of the fastest-growing economies in the world — 7.1% GDP growth in 2018, and 6.7% at the mid-point of 2019. To put that in perspective: Vietnam’s GDP is growing at almost twice the rate of the USA.

In addition, Vietnam has the fastest-growing middle class in the region. It is predicted to almost double in size between 2014 and 2020 (from 12 million to 33 million people). Vietnam’s super-rich population is also growing faster than anywhere else, and there is no doubt that it will continue to rise over the next ten years.

2. Market access for goods

Nearly all customs duties – over 99 percent of the tariff lines – will be eliminated. The small remaining number will be partially liberalised through duty-free quotas. As Vietnam is a developing country, it will liberalise 65 percent of the value of EU exports to Vietnam, representing around half of the tariff lines, at entry into force. The remaining duties will be eliminated over the next ten years. This is an unprecedented, far-reaching tariff elimination for a country like Vietnam, proving its aspiration for deeper integration and trading relations with the EU.

Meanwhile, the EU agreed to eliminate duties for 84 percent of the tariff lines and 71 percent of its trade value for goods imported from Vietnam immediately at the entry into force of the EVFTA. Within 7 years from the effective date of the EVFTA, more than 99 percent of the tariff lines will have been eliminated for Vietnam. This is a wider reduction compared with the 95 percent of the tariff lines that the former TPP countries offered to Vietnamese imports. In the ASEAN region, Vietnam is the top country exporting goods to the EU. However, the market share of Vietnam’s products in the EU is still small. As a result of the EVFTA, the sectors set to benefit most are main export sectors that used to be subject to high tariffs from the EU including textiles, footwear, and agricultural products. The EU is also a good point for Vietnam to reach other further markets.

Vietnam will benefit more from the EVFTA compared with other such agreements, since Vietnam and the EU are considered to be two supporting and complementary markets. In other words, Vietnam exports goods that the EU cannot or does not produce itself (i.e. fishery products, tropical fruits, etc.) while the products imported from the EU are also those Vietnam does not produce domestically, including machinery, aircraft and high-quality pharmaceutical products.

With better market access for goods from the EU, Vietnamese enterprises could source EU materials, technology, and equipment at a better quality and price. This, in turn, will improve their own product quality and ease Vietnam’s burden of over-reliance on its other main trading partners.

The EVFTA is considered as a template for the EU to further conclude FTAs with other countries in the ASEAN region with the aim of concluding a region-to-region FTA once there is a sufficient critical mass of FTAs with individual ASEAN countries. This process could take about 10-15 years. Thus, Vietnam should take advantage of this window of opportunity before FTAs with others in the region are concluded and take effect to become a regional hub.

3. Market access for EU service providers

Although Vietnam’s WTO commitments are used as a basis for the services commitments in the EVFTA, Vietnam has not only opened additional sub-sectors for EU service providers, but also made commitments deeper than those outlined in the WTO, offering the EU the best possible access to Vietnam’s market. Sub-sectors that are not committed under the WTO, but under which Vietnam has made commitments under EVFTA, include: Interdisciplinary Research & Development (R&D) services; nursing services, physiotherapists and para-medical personnel; packaging services; trade fairs and exhibitions services and building-cleaning services.

When these services reach international standards, Vietnam has a chance to export high-quality services, resulting in not only an increase in export value but also export efficiency, thus helping to improve the trade balance.


Vietnam has one of the highest ratios of public investment to GDP in the world (39 percent annually from 1995). However, until now, Vietnam has not agreed to its Government procurement being covered by the Government Procurement Agreement (GPA) of the WTO. Now, for the first time, Vietnam has undertaken to do so in the EVFTA.

The EVFTA commitments on Government procurement mainly deal with the requirement to treat EU bidders, or domestic bidders with EU investment capital, equally with Vietnamese bidders when the Government purchases goods or requests a service worth over the specified threshold. Vietnam undertakes to follow the general principles of National Treatment and Non-discrimination. It will publish information on intended procurement and post-award information in Bao Dau Thau – Public Procurement Newspaper – and information on the procurement system at muasamcong.mpi.gov.vn and the official gazette in a timely manner. It will also allow sufficient time for suppliers to prepare and submit requests for participation and responsive tenders and maintain the confidentiality of tenders. The EVFTA also requires its Parties to assess bids based on fair and objective principles, evaluate and award bids only based on criteria set out in notices and tender documentation and create an effective regime for complaints and settling disputes. These rules require Parties to ensure that their bidding procedures match the commitments and protect their own interests, thus helping Vietnam to solve its problem of bids being won by cheap but low-quality service providers.

