Foreign investment exceeds US$33 billion in 11 months

HCMC – Vietnam has attracted US$4.85 billion of foreign investment this month, taking the total pledged capital in the year to date to more than US$33 billion, up nearly 83% year-on-year.

According to the Foreign Investment Agency under the Ministry of Planning and Investment, in the year to November 20, over 2,290 new projects had obtained investment certificates with total registered capital of US$19.8 billion, up 52% year-on-year.

Besides, 1,100 foreign-invested projects got approval to inject an additional US$8 billion, up nearly 58% year-on-year. There were more than 4,500 mergers and acquisitions (M&A) deals involving foreign investors with total capital contributions of about US$5.3 billion, up nearly 58%.

As such, the total amount of foreign investment this year to date has amounted to more than US$33 billion. It is estimated that foreign investment into the country would reach US$35 billion by the end of this year, far exceeding the Ministry of Planning and Investment’s expectation of US$28 billion.

The processing and manufacturing sector took the lead in attracting foreign funds in the 11 months, though its proportion tumbled. With nearly US$15 billion of foreign investment in January-October, this sector made up less than 50% of the country’s total, a sharp fall compared to its proportion of about 70% in the past few years.

Meanwhile, the power generation and distribution sector came second with total foreign investment of nearly US$8.4 billion, accounting for a quarter of the country’s total. Attracting US$2.5 billion, the real estate sector came third, making up nearly 8%.

As of November 20, foreign direct investment (FDI) projects had disbursed US$16 billion, up 11.9% over the same period last year.

In January-November, exports of FDI enterprises, including crude oil, reached nearly US$141 billion, up nearly 23% from the year-ago period and accounting for more than 72% of the country’s total export revenue.

Their imports have also risen by more than 23% year-on-year to nearly US$115 billion, making up 60% of the country’s total. This led to the FDI sector’s trade surplus of more than US$26 billion.

According to the Foreign Investment Agency, there have been 112 countries and territories investing in Vietnam this year to date.

Japan has surpassed South Korea to become the biggest investor with nearly US$9 billion, or 27% of the country’s total. South Korea came second with total registered capital of nearly US$8.2 billion and Singapore took the third position with US$4.7 billion.

Source: The Saigon Times

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Challenges in Preparing Documents for Representative Office Application

The representative office (RO) is a popular foreign investment vehicle which investors utilize when wishing to enter the Vietnamese market without committing too much investment.  The representative office could help the foreign entity to hire local employee to carry out market research, business promotion.

A foreign company wishes to establish a representative office in Vietnam must submit an application dossier for a license to the Provincial Department of Industry and Trade (DIT).

However, there are cases which the government agencies receiving the application would be different from department of industry and trade depending on the business lines carried out by the foreign entity.

Firstly, the trade service is bound in Vietnam’s Commitment in trade service in WTO but there are no existing specialized legislative documents:

When the trade service which the foreign entity provides does not fall under areas prescribed by specialized legislative documents in Vietnam, the licensing agency shall submit a written request for directions to the relevant ministries for opinions. The foreign entity shall wait for at least 15 working days for receiving a written notice of whether the license for establishment of the representative office is granted or rejected. This process not only extends duration of establishment of representative office but also rises risk of rejection.

Secondly, the trade service is not yet bound in Vietnam’s Commitment:

Where the scope of operation of the representative office is inconsistent with Vietnam’s commitments or the foreign trader is not located in the country or territory being party to treaties to which Vietnam is a signatory, there is an extra process in registration of representative office. The representative office shall be approved by relevant ministers, heads of ministerial agencies for establishment of the representative office.

Thirdly, trade services are supplied in foreign countries, but such does not exist in Vietnam

The foreign entity has to apply codes as following to Vietnam standard industrial classification system or CPC. If the foreign entity can not define a code, it is merely impossible to register the representative office.

In most of the cases, the foreign entity should consult with law firm in Vietnam whom lawyers have expertise in WTO laws, law on investment and experience in working with Vietnam state authorities, to prepare application right at the start and be ready to challenge the authorities when required to protect best interests of the clients.

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Travel firms want visa procedures simplified

HCMC – The Government should simplify the visa procedures for international tourists by issuing visas on arrival or e-visas to make the country more attractive to foreign guests, according to local travel firms.

