Lawyer in Vietnam Dr. Oliver Massmann DOING BUSINESS IN VIETNAM

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DR. OLIVER MASSMANN - Partner, General Director
DUANE MORRIS VIETNAM LLC
DOING BUSINESS IN VIETNAM

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AGENDA:
• VIETNAM’S ECONOMIC OVERVIEW
• VIETNAM’S LEGAL SYSTEM
• INVESTING IN VIETNAM
• VIETNAM’S INTERGRATION TO REGIONAL AND
WORLD’S ECONOMY
• CONCLUSION
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Vietnam 2018 Economy at a glance
• GDP: US$220.3 billion
• GDP per capita: US$2,385
• GDP Growth: 7.08% (record breaking since
2008)
• Inflation: 3.54%
• Population: About 91.70 million
• Labor force aged 15 and above: 54.61 million
• Total export and import turnover: : >US$482
billion (14% increase compared with 2017)
• Regional Minimum wage (Region I): VND 4.180
million (US$ 180) per month (Jan 2019)
• Vietnam’s average age: 29 years old
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Welcome to the most dynamic country on this
planet : Vietnam!
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Fastest-growing ASEAN economy
in 2018 and 2019, as in 2017 –
Standard Chartered Bank predicts

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Increasing Foreign Direct Investment
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Vietnam’s super rich population is growing
faster than anywhere else….
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… and is on track to continue leading
the growth in the next decade

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Communist Vietnam Has More Millionaires
Than Capitalist Philippines
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Female Business Ownership
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* Similar to Thailand, Hong Kong and Switzerland
** Far above Singapore, Myanmar and Indonesia
Source: Mastercard Index of Women Entrepreneurs 2018

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VIETNAM’S LEGAL SYSTEM
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Main features of Vietnam’s Legal System
• Vietnam legal system is based on socialism legal theory and
inherited from the Soviet Union civil law system
• The legal system of Vietnam was formed gradually under the
leadership of Communist Party and democratic centralism
principle
• Under democratic central principle, there is no separation of
state power. All three state braches have involved in
legislation.
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Main features of Vietnam’s Legal System
• The Communist Party has played leading role in all
aspects therefore legal system is under influences of
Party’s policies.
• Legal Committee and various subordinate offices play
roles of assisting the National Assembly with making law
• Ministries are in charge of drafting law for submission to
appropriate levels for consideration, revisions and
approval.
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Procedures for law-making
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Legislation
program proposed
by the
Government
Laws drafted by
relevant ministries
Comments and
Assessment
Amendment,
Finalization and
Submission to the
National Assembly

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Basic structure of Vietnam’s Legal System
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National Assembly
High Supreme
Court
Government
(ministries
and
ministerial
agencies)
Supreme
People’s
Prosecutor of
Vietnam
Legislative authority
Administrative
authority
Judicial authorities

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Basic structure of Vietnam’s Legal System
• Legislative Branch: the National Assembly
– Highest State authority
– Exercises state activities’ supervision
– Has 14 legislative and supervision duties (art 84 of Constitution)
– Operates in 5-year term, meets twice a year and has its standing
committee
– Appoints President, Vice President, Chair and Vice Chair of the
National Assembly, Prime Minister and members of the cabinet
• Administrative Branch: the Government
– Highest administrative body
– Comprises of the Prime Minister, Deputy Prime Ministers, Ministers
(and ministerial bodies) and other members.
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Basic structure of Vietnam’s Legal System
• Judicial Branch:
• Supreme People's Court - highest judicial body. Supervises
lower-level courts under the authority of the NA, judges are
appointed by NA for 5-year terms.
• Local People’s Courts deal with legal issues (labor and
individual disputes) at the district precinct levels. Report to
provincial or municipal governments.
• Military Tribunal - criminal military cases
• Other tribunals
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Law-making bodies and civil legal system in Vietnam
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National Assembly
The Standing Committee
The Constitution
Laws
Ordinances
Prime Minister
Decrees
Regulations
Decisions
Ministries Circulars
Implementation process

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Different types of legal documents
• Constitution: a supreme codified written legal document in
which:
– defines: fundamental political principles;
– establishes: the structure, procedures, powers and duties of a
government;
– provides and guarantees certain rights to the people
• Laws, Codes: govern social relations (marriages, labor, land,
etc.)
• Sub-legal documents: implement, guiding implementation
of Laws and Codes.
• Note: judicial precedents are not defined as a source of law
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Effectiveness of legal documents
• At the time of adoption/ publication
• Within a certain period of time from the publication
date
• A specified date in that legal document or a
document ratifying it
• A legal document expires when:
– A new document replaces it; or
– The effective period specified in that document lapses.
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Governing scope of legal documents
• Nationwide or region-wide
• Within the competency limit of the adopting
authority
• Specific groups of people: state officials, foreigners,
accountants, lawyers, etc.
• Governing scope of most documents can be found at
the beginning of each document
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International Treaties / Conventions
• International treaties and
conventions must be ratified by Vietnam.
• Can be directly or indirectly applied in Vietnam
• Vietnam generally interprets international treaties
into domestic laws as a way of implementing
international treaties in Vietnam.
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INVESTING IN VIETNAM
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FOREIGN INVESTMENT IN VIETNAM
REGIONAL COMPARISON OF COMPETIVENESS
ON MARKET ACCESS
Vietnam ties in first place with Singapore
• *Typical restrictions: number of opened sectors, JV requirement,
limits on foreign-owned shares, permission requirement
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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

