guide to do b in vn
TRANSCRIPT
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Guide ToDoing Business in Vietnam
Text 16/20 pt.
Text 12/16 pt.
Text 8/10 pt.
1 Introduction
2 Forms of Doing Business
4 Government Approvals
5 Business Scope and Authority
6 Capital Structure
7 Retail and Distribution
8 Taxation
10 TheRighttoPurchaseForeignCurrencyandRemitProts10 WTO and Foreign Investment in Vietnam
11 Import/Export
11 Litigation in Vietnam
16 Real Estate Law
19 Internet
20 Labour
23 Environmental Law
24 Bankruptcy Law
24 Intellectual Property
25 Technology Transfer
26 Government of Vietnam and Charts of Major State Agencies
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Introduction
Since its accession to the World Trade Organisation (WTO) on 11 January 2007,
Vietnam has taken active steps to revamp its legal ramework or business and
investment in Vietnam. The changes are largely avourable to both oreign and
local investors.
Since the introduction in 2006 o both the Investment Law, which regulatesinvestments in Vietnam, and the Law on Enterprises, which sets out the types o
corporate vehicles investors may establish to carry out their investment projects,
additional legislation has been enacted to urther enhance both oreign invest-
ment and oreign invested business operations in Vietnam.
Together, the Investment Law and the Law on Enterprises create a more avour-
able and clearer legal ramework or doing business in Vietnam. Local and
oreign businesses alike enjoy a common legal regime or uture development in
Vietnam.
All types o companies must operate according to the same corporate governance
rules. This should create a level playing eld or doing business. The ailure tocomply with these corporate rules will lead to personal liability or directors or
ocers o a company, regardless o whether the company is oreign-owned,
Vietnamese-owned or State-owned. Similarly, the Investment Law also applies to
both local and oreign investors.
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2 Guide to Doing Business in Vietnam
Forms of Doing Business
WHAT KEY LAW GOVERNS INVESTMENTS IN VIETNA M?
Whether a oreign investor invests directly or indirectly in Vietnam, the
applicable law is the Investment Law. The Investment Law contains a signicant
number o investment guarantees and provides a roadmap or the conditions and
procedures or investment in Vietnam.
Direct investment is dened to include the ollowing:
Establishing wholly oreign-owned enterprises ( WFOE)
Establishing joint ventures between local and oreign investor(s) ( JV)
Investing pursuant to a contract: Business Cooperation Contract ( BCC),
Build- Operate, Build-Transer-Operate or Build-Operate-Transer or Build-
Transer Contract
Investing in developing a business (to expand the size or improve the capacity
o a project or to introduce new technologies, increase the quality o products
or reduce pollution to the environment)Purchasing shares o, or contributing capital to, companies or branches in
Vietnam to participate in management
Investing in a merger or acquisition o a company or branch and
Other orms o direct investment (to be set out in subsequent legislation)
Indirect investment is dened to include the ollowing:
Purchasing o shares, bonds and other valuable papers
Investing through securities investment unds and
Investing through other intermediary nancial institutions
The Investment Law requires an investor who invests directly to obtain
approval or the relevant project. Approval is given via the issuance o an invest-
ment certicate (IC). In respect o indirect investments, the Investment Law
stipulates that the investor needs to comply with the Securities Law and other
relevant laws.
I a oreign entity does not wish, or is not ready, to invest in Vietnam, but desires
to have a commercial presence in Vietnam, it may set up a representative oce.
WHAT ARE THE MOST COMMON BUSINESS FORMS FOR DIRECT INVESTMENT IN
VIETNAM?Most oreign investors will utilise either a WFOE, JV or BCC to carry out a
project in Vietnam.
A WFOE and JV are both Vietnamese corporate legal entities and thereore, in
each case, a Vietnamese corporate vehicle to carry out investment in these orms
must be established.
In a BCC, no legal entity is ormed. The parties to such arrangement may agree to
share prots and losses or conduct their business aairs in a particular manner,
in much the same way as a partnership; it is, in eect, a contractual JV.
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IN ORDER TO CARRY OUT A DIRECT INVESTMENT PROJECT IN VIETNAM IN
WFOE OR JV FORM, MUST AN INVESTOR SET UP A VIETNAMESE LEGAL ENTITY?
Yes, to carry out a business or an investment project in the WFOE or JV orm, an
investor must set up a Vietnamese legal entity.
In respect o oreign investors carrying out their rst project in Vietnam, the
incorporation o the Vietnamese company takes place simultaneously with the
licensing o their rst project. In other words, a oreign investor cannot incorpo-
rate a company without a project. However, subsequent to the rst project, they
have the option to carry out additional projects either using the established
corporate vehicle or setting-up new corporate vehicles.
WHAT TYPES OF VIETNAMESE LEGAL ENTITIES ARE AVAILABLE?
A oreign investor ( just like a local investor) may select the ollowing Vietnamese
legal entities to carry out a project:
A limited liability company (LLC) being either a single-member LLC (SLLC)
or an LLC with two-or more members (maximum o 50 members) (MLLC)A shareholding or joint stock company ( JSC) which is a company with at least
three shareholders but no maximum number o shareholders
A general partnership or a limited liability partnership
A private enterprise (akin to a sole proprietorship)
WHAT ARE SOME IMPORTANT DIFFERENCES BETWEEN AN LLC AND A JSC?
The key dierence is the ability o a JSC to mobilise capital by the sale o shares
and securities. Furthermore, a company that wishes to list on a public securities
exchange in Vietnam or conduct a public oering must be a JSC. In general,
shareholders o a JSC have the right to reely assign their shares. In contrast, inan LLC, the assignment o charter capital (equity) is subject to the right o rst
reusal by the members. Finally, the corporate governance structure o a JSC is
more complex than an LLC.
WHAT FACTORS SHOULD A FOREIGN INVESTOR CONSIDER IN DECIDING TO
CHOOSE A JV OR A WFOE?
The two main actors that lead a oreign investor to choose a JV are: (1) many
business sectors in Vietnam require a JV to establish a commercial presence in
Vietnam and (2) the Vietnamese party has a key asset, local know-how and
knowledge, or other actors that make the JV the necessary choice. For example,
in real estate development projects, the Vietnamese party usually has the land
use rights, which by law cannot be directly transerred to a oreign investor, but
may be contributed into a JV.
WHAT IS A REPRESENTATIVE OFFICE PERMIT TED TO DO?
A representative oce represents the oreign company in Vietnam, as the name
suggests. It is oten the rst step in establishing a commercial presence in the
country. A oreign company that wishes to establish a representative oce in
Vietnam must rst be duly established, or at least one year, in accordance with
the laws o its home jurisdiction.
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4 Guide to Doing Business in Vietnam
Representative oces have limited rights. They are permitted to engage only in
certain business activities, including business development and cannot engage in
activities that generate prot in Vietnam. The head o the representative oce is
permitted to sign economic or commercial contracts with Vietnamese businesses
on behal o the oshore company i he or she has specic legal authority or each
contract (i.e., a general authorisation is not permitted) rom the oshore com-
pany. Despite the limitations, a representative oce may play an important rolein acilitating operations and business objectives on behal o the oshore company.
Government Approvals
WHAT IS THE APPROVAL PROCESS FOR ESTABLISHING JVS AND WFOES?
In respect o oreign direct investment, whether it is in the orm o a WFOE, JV,
BCC or any other permitted orm, an IC must be obtained rom the relevant
licence issuing body.
