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Investing and Doing business in Myanmar, Cambodia and Vietnam

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Investing and Doing business in Myanmar, Cambodia and Vietnam

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Investing and Doing business in Myanmar, Cambodia and Vietnam

  1. 1. www.duanemorris.com ©2011 Duane Morris LLP. All Rights Reserved. Duane Morris is a registered service mark of Duane Morris LLP. Duane Morris – Firm and Affiliate Offices | New York | London | Singapore | Los Angeles | Chicago | Houston | Hanoi | Philadelphia | San Diego | San Francisco | Baltimore | Boston | Washington, D.C. Las Vegas | Atlanta | Miami | Pittsburgh | Newark | Boca Raton | Wilmington | Cherry Hill | Lake Tahoe | Ho Chi Minh City | Duane Morris LLP – A Delaware limited liability partnership Investing and Doing Business in Myanmar, Cambodia and Vietnam Singapore, 27th May 2015 OLIVER MASSMANN Partner - General Director of Duane Morris Vietnam LLC This outline should not be construed as legal advice or as pertaining to specific factual situations.
  2. 2. www.duanemorris.com INVESTING AND DOING BUSINESS IN MYANMAR
  3. 3. www.duanemorris.com Agenda: • An Introduction to Myanmar • Investment in Myanmar • Why choose Myanmar?
  4. 4. www.duanemorris.com First impressions from Myanmar Confucius never arrived!
  5. 5. www.duanemorris.com Myanmar at Glance: • Official Name: Republic of the Union of Myanmar • Location: South East Asia • Neighbors: Bangladesh, China, Laos, India and Thailand • Area: 676,578 Km2 • Capital: Naypyidaw • Largest city: Yangon (Rangoon) • Currency: Kyat (MMK) (01 USD = 1029.50 MMK) • Language: Burmese • Population: 61 million MYANMAR IN 2014 GDP US$ 60 billion GDP per capita US$ 910 GDP Growth 7.8 % Inflation 6.6 % Cumulative FDI as of Dec 2014 859 approved projects with a value at US$52.84 billion Import turnover (2012) US$ 17,670 million Export turnover (2012) US$ 9,203 million Labor force 31.4 million Minimum wage No general minimum wage Public sector: US$48.6/month Laborer: About US$1.94/day
  6. 6. www.duanemorris.com MYANMAR: Opportunities and Challenges  Recent democratic reform with new Union Government headed by President Thein Sein in March 2011  International sanctions are lifted and foreign firms eye on Myanmar  GDP growth rate is projected to average around 6 per cent per year until 2020, with GDP doubling to $124 billion by 2020  Myanmar has all the elements required to create another Asian economic miracle
  7. 7. www.duanemorris.com MYANMAR: Challenges • The challenges of Myanmar:  US$1,500 : Average productivity of a worker in Myanmar today, about 70% below that of benchmark Asian countries  4 years of average schooling in Myanmar  10 million additional people to absorb in Myanmar large cities by 2030  US$650 billion: Total investment needed by 2030 to support growth potential, US$320 billion in infrastructure alone Source: McKinsey&Company
  8. 8. www.duanemorris.com MYANMAR: Opportunities  Potential to achieve US$ 200 billion+ GDP in 2020, over four times as high as today  With spending potentially tripling from US$ 35 billion to US$ 100 billion, an estimated 10 million member of the consuming in 2030 from 2.5 million in 2010  Potential to create more than 10 million additional non-agricultural jobs by 2030  500 million people living in countries bordering Myanmar and the closest parts of China and India, a huge potential market Source: McKinsey&Company
  9. 9. www.duanemorris.com INVESTMENT IN MYANMAR
