Midterm VBF 2015 - Full Report - Eng PDF

MIDTERM VIETNAM BUSINESS
FORUM 2015
Hanoi, June 9, 2015
MPI
MINISTRY OF PLANNING
& INVESTMENT
Midterm Vietnam Business Forum 2015
ENHANCING ENTERPRISE
COMPETITIVENESS FOR GLOBAL
INTEGRATION
Hanoi, June 9, 2015
DISCLAIMER
The Vietnam Business Forum (VBF) is a structured and ongoing policy dialogue between the
Vietnamese Government and the local and the foreign business community for a favorable
business environment that attracts private sector investment and stimulates sustainable
economic growth in Vietnam.
This publication was created for the Midterm Vietnam Business Forum on June 9, 2015 in Hanoi.
The conclusions and judgments contained in this publication, as well as presentations made by
businesses representatives at the Forum, should not be attributed to, and do not necessarily
represent the views of, the VBF Consortium Board, or the VBF Secretariat, or its co-chairing
institutions including Vietnams Ministry of Planning and Investment, the World Bank group, and
IFC - a member of the World Bank group. These parties do not guarantee the accuracy of the
data in this publication and the aforesaid presentations, and accept no responsibility for any
consequences of their use.
This publication is distributed subject to the condition that it shall not, by way of trade or
otherwise, be lent, re-sold, hired out, or otherwise circulated on a commercial basis.
TABLE OF CONTENTS
TENTATIVE AGENDA
Section I: REVIEW OF BUSINESS CLIMATE
1.1.
Perceptions by Foreign & Local Business Associations/Chambers
Section II: TRADE, TOURISM AND INVESTMENT - Issues of implementation of new Laws on
Investments, Enterprises, Immigration, Residential Housing and Real Estate Business
2.1.
2.1.1.
INVESTMENT AND TRADE

Report from VBF Investment and Trade Working Group
2.2.
2.2.1.
VISA AND TOURISM

Position Paper of VBF Tourism Working Group
2.3
2.3.1.
2.3.2.
RESIDENTIAL HOUSING AND REAL ESTATE BUSINESS

Position Paper of VBF Land Sub-Group
Comments and recommendations on the draft Decree guiding the implementation of
Law on Residential Housing 2014
Law on Real Estate Business 2014
2.3.2.
2.4.
2.4.1.
2.4.2.
2.4.3.
2.4.4.
2.5.
2.5.1.
2.5.2.
INVESTMENT LAW AND ENTERPRISE LAW

Comments and recommendations on the draft Decree on Business Registration
Investment Law 2014
Enterprise Law 2014
Meeting notes with Ministry of Planning and Investment on draft Decree guiding the
implementation of Investment Law 2014 on April 22, 2015 in Ho Chi Minh City
OTHER ISSUES
Comments and recommendations on the draft Circular on importation of used
machinery, equipment and production lines
Meeting notes with Ministry of Science and Technology on draft Circular on
importation of used machinery, equipment and production lines on 17th March 2015 in
Ho Chi Minh City and 18th March 2015 in Hanoi.
Section III: BANKING AND CAPITAL MARKETS - Needs for positive growth
3.1.
3.1.1.
BANKING
Position Paper of VBF Banking Working Group
3.2.
3.2.1.
3.2.2.
CAPITAL MARKETS
Position Paper of VBF Capital Markets Working Group
Talking points for the meeting with State Securities Commission of Vietnam on
25th May 2015 in Hanoi
Page 1 of 2
3.2.3.
3.2.4.
3.2.5.
Comments and recommendations on the draft Decree amending a number of Articles

of Decree no.58/2012/ND-CP on securities
Comments and recommendations on the draft Circular amending a number of Articles
of Circular No. 213/2012/TT-BTC guiding operations of foreign investors on
Vietnamese securities market
Comments and recommendations on the draft Circular guiding information disclosure
on Vietnamese securities market
Section IV: INFRASTRUCTURE - Requirements for PPP implementations, port

strengthening and power generation needs in Master Plan VII
4.1.
4.1.1.
PUBLIC-PRIVATE PARTNERSHIP (PPP)

Position Paper of VBF Infrastructure Working Group: New PPP Decree Paving
the way for enhanced competitiveness?
4.2.
4.2.1.
PORT AND SHIPPING

Position Paper of VBF Port and Shipping Sub-Group
4.3.
4.3.1.
4.3.2.
POWER AND ENERGY

Position Paper of VBF Power and Energy Sub-Group
Topic discussions for the meeting with Ministry of Industry and Trade (MOIT) and
Ministry of Planning and Investment (MPI) on 15th May 2015 in Hanoi
Meeting notes with MOIT and MPI on 15th May 2015 in Hanoi
4.3.3.
Section V: REPORTS FROM OTHER WORKING GROUPS

5.1.
5.1.1
5.1.2.
5.1.3.
CUSTOMS AND TAX

Position Paper of VBF Customs Working Group
Comments on discussion topics on the existing Law on Import and Export Tariffs
Comments on the draft Law amending the Law on Import and Export Tariffs
5.2.
5.2.1.
HUMAN RESOURCES
Position Paper of VBF HR Sub-Group
5.3.
5.3.1.
5.3.2.
MINING
Position Paper of VBF Mining Working Group
Policy brief financial mechanism in extractive industry
Section VI: APPENDIX

6.1.
Summary notes of Mid-term Vietnam Business Forum June 2015
Page 2 of 2
MID-TERM VIETNAM BUSINESS FORUM 2015

Enhancing Enterprise Competitiveness for Global Integration
Date and Time: 7:00 13:30, Tuesday, June 9, 2015

Venue: Crystal Grand Ballroom, 6th Floor, LOTTE HOTEL HANOI, 54 Lieu Giai, Ba Dinh, Hanoi
TENTATIVE AGENDA
Registration
8:00 8:15
Opening Remarks
Ministry of Planning and Investment H.E. Mr. Bui Quang Vinh, Minister
International Finance Corporation Mr. Kyle F. Kelhofer, Regional Manager
Vietnam Business Forum Consortium Mrs. Virginia B. Foote, Co-Chair
8:15 8:45
Review of Business Climate

1. Vietnam Chamber of Commerce and Industry Dr. Vu Tien Loc, President
2. American Chamber of Commerce Ms. Sherry Boger, Chairperson
3. European Chamber of Commerce Mr. Tomaso Andreatta, Vice Chair
4. Korea Chamber of Business Mr. Ryu Hang Ha , Chairman
5. Japanese Business Associations - Mr. Shimon Tokuyama, Chairman
6. Hanoi Young Business Association Mr. Tran Anh Vuong, Vice Chair
SESSION 1
7:00 8:00
1. Trade, Tourism and Investment - Issues of implementation of new Laws

on Investment, Enterprises, Immigration, Residential Housing and Real
Estate Business
Investment and Trade: Mr. Fred Burke Co-Heads of Investment and
SESSION 2
Trade Working Group
8:45 9:40
Visas and Tourism: Mr. Ken Atkinson Head of Tourism Working Group
Residential Housing and Real Estate: Mr. David Lim Head of Land Sub-Group
Responses from the Government

Ministry of Planning and Investment
Ministry of Health
The Supreme Peoples Court
Ministry of Justice
Ministry of Science and Technology
Ministry of Public Security
Ministry of Culture, Sports and Tourism
Ministry of Construction
Ministry of Labour - Invalids and Social Affairs
Page 1 of 2
SESSION 3
2. Banking and Capital Markets Needs for positive growth

Banking: Mr. Nirukt Sapru Head of Banking Working Group
Capital Markets: Mr. Kien Nguyen Representative of Capital Markets
Working Group
9:40 10:15
10:15
10:30

State Bank of Vietnam
State Securities Commission of Vietnam
Ministry of Finance
Coffee Break
3. Infrastructure Requirements for PPP implementations,
strengthening and power generation needs in Master Plan VII
SESSION 4
10:30
11:10
port
Infrastructure: Mr. Tony Foster and Mr. Tran Tuan Phong Co-Heads of
Infrastructure Working Group

Port & Shipping: Mr. Robert Hambleton Head of Port and Shipping Sub-Group
Power & Energy: Mr. Sean Chung Representative of Power and Energy
Sub-Group
Ministry of Transport
Ministry of Industry and Trade
Ministry of Finance
LUNCHEON
SESSION 5
11:10 - 11:45 KEYNOTE ADDRESS by PRIME MINISTER H.E. Mr. NGUYEN TAN DUNG
11:45 12:00
12:00
13:30
Closing Remarks
World Bank Mrs. Victoria Kwakwa, Country Director
Vietnam Business Forum Consortium Dr. Vu Tien Loc, Co-Chair
Ministry of Planning and Investment H.E. Mr. Bui Quang Vinh, Minister
VIP Lunch By Invitation Only
Networking Lunch
+ Executive Club Lounge 59th Floor, Lotte Hotel Hanoi
+ Grill 63 63rd Floor, Lotte Hotel Hanoi
END OF MID-TERM VIETNAM BUSINESS FORUM 2015
Page 2 of 2
Section I
REVIEW OF
BUSINESS CLIMATE
American Chamber of Commerce in Vietnam (AmCham)

AMCHAM STATEMENT
Mid-term Vietnam Business Forum
Hanoi, June 9, 2015
Presented by
Ms. Sherry Boger
Chairperson
Prime Minister and Ministers,
Business leaders
Distinguished Delegates
Ladies and Gentlemen
I am pleased to participate in this important VBF Meeting, with the theme: Enhancing
competitiveness toward international economic integration.
SOME POSITIVE DEVELOPMENTS
First, it is important that we recognize that Vietnam has been extremely successful in
international economic integration in general and with the United States in particular. Last
year, total trade between our two countries again expanded by 20% and reached $36.3
billion, and could reach nearly $72 billion by 2020 if present trends continue, and even more
with TPP1. Moreover, in 2014, Vietnam became the leading ASEAN country supplier to the
United States, ahead of Malaysia and Thailand. Vietnams share of total U.S. imports from
ASEAN was 22%, and could exceed 30% by 2020, if present trends continue2.
On the other hand, Vietnam is the lowest-ranked of all ASEAN countries for U.S. exports, at
only $5.7 billion in 20143. This figure could certainly be increased by improving Vietnams
business environment for exporters from the U.S. and other countries, and importers in
Vietnam and their distributors.
At the same time, revenues of AmCham companies and their partners in Vietnams
domestic market continued to grow, as well, and a number of AmCham companies
increased their FDI in Vietnam.
TPP, OTHER FREE TRADE AGREEMENTS AND INTERNATIONAL ECONOMIC INTEGRATION
After many years of work, the Trans-Pacific Partnership Free Trade Agreement is closer to
conclusion and ratification. With work and reform, Vietnam could be the largest beneficiary
from the TPP in relative terms.
The TPP is important for all member countries and especially Vietnam, first of all, because
of the specific, positive impact on exports of goods and services, GDP growth, and the
1
see attachment 1
see attachment 2
3
see attachment 2
2
Page 1 of 9
creation of more jobs. Some experts predict that Vietnams exports will increase by 28.4%
with TPP. The expected export baseline in 2025 without TPP of $239.0 billion could grow
to $307 billion. In addition, the expected GDP growth benefits are substantial. According to
the World Bank, Vietnams average annual GDP growth rate was 7.4% over the period 1990
2007, and is projected at 5.6% over the period 2008-2018. With TPP, Vietnams GDP in
2025 could be 10.5% higher than the baseline estimate.
Business and government leaders are increasingly aware of the growing importance of the
Asia Pacific Region and the associated benefits of TPP. According to a widely quoted study
published by the Brookings Institution and the Organization for Economic Cooperation and
Development (OECD) Growth of both multinationals and the global economy will depend
increasingly on emerging market consumers, especially in Asia (India, ASEAN, and China).
Global middle-class spending should rise from $21.3 trillion in 2009 to $55.7 trillion in 2030.
Asias share should increase from 23% in 2009 to 59% in 2030. In 2009, there were 525
million middle-class consumers in the region. By 2030, that number will be 3.2 billion.
That is one reason why U.S. and other global corporations have established and are
establishing more production facilities in Vietnam, to serve Vietnam, ASEAN, Asia-Pacific,
and other global markets. It is also why we are all interested in developing free trade
agreements such as the TPP, the EU-Vietnam FTA, the ASEAN Economic Community 2015,
the Korea-ASEAN FTA, the Japan-ASEAN Economic Partnership Agreement, etc.
Finally, as the U.S. Congress has moved and is moving toward approval of Trade Promotion
Authority to prepare for prompt ratification of TPP, we hope and expect that Vietnam and
the U.S. will have concluded negotiations. We salute the TPP as it will help to further lay a
foundation for regional integration, and further economic and social development.
Cooperation in the TPP can be a foundation and engine for the U.S.-Vietnam Comprehensive
Partnership announced in July 2013.
ENHANCING ENTERPRISE COMPETITIVENESS TOWARD INTERNATIONAL ECONOMIC
INTEGRATION
While Vietnam has been extremely successful in attracting FDI and benefitting from
significant export growth from FDI factories, and we would like to see additional growth and
participate in the further development of supporting industries.
In 2015, small and medium-sized enterprises (SMEs) in Viet Nam generally lack the
capacity to participate in supply chains for FDI factories. Only 36% of all Vietnamese firms
are integrated into export-oriented production networks, compared with nearly 60% in
Malaysia and Thailand. Just 21% of Vietnamese SMEs participate in global supply chains,
and SMEs contribution to exports from Viet Nam is significantly less than in other
countries. Improvements in hard and soft infrastructure can greatly grow these numbers
Future economic and social development will depend on further integration into global
supply chains so we can all benefit from global sources of funding and technology and gain
access to global markets. A proposed new law on SMEs together with the selection of five
industry sectors for developing clusters and value-chain products: electronics, textiles,
food processing, agricultural machinery, and tourism can help. Action plans should be
drawn up that include cooperation with the private sector, especially FDI, which would
better inform the government and companies both about successful SME development
incentives in other countries, and about necessary requirements for joining global supply
chains and developing supporting industry clusters. In addition, a modern education system
that supports such development by providing work-ready graduates and innovative
Page 2 of 9
research for manufacturing industry, accounting practices that are globally accepted,
administrative and tax procedures that are streamlined and transparent,-- all contribute
to supply chain integration.
Vietnam has roughly 400 business associations representing specific business sectors and
regions. These associations are a source of information on market conditions for their
members, as well as training in business development and export requirements. Given
their role in raising the competiveness of SMEs in the export economy both as direct
exporters and suppliers to FDI, they can serve as conduits for government support in the
key areas noted above.
Last November, our Manufacturing Committee organized a supplier development day
with the participation of a large number of Vietnam companies. In addition, we have
organized in recent years and will be pleased to organize in the coming days training
sessions for Vietnamese businesses on how to become a qualified supplier, in
cooperation with local and national government agencies and business associations.
As for education of work-ready graduates for industry, our members are pleased to be
involved in a number of projects either leading or contributing to vocational, practical and
curriculum modernization. In support of developing the high tech sector, we encourage the
government to lead a large scale transformation to scale HEEAP (Higher Engineering
Education Alliance Program) in 2018 with HEEAP 3.0 across the country to achieve
internationally recognized accreditations, support basic and applied research, and develop
a foundation for innovation and entrepreneurship.
ENHANCING GOVERNMENT COMPETITIVENESS TOWARD INTERNATIONAL ECONOMIC
INTEGRATION
It is also important that local and national government agencies improve their
competitiveness and rigorously implement streamlined procedures as government service
providers to businesses to help prepare for international economic integration.
The Government has issued Resolution 19/2014and Resolution 19/2015, setting Key
Performance Indicators for efficiency in providing government services, including tax
reporting and payment procedures; access to electricity; protection of IPR, property rights;
investors and minority shareholder rights in line with international standards; fairness and
transparency in market-based access to credit; to reduce the time for import and export
clearance to the average of the ASEAN-6 group; to reduce the time to deal with business
insolvency; to publicize information about business performance and financial standing in
accordance with law and in line international best practices.
Resolutions 19 lay out key indicators for progress and we urge more effort to be sure that
the policy is understood and implemented at the government agencies working levels. We
therefore very much appreciate the governments work with the VBF working groups and
the regular dialogue that we have. There should be regular and meaningful government
consultation and cooperation with businesses, including FDI, at the working level, on a
monthly and quarterly basis to assess progress. And there must be concrete targets to
improve the business environment.
For example, the Customs and Trade Facilitation Key Performance Indicator (KPI) for
2015 is to reduce the time for import and export clearance to the average of the ASEAN-6
group (being 14 days to export and 13 days to import) compared with 21 days for both
import and export in Vietnam in 2013. And the Customs and Trade Facilitation KPI for 2016
Page 3 of 9
is to reduce further the time to export to under 10 days and the time to import to under 12
days.
Recently we have established a Vietnam Trade Facilitation Alliance, (VTFA) led by VCCI
and AmCham, with the participation of leading export industry associations (apparel,
footwear, furniture, etc.) to facilitate these regular government-business consultations and
help achieve the customs KPI. Supported by a grant from the USAID Governance for
Inclusive Growth Program, part of the World Bank Trade Facilitation Support Program of
technical assistance provided by the developed countries to the developing countries under
Section II of the WTO Trade Facilitation Agreement, the VTFA is working to establish formal
consultative relationships between the General Department of Vietnam Customs (GDVC),
and other government agencies involved in international trade, and business associations,
as provided for by the WTO Trade Facilitation Agreement and by the WCO Revised Kyoto
Convention, as well as the TPP and other Free Trade Agreements. The VTFA is intended to
serve as a national coalition for business and trade stakeholders to provide regular
consultations with GDVC and other ministries or agencies regulating international trade,
through regularly scheduled formal monthly and quarterly public meetings.
We also very much appreciate the MOU VBF has with the Customs Department and the
ongoing work with the business community to implement important reforms and
modernization.
As another example, we were very pleased with a meeting of HCM City Leaders to try to
resolve business difficulties and improve the business environment. And they will
recommend to the Central Government solutions to problems which need to be resolved at
the national level. The HCM City leaders will develop a small working group to meet with
the business representatives to resolve difficulties facing investors and entrepreneurs,
improving business environment in order to build an equal business investment
environment and make the rules and policies of Vietnamese government more transparent.
Some specific issues that affect our members greatly are visas, tax problems, and
restrictions on imports of used machinery as important difficulties facing businesses.
Visas: Vietnams Immigration Law was revised in June 2014 and became effective on
January 1, 2015. We think this change is a major step backwards. According to some
provisions of the law, U.S. citizens that plan to visit Vietnam under the equivalent of a U.S.
B-1 or B-2 visa will receive visas that have, at most, a three-month period of validity, and a
single-entry only. This means that, in the near future, based on reciprocity, U.S. visas for
Vietnamese citizens that are temporary visitors could be reduced from the current one year
validity to only three months validity, and from multiple-entry to a single-entry only.
This development, has already resulted in significant impediments to business and
pleasure travel both ways between Vietnam and the U.S., and could reduce the large
revenues that tourism generates, not to mention the negative impact on the planned
development of tourism as one of the five priority industry clusters in Vietnam.
Tax: We have raised with both the Ministry of Finance and the Ho Chi Minh City Peoples
Committee a particular situation where U.S. importers and their distributors are being
disadvantaged by a requirement to pay Value Added Tax on imported goods twice. The tax
authorities froze distributors bank accounts while the case was under appeal. We hope that
this case can be solved promptly. There are a number of other cases involving tax issues
that we will raise.
Page 4 of 9
Imports of Used Equipment (proposed revised Circular 20): At meetings in both HCMC and
Hanoi, businesses universally opposed the revised circular, which was intended to promote
development of manufacturing industries by encouraging imports of new machinery,
equipment and production lines that are manufactured with the latest technology.The
restrictions in the draft Circular are likely to have the opposite effect, and discourage
manufacturing industries, because of coverage of long-term capital equipment, parts and
accessories due to the broad scope of the Harmonized System customs classification codes
involved. An extensive global trade in used manufacturing equipment has developed,
particularly in capital-intensive industries, because it is often preferable for an investor to
obtain high-quality used or remanufactured equipment, often moving equipment from one
of their own existing factories in another country to Vietnam, rather than order new
equipment with long delivery lead times and much higher cost. Rather than restriction, the
goal of encouraging imports of manufacturing equipment for high technology industries is
better served by providing new duty and tax incentives for investment in appropriate
equipment and technologies.
ENHANCING COMPETITIVENESS REQUIRES GOVERNMENT-BUSINESS DIALOGUE AT ALL
LEVELS
AmCham members and prospective foreign direct investors are frustrated by persistent
delays and uncertainty on key projects, policies, and regulations, including implementing
circulars for Laws and Decrees, key infrastructure projects, streamlining administrative
procedures, and others.
In the automotive sector, for example, the lack of a clear road-map and details under the
strategy document of Automotive Master Plan 2020- vision 2030 has dampened investor
confidence and brings the risk of manufacturers considering alternate plans within the
ASEAN region.
In the banking/finance sector, policy direction and regulation have been well-intentioned,
but delays and inconsistencies in implementing circulars, and indeed the capacity of certain
agencies to understand rules, has been a huge challenge. We need to develop
(1) Implementation capacity at the working level, especially in licensing; (2) Inter-agency
collaboration to resolve discrepancies in regulation; (3) a better system of resolving issues
at the working level wherever possible.
In the children's milk sector, the Governments recent decision to extend Decision 1079/QDBTC on the application of price stabilization measures for milk products for children 6
years old and under for a further 18 months will continue to create pronounced negative
impacts on the industrys development and businesses. Prices in this sector are already
comparable to global prices and the market is diverse and competitive. This Decision goes
against the spirit of the 2012 Price Law, which promises to respect the self-determination
of prices and competition of businesses, and contradicts WTO regulations, TPP
competition principles, international practices, and Vietnams goal of achieving market
economy status.
OTHER KEY POLICY ISSUES: BANKING SYSTEM, SOE REFORM, CORRUPTION
Additional perennial policy challenges are to reform the banking system and deal with nonperforming loans, reform of state-owned enterprises, and corruption.
Banking System: The Banking Working Group will address reform of the banking system.
Page 5 of 9
State Owned Enterprises: We are concerned that equitization has been very slow and in
some cases is in name only. It is hard to see how the sale of only a minority share changes
the governance, the reliance on the State, or the power of the partially equitized SOE to still
crowd out private sector development.
Corruption: We know the government shares with us the concern that corruption has
become corrosive and widespread in Vietnam and is dangerous to the economy and society
as a whole. While there have been some actions from the Government, it is time to address
corruption in a wider fashion by implementing systems well known to reduce the
opportunities for illegal payments as well as incorporating a code similar to the U.S.
Foreign Corrupt Practices Act (FCPA)or the UKs Bribery Act. A significant step forward
would be to take actions that greatly limit the use of cash payments and face-to-face
transactions, and to increase the use of e-Commerce in Vietnam.
CONCLUSION
Once again, we express our appreciation for the guidance in the Prime Ministers 2014 New
Years Message, in Resolutions 19/2014 and /2015and this opportunity for interaction
between State agencies, between the State apparatus and socio-political organizations .
Dialogues with the people and businesses to promote closer relationships between the
State, cadres, civil servants and the people and better match policy and legislation with
reality.4
We also appreciate the interest and efforts of the National Assembly in organizing the
Spring Economic Forum in April 2015 with the theme Continuing to reform the investment
and business climate in Vietnam: Turning Words into Action.
We look forward to cooperation and support through regular and meaningful Governmentbusiness consultations at all levels of government, with concrete targets to be achieved.
We remain active in support for the TPP and the preparations in Vietnam needed to bring
further success.
On behalf of all AmCham members,
I wish distinguished participants good health, happiness and success.
Thank you very much.
Attachments
1. Vietnam U.S. Trade, 2000 2020e
2. ASEAN U.S. Trade, 2000 2020e
3. Visa Reciprocity of TPP, ASEAN Countries (Validity, Multiple or Single Entry)
"Phi tng cng tng tc gia cc c quan trong b my nh nc v gia b my nh nc vi cc t chc
Chnh tr x hi. M rng i thoi vi ngi dn v doanh nghip bng nhiu hnh thc Nh nc, cn b,
cng chc gn dn hn v ch trng, chnh sch, php lut st vi thc tin hn."
Page 6 of 9
Attachment 1 Vietnam U.S. Trade, 2000 2020e
Source: U.S. Department of Commerce, 2000 2014 actuals; 2015 2020 estimates
http://www.census.gov/foreign-trade/balance/c5520.html#2010
Page 7 of 9
Attachment 2 ASEAN U.S. Trade
Source: U.S. Department of Commerce, 2000 2014 actual; 2015 2020 estimates
Page 8 of 9
Attachment 3: Visa Reciprocity Schedules between U.S., TPP and other trade partners
Vietnam
Max B1/B2
validity
(entries/months)
M/12*
Canada
M/120
Mexico
Peru
M/120
M/120
Chile
M/120
Japan
Singapore
Malaysia
Brunei
M/120
M/120
M/120
M/120
Australia
M/12 (M/60 with

$25 fee)
Visa Waiver Program (VWP)
New Zealand
M/120
Myanmar
B1 or B2 1/3 ($32),
B1 M/12 ($162)
N/A
China
M/120
N/A
Indonesia
M/60
N/A
Thailand
M/120
N/A
Cambodia
2/3
N/A
Philippines
India
M/120
M/120
N/A
N/A
Other regional trade
Transpacific Partnership (TPP)

Members
Country
Max B1/B2 validity

(entries/months)
N/A
No visa required for stays of
180 days or less
N/A
N/A
Visa Waiver Program
(VWP)**
N/A
Treatment for U.S. citizens

M/3 (M/6 for family visits)
No visa required for stays of 180 days or less
No visa required for stays of 90 days or less.
Electronic Travel Authority (ETA) approval
required prior to departure (20 AUD/1 year).
Visa required, valid for up to three months from
date of issue. Max stay is 28 days for tourists; 70
days for business travelers. eVisa option
Visa required, M/120
Visa required, can be obtained upon arrival, valid
for 30 days (extendable for additional 30 days)
Visa required, can be obtained upon arrival or
online, valid for 30 days
Visa required. Valid M/120 for stays of six months.
M/12 = multiple entries, 12 months
**
Nationals from Visa Waiver Program (VWP) countries can enter the United States for business or pleasure for 90
days or less. All VWP travelers must receive Electronic System for Travel Authorization (ESTA) approval prior to
embarking on a plane for the U.S. ($14/2 years)
Page 9 of 9
EUROCHAM POSITION PAPER

Hanoi, June 9, 2015
Presented by
Mr. Tomaso Andreatta
Vice Chairman
Honorable Ministers, Ambassadors, Your Excellencies, Ladies and Gentlemen: on behalf of
EuroCham and its partner European Business Associations, I would like to thank the
Ministry of Planning and Investment and all the authorities represented here today for
facilitating this ongoing constructive dialogue with the private sector through the Vietnam
Business Forum.
Looking at the results of our most recent Business Climate Indices, the general perception
of Vietnams business environment has been quite positive among our Members. Indeed,
EuroCham is pleased to acknowledge the recent efforts that the Vietnamese Government
has made to further improve the business environment and to increase Vietnams
competitiveness, for example through the issuance of Resolution No. 19/NQ-CP/2015 dated
12 March 2015. Despite these promising efforts, some concerns remain among European
investors. This paper aims to identify those concerns and to propose solutions to further
improve the business climate in Vietnam.
For this Position Paper, EuroCham would like to focus on the following six key issues, which
all have an impact on Vietnams competitiveness: free trade agreements (FTAs),
education and training, intellectual property rights (IPR), State-owned enterprise (SOE)
reform and competition, judicial recourse and infrastructure development through publicprivate partnerships (PPPs).
I. EU VIETNAM FREE TRADE AGREEMENT
The Vietnamese Government is currently negotiating several FTAs that have the potential of
providing a long-term boost to the Vietnamese economy. These agreements include the
FTA between Vietnam and the European Union (EU), as well as the Trans Pacific
Partnership (TPP) with the United States and other countries in the Pacific region.
In this regard, the European business community hopes that Vietnam and the EU will agree
on a strong and implementable FTA for the benefit of both local and foreign businesses. We
strongly believe that the conclusion of this FTA will help Vietnam to achieve reforms of its
economy that will increase the confidence of international investors and that will encourage
trade exchanges at the global level.
Another project of economic integration for Vietnam is the ASEAN Economic Community
(AEC), which is scheduled to be completed within this year. EuroCham believes that these
two projects will allow Vietnamese companies to adapt to global market standards and will
help maintain and increase the quality of products and services available to Vietnamese
consumers. If properly implemented, the FTA and the AEC will obviously facilitate trade
through the removal of tariffs but they could also help Vietnam to align its safety and quality
Page 1 of 6
standards with those in Europe and other Western countries. The implementation of
efficient and transparent customs procedures could help Vietnam to benefit as much as
possible from these trade agreements. At the same time, some related issues that could be
resolved include eliminating burdensome requirements for imported goods, for example
with regard to duplicated local clinical trials in the pharmaceuticals sector. As well as
improving the quality of laboratories and testing methods in Vietnam and the mutual
recognition of foreign test results, for example with regard to food safety. Finally, further
opening the market to foreign direct investment can lead to an increased transfer of skills
and technology, which will help Vietnam to avoid the so-called middle-income trap.
II. EDUCATION AND TRAINING
Without a doubt, Vietnam has a high potential workforce. If Vietnam wants to move towards
higher value-added and technical industries and service sectors, however, we believe that
there is great need for adequate training. Within ASEAN, Vietnam unfortunately still ranks
in the lower half of human resources development. And indeed, in a survey of the World
Economic Forum Report for 2014-2015, more than 10% of the respondents who were asked
to select the five most problematic issues for doing business in Vietnam identified an
inadequately educated workforce as one of the main issues. Sectors in which our Members
operate and which have specifically raised this issue include information technology, and
tourism and hospitality. In both these sectors, improved education and training could lead
to further growth and to increased competitiveness of Vietnam at the regional level.
Two other issues relating to human resources concern the relatively strict rules on
overtime hours in Vietnam and the burdensome procedures and strict conditions for
foreigners to work legally in this country. Increasing overtime limits and encouraging
labour subleasing could positively contribute to Vietnams regional competitiveness,
whereas facilitating foreigners to work in Vietnam could result in more transfer of
knowledge and a better training of the Vietnamese workforce.
III. INTELLECTUAL PROPERTY RIGHTS
A strong protection of IPR is essential to encourage foreign investment in Vietnam. Even
though Vietnam has improved its legal framework and enforcement of IPR in recent years,
infringements and the enforcement of IPR laws remain a concern for European and
Vietnamese businesses alike.
EuroCham therefore calls on the Vietnamese Government to step up its efforts in
guaranteeing an effective protection of IPR in order to develop technologically-advanced
industries and to promote innovation. The foregoing may result in more foreign investment
in manufacturing, research and development, but it will also encourage Vietnamese
companies to invest in innovative activities. Needless to say, counterfeit products in sectors
such as agriculture and pharmaceuticals may even pose risks to consumers health.
We believe that enforcing a good protection of IPR can only be achieved by ensuring that
trademark and copyright infringers face dissuasive legal sanctions. At the same time, we
note that infringement of online IPRs is becoming more important with the growth of the
number of internet users. Enforcement is particularly difficult here, especially when it
comes to illegal trading in copyright-protected work and infringing goods, but also with
regard to infringements on websites and abusive domain name registration and
maintenance. EuroCham recommends that the administrative fines against individuals
committing copyright infringements will be increased and that law enforcement efforts
against infringing websites shall be strengthened. In particular this means that Cease and
Desist Decisions be immediately enforceable to limit/reduce the damage to the IPR
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legitimate owner. The adoption of a uniform domain name dispute-resolution policy system
to resolve disputes around .vn domain names as well as a more effective dispute
settlement mechanism in general would also be welcome.
Further solutions proposed by the European business community to address IPR-related
issues include the creation of shortlists of geographical indications, the protection of
regulatory data and trademarks, and a more efficient enforcement of IP laws. Once more,
EuroCham would like to stress the importance of strong IP protection standards in Vietnam
to increase its regional competitiveness in attracting foreign investment and encouraging
innovation.
IV. SOE REFORM AND COMPETITION
SOEs have traditionally played a vital role in Vietnam and they continue to be the backbone
of Vietnams economy. With the financial aid of institutions such as the OECD, the World
Bank and the Asian Development Bank over the years, there have been several rounds of
SOE reform in Vietnam. Nonetheless, the actual reform has been very gradual and the
Vietnamese Government has seemed reluctant to reform strategic SOEs. Whereas smaller,
loss-making SOEs have been merged or liquidated, so far the State has been eager to
retain control over major SOEs.
Currently, there are around 800 Vietnamese SOEs in which the State holds 100% of the
capital. This number is in sharp contrast with the 12,000 SOEs that existed in 1990.
According to the most recent official statistics, SOEs accounted for around 35% of
Vietnams GDP and for around 30% of the States revenue in 2013. EuroCham would like to
recognize that SOE reform in Vietnam since 1986 has been successful to some extent.
However, we believe that further reform is needed and that this may contribute to increased
foreign investment as a result of increased competitiveness, to Vietnams further
integration in the global economy and even to Vietnam obtaining market economy status. In
addition, as the process of privatization that has taken place in Europe in the 1990s clearly
shows, the sale of the larger and highest quality state owned companies has generated
financial resources that have contributed to improve state debt position and or to finance
investment in necessary infrastructures.
Compared with private companies, the capital efficiency ratio of SOEs in Vietnam remains
very low and SOE debts weigh heavily on the State budget. Furthermore, difficulties remain
with regard to the separation of functions of the State as market regulator and owner, as
well as with regard to public disclosure of information. Indeed, in practice SOEs continue to
receive preferential treatment (e.g. access to capital, land and subsidies), leading to market
distortions and an unhealthy competition between the private sector and the State-owned
sector. Even though SOEs may seem legally and financially independent, the State often
retains its control, for example through the ability to appoint a majority of board members.
Unfortunately, often we cannot speak of a so-called level playing field for private
companies and SOEs. A related example includes the pharmaceuticals sector, where
foreign invested private enterprises, as well as certain imported pharmaceutical products,
are currently not always allowed to (directly) participate in tender procedures.
Despite the ambitious plans of the Vietnamese Government to equitize 289 SOEs in 2015,
EuroCham believes that the equitization of SOEs in practice still does not live up to its full
potential. For example, the number of shares that is being offered to private investors is
often considered too low to effectively attract private strategic investment (e.g. only 5% to
20% is offered for sale). In practice, foreign investors are usually only interested in buying
SOE shares if they can obtain decision-making power in the enterprise. Instead, the State
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tends to retain the power to appoint all or a majority of the board members and as
mentioned before SOEs continue to enjoy preferential treatment when compared to
private enterprises. Furthermore, in practice equitization often means that shares are
bought by employees of the SOE. For these reasons, until now interest from the foreign
private sector to invest in SOEs has been rather low.
EuroCham believes that equitization and corporate governance reform of SOEs can only be
effective when there is a clear vision from the Vietnamese Government and when there is a
true commitment to realize such reform. We acknowledge the Governments good efforts
with regard to corporate governance reform of SOEs under the newly issued Law on
Enterprises; but at the same time we encourage more efforts to effectively create a level
playing field in all business sectors between SOEs and private companies. The most
important reform of all is the opening of energy markets, today still mostly controlled by
state monopolies, where competition would bring transparency as well as abundant new
capital for investment, both from domestic and international sources.
V. JUDICIAL RECOURSE
Our Members have increasingly expressed their concerns about the lack of a welldeveloped and transparent system of judicial recourse in Vietnam. As an example, in many
countries around the world, a popular way to settle investment disputes is to start
proceedings before a civil or commercial court. In theory, this option is also available in
Vietnam, but foreign investors generally opt for arbitration, partly due to a lack of
transparency of the Vietnamese court system.
Indeed, an alternative to court proceedings is arbitration at the Vietnam International
Arbitration Centre (VIAC), which could be a more flexible and efficient way to solve
disputes. However, it has been noted that Vietnamese courts are increasingly intervening in
VIAC proceedings. In many cases, this leads to the termination of the arbitration
proceedings before an award is issued, or to the setting aside of an award once it has been
issued by a VIAC tribunal.
Another alternative is international arbitration, which is generally chosen by foreign
investors in Vietnam for the settlement of disputes regarding high value contracts.
International arbitral awards are generally enforceable in most jurisdictions around the
world under the New York Convention of 1958 on the Recognition and Enforcement of
Foreign Arbitral Awards (NYC). Most contracting states of the NYC apply the provisions of
the convention, and they duly recognize and enforce foreign arbitral awards within their
respective jurisdictions. However, the European business community in Vietnam is raising
its concerns about the difficulties encountered to achieve the recognition and enforcement
of foreign arbitral awards through the Vietnamese courts. This issue is particularly relevant
for high value contracts in the commodities sector (e.g. cotton, coffee, rice, tea, and
etcetera).
A reversed burden of proof for award creditors and the fact that Vietnamese courts are
rejecting applications for the recognition and enforcement of foreign arbitral awards on
grounds that are not consistent with the NYC provisions are two important grounds for
concern among our Members. For further background information on this topic, we kindly
invite you to read our Whitebook of 2015.
At the same time, EuroCham welcomes some recent positive developments, such as the
issuance of Letter No. 246/TANDTC-KT on the settlement of requests for the recognition
and enforcement in Vietnam of foreign business and commercial arbitral awards by the
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Supreme Peoples Court. This letter instructs lower level judges to properly apply the
provisions of the NYC. EuroCham encourages the Vietnamese Government, however, to
further improve the recognition and enforcement of foreign arbitral awards in line with its
obligations under the convention, and is ready to support in the training of judges and other
relevant members of the state administration to the rules and methods of arbitration.
VI. INFRASTRUCTURE DEVELOPMENT AND PUBLIC-PRIVATE PARTNERSHIPS
Our Members regularly call for the development of modern and efficient infrastructure to
enhance economic growth and to lower the costs of doing business in Vietnam. Indeed, we
believe that the development of this country requires more roads, airports, ports, hospitals,
as well as more power, waste and water treatment infrastructure. One of the infrastructure
projects that our Transportation and Logistics Sector Committee has been bringing to the
Governments attention is the creation of a domestic and international transshipment hub
in Cai Mep. Since it is estimated that the State budget can only meet around 50% of
Vietnams infrastructure needs, private investment in the form of public-private
partnerships (PPPs) seems crucial.
In order to attract such private investment, a clear legal framework is required to
implement PPPs. EuroCham is pleased with the recent progress that has been made by the
Vietnamese authorities, including the adoption of a new Law on Public Procurement, as
well as a new Decree on PPPs and a new Decree on investor selection. However, other
ASEAN countries already adopted their PPP framework at an earlier stage, which means
that they manage to effectively attract public-private projects. These countries will remain
more attractive in the eyes of foreign investors if Vietnam does not manage to successfully
implement a number of PPP projects in the near future.
As mentioned above, EuroCham welcomes the new regulations and we hope that they will
effectively revive the interest of the private sector to invest in PPP projects. The creation of
a project development facility that will be used to assess the feasibility of potential PPP
projects, as well as the viability gap funding by the Government to support projects that
would not otherwise be financially viable, are two initiatives that send a positive message to
foreign investors.
In addition to that, we encourage the Vietnamese Government to take a clear lead in
identifying potential PPP projects, in assessing them and in organizing a competitive and
open tendering procedure. Furthermore, we call on the Government to facilitate foreign
investors that are interested in PPP projects as much as possible in order to successfully
implement the first PPP projects in Vietnam in due course.
CONCLUDING REMARKS
EuroCham believes that the economic decisions that will be made over the next few years
could have a defining influence on Vietnams future, as well as on its international
competitiveness and on the countrys sustainable economic growth model.
We therefore invite and encourage the Vietnamese Government to address the issues
outlined in this Position Paper and to comfort the expectations of the European business
community in Vietnam. For more detailed information about the issues raised in this paper,
we kindly refer you to the EuroCham Whitebook of 2015, which highlights a number of
recommendations formulated by our Members.
Please note that our suggestions in this Position Paper are made on behalf, and in the
interest of our Members, the European business community in Vietnam. However, it is clear
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that in the vast majority of cases these suggestions are clearly in the long term interest of
the Vietnamese Government and the Vietnamese people. We believe that the economy can
only grow sustainably and that Vietnams competitiveness can only improve if the business
climate is favorable. Such could be achieved, among other things, by concluding a strong
and implementable FTA with the EU, by stepping up the efforts regarding education of the
workforce, reform of SOEs and the implementation of PPP projects; by increasing IPR
protection and by improving Vietnams system of judicial recourse.
We sincerely hope that our suggestions in this Position Paper will help the Vietnamese
Government to reach its goals and EuroCham will continue to assist wherever possible. We
are therefore looking forward to working with the Government of Vietnam and all our
Members and partners, both Vietnamese and European, to enhance Vietnams
competitiveness towards further international economical integration!
Page 6 of 6
KOCHAM POSITION PAPER

Hanoi, June 9, 2015
Presented by
Mr. Ryu Hang Ha
Chairman
INTRODUCTION
Honourable Ministers, Ambassadors, Co-Chairs of the Vietnam Business Forum (VBF),
Ladies and Gentlemen: On behalf of the Korea Chamber of Commerce in Vietnam, we would
like to first thank the Vietnamese Government for facilitating this ongoing dialogue at the
VBF. We sincerely appreciate the opportunity to contribute at this forum.
Please find below a summary of four (4) key issues that are of concern to Korean
enterprises in Vietnam. We hope the legislators will take it under consideration and
address them in a prompt manner.
I. DIFFICULTIES IN IMPORT OF USED MACHINERY AND EQUIPMENT
Comments: In order to implement the Directive No. 17/CT-TTg dated 9 Aug 2013 of the
Prime Minister on strengthening management and control over the import of technology,
machinery and equipment by enterprises, Ministry of Science and Technology issued
Circular No. 20/2014/TT-BKHCN on import of machinery, equipment and production lines
dated 15 May 2014, which would take effect from 1 Sep 2014 (Circular 20). According to
Circular 20, used machinery and equipment which are not specifically prohibited from
importing into Vietnam may be imported if they meet the following conditions:
i)
The usage period does not exceed 5 years (from the manufacture year);
ii)
The quality is equal to at least 80% of the original quality.
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However, due to various objections of many foreign-invested enterprises in enforcing

Circular 20, Ministry of Science and Technology issued Decision No. 2279/QD-BKHCN dated
29 Aug 2014 on suspension of implementation of this Circular from 1 Sep 2014.
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Currently, Vietnam Ministry of Science and Technology, other relevant Ministries and State
agencies have been discussing and gathering opinions from organizations and enterprises
on conditions and procedures on import of used machinery, equipment and production
lines. However, by attending several seminars on collection of opinions of enterprises in
order to complete the draft of the circular on amendment of Circular 20, we have
acknowledged that the draft still remain unchanged the previous conditions on usage
period and the remaining quality in order to import the used machinery, equipment and
production lines. In accordance with the latest draft of the circular on amendments of
Circular 20, the usage period is extended from 5 years to 10 years and remaining quality is
still 80% or more in comparison with original quality.
Many foreign-invested enterprises have opinions that it is very difficult to satisfy the
conditions of usage period of 10 years with remaining quality of 80% or more of its original
quality. Moreover, there are no clear criteria under the current drafted circular to evaluate
the usage period and remaining quality of used machinery, equipment and production lines.
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As for the self-production machinery and production lines, criteria on the quality of
products are strictly confidential for the companys business. Therefore, it is hard for a
third party who imports those products to assess criteria and evaluate the quality of
products. Besides, certain required documents of competent authorities of Vietnam are not
available to be issued by manufacture countries. This may cause a significant delay in
carrying out procedures to import used equipment and machinery into Vietnam.
Recommendation: We highly recommend that the usage period should be calculated from
the commencing date of the usage rather than from the manufacture year. Moreover, the
draft of the circular should provide the clear and accurate criteria for different types of
used machinery, equipment and production lines to determine the usage period and quality
level. It shall not be appropriate if just one criteria is applicable to all types of machinery,
equipment and production lines.
II.
POWER PROJECTS
Comments: According to our research, the power demand has increased for more than 10%
per annum around Southern area of Vietnam. However, based on the power development
plan under the Decision 1208/QD-TTg of the Prime Minister dated 21 July 2011 approving
the national master plan for power development in the 2011-2020 period, with
consideration to 2030 (Power Master Plan VII), Decision 2414/QD-TTg of the Prime
Minister dated 11 December 2013 on adjusting list, schedule of a few of power projects and
providing for a few of special regulations and policies for investment in urgent power works
during 2013 -2020 (Revised Power Master Plan VII), and recent report on project to adjust
the Power Master Plan VII, there are concerns that serious power crisis may be occurred
from the year of 2018 due to various delays of power projects. The operation of power
projects such as Duyen Hai 1 & 3, Long Phu 1, Vinh Tan 1 & 3, Van Phong 1 and others will
be delayed until 2020. Many other power projects in form of BOT have been delayed to put
into operation. Accordingly, energy supply companies in Southern area of Vietnam will be
under difficulties in supplying power for manufacturing and office works due to power
outage.
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With respect to the nuclear power projects, it will be conducted in turn by different
countries starting from Russia, Japan, and then South Korea. However, the commencement
date of the first nuclear power project which is Ninh Thuan 1 nuclear power project has
been continuously delayed. In accordance with the opinion of the Prime Minister Nguyen
Tan Dung, the commencement date of this Ninh Thuan 1 project may be delayed until 2020.
Recommendation: The government should shorten approval process for power projects
around Southern area of Vietnam. The power projects should be performed through the
involvement of the trusted and well-known power investors. In term of nuclear power
projects, it takes too long time for various approval processes (such as Pre-F/S, F/S, EIA,
etc) that causes the delay of commencement of projects. Therefore, we sincerely ask for
speeding up the commencement date as soon as possible and particularly we also kindly
ask Vietnam Government for early approval of the Pre-FS of Korean nuclear power project
so that it can commence as soon as possible.
III.
DISMISSAL DUE TO FALSE INFORMATION ON ABILITY AND EXPERIENCE
Comments: According to Article 19 of Labour Code 2012, the employee has obligation to
provide the employer, prior to execution of labour contract, the information being the
employee's educational standard, professional qualifications, experiences and other
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matters directly relevant to signing of a labor contract which the employer requests.
However, the Labor Code and its guiding legal documents do not regulate the consequence
if the employee intentionally provides false information on his/her ability and experience in
order to sign a labor contract with an employer. Upon the current regulations of labor laws
of Vietnam, the employer cannot immediately terminate the labor contract or dismiss such
employee but must take time to undergo the procedures to unilaterally terminate the labor
contract or dismiss the employee when he/she provides the false information on the above
issues. For instance, in case of unilaterally termination of the labor contract, in addition to
satisfaction of certain requirement, the employer must notify the employee at least thirty
(30) days in the case of a definite term contract. The practice proved that it may cause
substantial risks to employer if the employer can not immediately terminate the labor
contract or dismiss such employee who holds important position such as director, general
director, chief accountant or other managerial position in the company or the position which
requires the professional license and qualification, experience under the provisions of laws
such as the lawyer, the doctor, the architect etc.
Recommendation: In the light of the above, we would like to propose that labour laws of
Vietnam should supplement relevant legal provisions to allow the employer to immediately
dismiss or unilaterally terminate the labour contract when discovering the false
information on ability and experience of the employee. At the same time, the employer
should have right to immediately suspend the job of the employee in the above cases
without requirement to comply with regulations in Article 129 of the Labor Code regarding
temporary suspension of work. In addition to that, we suggest applying the case of invalid
civil contract as the supplemented cases of invalid labor contract.
IV. THE CHANGE OF HS CODE APPLICATION
Comments: We would like to refer to Circular No. 164/2013/TT-BTC of Ministry of Finance
dated 15 November, 2013 on promulgating the preferential import and export tariff
according to list of taxable goods items which taken effect since 1stJanuary, 2014. As shared
by the enterprises, during the course of implementation of such circular, the following case
may occur: the goods which is previously exempted from import duty may become the
goods which is imposed the import duty. In addition, we also receive the complains from
enterprises that in some cases, the goods which used to be exempted from the import duty
can be imposed retroactively even though the goods was imported and customs clearance
was completed before the aforesaid circular took effect. Accordingly, it is so disadvantages
for the enterprise when the import duty is imposed retroactively.
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Recommendation: Therefore, our suggestion is that the Government of Vietnam should

consider not imposing the import duty retroactively in respect of the goods which was
imported before the Circular 164/2013/TT-BTC took effect. Furthermore, we truly expect
that goods which used to be exempted from the import duty can continue to be exempted
from the import duty.
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The Japan Business Association in Vietnam (JBAV)

STATEMENT BY JBAV
Hanoi, June 9, 2015
Presented by
Mr. Shimon Tokuyama
Chairman
H.E. Nguyen Tan Dung, Prime Minister of the Socialist Republic of Vietnam,
H.E. Bui Quang Vinh, Minister of Planning and Investment,
Ladies and Gentlemen,
Firstly, on behalf of the Japanese business community, I want to extend my deepest thanks
for the invaluable support you have given us and your great efforts in improving the ease of
doing business in Vietnam. This Vietnam Business Forum (VBF) meeting is the first of many
such meetings since JBAV became a consortium member of the Vietnam Business Forum.
In the capacity of JBAV, and through this meeting, we want to contribute as much as we can
to improving the local business and investment climate, drawing more investment from
Japan, adding more value to Vietnam and taking Japan-Vietnam business ties to new
heights.
We also highly value the Prime Minister and Government of Vietnam's sound leadership,
stabilization of the economy to reach a high 6% growth rate, valorization and import-export
balance over the last 4-5 years.In addition, recently we have also positively noted the
governments moves to promote policies for state-owned enterprise reform and financial
stabilization. Together with the government of Japan as Vietnam's largest ODA provider we
will keep engaged in discussions and take coordinated action with you to further promote
economic and industrial development for Vietnam.
1. FISCAL DISCIPLINES AND INFRASTRUCTURE DEVELOPMENT SUPPORTING LONG
TERM GROWTH
We have learnt that there has been much debate recently on the issue of government debt
and we welcome your strong efforts to improve the government fiscal disciplines.
Nevertheless, improving the national government fiscal disciplines does not amount to zero
budget spending. So we hope that Vietnam will continue to follow effective fiscal strategies
to promote growth.
Particularly, we are of a view that maintaining financial support for the infrastructure
development plan in the fields of transport and power is critical. Infrastructure
development resources in these areas may come from Japans long-term and low-interest
ODA funding. Improving the government fiscal disciplines through effective use of ODA
resources is actually an efficient strategy. Moreover, as available public resources are
limited, making the best use of private funding is of great importance. Limitation by the
government of Vietnam to provide a guarantee for infrastructure projects implemented by
Project Finance and/or ECA (Export Credit Agency) loans such as JBIC loans will not only
delay the projects but may also seriously lower Vietnam's investment climate ratings. While
we are aware of the challenges the Government of Vietnam can face in executing its policies
to achieve both economic development and fiscal disciplines, we do hope that the
government maintains sufficient financial measures where needed.
Page 1 of 5
2. INVESTMENT CLIMATE DEVELOPMENT AND SUPPORTING MANUFACTURING FOR

DOMESTIC MARKET
Vietnam has a stable macroeconomic framework and is a powerhouse in the export of
assembled and outsourced products. Going forward, Vietnam will be entering a period of
achieving its goals for self-sustained economic growth by relying on domestic industrial
growth, with a policy focus on industrial development for domestic market. After the
economy bouncing back strongly in 2015, it turns out the balance of international payments
may become a barrier to economic growth. To make sure that the international payments
keep balanced, continued assistance for in-country supporting industries and development
of the investment climate to attract more foreign investment is necessary. Importantly,
policies that promote high efficiency industries and expand supporting industries will help
increase tax revenue and improve the current fiscal position.
(1) Investment Climate Development
Many Japanese investors hoping to join the picture as strategic investors may stand to
gain from the generation of new value and taking part in business ventures. Unlike
financial investors who intend to own at most 35% of shares with veto powers, whether
strategic investors (even minority shareholders at the start) holding more than 50% of
the shares may run a business or not is a vital point to look at when one considers his
investment options. We hope that the government seriously considers relaxing the
restrictions on the ratio of equity financing in state-owned enterprises and listed and
publicly traded companies. Furthermore, when a state-owned enterprise launches an
initial public offering (IPO), the initial gateway information that foreign investors have
access to is very important and needs to be improved both in terms of quality and
quantity.
(2) Automotive industry
By 2018, when automotive duty is banned within the ASEAN block, the local car market
will be under intense price pressure from the competition of automobiles imported
from Thailand and Indonesia. Meanwhile, given the local automotive industry is still
small scale and supporting industries are not yet strongly promoted, maintaining a
local automotive industry will be a daunting task. In case Vietnam cannot hold on to
manufacturing, part production will be very unlikely to survive.
The demand for automobiles will continue to grow along with economic development
and if policies for automotive industry development fail the balance of international
payments will suffer and in turn impede economic growth in the long run. The strategy
for automotive industry development was released last July but no detailed regulatory
instruments for implementation followed that. This prevents firms from starting to
prepare their production plans for beyond 2018. Time is running out and we hope that
the government will soon introduce specific policies.
(3) Housing development
Housing development, like the automotive industry, is a sector expected to bring
supporting industries related to chemical and steel products, which is efficient for your
country where many projects of steel and oil refinery are ongoing house related
industries, such as domestic appliances will also grow. Particularly for a young
developing country like Vietnam the demand is huge. Moreover, against the backdrop of
on-going robust urbanization, meeting the housing demands of middle-income earners
may support stable economic growth.
Page 2 of 5
Japan has significant knowledge of housing development, stemming from areas

destroyed during the war, so Japan-Vietnam partnership in this area will be vital. In
Japan, policies for providing housing to low-income earners and fixed, long-term loans
to buy houses for middle-income earners have proven their efficiency. We hope that
Vietnam will consider policy strategies for housing development for the middle-income
demographic - particularly the governments support, through banks, to provide fixed,
long-term loans.
(4) Universal development of modern retail business, with food manufacturing at the core
A large number of Japanese food companies have seen the attraction of a market of 90million people but are held back by the challenges that current investors face. There
are now more than half a million retail outlets and a large number of mid-sized
wholesale dealers in a very complex market. In small-holding stores merchandise is
not well organized. While modernizing the retail market will on the one hand put
pressure on traditional retailers, food manufacturers may bring more of their products
to consumers.
With regards to market entry by foreign retailers, we have a 3-pillar request: making
economic needs test (ENT) procedures and items transparent; adding transparency to
the oversight of police, food safety authorities and the master plan for the sector; and
establishing a timeline for inspections, the number of stores allowed to be registered
and an allowed percentage of excess registrations.
3. MAINTAINING INTERNATIONAL COMPETITIVENESS AND IMPROVING THE
MANUFACTURING INDUSTRY
It is important that Vietnam maintains the global competitiveness of its manufacturing
industry, including outsourcing and assembly business from FDI enterprises. As the 2018
deadline for ASEAN total integration is drawing near, and with increasing international
competition, domestic support for the local manufacturing industry to maintain its
competitiveness in terms of labor costs is needed.
(1) Minimum wage
Since Jan. 1, 2015, the regional minimum wage has increased by 14%, overwhelming
consumer price index (CPI) growth. We have learnt that the government has set a
target of increasing the regional minimum wage to VND4 million by 2018, with gradual
increases over the years.
We have no objection to Vietnamese people getting wealthier, and we also understand
that it is a necessary factor to increase domestic demand as discussed above. However,
the rise of labor costs in the outsourcing and assembly business is a concern. Rapid
and unexpected annual minimum wage increase will also weaken Vietnams
international competitiveness. What we want to say is listen to businesses.
(2) Restrictions on overtime work:
According to Article 106.2(b), the amount of overtime work is restricted so as to not
exceed 4 hours per day, 30 hours per week and 200 hours per year and the employer, if
in violation of this regulation, will be subject to specific, severe sanctions. However,
meeting production orders while fully complying with this restriction on the amount of
overtime work will force employers to increase the number of shifts, which will result
in a substantial increase in labor costs. Additionally, we understand that a significant
number of employees are willing to work longer overtime hours in order to receive
greater compensation for such overtime work. We are of the view that given both
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employers and employees agree, it is reasonable to allow them to increase the number
overtime hours, at least to a reasonable degree. We would appreciate it if the
Vietnamese government would review and reform its overtime work regulations.
(3) Clear explanation of the revised decree No. 20/2014/TT-KHCN on importing secondhand machines:
Some items in the decree related to the screening of second-hand machines have not
been explained yet. We are concerned about whether it is feasible to establish
appropriate written standards for appraisal to implement the criteria requiring secondhand machines have a certain proportion of remaining value. More specifically, as this
regulation covers a wide range of machines, we believe that thousands of detailed
standards for appraisal will need to be established which fully take into account the
nature, function and a variety of other aspects of the machine. We are afraid that the
implementation of this regulation under immature standards for appraisal may provide
authorities with wide ranging discretionary powers as to the operation of this
regulation. Such wide ranging discretionary power substantially harms the healthy
activity of enterprises. In the case such clear explanation cannot be written out in the
decree, we would then request a postponement of the enforcement of it.
4. IMPROVEMENTS TO DECREES RELATED TO THE OF LAW ON INVESTMENT AND LAW
ON ENTERPRISE
(1) Protection of the incentives given to investors (Law on Investment)
A draft decree to implement the Law on Investment provides that investors should
return any incentives to the state in a case where the investors have lost their eligibility
to enjoy the incentives. This is less favorable than the current decree to implement the
Law on Investment, particularly in the case where the investors are not at fault and the
investors met the conditions of eligibility for some part of the incentive's duration. This
provision in the draft decree should be deleted and it should instead include the
provision that the investors shall not enjoy the incentives any further in such a case.
Also, a grace period to continue enjoying the incentives, to allow investors to adjust
their projects, should be granted in a case where the investors are not at fault in having
lost their eligibility to enjoy the incentives.
(2) Protection from changes to the law (Law on Investment)
The new Law on Investment 2014 provides for the protection of incentives from changes
to the law only, however it should also provide for protection of lawful interests which
are not incentives from changes to the law, as the Law on Investment 2005 provides for.
We believe the Law on Investment 2014 should not exclude the protection of lawful
interests from changes to the law, as this has been granted to large scale BOT project
contracts in the past.
(3) 90 day deadline for charter capital contributions to LLCs (Law on Enterprise)
The Law on Enterprise 2014 changes the 3-year grace period for charter capital
contributions to LLCs, which is provided for in the Law on Enterprise 2005, and sets up
a 90 day deadline for charter capital contributions. If the procedure to increase the
charter capital is completed quickly there will be no problem. However, since in the
case of a foreign invested project, the charter capital should be noted both on the
Investment Registration Certificate and the Enterprise Registration Certificate, we have
a concern that registration of increasing of the charter capital may be delayed and
which would cause a delay to the disbursement of the additional capital which is
necessary for the businesses operation, such as ongoing construction of facilities for
the project. We would like to request the Vietnamese government to take the necessary
Page 4 of 5
measures so as not to cause delays to the registration of charter capital increases and
the amendment of Investment Registration Certificates under the Law on Investment
2014 and Law on Enterprises 2014.
5. RELAXATION OF THE CONDITIONS FOR ENTRY UNDER A VISA EXEMPTION
Following the amendment of the Law on Entry, Exit, Transit, and Residence of Foreigners in
Vietnam, entry of Japanese citizens into Vietnam has been restricted in some cases.
Previously, in the case of entering Vietnam under a Visa exemption, the record of a
Japanese citizen entering Vietnam without a Visa did not affect their ability to re-enter
under a Visa exemption even in the case that their last exit from Vietnam was less than 30
days ago. Now, any Japanese citizen who has such a record of staying in Vietnam is
required to obtain a Visa when they wish to re-enter Vietnam. This change to Visa
exemptions limits the opportunities for Japanese citizens who wish to visit Vietnam more
frequently for business or tourism.
As such, we request that the conditions for entry under a Visa exemption for Japanese
citizens be changed to allow them to enjoy the exemption, regardless of the time of their
last exit from Vietnam, as stated in the law prior to the amendment.
6. CONCLUSION
We are confident that the Japanese business community can contribute more to the
economic and industrial development of Vietnam, particularly if our recommendations are
taken into account in the governments policies. Meanwhile, we are open to further
discussion and consultation.
Thank you very much for your attention.
Page 5 of 5
Hanoi Young Business Association (HanoiBA)

BUSINESS SENTIMENT OF HANOIBA
Hanoi, June 9, 2015
Presented by
Mr. Tran Anh Vuong
Standing Deputy Chairman
A number of economic developments made during 2014, such as important policies on tax
and labor which become effective from 2015, shows a strong commitment from the
government in developing an investor-friendly business environment. Moreover, the
introduction of new Investment and Enterprise Law partly helps businesses in general and
the private sectors in particular, have clearer feelings of Government desire to change.
However, private sectors are somehow still not confident in the current business
environment.
Private enterprises are more and more interested in Corporate Social Responsibility (CSR),
and are actively investing in value-added and innovative technology sector with very little
support from the Government in the form of encouragement. Meanwhile, state enterprises
are getting more incentives exploring and exploiting land, forestry, minerals or constructing
large infrastructure projects. Currently, a large group consists of banks and financial
institutions, is attracting investment capital through the security market and real estate
market to focus on non-production activities and has no intention of reinvesting in
production and technological development.
Capital continues to be invested in the infrastructure construction and industrial sectors in
which the State holds interests, while the recent events show that the State enterprises
now do not create more jobs, but rather inefficient investment and even capital losses.
Many BOT infrastructure projects, though not 100% of the capital invested by the State, but
partly comes from State capital and partly comes from bank borrowings. In reality, it is
clearly noticed that State capital accounts for a large proportion of investment projects.
After completion of these projects, the state will charge businesses and citizens to recover
capital investment, which will create enormous cost burdens for businesses, reducing the
competitiveness of goods produced domestically.
Over the years, we realize that the government has been following a policy where the
largest finances are not used for production and creation of wealth to the society, but
instead poured into land, financial services, and gold and foreign exchange hoarding. We
believe that this policy needs changing. So we urge the government to quickly introduce
new forms of investment to ensure that businesses get equal access to finances through an
open, transparent and fair market.
Through our comments in this important VBF gathering, we want to shed light in the most
positive way possible on the policies that have been long awaited by businesses, and
hopefully will be introduced soon by the government.
Page 1 of 3
1. Putting quickly and pragmatically to life the positive new rules of the Science and
Technology Law. The role of businesses is so frequently mentioned as a unifying thread in a
law that seems to be not so much related to businesses Science and Technology Law No.
29/2013/QH13. The law shows major changes in awareness toward a business-centered
approach in the development of science and technology in Vietnam.
But to translate this law into real life and meeting the needs of finances for science and
technology, mobilizing ODA funding or innovations funds for national science and
technology development, it is essential to have a step-by-step procedure which is both
simple and logical. At the same time, the government needs to put in a sustainable and
large enough amount of funding in this process. Two years into the existence of the law
(June 2013 June 2015), despite the introduction of various implementing documents and
supportive mechanisms, the resources available to support science and technology
development do not seem to find a reliable address. This again is wearing thin businesses
trust in the governments new policies.
2. Encouraging investment in supporting industries and defining the key role of
supporting industries. Policies for development of heavy industry (cement, steel, mining,
etc.), automotive industry, textile, among others, and recently agribusiness and rural
development have not been as effective as they should be, with some of them even deviate
from the goal of promoting industry development. Meanwhile, supporting industries a
pivotal pillar of an industrial economy and one that looks like it is tailored to promote the
involvement of small and medium enterprises (SMEs) and private companies, with so many
past success stories (Japan, Korea, Taiwan and China) have not been recognized for the
important role that is has, and it takes too much time to have a law of its own. Like many
other sublegal documents for the Science and Technology Law that help bring it to life, a
dedicated Decree for supporting industries has not seen the light of day even though
multiple drafts versions have been produced. We urge that this Decree is released as soon
as possible, and propose the following points to be concentrated on:
a) Development of craft villages and household businesses to become outstanding
supporting industry units, based on their experience, established track records and
understanding of the market and industry;
b) Creation of more industrial clusters at small and medium sizes; encouraging new,
innovative and fledgling businesses to invest through formalized incentives and some
venture capital from the governments funding; Giving preferences to start-ups,
especially joint venture companies with foreign and domestic partners equity, capital
investment, imported technologies, and in the long run, naturally handed over
production and governance technologies;
c) Consolidating specific businesses referred to in (a) and (b) above through incentives for
relocation, M&A, and so on, to create a network of supporting technology firms with
good experience, innovation, passion and dedication, and ones that take bold steps in
investment;
d) There is a need for the governments investment funds that are robust enough to invest
in small and micro companies that set out to build their own factories.
The countrys limited resources should be allocated among many areas and smaller sized
businesses, instead of focusing on a few mega-sized groups of companies, leading to
imbalance. The fall of just one of these large firms may entail devastating effects on the
entire economy.
Page 2 of 3
3. Poor enforcement resulting in unhealthy competition. For a number of conditional

lines of business, including special investment sectors such as insurance, banking or key
manufacturing industries like car making and so on, an enabling environment is vital. These
are often industries that are more profitable than others. Poor audit and inspection,
however, may lead to unqualified businesses slipping through by lowering costs and
unhealthy competition ploys. That happens at the cost of complying companies.
On the other hand, there are some overly restrictive rules deter smaller firms, such as
rulings on environment and fire control. Having in place systems that meet the existing
rules will be very costly, sometimes as much as billions of dong. Reasonable policies from
the government are highly recommended, especially to help small and medium firms to
grow.
4. Tertiary and vocational education. While the Tertiary Education Law No. 08/2012/QH13
that came into effect in 2013 gave autonomy to academic institutions, after two years it is in
existence, most public universities have not changed much through this policy.
From a businesses perspective, tertiary and vocational education is the main source of
human resources supply for firms. Despite some limited advancement in raising the skills
and competencies of graduate students, the pace is not as expected, and the quality of
graduates is still not good enough. Most graduate students are unable to start work
immediate even in the jobs they are trained to do. This situation of human resources quality
leads to a fact that Vietnams productivity will not go up, and as a result, it will lower the
countrys labor-related competitiveness edge.
Closing
There are just less than six months of this year of integration, but most small and medium
firms do not seem to be well prepared for the journey, as they try to passively adjust rather
than making conscious steps for integration or turning their attention to how to protect the
local market from the influx of imports. Meanwhile, having to confront protective barriers
from very close by markets in the region will make the market, even though as liberalized
as it may be, to be hard to get access to, become counterproductive, and even scaled-down
when local markets are shared.
Again, we want to stress that private companies, especially small and medium firms, are
feeling the challenges more clearly than ever as 2015 is determined as the year of
integration with a variety of bilateral and multilateral agreements to be concluded and
come into effect, including the ASEAN Economic Community (AEC) or Trans-Pacific
Partnership (TPP).We hope that the government listens to the business community as a
whole and small and medium enterprises, and provides the best support available for this
group to grow and become a reliable backbone for the countrys economic development.
We look forward to having the support and cooperation from both regulatory agencies and
donors.
Page 3 of 3
INVESTORS FEEDBACK
Hanoi, June 9, 2015
Prepared by
Mr. Sigmund Stromme
Chairman Nordcham HCMC
Government leaders, business representatives, ladies and gentlemen, The Nordic
Chamber of Commerce Nordcham, appreciates this opportunity to share its views on
the business climate in Viet Nam.
As a small Nordic business community with a long history in Viet Nam we would like
to share our view on s few specific areas which Nordic investors focus on.
POWER AND ENERGY
The government has done a good job in ensuring sufficient energy through 2014/15,
however Nordcham members are quite concerned about the uncertain outlook of power
supply especially information put out by authorities responsible for energy about
expected shortages in the south of Vietnam in early 2015.
In order to bolster renewable energy, we support the creation of an attractive
investment environment for these sectors. As such, we back the recommendations put
forth by MOIT consultants, which call for an increase in the FIT level for wind energy
and simplification of application process. As well as MOIT with FIT for the Standard
Power Purchase Agreement for Biomass plants and waste to energy.
EVN continues to run at a loss and electricity costs remain the lowest in the region. This
limits both direct investments in grid infrastructure and energy efficiency efforts by
customers. It is suggested to continue the adjustment of energy tariffs as well as
improvement for a sustainable power sector development in Vietnam, and for MOIT to
prepare a road map of Retail Power Pricing to 2020 with a vision to 2030. This will enable
EVN in restructuring and becoming more profitable following international practices, hence
will open access to private investment both domestically and internationally, and will
stimulate greater energy efficiency efforts from end use customers.
WATER AND ENVIRONMENT
Water quality, flood protection and waste water management continues to have an impact
on Foreign Direct Investment planning and costs for Vietnam. Municipal water and waste
water control projects continue to fall behind with negative impact on our environment.
Noting the high risk of climate related disasters in coastal, low-lying areas, and urban
flooding in Vietnam, continued efforts at mitigation and adaptation are needed. Progress is
notable in some areas, but the challenge is serious and needs attention. Recent
improvements in the PPP and BOT legislation have been positive, but will are behind on PPP
and BOT structure similar to other ASEAN countries to attract private investments.
LABOR AND HUMAN RESOURCES
The Vietnamese workforce is young and dynamic, even compared to other Asian
countries, and is one of the main and important assets of Vietnam, which can stimulate
further foreign investment.
Page 1 of 3
Many of our companies have difficulties in recruiting skilled workers and also engineers.
We believe it is necessary for the authorities to focus and invest more in education,
particularly vocational schools and engineering, in order to upgrade the knowledge and
standard of the workforce.
As to foreign experts that are needed in the initial phase of the establishment of new
investments, it should not be made to complicated, as they are needed for a proper
technology transfer. For the Nordic companies we believe that the cost of bringing in foreign
nationals will anyway limit their use, to only the period the investors judge it feasible.
LOGISTICS/TRANSPORT/PORT SITUATION.
Many of our member companies are still experiencing great problems due to increased
transport and logistics cost as a result of port congestion and lack of handling capacity in the
major Vietnamese ports. In order for Vietnam to remain competitive compared with its
neighboring countries it is important to improve the cargo handling capacity and cost.
Present ports need to be improved and new ports need to be built, this applies both
for container terminals and bulk-steel cargoes. We recommend that in order to
accelerate investment in this important sector the policy is eased to allow 100% foreign
shareholding in transport and port investment projects.
We would also recommend that the relocation of main ports out of HCMC center is
accelerated to transfer the cargo flow to more transport accessible and cost efficient
deep sea ports in Ba Ria Vung Tau province.
The new trucking rules regarding maximum weight trucks can carry have sharply
added transport cost and are quite different from international standard. Furthermore
the rules and regulations are continuously changed/amended making difficult to even
follow what the current regulations are. We agree that maximum weight has to be
applied, and we do in general fully support this new measure, however it is today
not always applied equally between ports and regions. Furthermore a fully loaded 20
feet container can be transported on a 20 feet trailer in loading ports around the
world, but in Vietnam it can now only be transported on a 40 feet trailer. We
therefore suggest that relevant rules and regulations are modified to apply international
standard so that particularly containers can be transported in a more efficient and safe
way.
Finally we have noted that as per WTO commitment as from January 2014 foreign
companies should be able to operate in the logistic field as fully foreign invested
companies, however the regulations on how to apply the new rules have not been issued
and the People Committee of HCMC has suspended the issuance of new investment
license for foreign logistic companies and amendments to existing license until receiving
clarification/guidance from MPI.
We recommend that comprehensive regulations are issued without further delay enabling
foreign companies to make needed investment in the logistic field, which will make the
logistic services more competitive and reduce exporter and importers cost.
ONE-TIME LICENSING
Reference is made to the new Circular 35/2014/TT-BCT of MOIT dated October 15th,
2014 regulating automatic import license applicable to fertilizer.
Page 2 of 3
Outstanding problems/obstacles
Company now have to apply every time for a one-time license for each lot of
fertilizer imported, small or big. Since company already has business license of
importing and trading fertilizer in Vietnam. This requirement only adds
complication to the actual process.
There is an additional requirement for issuing that one-time license which is to have
a confirmation from a specific bank at the time of the importation. It is unreasonable
as companies are uncertain what bank they will select for payment to supplier at the
time of importation; most supplies are on credit with the support of mother
companies. The final choice of bank depends on the competitiveness of banks and
exchange rates when payment to supplier is due.
Proposal for solution
Not apply one-time license requirement to companies that already have import
rights in their business license.
Waive the requirement for confirmation letter from the bank in order for companies
to obtain permission to import fertilizer to Vietnam.
LEGAL FRAMEWORK FOR FOREIGN INVESTORS
In a recent legal case where the Appellate Court of the Supreme Peoples court of Ho
Chi Minh City revoked an investment certificate from 2007 related to the Conversion of
Ba Ria Serece port Co from a joint venture to a joint stock company, and furthermore an
transfer of shares in 2010 from one foreign shareholder to another, both of which are
our Nordcham members. The claim was filed by one minority Vietnamese 10%
shareholder against the People Committee of Ba Ria Vung Tau and its Department of
Planning and Investment DPI. All shareholders had agreed and signed on the relevant
company decision to convert from J/V to STC, but some details in the new charter was
not agreed to by this shareholder. The company has 70% foreign shares and 30 %
Vietnamese shares and is operating the most successful port and profitable Port the Ba
Ria Vung tau area. With the decision by the court 8 years after conversion and 5 years
after a share transfer the company now has undefined legal status as this is
unprecedented, and there is no legal clear guidance about how the company can now
function/operate. To have an investment certificate revoked after such a long time,
seriously affecting the operation of a successful company, is a great concern to the
foreign shareholders who also have other large investments in Vietnam.
From NordChams perspective, our members are confident about their investment in Vietnam
which is based on a long term view. Several new Nordic companies have increased their
present investments and new companies have been established during the past year.
We appreciate this opportunity to participate in the Vietnam Business Forum and thank
for this opportunity to exchange views and enhance understanding between the
Government of Vietnam and the business community.
We wish good health to the Minister, representatives of business associations, and the
diplomatic corps, and all the representatives here today.
Thank you.
Page 3 of 3
Section II
TRADE, TOURISM AND

INVESTMENT
Main discussion topics:
Issues of implementation of new
Laws on Investment, Enterprises,
Immigration, Residential Housing
and Real Estate Business
Investment and Trade
Report from Investment and Trade Working Group
Vietnam Business Forum, 2015
REPORT FROM INVESTMENT AND TRADE WORKING GROUP
Presented by
Mr. Fred Burke
Investment and Trade Working Group
On behalf of the Investment & Trade Working Group, we wish to present the following
issues for consideration. Some of these issues have already been the subject of Working
Group meetings and stakeholder consultations, and much progress has been made in
certain areas. Please forgive us for using our valuable time to focus on the issues that still
need more work.
1. ARBITRATION
The first major issue we would like to raise is the issue of recognition and enforcement of
arbitration awards. We raised this issue one year ago and there have been at least two
stakeholder workshops which have collected data and provided some preliminary
assistance to the legal community. However, for the situation we face in terms of the poor
record of recognition and enforcement of arbitration awards remains basically unchanged
and much more needs to be done.
a. Status
Although reliable statistics are hard to come by, it seems that the majority of arbitration
awards, whether they are from foreign or domestic arbitration organizations, are not
respected by the courts of Vietnam. They are dismissed, often for spurious technicalities
that appear to be driven by prejudicial attitudes, a misinformed understanding of the
concept of arbitration or in some cases undue influences. Specifically, according to
statistics provided by the Vietnam International Arbitration Centre ("VIAC"), 19 out of 44 of
its awards submitted for recognition and enforcement were set aside in 2014. This means
almost half of the awards challenged were set aside. This compares unfavourably to the
statistics in other countries, as presented in our stakeholder meeting (see below).
Vietnam has done a lot of good work to build the legal framework for arbitration is an
important supplement to the judicial system and one that has been a crucial factor in
attracting foreign investment trade and investment over the years. Vietnam joined the 1958
Convention on Recognition and Enforcement of Foreign Arbitral Awards inSeptember, 1995.
Its most Law on Commercial Arbitration was adopted in and was a significant improvement
on the prior decree. Other laws and regulations support the operation and implementation of
arbitration proceedings the enforcement of arbitration awards.
Notwithstanding all this good work, it seems that one crucial link in the chain is still
missing. Specifically, judges in Vietnam often misunderstand most basic principle of
arbitration, which is based on the contractual agreement between businesses to submit
their disputes to a certain form of expedited, simplified dispute settlement. On the contrary,
Vietnamese judges apply highly technical procedural standards to arbitration awards that
are simply not appropriate. These judges second-guess the decisions of qualified
arbitrators, who often have specialist expertise which they apply to their serious
deliberations of the issues presented for arbitration. What is most frustrating is that when
these judges disregard the arbitrators, considered awards, they do so without providing any
opportunity for appeal and very little transparency.
Below is a slide from the April, 2015 Working Group meeting on arbitration issues
summarizing the implementation of the New York Convention to date.
Page 1 of 10
Typically, judges set aside arbitration awards (that would be valid in any other jurisdiction)
on spurious procedural grounds. The two most popular excuses for not respecting an
arbitration award are:
a) claiming that the arbitration procedure failed to follow strictly the procedural provisions
of the Civil Procedure Code, when more flexible procedures relevant to arbitration
proceedings should be valid and recognized; and
b) (b) claiming that the arbitration award somehow violates the "fundamental principles of
Vietnamese law".
b. Issues
In both cases, this approach is inconsistent with Vietnam's treaty obligations under the
Convention.
i. Procedural Standard
On the first point, it is a fundamental principle of our arbitration each party have notice
of the proceedings and have an opportunity to be heard in them. If it does not, then the
arbitration award may be set aside by a court of competent jurisdiction. However, a
technically deficient power of attorney is irrelevant if the party in fact had notice, did
appear and participate in arbitration. Arbitration is meant to be a flexible procedure
without having to invoke the time and expense of applying the evidentiary and
procedural rules that would apply in a judicial setting. This is part of the appeal of
arbitration globally, and it is why it can be an effective and efficient supplement to the
judicial system. Parties agree as a matter of contract to submit their disputes to
arbitration and, when doing so, they stipulate the rules of arbitration apply. Whether
the arbitration organization is the Vietnam International Arbitration Centre, the
Singapore International Arbitration Centre or an institution in London, Geneva, New
York or elsewhere, they all follow the same principle, which is that dispute resolution
by arbitration is a contractually agreed process that doesn't necessarily require all the
same procedural trappings that litigation does.
Page 2 of 10
ii. The "Fundamental Principles of Vietnamese Law" Exception

Second, on the issue of what are the "Fundamental principles Vietnamese law", we
acknowledge that this standard varies from one country to another. In all countries, a
contract for slavery would be invalid, while in another a contract purporting to waive
workers' rights in terms of overtime requirements or waiver of statutory benefits would
be deemed to constitute a violation of "fundamental principles" and would not be
enforceable notwithstanding an arbitration agreement recognizing it. But in Vietnam, it
seems that courts take the position that anything that is not entirely compliant with
Vietnamese administrative requirements and consistent with the outcome that would be
reached under Vietnamese law somehow violates quote "fundamental principles". For
example, in one recent case, a well considered arbitration award was set aside on the
basis of the "fundamental principle" that they contract had been denominated in a
foreign currency in violation of Vietnam's foreign exchange regulations requiring that all
contracts be denominated in Vietnamese dong.
It does not help in developing a jurisprudence of what "fundamental principles" are that
court decisions in Vietnam are nearly impossible for the public or the legal community
to access, so they rely on anecdotal information.
These failures are seriously undermining investor confidence in Vietnam's legal system.
Without a backstop to enforce contracts, none of the laws of Vietnam has worked so
hard to put into place mean anything. In order to begin to address this problem, we
respectfully propose the following preliminary steps which, among others may start us
in the right direction of improving the situation.
c. Proposals
To address these issues, we suggest the following measures:
i. Inspection and Assessment
First, we recommend that an appropriate body be charged with the authority to review
the cases that have been set aside for legal soundness, as well as to check to ensure
that no undue influence has affected any of the cases that have been decided against the
enforcement of the arbitration awards.
ii. Transparency
Second, there should be more transparency in the system. There should be public
information available regarding the number and substance of cases submitted for
judicial recognition and enforcement. The result of those applications should be
published along with the judicial reasoning underlying them. Currently, these records,
although they are supposed to be public, are not.
iii. Skills Training
Third, because at least some of the arbitration awards may have technical deficiencies
in them, more should be done to strengthen the arbitration skills of Vietnam's
arbitrators and its key arbitration institutions. This is an area where technical
assistance in years past has been lacking and more should be done in terms of focusing
technical assistance efforts going forward to ensure that Vietnam can reduce risk for
investors and traders and maintain competitiveness in its increasingly integrated
economy.
Page 3 of 10
iv. Appeals
Fourth, while the grounds for appealing an arbitration award should be very narrow and
strictly applied, there should be a special appeal mechanism for judicial decisions that
set aside arbitration awards on spurious grounds.
Although part of the purpose of arbitration is to cut short time-consuming and
expensive process litigation, when it comes to recognition and enforcement of
arbitration awards, the current procedure is manifestly unfair and its application
requires some sort of appeal in order to encourage better behavior at the initial review
level. If it would take too long to amend the law or issue a decree correcting it, we
suggest that the State Inspectorate or other some other supervisory authority be
delegated to check to ensure that no undue influence has affected any of the cases that
have been decided against the enforcement of the arbitration awards. In any case, there
should be some recourse or the absolute power currently enjoyed by the first court will
be too tempting to abuse.
Other measures would no doubt be welcome but these are the four most immediate
measures that we can suggest to improve the system. This is urgent work and needs to
be done soon before too many more bad experiences destroy Vietnam's reputation as a
country that takes seriously the concept of the rule of law and the concept of party
autonomy in selecting the mechanism that enterprises prefer to use to resolve their
commercial disputes.
2. ENTERPRISE LAW ("EL") & INVESTMENT LAW ("IL") IMPLEMENTATION ISSUES
a. Investment Certificates and Business Registration Certificates
In our recent stakeholder meetings regarding the implementing decrees for the amended
Enterprise Law and Investment Law, our members were told that the new licensing
requirements would be simpler and more efficient than under the previous rules even
though they will be required to get two documents with different applications as compared
to the former system which only required either an investment Certificate or a Business
Registration Certificate. Now, investors are required to get both an Investment Certificate
and a Business Registration Certificate.
Can you please explain how doubling the paperwork is consistent with the important policy
to reform administrative procedures? We don't understand why a single application form
cannot suffice to apply for both applications since each authority checks informally with the
other already. We also do not see any real efficiency arising out of the new two step
procedure. We are hopeful that promises that it made about greater efficiencies will come
true.
b. Conditional Investment Sectors
We're also concerned that in the very many areas where foreign investment is subject to
conditions, the conditions have not yet been worked out and therefore there may be
obstacles to foreign investment. The IL compiles a list of 267 conditional business lines
from numerous existing international treaties, laws, ordinances and decrees. The
implementing decree of the IL must clarify what laws would prevail if there is a discrepancy
between the IL (and its implementing decree) and the specific laws. Also, if there are
changes to any of these 267 conditional business lines, it is important to identify what laws,
the IL or the specific laws, will enact such changes? Also, We assume that the authorities
will continue to have discretionary authority to approve investment projects on a case-bycase basis even where there subject to conditions. Can you please confirm that?
Page 4 of 10
c. The relationship between charter capital and contributed capital

Under the new IL and EL, the charter capital and contributed capital are two different
concepts, where charter capital is contributed by an investor to establish the legal entity,
and the contributed capital is contributed by the investor to implement an investment
project. The charter capital must be contributed within 90 days from the establishment of
the legal entity, whereas the contributed capital can be contributed as required in
accordance with the progress of the investment project. This distinction is great, in the
sense that the investor will not be required to contribute the entire contributed capital
within 90 days.
However, the legal entity is established in order to own and operate the investment project,
and it is unclear how these capital amounts relate to each other on the various important
documents of the legal entity, including the Investment Registration Certificate ("IRC"), the
Enterprise Registration Certificate ("ERC"), and its balance sheet and financial statement.
Does it mean that after each phase of contributed capital is paid, the legal entity would need
to amend its ERC to reflect the increased charter capital? (We think it should, as the nature
of these two amounts are equity from the investor). From a banking regulation perspective,
shall commercial banks base themselves on the IRC to allow contributed capital to come in,
or on the charter capital amount as under the current law and practice?
If IRC and ERC co-exist for a legal entity that reflect 2 different equity amounts, would M&A
transactions be conducted to sell the charter capital under the ERC, or the contributed
capital under the IRC? This question becomes a little uncertain under the new laws. As
such, we see the need for the charter capital and contributed capital to be reconciled and
consistent, so that they actually reflect the equity amount that has been paid by the foreign
investor. This link still is missing in the implementing decrees of the IL and EL. We hope
that the pending implementing decrees (due out before this Forum) will clarify these points.
3. DRAFT CIRCULAR ON IMPORT OF USED EQUIPMENT
We held two stakeholder consultations on Circular 20/2014/TT-BKHCN, which is intended
to replace suspended Circular 20/2014/TT-BKHCN that became effective on September 1,
2014 Imports of Used Machinery, Production Lines and Equipment.
Draft Circular No. 20/2014/TT-BKHCN that is to take effect on July 1, 2015 purports to
encourage imports of new machinery, equipment and production lines that are
manufactured with the latest technology, presumably to enhance economic growth and
development. At a public consultation in Ho Chi Minh City on March 17 , 2015, Director
General Mr. Do Hoai Nam of the Department of Technology Auditing, Examination and
Assessment of the Ministry of Science and Technology explained that, in addition, there was
great concern that Vietnam would become a dumping ground of old technology and scrap
machinery due to a new decree or regulation in China that prohibited imports of used
machinery and equipment. He expressed the view that the draft Circular was a measure
necessary to avoid this problem in Vietnam.
th
According to the strong consensus of the enterprises attending, regrettably, the new trade
restrictions in the draft Circular are likely to have an effect opposite to that intended. A practical
example: progressive dies or other specialized new tooling and high-tech controls items are
used with multi-ton and multi-year capital equipment such as, stamping presses or machine
tools in many industrial applications. While the dies, specialized tooling and computerized
controls items may be new, the presses and machine tools in which they are used have useful
lives of many years, well exceeding the arbitrary limits of 10 years or, an arbitrary and
impractical remaining quality of 80% or higher standard stated in the draft Circular.
Rather than enacting a new restriction on imports, the goal of encouraging imports of
Page 5 of 10
manufacturing equipment for high technology industries is better served by providing new
duty and tax incentives for investment in such new equipment and technologies.
The restrictions in the draft circular will actually discourage such investments and imports
because of likely unintended coverage of long-term capital equipment, parts and
accessories, due to the broad scope of the Harmonized System customs classification
codes involved that are listed with the draft Circular. The consideration of slowing or
limiting transfer of useful high-technology manufacturing equipment to Vietnam is
particularly applicable to machines and equipment used for semiconductor, automotive, flat
panel, optical and solar cell industries.
This is because it is faster and more cost-effective for an investor to obtain high-quality
used manufacturing machines in these industries, often moving equipment from existing
factories in another country, for example, from China, Mexico, Costa Rica, Malaysia,
Thailand, Korea, Japan, the U.S. or EU, than to order new equipment because of long lead
times for highly specialized equipment and the significantly greater expenses involved.
The new draft Circular is also intended to ensure that such goods meet requirements of
quality, safety, energy saving and environment protection. However, instead of enacting new
trade-restricting measures, a better approach that involves modernization and
enhancement of existing compliance regulations and their enforcement by regulatory
agencies through up-to-date implementation of international standards and electronic
processing of administrative procedures is recommended. Such an approach will be in
keeping with international trade agreement requirements for implementation of the
National Single Window by Vietnam.
The new draft Circular mandates a new Pre-Shipment Inspection requirement for a Quality
Inspection Certificate, to be a condition of importation and customs release of used machinery,
production lines and related accessories and parts. This new administrative measure is not in
keeping with the priorities announced in Prime Ministers Resolution No. 19 for 2015 because;
it will increase customs clearance times and add administrative burdens for business and trade
stakeholders. In addition, the arbitrary standards of either a 10-year machine life or 80% of
useful life are not international standards, according to industry experts and quality inspection
and testing services. As a result, the new measure appears to be inconsistent with the WTO
Agreement on Pre-shipment Inspection (Article 2(4) Standards) that is part of GATT 1994. The
new measure also appears to be not in accord with the WTO Agreement on Technical Barriers
to Trade (Article 2) that is also contained in GATT 1994.
As a result, enterprises participating in the consultation sessions recommended that the
restrictions on imports of machinery and equipment contained in the draft Circular be
abandoned, while new administrative procedures to ensure compliance with international
standards of safety, energy savings and environmental requirements be simplified and
incorporated into the National Single Window project.
In sum, we believe that rather than enacting new restrictions on trade, concerns about
Vietnam becoming a dumping ground of old technology and scrap machinery are best
addressed on a case-by-case basis, through enforcement by the General Department of
Vietnam Customs and other relevant agencies of existing laws and measures that involve
antidumping, subsidies and countervailing measures, appropriate customs valuation of
imports and prevention of customs fraud with such imports. These are the appropriate tools
provided for in international agreements and in Vietnams implementing legislation to
prevent unfair trade and other unlawful import practices.
Page 6 of 10
4. NEW DRAFT CIRCULAR ON FOOD SAFETY OF IMPORTS (THE DRAFT)

We are concerned that the Draft new Circular on Food Safety results in unnecessary and
onerous new administrative procedures that are inconsistent with the Government's efforts
to streamline the administrative environment.
a. Inspection Methods
i. Compliance incentive reduced: First, the number of inspection methods reduces from
4 to 3, which reduces the flexibility in inspection compliance. The current systems of 4
methods, which sets forth various eligibility criteria (e.g. food of low risk, certified by
third party in exporting country), facilitates higher compliance incentives of importers.
The Draft has eliminated most of these criteria;
ii. Possible discrimination and further delay in customs clearance: Under Decision
No.23, GMP/HACCP qualified food is only be subject to sensory inspection of
representative samples. Now, under this Draft, GMP/HACCP qualified food is subject
to sensory inspection of the whole consignment, and also subject to further testing if
the inspection agency detects any sensory suspicion. GMP and HACCP are food safety
management systems that are internationally accepted methods to control the food
safety. New regulations may provoke:
Further controversy regarding national treatment principle as compared with similar
GMP/HACCP qualified food produced in Vietnam;
Delay in customs clearance procedure, which contradicts current reform in customs
management as implemented by the new Law on Customs;
iii. MFN Inconsistency and substantial restriction in scope of imports eligible for Dossier
Inspection (Method of Reduced Inspection): In addition to imports mutually recognized
under mutual recognition agreements, only imports that have qualified for 5 consecutive
Normal Inspections that have conducted in 1 year time are eligible for Dossier Inspection.
This means that only imports that are imported into Vietnam more than 5 times a year are
eligible for this inspection method. Such a regulation is de facto inconsistent with the MFN
principle when establishing discrimination between imports from larger vs. smaller traders.
Such a regulation also slows down the customs clearance process as the number of
imports subject to Normal Inspection is increased.
b. Inspection Duration
Though, the timeline is more clearly defined, the actual time for a consignment to be
released will be longer. Particularly, for Dossier Inspection, the current duration for
receiving the Notification is only 2 working days since arrival date, while, under the Draft, it
may take up to 4 working days since arrival date to receive the Notification.
c. Notification Issuing Authority
There is inconsistency in regulating the Notification Issuing Authority. Pursuant to Section 3,
Article 11 of the Draft, VFA and local divisions of VFA are entitled to issue the Notification of
Food Safety Qualification / Non-Qualification. However, the Draft only provides the jurisdiction
of VFA under Article 20 of the Draft without providing any jurisdiction of local division of VFA. As
such, pursuant to Section 1, Article 20, only VFA is entitled to issue the Notification.
Such a new regulation is a big step backward against the administrative reform. Under the
current regulations of Decision No.23, an inspection agency assigned by VFA is entitled to
issue the Notification. Now under the new regulation of the Draft, the inspection agency is
only allowed to conduct the inspection, and then it must submit the inspection result to the
Page 7 of 10
VFA. Only VFA is entitled to issue the Notification. Turning one step into two steps obviously
doubles the possibility for obstructionism and error.
Taking into account the volume of food importation, actual delay shall occur during
implementation and this will drive up the cost of food products for consumers in Vietnam. In
such event, the inspection timeline set forth in the Draft will predictably be violated constantly,
and unreasonable burdens will be imposed on importers. This new regulation also creates
pressure on the current staff of the VFA due to sudden surge in workload, and results in
unnecessary demand of recruiting a larger number of civil servants to secure the timeline,
which contradicts the reform policy of personnel reduction in governmental organizations.
5. TAX ADMINISTRATION
According to most international surveys, Vietnam remains a difficult place to do business.
For example, in 2015 a World Bank "Ease of Doing Business Survey" ranks Vietnam 78 out
of 189 countries, a slip of 6 places from 2014. When compared to Vietnams GDP ranking
(52 ), Vietnams is clearly lagging in terms of ease of business.
th
nd
According to this Survey, by far the biggest problem in the ease of doing business ranking is
tax, where Vietnam ranks 173 out of 189 countries, slipping 2 places vs. 2014.
When it comes to "paying taxes" (the administration of tax payment and audits) Vietnam
ranking was lower than every other country in Asia and the Asia Pacific.
Surveys such as these are not the only source of information regarding the poor state of
Vietnams tax administration system. Members of the Tax and other Working Groups
regularly provide accounts of the burden of tax compliance; drawn out audits, illogical postaudit assessments, such as requiring importers to pay VAT twice on the same import
transaction; and appeals going unresolved well beyond the statutory 60 day period because
the local and central governments are not aligned.
Page 8 of 10
Interestingly the major problem with Vietnams tax is not the base CIT tax rate (currently
22%), where Vietnam ranks in the top half of countries. Additional taxes such as VAT, and
mandatory employee-related contribution drive the total tax as % of net profit to over 40%.
However the vast majority of business complaints relate to the cost and time of compliance
and the lack of predictability, simplicity and transparency in tax policy and enforcement.
This gap has a silver lining, it suggests that perhaps the most significant step the
government can take in attracting investment (and increasing the tax base) is improving tax
administration. The reverse is also true: Failing to improve tax administration forces
Vietnam to focus on reduced rates as a means of proving its tax friendly credentials and
attracting investment. In other words, failure to reform is negatively impacting revenue
collection because both the base (fewer investors) and the rate (lower rates to encourage
investment) are lower.
We urge the government to make tax reform a top priority for improving the business
environment and driving economic reform and growth. Reform initiatives should begin with
a publically communicated reform plan which would include the following:
A list of KPIs related to ease and cost of compliance, and transparency and
predictability of tax policy.
This list should include deadlines and the parties accountable for meeting them.
The list of disallowed deductions should be substantially reduced.
More resources should be devoted to helping tax payers file correct returns in the first
place, rather than catching them out on their errors in the audit process.
A tax website should report on the most frequent mistakes discovered in post-audit
assessment along with recommendations to help companies avoid such mistakes in the first
place. Help lines and web-based guidance should be introduced to help willing taxpayers
comply with the law and avoid disruptive and even devastating enforcement cases.
Tax offices should be required to required to receive appeal submissions regardless of
their form and both the submitting party and the tax official will sign a copy of that
appeal. Tax officials will have the right to request these appeals be corrected if
needed, but they shall be responsible for noting the time the appeal was submitted.
This will prevent the tax authorities from circumventing the 60 day appeal requirement
by refusing to accept the appeal.
Local tax offices should be required publish the average periods from initial appeal to
resolution.
6. DRAFT COSMETIC MANAGEMENT RULES
Our members are also concerned about the proposed circular currently being drafted by
the Drug Administration of Vietnam (DAV) that would provide detailed guidance for the
management of the cosmetic industry in Vietnam (Draft Circular). The Draft Circular,
which would replace Circular 06/2011/TT-BYT, On Providing Cosmetic Management of the
Ministry of Health, would require that cosmetic manufacturers declare certain details
regarding their products with the DAV in order to obtain notification numbers that would
then have to be printed on the packaging of the cosmetic products they produce
(Notification Number). 1 As discussed below, we believe the Notification Number
requirement is unnecessary and burdensome, and hope that you will consider alternative
measures that meet the legitimate regulatory purposes of the Draft Circular, without
adversely effecting the cosmetic industry or Vietnamese consumers.
Article 23 of the Draft Circular.
Page 9 of 10
Why should the Notification Number requirement should be removed from the Draft
Circular before it is promulgated?
a. Inconsistency with the ASEAN Community Objectives
The Notification Number requirement does not currently exist under either the ASEAN
Cosmetic Directive ("ACD") or Decree 89/2006/ND-CP regarding the labelling of goods. As
such, this new requirement risks undermining the important ACD objective of harmonizing
technical regulations across ASEAN member states as part of creating a unified ASEAN
Economic Community by 2015.
b. No Positive Effect for Consumers
The Notification Number requirement does not benefit consumer safety or provide
consumers with additional product information. Under current ACD requirements,
cosmetic manufacturers must provide notification and self-declare regulatory compliance.
The manufacturer then is fully responsible under law for the safety and quality of all
products it places on the market.
The Notification Number requirement would not grant consumers any additional protections.
Instead, the Notification Number requirement may cause consumers to mistakenly believe that
the safety and quality of the cosmetic products they purchase have been approved by
Vietnamese authorities when they see notification numbers printed on cosmetic products.
c. Product Traceability not Improved
We appreciate that the DAV inclusion of the Notification Numbering requirement in the
Draft Circular is intended to improve product traceability. However, international practice
shows that post-market surveillance is the most effective way to ensure product
traceability and compliance with quality and safety regulations for cosmetic products. Upon
request, we can provide you with information from cosmetic industry associations of other
countries or regions which show the ability of these measures to provide effective
traceability without harming the industry or consumers.
d. Manufacturing Costs Increased and Consumers Disadvantaged
The Notification Number requirement would considerably increase the cost and complexity
of production for cosmetic companies whether they import goods from abroad or produce
them in Vietnam. This will increase prices for consumers, slow the pace of innovation and
place the Vietnamese economy at a competitive disadvantage within ASEAN and globally.
In practice, the Notification Number requirement would increase manufacturing costs by
requiring that packaging be discarded and replaced whenever there is a change in
notification numbers following changes in any of the notification information. The
Notification Number requirement would also result in delays to production, increased
supply chain complexity due to the different packaging required for the same products
produced at different locations and other unforeseen consequences. In a large part, the
costs created by these manufacturing challenges will increase prices for consumers while
reducing consumer choice.
For these reasons, we suggest removing the requirement to print the Notification Number
on the product packaging from the Draft Circular.
We acknowledge and appreciate the great efforts that the Vietnam Ministry of Health
continues to make towards achieving the objectives of the ACD while meeting its legitimate
regulatory objectives. We sincerely hope that you will consider the concerns we have stated
above as you deliberate the provisions to be included in the Draft Circular when it is
officially promulgated.
Page 10 of 10
Visa and
Tourism
Tourism Position Paper
TOURISM POSITION PAPER
Presented by
Mr. Ken Atkinson
Tourism Working Group
Introduction
Whilst Visitor arrivals in 2014 were up 4% from 2013 levels at approx. 7.9 million, the
figures are concealing a worrying trend in a significant decline in arrivals from China and
Russia. In addition, the increase in actual tourism arrivals was only 2%. This overall trend
has continued with arrivals in the first 3 months of 2015, down 12.9% on the same period for
2014.
In April 2014, Chinese visitor arrivals were 47% on the previous years corresponding period
and Russian visitors were 37% up. By end of June, this had decreased to 37% and 30%
respectively and by year end 2% and 22% respectively. In Q1 of 2015, Chinese arrivals were
approx. 40% down on the Q1 2014 and Russian arrivals were approx. 27% down.
In 2014, Visa waiver countries (S. Korea, Japan, Russia, Norway, Sweden, Finland and
Denmark) showed an average 5% year on year increase and in Q1 2015 there was a 7%
increase over the corresponding Q in 20141. South Korea registered the biggest growth with
13% in 2014 and 31% Q1 over Q1 2014. Visitors from Finland also increased 28% in Q1
20152.
Travel and Tourism is a major contributor to both employment and to GDP and in
comparison to other major contributors seems often sadly neglected.
The direct contribution of Travel & Tourism to GDP in 2013 was VND149,753 bn (4.6% of
GDP). This is forecast to rise by 8.9% to VND163,034 bn in 2014. This primarily reflects the
economic activity generated by industries such as hotels, travel agents, airlines and other
passenger transportation services (excluding commuter services). But it also includes, for
example, the activities of the restaurant and leisure industries directly supported by
tourists.
The direct contribution of Travel & Tourism to GDP is expected to grow by 6.3% pa to
VND299,846 bn (4.7% of GDP) by 2024)3.
The total contribution of Travel & Tourism to GDP (including wider effects from investment,
the supply chain, and induced income impacts, see page 2) was VND311,117 bn in 2013
(9.6% of GDP) and is expected to grow by 8.9% to VND338,660 bn (9.9% of GDP) in 20144.
Leisure travel spending (inbound and domestic) generated 89% of direct Travel & Tourism
GDP in 2013 (VND233,062 bn) compared with 11% for business travel spending
(VND28,762.3 bn)5.
VNAT
All Vietnam statistics are from VNAT.
3
World Travel and Tourism Council Impact Report 2014
4
5
2
Page 1 of 12
Leisure travel spending is expected to grow by 8.9% in 2014 to VND253,786 bn, and rise by
6.4% pa to VND471,505 bn in 20246.
On the employment front, in 2013, Travel & Tourism directly supported 1,899,000 jobs (3.7%
of total employment). This is expected to rise by 5.4% in 2014 and rise by 1.5% pa to
2,329,000 jobs (3.9% of total employment) in 20247.
In 2013, the total contribution of Travel & Tourism to employment, including jobs indirectly
supported by the industry, was 7.9% of total employment (4,071,500 jobs). This is expected
to rise by 5.2% in 2014 to 4,283,500 jobs and rise by 1.2% pa to 4,824,000 jobs in 2024 (8.0%
of total)8.
The World Travel and Tourism Council (WTTC) ranked Vietnam 16 out of 184 countries in the
potential for long-term growth in the tourism sector in its 2014 impact report.
I. ENTRY VISA POLICY
Entry Visa Policy Trend
According to World Tourism Organisation (UNWTO), entry visa policy is one of the
Government policies that have the biggest impact on international tourism flow.
International tourists consider visa procedure as an additional cost in terms of cost and
time. If the cost for visiting a destination exceeds a tourists budget, they might not choose
that destination, but instead an alternative one which is more convenient.
Given the integration of the international economy, travelling facilitation is one of the
priorities of cooperation framework such as World Trade Organization (WTO), Asia-Pacific
Economic Cooperation (APEC), Association of Southeast Asian Nations (ASEAN), Greater
Mekong Subregion (GMS).Facilitating travelling, simplifying visa policy and visa exemption
are considered as important methods, not only to increase tourists exchange but also to
promote trading, investment and cultural exchange.
At the 19 ASEAN summit (in Indonesia, 2011), ASEAN leaders committed to continue
promoting the visa simplification process for ASEAN citizens as well as supporting the
initiative of common visa for non-ASEAN citizens, contributing toward the establishment of
a common ASEAN community in 2015. Currently, ASEAN is studying the members situation
to promote the implementation of entry visa procedure facilitation initiatives.
The recent UNWTO statistic shows the trend of visa policy simplification has started to take
effect. At the beginning of 2008, about 70% of the global population needed visas when
travelling. This number reduced to 64% in 2010 and 60% in 2013.
To increase the competitiveness, attract direct investment and international tourist flows
(in order to increase foreign currency income, create jobs), many countries are studying
to step by step to expand the visa exemption, in order to make them more competitive in the
market.