To receive an IC, an investor will complete either a registration or an evaluation
procedure based on the size and type o project.
Registration applies to projects:
Under VND 300 billion (approximately USD 15,000,000 1) and
Not on list o conditional sectors
The time limit or issuance o an IC: 15 business days.
Evaluation applies to projects:
Over VND 300 billion or
On the list o conditional sectors
Time limit to issue an IC: 43 business days.
Conditional is dened to mean investment in sectors impacting:
National deence and security, social order and saety
Banking and nance
Public health
Culture, inormation, press and publishing
Entertainment services
Real estate
Survey, prospecting, exploration and mining o natural resources, environ-
ment or ecological
Development o education and training or
Other sectors as set out by law
1 VND 20,000/USD 1
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WHAT LEVEL OF THE VIETNAMESE GOVERNMENT MUST APPROVE A
PARTICULAR PROJECT?
Decree No. 108/2006/ND-CP dated 22 September 2006, which guides the
Investment Law, delegates the authority to issue ICs to the local Peoples
Committees (PCs) or most types o projects (including real estate) regardless o
size except or limited types o sensitive projects which require approval directly
rom the Prime Minister (e.g., casino projects and production o cigarettes).
However, even with respect to these sensitive projects, i the Prime Minister has
already approved the investment policies or investing in these sectors, the local
PCs are authorised to issue the IC.
Business Scope and Authority
WHAT IS THE SIGNIFICANCE OF A COMPANYS BUSINESS REGISTRATION
CERTIFICATE OR AN IC?
All validly existing private business enterprises in Vietnam must have either a
business registration certicate (BRC) or an IC. For oreign investors, the IC is
both the BRC and the approval to undertake the investment project. Foreign
invested enterprises (FIEs), which include WFOEs and JVs, always need to
obtain an IC. ICs are usually issued by the local PC with jurisdiction over the
matter. The ICs state the legal name o the company, the nature o the company
(LLC or JSC), its business lines, its legal representative, business address, the
amount o registered capital, and the details o any authorised project. Without a
valid IC, oreign business enterprises cannot legally do business in Vietnam.
WHAT IS A LEGAL REPRESENTATIVE OF A VIETNAM ESE COMPANY?
The legal representative is an ocer o a Vietnamese company who has the
primary responsibility and power to act on behal o the company in its dealing
with the State. Pursuant to the Law on Enterprises, either the chairman o the
company (in the case o some SLLCs) or the chairman o the members council (in
the case o some SLLCs and all MLLCs), chairman o the board o management
(in the case o a JSC), or the general director (regardless o corporate orm) must
be designated as the legal representative.
Legal representatives have the authority to bind the company in contracts and
are personally liable or the commission or omission o certain acts. For example,
in the context o an LLC, the legal representative o the company must notiy thebusiness registration body in writing o the progress o capital contribution
within 15 days rom the date undertaken or capital contribution, and must bear
personal liability or any damage to the company and to other persons due to late
notication or inaccurate, untruthul or incomplete notication. The legal
representative must reside in Vietnam.
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6 Guide to Doing Business in Vietnam
WHAT IS THE SIGNIFICANCE OF A VIETNAMESE COMPANYS BUSINESS LINES?
Unlike in most common law countries, a company in Vietnam is only permitted
to conduct business activities that are narrowly dened and mostly codied into
a State recognised and published list o business activities called business lines.
Generally, or FIEs, the permitted business lines must be closely tied to what is
considered necessary or that particular project. Furthermore, to obtain an IC,
the investor needs tangible plans, including a easibility study, detailing preciselywhat the investor will do. Broadly drated business lines such as doing any
lawul business permitted by law are not permitted.
WHEN DO CONTRACTS IN VIETNAM NEED TO BE NOTARISED?
Generally, all land related documents in Vietnam need to be notarised, including
those related to improvements upon land such as the construction o buildings
and houses. Most other contracts, including civil and commercial contracts, need
not be notarised.
Capital Structure
WHAT IS THE CAPITAL STRUCTURE OF AN FIE?
Generally, or FIEs, there is no per se net worth or capital structure requirement;
however, companies must have enough capital resources to successully realise the
business goals set out in their IC. The capital structure is stated in the IC, including
the total investment amount. In practice, generally, at least 20% o the total
investment amount should be contributed as equity (rather than rom loans). In the
case o a JSC, ounding shareholders o JSCs are required to register to subscribe
together or at least 20% o the number o ordinary shares oered or sale.
CAN THE C APITAL CONTRIBUTION IN AN FIE BE REDUCED, WHETHER BY
DISTRIBUTION OR OTHERWISE?
Yes, but there is a qualied waiting or a lock-in period. In an LLC, investors
may reduce their capital contribution i business operations have been carried out
or more than two years rom the date o business registration; and, at the same
time, ensure that debts and other property obligations o the company are able to
be paid in ull ater returning part o the contributed capital to the investors.
Note that this is not applicable to an SLLC, which is not legally permitted to
reduce its charter capital. In a JSC, within three years rom the date o issuance
o the IC, the shares o ounding shareholders cannot be sold except to other
ounding shareholders unless the sale is approved by the remaining shareholders.
Also, a JSC can only redeem no more than 30% o the total number o ordinary
shares sold and part or all o the dividend preerence shares sold.
WHAT ARE THE TIME LIMITS FOR CONTRIBUTING C APITAL?
Under the Law on Investment, investors must contribute their capital contribu-
tion in accordance with the schedule stated in their IC.
Members and owners o LLCs must pay in ull the capital registered or contribu-
tion within a maximum o 36 months rom the date o issuance o the IC o the
company.
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The ounding shareholders o a JSC are required to register to subscribe or at
least a combined 20% o the number o ordinary shares oered or sale and must
pay in ull or the shares registered or subscription within 90 days rom the date
o issuance o the IC o the company. At the time o establishment o a JSC, its
charter capital is equal to the total value o the issued shares that the ounding
shareholders and other shareholders have subscribed in the JSC. Accordingly, i
shareholders have subscribed to purchase all shares that can be issued, thecharter capital would be equal to the total nominal value o all shares that can be
issued. However, in case that the shareholders have committed only to purchase a
portion o the shares that can be issued, the charter capital would be the total
nominal value o subscribed shares and, in this case, a JSC may urther oer or
sale the remaining shares within 3 years ater obtaining the IC. Purchasers o
subscribed shares are required to pay or the shares within 90 days rom the date
o issuance o the IC. The charter capital o a JSC is the total par value o the
number o issued shares being the number o shares ully paid up to the company
by the shareholders.
ARE THERE LIMITATIONS ON THE AM OUNT OF EQUITY A FOREIGNER CANPURCHASE IN A DOMESTIC ENTERPRISE?
Not generally but there are the ollowing notable exceptions:
For publicly listed companies, the cap on ownership remains at 49%
The allowed ownership ratio in the ollowing sectors is restricted: banking,
petroleum, civil aviation, publishing, press, education, securities, legal ser-
vices, and insurance
The allowed ownership ratio or State owned enterprises undergoing equitisa-
tion or otherwise converting their orm is restricted
The ownership ratio or sectors set out in Vietnams WTO commitments must
ollow the restrictions set out therein
In practice, it should be noted that there are issues with licencing authorities
reusing to register and/or implement oreign acquisitions o domestic companies
doing business in certain sensitive sectors, such as real estate and distribution,
despite there being no limitations in the law.