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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.
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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
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New Negative List under 2014 Investment Law
• All non-prohibited business activities are permitted
“Investors are entitled to conduct business investment activities in
industries and trades which are not prohibited by this Law.”
• Reduction of conditional and prohibited activities
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Investment procedure under new 2014 Investment Law
• Under the Investment Law and Enterprise Law: 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
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INVESTMENT INCENTIVES
Items 2019
Inside SEZ Outside SEZ
Tax rates 10% for first 15
years
20%
CIT Holidays 04 years 2 years
CIT reduction 50% for subsequent
09 years
50% for subsequent
04 years
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• Carrying forward losses
• Reduction or exemption of land rental, land use fee
• Incentives for enterprises employing female workers

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Personal Income Tax
– Subjects:
 Vietnam residents: those individuals residing in
Vietnam for 183 days or more in a calendar year, or in
12 consecutive months from the first date of arrival
 Non-residents: an individual staying in Vietnam from
90 to183 days in a tax year
- Tax rates: varied for employment and non-employment
income (employment income: graduated tax rates from 5-
35%; non-employment income: depending on each type
of income)
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Taxation in Vietnam
• Value-added Tax (“VAT”)
– Tax applied to goods and services used for
production, trading and consumption in Vietnam
(including goods and services purchased from abroad)
– Tax rate: 0-10% depending on types of goods and
services
• Other taxes: special sales tax (applied to luxury goods or
amusement places), natural resources tax, land and
housing tax, etc.
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Labor and Employment
• Minimum regional wages: ranging from US$125 –
US$180/month
• Social security:
– both employer and employee have to contribute to social fund (social
insurance, health insurance, unemployment insurance)
– The Fund covers the employees’ benefits during sick leave, maternity leave,
retirement, allowances for work related accidents and occupational diseases,
and survivors’ benefits
• Pension: Monthly pensions are provided from the Social
Insurance Fund where an individual has contributed social
insurance for more than 20 years and when they reach 60 years
of age for men, or 55 years of age for women.
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VIETNAM’S INTEGRATION TO
REGIONAL AND INTERNATIONAL
ECONOMY
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Vietnam’s Free Trade Agreements
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ASEAN - China
ASEAN - Korea
ATIGA
ASEAN - India
ASEAN – Australia –
New Zealand
ASEAN - Japan
RCEP
Vietnam - Chile
Vietnam - Korea
Vietnam – Eurasian
Economic Union
Vietnam - EU
Vietnam - EFTA
CPTPP
ASEAN – Hong Kong
Vietnam - Israel
Vietnam - Japan
Signed
In negotiation/
Negotiation concluded
In negotiation

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AEC Market Snapshot – Asia’s main
investment hub
• 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
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AEC - Services sectors of priority integration
• Air travel
• e-ASEAN
• Healthcare
• Tourism
• Logistics services
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AEC Mutual recognition arrangement
• To facilitate the free flow of professional services
• Professional service providers registered/certified in their home countries
to be equally recognized in other signatory countries
• Up to now, 8 mutual recognition arrangements on:
– Engineering services
– Nursing services
– Architectural services
– Surveying qualifications
– Accountancy services
– Medical practitioners
– Dental practitioners
– Tourism professionals
E.g.: a certified practicing Indonesian doctor will then be allowed to practice in Vietnam
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Comprehensive and Progressive Trans-Pacific
Partnership (“CPTPP”)
• On 8 March 2018, the CPTPP was finally signed in Chile. The
CPTPP accounts for 495 million people representing 13.5% of the
world total economic output - worth a total of $10 trillion.
• CPTPP will lead to an increase of 1.32% in Vietnam’s GDP
• Vietnam will have access to newer markets and can expand their
exports to countries such as Canada, Mexico, and Peru with whom
it does not have a trade agreement.
• Opportunity for Vietnam to re-structure the export market
portfolio, not rely too much on the United States.
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CPTPP and AEC intersection
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Thailand
Malaysia
Brunei
CanadaAustralia
Cambodia
Indonesia Myanmar
Peru
Philippines
Japan
Laos
Mexico New Zealand
Singapore
Vietnam
Chile