Page 2 of 12
Impact of visa policy simplification

Given the greater competitiveness among different economies, a destination that is very
attractive but inconvenient in terms of entry visa may well lose visitor traffic to countries
that have a more convenient entry policy, for example in Vietnams case to Thailand,
Cambodia, Indonesia, Malaysia etc. In this case, no matter how strong and interesting the
promotion campaigns are, tourists still face difficulty in accessing the country because of
its visa policy.
Visitors from potential long haul markets often tend to combine different destinations in
their trip. For example, visitors from Europe and America when visiting Cambodia, Thailand
and Malaysia often want to visit Vietnam as well. However, because of the inconvenient visa
procedure they may give up the chance to visit Vietnam.
In 2014, Thailand had 24,8 million international arrivals and exempted visas and fees for
citizen from 61 countries in total, in which 49 countries received unilateral visa exemption.
Meanwhile Malaysia received 27,4 million international arrivals and exempted visa fees for
155 countries including 85 countries with unilateral visas. Similarly, Singapore received
15,1 million international arrivals and Singapore granted free visa free entry to citizens of
150 countries with unilateral free visa entry for 82 countries.
Japan, only started to pay attention to attracting international tourist to Japan, in 2003,
when they implemented the campaign: Visit Japan Campaign. During the period of 2001
2014, visitors to Japan increased 2,6 times, and for the first time reached 10 million arrivals
in 2013. Japan has a target of 20 million visitor arrivals by 2020.
Target markets for Japan are Thailand, Malaysia, Indonesia, Vietnam and Philippines, and
the Japanese Government has quickly loosened the visa entry policy for citizens from these
countries. As the result, this campaign has brought very positive outcomes. In 2014, the
number of Thai Tourists increased 45,5% (from 453.642 to 657.606 arrivals) ; meanwhile,
Malaysian Tourists to Japan increased 41,1% (from 176.521 increased to 249.516 arrivals) ;
Tourists from Philippines to Japan increased 70% (from 108.351 to 184.211 arrivals).
The issue of security
According to UNWTO and WTTC, the border/ gate is the place that can help to stop security
threats from the outside. Even when a person is permitted to enter a country, they can still
can be refused entry at the border gate.9 Therefore, visa exemption does not need to affect
security.
According to UNWTO General Secretary, Mr. Taleb Rifai: There is no evidence showing that
a rigid policy on entry visas ensures greater national security. Europe, for instance, with its
complicated immigration policy and a lot of procedures still has to face illegal immigration,
in which 95% do not have visas. Illegal immigrating and security do not have any relation.
Most of the terrorism activities were conducted either by people who own a legal entry visa
or native citizens.
Recommendations
It is our opinion that Vietnam needs to seriously examine its current visa regime from a
totally neutral perspective without undue influence from individual stakeholders in
World Tourism Organisation (UNWTO) and World Tourism and Travel Coucil, 2012. The impacts of visa policy
simplification on the creation of jobs at G20 economies: World Tourism Organisation.
Page 3 of 12
order to move to a regime that encourages tourism and business travel and which is not
detrimental to the countrys security or income.
Vietnam needs to review and expand its visa waiver and visa on arrival policies.
Vietnam needs to review the rule that prohibits visitors with visa exemptions from
returning within 30 days without a valid visa
Vietnam needs to introduce a transit visa system, which will both attract tourists and
help develop Vietnam as a transit hub.
Vietnam also needs to consider visa reciprocity as required under various trade
agreements as at the current time there seems to be inconsistencies
i
All these recommendations are addressed in more detail below.

1. Visa On Arrival, Visa Exemptions And Waivers
Currently Vietnam has visa exemption for citizens of ASEAN Countries and Visa exemption
for citizens of Japan, Russia, South Korea and the 4 Nordic Countries. The comparison to
our ASEAN neighbors, and often our competitors for tourism dollars are shown below:
Countries
Brunei Darussalam10
Cambodia11
Indonesia12
Lao PDR13
Malaysia14
Myanmar15
Philippines16
Singapore17
Thailand18
Viet Nam19
Visa exempt/free
58
19
15
40
155
6
157
158
66
16
Visa on arrivals
7
3
62
166
No specific number is given
26
N/A
N/A
15
158*
In the case of Vietnam this is e-visa and not a true visa on arrival system.
In turn below are the number of Visitor arrivals for each of the above countries and their
growth in 2014 compared to 2013.
Countries
Brunei Darussalam20
Cambodia21
Indonesia22
Lao PDR23
2013
268,122
4,210,165
8,800,000
3,779,490
2014
N/A
4,502,775
9,300,000
4,158,719
10
Visa Information from MOFAT

Visa Information from Embassy of Cambodia
12
Visa Information from Embassy of Indonesia
13
Visa Exemption and Visa on Arrival
14
ASEAN Secretariat Malaysia
15
Visa Information from Embassy of Myanmar
16
ASEAN Secretarial Office Philippines
17
Entry visa from Immigration & Checkpoints Authority of Singapore
18
ASEAN Secretariat Thailand
19
Vietnam visa information
11
Tourism Statistic from Brunei Times

Tourism Statistic from Ministry of Tourism of Cambodia Board
22
2014 Achievements and Tourism Indonesia Targets for 2015 from Indonesia Tourism Board
23
Tourism Statistic from Vientiane Times
20
21
Page 4 of 12
Change
6.95%
5.68%
10.03%
Malaysia24
Myanmar25
Philippines26
Singapore27
Thailand28
Viet Nam29
25,714,447
2,044,307
4,681,307
15,567,923
26,546,725
7,572,352
27,437,315
3,081,412
4,833,368
15,086,827
24,779,768
7,874,312
6.70%
50.73%
3.25%
-3.09%
-6.66%
3.99%
In addition it is useful to look at the number of countries, whose citizens are granted visa
free access to the majority of countries (of which 229 are surveyed) and below are a few of
the leading ones30:
Germany, USA, UK
Canada
Belgium, France, Italy, Luxembourg, Netherlands, Portugal, Spain
Austria, Ireland
New Zealand, Switzerland
Greece
Australia
174 out of 229;

173;
172
171
170
169
168
Vietnam affords no visa waivers or exemptions for any of the above mentioned countries.
A report published by the World Tourism Organisation (UNWTO) and the World Travel &
Tourism Council (WTTC) highlighted that Vietnam could potentially increase tourism
arrivals by 8 to 18% if it were to move to a program of visa facilitation (i.e. Visa on arrival)31.
Therefore we believe Vietnam should be looking at the major higher spending tourism
markets and markets for trade and investment and introducing an expanded number of
countries whose citizens are eligible for Visa on arrival or visa exemption. Also it is worth
noting that by Visa on Arrival we do not mean the current E Visa program which is nothing
more than an authority to travel to the country before being faced with high visa charges
and chaos at most times in HCMC where the waiting time can run from 39 minutes to 2.5
hours.
One common objection to the removal or
relaxing of visa requirements is the loss of
revenue from Visa fees however we believe
that most tourists travel on a budget and
that the waiving of visa fees will result in
more local spending benefiting directly
those serving the tourism industry which
in turn will lead to an increase in local tax
collection.
24
Tourism Statistic from Malaysia Tourism Board

Tourism Statistic from Ministry of Hotels and Tourism of Myanmar
26
Tourism Statistic from Philippine Tourism Board
27
Visitors Arrival report from Singapore Tourism Board
28
Tourism Statistic from Thailand Tourism Board
29
Tourism Statistic from Vietnam Tourism Board
30
The Henley Global Visa Restriction Survey
31
Report published in May 2012
25
Page 5 of 12
As a start; Vietnam needs to look at countries with whom they have Free Trade Agreements
or are negotiating such Agreements as a starting point to expand the current list of Visa
waiver countries
Recommendations
Immediately expand the list of visa exemption countries to include all EU member
countries; countries in the TPP who do not have visa waiver namely Australia, Brunei,
Canada, Chile, Mexico, New Zealand, Peru and USA; and India.
Move to a true visa on arrival system for all current visa waiver countries plus the
countries mentioned above;
Introduce a true E Visa where visitors can get their Visa online and print for processing
at immigration;
Reduce visa fees which are the second highest in Asia and consider a premium for E
Visa and E visa application;
Improve the system and reduce waiting time for those using E visa on arrival
2. Return Visit 30 Day Rule
Under current regulations, a person arriving with citizenship of a visa exempt country,
cannot return within 30 days without a valid visa*32.
This rule is causing problems for travel agents and tourists alike as many visitors wish to
make side trips to Cambodia, Laos and Myanmar for example where they may go for 2 or 3
days, taking advantage of the flight links with these countries but then find they have to
apply for a visa in order to reenter Vietnam.
Recommendation
Allow visitors from visa exempt countries one re-entry for a maximum of 5-7 days.
3. Transit And Airside Visas
It is noted that China has recently liberalised its Visa requirements, allowing for tourists
from 51 countries to receive 72 hour extended transit visa's on arrival which allow them to
exit the airside of airport terminals into the cities and regions around Beijing, Guangzhou,
and Shanghai and two other regional cities. This has lead to an increase of tourism stop
overs and spending by transiting passengers across a range of hospitality, transport, and
tourism industries. Having visited China once for a stopover visit, travelers will consider
Vietnam as the safe, clean air alternative to stop overs to China.
Current transit arrangements for some passengers transiting Vietnam on Vietnam Airlines
to the EU from Australia has them arrive in HCMC and the onward flight to the EU is from
Hanoi. The intermediate flight between HCMC and Hanoi is domestic, requiring passengers
to have a 30 day tourist visa to complete a 4-6 hour transit of Vietnam airports.
Capacity constraints for regional Vietnam resort destinations, e.g. to be able to supply
enough room to handle the demand from inbound tourists, tour operators and tourists are
now
looking
to
maximise
locations
available
for
stops
in
Vietnam
as alternative destinations. Airlines hoping to maximise aircraft utilisation and destinations
are looking for multi-city continuing flights in Asia and Vietnam. International Airlines are
looking to exploit a one ticket, 'system pass' allowing 1 ticket hop on/hop off passes for
Asian destinations.
32
* We understand that this may now have been changed to allow return to Vietnam for a small
administration charge.
Page 6 of 12
Given the advent of Low Cost Carriers (LCC's), the focus of travel ticketing is becoming
point to point sales, without automatic transit and baggage connections enjoyed by IATA
interline agreements. For a growing portion of travelers, the use of LCC's means that they
must clear immigration and then customs to check in for their next flight on a multi leg
journey. Currently this transit process is not addressed in Vietnam for transit passengers
who do not intend to stay in Vietnam, but who need to check-in for a new flight as a transit
passenger. There is an opportunity for differentiation in the regional marketplace to
streamline the LCC and multi-carrier transit experience while promoting Vietnam as an
airline transit hub that caters to airside/transit passenger check-ins33.
While the focus has been on inbound arrivals for the majority of the discussion on visa's and
visa free travel, the growing outbound travel market is restricted from growth to the EU by
the onerous visa qualification restrictions put on Vietnamese nationals in order to travel
to Europe.
Recommendations
Create a visa free zone (similar to Phu Quoc) for major/regional international airports,
initially Hanoi, Ho Chi Minh City and Danang in order to create a stop over visitor
industry.
EU and target market passengers transiting Vietnam, where arrival and departure cities
differ, need to be provided 24-72 hour domestic transfer authority to allow for travel
between airports. Grow Vietnam as a viable/flexible transit hub for carriers, while
encouraging spending of currency by passengers during the transit period between the
ports of entry and exit.
Allow a system for international carriers to use continuing flights within Vietnam to drop
and load passengers at multiple airports. Example being, a flight arrives from the EU
in Hanoi where it drops passengers and picks up passengers enroute to Nha Trang or
Ho Chi Minh City, where it again drops and picks up passengers for onward flights to the
EU or connecting destinations.
Streamline systems for passengers who are transiting visa free zones (such as Phu
Quoc) enroute to a port of entry which normally does require a visa for entry so that the
passengers are not required to proceed through the immigration process twice.
Create the ability for transit passengers, with or without baggage, to collect baggage
and check-in for continuing flights on the airside (international) of immigration.
Encourage LCC's and full service carriers to utilise and provide/promote airside
services and check-in for continuing passengers to avoid immigration overloads and
delays. Encourage the development of airside hotel/stop over accommodation as is seen
in Middle East markets to facilitate/attract long haul passengers using Vietnam as a
transit point.
The reducing or eliminating of the visa requirement for Vietnamese citizens to travel to
EU countries should be considered as a focus point to be raised on a regular basis with
counterparts in the EU community. The ability for Vietnamese nationals to travel to EU
for short stays allows for better understanding of bi-lateral economic opportunities
available to be implemented in trade and tourism.
4. Visa And Temporary Residence Card
The new Immigration law No. 47/2014/QH13 that was implemented on January 1, 2015 has
generally been seen as an improvement to the old system. As an example, it seems logical
33
There now appears to be an airside transit desk at HCMC international arrivals. However scope of activity is not
known.
Page 7 of 12
that a foreign national coming on assignment to Vietnam does not obtain his work visa
through a travel agency but instead through sponsorship of the host entity in Vietnam.
The new and numerous categories of visas also makes the new immigration law more
comprehensive, with a differentiation between those entering Vietnam on Business trips
and those entering Vietnam for assignment purpose among many others.
However, the processing time to obtain a Business visa pre-approval letter has significantly
increased from 1 or 2 days to 5 working days minimum. In addition, such visas (ie: DN or L
visa) can only be obtained at the Vietnamese embassy in most of the cases while Business
Visa could be stamped upon arrival at the airport in the past.
Furthermore a foreign national coming to Vietnam, attending a business event or exploring
business opportunities without a local sponsoring entity can only obtain a tourist visa.
In order to facilitate the entry of foreign Business visitors and International assignees to
Vietnam it seems necessary to streamline the processes.
Recommendations
The introduction of an expedited service like in many countries, with an additional fee
to obtain visa approval letter in 1 day would be highly welcomed by the business
community;
Immediately expand the list of visa exemption countries to include all EU member
countries; countries in the TPP who do not have visa waiver namely Australia, Brunei,
Canada, Chile, Mexico, New Zealand, Peru and USA; and India.
Getting business and work visa endorsed on travellers passport on arrival at the
international airport or at the Vietnamese embassy overseas should always be options
available.
II. VTOS IMPLEMENTATION AND ITS POTENTIAL IMPACT ON HOTEL STAR
CLASSIFICATION
Whilst the industry fully supports the introduction and application of VTOS in Vietnam, for
the purpose of developing a larger and better qualified and skilled pool of tourism and
hospitality workers, the industry also feels that more recognition should be given to
international branded hotels who have spent considerable amounts of time and money to
train their employees towards recognized international global standards. Whilst these
international hotel companies are not training institutions per se, they are focused to
deliver upon their respective brand standards, which create points of service differentiation
between one hotel and another. Therefore, it will be more appropriate, if VTOS is made first
and foremost mandatory for all educational and training institutions in Vietnam. And that
their application is, in particular pushed for the mostly locally managed 1 to 3 star
properties, which do not have international standard training programs. This would
recognize the quality and benefits of international standard training programs which global
hotel chains use, at a time when the revised VTOS will be made mandatory, tested and
implemented in wider circles of the training and education as well as tourism and
hospitality sectors.
We would therefore urge that a consultation process be put in place, whereby a solution
must be found to recognise the existing high level standards within the internationally
branded hotels, in the form for example of a quick and simple balance accreditation of
entire hotel chains or properties in Vietnam, in line with the simple and non-bureaucratic
assessment criteria as prescribed in the MRA -TP.
Page 8 of 12
However, to potentially remove the star rating of a recognised global hotel chain and
administer financial penalties for non-compliance with the VTOS and accreditation
requirements would be a major step in the wrong direction.
III. DESTINATION MARKETING
1. Public-private partnership and destination competitiveness
To compete effectively, destinations have to deliver superb experiences and excellent value
to visitors. The business of tourism is complex and fragmented and, from the time that
visitors arrive in the destination until they leave, the quality of their experience is affected
by many services and experiences; including a range of public and private services, the
environment and community welcome. Delivering excellent value depends on many
organisations working together in unity. Destination management calls for a coalition of
these different interests to work towards a common goal to ensure the viability and integrity
of their destination now, and for the future. This is a key challenge in a region where there
is limited cooperation and communication between the public and private sectors, and
between competing private sector companies, at present.
Most destination management issues arising in the region need to be addressed at the
provincial level. This is where structures of Government exist to address them and can be
strengthened. It is therefore important that effective governance structures for tourism are
in place locally. It is at the local destination level that many services vital to tourism are
delivered and where the positive and negative socio-economic and environmental impacts
of tourism are most apparent, requiring sound local planning and management.
Destination management at present is largely the responsibility of Department of Culture,
Sport and Tourisms (DCST) reporting to Peoples Committees and, occasionally, to
Vietnam National Tourism Administration (VNAT). In general, there are no structures for
shared responsibility between Government agencies which impact tourism, or between
DCSTs and the business sector. DCSTs do not formally meet with the business sector and
industry representation organisations in the provinces are weak. Financial resources for
marketing are very constrained and not transparent.
In order to better serve the customers of the tourism sector in Vietnam and improve the
destination development and management, the Ministry of Culture, Sports and Tourism
(MCST) and the VNAT have started a strategic planning initiative by strengthening
destination management structures at destination levels. The EU-funded Environmentally
and Socially Responsible Tourism Capacity Development Programme (ESRT) with the VNAT
are supporting the collaboration of provinces and business sector stakeholders to jointly
work on destination management issues. With this support, existing Provincial Steering
Committees have been strengthened to include the business sector, and developing
practical agendas for them.
Potential gains/concerns for Vietnam
The overall performance of the tourism industry gives cause for concern however: There
has been a decline in occupancy as accommodation supply is increasing. The collapse of
the Chinese market in 2014 and the Russian market has brought the need for better
destination management regarding accommodation supply, and the need for a more
strategic, broadly-based marketing approach, sharply into focus in the region.
Tourists are not restricted by provincial boundaries when they travel. They visit and travel
throughout regions based upon the product offerings available. However, working at a
Page 9 of 12
destination / regional level needs to be carefully guided by development of destination

bodies that develop and implement projects based upon strategic regional tourism plans.
We believe it would also be helpful if tourism planning and tourism products would be
further improved. In particular, a regional approach to tourism which goes beyond
provincial borders and allows joint product development will encourage tourists to stay
longer as well as encourage return visits to different parts of the country.
Effective stakeholder engagement and mechanisms for collaboration such as public-private
partnerships, and coordination bodies for destination management in the regions will
contribute to enhance competitiveness and distinguish Vietnam in the regional and global
tourism marketplace as a destination that delivers high quality, sustainable, tourism
experiences that benefit local people and respect and conserve national resources.
Recommendations
Our members feel that active involvement of the Ministry and the Government in enabling
and supporting the development of destination management structures in the regions with
a strong involvement of the business community is necessary.
We also recommend the following specific measures:
Establishing improved mechanisms for communication between tourism-related
businesses, associations and the public sector; to work with industry groups and
associations in working groups on a regular basis; to coordinate organisational
structures
Putting in place region-wide coordination structures to focus and maximise the actions
of cooperating provinces and facilitate cooperation
Strengthening Tourism Associations in creating co-operation and representatives for
the business sector in order to contribute to important issues within the tourism sector
Strengthen public-private cooperation for promotion and marketing at destination levels
to support responsible tourism products and services
Adopting green and responsible tourism agendas and implementing them
Improving the product, province by province, to meet (future) market needs and
providing more things to do for visitors staying in the regions expanding
accommodation base
Develop stronger regional products that clearly reflect destinations and attractions of
Vietnam; Create the regional linkage in tourism product development
Apply responsible promotion and marketing programmes, which create a competitive
advantage, increase value and demand, customer loyalty and satisfaction, and facilitates
more respectful interaction in destinations
Delivering professional marketing, focussed on specific target markets and addressing
issues such as greater awareness, electronic media and seasonality to improve
business viability
2. Joint marketing initiative between TAB & VNAT
Following the establishment of the Tourism Advisory Board (TAB) in 2014, industry
stakeholders have worked with officials from the Vietnam National Administration of
Tourism (VNAT) to revitalize Vietnams tourism industry. One of the main focuses is to
improve the countrys international marketing efforts.
VNAT and the TAB are undertaking a joint marketing initiative focused on key international
markets. The aim of this program will be to develop an internationally recognized, digital
platform for marketing Vietnam globally. Central objectives of the marketing initiative
include:
Page 10 of 12
Position Vietnam as a must-see tourism destination in SE Asia

Develop internationally recognized branding materials
Focus marketing activities on select key markets
Increase international arrivals to Vietnam
Attract high value visitors with longer stays and higher spends
Enhance industry cooperation to leverage resources
Appointment of a Third Party Agency

The TAB and VNAT in May 2015 formally launched a tender to identify a digital marketing
agency to orchestrate a campaign for online marketing. Digital marketing is an extremely
effective channel that offers increased engagement with visitors and the travel trade, highly
measureable performance, rapid strategy adjustment and enhanced targeting capabilities.
Developing a strong digital marketing campaign is crucial given the governments limited
marketing budget.
The timeline for execution entails the appointment of an agency by the end of June 2015 and
to unveil the campaign in London at the World Travel Market in November 2015.
Key Target Markets
The campaign goals will focus on markets where travelers are already searching for
Vietnam related travel offerings. This will yield higher results as there will be a closer
correlation to online marketing efforts and actual visitation. The eight countries that we will
focus on include: USA, Germany, France, UK, Japan, Singapore, Malaysia, and Australia.
Consideration of additional markets will be made on a case-by-case basis.
International Arrivals to Vietnam from Key Markets
Country
Arrivals
2013
Growth
Arrivals
2014
Growth
USA
432,228
-2.6%
443,776
3%
Germany
97,673
-8.4%
142,345
31%
France
209,946
-4.4%
213,745
2%
UK
184,663
8.4%
202,256
9%
Japan
604,050
4.8%
647,956
7%
Singapore
195,760
-0.2%
202,436
3%
Malaysia
339,510
13.5%
332,994
-2%
Australia
319,636
10.3%
321,089
0%
Source: VNAT
YOY
Total Search Query vs. Actual Visitors to Vietnam

(2013-2014)
YOY
Source: Google Internal Data
Budgetary Constraints
This joint marketing initiative is unprecedented in Vietnam and entails collaboration
between public and private stakeholders. The long-term objective of this marketing
initiative will focus on building VNATs capacity to administer similar, best-in-class
campaigns and to collectively lobby support for the government to contribute additional
funding towards the promotion of Vietnams tourism industry.
In order for this partnership to work, the TAB is requesting for formal commitments from
MCST/VNAT to contribute funds to a joint marketing initiative to be administered by TAB in
Page 11 of 12
conjunction with VNAT.

contributions.
The aim is to achieve a 1:1 matching of Public-Private
At present, the funding that is contributed to marketing Vietnam globally is less than
US$1.5 million. This amount is substantially inadequate for VNAT to be effective and is a
fraction of what Vietnams neighboring competitors contribute to their national tourism
boards. We cannot emphasize enough the importance of the travel and tourism industry to
Vietnams economy. The industry generated nearly 10% of GDP. Thus, it is imperative that
the government recognize the industry contribution to the socioeconomic welfare of the
state and to properly support the industry with an adequate budget for international
marketing.
Recommendations
Increase budgetary support of Vietnams tourism marketing efforts
Stronger support and collaboration with private industry in marketing Vietnam globally
APPENDIX: Visa Fees Vs Revenue And Tax
The biggest obstacle to a move to more visa facilitation seems to be the loss of visa fees by line
ministries. This argument, if correct, is in our opinion very shortsighted as it loses sight of the
big picture, as this short summary will show.
Loss of Visa fees
TWG is inter-alia advocating visa exemption for EU, North America, Australia and New Zealand.
Those countries currently account for 1.6 million arrivals. If you take an average visa and
processing fee of US$70, that amounts to visa fees of approx. US$11 million.
Spending and Tax revenue
On the other hand, if granting visa exemption to those countries increases arrivals by 10% then
visitors from those countries would increase by 160,000. Based on the current overall average
stay of 11.3 days and overall average daily spend of US$102, which are both lower than normal
for visitors from those destinations, then total additional spending would be approx. US$200
million.
This would result in a VAT contribution of US$20 million and a net gain in Government
revenues of US$9 million, leaving an amount of US$180 million into private sector business
driving growth in income and employment.
Recommendation
These statistics are compelling reasons why the Government should be urging line ministries to
think about the good of the country and to consider extending the visa facilitation program
further.
Page 12 of 12
Residential Housing
and Real Estate
Land Sub-group Position Paper
EXECUTIVE SUMMARY
Presented by
Mr. David Lim
Head of Land Sub-Group
We set out below the key issues arising from the new laws and related draft decrees.
1. Legal capital: Article 3.1(a) of the third draft decree of law on real estate business (LREB)
stipulates that real estate projects which are required to obtain the investment in-principle
decisions or investment in-principle approvals shall have a minimum legal capital of VND50
Billion. In addition, Article 3.1(c) of the third draft decree of LREB provides that the current
enterprises conducting real estate business will have one year to increase their legal
capital to VND20 Billion/VND50 Billion in accordance with the LREB. It is recommended that
the requirement on legal capital is only applicable to new real estate construction and
development projects which, in any event, shall not be more than VND20 Billion.
2. Timeline for Capital Contribution: Articles 48.2 and 74.2 of the Law on Enterprise 2014
require that capital in limited liability company are contributed in full within 90 days
from the issuancedate of the enterprise registration certificate. We propose
incorporating provisions which allow capital to be contributed according to the
implementation of the project.
3. Transitional provisions: There is no transitional provision to deal with implementation

of agreements which have already been signed under the old LREB and law on
residential housing (LRH), except for provisions in relation to method of calculation
and record of the residential housing area, the warranty period of residential housing
and parking plot. We suggest adding the following provision to the third draft decree of
LREB and the fourth draft decree of LRH: Agreements which have already been signed
before the Law on Real Estate Business/Law on Residential Housing takes effect shall
continue to be implemented in accordance with the law at the time when they were signed.
4. Bank Guarantees For Residential Presales: Provisions for this have not yet seen issued.
We suggest providing necessary provisions and detailed guidelines before 1 July 2015.
5. Foreigners buying property in Vietnam: Articles67, 68.4, 69.2(b) and 69.3(b) of the
fourth draft decree of LRH introduces additional widerrestrictions whereby foreign
organisations/individuals (i) are prohibited to purchase houses at areas where
foreigners are prohibited or restricted from residing or travelling,(ii) may own no more
than 10% of the total number of individual housing in each residential housing project,
and (iii) can only have one-time extension of residential housing ownership. We suggest
removing such additional restrictions which were not in the LRH.
6. First Time Foreign Investors: Article 15.1(d) of the third draft decree of LREB provides
that the application files for project transfer shall include the enterprise registration
certificate which investors being foreign individuals and organisations which invest in
Vietnam for the first time do not have. We therefore suggest adding the phrase except
for investors being foreign individuals and organizations who make investment in
Vietnam for the first time to the second paragraph of Article 15.1(d).
Page 1 of 5
LAND SUB-WORKING GROUP POSITION PAPER

A. INTRODUCTION
From 1 July 2015 onwards, pursuant to the new Law on Real Estate Business 2014 (LREB)
and the Law on Residential Housing 2014 (LRH), it is anticipated that the demand in the
nations property market and the investment into the real estate industry will grow rapidly
within the short term future. Whilst the new LREB and LRH have been well received at face
value, some additional requirements and restrictions may be considered as too onerous.
The delay in introducing necessary guidelines can also cause major barriers to investors.
As the theme for the Mid Term Forum 2015 organized by the Vietnam Business Forum is
Enhancing Enterprise Competitiveness for Global Integration, the Land Working Group has
reviewed the third draft decree guiding implementation of the LREB and the fourth draft
decree guiding implementation of the LRH and prepared this position paper to address
competitiveness in the real estate industry. In this position paper, we set out our comments in
respect of the key provisions in the relevant laws which may restrict the competitiveness in
the real estate industry and our recommendations to address such issues.
B. ISSUES
1. Increase of legal capital
Article 3.1(a) of the third draft decree of LREB stipulates that real estate projects which are
required to obtain the investment in-principle decisions or investment in-principle
approvals shall have a minimum legal capital of VND50 Billion. We note however that such
minimum requirement of legal capital is not consistent with Article 10.1 of LREB which
provides that the enterprises conducting real estate business must have a minimum legal
capital of VND20 Billion.
The minimum requirement of legal capital of VND20 Billion is already too high for small
scale projects. Even companies with strong financial resources will reconsider if it is
commercially reasonable to contribute a high amount of capital for a project that has very
low total investment capital. A possible outcome of this policy is that it will discourage real
estate companies from undertaking small scale real estate projects. This will seriously
impact the real estate sector negatively. The amount of legal capital should not therefore
be increased to VND50 Billion. We would propose that a percentage of total investment
capital be used instead. This will ensure that only companies with sufficient financial
resources undertake large scale projects and will not penalize developers who undertake
small scale projects.
Further, the minimum requirement of legal capital applies to all real estate business
activities including activities which do not require a high amount of capital e.g. lease and
sublease of space. The requirement for legal capital should only apply for real estate
construction and development projects whereby high investment capital is required. The
requirement for such high legal capital will lead to inefficient use of capital and inhibit
business competitiveness in the real estate industry.
Recommendation: The requirement on legal capital is only applicable to real estate
construction and development projects according to the value and scale of the projects
which, in any event, shall not be more than VND20 Billion. If a higher legal capital is
required, a percentage of total investment capital shall be applied.
In addition, Article 3.1(c) of the third draft decree of LREB provides that the current
enterprises conducting real estate business will have one year to increase their legal
capital to VND20 Billion/VND50 Billion in accordance with the LREB. This requirement will
cause serious implications to projects which have already been licensed and are currently
Page 2 of 5
being implemented. There are currently many projects which are being implemented
smoothly and it is difficult to understand why this is necessary. This also sends out a very
negative signal to the business community that rules and laws which have been
implemented can be changed at any time.
Recommendation: We would recommend that the new provisions should not be applicable
to projects which have already been licensed under the existing laws.
2. Timeline for Capital Contribution
It is provided in Articles 48.2 and 74.2 of the Law on Enterprise 2014 that the members of a
limited liability company are required to contribute the capital in full within 90 days from
the date of issuance of the enterprise registration certificate. This means that the investors
are required to contribute the capital within such a short period of time notwithstanding
that the implementation of the project may be conducted over an extended period of time.
This requirement is unrealistic as such high amount of capital contributed may not be
required at the beginning of the project. An example of this is large scale projects e.g.
township developments and infrastructure projects. This requirement disincentives
developers from undertaking large scale projects which are necessary for organised and
coordinated development. This requirementwill also lead to inefficient use of capital and
inhibit business competitiveness in the real estate industry.
Recommendation: We propose incorporating provisions which allow capital to be

contributed according to the implementation of the project. Flexibility is also required for
extended period for contribution of capital in large scale projects.
3. Transitional provisions
There is no transitional provision to deal with implementation of agreements which have
already been signed under the old LREB. Further, Article 74.7 of the fourth draft decree of
LRH provides a transitional provision for contracts which have been signed before 1 July
2015 in relation to method of calculation and record of the residential housing area, the
warranty period of residential housing and the parking plot. We note however that the
fourth draft decree LRH is silent on the transitional provisions for other contents of the
residential housing contracts which have already been signed under the old LRH. There are
numerous agreements which have already been signed before the new LREB and LRH
comes into effect e.g. sale and purchase agreements, sale and purchase of assets to be
formed in the future, contracts for mobilization of capital, hire purchase agreements, lease
and sub-lease agreements, project transfer agreements. Note that there are substantial
changes to terms and conditions for the conduct of real estate business which may affect
all these agreements. It is not immediately clear to what extent any existing agreements
must be amended to comply with the LREB and the LRH. This will cause a lot of uncertainty
and difficulty to both business entities and also individuals who have entered into real
estate transactions. In order to prevent any negative impact to the real estate sector and
the economy, in general, we would propose that all existing agreements continue to be
implemented according to the existing laws and no changes are required.
Recommendation: We suggest adding the following provision to the third draft decree of
LREB and the fourth draft decree of LRH:
Agreements which have already been signed before the Law on Real Estate Business/Law
on Residential Housing takes effect shall continue to be implemented in accordance with
the law at the time when they were signed.
Page 3 of 5
4. Bank Guarantees For Residential Presales

According to Article 56.1 of the LREB, it is stated that the sale and lease-purchase of
residential houses must be guaranteed by a commercial bank of Vietnam (which is included
in the list of commercial banks published by the State Bank of Vietnam) prior to selling or
lease-purchasing such residential houses. This has been introduced to provide more
protection to retail buyers who may be left without any recourse in the case where a real
estate developer runs into financial difficulty.
We note however that provisions on the implementation of such requirement have not yet
been issued. There is a grave concern that the developers may be deprived of the right to
sell the residential houses if such provisions are not issued in a timely manner.
Recommendation: We therefore suggest providing necessary provisions and detailed
guidelines before 1 July 2015 so that this scheme will be implemented in an orderly and
efficient manner to fully achieve this objective.
5. Foreigners buying property in Vietnam
Article 161.2(a) of the LRH allows foreign individuals/organisations to own a maximum
number of 250 individual residential houses in a ward, comprising villas and terraced
houses. We note however that Article 68.4 of the fourth draft decree of LRH introduces an
additional restriction whereby foreign organisations/individuals may own no more than 10%
of the total number of individual housing in each residential housing project. We are of the
view that the number of maximum units which the foreign individuals and organisations are
allowed to own are further limited and not consistent with the LRH.
Further, according to Article 67 of the fourth draft decree of LRH, foreign individuals and
organizations are not entitled to own residential houses in areas where foreigners are
prohibited or restricted from residing or travelling as provided under the law on residence
and travel. We note however that according to Article 159.2(b) of the LRH, foreign individuals
and organizations are only prohibited to purchase houses in national defense and security
area. Article 67 of the fourth draft decree of LRH has introduced a wider restriction for areas
which foreign individuals and organization are allowed to purchase houses.
In addition, Articles 69.2(b) and 69.3(b) of the fourth draft decree of LRH introduces another
addition restriction on the one-time extension of residential housing ownership requested
by foreign owners. Such restriction will cause concerns to foreign buyers and may cause
negative impact to business development of the developers, including Vietnamese
developers. In order to be consistent with Article 159.2(b) of the LRH, we propose that the
extensions will be granted unless foreign individuals and organisations are not allowed to
own the commercial residential houses for national defence and security reasons only.
Recommendation: We suggest removing such additional restrictions under the fourth draft
decree of LRH as such restrictions may deter the foreign investors from purchasing
property in Vietnam and affect the ability of real estate enterprises to conduct business.
These restrictions also cause Vietnam to lose competitiveness in comparison to other
countries which have fewer restrictions on foreigners owning the property.
6. First Time Foreign Investors
Article 15.1(d) of the third draft decree of LREB provides that the application files for project
transfer shall include the enterprise registration certificate. We note that these conditions
can apply to transferees being domestic investors and foreign investors who already have
existing projects in Vietnam; however they cause many difficulties to investors being foreign
Page 4 of 5
individuals and organisations who make investment in Vietnam for the first time with the
investment project being the transferred project.
Pursuant to the laws on investment, a foreign investor which invests in Vietnam for the first
time must have an investment project to be entitled to establish an enterprise and obtain an
investment registration certificate and an enterprise registration certificate. However,
these provisions require foreign investor which invests in Vietnam for the first time to set up
a company before it can be engaged in a project as required by the laws on investment. This
overlapping and conflicting regulation has restricted the rights to receive transfer of real
estate projects of foreign investors who make investment in Vietnam for the first time.
Recommendation: We therefore suggest adding the phrase except for investors being
foreign individuals and organizations who make investment in Vietnam for the first time to
the second paragraph of Article 15.1(d).
C. CONCLUSION
The points we have highlighted limit the rights of real estate enterprises hence affecting the
competitiveness in real estate industry. The additional restrictions, onerous contribution
obligation and delay in introducing necessary guidelines provided in the draft decrees
create the impression that the investors will face many hurdles to invest in Vietnam. The
impact of the new laws would therefore be diminished. In view of the issues above and the
governments objective to ensure growth in the real estate industry, it is crucial that clear
and consistent guidelines are provided to eliminate any complications or confusion to the
investors. The administrative procedures should also be simplified to expedite the process
and onerous requirements should be removed to provide more flexibility to the
investors.These changes are critical to ensure that Vietnam continues to remain
competitive in the region.
Page 5 of 5
Comments on draft Decree guiding implementation of Law on Residential Housing
COMMENTS ON THE DRAFT DECREE GUIDING IMPLEMENTATION OF LAW ON RESIDENTIAL HOUSING 2014 (THE 4TH DRAFT)
Prepared by
Mr. David Lim - ZICOLaw
VBF Land Sub Group
NO.
1.
DRAFT DECREE OF LAW ON RESIDENTIAL HOUSING (LRH)

Article 10. In-principle investment decision on investment projects for
construction of residential housing.
1. Where investment projects for construction of residential housing are

funded by capital source prescribed in Article 36.3 and Article 53.1 of Law
on Residential Housing, the competency to make in-principle investment
decisions shall comply with the Law on Public Investment; the Ministry of
Construction shall give evaluation opinions on projects funded by central
capital; the Department of Construction shall give evaluation opinions on
projects funded by local capital.
2. Where investment projects for construction of residential housing are
not in category prescribed in Clause 1 of this Article but fall into category
prescribed in Article 31.2 and Article 32 of Law on Investment, the
competency to make in-principle investment decisions shall comply with
Law on Investment but must have evaluation opinions of the Ministry of
Construction for projects the in-principle investment decision of which is
decided by the Prime Minister; and of the Department of Construction for
projects the in-principle investment decision of which is decided by the
Provincial Peoples Committee.
COMMENTS AND RECOMMENDATIONS

According to Article 170 of the LRH, the residential housing projects
shall apply for the IIA, except for those residential housing projects
that are required to obtain the IID in accordance with Law on
Investment (LOI). We note however that Article 10.3 of the Draft
Decree of LRH stipulates that all residential housing projects are
required obtain the IID, irrespective of whether such projects are not
required to obtain the IID under the LOI. We note that the provision on
Investment In-principle Decision under Article 10.3 in the Draft
Decree of LRH is not consistent with the provision on Investment Inprinciple Approval provided under Article 170.2 of the LRH. This will
cause confusion to investors since it is unclear whether they are
required to obtain the IID or the IIA in the event that their projects do
not fall under the provisions in the LOI.
Recommendation: We therefore suggest amending the reference
Investment In-principle Decision to Investment In-principle
Approval under Articles 10.3(b), 10.4(b), 10.5(b), 10.6 and other
relevant provisions in the Draft Decree of LRH.
3. For the construction of residential housing not in category prescribed

in Clauses 1, 2 of this Article, the competency to make in-principle
investment decision shall be as follows:
a. After having evaluation opinions of the Ministry of Construction, the
Prime Minister shall make in-principle investment decisions with
respect to the following projects:
- Projects using not less than 100 hectares of land in areas other
than existing urban area;
- Projects using not less than 50 hectares of land in existing urban
Page 1 of 14
According to Article 10.4(a) of the Draft Decree of LRH, the investors

are required to submit the documents regarding the construction
progress and the responsibilities of the developers for social
infrastructure works. We note however that according to Article
11.1(e) of the Draft Decree, the social infrastructure works are not
required for the project area which already has social infrastructure
works.
Recommendation: We therefore suggest amending Article 10.4(a) as
follows:
- Construction progress; construction of technical infrastructure works,
NO.
-

areas;
Projects located in administrative boundaries of several
provinces, cities under central authority.
b. After having the agreement opinions of the Ministry of Construction,

the provincial Peoples committee shall make in-principle investment
decisions with respect to the following projects:
- Projects using from 20 hectares to under 100 hectares of land in
areas other than existing urban area;
- Projects using from 10 hectares to under 50 hectares of land in
existing urban areas.

social infrastructure (except when the project area has already had social
infrastructure), parking area for public and for family households,
individuals residing in the project area. - Responsibilities of local
authorities and developers in project implementation and construction
of social infrastructure works of the projects (except when the project
area has already had social infrastructure)
-
c. The provincial Peoples committee shall make in-principle investment

decisions with respect to other projects which are not in categories
prescribed in Points a, b of this Clause.
4. Application file for in-principle investment decision shall be as follows:
a. For projects prescribed in Clauses 1, 2 of this Article, besides
documents required by the laws on public investment, laws on
investment, there shall be additional documents clarifying the
following contents:
- Ratio and quantity of assorted types of residential housing based on
residential unit (apartments in apartment building, villas, individual
residential housing); gross construction floor area of residential
housing; structure of construction floor area of each type of
residential housing;
- Construction progress; construction of technical infrastructure works,
social infrastructure, parking area for public and for family households,
individuals residing in the project area.
- Land areas for construction of social residential housing, residential
housing for lease; plans on management, use of residential housing,
plans on management or handover of technical infrastructure works
to the localities after the completion of the investment in construction
thereof.
- Responsibilities of local authorities and developers in project
implementation and construction of social infrastructure works of the
projects.
Page 2 of 14
Article 10.4(b) of the Draft Decree of LRH provides that the application
dossiers for obtaining the IIA include the following:
A. Legal dossiers of investors assigned to be developers; in case
developers have not been selected, there shall be reports on how
the developer will be selected and the preparation of developer
selection (Report);
B. Statement requesting for the IIA, including legal basis, approved
contents, reasons for approving and evidence showing the
appropriateness of the project contents with the approved
programs and the plans on residential housing development; and
C. Detailed zoning file of the area where the projects are located.
Regarding Item (A), we note that the contents required for (i) the legal
dossiers of investors, and (ii) the Report are unclear under the Draft
Decree of the LRH.
Regarding Item (B), the onus is on the investors to provide reasons for
applying for the project approval and the evidence showing the
appropriateness of the project contents with the approved programs
and plans on residential housing development. We are of the view that
the competent authorities would be able to evaluate whether the
investors are qualified to conduct the projects based on the
application dossiers provided by the investors.
Regarding Item (C), we note that it is unclear what documents are
required to be included in such detailed zoning file.
Recommendation: We suggest incorporating clear provisions on the
contents required for of (i) legal dossiers of investors, (ii) the Report,
and (iii) the detailed zoning file. Further, we also suggest removing the
NO.

b) Application file for in-principle investment decision for cases
mentioned in Clause 3 of this Article shall be as follows:
- Legal dossiers of units assigned to be developers; in case developers
have not been selected, there shall be reports on the form of
developer selection, preparation of developer selection;
- Statement requesting for in-principle investment decision for projects for
construction of residential housing, including legal bases; contents need
to be approved in accordance with Point a of this Clause; reasons for
approving and evidence showing the appropriateness of the project
contents with the approved programs, plans on residential housing
development.
- Detailed zoning file of the area where the projects are located.
5. Contents of in-principle investment decision shall be as follows:
a) For projects in the category prescribed in Clauses 1, 2 of this Article,
besides the contents of in-principle investment decision in accordance
with Law on Public investment, Law on Investment, there shall be
additional decisions on contents stipulated in Clause 4.a of this Article;
b) For projects in the category prescribed in Clause 3 of this Article, the
contents of in-principle investment decision shall comprise:
- Names of project and developer;
- Location, boundaries, land area of the whole project;
- Objectives of the project, forms of investment;
- General contents of the project (work, products)
- Total investment capital; sources of investment capital;
- Time and progress of project implementation; periods of investment
(if any);
- Methods of land allocation, land lease, transfer of land use right (if
any);
- Land for construction of social residential housing, residential
housing for lease;
- Infrastructure works to be handed over to the State;
- Regulations applicable to concerned parties in management of
construction, operation, business and handover of works;
- States supports, incentives to the project;
- Responsibilities of developer to the State;
- Expected administrative management unit towards the project. The

requirement on the investors providing reasons for applying for the
project approval and the evidence showing the appropriateness of the
project contents as set out in Item (B).
-
Page 3 of 14
Article 10.5(b) of the Draft Decree provides that the contents of the IIA
comprise the handover of infrastructure works from the developers to
the State. We note however that the handover of infrastructure works
is not compulsory for projects which the developers will self-manage
infrastructure works based on the approved IID.
Recommendation: We suggest amending such provision under Article
as follows: Infrastructure works to be handed over to the State, if
any
NO.
2.

regulations on cooperation in administrative management,
administrative handover, security and public services between
developer and relevant local authorities in the course of
implementation until the project completion.
6. For projects prescribed in Clause 3 of this Article, the Ministry of
Construction shall provide guidelines on the Statement requesting for inprinciple investment decision, contents of in-principle investment
decision, order and procedure for requesting in-principle investment
decision.
Article 17. Capital for development of commercial residential housing
1. Capital mobilization for commercial residential housing construction
investment shall be performed in such forms prescribed in Article 69 of
Law on Residential Housing; cases of mobilization not in accordance with
this Article shall have no legal validity, and developers shall be penalised
in accordance with laws and must compensate to capital contributors.
2. Capital mobilization for commercial residential housing development

shall be regulated as followings:
a. Capital mobilization prescribed in Clause 2 Article 69 of Law on
Residential Housing has to satisfy all forms and conditions prescribed in
Clause 3 of this Article. Profit shall be distributed to capital contributors,
investment co-operators, business co-operators basing on the
proportion of capital contribution as agreed in the contract only;
developers shall not apply the form of capital mobilization prescribed in
this Clause or any other forms to distribute residential housing products
or to distribute land use right under the project to capital contributors;
b. In case of collecting advanced payments of purchasers, lessees, lease
purchasers prescribed in Clause 3 Article 69 of Law on Residential
Housing, conditions and forms of sale and purchase contract, lease
contract or lease purchase contract shall be complied with in
accordance with laws on real estate business;
c. In case of obtaining loans from credit institutions, financial
institutions or issuing bonds to mobilize the deficient capital for
constructing residential housing, conditions prescribed by law and as
agreed in the loan agreement or regulations on issue of bonds shall
be complied with.
Page 4 of 14
As previously commented, in view of the current difficult real estate

condition, investors should be encouraged to mobilise capital from any
sources permitted by laws. Therefore, the listing of sources of capital
and forms of financing which the investors are permitted to mobilise
in Article 69 of LRH is unnecessary and causes difficulties as well as
restricts the investors from mobilising capital for their projects.
In addition, Article 9 of Decree 71/2010 provides that developers have
the right to distribute the profit to capital contributors in the form of
cash, shares or residential housing products. We note however that
the right to distribute the profit in form of residential housing products
is prohibited under Article 17.2(a) of the Draft Decree of LRH. We are
of the view that the restriction under Article 17.2(a) of the Draft Decree
of LRH will curb the flexibility of the investors in operating the real
estate projects in Vietnam.
Recommendation: We therefore suggest deleting restriction in Article
17.2(a) as follows:
Capital mobilization prescribed in Clause 2 Article 69 of Law on
Residential Housing has to satisfy all forms and conditions prescribed
in Clause 3 of this Article. Profit shall be distributed to capital
contributors, investment co-operators, business co-operators basing
on the proportion of capital contribution as agreed in the contract
only; developers shall not apply the form of capital mobilization
prescribed in this Clause or any other forms to distribute residential
housing products or to distribute land use right under the project to
capital contributors
NO.
3.

3. Capital mobilization for residential housing investment and
construction as prescribed in point a Clause 1 of this Article shall be
performed by a capital contribution agreement or investment cooperation agreement or business co-operation contract; the developer
shall sign the contract only after the residential housing investment and
construction project has been approved, site-clearance has been
conducted, with minutes on handover of the project boundaries available
and a notification on satisfying all conditions for capital mobilization has
been issued by the Department of Construction where the project is
located.
4. Organizations, individuals who mobilise capital as prescribed in
Clauses 1 and 2 of this Article must use such mobilized capital for the
right purpose of constructing residential housing in such project; in case
of using mobilized capital for wrong purpose or appropriating such
capital, they shall be dealt in accordance with laws.
Article 17. Capital for development of commercial residential housing
1. Capital mobilization for commercial residential housing construction
investment shall be performed in such forms prescribed in Article 69 of
Law on Residential Housing; cases of mobilization not in accordance with
this Article shall have no legal validity, and developers shall be penalised
in accordance with laws and must compensate to capital contributors.

Article 17.3 of the Draft Decree of LRH provides conditions for capital
mobilization of the developers. We note that enterprises conducting
any business in Vietnam are allowed to raise capital at any time for
their operation purposes. Therefore, it is unfair and will cause
concerns and difficulties to real estate enterprises since they have to
satisfy conditions under laws before raising capital.
Recommendation: We suggest removing Article 17.3 from the Draft
Decree of LRH.
2. Capital mobilization for commercial residential housing development

shall be regulated as followings:
d. Capital mobilization prescribed in Clause 2 Article 69 of Law on
Residential Housing has to satisfy all forms and conditions prescribed in
Clause 3 of this Article. Profit shall be distributed to capital contributors,
investment co-operators, business co-operators basing on the
proportion of capital contribution as agreed in the contract only;
developers shall not apply the form of capital mobilization prescribed in
this Clause or any other forms to distribute residential housing products
or to distribute land use right under the project to capital contributors;
e. In case of collecting advanced payments of purchasers, lessees, lease
purchasers prescribed in Clause 3 Article 69 of Law on Residential
Housing, conditions and forms of sale and purchase contract, lease
Page 5 of 14
As previously commented, in view of the current difficult real estate

condition, investors should be encouraged to mobilise capital from any
sources permitted by laws. Therefore, the listing of sources of capital
and forms of financing which the investors are permitted to mobilise
in Article 69 of LRH is unnecessary and causes difficulties as well as
restricts the investors from mobilising capital for their projects.
In addition, Article 9 of Decree 71/2010 provides that developers have
the right to distribute the profit to capital contributors in the form of
cash, shares or residential housing products. We note however that
the right to distribute the profit in form of residential housing products
is prohibited under Article 17.2(a) of the Draft Decree of LRH. We are
of the view that the restriction under Article 17.2(a) of the Draft Decree
of LRH will curb the flexibility of the investors in operating the real
estate projects in Vietnam.
Recommendation: We therefore suggest deleting restriction in Article
17.2(a) as follows:
Capital mobilization prescribed in Clause 2 Article 69 of Law on
Residential Housing has to satisfy all forms and conditions prescribed
NO.
f.

contract or lease purchase contract shall be complied with in
accordance with laws on real estate business;
In case of obtaining loans from credit institutions, financial
institutions or issuing bonds to mobilize the deficient capital for
constructing residential housing, conditions prescribed by law and as
agreed in the loan agreement or regulations on issue of bonds shall
be complied with.
-
3. Capital mobilization for residential housing investment and

construction as prescribed in point a Clause 1 of this Article shall be
performed by a capital contribution agreement or investment cooperation agreement or business co-operation contract; the developer
shall sign the contract only after the residential housing investment and
construction project has been approved, site-clearance has been
conducted, with minutes on handover of the project boundaries available
and a notification on satisfying all conditions for capital mobilization has
been issued by the Department of Construction where the project is
located.
4.
4. Organizations, individuals who mobilise capital as prescribed in

Clauses 1 and 2 of this Article must use such mobilized capital for the
right purpose of constructing residential housing in such project; in case
of using mobilized capital for wrong purpose or appropriating such
capital, they shall be dealt in accordance with laws.
Article 67. Area in which foreign organizations, individuals may own
residential houses
1. Foreign organizations, individuals shall only be entitled to own
residential housing, including apartments and individual residential
houses in investment projects for construction of commercial residential
housing in areas where foreigners are not prohibited or restricted from
residing or travelling as provided for by law on residence and travel.
2. The Ministry of National Defence and the Ministry of Public Security
are responsible for determining the areas where foreigners are
prohibited or restricted from residing, travelling in each locality and shall
notify the provincial Peoples committees in writing thereof. The
provincial Peoples committees shall direct the Department of

in Clause 3 of this Article. Profit shall be distributed to capital
contributors, investment co-operators, business co-operators basing
on the proportion of capital contribution as agreed in the contract
only; developers shall not apply the form of capital mobilization
prescribed in this Clause or any other forms to distribute residential
housing products or to distribute land use right under the project to
capital contributors
Article 17.3 of the Draft Decree of LRH provides conditions for capital
mobilization of the developers. We note that enterprises conducting
any business in Vietnam are allowed to raise capital at any time for
their operation purposes. Therefore, it is unfair and will cause
concerns and difficulties to real estate enterprises since they have to
satisfy conditions under laws before raising capital.
Recommendation: We suggest removing Article 17.3 from the Draft
Decree of LRH.
Page 6 of 14
According to Article 67 of the Draft Decree of LRH, foreign individuals

and organizations are not entitled to own residential houses in areas
where foreigners are prohibited or restricted from residing or
travelling as provided under the law on residence and travel. We note
however that according to Article 159.2(b) of the LRH, foreign
individuals and organizations are only prohibited to purchase houses
in national defense and security area. Article 67 of the Draft Decree of
LRH has introduced a wider restriction for areas which foreign
individuals and organization are allowed to purchase houses.
Recommendation: We therefore suggest amending this Article as
follows:
NO.
5.

Construction to determine which investment projects for construction of
commercial residential housing in their respective localities are
permitted to be sold to foreign organizations, individuals.

1. Foreign organizations, individuals shall only not be entitled to own
residential housing, including apartments and individual residential
houses in investment projects for construction of commercial
residential housing in national defense and security areas where
foreigners are not prohibited or restricted from residing or travelling
as provided for by law on residence and travel.
2. The Ministry of National Defence and the Ministry of Public Security
are responsible for determining the national defense and security
areas where foreigners are prohibited from owning apartments and
individual residential houses or restricted from residing, travelling in
each locality and shall notify the provincial Peoples committees in
writing thereof. The provincial Peoples committees shall direct the
Department of Construction to determine which investment projects
for construction of commercial residential housing in their respective
localities are under national defense and security areas permitted to
be sold to foreign organizations, individuals.
- Article 161.2(a) of the LRH allows foreign individuals/organisations to
Article 68. Quantity of residential houses that foreign organizations,
own a maximum number of 250 individual residential houses in a
individuals are entitled to own
ward, comprising villas and terraced houses. We note however that
1. Based on the notification of the Ministry of National Defence and the
Article 68.4 of the Draft Decree of LRH introduces an additional
Ministry of Public Security as prescribed in Article 67.2 of this Decree, the
restriction whereby foreign organisations/individuals may own no
Department of Construction shall be responsible for publicly announcing
more than 10% of the total number of individual housing in each
on its website the list of investment projects for construction of
residential housing project. We are of the view that the number of
residential housing that foreign organizations, individuals are not allowed
maximum units which the foreign individuals and organisations are
to own residential housing.
allowed to own are further limited and not consistent with the LRH.
2. Foreign organizations, individuals are only permitted to own the
number of residential housing as stated in Clauses 3, 4 of this Article,
Recommendation: We therefore suggest removing Article 68.4 of the
except for the projects which are announced by the Department of
Draft Decree of LRH.
Construction as set out in Clause 1 of this Article.
3. Foreign organizations, individuals are entitled to own no more than
thirty percent (30%) of the total number of apartments in one apartment
building; where an area equivalent to a ward level administrative unit has
several apartment buildings for sale, hire purchase, then foreign
organizations and individuals shall be entitled to own no more than thirty
percent (30%) of the number of apartments in each apartment building
Page 7 of 14
NO.

and no more than thirty percent (30%) of the total number of apartments
in all these apartment buildings.
4. In case of investment projects for construction of residential housing

having individual residential housing therein, foreign organizations,
individuals may own no more than ten percent (10%) of the total number
of individual housing in each project; or no more than two hundred and
fifty (250) individual residential houses where there are more than two
thousand and five hundred (2500) individual residential houses in a
project or in several projects located in an area equivalent to a ward level
administrative unit.
6.
5. The Ministry of Construction shall provide guidelines on manners to

determine the quantity of residential housing that foreign organizations,
individuals are entitled to own in accordance with Clauses 3, 4 of this
Article.
Article 69. Extension of period of residential housing ownership in
Vietnam by foreign organizations and individuals
1. Residential housing purchases by foreign organizations, individuals set
out in Article 123.1 of Law on Residential Housing shall comply with
regulations in Article 8.1 and Article 9.1 of this Decree.
2. In case of residential housing ownership by foreign individuals
prescribed in Article 161.2.c of Law on Residential Housing, extension of
period of residential housing ownership shall be as follows:
a. Three (03) months prior to the expiry of residential housing
ownership, if owners wish to extend the period, they shall lodge an
application specifying the proposed extension period accompanied by
a certified copy of the Certificate with the provincial Peoples
committee where residential housing is located for consideration and
settlement;
b. Within thirty (30) days from the receipt of application submitted by an
owner, the provincial Peoples committee shall consider and issue a
written document approving for extending one time the period of
residential housing ownership at request of the owners, but not
exceeding fifty (50) years from the expiry of the first ownership period
stated in the Certificate;
Page 8 of 14
Article 69.2 of the Draft Decree of LRH provides that the provincial
Peoples Committees shall consider and approve the extension of the
term of residential housing ownership of foreign entities. The
conditions for such approval are, however, not provided in the law.
This will cause concerns and uncertainties to foreign owners. Article
159.2(b) provides that foreign individuals and organisations are
allowed to purchase, lease-purchase any commercial residential
houses under residential housing investment and construction
projects, except for areas relating to national defence and security. In
order to be consistent with Article 159.2(b) of the LRH, we propose
that Article 69.2 of the Draft Decree of LRH be amended to reflect that
the extension will be granted unless foreign individuals and
organisations are not allowed to own the commercial residential
houses for national defence and security reasons only.
Recommendation: We suggest inserting the following new provision:
5. Extension of period of residential housing ownership by foreign
organisations or individuals shall be granted except where ownership
is not permitted for national defence and security reasons.
NO.

c. After signing the written document approving the extension, the
provincial Peoples committee shall send it to agencies having
authority to issue the Certificate for recording such extension in the
Certificate.
3. In case of residential housing ownership by foreign organizations

prescribed in Article 161.2.d of Law on Residential Housing, extension of
period of residential housing ownership shall be as follows:
a. Three (03) months prior to the expiry of residential housing
ownership, if owners wish to extend the period, they shall lodge an
application specifying the proposed period for ownership extension
accompanied by a certified copy of the Certificate, Investment
Certificate extended by competent agencies for operation and submit
it to the provincial Peoples committee where residential housing is
located for consideration and settlement;
b. Within thirty (30) days from the receipt of application of an owner, the
provincial Peoples committee shall consider and issue a written
document approving for extending one time the period of residential
housing ownership at request of the owners, but not exceeding the
period stated in the Investment Certificate which has been extended
by competent authority for operation;
c. After signing the written consent for extension, the provincial Peoples
committee shall send it to agencies having authority to issue the Certificate
for recording the extension in the Certificate.
7.
4. The Ministry of Natural Resources and Environment shall cooperate with

the Ministry of Construction provide guidelines on recording the extension of
period of residential housing ownership in the Certificate in accordance with
Clauses 2, 3 of this Article.
Article 70. Management of residential housing of foreign organizations,
individuals in Vietnam
1. The Department of Construction shall create a separate item on its
website to manage information comprising list of investment projects for
construction of residential housing which are allowed to sell, hire
purchase to foreign organizations, individuals; quantity of residential
housing for which foreign organizations, individuals have been issued
with a certificate.

Articles 69.2(b) and 69.3(b) of the Draft Decree of LRH introduces an
addition restriction on the one-time extension of residential housing
ownership requested by foreign owners. Such restriction will cause
concerns to foreign buyers and may cause negative impact to business
development of the developers, including Vietnamese developers. In
order to be consistent with Article 159.2(b) of the LRH, we propose
that the extensions will be granted unless foreign individuals and
organisations are not allowed to own the commercial residential
houses for national defence and security reasons only.
Recommendation: We suggest removing the term one time under
Articles 69.2(b) and 69.3(b) of the Draft Decree of LRH.
Page 9 of 14
According to Article 70.1 of the Draft Decree of LRH, the DOC shall, on
its official website, provide a list of investment projects which foreign
individuals and organisations are allowed to purchase, leasepurchase houses. We note however that this Article is not consistent
with Article 68.1 of the Draft Decree of LRH which provides that the
DOC shall provide a list of investment projects for construction of
residential housing that foreign individuals and organisations are not
allowed to own residential houses.
NO.

2. Developers are only allowed to sell, hire purchase residential housing
to foreign organizations, individuals in accordance with the exact quantity
prescribed in Article 68 of this Decree.

In addition, we note that according to Article 159.2(b) of the LRH,
foreign individuals and organisations are allowed to purchase, leasepurchase any commercial residential houses under residential
housing investment and construction projects, except for areas
relating to national defence and security. Both Articles 68.1 of and 70.1
of the Draft Decree of LRH should only be applied on the basis of
Article 159.2 of the LRH.
3. After signing the contract for sale and purchase, contract for hire
purchase of residential housing, developer shall immediately send
information on the address of sold or hire purchased house to foreign
organisations and individuals to the Department of Construction where
such residential housing is located in order to publish such address on its
website.
When issuing the Certificate to foreign organizations, individuals,
agencies having authority to issue the Certificate shall immediately
announce the information on residential houses which have been issued
with the Certificate to the Department of Construction in order to publish
such information on its website.
4. Any transaction on purchase and sale, grant of hire purchase of
residential house in excess of the quantity that foreign organisations and
individuals are allowed to own as set out in Article 68 of this Decree or
any transaction on purchase, hire purchase of house in investment
projects for construction of residential housing not in the area permitted
to be owned [by foreign organisations and individuals] shall be invalid and
not be issued with the Certificate by competent authority; the sellers,
lessor of a hire purchase must compensate for damage caused to the
purchaser or the lessee of a hire purchasers.
We therefore suggest that the list shall be limited to investment

projects for construction of residential housing which the foreign
individuals and organisations are not allowed to sell or leasepurchase because they are located in areas relating to national
defence and security.
Recommendation: We suggest amending Article 70.1 of the Draft
Decree of LRH as follows: The Department of Construction shall
create a separate item on its website to manage information
comprising list of investment projects for construction of residential
housing which are not allowed to sell, hire purchase to foreign
organizations, individuals; quantity of residential housing for which
foreign organizations, individuals have been issued with a certificate.
-
5. Agency having authority to issue the Certificate to foreign

organisations and individuals is responsible to make an announcement
and send a copy of issued Certificate (including extensions thereof) to the
Ministry of Construction, the Ministry of Natural Resources and
Environment for monitoring and managing.
According to Article 70.1 of the Draft Decree of LRH, the DOC shall
publish the quantity of residential houses for which foreign individuals
and organisations have been issued with the Certificate. According to
Article 70.3 of the Draft Decree of LRH, after signing the contract for
sale and purchase and the contract for lease-purchase of residential
housing, the developer must send information to the Department of
Construction in order to publish such information on its website.
Article 70.1 should be amended to include the information on signed
contracts as well.
Recommendation: We suggest amending this Article 70.1 as follows:
The Department of Construction shall create a separate item on its
website to manage information comprising list of investment projects for
construction of residential housing which are not allowed to sell, hire
purchase to foreign organizations, individuals; quantity of residential
Page 10 of 14
NO.

housing for which foreign organizations, individuals have been issued
with a certificate; quantity of contract for sale and purchase, contract for
hire purchase of residential housing sold or hire purchased house to
foreign organisations and individuals; and quantity of contract for sale
and purchase, contract for hire purchase of residential housing
previously owned or hire purchased by foreign organisations and
individuals.
-
Article 70 of the Draft Decree of LRH only deals with contracts for sale
or hire-purchase of residential housing by a developer to foreign
organisations and individuals only. There are no provisions for
secondary sale or assignment of hire-purchase of residential housing
involving foreign organisations or individuals i.e. sale by foreign
organisations or individuals to Vietnamese buyers and vice versa. The
lists maintained by the Department of Construction will therefore not
accurately reflect the quantity of units owned by foreign organisations
or individuals. To address this issue, we would recommend as follows:
a. all sellers of residential housing send information on the sale or
hire purchase to a foreign organisation or individual or a sale or
hire purchase of a residential houses previously owned by a
foreign organizations, individuals; and
b. the agencies having authority to issue the Certificate should notify
the Department of Construction when a Certificate is issued which
affects the quantity of units owned by foreign organisations or
individuals.
Recommendation: We suggest amending Article 70.3 of the Draft
Decree of LRH as follows:
After signing the contract for sale and purchase, contract for hire
purchase of residential housing, the developer seller shall
immediately send information on the address of sold or hire
purchased house to foreign organisations and individuals to the
Department of Construction where such residential housing is located
in order to publish such information on its website.
After signing the contract for sale and purchase, contract for
Page 11 of 14
NO.

assignment of hire purchase of residential housing previously owned
by a foreign organisations, individuals, the seller shall immediately
send information on the address of sold or hire purchased house to
foreign organisations and individuals to the Department of
Construction where such residential housing is located in order to
publish such information on its website.
When issuing the Certificate to foreign organisations, individuals, or to
any purchaser of a residential houses previously owned by a foreign
organizations, individuals, agencies having authority to issue the
Certificate shall immediately announce the information on residential
houses which have been issued with the Certificate to the Department
of Construction in order to publish such information on its website.
-
Article 70.4 of the Draft Decree of LRH stipulates that any

Transactions in excess of the quantity which the foreign individuals
and organizations are allowed to own as set out in Article 68 of the
Draft Decree of LRH shall be invalid and not be issued with the
Certificate by competent authority. It is however unclear (i) how to
identify which Transactions exceed the maximum units, and (ii) who
will have the authority to decide on which Transactions are invalid.
Recommendation: We suggest providing clear method of identifying
an invalid Transaction.
Page 12 of 14
Article 70.4 of the Draft Decree of LRH provides that in case the
Transaction is invalid pursuant to the abovementioned reason, the
sellers/lessors of lease-purchase must compensate for damage
caused to the purchasers or the lessees of the lease-purchase. This
Article is however contrary with Article 137.2 of the Civil Code 2005,
which provides that the party at fault which caused damage must
compensate. Further, such requirement is unfair to the developers
given that they will be liable for the occurrence of such invalid
Transaction irrespective of whether the damage suffered by the
purchasers or the lessees of the lease-purchase is due to the
developers faults.
NO.
8.
Article 74. Transitional provisions on residential housing development

and management
1. In case the application file for in-principle investment decision was
lodged but the competent authorities have not issued such decision, the
procedure for issuing in-principle investment decision shall comply with
Law on Residential Housing and this Decree.
2. For projects of residential housing construction which have been

approved but fall in category required adjustment of the projects content
as prescribed in Article 182.1 of Law on Residential Housing, developers
shall report to the agency having authority to make in-principle
investment decision to issue a document amending such in-principle
investment decision in accordance with law before approving the
supplementations and adjustments and implementation thereof.
Article 74.3 of the Draft Decree of LRH requires that the developer
must submit a written proposal on changing the English names of the
project and areas within the project which have been approved by the
authorities and has not yet been commenced construction of
residential housing. We are of the view that such requirement is not
practical and will cause difficulties for investors conducting
residential projects.
Recommendations: We therefore suggest amending this Article as
follows:
For an approved investment project for construction of commercial
residential housing in which the developer use foreign language in the
names of project and areas in project and the project has not yet been
commenced construction of residential housing, the developer are not
required to must submit a written proposal on changing names of the
project and areas within such project in accordance with Article 19.3
of Law on Residential Housing to the provincial Peoples committee
for approval. Any transaction relating to investment project for
construction of residential housing must are allowed to use the exact
English name which has been approved by the competent authority.
3. As from the effective date of Law on Residential Housing, the name of

project and name of areas in the investment projects for construction of
residential housing must comply with Article 19.3 of Law on Residential
Housing.
For an approved investment project for construction of commercial
residential housing in which the developer use foreign language in the
names of project and areas in project and the project has not yet been
commenced construction of residential housing, the developer must
submit a written proposal on changing names of the project and areas
within such project in accordance with Article 19.3 of Law on Residential
Housing to the provincial Peoples committee for approval. Any
transaction relating to investment project for construction of residential
housing must use the exact name which has been approved by the
competent authority.

Recommendation: We therefore suggest amending the last sentence
of Article 70.4 as follows: the party which caused such damage shall
make compensation.
There should be transitional provisions on how to deal with the
application file for investment approval which has been submitted
prior to the effective date of the Draft Decree of LRH but the approval
for such application has not been issued by the competent authorities.
4. Where an investment project for construction of residential housing for

resettlement has been approved, it shall be approved in accordance with
Page 13 of 14
Article 74.7 of the Draft Decree of LRH provides a transitional provision

for contracts which have been signed before 1 July 2015 in relation to
method of calculation and record of the residential housing area, the
warranty period of residential housing and the parking plot. We note
however that the Draft LREB is silent on the transitional provisions for
other contents of the residential housing contracts which have already
been signed under the old LRH. There are numerous agreements which
NO.

Law on Residential Housing and this Decree; Where the provincial
Peoples committee has approved the plan for compensation, assistance,
resettlement, then the approved plan shall be continuously implemented.
5. Where a commercial residential housing has been handed over to the
purchaser by the developer but an application file for issuance of the
Certificate to such house has not been submitted to the competent State
authority up to the effective date of the Law on Residential Housing, the
purchaser of such house shall be permitted to transfer the contract for sale
and purchase of residential housing in accordance with guidance of the
Ministry of Construction.
6. Where an apartment building management committee has been
established prior to the effective date of the Law on Residential Housing
and such committee wishes to re-organize the operation model as
stipulated in the Law on Residential Housing, an apartment building
meeting shall be held in order to re-establish the apartment building
management committee in accordance with the Regulations on
management and use of apartment buildings issued by the Ministry of
Construction.
7. In cases of sale and purchase, hire purchase of residential housing
prior to the effective date of the Law on Residential Housing and the
parties have already agreed in the contract on the method of calculation
and record of the residential housing area, the warranty period of
residential housing, parking plot which are different from those
stipulated in Law on Residential Housing, they shall be entitled to
implement the signed agreements, unless otherwise mutually re-agreed
by the parties in accordance with Law on Residential Housing.
Page 14 of 14

have already been signed before the new LRH comes into effect eg sale
and purchase agreements, sale and purchase of assets to be formed in
the future, hire purchase agreements. Note that there are substantial
changes to terms and conditions for the conduct of residential housing
transactions which may affect all these agreements. It is not immediately
clear to what extent any existing agreements must be amended to
comply with the new LRH. This will cause a lot of uncertainty and
difficulty to both business entities and also individuals who have entered
into residential housing transactions. In order to prevent any negative
impact to the real estate sector and the economy, in general, we would
propose that all existing agreements continue to be implemented
according to the existing laws and no changes are required.
Recommendation: We suggest adding the following new provision to
Article 74 of the Draft Decree of LRH:
Agreements which have already been signed before the Law on
Residential Housing takes effect shall continue to be implemented in
accordance with the law at the time when they were signed.
Comments on draft Decree guiding implementation of Law on Real Estate Business
COMMENTS ON THE DRAFT DECREE GUIDING IMPLEMENTATION OF LAW ON REAL ESTATE BUSINESS 2014 (THE 3 VERSION)
RD
Prepared by
Mr. David Lim ZICOLaw
VBF Land Sub - Group
No.
DRAFT DECREE OF LAW ON REAL ESTATE BUSINESS (LREB)

Article 3. Conditions applicable to organisations and individuals
conducting real estate business
1.
Any organization or individual conducting real estate business
must establish an enterprise or co-operative (hereinafter referred to
as enterprise) as set out in Clause 1, Article 10 of the Law on Real
Estate Business and must have the legal capital as follows:
a. Having the legal capital not less than VND50 billion for cases of
investment made in real estate projects for business purpose
for which competent State authorities shall decide the
investment in-principle decisions, investment in-principle
approvals in accordance with the provisions of law on public
investment, law on investment, law on residential housing, [and]
law on urban;
1
b. Having the legal capital not less than VND20 billion for cases of
investment made in real estate projects for business purpose
not under the category set out in Point a of this Clause;
c. Enterprises which have already had the real estate business
function before 01 July 2015 but not satisfied the requirements
on legal capital set out in Points a and b of this Clause shall be
permitted to continue conducting real estate business; however,
from 01 July 2016, if they continue to conduct real estate
business and fall under the categories with the legal capital
required in Points a and b of this Clause, they must satisfy such
sufficient legal capital in accordance with law.
2. Cases not required to satisfy the requirement on legal capital set
out in Clause 1 of this Article include:
a. Organisations, family households, individuals who sell,

Article 3.1 of the Draft Decree of LREB stipulates that any organization
or individual conducting real estate business must establish an
enterprise or co-operative. According to the laws on investment,
organisation or individual may also conduct real estate business by
way of entering into a business cooperation contract without
establishing a legal entity. Therefore, we suggest incorporating the
latter provision to the former provision.
Recommendation: We suggest amending Article 3.1 as follows: Any
organization or individual conducting real estate business must
establish an enterprise or co-operative or sign business cooperation
contracts with the entities conducting real estate business and must
have the legal capital to Article 3.1.
Further, Article 3.1(a) of the Draft Decree of LREB also stipulates that
real estate projects which are required to obtain the investment inprinciple decisions (IID), investment in-principle approvals (IIA)
shall have a minimum legal capital of VND50 Billion. We note however
that such minimum requirement of legal capital is not consistent with
Article 10.1 of LREB which provides that the enterprises conducting
real estate business must have a minimum legal capital of VND20
Billion.
The minimum requirement of legal capital of VND20 Billion is already
too high for small scale projects. Even companies with strong financial
resources will reconsider if it is commercially reasonable to contribute
a very high amount of capital for a project that has very low total
investment capital. A possible outcome of this policy is that it will
discourage real estate companies from undertaking small scale real
estate projects. This will seriously impact the real estate sector
negatively. The amount of legal capital should not therefore be
Page 1 of 13
No.

transfer, lease out, hire-purchase real estate in small scale
and not on a regular basis set out in Article 5 of this Decree not
required to establish an enterprise and satisfy the requirement
on legal capital;

increased to VND50 Billion. We would propose that a percentage of
total investment capital be used instead. This will ensure that only
companies with sufficient financial resources undertake large scale
projects and will not penalise developers who undertake small scale
projects.
b. Enterprises conducting real estate services, individuals

conducting independent set out in Chapter 4 of the Law on
Real Estate Business not required to satisfy the requirement
on legal capital.
Further, the minimum requirement of legal capital applies to all real

estate business activities including activities which do not require a
high amount of capital e.g. lease and sublease of space. The
requirement for legal capital should only apply for real estate
construction and development projects whereby high investment costs
are required.
3. Enterprises conducting real estate business who must satisfy

the requirement on legal capital must be responsible for the
truthfulness and accuracy of the legal capital amount and must
maintain their legal capital not to be lower than the legal capital
amount set out in Clause 1 of this Article throughout their real
estate business duration.
4. Pursuant to the socioeconomic development conditions of the
country in each period, the Ministry of Construction shall research
and then make proposal to the Government for adjusting the legal
capital appropriately but not less than VND20 billion.
Recommendation: The requirement on legal capital is only applicable

to real estate construction and development projects according to the
value and scale of the projects which, in any event, shall not be more
than VND20 Billion. If a higher legal capital is required, a percentage of
total investment capital shall be applied.
-
According to Article 3.1(c) of the Draft Decree of LREB, the current

enterprises conducting real estate business will have one year to increase
their legal capital to VND20 Billion/VND50 Billion in accordance with the
LREB. This requirement will cause serious implications to projects which
have already been licensed and are currently being implemented. There
are currently many projects which are being implemented smoothly and it
is very difficult to understand why this is necessary. This also sends out a
very negative signal to the business community that rules and laws which
have been implemented can be changed at any time. We would
recommend that the new provisions should not be applicable to projects
which have already been licensed under the existing laws.
Recommendation: We suggest amending Article 3.1(c) as follows:
Enterprises which have already had the real estate business function
before 1 July 2015 but not satisfied the requirements on legal capital
set out in Points a and b of this Clause shall be permitted to continue
conducting real estate business; however, from 01 July 2016, if they
Page 2 of 13
No.

continue to conduct real estate business and fall under the categories
with the legal capital required in Points a and b of this Clause, they
must satisfy such sufficient legal capital in accordance with law.
-
Article 5. Regulations regarding organisations, family

households, individuals who sell, transfer, lease out, hirepurchase real estate in small scale and not on a regular basis
Organisations, family households, individuals who sell, transfer,
lease out, hire-purchase real estate in small scale and not on a
regular basis set out in Clause 2 of Article 10 of the Law on Real
Estate Business include the followings:
1. Organisations, family households, individuals who sell, transfer,
lease out, hire-purchase real estate that not by way of investment
in a real estate project for business purpose.
Recommendation: We suggest amending Article 3.3 as follows:

Enterprises conducting real estate business who must satisfy the
requirement on legal capital must be responsible for the truthfulness
and accuracy of the legal capital amount and must maintain their legal
capital not to be lower than the legal capital amount set out in Clause 1
of this Article throughout their real estate business duration.
Article 5.6 of the Draft Decree of LREB provides that organizations,
households, individuals investing in construction of residential houses
for sale, lease, lease-purchase which are not required to establish an
enterprise in accordance with the LRH are considered as conducting
real estate business in small scale and on irregular basis. It is however
not provided in the LRH and the Draft Decree of LRH which
organizations, households and individuals investing in construction of
residential houses for sale, lease, lease-purchase are not required to
establish an enterprise.
Recommendation: We suggest incorporating a clear provision in the
Draft Decree of LRH on which organizations, households and
individuals investing in the construction of residential houses for sale,
lease, lease-purchase are not required to establish an enterprise.
2. Organisations, family households, individuals who contribute

capital for business purpose by land use right, ownership of
housing and buildings.
3. Organisations who transfer the land use right, sell houses and
buildings as a result of bankruptcy, dissolution, division/splitting.
Article 3.3 of the Draft Decree of LREB, enterprises conducting real

estate business must maintain their legal capital amount as required
by the laws throughout their business duration. Please consider if it is
necessary impose this requirement for the enterprises who have
completed their projects whereby there are no future capital needs.
Real estate companies should be permitted to reduce capital where
there are no future requirements for capital. We would therefore
propose the removal of this requirement.
We note that there is no definition of conducting real estate business

in small scale and on irregular basis under the LREB and Draft Decree
of LREB.
Page 3 of 13
No.

4. Banks, credit institutions who transfer land use right, sell
houses and buildings which are mortgaged for debt recovery.

Recommendation: We suggest providing a definition of conducting
real estate business in small scale and on irregular basis under the
Draft Decree of LREB.
5. Banks, organisations, family households, individuals who transfer

the land use right, sell houses and buildings for the purpose of asset
realization pursuant to a decision of a Court, of a competent State
authority upon settlement of a complaint or denunciation.
6. Organisations, family households, individuals who invest in
construction of residential housing for sale, lease, hire-purchase
not required to establish an enterprise in accordance with the
provisions of laws on residential housing.
7. Agencies, organisations who are permitted by a competent State

authority to transfer the land use right, to sell houses, buildings
under the State ownership in accordance with the provisions of
laws on public asset management.
Article 6. Types of contracts used in real estate business
The types of contracts used in real estate business set out in
Article 17 of the Law on Real Estate Business must be made in
writing in form provided for in the appendices to this Decree,
specifically as follows:
1. Contracts for sale and purchase of houses, buildings which are
existing or to be formed in the future must comply with the form
set out in Appendix 1.
2. Contracts for lease of houses, buildings which are existing or to
be formed in the future must comply with the form set out in
Appendix 2.
3. Contracts for hire-purchase of houses, buildings which are
existing or to be formed in the future must comply with the form
set out in Appendix 3.
According to Article 6 of the Draft Decree of LREB, real estate business

transactions must follow the templates provided in the Appendices
under this Decree. We are of the view that such templates should only
be a guide for the organisations/individuals engaging in real estate
transactions but it is not possible to have a complete set of provisions
covering all aspects of real estate transactions. The parties in a real
estate contract should therefore be allowed to supplement the
templates with provisions which are not contrary with the laws.
Recommendation: We suggest adding the following provisions to the
end of Article 6:
The parties in a real estate contract are allowed to adjust the
templates set out in appendices mentioned above, provided that such
adjustments are not contrary with the laws
4. Contracts for transfer, lease, sub-lease of land use right must

comply with the form set out in Appendix 4.
Page 4 of 13
No.