More tourists from Japan, South Korea, the UK, Germany, France, Italy and Spain have come to Vietnam, reflecting the positive impact of the relaxed visa policy for visitors from these countries.

International tourists can get an entry visa on arrival in Laos, Cambodia and Thailand. For Vietnam, foreign tourists must ask travel agencies to complete all Vietnam visa procedures before arrival so that they can get a visa stamp at the border gate and make a fee payment, a process which is time-consuming.

Tien said last-minute tour bookings are popular now, so with the current visa issuance system, Vietnam may lose a lot of such tourists if applying for a visa remains complicated.

Though the Government permitted the issuance of e-visas since the beginning of this year, a large number of tourists have still requested travel agencies for help since the e-visa system has not worked smoothly, Tien said.

Sharing the same view, Lien Bang Travelink director Tu Quy Thanh said many existing problems make Vietnam’s visa policy less attractive.

In particular, international tourists to Phu Quoc Island off mainland Kien Giang Province are not required to apply for an entry visa but if they want to travel to other parts of the country, they will have to apply for a visa.

For international tourists who arrive at other airports than Phu Quoc, they must head to domestic terminals to fly on to the island, which costs airlines more time and human resources.  

According to the Tourism Advisory Board, Vietnam’s visa policy is not as liberal as other regional countries such as Thailand, Malaysia, Indonesia and the Philippines. Vietnam now waives entry visas for tourists from 23 countries and territories, but Thailand does that for 58 source markets, Malaysia 164, Singapore 160, Indonesia 169 and the Philippines 160.

Vietnam’s visa exemptions apply to short visits only, whereas tourists in the other countries can stay for up to 30 days or even 90 days in some cases.

Source: The Saigon Times

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Vietnam’s energy sector faces tough competition

HANOI – Vietnam’s energy sector is facing tough competition with many countries in Asia and America since most energy giants have scaled down investment due to the low oil price, said Mark Edmunds, Southeast Asia Energy & Resources Industry Leader and Asia Pacific Oil & Gas Sector Leader for Deloitte.

Speaking to the Daily, Edmunds said many countries are struggling to attract foreign investors in the sector as the oil price has remained low over the past four years. Even big companies like ExxonMobil, BP and Shell have become choosy before entering a market.

To attract investors, authorities should consider important factors such as tax policies, business environment and administrative papers. With less capital moving around, companies are looking for shorter investment cycles to recover cash quickly.

Aside from Southeast Asia, Mexico is emerging as a new investment destination for oil giants. It has opened its market after prohibiting foreign investment for nearly 80 years.

Regarding power generation in Vietnam, Edmunds said the nation has seen many coal fired and hydropower plants. However, the Government is shifting to renewable energy sources such as solar, wind and natural gas.

The U.S. has improved air quality significantly thanks to the use of gas-fired electricity, while China and India are also following suit. This move would be good for Vietnam as well as a more balanced use of energy sources will help protect the environment.

At present, Vietnam still imports natural gas for domestic use. However, as the demand for natural gas continues to rise, the nation is expected to become a natural gas exporter in the future.

The expert said Vietnam is going on the right way for giving incentives to attract foreign investors into the energy sector. Earlier, many large enterprises have invested in Vietnam because of the qualified workforce and appropriate investment policies.

Under the current circumstances, the nation should invest in technology to develop its natural resources properly, and protect its natural gas reserves and the environment, Edmunds added.

Source: The SaiGon Times

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Taxman wants sweeping power to fight tax violations

HCMC – The General Department of Taxation has proposed new regulations that give sweeping power to tax authorities to fight tax violations, including putting violators in custody or filing criminal charges against them.

In the draft law on tax management sent to the Government, the tax authority plans to set up a force with investigative power, build a database and take professional measures to prevent violations against the tax law.

Besides, the tax authority wants to have authority to ask related agencies, organizations and individuals to provide information and documents to facilitate investigations, as well as seal goods, storehouses, documents, and detain violators in case there is proof of violations.

If serious violations subject to criminal charges are detected, the taxman can initiate prosecution and undertake investigations in accordance with the criminal procedure code and the law on organization of criminal investigation bodies.

According to the tax authority, those regulations are proposed to deter and prevent tax evasion and fraud.

As explained by the tax department, tax investigations are by nature prosecutions against taxpayers who intentionally decline to fulfill their tax obligations.