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

Criteria – EVFTA


Investment disputes now could be settled under the EVIPA. In disputes regarding investment (for example, expropriation without compensation or discrimination of investment), an investor is allowed to bring the dispute to the Investment Tribunal for settlement. To ensure the fairness and independence of the dispute settlement, a permanent Tribunal will be comprised of 9 members: 3 nationals each appointed from the EU and Vietnam, together with 3 nationals appointed from third countries. Cases will be heard by a 3-member Tribunal selected by the Chairman of the Tribunal in a random way. This is also to ensure consistent rulings in similar cases, thus making the dispute settlement more predictable. The EVIPA also allows a sole Tribunal member where the claimant is a small or medium-sized enterprise or the compensation of damaged claims is relatively low. This is a flexible approach considering that Vietnam is still a developing country.

In case either of the disputing parties disagrees with the decision of the Tribunal, it can appeal to the Appeal Tribunal. While this is different from the common arbitration proceeding, it is quite similar to the 2-level dispute settlement mechanism in the WTO (Panel and Appellate Body). We believe that this mechanism could save time and cost for the whole proceedings.

The final settlement is binding and enforceable from the local courts regarding its validity, except for a five-year period following the entry into force of the EVIPA (please refer to further comments in the Legal Sector Committee’s chapter on Judicial Recourse).


The EVFTA and EVIPA, once ratified by Vietnam, will create sustainable growth, mutual benefits in several sectors and be an effective tool to balance trade relations between the EU and Vietnam. Vietnam is making continuous efforts and progress to meet the high standards set out in the two FTAs and is currently offering greater opportunities for foreign businesses in preparation for the FTAs’ finalisation. It is now time for foreign investors to start their business plans and grasp the upcoming clear opportunities.

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


It has been 10 month waiting after Decision 11/QDD-TTg expired, now the Prime Minister has issued Decision 13/2020 on the incentive mechanism for solar power development. We would like to update the very new key issues as follows:

1. FIT scheme

Following notification No. 402/TB-VPCP of Prime Minister Nguyen Xuan Phuc, now FIT scheme is confirmed that it only applies for the following projects:

– For grid-connected projects: the projects that: (i) has in-principle investment decision before 23/11/2019, and (ii) COD of the whole or part(s) of project from 01/7/2019 to 31/12/2020.
– For grid-connected projects in Ninh Thuan: (i) the projects that were included into power development plans, (ii) COD before 01/01/2021, and (iii) the accumulated capacity not exceeding 2,000 MW.
It is noted that regarding grid-connected projects, FIT scheme is only applied for projects with solar cell’s capacity more than 16% or module more than 15%.

– For rooftop projects: the projects that are brought into operation, generate electricity and have electricity meter readings confirmed from 01/7/2019 to 31/12/2020.
The term of FIT scheme for the above projects shall be applied for 20 years from COD.

2. FIT2

FIT2 are as follows:
– Floating solar energy projects: UScent 7.69
– Ground mounted solar energy projects: UScent 7.09
– Rooftop energy solar energy projects: UScent 8.38

For Ninh Thuan province, grid-connected solar power projects that (ii) COD before 01/01/2021, and (iii) the accumulated capacity not exceeding 2,000 MW will be applied the FiT of UScent 9.35.

3. Competitive mechanism

The projects that do not fall with the scope of FIT scheme shall be subject to competitive scheme.

4. COD definition

COD of the whole or part(s) of the grid-connected project is defined as the date that the whole or part(s) of the project is ready to sell electricity to the buyer and satisfy the follows:
a) Has finished the initial tests for the whole or part(s) of the construction;
b) Has been issued electricity operation license;
c) Has agreed to the index of the electricity meter in order to make payment.

5. Rooftop project definition

Rooftop projects are the projects have photovoltaic panels installed on the rooftop of the construction and have the capacity not exceeds 01 MW, connect to the grids which is less than 35kV.


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