5. Contracts for transfer of the whole or a part of a real estate
project must comply with the form set out in Appendix 5.
Article 11. Order of and procedure for transfer of contracts for
hire-purchase of existing houses and buildings
1. The transfer of contracts for hire-purchase of houses and
buildings must be made in writing in form set out in Appendix 6
attached to this Decree, with the confirmation of the lessor of a
hire-purchase in such transfer document.
Where a transferor of a contract is not an organisation having legal
entity status, the writing document for contract transfer must be
notarised/certified before sending to the lessor of a hire-purchase
for confirmation purpose. The notarising agency shall be
responsible to certify the writing document for contract transfer on
the parties production of the signed contract for hire-purchase of
house or building and their personal identification papers as
required by the notarising agency; in the cases of transfer made for
the second time onwards, then writing documents for contract
transfer of previous time(s) must also be shown.
Recommendation:
We
therefore
suggest
removing
notarisation/certification requirement under Articles 11.1 and 13.2.
-
2. After either the transferor or the transferee of the contract has

paid taxes in accordance with the provisions of law, within 05
working days at maximum from the receipt of writing document for
contract transfer, the lessor of a hire-purchase shall be
responsible to made confirmation in such writing document for
contract transfer and return it to the application file submitting
party and no fee shall be collected in relation to such contract
transfer.
3. From the date the lessor of a hire-purchase makes confirmation
in a writing document for contract transfer, the transferee of the
hire-purchase contract may continue exercise the rights and
obligations of a lessee of a hire-purchase of houses and buildings
to the lessor of a hire-purchase pursuant to the contract for hirepurchase of house or building signed between the lessor of a hirepurchase and the transferor of the hire-purchase contract.
Articles 11.1 and 13.2 of the Draft Decree of LREB provide that in case a
transferor of the contract is not an organisation having legal entity status,
the transfer contract must be notarised/certified. This requirement
imposes an additional procedure for conducting contract transfer and may
cause further delay on the transfer process.
the
According to Articles 11.1, 11.2, 13.2(a) and 13.2(b) of the Draft Decree of
LREB, the lease-purchase contract shall be confirmed by the developer in
the event that the transferor intends to transfer the lease-purchase
contract to other party. The lease-purchase contract shall be confirmed by
the developer upon (i) the notarisation/certification of the transfer of the
lease-purchase contract entered into between the transferor and the
transferee; and (ii) the payment of the applicable tax by the transferor or
transferee. The requirement to obtain confirmation twice from the
developer on the lease-purchase contract creates administrative burden
for a developer. The obligation to confirm the payment of tax should be on
the transferor or transferee and not the lessor.
Recommendation: We therefore suggest that the transferor shall only
be required to obtain confirmation from the developer once, i.e. upon
the notarisation/certification of the transfer of the lease-purchase
contract and the confirmation of payment of tax be made by the
transferor or the transferee.
It is unclear what the application file in Article 11.2 of the Draft

Decree of LREB refers to.
Recommendation: We suggest that this is clarified.
Page 5 of 13
No.

4. For cases of transferring contracts for the second time onwards,
the same transfer procedure must also be performed as in the
case of transferring contracts for the first time.
5. The transferee of a contract for hire-purchase of house or
building finally shall be issued with a Certificate of land use right,
ownership of residential housing and other assets attached to the
land by the competent State authority in accordance with the laws
on land after all financial obligations relating to assignment taxes
have been paid in full in accordance with law.
6. In performing the procedure for issuance of the certificate of
land use right, ownership of residential housing and other assets
attached to the land, the party requesting such issuance must
submit to the certificate issuing authority such documents relating
to the transfer of contract, specifically as follows:
a. Contract for hire-purchase of house or building which has
been signed for the first time;
b.
Minutes of liquidation of the hire-purchase contract (in case

it has been liquidated);
c.
Writing document on contract transfer with confirmation of

the lessor of a hire-purchase and being notarised in
accordance with Clause 1 of this Article;
Receipt of tax payments for each time of contract transfer
in accordance with law or documents evidencing exemption
of income tax [payment] in accordance with law.
d.
Article 13. Order of and procedure for transfer of contracts for

sale and purchase, hire-purchase of residential housing to be
formed in the future
1. The order of and procedure for transfer of contracts for sale and
purchase of residential housing shall comply with the laws on
residential housing.
Page 6 of 13
No.

2. The order of and procedure for transfer of contracts for hirepurchase of residential housing shall be as follows:
a. The transfer of contracts for hire-purchase of residential
housing to be formed in the future must be made in writing
in form set out in Appendix 7 attached to this Decree, with
the confirmation of the investor in such transfer document.
Where a transferor of a contract is not an organisation
having legal entity status, the writing document for contract
transfer must be notarised/certified before sending to the
investor for confirmation purpose. The notarising agency
shall be responsible to certify the writing document for
contract transfer on the parties production of the signed
contract for hire-purchase of residential housing and their
personal identification papers as required by the notarising
agency; in the cases of transfer made for the second time
onwards, then writing documents for contract transfer of
previous time(s) must also be shown.
b. After either the transferor or the transferee of the contract
has paid taxes in accordance with the provisions of law,
within 05 working days at maximum from the receipt of
writing document for contract transfer, the lessor of a hirepurchase shall be responsible to made confirmation in
such writing document for contract transfer and return it to
the application file submitting party and no fee shall be
collected in relation to such contract transfer.
Article 15. Order of and procedure for transfer of the whole or
part of a project the investment of which is decided by the
provincial Peoples committee (decision made on the investment
policy, investment decision, documents approving the
investment)
1. The transferring investor shall submit 01 set of application file for
transfer of the whole or part of a project to the provincial Peoples
committee where the project is located (or to an agency which is
authorised by such provincial Peoples committee). The application file
for transfer of the whole or part of a project shall include:
According to Article 48 of LREB, investor of a real estate project is

allowed to transfer the whole or part of a real estate project to another
investor in order to conduct business development, provided that there
is no change in the objectives and contents of the project and the
interests of clients and related parties are ensured. Further, Article 49
regulating conditions for transferring the whole or part of a real estate
project does not provide the reason for transfer. Therefore, we
understand that investor of a real estate project may, at its own
discretion, decide to transfer the whole or part of a real estate project
to another investor, subject to the satisfaction of conditions to transfer
the real estate project as set out in Article 49 of LREB.
Page 7 of 13
No.

a. Request for transfer of the whole or part of the project
made by the transferring investor, in which specifying the
reasons for transfer; the status of investment project
implementation up to the time of request for transfer;
recommending an investor who receives the transfer; plans
for handling interests and obligations of customers and
concerned parties in form set out in Appendix 8 attached to
this Decree;
b. The file of the project or part of the project requested for
transfer shall include:
- Document permitting the investment or document
approving the investment made by the competent State
authority (certified copy));
- Decision on project approval (certified copy);
- Land use right certificate in respect of the whole or part of
the project requested for transfer (certified copy);
- Approved investment project, including the explanation and
basic design.

We note however that Article 15.1(a) of the Draft Decree of LREB
provides that the application request for transfer of the whole or part of
the project made by the transferor must clearly state the reason for
transfer. We are of the view that such requirement is unnecessary and
causes difficulties as well as restricts the investors from transferring
their projects.
-
Recommendation: We therefore suggest removing the reason for

transfer under Article 15.1(a), Part II of Appendix 8A and Part III of
Appendix 8B of the Draft Decree of LREB.
Article 15.1(d) provides that the application files for project transfer
shall include the business registration certificate. We note that these
conditions can apply to transferees being domestic investors and
foreign investors who already have existing projects in Vietnam;
however they cause many difficulties to investors being foreign
individuals and organizations who make investment in Vietnam for the
first time with the investment project being the transferred project.
Pursuant to the laws on investment, a foreign investor who makes
investment in Vietnam for the first time must have an investment
project to be entitled to establish an enterprise and obtain an
investment registration certificate and an enterprise registration
certificate. However, these provisions require foreign investor who
makes investment in Vietnam for the first time to set up a company
before it can be engaged in a project as required by the laws on
investment. This overlapping and conflicting regulation has restricted
the rights to receive transfer of real estate projects of foreign investors
who make investment in Vietnam for the first time.
Report on the project implementation progress made by the

transferring investor up to the time of transfer in form set out
in Appendix 9 to this Decree.
c. The file of the investor who receives the transfer shall
include:
- Request for receipt of transfer of the project or part of the
project, in which contains its undertakings on continue
implementing and investing in construction and business in
strict compliance with laws, ensuring the implementation
progress and particulars of the project upon its receipt of
project transfer (in form set out in Appendix 10 to this
Decree).
- Business registration certificate in which contains the
business line of conducting real estate business or
Enterprise registration certificate recording an amount of
Recommendation: We therefore suggest adding the phrase except for

investors being foreign individuals and organizations who make
investment in Vietnam for the first time to the second paragraph of
Article 15.1(d).
-
Article 15.1(d) also provides that the transferees will submit documents
evidencing the owners equity to the authority for the purpose of
Page 8 of 13
No.

charter capital satisfying the requirements set out in Article
3 of this Decree (certified copy);
- Document evidencing that the investor owns an amount of
fund for implementing the project which is not lower than
20% of the total investment amount with respect to projects
with a land use size less than 20 hectares; and not lower
than 15% of the total investment amount with respect to
projects with a land use size from 20 hectares or more in
accordance with the provisions of laws on land or
confirmation document made by an independent audit firm
regarding the current available equity owned by the new
investor as recorded in the enterprises latest financial
statements (being the year of application [for project
transfer receipt] or the preceding year of such year)
satisfying the requirements on capital mentioned above for
project implementation.
2. Within 30 days from the receipt of valid application files in full,
the main agency which is authorised by the provincial Peoples
committee shall be responsible to organise the evaluation in
accordance with Article 17 of this Decree and report the evaluation
result to the provincial Peoples committee for [the latters]
issuance of a decision permitting the transfer. Where it has not
satisfied all conditions to be permitted for transfer, the provincial
Peoples committee must send a notice in writing to the
transferring investor specifying the reasons therefore.
3. Within 30 days from the issuance of a decision permitting the
transfer of a project or part of a project by a competent State
authority (in form set out in Appendix 11 to this Decree), the parties
must complete the signing of a transfer contract and complete the
handover of project or part of project. The investor who receives
the transfer shall be responsible to continue implement the project
or the part of project right after receipt of handover. The
transferring investor shall be responsible to hand over the investor
receiving the transfer all of the dossiers relating to the project or

obtaining the project transfer decision. We note however that it is
unclear what documents are required for evidencing the owners
equity.
Recommendation: We therefore suggest amending this Article as
follows:
Document evidencing that the investor owns an amount of fund for
implementing the project which is not lower than 20% of the total
investment amount with respect to projects with a land use size less
than 20 hectares; and not lower than 15% of the total investment
amount with respect to projects with a land use size from 20 hectares
or more in accordance with the provisions of laws on land (including (i)
bank statement; (ii) undertaking of the parent company or a financial
institution(s) to provide financial support; (iii) guarantee for the
financial capability of the investor; or (iv) other documents proving the
financial capability of the investor) or confirmation document made by
an independent audit firm regarding the current available equity owned
by the new investor as recorded in the enterprises latest financial
statements (being the year of application [for project transfer receipt]
or the preceding year of such year) satisfying the requirements on
capital mentioned above for project implementation.
-
Article 15.2 provides that within 30 days from the receipt of valid
application files in full, the agency that is authorised by the provincial
Peoples committee shall be responsible to evaluate and report the
evaluation result to the provincial Peoples committee for issuance of a
project transfer decision.
We note however that it is unclear under Draft Decree on how the
transfer will proceed if the project transfer decision is not issued within
30 days for any reason.
Recommendation: We therefore suggest amending Article 15.3 as
follows:
Within 30 days from the issuance of a decision permitting the transfer
of a project or part of a project by a competent State authority (in form
set out in Appendix 11 to this Decree) or where no decision permitting
Page 9 of 13
No.

part of the project, together with handover minutes and document
checklist. The handover of landmarks of the project on site shall
comply with the provisions of laws on land.

the transfer of a project or part of a project by a competent State
authority (in form set out in Appendix 11 to this Decree) is issued within
30 days from the receipt of valid application files in full and the
provincial Peoples committee has not issued a notice in writing to the
transferring investor specifying that all conditions to be permitted for
transfer have not been met, the parties must complete the signing of a
transfer contract and complete the handover of project or part of
project. The investor who receives the transfer shall be responsible to
continue implement the project or the part of project right after receipt
of handover. The transferring investor shall be responsible to hand
over the investor receiving the transfer all of the dossiers relating to
the project or part of the project, together with handover minutes and
document checklist. The handover of landmarks of the project on site
shall comply with the provisions of laws on land.
Before performing procedure for handover, the transferring

investor must send written notice to all customers (if any) and
notify on mass media 15 days in advance (at least on 03 consecutive
issues of a newspaper published in locality, a local television
channel or central television channel and the website (if any) of the
main agency at provincial level where the project is located which
conducts the project evaluation) regarding the transfer of project
or part of the project and interests of customers.
4. Where the investor who receives real estate project transfer is a
foreign invested enterprise, then after issuance of a decision
permitting the project transfer made by a competent State
authority, the transferring investor shall perform procedure for
returning the land to the State and the competent State authority
shall decide to allocate land or lease land to the investor who
receives the project transfer in accordance with the laws on land
within 30 days from the full receipt of valid dossiers.
5. Pursuant to the decision permitting transfer of the whole or part
of project made by the competent State authority and the contract
for transfer of the whole or part of the project which has been
signed by two parties, the natural resources and environment
management agency shall perform procedure for recovery of land
from the transferor and then allocate such land to the transferee
and organise the handover of landmarks of the project on site in
accordance with the provisions of laws on land.
Article 15.5 of the Draft Decree of LREB provides that pursuant to the
project transfer decision and the project transfer contract, the natural
resources and environment management agency shall perform
procedure for recovery of land from the transfer or and then allocate
such land and hand over the project site to the transferee in accordance
with the provisions of laws on land. It is unnecessary for the land to be
recovered and re-allocated to the transferees. The authorities merely
have to amend the land use rights certificate to record that the
transferee is the new land user since the transferee, being a successor
of the project, will have the continuous right to use the land for the
purpose of development of the project as a result of the project transfer.
Further, we note that the handover of the project site is repeated of the
last sentence in first paragraph of Article 15.3.
Recommendation: We therefore suggest removing Article 15.5 from the
Draft Decree of LREB:
Pursuant to the decision permitting transfer of the whole or part of
project made by the competent State authority and the contract for
transfer of the whole or part of the project which has been signed by two
parties, the natural resources and environment management agency shall
Page 10 of 13
No.
Article 16. Order of and procedures for transfer of the whole or

part of a project the investment of which is decided by the Prime
Minister (decision made on the investment policy, investment
decision, documents approving the investment)
1. The transferor shall be responsible, together with the transferee
of the whole or part of a real estate project, to prepare dossiers
and submit the same to the competent authority in compliance with
Clause 1, Article 15 of this Decree.

perform procedure for recovery of land from the transferor and then
allocate such land to the transferee and organise the handover of
landmarks of the project on site in accordance with the provisions of laws
on land.
-
We note however that it is unclear under the Draft Decree on what will
happen if the project transfer decision is not given within this timeline
for any reason.
2. Within 45 days from the full receipt of valid dossiers, the provincial
Peoples committee shall be responsible to organise the evaluation in
accordance with Article 17 of this Decree, and seek opinions of
specialised managing Ministry and the Ministry of Construction, and
then report to the Prime Minister for his decision.
3. Other contents in relation to the transfer of the whole or part of a

real estate project the investment of which is decided by the Prime
Minister shall comply with Article 15 of this Decree.
Article 17. Evaluation and granting opinions regarding the
dossiers for transfer of the whole or part of a project
1. The contents of evaluation and granting opinions regarding the
dossiers for transfer of the whole or part of a real estate project
shall include:
a. [Contents] regarding the dossiers requesting for transfer of
the whole or part of the project made by the project
investor.
b. [Contents] regarding the conditions of project or part of
project subject to transfer.
c. [Contents] regarding the condition of the transferring
investor.
d. [Contents] regarding the conditions of the investor who
Article 16.2 provides that within 45 days from the receipt of valid
application files in full, the provincial Peoples committee shall
evaluate and seek opinions of specialised managing Ministry and the
Ministry of Construction, and then report to the Prime Minister for his
decision.
Recommendation: We therefore suggest adding to the following to the

end of Article 16.2 If the decision is not given within the 45 days time
period for any reason, the transfer will proceed as if a decision to permit
the transfer of the whole or part of a real estate project has been
granted.
According to Article 17.1(c) of the Draft Decree of LREB, the authorities

shall evaluate and provide their opinions regarding the conditions of the
transferor. We note that the licensing authorities and the relevant
authorities have already evaluated the capacity and conditions of the
transferor before approving the investment by the transferor in the
project. We therefore are of the view that such requirements are
unnecessary and should be removed.
Recommendation: We suggest removing the conditions of the
transferors under Article 17.1(c) of the Draft Decree of LREB.
Page 11 of 13
No.

receives the project transfer.
2. The agency which takes the main role in evaluation task and
the agencies responsible for giving opinions regarding the dossiers
requesting for transfer of the whole or part of a real estate project
must give their opinions regarding the contents mentioned in
Clause 1 of this Article, and at the same time must specify their
opinions as to whether the project or part of project under transfer
has satisfied all conditions for transfer or not. Where it has not
satisfied all conditions for transfer, reasons must be specified for
the evaluation presiding agency to report the same to the agency
having authority for permitting the project transfer or respond to
the transferring investor clear reasons in case of refusal of project
transfer.
Transitional provision
Implementation of current agreements

There is no transitional provision to deal with implementation of
agreements, which have already been signed under the old LREB.
There are numerous agreements which have already been signed
before the new LREB comes into effect e.g. sale and purchase
agreements, sale and purchase of assets to be formed in the future,
contracts for mobilization of capital, hire purchase agreements, lease
and sub-lease agreements, project transfer agreements. Note that
there are substantial changes to terms and conditions for the conduct
of real estate business which may affect all these agreements. It is
not immediately clear to what extent any existing agreements must be
amended to comply with the LREB. This will cause a lot of uncertainty
and difficulty to both business entities and also individuals who have
entered into real estate transactions. In order to prevent any negative
impact to the real estate sector and the economy, in general, we
would propose that all existing agreements continue to be
implemented according to the existing laws and no changes are
required.
Recommendation: We suggest adding the following provision to the
Draft Decree of LREB:
Agreements which have already been signed before the Law on Real
Page 12 of 13
No.

Estate Business takes effect shall continue to be implemented in
accordance with the law at the time when they were signed.
-
Enterprises conducting valuation services

According to Article 80.1 of LREB, any real estate business enterprise,
including enterprises conducting valuation services currently operating
and not yet satisfying all the conditions stipulated in the LREB must
satisfy all the conditions within 1 year from the effective date of the
LREB, i.e 1 July 2015. We note however that Article 33.1 of Decree
89/2013 provides another timeline for current enterprises to comply
with the law on pricing, which is 25 September 2015. The difference of
the deadline provided under the LREB and Decree 89 will cause
confusion to enterprises.
Recommendation: We therefore suggest clarifying that current
enterprises conducting valuation services have to comply with
conditions provided under the law on pricing from 1 July 2016 only.
Page 13 of 13
Investment Law and

Enterprise Law
Comments on the draft Decrees on business registration and guiding the 2014 Law on Enterprises
COMMENTS ON THE DRAFT DECREES ON BUSINESS REGISTRATION AND GUIDING THE 2014 LAW ON ENTERPRISES
As at 20 April 2015
Prepared by:
Allens
1
General comments
We understand that following the issuance of the 2014 Law on Enterprises (LOE), the Ministry of Planning and Investment (MPI) are collecting
opinions on the draft guiding decrees of the LOE, including (i) Decree on detailed guidelines for the implementation of the LOE (Draft
Implementing Decree) and (ii) Decree on business registration (Draft Registration Decree). As an overall view, the Draft Registration Decree
has been prepared in details and clarified some important points of the LOE while the Draft Implementing Decree is rather general and mostly
focus on providing guidelines for social enterprises, leaving a number of issues under the 2014 LOE unaddressed. Therefore, we would like to
take this opportunity to propose some issues which we think could be better addressed in the implementing decrees for these two drafts.
Our comments and suggestions are set out in the table below and sorted in ascending order of the relevant provision in each draft decree
version as of March 2015.
2
Main comments on the Draft Decrees guiding the 2014 Law on Enterprises
No.
A.
1.
Draft Decree
Issues
DRAFT BUSINESS REGISTRATION DECREE
25, 26
Article 25, 26 of the Draft Registration Decree set out the list of
documents required for enterprise establishment, which includes
a legalized copy of the incorporation certificate of a
member/shareholder being a foreign investor. This requirement
will apply even in the case when the legalized incorporation
certificate has already been submitted during the application
process for investment registration certificate (IRC).
Resubmission of another legalized copy would be redundant and
onerous for the foreign investors, especially if the IRC process is
prolonged and the legalized document prepared by the foreign
investor since the beginning of the IRC application process
becomes expired at the time of applying for the enterprise
registration certificate (ERC).
Page 1 of 6
Recommendation
We recommend that the applicant only needs to provide
certification of true copy of the incorporation certificate in the
ERC application if the IRC has already been granted. An updated
legalized incorporation certificate should only be required upon
request by the business registration office (BRO) if there is any
discrepancy with the IRC.
Submission on the draft Decrees guiding the 2014 Law on Enterprises
No.
2.
Draft Decree
33, 35
Issues
Article 33 of the Draft Registration Decree gives a company the right
to request the BRO to provide a copy of an ERC.
Article 35 of the Draft Registration Decree gives organization and
individual the right to request for information on enterprise
registration of an enterprise.
3.
4.
48
55, 56, 57, 58
In practice, in order to lodge their request with the BRO, the

applicant is usually required to provide additional documents
proving the purpose for requesting such information and the
process is usually long due to the absence of a specified timeline.
The 2014 LOE allows for multiple legal representatives, yet, it is not
clear whether all legal representatives must be registered with the
BRO and specified in the companys ERC. Article 48 of the Draft
Registration Decree only provides procedures for change of legal
representative. No procedure for supplement/removal of legal
representative is specified in the Draft Registration Decree, and this
could be taken as implying that not all legal representative are
registered in the ERC.
Articles 55, 56, 57 and 58 of the Draft Registration Decree provide
procedures for various notification obligations of a company regarding
change in business registration information. Under these provisions,
the notification obligation of a company is deemed completed if the
company does not receive any additional request on amending or
supplementing the application file from the BRO after 3 business
days. No further details on notifying method of the BRO is provided. We
are concerned that in practice, notifications by the BRO might get lost
and/or unable to be received by the company due to some technical
reasons and that the BRO may still request for additional information
after 3 business days for this reason.
Page 2 of 6
Recommendation
To ensure timely information to facilitate business
activities/transactions, we recommend setting a timeline for
providing copy of an ERC under Article 33 and enterprise
registration information under Article 35 of the Registration
Decree of around 3 business days. The BRO may request the
applicant to specify the purpose of such request in the request
form but they should not be able to require any additional
supporting document attached to that request.
We would suggest the Registration Decree require all legal

representatives to be registered in the ERC and subsequently
listed in the National Portal for Enterprise Registration for easy
verification by third party.
Article 48 of the Registration Decree should cover procedures for
both change of legal representative(s) and supplemental/removal
of legal representative(s).
We recommend, for ease of implementation, adopting electronic
communications so that the BRO will send its rejection or
request for further information via email within 3 business days.
We also recommend a general prohibition in this provisions that
upon expiry of the 3 business days period, the BRO must not
request enterprises to supply any additional documents and the
company should be entitled to consider that its notification is
accepted and valid, if there is no email notification from the BRO
after this period.
No.
5.
6.
7.
8.
Draft Decree
60
Issues
Article 60 of the Draft Registration Decree provides that the BRO
can consider and issue written receipt to the company within 3
days upon receive of notification of the company regarding
changes in its management personnel or its decision to issue
shares under private placement. It is unclear why the BRO need 3
days to issue its written receipt in these cases.
Article 83 of the Draft Registration Decree grants the BRO the
power to declare fraud and revoke the ERC. The BRO can involve
the police to identify fraud if doubt about the truthfulness of the
application. It is not clear whether involvement of the police is a
must or just a choice of the BRO.
Recommendation
We would recommend written receipt is given immediately upon
submission of the notification by the company to timely record its
fulfilment of the notification obligation. Immediate issuance of
receipt does not affect the right of the BRO to comment on the
application file later on (eg. Article 123 of the LOE provide 5
business days for the BRO to reject the private placement).
83
We suggest requiring police confirmation before any declaration
of fraud is made by the BRO as the BRO might not be in an
adequate technical position to confirm a fraud. Besides, there
should be criteria for suspecting fraud (eg. sign of rubbing,
inconsistency in information provided etc.) which will act as
grounds for the BRO to request police examination.
Not yet
Article 18 of the 2014 LOE provides that in case of request by the We recommend criminal records should not be requested on an
addressed
BRO, criminal record of the person registering for enterprise usual basis (i.e. not required in an application dossier for
(LOE ref: Art
registration must be submitted. It is not clear:
enterprise establishment), but only in suspicious cases and the
18)
Whether criminal record applies to the legal representative(s) or indicators of suspicious cases should clearly be set out. Besides,
only applies to the founding shareholders of a joint stock foreign investors who are not resided in Vietnam should be
company/members of a limited liability company/owners of a allowed to submit a legalized criminal record issued in their
home country.
privately owned company;
whether this must be included in the application dossier for
corporate formation or only when requested by the BRO and, if
so, the basis for such a request; and
as for foreign investors whose criminal records might not be able to
obtained in Vietnam, how this condition could be satisfied.
Not yet
In accordance with Article 202.2 of the LOE, one of the conditions According to Article 202.8 of the LOE, after the 180 day period, if the
addressed
for a company to apply for dissolution is that it must not be BRO has not received any comment on/rejection to the dissolution,
(LOE ref: Art. subject to any litigation or arbitration proceeding at the time it the BRO shall update the legal status of the company in the National
201.2)
files an application for dissolution. There is no clear provision on Portal for Enterprise Registration. Therefore, we recommend the
how to determine a company is subject to litigation or arbitration Registration Decree specifying that the company should be deemed
proceeding.
as having satisfied the condition on litigation or arbitration proceeding
after 180 days.
DRAFT IMPLEMENTING DECREE AND ISSUES UNADDRESSED IN THE 2014 LOE
Page 3 of 6
No.
9.
Draft Decree
18
10.
Not yet
addressed
(LOE ref: Art
48, 74)
11.
Not yet
addressed
(LOE ref: Art
36)
Issues
Article 18 of the Draft Implementing Decree states that the
company might choose to have or not to have a corporate seal. In
case there is no corporate seal, it is not clear what criteria will be
used to verify a document issued by the company. On the other
hand, in case the company has a seal, is it necessary that any
document issued by the company must be chopped with a seal in
order to be valid?
Recommendation
To enable flexibility, we recommend stating that either (i) a signature
of one legal representative accompanied with a company seal or (ii)
signatures of two legal representatives would be sufficient to prove
the validity of a document issued by a company. In this case, a
company not having a seal might need to have at least two legal
representatives. Verifying a corporate document by two legal
representatives is consistent with international practice in corporate
governance.
The 2014 LOE states that the registered charter capital of an LLC We recommend the 90 day time limit for subsequent increase of
must be contributed within 90 days from the date of issuance of the charter capital should be waived to enable reasonable time for
ERC. It is not clear whether this 90 days period apply to all investors of large scale project to inject capital. The 90 day
subsequent increases of the charter capital or only to the original period might not be feasible in practice especially for projects
capital contribution upon establishment of the company.
requiring a large amount of capital.
In reference to the 90 day time limit for charter capital We would recommend the Implementing Decree to make clear
contribution, it is not clear whether the contribution of capital in that capital contribution in form of (value of) land use right can be
form of (value of) land use right is deemed contributed when (i) deemed contributed when the land use right transfer agreement
the land use right transfer agreement is signed/notarized or (ii) is signed/notarized. This is because if (ii) applied, it might not be
when the land use right certificate has been granted to the practically possible for the company to obtain the land use right
company.
certificate within 90 days, thereby violating the 90 day time limit
requirement.
Page 4 of 6
No.
12.
13.
Draft Decree
Not yet
addressed
(LOE ref: Art
13, 29)
Not yet
addressed
(LOE ref: Art
29)
Issues
Method for choosing a new legal representative is not specified
when the sole legal representative being the member of a one
member LLC or a major shareholder of a joint stock company is
arrested or in similar situations. Such method is available for a
two member LLC only. In practice, there's case when a legal
representative being a major shareholder of a joint stock
company is arrested, resulting in the company's transactions
being stuck as a new legal representative cannot be appointed
absent vote from such major shareholder.
The 2014 LOE allows courts, in special circumstances, to appoint
a legal representative during court proceedings. However, what
could constitute a 'special circumstance' is not specified in
detailed in the 2014 LOE. The implementing regulations of the
2014 LOE should define the scope of these special
circumstances.
In accordance with the 2014 LOE, business lines of a company are
no longer required to be registered in the company's ERC and only
need to be notified to the BRO. It is not clear whether the BRO
would issue the ERC to the company and/or would accept the
notification of the company on changes of business lines in case the
company does not satisfy requirements for the conditional business
line (eg the company notifies real estate business but its registered
charter capital is below the minimum legal charter capital required
for real estate business).
Page 5 of 6
Recommendation
We recommend the Implementing Decree adds a provision
specifying cases where the court may appoint a legal
representative during court proceedings, which include, among
others, "when the sole legal representative being the member of
a one member LLC or a joint stock company is arrested or in
similar situations".
We would recommend the Implementing Decree adds a provision

to make clear that the BRO will not review business conditions of
the company when issuing ERC or receiving notification of the
company on changes of business lines. The company shall be
allowed to operate a specific conditional business line when it
has satisfied all conditions.
No.
14.
Draft Decree
Not yet
addressed
(LOE ref: Art
4.27)
Issues
There is an significant inconsistency between Article 23.1 of the
2014 LOI and Article 4.27 of the 2014 LOE:
Under Art 23.1 of the 2014 LOI, FIE with 51% of the charter
capital held by a foreign investor (including those listed in
items (a), (b) and (c) of Article 23.1), will be subject to
investment conditions applicable to foreign investors;
However, Article 4.27 of the 2014 LOE provides that ownership

ratio of foreign investors is the total ownership of voting
capital of all foreign investors in a Vietnamese enterprises.
This definition is then not used anywhere in the 2014 LOE.
This inconsistency makes it unclear whether a shareholding

company established in Vietnam will be treated as a foreign
investor if it has both ordinary and dividend preference shares
and the foreign investors hold 51% of the ordinary (voting) shares
in the company which is less than 51% of its charter capital. This
is a significant issue that will affect structuring of M&A
transactions in Vietnam and should be clarified in the
implementing regulations.
Page 6 of 6
Recommendation
The Implementing regulations for the 2014 LOI and 2014 LOE
should clearly clarify this problem. We would expect that the
LOI's approach will prevail when identifying conditions applied for
FIEs.
Comments on draft Decree on business registration & guiding LOE
COMMENTS ON DRAFTS DECREES ON BUSINESS REGISTRATION & GUIDING

THE 2014 LAW ON ENTERPRISES
Prepared By
Nagashima Ohno & Tsunematsu, Hanoi Branch
I. Comments on the Draft Decree on Business Registration Procedures
(replacing Decree 43/2010/ND-CP)

Articles
Comments
Article 7: Business lines
According to Article 29 of the Law on

Enterprises,
business
lines
(not
in
the
Article 7.2 provides that the codification of business
conditional sectors) will not appear on the BRC.
lines in the BRC is only for the statistics purpose;
However, under Article 7.2 of Draft Decree, it

seems that the business lines will be recorded
Article 7.6 provides that if a company register for a
in the BRC. This is not consistent with the LOE.
business line that is more detailed than the level 4
Please make it clear again, as in the LOE, that
[of Vietnamese system of industries], the companys
the
business
lines
other
than
those
in
business will be limited within such registered conditional sectors shall not be recorded in the
detailed business lines.
BRC, and companies can do any business other

than those conditional or prohibited freely
regardless of the registration (Article 7.1 of
LOE).
Article 22: Settlement of violation on intellectual
This suggestion cannot be realized in the
property rights
practice. This is because NOIP does not provide

searching service and the NOIPs online
Article 22.1 suggests the company to consult the database is not promptly updated.
Intellectual Properties Database of the National
Office of Intellectual Properties (NOIP) in order to
not infringe the intellectual properties of other
persons.
Article 26 and other articles on the company
In order to avoid the subjective assessment of
registration dossier
the licensing officer on the validity of a legalized

document,
please
expressly
stipulate
the
It is required that the incorporation certificate of a
validity duration of a legalized document (e.g.
foreign member/shareholder must be legalized.
three months, six months).
Article 30: Personal identity papers in a company
This kind of paper is not mentioned in the Law
registration dossier
on Entry, Exist, Transit, and Residence of

Foreigners in Vietnam. Please clarify (whether
Article 30.3 require a foreigner who resides in
this document is a Temporary Residence Card
Vietnam to provide the temporary stay certificate
or a certification letter issued by the police of
(Giy ng K Tm Tr) issued by competent
the ward where the foreign is living).
authorities of Vietnam.
Page 1 of 5
Articles
Comments
Article 34: Business Registration Database
This article does not mention to the circumstance
update & standardization
where
the
registration
information
database
on
is
the
company
incorrect/out
of
date/missing not due the companys fault, and the

company requests the licensing authorities to
amend/update/supplement. We suggest adding
such circumstance and timeframe for the
licensing
authorities
to
amend/update
the
information.
Article 50: Registration for change of member of
The Notification to the licensing authorities
limited liabilities company with two or more
must be accompanied with, among others,
members
documents evidencing the completion of capital

contribution of a new member/ completion of
the assignment process. This requirement is
also repeated in many other articles.
In practice, the licensing may have different
view on such document. Please clarify the name
of document (e.g. banking conform letter,
confirmation letter issued by the company).
Please note that, in practice, buyer thinks that it
is too risky to pay full amount of the transfer
price to the seller before completion of the
change of the registration. Thus, The receipt of
transfer price in full should not be required to
be submitted for the change of registration.
Article 58. Notification of change of foreign
Under Article 58 of the Draft Decree, the
shareholder in an unlisted company
Notification must be filed with, among other,

the resolutions and copy of the minutes of
meeting of the General Shareholders Meeting
(GSM). In the LOE, the assignment of shares
by a shareholder (except for transfer by a
founding
shareholder
to
non-founding
shareholder within the lock up period of three

years) is not need to be approved by the GSM.
This provision is not in line with the LOE.
Page 2 of 5
II.
Comments on the Decree guiding the LOE (replacing Decree 102/2010/ND-CP)
Below are our comments on specific provisions of the Draft Decree:

Articles
Comments
According to Article 10 of the LOE, one of the
conditions of a social enterprise (SE) is to
settle social, environmental matters for the
community benefits. However, there is no
definition of social, environmental matters. Is
an enterprise that is established to solve the
technical matter for the community benefits,
considered
SE?
Currently,
many
organizations established as a science and

technology organizations (i.e. under the
Vietnam Union of Science and Technology
Associations) desire to operate as SE.
However, without being defined, the general
term of social, environmental matters may
be construed, in a conservative way, to not
cover an enterprise that operates in science
and technology sector for the community
benefits.
Therefore, we suggest giving a definition of
social, environmental matters.
Article 7.2: Procedures to receive supports This provision is fine in case the SE receives
from individuals, organizations
the supports/donation from a few individuals,

organizations. However, if the SE receives the
supports/donation in small amount from
numerous individuals/organization, it may be
difficult and time consuming for the SE and
the donators to enter into support/donation
agreement and file a copy of such agreement
to the Business Registration Authority for
each
time
of
support/donation
receipt.
Therefore, it should have a provision on

documentation and reporting in relation to
this case.
Use of mobilized donation/support
The second version of the Draft Decree has

a provision (Article 4.5) on the use of
mobilized donation/support that provides:
Page 3 of 5
Articles
Comments
An SE is not permitted to use the

mobilized
donations/support
for
the
purposes other than to set off costs of

management and operation to settle the
social, environmental issues that the SE
has registered
This provision is necessary in order to
prevent the misuse of donation/support. We
suggest
retaining
this
provision
and
specifying the maximum limit of cost of

management and operation that an SE is
permitted to use. For example, the annual
cost of management and operation must
not
exceed
[X%]
of
the
total
donations/support that the SE mobilizes in

a fiscal year.
Article 10.1
Owner
of
Based on the languages of this Article, it is

private
enterprise,
owner, unclear who will need to make the
member, and shareholder of an enterprise commitment and form of commitment. It is

shall only assign its capital contribution, advisable to expressly provide that the
shares to other organization(s), individual(s) assignee
if there is a commitment to continue continue
must
commit
performing
in
writing
the
to
social,
performing the social purposes during the environmental purposes for community
registered term
benefits during the registered term.
Articles 14.3, 16.3, and 17.7 refer to Article Article 44 of the LOE is on the companys
44 of the LOE
seal. These Articles 14.3, 16.3, and 17.3 of

the Draft Decree should refer to Article 144
of the LOE.
Article 17.1.(a) provides that a SE will be This provision does not refer to the
converted into an enterprise upon the circumstance where the SE requests to
expiration of the period under which it extend the registered period to perform the
registered to perform the social targets.
social
targets.
We
suggest
adding
provision on the case where the SE

requests, with appropriate explanation and
reasons, to extend the registered period to
perform its social targets.
Article 18.3 provides:
It is impossible to return the remaining
In case of social enterprise liquidation, the assets to the donating or supporting

Page 4 of 5
Articles
Comments
remaining balance of assets or finances persons in case the assets origin from
received by the social enterprise shall be small amounts donated by many persons
returned to the donating or supporting during
long
period.
How
can
the
individuals, agencies and organizations, or enterprise determine the donators from

transferred to other social enterprises and whom the remaining balance of assets is
organizations pursuing similar social goals.
given? How can the enterprise track the

donators to return their donation if there
are numerous donators who gives small
amount? Will a donator be willing to take
back the donation, especially in case of
non-cash donation?
The solution to transfer the donation to a
SE having similar social targets to the
liquidated SE is more appropriate. However,
the mechanism of assets transfer under
Article 18.3 is very simple. This may
facilitate a long and inexplicit chain of asset
transfer
among
the
SEs
for
wrong
purposes. It is advisable to work out more

detailed conditions and procedures to
transfer the remaining asset of a liquidated
SE to another SE.
Page 5 of 5
Comments on the draft Decree guiding the 2014 Law on Enterprises
COMMENTS ON THE DRAFT DECREE GUIDING THE 2014 LAW ON ENTERPRISES
Prepared by
Ms. Lan Phuong Nguyen
Baker & McKenzie (Vietnam) Ltd.
No.
1
Comments
Specific Modifications (if any)
General comments: From the investment procedure perspective of foreign investors, our most important comment on the Draft is to combine the
three procedures (i.e., in-principle/preliminary approval, issuance of the Investment Registration Certificate (IRC), and issuance of the Enterprise
Registration Certificate (ERC)) into one integrated chain of procedures. Following that, the investor only needs to submit an application dossier to an
investment registration authority, and then the relevant licensing authorities will automatically process the procedures in accordance with the
timeline provided by the law. Such chain of procedures should be applied for both green field investment and amendment of the project's or
enterprise's registration. Under the current draft decree, the investor is required to submit consular legalized copies of relevant documents twice,
which would result in duplication of expenses and time. Also under the current draft decree, the investor, although being issued with an Investment
Registration Certificate, is uncertain whether it is allowed to establish an enterprise to implement such approved investment project. This is
because the procedure for establish such an enterprise requires separate approving process.
Below is specific comments on each article:
Article 21 on naming the enterprises:
Our understanding is that, only if the enterprises want to have name
consultation then they will be required to consult with the business
registration authorities, and this consultation is not mandatory. Therefore,
Article 21.1 can be amended as follows:
1. Prior to registering the name of the enterprise, the enterprise
may refer to the names of operating enterprises recorded at the National
Enterprise Registration Database or consult with the Business
Registration Authority in writing.
In some other countries, there are mechanisms allowing enterprises to
reserve specific names. It is recommended to the drafting committee to
consider this kind of mechanism.
Article 25, 26 on Business Registration Dossier
We recommend that Point d should be separated from Clause 4. There
should be Clause 5 providing that investors obtaining IRC must submit an
ordinary copy of such IRC (without having to certify because the IRC is
recently issued by the same body) and need not to submit the dossier in
Clause 4 (because the business registration authority must know that the
investors have already submitted such dossier in order to obtain such an
Page 1 of 3
Article 25. Business registration dossier of multi-member limited

liability companies ("MMLLC"), joint stock companies("JSC") and
partnerships
1. Business registration request.
2. Company charter. Members, founding shareholders are jointly
responsible for the company charter.
No.
Comments

3. List of members of the MMLLC, members of the partnership, list of
founding shareholders and foreign investors of JSC.
IRC).
4. Valid copies of the following documents:

a) One of the personal identification documents specified at Article
30 of this Decree in case the founder of the company is an
individual;
b) Establishment decision, ERC or other equivalent documents, one
of the personal identification documents specified at Article 30 of
this Decree of the authorized representative and the respective
power of attorney in case the founder of the company is a legal
entity.
If the members, shareholders are foreign organizations, the
legitimate copies of ERC must be consular legalized.
5. Ordinary copies of the IRC if the enterprise is established or jointly
established by foreign investors in accordance with the provisions
of the Law on Investment. In this case, the foreign investors will
not need to submit the dossier stipulated in Clause 4.
4
Articles 45 to 60 on the registration of changes of business registration

content should have the provisions on the effective date of such changes.
In particular, it should be when the enterprises decide to make such
changes, or other dates as so decided by the enterprises.
Pursuant to the Draft, these procedures are simply notification procedures
and therefore it does not mean that the changes will only be effective when
the business registration body conducts some procedures.
In practice, enterprises get confused when they have to determine which

date is the effective date. For example, in case of changing the legal
representative of the enterprise, who will be the legal representative of the
enterprise when the enterprise already fired the former representative and
the new one has yet been recorded on the ERC?
Articles 50 and 51, the application dossier to register the change of the
enterprises ownership must include the transfer agreement and other
documents verifying that the transfer has been completed, with the
enterprises certification.
Page 2 of 3
No.
Comments
We recommend removing the above clause or clarifying what documents
would be considered as documents verifying that the transfer has been
completed. This requirement has caused a lot of difficulties in practice
because the investment registration authorities requested the transferree
to completely pay the tranferror. This interpretation is overly-rigid.
According to the Civil Code and the Commercial Law, parties in a
transaction are allowed to agree upon the payment term, and payment
method (in cash, by new shares, by offsetting debts, etc.) The payment
terms must not be included as part of the administrative process.
In addition, if the ERC does not record the name of the new investor, it
would not know whether the transaction has been completed or not.
Recommend additing provisions on the timeline for contributing charter
capital of the enterprise.
Under Law on Enterprises, the charter capital must be paid within 90 days
from the date of issuance of the ERC. This timeline is unfeasible in case of
real estates projects or PPP projects which need large amount of capital.
We recommend allowing that:
- The charter capital registered for establishing the enterprise can be
smaller than the contribution capital recorded in the IRC;
- The charter capital from [USD 1 million] or more (or another amount)
can be contributed by Promissory Note issued to the enterprise.
Page 3 of 3
Comments on Draft Decree on Business Registration
COMMENTS ON DRAFT DECREE ON BUSINESS REGISTRATION
ARTICLE
NO.
Article 7.7
Article 9
Article
12.1
Article
35.1
NO.
Prepared by
TMI Vietnam
RECOMMENDATION
COMMENT
Article 7.7 provides that, declaration of business lines specified in Clauses 3 and 4
of this Article shall follow the provisions of Clause 6 of this Article. However, the
provisions of the Clause 6 as mentioned seem unable to be applied to the business
lines in Clause 4.
In particular, Clause 4 of Article 7 regulates about conditional business lines
not included in the Economic sector system in Vietnam but specified in other
normative regulations, i.e, the business lines under Clause 4 of Article 7 are
those that have not been listed in the Economic sector system in Vietnam.
Whereas, Clause 6 of Article 7 regulates that in case a business wants to
apply for more specific business lines than Category 4 descriptions, it shall
select a Category 4 business line from the Economic sector system in Vietnam
[]. Since the business lines under Clause 4 are not contained in the
Economic sector system in Vietnam, there will be no appropriate Category 4
descriptions that can be chosen for a business line as specified in Clause 4.
Article 9 provides that, enterprises shall submit 01 set of application dossier
when they apply for company registration, []. However, it is unclear that
one set of application dossier means (i) one set of original version only (if
this is the case, it must also specify whether copied versions are required or
not), or (ii) one set that includes an original version and a certain copied
version(s).
Under this Article 12.1, in case a founding member of an enterprise, or an
enterprise authorizes another entity to submit applications for implementing
company registration procedures, it is required to submit service
agreement between the enterprise founding member or enterprise and the
agency providing brokerage services for application submission [].
Currently, it is allowed to submit a POA; however, this provision keeps silent
on whether POA is acceptable in replacement for a service agreement or not.
Article 35.1 provides that, within 05 working days after release of the
Company registration certificate [], the business registration agency shall
forward such company registration information [] to tax administration
agency, statistics agency, labor administration agency and social security
authorities.
Page 1 of 3
We suggest amending this Article 7.7 to make it more

consistent and to have clearer guidance on the declaration
of the business lines specified in Clause 4 of Article 7.
In order to avoid confusion, we suggest clarifying the

number of original versions and the number of copied
versions acquired for 01 set of application dossier for each
case of application.
We suggest that other than service agreement, POA from

an enterprise founding member or an enterprise to an
agency should also be accepted.
We suggest that the tax authorities automatically carry out

tax registration and issue tax codes to enterprises upon
receiving company registration information from the
business registration agency, so the enterprises will not
have to apply for tax registration.
NO.
ARTICLE
NO.
Article
39.2
Article
42.1, 42.2
Article 45,
46, 47, 48,
49, 50, 51,
52, 53, 54
Article
60.1
Article 61
RECOMMENDATION
COMMENT
Pursuant to this provision, the business registration agencies shall send
company registration information to tax authorities, which means
enterprises do not need to do so. However, it is unclear that in such case,
whether the tax authorities will automatically carry out tax registration and
issue tax codes to enterprises, or enterprises still have to apply for tax
registration as under the current regulations.
Article 39.2 provides that, entities and individuals may choose to initiate
electronic online company registration or lodge an application physically at a
Business registration office.
Pursuant to Article 42.1 and 42.2, an enterprise founding member must by

himself/herself/itself register for a business registration user account and
shall use such account to apply for enterprise establishment. However, it is
unclear on whether a person authorized by an enterprise founding member
can do so either or not.
Articles 45 to 54 stipulate the cases that must be registered if there are any
changes in enterprise information. However, at several places in these
articles, it is still used with the enterprise shall submit a notice to the
Business registration office. The term notice may cause
misunderstandings with the cases where enterprises only need to send
notice to the Business registration office, as separately set forth in Articles
55 to 59, 60.2 and 60.3.
This provision states generally about report duty of enterprises on changing
information of the manager(s) of enterprises to the Business registration office
in accordance with Article 12 of the LOE; however, both Article 12 of the LOE and
this Draft keep silent about the detailed content that must be included in such
report.
This provision states generally about the duty of enterprises in sending
notice to business registration office to request for the publicity of enterprise
registration information. However, it is unclear about the detailed content
that must be included in such notice.
Page 2 of 3
We suggest amending this Article 39.2 as follows: entities

and individuals that are allowed to establish enterprises
under the Law on Enterprises may choose to initiate
electronic online company registration or lodge an application
physically at a Business registration office. By this way of
amendment, the right of foreign investors in choosing
electronic online company registration can be clearly stated.
We suggest that an authorized person can also create
account and do such application on behalf of the
enterprise founding member.
We suggest using unified term to help readers easily

distinguish between such two different circumstances of
registering and notifying.
We suggest specifying the detailed content that must be

included in the report on changing information of the
manager(s) of enterprises to the business registration
office.
We suggest specifying the detailed content that must be
included in the notice to request for the publicity of
enterprise registration information in each of the following
cases:
NO.
ARTICLE
NO.
RECOMMENDATION
COMMENT
Besides, it also keeps silent that for enterprises doing electronic online (i)
enterprise registration through the National website for company
registration, whether it is required that they must notify again the
information which has been declared onto the National website for company
registration when they apply for enterprise registration or not.
(ii)
Page 3 of 3
For enterprises doing electronic online enterprise

registration through the National website for
company registration: Since their information has
been declared onto the National website for company
registration when they apply for enterprise
registration, we suggest excluding such information
from the required content of the notice;
For enterprises doing paper enterprise registration:
the detailed content that must be filled in the notice in
this case.
Comments on draftt Decree on business registration
Vietnam Busines Forum, 2015
COMMENTS ON DRAFTS DECREES ON BUSINESS REGISTRATION (DRAFT)
Prepared by
ZICOlaw Vietnam
1.
Clause 3 Article 27 of the Draft provides that in the case of enterprise amalgamation, the
enterprise registration file must include contract for enterprise amalgamation, minutes of
meeting and decision of the Members Council for limited liability companies with two or
more members, or minutes of meeting and decision of the General Meeting of Shareholders
for joint stock companies, in relation to the amalgamation in accordance with Article 194 of
the Law on Enterprises.
However, pursuant to the 2014 Law on Enterprises, the Members Council for limited
liability companies and the General Meeting of Shareholders for joint stock companies shall
issue a resolution and not decision. Therefore, the wordings used in Clause 3 Article 27 are
not consistent with the 2014 Law on Enterprises.
Recommendation: We suggest amending Clause 3 Article 27 of the Draft as follows:
3. In the case of amalgamation of some companies into a new company, besides
documents and papers mentioned in Articles 22 and 23 of this Decree, the enterprise
registration file must include the contract for enterprise amalgamation, minutes of meeting
and resolution of the Members Council for limited liability companies with two or more
members, or minutes of meeting and resolution of the General Meeting of Shareholders for
joint stock companies, in relation to the amalgamation in accordance with Article 194 of the
Law on Enterprises and the Business registration certificate or Enterprise registration
certificate or other equivalent documents of the companies subject to amalgamation.
2.
Clause 3 Article 38 of the Draft provides that after receiving the seal specimen notice, the
business registration agency (BRA) must post the same on the national enterprise
registration website. However, the Draft does not provide a time-limit for the BRA to do so.
Since the change of seal may cause effect to enterprises operations as well as its partners,
the posting of change in seal must be posted promptly for the convenience of the enterprise
during its operation.
Recommendation: We suggest Clause 3 Article 38 of the Draft should provide a specific
time-limit for the BRA to post information on seal specimen in order to create favourable
conditions to enterprises in reference.
3.
Articles 41 and 42 of the Draft provide for the order and procedure for registering
enterprise via electric website using public digital signature, and the order and procedure
for enterprise registration not using public digital signature. However, both Articles fail to
provide a specific time-limit for performing such procedures. Pursuant to Clause 2 Article
27 of the 2014 Law on Enterprise, the business registration agency must issue an
Enterprise registration certificate within 3 business days from the receipt of dossiers,
except for the cases of refusing to issue Enterprise registration certificate. Therefore, the
registration of enterprises via electronic website must also comply with the time-limit set
out in Clause 2 Article 27 of the 2014 Law on Enterprises.
Recommendation: We suggest amending Clause 3 Article 41 and Clause 4 Article 42 of the
Draft as follows:
3. Where it satisfies all conditions for being issued with an Enterprise registration
certificate, the Business registration agency shall send information to tax authority to
automatically create a code for the enterprise. Upon receipt of enterprise code from tax
Page 1 of 2
Comments on draftt Decree on business registration
Vietnam Busines Forum, 2015
authority, the Business registration agency shall issue the Enterprise registration
certificate within 3 business days from the receipt of valid dossiers. In case of improper
dossiers, the Business registration agency shall consider and send notice via the Internet to
the enterprise for its dossier amendment and supplementation.
4. Where it satisfies all conditions for being issued with an Enterprise registration
certificate, the Business registration agency shall send information to tax authority to
automatically create a code for the enterprise. Upon receipt of enterprise code from tax
authority, the Business registration agency shall issue the Enterprise registration
certificate within 3 business days from the receipt of valid dossiers. In case of improper
dossiers, the Business registration agency shall consider and send notice via the Internet to
the enterprise for its dossier amendment and supplementation.
Page 2 of 2
Comments on draft Decree on the 2014 Investment Law
DECREE IMPLEMENTING THE 2014 INVESTMENT LAW

AND THE ATTRACTION TO FOREIGN INVESTMENT TO VIETNAM
Prepared by
Dr. Le Net
LNT & Partners
Foreign investors are highly appreciative of Vietnam for adopting the revised Constitution in
2013, in which the right to do business is fully recognized, and the recognition of equal
treatment between state-owned, private and foreign invested enterprises. These
fundamental principles have shed light for many legislative reforms, including the Law on
Enterprise, the Law on Investment (LOI), the Housing Law, the Law on Real Estate
Business, the Civil Code, the Criminal Code and many other legal documents. Never before
has Vietnam undergone such major legal reforms. As much as foreign investors celebrated
the legal forms, they also hope that the achievement of the reforms would not be distorted
or undermined by arbitrary administrative actions and red tap. Our comments hope
contributing to clarification of unclear issues with respect to conditional projects as laid
out under the draft Decree implementing LOI (the LOI Decree).
Under the LOI, there are 267 lines of business that are considered conditional projects,
such as distribution, logistics, healthcare, education, tobacco production or printing.
Compared to equivalent concept in other countries, particularly Indonesia and China ,
Vietnams list is considerably longer. Each of them has around 30 40 areas where foreign
investment is restricted. Moreover, the procedure for obtaining approval for entry into the
areas of restricted investment are more straight forward than those under the LOI. In
China, a new draft foreign investment law has been released, in which investment in areas
that are in the restricted list, only requires approval from the Ministry of Foreign Commerce
(MOFCOM) instead of various of ministries as it was in the LOI Decree. The Chinese law also
makes it relatively easy for foreign investors to hold a minority, non-control based interest
in an industry where investment is restricted by the Chinese government . Whereas, the
draft LOI Decree does not change the existing Vietnamese provisions; and any investment
falling into the restrictive list, however small, still needs to be approved by a ministry-incharge.
1
To overcome the restrictive list, China has also allowed for the establishment of a local
holding company, hence officially providing protection for such investments. We understand
that establishing a local holding company is now allowed under Vietnam LOI if total foreign
equity holding of that holding company is lower than 51%. This principle should also be
repeated under the LOI Decree.
In order to maintain Vietnams attractiveness to foreign investors, as China and Indonesia
do, we propose the following changes in the draft LOI Decree. The concrete changes to the
draft are proposed in the Vietnamese version of our article. The proposed changes are as
follows:
4
See the negative list (including restrictive list) under Indonesian law at http://www.indonesiainvestments.com/news/todays-headlines/indonesia-revises-negative-investment-list-to-boostforeign- investments/item1966
2
See restrictive list under China law at http://www.bnn.ca/News/2015/3/13/China-issues-final-listof-restricted-foreign-investment-sectors.aspx
3
See comment from Morrison & Foerster on the new China Investment Law at
http://www.mofo.com/~/media/Files/ClientAlert/2015/02/150212ChinasDraftForeignInvestment.pdf.
4
See the graph of variable interest entity (VIE) under the new China Foreign Investment Law at Wall
Street Journal 28 Jan 2015, at http://www.wsj.com/articles/how-chinas-draft-rules-may-affectforeign-investors-1422412416
Page 1 of 3
1. Article 8.3.e, g: the list of conditions to investment should not be an open-ended list.
Therefore words such as other approvals from relevant authorities, other
requirements that may be requested from time to time by relevant authorities should
be deleted.
2. Art 9.2.b: the restrictive list should apply to Greenfield investment, not to M&A, as long
as foreign investors hold minority shareholders and the target is considered as a local
company. This principle is also applied in China. Therefore, the scope investment by
share or equity acquisition should be removed from the restrictive list.
3. Art 10: in order to make the LOI Decree become the single legislative document that
governs the restrictive list that should not be distorted by other regulations of other
authorities, we propose that the Decree prohibits ministries or the peoples committee
from issuing implementing guidance contrary to the Decree, or prohibits local
authorities to request ministries in charge to interpret the laws. The only authority
allowed to interpret laws should be the Ministry of Justice, in order to avoid deviation
from the principle of the LOI by way of interpretation.
4. Art 11.3 and 4: deviation from the LOI Decree should be restricted. Therefore, paragraph
3 and 4 should be deleted. Any proposal to amend the conditions for investment must be
approved by the MPI to guarantee consistent application which will have the effect of
enhancing legitimacy.
5. Art 13.1.f: any proposal to amend investment conditions from authorities must be
counter-argued or receive feedback from VCCI, Amcham, JBAH or Eurocham. Without
feedback, MPI may not approve/disapprove an application.
6. Art 14.3: the consultation from MPI mechanism should be replaced with approval
from MPI, based on the proposal of the ministries and feedbacks from investors
representatives. Investors that do not agree with the proposal on investment conditions
may lodge a complaint to the MPI.
7. Art 33A (supplement) the draft LOI Decree should make clear the principle under Art 28
LOI, that M&A projects do not need to obtain an IC for them to be completed. Moreover,
if the conditions for investment can be approved by the local department of investment
(DPI), then it is unnecessary to obtain ministries approval.
8. Art 37.1.b2 (supplement) that draft LOI Decree should allow FDI enterprises to have the
right to acquire/subscribe shares/equity in local companies. These principles are
already allowed under the Art. 23 and 28 LOI.
9. Appendix III: the appendix provides details of conditions that must be complied with in
order to invest in Vietnam, and the authorities that are in charge of this. Unfortunately,
the authorities in charge seemed to be overly large. For example, when an economic
needs test (ENT) should be granted, the authority to grant, under the current law, is the
local peoples committee and not the MOIT. Moreover, some conditions are very simple
to review and apply, such as the foreign shareholding ratio, the scope of services to
provide (logistics, real estates, agriculture etc,) we propose that the local DPI or
industrial zones authority may apply the LOI Decree and make the decision. There is no
need to refer ministries if the issue is only the interpretation of law. If there is a dispute
about a law that needs to be interpreted, then the place to ask or refer to should be a
court, or the Ministry of Justice, or the lawyers. For the sake of objectivity and fairness,
the authorities that draft the regulations should not be the authorities that interpret the
regulations. The details of comments are set forth in our Vietnamese version of this
article.
Vietnam is now reaching a pivotal point. China and Indonesia have already cast their
decisions on the direct of their foreign investment laws. At the opening of the ASEAN
Economic Community (AEC), and the Trans-Pacific Partnership Agreement (TPP), the
choice that Vietnam faces is not left or right, but up or down. Whether Vietnam can open up
Page 2 of 3
and liberalize its market, encourage its private sectors to engage with the world and
cooperate with foreign investors, and benefit from the rich fruits of the globalised economy,
or to restrain them from such cooperation and not enable them to access the foreign
technology, capital or expertise needed for a much more challenging and competitive AEC
and TPP environment, and go down the route of the natural resource curse and developingcountry trap; it is for the Government of Vietnam to decide.
Page 3 of 3
Comments on the draft Decree guiding the 2014 Law on Investment
COMMENTS ON THE DRAFT DECREE GUIDING THE 2014 LAW ON INVESTMENT
Prepared by
Ms. Nguyen Lan Phuong
Baker & McKenzie (Vietnam) Ltd.
No.
1
Comments
The procedures under the current Law on Investment (LOI) are moderately specific, therefore the guiding Decree needs to aim at detailing unclear
provisions of the LOI. At the moment, the draft decree provides a lot of references back to the LOI. From the drafting perspective, such backreferences make it difficult to read and understand the decree.
With respect to the investment procedures of foreign investors, our most important comment to the draft decree is that the draft decree should
combine three steps (i.e., in-principle/preliminary approval, issuance of the Investment Registration Certificate, and issuance of the Enterprise
Registration Certificate) into one integrated chain of procedures. Following that, the investor only needs to submit an application dossier to an
investment registration authority, and then the relevant licensing authorities will automatically process the procedures in accordance with the
timeline provided by the law. Such chain of procedures should be applied for both green field investment and amendment of the project's or
enterprise's registration. Under the current draft decree, the investor is required to submit consular legalized copies of relevant documents twice,
which would result in duplication of expenses and time. Also under the current draft decree, the investor, although being issued with an Investment
Registration Certificate, is uncertain whether it is allowed to establish an enterprise to implement such approved investment project. This is because
the procedure for establish such an enterprise requires separate approving process.
We hereby propose the following comments to the draft decree.

Article 2: Interpretation. The schedule of definitions/terms is not exhaustive. The
draft decree must exhaustively list out all relevant definitions/terms.
To add the definition of the "copy", whether a normal copy or a consular legalized
copy would suffice.
Article 6 requires the investors to submit the "original" in foreign language.
However, there are documents which the investors cannot provide the originals;
hence, copies of such documents must be acceptable.
Article 9: List of investment/business conditions applicable to foreign investors is

enclosed in Annex III of this Decree.
The list of these conditions can be published on the National Information Portal. This
is to prevent the circumstances where the specific laws are amended that cause
Annex III of the Decree to be amended as well.
Page 1 of 5
Article 6. Language
The investment project dossier and other official documents
submitted to Vietnamese authorities must be made in
Vietnamese. If the dossier includes documents in foreign
language, the investor must submit the original or copy in
foreign language of such document.
No.
Comments
For example, currently the draft is listing out all business conditions which were
provided for under Law on Real Estate Business 2006, yet these conditions have
been replaced by Law on Real Estate Business 2014.
Article 23.1, the investment registration authority suggests the project
implementation location to the investors.
This provision is unclear. The investors may interpret this to understand that
investment registration authorities are responsible to suggest them the locations to
implement their investment projects. Is this really a responsibility of the investment
registration authorities? If yes, are they subjected to any timeframe? If no, what is the
rationale behind this provision?
Article 24 is unclear as to whether Ministries' opinions are required in case of
investments in coastal areas (e.g., resorts) not close to land areas for security
purposes.
In addition, it is possible that foreign investors cannot know all coastal areas that
are planned for security purposes so that they can proceed with this procedure.
Therefore, we recommend allowing them to apply for the normal procedures to
obtain the Investment Registration Certificate or the in-principle approval, and the
investment registration authorities will seek opinions of the relevant Ministries
regarding the matter.
Articles 26 and 27 on in-principle approval: When combining the approving
processes of relevant authorities, the timeline of 35 days or 60 days would be
insufficient.
For example, the in-principle approval of the Prime Minister according to the
process under the LOI is 58 days, not to mention the amount of time attributable
for the in-principle approval of the provincial People's Committee and the Prime
Minister, who do not have specific timeline for approving in-principle.
Moreover, it is required 8 copies of the dossiers, including 2 original dossiers for
obtaining the in-principle approval from the PM. Why does the draft require 2
original dossiers?
Article 30.1(b), when amending the in-principle investment, the investor must submit:
b) A copy of the Identification Card, Citizen Card or Passport of the investor being
individuals; copy of incorporation certificate or equivalent documents certifying the
Page 2 of 5
Recommend adding the timeline for approving in-principle of

the provincial Peoples Committee and the Prime Minister,
and revising the total amount of time to ensure sufficiency.
No.
10
Comments
legal status of the investor being organizations;
We recommend removing this requirement. According to Clause 1(d), when
transferring the investment project to another investor, the application dossier
includes:
A contract on investment project transfer and the legal documents of the
transferred investor in case of changing the investor;
"Legal document" in item d) must be clarified as "copy of the Identification Card,
Citizen Card or Passport of the investor being individuals; copy of incorporation
certificate or equivalent documents certifying the legal status of the investor being
organizations"
Articles 30 and 32 need to specify as in the case of change of the investor due to
splitting, consolidation, merger, then it is not required to go through the procedure
to modify the in-principle investment because the investment projects are assets
attached to the splitting, consolidation, or merger.
Article 32, the procedure to amend the in-principle approval of the PM requires
investors to submit 18 copies of the application dossiers, including 2 original copies.
We understand this is a typo, and the procedure indeed just requires 8 copies of the
application dossiers. We recommend requiring the investor to submit only 1 original
copy.
Article 34, on the application dossier requesting the issuance of the Investment
Registration Certificate: lacking provisions for the investment projects requiring inprinciple approvals. In fact, dossiers for all projects are alike. We recommend
amending Article 34.1 as stated in the right column.
Article 34.2 applies in cases where investment projects accompanied with
establishment of an enterprise. We understand that, the MPI will issue a template
for the Request for the issuance of an Investment Registration Certificate. Such
form will include all information items listed in this clause 2. Therefore, it is
unnecessary to list all of the information as current drafted. Consider to amend as
stated in the right column.
The MPI may regulate the templates for requesting the issuance of the Investment
Registration Certificate and concurrently requesting the issuance of the Enterprise
Registration Certificate. The business registration authorities do not need to provide
separate templates.
Page 3 of 5
1. For projects not falling under the cases where in-principle

approval is required as stated in Articles 30, 31 and 32 of LOI,
the Investor submits the application dossier as mentioned in
Article 33.1 of this Law, accompanied with the request for
issuance of an Investment Registration Certificate following
the form provided by the Ministry of Planning and Investment.
2. In case of requesting the issuance of an Investment
Registration Certificate with the establishment of an
economic organization, the investor must submit a request
for the issuance of an Investment Registration Certificate
following the form as specifically provided by the Ministry of
Planning and Investment.
No.
11
Comments
Article 36 on Establishment of Economic Organization of foreign investors, economic
organizations with foreign capital, may be amended as stated in the right column.

Option 1: Article 36. Establishment of Economic Organization
of foreign investors, economic organizations with foreign
capital
Upon being issued with the Investment Registration
Certificate in accordance with Article 35 of this Decree, the
business registration authority will issue a Certificate for
the establishment of an economic organization for the
investor within 3 working days.
Option 2: Article 36. Establishment of Economic Organization
of foreign investors, economic organizations with foreign
capital
1. Upon being issued with the Investment Registration
Certificate in accordance with Article 35 of this Decree, the
foreign investor registers for establishment of an economic
organization to implement the investment project.
2. The application dossier, the procedure for registering the
establishment of the economic organization will follow the
regulations of the law on enterprises or relevant laws
corresponding to each type of economic organizations. The
investor is exempt from submitting documents which have
been previously submitted to the investment registration
authority when requesting the issuance of the Investment
Registration Certificate.
12
Articles 38 and 39 do not have any contents different from that of the LOI.
However, the draft decree has yet provided the procedure to amend the in-principle
approval if applicable. The draft needs to clarify as to whether the amendment of the
in-principle approval needs to be conducted before or after or simultaneously with the
registration procedure mentioned in Article 38.
In terms of the application dossier, please kindly note that the investor has
submitted the legal documents and capital transfer agreement in case of amending
the in-principle approval (35 - 60 days). In the procedure for notifying foreign
Page 4 of 5
No.
13
14
15
16
17
18
Comments
investment (15 days), the investor is also requested to submit the legal documents
and the capital transfer agreement (Article 26 of the LOI). Afterward, when
amending the Enterprise Registration Certificate, the foreign investor once again is
requested to submit the consular legalized copies of their legal documents. Please
revise this to establish a thorough process, and the investors will only have to
submit their legal documents one time.
Article 40, Within 30 days since being issued with the Investment Registration
Certificate, the foreign investor must conduct the procedure to register for the
establishment of an economic organization to implement the investment project in
accordance with Article 36 of this Decree.
We recommend following the shortened procedure as above mentioned.
Article 41 requests the investor to make a deposit to guarantee its investment project
implementation. This provision has yet provided clear guidance on where the investor
should make the deposit, i.e. the National Treasury, the MOF, or a blocked account of
the enterprise at a commercial bank?
Article 54 on periodical report.
Monthly, quarter reports have the similar contents. Please remove the requirement
of submitting the monthly report to reduce reporting burdens of the enterprises.
The draft has yet provided procedures for enterprises to return their Investment
Registration Certificate when they become enterprises without foreign ownership.
In addition, we recommend considering to allow foreign investors who own up to
49% of the charter capital to be exempted from obtaining the Investment
Registration Certificate, because the domestic investors own 51% or more.
Otherwise, the investor will have to conduct 2 steps to avoid doing the Investment
Registration Certification procedure: first to establish a domestic-owned enterprise,
then to have such domestic-owned enterprise to transfer up to 49% of its charter
capital to the foreign investor.
Lastly, the investment procedure applied for foreign investors establishing social
enterprises is unclear as to whether they are subjected to Investment Registration
Certificate. How should they describe the investment objectives? How to resolve the
case where the investors being non-profit organizations/NGOs do not have
documents as required by law, for example lack of most 2 recent financial
statements or lack of sufficient balance in their bank accounts?
Page 5 of 5
The draft must have specific regulations for these social

projects.
Submission on The Draft Decree Detailing The 2014 Law On Investment
SUBMISSION ON THE DRAFT DECREE GUIDING THE 2014 LAW ON INVESTMENT

As at 20 April 2015
Prepared by
Allens
1.
General comments
The Draft Decree has detailed some of important points in the Law on Investment 2014 (2014 LOI). Nevertheless, it does not completely clarify
some issues raised from the 2014 LOI, which,in our view,would cause significant difficulties in practice.
One area where the Draft Decree can be improved is in respect of the process for issuance of investment registration certificate (IRC) and
enterprises registration certificate (ERC). It has been the business community's expectation from the consultation process with the MPI on the
2014 LOI that implementing regulations would try to minimise the administrative burden for foreign investors due to the splitting of the old
investment certificate (IC) into two separate IRC and ERC under the new law. This could be done by having the foreign investors only
submitting one application dossier to the licensing authority and there will be internal transfer between different departments in the authority
in order to provide to the investor at the end of that process boththe IRC and the ERC required for their project. This is notreflected at all in the
Draft Decreeand westrongly submit that the Government should carefully and thoroughly consider the design of this process to achieve the
original objective of the 2014 LOI, that is, to simplify the investment registration regime and make it easier to do business in Vietnam.
We also have a number of other comments set out in the table below and sorted in ascending order of the relevant provision in the Draft Decree.
2.
Main comments on the Draft Decree implementing the 2014 Law on Investment
No.
Draft Decree
Reference
Issues
Recommendation
Pursuant to Article 6, application dossiers for investment projects

submitted to the authority must be in Vietnamese; in case there are
some documents in foreign languages, the investor must submit the
original document in the foreign language.
The Implementing Decree should set out in details the

requirements for the original foreign documents in
application dossiers.
It is unclear what are the requirements for the original foreign

documents, whether they need to be legalised with the relevant
embassy/consulate or whether it is sufficient to have it certified
true and correct copy by an independent lawyer/notary officer. We
further note that in certain cases, it is not possible for the investor
to submit the original document (e.g. incorporation certificate) but
only certified true copy of the original document and the
Implementing Decree should specifically permit that.
Page 1 of 8
No.
2
Draft Decree
Reference
7.1
9.1, Schedule 3
19
Issues
Recommendation
Article 7.1 regulates the prohibited industries and trades

prohibited which are provided in Article 6 and Appendices 1, 2 and
3 of the 2014 LOI. However, Appendices 2 and 3 do not mention the
prohibited industries and trades, but rather the Schedule of
chemicals and minerals and the Schedule of endangered,
precious and rare species of wild flora and fauna of Group 1:
Endangered, precious and rare species of wild flora and fauna
banned from exploitation or use for business investment
purposes.
Article 9.1 and Schedule 3 provide a detailed list of conditional
business lines and business investment conditions for foreign
investors.
The wording in Article 7.1 could be amended as follows:

"Article 6 of the Law on Investment sets out the industries
and trades in which business investment is prohibited and
Appendices 1, 2 and 3 of the Law on Investment set out the
goods, flora and fauna in which business investment is
prohibited."
While this may be a good intention of the lawmakers to make it

easier for foreign investors when considering their business lines,
we are concerned that discrepancies may arise between Schedule
3 list and other industry specific laws, in which case it will cause
great anxiety to foreign investors in order to work out which
conditions they need to comply with. The 2014 LOI also does not
envisage that any separate list will be provided for foreign
investors but all business investment conditions will be published
on the National Portal For Enterprises Registration (National
Portal). Under Article 9.5 of the Draft Decree, foreign investors
will still have to go to the National Portal after consulting the
conditions in Schedule 3 list to see whether there are other
conditions applicable for their business.
Article 19 provides conditions and procedures for applying
investment incentives, in which Article 19.3 sets out the starting
date for project implementation in respect of those investment
projects that do not have an IRC (as it is not required) to record the
relevant investment incentives. It is not clear why Article 19.3 is
necessary and in any event it may not be appropriate for the
Implementing Decree to specify the starting time in this case
because each respective authority providing investment incentives
may have their own law specifying when the investment incentives
Page 2 of 8
We suggest Article 9.1 and Schedule 3 list should be deleted

from the Implementing Decree to reduce the risk of any
discrepancy between different laws and lists in the future. In
practice, all business investment conditions should be
published on the National Portal and the authority can make
information on the National Portal friendlier to the foreign
investors by having a separate table or make it easy to search
by key words for all those conditions and business lines that
are only conditional for foreign investors.
In case the industry specific law and the updated conditions
on National Portal are inconsistent, the former shall prevail.
We recommend removing item (3) in Article 19 and leaving it

to the relevant authority providing investment incentives to
specify the starting date when incentives will apply. If Article
19.3 was to be kept, clearer indication of timing should be
provided in paragraph (c).
No.
Draft Decree
Reference
26.1
26.3
Issues
Recommendation
will start to apply. Further, paragraph (c) of Article 19.3 refers to

the date of decision on investment of the investors which is not
clear enough and ambiguities can still arise in specific cases, such
as when the issuance date of the investor's resolutions differs from
the date of the General Meeting of Shareholders.
Article 32.1(a) of the 2014 LOI regarding the authority of Provincial
People's Committee on in-principal approval states that:
"Projects to which the State allocates or leases out land without
auction, tendering or transfer; and projects with a requirement for
conversion of the land use purpose."
It is not clear in reading the law whether the word 'transfer' in this
case refers to State allocation or lease of land without a transfer.
We understand that 'transfer' in this case refers to a project using
land acquired by way of transfer from another existing land user
(not the State) under the Land Law.
We propose Article 26.1 of Draft Decree should be amended

as follows:
"1. The authority to decide in-principal approval of the
Provincial People's Committee is regulated at Article 32 of
Law on Investment.
The Implementing Decree should clarify this but Article 26.1 of the
Draft Decree just refers back to Article 32 of LOI without any
clarification.
Pursuant to Article 26.3, the investor shall submit 06 dossiers to
the investment registration agency of the locality in which the
project shall be implemented. In case of irregular dossiers, the
investment registration agency shall send notification in writing to
the investor within 3 working days from the date of dossiers receipt.
This provision does not clarify whether the investors could assume
that their dossiers are accepted if the investment registration
agency does not send any written notification after the 3 working
day period expires.
34.1 and 34.2.d
Under Article 34.2.d, in case the request for the issuance of IRC
associated with the establishment of an economic organisation, the
written request for issuance of IRC must provide the information of
charter capital and capital contribution ratio.
However, the provisions does not specify whether the 'capital of the
Page 3 of 8
Projects to which the State allocates or leases out land by

way of auction, tendering or project using land acquired by
way of transfer from existing land user do not need to go
through the process of in-principal approval of the Provincial
People's
Committee."
Article 26.3 may be clarified as follows:

"The investor shall submit 06 dossiers to the investment
registration agency of the locality in which the project shall
be implemented. If the dossier does not conform with
requirements in the law, the investment registration agency
must notify the investor in writing within 3 working days from
the date of their receipt of the dossier in order for the
investor to amend or update the dossier. The investment
registration agency must not request the investor to amend
or update their dossier after 3 working days from the date of
their receipt of the dossier.
There is two spelling mistake as Article 34.1 should refer to
the 2014 LOI, not "this law", and in Article 34.2(d), the word
"gi trnh" should be replaced with "gii trnh".
In respect of the time-limit for capital contribution, we
No.
Draft Decree
Reference
Issues
Recommendation
project contributed by the investor' must be equal to the initial

charter capital of the FIE at the time of establishment and whether
this capital can be contributed over a period longer than 90 days
prescribed under the Law on Enterprises.
understand that the 90-day term stipulates the commitment

of the investor towards the project. However, for those
projects which cost billion US dollars, it is impossible for the
investor to contribute such capital within 90 days. We
recommend that one out of the two following regimes should
be applied with a view to avoiding the situation where the
equity capital in the large project must be contributed within
90 days:
(1) The Implementing Decree should explicitly recognise that
FIEs may have an initial charter capital that is lower than the
total capital to be contributed by the investors (e.g. $10 vs
$40 in our example here). This could be made clear at
Article 34.2(d) by providing that the required information
includes "explanation regarding charter capital and capital
contribution ratio, including any schedule for contribution of
charter capital and any other schedule for contribution of
investment capital over the life of the project."OR
(2) The Implementing Decree should mention the term
"owner's contributed capital" instead of "charter capital" as
in Article 39.6 of the 2014 LOI. Specifically, Article 34.2(d)
should require "information on value of owner's
contributed capital, investment capital and the capital
contribution ratio". When applying for the issuance of IRC,
the investor only needs to provide information about the
proposed owner's contributed capital and loan capital. The
owner's contributed capital is not necessarily contributed
within 90 days. When applying for the ERC issuance, the
investor only needs to provide information about charter
capital and this amount should be contributed within 90
days.
Article 35.1 should be supplemented as follows:
"1. [] The investor shall not be required to submit any
additional dossier to receive the IRC after the in-principle
approval for the project has been issued".
For example, the investment capital of the project is $100 of which

$40 is capital contributed by the investor and $60 is borrowed. Does
the FIE need to have $40 as its charter capital at the time of its
establishment or can the FIE have a lower initial charter capital
(e.g. $10) which the investor will contribute within 90 days and the
rest $30 will be contributed as increased charter capital of the FIE
later on? In another word, will the investment licensing authority
accept that the initial charter capital of the investment project will
be less than 15-20% of the total investment capital (in this example
it is only 10% and in real life, could be much lower as investors,
especially those in large-scale investment projects, would not want
to pump too much cash into the project company at the initial stage
when there is no operating or construction activities to be
occurred?). We understand that although it is not written, the 1520% ratio requirement is often used by the authority in deciding
whether to approve an investment project in practice.
35.1
Article 35.1 of the Draft Decree provides that: "The investment

registration agency shall issue an IRC to the investor within a timelimit of five working days from the date of receipt of the written
decision on the investment policy", which is more or less the same
as regulated in the LOI.
Page 4 of 8
No.
10
11
Draft Decree
Reference
38.1
39.1
39.2
Issues
Recommendation
In our view, the implementing regulations should make it clear that

the IRC will be issued by the licensing authorities
within 5
business days after an in-principle approval for the project has
been issued i.e. the foreign investor does not need to re-submit
any application file for the IRC.
Article 38.1 of Draft Decree states that when investing by way of
acquisition of capital contribution or shares of an economic entity
(M&A), the foreign investors do not need to apply for the IRC.
However, it is not clear if the target company still has to go through
the procedure to apply for IRC for their existing investment projects
after completion of the M&A transaction.
This is because from the wording of Article 36.1.(b) of LOI, a target
company with the total foreign ownership after completion of the
M&A transaction exceeding 51% will be subject to the IRC
procedure for their investment projects and this could be
interpreted that they will need to apply for IRCs for all of their
investment projects including those that they have already had or
have been carried out before the foreign investors acquires the
target.
Article 39.1 of Draft Decree states that:
"The dossier, procedure to register the capital contribution, share
purchase in economic organization will be implemented as regulated
at clause 2 and 3 of Article 26 of LOI."
As clause 2 and 3 of Article 26 of LOI is not clear what documents
are required as part of the application dossier, article 39.1 should
clearly specify whether a copy of the acquisition agreements or an
evidence of payment of the purchase price by the foreign investor
will be required as a part of the registration file. From the wording
of Article 39.1 of Draft Decree and Article 26.2 of the 2014 LOI, we
think that there is no such requirement.
Article 39.2 of Draft Decree states that the Department of Planning
and Investment will issue a notice regarding the registration of
capital contribution, share purchase in economic organization.
However, it is not clear under the Draft Decree which division of the
Page 5 of 8
The Implementing Decree should clarity this uncertainty and

it is recommended that no IRC will be required for the target
company. When a foreign investor submits their application
dossier for the M&A approval, the licensing authority will
have checked the required conditions of the foreign investors
and the target company before issuing an approval for the
M&A transaction to process. Therefore, an additional IRC for
the target company is not necessary.
Article 38.1 should be amended as follows:
"[1. ] In this case the investor and the target company do
not need to conduct the procedure for issuance of Investment
Registration Certificate."
Article 39.1 of Draft Decree should be amended as follows:
"39.1 The dossier, procedure to register the capital
contribution, share purchase in economic organization will be
implemented as regulated at clause 2 and 3 of Article 26 of
LOI. Besides the required documents in Article 26.2 of LOI,
the foreign investors do not need to submit any other
documents."
There is a spelling mistake as the words "cc p ng"

before "cc iu kin sau:" should be removed from Article
39.2.
No.
12
Draft Decree
Reference
40.1
Issues
Recommendation
DPI will have such authority (i.e. foreign investment division or the
business registration division). We propose that the foreign
investment division will have the authority to review the registration
as the registration relating to foreign investors.
Article 40.1 of Draft Decree states that within 30 days from the date
of issuance of IRC, foreign investors shall perform procedures for
registration of economic organizations establishment.
Article 39.2 of Draft Decree should be amended as follows:

"39.2 Foreign investment division of the Department of
Planning and Investment issues the notice []"
The period of 30 days since the issuance of IRC indicates that the
application file for issuance of IRC and ERC must be submitted at
different points of time. As noted in our general comment, we are of
the view that foreign investors should not be required to perform
any additional procedures to register the new FIE but this process
could be handled automatically and internally between the foreign
investment offices and the business registration offices of the
relevant DPI.
Further, this procedure would result in the following problems:
(i) Will the investment incentives in the IRC for foreign investors be
recorded in the ERC for FIEs (these incentives are applicable to the
enterprises, not the investors)?
(ii) If the investment incentives are fully recorded in the ERC, in
case of amendment or addition to investment incentives, must IRC
and ERC be amended?
13
41
(iii) The period of 30 days is too short for the investors to prepare
the application file for the issuance of ERC.
Article 41 only clarifies the exceptions where an investor does not
need to provide an escrow deposit for the performance of the
investment project.
However, the implementing regulations do not specify the
procedure for paying and refunding the performance bond as
required under the 2014 LOI.
Page 6 of 8
With a view to simplifying the procedures of application for

the issuance of IRC and establishment of the enterprise, we
suggest removing Article 40.1 and replacing it with another
regime as follows:
- The investment registration agency shall work internally in
order for the foreign investor to submit only one application
dossier at the investment registration agency and such
dossier will be automatically transferred to the enterprise
registration agency.
- Both IRC and ERC shall include the provisions of investment
incentives.
- In case of amendment or addition to investment incentives,
only ERC needs amending and the amended ERC shall be
applicable in priority.
- If this proposed regime could not be applied, we
recommend the Government to prolong the 30 day period
for preparation of application file for the issuance of ERC.
We recommend that the Draft Decree should regulate the

procedure for making the escrow deposit and for refunding
the performance bond e.g. time, method to calculate the
deposit, the sum of money refunded at different stages
regarding the schedule of the investment project, etc.
The Decree should also regulate all circumstances the
escrow deposit shall not be refunded.
No.
14
15
Draft Decree
Reference
54.1
72.1
Issues
Recommendation
Pursuant to Article 54.1, "economic organizations conducting

investment projects" must submit a report to the investment
registration agency and the local statistics agency every month
with very detailed information about the progress of the investment
projects.
The economic entities should not be required to provide

monthly reports and for statistical purposes, the investment
authority and statistics agency can obtain such information
from the relevant government agencies. If it is necessary for
the investment licensing authority to monitor the progress of
the investment project implementation, we suggest that
annual reports or half-yearly reports should be adequate for
such purpose.
We have significant concerns that this is an unduly onerous

reporting obligation on the companies, primarily FIEs, and a
duplication of many other types of reports that FIEs have already
had to do otherwise with the Tax Department, Customs or
Department of Labour, Invalids and Social Affairs.
Pursuant to Article 72.1 of Draft Decree, FIEs with IC are entitled to
continue their activities under the issued IC and the old Charter.
It is unclear whether this provision is also applicable to companies
that did not register to operate under the Law on Investment 2005.
16
75, 77
17
Example
relating to IRC
and ERC
Articles 75 and 77 provide the transitional provisions for investors if

they want to amend an existing IC for changes in the investment
project and in the FIEs respectively. Accordingly, new IRC or new
ERC will be issued with all the amended and unchanged contents
but there is no mention if the new IRC or ERC will replace the
existing IC wholly or partly. It will also be practically confusing if
the old IC is not replaced in whole but only partly and investors
have to maintain partly valid pre-2014 law document (IC) and post2014 law documents (IRC and ERC).
We would like to point out one remaining issue regarding IRC and
ERC.
For instance, a wholly foreign company sells 50% of capital
contribution to another foreign investor. Pursuant to the draft
Decree, the two following steps must be done:
(i) Register the M&A; and
(ii) Register to amend the ERC to record the change of the new
member.
Page 7 of 8
Modification is needed to avoid contradiction between Law on

Enterprise and Law on Investment.
It should also make clear whether companies not reregistered under Law on Investment 2005 are entitled to
continue operating without any further procedures.
We recommend that while it is not compulsory for companies
operating under an IC to take any step to convert it into the
new documents, if there is any request for amendment of the
existing IC like in these cases, the authority should just take
this opportunity to replace all pre-2014 law documents (IC,
investment licences) with the new IRC and ERC for
conformation with the 2014 LOI and easier administration in
the future.
We propose that whenever the amendment of the IRC is
required, the investment registration agency should record
the new investor in the IRC to put the investors' mind at ease.
No.
Draft Decree
Reference
Issues
Recommendation
As we understand from the Draft Decree that the IRC needs not
amending, there would be some issues arising as follows:
The name of the new investor is not reflected in the IRC. As
a result, inconsistency between IRC and ERC in regard of
the investors will be raised.
In case the IRC is amended to reflect the change of other contents,
will the name of the new investor be recorded in the IRC?
Page 8 of 8
Comments on draft Decree guiding the 2014 Law on Investment
COMMENTS ON DRAFT DECREE GUIDING THE IMPLEMENTATION OF A NUMBER OF

ARTICLES OF THE 2014 LAW ON INVESTMENT
Prepared by
Nagashima Ohno & Tsunematsu, Hanoi Branch
Articles
Comments
Article 6: Applicable languages
The language of the provision is not clear. It is
[] In case the investment project
understood that the original foreign language version
dossier
and
is the original copy of a document. However, for certain
materials in foreign languages, the
documents (e.g. Incorporate Certificate) of a foreign
investor shall submit the original foreign
investor, this is only a copy of the original version and
language versions thereof.
that copy must be legalized.
contains
documents
Moreover, this provision is silent on whether or not a

notarized Vietnamese translation of a document in
foreign language is required.
We suggest amending as follows:
[] In case the investment project dossier contains
documents and materials in foreign languages, the
investor shall submit the original foreign language
versions or a legalized copy of the original language
versions, and the notarized Vietnamese translation
thereof.
Article 9 and Schedule III: Conditional
Schedule III of the Draft Decree repeats the restriction
businesses applicable to foreign
under
investors
industries, the restrict periods have been expired but
commitments
to
WTO.
Regarding
certain
remain appear in Schedules III. To make Schedule III

clearer, we suggest removing the restrictions that have
been expired.
Article 20: Adjustment and
Under Article 20.1, the investor may request the
supplementation of investment
Investment Registration Authorities to adjust or update
incentives
the investment incentives recorded in its Investment

Certificate. However, this Article does not provide the
required documents and procedures to be followed to
obtain extra incentives. The Draft Decree should set
forth such documents and procedures.
Under Article 20.2, the investor must return the
benefits previously awarded if it fails to meet the
Page 1 of 3
conditions to eligible for such incentives. This provision

may create negative effects on the investors operation
and put the investor in a precarious situation. Of
course, the investor will not be eligible for incentive if it
no longer satisfies the incentive conditions. However,
the withdrawal of incentive should not be retroactive if
the investor fails to meet the incentive conditions
without its faults.
We
suggest
retaining
Article
28.2
of
Decree
108/2006/ND-CP that provides If, during performance

of an investment project, an investor fails to satisfy
conditions for enjoying investment incentives, the
investor shall not be entitled to such incentives.
Alternatively,
it
is
advisable
to
set
forth
the
circumstances under which the investor must return

the benefit previously awarded.
Artciel 24: Procedures for investment
Which article in LOE this Article 24 of the draft decree
preparation in island, border and
legally base on? The decree cannot provide unfavorable
littoral communes, wards and
condition to foreign investor which is not in the LOE.
townships
Articles 26.3 and 27.3: Authority,
It is requried that the investor must file at least one/two
dossiers and procedures for project
original copies of dossier. In practice, it take time to
preliminary acceptance by provincial
prepare an original copy. It may trouble the investor if,
level People's Committees/ Prime
upon filing the dossier, the authorities request more
Minister
original copy of the dossier. Please give an exact

number of the original copies (e.g. two or three copies)
that the investor must submit.
Article 30: Dossiers required to amend
According to Article 30.1.(g), the application dossier
investment policies
must contain a letter issued by the taxation authorities

to certify the performance of tax payment obligation. In
practice, it takes time and effort for a company to
obtain
confirmation
letter
from
the
taxation
authorities. Meanwhile, it would be easier for the

Investment Registration Authorities to request the tax
authorities to provide such letter. To create favorable
conditons for investors, we suggest removing this
requirement.
Page 2 of 3
Article 41: Guarantee for the project
Neither this Article and Article 42 of the Law of
performance
Investment mention to: (i) the state authorities in
Article 41.2 provides:
charge of determining the escrow amount; (ii) the
The escrow amount to guarantee the organization where the escrow amount is hold (e.g.
project implementation shall be of 1% to
bank, State Treasury); (iii) the date on which the
3% of the project capital, subject to the
esscrow amount must be deposited; and (iv) who will be
size, nature and schedule of each
eligible to the interest earned on the escrow amount.
project.
We suggest specifying these matters in the Draft

Decree.
Article 54. Reporting content of reports
It is required that the company must file
montly report
and reporting period of economic
on the contribution of Charter Capital, Investment
organization implementing investment
Capital in terms of capital resources, investment items,
projects
net revenue, import, export, labor, taxes and amounts

payable to the State Budget. Besides, the company
must file quarter reports and annual report.
The requirement on monthly report may burden both
the company and the state authorities. In practice, it
take time to a company to collect data to prepare a
monthly report. Meanwhile, in practice, the officers of
Investment Registration Authorities in big cities (i.e.
Hanoi City, Ho Chi Minh City) are always overloaded and
seem to not have sufficient time to read all the reports.
Therefore, we suggest to simplify the contents of a
montly report (i.e. only limits to the material matters
such as the contribution of Charter Capital and
Investment Capital).
Page 3 of 3
COMMENTS ON DRAFT DECREE GUIDING THE IMPLEMENTATION OF A NUMBER OF ARTICLES OF