The taxman, according to the proposed regulations, can launch investigations without prior notice, and investigated tax payers will have lawyers or representatives during the process.

Many countries have already assigned tax investigations to their tax bodies. Once violations need to be prosecuted, tax authorities will take measures to collect evaded taxes, and at the same time hand over the cases to competent authorities in compliance with the criminal proceedings law.

More than 80 countries, including some ASEAN countries, have set up tax investigation bodies. The tax management body in Vietnam consists of both tax and customs agencies, with the customs having been given power to launch investigations in its area but the tax authority having no such power.

Source: The Saigon Times

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Protecting Intellectual Property Rights Abroad for Vietnam Enterprises

The development of international supply chains has become a critical success factor for big companies, and should be seen as important key for products of developing countries to gain entry into high standard market such as USA, European Countries, and Japan. However, many Vietnam companies have experienced problems in shifting their supply chain abroad as well as managed their intellectual property such as geographical indication, trademarks.

On October 24th, 2017, Vietnam Intellectual Property Association (VIPA) in cooperation with the World Intellectual Property Organization (WIPO), Vietnam Chamber of Commerce and Industry (VCCI), International Association for the Protection of Intellectual Property Rights (AIPPI) organized the seminar “Protecting intellectual property rights abroad for Vietnamese enterprises” to provide Vietnam companies value information for protecting their Intellectual Property right in the Fourth Industrial Revolution and global supply chain development.

All the experts have strongly recognized the important role of intellectual property protection abroad for Vietnamese enterprises and introduced:

-Introduction to the International World of Intellectual property

-Protecting a valuable asset- How to protect your Brand with Madrid

-Options to protect an invention: Patent Cooperation Treaty (PCT) and trade Secrets

-Introduction to the international design System- Hague

-Other WIPO services, Tools and Products

-About International Association for the Protection of Intellectual Property- AIPPI (Association Internationale pour la Protection de la Propriété Intellectuelle)

Vietnam is a member of the WIPO and is a signatory to the Paris Convention for the Protection of Industrial Property. It has acceded to the Patent Cooperation Treaty and the Madrid Agreement Concerning the International Registration of Marks, and in 2004 joined the Berne Convention. Therefore, the Vietnamese enterprises should file trademarks, patents or industrial designs by international systems for saving cost and managing the registration procedures effectively. However, it is suggested that the international Bureau of WIPO does not decide whether trademarks, patents or industrial designs are eligible for protection or not, and the final decisions must depend on Intellectual Property law of each country i.e. Vietnam. For differences of laws in every country and difficult techniques when preparing Intellectual Property application, applicants should find valuable assistant from Intellectual Property agent.

Our licensed agent of intellectual property practice at ANT Lawyers helps clients to protect, and profit from their intellectual assets in Vietnam.

ANT Lawyers is supported by a team of experienced patent, trademark, design attorneys with qualification and skills handling full range of legal services relating to intellectual property in Vietnam.  We have specialized in the preparation and registration of patents, trademarks and designs for our clients.

Tuan Nguyen and Thao Hoang at ANT Lawyers

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Effectiveness of a Lawsuit against Infringement of IP in Vietnam

How to handle effectively with infringement is a big concern of Intellectual Property (IP) holders. Should the IP holder file a lawsuit at Court? Is this way effective in Vietnam?  This article will give you general information about handling of intellectual property disputes through legal action at court in Vietnam.

Unlike many countries in the world, in case of infringement, most IP holders proceed with lawsuits in the courts (judicial authorities), while other administrative agencies only perform measures to ensure enforcement of judgments of the court.

Protection of IP rights through the litigation has many advantages over administrative measures because it guarantees the enforcement and compensation from infringers. However, in our opinions, the practice of resolving IP rights disputes in courts is not as effective as administrative measures in Vietnam.

Vietnamese laws have not given separate regulations on procedures for settling IP disputes. Therefore, the procedures for settling disputes shall be governed by the Law on Civil procedure. According to Clause 2 of Article 30 and Clause 1 of Article 34 of this law, disputes over intellectual property rights and technology transfer between individuals and organizations and all purposes of profit are commercial disputes to be trialed at the courts of the province.

According to Article 202 of the IP Law, the court could decide the following civil measures to the infringers upon IP right:

-Compelling termination of the infringement of intellectual property rights;

-Compelling public rectification and apology;

-Compelling the performance of civil obligations;

-Compelling compensation for damages;

-Compelling destruction, or distribution/ use for non-commercial purpose.