  10. 10. www.duanemorris.com INVESTMENT IN MYANMAR - Introduction • With its natural and human resources and cultural and national heritage Myanmar represents excellent potential for business investment. • Myanmar welcomes foreign investments in all forms. The Government is intending to maintain good and strong economic relationship with all countries, all foreign organizations and individuals. • An untapped market- rich in natural resources with a young population and a high number of English speakers. • A fertile and resource-rich country strategically located in the heart of Asia, one of the world’s largest growing economic regions. • Firms involved in precious stone, agricultural products or other industries may find Myanmar a fascinating place to begin developing longer term interests. • Significant legal reforms aiming to improve investment climate:
  11. 11. www.duanemorris.com STRATEGIC INVESTMENTS: Most promising sectors • Construction and infrastructure: knowing that poor infrastructure may hold the country back, Myanmar’s Government has accorded high priority to infrastructure development projects - such as roads, railways, bridges, ports facilities, airports, electric power, irrigation networks, communication systems, private schools construction, private hospitals, etc. • ELECTRICITY/ENERGY: only about 15% to 20% of the total population are accessible to the electric power supply, and the rest have to rely on conventional natural resources… ELECTRICITY IS CRITICAL TO THE COUNTRY‘S DEVELOPMENT! • Oil and gas: rich of oil and gas reserves, mostly unexploited, offering great opportunity for international bidders. World’s largest hydrocarbons companies such as Chevron, BP, Woodside, Shell, ConocoPhillips, ExxonMobil all expressed interest in entering Myanmar . • Telecommunication: with population of over 60 million peoples, telecommunication is one of the most promising and lucrative industry. • Mining: Myanmar is rich in mineral resources and minerals of potential importance are copper, gold, lead, zinc, silver, tin and tungsten, antimony, chromium and nickel. In terms of mineral potential, Myanmar ranks high among Asian countries, but mineral resources are very much under- utilized • Other: forestry, agricultural, tourism.
  12. 12. www.duanemorris.com Form of Foreign Investment • Under the recent Foreign Investment Law 2012, foreigners are now allowed to set up companies fully owned by them (whether this company was incorporated in Myanmar or abroad), or go into joint venture with any Myanmar citizen or the government of Myanmar! • Any company with one or more foreign shareholders is classified as a Foreign Company, thus subject to Foreign Investment Law rather than Myanmar Companies Act (1914) • Possibility of establishing a Special Company created under the Special Company Act of 1950 (where part of the equity belongs to the State)
  13. 13. www.duanemorris.com Form of Foreign Investment (cont.) • A foreign investor may incorporate in Myanmar a 100% foreign owned company permitted by the Myanmar Investment Commission! • A foreign company may establish a place of business or carry on business in Myanmar as a branch of a foreign incorporated company: by first apply for a Permit to Trade from the Ministry of National Planning and Economic Development. • A foreign investor can join with any individual, firm, company, co- operative or state-owned enterprise from Myanmar to establish a joint venture either as a partnership firm or a limited company on the basis of a joint venture contract (ratio of foreign capital is now decided by the JV parties)
  14. 14. www.duanemorris.com Form of Foreign Investment (cont.) • Foreign companies with business relations or investment projects in Myanmar may apply to set up representative offices in Myanmar (this being a common practice for banks). • In contrast with a branch, a Representative Office of a company incorporated outside Myanmar is not allowed to perform direct commercial or revenue generating activities in Myanmar. • However, it is permitted to liaise with its head office and collect data useful for the head office.