Retail and Distribution
ARE THERE ANY FOREIGN OWNERSHIP LIMITATIONS IN THE RETAIL ANDDISTRIBUTION BUSINESS IN VIETNAM?
As rom 1 January 2009, WFOEs are allowed to engage in trading and distribu-
tion in Vietnam, thereby eliminating the last restriction on oreign investment in
this sector. Foreign investors directly investing in this business sector will still
need to apply or and obtain on IC, and are still limited in the ability to reely
establish retail outlets.
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8 Guide to Doing Business in Vietnam
WHAT ARE THE REQUIREMENTS TO ES TABLISH A RETAIL OUTLET?
Pursuant to the WTO, Vietnams commitment on wholesale trade and retailing
services states: The establishment o outlets or retail services (beyond the rst
one) shall be allowed on the basis o an Economic Needs Test (ENT). In turn, the
ENT is explained as: Applications to establish more than one outlet shall be
subject to pre-established publicly available procedures, and approval shall be
based on objective criteria. The main criteria o the ENT include the number oexisting service suppliers in a particular geographic area, the stability o the market
and geographic scale. What this means in practice is that the licensing o FIE
retail stores, beyond the rst one, is at the discretion o the Vietnamese authorities.
ARE THERE ANY RESTRICTIONS ON WH AT PRODUCTS MAY BE SOLD?
Although the retail and distribution sector has been urther liberalised to permit
more oreign investment, there are still restrictions on the distribution o certain
products. Oten these restrictions relate back to the restrictions on the importa-
tion o certain products discussed in more detail below. Foreign investors should
consult the relevant product lists prescribed by Vietnam in accordance with itsWTO commitments in order to determine whether certain products may be
imported and sold in Vietnam.
Taxation
WHAT ARE THE CORPORATE INCOME TAX (CIT) R ATES?
The uniorm CIT rate is 25%. However, this CIT rate is not applicable to enter-
prises operating in the ollowing sectors:
For prospecting, exploring and mining o petroleum and gas and other rare
and/or precious natural resources, the CIT rates applicable to these sec-
tors are rom 32% to 50%, depending on each specic project and business
establishment
For education and training, occupational training, health care, culture, sport
and environmental related sectors, the CIT rate applicable to these sectors is
10%
There is a special incentive CIT rate o 10% or a period o 15 years (calculated
rom the rst year in which the enterprise has turnover) or newly established
businesses that have investment projects in areas with specially dicult socio-
economic conditions, in economic zones and in high-tech zones; and, or newly
established businesses with investment projects in the sectors o high technology,
scientic research and technological development, investment in development o
specially important inrastructure acilities o the State, and production o
sotware products. Furthermore, there are tax exemptions or holidays available
or a maximum o our years (calculated rom the rst year the business has
taxable income) ollowed by a 50% reduction in the amount o corporate income
tax payable or a maximum o nine subsequent years or the same types o projects.
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There is also a special incentive CIT rate o 20% or a period o 10 years rom the
rst year in which the enterprise has turnover or newly established businesses
with projects in areas with dicult socio-economic conditions. There are also
tax exemptions or holidays available or a maximum o two years ollowed by a
50% reduction in the amount o corporate income tax payable or a maximum o
our subsequent years or these types o projects.
WHAT ARE THE VALUE ADDED TAX (VAT) R ATE S?
There are three VAT rates: 0%, 5%, and 10%, depending on the nature o the
transaction.
WHO IS SUBJECT TO PERSONAL INCOME TAX (PIT) AND WHAT ARE THE RATES?
Persons who are considered resident individuals are subject to PIT. Non-
residents are also subject to PIT, i the income is derived in Vietnam, irrespective
o where the income is paid.
Foreigners who all under the ollowing categories are considered to be resident
individuals o Vietnam or the purpose o PIT:
Those who are physically present in Vietnam or a period o 183 days out
o one calendar year or 12 consecutive months rom the date o entry into
Vietnam or
Those who maintain regular residence in Vietnam, including registered tem-
porary residents or those who have leased a residential premises in Vietnam
or a term o 90 days or more within a tax year
The taxable income o resident individuals includes income arising rom both
within and outside the territory o Vietnam, irrespective o where the income is
paid, i.e., resident individuals are subject to global taxation.
The applicable PIT rates are progressive and are set out below.
Monthly Income PIT Rate in %
up to USD 250 5
rom USD 250 to USD 500 10
rom USD 500 to USD 900 15
rom USD 900 to USD 1,600 20
rom USD 1,600 to USD 2,600 25
rom USD 2,600 to USD 4,000 30
over USD 4,000 35
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10 Guide to Doing Business in Vietnam
TheRighttoPurchaseForeignCurrencyandRemitProts
MAY A FOREIGN INVESTOR PURCHASE FOREIGN CURRENCY IN VIETNAM?
Yes. The Investment Law specically allows oreign investors to purchase oreign
currency at credit institutions licensed to trade in oreign currency in Vietnam to
meet their non-capital transactions and other permitted transactions (such as
repayment o o shore loans, and remittance o dividends abroad) as set out inthe oreign exchange laws. The law sets out a broad range o permitted transac-
tions. The banks are in charge o oreign exchange compliance and will guide
their customers accordingly. As long as the proper documentation is provided to
the bank, remittance o shore is not a problem. There is no prots remittance tax.
Although all enterprises have the right to convert currency, there is no guarantee
o the availability o any particular oreign currency in Vietnam except or
important projects in certain elds.
IS IT POSSIBLE TO REPATRIATE INVESTMENT FROM VIETNAM?
Yes. The Investment Law provides that a oreign investor, ater it has met itsnancial obligations to the State, may remit the ollowing rom Vietnam:
Prots derived rom business activities (prots may be remitted on an annual
basis)
Payments received rom the provision o technology and services and rom
intellectual property
Principal o and any interest on o shore loans
Invested capital and proceeds rom the liquidation o investments
Other sums o money and assets legally owned by the investor
WTO and Foreign Investment in Vietnam
HOW DOES VIETNAM S WTO ENTRY BENEFIT FOREIGN INVESTMENT IN
VIETNAM?
While the WTO Agreements are not specically ocused on investment terms and
conditions, as a condition to entry into the WTO, Vietnam agreed to open up a
number o previously restricted or closed service sectors to greater oreign
investment, including distribution and retail services, architectural and engi-
neering services, construction, banking and education services. Except or alimited number o sectors not bound under WTO Agreements, most service
sectors are currently open to ull oreign investment by way o establishing
commercial presence in the orm o a JV, a BCC or a WFOE. The presence o
natural persons is unbound except or measures relating to entry and temporary
stay o natural persons who all in certain categories, or example, intra-corpo-
rate transerees, service salespersons, persons responsible or setting up a
commercial presence, contractual service suppliers, etc. Establishment o a
branch by a oreign company is still limited. In practice, only oreign banks, law
rms, ranchising service companies and construction and related engineering
service companies are permitted to set up branches.
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WILL VIETNAM LIVE UP TO ITS W TO COMMITMENTS?
Ultimately, this is a political question. The WTO rules are complex and demand-
ing and many developing countries have trouble complying with all o them.