THE 2014 LAW ON INVESTMENT
Prepared by
TMI Vietnam
Abbreviated words and phrases:

1.
Decree 108 means Decree No. 108/2006/ND-CP dated 22 September 2006;
2.
ERC means enterprise registration certificate;
3.
IRC means investment registration certificate;
4.
LOI 2014 means Investment Law No. 67/2014/QH13 adopted by the National Assembly on 26 November 2014;
Current Draft
Circular
Article 2
Article 2.4
No
Article 6
Existing
regulations
Article 4 of
Decree 108
TMIs Comments
Recommendation
The phrase Investment Law of 2005 is used twice in this Draft

Decree (i.e., in the definition of Investment Certificate and that
of Investment licenses and Investment incentive certificates)
but it has not been defined yet.
The word including is used many times in this Draft Decree.
There should be a definition of Investment Law of

2005 to ensure the use of such phrase is
consistent throughout the Draft Decree.
However, for the interpretation of this word in practice, it can be

interpreted as either (a) including, without limitation to (this is
the common interpretation of lawyers and investors) or (b)
comprising/consisting of (this is the common interpretation of
the State authorities). Accordingly, this cause may
controversies while implementing the regulations in practice.
Article 6 of the Draft Decree provides that the investment
project dossier must be made in Vietnamese language.
However, there is no definition of investment project dossier in
this Draft Decree, and it is unclear whether this phrase also
covers other phrases having the word dossier, such as
applicationdossier investment project preliminary acceptance
(as provided in Article 26.2 of this Draft Decree) or application
dossiers for preliminary acceptance adjustment (as provided in
Article 30 of this Draft Decree).
Page 1 of 7
To avoid the potential controversies, this word

should be consistently used as including, without
limitation to, which is commonly and globally
recognized.
Article 6 of the Draft Decree should be revised to

make clear its scope of governance.
Otherwise, Article 2 of the Draft Decree should be
added with a new definition of investment project
dossier or application dossier, as the case may
be, and this definition should be used consistently
throughout the Draft Decree.
No
Current Draft
Circular
Article 6
Article 6
Article 6
Existing
regulations
TMIs Comments
Recommendation
Article 4 of
Decree 108
Since the word dossier and the phrase having the word
dossier are used inconsistently in this Draft Decree, there
would probably be disputes between investors and the State
authorities relating to the matter of whether a specific
document included in the dossier must be made in Vietnamese
language or not.
In this Article 6 of the Draft Decree, due to the lack of the
definition of investment project dossier and while Article 6 of
the Draft Decree requires the language of the investment
project dossier to be Vietnamese, it will unclear whether the
language of certain agreements/contracts which must be
included in the dossier (for example, the capital/share transfer
agreement or joint venture agreement) must also be made in
Vietnamese or not.

make clear its scope of governance.
Article 4 of
Decree 108
Article 4 of
Decree 108
If it is a must, it will not be reasonable to foreign investors

who cannot read documents in Vietnamese and who are not
confident in signing on documents in Vietnamese.
Article 6 of the Draft Decree does not clarify which language of
the application dossier will prevail in case of discrepancy, while
Article 4 of Decree 108 clearly regulates this matter.
Due to the lack of this clarification, in case of discrepancy
between the Vietnamese version and the foreign language
version, the foreign investor wants to refer to the foreign
language version as it is the version that the investor fully
understand, but the licensing authority does not agree and still
refers to the Vietnamese version. As a result, the contents of
the IRC may not be satisfactory to the investor.
Article 6 of the Draft Decree provides that In case the
investment project dossier contains documents and materials
in foreign languages, the investor shall submit the original
foreign language versions thereof.
Page 2 of 7
Otherwise, Article 2 of the Draft Decree should be

added with a new definition of investment project
dossier or application dossier, as the case may
be, and this definition should be used consistently
throughout the Draft Decree.

provide that In case of discrepancy between the
Vietnamese and the foreign language version of
the application dossier, the foreign language
version shall prevail.
This sentence of Article 6 of the Draft Decree

should be removed.
No
Current Draft
Circular
Article 7.1
Article 9.1
Article 10.1
Existing
regulations
TMIs Comments
Recommendation
This document is vague and may lead to a scenario where the

foreign investor does not want to prepare the foreign language
version of the application dossier (for example, the foreign
investor totally trusts its lawyer and does not want to spend
time to sign the foreign language version), but the foreign
investor still has to do so as required by this article of the Draft
Decree.
Article 7.1 of the Draft Decree states that Banned investment
and business lines are specified in Article 6 and Annexes 1, 2
and 3, Investment Law.
The phrase and Annexes 1, 2 and 3, Investment

Law of this Article 7.1 of the Draft Decree should
be removed.
However, Annexes 1, 2 and 3 of the LOI 2014 only provide the

list of narcotic substances, chemicals and minerals, and rare
and/or endangered species of wild fauna and flora rather than
banned investment and business lines.
Article 9.1 of the Draft Decree provides that Annex III of the
Draft Decree will specify all investment and business eligibility
criteria for foreign investors.
Article 9.1 of the Draft Decree should be revised to

provide that this Draft Decree will prevail over
other decrees of the Government, and the relevant
authorities should ensure that the list in Annex III
Although it is good for foreign investors to collect such criteria from of this Draft Decree must always be very well
several decrees of the Government and provide a consolidated list of updated in correspondence with other decrees of
investment and business eligibility criteria for foreign investors in the Government.
only one legal document, there is a possibility that any of other
Decrees
of
the
Government
has
been
amended/replaced/supplemented but the list in Annex III of this
Draft Decree is not amended/replaced/supplemented accordingly.
In addition, if there is any discrepancy between the criteria
mentioned in the list in Annex III of this Draft Decree and the
criteria mentioned in another decree of the Government, it is
unclear about which one will prevail.
Article 10.1 of the Draft Decree states that The List of conditional
investment and business lines (hereinafter collectively referred to
as investment and business lines).
Page 3 of 7
Article 10.1 of the Draft Decree should be revised

to provided that The List of conditional investment
and business lines as provided in Annex 4 of the
No
10
Current Draft
Circular
Article 10.2
11
Article 25.2(b)
12
Article 30.1(b)
Existing
regulations
TMIs Comments
Recommendation
Investment Law (hereinafter collectively referred

It is unreasonable to use the phrase investment and business to as conditional investment and business
lines as the abbreviated one for the phrase conditional investment lines)
and business lines because the word conditional is the most
important word but was omitted.
Article 10.2 of the Draft Decree provides that Investment and Article 10.2 of the Draft Decree should be revised
business eligibility criteria shall be defined in normative to provide that Investment and business eligibility
regulations enacted by the National Assembly and National criteria shall be defined in normative regulations
Assembly Standing Committee.
enacted by the National Assembly and National
Assembly Standing Committee and also in
However, Article 7.3 of the LOI 2014 stipulates that Conditions for international agreements to which the Socialist
making investments in the business lines mentioned in Clause 2 of Republic of Vietnam is a signatory .
this Article are specified in the Laws, Ordinances, Decrees, and the
international agreements to which the Socialist Republic of Vietnam
is a signatory.
This means Article 10.2 of the Draft Decree does not refer to
international agreements, so this article of the Draft Decree is
not consistent with the LOI 2014.
Article 25.2(b) of the Draft Decree refers to an investment
project proposal but this Draft Decree has no definition or
regulation on this investment project proposal.
Article 30.1(b) of the Draft Decree requires the investor to

submit Copies of personal ID card or passport for private
individuals; copies of Incorporation certificate or other
equivalent documents certifying the legal status for institutional
investors, which the investor already submitted at the time of
applying for the project preliminary acceptance, even though
there is no change to the investor of such project.
Page 4 of 7
This Article 25.2(b) of the Draft Decree should be

revised to provide that For started investment
projects, the investor shall submit reports on the
progress of the investment project up to the point
of applying for the Investment certificate, instead
of making project proposal and complete the
procedure specified in Article 35.2 of this Decree
Article 30.1(b) of the Draft Decree should be
revised to provide that these documents are only
required in case there is any change to the
investor of the project (as mentioned in Article
30.1(dd) of the Draft Decree).
No
Current Draft
Circular
13
Article 34.1
14
Article 34.2
Existing
regulations
TMIs Comments
Because of this requirement, the investor will have to spend time
and money to prepare such document(s) again, and the licensing
authority will have to receive unnecessary document(s) as
attached in the application dossier.
Article 34.1 of the Draft Decree states that For projects not subject
to preliminary acceptance specified in Articles 30, 31 and 32,
Investment Law, investors shall submit application dossiers as
specified in Article 33.1 of this Decree. However, Article 33.1 of
the Draft Decree refers to investment and business eligibility
criteria instead of listing out the documents which must be included
in an application dossier.
Article 34.2 of the Draft Decree states that In case the
application for investment certification is associated with the
creation of an economic organization.
Recommendation
The cross-reference in Article 34.1 must be

revised.
To avoid any misunderstanding and to avoid any

conflict with the provisions of the LOI 2014, this
Article 34.2 should be removed entirely.
Based on the plain reading of this provision, it may be interpreted

that the foreign investor can concurrently conduct (a) the
registration of the investment project (i.e., applying for the IRC) and
(b) the registration of the establishment of the economic
organization (i.e., applying for the ERC).
15
Article 37.1(a)
However, this provision is contrary to the provision of Article

22.1 of the LOI 2014, which states that Before establishing an
economic organization, the foreign investor must have an
investment project and apply for an [IRC] and which means
the foreign investor must register the investment project to
obtain an IRC first before registering the establishment of the
economic organization to obtain an ERC, and also the provision
of Article 36 of the Draft Decree, which reiterates Article 22.1 of
the LOI 2014.
Article 37.1(a) of the Draft Decree mentions about
incorporation certificate. However, pursuant to Articles
26.2(b), 33.1(b), 55.1(b), 59.2(b) and 61.2(b) of the LOI 2014 and
Page 5 of 7
The phrase or incorporation certificate in this

Article 37.1(a) of this Draft Decree should be
removed.
No
16
17
Current Draft
Circular
Article 39
Article 41
Existing
regulations
TMIs Comments
also Articles 30.1(b) and 45.2(d) of this Draft Decree,
incorporation certificate is one of the corporate documents that
the foreign investor must attached to the application dossier,
and this is not a certificate issued by the Vietnamese licensing
authority under the LOI 2014.
Article 26.2(a) of the LOI 2014 requires that the application
dossier must include a written application for registration of
capital contribution or purchase of shares/capital contributions,
and Article 26.2(a) of the LOI 2014 also list out the key contents
of this written for registration.
However, neither the LOI 2014 nor the Draft Decree confirms
whether the investor can make the written application for
registration in its own way and format, as long as such written
application has all contents required by law, or the investor
must make such writtenapplication for registration in a form
prescribed by the Ministry of Planning and Investment.
Article 42 of the LOI 2014 and Article 41 of the Draft Decree
mention about the project implementation bond. However,
there are a number of uncertainties about these provisions, in
particular:
a. The LOI and the Draft Decree provide that the bond will be equal to
1%-3% of the total investment capital of the project, but the LOI
and the Draft Decree do not identify the authority having the power
to decide the amount of the bond;
b. The LOI and the Draft Decree provide that the amount of the bond
will depend on the size, nature and schedule of each project.
However, these provisions are very vague and will give the
competent authority very broad discretion to decide;
c. Article 41.5 of the Draft Decree requires that the bond must
be transferred to the State treasury in case the project is
terminated as specified in Article 28.1(g) of the LOI 2014.
However, other than this project termination circumstance,
the LOI and the Draft Decree do not clarify where the deposit
Page 6 of 7
Recommendation
Article 39 of the Draft Decree should be added with

a new sentence to confirm this point.
Article 41 of the Draft Decree should be revised to:

a. Identify the authority having the power to
decide the amount of the bond;
b. Specify the criteria to determine the amount of
the bond; and
c. Identify the place where the bond will be kept
until being refunded to the investor.
No
18
19
20
Current Draft
Circular
Article 44
Article 45.2(d)
Chapter VI
Existing
regulations
TMIs Comments
will be kept i.e., whether the investor can open an escrow
account in a commercial bank in Vietnam and then deposit
the bond to such escrow account or the investor must
deposit the bond to the State treasury from the beginning.
Article 44 of the Draft Decree regulates the cases of investment
project liquidation.
However, this article does not confirm whether the investor
must also liquidate the company in case the investor decides to
liquidate the investment project and the company only has such
project.
Article 45.2(d) of the Draft Decree requires the application
dossier to have documents evidencing the legal status of both
the transferee and the transferor.
However, since the transferor is the current investor of the
project to be transferred and the licensing authority already has
documents evidencing the legal status of the transferor from
the time the transferor applied for the issuance of the IRC, it is
unnecessary to require the transferor to re-submit such
documents.
Chapter VI of the Draft Decree lacks of provisions mentioning
about the circumstance where an investor already submitted an
application dossier for the issuance of the investment
certificate before 1 July 2015 but the investment certificate (or
the IRC and the ERC, as the case may be) will be issued after 1
July 2015.
Due to this lack, the licensing authority may suspend the
issuance of the IRC and the ERC for certain period to wait for
further guidance of the Government or the Ministry of Planning
and Investment on this matter. If it is the case, it will cause
many problems for the investor.
Page 7 of 7
Recommendation

provide that the investor does not need to liquidate
the company as long as the company has other
investment project(s) or the investor commits to
register a new investment project for the company
within a specific period (for example, within 90 days
as from the date of the project liquidation decision).
Article 45.2(d) of the Draft Decree should be
revised to provide that only the transferee is
required to submit documents evidencing its legal
status.
Chapter VI of the Draft Decree should have

provisions stipulating that the licensing authority
must issue the ERC and the IRC (instead of the
investment certificate) and must not delay the
licensing process.
COMMENTS ON DRAFT DECREE GUIDING THE 2014 LAW ON INVESTMENT
No
1
Article
Article 9
Content
Prepared by
HSBC Vietnam
HSBCs Comments
Article 9. Investment and business sectors and Practice / Reason for the change:
1. The list of conditions applicable for foreign investors (stipulated in Clause 1
conditions for foreign investors
1. The list of investment and business conditions Article 9 of this Draft Decree) is the most important information that foreign
applicable to foreign investors is set forth in Appendix III investors would need to be and have the rights to be fully aware of. Therefore,
we recommend that, in addition to the general list of industries/sectors with
of this Decree.
conditions for investment/business (as stipulated in Appendix 4 of the Law on
2. Foreign investors, economic organizations as prescribed Investment), the list of conditions applicable for foreign investors (detailed
in Clause 1 Article 23 of the Investment Law shall comply content of Appendix III of this draft decree) must be publicly published and
with investment and business conditions for foreign regularly updated in both Vietnamese and English on the official website of
investors in the following cases:
National Business Registration Portal
a. Carrying out investment projects through economic http://dangkykinhdoanh.gov.vn/HelpAndSupport/tabid/104/CategoryID/45/langu
organizations established under the provisions of age/en-GB/Default.aspx)
Article 22 of the Investment Law;
b. Making an investment in the form of capital 2. In addition, we also recommend re-arranging this article to make it easier to
contribution, purchase of shares/of capital portions understand.
contributed in economic groups according to the
provisions of Article 24 of the Investment Law;
Recommendation: We recommend the amendments as below:
c. Performing a business cooperation contract in Article 9. Investment and business sectors and conditions for foreign investors
accordance with the provisions of Article 28 of the 1. Foreign investors, economic organizations as prescribed in Clause 1 Article
Investment Law.
23 of the Investment Law shall comply with investment and business conditions
for foreign investors in the following cases:
3. Investment and business conditions for foreign a. Carrying out investment projects through economic organizations
investors, economic organizations as prescribed in
established under the provisions of Article 22 of the Investment Law;
Clause 1 Article 23 of the Investment Law are stipulated b. Making an investment in the form of capital contribution, purchase of
in laws, ordinances, decrees, international treaties to
shares/of capital portions contributed in economic groups according to the
which Vietnam is a party and applied in the following
provisions of Article 24 of the Investment Law;
forms:
c. Performing a business cooperation contract in accordance with the
a. Conditions on the foreign investors holding ratio of
provisions of Article 28 of the Investment Law.
charter capital in economic organizations;
b. Conditions regarding investment forms;
2. Investment and business conditions for foreign investors, economic
Page 1 of 3
No
Article
Appendix
III
Content
HSBCs Comments
c. Conditions regarding the scope of investment and organizations as prescribed in Clause 1 Article 23 of the Investment Law are
business;
stipulated in laws, ordinances, decrees, international treaties to which Vietnam
d. Conditions
regarding
Vietnamese
partners is a party. The list of investment and business conditions applicable to foreign
participating in the execution of investment activities; investors is set forth in Appendix III of this Decree and applied in the following
dd. Other conditions as prescribed in international forms:
treaties to which Vietnam is a party.
a.
Conditions on the foreign investors holding ratio of charter capital in
economic organizations;
4. Foreign investors carry out investment and business b.
Conditions regarding investment forms;
activities in different sectors must meet all conditions as c.
Conditions regarding the scope of investment and business;
prescribed for such sectors.
d.
Conditions regarding Vietnamese partners participating in the execution of
investment activities;
5. In addition to the conditions as prescribed in Clauses 2 dd. Other conditions as prescribed in international treaties to which Vietnam is
and 3 of this Article, foreign investors, foreign-invested
a party.
economic organizations which carry out investment and
business activities in sectors included in the List of 3. Foreign investors carry out investment and business activities in different
sectors in which investment is conditional as prescribed sectors must meet all conditions as prescribed for such sectors.
in the Appendix 4 of the Investment Law must also satisfy
investment and business conditions for such sectors as 4. In addition to the conditions as prescribed in Clauses 2 and 3 of this Article,
set out in Clause 3 Article 8 of this Decree.
foreign investors, foreign-invested economic organizations which carry out
investment and business activities in sectors included in the List of sectors in
6. Where international treaties on investment contain which investment is conditional as prescribed in the Appendix 4 of the
provisions on sectors in which investment is conditional, Investment Law must also satisfy investment and business conditions for such
or investment and business conditions for foreign sectors as set out in Clause 3 Article 8 of this Decree.
investors which are different from the provisions of the
Investment Law, relevant laws, ordinances, decrees, the 5. Where international treaties on investment contain provisions on sectors in
provisions of such international treaties shall prevail.
which investment is conditional, or investment and business conditions for
foreign investors which are different from the provisions of the Investment Law,
7. Foreign investors governed by international treaties
relevant laws, ordinances, decrees, the provisions of such international treaties
which contain different provisions on investment and
shall prevail.
business sectors and conditions may elect to apply
provisions of any of such international treaties.
6. Foreign investors governed by international treaties which contain different
provisions on investment and business sectors and conditions may elect to
apply provisions of any of such international treaties.
LIST OF SECTORS IN WHICH INVESTMENT IS
In addition to Appendix III of this Draft Decree (LIST OF SECTORS IN WHICH
CONDITIONAL - APPLICABLE TO FOREIGN INVESTORS
INVESTMENT IS CONDITIONAL - APPLICABLE TO FOREIGN INVESTORS),
Page 2 of 3
No
Article
Content
HSBCs Comments
recently, the MPI has published 04 other appendices (Appendix 01 to Appendix
04) LIST OF CONDITIONS FOR INVESTMENT/BUSINESS APPLICABLE FOR
FOREIGN INVESTORS and invited public comments. We observe that Appendix
III and those 4 Appendices have some parts overlapped (i.e. the descriptions of
the applicable conditions for each sectors). This is very confusing.
We request the MPI to clarify the connection between Appendix III and those 04
Appendices, and suggest that they are merged into one to avoid confusion. We
also recommend numbering the Appendices using the Roman numbering to
ensure consistency of the Draft Decree.
Page 3 of 3
COMMENTS ON DRAFT DECREE GUIDING THE IMPLEMENTATION OF A NUMBER OF

ARTICLES OF THE LAW ON INVESTMENT 2014
Prepared by
ZICOlaw Vietnam
1. Clause 3 Article 1 of the Decree provides that This Decree applies to investors and
organisations, individuals relating to business investment activities. However, please
note that Clause 14 Article 3 of the 2014 Law on Investment has defined investors
means organisations, individuals relating to business investment activities.
Therefore, the phrase and organisations, individuals relating to business investment
activities in Clause 1 Article 3 of the Decree is redundant.
Recommendation: We suggest amending Clause 3 Article 1 of the Decree as follows:
3. This Decree applies to investors in accordance with the 2014 Law on Investment.
2. Clause 4 Article 3 of the Decree provides that The rights and obligations in respect of
individuals, family households, economic organisations which are incorporated and
conducting business investment activities are in compliance with the laws on
investments, laws on enterprises and relevant laws. The content of this Clause are not
consistent grammatically with Clauses 1, 2, and 3 and itself is also unclear.
Recommendation: We suggest amending Clause 4 Article 3 of the Decree to be read as
follows:
3. Having other rights and obligations applicable to investors in accordance with the
laws on investment, laws on enterprises and other laws relevant to business investment
activities of the investors.
3. The requirement provided in Article 6 of the Decree that investors must submit the
original document in foreign language in case the project dossiers include documents
and papers in foreign language is inappropriate, since in many circumstances the
investors only have one original copy for some documents (such as the Business
licence, Charter, Approval issued by competent authorities of the country where the
foreign investors headquarter, etc.).
Recommendation: We suggest amending Article 6 of the Decree to be read as follows:
Investment project dossiers and official documents to be submitted to Vietnams State
authorities shall be in Vietnamese. Where the investment project dossiers include any
document or paper in foreign language, the investor must submit the original copy
thereof or the certified copy or the legalised copy of such document in foreign
language.
4. The contents of Clause 2 Article 8 of the Decree are the same as the contents of Clause
7 Article 7 of the 2014 Law on Investment.
Recommendation: We suggest removing this provision.
5. The contents of Clause 5 Article 8 of the Decree are redundant and unnecessary, which
make the Decree wordy, since:
(i) The conditional business lines are specifically provided for in the Law on Investment;
and
Page 1 of 4
(ii) Pursuant to Clause 3 Article 7 of the Law on Investment, the conditions for making
investment and business are provided for in the law, ordinance, decree and
international treaties.
6. The headline of Article 9 of the Decree should be stated specifically as Business lines
and industries and conditions for making investment and business applicable to foreign
investors and economic organisations mentioned in Clause 1 Article 23 of the Law on
Investment since this Article is applied only to economic organisations set out in
Clause 1 Article 23 of the Law on Investment.
7. Point c, Clause 2 of Article 9 provides that foreign investors and organisations set out in
Clause 1 Article 23 of the Law on Investment when perform business cooperation
contracts must also comply with the conditions for making investment and business
applicable to foreign investors. We are of the view that this provision is inaccurate;
particularly, only when the parties enter into business cooperation contract in order to
conduct conditional business lines, then foreign investors and organisations set out in
Clause 1 Article 23 of the Law on Investment must comply with the conditions for
making investment and business applicable to foreign investors.
Recommendation: We suggest amending the Point c Clause 2 of Article 9 to be read as
follows:
c. To perform business cooperation contracts in accordance with Article 28 of the Law
on Investment in order to conduct conditional business lines as set out in Appendix 4 to
the Law on Investment and Appendix III to this Decree.
8. Clause 3 of Article 9 is redundant and unnecessary since the list of conditions for
making investment and business applicable to foreign investors and economic
organisations mentioned in Clause 1 Article 23 of the Law on Investment which is set out
in Appendix III of the Decree has included the restrictions in terms on form of
investment, capital contribution ratio, and scope of investment and business.
9. Regarding Clause 5 of Article 9: Reference to foreign invested economic organisations
in this Article is inaccurate since foreign invested economic organisations which are not
under the categories mentioned in Clause 1 Article 23 of the Law on Investment shall
not comply with Clauses 2, and 3 Article 9 of this Decree.
Recommendation: We suggest replacing the above phrase with the phrase economic
organisations set out in Clause 1 Article 23 of the Law on Investment.
10. Clause 3 Article 19 of the Decree only sets forth the timeline for conducting investment
projects for projects mentioned in Clause 2 Article 19 of the Decree and not provides the
timeline for applying investment incentives in these cases.
Recommendation: We suggest providing specific provisions on the timeline for applying
investment incentives for cases set out in Clause 3 Article 19 of the Decree.
Page 2 of 4
11. Clause 2 Article 20 of the Decree provides that in the course of investment project
implementation, if the investor fails to satisfy conditions for being entitled to investment
incentives, the investor must return the investment incentives already enjoyed
previously.
We are of the view that this provision is unreasonable if it is applied to all investment
circumstances. For instance, in an investment project in a rural area, at the beginning of
the project implementation, the investor satisfies the condition being using 500
employees and therefore it is entitled to investment incentives set out in Point d Clause
2 Article 15 of the Law on Investment. However, due to economic reasons, after 1 year of
project implementation, the number of employees used by the investor is less than 500.
Therefore, the provision requiring the investor to return investment incentives enjoyed
in 1 year before the time it fails to satisfy the conditions for investment incentives is
unreasonable.
Recommendation: We suggest amending Clause 2 of Article 20 to be read as follows:
2. In the course of investment project implementation, if the investor fails to satisfy
conditions for being entitled to investment incentives, the investor shall no longer be
entitled to investment incentives from the time of failure to satisfy conditions for
investment incentives.
12. Article 33 of the Law on Investment provides that within 35 days from the receipt of
investment project dossiers, the investment registration agency must notify the result
thereof to the investor; within 07 business days from the receipt of documents and
assessment report from the investment registration agency, the provincial Peoples
Committee shall make in-principle investment decision. As such, the provisions in
Clause 4 Article 26 of the Decree are unclear and inconsistent with the provisions in
Article 33 of the Law on Investment, since Clause 4 Article 26 of the Decree is unclear
on whether 35 days from the receipt of valid dossiers means 35 days from the date on
which the investment registration agency receives valid dossiers from the investor
(pursuant to Article 33 of the Law on Investment) or 35 days from the date on which the
provincial Peoples Committee receives valid dossiers from the investment registration
agency.
Recommendation: We suggest amending Article 26.4 of the Decree to be read as
follows:
4. Within 35 days from the date on which the investor submits valid investment project
dossiers to the investment registration agency, the provincial Peoples Committee shall
make in-principle investment decision. The order, procedure, contents of assessment,
and in-principle investment decision shall comply with Clauses 3, 4, 5, 6, 7 and 8 Article
33 of the Law on Investment.
13. Clause 1 Article 40 of the Decree provides that within 30 days from the issuance of
Investment registration certificate, the foreign investor must perform procedure for
registering establishment of economic organisation in order to implement the
investment project. However, in our opinions, the time for the foreign investor to
prepare application file for register the establishment of economic organisation should
be longer since there are several documents and dossiers for which the investor needs
much time to prepare (such as legalisation of the copy of Enterprise registration
certificate or equivalent document in accordance with the laws on enterprises, etc.)
Page 3 of 4
Recommendation: We suggest amending Clause 1 Article 40 of the Decree to be read as

follows:
Within 60 days from the issuance of Investment registration certificate, the foreign
investor must perform procedure for registering establishment of economic
organisation in order to implement the investment project in compliance with Article 36
of this Decree.
14. Clause 1 Article 71 of the Decree provides that the investor shall continue implement
the investment project in accordance with the Investment licence, Investment incentive
certificate, Investment certificate or other documents of equivalent legal value issued by
competent State authorities.
However, Clause 4 Article 71 of the Decree provides that the investor must perform
other rights and obligations pursuant to the provisions of the Law on Investment and
this Decree. We are of the view that this provision can cause conflict with the
provisions in Clause 1 Article 71 of this Decree in case there are provisions in the Law
on Investment and this Decree stipulating other contents (in a negative way) different
from those set out in the Investment licence, Investment incentive certificate,
Investment certificate issued to the investor.
Recommendation: Therefore, for consistency purposes, we suggest amending Clause 4
Article 71 of the Decree as follows:
4. To perform other rights and obligations in accordance with the Law on Investment
and this Decree in case the provisions therein are not contrary to those set out in the
Investment licence, Investment incentive certificate, Investment certificate issued to the
investor.
15. The list of areas/localities entitled to investment incentives set out in Appendix II to the
Decree does not include the areas of Industrial zones, processing-export zones, hi-tech
parks, economic zones in accordance with Point b Clause 2 Article 16 of the Law on
Investment relating to Areas/localities entitled to investment incentives.
Recommendation: We suggest adding the above areas/localities to the List of
areas/localities entitled to investment incentives set out in Appendix II to the Decree.
Page 4 of 4
Comments on draft Decree guiding the 2014 Law on Enterprises
JBAVS OPINION ON DRAFT DECREE IMPLEMENTING SOME ARTICLES OF THE

ENTERPRISE LAW, DRAFT DECREE TO IMPLEMENT THE LAW ON INVESTMENT AND
DRAFT DECREE ON REGISTRATION OF ENTERPRISES
Prepared by
Japanese Association in Vietnam (JBAV)
Narrow scope of authorization to the government
The Enterprise Law 2014 of Vietnam (the Enterprise Law 2014) explicitly authorizes the
government to issue regulations which govern some specific issues such as the details of
social enterprises, corporate seals, cross shareholdings, etc.
We note that the scope of the Decree to implement some articles of the Enterprise Law 2014
is so narrow. It only provides for social enterprises, corporate seals and cross shareholdings.
We heard this is because the government interpretsthese authorizations in the Enterprise
Law2014 that the government may not issue regulations governing other matters which are
not explicitly authorized to issue those regulations by the provisions of the Enterprise Law.
We admit that it is not appropriate for the government to issue the regulations which
substantially supersede the provisions of the law made by the National Assembly.
However, we note the Enterprise Law 2014 has only 213articles which arefar smallerthan
those of the company laws in other jurisdictions. For example, the Company Law of Japan
has 979 articles and the government decree to implement the Company Law has 238
articles.
Given that the Enterprise Law 2014 has small number of the articles, we believe there must
be many issues which should be clarified in the government decree to implement some
articles of the Enterprise Law. For example, as we pointed out in our opinions on the Draft
Enterprise Law 2014 last November, our members expressed their concern about to what
ratio (less 65% such as 51% or 50.1%) the majority voting may be reduced in the provision of
the charter of an LLC having more than one members, while the default majority rule is 65%
voting rights for a decision on ordinary matters of a members meeting. Although some MPI
official has expressed his view that this point should be clarified in a guiding legal normative
document to implement the Enterprise Law, we note the Draft Decree to implement some
articles of the Enterprise Law 2014 does not provide for this issue. We believe this issue
should be clarified in the Decree to implement some article of the Enterprise Law
2014,regardless of whether the Enterprise Law 2014 explicitly authorizes the government to
issue a regulation which governs this issue or not.
Page 1 of 1
Comments on draft Decree guiding the 2014 Law on Enterprises
COMMENTS ON DRAFT DECREE GUIDING THE IMPLEMENTATION OF A NUMBER OF ARTICLES OF

THE LAW ON ENTERPRISES 2014
Prepared by
TMI Vietnam
Abbreviated words and phrases:

1.
ERC means enterprise registration certificate;
2.
LOE 2014 means Enterprise Law No. 68/2014/QH13 adopted by the National Assembly on 26 November 2014;
No.
1
Current Draft
Circular
Articles 18.2
and 19.2
Articles 18 and
19
Existing
regulations
TMIs Comments
Recommendation
Article 18.2 of the Draft Decree provides that In case an enterprise

maintains multiple seals, the seals must resemble each other entirely in
terms of content, design and size.
The sentence of In case an enterprise maintains

multiple seals, the seals must resemble each
other entirely in terms of content, design and size
of Article 18.2 of the Draft Decree should be
removed.
Given that Article 44 of the LOE 2014 and Article 18.1 of the Draft Decree allow the
company to decide on the number and the contents of the seals, the company
may want to have different seals for different persons in the company (for
example, one for the Chairman of the Members Council and another one for the
General Director). Accordingly, other than the company name and the company
ID number as required by Article 44 of the LOE 2014, the company may want to
include in the content of each seal the title of the person holding such seal.
Therefore, the provision of Article 18.2 of the Draft Decree seems to be
unnecessary and will limit the right of the company in deciding on the
contents of the seals.
Article 18 of the Draft Decree only regulates the number, the contents, the To ensure that the authorities do not challenge the
shape and the internal use rules of the seals, but it does not mention about company in the circumstance where the color of
the color of the seals.
the seals of such company is not red, Article 18 of
the Draft Decree should be added with a provision
At the moment, the color of the seals must be in red but in practice, stating that the company can also freely decide on
depending on the desire of the companys owner(s) and/or the desire of the the color of its seals.
seal holder(s), the color of the seal may vary.
Page 1 of 1
COMMENTS ON THE DRAFT DECREE GUIDING THE IMPLEMENTATION OF LAW ON ENTERPRISES 2014
Prepared by
HSBC Vietnam
No.
Article
Content
HSBCs comments
Not
available
Not available
Practice / Reason for the change:

As per our observation, there are many cases where entitled foreign shareholders sign a POA to
authorize an individual to attend the meeting and cast the votes on their behalf. Issuing
companies often require that the POA is notarized and/or consularized before presented at the
meeting for the entrance registration. The process of notarization and consularization in foreign
countries may take up to one month to complete. In the meanwhile, there is no market-standard
format of the POA. Consequently, foreign shareholders cannot start executing the POA (ie
signing, notarisng and/or consularising) until the issuing company announces the accepted
template for their meeting (which is often no sooner than 7 days prior to meeting date).
It is stipulated in Clause 3 Article 139 of the Law on Enterprises that the issuing company must
attached the template for POA in their invitations of the Shareholder meeting which are sent to
the investors. However, the standardized template for such POA (which is accepted by all issuers
in Vietnam) is not specified.
Recommendations:
We would propose that a standard template for the POA is stipulated in decree to support foreign
investors to exercise their benefits. We are pleased to provide a sample of the standard POA
template for your reference. Please refer to the Sample enclosed in this correspondence.
Page 1 of 1
COMMENTS AND RECOMMENDATIONS ON THE DRAFT DECREE GUIDING THE

IMPLEMENTATION OF THE 2014 LAW ON ENTERPRISES
Prepared by
ZICOlaw Vietnam
1. Conversion of social enterprises (SE) to enterprises

Clause 4 Article 17 of the Draft provides that if a SE converts to an enterprise when (i) it
changes its objectives, or due to social and environment issues, or (ii) it is approved by
competent State authorities, the SE shall comply with the procedures set out in Clauses
4 and 5. The reference to the procedure for conversion of SE is inaccurate.
4. An social enterprise must register for conversion to enterprise in the cases as set
out in Points b and c Clause 1 of this Article. The dossiers, order and procedures for
registering conversion of social enterprise to enterprise shall comply with Clauses 5
and 6 of this Article.
2. Enterprises seal
a. Content of the seal
Clause 5 Article 21 of the Draft provides that the enterprises seal must not include the
contents set out in Article 20 of the Draft. Reference made to Article 20 is inaccurate
since Article 20 of the Draft does not relate to seal.
5. In addition to information on enterprises name and enterprises code, the enterprise
may add other language and image to the contents of the enterprises seal, except for
cases as set out in Article 23 of this Decree. Languages used in the contents of the
enterprises seal must be formed from Vietnamese alphabets and letters F, J, Z, and W
and numbers.
b. Seal management
Clause 1 Article 24 of the Draft provides that current enterprises who are using seals
issued by public security authority shall not be required to notify their seal specimen to
the business registration agency. The phrase current enterprises here is inaccurate
and confused. Current enterprises can mean either enterprises established before the
effective date of the 2014 Law on Enterprises or enterprises established after the
effective date of the 2014 Law on Enterprises and currently using enterprises seal.
Recommendation: We suggest clarifying the term current enterprises as provided for
in Clause 1 Article 24 of the Draft.
c. Change of seal
Clause 3 Article 24 of the Draft provides that the enterprises legal representative must
send notice to the business registration agency in the cases of (i) making seal or making
new seal; (ii) destroying seal; (iii) changes in number, contents or form of the seal; or (iv)
changes in the seals ink colour. However, Clause 4 Article 24 of the Draft provides that
the order, procedure and dossiers for notifying seal specimen, seal destruction, seal
changing and changing other contents as set out in Clause 3 of Article 24 shall be
provided for in another decree of the Government. Therefore, Clause 4 Article 24 of the
Draft is inconsistent with Clause 3 of the same Article.
Page 1 of 2

4. The order, procedure and dossiers for notifying seal specimen, seal destruction, seal
changing and seals ink colour changing as set out in Clause 3 of this Article shall be
provided for in Decree No. . /2015/ND-CP of the Government dated _________ 2015 on
enterprise registration.
Page 2 of 2
Summary of roundtable discussion on draft Decree on the 2014 Investment Law
Vietnam Business Forum 2015
SUMMARY OF ROUNDTABLE DISCUSSION ON THE DRAFT IMPLEMENTING DECREE TO

THE INVESTMENT LAW OF 2014
8. 00 12. 00, April 22, 2015

Representative office of Ministry of Planning and Investment, 178 Nguyen
Dinh Chieu Street, Ho Chi Minh City
Participants List: Please see attached.
A.
-
MEETING AGENDA
Overview of the implementing decree to the investment law
Comments to the draft implementing decree to the investment law
Responses by drafters
Discussion
Conclusion
Time:
Venue:
B. MEETING SUMMARY
1. Overview of the implementing Decree to the Investment Law
Mr. Tran Hao Hung, head of the Legal Affairs Department, MPI
- The 2014 Investment Law and Enterprise Law will have eight implementing documents.
The Enterprise Law will have four implementing documents: (1) implementing decree to
the Enterprise Law regarding specific parts the National Assembly assigned to the
government toprovideguidance, (2) decree on company registsration, (3) implementing
decree on defense and national security corporations and combination of defense,
national security and business as well as (4) implementing decree to the Enterprise Law
on disclosure of information on 100%state-owned enterprises. The Investment Law will
have four implementing documents:(1) implementing decree for specific provisions of
the Investment Law, (2) implementing decree on offshore direct investment regulated by
the MPI, (3) implementing decree for specific types of portfolio investment including
shareholding, stock, bonds, investment through mutual funds and offshorebrokerage
financial institutions regulated by the State Bank of Vietnam (SBV) and (4) the Prime
Ministers decision defining hi-tech industries.
-
Release pathway: The drafting of the eight documents has finished. In early May 2015,
the two most important draft decrees on company registration and implementation of
the Investment Law - will be completed and submitted to the Ministry of Justice for
review. The Prime Minister and MPI Minister have noted that the implementing
documents must be released from July 1, 2015.
The focus of the roundtable discussion will be on the draft implementing decree to the
Investment Law.
+
Chapter I: Justification and key concepts and definitions in Article 2. The article
repeats a number of familiar definitions, including those for investment licenses,
investment certificates, foreign-invested enterprises and international treaties
Vietnam is a party to. Particularly, international treaties and Vietnamsschedule for
service commitments to the World Trade Organization also recognize these
concepts. As a result, theseconcepts must be revisited to ensure continuity in
application of the Investment Lawand transparency in its implementation.
Participants in the roundtable are requested to have inputs on whetherthese
concepts and definitions are needed and whether they closely reflect Vietnams
currentdevelopment stage.
Page 1 of 14
The provision on the language used has changed from Decree 108. While this isa
technical matter, it is important because it involves preparation of project
documents, their legality and the supporting documents investors need to submit to
competent authorities.
+
Chapter 2:Industries/trades for which investment and business undertakings are

banned and those subject to conditional investment and business undertakings
represent the biggest leap forward of the 2014Investment Law. The decree will
provide detailed guidance to ensuresuch dynamic aspectsofthe Investment Law
deliver meaningful results for investors. The most important change is the approach
tothe lawsapplication, from what investors can do to what investors can do without
breaking the law. Historically, rulings on trades/lines of business for which
investment is banned or subject to conditional investment overlapped in hundreds of
legislative instruments. The new Investment Law provides a uniform and explicit list
of lines of business banned from investment or subject to conditional investment.
Anything other than the listed items is open for investment and business. For foreign
investors, the new rules not only have a bearing on more transparentinvestment
opportunities, but also address inefficiencies inexisting rules. The Foreign
Investment Administration is moving to aggregate all eligibility investment criteria
applicable to foreign investors to heighten the Investment Laws effectiveness and
how it relates to investors as well as provideregulatory agencies with the rationale
for awarding investment certificates.
Four consultative topics:(i) Regarding regulations on posting the list of
industries/lines of business and criteria for making investment/doing business on
the National Website for Company Registration, the Investment Law highlights
prohibited or conditional lines of business. Thus, the eligibility criteria respective of
the lines of business specified in the Investment Law need to be aggregated and
published on thisNational Website. Consultative issues relate to the legality of
investment/business engagement criteria that the government will publish on the
National Portal. However, what arethe legal consequences if the government fails to
post in full or accurately, the eligibility criteria for investment/business undertaking
andwhichregulations apply?If information posted on the national portal is erroneous,
what legal ramifications will it have?
(ii) Eligibility criteria for investment/business undertakings specifically applicable to
foreign investors:Such criteria should be formalized in the decree. As far as the
drafters are concerned, the criteria for 267 lines of business specified in the
Investment Law are applicable to all investors, regardless of being in-country or
offshore investors. The criteria are presented in the form of business licenses as
well as practice, legal capital andqualification certificates. But for foreign firms,
apart from the 267 listed lines of business, some international treaties also provide
on other business lines which foreign investors are also subject to other specific
criteria applicable to domestic investors. For example, foreign investors form a
business entity, acquire equity or shares in Vietnamese firms or enter into business
cooperation contracts. Suchcriteria immediately applieswhen a foreign investor
applies for an investment certificate in Vietnam,capital contribution or share
purchase procedures. The drafters want to incorporate these criteria and make
itaccessible to all foreign investors through an exclusive rule. There have been
different views on whether there should be aseparate list for foreign investors or for
inclusion in theoverall list of eligible criteria for the 267 lines of business.
Page 2 of 14
(iii) Mechanisms to revise and update banned or conditional lines of business in the
list enclosed with the Investment Law and changes to investment/business
engagement criteria respective of such lines:These lines of business havebeen fixed
in the Investment Law, but the current regulatory system may undergo other
changes.
(iv) Listeditems in Article 9 -specific rulings on lines of business and eligibility
criteria applicable to foreign investors:Is the language inArticle 9 easy to
understand?
+
Chapter 3 - Investment incentives: (i) Applicability of investment incentives in Article

16 and particularly the list of lines of business and locations entitled to investment
incentives; the draft document has specific criteria for new investment projects and
business expansion projects. Roundtable participants inputs are welcomed. (ii)
Regarding recognition of incentives in investment certificates, there have been
different views on whether suchincentives should be stated in the investment
certificate, including incentive types, contents, levels and grounds to
awardincentives.
Chapter 4 - Investment procedures: Includes rules on procedures for investment,

preliminary investment undertakings decision-making at National Assembly and
Prime Minister levels,release of the investment certificates for foreign investors and
formation of economic operators,procedures for capital contribution and share
purchasesas well asprocedures for project implementation. Part oneprovides
common steps for an investment project and this is important because the
Investment, Land and Environment lawshave inconsistent rulings.
Parts 2 and 3 highlight procedures for preliminary investment undertakings
decision-making by the National Assembly and Prime Minister. The Investment Law
isclear on the procedures for preliminary decision-making. But, are current
Investment Law rulings sufficient and is further guidance needed?The
draftersintention is thatParts 2 and 3 will only make reference to provisions inthe
law, before the MPI provides templates for procedures specified in the Investment
Law. The MPI is preparing templates associated with investment project documents
and forms for the preliminary decision and investment certificates.
Part 4 provides on procedures for award of investment registration certificates and
incorporation of economic operators by foreign investors. Participants comments on
investment certificate dossiers are needed to ensure a connection between
investment and business certificates for a company following its receipt of the
investment certificate and changes made to investment and company registration
certificates throughout a companys life cycle.
Part 6 provides on the implementation of investment projects with details on project
termination, withdrawal of investment certificates, transfer of projects, project
phase-out and resolution of issues pertaining to project close-outs and wind-upsif
investors are not present in Vietnam. Article 41, Part 6, addresses project
performance security issues, with clear provisions on deposits required, locations,
schedules, conditions and release of funds. These are new provisions in the
Investment Law, for which the government has the authority to provideguidance.
Other topics for discussionare Article 43 on project suspension,Article 44 on project
Page 3 of 14
close-outs,Article 45 on adjustment of investment certificatesand Article 47

withdrawal of investment certificates.
on
Chapter 5 - government stewardship for investment: Part 2, Chapter 5, provides on

reporting schemes. Are regulations on reporting frequency, contents and format
reasonable?
Chapter on the sunset clause:This chapter provides for the sunset clause related to
investment incentives, renewal of company registration and non-refundable transfer
provided for in the former Foreign Investment Law. These are important practical issues
that should be addressed to avoid any negative impact on businesses.
2. Comments to the draft implementing Decree to the Investment Law

Ms. Nguyen Lan Phuong Lawyer, Baker & McKenzie
- The draft decree makes extensive reference to the Investment Law. From a drafters
perspective, too much cross-reference to the underlying Investment Law makes the
decree hard to follow. From a foreign investors perspective as an implementer, these
three steps should be combined to form a closed circuit -preliminary investment
undertakings acceptance, release of the investment certificate and company
registration certificate. Accordingly, investors will only need one application with the
investment registration authority, toaddress procedures in line with prescribed timeline
steps. The cycle should apply new awards and adjustments to projects and firms. The
draft decree requires investors to file consulate certified copies onat least three
occasions in theadjustment of an investment project, which incurs significant financial
and time costs for investors. The draft also neglects to point out whether upon receipt of
the Investment certificate, the investor can create a business to roll out aproject as
starting a business is considered a different procedure.
-
Article 2 -terms and definitions:If a list is given, all key terms should be listed in full in
the draft decree. There is a term for which a definition should be added copy/ies. A
large number of rules require foreign investors to file copies of documents
demonstrating their legal status. Do these require normal or consulate certified copies?
Article 6 asks investors to submit originals in foreign languages. While investors can
provide originals for some documents, this is not the case with other documents for
which the investor has one original. It would be useful to make changes to the draft to
allowinvestors submitting anoriginal or legitimate copy in a foreign language.
Article 9 - List of eligibility criteria for investment/business undertakings applicable to

foreign investors: These are aggregated in Appendix 3 of the draft decree. There is
aview that a full list should be provided in the decree so investors have a single source
for reference. But as provisions of the law frequently change, suchcriteria should be
listed on the National Portal. In this way, whenever the law changes there will be no
need to change the implementing decree to the Investment Law. For example, the
Trans-Pacific Partnership (TPP) Agreement expected to be soon endorsed will enclose a
list of eligibility criteria foreign investors must comply with.
Additionally, Appendix 3 of the draft decree lists eligibility criteria to enter property
business under the Property Trading Law 2006, replaced bythe Property Trading Law
2014 with altered criteria.
Page 4 of 14
In respect of the timeline to release an investment certificate to a foreign investor in a

conditional field of investment, while the Investment Law specifies the certificate will be
released within 15 days, some specialized laws require consultation with relevant
ministries. Examples include franchising or dealerships under Decree 23, which should
be consulted with the Ministry of Industry and Trade (MOIT). Is 15 days sufficientfor the
investment certifying agency, including consultation with the MOIT?
-
Article 23. 1 points to the investment registration agency recommending project site(s)
for investors. This is vague as investors are unclear on whether the investment
registration authority is obliged to recommends project site(s)? The length of the
process and purpose of this clause is unclear.
Article 24: Investment preparation for projects located in areaswithdefense interests:

The draft requires investments in littoral towns, such as resorts, should consult the
Ministries of Defense and Public Security and other relevant ministries. Article 24 is
ambiguous as which ministries should be consultedif a coastal town is not adjacent to
any national security or defense site? Should any consultation be needed in this case?
Thus, a normal investment certification procedure should be used and the investment
certifying agency shouldconsult relevant ministries if the project site is near a defense
area.
Articles 26 and 27 preliminary acceptance: An accumulation of technical steps from

relevant agencies may result in a period longer than the 35 or 60-day timeline set forth
in the draft. Clear indication of the turnaround time for acceptance by the provincial
People's Committee and Prime Minister, while reasonable changes tothe total
timeframe are also made. Therearealso a considerable number of dossiers applying for
Prime Ministerialacceptance eight sets of applications, including two originals. What is
the purpose of requiring two original sets of documents?
Article 30. 1b procedures for making changes to preliminary acceptance: Paragraph 1.

b specifies that applicants must submit a copy of the personal identity paper, corporate
articles of association or other equivalent documents. Do investors need to submit
documents substantiating their legal status again only to make changes to other parts
of the investment certificate? Investor needs changes to the investor of the project,
Paragraph 1d requires the dossier include an agreement for project transfer and legal
background of the project recipient if there are changes to investors. The legal identity
documents in Paragraph 1. d should include copies of personal identity paper or ID
cards for individual investors, copies of articles of association or other equivalent
documents that certify the legal status of institutional investors.
Article 30 additional provisions for changes to investors in spin-offs, mergers and

acquisitions that do not require adjustments to preliminary acceptance, because an
investment project is an asset which accompanies the company when it is divided,
merged or acquired.
Articles 38 and 39 procedures for capital contribution, and equity buyback: There is no
specific rulings on procedures for preliminary acceptance in cases of adjustments of
preliminary acceptance. Should this procedure take place before, after or at the same
time asregistration procedures of Article 38? In terms of dossiers, as part of the
procedure for preliminary acceptance adjustments, investors already submit legal
background documents and the fund transfer agreement. In the procedure for foreign
Page 5 of 14
investment notification, investors have also submitted legal background, fund transfer
agreement and consulate certified copies. A self-contained process is needed, where
investors only once submit legal background documents and fund transfer agreements.
-
Article 40: Within 30 days after receipt of the investment certificate, investors must start
the procedure to register economic operator creation for implementation of the
investment project under Article 36 provisions. The company registration agency may
automatically grant foreign investors a company registration certificate. But ifthe
investor is requested to submit a different set of application dossiers; the previously
submitted application will not be required again. Also, is 30 days long enough for
applicants to supplyneeded documents for re-submission if theyneed consularization?
Article 41: Requiring investors deposits as project performance security. In the

regulation providing for thefivedays after the investor presents in full supporting
documents proving completion of procedures for land allocation, land lease, transfer of
land use rights and other necessary documents, the approach adopted is broad
asinvestors may not know which papers to submit to receive the 5% of deposit fund.
When an investor receives allocated or leased land and has completed required
procedures to start construction, the ultimate license needed will be the building
permit. Foreign investors should only submit a copy of the building permit to the
registration authority to meet this articlesrequirements.
The ruling requiring within fivedays after the investor presents supporting documents
proving completionof its obligations for accepting all construction work, plant and
equipment, and application for necessary licenses for operation: Many building work
take place through different stages, have different components and time durations
which could testinvestors. Also, drafters should know businesses do not need to ask for
acceptance of an authority to operate their plant and equipment and there is no paper
proving that an investor has completed registration as required. Additionally,
arebanking fees on the account of the investor and if not, how will theybe treated?
Article 54 regular reporting: Monthly and quarterly reports are similar and
measurements and outcomes reported will not differ much for most companies.
Monthly reports should be removed to ease reporting burdens for firms and projects.
Also, the draft does not provide procedures for firms to return investment registration
certificates or for a foreign-invested firm to turn into an entirely Vietnamese business.
The drafters can consider a waiver forthe investment registration certifying procedure
for foreign investors who finance up to 49% of the charter capital. This is because the
remaining domestic investors own 51% or more of the charter capital in this case and
theinvestment registration certifying procedure is waivered. Without such a waiver,
investors will undergo two steps. The first is for the domestic partner to form a
Vietnamese company, before transferring 49% of the companys charter capital to the
foreign investor. With this two-step procedure, investors do not needto perform the
investment registration certifying procedure.
It is unclear whether foreign investors starting a social enterprise must apply for
aninvestment registration certificate. In the case of non-government and non-profit
investors, what will happen with dossier requirements?For example, what if there are
no financial statements or bank accounts for the last two years? While many foreign
investors want to engage in social projects in Vietnam, theymust still go through normal
investment registration procedures.
Page 6 of 14
Ms. Ha Chi Lawyer, Allens

- Article 9. 1, Appendix 3 - list of investment fields for foreign investors: This list helps
foreign investors know what criteria applies, butsome are concerned
aboutinconsistencies between this list and criteria included under the Investment Law
and other specialized laws. We suggest removal of this appendix list from the draft
implementing decree and post the information on the National Portal. A different subcategory may be created for foreign investors on the National Portal to accommodate
information searches.
-
Article 34. 2 Award of the investment certificate and economic operator creation: The
application for the investment certificate must provide information on charter capital
and equity sharing. The new Enterprise Law requiresfor a limited liability company with
two or more members to have all charter capital paid in within 90 days after
registration. This timeline seems unachievable for large projects.
Part 3, Chapter 4 - procedures for changes to preliminary acceptance: While the

application for adjustment of preliminary acceptance included updated documents,
adjustments of preliminary acceptance appearno different tothe original preliminary
acceptance procedure under the Investment Law. For projects having been preliminarily
accepted and in need of adjustments such as in cases of changes to investors or
increased project scale), should a more simplified procedure be in place?
Article 35. 1 The investment certificate should be released within fiveworking days
after receipt of preliminary acceptance. Does this ruling mean investors do not needto
submit any other documents when applying for investment registration certificate? A
suggested addition to Article 35. 1 is: The investment registration certifying agency
shall grant the investment certificate to the investor within fiveworking days after
receipt of the preliminary acceptance decision, and the applicant must not submit any
other documents to have the investment registration certificate granted after the
preliminary acceptance has been awarded.
Article 38. 1: In case of capital contribution and equity buybacks, investors do not needto
perform the investment registration certifying procedure. But, does a Vietnamese
company needto perform the investment registration certifying procedure when the
foreign investor acquires equity in it? A Vietnamese company with 51% or more of
foreign investor-ownedcharter capital will be considered a foreign-invested firm.
Foreign investors in this case will needto perform the investment registration certifying
procedure for projects. If a foreign investor buys into an existing Vietnamese company
implementing on-going projects, and the Vietnamese company doesnot have investment
registration certificate for these on-going projects,willthe foreign company buying 51%
or more of equity needto apply for an investment registration certificate for current
projectsor does it only need an investment registration certificate for upcoming
projects?
Article 39. 1 Dossiers and procedures for capital contribution registration: Do any
other papers aside from those specifiedin Paragraphs 2 and 3, Article 26, Investment
Law, need to be submitted, such as copies of sales agreements or evidence of foreign
investors payment?
Article 54. 1 Reporting by economic operators: The monthly reporting is unnecessary

for firms, asannual or semi-annual reporting is sufficientif the investment registration
agency requires a project status update.
Page 7 of 14
Ms. Trang Nguyen Lawyer, VILAF

- Application of the new or old law: What happens if an application is filed under the old
law prior to July 12015, but the investment certificate is not released before July 1? Will
the licensing agency continue to grant a company the registration and investment
registration certificates in line with the old law, or return the application and ask for a
new one?The draft decree must have aspecific solution for this. It issuggested the
licensing agency uses the old law because the license granted under the old law is still
valid.
-
If a foreign investor acquires 70%, 80% or 90% of equity ina Vietnamese firm and files an
application before July 1 2015, some licensing agencies may agree to grant an
investment certificate recognizing foreign investorownership and the new investment
certificate will replace the current investment registration and company registration
certificates of the companies. But under the new Investment Law, there will be two coexisting papers the investment and company registration certificates. Will a single
investment registration certificate be valid?
Capital accounts of foreign investors: The Investment Law has a specific provision on
offshore investment capital accounts, but no specific rulings on inbound investment
capital accounts. Circular 19/2014/TT-NNHN provides guidance that when foreign
investors buy into a Vietnamese firm and receive an investment registration certificate;
it will become a foreign-invested firm and be allowed to set up a direct investment
capital account. But under the current Investment Law, foreign investors buying into a
domestic firm will no longer receive an investment certificate. If investors cannot have a
direct investment capital account, which account should they use to transfer equity
acquisition funds? The MPI is encouraged to workwith the SBV to introduce a specific
provision on transactional accounts for foreign investors buying into Vietnamese
companies.
Article 22. 3, Investment Law foreign ownership: Rulings on foreign investors

ownership in listed and public companies are subject to securities laws. The current cap
is 49% under the Prime Ministers Decision 55/2009/QD-TTg, but Article 22. 3.c states
that for otherthan public companies, the ratio shouldbe defined in specialized laws.
According to Article 22. 3, if a company is at first a public company before divestment
into a joint stock company, will foreign investors who own 49% of equity needto reduce
holdings from 49% under specialized laws. If foreign investors withdraw investment,
how will their interests be protected? To addressthis issue, two options are
recommended. Firstly, foreign investors can continue to hold the 49% equity or
secondlyif foreign investors withdraw their investment; rules should be in place to allow
such divestment to take place within at least fiveyears to avoid the sales ofshares that
may affect the companys wellbeing.
3. Responses by drafters
Mr. Tran Hao Hung Director of Legislation Department, MPI
- Investment procedures: The recommendation for a conjoint procedure incorporating the
three stages of making an investment (preliminary acceptance, investment certification
and starting a business) is reasonable. For foreign investors, the laws set aside the
procedure for investment certification and company registration. Of the two, the
investment certification procedure should be done first, before starting a
businessandconsistently adhered to. The drafters of the implementing decree to the
Investment Law, however, have designed a procedural cycle that, even with the two
Page 8 of 14
segregated licensing steps, can still provide utmost convenience for clients. Not all
projects or investors need to cover all the three steps of preliminary acceptance,
investment certification and starting a business. For Vietnamese investors, there is no
investment certifying procedure and only a few projects need preliminary acceptance.
Regarding concerns about the feasibility of the 15-day time line, other relevant settings
have been coherently designed to ensure achievability. The draft decree provides
criteria for licensing and dossiers. Also, investment/business engagement criteria will
be publicly and transparently disclosed to investors. Moreover, the draft decree no
longer provides on procedures and steps for consultation. With respect to import-export
and distribution by foreign investors, the MPI is in discussion with the MOIT to revise
Decree 23, regarding procedures and steps.
There is agreement that once preliminary acceptance is granted, investors will not have
to submit any furtherpapers for the investment certifying procedure. For projects
requiring all three steps of preliminary acceptance, investment certification and starting
a business, the draft decree is designed to avoid documentation overlaps. A second rule
is no repetition andissues considered atthe preliminary acceptance step will not be
revisited at the investment certifying stage. A third rule is that if a procedure is dealt
with by different agencies, such agencies will share results and use documentation
already submitted by applicants.
-
Procedures for capital contribution and share purchases in Vietnamese firms by foreign
investors: The draft will be morespecific on who needs to perform the acceptance
procedure for capital contribution and share purchases the recipient of the capital or
foreign investor? With capital contribution and share purchases, there is no investment
certifying procedure and only aprocedure toreview investment criteria if foreign
investors undertakecapital contribution and purchase shares from the businesses
within conditional lines of business that foreign investors are subject to or have 51% or
more equity. The drafters will furtherexamine the issue of foreign investors financing or
acquiring equity in firms operating under a previously granted investment certificate.
The drafters have noted the comment on transition of companies filing an application
prior to July 1, 2015, as it has not been addressed in the draft decree, and willensure
unnecessary conflicts are avoided. The drafters particularly noted concern on capital
accounts and will take action accordingly. Vilafis requested toprovide specific comments
on the interpretation of provisions to inform drafters fordiscussions with the SBV.
4. Discussion
Mr. Do Tien Thinh Director, Business Registration Supporting Center, MPI
- Procedural reform and single-window mechanism: The Enterprise Law and Investment
Law have clearly spelt out requireddocuments for application dossiers tostart a
business and get a Investment certificate. Compliance with the law is expected. To have
a closed circuit for dossier processing, the drafters can look at internal rules associated
with stewardship responsibilities of relevant agencies.
-
Regulations on capital contribution and share purchases: The drafters can consider
highlighting several instances where capital contribution and share purchases are
prohibited to maintain the quality of foreign investment.
Page 9 of 14
When a start-up is formed based on an investment project and more than 51% of equity
is transferred to a Vietnamese investor, an investment certificate is no longer required.
Rules are needed for cancellation of granted investment certificates. In addition,
drafters couldconsider allowing for the renewal of original investment certificates in
this case. Historically, before a start-up was formed the investment certificate granted
to foreign investors withanimportant part of investment incentives. New rules should be
in place to provideoptions tocancel the investment certificate,orin the case ofa
Vietnamese legal entity acquiring equity from a company created based on an
investment project, the procedure for investment certificate renewal should allow the
company to enjoy all previously available investment incentives.
Succession procedures in the event of abusiness split-up: If a five-member company

has two foreign individuals who want to split off to another company and take an existing
project and investment certificate from the parent company to the spin-off, what
procedure will apply?
Dossier components for foreign direct investment (FDI) companies: FDI companies
operating under previousrules have different governance schemes, dossier components
and denominations. As such, the sunset clause should recognize resolutions
fromgeneral shareholder or owner boards or an equivalent meeting. If not, rulings on
dossiers will not be complied with when the company submits different papers.
The time gap between investment and business registration certificates: Thirty days
could be increased to 60 days. Also, this provision couldbe supplemented with a rule on
non-implementation of business registration beyond the 60-day timeline. Two options
are possible. Firstly, if company registration is delayed an administrative sanction could
apply and company registration cancontinue. Secondly, the draft decree couldbe more
flexible to facilitate smooth business operations. If the 60-day milestone is passed and a
legal entity is not formed, investors must notify changes tobe made to the investment
certificate. The certificate will be updated and allow theinvestor to continue business
registration and avoid a penalty.
Reporting by FDI companies: The drafters should work with MPIs supervision and
statistics departments to consolidate relevant circulars with a uniform reporting
scheme. The current business registration procedure removed most reporting duties
for businesses in favor of a national database, while the Investment Law makes rulings
on the foreign investment portal. Reports from the foreign investment system should be
generated with the removal of the reporting duty for several kinds of reports. Online
report submissions could also be considered and integrated into the decree. Hard copy
reports could still be needed onspecific occasions in relation to project progress, but
reports can be consolidated into one package on a biannual or annual basis.
The Investment Law and Enterprise Law do not specify whether foreign investors and
individuals cancreate a private company and thedecree couldinclude provisions on this.
Regarding business registrationapplications, private firms do not need to submit an
investment registration certificate.
Use of national portal for company registration for publication of list of business lines:
The drafters couldconsider explicitly pointing out the portal is only a means of diffusion
of policies, laws and regulationsand does not have the validity ofa legislative document.
Ifthere is a discrepancy on the portal related to the list of conditional lines of business
and eligibility criteria, relevant specialized laws will apply.
Page 10 of 14
Mr. Pham Trung Kien - HCMC Department of Planning and Investment

- Investment project: According to the Investment Law, an investment project is a mix of
proposals for mid- or long-term use of funds to make investments or do business.
Opaquedefinitions will see firms and investment regulatory agencies struggle to know
identify investment projects. For example, a foreign investor starting a foreign whollyowned enterprise will need to address investment registration certifying and business
start-up procedures, and thenthecompany want to carry out a new project in another
municipality. In such a case, will the firm needto follow the investment registration
certificate procedure for a second or third project?
-
In the new Investment Law, the number of entities subject to needing an investment
registration certificate has been minimized, but some public administration issues have
emerged. For example, how will statistical data on foreign investment capital be kept as
ifit only comes from taking stock of active businesses based on investment registration
certificates, it cannot cover all foreign investment entering Vietnam. Moreover,
unreliable data couldmislead policy-makers or socio-economic governance.
An intertwined process for investment registration certification and business

registration:Several challenges may emerge, such as if the investment registration
agency is the authority of a export processing zone, industrial park or hi-tech park, the
company or business registration agency is the business registration division of the
provincial Planning and Investment Department. As such, having such a conjoint
mechanism in place will be difficult. The drafters will work for a more viable solution.
Investment incentives: Should eligible incentives be recorded inthe investment

certificate? If entitled project incentives are specified in the law, there is no need to
repeat them in the investment certificate. But for projects with off-the-chart incentives
or those reached through agreement between investors and the Vietnamese
government, incentives should be noted.
Investment certificate adjustments: Procedures related to adjustments to investment

certificates in specific cases, such as a mergers or acquisitions, should be clarified.
For foreign investors, the draft decree shouldprovide guidance on provisions from
international agreements Vietnam is a signatory to. Drafters are determined tohelp
licensing agencies quickly complete procedures and avoid wasting time consulting
relevant agencies. If investment is proposed forareas not open to the market, but there
is thepromiseof jobs and local investment attraction, will the licensing agency consult
relevant ministries or turn down such proposals?
Splitting investment and company registration certificates: Should investment and

company registration certificates content be consistent? For example, should a
projects purpose be aligned with business lines acompany is engaged in after getting
the investment registration certificate to start a business? If discrepancies occur, will
the business registration authority reject the business start-up application and do
regulations on capital, charter, contributions to project implementation need to be
aligned?, Do project term and company life cycles need to match and should
aninvestment or a business registration certificate be adjusted first and should aproject
company or project be terminated first? The drafters should clarify these points and it is
recommended adjustments or withdrawals are made in first-in, first-out sequencing.
Page 11 of 14
It is recommended thedetermination of the legal validity of investment certificates is

made through recognition of investorsregistered investment activities and not those
certified by a government agency for such registration. Civil transactions pertaining to
an investment registration certificate must comply with the laws.
Ms. Nguyen Vu Bao Ngoc Legal Department, Mizuho bank

- Article 42, Investment Law - guidance on deposits: Can banks and investors directly
apply this rule or should they await further SBV guidelines?Our recommendation is no
further guidelines are needed, as foreign investors expect concise and explicit rulings
without further guidance from other specialized authorities.
The currency for the deposit account needs to be made clear.
Refund of deposit fund: The deposit fund shouldbe returned to investors, plus interest.
Ifthe investor fails to see the project through and the deposit is handed over to the State
budget, clear rulings on how interest should be treated are missing.
-
Article 41. 4 - Commercial banks: Credit institutions should be usedas commercial

banks do not cover foreign bank branches.
Representative of Dong Thap Planning and Investment Department

- Article 24. 1 rules that foreign investors withprojects in islands and border communes,
wards or townships must notify an investment registration agency of theintended site.
Article 24. 2 specifies the investment registration agency consults relevant authorities
on the project site. In an inland border economic development zone approved in the
zoning phase, with inputs from relevant ministries, if a foreign investor registers the site
is it necessary to consult relevant authorities again?
-
Article 34. 1: The investment certificate application and proposed investment project
outlines can be combined for a more streamlined procedure.
Ms. Le Huynh Chi Loan TayNinh Department of Planning and Investment

- Article 13. 4 specifiesthat after the draft law is integrated in the law and ordinance
development agenda of the National Assembly, the MPI shall follow a simplified
procedure and protocol. There is, however, no clear indication as to what a simplified
procedure and protocol may be. Clarification of such simplified procedure is needed.
-
Article 14 procedure for revising investment and business undertaking criteria rulings:
Ministries and ministerial level agencies that want to revise investment/business
engagement criteria now need to consult the MPI. What happens with
investment/business engagement areas under MPI jurisdiction? There should be a focal
agency, preferably the MPI. When other agencies want to make changes to
investment/business undertaking criteria, they can file a proposal to the MPI which will
hold consultations with relevant agencies on the proposal. The MPI will then directly
follow procedures to revise the respective normative document.
Business Representative
- Timing for project implementation: Projects needing preliminary acceptance may
commence after the acceptance decision is released. But after the preliminary
acceptance is granted, the project cannot commence immediately asit must wait for the
start-up to be formed. Clarification of the project commencement timing is needed.
Page 12 of 14
5. Conclusion
Mr. Tran Hao Hung Director of Legislation Department, MPI
- The drafters will further look into the preferred option of using a list of investment
incentivizing sites annexed to this decree vis--vis the equivalent list of Decree
218/2013/ND-CP, guiding the implementation of the Corporate Income Tax Law. As this
decree comes out at a later date and is more up-to-date, it is more likely to mass inputs
from local teams.
-
Intertwined investment procedures: A closed-circuit process integrating preliminary

acceptance, investment certification and start-up registration is recommended. As the
Investment Law has specifically identified these as three stand-alone steps, compliance
with the law is expected. The drafters will meet relevant MPI agencies to review the
three procedures, filter out overlaps, and facilitate businesses with simplified
procedures.
Page 13 of 14
Appendix 1: List of participants

No.
Full Name
Position
Department
Provincial Autorities
1
Tran Hao Hung
Director
Legal Department, MPI
2
3
Do Van Su
Dau Thi Bich Thuy
Pham Van Tuong
Nguyen Thanh Toan
Head of Division
Deputy Head of Division
Deputy Head of Division of
Training
Head of Division of Business
Registration Office
12
13
Le Huynh Chi Loan

Vu Thanh Tru
Representative
Representative
14
Nguyen Ba Toan
Representative
Foreign Investment Agency, MPI

Can Tho Export Processing and
Industrial Zones Authority
Bac Lieu Planning and
Investment Department
Ba Ria- Vung Tau Planning and
Tra Vinh Economic Zones
Dong Thap Economic Zones
Economic Zones Management
Department
Planning and Investment
Department in HCM City
HCM City Export Processing and
Industrial Zones Authority
Tay Ninh Planning and
Southern Investment Promotion
Planning and Investment
Department in HCM City
6
7
8
Nguyen Hai Dang

Pham Tiet Khoa
Nguyen Thi Minh Tuyen
Representative
Representative
Representative
Le Tuyen Cu
Deputy Director
Pham Trung Kien

Nguyen Thi Bich Ngoc
Representative
15
16
17
Ta Chu Ngon Nguyen

Nguyen Duc Nghiem
Phan Thi Thanh Nhan
Deputy Head
Representative
Representative
Hepza
Southern Investment Promotion
Foreign Investment Agency
10
11
Representative
VBF Representatives
1
2
Nguyen Lan Phuong

Trinh Luong Ngoc
Lawyer
Legal Counsel
Baker & McKenzie

VILAF
Luong Van Trung
Lawyer
Bross & Partners
Nguyen Huy Hoang
Lawyer
Bross & Partners
Nguyen Trung Nam
Lawyer
EPLegal
Ha Chi
Associate
Allens
7
8
Trang Nguyen
Nguyen Minh Hoang
Associate
Associate
VILAF
EP Legal
Phan Thanh Son
Head of Operation Center
Hong Leong Bank Vietnam
10
Ho Thanh
Associate
EP Legal
11
Nguyen Thi Hong Van
Legal Counsel
HSBC Bank
12
Stephane Gripon
Mondelz International
13
Tran Viet Hai
General Manager
Trade and Investment
Advisor
14
Dang Thi Ngoc Huong
Legal Director
TVM Corp
15
Huynh Cong Tam
Associate
Russin & Vecchi
17
Ha Phung
Secretariat
VBF
Page 14 of 14
Embassy of Denmark
Other issues
Comments on the draft Circular on importation of used machinery
COMMENTS ON THE DRAFT CIRCULAR REGULATING THE IMPORTATION OF USED

MACHINERY, EQUIPMENT AND PRODUCTION LINES
Presented by
Mr. Nestor Scherbey
AmCham Customs & Trade Facilitation Committee
-
The Circular is expressly intended to encourage imports of new machinery, equipment

and production lines that are manufactured with the latest technology, presumably to
enhance economic growth and development. Regrettably, the new restrictions in the
draft Circular are likely to have an effect opposite to that intended. A practical example:
progressive dies or other specialized new tooling and high-tech controls items are used
with multi-ton and multi-year capital equipment such as, stamping presses or machine
tools in many industrial applications. While the dies, specialized tooling and
computerized controls items may be new, the presses and machine tools in which they
are used have useful lives of many years, well exceeding the limits of 10 years or 80% of
useful life stated in the draft Circular. Rather than restriction, the goal of encouraging
such imports is better served by providing new duty and tax incentives for investment in
such new equipment and technologies. The restrictions will actually discourage such
investments and imports because of likely unintended coverage of long-term capital
equipment, parts and accessories due to the broad scope of the Harmonized System
customs classification codes involved.
The consideration of slowing or limiting transfer of useful high-technology

manufacturing equipment to Vietnam is particularly applicable to machines and
equipment used for semiconductor manufacturing. It is because it is faster and more
cost-effective for an investor to obtain high-quality used manufacturing machines for
this industry, than to order new ones because of long lead times for such equipment and
greater expense. Here is what a company in California that specializes in such
equipment reports:
...Since the demand for used semiconductor fabrication equipment gained traction in
the late 90s, around 2,000 companies emerged worldwide as buyers and sellers. The
reason for the demand for used or remanufactured equipment remains the same as
when SEC/N President Gary Alexander stated in 2000: that quality remanufactured
equipment is often available at a fraction of the cycle time and cost of new equipment.
In todays world of multi-million dollar capital equipment, the cost savings when buying
used can average as much as 50%. While the benefit of lower costs continues to be a
primary driver, other considerations have emerged as critical factors such as
installation, parts availability, maintenance, service, quality, training and safety"
The new draft Circular is also intended to ensure that such goods meet requirements of
quality, safety, energy saving and environment protection. Instead of enacting new
trade-restricting measures, a better approach that involves modernization and
enhancement of existing compliance regulations and their enforcement by regulatory
agencies through up-to-date implementation of international standards and electronic
processing of administrative procedures is recommended. Such an approach will be in
keeping with international trade agreement requirements for implementation of the
National Single Window by Vietnam.
Page 1 of 2
Comments on the draft Circular on importation of used machinery
It is recommended that the standard for Quality that is specified as 80% of useful life
be defined in greater detail through objective measures because quality of machines
and equipment is typically defined by performance specifications of specific machines
and equipment, according to their purpose. For example, in the case of computer
printers, Mean Time Before Failure (MTBF) in terms of hours or pages printed is a
common measure, while in other cases, completely different parameters apply.
As a result, the AmCham Customs & Trade Facilitation Committee recommends that
the restriction on imports of machinery and equipment contained in the Circular be
removed, while administrative procedures to ensure compliance with safety, energy
savings and environmental requirements be simplified and incorporated into the
National Single Window project. It is also recommended that standards of quality based
upon industry standards for the particular machine or equipment be adopted, instead of
a general approach involving a specified percentage of useful life, as currently listed
in the draft Circular.
Page 2 of 2
Comments on Draft Circular on Used Machinery and Equipment

MACHINERY, EQUIPMENT, PRODUCTION LINES
(hereby referred to as " Draft Circular on Importation of Used Equipment" - the 3rd Draft)
Prepared by
Duane Morris
1. Necessity to issue the draft circular
While we understand the Government of Vietnam does not want Vietnam to become a
digital dumping ground of the world, we are concerned about possible negative impacts
the Draft Circular may have on the business community in Vietnam.
Specifically, given the difficulties and disputes among experts on how to assess quality of
the Used Machinery, we opine that the import and use of the Used Machinery should be
subject only to the other relevant laws effectively at present (e.g. - environment protection;
Vietnamese quality standards, etc.). In the past, by issuing Decision 46 (dated 4 April 2001)
removing technical criteria on import of the Used Equipment, the Government of Vietnam
has made a tremendous effort in boosting foreign investment in the country on one hand
and effectively controlled technologies imported in Vietnam on the other hand.
Our suggestion: Please consider the necessity of issuance of this Draft Circular and its
possible impacts on the business communities, especially manufacturing enterprises.
2. Lack of clear technical criteria
The Draft Circular sets out 02 major criteria for imported Used Machinery: (i) novelty (or
remaining quality) level and/or (ii) period of use. These two criteria can be used
separately or in combination depending on different categories of enterprises (please see
Section 4 below for further explanation). Pursuant to the Draft Circular, the minimum level
and period of use are 80% and 10 years respectively.[1]
In this regard, we understand that how to assess the remaining quality is still disputed
among the experts. For example, according to the public media, Mr. Nguyen Vu Hai, the
Deputy Head of Vietnam Register (Ministry of Transportation) said that they (i.e. - the
Vietnam Register) has been unable to assess how 80% remaining quality should be
assessed during their 20 years of operations. In fact, remaining quality is an ambiguous
concept and the assessment may vary by local assessment entities, qualifications of which
are questionable.
Even so, we opine that the 80% novelty requirement appears to be too high given the
status of Vietnam as a developing country that needs appropriate but affordable
technologies.
Our suggestion: Please consider removing the novelty requirement or at the very least
reducing it.
3. Impractical criteria
We are concerned that mistakes of the last draft and even Circular 20 are repeated. Again
the most controversial content is fixed criteria on the remaining quality and period of use
of the used equipment, machinery and production.
For one thing, each enterprise may have different commercial and technical demands for
appropriateness of used equipment, machinery and production lines to its operations. For
example, it is proven that a brand-new Chinese equipment may not have the same quality
Page 1 of 2
Comments on Draft Circular on Used Machinery and Equipment
as its second hand Euro-made counterpart. On a similar basis, different categories of

equipment and machinery (e.g. - electronic, semiconductor, mechanical) may have different
life circles and should be therefore subject to different levels of novelty, period of use, etc.
Our suggestion: Please consider setting out the different criteria for equipment and
machinery produced in countries of different production levels.
4. Discrimination among enterprises
Pursuant to Article 6.4 and 6.5, criteria for import of the Used Machinery are different
between State-owned enterprises and the private sector. This approach may violate the
principle of equal treatments among enterprises irrespective of their form of ownership
and economic sector pursuant to Article 5 of the Enterprise Law of Vietnam (both 2005 and
2014 versions).
Our suggestion: Please consider unifying a single set of criteria for all enterprises
regardless of their source of capital.
5. General and ambiguous principles on management of import of the used machinery
Article 4 of the Draft Circular, the following principles in managing import of the Used
Machinery must be followed:
- Import of new machinery and equipment is encouraged.
- The Used Machinery must satisfy conditions on quality, safety, environment protection,
etc.
- The Used Machinery must satisfy conditions of other regulations than the Draft Circular.
Our comment: We are concerned that the final principal makes criteria on the import of the
Used Machinery open-ended. Specifically, by subjecting the import of the Used Equipment
to other regulations issued by State bodies from time to time, importers may be imposed
with more restrictions in future.
Page 2 of 2
Comments on the draft Circular on importation of used machinery, equipments and production lines
COMMENTS ON THE DRAFT CIRCULAR REGULATING THE IMPORTATION OF USED MACHINERY, EQUIPMENT, PRODUCTION LINES
(hereby referred to as " Draft Circular on Importation of Used Equipment" the 3rd Draft)
Prepared by
The Japan Business Association in Vietnam
No.
1.
Draft Circular on Importation of Used Equipment
Comments/Recommendations
Article 1. Scope
1. This Circular specifies the eligibility criteria, dossiers and procedures for importation, and
inspection arrangements for used plant, equipment and production lines, including
components, spare parts and replacements for use in domestic business activities.
HS codes of 85.18, 85.19, 85.21, 85.22, 85.45 85.48

are not suitable with the purpose of this Circular.
Please consider removing these codes from the
applicable subject.
HS code 85.24 is not included, please kindly revise
to include it.
Plant, equipment, components, spare parts and replacements with HS codes specified in the
List of allowed imports and exports in Vietnam, annexed to Circular 156/2011/TT-BTC, dated
Nov. 14, 2012 of the Ministry of Finance, specifically in the following Chapters:
a) Chapter 84. Nuclear reactors, boilers, mechanical machinery and equipment, and their
components: HS codes of 84.02 84.87.
b) Chapter 85. Electric machinery and equipment, and their components; sound recorders and
playback equipment, television video and sound recorder and playback equipment, and
components and accessories of the above mentioned equipment: HS codes of 85.01 85.05;
85.07 85.09; 85.11; 85.14; 85.15; 85.18 85.22; 85.24 85.33; 85.35; 85.36; 85.43; 85.45
85.48.
2. This Circular shall not apply to the importation of the following used plant, equipment and
production lines:
a. Goods in transit and transshipment;
b. Temporarily imported and re-exported goods (except for outsourcing agreements,
importation for production purposes, construction as part of investment projects); and
temporarily exported and re-imported goods;
c. For performance of repair and maintenance service agreements.
d. For research and development of technologies that are unavailable domestically;
dd. For takeover from domestic export-processing zones and export-processing companies
(that are not based in export-processing zones); and between export-processing zones;
e. For national defense and security purposes;
f. In-kind aids from foreign non-governmental organizations; humanitarian and non-refund aids
Page 1 of 5
There is no HS Code to distinguish between new

and used machinery and equipment, which are
subject to amend of this Circular. We urge the MoST
to issue specific regulations and steps to determine
what is new and used machinery and equipment
during customs clearance.
Please clearly identify necessary documents,
needed to be submitted, of used plant, equipment
and production lines that are not applicable subjects
(especially in point c) d) e) g)).
No.
2.
3.
4.

from governmental organizations, United Nations organizations, inter-governmental
organizations, foreign business entities or private individuals provided through official agreements
between the parties involved and approved by relevant authorities.
g. Items presented as gifts and donations for humanitarian purposes.
i) Plant and equipment that fall under the List of potentially unsafe products and goods (List of
Category 2 products) released by the Ministry of Transport under the provisions of the Law on
Product and Goods Quality, and spare parts, components and replacements of such plant and
equipment.
Article 3. Terms and definition
" In this Circular, the following terms shall be construed as designated below:
1. Plant and equipment refer to a combination of interlinked items and components, of which
at least an item or component has physical movements with relevant driving or controlling
mechanisms and electric circuits, being pieced together with customized applications,
particularly for use in manufacturing, processing, moving or packaging materials.
2. Production lines are equipment, tool and instrument systems installed based on
schematics and technological processes that ensure coherent operation for the
manufacture of products.
3. A comprehensive production line is one that incorporates equipment, tools and instruments
supplied, manufactured and installed in accordance with the designated design at a same
time, having the appropriate output/efficiency throughout the line, and can be used
automatically or semi-automatically.
4. Using time (in years) means a defined period from their manufacturing to importation,
until open customs declaration.
5. Remaining quality (in percent) compared with the original quality means the acceptable rate of
specifications of used machinery, equipment and production lines compared with these of brandnew machinery, equipment and production lines (100% new)."
Article 6. Eligibility criteria for importation of used plant and equipment
3. Being in line with the industrys master plan for development approved by the Prime Minister
and relevant Ministries and Departments.
Article 7. Eligibility criteria for importation of used production lines
"
1. Not falling under the categories specified in Article 5 of this Circular.
2. Meeting the requirements for safety, energy efficiency and environment-friendliness of
Page 2 of 5
Definition of production lines is not clear, please

consider specifying according to HS code, or
removing production lines term from this Circuar.
Please clearly define and detail the industrys

master plan for development approved by the Prime
Minister and relevant Ministries and Departments
(plant and equipment and its corresponding plan).
Definition of production lines is not clear, please
consider specifying according to HS code, or
removing Article 7.
Please clearly define and detail the industrys
No.
5.
6.
7.
existing laws and regulations.

3. Being in line with the industrys master plan for development approved by the Prime Minister
and related Ministries and Departments.
4. Having 80% remaining quality or higher compared to the original state."
Article 8. Eligibility criteria for importation of components, spare parts and replacements
" Imported components, spare parts and replacements shall meet the following requirements:
1. Being technically compatible with the designated plant and equipment that needs
replacement or repairs.
2. Not yet readily available domestically.
3. Having 70% or higher remaining quality."
master plan for development approved by the Prime

Minister and relevant Ministries and Departments
(plant and equipment and its corresponding plan).
Article 10. Dossiers and procedures for importation of used production lines
"
1. State-owned enterprises and other importers shall complete importing procedures at the
designated customs office in charge of the importation. Apart from the normally required
importing documents, the importers shall also submit to the customs office one quality
inspection certificate in original, containing the key information required in Article 13.2 of this
Circular, issued by a qualified inspecting agency as defined in Article 15 of this Circular.
Inspection shall be done by the inspecting agency in the exporting country before the
production line is disassembled and packaged for shipment.
2. The customs office shall, based on the documents submitted by the importers, verify if the
used production line meets the eligibility criteria for importation specified in Article 7 of this
Circular, and proceed with customs clearance in accordance with prevailing regulations."
Article 15. Eligibility criteria and procedures for an inspecting agency to take part in the
assessment of used plant, equipment and production lines
"
1. Stage 1 as this Circular comes into effect till the end of 2016: subject to the Trade Law
a. Inspecting agencies incorporated under the provisions of the Trade Law, registered for
provision of plant, equipment and technology inspecting services, and meeting the
requirements of Article 14 of this Circular shall lodge an application for involvement in the
inspection of used plant, equipment and production lines, enclosed with an inspection
certificate sample (scan copy) to the Ministry of Science and Technology.
Page 3 of 5
MoST shall provide details of components,

accessories and replacements that can not be
produced in the country.
It should be clearly stated that components,
accessories and replacements that can not be
produced in the country do not include counterfeit
goods produced domestically.
Similar to Article 7, definition of production lines is
unclear. Please consider specifying according to HS
code, or removing Article 10.
From now until the end of 2016 - Stage 1, please

consider specifying conditions and procedures for
foreign inspection agency to carry out inspection
activities.
No.
Such application shall encompass at the minimum the following key information:
Name, address, website, email, telephone, fax of the organization.
Names of the organizations representative and subscriber of the inspection certificate.
A list of information demonstrating satisfaction of the provisions of Article 14 of this
Circular.
Track record of inspecting activities involved in over the last two years.
Compliance with prevailing laws and this Circular.
Signature and stamp of the head of the inspection agency.
b. Within 03 working days, if sufficient information required in a) of this paragraph above is
provided, the Ministry of Science and Technology shall issue a notice on the ministrys
website for interested regulatory agencies, organizations and individuals to know of and
choose to use the inspection agency.
c. To facilitate implementation at the early stage when this Circular comes into effect, the
Ministry of Science and Technology shall provide a List of qualified inspecting agencies in
Annex II of this Circular for interested regulatory agencies, organizations and individuals to
know of and choose to use.
8.
9.
This list shall be regularly updated based on the applications of other qualified inspecting
agencies."
Article 16. Cost of inspection
1. Cost of inspection for imported plant, equipment and production lines shall be paid by the
organizations or individuals requesting the inspection as agreed between the parties involved.
Article 20. Notifying and reporting schemes
3. December every year, inspection agencies participating in the assessment of used plant,
equipment and production lines shall report their performance of inspection work to the
Ministry of Science and Technology for aggregation and overall administration. A sample report
is provided in Annex IV of this Circular.
Page 4 of 5
Regarding cost of assessment done in Vietnam, it

should not base solely on agreement between the
parties involved. Instead, the MoST should prepare
a detail cost breakdown for each category.
Inspection agencies participating in the assessment
of used plant, equipment and production lines to
report their inspection work on imported machinery
and equipment into Vietnam is not feasible.
Assuming they do carry out the work, it will only
increase the cost of inspection.
Please consider removing this specific point or
passing the responsibility to the MoST to do the
reporting work.
No.
10.

Article 23. Effectiveness
1. This Circular comes into effect from July 1, 2015.
In relation to the appointment and announcement of
inspection agencies and assessment methodology, it
takes time to make necessary preparation. Besides,
there is a high possibility of arising difficulties when
this Circular comes into effect. Difficulties may
include delays during customs clearance for import
procedures. We suggest the MoST to appoint
domestic and foreign inspection agencies, then to
spend some time with related parties to deliver the
information before implementing the Circular.
Page 5 of 5
Comments on the draft Circular on importation of used machinery, equipment and production lines
COMMENTS ON THE DRAFT CIRCULAR REGULATING THE IMPORTATION OF USED MACHINERY, EQUIPMENT, PRODUCTION LINES
Prepared by
Baker & McKenzie Vietnam
No.
Article 1. Scope
"1. This Circular specifies the eligibility criteria, dossiers
and procedures for importation, and inspection
arrangements for used plant, equipment and production
lines,
including
components,
spare
parts
and
replacements for use in domestic business activities.
Issues: Article 1.1 of the Draft limits the scope of application of this Circular to
"machinery, equipment, components, spare parts, replacements" of Chapter 84 and
Chapter 85 of the List of import, export goods in Vietnam that was issued together with
Circular 156/2011/TT-BTC.
Whereby, used products with HS code listed in the Draft may be imported if satisfying the
conditions stipulated in the Draft. These products must not be in the category of used
goods that are banned from import as stipulated in Decree 187/2013/ND-CP and Circular
04/2014/TT-BTC.
Plant, equipment, components, spare parts and

replacements with HS codes specified in the List of allowed
imports and exports in Vietnam, annexed to Circular
156/2011/TT-BTC, dated Nov. 14, 2012 of the Ministry of
Finance, specifically in the following Chapters
a. Chapter 84. Nuclear reactors, boilers, mechanical
machinery and equipment, and their components: HS
codes of 84.02 84.87;
b. Chapter 85. Electric machinery and equipment, and
their components; sound recorders and playback
equipment, television video and sound recorder and
playback equipment, and components and accessories
of the above mentioned equipment: HS codes of 85.01
85.05; 85.07 85.09; 85.11; 85.14; 85.15; 85.18
85.22; 85.24 85.33; 85.35; 85.36; 85.43; 85.45
85.48;"
Article 1. Scope
"...
2. This Circular shall not apply to the importation of the
following used plant, equipment and production lines:
a. Goods in transit and transshipment;
However, most of the products bearing the HS code under the scope of application of the
Draft also belong to the list of used goods that are banned from import as stipulated at
Appendix I of Circular 04/2014/TT-BCT.
Recommendation: To consider expanding the list of HS codes of used products governed
by the Draft so that the Draft could have a wider and more effective scope of application.
Issues: The Draft only allows Vietnamese enterprises to repair and maintain used
products for foreign customers. The Draft has not foreseen the case where
Vietnamese enterprises conducting refurnishing services. In practice, enterprises in
Vietnam also would like to import used machinery and equipment to repair, maintain
and refurnish in order to resell to domestic and foreign customers.
Page 1 of 7
No.
b. Temporarily imported and re-exported goods (except for

outsourcing agreements, importation for production
purposes, construction as part of investment projects);
and temporarily exported and re-imported goods;
c. For performance of repair and maintenance service
agreements;
"...
1. Plant and equipment refer to a combination of interlinked
items and components, of which at least an item or
component has physical movements with relevant driving or
controlling mechanisms and electric circuits, being pieced
together with customized applications, particularly for use in
manufacturing, processing, moving or packaging materials."
Recommendation: Supplement the Draft with the case of "import used machinery,
equipment, [and/or] production line to conduct repairing, renewal business or to
refurbish to supply, distribute in domestic market or to re-export."
Issues: There is no need to define "machinery, equipment". Machinery and

equipment that fall under the scope of this Draft is determined based on the
classification system of goods (HS codes) stipulated in the List of import, export
goods in Vietnam that was issued together with Circular 156/2011/TT-BTC.
Accordingly, machinery and equipment subject to the Draft and their components,
spare parts, replacements are already classified with respective HS codes.
Enterprises may refer to the HS codes to identify if their used goods fall under the
scope of the Draft or not, without having to refer to the definition of "machinery,
equipment".
Meanwhile, defining "production line" is necessary as there is no HS code for
"production line" and thus it requires enterprises to refer to a specific definition.

"...
3. A comprehensive production line is one that incorporates
equipment, tools and instruments supplied, manufactured
and installed in accordance with the designated design at a
same time, having the appropriate output/efficiency
throughout the line, and can be used automatically or semiautomatically."
Article 6. Eligibility criteria for importation of used plant
and equipment
"...
2. Meeting the requirements for safety, energy efficiency and
environment-friendliness of existing laws and regulations;"
Recommendation: Remove the definition of "machinery, equipment".