  15. 15. www.duanemorris.com General Types of Companies • Private Limited Liability Company • Public Limited Liability Company • Sole Proprietorship • Company Limited by Guarantee with Share Capital • Company Limited by Guarantee without Share Capital • General Partnership • Branch of a Foreign Company
  16. 16. www.duanemorris.com Capital requirement • Minimum capital required to register for a Permit to Trade:  Kyats 133,333,333 for an industrial company (~US$120,312)  Kyats 66,666,666 for a trading company (~US$60,156)  Kyats 40,000,000 for a service company (~US$36,094) Note: Fifty percent (50%) of the prescribed capital must be brought in as foreign currency before the Permit to Trade is issued and the balance 50% must be remitted within 30 days prior to the date of renewal of Permit to Trade
  17. 17. www.duanemorris.com Restriction • Activities prohibited by the Myanmar Foreign Investment Law:  Business which can affect the traditional culture and customs of the national races within Myanmar  Business which can affect public health  Business which can affect the environment and eco-system  Importation of hazardous or poisonous wastes into the country  Business which produce or use hazardous chemicals under international agreements  Production or manufacturing work or services which are activities reserved for citizens  The importation of technologies, medicines or utensils/paraphernalia without relevant permits, or not designated for use  Agricultural investment and plantation and cultivation for long and short terms which can be performed by citizens  Livestock breeding which can be performed by citizens  Marine fishing which can be performed by citizens  Foreign investment activities within 10 miles from boundary/borders between neighboring nations of Myanmar, except in State economic zones approved by the Myanmar Government
  18. 18. www.duanemorris.com Restriction (Cont.) • There are 21 economic activities which are prohibited. • Notable ones include:  Manufacturing and related services of arms and ammunition for the national defense.  Economic activities which is deemed to deteriorate the watershed or catchment protection forests, religious places, traditional belief, pasture land, shifting cultivation farms and water resources  Installation of factory in Myanmar utilizing of the imported wastes  Management of natural forests  Prospecting, exploration and production of jade/gem stones  Production of minerals by medium scale and small scale  Administration of Electric Power System  Trading of Electric Power  Inspection of Electrical Works  Exploitation of minerals including gold in the revering and water way  Air Navigation Services  Pilotage Services  Joint Printing and Broadcasting Service
  19. 19. www.duanemorris.com Restriction (Cont.) • 42 economic activities allowed only in the form of joint venture with Myanmar citizens. • Notable ones include:  Production and Distribution of hybrid seeds, high-yield seeds and local seeds  Manufacturing and marketing of grain products such as biscuits, wafers, noodles, macaroni, vermicelli, spaghetti and other cereals related food products; of all kinds of confectionery including those of sweets, cocoa, and chocolate  Distilling, blending, rectifying, bottling and marketing of all kinds of spirits beverages and non- beverages  Prospecting, exploration and production of Industrial minerals and metallic mineral  Large scale production of minerals  Construction related to develop rail/road links such as bridges, highways, bypass, subways etc  Establishment of international standard golf courses and resorts;  Establishment , sales and lease of residential apartments /condominiums; office/commercial buildings  Domestic/International Air Transport Service  Tourism business
  20. 20. www.duanemorris.com Investment Guarantee • Enterprises operating under the Foreign Investment Law have the State guarantee against nationalization and expropriation. • Guarantee is subject to an exception if the nationalization or expropriation is in the natural interest, in which case the investor is to be compensated for the market value of the investment. • Government also guarantees that investment will not be terminated during the permitted term, and foreign capital will be transferred to investors upon the expiration of the term of the investment contract. • Myanmar has investment protection agreements with China, India, Kuwait, Laos, the Philippines, Thailand and Vietnam.
  21. 21. www.duanemorris.com WHY CHOOSE MYANMAR?
  22. 22. www.duanemorris.com WTO ANALYSIS OF LIBERALIZATION OF MARKET ACCESS: MYANMAR IS AT SAME LEVEL WITH INDIA – NOT TOO BAD? • *Typical restrictions: number of opened sectors, JV requirement, limits on foreign-owned shares, permission requirement Country Limitation of market access* Country Limitation of market access* Malaysia medium Myanmar high Indonesia medium Cambodia medium Philippines medium Laos medium Singapore low India high Thailand medium China medium Brunei high Vietnam low
  23. 23. www.duanemorris.com WHY CHOOSE MYANMAR? • Myanmar: Last untapped market in Asia with full of potential to become new FDI hub • BUT it depends on commitments on institutional reforms!!!! • OPEN OR ISOLATED? • MODERN OR CONSERVATIVE? • Remember:  Myanmar is the founding member of WTO that means WTO service sector commitment : Unbound ⇒ Myanmar must move fast on concluding free trade agreements
  24. 24. www.duanemorris.com INVESTING AND DOING BUSINESS IN CAMBODIA
  25. 25. www.duanemorris.com Agenda: • An Introduction to Cambodia • How to invest in Cambodia • Why choose Cambodia?