However, Vietnam has many good reasons to comply. First, non-compliance
would subject Vietnam to compulsory dispute resolution pursuant to WTO rules
and could result in retaliatory measures by the oended nation. Second, the
Vietnamese leaders seem to recognise the benets that WTO membershipprovides and have issued laws prior to and ater WTO accession that have
overhauled the legal system to make it more transparent, predictable, air,
investor riendly, and in line with Vietnams compliance obligations set out in its
WTO commitments.
Import / Export
MAY A FOREIGN INVESTED COMPANY FREELY IMPORT ITS GOODS INTO
VIETNAM?Generally, most goods may be imported into Vietnam. Some goods are prohib-
ited, some are restricted and subject to permission rom the Ministry o Industry
and Trade, and some others are subject to other regulation (such as health and
ood products, or example). Even without a physical presence in Vietnam, a
oreign company may import goods into Vietnam, but this would require obtain-
ing a certicate o registration o the right to export and import.
WHAT ITEMS ARE PROHIBITED FROM IMPORT?
Currently, the list o goods prohibited include: cigars, petroleum, specialised
newspapers and magazines, disks and videos, aircrat and rockets, weapons and
ammunition, certain types o second hand consumer goods, materials and
transport acilities. This list is not exhaustive and is subject to change rom time
to time.
Litigation in Vietnam
WHAT IS THE STRUCTURE OF THE VIETNAMESE COURT SYSTEM?
The court hierarchy o Vietnam has three tiers: at the top is the Supreme Court,
then the Provincial Courts, and then the District Courts.
The Supreme Court is composed o one Council o Supreme Court Judges and
separate special courts, namely the Central Military Court, the Criminal Court,
Civil Court, Economic Court, Labour Court, Administrative Court and respective
appellate courts. The Supreme Court is empowered to hold supervisory and/or
review trials o cases with judgments which have already taken legal eect but
have been protested.
In limited cases, the Supreme Court has the power to take up and review judg-
ments o rst instance in the immediate lower courts, which have not yet taken
legal eect but have been appealed or protested.
The Council o Supreme Court Judges is the highest body or trials that apply
supervisory and review procedures (highest body or trying supervisory and
review cases) and the supreme authority on guiding courts on the uniorm
application o laws.
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12 Guide to Doing Business in Vietnam
Under the procedural laws o Vietnam, a supervisory trialis a hearing that
reviews judgments that have been rendered but have been protested or a possible
serious violation o law. A serious violation o law is dened as (i) conclusions in
the judgment do not refect the objective acts; (ii) a serious violation o proce-
dural laws; and (iii) a serious mistake in the application o the law.
Areview trialis a hearing o judgments which have been rendered but have been
protested based on the discovery o new acts that can materially aect the
contents o those judgments.
Protestis the procedure (or the right o the Procures Oce or Superior Courts) in
which the procures oce (prosecution oce) or the superior court makes an
appeal or objection to the judgment o a court. There are two types o protests.
First, the Procures Oce o the same level or higher may protest a judgment by
requesting an appellate court hear the case ollowing the appellate procedure.
The Procures Oce may appeal a judgment o a court o rst instance to the
court o appeal regardless o the parties wishes. Second, the Procures Oce or
Superior Court may protest the judgment by requiring a competent court hear
the case via supervisory or review procedure.
A Provincial Court is composed o one Committee o Provincial Court Judges and
separate special courts, namely the Criminal Court, the Civil Court, the
Economic Court, the Labour Court, and the Administrative Court.
A Provincial Court is empowered:
To hold rst-instance trials o cases according to the provisions o the Code o
Civil Procedure which include:
Transportation agreements via airway or sea way, sales o securities, dis-
putes in investment, banking, insurance, intellectual property, and company
Cases where a concerned party to the dispute is living abroad or the
disputed property is located abroad
Cases that a Provincial Court takes rom a District Court where it deems
necessary
To conduct appellate trials o cases where the rst-instance judgments and/or
rulings o lower courts have not yet taken legal eect but have been appealed
and/or protested against according to the provisions o the procedural law
To supervise, review cases where judgments and/or rulings o lower courts
have already taken legal eect but have been protested, according to provi-
sions o the procedural law
The Committee o Provincial Court Judges has the power to hold supervisory and
review trials which have already taken legal eect but have been protested.
Generally, a District Court has the power to hold rst-instance trials in civil,
commercial, and labour cases except or when the Provincial Courts deem it
necessary to exert jurisdiction over a matter.
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WHAT ARE THE QUALIFICATIONS OF JUDGES IN VIETNA M?
According to the 2002 Law on Organisation o the Peoples Courts and
Ordinance on Judges and Peoples Assessors, to be appointed as a judge a person
must meet the ollowing conditions:
(a) Be loyal to the Fatherland and the Constitution o the Socialist Republic o
Vietnam
(b) Have good qualities and virtue
(c) Be incorruptable and honest, determined to protect the socialist legality
(d) Have a bachelors degree in law and have been trained in the Judicial Academy
(e) Have engaged in practical work or a period o time prescribed by law
( ) Have the adjudicating capability
(g) Have good health to ensure the ullment o assigned tasks
The required time set out in point (e) above is our years or a District Court.
To become a Provincial Court judge, a person must have been a District Court
judge or at least ve years or i not appointed as a District Court judge, a person
must have worked in the legal proession or at least 10 years.
To become a Supreme Court judge, he must have been a Provincial Court judge
or at least ve years or i not appointed as a Provincial Court judge, he must have
worked in the legal proession or at least 15 years.
The term o oce or every judge is ve years. Upon the termination o the term,
a Judge Selection Council will review the perormance o a judge and decide i he
is qualied or reappointment. The components o the Judge Selection Council
are dierent according to the level o a judge, i.e., District or Provincial or
Supreme Court judge.
IS THE ROLE OF JUDGES SIMIL AR TO OTHER CIVIL LAW JURISDICTIONS IN
THAT THEY TAKE THE LEAD IN INV ESTIGATING THE CASE?
The revised Code o Civil Procedure has introduced some eatures o a more
adversarial litigation system, including: burdens o proo and requiring parties to
take the initiative in adducing evidence to support their case. Thereore, it has
lessened the judges role as the lead investigator in the case. However, it is a civil
law system and the rule or the parties right to discovery is not comprehensive.
WHAT IS THE SYSTEM FOR ENFORCING COURT JUDGMENTS?
From 1 July 2009, an order to execute a civil judgment is governed by the Law on
Execution o Civil Judgments. Once a judgment is obtained, it is given to the civil
judgment executing bodies who must issue a decision to execute the judgment.
The executors must allow the debtor at least 15 days, counting rom the date o
decision to execute the judgment, to voluntarily comply with the judgment.
However, in situations where it is necessary to prevent the judgment debtors rom
dispersing, destroying or hiding executable assets rom execution, the teen day
wait period is not applicable.
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14 Guide to Doing Business in Vietnam
The executors are entitled to apply, among other things, the ollowing measures
to eect a judgment:
Seizure o account deposits, seizure o money, recovery o valuable papers o
the judgment debtors
Seizure o incomes o the judgment debtors
Blockade o accounts, property o the judgment debtors at banks, credit
organisations, State treasuries
Detaining, or handling o the assets o the judgment debtors, including their
assets being held by the third persons
Forced handover o houses, transer o land use rights or handover o objects
or other assets
Banning judgment debtors rom doing certain types o work/employment or
orcing judgment debtors to do certain types o work/employment
The time rame rom ling a lawsuit to obtaining a judgment is 90 days or more,
depending on the complexity o the case and the court workload. Ater the
judgment, the losing party has 15 days to appeal. Add to this the 15 days to await
voluntary execution, most judgment creditors will likely wait at least one 120 days
rom the date o ling the civil petition or a decision to orce judgment execution.