Issues: This term is not used elsewhere in the Draft.
Recommendation: There is no need to define this term.
Issues: This provision is necessary but rather vague and would lead to difficulties in
implementation. What mechanism will be used to determine and examine whether the
used machinery, equipment, production line meets with the requirements? Will the
examination organization when certifying the "remaining quality" will also check if the
used machinery/equipment/production line meets with these requirements?
Page 2 of 7
No.

and equipment
"...
4. Used plant and equipment to be imported by state-owned
enterprises: service length of no longer than 10 years and
80% remaining quality or higher;"
Recommendation: The Draft needs to clarify the procedure as well as the
authorities/organizations authorized to verify whether the used equipments meet with
these requirements.
Issues: This is a new provision from Circular 20/2014/TT-BKHCN. The criterion "80%
remaining quality or higher" for all used machinery and equipment is not reasonable.
Machinery and equipment of each industry requires appropriate classification and
respective ratio.
There is no clear basis and criteria for the ratio 80%. Each nation and each producer
applies different quality standards; therefore, imported used machinery with remaining
quality lower than 80% will not necessarily have poorer quality than brand-new
machinery.
Besides, the requirement that the service length must not exceed 10 years is too short
and not reasonable. Machinery and equipment of each industry requires appropriate
classification and respective service length.
The different treatment toward State-owned enterprises (SOEs) and non-SOEs will affect
the competitiveness of SOEs. This provision will cause difficulties to SOES in balancing
business budgets, affect the business efficiency of the enterprises and State capital,
especially in the current economic situation.

and equipment
"...
5. Used plant and equipment to be imported by non-public
organizations and private individuals (hereinafter collectively
referred to as other importers) shall meet either the
following two requirements:
a. Service length of no longer than 10 years, or
b. Remaining quality of 80% or higher."
Recommendation: To classify products in different groups to determine the appropriate

ratio and service length. To consider allowing SOEs to choose between two criteria being
"remaining quality" and "service length".
Issues: The third Draft increased the ratio to 80% from 70% as compared to the second
draft and the same as Circular 20/2014/TT-BKHCN. The criterion "80% remaining quality
or higher" for all used machinery and equipment is not reasonable. Machinery and
equipment of each industry requires appropriate classification and respective ratio.
There is no clear basis and criteria for the ratio 80%. Each nation and each
producer applies different quality standards; therefore, imported used machinery
with remaining quality lower than 80% will not necessarily have poorer quality
than new machinery.
Page 3 of 7
No.
Besides, the requirement that the service length must not exceed 10 years is too short
and not reasonable. Machinery and equipment of each industry requires appropriate
classification and respective service length.
Recommendation: To classify products in groups to determine the appropriate ratio and
service length.
Article 7. Eligibility criteria for importation of used

production lines
"...
4. Having 80% remaining quality or higher compared to the
original state."
Article 8. Eligibility criteria for importation of components,
spare parts and replacements
"Imported components, spare parts and replacements shall
meet the following requirements:
1. Being technically compatible with the designated plant and
equipment that needs replacement or repairs;
2. Not yet readily available domestically;
3. Having 70% or higher remaining quality."
Issues: Similarly, the criterion "80% remaining quality or higher" for all used production lines is
not reasonable. There is no basis or criterion for the ratio 80%.
Recommendation: To classify production lines of each industry to determine the
appropriate classification and respective ratio.
Issues: The Draft limits the import of components, spare parts and replacements for the
purpose of "replace, repair" other machinery and equipment only.
In addition, the second criterion of "not yet readily available domestically" is unreasonable and
against the principles of a market economy. It is difficult to determine which component, spare
part or replacement has been available domestically or not. Moreover, in the case where the
local products do not meet with the quality standards as so desired by the enterprises, it is
sufficient to allow them to import products. This criterion could be viewed as a protectionism
measure.
Again, the criterion "70% remaining quality of higher" for all used components, spare
parts and replacements is not reasonable. There is no clear basis and criterion for the
ratio 70%.
Recommendation: To determine a lower and more reasonable ratio of remaining quality
for each kind of components, spare parts and replacements. To allow enterprises to
select between two criteria being remaining quality and year of manufacture of
components, spare parts and replacements.
To remove the first criterion on import purpose. To allow enterprises to import for
business (for example, for renewal and refurbishing business, reselling to other
enterprises in Vietnam).
To remove the second criterion.
Page 4 of 7
No.
10
11
12

Article 9. Procedures for importation of used plant and
equipment
"1. Importing state-owned enterprises:
...
a) Technical documents demonstrating the year of
manufacture of the imported plant and equipment: user
manual (guide) or year of manufacture certificate issued by
the manufacture in original;"
Article 9. Procedures for importation of used plant and

equipment
"...
2. For other enterprises:
a) Where the service length requirement specified in
Article 6.5.a of this Circular applies:
-Technical documents demonstrating the year of
manufacture of the imported plant and equipment, user
manual (guide) or year of manufacture certificate issued by
the manufacture in original;"
Issues: The requirement for import enterprises to provide the original copy of technical
documentsdemonstrating the year of manufacture of the imported machinery and
equipment will cause difficulties to enterprises. Indeed, user manuals (catalogue) of
machinery and equipment normally do not show the year of manufacture; original copies
of the certificate recording the year of manufacture issued by the manufacture after 10
years usually get lost. Machinery and equipment which have been repaired, replaced
with new details and components will have many different technical documents.
Requiring enterprises to submit all of such documents will increase procedural burden
and be time-consuming.
Recommendation: To allow SOEs to submit other documents which also evidence the
year of manufacture if they cannot find the originals of the catalogue and the certificate
of the year of manufacture issued by the manufacturer.
Issues: The requirement for import enterprises to provide the original copy of technical
documentsdemonstrating the year of manufacture of the imported machinery and equipment
will cause difficulties to enterprises. Indeed, user manuals (catalogue) of machinery and
equipment normally do not show the year of manufacture; original copies of the certificate
recording the year of manufacture issued by the manufacture after 10 years usually get lost.
Machinery and equipment which have been repaired, replaced with new details and
components will have many different technical documents. Requiring enterprises to submit all
of such documents will increase procedural burden and be time-consuming.
Recommendation: To allow enterprises to prove the date of manufacture of machinery

and equipment by submitting other documents which also evidence the year of
manufacture if they cannot find the originals of the catalogue and the certificate of the
year of manufacture issued by the manufacturer.
Article 13. General requirements relating to the quality Issues: This provision will cause difficulties to enterprises conducting quality
assessment overseas to find an inspecting agency that satisfy the standards and provide
certificate
"2. The quality certificate shall encompass the following the quality certificate with all the content stipulated by the Draft.
information:
Recommendation: To amend this Clause as follows:
a. Information of the importing organization or individual (name, "2. The quality certificate may encompass the following information".
address, telephone, email, fax, name of representatives);
b. Information of the organization or individual authorizing
or delegating the importation (if any);
Page 5 of 7
No.
c. Information of the imported merchandise (name, origin,

year of manufacture);
d. Information of the importing organization or individual
(name, address, nation, telephone, email, fax, name of
representatives);
dd.
Purpose
of
importation
(for
direct
use/sales/implementation of investment projects);
e. Place of assessment, time of assessment, conditions of
assessment;
f. Methodology and standards used for assessment;
g. Assessment results:
h. The remaining quality compared to the original state;
i. Year of manufacture of the plant and equipment (where
applicable).
j. Warranty of the inspecting agency for neutrality, fairness
and reliability of the assessment results;
k. Date of certificate issuance and effectiveness;
l. Names and signatures of inspectors; name, position and
signature of the representative of the leadership of the
inspecting agency, and seal);
Using the above listed information, inspecting agencies shall
develop their sample quality certificates with their own
designs."
Page 6 of 7
No.
13
14
Article 15. Eligibility criteria and procedures for an

inspecting agency to take part in the assessment of used
plant, equipment and production lines
"1. Stage 1 as this Circular comes into effect till the end of
2016: subject to the Commercial Law
a) Inspecting agencies incorporated under the provisions of
the Trade Law, registered for provision of plant, equipment
and technology inspecting services, and meeting the
requirements of Article 14 of this Circular shall lodge an
application for involvement in the inspection of used plant,
equipment and production lines, enclosed with an inspection
certificate sample (scan copy) to the Ministry of Science and
Technology."
Issues: The Draft provides the conditions and procedures to recognize inspecting
agencies with two stages, enabling domestic inspecting agencies to gradually satisfy the
current inspecting standards. However, this provision indirectly limits the enterprises'
ability to choose a foreign inspecting agency, since the Draft only applies to "inspecting
agencies established in accordance with the Commercial Law".
Article 17. Responsibilities of relevant ministries, line

agencies and local governments
"...
2. Relevant ministries and line agencies shall, within their
respective jurisdiction and where needed, apply stricter
controls than the general requirements of Articles 6, 7 and 8
of this Circular, and set specific requirements for service
length and remaining quality for used plant, equipment
and production lines in different trades and industries as the
circumstances require.
Issues: The ratio for "remaining quality" and "service length" of the machinery,
equipment and production line ("Machinery") should be determined industry-byindustry. If it is required to apply a common standard for all machinery of all industries
for the time being, the Draft should determine the deadline for Ministries and relevant
authorities to adopt specific provisions on the "service length" and "remaining quality"
for Machinery under their management.
Where specific rulings from the relevant ministries and line

agencies are absent, the importation of used plant,
equipment and production lines shall follow the rulings of
this Circular."
Recommendation: To amend this provision as follows:

"
2. Before 30 November 2016, relevant ministries and line agencies shall issue specific
requirements on "service length" and "remaining quality" of used machinery, equipment,
production line under their specific industries and areas as the circumstances require.
Where specific rulings from the relevant ministries and line agencies are absent, the
importation of used plant, equipment and production lines shall follow the rulings of this
Circular."
Recommendation: To provide detailed provisions on eligibility criteria and procedures to

recognize inspecting results of inspecting agencies in the country of export for Stage 1.
The possible deadline for issuing such specific provisions may be 30 November 2016 in
line with that of Article 17.3 of the Draft (the date when Ministries and authorities must
provide the list of qualified inspecting agencies).
Page 7 of 7
Comments on draft Circular on used machinery and equipment

MACHINERY, EQUIPMENT, PRODUCTION LINES
Prepared by
VILAF
1. Definition of State Owned Enterprises (SOEs)
As from 1 July 2015, the new Enterprises Law will effective and accordingly the SOEs mean
enterprises wholly owned by the State.
However, under the 2nd footnote of the Draft Circular, we understanding that the MOST is
referring to another definition of SOEs which is stipulated at Decree 99/2012/ND-CP dated
15 November 2012 of the Government on assignment and decentralization of the exercise of
the rights and the performance of the responsibilities and obligations of the State (as the
owner) toward SOEs and State capital invested in enterprises (Decree 99). For
information, according to Decree 99, SOEs are defined to be enterprises, in which the State
holds over 50% of charter capital, including:
- enterprises in which the State holds 100% of charter capital and which are singlemember limited liability companies;
- enterprises in which the State holds over 50% of charter capital and which are jointstock companies or limited liability companies with two or more members.
Our suggestion: To avoid any confusion, it is advisable that the MOST should directly and
clearly detail the scope of SOEs at Article 2.1 of the Draft Circular, not refer to another
regulation at a footnote. The MOST may consider incorporating the definition of SOEs at
Decree 99 into the main part of Draft Circular.
2. Calculation of Usage Duration
Under the Draft Circular, the usage duration is one of statutory conditions for the import of
used machineries, equipments and technological lines. The usage duration shall be
calculated in years and counted from the year of manufacture to the year of customs
declaration in accordance with Article 3.4 of the Draft Circular.
Our suggestion:
In our view, to be more reasonable to the importers, it should be a duration in which the
used machineries, equipments and technological lines are actually used. Any duration of no
use or suspension to use would be excluded from the usage duration.
In addition, the usage duration with odd months may be rounded as follows:
- From full 1 month to under 6 months, it may be rounded down to zero;
- From full 6 months to 12 months, it may be rounded up to 1 year.
3. Determination of Remaining Quality
Similarly to the usage duration, the remaining quality in comparison with the original
quality is one of statutory conditions for the import of used machineries, equipments and
technological lines. Under Article 3.5 of the Draft Circular, it is defined to be rate to satisfy
specifications of used machineries, equipments and technological lines in comparison with
these of brand-new machineries, equipments and technological lines.
However, because of the absence of clarification on original quality, there are a lot of
different interpretations on ground or basis to determine the original quality. Each nation as
Page 1 of 3
well as each manufacturer may apply different standards to the same machinery,
equipment and technological line. Therefore, there is a scenario in which the quality of the
used machineries, equipments and technological lines is higher than the quality of brand
new ones.
Our suggestion: In our view, for the purpose of accurate and scientific quality assessment,
the MOST may consider preparing a system of standards applicable to each machinery,
equipment and technological line.
4. Quality Test Certificate
In certain cases under the Draft Circular, a quality test certificate is required to be
submitted to the customs authority as one of application documents for importing the used
machineries, equipments and technological lines (Quality Test Certificate). The Quality
Test Certificate must comprise compulsory contents as follows:
- Information of the importer (name, address, telephone, email, fax, name of
representative);
- Information of organization/individual authorized to import (if any);
- Information of imported goods (name, origin, year of manufacture);
- Information of the exporter (name, address, telephone, email, fax, name of
representative);
- Purpose of import (to serve activities of manufacture and business/re-sale/investment
project);
- Location, time and condition of assessment;
- Method and standards of assessment;
- Results of testing (the remaining quality in comparison with the initial quality, the year
of manufacture if necessary);
- Commitments of the assessment organizations of objectivity, fairness and accuracy of
assessment results;
- Date of issuance and term of effectiveness of assessment report;
- Name and signatures of the individual official in charge of assessment and the
representative of the assessment organization (together with the seal of such
organization).
Our suggestion: Because a Quality Test Certificate issued by a foreign assessment
organization is acceptable and recommended, the MOST should clarify whether the above
mentioned compulsory contents are also applicable to such certificate. As a matter of
practice, we understand that the foreign assessment organization always sets up its own
standard form of Quality Test Certificate or must comply with standard form stipulated by
relevant foreign laws. Therefore, there is a risk in which their standard form is inconsistent
with the requirements by the Draft Circular.
5. Appointment of Quality Assessment Organization
According to Article 15 of the Draft Circular, the ministries and State agencies will be
responsible for promulgating their guidance on procedure to appoint the quality
assessment organizations in respect of the used machineries, equipments and
technological lines under their assigned management authority. However, we understand
that the promulgation of such guidance will be time-consuming and the ministries and
State agencies are permitted to have one year (i.e. 2016) for preparation.
During this period, a temporary procedure of registration for quality assessment is
applicable instead. Accordingly, the quality assessment organizations must submit an
Page 2 of 3
application form (enclosed with its standard form of Quality Test Certificate) to the MOST
and afterwards a list of eligible quality assessment organizations will be announced by the
MOST.
Our comment: Nevertheless, we are aware that the delay in promulgation of guidance is not
rare in practice and the ministries and State agencies may not meet the scheduled
deadline. In such case, it is advisable that the temporary procedure of registration for
quality assessment with the MOST should be extended until the ministries and State
agencies promulgate its own guidance.
6. Cases of Exemption
Based on Articles 6 and 7 of the Draft Circular, it appears the conditions for import of the
used machinery, equipments and technology lines are compulsory and there are no cases
of exemption.
We are aware that some specialized regulations of Vietnam require a license/permit for the
import of such goods which is issued by the specialized State agency other than the MOST.
For example, according to the Law on Tobacco Control and its guiding regulations, the
import of (brand new or used) machinery, equipments and technology lines for tobacco
manufacturing and processing activities in Vietnam is subject to an approval of the Ministry
of Industry and Trade and may be an approval in principle of the Prime Minister in practice.
If these decision making State agencies accept to import the used ones whose quality is
lower than those stipulated by the Draft Circular, we are concerned about the confliction
between the Draft Circular and the approval of the relevant State agency.
In light of above, we recommend that the importer shall be exempted from the criteria of
import of the used machinery, equipments and technology lines stipulated by the Draft
Circular if it obtains a proper license/permit of import from the relevant State authority in
charge.
Page 3 of 3
Summary of consultative meeting on draft Circular on used equipment
SUMMARY OF THE CONSULTATIVE MEETING ON THE DRAFT CIRCULAR ON IMPORTATION

OF USED MACHINES, EQUIPMENT AND PRODUCTION LINES
-
Date and time:

Venue:
List of participants:
8.30-11.30am, March 17, 2015

VCCI branch,171 Vo Thi Sau Str., District 3, Ho Chi Minh City
See appendix 1
I. MEETING AGENDA
- Content of the draft Circular on imports of used machinery, equipment and production
lines (draft Circular)
- Comments/feedback from businesses on the draft Circular
- Responses by Department of Technology Assessment-Evaluation-Verification, Ministry
of Science and Technology (MOST)
- Open discussion.
II. MEETING SUMMARY
1. Content of the draft Circular on imports of used machinery, equipment and production lines
Mr. Do Hoai Nam, Director General of Technology Assessment-Evaluation-Verification,
MOST
- Imports of used machinery, equipment and production lines must be reviewed and
imported production lines must be inspected prior to arriving in Vietnam. In other cases,
importers may provide a self-administered statement and customs may choose to
undertake an inspection or post-check for a faster clearance process.
-
For plant and equipment monitored by relevant ministries, such ministries may include them
in the list of plant and equipment not subject to this Circular. Already, the Ministry of
Transport (MOT) has proposed construction plant and equipment be left out of this Circular.
The MOST requests other ministries and line agencies list selected technology
inspection agencies. If ministries fail to list inspection agencies as required by the
Product and Commodity Quality Law, such agencies will be selected in accordance with
the Trade Law. The utilization of inspection agencies will span one year following this
Circular coming into effect. Thereafter, inspections will be further tightened in line with
provisions of the Product and Commodity Quality Laws implementing Circular.
As specified in the Technology Transfer Law, technology assessment and inspection

agencies must be eligible entities to operate and a technology appraisal service is
expected to be introduced as a result of the revised Technology Transfer Law drafted by
the MOST.
It should be noted that the use of the two criteria the service life since manufacturing
date (10 years) and the quality of plant and equipment (80%) was guided by inputs from
ministries and line agencies. As the lead agency in the process, the MOST assembled
this legislation based on recommendations from ministries, line agencies, companies
and associations.
From a State administration perspective, to ensure the best interests of the community
in the implementation of a national technology development strategy and technology
upgrade policy, the MOST must identify ways to prevent imports of plant, equipment and
production lines that are energy and material inefficient, polluting and unsafe for
workers to operate.
Page 1 of 9
2. Comments/Feedback from businesses on the draft Circular

Mr. Nguyen Van Dong, Chairman, Vietnam Printing Association
- For the Circular to meet expectations, a number of basic rules must be followed to limit
burdens on taxpayers and produce fair deterrents for wrongdoing. Based on this, the
following specific comments should be noted:
-
Article 1 Scope: Exclusion is recommended for listed plant and equipment assigned by
the government to relevant ministries for administration as per Decree 187/2013/ND-CP
on trading of international goods and dealership, trading, outsourcing and
transshipment of goods with foreign partners (Decree 187) as well as Decree
60/2014/ND-CP on printing activities. The two decrees specifies that the Minister of
Information and Communication provides specific rulings on plant and equipment
imports, based on development trends of printing technology and equipment over time.
Chapter 2, Article 6: The eligibility for importation of used plant and equipment fixed
with a 10-year length of service for all plant and equipment in different lines of business
is unreasonable in our view. This is particularly so in the case of printing, where typeset,
layout, electronic film making or digital printing equipment could be decommissioned
after just five years. Meanwhile, traditional printing machines such as offset, bronze
pipe, flexographic printers or manufacturing machines from Germany, Japan, USA or
the Italy may efficiently operate after 20 years. Moreover, some print products do not
require very high quality, such as common administrative papers in provinces.
Moreover, some provincial newspapers do not even require advanced printers and may
accept a decade-long length of service to save costs.
Overall, the required length of service less than 10 years for used printing plant and
equipment is rigid and lacks the necessary scientific and practical justification. The
drafting team is encouraged to separate eligibility criteria for different types of plant
and equipment and develop a list of plant and equipment with more reasonable lengths
of service.
Regarding the required remaining quality level of 80% or higher: While this is a
quantitative measure, the draft Circular fails to provide any scientific methods of
measurement such as:
+ A piece of equipment may consist of thousands of components, which degrade at
different degrees of use and may have different impacts on the quality of end
products.
+ Quality inspections cannot be done visually. Instead, they require machines to be
disassembled and even to undertake a test run with different types of materials.
+ In reality, only a handful of printing facilities in the printing sector directly import
used plant and equipment for use. Often this is done through specialized importers
of used equipment in Vietnam or overseas. Experts from such agents verify the
status, equipment quality and replace parts and reinstate equipment after trial runs
before sales to printing firms. As such, the status of imported plant and equipment
at border crossings and when first put into use is often different given the
considerable upgrade. Thus, inspections offer no real value.
Chapter 3 - Import dossiers and procedures: Any discrimination between State-funded

enterprises and other businesses is discouraged and overall coverage should be
applied.
Page 2 of 9
Inspection agencies: The Vietnam Printing Associations position is that only

professional companies specialized in used plant and equipment trading, printing
manufacturing and repairs can inspect used printing industry equipment. These
professionals, however, can only verify equipment after disassembling and undertaking
trial runs. Meanwhile, printing regulatory agencies and similar foreign bodies can only
verify supplies and goods quality based on specific standards.
Consequently, certification of the remaining quality of specific printing industry plant
and equipment is redundant and will burden firms with time and financial costs. This
could result in imported equipment left at border crossings for months or even years
pending inspection results.
Mr. Nestor Scherby, Chairman, AmCham Customs & Trade Facilitation Committee
- The draft Circulars new restrictions are likely, in fact, to have impacts opposite than
intended. Rather than applying restrictions, instead new duty and tax incentives should
be offered for investment in new equipment and technologies. The restrictions will
actually discourage such investments and imports because of likely unintended
coverage of long-term capital equipment, parts and accessories due to the broad scope
of the harmonized system customs classification codes.
-
The word dumping means unfair trade practices, where goods are exported to a
country at artificially low prices. There are better ways to tackle this problem such as
customs valuations or imposition of the 2005 Law on Import and Export Duties, and
other existing laws. It is recommend the markets view be accepted and supported with
reinforcement of existing laws.
It is faster and more cost-effective for an investor to obtain high-quality used

manufacturing machines than order new ones because of long lead times for such
equipment and greater expenses. A company in California, that specializes in
semiconductor fabrication equipment, reported that: the cost when buying used can
average as much as 50%. While the benefit of lower costs continues to be a primary
driver, other considerations have emerged as critical factors such as installation, parts
availability, maintenance, service, quality, training and safety.
Instead of enacting new trade restrictions, a more effective approach is recommended

that involves enhancement of existing compliance regulations and strict enforcement by
regulatory agencies through up-to-date implementation of international standards and
electronic processing of administrative procedures.
It is recommended that the standard for quality specified as 80% of useful life be
defined in greater detail through objective measures. This is because the quality of
machines and equipment is defined by performance specifications of specific machines
and equipment.
Only one country prohibits importation of used equipment - China. Vietnam would
benefit from the transfer of used equipment and production lines without engaging
normal trading firms, through the shifting of major global manufacturers with used
production lines from areas of higher production costs to cheaper areas. As such, the
adoption of this Circular will raise a barrier against such movements.
A team of Japan Inspecting Association experts came to Vietnam in 2014 to work with
the MOST and introduced various product quality inspection methods. Nevertheless,
Page 3 of 9
there is concern whether Japanese inspection methods for production lines, equipment
or parts imported into Vietnam will work.
-
There is agreement to remove Circular 20 and the MOST is encouraged to consider this
proposal. If the Circular is retained, the MOST must provide clear guidance on issues
pertaining to defining inspection agencies and procedures.
Ms. Duong Thi Toi, HCMC Bar Association member

- The MOSTs requirement for length of service seems reasonable, but imposing an active
period of no longer than 10 years for all plant and equipment is unreasonable. This is
especially true for heavy industry and mechanical equipment. Use of this requirement
on manufacturing or electronic production lines will even threaten to turn Vietnam into
a technology dumping ground. Thus, the MOST is encouraged to introduce more specific
criteria, at least for heavy and light industries.
Mr. Pham Ngoc Tuan, Vice Chair, HCMC Mechanics Association
- Mechanical equipment is different from other industries. In countries like Japan,
manufacturing equipment active for 50 years may still be in good condition. From global
experiences, there is no reason why Vietnam should go in the opposite direction while
local mechanical manufacturing slowly evolves. Therefore, the MOST is encouraged to
reconsider the active period requirement and other restrictions for importing used plant
and equipment.
-
The MOST also needs explicit inspection standards prior to releasing the Circular.
Ms. Le Nguyen Thuy Dung Legal Manager, Intel Co.

- Imported plant and equipment to Vietnam could come from numerous different
countries, hence making verification of equipment quality difficult.
-
Two groups of countries, one with liberal regulations (Japan, Singapore, Thailand) does
not restrict importation and closely regulates how equipment is utilized. The second
group has strict controls (China, India), but even these countries do not impose
restrictions on equipment used in export processing zones and there are no
requirements on remaining quality and length of service.
The MOST is urged to take these points into consideration and provide more supportive
rulings for export processing zones.
Ms. Nguyen Ngoc Bien Thuy Huong, Instructor, Law Department, Binh Duong University
- This Circular has several advantages, including removal of specific lines of business
from the regulated scope such as building or engineering machinery (assigned to the
Vietnam Register for inspection process). Yet, there are a number of shortcomings as
follows:
+ Using length of service as a condition for importation and how the active period is
determined from the year of manufacturing to that of importation is not advisable.
This is because through utilization, some replaced parts or components would not
be coherent in terms of time in service. Also, the purpose of setting importation
criteria is to restrict poor quality, used equipment. To meet this need, using the
quality criteria would be sufficient and there is no need for the length of service
condition.
An important question is why are used production lines, parts and components only
subject to 80% and 70% or higher remaining quality requirement, without the time
Page 4 of 9
in use condition, whereas both apply to plant and equipment? Is there inconsistency
and non-alignment between the provisions in the same piece of legislation?
Furthermore, what justifies the MOSTs setting of the 80% and 70% or higher
remaining quality requirement as an importation condition?
Discriminating between State-owned enterprises (SOEs) and non-public firms in
terms of importation criteria is unreasonable, while saying SOEs need more
stringent governance is unconvincing. The purpose of restricting importation of used
plant and equipment is to mitigate use of substandard quality and polluting
machinery in Vietnam. That purpose requires SOEs and non-public firms to adhere
to equal import criteria.
Article 9 - Import procedures and dossiers: There is a requirement that the dossier
consists of technical factsheets demonstrating the year equipment was produced. If
not, there must be a certificate stating when the equipment was produced from the
manufacturer. While the Circular sets the length of service at no longer than 10
years, it requires this paper be original hard copy. Is it practical to require an
original certificate of origin from the manufacturer when the equipment has been
used for 10 years? The document may be missing, damaged or rendered
meaningless as new components may have been replaced while the equipment was
in use.
Mrs. Vo Thi Nhu Ngoc, Vo Thi Nhu Ngoc Law Firm

- The Circular should not be applied to non-public firms.
-
When the Circular comes into effect, it will force major groups and companies to move
away from transferring technologies from other advanced countries to Vietnam.
Instead, there should be severe penalties to deter intentional importation of obsolete

and polluting production lines by institutional or personal entities.
Mr. Tran Thanh Trong, Chairman, Binh Duong Mechanical & Electrical Association
- Circular 20 is necessary to avoid Vietnam becoming a technology dumping ground.
Moreover, liberal importation of equipment may negate innovation incentives for
Vietnamese firms.
-
Regarding the manufacturing year and quality criteria, there is agreement with the
drafts 10-year active period requirement. However, the requirement for technical
factsheets demonstrating manufacturing years including user manuals, should be
removed as user manuals should not be used as evidence of the manufacturing year,
but only a manufacturers certificate. In addition, it should be made clear whether the
manufacturers certificate is issued at the time of manufacture or importation, and
whether the certificate should be stamped.
There is agreement with the need for inspection, but the MOST needs to provide more
specific inspection guidelines and standards and state who are permitted to undertake
such inspections.
Mr. Nguyen Van Binh, Counselor, HCMC Bar Association member

- While Decree 187/2013/ND-CP provides detailed guidelines for implementation of the
Trade Law regarding trading of international goods and dealership, trading, outsourcing
and transshipment of commodities with foreign partners, participants in this meeting
have concentrated on more technical sides. While the Trade Law encourages
Page 5 of 9
commerce, this Circular seems to contain implicit causes for disputes and hindrances
to the development of the market and firms. It is recommended that a different form of
regulation is used instead of a Circular, that should serve as an implementation
document and not to introduce rules.
Mr. Luong Thanh Quang, Raja &Tann LCTLawyers
- The importation of used equipment is supported and we do not believe used equipment
poses environmental threats.
-
Buyers of electronic goods like iPads or iPhones in the United States are charged
environment levies, but there is no such environment tax for equipment parts in
Vietnam. Use of a reasonable levy could be considered as a means of restricting
importation.
Representative of Long An Battery Co.

- Because used plant and equipment may seem unequal in terms of quality, this does not
mean they are not as efficient as some otherwise substandard counterparts, like those
from China. Importers understand the draft Circular has a governance purpose for
environmental protection or anti-dumping. But, there are also other administrative
instruments such as taxes, quality testing, safety and technical specifications that could
be used. These alternative instruments could be just as effective in restricting trade in
used equipment, equipment imports for re-export purposes or importation of used
equipment.
-
If the current version of the Circular is retained, will importers find other ways to still
bring substandard equipment into the country and leave a trail of corrupt practices
along the way?
Mr. Hoang Van Son, Counselor, HCMC Bar Association member

- The Circular needs to be reviewed and its provisions divided into different plant and
equipment categories if it is to be feasible. Inspections in this field have limitations and
if done incorrectly, may result in higher costs for firms.
-
Article 4.3 of the draft Circular is likely to place importers in a difficult position as it
requires Used plant, equipment and production lines to be imported, apart from
meeting the requirements of this Circular, shall satisfy existing regulations of the
government, and relevant ministries and line agencies on commodity importation.
Foreign investors sometimes do not register investment capital in cash but production
lines or equipment, then leave the country after a few years in operation. This is a real
concern and a difficult one for regulators.
The draft distinguishes between SOEs and foreign-invested enterprises. We advise

against such discrimination and instead groupings should include limited liability, joint
stock or privately held companies, if any.
3. Responses by the Ministry of Science and Technology

Response by Mr. Do Hoai Nam, Director General of Technology Assessment-EvaluationVerification, MOST
- This Circular follows Decree 187 and the Trade Law. The creation of the Circular was
assigned by the government, with the MOST the lead agency that collected inputs from
stakeholders for the government. The Circular will be released when considered
necessary. In addition, based on two pieces of Prime Ministerial legislation Directive
Page 6 of 9
17/CT-TTg on strengthening governance and management of corporate importation of

technologies, plant and equipment and Decision 929/QD-TTg approving the SOE
reform, focusing on state-owned business groups and large corporations for 20112015 project, the government has placed responsibility with relevant ministries and line
agencies in the overall management of plant and equipment imports, following the
cases of Vinashin and Vinalines.
-
Discrimination between SOEs and other types of business in the draft Circular is a
mistake. The drafting team intended to make a point related to used plant, equipment
and production lines imported using State funding.
Paper production: In term of investment, no paper factories with imported used

equipment and technologies have proven to be efficient to date, including state-funded
and private firms. The government recently turned down a Bai Bang Paper Factory
Phase 2 proposal to import used production lines, given the poor performance of used
equipment financed by external funding from the previous phase.
Concerns have been voiced to regulatory agencies about imported used equipment
turning the country into a technology dumping ground. That prompted the MOST to
request other ministries cooperate and propose lists of equipment subject to different
criteria, such as the mechanical engineering, building and health care sectors. In
accordance with the current law-making process, the drafting team is required to
collect formal written feedback from relevant ministries and line agencies and reflect
them in the draft Circular. Comments from participants in todays meeting will be
reflected in our report to the minister, who in turn will report to the government on
whether this Circular is needed.
As this piece of legislation may affect many firms, unanimous consensus and sharing
from the business community which takes into consideration broader community
interests, are vital.
The issue of inspections overseas and in Vietnam remains unclear. Foreign inspection
agencies must adopt mutually recognized standards between different countries and
territories. If they meet the inspection qualities as specified in the draft, they could be
viewed as equal to a Vietnamese inspection entity.
Regarding the issue of equipment origin, the drafters previously proposed there should
be separation between equipment from the European Union, United States and Japan
and equipment from China. Now Vietnam is a member of the World Trade Organization,
such discriminative rule is prohibited. Accordingly, Notice 2527/TB-BKHCN on
suspension of importation of used plant, equipment and production lines clearly
indicated a halt of importation of equipment from precluded countries.
The purpose of this Circular is to enhance regulations on plant and equipment that fail
necessary safety, energy efficiency and environmental protection requirements. Some
firms want to import used batteries for regeneration, while international rules and many
countries prohibit this. As a result, recycling must rely on the supply of used batteries
within Vietnam.
The MOST has consulted with the Ministry of Justice and received the latters
endorsement for the release of this Circular.
Page 7 of 9
As for high technology equipment, the governments position is to encourage

importation and this intention is reflected in the draft Circular to promote investment. In
2008, the National Assembly passed the High Technology Law, stating that firms
qualified to engage in hi-tech activities or use high technologies are entitled to the
highest levels of investment incentives available in current laws.
4. Open discussion
Mr. Nguyen Ngoc Thinh, Zien Solutions
- Zien Solutions has imported new products not available in the local market. However
since Circular 20 came into effect, it has encountered significant challenges working
with the Customs Office. The MOST is urged to consider introducing regulations that do
not create more barriers for importers or increase corrupt practices.
-
Response by Mr. Do Hoai Nam, Director General of Technology Assessment-EvaluationVerification Department, MOST
- Circular 20 only restricts and prohibits imported plant and equipment from China. Plant
and equipment used for scientific research and technology development does not fall
under the scope of this Circular.
Page 8 of 9
APPENDIX 1: list of participants

No
Name
Title
Director General of Technology
Assessment-EvaluationVerification Department
Company
Mr.
Do Hoai Nam
Mr.
Dau Anh Tuan
Director of Legal Department
Mr.
Nestor Scherbey
AmCham
Mr.
Tran Van Quang
Clean Development
Vietnam Chamber of Commerce

and Industry
AmCham Customs & Trade
Facilitation Committee
Dragon Capital Group Limited
5
6
Mr.
Mr.
Le Van Dong
Do Hong Trung Hoa
Mr.
Motohisa Nakagawa
Deputy Managing Director

HR & Administration Department
Chief of Business Environment
Committee/Lawyer
Les Vergers Du Mekong

MITSUI & CO., VIETNAM
JBAH/Nagashima Ohno &
Tsunematsu Hcmc Branch
Mr.
Long Nguyen
Associate
Nagashima Ohno & Tsunematsu

Hcmc Branch
Mr.
Chief Financial Officer
The Blue Circle
10
Mr.
Jean-Francois (Jeff)
Peron
Thinh Nguyen
Representative
Zien Solutions.
11
Mr.
Bui Thanh Tinh
Portfolio Project Manager
FrieslandCampina Vietnam
12
Mr.
Bui Thi Ngoc Thuy
Representative
Woo Jin Vina
13
Mr.
Nguyen Thi Thanh

Nhan
Customs/Trade Compliance
Manager
Intel Vietnam
14
Mr.
Le Nguyen Thuy Dung
Legal Manager
Intel Vietnam
15
Mr.
Associate
Baker&McKenzie
16
Mr.
Associate
Baker&McKenzie
17
Mr.
Andrew Fitanides
Nguyen Vu Quynh
Trang
Mai Chi
18
Mr.
Masayoshi Omichi
Sales Director
Vietnam Japan Gas JSC
19
Mr.
Nguyen Van Dong
Chairman
Vietnam Printing Association
20
Mr.
Truong Quoc Tuan
Representative
T.A.T Machine tool and Equipment

JS Co.
21
Ms. Duong Thi Toi
Member
HCMC Bar Association
22
Mr.
Pham Ngoc Tuan
Vice Chair
HCMC Mechanics Association
23
Ms.
Nguyen Ngoc Bien Thuy

Instructor, Law Department
Huong
24
Ms. Vo Thi Nhu Ngoc
Partner
Vo Thi Nhu Ngoc Law Firm
25
Mr.
Tran Thanh Trong
Chairman
Binh Duong Mechanical &

Electrical Association
26
Mr.
Nguyen Van Binh
Counselor
HCMC Bar Association member
27
Mr.
Luong Thanh Quang
Lawyer
Raja &Tann LCTLawyers
28
Mr.
Hoang Van Son
Counselor
HCMC Bar Association member
29
Ms. Ngoc Anh
Representative
VBF Secretariat
VILAF
Page 9 of 9
Binh Duong University
Summary of consultative meeting on draft Circular on used machinery
SUMMARY OF THE CONSULTATIVE MEETING ON THE DRAFT CIRCULAR ON IMPORTATION

OF USED MACHINES, EQUIPMENT AND PRODUCTION LINES
-
Time:
Venue:
List of participants:
8:15am-12pm, Wednesday, March 18, 2015

7th Floor, VCCI building, No. 9 Dao Duy Anh, Hanoi
Appendix 1
A. MEETING AGENDA
-
Content outline of draft Circular on importation of used machines, equipment and

production lines (draft Circular) and key issues for businesses comments/
recommendations;
Presentations of business associations, chambers of commerce and companies
representatives
Feedback fromthe Department of Technology Assessment-Appraisal-Inspection,
Ministry of Science and Technology (MOST)
B. MEETING SUMMARY
I. Outline of draft Circular content and key issues for businesses comments/
recommendations
Ms. Tran Tuyet Nhung, Vice Director, Department of Technology Assessment-AppraisalInspection, Ministry of Science and Technology
- Circular-making concept:
+ Regulating used machines, equipment and production lies imported for use in
Vietnam
+ Preventing importation of used machines, equipment and production lines that are
obsolete, substandard, energy and material inefficient and pollutingto prevent
Vietnam becoming a technology dumping ground.
-
Normative references:
i) GovernmentDecree
187/2013/ND-CP,
providing
detailed
guidelines
for
implementation of the Trade Law regarding trading of international goods and
dealerships, trading, outsourcing and transshipment of commodities with foreign
partners. The MOST, as a lead agency and in collaboration with relevant ministries
and line agencies, developedthe draft Circular.
ii) Prime Ministers Directive 17/CT-TTg, August 9, 2014, on strengthening regulations
and monitoring of corporate importation of technologies, machines and equipment.
The MOST actedas a lead agency and worked with relevant ministries and line agencies
to draft the Circular. The business community and associations commented and
recommend how the draft couldbe improved.
During the drafting process, the drafting team studied and referred to other countries
practicessuch as:
+ Indonesia: Regulations under two codes HS84 and 85 for20 years, beyond which
reviews on a case-by-case basis, except HS 8471.41.10 and HS 8531.20.00,
whichcoverfiveyears
+ Thailand: No import restrictions. Any infringement onthe environment, quality and
safety laws during use may result in seizure and decommissioning. To benefit from
Page 1 of 10
+
+
+
-
government incentives, used equipment must have an active period of no longer than
10 years and a remaining service life of five years.
China: A uniform timeframe of 10-14 years applies to the list of used mechanical and
electric equipment, with specific lists subject to 8-35 year timeframes. Applications
must be filed to authorities 90 days prior to importation.
India:Remaining quality of more than80%, to be inspected by the export
administration
Bangladesh:Service life of more than10 years
Taiwan: No importation.
Main parts of the revised Circular, third draft:

+ HS codes applied (Article 1): each chapter lists a four-digit HS code.
+ Import eligibility:
o Article 6, on used machines and equipment: Businesses are definedby whether
they are State-owned or not. State-owned enterprises(SOEs) are subject to
stricter controls, as they have to meet under-10 year length of service and more
than 80% remaining quality criteria.Other importers may choose one of the two
criteria.
o Article 7, on used production lines: Allfirms must satisfy the remaining quality
( 80%) requirement and inspections must be undertaken in the exporting
country, before disassembling and packaging for shipment.
o Article 8, on importation of used parts, components and replacements: These
provisions apply to machines and equipment in need of parts replacement and
repairs, not for disassembling for resale. The parts and components must not be
locally available and have remaining quality of 70% or more.
+
Quality requirement: Inthe case of SOEs,imported used machines, equipment,

components and parts must come with an inspection certificate issued by a qualified
inspecting agency.Other enterprises may choose self-claimed declarations or
inspection certificates.Production lines need an inspection certificate and the
inspection must be undertakenin the exporting country, before disassembling and
packaging within the past six months.
Qualifications of inspecting agencies:

o Phase 1 by the end of 2016:In accordance with the Commercial Law (inspecting
agencies registered to MOST for uniform regulations)
o Phase 2 from January 1, 2017: In accordance with Product and Goods Quality Law
(ministries/line agencies to select qualified inspecting agencies).
Customs clearance (Articles 9, 10 and 11): Atthe Customs office, which may request
re-inspection if documentary discrepancies are found. The MOST and relevant
ministries/line agencies may state their views ifneeded.
Responsibilities of ministries/line agencies (Article 16): Ministries and line agencies,

within their jurisdictions and in consideration of the need for stricter controls than
stated in Articles 6, 7 and 8 of this Circular, may set in place specific requirements
for special industries or sectors where needed.
Topics that need concentrated discussions:

+ HS codes to be four or two-digit, or no HS codes at all
+ Cases not subject to regulation of this Circular (Article 1.2). Please note item (i) the
List of Category 2 commodities is subject to the Product and Goods Quality Law,
Page 2 of 10
released by the Ministry of Transport (MOT), whichcan also closely regulate

transport vehicles.
Import eligibility.
II. Presentations of business associations, chambers of commerce and company

representatives
Mr. Fred Burke, Head of VBF Investment and Trade Working Group
- Overall, it isnot a good idea to regulate used equipment in thisway and some articles
should be reconsidered. Existing regulations, including those related tohealth and
safety of workers and the environment, are sufficient to manage used equipment.
-
To conform to international commitments, no more burdens should be placed on

enterprises, whichare experienced enough tomake accurate assessments on used
equipment and on remaining quality than local assessment agencies.
The issue of competency deficiency of inspecting agencies is also a concern, whereas

there is no mention of involvement of international inspecting agencies.
Import eligibility criteria, such as 80% remaining quality or 10-year active period,
appearrandomly chosen.
Importers eligibility by whether a company is a SOE or a private firm also engenders

inequality, while the increasingly fading line between the two may lead to confusion
when applying regulations.
There is concern that somewill not be able to meet the requirements for import
customs documentation.
Many agree that it is unnecessary to issue the Circular and its feasibility as well as gaps
within legislation, such as energy efficiency and consumption, may be better addressed
by new standards than a new quality control or assessment regulation.
Mr. Nguyen Mai, Chairman, Foreign-owned Companies Association

- The Circular is unreasonable as itdiscriminates between SOEs and other firms, while it
is also contraryto the goal of a level playing field for all. The MOT does not fall under the
regulating scope of this Circular, hence there no nationwide consistency.
-
Thailands approach could be examined as it does not rely on specific rulings for used
equipment imports. Other countries practices related to used machine regulations
require only compliance with environmental protection, work safety and quality
standards. Otherwise, the firm will be closed down by the authorities.
The regulatory system and administrative procedures will move towards increased ease
of doing business for enterprises. Increased FDI is also expected with Microsoft and
Samsung withdrawing from China and selectingVietnam for their production facilities.
When moving their factories to Vietnam, these firms must first make sure operations
remain productive and it is unlikely authorities can authenticate operation performance
better than these prestigious firms.
Page 3 of 10
The MOST could reconsider the necessity of this Circular, while on a personal level I do
not believe it is necessary. Disassembling and deciding on the quality of a piece of
equipment may also leadto corrupt practices. Regulations should pay more attention to
community benefits and energy concerns.
Mr. Vu Ngoc Bao Vice Chair and General Secretary, Paper and Pulp Association
- For the last 30 years, 30% of the paper industrys output has comefrom the State-owned
sector, but today it only contributes 7%.The sector has usedequipmentwith a length of
service of more than 50 years andhasprovided economic value and met environmental
criteria. A paper industry production line costs a minimum of USD100 million, and
advanced lines may cost USD100-200 million. However, inHanoi now there are still
machines over 70 years of age that produce saleable outputs and provide good profits.
-
Instead of the 10-year timeline or 80% of remaining quality, before importing any
equipment, it is suggested therelevant ministry or line agency submit a feasibility study
to the MOST to review and consider whether to allow importation.The current law has
sufficient codes and standards to meet the goals of this Circular in protecting the
environment, safety, costs and benefits. So,no new rules are needed.
The Circular should provide specific standards for safety, environmental protection and
technology specifications. For example, provide specific regulations on material
efficiency in the paper industry.
Mr. Kawanabe Kenta, Japanese Business Association in Vietnam

- For each field, Vietnam has in place a separate set of codes, for example with
production lines, quality, environment or safety.If these specific sets of rules strictly
apply, it will be possible to restrict and control importation of obsolete used equipment
that is unfit for today.
-
The MOST is encouraged to rescind this Circular. The current draft Circular has
reflected some Japanese Business Association feedbackby lifting some restrictions
onimportation of production lines.This allows non-public firms to meet just either
requirement, whether no longer of 10 years in active use or remaining quality of 80%.
But, it is difficult for inspections to tell ifa piece of machine is 80% of its original
state.Last year, experts from Japans inspecting agency association worked with
Vietnams MOST and introduced quality inspecting methods. But equipment imported
into Vietnam may originate from other countries, thus Japanese methods cannotcover
all types of equipment.Having a uniform inspecting method is also a challenge.
The association has two main recommendations: i) The MOST couldconsider removal of
Circular 20 and (ii) if the Circular must be released, the ministry must provide clear
regulations on the definition of inspecting agencies, procedures and methods used to
avoid confusion for stakeholders.
Mr. Nguyen Truong Vinh, Deputy Chief, Air Pollution Control Division, Pollution Control
Administration, Ministry of Natural Resources and Environment
- Consideradditions to the list of banned import equipment rejectedbyother countries
-
There should be no discrimination betweenSOE or other enterprise importers
Page 4 of 10
Consistency with regulations of other ministries/line agencies is needed. For example,

Decree 114/2014/ND-CP on subjects eligible and conditions for licensed import and
dismantlement of used vessels is implemented by the MOT, but the Ministry of Health
and Ministry of Agriculture and Rural Development also have rulings on imported
equipment
Specific environment-related rulings are needed. Under the Environmental Protection

Law of 2014, equipment must be environment friendly and consistof no ozone layer
destructive substances and PCB-based transformer oil
It is difficult todetermine the criteria for the80% quality and 10-year active period.
Therefore, inspecting proceduresmust be clearly stipulated and environment-related
findings should be integrated intoinspecting results.
Mr. Le Anh Ba, Vice chair, Vietnam Building Material Association

- Discrimination of SOEs and other firms by the Circular is unreasonable and inconsistent
with the new Enterprise Law that calls on equality between enterprises.The government
should play a constructive rather than penalizing role.The 80% quality requirement is
qualitative in nature and may entail complex administrative procedures.There is a need
for guidelines to raisetechnical barriers to prevent importation of non-productive used
equipment.
Mr. Nguyen Duc Thinh, Director, Mechanics Development Consulting Center, Mechanical
Engineering Companies Association
- Circular 20 aims to strike a balance between different stakeholders interests, to raise
barriers to protect the domestic mechanical engineering industry and promote
manufacturing capacity to support industrialization, while also protecting equipment
traders and users.The Circular should set barriers that safeguard domestic industry
and ease burdens on enterprises.
-
The 80%remaining quality issue has raised concerns,so rules should be firsttrialed for
improvements. The 10-year length of service requirement isgood, but 80% of quality is
high and could be 70%.
Mr. Phan Van Hai, Managing Director, Vietnam Building Machinery Development Co.
Vietnam needs viable legislative regulations that allow it to remain competitive with
other countries.For example, as the mechanical engineering and building machinery
industries in Vietnam remain underdeveloped, it dependent on imported machineries
with 90% of equipment imported. If this Circular becomes effective, the local
mechanical engineering and building machinery industries will find it even harder to
compete with other countries, since there is no restriction on the quality or length of
service for used equipment in other countries.Used equipment is also vital for small and
medium-sized enterprises, especially in the farming sector.If this restrictive Circular is
released, the local agribusiness may witherThe Circular needs to provide specific
rulings fordifferent lines of business, as any across-the-board attempt to implement the
Circular will be challenging.
Mr. Pham Hoai Long, Vice Director, Hanoi branch, Vinacontrol
- It is not advisable to segregate SOEs from other firms in the eligibility criteria, given
thegoal of an equal business climate
Page 5 of 10
More research into the 80% remaining quality or 10-year time in use is needed to come
up with more specific criteria.The current Circular 20 is more related to the Trade Law
than Product Quality Law. In the future, Circular 20 may expand to the realm of the
Product Quality Law, where Category 2 products banned for importation fall under the
jurisdiction of relevant ministries and line agencies.
The MOST might need to look further into more specific eligibility criteria in terms of the
active period and remaining quality of equipment, drawing from practices adopted in
Indonesia, China and India, where such criteria are being used as technical barriers.
There is concern about the competencies of inspection agencies whether to adopt the
80% remaining quality or under 10-year time in use rules.A uniform set of assessment
criteria must bein place and recognized by regulatory agencies to formalize results.
Measuring an 80% quality ratio is difficult, but a professional panel may be used and the
results will be relative rather than absolute.It should be understood, however, whether
the 80% means performance or fuel/energy consumption, visual operational status,
output and product quality or systemic performance of the production line, itis just a
relative number.
Mr. Dau Anh Tuan, Head of Legal Department, VCCI

- Iscriteria like 80% remaining quality practically feasible asmany companies in the south
have unsuccessfully searched for a qualified inspecting agency for imported production
lines and equipment?
Mr. Vo Van Trung, Vietnam Building Machinery Association
- If the MOST is introducing this Circular to ensure safety and quality, it is unnecessary
given the current context in Vietnam.If the Circular proceeds, there are several
concerns with the thirddraft, such as:
-
Regarding scope,Chapter 84 encompasses codes 84.02- 84.07, while HS codes 84.29 and
84.30 should be removed as they are among Category 2 products under the MOTs
jurisdiction.Paragraph (i).2 requests the MOT disclose its Category 2 product list in line
with Circular 63/2011/TT-BGTVT dated December 22, 2011 promulgating the list of
products and goods likely to be unsafe subject to the state management by the MOT,
while this list may expand to an entire law behind this Circular.Other ministries should
have their own lists of products under specific jurisdiction and along with suchlists,
there should be laws in response to this Circular to support businesses.
Regarding eligibility criteria, years in use should be dropped and the quality
requirement should be limited, as the on-going inspection of all Category 2 products by
the Register Administration shows that determining the 80% quality status is difficult.
Even existing inspecting agencies, including the MOST, do not have the resources to
undertake such an assessment. In the 1990s, the MOST tried to use this 80% quality
standard but later moved away from it.Such requirement will be costly and burdensome
forimporters and Customs authorities, while the government will needmore taxes to
finance inspections.
Import procedures, Article 9.2, Chapter 3, distinguishes two types of businesses.While
the need for increased control of SOEs is justified, other importers must present
technical documents. This requirement is unnecessary; asimporters already have to
submit quality certificates for Customs clearance. Thus, only a copy of technical
Page 6 of 10
documents showing the manufacturing year of the imported machines and equipment
should berequired.
-
The quality assurance statement for Customs declaration should be removed,

asimporters already have to present the quality certificate for 80% of remaining quality,
effectively rendering the quality statement redundant.Moreover, if the statement must
be used, the sample should change the recipient from General Department of Vietnam
Customs to the Customs office where the importation takes place.
Roles and functions of regulatory agencies and inspecting agencies: Article 17.2 needs
to insure ministries and line agencies provide specific criteria of time in use and
remaining quality, as well as inspecting schemes to determine whether the 80%
requirement is met. Ministries/line agencies should have criteria in place before the
Circular comes into effect to allow importers to respond.
Mr. Nguyen Cong Tuan, Vietnam Printing Association

- Circular replacing Circular 20 will face multiple challenges. In terms of importing used
printing equipment, a very significant amount has been in use for up to 25 years.If this
Circular is released, a large number of used printing machines in operation will be
affected.
+
+
+
The 80% quality requirement is difficult to measure and in terms of time in use,
there have been no apparent problems, as machines of 50-60 years of age are still
functioning well and the 10-year limit will be burdensome.The time in use
requirement should be practical to have any real value.
Criteria should be specific forindividual sectors.
Some say ministries/line agencies need more practical regulations, but as
thisassociation sees it, this MOST Circular serves as an implementing document to
Decree 187, soother ministries/line agencies should also tighten their rules.
Mr. Young Jun Cho, ViceChairman, Korea Chamber of Commerce in Vietnam

- The 80% quality and 10-year time in use criteria are demanding and unspecific.While
more Korean companies are interested in doing business in Vietnam, many others
willmove elsewhere.The Korean business community already feels it is difficult to
import used equipment from China to Vietnam and this is a major barrier.More
thoroughly research from authorities and agencies is needed.
Representative of Microsoft Vietnam
- Microsofts policy is to move its China and Hungary factories to Vietnam tobecome the
corporations core production hub.However, the introduction of Circular 20 will affect
the technology transfer processsince the production lineshave been in use in other
countries for 15-20 years. Therefore, the 10-year limit of the Circular will raise a barrier
to foreign-owned companies that plan on technology transfer to and investment in
Vietnam. Thiswill adversely affect the overall investment landscape in Vietnam.
Microsofts recommendations include:
+ Regarding Articles 6 and 7, on production lines, equipment and machineries, the
safety, efficiency and environmental protection criteria remain unclear and lack the
grounds for measurement. This should be made clear for corporate stakeholders
and also allow inspecting agencies to have a foundation to have reliable inspection
certificates.
Page 7 of 10
It is hard to tell equipment and production lines apart at the time of

importation,because equipment and tools may be part of manufacturing lines, but
imported from different countries and are only put together in Vietnam to make
complete manufacturing or production lines.How should the 80% quality condition
be measured in this case?
How can tools, instruments and machinery referred to in Article 8 (replacement
parts) be determined to be made in Vietnam?Are made-in-Vietnam replacement
components and parts good enough to be used with imported lines?How do we know
replacement components or parts made in Vietnam meet MOST standards and
criteria and factories standards?
Regarding documentation, Circular 20 does not clearly state whether such transfers
and movements are subject to this Circular. In case of transfer - understood as
closing down a factory elsewhere and taking equipment to Vietnam for use in
production - it is sometimes impossible to get the original technical documents of
equipment from the first production facilities, since the installation was up to 10
years ago.Moreover, how long will it take to get a certificate and if a foreign
inspecting agency is used, what criteria should the agency meet to be qualified
under Vietnamese law?
Articles 14 and 15, related to inspection certificates, should point to the disclosure of
a list of qualified inspecting agencies in Vietnam and overseas, what criteria defines
that an agency is qualified according to Vietnamese norms and how to manage these
agencies, given that the process only gets access to the document and not the actual
inspection work.
Mr. Chu The Hung, Managing Director, APZ

- The 80% quality requirement is unreasonableand no business has the financial
resources to pay a foreign inspecting agency. Second, when the shipment arrives, apart
from the shipping documents, is there a need for other documents demonstrating the
quality of production lines through factsheets, sales contracts. Most sales contracts
describe the items as over 80% quality. Also an importers statement that the years
pertaining to the imported goods are authentic is needed. If a quality inspection
certificate from the exporting country is missing, an inspection must be done in
Vietnam.The current procedure should be reviewed.
Mr. Vu Ngoc Bao, Vice chair and General Secretary, Paper and Pulp Association
- An Indian company moved its factory to central Vietnam last year. A comparison with
wastewater norms for paper production showed that the equipment failed and this
actually resulted in the firm quitting the market.This shows that current laws in Vietnam
are sufficient and can achieve the Circularsgoals.
Mr. Doan Nang, former head of Legal Affairs Department, Ministry of Science and
Technology
- It is unwise to rescind altogether a law-making project that aims to build technical
barriers.Our suggestions are:
+ Goods, machines and equipment in the market vary in nature and specifications.
Thus, it is impractical to provide an all-in-one regulation. Instead there should be
specific categorization and quality requirements should follow groupingswith
specific criteria applied to inspection agencies.
+
Articles 6.1 and 6.2: An eligibility requirement for used machines and equipment to
be imported is that products are not among those specified in Article 5 and meet
Page 8 of 10
current safety, energy efficiency and environment norms.However, specific

requirements as to what safety, energy efficiency and environmental protection
norms entail should be provided.
+
Article 6.3: Imported machines and equipment must conform to industries master
plans.The Prime Minister or ministries/line agencies only approve industries
master plans, instead of specific rulings for types and quantity of equipment
imported.
Article 6.4 - SOEs to meet 10-year time in use and 80% remaining quality criteria:
There is discrimination between SOEs and non-public businesses, whereas all other
normative regulations are trying to promote equality.Equal treatment for both types
of enterprises is needed.The no longer than 10 years requirement should be
reconsidered, as sometimes a machine that is over 20 years old can still meet
current safety, efficiency and environment norms. .The quality requirement of more
than 80% is impractical, so segregation for different types of products is
needed.Ministries, line agencies and professional regulatory agencies will also have
specific rulings for the products under their jurisdictions.
Moreover, burdensome and time-consuming administrative procedures should be

reduced.Feedback on Circular 20 shouldbe collected, then good practices from other
countries, including China and Thailand, be studied to create an environment that
promotes strong international integration among local firms and sets in place
reasonable technical barriers.
III. FEEDBACK FROM THE GOVERNMENT

Ms. Tran Tuyet Nhung, Vice Director, Technology Assessment-Appraisal-Inspection,
- Criteria should be divided into groups (categorization of products by type), which may be
the best and optimal option, but application will not be simple.Electrics-electronics,
information technology, health care and foodstuff industries may adopt a length of
service requirement of no longer than five yearsand others like machine tools may use
10-12 years.As a public governance regulation, the Circular should harmonize interests
and come up with the most viable choices. Apart from general rules, specific
requirements may apply, and relevant ministries and line agencies can also use own
specific regulations as required in their lines of work.
-
For businesses other than SOEs, Customs procedures offer two alternatives - using
time in use or remaining quality criteria.If time in use is chosen, import documents
should consist of all documents required for clearance and the time in use must be less
than 10 years.If the time requirement is not met, the quality standard can be used.
The drafting team wants to modify the draft based on the most supported versions, but
unfortunately there is no version with full agreement.The drafting team anticipates that
there will be three to five options, and will try to selectthe one most appropriate one.
We received feedback from the Publishing Administration, but considering the unique
needs of the printing industry, we will continue collecting comments from this field
make adjustments accordingly.If stakeholders encounter problems, proposals can be
filed with relevant ministries and the MOST will revise regulations accordingly.Most
other ministries and line agencies have expressed agreement with the drafters.
Page 9 of 10
APPENDIX 1: List of Key Participants

No
Name
Ms.
Tran Tuyet Nhung
Mr.
Dau Anh Tuan
Title
Vice Director of Technology
Assessment-AppraisalInspection
Director of Legal Department
Company
Mr.
Fred Burke
Head/Managing Director
Mr.
Hoang Duc Minh
Mr.
Kim Kyoung Don
Mr.
Nguyn Thng Hi
Lawyer
Manager of Investment
Department
Public Affairs
Mr.
Hiroshi Chisima
Director
JETRO
Japan Business Association
in Vietnam/
The Thang Long Industrial
Park 2 Corporation
Ministry of Science and

Technology
VCCI
VBF Investment and Trade
Working Group/
Baker&McKenzie Vietnam
Duane Morris Vietnam
KOTRA Hanoi
Intel Vietnam
Mr.
Kenta Kawanabe
Leader of the Working Group

on used machines regulation/
Director
Mr.
Koichi Yamaguchi
Chief Representative
JX METALS TRADING
10
Mr.
Kengo Ando
Secretary General
Japan Business Association

in Vietnam
11
Mr.
Masaaki Toma
Second Secretary
Embassy of Japan
12
Ms.
Nguyen Vu Quynh Lam
Senior Associate
VILAF
13
Mr.
Nguyen Mai
Chairman
Foreign-owned Companies
Association
14
Mr.
Vu Ngoc Bao
Vice Chair and General

Secretary
Paper and Pulp Association
15
Mr.
Nguyen Truong Vinh
Deputy Chief, Air Pollution

Control Division, Pollution
Control Administration
Ministry of Natural
Resources and Environment
16
Mr.
Le Anh Ba
Vice chair
Vietnam Building Material

Association
17
Mr.
Nguyen Duc Thinh
Director, Mechanics
Development Consulting
Center
Mechanical Engineering
Companies Association
18
Mr.
Phan Van Hai
Managing Director
19
Mr.
Pham Hoai Long
Vice Director, Hanoi branch
20
Mr.
Vo Van Trung
Representative
21
Mr.
Nguyen Cong Tuan
Representative
22
Mr.
YoungJun Cho
Vice-Chairman
the Korean Chamber of

Commerce in Vietnam
23
Mr.
Chu The Hung
Managing Director
APZ
24
Mr.
Doan Nang
former head of Legal Affairs

Department
Ministry of Science and

Technology
25
Ms.
Ha Phung
Coordinator
VBF Secretariat
Page 10 of 10
Vietnam Building Machinery

Development Co.
VINACONTROL
Vietnam Building Machinery
Association
Vietnam Printing Association
Section III
BANKING AND
CAPITAL MARKETS
Banking
Banking Position Paper
BANKING POSITION PAPER
Prepared by:
Banking Working Group
SECTION A KEY AND EMERGING ISSUES

The Banking working group (BWG) hereby presents to the State Bank (SBV) the following
key issues.
1. Circular 301
On March 12, 2015, SBV has sent an official Letter No. 1464/NHNN-TTGSNH regarding
guiding implementation of Circular 30 (OL 1464) in response to BWG Letter No. VBFBWG-2014004 dated January 05, 2015. But Official letter 1464 did not provide a specific
guide for the Banking working group to actually start taking entrustment for lending
from corporate clients.
On May 4, 2015, the Banking working group had an official letter sent to SBV, Ministry of
Planning and Investment, Ministry of Finance and Ministry of Justice asking for your
joint guidance (we attached the official letter with this document for your reference). In
the letter, the Banking working group requested that SBV work with relevant agencies
to provide specific guides on how to perform entrusted lending transactions between
corporate clients and credit institutions/foreign bank branches as provided in Circular
30.
2. Circular 36/2014/TT-NHNN on safe operation limits and ratios of credit institutions
and branches of foreignowned banks (Circular 36)
The Banking Working Group appreciates the Official Letter 3110/NHNN-TTGSNH dated
May 6, 2015 providing responses to address queries and questions of credit institutions
and foreign bank branches regarding the implementation of Circular 36. Our bank
members are studying the responses given in the official letter to implement Circular 36
in line with other banks in the market. If there are still any encountered issues, we very
much hope that the SBV could facilitate further technical discussions with the working
group in the coming time.
3. Specific issues pertaining to foreign exchange governance
We valued the opportunity to meet the Foreign Exchange Administration on Feb. 5, 2015,
where numerous foreign exchange concerns were solved. We hope that more of such
efficient meetings at the working level between SBVs departments and the Banking
working group will continue in the future.
Here are some emerging concerns that we are facing and also some other issues that
await clarification. The Banking working group suggests that SBV walks us through this
to make sure we remain in compliance with the law.
Transfer of equity of non-resident foreign investors in a foreign invested enterprise

or foreign investment project to another non-resident foreign investor
Article 1.4, Ordinance 06/2013/PL-UBTVQH13, dated Mar. 18, 2013, revising the Foreign
exchange Ordinance, specifies; Enterprises with foreign direct investment and foreign
investors who are parties to business cooperation contracts shall set up a direct
Circular 30/2014/TT-NHNN dated November 06, 2014, providing on entrustment and fiduciary service delivery
by credit institutions and foreign bank branches
Page 1 of 11
investment capital account at an eligible credit institution. Equity financing and

transfers of the principal investment capital, earnings and other legal revenues shall be
made through this account Other legal transfer of funds related to investment
activities shall be subject to relevant laws and guidelines of the State Bank of Vietnam.
To guide the implementation of the above regulation, SBV released Circular 192.
According to the report: Transfer of equity in a foreign invested enterprise and foreign
investment projects of foreign investors shall comply with the provisions of the
Investment Law, Enterprise Law, Personal income-tax Law, Corporate income-tax Law,
while implementing the documents of these laws, existing regulations for foreign
exchange control and other relevant laws and regulations (Article 4.4). Transfer of
payments for the value of the transferred equity and investment projects shall be
subject to existing rules for foreign exchange control and other relevant laws and
regulations (Article 4.5).
Additionally, according to Article 7 on using foreign currency direct investment capital
accounts; collection of, and payments for the value of transferred investment capital
and investment projects may be executed through a foreign currency direct investment
capital account of the company with direct foreign investment or foreign investor being a
party to a business cooperation contract.
Our understanding is that according to the above rule, in case (1) a non-resident foreign
investor transfers his/her equity in a foreign invested enterprise or foreign investment
project to another non-resident foreign investor; (2) a resident Vietnamese investor
having foreign investment and a foreign investment project transferring to a nonresident foreign investor. The value of transferred equity may be determined and paid
in a foreign currency and must be made through a foreign currency direct investment
capital account of the company with direct investment or foreign investor in a business
cooperation contract maintained at an eligible bank. We need SBVs clarification on this.
Verification of supporting documents: Between Decree 703 (Article 16) and Circular 164
(Article 9), there is one inconsistent part on the obligation of banks related to verification
of supporting documents. We suggest that banks should only have the verifying
obligation to meet their customers practical needs (to avoid speculating acts) and make
sure the banks activities comply with the law. It is not advisable to rule that banks
should assume the obligation to make sure that their customers business activities
comply with the law, because that should be the obligation of the customers and other
regulatory agencies.
Circular 07/2012/TT-NHNN on the foreign exchange position of CIs and foreign bank
branches.
While banks may report foreign exchange positions that arise from monetary derivative
transactions (e.g. cross currency swaps (CCS) a useful instrument for customers to
hedge against interest rate and foreign exchange rate risks under Circular 01/2015/TT-
Circular 19/2014/TT-NHNN provides guidance on foreign exchange control for foreign direct investment in
Vietnam.
3
Decree 70/2014/N-CP, July 17, 2014, providing details on several provisions of the amendments to the
Foreign exchange Ordinance.
4
Circular 16/2014/TT-NHNN, Aug. 1, 2014, guiding use of foreign exchange accounts, VND accounts by
resident and non-resident persons at eligible banks.
Page 2 of 11
NHNN, Jan. 6, 2015), these positions are not included in the gross foreign exchange
position used to rate compliance with the foreign exchange position limit at day end.
Under-reporting of the gross foreign exchange position may lead to high risks for banks.
An example is when the positions generated from CCS deals are squared through spot
foreign exchange deals. Since the gross foreign exchange position only includes
positions generated from spot foreign exchange deals, and not those generated from
CCS deals, the total foreign exchange position reported under the current scheme will
be much greater than the real balance, and may even result in banks being in breach of
the foreign exchange position limit while in fact their real foreign exchange position is
much lower.
Calculation of foreign exchange positions generated from monetary derivatives will also
follow international practices because it reflects accurately and truthfully the actual
foreign exchange position of the banks. Moreover, reporting accurately and truthfully
the foreign exchange position by banks will also help the State Bank to have accurate
and reliable data for its decision making and introduce accurate and reasonable policies
relating to foreign exchange control.
We hope that SBV considers allowing foreign bank branches and wholly foreign-owned
banks to report their foreign exchange positions generated from monetary derivatives
by including them to the end-of-day total foreign exchange position, which will be used
to rate their foreign exchange position limit specified in Circular 07. Reporting this way
is also consistent with recent guidance in Official letter 7221/NHNN-TCKT, dated Oct. 1,
2014, which allows wholly foreign-owned banks to adopt international accounting
standards for foreign exchange transactions and derivative contracts related to financial
instruments until the Ministry of Finance has in place official financial standards.
-
Compliance with regulation on deposit

Art. 13.2 of Decree 70 (2014) states: only "resident individuals; being Vietnamese
citizens are allowed to place saving deposits in foreign currency at authorized credit
institution, and to withdraw the principal and interest amounts in the same currency".
As per Art. 4.13 of the LCI 2010, taking deposit by a credit institution does stand for the
receipt of funds deposited by customers; being organizations or individuals in form of
demand deposit, time deposit or saving deposit etc.
As such, and further to much clarification with the SBV, we clearly noted that:
+
A customer being an organization (domestic or overseas) or foreign individual

person (resident or non-resident in Vietnam) ("Customer") is not allowed to place a
saving deposit in foreign currency. In fact, an organization is not subject of saving
deposits despite clear guidance or regulation. By the way, there is no restriction
applicable to any time deposit in both foreign currency and VND placed by the said
Customer.
Circular 06/2014/TT-NHNN, Circular 07/2014/TT-NHNN and Decisions 2172 (2014),

and 2173 (2014) of the SBV providing guidance on time deposit of customers
including both individual and organizations do not distinguish the resident and nonresident. Needless to say, the interest rate cap for deposit in VND and foreign
currency only apply to time deposits, and no limit applied to savings deposits.
Page 3 of 11
Therefore, almost all CIs/FBBs to continue receiving time deposit in VND and foreign
currency from individual and organization (customer) being resident and nonresident in-line with the above regulation. Please correct us in writing if our
understanding and practice elaborate herein above is not accurate.
SBV has recently issued the draft regulation on deposits and requested credit
institutions and foreign bank branches to issue comments and recommendations. In
response to SBVs request, BWG has submitted a consolidated comment paper on the
draft regulation. We very much hope that SBV will consider our feedback and make
necessary changes in the regulation once it is issued.
Circular 16/2014/ TT-NHNN guiding uses of foreign currency and Vietnamese dong
accounts by resident and non-resident persons with eligible banks (Circular 16)
Article 3, Circular 16, provides on use of foreign exchange accounts by resident
institutional persons in fund transfers or cash withdrawals in foreign currencies to pay
salary, bonuses, and allowances for non-resident and resident foreign persons. And
cash withdrawals in foreign currencies to pay individuals working for the organization
when they are sent overseas for business purposes.
In practice, resident corporate persons often send their staff on business trips to work
on the companys projects or on study tours overseas. As such business trips or study
visits are often long-term (several months), taking cash with them (maximum USD5,000)
is unreasonable, and both the company and employee may wish to have the employees
salary transferred to the employees account opened overseas to use for personal
finance needs. Such salary transfers overseas will end once the employee comes back
home.
We suggest that SBV includes and provides guidance on the transfer of funds in foreign
currencies overseas for personal use by individuals working for their organization, when
they are send abroad on long-term business or study visits.
We need SBV to clarify the criteria determining the form of foreign direct investment:
(i) the foreign investors making capital contributions and getting involved in running the
business, or (ii) the company awarded an (foreign direct) investment certificate, or (iii)
both. In practice, many Vietnamese companies may also receive an Investment
certificate while a company may have foreign investors involved in governance but does
not have an Investment certificate. Also, please make clear how this should be done in
case of foreign banks in Vietnam?
4. BWGs recommendations on disclosing inspectors verdicts

Under the governments Decree 26/N-CP, dated Apr. 7, 2014 on the organization and
operation of banking inspectors and supervisors, and Circular 03/TT-NHNN, Mar. 20,
2015, guiding the implementation of specific provision of Decree 26; inspectors verdicts
may be disclosed, excluding its sensitive parts. Disclosure of inspectors verdicts,
however, may result in adverse consequences:
-
Creating a negative, knock-on effect to other credit institutions;

Disclosing only parts of the inspectors verdicts will lead to the fact that the public,
customers or other credit institutions and foreign bank branches cannot get the
whole picture of the inspection, which may hurt the reputation of the inspected entity.
Page 4 of 11
Customers dealing with an audited entity may not have a thorough understanding of
the inspectors verdicts, so they may have a negative view of the credit institution or
foreign bank branch.
For these reasons, we suggest that the State Bank considers a ruling that the entire
inspectors verdict is government classified information and no part of it must/to be
disclosed.
5. Circular 23/2014/TT-NHNN, guiding setting up and using transactional accounts at a
payment service provider
Translation to Vietnamese with notarization or consular certification of incorporation

decision or personal identity paper when setting up an account (Article 12.3, Circular
235)
We understand that this is a matter of national sovereignty when these documentations
are submitted to a government agency, but at the same time also realize that this ruling
will lead to a major procedural burden for commercial banks and foreign investors,
especially at a time when Vietnam is looking for serious international integration,
whereas commercial banks can read and understand well/completely comprehend,
documents in foreign languages. We recommend removal of this rule.
Item 2 Article 12 and Item 2 Article 13, Circular 23:

In the technical meeting with regard to the Foreign exchange management and payment
accounts between SBV and BWG VN Enterprise Forum (VEF), dated 5/2/2015; SBV did
make clear that (1) payment account is a general term, being deposit accounts without
tenor serving for payment purposes, hence indirect investment accounts should be a
particular type; (2) Circular 23 guides organizations operating in Vietnam territory ,
hence foreign investors opening indirect investment accounts wont be subjects
governed by Circular 23; (3) indirect investment accounts should not be listed in
payment accounts.
In addition, regulations guiding Laws on Security, such as Circular 213/2012/TT-BTC
dated 6/12/2012 of Ministry of Finance (MOF) guiding activities of foreign investors in
Vietnams securities market (Circular 213) and Circular 05/2014/TT-BTC dated
15/1/2015 of MOF guiding the securities depository, registration, clearing and
settlement (Circular 05 BTC), allow foreign investors, global custodians to use SWIFT
message to send instructions/orders to their local custodian in Vietnam. And are not
required to send manual instruction or provide IDs or signature specimens of
authorized signers, of chief accountant or accountant director.
Also, we would like to emphasize that, in the past, the State Securities Commission
(SSC) and Vietnam Securities Depository (VSD) required foreign investors to submit
an (1) Appointment Letter of representation for foreign investors and (2) Information slip
of appointed representative of foreign investors in the Securities Trading Code
Application package. However, later on, based on the feedback from foreign investors,
custodian banks and other market participants, MOF and SSC did consider and remove
such requests, reflected in the Circular 121/2008/QD-BTC dated 24/12/2008 of MOF.
This is absolutely in line with the Governments attempt to reform administrative
procedures to encourage foreign institutional investors in Vietnams securities market.
Circular 23/2014/TT-NHNN, guiding opening and use of transactional accounts at payment service providing
institutions.
Page 5 of 11
6. Recommendation for addition of banking products in SBVs upcoming normative

regulation amendment and enactment
New draft Circulars

Lending rules: Lending for restructuring loans with other credit institutions
In international banking practice, credit institutions issuing loans to restructure their
debts with other credit institutions do not alter the nature of the loan or mask bad debts,
and is a normal and common practice in the lending operation of credit institutions.
Lending rule 1627 and the draft Circular replacing Decision 1627 are not specific enough
on debt restructuring lending. But in the lending practices of CIs and FBBs, there have
been a number of procedures to restructure loans without altering the nature of the
loans on the side of the borrower, and not to mask bad debts, such as; mid-term and
long-term lending to restructuring short-term loans, lending in foreign currencies to
restructure loans in VND, lending in VND to restructure foreign exchange loans,
granting new loans to repay existing loans with other CIs. Also, in the recent harsh
times of business practices, the government and State Bank even advised CIs to do this,
considering it as a way to bail businesses and the market out of trouble.
Allowing CIs and FBBs to use lending for restructuring of debts is a necessary
regulation to give the borrower an opportunity to maintain and stabilize their business
operation, and generate income to repay their debts to the banks; which is consistent
with current international practices in bank lending.
As such, we suggest that the State Bank considers additional rulings on debt
restructuring lending in the draft Circular guiding credit institutions lending activities
which is being discussed as a replacement of the lending rules annexed to Decision
1267 to ease bottlenecks for customers. Including mid-term and long-term lending for
restructuring of short-term loans, lending in foreign currencies to restructure loans in
VND, lending in VND to restructure loans in foreign exchange, granting new loans to
repay existing debts at other CIs, providing that CIs and FBBs must make sure that the
(tenor?) of the loans match the customers business cycle and debt servicing ability, and
not for purposes of masking bad debt by CIs and FBBs, and hiding facts about the
customers unhealthy business and financial conditions, or distorting the customers
credit quality. We also hope that SBV considers and accepts allowing loan
renewal/rotation (under 01 year) and particularly, not equaling revolving credit as debt
rescheduling or a malpractice under rulings on reserve creation.
Agent banking
Article 106, CI Law, specifies that commercial banks may entrust, take entrustment and
act as agents in areas related to banking activities, insurance brokerage and wealth
management in line with the State Banks rulings. But SBV has not released an
implementing Circular addressing agent for banking activities. The Banking working
group is ready to share information on international practices and work with SBV in
pushing out early these rules to facilitate and meet real users needs for agent banking
offerings and developments of this field of expertise.
Cash Management product

Cash management activity offered by banks will provide clients with effective solutions
in the management of clients cash flow and liquidity. In Vietnam, the Law on Credit
Institutions classifies cash management as one of the banking activities which
commercial banks and foreign bank branches in Vietnam can provide to clients.
Page 6 of 11
However, in an absence of a specific legal framework and/or guidance from SBV on cash
management, banks could not be able to provide cash management service to clients.
This would cause clients; particularly multi-national companies with many subsidiaries
and affiliates to lack access to effective liquidity management tools such as cash
management offered by local banks and foreign banks in Vietnam. This could
potentially have an adverse impact on the competitiveness of Vietnams banking system
as well as the attraction of foreign investment into Vietnam. We recommend that SBV be
able to lay out the legal groundwork for cash management so that local banks and
foreign bank branches in Vietnam could be able to offer this service to clients.
Non- recourse discounting and factoring

Laws on Credit Institutions and Circular 04/2013/TT-NHNN dated 1/3/2013 only
recognize discounting and factoring activities on a with recourse basis to the seller. This
is not in line with international practices, for products/ solutions such as factoring, bill
discounting and any other product where the bank has enforceable recourse to the
buyer or the buyers bank.
The recourse imposed on the exporters restricts them from accessing good quality
funding to finance their working capital and reduce the payment risks from the buyer.
Aligning Vietnam with the international trade finance standards would help protect
exporters in Vietnam against buyers default and delays of payment, ensuring a steady
source of funding. As these products offer risk protections against buyers and buyers
country risks, Vietnamese exporters would be more comfortable developing commercial
relationships with new markets or counterparties to grow their exports. We recommend
that SBV issue the regulations allowing discounting and factoring activities on a with
recourse basis to both the seller and the buyer.
Notwithstanding the above, we would like the SBV to consider issuing a new or
supplementing regulation on business of discounting bills, notes and other valuable
papers without recourse and/or bill of exchange. By nature, it is a transaction under
which the bank extends credit to the buyer for yearly payments to the seller for
purchase of goods/services. Provided that the seller transfers its whole rights relating
to the sale contract/invoice executed with the buyer, and the buyer accepts to pay the
whole contract price/invoice amount to the bank by the original due date. The
discounting charge shall be the difference between the invoice amount and the one duly
paid early to the seller, converted into a percentage. The terms and conditions of this
type of credit extension are quite similar to lending to the borrower and disbursing
funds to the supplier of the borrower. The current guideline given by the SBV under OL
3212 of 08/05/2013 and OL 7294 of 05/10/2013 said that the above transaction scheme
(i.e. discounting bills, notes and other valuable papers without recourse and/or bill of
exchange) is not for credit businesses but would be regarded as international payment
services. Kindly be advised that under the (international) payment service, (i) the bank
only collect remittance fees (not the discounting charge) and (ii) the bank shall take the
fund of the buyer and transfer it to the seller, but not by using its own fund to pay to the
seller first, then collecting it from the buyer afterward.
Page 7 of 11
Decree 966
Decree 96 is clearly intended to strongly enhance the effectiveness of bank enforcement
and oversight in Vietnam. In this regard, we applaud the Government for such a
comprehensive and detailed approach.
The Decree 96 does not provide for the mechanism of applying the (lightened or
bleached?) sanctions based on circumstances stated in Articles 3 and 8 of the Ordinance
on Administrative Sanctions (2002) duly amended (2008). We understood these
circumstances shall be applied in any cases. However, Decree 96 provides for mainly
financial oriented sanctions, because when a violation may have been detected, stopped,
prevented in the future and its consequent has been recovered, the violating entity still
has to pay penalty with the lowest fine. This manner seems to not encourage the mind of
self-improvement of the internal control system of CI/FBB. If the revision of Decree 96
is time consuming, we would recommend the SBV to consider a Circular
implementation of such Decree with circumstances stated in Articles 3 and 8 of the
Ordinance be taken into account. For example, the sanction will be decided based on
the nature of violation and its consequence/impact, the actual status of remedy,
preventive measures taken etc. when it is known by the SBV. As such the reminder in
writing can be applied or all sanctions may be exempted.
Offshore Counter Guarantees

In the calculation of single credit limit in banking activities, local regulations on banking
guarantees and credit activities only exclude guarantee balance in case the guarantee
issuance is on the basis of the counter guarantee issued by local credit institutions or
foreign bank branches in Vietnam. In case the guarantee is issued on the basis of the
counter guarantee that is issued by a foreign bank overseas, for example, the foreign
branches of the foreign bank branches in Vietnam or the mother bank of the guarantee
issuing bank, such a guarantee is still subject to single credit limit calculations. In fact,
in both cases, the credit risk for the guarantee issuing bank associated with this
guarantee is almost the same since it already rests with the counter guarantee issuing
bank. This is also, not in line with international practices. The non-recognition of the
counter guarantee issued by a foreign bank as an exclusion in the single credit limit
calculation would potentially restrict the capacity of foreign bank branches in Vietnam to
issue large-amount guarantees to support large FDI projects in Vietnam. If however,
foreign bank branches in Vietnam could only rely on local banks as a counter guarantee
issuer with more limited capacity in terms of capital and credit worthiness in
comparison with foreign banks.
We recommend that SBV would allow the exclusion of the guarantees which are issued
on the basis of a counter guarantee issued by foreign banks overseas out of the single
credit limit calculation.
Close Out Netting and Set-Off

Currently, there is no regulation that addresses netting of market transactions. While
trading partners within Vietnam may agree to offset their positions or obligations, it is
unclear whether these agreements are permissible or enforceable under current local
laws. Besides reducing transaction costs, netting is a critical tool for efficient markets
as it reduces credit and liquidity risks, as well as ultimately, systemic risk. Additionally,
given that netting results in more favorable capital treatment for credit risks; netting
arrangements are crucial for Vietnamese-domiciled banks as it may help to improve
Decree 96/2014/ND-CP on Civil penalization in relation to monetary and banking practices
Page 8 of 11
their credit ratings when they participate in the international markets in order to hedge
their positions. We recommend SBV to propose to the Government and work with
relevant authorities; industry and external experts to develop regulation on close out
netting and set-off in line with international best practice.
SECTION B REVIEW OF PENDING AND LONG OUTSTANDING ISSUES
The working group respectfully recommends that SBV reviews and provides its guidance on
the following matters raised previously.
1. Licensing
New licenses for existing activities under old regulations/licenses
Recently SBV issued several regulations which require credit institutions (CIs)/foreign
bank branches (FBBs) to have such businesses stated in their specific license for doing
so while the relevant old regulations did not require a license (Circular 01/2015 on
Interest Rate Derivatives transactions) or the license shall be invalid upon the
effectiveness of the new regulation (Circular 21/2014 on FX licenses which covers
factoring business), ...).(??)
The Circular 01 became effective since March 2nd, 2015. The CIs and FBBs submitted
applications to SBV for a while but the licensing departments were overloaded and could
not grant the license on time. Circular 21 provides the deadline for obtaining FX license
from SBV is 14 Oct 2015. We assume the situation shall be similar and this will take the
CIs/FBBs into an uncertain position and to be challenged by SBVs inspectors.
We would ask for SBVs comprehensive consent permitting CIs/FBBs to continue with
those activities under the old regulations waiting for new licenses from SBV.
FX license
We recommend that banks should be allowed to carry out basic FX activities in both
domestic and international markets so as to meet clients needs, properly hedge
associated risks, and ensure liquidity. Importantly, there should be no limitations on
basic FX activities in the international market performed by foreign bank branches in
term of client categories. Basic FX activities in the international market should be
licensed on an umbrella basis, to reduce the unnecessary and heavy administrative
workload for both banks and the SBV.
Update of general banking license

We understand that SBV has put a lot of efforts to work out an approach to sort out the
existing licensing risks faced by all banks in the market. This approach is applauded and
appreciated by all banks across BWG. However, the latest updates from SBV, shows that
all license updates are put on hold until the new regulation on license re-issuance is
issued. This exposes many legal risks to banks (or interruption of financial services to
clients) and we are looking forward to the guidelines to be issued soon by SBV on this
matter.
During the interval period, we highly appreciate if the SBV can confirm in writing that
CIs/FBBs; being applicants who were conducting the businesses (i) mentioned in all
current licenses and (ii) as stated in specific regulations at the moment of submitting
the application for a comprehensive license, can continue such business pursuant to
technical regulations applicable to each type of product.
Regarding Circular 01 , the BWG has made a written request to SBV asking for a grace
period in applying for an interest rate derivative license. Meanwhile, several banks have
submitted an application but are still awaiting approval. The BWG is in a view that while
waiting for the approval, banks may still engage in interest rate derivative activities.
Page 9 of 11
Regarding Circular 21, most foreign banks have not applied for renewal of a banking
eligible certificate as most of them are still preparing their dossier.
Pending of approval for organizational structure of FBBs
Article 89.1 of the Law on Credit Institutions requests FBBs to obtain SBVs written
approval of organizational structures before the implementation. However, all the
applications to the Licensing Department - SBV for organizational structure of FBBs
was kept pending and no approval has been granted so far, with the reason being that
there is no guideline for such an approval process. This takes the FBBs into a risky
situation since we could not wait and had to implement the organizational structure
without approval from SBV.
We would suggest SBV to push this process and, during the interim period, to allow
FBBs to implement their organizational structure without SBVs approval in order to
meet their business requirements.
Update of commodity product license
Currently SBV only allows credit institutions and foreign bank branches to offer
commodity derivatives on a pilot basis which is normally for one (01) year and subject to
SBV approval for any extension. Uncertainty in licensing could result in disruption to
banking services to clients, and also to banks risking legal breaches with existing
transactions committed to them. We request that the SBV re-evaluate the pilot
license framework for commodity derivatives as a more permanent approach. The BWG
will continue to work with SBV to develop the regulation on commodity derivatives to
facilitate this process.
2. Reimbursement of interest subsidy
Over the last years, banks have been waiting for the reimbursement of 20% of due
interest subsidies under the interest rate support initiative that ended in 2009. Following
our previous meetings with SBV in late 2012, we note that the figures have been checked
and finalized for a number of BWG members. We also understand that this is a
complicated matter that may have bearings on the public funding balance sheet and
nations financial health. However since the unpaid accumulated reimbursements are
presenting themselves as a problem with the banks in relation to their internal
accounting systems and audited financial statements, the working group would
appreciate if SBV wraps this up and starts releasing this interest rate refund as soon as
possible.
3. Anti Money Laundering (AML)
The working group is delighted that Circular 31/2014/TT-NHNN, revising Circular
35/2014/TT-NHNN on anti-money laundering was released on Nov. 11, 2014, in which
many BWGs recommendations have been accepted. There are, however, several points
in the new Circular 31 revising Circular 35, and Decree 116 that are in fact very hard or
impossible to implement. So the BWG would hereby update SBV of the following
information:
-
Obtaining information of personal residential address, of the representative person

of the parent company, subsidiary, representative office for foreign customers and
information of beneficiary individuals, entities (ID, passport, tax code, etc.)
It is difficult to obtain such information for foreign/non-resident customers. The
verification of the foreign beneficial owner is impractical to perform in case there is
data privacy law in their country that prohibits the information sharing with the bank
Page 10 of 11
in Vietnam as in many cases, even the branch or affiliate under the same bank in that
country is not permitted to collect the information pursuant due to the countries
regulations.
-
Meeting customers at first establishment of relationship

This is impractical for foreign investors. Moreover, in accordance with Article 14.3.b
of Circular 23/2014/TT-NHNN guiding the opening and usage of payment account at
the institutions providing payment service, the bank is not required to meet in person
when opening the payment account for entity clients. We recommend SBV to
acknowledge that this point is the further guidance for the similar requirement in
AML regulations.
Information sharing in anti-money laundering between the headquarters, branches

and subsidiaries.
The draft Circular revising, Circular 35/2013/TT-NHNN addresses information
sharing in anti-money laundering between the headquarters, branches and
subsidiaries in a same institution, which is a must. And for information treated as
confidential in banking business, reporting entities may only provide it to offshore
financial institutions which they have an agent banking relationship with for the
purposes of anti-money laundering efforts if they are accepted by the SBV Governor.
This rule however is not included in Circular 31 revising Circular 35. We hope SBV
clarifies this.
CONCLUSION
Many of the issues and comments mentioned in this paper come from a clear and urgent
drive by the State Bank of Vietnam to create a better governed more transparent banking
system. We are moving steadily and progressively to this aim and there is increasing
confidence that we are moving in the right direction. As noted in the beginning, we believe
that Vietnam can shortly begin work on other aspects of developing the financial markets,
so that Vietnam has a solid and robust financial sector for future growth.
The BWG remains committed to help in any way possible in furthering Vietnams financial
market development to serve the needs of our customers and the nation.
Page 11 of 11
Capital Markets
Recommendations of Capital Markets Working Group
RECOMMENDATIONS TO PROMOTE AND DEVELOP THE STOCK MARKET IN VIETNAM
Presented by
Mr. Kien Nguyen
Representative
Capital Markets Working Group
In our view, the stock market in Vietnam has been going backwards, especially when
compared with other ASEAN countries. Although the State Securities Commission (SSC)
has been listening to investors concerns and trying its best to support its investors, the
factors attributable to the stock market going down appear to be beyond the SSCs control
and require immediate and decisive response from the Government.
Vietnam, with a population of 91 million people, has the stock market capitalization
of approximately $46 billion, being only 25% to its GDP;
The Philippines, with a population of 99 million people, has the stock market
capitalization of approximately $184 billion (4 times bigger than Vietnam), being 65%
to its GDP;
Thailand, with a population of 69 million people, has the stock market capitalization
of approximately $418 billion (9 times bigger than Vietnam), being 112% to its GDP;
Malaysia, with a population of 30 million people, has the stock market capitalization
Singapore, with a population of 5 million people, has the stock market capitalization
and
Indonesia, with a population of 251 million people, has the stock market
capitalization of approximately $397 billion (8 times bigger than Vietnam), being 45%
to its GDP;
As a result, in our view, the current stock market of Vietnam will be unable to support the
privatization process. To our knowledge, the estimated total value of the SOEs to be
privatized in the next 3 years is US$25 billion. If the Government offers to sell only 15% of
the shares, the market will need US$3.75 billion to buy those shares. Thus, the capital
mobilized locally will certainly not be enough to buy the shares, and a new flow of foreign
capital will be needed to purchase those shares.
However, for the period between 1 January and 19 May 2015, there was only a new foreign
capital of US$5 million to Hanoi Stock Exchange and US$113.3 million to Ho Chi Minh Stock
Exchange.
To promote and develop the stock market in Vietnam, we have 3 suggestions as follows:
1. PRIVATIZATION AND LISTING OF PRIVATISED SOES
We suggest that the Government take into account the following factors concerning
privatization:
(a) the privatization must go together with the listing of privatized companies; and
Page 1 of 2
Recommendations of Capital Markets Working Group
(b) to create liquidity for the aftermarket, the privatization should be done through a
global syndicate and 25-30% should be sold off.
2. INCREASING FOREIGN OWNERSHIP LIMITS
(a) For 3 years, foreign investors have been waiting for the Government to increase
FOLs in public companies, and we are currently still waiting for the amended Decree
58/2012/ND-CP;
(b) To attract a new flow of foreign capital to the stock market and also to the newly
privatized SOEs, Vietnam should proactively and decisively abolish the restriction of
49% foreign ownership currently applicable to public companies, and:
apply Vietnams WTO commitments to public companies providing services; and
open up the stock market by removing all ownership restrictions applicable to

public companies and other businesses which do not fall into the Vietnams WTO
commitments (except business lines which are subject to special conditions or
related to national security).
3. CREATION OF PENSION FUNDS