In addition, when initiating a lawsuit or during dispute at court, the IP holders may request the court to apply provisional emergency measures in order to prevent damages.

In practice, the IP holder does not proactively protect IP rights by civil measures to file a lawsuit at court. The number of cases resolved by courts is much lower than the number of cases handled by administrative measures. Specifically, the number of cases resolved by court are 177 cases from 2012 to 2015, of which 91 cases were canceled. The number of cases resolved by administrative measure is of 22,914 cases (excluding cases handled by Vietnam Customs Authority)

The reason for the above survey is that, the IP holder is less likely to resolve disputes through courts because time for dispute resolution is lengthy, the process is cumbersome and complicated, but not as effective as administrative measures. Therefore, dealing with disputes in the specialized administrations will give faster effects to the IP holders in Vietnam.

Tuan Nguyen and Thao Hoang @ ANT Lawyers

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PM: Vietnam is a reliable business partner

HCMC - Vietnam is working hard to improve itself in order to become a reliable business partner, Prime Minister Nguyen Xuan Phuc said at the Vietnam Business Summit (VBS) 2017 in Danang City on November 7.

He told VBS, which was part of the APEC Economic Leaders’ Week in Danang, that an AmCham Singapore survey conducted in September 2017 showed 56% of respondents said Vietnam is their best trade partner.

Economic reforms have made Vietnam one of the fastest growing economies in the world, with average gross domestic product (GDP) growth of 7% a year. The country’s income per capita in 2017 has edged up to US$2,300, or US$6,800 based on the Purchasing Power Parity.

The Vietnamese middle class has grown rapidly, fueling domestic consumption and opening up business opportunities for investors.

PM Phuc said Vietnam ranked 55th out of 137 countries in the World Economic Forum’s Global Competitiveness Report for the 2017-2018 period, and 68th out of 190 countries in the World Bank’s Doing Business Report released on October 31, 2017.

In the 2007-2016 period, household expenditures grew 16% a year and accounted for 67.3% of the country’s GDP, making domestic consumption a driving force for economic growth.

By 2020, he added, Vietnam will be among the countries having the largest numbers of

mobile users in the region, presenting a new opportunity for investors to come to the country for business and investment.

The Vietnamese Government has a strong determination to improve itself so that it can help individuals and organizations to grow businesses, he said. Particularly, the Government will try to further improve the legal framework, promote private business, ensure sustainable development, narrow the income gap between rich and poor, develop healthcare and education, improve social security, and protect vulnerable groups in the economic development process.

The country will also foster innovation and entrepreneurship by propping up startups. “We are calling for investors’ stronger engagement and investment funds’ early-stage financing for startups,” Phuc said.

In addition, Vietnam will reform its tax system to improve the competitiveness of the economy, and this system will meet the requirements of transparency, equality and efficiency set by the Organization for Economic Co-operation and Development, he said. Corporate income tax will be cut from 20% to 15-17% to help businesses grow.

Source: The Saigon Times

According to the Government news website, VBS 2017 themed “Vietnam: We Mean Business” was held at the Ariyana Convention Centre, with more than 2,000 domestic and foreign businesses attending.

World Bank Vice President for the East Asia and Pacific Region Victoria Kwakwa, Philipp Rösler, managing director of the World Economic Forum, and Vu Tien Loc, president of the Vietnam Chamber of Commerce and Industry were also present at the summit.

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What Goods Allowed to Be Imported into Vietnam?

Foreign owned companies in Vietnam wishing to import and distribute physical goods into Vietnam must comply with many regulations. It is imperative that the right to conduct import business of foreign investors and FDI companies differ from the right of Vietnamese traders having no foreign direct investment capital because trading activities are considered conditional investment area.

1. General Principles of Imported Goods

In principle, as other countries, the importers have to follow the general rules when importing and distributing physical goods into Vietnam:

• Not to import goods specified under the list of goods banned from import or suspended from import provided, published by Vietnam government;

• Follow the guideline or import regulations and conditions required by ministries and ministerial-level agencies. There are specific conditions for importing certain goods which the importers have to follow i.e. certain medical equipment have to be approved by the Ministry of Health; Food, cosmetics products need to be testedReceiving and transmitting telecom equipment must be inspected by Ministry of Information and Communication; Books, CDs will be checked and scanned for contents to be approved by Ministry of Cultures, Sport and Tourism; Equipment must satisfy energy, environmental regulations to be inspected and labeled by Ministry of Science and Technology…

• Implement other relevant laws, commitments of the Socialist Republic of Vietnam in treaties which it has signed or acceded to, and the roadmap announced by the Ministry of Industry and Trade.