  26. 26. www.duanemorris.com First impressions from Cambodia Southeast Asia’s hidden gem
  27. 27. www.duanemorris.com Cambodia at Glance: • Official Name: Kingdom of Cambodia • Location: South East Asia • Neighbors: Laos, Vietnam and Thailand • Area: 181,035 Km2 • Capital: Phnom Penh • Currency: Riel (KHR) (01 USD = 4101.73 MMK) • Language: Khmer • Population: 15.2 million CAMBODIA IN 2014 GDP US$15.25 billion GDP per capita US$709.18 GDP Growth 7.3 % Inflation 1.6 % Cumulative FDI as of Dec 2014 US$4 billion Import turnover US$2.9 billion Export turnover US$1.99 billion Labor force 8,433,164 Minimum wage US110 a month - Garment sector only
  28. 28. www.duanemorris.com Cambodia: A new hub in ASEAN? Cambodia is set to be a manufacturing and services hub for ASEAN • Strategic location at the heart of ASEAN, with a rapidly improving transportation network • Annual GDP growth of more than 7% and predicted to rise in 2015, with much higher rates concentrated in urban and tourism centers • Only seven months until full ASEAN Economic Community integration, the Cambodian government is working hard to reform regulatory processes to make Cambodia both AEC compliant and more attractive for foreign investment • Low costs - low wages – low entry costs, together place Cambodia ahead of its neighbors for light manufacturing as well as making Phnom Penh an ideal place for corporate and/or operation headquarters for ASEAN business
  29. 29. www.duanemorris.com CAMBODIA: Challenges • Ease of doing business is ranked among the lowest in the world, with the World Bank placing Cambodia at 135th while ease of starting a business in Cambodia is ranked at 184th • A literacy rate of just 70% lags behind regional competitors for investment, like Myanmar and Vietnam • 40% of children under five-years-old are malnourished, limiting economic potential, especially in rural areas • The legal and regulatory frameworks are changing rapidly, which is a good sign for future investment but can pose an immediate challenge to investors • The General Department of Taxation collected only US$881.4 million in 2013, far below possible tax revenue, leaving the government less able to invest in key infrastructure
  30. 30. www.duanemorris.com CAMBODIA: Opportunities • Unrestricted foreign investment in a dollarized economy, with numerous incentives for investors • With more than 50% of the population under 24 years of age and a GNI per capita of US$950, the Cambodian market is set for rapid growth • Cambodia welcomes foreign investment in law and in practice, with an equal treatment guarantee under the Law on Commercial Enterprise • Special economic zones provide tax and custom incentives, world class services and infrastructure, ensuring low cost access to other ASEAN countries
  31. 31. www.duanemorris.com INVESTMENT IN CAMBODIA
  32. 32. www.duanemorris.com INVESTMENT IN CAMBODIA - Introduction • The Agricultural sector is almost totally undeveloped, with almost value added agricultural production constituting only 1/3 of the GDP over the past year, making the agricultural sector the next big target for foreign investment • The first oil producing project is set to go online this year and the first refinery is still in the construction phase • Exports of garments and footwear, based on customs data, reached $6.0 billion in 2014, but this sector has not yet expanded to other kinds of light manufacture, creating huge opportunities for investment • With only 22.5% percent of Cambodian households having access to electricity, there a massive opportunities for those able to power Cambodia’s growth • Tourism in Cambodia has rose 17.5 percent year on year in 2013, but is only just starting to diversify from Cambodia’s two tourism hubs of Siem Reap and Sihanoukville
  33. 33. www.duanemorris.com Form of Foreign Investment • Representative Offices, can be set up in a matter of weeks and is allowed only to represent the foreign corporation (no doing business. However, no licensing requirements and an easy exit from Cambodia make this a low risk option for interested investors • Branch Offices allow foreign companies to do business freely in Cambodia without making a long term investment in the country
  34. 34. www.duanemorris.com Form of Foreign Investment (cont.) • Subsidiary (private limited company): • Foreigner investors can create a wholly-owned subsidiary in Cambodia entitled to do anything a Cambodian company can do, other than own land • Or, foreign companies can join one or more local investors to create a joint venture, without facing any restrictions • Land holding company, a 51% locally owned LLC capable of owning land in Cambodia • Limited regulations on shareholders rights allow foreign investors hold a minority shareholding, and still manage the joint venture on their own terms, while the company can hold land
  35. 35. www.duanemorris.com General Types of Companies • Private Limited Company • Public Limited Company • Sole Proprietorship • General / Limited Partnership • Limited Liability Company
  36. 36. www.duanemorris.com Prohibited investment activities • Production and processing of psychotropic substances or narcotic substances; • Production of poisonous chemicals, agriculture pesticides and insecticides, and chemicals prohibited by international agreements and the World Health Organization (WHO); • Processing and production of electrical power from imported waste; • Exploitation of forests prohibited by the Forestry Law; and • Any other investment activities prohibited by other laws.
