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A Legislative change expects to transform Vietnam Business Community

A new Investment and Enterprise Law will come into force from 1 July 2015, hoping to boost investment environment in Vietnam and enhance competitiveness with neighbor emerging markets. These new laws contain more transparent and consistent provisions, which enable investors to feel more confident of doing business in Vietnam. I will discuss the main new provisions in the two new laws in more detail below.
1. Unified investment incentives
The old laws set forth investment incentives as encouraging indicatives to attract more capital, technology and human resources in less developed industries and geographical areas. However, investment incentives regulations are not stipulated consistently and fragmented in different sections of law. This has caused overwhelming “incentive rat race” for attraction of foreign direct investment amongst provinces and cities around the country. The new law lays strictly down general principles governing investment incentives. For example, the new law set forth three forms of providing investment incentives:

Favorable corporate income tax rate for a definite period or for the whole duration of implementation of investment projects; and exemption from and reduction of corporate income tax; Tax exemption in respect of goods imported to form fixed assets; raw materials, supplies and components for...

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Distributionship or distribution agreement, which one matters?

The name does not make a difference. A distributorship is another kind of arrangement for the purchase and sale of goods. The distributor buy the goods for resale, generally from the manufacturer or other producers. The distributor may have an exclusive right or a non-exclusive right to market the goods within a specified territory. In general, an exclusive distributorship does not impose any restriction on the price at which the distributor may resell the product, will be lawful—that is, it will not constitute an illegal restraint of trade—if (i) the manufacturer of the goods does not control a substantial share of the market, (ii) competitive goods of other manufacturers are readily available in the market, (iii) the distributorship is reasonable in terms of the period and area of exclusivity, and (iv) the distributorship is not part of a scheme to control the prices at which the goods are resold. If a manufacturer markets the same goods within the same territory as its distributor, the effect of this arrangement must also be considered.

To some extent, there are similarities between the distributorship agreement and the trademark and license agreement. The economic concerns of the manufacturer and the distributor differ, though, in...

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Arbitration clause: implication of place (seat) of arbitration and a case law recently settled by Vietnam International Arbitration Center (VIAC)

Place of arbitration is the starting point

The arbitration law (lex arbitrii) consists of provisions governing the arbitration particularly the formal validity of the arbitration agreement, the arbitrability of the dispute, the composition of the arbitral tribunal, fundamental procedural guarantees, assistance from the courts and judicial review of the award. The parties can only indirectly choose the lex arbitrii by fixing the seat of the arbitration in the country where this arbitration law applies. From there, the seat of the arbitration plays a dual role. First, it determines the scope of application of the lex arbitrii. Secondly, the seat defines the jurisdiction of national courts to review the award. National courts only have jurisdiction for reviewing awards which were “rendered” in their country. Choosing seat of arbitration not only important in international agreement but also in domestic agreements which entirely performed within the territory of Vietnam. For instance, by choosing a seat of arbitration in Ho Chi Minh City, the people’s court of Ho Chi Minh is consequently vested in reviewing the arbitration award.

The pre-eminence of the seat as connecting factor does not mean that a court confronted with a foreign award will always apply the lex arbitrii of...

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Third-Party Legal Opinion – a good signal for foreign investment protection under Public-Private Partnership (PPP)

When investment dispute between a foreign investor and the local government comes into play (especially in public-private partnership agreements), both parties have usually recourse to the dispute settlement body. It would be costly and time-consuming for the parties seeking for their own victory. Consulting with third party’s legal opinion can be a way-out to avoid a legal battle. To keep up with a promise to boost and make investment climate much more transparent and protective against foreign investors, the Government set out unified and comprehensive procedures for seeking third-party legal opinion before the disputing party end up bringing a case to the dispute settlement body. Under Decree 51/2015/ND-CP dated 26 May 2015, the opinion giver is the Ministry of Justice and opinion recipient is a party to public-private partnership agreements.

Contents

The content of the legal opinion is not to address factual situations and issues unrelated to the laws of Vietnam. The content must have the following:

Factual situation and assumptions; Legal standing of a Vietnamese party in the course of signing and executing contracts; Legal capacity to enter into and sign a contract; Legal compliance on negotiation, signature and execution of a contract; Purpose use of the legal opinion...

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New update on Global Climate Change

175 parties signed the Paris Agreement on Climate Change

New York, 22 April - In an extraordinary show of support for the Paris Climate Change Agreement adopted last December, 175 Parties (174 countries and the European Union) signed up to it at a ceremony at UN Headquarters today that far exceeded the historical record for first-day signatures to an international agreement.

The ceremony, held the first day the Paris Agreement was open for signature, marked the initial step toward ensuring the agreement enters into force. The agreement can enter into force 30 days after 55 Parties accounting for 55 per cent of global emissions deposit their instruments of ratification.

The Paris Agreement marked a watershed moment in taking action on climate change.  After years of negotiation, countries agreed to limit global temperature rise to well below 2 degrees Celsius, while pursuing efforts to keep temperature rise to 1.5 degrees.

Even as the agreement was adopted, countries recognized that present pledges to reduce emissions were still insufficient to reach these goals.  The Paris Agreement mandates regular meetings every five years, starting in 2018, to review progress, and to consider whether it is necessary to increase ambition. [1]

[1] http://newsroom.unfccc.int/paris-agreement/closing-paris-agreement-signing-press-release/

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Vietnam Real Estate Market – which risk factors should not be underestimated

Vietnam’s real estate market is witnessing almost a full recovery. As an emerging and developing market, the risk factors are still unfolding but generally profits are grossly overestimated when investing in the real estate market in Vietnam. This article highlights the most globally recognised problematic factors affecting investment decisions in Vietnam’s real estate market.