The actual execution o the decision by executors may take additional time.
In order to reduce the workload o the state judgment-executing agencies, on 19
February 2009, the Prime Minister issued Decision No. 224/QD-TTg to approve
the establishment o the private baili system. Pursuant to this decision, several
pilot baili oces will be set up in Ho Chi Minh City. The baili oce is not
intended to be part o a state body. Rather, it is to be a private enterprise. A baili
has, among other powers, the power to execute court judgments. However, the
eectiveness o the private baili system in executing judgments remains to beseen because the Government is in the process o drating legislation to guide the
operation o the private baili system and, consequently, baili oces are
currently not in operation.
HOW INDEPENDENT OF POLITICS IS THE VIETNAMESE COURT SYSTEM?
Independence o the judiciary system rom politics is guaranteed under the laws
o Vietnam. However, in practice, most members o the judiciary system are
members o the Communist Party and will seek its advice on sensitive matters.
POLITICAL ISSUES APART, HOW WELL DO VIETNAMESE COURTS WORK?Anecdotal evidence indicates that litigants are oten dissatised with the quality
o the judicial system in Vietnam. The common cause seems to be the lingering
perception that the judicial system is not transparent or accountable. Moreover,
since the hearing process may encompass stages o rst instance, second
instance, appeal, supervision, and review, reaching a nal judgment is oten quite
long and rustrating. Nonetheless, with recent and pending legislation, the
situation is improving and will hopeully continue to improve.
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IS ARBITRATION IN VIETNA M PREFERABLE TO LITIGATION?
In Vietnam, because o the appeal rules and the lack o practical independence
o the judiciary, arbitration is sometimes preerable to court action. However, in
cases where a dispute must be resolved by a Vietnamese court, such as those
involving land use rights, arbitration is not possible.
The enactment o the Law on Commercial Arbitration replacing the 2003
Ordinance on Commercial Arbitration has improved the terms o commercial
arbitration. One benet o the Law on Commercial Arbitration is that, or dis-
putes that all within its scope, an arbitral award arising pursuant to it may be
brought directly to an enorcement agency or enorcement unless such award is
cancelled by a Vietnamese court.
The ollowing are the salient points which are set orth under the Law on
Commercial Arbitration which address deects o the 2003 Ordinance on
Commercial Arbitration:
A oreign arbitrator may now be appointed to comprise an arbitration tribunal
in Vietnam.There is no limitation with respect to the qualication o an arbitrator as
regards the possession o a bachelors degree
An arbitration tribunal now has the power to impose interim relie measures
to prevent changes in the status quo ante
The use o Vietnamese language is no longer required and the parties to
an arbitration can choose to use the most convenient language during the
proceedings
As the Law on Commercial Arbitration was only issued recently, its implementa-
tion has yet to be tested.
IS OFFSHORE ARBITRATION POSSIBLE?
Yes, under the Law on Investment the parties may choose oshore arbitration.
The Code o Civil Procedure sets out guidelines on the recognition and enorce-
ment o oreign arbitral awards in Vietnam. Vietnam has been a party to the New
York Convention on the Recognition and Enorcement o Foreign Arbitral Awards
since 28 July 1995. It should be noted that enorceability is oten an issue with
oreign arbitral awards because the awards must not be contrary to the unda-
mental principles o Vietnamese law. According to some published Vietnamese
court opinions, any violation o Vietnamese law could be construed as being as
against the undamental principles o Vietnamese law. This means Vietnamesecourts are given a second chance to review a decided arbitral award which may
rustrate the party seeking to enorce such award.
ARE FOREIGN JUDGMENTS ENFORCEABLE IN VIETNAM?
Generally, oreign judgments are not enorceable in Vietnam. Under the Code o
Civil Procedure, Vietnamese Courts will only consider the recognition o judg-
ments issued by Courts in countries that have entered into a judicial agreement
with Vietnam. To date, most o the countries that have entered into a judicial
agreement with Vietnam are socialist regimes.
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With regard to countries that have not signed a judicial agreement with Vietnam,
the recognition o the judgements issued by the courts in those countries may be
considered or recognition on a reciprocal basis. However, in practice, ew
judgements issued by courts in oreign countries (most o them socialist coun-
tries) have been recognised by the Courts o Vietnam.
Real Estate Law
IS IT POSSIBLE FOR FIES TO OWN LAND IN VIETNAM?
Technically, no. In Vietnam, land belongs to the people and the right to use the
land is administered by the State or the people. Ownership is reerred to as a
right to use land (LUR) and evidence o such right is a land use right certicate
(akin to a title deed) (the LUR Certifcate) which sets out the term and the
purpose o the land use. LURs can be granted on a long-term basis (i.e., without
a specic term o use) or or a limited term. In general, long-term use LURs are
only granted or a number o very limited purposes such as or residential,personal use, or households and individuals that have already been granted
long-term LURs to use or the amilys production, business purposes, or
national security purposes, etc.
While a LUR Certicate is similar to a deed in most countries, some dierences
and uncertainties should be noted. For example, LUR may be used only or the
specic purpose or which it was granted. Failure to do so can lead to withdrawal
o the LUR. In general, the State is required to provide compensation i it with-
draws or reclaims the land. However, there are circumstances when no
compensation is required. For example, the Government may withdraw land:
When the term in the LUR Certicate has expired and no extension is given:
Regarding land and the assets on land, no compensation will be paid
When the land or an investment project has not been used or 12 consecutive
months or when the implementation schedule has been delayed or 24 months
rom the date committed to in the project authorisation documents ater the
date the land was handed over and no approval is granted or such delay:
No compensation is payable in respect o land
Government will issue (but has not yet done so) legislation on compensa-
tion or assets on land
Furthermore, the term or duration o the LUR or oreign investors is usually 50,and may be up to 70 years (in the case o residential land and in special circum-
stances), but not in perpetuity. However, pursuant to Decree No. 84/2007/
ND-CP, oreign developers o residential land may obtain a land lease or 70 years
which may be extended without limit, each time or an additional period o 70
years without being required to pay additional rental ees or the extended
duration.
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There are our orms o LUR: The rst two comprise an allocation with or
without payment o a land use ee (LUF); and the last two comprise a lease with
payment annually or a lump-sum payment or the whole o the lease term.
Previously, oreign individuals and organisations were entitled only to: (1) receive
a lease (and could not receive an allocation) rom the State or (2) obtain land as
capital contribution by a Vietnamese party into a JV with a oreign company.
Currently, under Article 24 o Decree No. 84/2007/ND-CP, the law allows theassignment o projects using land rom domestic economic organisations (e.g.,
domestic companies) to oreign invested companies in a variety o circumstances,
providing oreign investors additional avenues to acquire land in Vietnam.
CAN A FOREIGN COMPANY OR INDIV IDUAL OWN IMPROVEMENTS AND OTHER
ASSETS ON LAND IN VIETNAM?
Yes, when a oreign developer builds assets on land or which it has a LUR, it has
an ownership interest in the assets provided the developer registers the assets.
However, with regard to purchasing existing assets on land, the answer is more
complex.