  37. 37. www.duanemorris.com Investment Incentives • Investment incentives include are provided under Qualified Investment Project (QIP) status, and include a customs exemption and tax holiday or accelerated asset depreciation • Most kinds of agricultural and manufacturing production are entitled to QIP status, although the service sector and real estate sector are excluded • No discrimination against foreign nationals, except for land ownership • No price fixing on products and services • Incentives currently being revised to increase regional competitiveness, indicating the dedication of the Cambodian government to retain its edge with regional competitors
  38. 38. www.duanemorris.com Investment Guarantee Cambodia offers robust protections to foreign investors, through the Law on Investment: • Article 8 A foreign investor shall not be treated in any discriminatory way by reason only of the investor being a foreign investor, except in respect of ownership of land as set forth in the Land Law. • Article 9 The Royal Government shall not undertake nationalization policy, which shall adversely affect private properties of investors in the Kingdom of Cambodia.
  39. 39. www.duanemorris.com Dispute Resolution • The brand new (2015) National Arbitration Council (NAC) of Cambodia provides a qualified domestic arbitration venue for the resolution of economic disputes • NAC decisions will be readily enforceable in Cambodia • Cambodian law allows parties to select foreign arbitration as well, and many investors choose to adjudicate disputes in Hong Kong or Singapore • Cambodia is a signatory of the New York Convention although enforcing foreign arbitral awards in Cambodia can still be a challenge
  40. 40. www.duanemorris.com WHY INVEST IN CAMBODIA?
  41. 41. www.duanemorris.com Why Cambodia? • Largely dollarized country  minimal foreign exchange risks • Increasing trade integration both regionally and internationally (member to ASEAN and WTO) • Favourable investment climate • Political stability
  42. 42. www.duanemorris.com INVESTING AND DOING BUSINESS IN VIETNAM
  43. 43. www.duanemorris.com AGENDA: • VIETNAM 2014 ECONOMY AT A GLANCE • INTEGRATION INTO THE WORLD ECONOMY • INVESTING IN VIETNAM • CONCLUSION – VIETNAM WILL BE THE NEXT ASEAN TIGER 43
  44. 44. www.duanemorris.com Vietnam 2014 Economy at a glance • GDP: US$187.5 billion • GDP per capita: US$2,028 • GDP Growth: 5.98 % • Inflation: 4.09% • Population: About 90.73 million • Labor force aged 15 and above: 54.48 million • Total export and import turnover: : US$ $298 billion • Minimum wage: VND 2.7 million (US$ 147) per month (Jan 2015) 44
  45. 45. www.duanemorris.com Vietnam has the fastest-growing middle and affluent class in the region (Boston Consulting Group) 45
  46. 46. www.duanemorris.com Vietnam’s international integration • WTO’s 150th member since 2007 • Members of all important world’s economic organizations: World Bank, International Monetary Fund, ASEAN (Association of South East Asian Nations), AFTA (Asia Free Trade Area), APEC (Asia Pacific Economic Conference) and WCO (World Customs Organization) • Signing around 20 FTAs with other countries, including strategic partners such as Japan, the US, India, and EU. Most notable FTAs currently in negotiation are the TPP and the EU- Vietnam FTA.46
  47. 47. www.duanemorris.com Trans- Pacific Partnership Agreement (TPP) • Parties: Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, Vietnam • Vietnam will enjoy strong economic and trade expansion and is expected an additional 1% economic growth from this agreement • Vietnam is expected to gain significantly from the TPP’s considerable plans for tariff and duty reduction • Vietnam’s export will enjoy the agreement’s great benefits when the US and Japan are one of the biggest partners of Vietnam, especially the garment and textiles sector • Export to the US would increase by 13-20% a year until 2017, fetching total export of US$25-30 billions • The foreign businesses are planning to enter Vietnam in preparation for a post-TPP business climate47