We urge the Government to pass the draft Decree on pension funds quickly because:
(a) these funds will provide a significant demand for the financial market and
privatization; and
(b) for the long term, pension funds will also help to reduce the pressure on the current
Social Security Fund, and provide Vietnam with an advanced social security platform,
being a multi-tiered system, which is well recognized to enhance benefits for
employees.
Page 2 of 2
Meeting talking points with the State Securities Commission
TALKING POINTS
MEETING BETWEEN STATE SECURITIES COMMISSION AND
CAPITAL MARKETS WORKING GROUP VIETNAM BUSINESS FORUM
The Capital Markets Working Group Vietnam Business Forum highly appreciates the
efforts of the Ministry of Finance, the State Securities Commission (SSC), the Stock
Exchanges and the Vietnam Securities Depository (VSD) in recent years to improve the legal
framework in order to create more favorable conditions for indirect investment activities of
investors. For your consideration, we would also like to share some of the difficulties that
we are facing, they are as follows:
Part I KEY MATTERS
1. Privatization of SOEs: We understand that following Decision 511 on privatization of SoEs of
the Prime Minister, the Government has been making effort to expedite the privatization process.
We also appreciate the Prime Ministers recent re-enforcement of the transfer of the State
ownership in SoEs to the State Capital Investment Corporation (SCIC) under Circular
118/2014/TT-BTC.
In our opinion, compulsory listing of privatised SoEs is a significant breakthrough and a
wise decision, showing the Prime Ministers determination towards the process of
privatization.
However, again we would like to emphasize that the compliance and enforcement of, as
well as the supervision of compliance and enforcement of, the Decision 51/2014 will play a
crucial role in the success of the privatization of the SOEs.
To our understanding, the estimate total value of the SoEs to be privatised in the next 3
years is US$25 billion. If the Government offers to sell only 15% of the shares, the market
will need US$3.75 billion to buy those shares. Thus, the capital mobilised locally will
certainly not be enough to buy the shares. As a result, the Government should assertively
open up the stock market as suggested in more detail in the items below.
To make the privatization process succeed, and also meet the expectation from both the
Government and investors, we would like to emphasize on the following:
a. the Government should publicly publish a list of SoEs to be privatised. The list should
contain names of SoEs, estimated time for privatization, and estimated price to be
offered to the public;
b. to create liquidity for the aftermarket, the privatisations should be done through a global
syndicate and 25-30% should be sold off;
c. The Government should pro-actively establish rules on good corporate governance
based on the international practice, and apply those rules to the privatised SoEs; and
d. The Government should expedite the creation of domestic pension funds as these funds
will provide a significant demand for the financial market and privatisation.
Decision No. 51/2014/QD-TTg on Guidelines on the capital divestment, sale of shares, trading registration,
and share listing on the stock exchange of state-owned enterprises (SOEs) dated September 15th, 2014 issued
by the Prime Minister (Decision 51/2014).
1
Page 1 of 10
2. Amendments to Decree 58/2012/ND-CP - Foreign ownership limits: We wish to express

our appreciation for the SSC seriously taking into account our comments on the proposed
amendments to Decree 58.
In our view, those amendments need to show the Governments true and strong
determination to open up the stock market to foreign investors. To attract the new flow of
foreign capital to the stock market and also to the newly privatised SoEs, Vietnam should
proactively and decisively abolish the restriction of 49% foreign ownership currently
applicable to listed companies, and:
a. apply Vietnams WTO commitments to listed companies providing services; and
b. open up the stock market or remove all ownership restrictions applicable to listed
companies which do not fall into the Vietnams WTO commitments (except business
lines which are subject to special conditions or related to national security).
We hope that those proposed amendments, when passed, will be a positive and significant
breakthrough of the Vietnamese Government to open up the stock market, which is also a
critical factor supporting the process of SoE privatization and contributing to State coffers
to offset budget deficits.
We hope that the SSC will provide investors with frequent update on the progress of passing
those new amendments.
3. NVDR (Non-Voting Depository Receipt): In our view, even though the Government truly
determined to open up the stock market, there will be companies subject to foreign
ownership restrictions (for instance, companies doing businesses which are subject to
special conditions or related to national security).
Based on our study, issue of non-voting depository receipts (NVDRs) to foreign investors
can be an effective option that may have a relatively broad-based effect on the performance
of the stock market, and at the same time maintain the ownership restrictions. On the one
hand, it helps promote the inflow of foreign investment, improve market liquidity whilst at
the same time reducing the capital costs of companies. On the other hand, it may also bring
a positive impact to the state budget and higher revenue from the payment of fees, taxes on
securities investments, and help to speed up the privatization (equalization) process.
Concerning the risks associated with NVDRs, firstly, the so-called foreign control risk
remains minimal. Thailand and Malaysia can be used as prime examples of this, as they
both allow nearly unlimited foreign investment in NVDR's.
Based on the experience of other countries in the region, we suggest that the Government
consider applying NVDRs in Vietnam as follows:
a. allow non-voting depository receipts (NVDRs) by adopting Thailands model, for a pilot
period of two years;
b. allow NVDRs to be issued in the trial period at a cap of 20% of the total shares; and
c. following the 2-year pilot project, if the NVDR option really does help improve market
performance, without conflicts of interests between local and foreign investors, loosen
or remove the above NVDR ratio.
Page 2 of 10
4. Proposed Amendments to Circular 213/2012/TT-BTC: We wish to thank the SSC for

proposing amendments to Circular 213.
We have already submitted a separate submission on those proposed amendments. For the
purpose of our dialogue with the SSC, we wish to raise our concern about the introduction
of new definition of group of related foreign investors in the current Circular 213 and also
in the proposed amendments. This definition has created unnecessary and troublesome
reporting obligations for foreign investors in the stock market in Vietnam. In addition,
present reporting requirements arising from this definition effectively prevent foreign
investors from engaging more than one fund manager for its investments in Vietnam.
We suggest that the definition of group of related foreign investors be deleted in the
amended Circular 213 and also in draft amendments to Circular 52/2012/TT-BTC on
Information Disclosure.
5. Pension Funds
We appreciate the effort of the Ministry of Finance in preparing the draft Decree on the
pension funds. We very much hope that the draft Decree will be submitted to the
Government in August this year under the current schedule, and be soon passed by the
Government so that the market participants will be able to establish the pension funds at
the earliest.
We particularly appreciate the Governments effort to set up a legal frame work for the
pension funds for following reasons:
a. these funds will provide a significant demand for the financial market and privatization;
b. the capital invested in the pension funds will be used to re-invest in the Government
bonds (our research shows that, according to the international practice, 40 to 60% of
the assets of pension funds are invested in the Government bonds. This practice is also
reflected in the draft Decree on pension funds). The capital invested in the pension
funds will also help reducing the investment in Government bonds by commercial
banks, which is currently at the alarming level (the commercial banks currently hold
83% of the total issued Government bonds as at the end of 2014);
c. the establishment of the pension funds will also help to reduce the pressure on the
current Social Security Fund (SSF). The SSF has been going through many changes
(including amendments on the Law on SSF) to ensure that it will sustainably grow and
not make losses. The pension funds will also provide Vietnam with an advanced social
security platform, being multi-tiered system, which is well recognized to enhance
benefits for employees; and
d. the pension funds will enhance benefits for their members as there is no contribution
limit in those pension funds (as opposed to the limited contributions to the current
SSF).
6. Accelerate the process of listing commercial banks which are public companies
We recommend the SSC to closely work with the SBV to enforce the process of listing
commercial banks which are public companies, and regularly provide official updates on
the progress to foreign investors.
7. Permit FX forwards for investors
We recommend the SSC to propose to the SBV to permit FX forwards for local institutional
investors, fund managers and foreign investors to hedge exposure, so that we can best
support and encourage investors investment activities in Vietnam market.
Page 3 of 10
8. Create a Securities Borrowing Lending (SBL) market aligned with international

practices
In addition to the SBL activities to support conversion transactions of ETFs and fails
management, we recommend the SSC to consider creating a SBL market with commercial
loans aligned with international practices so that we can attract more qualified investors to
Vietnam market.
9. Mitigating counterparty risks relating to Settlement bank
We appreciate the effort of the Ministry of Finance, SSC, VSD and the State Bank of Vietnam
(SBV) to lower counterparty risk relating to Settlement bank, i.e. the plan and
implementation of transferring cash payment function for government bond trades from
commercial bank (via Bank for Investment and Development of Vietnam - BIDV) to the SBV
as per the Resolution of the government. Foreign investors have been showing great
interest with this plan and regularly ask for updates on the implementation progress.
However, though the plan has been announced for a long time, we have not received any
official updates on the progress in the last year.
Currently, all payment activities of securities transactions are still being made via BIDV- the
designated settlement bank. We recommend the SSC to work with the SBV to speed up the
process of transferring cash payment function for government bonds from BIDV to the SBV,
and regularly update the market with the progress.
Also, foreign investors would expect the shift of cash settlement for equity trades from BIDV
to the SBV after the shift for bond trades and look forward to an update on the plan.
PART II SPECIFIC MATTERS
A PROCEDURES FOR MARKET ENTRANCE
1. Procedure of certification, notarization
1.1. Practice/Reason for the change
We would like to share some feedbacks from the investors during their preparation process
for the STC applications as below:
- In case the investment entities (normally big funds) use the global custodians, the global
custodians are the entities who will prepare the documents for the investors STC
applications. Global custodians are often big financial institutions, with professional
activities and good reputation globally. There are staffs of these global custodians being
in-house Public Notaries. In these cases, the documents of the investment funds will be
certified-true-copy by these in-house Public Notaries.
- In addition, it is a fact that many investment funds register their establishment in one
country but their fund managing companies or global custodians locate in another
country. The preparation of the STC applications for the investors often takes place in
the country where the fund managing companies or global custodians locate. Thus,
acceptance of notarization in such countries will facilitate foreign investors investment
activities, save time and costs for the investors (in comparison with notarization
mandatorily made in country of domicile).
1.2. Recommendations
- In order to save time and cost and to support the investors in Vietnam market, we
propose the SSC to accept documents of offshore funds using global custodians which
are certified/verified by in-house Public Notaries being staff of global custodians.
- We propose the SSC and the VSD to accept documents for STC applications of
investment funds being notarized at countries not being countries of domicile in order to
save time and cost for the investors.
Page 4 of 10
2. Acceptance of company secretarys certification of the authorized signature list

In accordance with international practice, companys secretary or secretarial
executive/manager is a senior position in a company and is stated in the Law on
Corporations, normally in the form of a managerial position or above. Basically, companys
secretary plays the following roles:
+ Ensuring that an organisation complies with relevant legislation and regulation, and
keeps board members informed of their legal responsibilities.
+ Acting as companys representative on legal documents, and it is their responsibility to
ensure that the company and its directors operate within the law.
+ Being responsible for registering and communicating with shareholders, to ensure that
dividends are paid and to maintain company records, such as lists of directors and
shareholders, and annual accounts.
In several countries, company secretary may be an individual or an organization whom is
licensed to implement company secretarys tasks. However, they must be members of
well-known accounting/administration associations.
In view of the important roles the company secretary plays in business, PLCs and large
companies require the company secretary to be suitably trained, experienced and
professionally qualified for these responsibilities. Therefore, company secretary is qualified
to certify the validity of an authorized signature list issued by such organization.
3. Simplified procedures for Licensing and Registration
We suggest that the SSC reviews its licensing and registration processes to simplify the
time and cost burdens for itself and domestic fund managers. For opened-end funds, given
the small number of banks providing such services, the SSC should be able to set up a list
of approved banks for supervisory, custody, fund admin and technical assistance services.
Similarly for select distributors an accredited list should be compiled. Subsequently when
applying for a new fund license, fund managers would not have to submit an identical set of
(normally dozens of) documents as they will often use the same service providers for all
funds in the same family of funds.
B SECURITIES TRADING AND SETTLEMENT
1. Coordination between stock exchanges and the VSD to announce the first trading date
for the bonus shares
Currently, the investors generally and foreign investors particularly, after receiving bonus
shares or stock dividend, are having difficulties locating information on first trading date of
that shares. Especially for foreign investors, when such information is publicly announced
but only in Vietnamese, they can only rely on local service providers (i.e. securities
companies, custodian banks, etc.) who do the translation of the information and forward it
to them. Particularly, for investors using custodian banks, it is even more difficult to access
the information as the custodian banks are not members of the stock exchanges, hence, do
not receive listing announcement directly from the stock exchanges.
Moreover, due to the same reason that custodian banks are not trading members of Stock
exchanges, custodian banks have to manually access Stock exchanges websites on a daily
basis to track any announcement on the first trading date of the new stocks. This is an effort
to ensure that the custodian banks can timely un-block the new stocks of the clients in their
Page 5 of 10
book, allowing the investors to start trading these stocks as soon as possible in the morning
trading session on first trading date.
In our view, this is not only the responsibility of the company but also the Exchange to
contact and notify registered shareholders or custodian banks of the first trading date.
We propose the SSC to set up a mechanism for coordination between the stock exchanges
and VSD so that (i) the payment date of the bonus shares/stock dividend is announced to all
depository members as soon as such information is received at the VSD; or (ii) so that the
payment date of the bonus shares/stock dividend is also the first trading date of the new
shares; or (iii) at least the first trading date will be announced on the payment date of the
bonus shares/stock dividend. This is to ensure that all investors (being clients of both
securities companies and custodian banks) can equally receive this information at the same
time.
2. Allowing right trading in stock exchanges
Transactions of the rights of listed shares are being executed between the investors in OTC
market during one or two months from the record date of the event to the subscription date.
The transfer of the rights is made through the VSDs system.
In many markets, the rights are traded as securities via the trading system of stock
exchanges.
We propose the SSC to consider allowing right trading via the system of stock exchanges.
3. Removal of pre-funding requirements and enhancement of risk mitigating measure in
securities trading
While there is no doubt that the requirement of pre-funding serves the purpose of keeping
failed trades to a minimum, it is inefficient from the perspective of foreign investors. In
most markets, foreign investors have to fund their accounts in the market on the
settlement date, whereas in Vietnam accounts have to be funded 3 daysprior to settlement
date in the case of equity trades. This prevents effective utilization of investors assets and
lowers the returns generated.
In addition, this requirement has created a manual process in the market wherein brokers
have to confirm sufficiency of balances in investors accounts with custodians. This is done
via phone callsand is a risk-prone process as several brokers could be calling custodians in
a very short window of time. As volume of trading grows, this risk will only increase.
We recommend the SSC to replace the pre-funding requirements with other risk mitigating
measures (i.e. CCP with a settlement guarantee fund and a CCP driven buy-in mechanism)
for the cash equities market to begin with and not wait for a derivatives market to be
established.
In case our recommendation cannot be implemented in the near future, we propose that
the VSD should leverage its new gateway to allow brokers to confirm balances in an
automated manner. Custodians could be asked to upload cash and securities balances into
a VSD run database to which the brokers could connect and block balances real-time.
Page 6 of 10
4. Odd-lot transactions via HOSE system

Currently, the process of odd-lot trading in Vietnam market is actually inconsistent. For
securities listed on HNX, investors can carry out odd-lot transactions through the stock
exchanges system and make settlement through VSD system which is similar to round-lot
transactions. However, for shares listed on HOSE, odd-lot transactions are still executed
off-exchange, the investor will have to sign a contract with a securities company or the
issuer. Settlement processes for cash and securities for odd-lot transactions of securities
listed on HOSE are completely separated and depend on the agreement between the buyer
and the seller. Regarding securities settlement, investors will have to prepare and submit
dossiers for transfer of odd-lot securities through VSD as per stipulated process.
For foreign investors who do not have a commercial representative in Vietnam, the biggest
difficulty in the preparation process for transfer of odd-lot shares is the title verification for
authorized signatures. In many cases, proving the legality and validity of the odd-lot
transactions of listed securities on HOSE and completing the transfer procedures via the
VSD system are very expensive compared to the value of the odd-lot transactions and very
time consuming due to the notarisation/consularissation procedures.
Many investors when carrying out odd-lot transactions have requested to write-off their
ownership of odd-lots securities. However, the legal framework in Vietnam market has not
provided any stipulation on write-off securities ownership.
We recommend the SSC and HOSE to consider centralizing odd-lots trading (which is
similar to odd-lot transactions via HNX system) at the soonest to reduce the trading costs
and minimize difficulty on execution of odd-lot transactions of securities listed on the HOSE.
At the same time, we also recommend the SSC to consider approving a mechanism
allowing investors to write-off ownership of odd-lot securities. These securities can be
transferred back to the issuer without any payment obligation or transferred to a joint
account at the VSD to be centrally handled by the VSD, the issuers or securities companies.
5. Procedure for handling collaterals being securities in transactions of commercial loans
with the involvement of the VSD
In VSDs new rules on securities registration issued in March 2015, it is stipulated that in
case the borrower and lender authorize the VSD to be the intermediary to manage the
collaterals, the dossiers and procedure for handling of the pledged securities would be
subject to the contract signed by the VSD with the 2 parties. This new rule has drawn the
attention of many foreign investors (being financial institutions) looking for involvement in
commercial loans with collateral securities in Vietnam but still concerning about the risks
arising during the handling of the pledged assets. However, currently, detailed guidance for
this case is not available so that the new rule can be implemented in practice.
We recommend the SSC/VSD to provide detailed guidance on the procedure for the abovementioned cases to support commercial loans of foreign investors in Vietnam.
6. Same day cash settlement and securities settlement for purchase transactions
executed on stock exchanges
Page 7 of 10
We truly appreciate the efforts by the MOF, SSC and VSD to shorten the timeline for
settlement of trades executed on the stock exchanges. However, the fact that cash
settlement and securities settlement for purchase trades are currently executed on two
different days (i.e. on T+2 and T+3 respectively) is causing difficulties for foreign investors in
cash management activities, trade record and reconciliation of their investments in Vietnam
market. In addition, separated settlement of cash and securities as mentioned above is not
aligned with the international practices in almost other securities markets which results in
foreign investors having to intervene and amend their reporting systems at huge costs so
that trade reports and information consolidation on their transactions in Vietnam can be
properly completed. These investors even have to replace their automation tools with many
manual reporting processes to adapt the unique practice of Vietnam market. This has
considerably increased the costs for foreign investors when trading in Vietnam securities
market.
Moreover, cash settlement and securities settlement executed on two different days means
that exposure to settlement bank has increased from intra-day to overnight which becomes
a concern of foreign investors in terms of risk management when they consider trading in
Vietnam market.
We propose that the MOF, SSC and VSD work on a new settlement cycle in which cash
settlement and securities settlement both take place on T+2.
C- CORPORATE GOVERNANCE OF PUBLIC COMPANIES
1. To enhance the information disclosure quality of public companies, listed companies to
ensure equal rights for foreign investors
1.1. Practice / Reason for the change
Currently, the number of foreign investors participating in the Vietnam stock market is
increasing. Recently, the SSC has announced plans for upgrading Vietnam's stock market
from Frontier market to Emerging markets in MSCI (Morgan Stanley Capital International)
market classification. This classification is widely used by foreign investors in their
strategic planning of global investment. Under this plan, the SSC is actively encouraging
public companies to publish information in English on the companys website.
General Shareholder Meetings minute is an important document / isthe base to allow
investors to track and supervise the companies activities for implementation of voting
contents in General Meeting. Therefore, we recommend a legal requirement of
publishment of English reference translation of the General Shareholder Meetings minute
applied to companies with capital ranging from average to large size (in.e. having a
chartered capital of VND 100 billion or more) in Article 3 Circular 121/2012/TT-BTC.
2. Ensuring meeting materials and final voting items are sent to shareholders along with
the meeting invitations for annual/extraordinary shareholder meetings
2.1 Practice / Reason for the change
Clause 4.2 Article 7 Circular 52/2012/TT-BTC on Information disclosure in securities market
stipulates that: Such public company shall publish on its website all documents regarding
the annual/extraordinary General Shareholder's Meeting: meeting notices, proxy
designation forms, agendas, ballots, discussion documents as the basis for decisionmaking and draft resolutions on each issue set forth in agendas and send notices of such
meeting and guidance on logging on the website on such meeting and documents regarding
Page 8 of 10
such meeting to shareholders fifteen (15) working days at the latest prior to the
commencement of such meeting.
However, per our observation, issuers usually send the meeting invitations within the above
timeline; meanwhile, meeting materials are sent to the shareholders much later (usually
no sooner than 5 days prior to meeting date, or even later). In many cases, the voting items
stated in the meeting materials (sent to the shareholders earlier) are changed/added
during the meeting without any prior notice to the investors.
These have been causing many difficulties to investors, especially for foreign investors and
their proxy, due to the 2 following reasons:
- Due to language barriers, foreign investors must wait until the meeting materials to be
translated into English so that they can read, understand and decide their votes. In most
of the cases, foreign investors must rely on their depository members to obtain English
version of such documents. Late dispatch of the meeting materials will not allow foreign
investors/depository members to have sufficient for all these steps.
- Foreign investors are usually not able to physically attend the meetings to cast the
votes, but authorize their proxy to vote on the items specified in the meeting materials
they received before the meetings. Late dispatch of the meeting materials or sudden
changes of voting items with no prior notice would not allow foreign investors to prepare
the authorization for their proxy as well as provide the voting instructions to their proxy.
2.2 Recommendation
We recommend the SSC to stipulate new sanctions for this violation in relevant regulations
to enforce public companies to strictly comply with the stipulations on information
disclosure as mentioned above, and amend Article 3 Circular 121/2012/TT-BTC to specify
the shareholders rights/public companys obligations to receive/provide full information of
the meeting, including meeting materials, final voting items, draft resolution, etc. at least
15 days prior to meeting date. This timeline is also in compliant with relevant stipulations in
Circular 52/2012/TT-BTC on Information disclosure in securities market.
D OTHERS
1. Electronic system for proxy voting (E-voting)
We appreciate VSDs proposal on an electronic system for proxy voting to support investors
in exercising their voting rights in Vietnam. for a country with stretching geography and
more than 31 million internet users like Vietnam, local investors also benefit from e-voting
system. Korea, Taiwan and India are few examples of using e-voting systems.
The new Law on Enterprises has also introduced new provisions being the very first legal
base for the operation of such e-voting system.
However, this is a brand new system and its inauguration may reveal technical issues of the
system its own or issues from depository members sides (due to the limitations of their
systems, techniques, operational processes, internal policies, information security,
limitation on human resources, etc.) Therefore, the members do need sufficient time for
comprehensive preparation before the inauguration of e-voting system.
In addition, the investors also need sufficient time to study and prepare to contribute
comments to the design of the system, as well as prepare to participate in the voting via evoting system in Vietnam.
Page 9 of 10
We would propose the SSC and the VSD to share with the members and investors further
details on the proposed operating model of e-voting system and VSDs draft rules on voting
activities via this system, so that the members/investors can contribute consistent,
comprehensive, useful comments to VSDs draft rules.
Page 10 of 10
Comments on the draft amendments to Decree No. 58 (dated Jan 22, 2015)
COMMENTS ON THE DRAFT AMENDMENT/SUPPLEMENT TO DECREE NO.58/2012/ND-CP

(Dated 26th February 2015)
Prepared by
VBF Capital Markets Working Group
No.
DRAFT DECREE
COMMENTS /PROPOSALS ON THE DRAFT DECREE
CHAPTER I GENERAL PROVISIONS

Article 2: Interpretation of Terms
Securities business organization.
1.
2.
Article 2a: Ownership ratio of foreign investors in

Vietnams securities market
2 [...]
d) For a public company which does not operate in the
industries or fields as stipulated in Points A, B and C of
this clause, the foreign ownership ratio is implemented
as stipulated in the Company Charter (if any), but
should not exceed the maximum ownership ratio as per
the decision by the Prime Minister.
Comment:
Although the Decree refers to the concept of Securities business organization, the
Decree and the Law on Securities have yet to define this concept
Currently, this concept is defined in Item 8, Article 2 of Circular 213/2012/TT-BTC on the
Guidelines of Operation of Foreign Investors in Vietnams Securities Market (Circular
213/2012) as follows:
Securities business organization includes securities company, fund management
company and branch of foreign fund management company in Vietnam.
Proposal: We propose this definition in the draft Decree should be modified as follows:
Securities business organization includes securities company, fund management
company, and branch of foreign fund management company in Vietnam.
Comment:
As per our understanding, one of the purposes of amending Decree No.58/2012 is to
replace Prime Ministers Decision No.55/2009/QD-TTg dated 15th April 2009 on the holding
ratio of foreign investors in Vietnams securities market (Decision 55/2009).
However, the proposal to the Prime Minister to promulgate another ownership ratio
stipulation as per Point D, Item 2, Article 2a of the Draft appears inconsistent with the
purpose itself on amending Decree 58/2012.
Besides, this proposal shall also bring two negative influences to the securities market:
(a) Firstly, this proposal make all regulations on the ownership ratio of foreign investors
in Vietnams securities market stipulated at Article 2a to be unreliable, and;
(b) Secondly, this proposal will cause another delay to the implementation of Decree 58
(amended) because foreign investors shall have to wait on another Prime Minister
decision on the ownership ratio.
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No.
3.
DRAFT DECREE

Proposal: We propose the ownership ratio as stipulated in Point D, Item 2, Article 2a of the
Draft shall be enclosed in the Appendix of the Draft and propose Point D, Item 2, Article 2a of
the Draft should be modified as follows (underlined):
2 [...]
d) For a public company which does not operate in the industries or fields as stipulated in
Points A, B and C of this clause, the foreign ownership ratio shall be implemented as stipulated
in the Company Charter (if any), but should not exceed the maximum of ownership ratio as
stipulated in Appendix ### of this Decree. as the decision by the Prime Minister;
Article 71: Requirements applicable to shareholders and capital contributing members of a securities business organization.
9. Foreign investors stipulated in Item 21, Article 2 of Comment:
this Decree are permitted to purchase shares or capital There are many unreasonable aspects in Article 71.9 of the Draft.
contribution portions to own unlimited charter capital As per the regulation in Item 9 of Article 71 of the Draft, foreign investors who satisfy the
of the securities business organization as per the
conditions prescribed in Items 7, 8 and 10 of the Decree are permitted to purchase shares
following conditions:
or capital contribution portions to own unlimited charter capital of the securities business
a) Only a foreign institution which satisfies the
organization.
conditions prescribed in Item 10 of this Article is The first unreasonable point in Article 71.9: The structure of shareholders and capital
permitted to purchase to own more than 51% of the
contributing members in a securities company is stipulated in Item 7 of Article 71. Point 1, Item
charter capital of securities business organization
7 of Article 71 requires a minimum of two (02) founding shareholders. However, does a foreign
b) Complying with the stipulation in Items 7 and 8 of
investor allowed to purchase unlimited shares in a securities business organization need to
this Article.
keep two such founding shareholders in the structure of shareholders? If the answer is yes,
then Item 7 is inconsistent with Item 9 of Article 71.
The purchase of shares and capital contribution The second unreasonable point in Article 71.9: It is stipulated in Point B, Item 7 of Article 71:
portions as well as the capital contributions to establish
The ownership ratio of shares and capital contribution portions of founding shareholders
securities business organizations by foreign investors
and founding members must be a minimum 65% of charter capital, of which an
shall be implemented in accordance with Ministry of
organization being an insurer or commercial bank must own a minimum 30% of the
Finance guidelines.
charter capital.
However, do foreign investors allowed to purchase an unlimited number of shares of a
securities business organization always need to maintain shares of capital contributions of
founding shareholders and founding members at a minimum 65% of charter capital, while
an organization such an insurer or commercial bank must own a minimum 30% of the
charter capital? If the answer is yes, Article 71.7, Item b will again be inconsistent with Item
9 of Article 71.
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No.
DRAFT DECREE

The third unreasonable point in Article 71.9: The regulation in Point A, Item 8 of Article 71 is
also illogical in the same manner as the first highlighted unreasonable point.
The fourth unreasonable point in Article 71.9: The regulation in Point B, Item 8 of Article 71
is also illogical in the same manner as the second highlighted unreasonable point.
The fifth unreasonable point in Article 71.9: It is stipulated in Point D, Item 8 of Article 71
that the fund management company and relevant person are not allowed to own 5% or
more of shares of a fund management company or another securities company.
Point d, Item 7 of Article 71 of the Decree only states that a securities company is not
allowed to own more than 5% of another securities company (as per Point d, Item 7 of
Article 71). However, a securities company is not prohibited from owning another fund
management company.
However, Point D, Item 8 of Article 71 of this Decree states that a securities company is not
allowed to own more than 5% of another fund management company and a fund
management company is also prohibited to own more than 5% of charter capital in any
other securities company.
The case of allowing a securities company own an unlimited amount of a fund management
company but the reverse not applying, is illogical as the operations of a fund management
company and securities trading run in parallel. Moreover, from the aspect of the actual
owner, groups of such companies still have the same owner in any case.
The sixth unreasonable point: Point B, Item 10 of Article 71 requires foreign investors to
present written approval from an overseas regulator to make a capital contribution to
establish a securities business organization in Vietnam. This is also an illogical and
unenforceable regulation because such regulators cannot not interfere in an enterprises
investment or business beyond its territory.
The seventh unreasonable point: Point C, Item 10 of Article 71 requires a foreign investor
contributing capital or purchasing to own 51% or more of the charter capital of securities
business organization to be from the country in which the regulator has authority in the
banking, securities or insurance sectors and the State Securities Commission (SSC) has
signed an unilateral or bilateral co-operative agreement for the purpose of exchanging
information and co-ordinating in management, inspection and supervision of securities and
securities market activities.
Page 3 of 7
No.
DRAFT DECREE

The SSC website states the its has not signed any agreement to exchange information with
equivalent regulators from other countries. Therefore, this regulation is not only illogical
and unpractical, but also does not reflect favorably on the Vietnamese Governments
progress in opening the market upon World Trade Organization (WTO) commitments
though use of technical barriers not in compliance with WTO Commitments.
The eighth unreasonable point: Although the Draft has prescribed detailed conditions for
investors to invest in a securities business organization in an unlimited manner, it has also
prescribed foreign investors purchase of shares, capital contribution portions or capital
contributions for the establishment of a securities business organization to be
implemented as per Ministry of Finance guidelines. It is understood that the SSC can
license a fund management company and securities company with 100% foreign owned
capital according to the old Decree 58 without any Ministry of Finance guidelines.
Therefore, the request for foreign investors to wait for the guidelines is not necessary and
shall extend the implementation time of the Decree.
Proposal: It is proposed that Items 8, 9 and 10 of Article 71 be modified as follows (underlined):

Item 8 of Article 71:
8. Structure of shareholders or capital contributing members in a fund management
company:
[...]
d) A fund management company operating in Vietnam is not permitted to contribute capital
to establish, purchase shares or capital contribution portions in another fund management
or securities company in Vietnam, except:
- During activities of a consolidation or merger or
- To purchase to own or jointly with affiliated persons (if any) to purchase in order to own
not more than 5% of the number of currently circulating shares of a fund management
company, securities company registered for trading and listing on the stock exchange.

9. Foreign investors as stipulated at Item 21, Article 2 of this Decree are permitted to
purchase shares or capital contribution portions to own in an unlimited manner the charter
capital of the securities business organization in the following cases:
a) Only a foreign institution which satisfies conditions prescribed in Item 10 of this Article
is permited to purchase 51% or more charter capital of a securities business
organization
Page 4 of 7
No.
DRAFT DECREE

b) Complying with the regulation in Item 7 and 8 of this Article;
Purchase of shares and capital contribution portions, and the making of capital
contribution in order to establish securities business organizations by foreign investors
shall be implemented in accordance with guidelines of the Ministry of Finance
Effectiveness of Decree 58 (Amended)
4.

10. Conditions for a foreign organization to contribute capital or purchase to own 51% or
more of charter capital of a securities business organization:
a) It is an organization operating in the banking, securities or insurance sectors and must
have operated for a minimum two consecutive (02) years immediately preceding the year of
capital contribution to establish [the securities business organization] or purchase of
shareholding or capital contribution portions.
b) It is subject to regular and consecutive supervision by a specialized branch Regulator
overseas in the sectors of banking, securities or insurance and such Regulator has
provided written approval to the capital contribution to establish a securities business
organization in Vietnam;
c) The foreign regulator and the State Securities Commission of Vietnam have signed an
unilateral or bilateral co-operative agreement for the purpose of exchanging information
and co-ordinating in management, inspection and supervision of securities and securities
market activities;
d) It satisfies the relevant conditions in Item 6 of this article.
Comment:
It is understood that one of the purposes of amending Decree No.58/2012 is to replace
Prime Ministers Decision No.55/2009/QD-TTg dated 15th April 2009 on holding ratios for
foreign investors in Vietnams securities market (Decision 55/2009)
However, there is no regulation in the Draft prescribing that Decree 58 (Amended) shall
replace Decision No.55/2009.
Proposal: It is proposed that the Draft should clearly prescribe that Decision No.55/2009 shall
be replaced by Decree 58 (amended).
5.
Article 28a. Offer for sales of fund certificates offshore

1. A fund management company is allowed to offer for Comment: The offer to sell fund certificates offshore is directly related to the fund. According
sale, to list fund certificates offshore and raise capital to the Securities Law, the General Meeting of Investors is the highest authority of the fund, not
to an establish investment fund offshore. The operation the General Meeting of Shareholders/Board of Members/Owners of Fund Management
Page 5 of 7
No.
DRAFT DECREE
of raising capital offshore of securities investment fund
established in Vietnam must comply with foreign
exchange regulations and be approved by the General
Meeting of Investors of Securities Investment Fund (in
the case of additional issuance or listing of fund
certificates offshore) and General Meeting of
Shareholders, Board of Members or Owners of Fund
Management companies.
6.
7.

companies. So, the Draft dated 22 January 2015 referring to the offer for sale of fund
certificates offshore to be approved by the General meeting of Shareholders/Board of
Members/Owners is unsuitable.
Proposal: It is proposed that Item 1 of Article 28a should be modified as follows (underlined):
1. A fund management company is allowed to offer for sale, to list fund certificates offshore
and raise capital to establish an investment fund offshore. The operation of raising capital
offshore of securities investment fund established in Vietnam must comply with foreign
exchange regulations and be approved by the General Meeting of Investors of Securities
investment Fund (in the case of additional issuance or listing of fund certificates offshore) and
General Meeting of Shareholders, Board of Members or Owners of Fund Management
companies.
Article 38. Cases in which [a company] is not permitted to redeem share
2. A company is not permitted to redeem shares from Comment: Item 9 of Article 23 of Circular No.212/2012/TT-BTC requires that in case a company
the following shareholders for use as its treasury buys treasury shares by order matching, persons being managers or affiliated persons of the
shares unless the
redemption is conducted in company and major shareholders as defined in the Law on Securities shall not be restricted.
accordance with the ratio of ownership of each
shareholder or the redemption of issued shares is Proposal: It is proposed that Item 2 of Article 38 should be modified as follows (underlined):
offered publicly or the redemption is in accordance with 2. A company is not permitted to redeem shares from the following shareholders to use as its
the decision or verdict of the Court and judgment of treasury shares unless the redemption is conducted in accordance with the ratio of ownership
arbitrator:
of each shareholder or the redemption of issued shares is offered publicly or the redemption
a) Managers of the company and affiliated [relevant] is in accordance with the decision or verdict of the Court and judgment of arbitrator:
persons defined in the Law on Securities
a) Managers of the company and affiliated [relevant] persons defined in the Law on Securities
b) Shareholders subject to restrictions on transfer in b) Shareholders subject to restrictions on transfer in accordance with the law as well as
accordance with law and the charter of the
charter of the company
company
c) Major shareholders as defined in the Law on Securities.
c) Major shareholders as defined in the Law on
Securities.
Regulations under Points A and C of this article shall not apply to a company that has listed
shares and is registered to trade on the Stock Exchange to redeem shares by the order
matching method.
Article 53. Conditions for listing securities on the Ho Chi Minh Stock Exchange [HoSe]
3. Conditions for listing of public fund certificates or Comment:
shares in a public securities investment company:
According to Circular No.229/2012/TT-BTC, the initial offer for sale of the Exchange Traded
[...]
Funds (ETFs) means the sales offer for lots of fund certificates (one lot of ETF certificates
Page 6 of 7
No.
DRAFT DECREE
8.

equals to 100,000 fund certificates, par value of a fund certificate when offered for sale
shall be VND10,000 each, so one lot of fund certificates shall be worth VND1 billion).
Therefore, Circular No.229 does not prescribe conditions for the minimum number of 100
investors joining to ETFs. As a result, such a regulation is infeasible and inconsistent with
Circular No.229/2012/TT-BTC and such types of ETFs.
Current listing regulations for the ETF of the HoSE prescribed such regulations and they
are suitable with Circular No.229/2012/TT-BTC.
Proposal: It is proposed that Item 3 of Article 53 should separately only stipulate for the listing
of ETFs and stipulate the same as listing regulations for ETFs of the HoSE to be consistent with
implementation.
Article 57. Application file for registration for listing securities on the stock exchange
4. An application file for registration of listing public Comment:
fund certificates or shares in a public securities Currently, listing regulations for ETFs of the HoSE prescribe the application file for
investment company shall comprise:
registration of ETFs and this regulation is also suitable for Circular No.229/2012/TT-BTC.
The current regulations, in our view, operate in an efficient manner and are obeyed by fund
....
management companies.
However, such regulations have many discrepancies with regulations in Item 4 of Article 57
of the Draft.
Proposal: To keep operations of ETFs stable, it is proposed that Item 4 of Article 57 of the Draft
should be prescribed the same as that for listing regulations for ETFs of the HoSE and Circular
No.229/2012/TT-BTC.
Article 60. Delisting
1. Securities shall be delisted when:
...
9.
2.. Securities shall be delisted on request by the listing

institution:
Comment:
At present, listing regulations for ETFs of the HoSE prescribe conditions and the
application file for delisting of ETFs and this regulation is also suitable for the Circular
No.229/2012/TT-BTC. The current regulations, in our view, operate in an efficient manner
and are obeyed by fund management companies..
...
However, such regulations have many discrepancies with regulations in Article 60 of the
Draft.
Proposal: It is proposed that Items 1 and 2 of Article 60 of the Draft should be prescribed the
same as for listing regulations for ETFs of the HoSE and Circular No.229/2012/TT-BTC.
Page 7 of 7
Comments on draft Circular amending Circular 213/2012 guiding the operation of foreign investors
COMMENTS ON DRAFT CIRCULAR AMENDING AND SUPPLEMENTING CIRCULAR NO. 213/2012/TT-BTC
Prepared by
NO.
Draft Circular dated Mar 16, 2015
Contents Of Opinion Contribution/Proposals

To propose amendments to the
definition
of
Trading
Representative
Comment:
Article 2(3) of the Circular defines Trading Representative means an individual in Vietnam...;
Article 3(3)(a) of the Circular stipulates that the Foreign Investor may authorize:
a Trading Representative to conduct trading and investment activities under the name of such Investor.
1.
Thus, the nature of Trading Representative is to carry out trading and investment activities under the
authorization of the Investor. This means that Investor is untimately responsible for all actions done by its
Trading Representative within the scope of the authorization (according to the regulation in Article 586(2)
of Vietnam Civil Code).
Also, according to the Article 3(8)(a), Foreign Investor may authorize a Representative Office or other
Organization to carry out the market reporting.
the Circular:
a) allows the Investor to delegate its market reporting obligations to individual, organization and
representative; and
b) prohibits the Investor from delegating its trading activities to organizations and representative office
in Vietnam.
In our opinion, those inconsistent provisions are illogical and cause many difficulties to Foreign Investor
in reality.
Therefore, we would like to propose that the Circular extend the scope of the definition of Trading
Representative to include institutions and representative offices.
Moreover, to our understanding, Foreign Investor often appoints a person as both Trading Representative
and Information Disclosure Agent.
The fact that acting as a Trading Representative and an Information Disclosure Agent bears significant
responsibility. Therefore, Foreign Investors tends to appoint a reputable domestic organization to be its
Trading Representative and Information Disclosure Agent.
Proposal: We would like to propose this definition in the Circular should be modified as below: Trading
Representative is an individual, organization or representative office of in Vietnam....
Page 1 of 5
NO.

To propose an amendment of Article
3(9)
2.
Deletion of the definition of Group of

related foreign investors
3.

Comment:
Article 3(9) stipulates that the conditions applied to individual Trading Representative;
To follow and in accordance with our proposal at the above-mentioned item 1, the conditions applied to
the Trading Representative in Article 3(9) shall not be suitable any more when the definition of
Transaction Representative is amended to include institutions and representative offices;
Especially, according to the Article 3(3)(a), the Investor:
(a) May authorize the Trading Representative to conduct the trading under the name of Investor. Such
authorization or appointment shall not include activities being asset management, trading account
management, making decisions on investment and disinvestment, selecting type of securities, trading
volume, price level, and time of of trading;
Since all of the asset management, securities investment and business are excluded from the scope of
authorization for Trading Representative under Article 3(3)(a) of the Circular, the requirement, that a
Trading Representative must have a securities/asset management licence, is unnecessary and
unreasonable.
Proposal: We would like to propose the Article 3(9) to be amended as follows:
9. The Trading Representative of Foreign Investor in Vietnam must satisfy the following conditions:
a) Have full capacity for civil and legal acts; not be currently subject to a criminal penalty or be banned by
a court from professional business practice;
b) Have a securities business practising certificate;
c) Not be concurrently an employee of a securities business organization or depository bank operating in
Vietnam;
d) Act as the sole representative of the Foreign Investor in Vietnam and have authorization in the form of
power of attorney from the Foreign Investor.
Comment:
The definition of Group of related foreign investors is first mentioned in the Circular 2012 and it is kept
and amended in this Draft;
This is a completely new definition, which does not fall into the scope of the definiton of Related person
under the Securities Law.
In our opinion, this definition has caused much trouble for Foreign Investor in complying with the
information disclosure as follows:
(a) The 1st reason: there have not been any definitions of Foreign Investment Fund and Investment
Portfolio of foreign investment fund in both Securities Law and the relevant regulations.
Page 2 of 5
NO.

In principle, it may be impossible for a local regulator to define a structure/concept which is
established/structured/incorporated from many different countries.
Consequently, many Foreign Investors have been facing difficulties to decide whether whether they
are a Foreign Investment Fund or an Investment Portfolio of a foreign investment fund as those
terms are not defined anywhere in the Vietnamese law.
(b) The 2nd reason: For risk diversification, a foreign fund or organization may have many separate and
independent investment portfolios or separately managed accounts (SMAs), which are managed by
different fund managers. Considering such investment portfolios or separately managed accounts as
related people is very illogical and does not comply with the international practice because the
investment decision making process of such investment portfolios or separately managed accounts is
completely independent and separate in many cases.
(c) The 3rd reason: Consider funds or investment portfolios managed by the same fund management
company or the same Trading Representative as related people is als very illogical and artificial for
the following reasons:
(i) For funds managed by the same fund management company: unlike the fund structurein Vietnam,
foreign funds are mostly established in the form of company, partnership or unit trust. Since each
fund has its own different shareholders, so in principle and reality, each fund operates
independently when making investment decision as each fund has different investment strategy
and has served different shareholders.
Also, under the international practice, when the funds act in concert in selling or buying shares of
a specific company, then they may be considered as related person and they are obliged to
disclose the trading information.
(ii) For investment portfolios or funds having the same Trading Representative: As above mentioned
in item 1, the nature of Trading Representative is to conduct some of the investment activities
under a specific authorization and the scope of such authorization is also restricted by the Article
3(3)(a) of the Circular (as previously referred to in item 2 above). Therefore, the provisions
considering the funds having the same Trading Representative as related people is very
unreasonable and illogical.
Page 3 of 5
NO.

(d) The 4th reason: The definition on Group of related foreign investors is also contrary to the national
treatment principle in accordance with WTO commitement of Vietnam. As question arises as to why
there is no definition of group of related investors, but there is only the definition of related
foreign investors targeting foreign investors in respect of the information disclosure? Why isnt the
group of related local investors covered by the Circular 52/2012/TT-BTC regarding the information
disclosure?
Vietnam government always calls for foreign investment, and emphasizes the fair and equitable
treatment for local and foreign investors. However, this regulation clearly shows an unequal
treatment in the information disclosure between the group of local and foreign investors.
4.
5.
Article 4(13)
A Multiple Investment Managers
Fund MIMF is permited to register
multiple securities trading code
numbers on the principle of
investment portfolios of the fund
managed by the same fund
management
company,
it
is
permitted to register one securities
trading code number.
Appendex
13
Document
of
Appointment Letter / Power of
Attorney made by Foreign Investors
to Transaction Representatives
Proposal: We would like to propose a complete removal this definition in the Circular.
Comment:
The provision is a very good improvement in Circular 213, which correctly reflects the demand of foreign
investors;
However, it now shows some shortcomnings:
(a) The International practice and reality show that, for risk diversification, institutional investor, which is
not necessarily a fund, may have many investment portfolios or Separately Managed Accounts
managed by different fund managers. Therefore, the fact that the definition is only limited to Foreign
investment Fund is not consistent with the international practice and actual demand of foreign
investors; and
(b) As the investment portfolios or Separately Managed Accounts of one investor can be managed by
different fund managers, so each investment portfolio or Separately Managed Account need a
securities trading code.
Proposal: We would like to propose this Article 4(13) should be modified as below:
A Multiple Investment Managers Fund MIMF, foreign institutional investor having multiple investment
portfolios or Separately Managed Accounts managed by multiple different fund managers are permited
to register multiple securities trading code numbers on the principle that investment portfolios of the
fund each fund, each portfolio or separately managed account managed by a fund manager is permitted
to register one securities trading code.
Comment:
Appendex 13 Document of Appointment Letter / Power of Attorney made by Foreign Investors to Transaction
Representatives is required to certify by Notary Public Office or Competent Authority;
According to the Civil Code, letter/authorization contract are not required to notarize to make it valid;
Page 4 of 5
NO.

According to International rule, letter/authorization contract of developed countries such as England,
United State and Australia are not required to notarize;
In reality, the requirement of notarizing or certifying by Competent Authority causes many difficulties for
Investors because the Investor is required to be presented at Notary Publics Office when signing the
Appendix 13.
Proposal: We would like to propose to cancel the requirement of certifying by Notary Office or Competent
Authority when such Appendix gets signed.
Page 5 of 5
COMMENTS ON DRAFT CIRCULAR AMENDING, SUPPLEMENTING A NUMBER OF ARTICLES OF CIRCULAR 213/2012/TT-BTC DATED 06
DECEMBER 2012 PROVIDING GUIDANCE ON OPERATION OF FOREIGN INVESTORS ON VIETNAM SECURITIES MARKET (CIRCULAR 213)
(Hereby refers to Draft Circular)
Prepared by
No.
Article
Content
Comment
GENERAL COMMENTS
We highly appreciate SSCs and VSDs efforts to automate the operational interaction with the members, including the construction of the electronic system
for STC applications (hereafter referred as e-STC system) in order to support foreign investors (FIs) with their market entrance process.
This is a brand new system which will have considerable impacts on market entrance process of FIs, hence, we look forward to contributing helpful comments and
inputs to relevant regulatory bodies on the mechanism as well as on legal framework for the inauguration of the system.
However, the fundamental mechanism of the e-STC system as per this draft circular is described in limited details which cannot provide members with
sufficient information on the system and its operating model for the members to provide valuable comments. Based on our understanding of the new system
as per the description in this draft circular, we have some general comments as follows:
1 - E-STC model with the participation of 3 parties (FIs Depository member VSD):
Per our understanding, the model proposed in this draft only involves participations of the members and the VSD. However, the real benefit of such an
electronic system can only be derived if it replicates the current manual process end-to-end. The process starts with the FI inputting data in the physical form,
which (in most cases) is then reviewed by their global custodian and then by their sub-custodian (ie depository member in Vietnam) there could be several
iterations of such reviews till the form is finally completed properly, after which the FI signs the physical form and dispatches to the depository member who
endorses the form and submits to the VSD. Unfortunately the model proposed in the draft Circular is seeking to automate only the last leg of this long process.
Therefore, we would like to propose a system architecture which essentially is a work-flow system with the following features:
- STC applicant accesses the web portal to first register themselves and obtain a unique user ID and password for themselves. STC applicant inputs the
details in the STC application form and uploads supporting documents to the system. The portal should have a friendly graphical user interface, an
example being a drop down option to specify the local custodian in Vietnam with information such as address and contact person of the custodian already
pre-filled on the form.
- the portal should allow for two further levels of review with access being controlled by the STC applicant eg a first level reviewer password can be
generated and used by the global custodian and a second level reviewer password can be generated and used by the local custodian
- the form remains in Draft status till the reviews are completed and local custodian is satisfied that the form is complete in all respects
- the applicant then submits the final form on the portal and the local custodian then endorses the final form on the portal.
- the form steps-through to VSDs back-office systems
- VSD officials conduct their normal checks and approve the STC registration on VSDs back-office system which triggers a notification on the portal that
applicants request has been approved and also triggers emails to the applicant and local custodian with a .pdf copy of the STC approval.
Page 1 of 18
No.
-
Article
Content
Comment
The system should also allow for supporting documents to be uploaded in .pdf formats. This will allow the easy digitization of archives by VSD instead of
collecting physical documents as now or asking local custodians to collect physical documents as proposed in the draft circular. In the spirit of making
the market more open for foreign investors and in line with the initiatives aimed at a market re-classification, we recommend that VSD should accept
supporting documents in English and not insist on Vietnamese translations.
We believe that Vietnam will be a trend-setter in frontier and emerging markets if SSC and VSD work towards creating such a system.
We also recommend that while such a system is developed, local custodians such as us should be invited to conduct User Acceptance Testing (UAT) so that
any software bugs or process glitches can be identified and ironed out.
2 Provide further details on the operating mechanism of the e-STC system:
If for some reason our recommended approach for the design of the e-STC system is not feasible, then As above-mentioned, the e-STC system is a brand new
system and its inauguration may reveal technical issues of the system its own or issues from depository members sides (due to the limitations of their
systems, techniques, operational processes, internal policies, information security, limitation on human resources, etc.) Therefore, the members do need
sufficient time for comprehensive preparation before the inauguration of e-STC system.
A
A1
As such, we would propose the SSC and the VSD to share with the members further details on the proposed operating model of e-STC system and VSDs draft
rules on STC applications via this system. And this should be done asap during the time the SSC is collecting markets comments on this draft circular, so that
the members can contribute consistent, comprehensive, useful comments to both the draft circular and VSDs draft rules.
DRAFT CIRCULAR
Article 1
2 amending Clause 7 Article 2 as follows:
(1) In the Draft Circular guiding information disclosure in securities market
[...]
Clause 2 of the
(replacing Circular 52/2012/TT-BTC of Ministry of Finance date 5 April
7. Group of affiliated foreign investors includes foreign
Draft Circular
2012 regarding this issue), the definition Group of Affiliated persons at
institutions having relationship with each other as follows:
Amending
Clause 7 Article 2 is as below:
a) Foreign funds, economic institutions having foreign 7. Group of Affiliated persons in this Circular includes:
Article 2 Clause
investment managed by the same local or foreign 7.1. Companies having master fund sub-fund relationship.
7 of Circular 213
fund managers;
7.2. Father, adoptive father, mother, adoptive mother, wife, husband, child,
b) Funds belonging to the same master fund or portfolios
adopted child, siblings of that individual.
belonging to the same fund, sub-funds belonging to 7.3. Funds belonging to the same master fund, sub-funds belonging to the
the same fund, or feeder funds;
same fund, feeder funds or other organization having the equivalent
c) Investment portfolio belonging to the same foreign
structure
fund, the same investment organization or economic 7.4. Funds or investors having the same trading representative, except for the
institutions having foreign investment managed by
case when trading representative of that investor is a fund manager.
multiple Investment Managers (MIMF);
d) Funds or investment portfolios having the same Thus, there are two cases defined in Draft Circular amending, supplementing
trading representative.
Circular 213 but not mentioned in Draft Circular on information disclosure:
Page 2 of 18
No.
Article
Content
(i)
(ii)
Comment
Foreign funds, economic institutions having foreign investment managed
by the same local or foreign fund managers;
Investment portfolio belonging to the same foreign fund, the same
investment organization or economic institutions having foreign
investment managed by multiple Investment Managers (MIMF);
We understand that, the stipulation on information disclosure obligation of

Group of Affiliated persons in the Circular on Information disclosure would
be an important legal foundation to stipulate and implement the legal
requirements on information disclosure mentioned in other legal documents,
including Circular 213 guiding operation of foreign investors in Vietnam
securities market. Therefore, amendment to Circular on information
disclosure is necessary to ensure the consistency with stipulation on
information disclosure in securities market in general.
(2) Per our experience in providing services for foreign institutional investors,
we acknowledged that there are cases where foreign investors having
MIMF structure and at the same time using multiple fund managers to
invest in Vietnam securities market. In this case, investors are confused
about information disclosure requirement applicable to group of affiliated
investors, the details are as follows:
For example, there are two MIMF groups on the market which are group ABC
(including fund A, fund B, fund C) and group EDF (including fund E, fund D,
fund F). Among them, Fund A, fund B, fund E, Fund D use the same fund
manager X, fund C and fund F use the same fund manager Y. Thus:
a) Under requirements on information disclosure applicable to MIMF, group
ABC has to assign one representative being in charge of information
disclosure to report on behalf of fund A, B, C.
b) At the same time, under requirements on information disclosure
applicable to funds using the same fund managers, fund A, B, E, D (using
the same fund manager X) have to assign one representative being in
charge of information disclosure to report for themselves.
In this case, information on securities ownership of fund A and fund B is
duplicated when two representatives being in charge of information disclosure
on point (a) and (b) report at the same time. On the other hand, fund A and B
Page 3 of 18
No.
A2
A3
Article
Content
Article 1
Clause 3 of the
Draft Circular
Amending point
a Clause 2
Article 4 of
Circular 213
Appendix 15.
3. Amending point a Clause 2 Article 4 as follows:

a) Except for documents extracted from websites of
foreign competent authorities, other documents issued by
competent authorities at countries of domicile have to be
notarized under foreign laws and under applicable laws of
Vietnam;
Appendix 15. Identity document of investors
2. Notarization under foreign laws can be done via one of

the following ways:
- Certified true copy by a Notary public; or
- Individual or representative of the organization certifies
true copy on the copy of the document in front of the
notary public, at the same time the notary public shall
verify the identity of the individual who certify true copy
(name, title and/or valid passport number/other lawful
individual identification)
Comment
have to bear double costs compared to normal investors for using two
representatives being in charge of information disclosure in Vietnam at the
same time.
Hence, we recommend amending the definition of Group of Affiliated foreign
investors in Circular 213 as follows:
7. Group of affiliated foreign investors includes foreign institutions having
relationship with each other as follows:
a) Foreign funds, economic institutions having foreign investment managed by the
same local or foreign fund managers;
b) Funds belonging to the same master fund or portfolios belonging to the same fund,
sub-funds belonging to the same fund, or feeder funds;
c) Investment portfolio belonging to the same foreign fund, the same investment
organization or economic institutions having foreign investment managed by multiple
Investment Managers (MIMF);
d) Funds or investment portfolios having the same trading representative.
(1) In case investment fund (normally large-scale investment fund) using
global custodian (GC), the GC will be responsible for preparing the
application for STC application. Thanks to their professional activities and
reputation on global scale, and in order to save time and effort for clients,
the GC will obtain documents stored in their data system and make
certified true copy to complete clients application. Afterwards, the notary
public will verify the signatures of GC.
(2) In practice, there are many cases where the funds are registered for
establishment in one country but their fund managers or GCs domicile in
other countries. The preparation of STC applications for those investors is
normally executed in the countries in which head-quarters of fund managers
and GCs domicile. Thus, the approval of document notarized in these
countries would create favorable conditions for investment activities of
foreign investors, save time and cost for investors (compared to notarized
process undertaking in investors countries of domicile).
Page 4 of 18
To save time and cost and support foreign investors in Vietnam securities
market, we recommend SSC to allow the application to be certified true
copy/verified by clients GC. At the same time, we recommend SSC to allow
STC application of investors to be notarized in countries not being countries of
domicile in order to save time and cost for investors.
No.
Article
Content
Comment
(3) We recommend SSC to clarify in which cases document issued by
competent authorities at country of domicile have to be notarized under
applicable laws of Vietnam? We understand that this stipulation is only
applicable to cases where documents of economic organization having
foreign investment is issued by Vietnamese competent authorities?
Specifically, we recommend:
- Amending point a Clause 2 Article 4 Circular 213 as follows:
a) Except for documents extracted from websites of foreign or Vietnamese
competent authorities, other documents issued by competent authorities at
countries of domicile have to be notarized, consularised be verified under
foreign laws and under applicable laws of Vietnam in case these documents
are issued by Vietnamese competent authorities;
A4
A5
Article 1
Clause 5 of the
Draft Circular
Amending
Article 4 of
Circular 213
Article 1
Clause 8 of this
5. Supplementing Clause 14 Article 4 as follows:

14. Stipulation set out in Clause 13 of this Article is
applicable to foreign investors having multiple investment
portfolios and having assets deposited at separate
depository accounts.
- Amending Point 2 Appendix 15 Circular 213 as follows:

2. Notarization, verification, certifying under foreign laws can be done via one
of the following ways:
- Individual or representative of the organization certifies true copy on the
copy of the document in front of the notary public, at the same time the
notary public shall verify the identity of the individual who certify true
copy (name, title and/or valid passport number/other lawful individual
identification)
To be certified true copy/verified by global custodian of the investor
Notarization, verification, certifying can be done in countries not being
countries of domicile of the investor.
(These recommendations are presented in details in the Attachment Draft
Appendix 15 enclosed in this letter).
We recommend amending the wording in this provision in order to ensure the
consistency in understanding and application in practice:
14. Stipulation set out in Clause 13 of this Article is applicable to investment
portfolios of the same foreign institution managed by multiple fund
managers.
8. Supplementing Article 10a, Article 10b after Article 10

as follows:
As you are aware, globally and in Vietnam, the general industry practice is that
foreign institutional investors appoint global custodians (GC) or a similar
Page 5 of 18
No.
A6
Article
Draft Circular
Supplementing
Article 10a after
Article 10 of
Circular 213
Article 1
Clause 8 of this
Draft Circular
Supplementing
Article 10a after
Article 10 of
Circular 213
Content
Article 10a. STC application, reporting on information
changes, revocation of STC via e-STC system:
1. Foreign investors are allowed apply for STC, report on
information changes, voluntarily revoke STC via e-system
in cases these foreign investors are the clients of
depository members and their KYC information has been
evaluated, collected by depository members under
internal rules of depository members.

as follows:
2. Each foreign investor shall assign one depository
member to apply for STC, report on information
changes, voluntarily revoke STC on their behalf via the
online system under the following principles:
a) Foreign investors shall submit the application (hardcopy) under regulations set out at point b, c, d Clause
1 Article 4 or Clause 2, Clause 6 Article 5 in this
Circular and appointment letter using the form
specified in Appendix 20 promulgated in attached
with this Circular for depository members in Vietnam
or foreign countries;
Comment
entity who then appoints a sub-custodian in Vietnam who is VSDs depository
member. In this model:
- GC evaluates and collects know-your-customer (KYC) information about
these foreign institutional investors.
- Local custodian bank does not conduct KYC on STC applicants/holders)
Also the current wording of this clause seems to suggest that the foreign
investors themselves can access the e-system, which we dont believe is the
current proposal of SSC and VSD.
Thus, we recommend amending this provision as follows:
1. Depository members are allowed to use the e-system to apply for STC,
report on information changes, voluntarily revoke STC on behalf of foreign
investors if they authorized to do so by such foreign investors in accordance
with the depository members internal policies governing such
authorizations.
(1) We recommend using only one Vietnamese name and one English name for the
new system to make it more convenient when being used in the future. We
propose the English name e-STC system for the new system.
(2) Per provisions in Point a Clause 2 Article 10a, we understand that if
appointing a depository member for STC application via the e-system, the
documents specified in Point b, c, d Clause 1 Article 4 or Clause 2, Clause
6 Article 5 of Circular 213 are not required to be notarised and translated
into Vietnamese? We suggest the SSC to clearly state this in the draft
circular to avoid misunderstanding.
(3) Also relating to Point (a) Clause 2 Article 10a, in case depository members
are appointed by investors to carry out STC registration process through
e-STC system, the STC registration form is not required under stipulation
set out in Point (a) Clause 1 Article 4 Circular 213? We suggest the SSC to
clearly state this in the draft circular to avoid misunderstanding.
(4) We understand that investors only need to submit Appointment letter
according to the form stipulated in Appendix 20 in the first time appointing the
depository members to carry out STC application/reporting on information
Page 6 of 18
No.
A7
Article
Article 1
Clause 8 of this
Draft Circular
Supplementing
Article 10a after
Article 10 of
Circular 213
Content
Comment
changes through e-STC system? If it is the case, we recommend amending
Point (a) Clause 2 Article 10a as follows:
2. Each foreign investor shall assign one depository member to apply for STC,
report on information changes, voluntarily revoke STC on their behalf via
the online system (e-STC system) under the following principles:
a) Foreign investors shall submit the application (hard-copy) under
regulations set out at point b, c, d Clause 1 Article 4 or Clause 2, Clause 6
Article 5 in this Circular and appointment letter using the form specified
in Appendix 20 promulgated in attached with this Circular (applicable for
the first time appointing that depository member) for depository
members in Vietnam or foreign countries;

as follows:
2. Each foreign investor shall assign one depository
member to apply for STC, report on information changes,
voluntarily revoke STC on their behalf via the online
system under the following principles:
c) Depository members shall be responsible for the

accuracy, truthfulness of the information of foreign
investors declared in electronic system and responsible
for keeping the documents (hard-copy) provided by
investors and for providing them to State Securities
Commission, Vietnam Securities Depository upon written
request.
(5) Documents listed in Point (a) of this Article shall only be applicable for
cases where investors apply for STC or report on information changes. We
recommend the SSC to specifically stipulate the documents need to be
submitted by members in case of STC revocation through e-STC system?
(1) We understand that, in principle, per Clause 3 Article 4 Circular 213, the
investors are those who must be responsible for the legitimation, accuracy
and truthfulness of the supporting documents and information submitted for
STC applications. However, as required in Point (c) Clause 2 Article 10a of this
Draft Circular, depository members shall be responsible for the accuracy,
truthfulness of the information of foreign investors when declaring in the esystem. We recommend the SSC to clearly specify what information is
mentioned in this provision, and clarify the scope of responsibilities that the
members have to bear? Based on such legal provisions, the members will
consider to decide whether or not to provide the services of STC applications
via e-system for their clients.
(2) If our understanding in point (2) of our Comment No.A6 above is correct
(i.e. it is not required to translate the supporting documents into
Vietnamese in case investors appoint a depository members to execute
STC application through e-STC system), in case SSC/VSD requests
depository members to provide the documents (hard-copy) of the STC
application submitted via e-system, is it compulsory to submit the
documents attached with Vietnamese translation?
Page 7 of 18
No.
A8
Article
Article 1
Clause 8 of this
Draft Circular
Amending
Article 10a after
Article 10 of
Content
Comment
(3) When the e-STC system is inaugurated, the depository members will have to
keep a very large volume of documents sent by investors. In practice, these
documents cannot be stored at the depository members office (due to
restriction on confidential information, securities and limitation in storing
capacity of the office) but have to be centrally stored at a separated center. In
case members receive letter from SSC/VSD requesting to provide the hardcopy of these documents, members need to have enough time to contact their
storage center, search for the needed application and send to members head
office. For members having offices located in different provinces, this process
shall take more time because documents need to be transported from one
city to another.
(4) Thus, we recommend stipulating a detailed timeline for members to
present the hardcopy upon requirement of SSC/VSD. At the same time, it is
necessary to stipulate a detailed timeline for this document to be returned
to members in order to continue to be stored, because Point (c) of this
Article has assigned legal responsibility of storing such documents to the
members.
8. Supplementing Article 10a, Article 10b Article 10 as

follows:
3. Vietnam Securities Depository shall grant securities
Specifically, we recommend amending Point (c) as follows:

c) Depository members shall be responsible for the accuracy, truthfulness of
the information of foreign investors declared in electronic system and
responsible for keeping the documents (hard-copy) provided by investors.
Depository members have to provide to State Securities Commission, Vietnam
Securities Depository the documents (hardcopy) within 10 working days since
receiving written request from State Securities Commission, Vietnam Securities
Depository.
No later than 10 working days since receiving documents from depository
member, State Securities Commission, Vietnam Securities Depository will
have to return the hardcopy to members in order to continue to be stored.
(1) Sending the written response of VSD to members may be timeconsuming due to the courier process. Thus, in order to facilitate
members to timely receive information, we recommend SSC and VSD to
study and build e-STC system so that, in case application is rejected, VSD
shall directly inform related members through that system attached with
comment on detailed reasons for rejection.
Page 8 of 18
No.
A9
A10
Article
Circular 213
Appendix 15
Appendix 15
Content
trading code for investors within one (01) day since
receiving sufficient, valid registration information from
foreign investors. In case of rejection, Vietnam Securities
Depository has to provide comment in writing and clarify
the reasons for rejection.
Appendix 15: Documents of investors identification

1. Documents of investors identification
(i).
Where foreign investment funds are structured in form of
investment portfolios managed separately by various fund
managers
(as specified in Funds Charter) (Multiple
Investment Managers Funds - MIM Fund), they are allowed to
register a STC for each investment portfolio managed by a
fund manager.
Documents of investors identification
(iii) Where institutions applying for STC are separate
accounting divisions of the same headquarter; or
subsidiaries
100% owned by multi-international
corporations who are already granted with STCs; or funds,
sub-funds of the same master fund, feeder fund; or
investment portfolios of the same fund or foreign
institutions who are already granted with STCs (if funds
are managed by Multiple Investment Managers or if
Comment
(2) We understand that Article 10a also aims at stipulating principles for
reporting on changes in investors information and revocation of STC via
e-system. However, Clause 3 of this Article only stipulates timeline for
VSD to grant new STC for investors. We recommend SSC to specifically
stipulate the timeline for VSD to approve the reports on changes in
investors information/STC revocation on e-STC system to make it more
convenient for implementation in practices.
Specifically, we recommend amending this provision as follows:
3. Vietnam Securities Depository shall grant securities trading code for
investors/approve changes in investors information/revoke STC upon
investors requirement within one (01) day since receiving sufficient, valid
registration information from foreign investors. In case of rejection, Vietnam
Securities Depository has to provide comment in writing and clarify the
reasons for rejection.
This Draft Circulation supplements Article 4 of Circulation 213 with a provision
authorizing various investment portfolios of the same institution established
under foreign laws and managed by multiple fund managers to be able to register
with different STCs. However, the provision in Clause 1 Appendix 15 only
mentions foreign investment funds.
Therefore, we suggest amending content of Appendix 15 (pls. see further
details in the Attachment Draft Appendix 15 enclosed in this letter) to
ensure consistent principles of STC issuances for MIM funds and institutions.
We realize that this provision is unnecessary. The relationship between
institutions/funds/investment portfolios as defined in this article will be
declared and reported by the investors in accordance to regulations of
reporting, information disclosure of Group of Affiliated foreign investor
stipulated at Clause 8, Article 3, Circular 213.
Therefore, we suggest removing this provision in Appendix 15 (pls. see further
details in the Attachment Draft Appendix 15 enclosed in this letter).
Page 9 of 18
No.
A11
Article
Appendix 15
Content
investment portfolios of an institution have the similar
structure with multiple investment fund):
- Documents identifying relationship between institutions
applying for new STC and institutions who are already
granted with STC, documents proving the separation and
independence of different investment portfolio belonging
to an investment institution, including documents issued
by the local competent authority of the domiciled country
where those institutions registers with (if any), or
investing management contracts or prospectuses or other
documents verifying such relationship or any other
alternative document required by Vietnam Securities
Depository if necessary;
- Copy of Certificate on securities trading code approval by
VSD;

1. Documents of investors identification:
(iii) Where institutions applying for STC are separate
accounting divisions of the same headquarter; or
subsidiaries
100% owned by multi-international
corporations who are already granted with STCs; or funds,
sub-funds of the same master fund, feeder fund; or
investment portfolios of the same fund or foreign
institutions who are already granted with STCs (if funds
are managed by Multiple Investment Managers or if
investment portfolios of an institution have the similar
structure with multiple investment fund):
- In case these institutions applying for STCs at the same

time, foreign institutional investors only need to submit
the original documents identifying legal status of the
master institutions, master funds as prescribed in this
Appendix.
Comment
(1) This Regulation only allows the submission of the original documents on
investors legal status (Certificate of Incorporation) or similar documents. Other
documents which can also be shared among sub-funds/sub-portfolios such as
Prospectuses, Funds Charter, List of Signatures, etc. are still required to be
separately submitted for every sub-funds/sub-portfolios.
(2) In practice, there are many cases that the sub-funds/investment portfolios
of the same master fund/master institutions report information changes at
the same time, and the updated information is shown in the same
document. Meanwhile, this provision only mentions the case of new STC
applications.
Therefore, we suggest amending this provision to clearly specify that: the
investors only need to submit one shared original notarized document (such as
Prospectus, Trust deed, List of authorized signatures, Notary letter, etc.) for all of
sub-funds/investment portfolio (and for the master funds\master institutions).
The notarized translation in Vietnamese will be prepared for each subfund/investment portfolio to ensure that documents can be stored as VSDs rules.
Page 10 of 18
No.
A12
A13
A14
Article
Appendix 15
Appendix 15
Appendix 20
Content
Comment
Specifically, we recommend amending this regulation as following:
- Where institutions applying for securities trading code/reporting on
changes in information at the same time and have the same supporting
documents, foreign institutional investors only submit one shared original set
of documents for all applications, however, the Vietnamese translation of
these documents shall be executed separately for each application.

3. Verification of the authorized signature
- Where foreign institutions have their company seal,
instead of providing supporting documents verifying the
authorization of the authorized person (who are not
Chairman of Board of Director, Members Council or
Directors (General Director)), those institutions shall only
use their seal affixed with signature of the authorized
person in STC applications.
- In cases where there are transfer of customers

assets (i.e. of foreign investors) when closing
accounts, final transferring for account closure, VSD
may consider to request foreign investors to
supplement
supporting
documents
verifying
authorized signature of authorized person to minimize
risks of customers asset loss.
Appendix 20.
APPOINTMENT LETTER ON STC APPLICATION, REPORT
ON INFORMATION CHANGES, VOLUNTARY REVOCATION
OF STC FOR FOREIGN INVESTORS VIA E-SYSTEM
(Pls. see details in the Attachment Draft Appendix 15 enclosed in this letter).
We recommend amending this regulation to ensure convenience in
understanding and application in practice as following:
- Where foreign organizations have their company seal, instead of providing
supporting documents verifying the authorization of the authorized person
(not Chairman of Director Board, Members Council or Directors (General
Director) as prescribed in Point (b) and (c) Clause 2 Article 2 of this Circular,
those institutions shall only use their seal affixed with signature of the
authorized person in STC applications.
(Pls. see details in the Attachment Draft Appendix 15 enclosed in this letter).
During the process of closing account/final transfer for account closing when
changing depository members, foreign investors assets shall be transferred
from one account to another but still under their names. Thus, there is no risk
of customers asset loss.
Therefore, we suggest remove this regulation in Appendix 15.
Foreign investors shall be required to sign this appointment letter and send to
Vietnam. Therefore, we recommend that Appendix 20 shall be in bilingual
form (Vietnamese English) so that it will be more convenient for foreign
investors to understand information comprehensively before signing in the
appointment letter.
We also provide a bilingual form (as attached file in this letter) for SSC
reference.
Page 11 of 18
No.
A15
Article
Appendix 20
A16
Appendix 20
A17
Appendix 20
Content
Appendix 20.
APPOINTMENT LETTER ON STC APPLICATION, REPORT ON
INFORMATION CHANGES, VOLUNTARY REVOCATION OF
STC FOR FOREIGN INVESTORS VIA E-SYSTEM
3. Headquarter address of investors (the address stated

on Business License/Business Registration as for
institutions)/Address (as for individuals): ............................
Appendix 20.
5. Business Registration: .........................................

Issued by: datemonth..year...........
Expire date: date..month.year
Appendix 20.
As the only representative and on our behalf (name of
the foreign investor), implement registration, reporting
on changes, revocation of securities trading code on
online STC registration system according to this
appointment letter.
Commit: (become effective on the signing date)
2. We commit to comply with Vietnamese Law on

registration, reporting on changes, revocation of
securities trading code on online system for STC
application, reporting on changes, and revocation of STC.
B
B1
Comment
Per our experiences in providing services to foreign investors in Vietnam
market, in most of the cases, information on headquarter address of foreign
investors shall not be shown on Business License/Business Registration as
for institutions. Thus, we recommend amending Appendix 20 as following:
3.Headquarter address of investors (the address stated on Business
License/Business Registration as for institutions)/Address (as for individuals):
............................
According to our experiences in providing services to foreign investors in
Vietnam market, in most of the cases, issued date and expire date of Business
Registration (or equivalent documents) are not stated on these documents.
Therefore, we recommend amending Appendix 20 as following:
5. Business Registration: .........................................................
Issued by (if applicable): datemonth..year...........
Expire date (if applicable): date..month.year
Name of the new electronic system serving registration, reporting on
changes, and revocation of e-STC in Appendix 20 is not used consistently. We
recommend using one Vietnamese and one English name for convenient uses
in the future.
In specific, we recommend amending this article as follow:
As the only representative and on our behalf (name of the foreign investor),
implement registration, reporting on changes, revocation of trading code on
online STC registration system (e-STC system) according to this appointment
letter.
Commit: (become effective on the signing date)

2. We commit to comply with Vietnamese Law on registration, report on
changes, abrogation of trading code on online STC registration system (e-STC
system)
ADDITIONAL RECOMMENDATIONS FOR AMENDING, SUPPLEMENTING CIRCULAR 213

Article 2 Article 2. Interpretation of terms
In accordance with international practice, companys secretary or secretarial
Clause 2
2. Competent representative of foreign institutions are:
executive/manager is at senior hierarchy in an organization, normally in the
Page 12 of 18
No.
B2
Article
Article 3 Clause 8
Content
a. Chairman of Director Board, Members Council or
Directors (General Director) of foreign investment
institutions;
b. Individual with sufficient authorisation according to
charter, agreement on capital contribution or other
equivalent documents of foreign institutions to sign in
documents and implement tasks related to this
Circular;
c. Individuals authorized by those specified in Point a, b
of this clause in written document which is verified by
notary abroad, or individuals attested by lawyer and
notary abroad to be qualified to represent foreign
institutions according to foreign laws.
Article 3. Securities investment activities of foreign

investors
8. Foreign investors, groups of foreign investors and
affiliated persons are responsible for fulfilling the
reporting, information disclosure responsibility with
regards to their securities trading activities as per the
regulations on information disclosure on the securities
market according to the below principles:
Comment
form of a managerial position or above. Basically, companys secretary plays
the following roles:
+ Ensuring that an organisation complies with relevant legislation and
regulation, and keeps board members informed of their legal
responsibilities.
+ Acting as companys representative on legal documents, and it is their
responsibility to ensure that the company and its directors operate within
the law.
+ Being responsible for registering and communicating with shareholders, to
ensure that dividends are paid and to maintain company records, such as
lists of directors and shareholders, and annual accounts..
In several countries, company secretary may be an individual or an
organization whom is licensed to implement company secretarys tasks.
However, they must be members of well-known accounting/administration
associations.
In view of the important roles the company secretary plays in business, PLCs and
large companies require the company secretary to be suitably trained, experienced
and professionally qualified for these responsibilities. Therefore, company
secretary is qualified to certify the validity of an authorized signature list issued by
such organization. Hence, we suggest SSC to consider amending this article of
Circular 213 as following:
2. Competent representative of foreign institutions are:
a) Chairman of Director Board, Members Council or Directors (General
Director) or company secretary (secretary/secretarial executive/ secretarial
manager) of foreign institutions
We recommend supplementing Circular 213 with stipulations on the reporting
regime in case there is any change in the appointed representative for
information disclosure of a group or any change in the list of affiliated persons
in that group. Specifically, we recommend to add a sentence in Point (b) of this
clause as below:
In case of any change in the appointed representative for information
disclosure of the group, or any change in the information declared in the
report as per Appendix 19, the group must re-execute the form with updated
information and submit to the SSC, Stock Exchanges, VSD.
Page 13 of 18
No.
Article
B3
Article 4 Clause 13
B4
Article 5 Clause 7
Content
b) Groups of affiliated foreign investors are responsible for
appointing one depository member, or one securities
business organization, or its representative officer (if any),
or one institution or individual to fulfill the reporting,
information disclosure obligations for groups of affiliated
persons following applicable laws;
The appointment letter to an institution or individual to
fulfill the reporting, information disclosure obligations
shall be prepared in accordance to Appendix 19 of this
Circular and submitted to the SSC, Stock Exchanges, VSD
Article 4. Application for a Securities Trading Code

13. Foreign investment fund which is managed by multiple
investment managers (MIMF) shall be allowed to apply for
multiple STCs following the principle that the investment
portfolios managed by an investment manager are
granted with one STC. The application dossier is stipulated
in Point 1 of this Article. In case of applying for additional
STCs, the application dossier includes documents
stipulated in Item a Point 1 of this Article and a copy of the
granted STC approval and documents as stipulated in
Appendix 15 attached herewith.
Article 5. Changes to be reported to VSD
7. Documents in foreign languages as defined in Point b
Clause 2, Point b Clause 6 of this Regulations shall be
notarized, certified according to foreign law, except for
cases where the signer of these documents is the one
signed on STC application as prescribed in Point a Clause
1 Article 4 of this Circular. The translation of these
documents from foreign languages into Vietnamese is
implemented according to Point c Clause 2 Article 4 of this
Circular.
Comment
We recommend amendment to this Clause as below:

13. Foreign investment fund which is managed by multiple investment
managers (MIMF) shall be allowed to apply for multiple STCs following the
principle that the investment portfolios managed by an investment manager
are granted with one STC in addition to the STC granted to the portfolio being
managed by the fund itself. The application dossier is stipulated in Point 1 of
this Article. In case of applying for additional STCs, the application dossier
includes documents stipulated in Item a Point 1 of this Article and a copy of
the granted STC approval and documents as stipulated in Appendix 15
attached herewith.
Point (b) Clause 2 and Point (b) Clause 6 Article 5 merely mention copies of
documents evidencing new information of investors but not require their
authorized signatures. Meanwhile, regulation of Clause 7 mentions the
signature of the signer on STC application as defined in Point (a) Clause 1
Article 4. This leads to misunderstanding while applying in practice,
specifically:
1. Regulations of Clause 7 means: Provided that the signer of Report on
information change is the one signed on STC application form (as
prescribed in Point (a) Clause 1 Article 4), documents in foreign languages
unnecessarily submitted as prescribed in Point (b) Clause 2, Point (b)
Clause 6 Article 5?
2. If that our understanding in (1) is correct, if it is unnecessary to submit
Page 14 of 18
No.
B5
B6
Article
Article 8 Clause 1
Appendix 1
Content
Comment
those documents, then why does Clause 7 require submission of translated
documents from other languages into Vietnamese?
3. Given that our understanding in (1) is not correct, does Clause 7 mean: If
the signer of Report on information amendment is the one signed on
trading code registration (as prescribed in Point (a) Clause 1 Article 4), is it
unnecessary to submit the document evidencing his authorized signature
when report on changes in investor information?
Article 8. Depository account

1. In case of depositing assets in custodian bank:
a) After applying for the STC number, foreign brokers,
100% foreign-owned insurance companies are allowed to
open two depository accounts in depository banks. Foreign
investment funds managed by different fund management
companies (MIMF) can open multiple depository accounts
following the principles that they can open one depository
account in depository bank for each issued securities
trading code. Any other foreign investor is allowed to open
only one account at depository bank.
Appendix 1. STC application form (applied for institutions)
In fact, there are many cases of changing information with regard to STC
registration document (in particular, amendment in name/address, etc.),
documents are completed by investors with the same signature as on STC
registration document at account opening stage (confirmed and approved by
VSD). Therefore, if statement (3) is right, we propose changes in Clause 7
Article 5 as following:
7. Where the document signer as prescribed in Point a Clause 2 hereof is the
one signed on STC application document as prescribed in Point a Clause 1
Article 4 of this Circular, reports on changes as prescribed in Clause 5 hereof
do not include documents evidencing his signing authorization.
Draft Circular amends and supplements Article 4 of Circular 213 in order to
permit portfolios belonging to one foreign organization under management of
different fund management companies (apart from MIM Funds) to register
many STCs.
Therefore, we recommend amending this provision to make it consistent in
regulation and application in practice as following:
1. In case of depositing assets in custodian bank:
a). Foreign institutions managed by different fund management companies
(MIMF) can open many depository accounts following principles in which each
issued securities trading code can open multiple depository accounts
following the principles that they can open one depository account in
depository bank for each issued securities trading code.
Current STC form requires many duplicated/unnecessary information (i.e.
Investment objective in Vietnam with estimated duration and investment
value, information of shareholders, nature of investment, Disclosure
representative, duplicated information of affiliated persons, etc.). While the
information is only for reference of VSDs executives and is not recorded in
Page 15 of 18
No.
B7
Article
Not available
Content
Not available
Comment
any database with the VSD, they are very confusing to the investors. Some
investors cannot freely input the information in the form without consulting
senior management in their organization which is a lengthy process. In
some other cases, some clients do not want to disclose the investment
value and asset allocation before they start trading in the market. Hence
very rough/indicative figures are provided in the form by the clients which
may be not accurate and, hence, not value-added.
We suggest changing Appendix 1 as below:
(i)
There are 3 fields date required in the form: Date at page 1,
Application Date & Execution Date at last page. We would recommend
that the date is required only once under the signature of the STC
applicant.
(ii)
The information of affiliated persons are required twice in Section 5 and
Section 6. We suggest remove one of them.
(iii)
The information in Section 7 - Investment Objective in Vietnam
(investment value, horizon, asset allocation) is for VSDs reference only
and is not recorded in any database. We would recommend removing
this section as it does not add much value for SSC/VSD.
(iv)
Some other information in Section 8, Section 9 and Section 10 should be
reviewed if they are really value-added for SSC/VSD. Otherwise it should
be removed.
According to current regulation of Circular 213, application file of STC shall be
signed by Director/Chairman of the Board of directors/President/Chairman or
authorized person of investment institutions. However, in fact, according to
many clients internal policy, an officer must first verify the documents by
signing on it before the authorized persons sign. As such, the STC application
is signed off by authorized persons together with another person (i.e. the
officer that reviewed the form in prior). This is very much the same as Vietnam
practice of initial sign-off of the officer before the signature of the senior
person is affixed.
We suggest modifying and supplementing Circular 213 to stipulate that: STC
application form is signed off by the authorized persons whose signing powers
have been proved with supporting documents, it should be acceptable. Other
signatures in the form should be disregarded.
Page 16 of 18
No.
B8
B9
Article
Not available
Not available
Content
Not available
Not available
Comment
Or we propose that SSC shall provide guidance so that the VSD shall add this
principle into its Rules on issuing STCs to support activities of foreign
investors in Vietnam market.
As per our experiences when guiding foreign investors in their STC
applications, similar to Vietnamese practices that TNHH stands for limited
liability company or MTV stands for one member company, many foreign
investment funds often use popular abbreviations in their names which are
fully accepted as the funds full names. For instance, LTD. is accepted for
Limited and PLC for Public limited Company, etc.
However, while these abbreviations are fully accepted as valid replacement of
the full words in foreign countries, they are not accepted in the documents for
STC applications in Vietnam. This tiny discrepancies result in foreign investors
having to re-execute the documents which is time-consuming and costly.
We suggest modifying and supplementing Circular 213 to stipulate that: it is
accepted to use common abbreviation with same meaning as full writing in
STC applications. Our proposal contains these abbreviations such as LTD for
limited, PLC for public limited company, LLC for Limited Liability
Company, PTE for private, LP for Limited Partnership, GP for
General Partner, TR for Trust, GR for Group, etc.
Or we propose that SSC shall provide guidance so that VSD shall add this
principle into its Rules on issuing STCs to support activities of foreign
investors in Vietnam market.
Currently, VSDs approvals on the STC numbers and on the change of
investors information issued to foreign investors are all in Vietnamese, hence
foreign investor cannot understand the information stated in this document.
Meanwhile, they have the rights and needs on storing these approvals.
We propose that SSC shall provide guidance so that the VSD shall issue the
approvals in form of bilingual document (Vietnamese English) to ensure
equal benefits of foreign investors.
We believe that such proposals are also matched with SSCs direction in the
implementation plan to elevate Vietnam to Emerging market in MSCIs market
classifications.
Page 17 of 18
No.
B10
Article
Not available
Content
Not available
Comment
Recently, in VSDs new rules on securities depository and corporate actions,
the use of SWIFT messages to replace forms which are supposed to be signed
by the investors has been accepted by the VSD.
We recommend to apply the same approach in the processes of STC
applications, reports on information changes and STC revocation requests, i.e.
accepting SWIFT messages from the investors/global custodians to replace
the STC application forms/reports on changes/requests for STC revocation.
We recommend to supplement Circular 213 with this stipulation, or propose
that SSC shall provide guidance so that the VSD shall add this principle into its
Rules on issuing STCs to support activities of foreign investors in Vietnam
market.
Page 18 of 18
Comments on draft Circular amending Circular 213
COMMENT ON DRAFT CIRCULAR AMENDING, SUPPLEMENTING A NUMBER OF ARTICLES

OF CIRCULAR 213/2012/TT-BTC DATED 06 DECEMBER 2012 PROVIDING GUIDANCE ON
OPERATION OF FOREIGN INVESTORS ON VIETNAM SECURITIES MARKET (CIRCULAR 213)
(Hereby refers to Draft Circular)
RECOMMENDATIONS FOR AMENDING APPENDIX 15
Prepared by
VBF Capital Market Working Group
APPENDIX 15
SUPPORTING DOCUMENTS ON THE IDENTIFICATION OF FOREIGN INVESTORS
(Issued in accordance with Circular 213/2012/TT-BTC dated 06 December 2012 by Ministry
of Finance guiding the investment activities of foreign investors in Vietnams stock market)
1. Identification document of foreign investors
(i) For securities investment fund:
- Lawful copy for Fund Establishment Registration, or equivalent document issued by
foreign competent authority (if any) or confirmation of establishment registration. If the
foreign investor is a hedge fund, additional document required are: Fund charter; or
Memorandum for Private Placement, establishment contract; or other document
providing details on investment strategies of the fund;
-
If the foreign competent authority does not issue confirmation on the establishment of
fund in accordace with foreign law, foreign investment fund can submit one of the
following document as a substitute:
+ A print-out from foreign competent Authoritys website; or
+ The articles of incorporation, the fund charter, Prospectus; or
+ Trust deed/Trust Agreement/ Fund Contract; or memorandum for private
placement, establishment contract; or
+ Tax Certificate issued by the Tax Authority in the country of the funds domicile; or
+ Other document as guided by Vietnam Securities Depository.
(ii) For investor which is not a fund:

- Lawful business license or certificate for business registration or equivalent document
issued by foreign competent authority confirming business registration; Business
license for operating in Vietnam (applicable for investor which is a branch of foreign
institution) or
- Tax Certificate issued by the Tax Authority in the country of investors domicile; or
- Documents extracted from websites of competent bodies in foreign countries; or
- Other document as guided by Vietnam Securities Depository.
(iii) Foreign institutions being structured as investment portfolios managed separately by
multiple investment managers (MIM) (clearly stated in the charter or investment
management agreement or equivalent documents), or Master fund/feeder fund having
multiple sub-funds, are allowed to apply for one STC for investment portfolios managed
by one investment manager/each sub-fund. Additional documents in this case include:
Fund Charter or Investment Management Agreement or equivalent documents (such as
trust deed or constitution document or prospectus or Statement of Additional
Information or Act by Government for Government entities) clearly stipulating that the
portfolios of the foreign institutions are managed by multiple investment managers
Page 1 of 4
(including full name, abbreviated name and country of domicile of investment

managers) or proving the relationship of master fund/feeder fund sub-fund.
In case the above-specified institutions submit STC applications/reports on information
changes of investors at the same time and have identical supporting documents, the
investors are required to submit only one original set of documents for all
applications/reports, but the Vietnamese translation of these documents must be
executed separately for each portfolio/sub-fund.
(iv) For foreign securities company who has been granted with a STC number and is
applying for another STC:
- A copy of the existing STC approval issued by the VSD.
2. Notarization, verification, certifying as per foreign laws can be done in one of the
following ways
- Individual or representative of the organization certifies true copy on the copy of the
document in front of the notary public, at the same time the notary public shall verify the
identity of the individual who certify true copy (name, title and/or valid passport
number/other lawful individual identification)
- To be certified true copy/verified by global custodian of the investor
Notarization, verification, certifying can be done in countries not being countries of domicile
of the investor.
Where foreign organizations have their company seal, instead of providing supporting
documents verifying the authorization of the authorized person (not Chairman of Director
Board, Members Council or Directors (General Director) as prescribed in Point (b) and (c)
Clause 2 Article 2 of this Circular, those institutions shall only use their seal affixed with
signature of the authorized person in STC applications.
Page 2 of 4
RECOMMENDATIONS
FOR BILLINGUAL VERSION OF APPENDIX 20
Ph lc 20/ Appendix 20
MU GIY CH NH THC HIN NG K, BO CO THAY I, T NGUYN HY M S GIAO
DCH TRC TUYN CHO NH U T NC NGOI
TEMPLATE FOR FOREIGN INVESTORS APPOINTMENT LETTER OF A DEPOSITORY
MEMBER FOR SECURITIES TRADING CODE APPLICATION, REPORT ON INFORMATION
CHANGE AND SECURITIES TRADING CODE REVOCATION VIA ELECTRONIC STC SYSTEM
(Ban hnh km theo Thng t ......./201.... /TT-BTC ngy thng nm ca B trng B Ti chnh sa
i, b sung mt s iu Thng t s 213/2012/TT-BTC ngy 6 thng 12 nm 2012 ca B trng
B Ti chnh hng dn hot ng ca nh u t nc ngoi trn th trng chng khon Vit
Nam)
(Issued in accordance with Circular......../201 ..../TT-BTC dated _____ by the Minister of

Finance revising a number of articles of the Circular No. 213/2012/TT-BTC dated December
6, 2012 by the Minister of Finance guiding operation of foreign investors in Vietnam
securities market)
GIY CH NH THC HIN NG K, BO CO THAY I, T NGUYN HY M S GIAO
DCH TRC TUYN CHO NH U T NC NGOI
APPOINTMENT LETTER OF A DEPOSITORY MEMBER FOR SECURITIES TRADING CODE
APPLICATION, REPORT ON INFORMATION CHANGE AND SECURITIES TRADING CODE
REVOCATION VIA ELECTRONIC STC SYSTEM
Knh gi: Cng ty/ngn hng (thnh vin lu k):
To: Securities company/Custodian bank (Depository Member)
Chng ti l/We are:
1. Tn y , tn giao dch, tn vit tt ca nh u t (ghi bng ch in hoa tn t chc nc
ngoi tn trn Giy php thnh lp/ng k kinh doanh) / Full name, trading name,
abbreviated name of the applicant (foreign institutions name in capital letters the name
specified in the license for establishment/business
registration)
2. Loi hnh nh u t /Investor type: C nhn/Individual T chc/Institutional
3. a ch tr s chnh ca nh u t /a ch lin lc (i vi c nhn) /Head office
address/contact address (in case of an individual):.........................................................................
Tel...................................fax....................................email................................................................
4. Quc tch ca nh u t/ Nationality:: ......................................................................................
5. Giy ng k NSH1/Identification Number1:................................................................................
Do: cp / Issued by: ......................................................................................................
Ngy cp (nu c): . ngy thngnm / Issuing date (if applicable) ................................
Ngy ht hn (nu c): . ngy thngnm / Expiry date (if applicable) ..............................
i vi c nhn: s H chiu cn hiu lc/chng thc c nhn hp php khc; i vi t chc: s Giy php
thnh lp php nhn nc ni t chc thnh lp hoc ng k kinh doanh; Giy php thnh lp t chc hoc
chi nhnh ti Vit Nam/For an individual: Valid passport number/Other valid personal identification documents;
For an institution: License of Establishment No. issued by the country where it is established or registered;
Number of License of Establishment of the institution/its branch
Page 3 of 4
Sau y ch nh / Hereby appoint:

Tn thnh vin lu k / Depository members name:
.......................................................................
Tn giao dch / Trading name:
..........................................................................................................
Tr s chnh / Head quarter:
.............................................................................................................
in thoi / Tel:........................................
Fax: .........................................
Giy php thnh lp v hot ng s / Establishment and operation license Number:.
Giy chng nhn ng k hot ng lu k s / Certificate of Registration for depository
operation Number.Ngy.thng nm / Dated do UBCKNN cp / issued by the
State Securities Commission.
Giy ng k thnh vin lu k s /Certificate of Registration for Depository Membership
Number: Ngy thng nm / Dated...do Trung tm lu k chng khon cp /
issued by Vietnam Securities Depository.
L i din duy nht v thay mt chng ti (tn nh u t nc ngoi), thc hin vic ng k,
bo co thay i, hy m s giao dch chng khon trn h thng ng k m s giao dch
chng khon trc tuyn theo Giy ch nh ny / To be the sole representative, who shall on our
behalf (the foreign investors name) proceed with the Securities Trading Code application,
reports of information changes and Securities Trading Code revocation via the electronic system
for Securities Trading Code under this Appointment Letter.
Giy ch nh ny c hiu lc k t ngy .../.../...cho n khi c thay th hoc hy b bng
vn bn ca chng ti (tn nh u t nc ngoi) / This Appointment Letter takes effect from
... /... /... until replaced or revoked in writing by us (the foreign investors name).
Cam kt: (c hiu lc k t ngy k)
Declaration: (effective from the date this registration from is signed)
1. Chng ti xin cam oan nhng thng tin nu trn v ni dung ca ton b h s v cc ti
liu km theo l hon ton chnh xc, trung thc / We hereby declare that the above
information and the contents of the dossiers and the attachments are completely accurate
and truthful.
2. Chng ti xin cam kt s tun th php lut Vit Nam v vic ng k, bo co thay i, hy
m s giao dch chng khon trn h thng ng k m s giao dch chng khon trc
tuyn/ We commit to comply with the laws of Vietnam on the application, reports on
changes and revocation of securities trading codes via the electronic system for Securities
Trading Code.
H s km theo/ Attachments
Nh u t / Applicants:..................................................................................................................
Tn v ch k ca cc i din c thm quyn/Names and Signatures of Authorized
Signatory:..........................................................................................................................................
Chc danh /Title: .............................. ............................................................................................
Ngy thc hin /Execution date: ........................... .......................................................................
Page 4 of 4
Comments on draft Circular guiding information disclosure on the securities market
COMMENTS ON THE DRAFT CIRCULAR GUIDING INFORMATION DISCLOSURE ON THE SECURITIES MARKET
(17 December 2014)
Prepared by
No
Draft Circular
Comments /Proposals On The Draft Circular
1.
2.