Generally, the law does not allow a oreign investor to directly purchase assets,
such as buildings or the sole purpose o buying, selling, or leasing assets on the
land. It does, however, allow a oreign investor to invest in an existing asset to
improve it. The extent o the improvement needed to satisy this requirement is
still unclear.
ARE THERE ANY CONDITIONS IMPOSED ON A DEVELOPER SEEKING TO RAISE
CAPITAL FOR DEVELOPING RESIDENTIAL HOUSING?
Yes, Decree No. 71-2010-ND-CP stipulates the ollowing methods that a devel-
oper may use to raise capital or residential housing and the conditions in each
case that must be observed.
By entering into loan agreements with credit institutions, investment unds or
issuing bonds. The developer may not grant an option to purchase the residen-
tial unit to the lender /bondholder
By entering into a capital contribution or an investment co-operation agree-
ment with a secondary developer to transer the LUR over the development
site. These agreements may only be entered into once site clearance has been
completed and the construction o the technical inrastructure works has
commenced. The transer o the LUR may only take place once the technical
inrastructure works have been completedBy entering into a capital contribution or an investment co-operation agree-
ment with entities under which the entity may share in the development
prots by receiving cash or shares or completed housing units. These agree-
ments may only be entered into once the development has been approved, the
construction o the housing works has commenced and prior written notica-
tion given to the Department o Construction
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By entering into a business co-operation contract with entities that unction
as real estate enterprises under which development prots may be distributed
by way o cash, shares or completed housing units. These contracts may only
be entered into only ater the development has been approved, site clearance
has been completed, the minutes o handover o the site boundary land-
marks completed and prior written notication given to the Department o
ConstructionBy entering into pre-sale contracts with individuals eligible under Vietnamese
law to own residential houses in Vietnam. These contracts may only be
entered into once the technical design or the project has been approved,
construction o oundations has been completed, procedures or sales via a
real estate trading foor completed and prior written notication given to the
Department o Construction
ARE THERE ANY RESTRICTIONS ON RE SIDENTIAL UNITS THAT CAN BE
DISTRIBUTED AS PROFIT UNDER CAPITAL CONTRIBUTION / BUSINESS
CO-OPERATION AGREEMENTS?
Yes, only up 20% o the units in a project may be dealt with in this way and
agreements can only be entered into with investors who are permitted under
Vietnamese law to own housing units. These units need not be transacted via a
real estate trading foor but conrmation is needed rom the Department o
Construction or each unit intended to be distributed in this way. Once the
oundations are completed the developer and investor should enter into a sale and
purchase agreement or the unit.
ARE THERE ANY LIMITS ON THE ADVANCE AMOUNTS A DE VELOPER MAY
REQUEST FROM A PURCHASER OF RESIDENTIAL HOUSING?
Payment by the purchaser o installments o the purchase price must be consis-
tent with the construction schedule and not more than 70% o the purchase price
may be paid beore handover to the purchaser.
HOW IS THE LAND USE FEE (LUF) AN D LAND RENTAL CALCULATED AND WHEN
IS IT PAYABLE?
LUF and land rental are based on the published land price list issued by the
Peoples Committee o each city or province setting out the value o land, taking
into account matters such as the use o the land and its location. I at the time o
the allocation, or lease, the published price list is not considered to refect the
lands market value then the LUF, or land rental, will be based on what thePeoples Committee considers to be the actual market value.
LUF is payable when the land is allocated (with some time extensions available
or low income earners). Land rental is payable annually or in one lump-sum
payment. I paid annually the rental is generally 1.5% o the land value, but a
higher rate o not more than 3% may be applied or high yield land, and a lower
rate o not less that 0.75% applied or low yield or agricultural land. Where the
rental is paid in one lump-sum the amount is generally the same as i the land
had been allocated rather than leased.
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MAY LAND BE MORTGAGED AND IS REGISTRATION OF A MORTGAGE REQUIRED?
In respect o an investor leasing land rom the State, the land may only be mort-
gaged i the land rental is paid, in advance, in a lump-sum. Furthermore, the land
may only be mortgaged to credit institutions licensed to operate in Vietnam, not
to o shore lenders or shareholders.
Registration o a mortgage is required and registered at Land Use Right
Registration Oces. The procedures or registration are airly clear and LUR
Registration Oces have prescribed time periods to carry out registration
ormalities.
Enorcement o a mortgage is based on the contract. I enorcement cannot be
carried out under the contract, the mortgagee may sell the land or request a State
body to sell the land by auction and commence proceedings.
CAN FOREIGN INDIVIDUALS OWN AN APARTMENT IN VIETNAM?
Yes, under a 5 year pilot program, individuals who have permission to reside in
Vietnam or more than one year have the right to purchase and own apartmentsor a maximum period o 50 years i they meet the ollowing criteria:
An individual who invests directly in Vietnam or is working in a managerial
position o an enterprise
An individual whose contribution to Vietnam has been rewarded with a
decoration or medal rom the State President and made special contribution
to Vietnam as decided by the Prime Minister
An individual who currently works in the socio-economic sector and holds a
bachelors or higher degree rom a university and possesses special technical
knowledge and/or technical skills which Vietnam requires
An individual who has married a Vietnamese citizen
A oreign individual may own only one apartment. The oreign individual will be
issued a home ownership certicate and, i the apartment is sold, devised or
donated, the new owner obtains the apartment or an additional term o 50 years
i the purchaser is oreign, and or an unlimited term i the purchaser is
Vietnamese. A oreign-owned apartment may be mortgaged.
Internet
WHO REGULATES INTERNET RELATED BUSINESSES?
Internet Service Providers (ISPs) must be licensed by the Ministry o
Inormation and Communication (MIC), and licences once issued will be valid
or up to ten years. Internet Content Providers (ICPs), dened as a body, organi-
sation or enterprise that provides inormation on the Internet through an ISP,
must also be issued a licence by the MIC. It seems to be the case that ICPs only
need to obtain a one-time permit to post inormation on the Internet instead o a
permit on every occasion. Further, these organisations are subject to governmen-
tal control by MIC and Ministry o Public Security.
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DOES VIETNA M HAVE LAWS RELATING TO ELECTRONIC COMMERCE?
Yes, Vietnam has laws governing electronic commerce. The MIC is the
Governmental authority responsible or presiding over electronic transaction
activities. The law stipulates the legal validity o data messages and electronic
signatures, signing and perormance o electronic contracts, and security, saety,
protection and condentiality in electronic transactions.
DOES VIETNA M CENSOR CERTAIN TYPES OF CONTENT THAT MAY BE PLACED
ON INTERNET WEBSITES?
Yes, under Vietnamese law an ICP cannot publish content on websites that may
oppose the State and/or the Communist Party, cause people to rebel against the
State and/or the Communist Party, inringe upon the ethics and customs o
Vietnam, or disclose national secrets. Misuse o the internet can result in nes
that range rom VND 100,000 to VND 100,000,000 and/or criminal charges.
Labour
WHAT APPROVALS DO EXPATRIATES NEED TO LEGALLY WORK IN VIETNAM?