  48. 48. www.duanemorris.com EU – Vietnam Free Trade Agreement • Vietnam’s annual economic expansions rate may grow an additional 15% every year (said Tomaso Andreatta, representative of the European Business Association in Vietnam (EuroCham), at the Vietnam Business Forum 2014) • Tariffs for most of Vietnamese export product to the EU will gradually reduce to 0% and Vietnam’s export to EU is expected to grow about 35% for next few years • The real wages of skilled laborers may increase by up to 12% while real salary of common workers may rise by 13% • The EVFTA is the legal framework for a more stable relationship in bilateral trade for Vietnam when competing in the international market • The EVFTA will generate greater effects, e.g. increased quality of investment flows from EU, acceleration of the process of sharing expertise and transfer of green technology and the creation of more employment activities 48
  49. 49. www.duanemorris.com ASEAN Economic Community (AEC) • AEC members: Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Viet Nam • GDP: US$2311.3 billion (2012) • GDP per capita: US$3748.4 (2012) • Population: 620 million, 60% under the age of 35 • AEC % of world GDP: ~3.3% • AEC % of world population: 9% • AEC’s merchandise exports: US$1.2 trillion - ~54% of total ASEAN GDP and 7% of global exports • If ASEAN were one economy, it would be the 7th largest in the world – 4th largest by 2050 if growth trends continue 49
  50. 50. www.duanemorris.com Investing in Vietnam 50
  51. 51. www.duanemorris.com WTO ANALYSIS OF LIBERALIZATION OF MARKET ACCESS Vietnam ties in first place with Singapore • *Typical restrictions: number of opened sectors, JV requirement, limits on foreign-owned shares, permission requirement 51 Country Limitation of market access* Country Limitation of market access* Malaysia medium Myanmar high Indonesia medium Cambodia medium Philippines medium Laos medium Singapore low India high Thailand medium China medium Brunei high Vietnam low
  52. 52. www.duanemorris.com Investment environment in Vietnam • Main governing laws: Investment Law, Enterprise Law and their implementing documents • Forms of doing investment in Vietnam: – Economic entity establishment; – Business cooperation contract: a contractual arrangement between two or more investors without creating a legal entity – Public-Private Partnership; a contractual agreement between competent state authorities and investors, an enterprise project in order to implement an investment project; – purchase of shares or capital contribution. 52
  53. 53. www.duanemorris.com Investment environment in Vietnam • Forms of enterprises in Vietnam – Limited liability company: members are liable to the extent of their capital contributed – Shareholding Company: charter capital (authorized share capital) is divided into shares and members are liable to the extent of their capital contributed – Partnership: established between two or more partners; – Business Cooperation Contract: an agreement without constituting a legal entity and each party is individually responsible for paying taxes. – Branch: a branch of a foreign company permitted to conduct commercial activities – Representative Office: represents the parent company, no actual business operations. A suitable tool for market research 53
  54. 54. www.duanemorris.com DEFINITION OF FOREIGN INVESTOR • New Investment Law: Very simple definition! Foreign investor is any foreign individual or organization incorporated under foreign law doing business investment activities in Vietnam 54
  55. 55. www.duanemorris.com FOREIGN INVESTORS – WHO ARE THEY? • Foreign nationals and foreign corporate entities • Defined by the 51% capital ratio: – Company with 51% or more charter capital owned by foreign investors (F1 company); or – Company with 51% or more charter capital owned by F1 company (F2 company); or – Company with 51% or more charter capital owned by F1 company and F2 company 55