2. Goods Prohibited to Be Imported into Vietnam

• For the goods being banned to be imported and distributed in Vietnam, the importers have to follow strictly to avoid penalties:
• Weapons, ammunitions, explosives (excluding industrial explosives), military technical equipment.
• Assorted fireworks, sky lanterns, assorted devices causing interference to vehicle speedometers.
• Used consumer goods: Textiles and garments, footwear, clothes; Electronic appliances; Refrigerating appliances; Home electric appliances; Medical equipment; Interior decoration goods;
• Assorted publications banned from dissemination and circulation in Vietnam
• Assorted cultural publications banned from dissemination and circulation or decided to be suspended from dissemination and circulation in Vietnam.
• Right-hand drive means of transport; assorted automobiles and their spare parts which have their frame or engine numbers erased, modified or tampered with; Assorted motorcycles, special-use motorbikes and motorbikes which have their frame or engine numbers erased, modified or tampered with
• Used supplies and vehicles
• Chemicals in Annex III of the Rotterdam Convention.
• Pesticides banned from use in Vietnam.
• Wastes and scraps, refrigerating equipment using C.F.C.
• Products and materials containing asbestos of the amphibole group
• Schedule-I toxic chemicals; Chemicals on the list of banned chemicals

It is important for foreign trader wishing to establish a trading company in Vietnam to not only study the market demand in Vietnam but also the country’s law on import, export, customs law to ensure their compliance during the operation.  If doubted, the Client is suggested to reach out for help and advisory of law firm in Vietnam by qualified lawyers in the area of import, export and customs.

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Draft cyber security law mismatches WTO rules

HANOI - The Vietnam Chamber of Commerce and Industry (VCCI) has pointed out discrepancies between some provisions of the draft Law on Cyber Security and the nation’s commitments to the World Trade Organization (WTO) and the Vietnam-EU Free Trade Agreement (EVFTA).

VCCI has written to the National Assembly Security and Defense Committee detailing the incompatibility between the draft law and Vietnam’s commitments to WTO and EVFTA. The draft law, crafted by the Ministry of Public Security, is now on the table of the National Assembly (NA) for discussion.

VCCI said Article 34 of the draft law specifies: “Foreign firms providing telecommunication and Internet services in Vietnam shall comply with Vietnamese regulations, respect national sovereignty, interests and security, user interests, obtain licenses, locate their representative offices and servers in Vietnam, and secure user data and accounts...”

However, according to Vietnam’s WTO and EVFTA commitments, foreign telecommunication and Internet service providers are not required to locate their representative offices in Vietnam.

Besides, Article 14.13 of the Trans-Pacific Partnership (TPP) agreement which Vietnam signed in February 2016 says: “The Parties agreed not to require the use of computing facilities within their territories as a condition for doing business.”

Although the NA has not approved the TPP, Vietnam and 10 other Pacific Rim countries are still conducting negotiations to finalize a deal without the United States. Therefore, VCCI said the draft law should run counter to the TPP.

VCCI said the country’s Cyber Information Security Law crafted by the Ministry of Information and Communications came into effect on July 1, 2016, so there is no need to issue a law on cyber security.

Article 11 of the draft law states the Ministry of Public Security is responsible assessing providers of cyber information security services. However, Article 44 of the Cyber Information Security Law regulates the Ministry of Information and Communications is in charge of coordinating with relevant ministries and agencies to issue licenses for those entities providing cyber information security products and services.

This is a clear indication that the Draft Law on Cyber Security and the Cyber Information Security Law overlap to some extent.

VCCI noted some requirements in the Ministry of Public Security’s draft law would make life difficult for businesses and push up the cost of doing business in the cyber security domain.

VCCI suggested the Ministry of Public Security eliminate Article 49 of the draft law that requires enterprises to ask the ministry for permission before finalizing their contracts because the draft law does not provide the procedures for doing so.

Source: The Saigon Times

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