Vietnam Outlook

In the 2000s, Vietnam’s growth rate averaged 6.4 percent per year and began to slow following the global financial and economic crisis. GDP had slightly recovered and had reached up to 6.3 percent during the first half of 2015.[1] Vietnam’s GDP is expected to be 6.6 percent in 2016.[2]

The Socio-Economic Development Strategy (‘SEDS’) 2011–2020 places structural reforms on the list of the most primary work to be done, which covers environmental sustainability, social equity and emerging issues of macroeconomic stability. In addition to focusing on the following areas: (1) promoting human resources/skills development; (2) improving market institutions; and (3) infrastructure development, a recent draft of the Socio-Economic Development Plan(‘SEDP’) 2016–2020 recognises ‘the challenges and opportunities associated with further deepening of economic integration since almost all tariff lines will be zero by 2020 and emphasizes the proactive integration and macroeconomic stability as other important...

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Industrial zones, export processing zones, and economic zones in Vietnam

I. Overview

Until June 2011, the country has 260 industrial zones (industrial zones are used to represent industrial zones, export processing zones, and economic zones) accounting for 72.000 ha.[1] As of early the year of 2013, the country established 280 industrial and export processing zones which had drawn above 64.8 billion USD in foreign direct investment (FDI).[2] Industrial zones are spreading in 57 provinces or cities, which are divided into three planned central areas: Southern central area with 124 IZs, accounting for 48% of the total number of IZs; Northern central area with 52 IZs, accounting for 20% of the total number of IZs; and Middle central area with 23 IZs, accounting for 10% of the total number of IZs. [3]

In Vietnam, the Ministry of Planning and Investment (MPI) is in the position of coordinating with relevant ministries, branches and People’s Committees of provinces and cities under central authority to formulate a master plan for development of industrial zones or economic zones and submit it to the Prime Minister for his approval.[4] The approved master plan for development of industrial zones or economic zones shall be used as the basis for consideration of the establishment of any industrial zone...

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Corporate Code of conducts for Transnational Corporations (TNCs)

Introduction

Existing laws, regulations, and codes of conduct do not provide a uniform definition of TNCs, which complicates identification of the entities involved in transnational business transactions. Regardless of various definitions, TNCs are corporations with production and marketing operations in more than one state. They have generally three common characteristics. First, it is composed of commercial entities operating in at least two countries. Second, these entities operate under a decision-making system which allows the formulation of common strategies or policies through one or more headquarters. Finally, the entities significantly influence each others' activities through various linkages, such as shared ownership, resources, and technology. Therefore, private enterprises or state-owned or mixed enterprises should be considered TNCs.

Codes of conduct as policy statements that define ethical standards for companies, originated in the early 1970s when TNCs were being widely criticized for their behavior in developing countries. Since that time, codes of conduct have been voluntarily developed by TNCs and MNCs, often with the help of NGOs, to inform customers about the principles they follow in the production of their goods and services. Even though several hundred codes of practice exist and there is no standard for their content, they typically feature criteria...

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An observation: Anti-money laundering in Vietnam and ASEAN

A need for regional cooperation in combating money laundering

It is generally accepted that individual countries cannot fight against money laundering because money laundering cases are usually and unceasingly international. This is true for many developing countries that are short on expertise, resources, capacity and legal framework to effectively tackle and counter money laundering offences.[1] General Chris McDevitt, Chief Communication Unit of Australia in Ha Noi said that laundering money was one of transnational crimes, and the best way to fight against it is cooperating with each other. Thus, Mutual legal assistance treaties (MLATs) are designed with the aim of addressing some of these challenges which provide legal, practical assistance in fighting against money laundering crimes.

It is a fact that many developing countries do not have domestic legal framework in place and lack basic human and financial resources, expertise, and legal infrastructure to tackle money laundering effectively. Normally, they are still struggling to complete the required infrastructure to fight money laundering and develop the capacity to conduct such complex and resource-intensive investigations. Absent an adequate domestic framework, international cooperation could provide an option to track illegal funds which have been transferred and laundered in other countries. For instance, MLA...

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Special considerations for counsel in plaintiff cases

The fact that a case is a plaintiff case adds several elements to the art of choosing outside counsel. One is the greater ease of using alternative pricing. Another is the opportunity to look to additional, or at least different, counsel than those that typically handle defense cases. A further difference is the possibility that counsel of lesser ability than normally used may suffice. These differences resolve into the following particular considerations in selecting counsel for plaintiff cases:

1. Fee basis

A few additional pricing arrangements, led by contingency pricing, are available in plaintiff cases that are not usually found in defense cases. All pricing methods used for defense cases may also be used for plaintiff cases. This means that plaintiff cases open up a larger set of potential counsel. They include not only outside counsel that a client would use for hourly-based defense work but also contingency attorneys.

2. Quality of counsel

The quality of outside counsel may be of lesser importance in plaintiff cases than in defense cases. That is because some plaintiff case whose victory would be sweet but whose loss would be a minor matter. Unlike plaintiff cases, defense cases in which serious consequences result from...

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