  56. 56. www.duanemorris.com • Prohibited business activities: – Trade in the narcotic substances as specified; – Trade in the chemicals and minerals as specified; – Trade in specimens of wild flora and fauna as specified in Appendix 1 of Convention on International Trade in Endangered Species of Wild Fauna and Flora; specimens of rare and/or endangered species of wild fauna and flora as specified; – Prostitution; – Human trafficking; trade in human tissues and body parts; – Business pertaining to human cloning. • Freedom to conduct business activities not prohibited by law  less risk in doing business PROHIBITED BUSINESS ACTIVITIES 56
  57. 57. www.duanemorris.com INVESTMENT PROCEDURE • 2 separate steps: Application for Investment Registration Certificate (“IRC”) and Application for Enterprise Registration Certificate (“ERC”) Step 1: IRC – IRCs for projects required to obtain preliminary approval of the National Assembly/ People’s Committee are issued within 05 working days upon issuance of such approval – For other projects, IRCs are issued within 15 days (instead of 35 days as in the old law) upon receipt of the application dossier • Step 2: ERC – Submit an application dossier to the licensing authority upon issuance of the IRC – ERCs are issued within 03 working days upon receipt of the application dossier 57
  58. 58. www.duanemorris.com M&A PROCEDURES FOR FOREIGN INVESTORS • Appears to be simple!!! Only registration required, no more IRC  Satisfying the requirements for investment  Submitting application dossier  Assessment by the licensing authority and decision making after 15 days • Subjects:  foreign investors making investment in conditional business activities applicable for foreign investors;  F1 Company, F2 Company or F3 Company holding 51% or more of the targeted economic enterprise as a result of the M&A  Exclusion: Company other than F1 Company, F2 Company and F3 Company:  Registration to amend the ERC (for LLCs)  Notification of the change in foreign shareholders (for JSCs)  The change will be effected within 03 working days 58
  59. 59. www.duanemorris.com Equitisation of State Owned Enterprises - QUO VADIS ? 59
  60. 60. www.duanemorris.com Equitization plan for 2011 – 2015 period • Target: 899 equitized SOEs • Results: 99 in 2011-2013; 432 in 2014 •  368 SOEs to be equitized in 2015! Great challenges ahead • Certain kinds of equitization: • issue of shares in order to capitalize state-owned enterprises • partial sale of state-owned capital; and complete sale of state-owned capital for the purpose of transformation into joint stock companies • Foreign equity limitation: 30% in general, except certain sectors (Securities: 49%; Banking and finance: 20%) • The State of Vietnam remains main control over certain equitized enterprises by holding special controlling shares in these enterprises. 60
  61. 61. www.duanemorris.com Outlook for Vietnam’s economy in 2015  In 2015, Vietnam is expected with a brighter economic situation:  Macro economy and monetary policy will remain stable  The inflation will be under control, estimated rate of 4%  2015’s GDP is estimated to rise from 6.2%  Exports, especially FDI manufacturing companies, will push the growth of Vietnam’s economy in 2015  Continued stronger reform of institutional and administrative procedures to improve investment environment 61
  62. 62. www.duanemorris.com VIETNAM – THE NEXT ASEAN TIGER • Manufacturing companies like Samsung Electronics Company and Intel Corporation coming to ASEAN • Foreign investment in manufacturing sector diverting from China to Vietnam • Vietnam being the biggest exporter to the U.S. from ASEAN • Disbursed foreign investment in Vietnam reached $12.35 billion in 2014, an increase of 7.4% from 2013 and compared with $2.4 billion in 2000 • Vietnam is in negotiation for TPP and EU-Vietnam FTA 62
  63. 63. www.duanemorris.com Questions & Answers
  64. 64. www.duanemorris.com Thank you very much! OLIVER MASSMANN Managing Partner – Duane Morris Vietnam LLC Member of the Supervisory Board of PetroVietnam Corporation Duane Morris Vietnam Duane Morris Myanmar Pacific Place, Unit V1307/08, 13th Floor, No. 10 Phoyazar Street, 15 Ward, 83B Ly Thuong Kiet, Hoan Kiem Dist Baukhtaw Yankin Township Hanoi, Vietnam Yangon Suite, Myanmar Contact email: omassmann@duanemorris.com

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