Foreigners rom the age o 18 who are qualied to act as managers, executive
directors or experts under Vietnamese laws and wish to work in Vietnam or
three months or more need to apply a work permit. Such an application must
include:
Registration slip regarding the proposed recruitment o the oreigner (stan-
dard orm o the Ministry o Labour, Invalids and Social Aairs (MOLISA))
Legal record issued by the authorised body o the country where the or-
eigner resided prior to coming to Vietnam but i the oreigner has currently
resided in Vietnam or 6 months or more, then a legal record issued by the
Vietnamese Department o Justice o the locality where the oreigner is resid-
ing will suce
Health certicate issued overseas or health certicate issued in Vietnam in
accordance with the regulations o the Ministry o Health
Certication o specialist or highly technical qualications o the oreigner
but or some occupations, this can be replaced by some other documents as set
out in the regulations and
Photographs o the oreigner
A work permit will allow them to work in Vietnam or up to 36 months. However,
a work permit may be extended in the ollowing cases:
When an employer has a labour plan to train a Vietnamese worker to replace
the oreign employee in such position but the Vietnamese worker is not yet
capable o perorming the required task; or
When a oreigner enters Vietnam to work in the elds o economics, com-
merce, nance, banking, insurance, science and technology, culture, sports,
education or medicine and the time required or such work exceeds 36 months
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The ollowing categories o persons are exempt rom obtaining a work permit or
his or her employment in Vietnam:
Those entering Vietnam to work or a period o less than three months
Those who are a member o a MLLC
Those who are the owner o a SLLC
Those who are a member o the board o management o a JSC
Those who are entering Vietnam to oer services
Those who are entering Vietnam to resolve an emergency situation, such
as a breakdown or a technically or technologically complex situation which
Vietnamese or oreign experts in Vietnam are unable to adequately deal with.
However, even in such situations, i the required emergency work exceeds
three months, a work permit must be obtained
Foreign lawyers to whom the Ministry o Justice has issued a certicate to
practise law in Vietnam
Those who are appointed as head representatives o a commercial presence or
NGOs in Vietnam
Those who move internally within the scope o activities o a specic enter-
prise providing services in accordance with the Vietnams commitments to
WTO
Those who work or an ODA project
Foreign journalists to whom the Ministry o Foreign Aairs has issued a
certicate to doing work in the press sector in Vietnam.
In response to requests or tender, oreign tenderers must prioritise Vietnamese
workers or ordinary work and i the employment o proessional oreigners will
be necessary, the plan o such employment must be stated clearly during thetendering application phase.
WHAT ARE THE KEY CONDITIONS FOR AN EMPLOYMENT CONTRACT IN
VIETNAM?
All workers, both oreign and Vietnamese, must have an employment contract
that covers a number o general issues, including the nature o the work, working
hours, breaks, salary, location and duration, etc. I an employee is called or
military or public service, the employment contract shall be suspended or the
duration o that particular service.
Normally, the employment contract must be signed by the employer and theemployee, though an authorised person may sign on behal o a group o workers.
The employment contract may take one o three orms:
A contract or an indenite term
A contract or a denite term o 12 to 36 months or
A seasonal or xed term o less than 12 months
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A contract or a denite term or seasonal term is automatically converted into an
indenite term contract i at the expiry o the contract the employee continues to
work or the employer and the parties ail to sign a new contract within 30 days
rom the date o expiry. In addition, a denite term contract may only be
extended on one occasion; thereater, the employee must either be released or
employed on an indenite term basis.
ON WHAT GROUNDS MAY AN EMPLOYER TERMINATE AN EMPLOYEE?
An employment contract shall terminate upon the ollowing:
Employment contract has expired
Work/assignment in accordance with the employment contract has been
completed
By mutual agreement between employer and employee
By court decision in respect o employees prison sentence or prohibition o the
employees resumption o work
By the employees death/or declaration by the court that the employee is missing
It is dicult or an employer to unilaterally terminate an employment contract. A
simple termination notice, no matter how ar in advance, is not by itsel permis-
sible unless the employee agrees. Otherwise, an employer may only unilaterally
terminate an employment contract in limited and dened circumstances as
ollows:
The employee is legally dismissed
The employee repeatedly ails to perorm the work required as per the employ-
ment contract
The employee suers illness or injury and remains unable to work ater having
received treatment or a period as stipulated by law
Reasons o orce majeure orcing the employer to scale down production and
reduce the number o employees
The enterprise ceases its operation
Dismissal is only permitted when the employee has committed one or more o the
ollowing acts:
Thet
Embezzlement
Disclosure o technological and business secrets
Any act that causes severe losses to the companys assets and interests
Repeating a breach while on a disciplinary sanction or an earlier breach
Repeating a breach ater being demoted or the earlier breach
Absence or ve working days or more in a month or 20 working days in a year
without justiable reasons
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Prior to termination the employer must send a notice o termination to the
employee as ollows:
45 days prior to the last day o work or an indenite term contract
30 days prior to the last day o work or a denite term contract o between 12
months and 36 months
3 days prior to the last day o work or a seasonal or xed term o contract less
than 12 months
Environmental L aw
WHAT ENVIRONMENTAL REPORTS OR STUDIES MUST B E SUBMITTED FOR
INVESTMENT PROJECTS IN VIETNAM?
There are two kinds o documents that anyone wishing to invest in Vietnam may
be required to submit: an environmental impact assessment report (the EIA
Report) and an environmental protection undertaking (EPU). An investor,
depending on their investment sector and/or their scope o investment, may have
to prepare one or the other.
The content o the EIA Report must include:
Specications o the project
Operational technology o the project
Measures to minimise any negative eects on the environment; an undertak-
ing to apply environmental protection measures during the construction and
operation phases and
Opinions o the local PC and the community where the project is carried out
The contents o the EPU report must include:
The project site
The orm and scale o production, trading and services, materials and raw
materials used or the project
Likely waste to be produced rom the project and
The undertaking to apply measures to minimise and treat waste and comply
with the laws on the environment
The undertaking must be registered with the local district PC where the project is
located beore commencement o the project.
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WHAT ARE SOME OF THE POSSIBLE ENV IRONMENTAL RELATED FINANCIAL
OBLIGATIONS AN INVESTOR MAY FACE IN VIETNAM?
An investor may ace the ollowing environmental related nancial obligations:
Environment tax: On 1 January 2012, the Law on Environmental Protection
Tax will enter into orce. Under such law, there are a variety o products/goods
having negative environmental and health consequences, such as gasoline, oil
and grease and petroleum, that will be subject to this tax
Environmental protection fees: These must be paid by organisations or
individuals discharging waste that could be harmul to the environment
Natural resource exploitation and restoration funds: An organisation or
individual that exploits natural resources must give a deposit to a credit
institution operating in Vietnam or to the environment protection und where
the exploitation is taking place
Environment protection funds: The State and each o its provinces have nan-
cial agencies to protect the environment. These agencies are unded by the
government and are charged with protecting the environment rom urther
damage
Bankruptcy Law
WHO MAY FILE BANKRUPTCY IN VIETNAM?
The bankruptcy law recognises liquidation and re-organisation o enterprises,
co-operatives and alliances o cooperatives established and operating pursuant to
the law. There is no individual bankruptcy legislation. Moreover, certain enter-
prises are subject to special treatment under the bankruptcy law.
WHICH COURT HAS JURISDICTION OVER A BANKRUPTCY?
There is no separate bankruptcy court. Depending on where the business is
registered, it will be under the jurisdiction o the District Peoples Court or the
Peoples Court in a province or a city under the Central authority. The Court o
Appeal under the Peoples Supreme Court has jurisdiction to review any appeal.
The judge has the power to collect evidence, investigate, convene, and chair
meetings o the creditors. Real estate is not treated dierently than other assets
in insolvency proceedings.