3. Internal person of a public company is defined as
someone who holds the position of: member of the
Board of Management, member of Inspection
Committee, General Director (Director), Deputy General
Director (Deputy Director or Deputy Director in charge of
specific department), Financial Director, Chief
Accountant, Head of Accounting Department of a public
company or similar positions as stipulated in the
company charter, a legal representative, authorized
person, other management positions decided or
appointed by General Shareholders/Board of Directors.
4. Internal person of a public fund is defined as
someone holding the position of a Fund founding
member (the Authorized Participants), member of the
Committee of Representatives of a securities investment
fund, member of the Board of Management or the
Inspection Committee (if applicable), an operator of a
public fund, fund management company and member of
Board of Management/Board Members, Inspection
Committee, Executive Board of Fund Management
Company, Chief Accountant/Chief of Finance and
Accounting Department of the fund management
company.
Comments: Directors in charge of specific departments within a company often do not

have similar or the same powers. In fact, some department directors have less powers
than General Directors.
Proposal: We propose this definition be modified to (underlined):
Internal person of a public company is defined as someone who holds the position of:
member of the Board of Management, member of Inspection Committee, General
Director (Director), Deputy General Director (Deputy Director or Deputy Director in
charge of a specific department who was appointed or had the appointment approved
by Board of Management), Financial Director, Chief Accountant, Head of Accounting
Department of a public company or similar positions as stipulated in the company
charter, a legal representative, authorized person, other management positions
decided or appointed by General Shareholders/Board of Directors.
Comments: Firstly, Circular No.212/2012/TT-BTC stipulates: Authorized Participant is a
securities company providing brokerage services and self-trading, and a depository bank
which signed the contract with the fund management company for setting-up the ETF
fund. Therefore, the Authorized Participant should not know internal information about
the Fund. So, the interpretation of Authorized Participant is being an internal person of a
Fund is unsuitable in our view.
Internal person of a public fund is defined as someone holding the position of a Fund
founding member (except for the Authorized Participants), member of the Committee of
Representatives of a securities investment fund, member of the Board of Management or
the Inspection Committee (if applicable), an operator of a public fund, fund management
company and member of Board of Management/Board Members, Inspection Committee,
Executive Board of Fund Management Company, Chief Accountant/Chief of Finance and
Accounting Department of the fund management company.
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5. Currently circulating voting stocks of a public
company means the issued voting stocks of the company
minus the treasury shares of the company.
7. Group of related investor in this Circular shall

include the following entities:
7.1 Group of companies is interrelated as parent
company-subsidiary company relationship.
7.2 Entitys father, adoptive father, mother, adoptive
mother, spouse, children, adoptive children, siblings of
such entity.
7.3 Funds of the same master fund, sub-funds of the
same fund, funds which capital is sponsored by the same
fund or other organizations having the same operation
model.
7.4 Funds or investors have the same
trading
representative, except if an investors trading
representative is a fund management company.
4.

Comments: The word shares in this case is inconsistent with the Business Law.
Currently circulating voting stocks shares of a public company means the issued
voting stocks shares of the company minus, the treasury shares of the company.
Comments: Item 7, Article 2 of Circular No.213/2012 defines: Group of related foreign
investors as follows:
7. Group of related foreign investors includes foreign institutions, related to each
other as follows:
a) Funds managed by the same fund management company, including domestic and
foreign fund management companies
b) Funds, sub-funds of the same master fund, feeder funds
c) Portfolios of the same fund managed by different multiple investment manager
funds
d) Funds with the same trading representative.
Item 8, Article 3 of Circular No.213/2012 stipulates that groups of related foreign
investors are obligated to report on ownership and publish information on securities
transactions in accordance with the Law on Information Disclosure on securities
market.
Our questions and comments are as follows:
(a) As per the provision in Item 5, Article 23 of the Draft and the State Securities
Committee guideline: A domestic fund with its own trading account managed by a
domestic fund management company should not be considered a relevant entity
and the ratio of share ownership of such a fund at the same company should not be
classified as a major shareholding.
(b) However, according to the definition of groups of related foreign investors in
Circular No.213/2012, a foreign fund with its own trading account managed by a
fund management company, including a domestic and foreign company, should be
considered as relevant entity and the ratio of shares ownership of these funds in
the same company should be classified as a major shareholding.
(c) Do groups of related foreign investors as per Circular No.213/2012 need to
announce information as mentioned in the Draft? If so, which article in the Draft
stipulates the obligation on information disclosure of groups of related foreign
investors?
(d) A portfolio/separately managed account is not a securities investment fund.
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8. Finishing time of securities transaction is defined as

follows:
8.1 In case the investor performs the transaction through
the Stock Exchange: The time is counted from the finish
of transaction payment.
5.

Therefore, the regulation on information disclosure of such portfolios must be
separated from the information disclosure of the investment fund.
Besides, according to the current regulation, the definition of Trading Representative is
only applied to foreign investors and Trading Representative is an individual, not an
institution. (Item 3, Article 2 of Circular No. 213/2012/TT-BTC (Circular No. 213/2012)).
Current documents do not stipulate the definition of Trading Representative for
domestic investors.
Therefore, Item 7.4, Article 2 of the Draft is unclear and unsuitable.
Proposal: We propose this definition be as follows:

To clearly define the relationship between the definition of Group of related person
according to this Draft and definition of Groups of related foreign investors as per
Circular No.213/2012.
The Draft needs:
(a) To specifically defineportfolio
(b) To specifically stipulate the obligation of information disclosure of portfolio
(c) To specifically stipulate who is the related person of portfolio.
Besides, we propose to modify Item 7.4, Article 2 of the Draft as follows:
7.4. Foreign investment funds or foreign investors have the same trading
representative, except for the trading representative of investor is fund management
company.
Comments:
The finishing time for securities transaction counting to the finish of transaction
payment, outlined in the regulation is unclear in our view. Which period of time is
considered finish of transaction payment?
For buyers, when shares are transferred to the buyers account and the change of
share ownership ratio is recorded in the buyers account (T+3 day as current
regulation), the transaction considered is finished?
For sellers, at the transaction date, the number of sold shares is deducted from the
sellers account and the change of share ownership ratio is recorded in the sellers
account (on T as per the current regulation). However, the seller will receive the money
on T+3.
Proposal: We propose this definition be modified as follows (underlined):
8. Finishing time of securities transaction is defined as follows:
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8. Finishing time of securities transaction is defined as

follows:
8.3. Where investors purchase shares/fund certificates in
a securities offering: the time shall be calculated from
the date the securities offering results are published on
the website of the State Securities Commission.
6.

8.1 In case the investor performs the transaction through Stock Exchange: on T+3
when the transaction is completed.
Comments:
Currently, Article 25, Circular No.204/2012/TT-BTC of the Ministry of Finance guides
procedures for public offerings and only requires the issuers to inform the State
Securities Commission of offering results within 10 days since the offering is
completed. There is no legal requirement for issuers to keep investors informed of
such a result. Meanwhile, investors are subject to information disclosure obligations,
based on the announcement date of the offering results.
On one hand, reporting on the results of securities offerings will be published on the
State Securities Commission's website. However, it might be difficult for foreign
investors to keep track of this information on a daily basis. On the other hand, due to
differences in publishing times of the report in Vietnamese and English on the State
Securities Commission's website (usually 1 to 2 days), foreign investors might not have
timely access to such information and might result in late information disclosure.
Thus, general investors and especially foreign investors have very limited access to such
information on a timely basis to fulfil disclosure obligations. The provision in Point 8.3 of
this Article would cause many difficulties for investors to implement.
Proposals: Therefore, we suggest the State Securities Commission stipulate a mechanism
in which offering results must be officially sent for investors attention and investor
disclosure obligations should only derive from the time they receive such official results.
7.
Article 3. Requirements of disclosing information

2. Information disclosure of an organization shall be
made by its legal representative or the person
authorized to disclose information. The legal
representative of such organization shall be liable for the
accuracy, timeliness and completeness of any
information disclosed by the person authorized to
disclose information.
Comments: Is the concept legal representative applicable to foreign institutional

investors? If yes, it cannot be applied to foreign investment funds. If not, we propose the
State Securities Commission clearly stipulate that this concept only applies to institutions
established as per Vietnamese law and regulations.
Proposals: For foreign investors, we propose the concept of authorized representatives of
foreign institutional investors be used as per Clause 2, Article 2, Circular No.213/2012.
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4. The entities of disclosing information (except for the
entities at Chapter V of this Circular), when making the
disclosure of information as stipulated in this Circular,
they must be made at the same time as the report on the
contents of disclosed information to the State Securities
Commission and the Stock Exchange, specifically as
follows:
[...]

Comments:
The Draft contains regulations for public companies and public funds. According to the
current regulation, public fund consists of closed-end and open-end funds, public
company consists of listed public companies (listed company) and unlisted public
companies. However, open-end funds and unlisted public companies are not listed on
the Stock Exchange. Therefore, the regulation: ...when making the disclosure of
information as stipulated in this Circular, they must be made at the same time as the
report on the contents of disclosed information to the State Securities Commission and
the Stock Exchange is unsuitable. This is because these institutions are unlisted and
disclosure of information to the Stock Exchange is not required, nor would they know
which Stock Exchange to send it to.
According to the Securities Law, even for information disclosure of major
shareholders, an unlisted public company must send the information disclosure to the
State Securities Commission and its own public company.
Proposal: We propose this regulation be modified to (underlined):
4. The entities disclosing information (except for the entities in Chapter V of this
Circular), when making the disclosure of information as stipulated in this Circular, they
must be made at the same timew with the report on the contents of disclosed
information to the State Securities Commission or the Stock Exchange, specifically as
follows:
Comments: This regulation may see entities disclosing such information to miss out the
information, the quantity of information disclosure shall be double and one set of disclosed
information must be duplicated (one copy of full information, one copy without personal
information).
9.
4.5. In the case of the contents must be disclosed by the

entities in the market including personal information
(ID/passport number, address, telephone number,
personal email, securities trading account), this kind of
information is not required for disclosure on websites of
such entities. In this case, the entity disclosing Proposal: We propose the State Securities Commission promulgate the form, enclosed
information must submit two documents to the State with the Draft, for such information disclosure, with personal information to be filled out on
Securities Commission and Stock Exchange, including the second page. This will prove more convenient for entities disclosing information.
one document of full personal information and one
document not containing personal information so the
State Securities Commission and Stock Exchange post
such information on their websites.
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7. The language used in information disclosure on the
Vietnamese
Stock
Market
7.3. Any listed company with a paid-up charter capital of
from VND500 billion as determined in its latest audited
10. financial statements or any listed company with foreign
ownership of from 20% over a period of one (01) year
shall disclose information in both Vietnamese and
English.

Comments: In our opinion, the requirement for information disclosure in Vietnamese and
English should only apply to listed companies with foreign ownership from 10% of charter
capital and within one (01) year to ensure that investors have equal access to information
and on timely basis compared to local investors.
Proposals: We recommend adjusting Point 7.3, Article 3 as underlined:

"7.3. Any listed company with a paid-up charter capital of from VND500 billion as
determined in its latest audited financial statements or any listed company with foreign
ownership of from 20%10% of charter capital over a period of one (01) year shall disclose
information in both Vietnamese and English".
7. The language used in information disclosure on the Proposals: To ensure foreign investors have access to information on an equal and timely
Vietnamese
Stock
Market basis compared to local investors, we recommend adjusting Point 7.5, Article 3 as follows:
7.5. The Stock Exchanges, the Vietnam Securities
11. Depository, listed companies and large-scale public 7.5. The Stock Exchanges, the Vietnam Securities Depository, listed companies and largecompanies shall ensure the accuracy and consistency of scale public companies shall ensure the accuracy, consistency of any information
any information disclosed in Vietnamese and English.
disclosed in English and Vietnamese and ensure that information is published in
Vietnamese and English at the same time."
9. The entities disclosing information shall preserve and Comments: As per current regulations, some periodic reports are made by code signing
archive reported and disclosed information in only, so keeping information in hard copy as per the regulation will prove burdensome for
accordance with the law.
organizations.
For the periodical disclosure of information, the entities
disclosing information must preserve the information in Proposal: We propose this regulation be modified as follows:
9. The entities disclosing information shall preserve and archive reported and disclosed
12. the form of hard copy and soft copy for at least ten (10) information in accordance with the law.
years.
For the disclosure of extraordinary information, the For the periodical disclosure of information, the entities disclosing information must
entities disclosing information must be preserved on its preserve the information in the form of hard copy or and soft copy for at least ten (10)
years.
website for at least two (02) years.
For the disclosure of extraordinary information, the entities disclosing information must be
preserved on its website for at least two (02) years.
CHAPTER II INFORMATION DISCLOSURE OF PUBLIC COMPANY
Article 8. Extraordinary disclosure of information and information regarding the General Meeting of Shareholders:
1. A public company must make an extraordinary disclosure of information within twenty-four (24) hours of the occurrence of one of the following
events:
1.3 To decide on the dividends, method of dividend Comments and proposal: Since this regulation is related to the definition Finishing time
13.
payment; to issue, to withdraw the issued shares to of securities transaction, we propose the above-mentioned Item 5 be modified as above.
Page 6 of 20
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increase the share capital from the owners equity; to
decide on split/add up shares.
1.8 In case of the securities company, which is a listed
company, buys back its own odd-lot shares according to
the customers request or buys its own shares to correct
the transaction mistake, the time of information
disclosure is counted from the time of finishing the
14. transaction.
1.16 In case of the total value of loans of the company

with thirty percent (30%) or more of the companys equity
at the time of the latest audited annual financial
statement, the company must disclose the information
on the decision of borrowing or issuance bonds with a
15.
value of twenty percent (20%) or more of the companys
equity as per the latest audited annual financial
statement or the latest reviewed six monthly financial
statements.
2. Information disclosure of the General Meeting of
Shareholders
2.1. A public company shall publish all documents
related to the first annual/extraordinary General Meeting
of Shareholders, including the invitation letter, proxy
appointment form, agenda, votes and discussion
16.
documents as the basis for approving the decision and
draft resolution for each issue in the agenda on the
companys website and at the same time send invitation
letters and instructions on how to visit the website for
the meeting and documents of the General Meeting of
Shareholders to shareholders at least ten (10) business
Comments:
At present, securities companies are allowed to periodically report odd-lot
transactions.
The need for securities companies to report whenever they buy back odd-lot shares
from investors, as per the regulation, will prove unnecessarily time-consuming.
Proposal: We propose this regulation be modified as follows (underlined):
1.8 In case of the securities company, which is a listed company, buys back its own
odd-lot shares according to the customers request or buys its own shares to correct
the transaction mistake, the time of disclosure of information is counted from the time
of finishing the transaction the last day of each month.
Comments: Regulation at Point, 2 Item 1.16 of Article 8 is unclear.
Proposal: We propose Item 1.16 be modified as follows (underlined):
In case of the total value of loans of the company with thirty percent (30%) or more of
the companys equity at the time of the latest audited annual financial statement, the
company must disclose the information on the decision of extra borrowing or issuance
bonds with total value of twenty percent (20%) or more of the companys equity as per
the latest audited annual financial statement or the latest reviewed six monthly
financial statements.
Comments:
From our experience in providing services to foreign investors without a commercial
presence in Vietnam, the draft resolution for the General Meeting of Shareholders is
usually published within a relatively short time before the meeting date and the
meeting agenda is completely in Vietnamese. As a result, foreign investors are unable
to access information before attending or authorizing a proxy to attend the General
Meeting of Shareholders. Therefore, we recommend to keep the timeline for publishing
the draft resolution of General Meeting of Shareholders applied to a Joint Stock
Company in general, which is 15 days as per current practice, to allow investors to
have sufficient time and the opportunity to access information in an equal manner to
local investors.
If the election of Board of Management/Board of Supervisors is included in the
Page 7 of 20
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Draft Circular
days before the opening of the General Meeting of
Shareholders.

meeting, a detailed list and information of candidates is not normally provided in the
agenda of the General Meeting of Shareholders provided by issuers. This is challenging
for investors that delegate their proxy to attend the meeting and vote, due to the lack of
information to provide voting instructions before the meeting date. Point dd, Clause 7,
Article 137 of the new Law on Enterprises has also stipulated the same.
Proposals: Thus, we recommend adjusting this clause as follows:

"2.1. A public company shall publish all documents related to the first
annual/extraordinary General Meeting of Shareholders, including the invitation letter,
proxy appointment form, agenda, votes, list and detailed information of candidate(s) in
case there is election of members of Board of Management/Board of Supervisors and
discussion documents as the basis for approving the decision and draft resolution for
each issue in the agenda on the companys website and at the same time send
invitation letters and instructions on how to visit the website for the meeting and
documents of the General Meeting of Shareholders to shareholders at least ten (10)
fifteen (15) days before the opening of the General Meeting of Shareholders."
CHAPTER III INFORMATION DISCLOSURE OF SECURITIES COMPANY, FUND MANAGEMENT COMPANY; BRANCH OF FOREIGN FUND MANAGEMENT
COMPANY IN VIETNAM
Article 14. Periodical disclosure of information of securities company, fund management company, branch of foreign fund management company
1. A fund management company, securities company and Comments:
branch of a foreign fund management company shall Circular No.212/2012/TT-BTC only stipulates the quarterly financial statement of a
make a periodical disclosure of information in
fund management company and does not mention the regulation as outlined in Item
accordance with Article 10 of this Circular, except for the
3.5, Article 10 of the Draft:
regulation at Item 2 of this Article.
Item 3.5, Article 10 of the Draft: In case the profit after corporate income tax in the
profit and loss statement between the quarterly report of the disclosing period and the
same quarterly report of the previous year fluctuates by ten percent (10%) or more or
the business result in the disclosure quarter shows a loss, the listed company or
large-scale public company must clearly explain such reasons in that quarterly
17.
financial statement. In case the parent company has subsidiary companies or a higherlevel accounting entity with subsidiary accounting entities, it is required to explain the
reasons in both financial statements of the parent company or higher-level accounting
entity and the consolidated income statement or general income statement.
On the other hand, this is not applicable for a fund management company that is not a
public company.
Page 8 of 20
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Comments: We propose this regulation be modified as follows (underlined):
A fund management company, securities company and branch of foreign fund
management company should make a periodical disclosure of information in
accordance with Article 10 of this Circular, except for the regulation at Item 3.5, Article
10 and Item 2 of this Article.
Article 15. Extraordinary disclosures of information.

1. Securities company, fund management company must make an extraordinary disclosure of information within twenty four (24) hours of an
occurrence of one of the following events:
1.1 There is a decision to bring legal proceedings, a Comments:
verdict or a decision of a court against a member of the Decision on sanction against administrative violation by the Government Bodies and
Board of Management, General Director, Deputy General
Agencies is a wide notion. Sometimes the decision on sanction against administrative
Director or Director, Deputy Director, Chief Financial
violation is not serious as other decisions in this Item 1.1, Article 15.
Officer, Chief Accountant, Chief of Accounting The administrative violation that need to be announced should include only the
Department, or a member of the Inspection Committee,
violations which are sanctioned by the direct government bodies in the securities field,
internal person of securities investment fund (as for a
such as State Securities Commission or Stock Exchange.
fund management company); there is a decision to bring
Proposal: We propose this regulation be modified as follows:
18. legal proceedings, a verdict or a decision of a court There is a decision to bring legal proceedings, a verdict or a decision of a court against a
relating to the operation of the company; there is a
member of the Board of Management, General Director, Deputy General Director or
conclusion by the tax office about a breach of the law on
Director, Deputy Director, Chief Financial Officer, Chief Accountant, Chief of Accounting
tax by the company; there is a decision on a sanction as a
Department, or a member of the Inspection Committee, internal person of securities
result of the administrative violation to the company by
investment fund (as for a fund management company); there is a decision to bring legal
the Government Bodies and Agencies.
proceedings, a verdict or a decision of a court relating to the operation of the company;
there is a conclusion by the tax office about a breach of the law on tax by the company;
there is a decision on a sanction as a result of the administrative violation to the company
by the Government Bodies and Agencies State Securities Commission or Stock Exchange.
1.7. There is a change in members of the Board of Comments: Phrase there is a change to... includes the decision on appointment or
Management or Board Members, Chairman, Director or dismissal of the executive officer.
General Director, Deputy Director or Deputy General
Director, Financial Director, Chief Accountant, Chief of Proposal: We propose this regulation be modified as follows (underlined):
1.7 There is a change in member(s) of the Board of Management or Board Members,
19. Accounting Department, Member of the Inspection
Chairman, Director or General Director, Deputy Director or Deputy General Director,
Committee,
authorized
person
who
discloses
Financial Director, Chief Accountant, Chief of Accounting Department, Member of the
information, the decision on appointment or dismissal of
Inspection Committee, authorized person who discloses information, the decision on
the Chief Executive Officer of the securities investment
appointment or dismission of should be the Chief Executive Officer of the securities
fund (for the fund management company).
investment fund (for the fund management company).
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1.10(c) A transaction, the value of which is equal to or
higher than ten percent (10%) of the chartered capital, or
a transaction resulting in the shareholding of a
shareholder changing (under or over) through the
thresholds of 10%, 25%, 50% and 75% of the chartered
capital of the company.

Comments:
At present, listed securities companies have insufficient tools to control shareholders
transactions.
This regulation is only suitable for securities companies and fund management
companies which are not public companies.

1.10(c) A transaction, the value of which is equal to or higher than ten percent (10%) of the
chartered capital, or a transaction resulting in the shareholding of a shareholder changing
(under or over) through the thresholds of 10%, 25%, 50% and 75% of the chartered capital
of the company (except securities and fund management companies which are public
companies).
Article 17. Other information disclosure of securities company and fund management company.
1. Disclosure of information on the General Meeting of Comments:
Shareholders/Board Members.
According to Circular No.212/2012/TT-BTC, a fund management company is not
1.1. A securities company and fund management
required to disclose information on the General Meeting of Shareholders. Besides, this
company must disclose information on the General
regulation is also unsuitable for non-public fund management companies.
Meeting of Shareholders as stipulated in Item 2, Article 8
21.
of this Circular.
Proposal: We propose this regulation be modified as follows:
1. Disclosure of information on the General Meeting of Shareholders/Board Members.
1.1 A securities company and fund management company which are public companies
must disclose information on the General Meeting of Shareholders as stipulated in
Item 2, Article 8 of this Circular.
3. The fund management company has an obligation to Comments: Clarification is sought on the phrase Entrusted Investor in this Draft. Is it an
disclose information in the case of a securities investor who entrusts the fund management company through a contract for portfolio
investment fund, securities investment company and management or is it included by funds?
22. portfolio of the Entrusted Investor managed by the fund
management company who are major shareholders, Proposal: We propose there should be a specific definition of Entrusted Investor in
internal shareholder as stipulated in Article 23 and Article 2, Interpretation of Terms.
Article 25 of this Circular.
4. In case the securities company make margin call Comments:
selling of shares/fund certificates of internal person of This regulation is unenforceable because a securities company cannot control nor
23. listed company, trading registration company/listed
knows all of the internal people of a listed company,trading registration
fund, securities company must disclose information
company/listed fund in the market.
before margin call selling.
A securities company can only control its own internal person and the internal person
Page 10 of 20
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is not allowed to make a margin loan as per the regulation, so the margin call selling
of shares/fund certificates is impossible.
Proposal: We propose the deletion of Item 4, Article 17:

4. In case the securities company make margin call selling of shares/fund certificates
of internal person of listed company, trading registration company/listed fund,
securities company must disclose information before making the margin call selling.
CHAPTER IV INFORMATION DISCLOSURE ON PUBLIC FUND, PUBLIC SECURITIES COMPANY, INDIVIDUAL SECURITIES INVESTMENT COMPANY
Article 18. Periodical disclosure of information of public fund.
1. Periodical disclosure of the financial statement.
Comments:
1.1 A fund management company shall make a periodical This regulation only stipulates the periodic disclosure of information of the financial
disclosure of information about the audited annual
statement for public funds, but does not stipulate other periodic disclosures of
financial statement of a public fund by the approved
information, such as monthly and weekly reports.
auditing organization no later than ten (10) days from the We believe specific regulations should be more practical and applicable.
date of the auditing organization approved to sign the Besides, with the application of Circular No.52/2012/TT-BTC, the period of information
audit report. The time period for disclosure of
disclosure for an audited annual financial statement is 10 business days from the date
information of annual financial statement of such public
of the auditing organization approval to signing the audit report. This presents
fund shall not exceed ninety (90) days from the last day
difficulties for a fund management company as it must select and book the press
of the financial year.
agency in advance. Therefore, we propose to increase this period from 10 to 15
1.2 A fund management company shall make a periodical
business days.
disclosure of information of the first six (06) months Besides, Item 1.3, Article 15 is only applied to closed-end funds, while Article 15
financial statement of a public fund within thirty (30) days
adjusts the disclosure of periodic information to public funds in general. According to
24.
from the last day of the first six (06) months of the
the current regulation, open-end funds and ETFs also make quarterly reports within 20
financial year, except for a real estate investment fund,
days after the last day of that quarter.
the period of information disclosure shall be sixty (60)
days from the last day of the first six (06) months of Proposal: We propose this regulation be modified as follows:
financial year.
Article 18 should stipulate and fully list all kinds of periodic information disclosure
1.3 A fund management company shall make a periodical
which a public fund is obligated to announce, instead of a financial statement and
disclosure of information of quarterly reports (for
referring to other documents as with the current Draft.
closed-end fund) within twenty (20) days from the last Increase from 10 to 15 business days for information disclosure of the audited annual
day of the quarter.
financial statement, from the date of the auditing organizations approval to sign the
1.4 The contents of information to be disclosed about the
audited statement.
financial statement of public fund shall be in accordance
with applicable law on accounting regimes applicable to
securities investment funds.
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2. Besides the financial reports as prescribed in Item 1 of
this Article, the fund management company shall make a
periodical disclosure on other information of a public
fund as follows:
2.1 The fund management company shall announce its
report on changes in the net asset value of a public fund
in accordance with provisions on establishment and
management of securities investment funds issued by
the Ministry of Finance.
2.2 The fund management company shall announce
information about the report on investment operations of
a public fund, a summary report on fund management
operations (for open-ended and real estate investment
funds), a statistics report on transaction fees of the
funds investment operations (for open-ended funds,
ETF) and other periodic information in accordance with
the establishment and management of a securities
investment fund issued by the Ministry of Finance.
Article 19. Extraordinary disclosure of information of public fund and information of General Meeting of Investors.
Suggested heading of Article 19 of the Draft:
Comments: The heading includes the disclosure of information of General Meeting of
Article 19. Extraordinary disclosure of information of Investors, but there is no regulation for this Article.
public fund and information of General Meeting of
25.
Investors.
Proposal: We propose Article 19 be modified as follows:
The information disclosure of General Meeting of Investors for each kind of fund
(closed-end, open-end and EFT) should be added to the content of this Article.
1. A fund management company must make an Comments: Definition of investment capital is unsuitable for a public fund.
extraordinary disclosure within twenty four (24) hours of
26. the occurrence of one of the following events concerning Proposal: We propose this regulation be modified as follows (underlined):
a public fund:
1.4 Decision to change investment chartered capital.
1.4. Decision to change investment capital.
CHAPTER V REPORT ON MAJOR SHAREHOLDERS/INVESTORS OWNING FIVE PERCENT (5%) OR MORE OF LISTED FUND CERTIFICATES, INTERNAL
PERSON OF PUBLIC COMPANY/LISTED FUND
There is still no disclosure of information for an We propose further additions to this regulation.
27.
individual securities investment company.
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Article 23. Report on transactions of major shareholders and investors owning five percent (5%) or more of fund certificates of a closed-end fund.
2. If an organization, individual or group of relevant Comments:
people holding five percent (5%) or more of the The regulation on disclosure when the 1% cap is exceeded is logical. However, it is not
circulating voting shares of a public company, the
practical because of the following reasons:
investor owning five percent (5%) or more of the fund
(a) Ex 1: A major shareholder holding 5.99% of As shares must announce if an
certificates of the closed-end fund when trading the
additional 0.02% of As shares is purchased because 6.01% of As shares will hence
share/fund certificates (including donations or receipt of
be owned. In reality, the disclosure of the additional 0.02% is illogical and will
donations, gifts or receipt of gifts, inheritance,
inconvenience shareholders.
assignment or implement the rights of buying shares or
(b) Ex 2: A major shareholder holds 5.1% of As shares. After the company buys back
converting convertible bonds or other cases of not
the shares from other shareholders and the buyback transaction is finished, the
trading shares/fund certificates) which lead to the
ownership ratio of this shareholder shall increase from 5.1% to 6.1%. According to
change of ownership ratio of shares over the threshold of
the Drafts regulation, a shareholder with a passive increase in shares, such as
one percent (1%), such entities must report to the public
outlined, should make a disclosure.
company, State Securities Commission and Stock
Exchange (for listed shares, trading registration, closed- Proposal: We propose this regulation be modified as follows (underlined):
end fund certificates) within seven (07) business days, 2. When an organization, individual or group of relevant people holding five percent
from the day of the above-mentioned change according
(5%) or more of the circulating voting shares of a public company, the investor owning
to Appendix VII attached to this Circular.
five percent (5%) or more of the fund certificates of a closed-end fund trades the
28.
share/fund certificates (including the case of donations or receipt of donations, gifts or
For example: The ownership ratio of shares of X listed
receipt of gifts, inheritance, assignment to implement the rights of buying shares or
company of investor A is 5.2%. At T-day, investor A
convert the convertible bonds or other cases of not trading the share/fund certificates)
places a buy order which increase the ownership ratio of
which lead to the change of ownership ratio of shares over the threshold of one percent
X shares to 6.1%. The finishing date of the transaction is
(1%), and such change increases the ownership of share/fund certificates to at least
T+3 day. Therefore, within 7 business days from T+3 day,
0.05% (except if the public company buys back its own shares), such entities must
investor A must announce the change of his ownership
report to the public company, State Securities Commission and Stock Exchange (for
ratio of shares to X company, State Securities
listed shares, trading registration, closed-end fund certificates) within seven (07)
Commission and Stock Exchange (due to the ownership
business days, from the day of the above-mentioned change according to the Appendix
ratio of investor A changing over the cap of 6%).
VII attached to this Circular.
Example 1: Investor A holds 5.99% of As shares. This investor should not need to
report the additional purchase of 0.02% of As shares as the ownership ratio of shares
should be increased to 6.01% of As shares after the additional purchase.
Example 2: Investor A holds 5.99% of As shares. This investor should report the
additional purchase of 0.05% of As shares as the ownership ratio of shares should be
Page 13 of 20
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4. A fund management company (domestic and foreign)

must disclose information as stipulated in Items 1. 2 and
3 of this Article upon the total portfolio of the fund
29. management company as well as the portfolio of the
Entrusted Investors (including domestic and foreign
investors).
5. The investor (including the securities investment fund)
shall have an obligation on disclosure of information as
stipulated in Items 1.2 and 3 of this Article based on the
total volume of shares/closed-end fund certificates held
30.
by such an investor (including the trust investment
portfolio).

increased to 6.04% of As shares after the additional purchase.
Example 3: Investor A holds 5.99% of As shares. This investor should not need to
report if company A buys back its own A shares, the ownership ratio of As shares of
this investor should automatically increase to 6.99%.
Comments: Clarification is sought on the phrase Entrusted Investor in this Draft. Is it an
investor who entrusts the fund management company through a contract for portfolio
management or is it included by funds?
Proposal: We propose a specific regulation phrased as the Entrusted Investors at Article 2 of
the Draft, specifically as follows: The Entrusted Investor in this Circular is the investor who
signs the portfolio contract with the fund management company.
Comments: This regulation is unclear on the information disclosure obligations of foreign
investment funds operating and investing in Vietnam.

5. A domestic and foreign investor (including foreign securities investment funds)
should have an disclosure information obligation as stipulated in Items 1.2 and 3 of this
Article based on the total volume of share/closed-end fund certificates held by such
investor/foreign securities investment fund (including the trust investment portfolio).
Article 25. Disclosure on the transactions of the internal person of public fund, the internal person of closed-end fund and the relevant person of
such entities.
1. When a internal person and relevant person of Comments:
internal person of a public company intends to trade Is the definition of the relevant person in Article 25 of the Draft the same as the
shares/right to purchase shares, convertible bonds/right
definition of group of relevant people as defined by Item 7, Article 2 of the Draft? If so,
to purchase convertible bonds of a company or when the
please modify this definition in accordance with the term as defined by Item, 7 Article 2.
If not, please specify a general definition to allow the entity disclosing the information
internal person of a closed-end fund or relevant person
to apply and obey all information disclosure obligations in the Draft.
of such entities intends to trade fund certificates, right to
31. purchase fund certificates of the closed-end fund, Besides, Article 23 of the Draft mentions the notion of group of relevant people, while
including assignment without using the trading system
Article 25 of the Draft mentions relevant person.
at the Stock Exchange.
The internal person of a public company, internal person Proposal: We propose all phrases of relevant person in Article 25 of the Draft be
of a closed-end fund and relevant person of such replaced by group of relevant people.
entities shall not be permitted to register simultaneously
to purchase and sell shares/right to purchase shares or
Page 14 of 20
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fund certificates/right to purchase fund certificates of
closed-end funds at the same registration stage.
2. The internal person and relevant person of the
internal person shall be permitted to register the next
transaction only when a report on the expiry of the
previous trading period is made.
3. In the case of failure to conduct the transaction or
failure to purchase all subscribed shares, the internal
person of a public company, internal person of a closedend fund and relevant person of such entities shall,
within three (3) business days from the expiry of the
proposed trading period, make a report to the State
Securities Commission and Stock Exchange.
4. In the case of a internal person of a public company,
internal person of a closed-end fund or relevant person
of such entities are also major shareholders/the investor
owning 5% or more of the closed-end fund certificates,
internal person and relevant person shall have an
obligation to announce the information.
5. In the case of a internal person of a securities
company of a listed company, trading registration
company, internal person of a listed fund or relevant
person of such entities.
[...]
7. In the case of the internal person of a public company
or the relevant person of such entities is also the
representative of State enterprise contributed capital in
a public company, such entities State capital should be
excluded from disclosure of information applying to the
internal person and relevant person.
8. A public company/fund management company shall
announce on its website within three (03) business days
from the date of receipt of report on transactions of
shares/right to purchase convertible bonds or
transactions of fund certificates/right to purchase
Page 15 of 20
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closed-end fund certificates of internal person and
relevant person of the internal person.
5. In case a securities company is the internal person of
a listed company, trading registration company, the
internal person of listed fund or relevant person of such
entities, when such entities perform the correction of
transaction mistakes, they shall only report to SSE,
State Securities Commission and Stock Exchange and
public company/fund management company within
32. twenty-four (24) hours from the finishing time of
corrected transaction.
Comment:
According to the definition of the internal person of public company and the internal
person of public fund in Article 2 of the Draft, such entities are individual, not a legal
entity.
However, Item 5, Article 25 stipulates: A securities company is an internal person of a
public company, internal person of a listed fund. Therefore, a legal entity is also an
internal person and this definition is unsuitable when compared to the definition of
internal person of public company and internal person of public fund in Article 2 of
the Draft.
Proposal: We propose Item 5, Article 25 of the Draft be reviewed to ensure uniformity and
that it is in accordance with the definition of internal person of public company and
internal person of public fund in Article 2 of the Draft.
Article 26. Report on the transaction of the ETF certificates.
[There is still no provision on the information disclosure Comments: There is still no regulation on the information disclosure of authorized
of authorized participants and market makers]
participants and market makers.
Proposal: The provision on the obligation of information disclosure of authorized
participants and market makers in the Draft should be modified.
1.2 When the internal person of listed company, internal Comments:
person of ETF and the relevant person of such entities For ETFs, an Authorized Participant is only an institution receiving orders from an
(except for the market makers) intend to create creation
investor. Normally, each ETF shall have many Authorized Participants. Therefore, it is
units to exchange the component securities, such
unnecessary to announce the exchange trading of such Authorized Participants.
entities shall announce to the listed company/fund For ETFs, there are numerous listed companies in a portfolio depending on the
management company, Authorized Participants, State
Reference Index of the ETF. Therefore, the announcement to listed companies of such
Securities Commission and Stock Exchange before
entities (for example, internal person of an ETF) when performing a transaction is
34. undertaking exchange trading as outlined in Appendix XII
unnecessary.
of this Circular.
In Article 25 of the Draft, there is provision for the announcement of an internal person
1.3 The internal person of the ETF/internal person of a
of a listed company for exchange trading if such internal person has a relationship with
listed company and relevant person of such entities
such listed company. Therefore, the stipulation in this regulation is unnecessary.
shall, after three (03) business days form the date of
Besides, the Stock Exchange has also promulgated regulations on information
finishing the exchange trading, make a report to the fund
disclosure for ETFs. Therefore, the modification of documents relating to information
management company/listed company, State Securities
disclosure of ETFs to be coherent to facilitate application by relevant organizations is
Commission and Stock Exchange regarding the number
proposed.
33.
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of holding ETF certificates/listed company shares after
creation as in Appendix XV of this Circular.
2. Trading of ETF certificates on the secondary market.

2.1 When trading of ETF certificates, investors must
report to the fund management company, State
Securities Commission and Stock Exchange if the trading
volume gains 3% on the volume of circulating fund
certificates in a day.
2.2 When the internal person of a ETF and the relevant
35. person of such entities trades ETF certificates, they must
obey the reporting obligation concerning ownership of
ETF certificates as described in Items 1, 2, 3 and 5, i of
Article 25 of this Circular.

1.2 When the internal person of a listed company, internal person of a ETF and
relevant person of such entities (except for market makers) intend to create the
creation units to exchange component securities, such entities shall make an
announcement to a listed company/fund management company, Authorized
Participants, State Securities Commission and Stock Exchange before undertaking the
exchange trading as in Appendix XII of this Circular.
Comments:
According to the Ho Chi Minh Stock Exchange information disclosure regulation and
Item 1.5, Article 26 of this Draft, an investor shall make a report only when the trading
volume in a day gains 5%, same as to be reported by major shareholders, then a report
is required whenever trading exceeds 1%. In reality, daily trading volumes frequently
exceed 3%. Therefore, the Authorized Participant would be required to send multiple
reports when trading.
Proposal: We propose deleting all of Item 2.1, Article 26 of the Draft (underlined):
2. Trading of ETF certificates on the secondary market.

2.1 When trading of ETF Certificates purchasing/selling, the investors must report to
the fund management company, SSC and SE if the trading volume gains 3% of the
volume of circulating fund certificates in a day.
2.2 When the internal person of an ETF and relevant person of such entities trade ETF
certificates, they must obey the disclosure obligation concerning ownership of ETF
certificates as described in Items 1, 2, 3 and 5, Article 25 of this Circular.
CHAPTER VII DISCLOSURE OF INFORMATION BY VIETNAM SECURITIES DEPOSITORY
Article 32. Content of information disclosure of Vietnam Securities Depository
1. The Vietnam Securities Depository shall disclose
Proposals: We recommend the draft circular specifically clarify what information is
information within twenty-four (24) hours from the
required to be disclosed by the Vietnam Securities Depository as specified in Points 1.4,
occurrence of the following events:
1.5, 1.6. This is because such contents may include confidential information on recognition
1.4. Information about the granting, change, revocation
of foreign investors and detailed transactions of investors in general.
36. of securities trading codes of foreign investors
1.5. Information about execution of rights of securities
registered at the Vietnam Securities Depository
1.6. Information on cases of off-exchange transfers
approved by the State Securities Commission.
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Not available
37.

Comments
Currently, after receiving bonus shares and dividends in the form of shares, investors
and foreign investors struggle to access information about the first trading date of
these shares. Especially for foreign investors, this information is completely published
in Vietnamese and they depend on local service providers such as securities companies
and custodian banks to translate and deliver this information. For foreign investors
using custodian bank services, accessing this information is even more challenging as
custodian banks are not Stock Exchange members and do not receive listed notices
directly from Stock Exchanges.
This forces custodian banks to keep track of Stock Exchange websites on a daily basis
and passively search for information on the first trading date of shares to allow
investors to buy-sell shares in the morning session of the first trading day.
Proposals: Thus, we recommend stipulating first trading date of shares as content to be
disclosed by the Vietnam Securities Depository so entities that are not Stock Exchange
members can also access this information. Specifically, we recommend amending Point
1.2 as follows:
"1.2. Information on the granting of initial securities registration certificates and
adjustment of securities registration certificates, granting of certificates of additional
securities registration; information on first trading date, information on cancellation of
securities registration;"
At the same time, we recommend supplementing rules that the Stock Exchange must
inform the Vietnam Securities Depository on the first trading date as per Clause 1, Article
34 of this Draft Circular.
We also recommend the State Securities Commission establish one coordinating
mechanism between Stock Exchanges and the Vietnam Securities Depository so
information on the first trading date can be disseminated to all depository members (i)
right after the Vietnam Securities Depository receives this information from the State
Securities Commission, or (ii) so that the bonus shares payment date is also the first
trading date of bonus shares, or (iii) at least the first trading date is informed to all of
depository members within the bonus shares payment date, to ensure all investors receive
shares at the same time, ensuring a level playing field for investors in the market.
Page 18 of 20
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Not available

Comments: Foreign investors are increasingly participating in Vietnams securities
market. As a result, they are increasingly concerned about searching for statistical market
information to support investment activities. However, some statistical information on
securities settlements and clearing, registration and depository, market shares of
depository members, have not been published for investors referencing or have only been
published in annual reports (usually only disclosed in July of the folllowing year), while
similar statistical information on securities transactions has been published by Stock
Exchanges on a daily basis on their websites. As a result, we recommend the Vietnam
Securities Depository periodically publish statistical market information on a monthly,
quarterly and annual basis.
Proposals: We recommend Article 32 be amended as follows (underlined):
3. The Vietnam Securities Depository shall carry out information disclosure of the
following information on its website on a monthly, quarterly, annual basis. Information
disclosure on a monthly/quarterly basis must be implemented within the first 10 working
days of the next month/quarter. Information disclosure at the end of the year must be
carried
out
within
the
first
20
working
days
of
the
next
year.
3.1 Number of trading accounts of local and foreign investors
3.2 Market shares of top 10 depository members obtaining STC approvals for foreign
investors
3.3 Settlement volume and value, market shares of top 10 depository members in
transactions settlements
3.4 Value of Settlement Compensation Fund
3.5 Volume and value of securities deposited at the Vietnam Securities Depository per
securities type (including listed shares, UPCOM shares, fund certificates, bonds); market
shares of top 10 depository members.
CHAPTER VIII DISCLOSURE OF INFORMATION BY THE STOCK EXCHANGES
Article 34. Information on listed organizations, transaction registration organizations at Stock Exchanges, information about securities member
companies; fund management companies managing listed funds, public securities investment companies
1. Information about listed organizations and
Proposals: As mentioned in the recommendations for Clause 1, Article 32, we recommend
organizations registered for trading:
including rules that ensure a Stock Exchange must inform the Vietnam Securities
1.1. General information about the listing and
Depository on the first trading date of securities. Specifically, we recommend the following
39.
registration transactions:
be included (underlined):
a) Information on initial listing/transaction registration
b) Information on unlisting/transaction de-registration
38.
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Draft Circular
c) Information about changes in listing/transaction
registration
d) Information on re-listing/transaction re-registration
dd) Information about handling of violations of listed
organizations/organizations registered for trading
(except for warnings in writing)
e) Other information required by Stock Exchanges.
6. The Stock Exchange provides information about listed

organizations, organizations registered for trading,
public funds, public securities investment companies to
securities companies.
CHAPTER IX ORGANIZATION OF IMPLEMENTATION
Article 36. Organization of Implementation
1. This Circular shall come into full force and effect from
DD/MM/2015 and replace Circular No.52/2012/TT-BTC
dated 5 April 2012 of the Ministry of Finance on
disclosure of information on the securities market. Any
40.
provisions on disclosure of information in other
documents issued by the Ministry of Finance which are
contrary to this Circular are repealed and regulations of
this Circular shall be applied.

"1. Information about listed organizations and organizations registered for trading:
1.1. General information about the listing and registration transactions:
a) Information on initial listing/transaction registration; first trading date
6. The Stock Exchange will provide information about listed organizations, organizations
registered for trading, public funds, public securities investment companies to securities
companies and the Vietnam Securities Depository."
Comments: At present, the regulation on Stock Exchange information disclosure stipulates

some forms applied for similar regulations of this Draft.
Proposal: We propose this provision be modified as follows (underlined):
1. This Circular shall come into full force and effect from DD/MM/2015 and replace
Circular No.52/2012/TT-BTC dated 5 April 2012 of the Ministry of Finance on
disclosure of information on the securities market. Any provisions on disclosure of
information in other documents issued by the Ministry of Finance or Stock Exchange
contrary to this Circular are repealed and regulations of this Circular shall be applied.
Page 20 of 20
Section IV
INFRASTRUCTURE
Main discussion topics:
Requirements for PPP
implementations, port strengthening
and power generation needs in
Master Plan VII
Public Private
Partnership (PPP)
New PPP Decree Paving the way for Enhanced Competitiveness
NEW PPP DECREE PAVING THE WAY FOR ENHANCED COMPETITIVENESS?
Presented by
Mr. Tony Foster and Mr. Tran Tuan Phong
VBF Infrastructure Working Group
Good infrastructure in Vietnam is critical to economic growth. Vietnams infrastructure

spending has increased impressively over the last 10 years. But the challenges over the
next 10 years are acute. According to a recent PwC survey, infrastructure spending will
have to more than double to over $50 billion a year by 2025 in order to remain competitive
with the rest of South East Asia.
As government resources around the world are always limited, one way of enhancing the
competitiveness of the economy is to involve the private sector more in providing
infrastructure.
An important milestone in this process was reached on 14 February 2015. The Vietnamese
Government issued a new decree regulating investment in public-private partnerships (the
PPP Decree). The new PPP Decree will replace the current pilot PPP regulations in
Decision 71 dated 9 November 2010 (Decision 71) as well as the BOT regulations in Decree
108, as amended (BOT Decree).
As the BOT Decree has been repealed, it is important that the PPP Decree is implemented
quickly both through the issuance of relevant implementing regulations and with some
demonstrable early successes. The VBF Infrastructure Group believes that it is important
for the success of the programme and improvements to the competitiveness of the
Vietnamese economy that will result that these early projects are financed on a nonrecourse basis.
INFRASTRUCTURE DEVELOPMENT BEFORE NEW PPP DECREE
Up until now, foreign investors in Vietnamese infrastructure projects have focused on four
types of structures:
BOT projects, such as AESs Mong Duong 2 project, the Phu My 2-2 project and the Phu
My 3 project;
BT projects, such as those attempted by some Korean investors, primarily in the road
sector;
Japanese PPP projects; which involve Japanese ODA being granted for a publiclyfunded portion of a development together with a private commercial project that
benefits from such public expenditure Lach Huyen port being an example;
Direct investments under the Investment Law, which can receive certain guarantees
from the Government relating to foreign exchange, performance of State -owned
companies and other risks to the financial returns expected from the project the
Nghi Son refinery project being the most recent example.
PPPs have been theoretically possible under Decision 71 for 4 years. But no foreign
investment has been made under these regulations. There was an attempt to get one off the
structuring blocks - the Dau Giay to Phan Thiet expressway project - but that does not
appear to be happening.
Page 1 of 6
STEPS FORWARD UNDER NEW PPP DECREE

1. Structures available for PPP
The PPP Decree covers both availability-payment type contracts and user-fee type
contracts. It expands the BOT Decree by covering the following additional types of project:
Build-Own-Operate
Build-Transfer-Lease
Build-Lease-Transfer
Operate-Manage.
In addition the PPP Decree authorises similar contracts if they are approved by the Prime
Minister. So there is room for discretionary variations on the theme. However, during the
early implementation of the PPP Decree the authorized state agencies may be reluctant to
offer similar contract forms outside of the main forms that are specifically named in the
PPP Decree.
2. Sectors available for PPP
The list of sectors available for public-private investment enumerated under the PPP
Decree is broader than that contained in Decision 71 and the BOT Decree. PPP investments
are allowed in transportation, water supply and waste treatment, power plants and
transmission, and infrastructure facilities for healthcare, education, culture, sport, industry
and agriculture.
Other projects may also be done through PPP, as decided by the Prime Minister.
Projects in the above sectors can still be implemented under the Investment Law
without recourse to PPP and are entitled to such incentives as exist under that law. The
VBF Infrastructure Group believes that it is important to the continued competitiveness
of the economy that any doubts about this point are dispelled as soon as possible. Non BOT infrastructure projects have been vital to the growth of the country to date, and it is
important that non-PPP infrastructure projects continue to be possible if they do not
need viability gap funding.
3. State participation in a PPP project
State capital can be used to fund gaps in the private sector viability of a project. This can
take various forms, including capital expenditure support or payments for availability of the
infrastructure that has been constructed.
There is no longer a cap on the State capital that can be used in a PPP project (previously
30% limit for pilot PPP projects and 49% limit via SOE participation for BOT projects).
The goal is for the State-owned capital to be determined according to the needs of the
project. This will involve a proposal and approval process, which could of course be political
in nature and which may prove cumbersome in practice. However, this is an area where
substantial work is being done to build capacity and mechanisms to support appropriate
determinations of when and how to fund viability gaps.
The VBF Infrastructure Group believes that appropriate decisions in this key area will be
important in whether the PPP program is ultimately successful in enhancing the
competitiveness of the Vietnamese economy. The VBF Infrastructure Group would
welcome the opportunity to discuss the area in more detail with the Government when
appropriate.
Page 2 of 6
4. Incentives
In addition to, and overlapping with, viability gap support, the PPP Decree provides certain
incentives to PPP projects. The table below illustrates the issues by comparing the
incentives provided under the PPP Decree with those granted under the current BOT
regime:
BOT Decree
Exemption from rent or land use
fees for the whole duration of the
project.
Mortgage of Land use rights can only be
land
use mortgaged to lenders, subject to
rights
an approval from the Prime
Minister and a legal opinion of the
Ministry of Justice.
Land
PPP Decree
Exemption or reduction from land
use fees/rental in accordance with
the land law.
Similar to BOT Decree. Land use
rights, and other assets and rights,
can be mortgaged in accordance
with the land law and civil law.
Mortgages of land use right to a
foreign lender are not possible
under current law, but approval of
the Prime Minister might be
obtained to use an onshore security
agent.
In accordance with the tax laws.
Similar to the BOT Decree.
Important infrastructure projects
(which are included in the
Governments
programme
or
approved by the Prime Minister)
can
obtain
FX
availability
guarantees.
Exchange
rate
guarantees are not mentioned and
the identity of the issuer of the
guarantee is vague.
Similar to the BOT Decree.
Tax
incentives
Foreign
exchange
A BOT company is entitled to

certain tax incentives.
In practice, the Government has
guaranteed the convertibility,
availability and remittability of
foreign currency for some BOT
projects.
Governments
support
for
use of public
utilities
A BOT company is entitled to

support from the Government
for the use of public services.
Accordingly,
the
Project
Company is permitted to use
land, roads and other support
facilities to implement projects
and has priority rights to use
public facilities to implement the
project where public services
are scarce.
Full guarantees have been Performance guarantees of stateprovided by the Government for owned
counterparties
are
different aspects of a BOT project. possible; the entity acting as the
guarantor on behalf of the
Government will be appointed by
the Prime Minister.
Government
Guarantee
Page 3 of 6
PROJECT DEVELOPMENT PROCESS

5. Development Steps
The PPP Decree sets out a set of steps that will have to be followed to develop a project:
Projects can be (i) proposed by the Authorised State Authorities (ASA), or (ii) proposed
by investors. Investors that propose projects or subsequently prepare the feasibility
study of a project can be entitled to incentives during the tender process. These
incentives could be a 5% preference in the tender process (whether bid on price, State
capital funding, socio-economic benefits or combination of the above);
Feasibility study to determine investment (including State contribution) and contract
structure;
Approval of State support;
Approved PPP projects will be published in the tendering system;
Bids by and selection of investor in compliance with the current tender law dated 26
November 2013 (the Tender Law) and Decree 30/2015/ND-CP of the Government dated
17 March 2015 on the bidding requirements for selection of investors for PPP projects;
Signing of project contracts.
Vietnam has so far not shown great abilities in developing projects for foreign investors to
bid on (Nghi Son 2 power project being an example of a testing case). The concern is that
the PPP Decree is overly prescriptive and therefore it will be difficult to implement in
practice. However, it may also be read as a reflection of current practice, and to the extent
that such practice is well-accepted the steps in the PPP Decree may be viewed as
pragmatic even if not ideal.
6. Project Contracts
The PPP Decree sets out the principal subjects to be covered in the project contract,
including lenders step-in rights, assignment rights and the right to amend the project
contract (normally all subject to the approval of the ASA). There is no detail and all risk
allocations remain to be determined. However, the VBF Infrastructure Group understands
that significant support activities are being conducted by the Governments development
partners to develop standardised bidding documents, project contracts and sector-specific
risk allocation models that may be drawn upon in tendering PPP projects. The VBF
Infrastructure Group would welcome the opportunity to discuss these documents before
they are promulgated.
7. Investment Certificate Process
The final step after concluding all the project discussions with the ASA is to obtain
investment/business registration certificates. Under the PPP Decree, the parties will
execute an investment agreement, instead of initialling the project contracts themselves.
8. Authority
The authority that is in charge of developing each kind of project depends on the sector
involved. The final approval authority will rest as follows:
(a) The Ministry of Planning and Investment (MPI) will issue the investment/business
registration certificates for:
(i) projects of national importance;
(ii) projects to which a Ministry is party to the project contract and
(iii) project to be implemented in two provinces or more.
(b) The provincial Peoples Committee will issue the investment certificate for other
projects (except very small ones).
Page 4 of 6
9. Comment on Tenders
Tendering has not had a great track record for foreign infrastructure projects. Many
investors will not prepare proposals that are then put out to tender (even if they do obtain a
preference in the bidding). Furthermore, many issues have been pushed into the Tender
Law. For example, the PPP Decree provides that the ASA and the investors may agree on
the performance security in accordance with the Tender Law. Under this law, the
performance security with respect to BOT contracts and other contracts in accordance
with investment law will be between 1% - 3%. This is not only vague but means the security
for a PPP project could be 3% - higher than under the BOT regime.
FINANCING ISSUES
The PPP Decree raises some concerns for project lenders. All of these issues have been
debated at length during the process of developing the drafts of the PPP Decree, so the VBF
Infrastructure Group assumes that no changes are likely in the implementing regulations.
However, the VBF Infrastructure Group would suggest that greater communication about
the governments position would be useful
(a) Land
In addition to the exemption available to investors on land rent/land use fees in BOT
projects, the PPP Decree contemplates a reduction in such rent or fees. The intention is to
overcome the problem that arose in the context of a mortgage of land use rights, which is
only possible if all land rent has been paid (the Governments position in past deals has
been that no mortgage is therefore possible because no rent is payable). However, even if
this is the case, it does not solve the mortgage problem, because the land law does not
allow foreign lenders to take mortgages over land use rights.
Clarity requested: There is a workaround to this problem, which has been used in practice in BOT
projects, which is to use an onshore security agent. However, this is uncertain and the State Bank
frowns on it. The VBF Infrastructure Group requests clarity on whether a foreign lender can take
a security interest over land and buildings if an onshore security agent is appointed.
(b) Exchange rate guarantee
It is unclear to what extent under the PPP Decree the Government will guarantee the
convertibility and remittability of foreign currency demands. If not, some PPP projects may
not be bankable. Current practice in BOT projects is to provide guarantees of exchange
rates, although sponsors are now often left with a small level of residual risk.
Clarity requested: to what extent does the Government contemplate providing guarantees
of exchange rates for projects with VND revenues in different infrastructure fields, and what
discussions are in progress with its development partners to provide foreign exchange
comfort for project sponsors and lenders?
(c) Governing law
Foreign law may be used as the governing law for (i) project contracts where one party is a
foreign investor; and (ii) contracts guaranteed by the competent authority, but only if the
foreign law is not contrary to Vietnamese conflict of law rules. If a contract is between two
Vietnamese entities, such as a power purchase agreement, it will need to be guaranteed in
order to be subject to foreign governing law.
Clarity requested: As a foreign governing law is a requirement of international lenders at the
current point in time in respect of non-recourse Vietnamese infrastructure projects, will the
Government provide a guarantee for offtake/revenue contracts for PPP projects (i.e. contracts
between the project company and the buyer of the infrastructure services that have been built)?
Page 5 of 6
EFFECT ON EXISTING PROJECTS

A few projects have been implemented as BOTs (Phu My 2-2, Phu My 3 and Mong Duong 2 in
particular). Numerous projects are being negotiated as BOTs under the existing BOT
regulations, particularly in the power sector. The transition clause of the PPP Decree
states that:
Projects that were signed or licensed prior to 10 April 2015 will remain governed by
their project documents and investment certificates.
Project documents that have been initialled prior to the effective date of the PPP Decree
are not subject to re-negotiation.
If a project contract has not yet been initialled the document should re-negotiated to
be compliant with this PPP decree. This may result in another delay for developers.
Projects that have been allocated to an investor prior to the effective date of the PPP
Decree will remain so allocated.
Feasibility study reports which have been approved prior to the effective date of the PPP
Decree do not have to be re-approved.
It is unclear what will happen with feasibility studies that have been submitted but
not yet been approved before 10 April 2014.
If any other transition issue arises it will be decided by the Prime Minister upon the
proposal of the MPI.
As the existing BOT regime has been abolished, there is a lot of pressure on this untested
PPP regime.
WORK REMAINING
The competitiveness of the Vietnamese economy depends on the PPP Decree working well.
The PPP Decree manages to be prescriptive and vague at the same time and needs clarity
on the specific issues, such as how specific risks are allocated and, at the end of the day,
standard forms for each infrastructure sector. To avoid different interpretation from
ministry to ministry, new implementing circulars will be needed. This is ultimately one
aspect of the need for more institutional capacity. But it is also a function of the
administrative system in Vietnam.
There should also be a pipeline of attractive and feasible PPP projects for the infrastructure
that Vietnam visibly needs and that also attract investors. The MPI has to date had difficulty
obtaining workable project proposals from ASAs. Many proposals have apparently been
submitted that are small or otherwise not attractive (e.g. of a size that would not interest
project financiers or where the role of the private sector is aspirational rather than real or
the revenue stream is conjectural).
The scope of available guarantees and further visibility into viability gap funding principles
are among the main gaps that ideally would be filled before starting bidding out a
comprehensive PPP program. These gaps can be filled on a project by project basis, but
the expense of preparing project proposals without having guidelines on what support is
available will make such preparation unattractive. And even if the approach is successful in
one case, the results are likely to provide little systemic encouragement outside a
particular sector.
While the PPP Decree is a step in the right direction, there is more to be done. It will be
important for the infrastructure of Vietnam, and hence of the economy and international
integration in general, that the next steps are done well.
Page 6 of 6
Port and Shipping
Port and Shipping Position Paper
PORTS AND SHIPPING POSITION PAPER
Presented by
Mr. Robert Hambleton
VBF Port and Shipping Sub-Group
I. EXECUTIVE SUMMARY
The Ports and Shipping Sub Group of the Vietnam Business Forum wishes to emphasize
again the importance of creating a domestic and international transshipment hub in Cai
Mep, that will not only contribute to solving the excessive demand / supply container
terminal imbalance in South Vietnam, it will also, as a direct consequence, create the
necessary scale to operate the required deep sea terminal for Vietnam and for all of her
importers and exporters.
Whilst it is recognized that the drive towards this ambition is well known within the Ministry
of Transport and the Ministry of Planning and Investment, this position paper draws the
support from a number of previous reports and recommendations together current
information, sourced from Government Departmentsas well as the Port and the Shipping
Industries themselves.
This Position Paper aims to bring together the recommendations of these different
government departments, organizations and business communities in order to demonstrate
that the overall aims of such groups are in fact the same. This would indicate that with such
common support, there lies a golden opportunity for the Vietnamese Government to make a
small number of decisions, in order to create significant positive impact for Vietnamese
importers and exporters.
With the advent of the Trans Pacific Partnership and the European Free Trade Agreement,
the need to create such a terminal has never been so great as now. The resultant increase
in trade (and therefore container traffic in and out of Vietnam) is now expected to far exceed
the previously expected growth of 7% to 8% from now until 2020. In order to maximize the
potential that both the TPP and European FTA will bring to Vietnam, it is essential that an
efficient deep sea container terminal exists to cater for such a demand. The current
reliance on the HCMC City Terminals is not sustainable both from an operational and a
commercial point of view.
In order to create this scale, it is essential first to create a competitive environment in
which to operate the container terminal. As described on a number of occasions before, the
first and critical steps in this regard are as follows:
i) A reduction in port dues for certain sized vessels. Note that in reducing the port dues
per vessel, a greater number of vessels will call in Vietnam, with the resultant increase
in overall income for the Country.
ii) A relaxation of the Cabotage Regulation. Whilst it is understood that there is a
reluctance to carry out a relaxation, the current local services on offer are not of the
required standard and they are currently prohibitively priced, which on both counts, are
blocking the progress. It is of course only a requirement to relax such a regulation in
and out of Cai Mep. In this way, a more competitive environment will be created as
Vietnam aims to take market share away from other hubs such as Hong Kong and
Singapore.
iii) In line with the changes of Customs processes and regulations that are taking place,
the Ports and Shipping Sub Group focuses on the key areas of the required customs
reform. This focus and action is fundamental, if Vietnam is to remain competitive with
other Asean Countries.
Page 1 of 5
Potential Financial Gain For Vietnam:

- For every Feeder Vessel that is no longer required to transport Vietnamese cargo
to/from existing Hubs such as Singapore and Hong Kong, there is a saving of transport
costs of at least USD 7 million per year.
- For each Mainliner call that would berth in Vietnam if the above 3 items are resolved,
there would be an additional income to Vietnam (through Port Dues) of around USD 1
million per year.
- Initial estimations of 2 feeders to be reduced and 10 mainline calls to be added, implies
a saving on feeder costs of USD 14 million and an additional income to Vietnam of USD
10 million per annum through Port Dues.
II. BRIEF REPORTS FROM RELEVANT STAKEHOLDERS
The following organizations, presentationsand reports have been consulted and they have
all, within the past 2 years, advocated the creation of a hub of sufficient scale in South
Vietnam. In order to achieve this, the solving of the three issues above is deemed essential
for progress.
- Report to Deputy Prime Minister Hai 6th August 2013
+ The Value of the Hub
- The Transport and Logistics Sector Committee of the European Chamber of Commerce
+ Within the Whitebooks of 2014 and 2015
- Efficient Logistics Report written by The World Bank, published 2014
+ Efficient Logistics, The Key to Vietnams Competiveness
- The Vietnam Trade Facilitation Alliance (American Chamber of Commerce and Vietnam
Chamber of Commerce and Industry)
+ Discussed with them in the American Chamber of Commerce April 2015
+ Particular emphasis on Customs Reform
- Transport and Logistics Partners Quarterly Meeting(TLPQM)
+ A group conceived in February 2014 comprising of the Department of Transport and
Industry Leaders.
- Current Input from Ports and Shipping Sub Group March 2015
+ From Shipping Lines: Maersk Line, CMA CGM, MSC, APL
+ From Container Terminals CMIT, SSIT
1. Value of a Hub: Report to Deputy Prime Minister Hai 6 August 2013
On the 6 August 2013, a report was written to the Deputy Prime Minister Hai. The report
summarized the value of creating a Hub in Cai Mep. Since then, the Operating
Cooperation Contract has been signed between CMIT and Saigon Newport and this is a
good step forward as the Hub concept is developed. Whilst some of the figures in the
report are now out of date, it was clear even then that the reduction of port dues and the
relaxing of the cabotage regulations are two vital ingredients if the Hub creation is to
materialize.
th
th
2. Whitebooks (European Chamber of Commerce) 2014 and 2015

In relation to separate reports written by the European Chamber of Commerce, through
its Whitebooks of 2014 and 2015, it has been made clear that the reduction of Port
Charges and the relaxing of the Cabotage Law (Section 2.8.2 Whitebook 2014) and
similar recommendations in the 2015 Whitebook (Section 2.9.2), are necessary actions if
the Hub is to be created.
3. Efficient Logistics: The World Bank - 2014
Published in 2014, the World Bank presented the extensive report entitled Efficient
Logistics A Key to Vietnams Competitiveness. In that report (Chapter 3, pages 71 and
Page 2 of 5
79) it was recommended that Vietnam needs to relax its Cabotage regulations. In
addition, also in Chapter 3, pages 80 to 82, there are a number of recommendations in
relation to the need to improve the Customs Regulations. Both aspects have the direct
link to the development of the Hub in Cai Mep.
4. Vietnam Trade Facilitation Alliance (VTFA) - 2014
In conjunction with the American Chamber of Commerce, the Vietnam Trade Facilitation
Alliance is organized to provide advisory support to the General Department of Vietnam
Customs and other agencies of the Government of Vietnam whose regulatory
requirements are enforced by the GDVC with imports and exports.
By definition, the VTFA therefore is particularly keen that the Customs Procedures are
in line with the target of creating the Hub Port.
See the Press release as announced on 12 December 2014:
th
Ho Chi Minh City, December 12, 2014------ The U.S. Agency for International
Development (USAID) today joined the American Chamber of Commerce in Vietnam and
the Vietnam Chamber of Commerce and Industry to formally establish a new Vietnam
Trade Facilitation Alliance (VTFA) through a memorandum of understanding. The private
sector-led alliance will provide policy and technical assistance to the General
Department of Vietnam Customs and relevant trade facilitation agencies and authorities
in Vietnam to advance Vietnams competitiveness.
Trade facilitation is a powerful tool for integrating small and medium enterprises
(SMEs) into domestic and global value chains, which makes growth more inclusive,
said USAIDs Acting Assistant Administrator for Asia Anne Aarnes. The VTFA will be an
important voice for these SMEs that too often are not well-represented in policy
processes.
A number of USAID programs, including the Provincial Competitiveness Index (PCI),
highlight the importance of SMEs, including women-led enterprises, to Vietnams
growth and the value of involving business in policymaking.
With todays launch, the VFTA will support the implementation of the Trade Facilitation
Agreement (TFA) in Vietnam, as well as next generation free trade agreements such as
the Trans-Pacific Partnership (TPP). The Alliance also aims to improve competitiveness
of Vietnams domestic and foreign companies through a more predictable and
transparent business enabling environment. There will be special emphasis on helping
Vietnam achieve the target it established in Resolution No. 19/NQ-CP to improve its
performance trading across borders by significantly reducing the time and cost of
importing and exporting to regional averages.
Through its multi-stakeholder networks, the VFTA will improve information sharing on
trade facilitation including participation in the annual Traders Satisfaction Survey,
implemented by Vietnam Chamber of Commerce and Industry in partnership with
General Department of Vietnam Customs, and the sharing of private sector generated
data on customs performance.
USAID has been working closely with the Vietnamese government and business groups
to develop and implement effective trade facilitation assistance to enable Vietnam to
meet the commitments in the TFA and prepare Vietnam for the implementation of the
Page 3 of 5
TPP. USAID support for the VTFA will enable Vietnam to build a sustainable and open
public-private partnership to facilitate trade, thereby reducing poverty and promoting
inclusive growth. The VTFA is a pioneering effort for USAID under its global trade
facilitation programming.
See more of USAIDs work on trade and other issues on www.usaid.gov/vietnam.
5. Transport and Logistics Partners Quarterly Meeting
In conjunction with the World Bank, the Ministry of Transport has established the
Transport and Logistics Partners Quarterly Meeting (TLPQM).
The main purpose of the TLPQM is to facilitate an effective interaction between the
Ministry of Transport and the transport/logistics stakeholders. This will assist all
TLPQM participants to better understand the common issues that relate to Government
policies.Therefore it will pave the way to pragmatic and workable solutions to any
concerns that may exist with the Logistics Industries of Vietnam.
Central to the aims of the TLPQM is the creation of a Hub in South Vietnam and this will
require the customs procedures to be made more efficient, cabotage regulations to be
relaxed and port dues to be reduced.
6. Input from the Ports and Shipping Sub Group
The comments that are made below have been made and brought to the attention of the
Ports and Logistics Sub Group of the VBF. All comments have been made from Shipping
Lines and Port Operators.
Benefits to Vietnam through the creation of a Hub:
a) There will be less pollution for Ho Chi Minh City by diverting the truck flow within HCMC
into Cai Mep
b) There will be less traffic and less risk of port congestion, since there is a far greater
port capacity in the Cai Mep region. The consequence of having less inner-city traffic will
be an improvement in safety and less risk of cargo delay. Reducing the risk of cargo
delays,improvesthe overseas buyers satisfaction through the reliability of Vietnamese
export cargo which, in turn,leads to an increase in purchasing orders.
c) There will be less river traffic due to fewer barges and vessel traffic. The river could be
deployed for tourism purposes with river tours and river activities thus attracting
greater revenue for Vietnam; a similar approach to that successfully adopted in
Bangkok.
d) The considerable risk associated with not making the change quickly enoughis quite
simple: there will be insufficient capacity to cater for the growth of the TPP and
European FTA. Through the TPP, Vietnams economy has been identified to have
potential growth of up to 35% by 2020. Exports are a major factor when influencing this
growth. The exports with the US have been growing between 10-11% in the past years
and the TPP will open up even more growth. It is essential that Vietnam capitalizes on
this opportunity immediately after the TPP has been signed. Failing to capitalize runs a
significant risk of damaging the direct foreign investment that is already underway and
indeed any further potential direct foreign investment.
e) As long as Vietnam continues to rely on river ports, cargo will rather find its way on
feeders to connect over other established hubs in the region, such as Singapore ad HKG.
This adds cost, increases inefficiency and reduces the competiveness of Vietnam.
f) Consolidation provides the critical mass to cater for larger services; thus saving cost
and making it more worthwhile for direct call services
Page 4 of 5
g) For as long as river ports remain an option for the Intra-Asia businesses, carriers will
find it difficult to run a more optimal panama size service (larger vessels) into Cai
Mep, given the concerns with shipper/consignee acceptance.
Attached below (via YouTube) explains the scale of change at the Port of Shanghai. It is
clear and evident that one of the central pillars of Chinas growth in exports is the
establishment of a Port with sufficient scale. This video summarizes how it was achieved.
https://www.youtube.com/watch?v=MlQmMTp_T0M
Cost Savings from the reduction of feeder services to/from existing hubs in Singapore
and Hong Kong
a) The weekly cost of running an 1100 TEU sized vessel is around USD 136,000, implying an
annual cost of around USD 7 million
b) The weekly cost of running a 1700 TEU vessel is around USD 208,000, implying an
annual cost of around USD 10 million.
Weekly cost FIO/1100 teu
usd 136,324
Weekly cost FIO/1700 teu
usd 208,444
Additional income to Vietnam if Cai Mep can attract additional mainline calls:
If Port Dues charges are set at USD 20,000 per call, additional income to Vietnam per
year per additional mainline call is USD 1 million. Potentially, through the creation of a
hub and the resolution of the 3 recommendations above, at least 10 mainline calls can
be attracted, generating a further USD 10 million per year.
Page 5 of 5
Power and Energy
Power and Energy Position Paper
POSITION PAPER
POWER AND ENERGY SUB-GROUP
Prepared by
Power and Energy Sub-Working Group
The Government has done a good job in ensuring sufficient energy through 2014/15,
however the members of the Working Group and their respective Chambers, Business
Associations and member are concerned about the uncertain outlook of power supply
especially information put out by MOIT on May 15th about expected shortages in the south
of Vietnam in-line with international agreements with Cambodia and Lao. In early 2015 VBF
facilitated a study with IISD/MPI/ United Kingdom Embassy and UNDP on understanding the
needs and concerns of foreign businesses with regard to energy supply and reliability and
how energy prices are going to drive their investment decision in Viet Nam. We appreciate
comments by MOIT.
Below are key conclusions from the main report sent to MOIT and MPI.
1. Viet Nams ability to attract FDI is NOT based on low energy prices. Stakeholder
analysis and survey results indicate that firms do not typically invest in Viet Nam as a
result of the fact that energy prices have been historically low. In fact, firms ranked the
state of power prices to be the least important factor of ten factors in their decision to
invest in Vietnam. Much more important in their investment decisions were other
drivers such as the cost and availability of skilled labor, domestic market condition and
Government development policy. When asked to rank the importance of energy prices
as a driver for investment decisions (on an increasing scale of 1-10), 72 per cent of firms
indicated a score of 5 or less.
2. On the whole, foreign investors are not seriously concerned about the prospect of
gradually higher power prices. This is likely partly to do with the fact that firms spend
relatively little on electricity. The study found that 90 per cent of foreign firms across all
sectors spend less than 10 per cent of total operating costs on electricity, with 60 per
cent of firms spending less than 5 per cent.The majority of firms indicated that they
would be willing to bear sustained nominal annual power prices increases of 15 per cent
or more before reconsidering future investment, and more than 65 per cent of firms
were willing to bear sustained price rises of more than 10 per cent per annum. Indeed,
the majority of firms that had made recent investments had already incorporated higher
power prices (with an average increase of 10 per cent) into their investment decisions.
Sustained annual industrial electricity tariff increases of 15 per cent would contribute
significantly towards the achievement of cost recovery over time.
This message was again reiterated in stakeholder analysis. Firms made it clear that they
understand that EVN continues to run at a large loss, that electricity costs remain the
lowest in the region, that generation capacity addition and power supply have become
increasing unreliable and that there is therefore a need to raise power prices to cover
costs and encourage energy sector investment, both from EVN and the private-sector.
3. Based on these findings, the Vietnamese Government should be more ambitious in
raising the price that large industrial consumers pay for power. Firstly, firms have
clearly indicated that energy prices are not a key driver of foreign investment in Viet
Nam. Secondly, as presented throughout this report, firms have also shown some
willingness to accept higher power prices over time as a key means of enhancing the
functioning of Vietnams electricity sector. This provides space for the Vietnamese
Government to be more determined in moving towards charging large industrial users
Page 1 of 3
the full cost of power, without being concerned that by doing so they will cause a
significant adverse investment response from multinationals.
4. Firms are concerned by the inadequacy of power supply and the prospects for
diminishing supply reliability, more so than by the prospect of higher power prices.
Sixty-five per cent of firms indicated that they were either rather unsatisfied or not
satisfied at all with power infrastructure and supply. Two-thirds of firms who disclosed
information said that they used back-up generation either sometimes or often.
Further, a large majority (73 per cent) of firms said that the unreliability of power supply
was more damaging to Vietnamese investment competitiveness than the prospect of
higher power prices over time. Given the linkages between low power prices and
inadequate investment in supply capacity, this seems to suggest a willingness to accept
higher prices in exchange for much improved electricity system functioning. Indeed, the
survey found that even 60 per cent of energy intensive industry and other heavy
manufacturing firms were willing to accept an immediate nominal increase in power
prices by 20 per cent in exchange for uninterrupted power supply.
Ensuring adequate power supply should therefore be the key priority of Vietnamese
energy policy, along with a long-term movement towards greener modes of electricity
generation. As such, a key focus of the crucial revisions to PDP7 should be the
identification, design and ultimate implementation of new mechanisms and incentives
that can enhance investment and supply reliability in power markets. Indeed, enhancing
electricity sector investment will likely only take place with higher tariffs for grid
electricity (to increasingly provide investment capital to EVN), higher PPAs to encourage
new private sector BOTs, and the development of a legal framework for investment that
makes the latter especially for renewable generation possible.
5. There is significant space (and necessity) for private-sector solutions to Viet Nams
power supply needs. Given both the current inefficiency of EVN and the difficulty of EVN
in allocating investment capital, private sector investment will likely need to play an
increasingly important role in securing adequate electricity supply in Viet Nam over
time. Renewable generation, in particular, is well-placed to meet growing energy needs
due to its scalability over short time frames, with wind power being particularly
promising given the extensive pipeline (4.4 GW) of registered projects and existing
(although currently inadequate) Government support policy. Again, however, this will
require higher grid tariffs, higher PPAs to encourage new private sector investments,
and a new enabling legal framework for investment. Working towards these three
outcomes should be a priority for Government, and should be addressed in the
important ongoing process to revise PDP7.
6. Despite the need for greater ambition in increasing power prices to industrial users, a
gradualist approach to price rises should be pursued. While firms are on the whole
willing to accept higher power prices over time, there are limits as to what firms can
realistically absorb in the short-term in terms of higher power costs. Survey results
suggest that only a few firms are willing to accept nominal power price increases much
above 20 per cent per annum. While higher power prices are necessary, the Vietnamese
Government should define and implement a gradual schedule for nominal industrial
power tariff appreciation of 15-20 per cent per annum (with scope for larger increases
depending on inflation rates) over three to four years. This would help to significantly
address the issues associated with currently low power prices, while giving firms the
certainty to plan accordingly and avoiding potentially damaging and destabilizing power
price spikes.
Page 2 of 3
The Power and Energy Sub Working Group have a continued relevance for cooperation and
meetings with Ministry of Industry and Trade
Renewable energy (RE) is best positioned to support Vietnams energy needs in the near
future due to its scalability during a short time frame. We look forwarded to receiving
MOIT proposed updated Feed In Tariffs for the Standard Power Purchase Agreement
for Solar, Biomass plants and waste to energy, when they are ready. In order to bolster
RE, the Working Group supports the creation of an attractive investment environment
for these sectors. As such, the Group backs the recommendations put forth by MOIT
consultants, which call for an increase in the FIT level for wind energy and simplification
of application process.
The working group agrees to set-up additional meetings with MOIT on the Direct Power
Purchase Agreement option between electricity end users and independent Vietnamese
power producers. The structure does not involve any physical transmission line between
the two parties, meaning that the electricity will flow through the existing national grid
currently used to transport electricity from the wind farm to the end user. In this model,
the IPP and the energy users will negotiate an electricity price for a long term PPA and
subsequently pay a wheeling fee to EVN for transmission, distribution and management
of the electricity. The interest of implementing this model is high from FDI buyers of
energy in Vietnam, developers and providers of technology, as well as banks to finance.
The working group looks forward to receive the updated National Power Plan 7, for
commenting on as mention by MOIT on 15 May, 2014
customers. It is suggested to continue MOIT adjustment of energy tariffs for a
sustainable power sector development in Vietnam as MOIT sees necessary. Important
for FDI is for MOIT to share a road map of Retail Power Pricing to 2020 with a vision to
2030. This road map should come from the final authority. This will enable EVN in
restructuring and becoming more profitable, open access to private investment both
domestically and internationally, and will stimulate greater energy efficiency efforts
from end use customers. We support the use of donor funds to off-set Government
guarantees as Government reaches it limits in the coming year.
EVN Rescue plan has been updated with EVN to be published in 2 months; VBF looks
forwarded to get a copy. We understand from World Bank that the 10 years roadmap of
reforms that EVN should take to meet certain financial indicators, standards. But as
above a road map must come from the final authority.
The Power and Energy Working Group emphasizes that the proposed strategy to support
Vietnams successful exploitation of natural resources for stable energy supply goes in
line with the expected realization of Free Trade Agreements and to strengthen the
private sector and SMEs to take advantage of upcoming FTAs. The expected boost in
Vietnams GDP and economic development, which is expected as a result Free Trade
Agreements, will be founded on a strong power supply.
Lastly the working group will work more to provide information on the planned
increased coal policy over natural resources. To release the scale up of coal will require
a major increase in infrastructure as existing infrastructure is handling an estimated 2.1
million tons and by 2020 we will need to import 38 million tons. Not clear who pays for
needed infrastructure for coal import.
Page 3 of 3
Power and Energy Discussion Paper
POWER AND ENERGY DISCUSSION PAPER
Prepared by
Power and Energy Working Group
The Government has done a good job in ensuring sufficient energy through 2014/15,
however the members of the Working Group and their respective Chambers, Business
Associations and members are quite concerned about the uncertain outlook of power
supply especially information put out by authorities responsible for energy about expected
shortages in the south of Vietnam. In early 2015 VBF facilitated a study with IISD.
Foreign Direct Investment (FDI) has unprecedented contributed to Viet Nams impressive
industrial performance. As the country continues to move forward with its ambitious
development agenda, it becomes critical to reach a better understanding on the needs and
concerns of foreign businesses with regard to energy supply and reliability and how energy
prices are going to drive their investment decision in Viet Nam.
Industries in Viet Nam are more energy intensive as compared to other countries and one of
the factors contributing to this is the low retail electricity tariff. The weighted average retail
electricity applied from March 16, 2015 is VND 1,622.01/kWh (NOT including VAT) (estimated
at USD 0.074/kWh) according to Decision No. 2256/QD-BCT dated March 12, 2015 of the
MOIT, which is generally lower than most countries and also below the long run marginal
cost. To address the rapid increase in energy demand, the Vietnamese Government had
planned to increase electricity tariffs but the Government has been reluctant to increase
electricity prices as a way of artificially managing inflation costs. However, recently MoIT
increased the tariff in Viet Nam and for most of the industries, tariff increase is by ~7.5%.
This increase in tariff is still not sufficient to cover the loss of EVN and the Government will
have to further increase tariff in coming years to attract investment in power sector so as to
increase power supply and reliability. Also, at the same time ensuring that the price
increase does not hurt the interest of FDI investors.
This report dwells on energy supply and pricing issues and provides recommendations for
the design of energy policy that addresses concerns and interests of FDI investors in Viet
Nam.The key issues being analysed are
What is the nature and size of businesses of FDI investors operating in Viet Nam?
If energy prices are likely to drive FDI investment decisions in most contexts?
Would higher electricity prices over the medium term likely to affect their companys
investment decisions in Viet Nam?
Is security of supply as important as cost?
Is importance of energy prices likely to be dependent on energy intensity of economy
and stage of development?
Are FDI investors willing to pay for power from renewable generation sources?
In order to assess the impact of energy pricing and energy supply reforms on foreign direct
investment decisions and to understand the needs and concerns of foreign businesses with
regards to energy supply and reliability in Viet Nam, primary research was undertaken. The
Primary research involved the following:
Three Outreach Workshops
Informal meeting with Stakeholders
Survey of FDI firms in Viet Nam
The analysis is based on 150 responses received from survey and stakeholder
consultations. The sample may be compared to around 4000 newly registered projects in
Page 1 of 3
the period 2011-2013. This indicates a sample of around 4% of the total population. Due to
the consistency of responses and correlation between verifiable metrics (such as origin of
investors) and the complementary information gathered from stakeholder meetings it can
be concluded that the information presents a relatively representative view of the interest
and concerns of the overall FDI investors in Vietnam.
However, caution should still be exercised when drawing conclusions from the data. Future
policy proposals based on this data should be subject to further stakeholder consultation.
The key findings from the survey and stakeholder meetings, which are used as an input for
recommendations on the implications of energy supply and pricing policy, are:
Around 60% of investors said that they spent less than 5% of their operating costs on
energy. Some investors, mainly in cement, steel, petrochemicals, energy, aluminum and
other heavy industries, spent more than 10% of their operating costs on energy. These
investors will likely be reluctant to accept higher prices but these are not the majority.
The relatively low share of cost of energy used by FDI projects compared to other costs
such as the cost of staff, materials and other inputs, means that for many investors, energy
prices are not a prime concern. The relatively low importance given to energy prices
indicates that they do not exert a significant influence on the decision to invest in Vietnam.
Most respondents (around 65%) are not satisfied with the energy infrastructure and
supply. Improving the quality and reliability of power would require higher prices
For the majority (73%) of respondents, power supply was a bigger problem than prices.
This all seems to imply that prices should rise to improve quality. However, when asked
about whether a 20% increase in prices could be justified in exchange for better quality
of service only 38% supported the initiative.
This contradiction perhaps reflects a reluctance to support an increase in costs without
being sure that the price increases would actually improve services and deliver a
meaningful improvement in their conditions or perhaps it indicates that investors are
cautious about the impacts of a large price rise and a more graduated approach would
prevent sudden price shocks that cause unpredictable consequences.
Good policies can accelerate and sustain the positive economic impact of different forms of
investment on the host economy provided policy makers can tap into a relevant, accurate and
comprehensive information repository. Based on the key findings as well as recent changes
of FDI performance and policies, selected policy implications can be drawn as follows:
Power prices needs to be adjusted to reflect real production costs.
Power price increase to enable both domestic and foreign investors to upgrade towards
more sustainable energy efficient and cleaner production technological levels.
Businesses in the sector (such as EVN) should ensure transparency in their operation
especially in their production costs.
Government planning should result in good implementation for building power plant
projects in the coming years to ensure more reliable power supply.
For few specific sectors in the special investment priority list, prioritised energy price
schedules may be applied to encourage investments including FDI in these sectors.
Government should have a clear road map for power price increase so that the FDI
businesses as well as other businesses in the economy are well informed and can
better anticipate their power production costs.
In order to promote the renewable energy sector to play a key role in energy generation
in Viet Nam, better incentives should be provided.
In order to provide impetus to FDI investment, Government needs to rationalize royalties
and taxes, regulatory policies and improve infrastructure development like building of
roads, ports etc. and also develop power supply and infrastructure.
Page 2 of 3
A campaign to raise awareness for both business community as well as the people to
get public consensus on the rational power price reform should be done by providing
reliable information on financial performance of power SOEs.
To understand the rational energy price adjustment level and adjustment roadmaps,
more dialogues among concerned stakeholders such as businesses, professional and
consumer groups, policy-makers, researchers etc. should be organised to share
information and views so that policies could reflect balanced interest of the various
stakeholders. VBF looks forward to continue dialogue with MOIT, MPI and related
Government bodies.
The past main positions of the Power and Energy Sub Working Group follow have a
continued relevance:
Renewable energy (RE) is best positioned to support Vietnams energy needs in the near
future due to its scalability during a short time frame (2 years), with wind at the forefront due
to extensive pipeline (4.4 GW of registered projects) and existing Government support policy.
In order to bolster RE, the Working Group supports the creation of an attractive
investment environment for these sectors. As such, the Group backs the
recommendations put forth by MOIT consultants, which call for an increase in the FIT
level for wind energy and simplification of application process.
The proposed 2014 of Direct PPA option between electricity end users and independent
power producers. The structure does not involve any physical transmission line between
the two parties, meaning that the electricity will flow through the existing national grid
currently used to transport electricity from the wind farm to the end user. In this model,
the IPP and the energy users will negotiate an electricity price for a long term PPA and
subsequently pay a wheeling fee to EVN for transmission, distribution and management of
the electricity. A legal precedent for this type of model does not exist in Vietnam, however
in Mexico this type of setup (Self Supply scheme) has been highly successful in unlocking
the potential of renewable energy without any changes needed to support policies.
Critical to realizing the scalability benefits of RE will be the ability of the state grid to
absorb the additional energy capacity from RE sources. Hence, the Working Group
supports efforts to modernize the grid and prepare the grid system for connecting to
large-scale RE capacity. This includes both infrastructure hardware and legal
framework for direct power purchase agreements between generation utility and end
users as was discussed in previous VBFs.
customers. It is suggested to continue and accelerate the adjustment of energy tariffs
for a sustainable power sector development in Vietnam. This will enable EVN in
restructuring and becoming more profitable following international practices, hence will
open access to private investment both domestically and internationally, and will
stimulate greater energy efficiency efforts from end use customers. Price adjustments
enabling a healthy energy market would prevent brownouts, and power shortages,
which currently impact industrial development and employment.
Finally, the Power and Energy Working Group emphasizes that the proposed strategy to
support Vietnams successful exploitation of natural resources for stable energy supply
goes in line with the expected realization of Free Trade Agreements and to strengthen
the private sector and SMEs to take advantage of upcoming FTAs. The expected boost in
Vietnams GDP and economic development, which is expected as a result Free Trade
Agreements, will be founded on a strong power supply.
Page 3 of 3
Summary of Meeting with MPI and MoIT
ROUNDTABLE DISCUSSION ON POWER AND ENERGY RELATED ISSUES

WITH THE MINISTRY OF INDUSTRY AND TRADE AND MINISTRY OF PLANNING AND
INVESTMENT
-
Date and Time: 2PM-4PM, Friday, 15th May 2015