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CPTPP - Gains for Vietnam
• Sectors that benefit the most from the CPTPP:
– Textiles, clothing, footwear
– Food, beverages and tobacco
– Chemicals, transport equipment, plastic parts
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CPTPP - Gains for Vietnam (cont.)
• Opportunity to involve in new supply chain in the region given
strict Rules of Origin
• More incentives for Government institutional and economic
reforms towards more transparent, open and predictable
investment environment, attracting more foreign investment in
Vietnam
• More sophisticated joining of separate business sections to
integrate into new profit streams
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CPTPP - Challenges for business in Vietnam
• Weak supporting industry
• Stagnation of the enterprise system
• Role of SOEs in the system
• Level of IP protection
• Corruption
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EU – Vietnam Free Trade Agreement
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EVFTA AND IPA
• The EVFTA is a new generation free trade agreement between Vietnam
and 28 EU member countries
• On 2nd December 2015, both Vietnam and the EU concluded the
negotiations.
• On 26 June 2018, the EVFTA was divided into 2 agreements in terms of
trade and investment following the European Court of Justice’s opinion
on the EU – Singapore FTA
• The EVFTA will cover trade issues while investment protection and
investment-related dispute settlement will be under the IPA.
• In August 2018, EU and Vietnam completed the legal review of the
EVFTA and the EU – Vietnam Investment Protection Agreement
(EVIPA).
• The EVFTA is the first comprehensive and ambitious trade and
investment agreements that the EU has ever concluded with a
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EVFTA – Comprehensive agreement
• Trade in goods
Market access for goods – tariffs
Rules of Origin
Export duties
Technical Barriers to Trade (TBT)
Sanitary and Phytosanitary Measures
Customs and Trade Facilitation
Administrative Cooperation in Customs Matters
• Services and investment:
E-commerce/ Renewable energy generation
Liberalisation commitments / market access
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Cross-cutting issues
Dispute Settlement
Government Procurement
State Owned Enterprises & Subsidies
Intellectual Property Rights
Geographical Indications
Trade and Sustainable Development
Cooperation and Capacity building
Annexes (car; green tech and pharma)

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EVIPA
• Applies to covered investment and its investors
“Investment” means every kind of asset which is owned or controlled,
directly or indirectly, by an investor of EU/ Vietnam in the territory of
Vietnam/ EU, which has the characteristics of an investment (for
example, commitment of capital or other resources, the expectation of
gain or profit, the assumption of risk and a certain duration).
• Investment protection
• Investor-to-State dispute settlement mechanism (“ISDS”)
• EVIPA will replace all bilateral investment agreements between
Vietnam and other EU members
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EVFTA – Main features
 Symmetrical elimination of nearly all tariffs (over 99%)
 Removal of almost all export duties and cap on remaining
ones
 Services commitments going beyond GATS
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EVFTA – Tariff Liberalization
• Tariff liberlization:
– 99% of tariffs both value and number of tariff lines
– After 7 years for EU
– Vietnam 10 years
• Coverage at entry into force:
– 71% of value of Vietnamese exports / 84% tariff lines
– 65% value of EU exports / 49% tariff lines
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EVFTA – Benefits for Vietnam
• Vietnam’s annual economic expansions rate may grow an additional 15%
every year
• 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
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EVFTA – Benefits for the European Union
• 23 of the 28 member states of the EU are trade partners
of Vietnam
• Improvement of intellectual property rights
• Higher level of security over EU’s investment in Vietnam
• Better access to EU’s second important trading partner
in ASEAN
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Government Procurement
• Average government procurement in the EU is about 16%
• Vietnam has one of the highest government procurement
rates of all countries worldwide (with about 39%)
• Vietnam is not a member of the Government Procurement
Agreement of the WTO
• Vietnam undertakes to transparency and procedural fairness
regulations
• Investors will get access to a huge market of government
procurement
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IPA - Conflict Resolution
• IPA secures a modern reformed investment dispute resolution
standard
• A standing international and fully independent investment tribunal
will be competent to all conflicts about investment protection
provisions (5 year transitional period for Vietnam)
• Decisions of the Tribunal can be appealed to a permanent Appeal
Tribunal
• UNCITRAL rules on transparency in treaty-based investor-state
arbitration are implemented which guarantees a high standard of
juridical transparency
• A final award must be enforced and cannot be questioned by local
jurisdiction54

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INVEST IN VIETNAM NOW!!!
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CONNECTIONS ARE BUSINESS
PLEASE CONNECT WITH ME ON
LINKEDIN:
OLIVER MASSMANN
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WHEREVER YOU ARE - BE ALL THERE
Jim Elliot
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DUANE MORRIS VIETNAM LLC
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Hanoi, Vietnam Ho Chi Minh City, Vietnam
Tel.: +84 24 39462200 Tel.: +84 28 3824 0240
Fax: +84 24 3946 1311 Fax: +84 28 3824 0241
Contact email:
omassmann@duanemorris.com
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References (1)
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References (2)
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References (3)
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References (4)
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