Intellectual Propert y
WHAT LAWS PROTECT INTELLECTUAL PROPERTY IN VIE TNAM?
The Civil Code and the Law on Intellectual Property codiy the bulk o the
regulations on intellectual property. Vietnam is also a signatory to the Paris
Convention, the Madrid Agreement and the Stockholm Convention o 1967, the
Berne Convention or the Protection o Literary and Artistic Works, and the
Geneva Convention or the Protection o Producers o Phonogrammes against
Unauthorised Duplication o their Phonogrammes.
Industrial property and copyright are regulated separately. Industrial property is
administered principally by National Oce o Intellectual Property and copy-
right is regulated by the Copyright Oce.
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IS REGISTRATION REQUIRED TO PROTECT INTELLECTUAL PROPERTY?
Yes, registration is generally required except or copyright. Registration o
copyright will create prima acie evidence or protection. Generally, or other
intellectual property rights, the rights are protected upon registration on a rst to
le priority basis. Exceptions to the rst to le rule are trade secrets, geographic
indications, and trade names which are entitled to legal protection upon ull-
ment o their own conditions or ormation and usage.
WHAT IS THE DURATION OF PROTECTION FOR PATENT, COPYRIGHT, TRADE
MARK, INDUSTRIAL DESIGN AND TRADE NAME?
Technology Transfer
WHO HAS THE RIGHT TO TRAN SFER TECHNOLOGY?
The ollowing organisations and individuals have the right to transer, the right
to use (by licensing/sub-licensing) or the ownership o technology:
The owner o the technology
Any organisation or individual being permitted by the owner o the technol-
ogy to transer the use or ownership o the technology
A technology transer must be implemented on the basis o a written contract
that includes specic terms required by law. The technology transer contract is
not required to be registered with the competent State body. However, the
transeror and transeree may agree to register in order to enjoy incentives
stipulated by law.
Type Brie Legal Description Duration o Protection
PATENT Atechnological solution presenting
worldwide novelty, an inventive step
applicable in socio-economic elds
20 years rom the date o
application
COPYRIGHT Rights o an organisation or individual
to works which such organisation or
individual created or owns works
means a creation o the mind in theliterary, rst artistic or scientic sectors,
expressed in any mode or orm
Authors lie plus 50
years except or movies,
photographs, plays,
applied ne artsworkswhich enjoy only 50years
protection rom date o
publication
TRADE MARK Marks used to distinguish goods or
services odiferent organisations and
individuals. They may take the orm
o words, images or anycombination
presented in one or more colours
10 years rom the date o
application, renewable or
successive 10 year periods
without limit
INDUSTRIAL
DESIGN PATENT
The outward appearance o a product
embodied in three dimensional
conguration, lines, colours or a
combination o such elements
5 years rom the date o
application, renewable
or anadditional two
periods o5 years up to a
maximum o 15years
TRADE NAME The designation o an organisation or
individual used inbusiness activities in
order to distinguish thebusiness entity
bearing such trade name rom other
business entities in the samebusiness
sector and area
Entire duration o use
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WHAT KIND OF TECHNOLOGY MAY BE TR ANSFERRED?
The legal objects o technology transer are:
Technical know-how
Technical knowledge in the orm o technological plans, technical solutions,
ormulae, technical parameters, design drawings, technical plans, computer
programs, and data inormation about the transerred technologySolutions or rationalisation o production and renovation o technology,
licences or special business rights and other objects as provided in the Law
on Technology Transer
In situations where the technology is also subject to protected intellectual
property rights, the transer o such technology must be conducted together with
the transer o intellectual property rights in accordance with the Law on
Intellectual Property.
WHAT TECHNOLOGY TRA NSFERS ARE PROHIBITED?
The ollowing technologies are not permitted to be transerred:
Technology that does not meet the regulations o the law on occupational
saety, occupational hygiene, ensuring the health o people, or on protection o
the environment
Technology that adversely aects culture, security and social saety
Technology which ails to have technical, economic or social eciency
Technology which serves national security or deence, but the permission o
the authorised State body has not been obtained
WHAT APPROVALS OR PROCEDURES SHOULD BE FOLLOWED IN ORDER TOTRANSFER TECHNOLOGY IN VIETNAM?
The transer o a technology which is restricted by law requires an approval and a
permit rom the Ministry o Science and Technology (MOST).
Any entity with a need to receive or to be transerred a restricted technology
must submit to the MOST an application or approval o transer o such technol-
ogy. I the entity receives a written approval rom MOST, the entity will be
permitted to enter into a technology transer contract, and thereater le an
application to the MOST or a technology transer permit.
CAN A FOREIGN INVESTOR CONTRIBUTE CAPITAL BY WAY OF TECHNOLOGY TOAN INVESTMENT PROJECT
Foreign investors can contribute capital by way o technology to an investment
project and the value o such capital contribution will be agreed by the parties in
the technology transer contract.
Government of Vietnam and Charts of Major State Agencies
OVERVIEW OF THE GOVERNMENT OF VIETNAM
The Socialist Republic o Vietnam is a single-party state. Only political organisa-tions aliated with or endorsed by the Communist Party are permitted to
contest elections. The President o Vietnam is the titular head o state and the
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mayer brown jsm 27
nominal commander in chie o the military o Vietnam, chairing the Council on
National Deence and Security. The Prime Minister o Vietnam is the head o
government, presiding over a council o ministers.
The National Assembly o Vietnam is the unicameral legislature o the govern-
ment, composed o 498 members. It is superior to both the executive and judicial
branches. All members o the council o ministers are derived rom the National
Assembly. The Supreme Peoples Court o Vietnam, which is the highest court o
appeal in the nation, is also answerable to the National Assembly. The General
Secretary o the Communist Party is perhaps one o the most important political
leaders in the nation, controlling the partys national organisation and state
appointments, as well as setting policy.
The ollowing charts show the general organisational structure o the Socialist
Republic o Vietnam.
NATIONAL STRUCTURE
National Assembly
Supreme Peoples Court
Local Peoples Court
Government
Ministries
Supreme Peoples Procuracy
Local Peoples Procuracy
GOVERNMENT OF VIETNAM
Prime Minister
Deputy PrimeMinister
Deputy PrimeMinister
Deputy PrimeMinister
Deputy PrimeMinister
Deputy PrimeMinister
Ministry ofFinance
Ministry ofLabour, WarInvalids andSocial Aairs
State Bank ofVietnam
Committeeon EthnicMinorityAairs
Ministry ofJustice
GovernmentInspectorate
Ministry ofForeign Aairs
Ministry ofPlanning andInvestment
GovernmentOffice
Ministry ofInterior Aairs
Ministry ofHealth
Ministry ofNationalDefence
Ministry ofPublic Security
Ministry ofNatural
Resources &Environment
Ministry ofAgriculture
and RuralDevelopment
Ministry ofIndustry and
Trade
Ministry ofConstruction
Ministry ofTransport
Ministry ofEducation and
Training
Ministry ofInformation andCommunication
Ministry ofScience andTechnology
Ministry ofCulture, Sports
and Tourism
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28 Guide to Doing Business in Vietnam
LOCAL STRUCTURE
Provincial PeoplesCommittee
Department of Trade
Department of Agriculturaland Rural Development
Department of Justice
Department of Planning andInvestment
Department of Science andTechnology
Department of Construction
Department of Finance
Department of NaturalResources and Environment
Other Departments
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About Mayer Brown JSM
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