Venue:
Ministry of Planning and Investment Premises, 6B Hoang Dieu, Ba
Dinh, Hanoi
Participants:
Appendix 1
A. MEETING AGENDA
- Findings of a survey on energy pricing and supply policy and policy implications
conducted by International Institute For Sustainable Development (IISD)
- Meeting Discussion
+ Power supply status across Vietnam
+ Alternative energy sources
+ Power prices
+ Competitive electricity wholesale market
+ Power Master Plan VII
+ Direct power purchase agreements
B. MEETING SUMMARY
I. Findings of a survey on energy pricing and supply policy and policy implications
conducted by IISD
Mr. John Rockhold Head of the Power & Energy Sub-Working Group, Vietnam Business
Forum (VBF)
- In accordance with Master Plan VII, Vietnam is moving towards coal as an energy
source, however no new coal power plants have come online. This is causing concern
among businesses about stable the power supply by 2020.
- To help the Vietnamese Government better understand the power needs and concerns
of different types of industries, the Working Group commissioned a survey of FDI firms
in Vietnam. It was conducted with financial inputs from the British Embassy in Vietnam
and technical support from the IISD.
Ms. Vibhuti Garg Energy Economist & Manager, IISD
- The research focused on a number of key issues, namely:
+ Would higher electricity prices in the medium-term affect a companys investment
decisions in Vietnam?
+ Will energy prices drive FDI investment decisions in the majority of contexts?
+ Are FDI investors willing to pay for renewable generation power?
-
IISDs analysis was based on 150 responses received from survey and stakeholder
consultations. The key findings from the survey and stakeholder meetings, used as
inputs for recommendations on the implications of energy supply and pricing policies,
are:
+ Around 60% of investors reported they spent less than 5% of operating costs on
power. Some investors, mainly in the cement, steel, petrochemicals, energy,
aluminum and other heavy industries, spent more than 10% of operating costs on
energy. Such investors would likely be reluctant to accept higher prices, but they are
not in the majority.
Page 1 of 6
+
+
The relatively low share of energy costs incurred by FDI projects compared to other
costs such as those covering staff, materials and other inputs, could be interpreted
as investors not seeing energy prices as a prime concern. The relatively low
importance given to energy prices indicates they do not exert a significant influence
on decisions to invest in Viet Nam.
Most respondents (65%) are not satisfied with energy infrastructure and supply.
For the majority (73%) of respondents, power supply was a bigger problem than
pricing levels. This implies that prices could rise to improve quality. However, when
asked whether a 20% price increase could be justified in exchange for a better
quality of service, just 38% supported the initiative.
Given the surveys findings, it is suggested that good policies could accelerate and
sustain positive economic impacts of different investment forms provided policy-makers
can tap into a relevant, accurate and comprehensive information repository.
II. Meeting discussion

1. Power supply status across Vietnam
Mr. Pham Thanh Tung Director of International Relations Department, General
Department of Energy, Ministry of Industry and Trade (MoIT)
- From 2016 to 2020, reserve power will rise from 46% to 50%. However, there will be
uneven distribution among north, central and southern Vietnam. The norths reserve
power will be 53-67%, 52-80% for the center and 7-21% for the south. Taking into
account the 20% of reserve power used for repair and maintenance, the south will not
have enough reserve power for 2016-2020.
- There are numerous reasons for the lack of reserve power in the south. One of them is
the sale of reserve power to Cambodia and another is due the delay in construction of U
Mon Power Plant II, III and IV.
- To tackle the distribution issue, World Bank and ADB funds are being used to develop a
power transmission system to improve power distribution nationwide.
Mr. John Rockhold Head of the Power & Energy Sub-Working Group, VBF
- Social and population concerns are also a factor. Electricity in rural areas is being cut or
reduced to ensure power supplies to investors investment activities/factories. This has
an impact on foreign direct investors, as if buyers see investors producing goods in
Vietnam at the expense of those people living in rural areas or the population, sales
could suffer.
Department of Energy, MoIT
- Regarding the comment that foreign investors may take advantage of policies to receive
energy while the population suffers, this should not be viewed as a concern as investors
should choose strategic locations with good infrastructure and energy supplies.
2. Alternative energy sources
- Vietnam has the ability to develop wind power, solar and biomass energy. To ensure
energy supplies to Vietnam, besides the mentioned energy sources Vietnam is working
with a number of other countries to develop nuclear power.
Page 2 of 6
Coal-fired power plants are under development. According the Master Plan VII, to
generate 156 billion kwh of electricity every year by 2020 (the total coal-run power
capacity by 2020 is 36,000MW), plants would be able to fuel 47% of the whole country
electricity using 67 million tons of coal. By 2030, when total capacity increases to
75,000MW, the plants would need 171 million tons to cover 57% of total power
production.
Currently, all coal-fired power plants are encouraged to follow the BOT model and Mong
Duong II is the most recent coal-fired power plant to come online. In providing further
guidance on Decree 15/2015/ND-CP on investment in public-private partnership (PPP)
form, a Circular is being drafted to offer detailed instructions and procedures to develop
power plants under the BOT model. The Circular will accelerate the determination and
selection process of investors and the negotiation process to put plants into operation
as quickly as possible. However, the global trend is to limit the development of coalgenerated power plants due to negative environmental impacts and it is difficult to
obtain funds from foreign credit institutions.
Policies on wind power and solar energy are in the final drafting stage and have been
submitted to the Prime Minister for approval.
A renewable energy program, encompassing all energy sources, has been developed
and submitted to the Government for consideration. Currently wind power, biomass and
waste-to-energy already exist, but other energy sources will be studied for
development. To guide the development of biomass, a number of legal documents are
set to be issued by the year-end. These include a Circular regulating the development of
biomass projects, one on the introduction of avoided cost-based tariffs schedule and
standard power purchase agreements, one on biomass power development and another
on waste-to-energy development projects. Development plans for other renewable
energy sources such as solar, thermal and bio energy are being studied.
3. Power prices
Impacts of high power price on foreign investment
- In terms of budget collection, an energy price increase would benefit the State budget.
However, any increase must be thoroughly studied to avoid social instability, such as the
social protests seen in Indonesia and Malaysia when power tariffs increased.
- Power prices in Vietnam have increased much more than previous periods due to coal
prices in Vietnam now being almost equal to international market prices and not
subsidized by the State budget. Environment fees are also rising because of strict
environmental regulations. So future energy price implications will be adapted to
market changes based on international prices.
- Power price increases will please power-generating industry and high technology
investors. However, many foreign investors as energy users also say if power prices
keep increasing, Vietnams business environment will lose its attractiveness.
- The participants in the VBF Power and Energy Sub-Groups survey were FDI companies
with a strong financial capacity and users of state-of-the-art technology that is
environmentally friendly. On the other hand, local companies are not so well off.
Therefore, if FDI firms are only catered to, it will send another signal that local firms are
getting a rough deal. Therefore, the overall strategy is to improve power and other
infrastructure to meet requirements of FDI and domestic firms.
Page 3 of 6
Power prices
Mr. Ngo Manh Kien, Electricity Pricing and Fees, General Electricity Regulatory Authority,
MoIT
- Since 2011, electricity prices have adopted mark-to-market accounting in accordance
with Decision 24/2011/QD-TTg on the adjustment of electricity selling prices according
to market mechanisms and Decision 69/2013/QD-TTg regulating average electricity
prices. Variable inputs include fuel prices, foreign currency exchange rates and
generated electricity output structures.
- The MoIT annually cooperates with Ministry of Finance to review new options for
average electricity prices, which are reviewed at least every six months. Since 2011,
electricity adjustments have been made at least twice a year and the current retail
electricity price is VND1,622.01/kwh in accordance with Decision 2256/QD-BCT of the
MoIT.
- Ensure transparency in Electricity of Vietnam (EVN) operations: On April 22, 2014 the
MoIT issued Directive 11/CT-BCT regulating information on mechanisms, policies and
legal document systems on market-based electricity pricing, production and business to
strengthen publicity and transparency in electricity production and business. All pricing
information is published on the MoIT website.
- A number of working groups has been set up to examine costs of production and selling
electricity across Vietnam and such information will be made public via the media.
- A clear roadmap for energy prices: Since 2013, in regard to Law No. 24/2012/QH13
amending and supplementing a number of articles of the Electricity Law, the Prime
Minister issued Decision 2165/QD-TTg to allow the average selling prices from 2013 to
2015 to fluctuate from VND1,437/kwh to VND1,835/kwh.
- An electricity price range for 2016 to 2020 will be announced this year.
- Cross-subsidized electricity charges: Decision No.28/QD-TTg dated April 7, 2014
indicated that electricity retail prices will be determined on the basis of average
electricity retail prices adjusted under the authority and structure of electricity tariffs.
Decision 28 also defines some policy beneficiaries as the Government provides
subsidies for the first 30 kilowatt hours of consumption for poor households, those living
in mountainous and isolated areas like islands.
- The sharing of the price increase roadmap for 2016-2020 would be greatly appreciated
to allow for contributions from interested stakeholders, especially foreign investors, to
allow them to plan and make valued inputs.
Mr. Sean Chung Vice President, ExxonMobil Exploration & Production Vietnam
- Overall, the MoITs plan to steadily increase power prices to cover costs is encouraging.
From energy producers perspective, this is a good sign that power costs are covered by
power sector revenues.
- The Vietnamese governments energy policy for coal or other energy sources is also
appreciated. Domestic energy development is probably the best way to secure energy
security and if power prices increase, that is a positive signal there is more affordability
in the domestic energy field to generate power.
4. Competitive electricity wholesale market
Mr. Ngo Manh Kien, Electricity Pricing and Fees, General Electricity Regulatory Authority,
MoIT
- The MoIT issued Decision No.6463/QD-BCT on July 22, 2014 regarding the approval of
the design of a competitive electricity wholesale market in Vietnam. EVN, with World
Page 4 of 6
Bank and EU support, is working to design a competitive electricity wholesale market in

Vietnam.
More foreign investment and support is needed to support this process as it is a new
area for the Vietnamese market.
- Foreign investors can also assist in the design of the wholesale competitive market that
the MoIT is working with the World Bank and EU. Therefore, it would be appreciated if
the working group could see the draft and provide its inputs.
5. Power Master Plan VII
Mrs. Virginia Foote VBF Chairman
- Power Master Plan VII stated that coal accounted for 57%. What is the rationale for this
determination as there may be other potential substitutes better developed, such as
offshore gas.
- Vietnam is relying on sources available to exploit. Petroleum and gas are potential
energy sources, however, a number of projects exploring and mining petroleum and gas
have not been put into operation due to implementing difficulties. Overall, developing
countries tend to use coal as a primary source of energy serving for country
development. Meanwhile other energy resources will be developed, such as renewable
and carbon-based energy, will gradually replace conventional energy.
- The approach to Power Master Plan VII is being reviewed by the World Bank under its
offer of technical assistance.
6. Direct power purchase agreements
- It important more of these informative meetings are conducted so the private sector
remains in the loop and informed about the latest sector developments.
- A future discussion with the MoIT is proposed, particularly on the direct power purchase
proposal to clearly explain the model, future gains and how other countries have taken
advantage of this model.
- A meeting is proposed to discuss the power purchase agreement design and model with
related stakeholders in the market. Some industrial zones, such as Formosa and VISIP,
buy electricity via power purchase agreements and power prices at industrial zones are
imposed by the local Peoples Committee. Investors can refer to this model for more
information.
Page 5 of 6
Appendix 1: List of participants

Name
Title
Organization
REPRESENTATIVES OF GOVERNMENT BODIES

Mrs. Nguyen Bich
1
Ngoc
Deputy Director General
Director of International
2
Mr. Pham Thanh Tung
Relations Department
Department of Electricity
3
Mr. Ngo Manh Kien
Pricing and Fees

General Department of Energy, MoIT
Electricity Regulatory Authority of
Vietnam, MoIT
Ms. Le Nguyet Anh
Deputy Manager
Mr. Vu Huong
Specialist
Mr. Ngo Hoang Thien
Officer
EVN
VIETNAM BUSINESS FORUM POWER AND ENERGY SUB-COMMITTEE

7
Mrs. Virginia B. Foote
VBF Co-Chair
Mr. John Rockhold
Head
Mr. Shimon Tokuyama
Chairman
VBF Consortium
VBF Power & Energy Sub-Working
Group
Japan Business Association in Vietnam
(JBAV)
10
Mr. Susumu Sato
Member of BF Committee
JBAV
11
Mr. Yoshihiro Wakui
12
Mr. Sean Chung
Vice President
ITOCHU Corporation
ExxonMobil Exploration & Production
Vietnam
13
Mr. Indronil Sengupta
Chief Executive
Tata Sons, Vietnam
14
Mr. M Shenbagam
Chief Representative Officer
Tata Power Vietnam
15
Mr. Dang Chi Lieu
Special Counsel
Baker & McKenzie
16
Mr. Nguyen Thanh Hai
Associate
Baker & McKenzie
17
Ms. Thuy Nguyen
Government Affairs and Policy

Leader
GE
18
Ms. Tran Thanh Nga
Information Officer
Freshfields Bruckhaus Deringer LLP
Ms. Thuy Vu
Government & Public Affairs

Director
Nike
20
Mr. Andrew Holt
First Secretary
British Embassy
21
Mr. Jack Lambert
Economic Officer
US Embassy
22
Ms. Ha Phung
Coordinator
VBF Secretariat
19
Page 6 of 6
Section V
REPORTS FROM OTHER

WORKING GROUPS
Customs and Tax
Customs Comments
CUSTOMS POSITION PAPER
Prepared by
Mr. Mark Gillin
VBF Customs Working Group
We would first like to note and commend the significant efforts and progress on the part of
the General Department of Customs over the past year in terms of improved regulation,
operational improvements through e-customs, and increased dialogue with the Vietnam
business community.
Over the past 12 months we have seen the introduction of the new e-Customs system, the
new Customs Law which came into effect on 1st January 2015, and the related
implementing Decrees which came into effect March 15, and a host of new (Circulars)
issued in late March and effective from April 1, of this year. The most comprehensive of the
new regulations, Circular No. 38/2015/TT-BTC replaces 13 previous customs regulations.
Still more regulations have been have been drafted but await approvals for issuance by the
Ministry of Finance.
The new regulation provides for Advance Customs Rulings concerning HS customs
tariff classification, valuation and origin of goods. These new regulations now allow for
practical use of these by importers, for the first time.
The transformation of Vietnam Customs from a collection of local, port-centered

services based upon transactional processing, into a more centralized and modern
service that conducts operations on the basis of customs risk management and PostClearance Inspection (Audit) is being rapidly implemented. Companies involved with
importing, exporting and transit trade will be assessed and classified by Vietnam
Customs into three major categories: (i) Priority Enterprises that will enjoy privileged
customs treatment and priorities in compliance and operations areas, (ii) Compliant
Enterprises that will be subject to compliance requirements that are enhanced in the
new regulations, and (iii) Non-Compliant Enterprises that will be subjected to measures
to bring them into compliance, including consultations, Post-Clearance audits,
administrative fines and penalty action.
Export Processing Companies (EPCs and EPZ firms) will enjoy relief from many of the
burdensome and impractical administrative burdens of various reporting procedures
that have long been complained of by business. Advance registration that required
notification, filing and updating of Bills of Material (BOMs) called norms for export
products involving use of imported materials and components has been eliminated.
Nevertheless, the new regulation requires that EPC companies maintain records of
actual Bills of Material (called practical norms) that were used as the basis for their
reporting of processing and consumption of imported materials or components used to
manufacture export goods.
Requirements for registration or filing of import / export processing contracts and

their appendices have been eased, while the deadline date for finalization or
liquidation for materials used in processing operations has been extended to the 90
day after the close of the fiscal year.
th
Page 1 of 2
Customs Comments
The changes in Vietnams customs laws, regulations and procedures are driven by
requirements stemming from the international trade agreements that Vietnam is or, soon
will be a party to. These include the ASEAN agreements implementing AFTA, the WTO
Trade Facilitation Agreement and, anticipated requirements that will appear in TPP, the
EU-VN FTA and others being negotiated by Vietnam.
Common to all of these agreements are major requirements involving advance customs
rulings, availability of information, discipline on fees and penalties, separation of customs
clearance from final determination of duties and taxes, post-clearance inspection and
international customs cooperation, National Single Window implementation and many
others. In addition, Prime Ministers Resolution No. 19 for 2015-2018 has made these farreaching changes a mandatory priority. Vietnam Customs and other border agencies are
also receiving technical assistance by foreign experts in these matters under WTO, WCO
and other programs providing such assistance.
Companies that are involved with importing, exporting and manufacturing activities in
Vietnam involving trade will find it necessary to raise their customs and trade compliance
standards and processes, in order to adapt well to the rapidly changing environment. The
standards for informed compliance will continue to rise under the new trade agreements,
particularly in such areas as HS classification, customs valuation, certification of origin
processes under new and very technical Rules of Origin, record-keeping and other
requirements. This is due to the fact that free trade and trade facilitation benefits cannot be
enjoyed without higher standards of trade compliance and enforcement.
Detailed implementing regulations are still under discussion. Once their content is clear,
we will give detailed information on the relevant issues.
Page 2 of 2
Comments on discussion topics on existing Law on Import and Export Tariffs
COMMENTS ON DISCUSSION TOPICS ON

EXISTING LAW ON IMPORT AND EXPORT TARIFFS
Prepared by
VBF Tax Sub-group
1. Blended tax
In our opinion, the blended tax should not be included in the draft Law on import/export
tariffs due to the following reasons:
- Regarding to the Vietnam WTO commitment, Vietnam has commits on reducing the
import tariff duty especially for those goods of significant commercial value imported
from WTO members. Thus, a combination of ad valorem tariff and specific/fixed duty
rate (i.e. the blended tax rate) might create remarkable tariff bars to trading into
Vietnam, leading to the fact that Vietnam could be deemed to go against what we
commits with WTO for opening market and tariff reduction. The draft Law does not
specify which situation or case will apply blended tax.
-
In our observation, Local company in Vietnam only get used to apply ad valorem or specific
tax/duty for each of their commercial goods, the blended duty if no clear and detailed
guidance provided for, will create confusion for the implementation of blended duty.
International practice
Per our knowledge, in Singapore, goods would be dutiable based on either ad valorem tariff
or specific duty rates depending upon classification of the goods rather than applying the
blended duty.
2. Quota duty
Currently, salt, raw tobacco, eggs, and sugar are being subject to import tariffs under the
quota as set forth in Decree No. 187/2013/ND-CP and Circular No. 111/2012/TT-BTC.
Accordingly, the imported quantity of these items that exceeds the amount of the annual
import quota as prescribed by the Ministry of Industry and Trade (or the imported quantity
does not have an import license under the tariff quota regime) shall be subject to an import
tariff under the quota of 50% to 90%.
We think that it is advisable to include specific provisions on the items to be subject to
quotas in the Law on Exports and Imports Tariffs (as amended) (hereinafter referred to as
the "Draft") rather than the general provisions in Decree No. 187/2013/ND-CP. In addition,
the Law on Exports and Imports Tariffs should set forth the import tariffs that apply
minimum and maximum quotas for the items requiring to apply tariff quota measures, and
[set forth] the authority to issue [legal documents governing] the application of import
tariffs that require the application of quotas from time to time. Specifying the above issues
in the Law on Exports and Imports Tariffs is aimed at standardizing the provisions of law,
and serves as a basis for governmental authorities to perform their rights and obligations in
their administration of import and export policies and as a basis for enterprises to clearly
understand the State's import and export policies.
3. Protective, anti-dumping, anti-discrimination, anti-subsidy tariff
These tariffs are now provided for in Ordinances. How can they be addressed in the law? If
yes, what part should be included in the law?
Regarding this matter, the working group is currently have 2 following conflicting opinions
that we would like to bring up to the drafting teams attention and consideration:
Page 1 of 4
a) Agree with the view that protective measures, anti-dumping measures and anti-subsidy
measures should be specified in the Draft rather than set forth in Ordinances for the
purpose of gathering and consolidating regulations on export and import tariffs in one
legislatory document.
b) Disagree with the view that the above mention tariffs should be specified in the draft.
They more relate to trade measures on goods which may create unfair competition in
the market. If possible, they should be covered under the competition relted
regulations.
International practice
In Australia for example, a separate Dumping Duty Act has been issued regulating any
action related to that kind of violation (the newly amended version in 2013).
4. Tariffs policies for imported goods used for production of exports
We support the exemption of tariffs imposed on imported goods used for production of
exports upon importation. This tariff exemption is the same as the exemption of import
tariffs on imported goods pursuant to processing contracts with the principal(s) abroad. The
tariff exemption upon importation instead of the tariff refund upon exportation will help
reduce the burden of cash flows for export enterprises and will help increase the
competitiveness of domestic exporters.
On another hand, there should have a mechanism for monitoring and clawing back duty in
case those imported good will not be used for export but for domestic consumption.
5. Imports of goods for investment projects
In our opinion, the following criteria should be added and considered in the draft Law:
- Preferential industries or geographical areas enjoyed duty exemption should be clearly
defined. In case the exemption is based on the industries and geographical areas
prescribed by law on investment, it should be clearly regulated. Should it is not the case,
the Draft should also state that the Government will issue a detailed list.
-
Please consider to remove the requirement of not be domestically produced in

paragraph 6.c, article 16 for create a convenience on companys compliance (particulary
stating as such: construction materials, which could not be produced in domestic, will
be exempted from custom duty when imported.) To our knowledge, the list for
domestically produced materials may not be updated from time to time causing
obstacles over the implementation of importers in enjoying their incentives. On another
hand, items listed by the Vietnamese authorities may not qualify project owners in
Vietnam in terms of technical standards or quality, then privileges relied on domestic
origin but not nature and quality of goods creating discrimination for suppliers supplying
goods into the country.
Clarify the concept of "replace and innovate technologies". If Company import goods
that are similar to previously imported goods for project expansion, replacing old assets
after the project has been operated, may the import goods be entitled for duty
exemption?
In case a project falls into preferential industries or geographical areas under the initial
investment license but at the time of replacing and innovating technologies, the project
does not qualify such incentive conditions, so the imported goods are still entitled for
duty exemption?
Page 2 of 4
International practice:
Indonesia: Relief from import duty
New investors (foreign or domestic), or existing investors who are expanding their
production by at least 30% or diversifying into new products, will be granted relief from
duties so that the final tariffs become 0 % on the importation of capital goods (machinery,
equipment, spare parts and auxiliary equipments) for two years, and on the importation of
raw materials and manufacturing components for two years of production. Car and
motorcycle assembly (except for components) does not qualify for this incentive.
Investors manufacturing for export also qualify for certain tax breaks, including refunds
on import duties (which normally range from 0% to 150% on the customs value of
imported goods) paid on raw materials, exemption from the 10% Value Added Tax and
the Sales Tax on Luxury Goods (ranging between 10%-75% imposed at point of import or
manufacture) on materials purchased domestically for use in manufacturing. There is
also no restriction on the import of raw materials regardless of the availability of
comparable domestic products.
Thailand: Relief from/Reduction of Import Taxes/Duties - Imported goods removed into

Investment Promotion Zones shall be granted tax and duty privileges. This includes:
1) Machinery: The machinery removed into the Investment Promotion Zones is either
granted import tax and duty free allowance or 50 percent reduction of import taxes
and duties, depending on the location of the zones.
2) Raw or Essential Materials: Raw or essential materials removed into the Investment
Promotion Zones for manufacturing export products shall be exempted from import
taxes and duties for 1-5 years, depending on the location of the zones.
6. Tax rebate criteria for temporary imports/re-exports and temporary exports/re-imports

In our opinion, the duration of temporary imports/export to re-export/reimport will be
determined as in agreement of relevant parties.
Singapores model: Goods, with the exception of liquor and tobacco, are allowed to be
imported for repairs and other approved purposes such as stage performance, testing,
experiments and demonstration without payment of duty and/or GST on condition that
they are re-exported within 6 months from the date of importation. If the goods are not
re-exported after the expiry of the given period, duty and/or GST will be charged.
7. Tariff policies applicable to goods imported from other countries to non-tariff zones,
and goods exported from within the country to non-tariff zones
Singapores model: In Singapore, The Zero GST Warehouse Scheme (ZGS) came into
effect on 1 Jan 2006, and currently is administered by Singapore Customs (SC). ZGS is
applicable to companies who wish to suspend GST on their imported non-dutiable
goods. There are three license types, namely Warehouse Type I, Type II and Type III, to
cater to the different needs of companies.
A Warehouse Type I licensee has to ensure that at least 80% of its imports are reexported. Type II and Type III licensees are not subject to this export requirement. In
addition, a Type III licensee can operate, and move goods freely between multiple ZG
warehouse locations under a single license.
Page 3 of 4
Generally, the higher the level of facilitation and flexibility accorded to a company, the
greater will be SC's requirement on the company's compliance level of record-keeping
and internal controls. In this regard, the level of facilitation and flexibility accorded, as
well as SC's requirements on a company's record-keeping and internal-controls
standard and compliance level will increase as goods will be moved from Warehouse
Type I to Type III.
Imported non-dutiable goods can be stored in a Zero-GST Warehouse pending reexport. The GST on the imported goods will be suspended as long as the goods remain
in the warehouse. GST is not charged on the sales of goods while they are in the
warehouse. There is also no GST payable on the goods when they are removed for
export. GST is only charged when the goods are removed from the warehouse for local
use. The movement of goods into and from the Zero-GST warehouse must be covered by
relevant Customs permits.
The operation of Zero-GST warehouse in Singapore appears equally the concept of Tax
suspended Warehouse scheme in Vietnam.
Malaysias Model: Free Zone Act 1990 (amended in 2006) regulated on the goods and
service in free trade zone. The Malaysian Policy states that goods and service of any
description, except those specifically and absolutely prohibited by law, may be brought
into, produced, manufactured or provided in a free zone without payment of any customs
duty, excise duty, sales tax or service tax. On another hand, the goods manufactured
within a free industrial zone shall not be taken out of such zone except for export or for
transmission of the goods to other free commercial zone with the approval of competent
authority.
Page 4 of 4
COMMENTS ON DISCUSSION TOPICS ON EXISTING LAW ON IMPORT AND EXPORT TARIFFS
Prepared by
Japanese Business Association in Vietnam (JBAV)
No.
1.
2.
Discussion Points
Blended tax: Should blended tax be included
in the law?
Protective, anti-dumping, anti-discrimination,
anti-subsidy tariff: These tariffs are now
provided for in Ordinances. How can they be
addressed in the law? If yes, what part should
be included in the law?
Comments/Opinions
We are in view that blended tax should be included in the new Law.
The Draft Law includes 3 new provisions, namely Article 11, 12 and 13. These articles provide general
regulations on protective methods (Article 11), anti-dumping methods (Article 12) and anti-subsidy
methods (Article 13), principles and conditions in applying these methods, which seem to be brought
from the applicable Ordinances on anti-dumping, anti-discrimination and anti-subsidy to the Draft
Law.
Since these articles do not directly govern about the taxes and seem to be irrelevant to the overall
structure and content of the Law, it should be considered whether to keep these articles or not.
3.
4.
5.
Tariffs policies for imported goods used for

production of exports: Is tariffs exemption
available on importation, or is refund only
available after exportation?
Imports of goods for investment projects: Are
current laws and regulations on imports of
goods for investment projects reasonable
(Article 16.6, current Law on Imports and
Exports Tariffs)? What can be added to make it
easier for implementers?
Tax rebate criteria for temporary imports/reexports and temporary exports/re-imports:

How long should temporary imports/re-
We suggest removing Article 11, 12, 13 of the Draft Law.

We are in view that tax exemption applicable on importation may be more convenient that refund
available after exportation. This would simplify customs/ tax procedures.
Generally speaking, the provisions on tax exemption applicable goods to be imported for creation of
fixed assets of investment incentive projects are unclear enough for implementation in practice (e.g.
whether goods registered in list of imported goods to be exempted from tax duties but not yet
imported into Vietnam will continuously enjoy with tax exemption or not, etc).
In addition, tax incentives are different from goods to be imported for processing (being enjoyed tax
exemption) and goods to be imported for manufacture of exported goods (being enjoyed tax refund)
and goods to be imported into processing zones (not being subject to tax duties). This would create
difficulties in practice. We suggest amending such provisions more appropriately.
Article 19.1(e), (g) of the Draft Law amending 19.1(e), (g) of the Current Law as follows:
Taxpayers shall have their paid tax amounts reimbursed in the following cases:
(e) Export goods, for which export tax has been paid and such goods must be re-imported within the
Page 1 of 2
No.
Discussion Points
exports and temporary exports/re-imports be
allowed to make it easier for implementers?
Comments/Opinions
time limit as set out by the Government;
(g) Import goods, for which import tax has been paid and such goods must be re-exported within the
time limit as set out by the Government;
The explanation for this amendment states that pursuant to Article 4.19 of Kyoto Convention,
repayment shall be granted in respect of imported or exported goods which are found to have
been defective or otherwise not in accordance with the agreed specifications at the time of
importation or exportation and are returned either to the supplier or to another person designated
by the supplier, subject to the following conditions that the goods (i) have not been worked,
repaired or used in the country of importation/exportation, and (ii) are re-exported/re-imported
within a reasonable time. The Draft Law supplement the provision of within the time limit as set
out by the Government to make it matched with the request of within a reasonable time of Kyoto
Convention.
However, we may consider that within a reasonable time should be subject to case -by-case
consideration, and subject to the agreement between suppliers and buyers on the time limit to
return goods which are defective or not in accordance with the agreed specifications. Setting a
fixed limit of time may be not appropriate in some cases where the parties agree on a period for
returning goods longer than the period as set out by the Government.
We suggest amending these provisions as follows:
Taxpayers shall have their paid tax amounts reimbursed in the following cases:
(e) Export goods, for which export tax has been paid and such goods must be re-imported within a
reasonable time;
(g) Import goods, for which import tax has been paid and such goods must be re-exported within a
reasonable time;
In addition, under the Current Law, the provision on responsibility and time limit for tax
reimbursement (15 days) applicable to relevant state authorities is governed under Article 10;
however, such provision is deleted under the Draft Law. Since this is an important provision, we are
in view that it should be remained in the Law. We suggest keeping Article 20 of the Current Law.
Page 2 of 2
Comments on draft Law on import and export tariffs
COMMENTS ON DRAFT LAW ON IMPORT AND EXPORT TARIFFS
No.
1
Draft Law on Import and Export Tariffs

Article 4. Taxpayer
The draft of Amending Law on Import and Export
duty has regulated the term "taxpayer" in replace of
the term "Subject of tax payment" of the current
law, which taxpayers are organizations and
individuals that having taxable imports or exports
stipulated in Article 2 of this Law
Article 8: Dutiable value and exchange rate for duty
calculation
Exchange rates for calculation of export duty,
import duty are buy transfers exchange rate of Joint
Stock Commercial Bank for Foreign Trade of
Vietnams Head Quarter (Vietcombanks HQ) at the
close of business of a day within a week.
Article 16: Duty exemption
Materials and supplies imported for export
manufacturing (production of exported goods) were
supplemented as duty exemption objects.
Prepared by
Deloitte Vietnam
Practically, in many cases the person named on the customs declarations (Importers of
records) are not owners (i.e. the owner of the goods), for example: authorized
importer/exporter or customs agents, logistics companies, domestic or foreign
contractors that providing goods for investment projects in Vietnam. The definition of
taxpayers, therefore, should be defined more comprehensive to cover above cases in
order to ensure the consistency between customs declarations, tax payment slips and
accounting records.
Foreign exchange rates change daily, even within the day. To avoid the arguments
between taxpayers and customs authorities, the amendment should be placed as
follows:
"Exchange rates for calculation of export duty, import duty are buy transfers exchange rate of
Joint Stock Commercial Bank for Foreign Trade of Vietnams Head Quarter (Vietcombanks
HQ) at the working day before the day that Taxpayer registers customs declaration at the end
of the day of a day within a week"
We totally agree with the supplement of imported materials for export manufacturing
to duty exemption objects in similar to materials for export processing by the following
reasons:
- In nature, both export manufacturing and processing has the same purpose (i.e.
import materials to produce of exported goods). According to prevailing
regulations, export manufacturing is classified as dutiable or duty payment grace,
while imports for processing activities entitled for duty exemption, thus creating
unfair to export manufacturing activities.
Besides, export manufacturing mostly attracts large investment from big and wellknown corporations over the world. This activity also directly generate GDP for
the economy, thus duty exemption will help promote further development of
export manufacturing, reduced the administrative procedures of customs aligned
with the spirit of Resolution 19/2015/NQ- CP of the Government dated 12 March 2015.
Page 1 of 3
No.
As applying payment deadline of 275 days, businesses always have to consider
which import declarations to be placed in customs liquidation since practically they
may not follow either FIFO or LIFO mechanism. In addition, the facts that
businesses often self-adjust their consumption rates to meet the deadline of 275
days, however the calculation and verification of such rates are very complicated
for both customs authorities and the business itself.
- Stipulated on Circular 38/2015/TT-BTC, export manufacturing company shall annually
report of imported materials via the inventory method of Input - Output Balance, in
similar to the export processing activities. Accordingly, we understand that
businesses will self-manage the usage of imported raw materials within the report
period and the customs liquidation is not required. By launching such new
mechanism, the payment deadline of 275 days is no longer appropriate.
We understand that the re-imported goods will be refunded with exported duty paid,
re-export goods will be refunded with imported duty paid within the time limit. However,
the Draft does not regulate on exemption of import duty for re- imported goods, and
exemption of export duty for re-exported goods with regard to above cases.
Article 16: Duty Exemption

Article 19 of the Draft supplements the refund for
the cases referred in subparagraph 4.19 Kyoto
Convention:
e) exported goods must be refunded with the duty
amount paid once being re-imported within the
time limit decided by the Government;
g) imported goods must be refunded with the duty
amount paid once being re-exported within the
time limit decided by the Government;

The Draft does not specify tax policy on imported
goods for performing repair service in Vietnam
then re- exported.
To ensure a consistent policy on import and export duty, we propose to supplement of

duty exemption for returned goods to the exemption cases in
Article 16: Furthermore, to determine the imported goods that does not meet
requirements on quality and specifications, importers have to carry out certain checks
which may alter the shape and nature of the goods. Therefore, upon returning to the
exporter, the goods might no longer remain as original imports though it has not been
used or gone through any processing phase in the import country. Given that fact, we
would like to propose a more flexible condition with respect to duty-free returns as
follows:
- Goods does not use or go through processing overseas.
- In the event that there is certain change in the goods shape or nature due to
quality check, the customs authorities shall verify the dossiers and physical goods
to give settlement case by case.
We are now aware of some cases that domestic companies and export processing
enterprises import goods for repairing in Vietnam then re- export to overseas
(performing repair service).
Since this activity has a same nature with export processing, we are of view that such
imports should be added in the duty exemption objects specified under Article 16.
Page 2 of 3
No.
We kindly suggest that the following issues should be clarified for further amendment of
The Draft amends terms on duty exemption for the Draft :
imports forming fixed assets of preferential - Preferential industries or geographical areas enjoyed duty exemption should be clearly
defined. In case the exemption is based on the industries and geographical areas
investment projects:
prescribed by law on investment, it should be clearly regulated. Should it is not the
6. Goods imports for forming fixed assets of
case, the Draft should also state that the Government will issue a detailed list.
preferential investment project which falling into
preferential industries and geographical areas, - Clarify the concept of "replace and innovate technologies". If Company import goods
that are similar to previously imported goods for project expansion, replacing old
investment projects financing by official development
assets after the project has been operated, may the import goods be entitled for duty
assistance (ODA) including:
exemption?
....
The import duty exemption for imported goods
stipulated in Points a, b, c of this clause shall apply In case a project falls into preferential industries or geographical areas under the
to project expansion, replacing and innovating initial investment license but at the time of replacing and innovating technologies, the
project does not qualify such incentive conditions, so the imported goods are still
technologies;
entitled for duty exemption?
Page 3 of 3
Human Resources
Report from HR Sub-Working Group
REPORT FROM HR SUB-WORKING GROUP

DEVELOPMENT OF VIETNAMESE WORKFORCE:
Enhancing Enterprise Competitiveness for Global Integration
Prepared by
Mr. Colin Blackwell
VBF Human Resource Sub-group
EXECUTIVE SUMMARY
The VBF broadly supports the MOLISA initiatives to reform the social security system.
These reforms are in line with international best practice.
We request that communication and consultation be improved with the business
community on social security changes. This will allow businesses to better explain the
complex issue to their employees.
We encourage the current efforts being made to simplify the work permit issuance process.
We propose a new short term business visa category to be considered.
We would welcome the opportunity for ongoing dialogue with MOLISA regarding the
impacts of the ASEAN Economic Community changes to freer movement of regional
skilled labour in certain job categories.
Page 1 of 3
DETAILED REPORT
We would like to thank the Ministry of Labour - Invalids and Social Affairs for the excellent
corporation with the business community. We would like to use this opportunity to comment
on two current employment topics.
1. Social Security
We note the extensive changes being proposed and implemented to the Social Insurance
laws. As a broad principle, the VBF supports the intent of these changes as they are good
for Vietnam and the Vietnamese environment. These changes follow international best
practice and bring Vietnam closer to other countries in the region.
Specifically, we would comment as follows:
- Expanding the groups of participants subject to compulsory social insurance is good, as
it broadens the safety net provided.
- All provisions to increase transparency are positive; such allowing employees to self
manage their social insurance books and asking employers to communicate information
every six months.
- The steps being taken to more clearly separating unemployment insurance from social
security for pensions are good.
- We understand that increasing the premiums is better for the long term economic
funding, but the additional costs of these should be considered in a larger picture when
there are future minimum wage increases proposals.
We would encourage more consultation and communication with the business community
on this topic so that employers are better positioned to explain this complex topic to their
employees. This increased communication would lessen the risk of any employee relations
misunderstandings, to the benefit of employees, employers and the economy. Some specific
ideas are:
- Reviewing the materials being used to explain the regulation changes to companies and
workers to ensure that the changes are properly explained and understood.
- Building a better system in the process of drafting the laws and regulations, where
consultation and comment collections will more directly interact with those
corporations and workers who are directly affected by the new rules.
- Building trust for the institution of collection, payment and managemet of social
insurance.
- The VBF and chambers of commerce are willing to support and assist with any
communication programs on this topic
2. Work Permits
Again we would like to thank the Ministry of Labour, Invalids and Social Affairs for the recent
dialogues and workshop on the evaluation of the implementation of decree 102/2013/ND-CP.
We are glad to say the Ministry of Labour is already assisting in resolving current issues
which we would like to highlight below:
- The procedure for Work permit re-issuance should be simplified and applications
should be accepted at least 30 days before its expiry date. Hence the applicants have
enough time to get their visa/temporary Residence renewed before it expires.
+ Trainees working in Vietnam, freelancers working for many different organizations
are currently out of scope of application of current decree 102 and need to be in the
scope of application.
+ Vietnamese Police clearance certificate requirement should be applicable only for
those who have been in Vietnam for 6 months or more.
Page 2 of 3
The processing time to obtain approval for the Foreign labour demand report should
be maximum 15 days as stipulated under circular No. 03/2013/TT-BLDTBXH and not 6
weeks like in some of the provinces.
Needs to define different document requirements depending on the type of

employment/assignment in the scope of application including:
+ Foreign nationals in Vietnam to work in fulfilment of a labour contract
+ Intra-company transferees or assignees working in Vietnam in relation to a service
contract between the employer (sending entity) and the host entity in Vietnam
(client/contractor).
+ Short term foreign nationals working in Vietnam for short term mission of less than
90 days (i.e.: to conduct training, Conduct any audit at companys or contractors site
(quality, financial, tax compliance, security, IT auditetc), Exploration of the market,
Provision, purchasing of goods / equipment. Maintenance and repair of equipment,
supervision and management of equipment assembly, Recruitment, interview) foreign
nationals coming to Vietnam for Internship. This group should not be required to apply
for work permit and stipulated in the decree.
The procedure for Work permit exemption should be a simple registration procedure
(e.g. completion of a work permit exemption form should be applied to exempt
applicant).
Provide more comprehensive guidelines on the issuance of work permits and improve
training of labour officers to ensure uniformity of procedure OR centralise work permit
application in one administrative body with qualified officers.
3. AEC regional labor movement changes

On a related topic, we note the upcoming ASEAN Economic Community provisions for freer
movement of some categories of skilled labour within ASEAN by the year end. Whilst this is
generally positive for the business community, we would caution that the implications for
this could be more far reaching than anticipated. According to MOLISA data, there are
currently around 55,000 foreigner work permits issued in Vietnam. If we look at some
neighboring countries with more open movement of foreign labour, we see this is already a
bigger issue for them Thailand and Malaysia are estimated to have foreign workforces
numbering in the millions. Whilst it is too early to predict what will happen in 2016, we
would request that MOLISA keeps open the communication channels with the business
community on this so that everyone can coordinate effectively to meet the opportunities and
challenges arising.
Page 3 of 3
Mining
Mining Position Paper
THE IMPORTANCE OF INTERNATIONAL INVESTMENT AND HIGH TECHNOLOGY

IN EXPLORATION, MINING AND PROCESSING OF VIETNAMS MINERALS FOR
NATIONAL INDUSTRIALIZATION, MODERNIZATION AND INFRASTRUCTURE
DEVELOPMENT AS PART OF VIETNAMS GLOBAL INTEGRATION
Prepared by
Mr. Bill Howell
VBF Mining Working Group
The Directive
The Prime Ministers Directive No.2/CT-TTg of January 2012 recognized that Vietnams
mineral wealth is an important element for national industrialization and modernization
and that the countrys minerals need to be mined and processed by advanced and
environmentally friendly technology.
Progress
The Mining Working Group agrees with this assessment and is pleased to report that since
the last Vietnam Business Forum in December 2014 there has been some progress towards
understanding and achieving the stated objectives:
In January 2015, Natural Resources and Environment Minister Nguyen Minh Quang,
together with key department heads of the General Department of Geology and Minerals
of Vietnam (GDGMV) and an official from the Prime Ministers Office visited Australia at
the invitation of the Australian Government. The delegation visited Australias largest
deep, underground copper-gold mine and met with Federal and State Ministers and
officials to learn more about modern technologies used in the Australian and world
mining industry, and to discuss the important interactions between government, private
companies, mining laws, environmental protection, safety and community participation
that are all a part of sustainable, efficient mining.
In February 2015, Decree No.15/2015/ND-CP governing private public partnership

investment projects (the PPP Decree) was issued to promote more foreign investment in
infrastructure development in Vietnam. Although not specifically directed at the mining
industry, it is recognized world-wide that large, modern mining operations are always
accompanied by significant infrastructure development, particularly in the more remote
and mountainous regions where major mineral deposits tend to be found and which are
invariably the areas with the lowest socio-economic conditions. Whilst mining is not
listed in the Decree as eligible projects for PPP, infrastructure development associated
with mining could be considered for PPP project status in conjunction with mining
investment on a case-by-case basis under the provisions of the Decree that include
other sectors decided by the Prime Minister.
In March 2015, at the end of a visit by Prime Minister Dung to Australia, a joint official
declaration by Australia and Vietnam specifically cited natural resources and the
environment as key areas for cooperation between the two countries, and encouraged a
greater role for the private sector in specific areas, including mining. The Australian and
Vietnamese Prime Ministers also committed to back businesses investing in Vietnam,
particularly in the sectors of agriculture, animal husbandry, mining and educationtraining.
The Problem and Challenge

The commitment to back investment in mining by modern, high technology which can be a
key contributor to Vietnams economic growth is welcomed by the Mining Working Group.
Unfortunately, major foreign and strong local investment is unlikely to be forthcoming while
Page 1 of 3
Vietnam maintains one of the most investor-unfriendly mining legislations in the world,
including the highest royalty rates and other taxes and fees which make even advanced and
high technology mining not economically viable. Stumbling blocks that need to be resolved or
clarified since the promulgation of the new Law on Minerals No.60/2010/QH12 are:
Resolution No. 712/2013/UBTV-QH13 of the Standing Committee of the National

Assembly promulgating the royalty tariff on minerals raised the royalty rates of a
number of minerals by 1-5%. The new royalty rates apply to minerals such as wolfram
(tungsten) 18%, antimony 18%, titanium 16%, copper 13%, iron 12%, manganese 11%,
and nickel, cobalt, molybdenum, mercury, magnesium, vanadium and other metallic
minerals at 10%. Minerals for which the royalty rates were not increased, but were
already in the range of 10-15% are platinum, gold, silver, alumina and bauxite, tin, lead
and zinc. These are the highest royalty rates in the world and are the single greatest
disincentive for potential major investors wishing to come to Vietnam with advanced,
high technology exploration and mining methods. For example, the royalty rate on gold
averages 1-5% world-wide on the sales value of the metal produced compared with
15% applied in Vietnam. However, it is reported that a new decree issued in February
2015 appears to provide a more reasonable method of calculating the royalty rate for
gold producers in Vietnam by allowing much of the cost of production to be deducted
before the 15% royalty on gold is applied. Depending on the calculation method used,
which is not yet clear, this is a positive move in the right direction.
Decree No.203/2013/ND-CP setting the method of calculating charges for the grant of
mineral exploitation rights has set the mining rights fee at between 1-5% (with most
metal minerals set at 2%). The fee is calculated as a percentage of the value of the
original ore (interpreted by some as crude ore) of the mineral zone licensed for
exploitation and defined by geological reserves and/or mining reserves, price to
calculate royalty, a co-efficient of mineral recovery involving the method of exploitation,
and a co-efficient for economic-social conditions. In modern mining operations, many
factors such as change in the geometry and grade of the ore-body as mining
progresses, ground conditions, and market price fluctuations of products are
encountered that can change mine output parameters. The mining rights fee set by
factors that exist before mining has commenced is impractical and will further deter
major foreign companies from investing in Vietnams mining industry. Also, many
experts view the mining rights fee as an additional royalty serving the same purpose.
Circular No.158/2011/TT-BTC guiding implementation of Decree No.74/2011/ND-CP

on an environmental protection charge for mineral exploitation imposes the fee on
the basis of the quantity of crude metal mineral ores, either as units of tones or cubic
meters mined. This implies that the fee is the same for valuable minerals as it is for
waste rock. If correct, it means that a modern, efficient, high-tonnage, low-grade
mining operation is hugely penalized, compared with small-scale and illegal mining
that can selectively target high-grade material in smaller rock tonnages, thereby
leaving behind and wasting much of Vietnams mineral wealth. This is contrary to the
Governments policy to eradicate wasteful, small-scale mining - it is more likely to
encourage such practices. Modern sustainable mining world-wide already incurs high
costs in environmental monitoring, transportation of solid and liquid wastes, recycling
of water and chemicals, and restoration of the environment through rehabilitation after
mining has finished. An environmental protection fee is a sound principle but should be
based solely on the levels of pollution caused by the mining operation.
Page 2 of 3
Decree No.122/2011/ND-CP amending some articles of Decree No.124/2008/ND-CP

implementing the Law on Corporate Income Tax No.14/2008/QH12 of 2008 reduced
CIT for all companies to 25%, except for mining of precious and rare natural resources
including platinum, gold, silver, tin, tungsten, antimony, gems and rare earths which
are fixed at 50%, except where more than 70% of the mine area is located in difficult
socio-economic areas, in which case the CIT rate shall be reduced to 40%. The CIT rate
for these minerals had previously been in a range of 32-50%. Decree 122 also reconfirmed that mineral exploitation operations are not entitled to other CIT incentives.
These CIT rates for mining projects, when combined with the royalty rates, mining
rights fees and environmental protection fees described in this position paper, make
investment in Vietnams mining industry by major companies and funds almost
economically impossible.
Conclusion and Recommendations

Although minerals are a non-renewable resource, most of the countrys mineral wealth has
yet to be discovered. Very little of Vietnam has been explored using advanced,
internationally accepted technology, which will almost certainly lead to the discovery of
new, major deeper ore bodies than have been found so far at or near surface. As a result,
very little mining is being carried out using advanced and high technology methods.
As long as Vietnams royalties, fees and taxes are significantly higher than world averages,
international best-practice methods and investment in Vietnam's mining industry will
continue to be discouraged and will go to countries with preferable investment conditions.
This in turn will encourage the continuation of inefficient and wasteful mining practices and
degradation of Vietnam's existing known mineral resources and its environment, and also
encourage increased illegal mining and export of minerals on which little or no tax is paid.
To achieve the objectives of the Prime Ministers Directive No.2/2012/CT-TTg, we
respectfully urge the Government to improve investment confidence in Vietnams minerals
industry by:
Re-examining existing legislation and Introducing more investor-friendly, competitive
mining legislation which includes an equitable tax system that is fair to both the
Government and the investor, and legislation that provides for consistent policies for
long-term commitment; and
Establishing a task-force to investigate the incorporation of the best elements of other
successful mining legislation around the world where a balance has been achieved
between attracting modern, high technology in exploration, mining and processing of
mineral resources while at the same time returning equitable revenue to the host
nation whose resources are extracted.
These steps will help to:
encourage exploration to increase Vietnam's mineral inventory by new, deeper
discoveries using modern technological methods;
allow sustainable mining and processing of the country's mineral wealth by advanced
high technology practices in an environmentally responsible, efficient and safe way;
increase revenue to government and communities;
accelerate development of infrastructure and service industries in the more remote
and often mountainous parts of Vietnam with poor socio-economic conditions, where
mineral deposits tend to be found.
Page 3 of 3
Policy brief Financial mechanism in extractive industry
POLICY BRIEF
FINANCIAL MECHANISM IN EXTRACTIVE INDUSTRY
Prepared by
Vietnam Chamber of Commerce and Industry
The economy of Vietnam is heavily dependent on the mining industry. The extractive
industry brought value up to 412,000 billion (accounting for 11.5% of national GDP) and
created more than 267 thousand jobs in 2013.
Mining businesses in Vietnam recently have 11 financial obligations to the Government with
fairly high level of contribution compared to other countries. Businesses in general are
willing to follow their obligations but the financial mechanism should be fair, transparent,
reasonable and stable. Currently, some contributions of mining companies do not satisfy
these criteria.
1. Grant charge of mining right
Under the decree 203/2013/ND-CP, mining companies must pay the grant charge of mining
right before receiving licenses. At this period, companies have to spend significantly to
cover the cost of exploitation and mine construction without any revenue. The addition of a
significant financial obligation is not rational. The charge causes mining companies spend
less money on exploitation and processing technologies. Consequently, cheap technologies
and unprocessed mineral reduce the general economic efficiency of the industry. There are
some cases when companies were licensed but not able to get the certificate at the state
office due to lack of money for the grant charge of mining rights.
The mining industry suggested that the Government should quickly amend the Decree
203/2013/ND-CP to allow companies to pay the grant charge annually after having revenue
from exploitation, similar to other financial obligation as the nature recourse tax and the
environmental recovery deposit.
2. Environmental Protection Fee for mineral exploitation
The collection of the Environmental Protection Fee (EPF) for mineral exploitation is not
really fair. The EPF calculation only bases on the mineral output but it does not reflect the
environmental damage of each mine. For example, companies use advanced technology in
order to cause less damage to the environment have the same fee rate as other companies
who are destroying the ecology. This regulation is not only unfair but also discourage
companies to invest in environmental protection methods.
The EPF management and spending is not transparent. Under the Ordinance of Fee and
Charge, a fee is the money companies have to pay for service providers. In this case, EPF
must be used to reinvest in environmental protection service at the exploitation area.
However, in practice, businesses and communities are not informed about the fee
management and spending. In some cases, the collected fee is used for other purposes,
and then forced mining companies have to pay additional fee to recover environmental loss
in the exploitation area.
Page 1 of 3
Collection of EPF for mineral exploitaion
Ministry of Finance, 2015 (unit: bilion VND)
Extractive industry suggests the Governmental amend the decree 74/2011/ND-CP as

follows: (1) the fee calculation must reflect the environmental pollution caused by the
exploitation; (2) the collected money must be used for environmental protection activities
around the mine; and (3) the information on the fee collection and spending must be
published.
3. Nature resources tax
Nature resource tax is the largest financial obligation in the extractive industry. At the
beginning of 2014, Resolution No. 712/2013/UBTVQH13 has considerably increased the
nature resources tax for many types of mineral (20-45%). The tax increase and the grant
charge for mining rights have made 2014 became the most difficult year for the extractive
industry since the economic crisis of 2008. Many companies have to cut off labor, suspense
or even liquidate because they could not implement this obligation.
Currently, the Ministry of Finance suggests increasing the Tax on Exploitation of natural
resources for most minerals at 15-50%, which is expected to be effective from 01/01/2016.
If this proposal is adopted, the number of liquidation mining companies will continue to
grow. The increase in financial obligations for mining companies often set in a hurry with no
roadmap, so business can get a huge risk.
The extractive industry recommend that the Government should postpone the tax increase
until 2017 and each tax increase decision should be made at least one year before it is
implemented .
Percentage of companies cut off labor (PCI, 2014)

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4. Extractive Industry Transparency Initiative (EITI)

Currently, enterprises face many difficulties in accessing information to prepare and
execute mining projects. Furthermore, in the licensing phase, businesses are not provided
information on the number of other businesses which are applying for license and the
selection criteria, which leads to increased direct and indirect costs (time, administration).
In addition, the tax and fee rate in the mining industry is high but the quality of the
monitoring of collection and spending is low. As a result, companies that evade tax may
have the advantage over fully complying companies. In addition, due to the lack of
transparency, the contribution of the mining enterprises has not been properly recognized
by society.
To create a healthy competitive environment for businesses, the Government should
enhance the transparency of information on the licensing of mineral activities, the
collection and spending of businesss contributions. Instead of raising taxes, The
Government should better control the tax collection to ensure the fairness among
businesses.
In order to implement these activities, the Government has to perform the Extractive
Industries Transparency Initiative in mining industry (EITI). According to the principles of
the initiative, Government and business together publicize information related to licensing
and financial obligations. Thus, businesses can easily access to information in the process
of developing and implementing project. The management of mining activities in general
and budget collection of the State in particular is also more favorable.
After implementing EITI, Vietnam will also get more favorable conditions for the Vietnambased mining enterprises that are operating implementing mining projects in the EITI
countries such as Indonesia, the Philippines, Timor Lester, Myanmar and other countries.
Thanks and best regards.
Page 3 of 3
Section VI
APPENDIX
ANNUAL VIETNAM BUSINESS FORUM

Hanoi, December 02, 2014
OPENING REMARKS
Government of Vietnam H.E. Mr. Bui QuangVinh, Minister of Planning and Investment
The Vietnam Business Forum(VBF) hasdeliverednew initiatives and positive impacts foran
improvedbusiness and investment climate in Vietnam.Its importance is reflected in the
constant attentionreceived fromVietnams Prime Minister and ministries, evidenced byhis
role atthe Mid-term VBF in June to acknowledge and tackle business difficulties.Today, the
Forumishonored again to receivethe Prime Minister.In 2014, the countrys investment
climatewitnessed significant improvements following three challenging years of
macroeconomic instability. Annual growth is forecast to exceed 5.8%and business
difficulties are easing.This Forum, with the theme Entrepreneurship for new trade
agreements,aims toprepare for Vietnams international integration to be accelerated bythe
signing and participation in new trade agreements, and development ofits investment
environment to become compatible with requirementsfrom these trade agreements and
international practices.
International Finance Corporation -Mrs. Wendy Werner, PracticeManager, Trade and
Competitiveness, EAP
Government efforts to build a sound macro-economic framework are delivering results. But,
Vietnam needs to fully benefit from its deep integration into the global economy. On a
similar note, while Vietnamese enterprises have made strong contributions to poverty
reduction and job creation, most are small and only a handful compete
internationally.Vietnam is starting to address structural competitive challenges, but more
progress is expected.
Overall, the country should improve its investment climate through transparency and
predictability, address the absence of robust supporting industries and pay adequate
attention to business networks. The Government should engage the private sector more
actively in the formulation and implementation of related policies and reforms. With
increased economic regional and global integration, local markets will open to foreign
companies and Vietnamese entrepreneurs will gain from increased exports and benefit
from global production networks. Upcoming trade agreements will launch a wave of
investment in economic activity that can kick-start the next stage of growth and lead
Vietnam towards high income status.
Vietnam Business ForumConsoritum Mrs. Virginia B. Foote, Co-Chairman
Significant progress has been made on issues important to the businesses community
since the last Forum. Especially, the new Investment, Enterprise and Land Laws were
passed, Tax Law amendments were made, work permit changes announced and the cap on
advertising and promotion expenses will be removed. One important area the VBF would
like to work with the Government in 2015 is administrative reforms to attract investment,
support industries and grow the local economy. Areas for improvement include
enhancement of best practices towards moving the non-cash transactions, streamline
procedures for taxes, fees and fines and advoid informal payments.
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SESSION 1. OVERVIEW OF THE INVESTMENT CLIMATE GOALS TO FULFILL

Vietnam Chamber of Commerce and Industry (VCCI) Mr. Vu TienLoc, Chairman
The local business community recognizes the Governments efforts to provide a better
regulatory environment through important laws, such as the Enterprise, Investment and
Tax laws. However, businesses still faced challenges in 2014. Key ones included
transparency in access to regulatory documents from Government agencies, lack of
predictability in changes in rulings by regulatory agencies, law enforcement not conducive
to businesses,firms facing administrative procedure hurdles as well as a return to oldfashioned governance approaches in specific sectors with tightened market entry criteria
hurting businesses.
Overall transformation of the regulatory system, administrative procedures and public
sector is underway, but public administrative reform through the transition of public
services to the private sector is moving slowly. It is recommended that a review of all public
service sectors managed by Government agencies and cross-referenced with practices
used by other ASEAN countries be undertakento transition business associations, civil
society and private sector, judicial sector reforms be enhanced through strengthening
regulatory systems and revise current legal systems to avoid criminalization of civil
business relations, improveregulatory instruments and promote dispute resolution through
negotiations and arbitration.
American Chamber of Commerce in Vietnam (AmCham) Mr. Gaurav Gupta, Chairman
American businesses are performing well in Vietnam, yet challenges remain and
preparation for new trade agreements is needed. Firstly, regarding workforce development
output is weak despite low labor costs and the lack of a skilled work force harms Vietnams
ability to fully benefit from the manufacturing shift to the country. The Government should
take bolder action to modernize and upgrade its outdated national curricular. Secondly, in
theease of doing businesses and a level playing field inconsistent regulatory interpretations,
enforcement and unclear laws remain significant challenges as does corruption. Thirdly,
the protection of intellectual property rights encourages entrepreneurship, promotes hitech growth and jobs for workers. But, such protection and enforcement in Vietnam falls
short for a country wanting to join the TTP and other trade agreements. Efforts to simplify
customs export procedures present a significant opportunity to reduce costs and corruption,
increase competitiveness and allow Vietnamese enterprises to participate in international
trade.
European Chamber of Commerce in Vietnam (EuroCham) Mr. TomasoAndreatta, Vice
Chairman
The Government has successful stabilized the economy, but the next steps are to resume
infrastructure investment to increase labor productivity which is still low compared to
regional standards. Government debtisincreasing and may have negative consequences on
international perception of risk of Vietnam. To improve, tax revenue should be increased
through fighting total tax avoidance and limiting expenses. Private capital from abroad is
needed for project financing with international infrastructure operators, banks and fund
managers to bring money to Vietnam. Boosting local economic activity can be done by firstly,
revamping confidence in the real estate and construction market, secondly stimulating
international commerce with reforms so more international companies invest and local
firms wake up to competition and thirdly by reforming the SOEs. Regarding EU FTA
negotiations, choosing a rule-based approach rather than arguing case-by-case is
important and Vietnam will only win if it opens up its market as widely and rapidly as
Page 2 of 13
possible to allow companies and SOEs to evolve and learn to swim in the sea of real
competition. Otherwise it will be overtaken by partners it has teamed up with in the ASEAN
economic community. The Eurocham Business Climate Index reflects the business
communitys high expectations to further open the market following the successful
conclusion of EU-Vietnam FTA negotiations.
Korea Chamber of Business in Vietnam (KorCham) Mr. Kim Jung In, Chairman
Korean companies currently face three key legal challenges.Many leading garment and
textile enterprises have facedtransfer pricing investigations/audits and had additional taxes
and penalties imposed without the opportunity to offer a defence. This could impact on the
foreign investment climate as there are no selection standards of companies for price
comparisons. Tax authorities are recommended to issue transparent guidelines on relevant
data and procedures, a calculation method and grant a grace period so enterprises can
prepare for investigations and audits. Regarding conditions for imports of used machinery,
equipment and product lines, a recent circular on used equipment has specified import
conditions. Further clarification on these requirements is required to provide greater clarity
to firms. In respect to import tax exemptions for high-tech companies, certified hi-tech
companies should be eligible for import tax exemptions when importing material for hi-tech
manufacturing. However, preferential benefits are rarely granted and it is recommended
the Government offer clear guidance to better support firms.
Japanese Business Association in Vietnam Mr. Shimon Tokuyama, Chairman of VBF
Committee
The Japan Business Association has five key points. Firstly, while the Investment and
Enterprise Laws are signififcant steps forward, the time specific capital contribution in the
Enterprise Law for big infrastructure projects is not practical and a more flexible approach
is requested that does not hinder business decisions. Secondly, the regulation that
Japanese can only enter Vietnam with a visa exemption once in 30 days is restrictive, as
many Japanese work away from their families and it is requested this regulation be
revisited. Thirdly, overtime restrictions and increasing minimum wages harm the countrys
competitiveness. A scheme extending the limitation of overtime with agreement by
employer and workers is suggested. Fourthly,development of supporting industries needs
to be acceleratedto increase the value chain and enhance competitiveness. The decree to
develop supporting industries being drafted by the MOIT must be more consistent,
especially to support local small- and medium-sized enterprises (SMEs). Lastly some
regulations - such as those restricting imports of used machines - must be more
pragmatic, while some regulatory processes are not business friendly.
Canadian Chamber of Commerce in Vietnam (CanCham) Mr. Antony Nezic, Chairman
Trans-Pacific Partnerships (TPP) benefits for Vietnam are two-fold growth from trade
and from structural reform. CanChams view is privatization of financially burdensome
SOEs, the nascent social welfare system,labor productivity and natural environment are
great challenges. In particular, highly unproductive SOEs should be opened up to capital
and improvied management and technology to strengthen Vietnams position economically
and a destination for capital, technical investment and trade. Regarding structural reform
of agriculture SOEs, this key sector needs immediate reform as FDI in agriculture and
productivity in rice, coffee and other key commodities over the last decades has declined.
Open door policies to licensing investments in agriculture and technologies will facilitate
linkages that Samsung has brought to the technology and manufacturing sector in Vietnam.
This industrialization of agriculture will have enormous positive consequences for rural
development and stem urbanization and mis-use of valuable agriculture land.
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SESSION II. TOPICS DISCUSSED WITH THE GOVERNMENT

1. Financial Sector and SOEs Reforms - Next Steps
Banking Working Group - Mr. Dennis Hussey, Head
Much progress has been made to address banking sector challenges to ensure consumer
confidence in financial markets. However, sudden implementation challenges with these
regulations should be crictically clarified, in particular new administrative penalties for
banks under Decree 96. Regardingforeign exchange management,Circular 23 potentially
burdens customers in terms of documentation provided to banks and Circular 05 potentially
restricts foreign portfolio investors in how they operate banking relationships. For
prudential ratios, Circular 36 places limitations on banks in terms of holding Government
bonds. The banking sector is looking with interest at the Governments agreement on
FATCA.
Looking forward,further development of local currency debt markets is needed help
domestic financial investors with further financing and investment alternatives, while
financing of SMEs also needs attention. Documentation associated with foreign exchange
international trade needs to be streamlined to allow importers and exporters to better
manage foreign currency flows. Banking financial sector opportunities for new technology
are tremendous. In particular, reducing Government cash payments will have many
advantages in terms of reducing physical cash handling, improving transparency and
accounting for Government and reducing corruption.
Response from the State Bank of Vietnam Mrs. Nguyen Thi Hong, Deputy Governor
The State Bank (SBV) has used monetary policy tools to improve investors confidence in
Vietnam. It has been aggressive in restructuring financial institutions to enhancemonetary
and banking regulation governance. Further action will be taken to reduce bad debt to 3%
by the end of 2015 as targeted by the Government andimprove the banking regulatory
system towards alignment with international practices. Circular 36 has helped banks better
manage risks in line with international standards.
The SBV looks forward to engaging the Banking Working Group (BWG) on upcoming rulings,
encompassing lending, replacement of Rule 1627, finance companyconsumer lending and
anti-money laundering. Regarding FATCA, the SBV has provided strong implementing
inputs and on capital market development and financing SMEs, the SBV supports the
BWGsrecommendations.
Capital Market Working Group Mr. Dominic Scriven, Head
Public sector reform and domestic/foreign fund raising are two potential determinants that
couldhelp triple the market size in the next three years. Recent statistics show that the top
10 State-owned enterprises that went public globally in the last seven years have seen their
share values drop by 50% on average, despite global securities prices increasing by 5%.
Regarding finances from domestic and offshore sources, in-country investors are small and
fragmented, while most countries rely on pension funds which should be replicated in
Vietnam. Foreign investment attraction remains modest with the local stock market only
having crowded in USD150 million, a fraction of total FDI (USD10 billion). Also, if it is
assumed foreign investors want to buy local shares regardless of quality, the maximum
amount of funds raised would only be USD3 billion and this underlines
inefficienciesinforeign investorownership scheme.
Page 4 of 13
Capital Market Working Group Mr. Terry Mahony, Representative

Decree 51 is a proactive step to develop a sound and liquid stock market to provide much
needed funding for Government expenditure and address budget deficits. But, effective and
professional implementation is crucial. There is a need to create liquidity and establish an
effective privatization process. Vietnam has the potential to become one of the new leading
stock markets in Asia, but it must follow standard financial rules, with improved
transparency, less corruption, bureaucracy, monopolies and employ tighter regulatory
framework. Unless standard global practices in privatization are adopted, Vietnam will
struggle to develop a vibrant stock market.
Response from State Securities Commission Mr. Vu Bang, Chairman
The stock market recovered strongly this year and financial safety standards in line with
Basel II Accord were introduced, as new rules on CAMEL-based precaution criteria and risk
management were put in use. A regulatory system related to open-ended funds, ETFs and
real estate funds is also in place.
Regarding privatization of state-owned enterprises, the Prime Minister recently released
Decision 51 on guidelines on the capital divestment, sale of shares, trading registration, and
share listing on the stock exchange of state-owned enterprises. And this hasbeen
welcomed by the market. Moreover, the Ministry of Finance and Securities Committee have
met with 120 companies and groups on its implementation to address technical challenges
and this will further enhance the privatization process in connection with listing on the
stock market. In respect to foreign investment, through enterprise classification,
businesseswill see more relaxed foreign equity ratios, except for some types of firms with
restricted or conditional business lines. The Securities Committee has proposed
adjustmentsto foreign ownership room, but further consideration of legal aspects is needed.
The committee recommends the submission process and release of this decision be similar
to Prime Ministers Decision 51 on divestment, which will speed up expansion of foreign
ownership faster than revising a decree.
2. Administrative Procedures Reforms - Efficient and Modernized
Education and Training Working Group Mr. Khalid Muhmood, Co-Head
Beside Autonotmy, administration of higher education within Decree 73 is a key concern of
the Education and Training Working Group. The law attempts to be all encompassing for all
organizations, while it should be more specific. The law is also cumbersome as there are
overlapping inspections processes between different ministries. The working group
recommends the law is recalibrated to make higher education and vocational training a real
strength. It is also important to maintain good communication to address issues and make
progress.
Response from Ministry of Education and Training Mr. Bui Van Ga, ViceMinister
Autonomy in issuance of degrees by academic institutions: The MOET is drafting a circular
to provide rules on degrees and certificates for use in the national education system and
other regulations on mandatory information to be reflected in degrees and certificates, as
well as the right of academic institutions to add other information.
Autonomy in partnering foreign academic institutions:The Minister of Education and
Training approves foreign partnership training programs at junior college, college,
masters and doctorate levels. Under Decree 77, fully autonomous public colleges can
approve twining programs andinstitutions that qualify for national level benchmarks can
Page 5 of 13
have autonomy to partner foreign entities. The MOET is drafting criteria for accreditation
under national benchmarks.
Foreign-owned universities organizational autonomy:Foreign-owned universities have full
authority to have organizational settings that fit their missions in accordance with
Vietnamese law.
Autonomy in curricula and training: Universities have full discretion to have curricula in
conformity with released competency standards. While the MOET does not object to
branching out into training fields, they should conform withhuman resources development
master and zoning plans.
Development of masters and doctorate degree holders in the faculty: The Higher Education
Law requires that university instructors hold masters degrees or higher. And each training
program needs a specific number of doctorate holders on staff to ensure research capacity.
Recommendations on Decree 73: To set up a foreign-owned educational institution in
Vietnam, while application requirements are the same, the decision-making authority and
specific requirements vary. Resolution 47 was recently released annulling the eligibility
criteria for minimum work experience for foreign teachers working in preschool institutions,
primary level education and language centers. The MOET is finalizing amendments to
Decree 73 in this direction.
Recommendations to encourage foreign-owned academic institutions to reinvest in
education: Decree 141 encourages non-profit private schools and foreign-owned academic
institutions to reinvest in education. The upcoming draft sample university charter will be
more specific on procedures for operation registration for non-profit private and foreignowned universities.
Land and Property Working Group Mr. David Lim, Head
Legislators are to be congratulated for enhancing foreigners property retention rights, yet
effective implementation is required. Regarding project transfers, numerous provinces do
not implement project transfers as prescribed in law. A clear instruction on the transfer of
projects should be given to local authorities to implement. For the registration of sale and
purchase agreements for apartment units, 20 business days are required to vet application
documents with another 20 business days required for resubmission if unsuccessful.
However, there are no prescribed guidelines/rules on the review process and this needs to
be addressed. Regarding land use rights certificates (LURC) for parts of construction work,
it is unclear whether LURCs can be issued for parts of construction work as the law does
not prohibit sales of parts of construction work. It is recommended provincial authorities
receive an instruction confirming LURCs can be issued for parts of construction work
implemented according to the requests of rightful parties.
Response from Ministry of Natural Resources and Environment Mr. Tran Hong Ha, Vice
Minister
Registration of apartment procurement agreements: Registration of apartments is subject
to Article 72, Decree 43/2014/ND-CPand rulings indicate procurement of apartments is
subject to terms agreed upon in the apartment procurement agreement. In accordance with
Article 95.7, Land Law, registration of land and appurtenances to land comes into effect
from the date of entry in the cadaster.
Page 6 of 13
Transfer of real estate projects: Criteria for transfer of land use rights coupled with
transfer of part or all of a housing development project, and infrastructure development
projects for transfer or lease are listed in Article 194, Land Law and Article 42, Decree 43.
Pledging land use rights and appurtenances to land by non-nationals is not addressed by
the law, but the Governments plan is trial it and post-pilot results will inform law-making
and formalization.
Award of certificates for land use rights and appurtenances to land: The working groups
inputs are reasonable andthe ministry will soon provide implementing guidelines.
Response from Ministry of Construction Mr. Bui Pham Khanh, Vice Minister
Foreign investors and non-nationals entering Vietnam are allowed to buy houses from
commercial and residential projects. Foreign investors are allowed to buy back real estate
projects that the Land and Real Estate Working Group recommended. These considerations
will be reflected in the implementing decree to the Real Estate Trading Law. The ministry
takes note of concerns raised by the working group and will reflect on those during
development of implementing decrees and circulars.
3. Development of Vietnamese Workforce - A More Competitive Future
Human Resources Working Group Mr. Colin Blackwell, Head
Development of an effective Vietnamese workforce is important in the context of FTAs. The
groups trade and commerce human resources survey, with 400 investment companies,
showed that half of responsdants reported that difficulties with human resources
legislation had reduced profits, with one-third impacted on and some considered relocating.
Most companies said there was no change to the work permit application process, which
was up to three times slower than other ASEAN countries. Firms also reported that the
over-time cap was difficult to implement and actually reduced output and disrupted
operations.
Education and Training Working Group Mr. Brian O'Reilly, Co-Head
Identifying industrys needs remain a pressing issue assurveys reveal that most employers
need technicians, yet the requisite skills are lacking. Enhanced technical education and
training instiutions are needed to address this need. The Government should urge technical
education and educational training insitutions to collect relevant information from
enterprises to improve training programs and communicate with enterprises to determine
current and future skills needs. Technical education needs to become more attractive to
Vietnamese students with appropriate skills tests for human resource management
practices.
Response from Ministry of Labor, Invalids and Social Affairs Mr. Nguyen ThanhHoa, Vice
Minister
Work permits:The Government released Decree 102 and Resolution 47 regulating guest
workers in Vietnam. MOLISA is preparing amendments to Decree 102 to be submitted to the
Government in Quarter 2 of 2015.
Government of Vietnam Speech by H.E. Mr. Nguyen Tan Dung
The Government of Vietnam highly appreciates todays contributions, which are duly noted
and will be considered for amendments, updates and improvements to current regulatory
Page 7 of 13
systems and policies.However, more work needs to be done in a determined way, if rapid
and sustainable socio-economic development is to be secured for Vietnam.
The key objectives fortheGovernment of Vietnam in 2015 are:
- Further macroeconomystabilization: Exchange rates will be controlled,inflation
maintained at 5%, budget overspending kept at 5%and2014s 5.3% deficit will be cut to
5% for 2015. Government debt will be maintained at a safe level and GDP growth is
expected to rise to 6.2% for 2015. The Governmentsfive-year plan for 2016-2020will see
Vietnam achieve GDP growth of 6.5%-7% a year.
-
Leadership and regulatory efforts will continue to optimizethe market economy system,
as will legislative system and administrative procedure reforms to promote robust
growth of capital, labor and property markets. All efforts will be made to provide a
conducive environment for businesses.
Proactive steps to integrate with the global economy:Free trade agreements(FTAs) with
the EU, the Customs Union of Belarus, Kazakhstan and Russiaand a potential one with
Korea will further this aim as well TPP negotiations with 11 other countries with a view
to signing the agreement in 2015.
Economic restructuring and a shift in the growth pattern to achieve better results over
2014 included: tapping available resources for infrastructure development through the
favored public-private partnership (PPP) approach, leveraging human resources
development to meet production and business needs, financial and banking system
restructuring, stepping up State-owned enterprises reform, emphasizing strong private
sector and SMEgrowth to attract foreign investors and restructuring the agribusiness
sector.
Anti-corruption:Optimizing the local market economy and administrative procedure
reform will enhance transparency and fight corruption.
4. Development of Private Sector - Building the Backbone of Business

Investment and Trade Working Group Mr. Fred Burke, Co-Head
While business community feedback has been incorporated during the regulation drafting
process, some concerns remain. Firstly, the 90-day rule in the Enterprise Law for
contributing chartered capital it is not practical for infrastructure and land development
projects. Secondly, implementation of the new Investment Law requirement requiring
investors to obtain investment and business registration certificates should be streamlined
to avoid duplication and redundancies in the application process. Thirdly, Vietnam has not
met international expectations in enforcement of foreign arbitration awards and this will
affect its reputation as an investment destination.
Fourthly, businesses need new guidelines and standards for recognizing marketing and
advertising expenses as legitimate business-related expenses.
With respect to new and emerging challenges, an amendment to the Land Law in industrial
zones should be abolished as lessees in such zones will not be able to use land-use rights
certificates as collateral for working capital loans if the industrial zone landlord has not
paid the entire land rental payment to the State. Regarding energy infrastructure and PPP,
delays to thermal power projects could result in energy shortages and the Government is
urged to look at alternative energy souces and options to allay manufacturing sector
concerns. While labor costs remain a competitive advantage for Vietnam, it should also
make other parts of the economy more efficient including transportation, logistics and
utilities.
Page 8 of 13
A number of issues remain pending, including simplication of VAT on export services,

streamline the work permit process and address inconsistencies related to the standard
Japanese health certificatewhen comparing the requirement of the health certificate under
the work permit rules, which continue to cause confusion for businesses. Stateenterpises
continue to absorb and use capital inefficiently and it is hoped Vietnam will continue its
drive for privatization as mentioned in the Prime Ministers remarks.
Response from Ministry of Planning and Investment H.E. Mr. Bui QuangVinh, Minister
Charter capital pay-in within a 90-day window: The revised Investment Law retains this
requirement to disclose the founders fundraising ability and avoid false equity listings. The
difference between charter capital, investment capital for project implementation purposes
and legal capital should be clearly understood. Charter capital is registered by the founder
when applying for business startup, which must be paid in within three months. Investment
capital for project implementation is capital raised in the implementing period and is not
bound by the compulsory pay-in requirement.
Investment licenses for foreign companies: The revised Investment Law retains rulings on
investment licensesand also provides simplified procedures for investment certification.
Apart from major projects that require preliminary acceptance by the Government and
National Assembly, other projects only need 15 days to have the investment certificate
granted. The procedure for starting a business also takes no more than three working days.
For foreign investment projects, investors may choose online registration if applicable. The
ministry is itemizing rules even further through other under-law guidelines to make these
procedures more specific, limit physical interactions and increasing use of online systems.
Expansion project definition: The MPI will work with the General Department of Taxation to
provide detailed guidance on this.
Tax Sub-Group Ms. Huong Vu, Head
- Foreign contractor tax (FCT) policy applied to sale of goods into Vietnam: Circular 103
regarding FCT, includes transactions of a purely commercial nature.
+
+
The sellers responsibility for the quality of goods provided to Vietnamese buyers is a
commercial condition.
Imposing sales prices: The price is a fundamental component of the value
proposition of one enterprise in the market. The foreign supplier shall have some
pricing policy control in markets where goods are sold, which also prevents
unhealthy speculation and undermines distribution. The implementation of a pricing
strategy should not turn foreign suppliers into entities bearing FCT.
Authorizing or hiring a Vietnamese organization to conduct part of a distribution
service, other services related to the sale of goods in Vietnam: Under the
international practices, which are typically Agreements on avoiding double taxation
signed between Vietnam and regions, standards in UN, OECDs documents, the
distribution activity of foreign sellers, depending on the model and level of
participation in Vietnamese market, might create a permanent establishment in
Vietnam or not and might be taxed on the income allocated to such permanent
establishment. The Government is proposed to consider this issue carefully.
Circular 103 should also be amended to exclude the condition when the seller bears
responsibility for quality of goods/services and/or imposes selling price from the
conditions triggering FCT to seller.
Page 9 of 13
Applying DTA to determining Permanent Establishment for tax reduction and tax
exemption: Vietnam has signed 69 agreements on DTA with other countries. However,
the tax authoritys interpretation sometimes fails to take the commercial nature of
transactions into account as well as international trading practices, which makes DTAs
application impossible for foreign enterprises.
On-the-spot import/export activity: A Vietnamese firm delivering goods to another such
enterprise on instructions of a foreign buyer is considered by tax authorities to be a
foreign enterprise representative, whereas for on-the-spot importing and exporting
such transactions are only a commercial agreement to optimize delivery/stock
circulation of commercial trading activities.
Foreign enterprises controlling sales prices in the Vietnamese market: The tax authority
said foreign enterprises with control of sales prices means they have control of sales
activities of Vietnamese enterprises. Therefore, local enterprises will become
dependent on foreign enterprises leading to constitution of permanent establishments.
Identifying expanded investment: An expanded investment project, in the eyes of the

Corporate Income Tax and Investment Law, does so to expand and improve production,
technology, product quality and reduce environmental pollution. In practice, an
enterprise must invest in fixed assets to maintain production using internal cash flows
without any injection of external capital. However the lack of clear guidance in
determining the starting point of expanded investment has led to
arbitrategeous interpretations in practice. TheGovernment and Ministry of Finance are
proposed to provide more specific guidance to identify investment expansion for the
period prior 2014 in the way that would base on invested capital which includes charter
capital and loan capital and is measured by the value of fixed asset after accumulated
depreciation on the Balance Sheet. In case enterprises use internal cash flow generated
from depreciation source to purchase assets, it cannot be considered as expanding
investment. In case enterprise used up all registered capital but invest using retain
earnings to purchase asset to maintain the manufacturing activities without any
increase in capital, capacity, scale of business, then the investment should not be
deemed as expanded investment and shall be able to applied corresponding tax policy in
each period.
Response from General Departmentof Taxation Mrs. Le Hong Hai, Deputy Director
General
All the working groups comments are recognized for reflection in taxation implementing
documents to move closer international practices.
OECD maintains a forumtoaddress tax base erosion and global transfer of tax-related
profits. Tax administration agencies hope to participate in this forum.
Some working group concerns have been addressed in regulations, but not all have been
clearly understood, such as provision and sales of products and services in Vietnam or
determination of residency status in Vietnam. These issues will be discussed through
dialogues with businesses.
Customs Working Group Mr. Mark Gillin, Head
Customs is preparing national decrees and circulars to implement common elements of
new trade agreements, including a national window, advanced rulings, authorized operators,
Page 10 of 13
export processing enterprises and export processing zones. Implementation of new

commitments involve complex, legal, procedural and technical issues, which need to be
coordinated across the ministries and agencies. Customs recently signed an MOU with the
VBF as a partner for dialogue. However, customs needs to make sure advancements at
policy level translate into changes in the field and result in the easing of regulatory burdens
for businesses.
Response from General Department of Customs Mr. Vu Ngoc Anh, Deputy Director
General
National single window: The Ministry of Finance is putting together an outline to be
submitted to the Prime Minister by late March to address two concerns. Firstly,
professional inspection of products at border crossings withsufficient technical conditions,
staffing and partnerships to save time for businesses.Secondly, introduction of a national
electric single window to promote investment andcomputerize administrative procedures at
ministries and line agencies.
The 275-day grace period for materials imported for production and exports, declaration of
material consumption rates by outsourcing companies: Under the new Customs Law, the
declaration of material consumption rates will be annulled. Regarding the 275-day grace
period, the law only allows one extension or another 275 days, unless imported materials
have a production cycle (ship building) or storing cycle longer than 275 days. If the Tax
Administration Law is revised next year in relation to this issue, companies whose
materials have not been used for production or sold to the market will not have to pay taxes.
Advanced rulings: Customs will not demand presentation of supporting documents that
firms do not have at the time prior acknowledgement is required, or demand documents
that may disclose firms trade secrets.
HS system: It will be unveiled when the Customs Law comes into effect from January 1,
2015. Regarding the right to consultation and disclosure, final responses may emerge later
than planned and this concern is duly noted and will be reported to the Government.
Power and Energy Sub-group Mr. John Rockhold, Head
Renewable energy is best positioned to support Vietnams future energy needs due to its
scalability during a short time frame, with wind at the forefront due to its supply and
existing Government support policy. To bolster renewable energy, a feed-in tariff is needed
for wind energy as is investment in the State grid system to absorb the additional energy
capacity from renewable energy sources. Accelerated adjustment of energy tariffs for
sustainable power sector development in Vietnam is needed to enable EVN to restructure
and become more profitable. The Working Group requests donor organizations help target
financing towards private sector energy sector investment and facilitate project finance with
credit/sovereign risk to be covered by bilateral Governments as opposed to the need for
Government guarantees.
Response from Ministry of Industry and Trade Mr. Cao Quoc Hung, Vice Minister
Energy-related concerns: The MOIT has set in place a master plan for national power
development for 2011-2020, with vision to 2030 Master schematic 7. Energy needs for
2010-2025 are expected to increase by 15% a year and in response the planpoints to
effective use of existing hydropower systems, rational development of coal-fired power and
development of fuel gas-fired power plants.
Page 11 of 13
In addition, viable plans will be made for nuclear power development and the first nuclear
power plant in Vietnam will go live by 2020 and by 2030, nuclear power output will reach
10,700MW. Vietnam also targets renewable energy development for power generation and
plans to increase the proportion of renewable energy power to 4.5% of the total power
output by 2020, and 6% by 2030. Regarding wind power, the current marginal output will be
brought to 1,000MW by 2020 and 6,200MW by 2030, or 0.7% and 2.4% of the overall output
by 2020 and 2030, respectively. Biomass power and co-generation in sugar factories,
according to the plan by 2020, will provide an output of 500MW, which will increase to
2,000MW by 2030.
Regarding proposals for creating a conducive environment forrenewable energy
development investment, the Government has introduceda range of incentives. It has also
created a pathway for development of transmission gridlines and is stepping up its energy
saving,while it is also ontrack with its roadmap on market-based energy pricing in line with
the Electricity Power Law and the revised version with a competitive wholesale electricity
market taking shape over time.
Automotive Working Group Mr. Gaurav Gupta, Head
Despite having more than 20 players and 40 brands in the automotive industry in Vietnam,
the growth in the overall automotive sector has not been as expected by investors and the
Government. Lack of growth and sub optimal capacity utilization has hurt investor
confidence and also questioned the future returns for new investments. A key factor to
attract investment is to grow the overall size and competitiveness of the CKD and
component industry. Investors plan their strategy based on the overall size of the industry
and the cost competitiveness of the CKD.
The Government should consider steps to accelerate growth of the overall industry and to
drive cost competitiveness of CKD to maintain a sustainable automotive industry. These
factors will lead to suppliers and investors coming to Vietnam, which in turn, would aid the
growth and development of the industry.
With the recent approval of the automotive master plan we are hopeful of stability and
transparency in policy going forward. Some key areas of interest in need or attention
include cost gaps and weak cost competitiveness of local CKD operations, increased
transparency on duty road maps within ASEAN and other FTAs and continued high
taxes/Special Consumption Tax (SCT).Regarding the two-wheeler industry, number plate
fees, SCT, removal of the 125cc motorcycles from the list SCT is applied to and limitations
on the number of two-wheel vehicles up to 2020 are pressing issues. Across two-wheeler,
passenger and commercial vehicles common issues include Corporate Income Tax (CIT)
incentives for supporting industries and for expansion projects prior to 1 January,
importation of remanufactured, end of life treatment for products, incentives for eco-green
vehicles and addressing road safety needs.
Response from Ministry of Industry and Trade Mr. Cao Quoc Hung, Vice Minister
Supporting industry: A decree has been submitted to the Prime Minister to address
weaknesses in businesses accessing global production chains.
Recommendations on duty and special sales tax: In line with the automobile industry
master plan, the MOIT submitted a final report to the Prime Minister presenting policies to
promote development, including duty for completely built units (CBUs) to aid local
manufacturing competitiveness. Details of the proposed roadmap for new CBU duties,
include for under-9 seat vehicles 50% by 2015,2016 and 2017 and 0% by 2018. For
Page 12 of 13
passenger automobiles of 11 seats or more, new truck CBUs and used vehicles, duty rates
for CBUs will follow Vietnams World Trade Organizationand FTA commitments. The duty
rate for car spare parts will remain at 5% before reducing to 0% by 2018.
Special sales tax: For under-24 seat passenger automobiles, the tax will increase for
vehicles with engine capacity of more than 3 liters and decrease for 10-16 seat passenger
vehicles. For 16-24 seat passenger vehicles, the 0% rate will apply. Special sales tax will
also apply to fuel-efficient and hybrid (biofuel), electric and fuel-saving vehicles.
Two-wheelers: The ministry has taken note of the proposals to increase license plate fees
and special sales tax, and limit the number of vehicles. It will work with the ministries of
Finance, Transport as well as Natural Resources and Environment to forumlate viable
policies.
CLOSING REMARKS
Ministry of Planning and Investment H.E. Mr. Bui QuangVinh, Minister
Between 2011 and 2013, the VBF raised concerns on 170 issues, of which 107 have or are
being addressed. These inputs have contributed to improving Vietnamspolicy environment
as well as the ease of doing business in Vietnam. With such progress, the number of
participants in the Forum has increased over time, while the Government and Prime
Minister have also taken increased interest in the Forum. Importantly, this Forumhas
discussed issues concerning Vietnams preparation for deeper global integration
throughFTAs. TheForumsinvaluable inputs derived from rich international experienceshave
provided a better perspective on international economic integration tohelp Vietnam on its
journey.
World Bank Mrs. Victoria Kwakwa, Vietnam Country Director
Vietnam has made significant progress in a number of areas and several pieces of very
important legislation will see it continue to move in the right direction and towards a more
private sector-driven economy. Negotiations and discussions continue on a number of key
FTAs which when signed and key pieces of legislation are place, will allow Vietnam to use
these events to transform itself and move towards a modern industrialized economy that it
would like to become. In terms of legislation, the key word is implementation and a number
of issues raised today need to be addressed. Furthermore, a mechanism for monitoring the
implementation of such laws that feeds back into the amendment and revision of policies is
important. Regarding structural reform, SOE reform and ensuring the quality and credibility
of the reform process is important. With financial sector reform, a clear strategy to
effectively address NPLs is still needed. Modernization of the agriculture industry and
addressing the domination of SOEs to allow more private participation need attention.
Overall, the Governments resolve to fight corruption remains a priority.
Vietnam Business Forum Consortium Mr. Vu TienLoc, Co-Chairman
In this Forum, the Prime Minister confirmed the Governments resolve to increase
regulatory reforms, enhance growth and market economy mechanismsto boost the private
sector. These messages are well received and give the business community confidence in
the future.
Page 13 of 13

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MIDTERM VIETNAM BUSINESS

Hanoi, June 9, 2015

Midterm Vietnam Business Forum 2015

Hanoi, June 9, 2015

INVESTMENT AND TRADE

VISA AND TOURISM

RESIDENTIAL HOUSING AND REAL ESTATE BUSINESS

INVESTMENT LAW AND ENTERPRISE LAW

Comments and recommendations on the draft Decree amending a number of Articles

Section IV: INFRASTRUCTURE - Requirements for PPP implementations, port

PUBLIC-PRIVATE PARTNERSHIP (PPP)

PORT AND SHIPPING

POWER AND ENERGY

Section V: REPORTS FROM OTHER WORKING GROUPS

CUSTOMS AND TAX

Section VI: APPENDIX

Summary notes of Mid-term Vietnam Business Forum June 2015

MID-TERM VIETNAM BUSINESS FORUM 2015

Date and Time: 7:00 13:30, Tuesday, June 9, 2015

Review of Business Climate

1. Trade, Tourism and Investment - Issues of implementation of new Laws

Trade Working Group

Responses from the Government

2. Banking and Capital Markets Needs for positive growth

Responses from the Government

Infrastructure Working Group

VIP Lunch By Invitation Only

American Chamber of Commerce in Vietnam (AmCham)

"Phi tng cng tng tc gia cc c quan trong b my nh nc v gia b my nh nc vi cc t chc

Attachment 1 Vietnam U.S. Trade, 2000 2020e

Attachment 2 ASEAN U.S. Trade

M/12 (M/60 with

Visa Waiver Program (VWP)

Visa Waiver Program (VWP)

Other regional trade

Transpacific Partnership (TPP)

Max B1/B2 validity

Treatment for U.S. citizens

M/12 = multiple entries, 12 months

EUROCHAM POSITION PAPER

KOCHAM POSITION PAPER

However, due to various objections of many foreign-invested enterprises in enforcing

DISMISSAL DUE TO FALSE INFORMATION ON ABILITY AND EXPERIENCE

Recommendation: Therefore, our suggestion is that the Government of Vietnam should

The Japan Business Association in Vietnam (JBAV)

2. INVESTMENT CLIMATE DEVELOPMENT AND SUPPORTING MANUFACTURING FOR

Japan has significant knowledge of housing development, stemming from areas

Hanoi Young Business Association (HanoiBA)

3. Poor enforcement resulting in unhealthy competition. For a number of conditional

TRADE, TOURISM AND

Investment and Trade

Report from Investment and Trade Working Group

Vietnam Business Forum, 2015

REPORT FROM INVESTMENT AND TRADE WORKING GROUP

Report from Investment and Trade Working Group

Vietnam Business Forum, 2015

Report from Investment and Trade Working Group

Vietnam Business Forum, 2015

ii. The "Fundamental Principles of Vietnamese Law" Exception

Report from Investment and Trade Working Group

Vietnam Business Forum, 2015

Report from Investment and Trade Working Group