Guide to Do B in VN

8/2/2019 Guide to Do B in VN

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Guide ToDoing Business in Vietnam

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Text 12/16 pt.

Text 8/10 pt.

1 Introduction

2 Forms of Doing Business

4 Government Approvals

5 Business Scope and Authority

6 Capital Structure

7 Retail and Distribution

8 Taxation

10 TheRighttoPurchaseForeignCurrencyandRemitProts10 WTO and Foreign Investment in Vietnam

11 Import/Export

11 Litigation in Vietnam

16 Real Estate Law

19 Internet

20 Labour

23 Environmental Law

24 Bankruptcy Law

24 Intellectual Property

25 Technology Transfer

26 Government of Vietnam and Charts of Major State Agencies


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Introduction

Since its accession to the World Trade Organisation (WTO) on 11 January 2007,

Vietnam has taken active steps to revamp its legal ramework or business and

investment in Vietnam. The changes are largely avourable to both oreign and

local investors.

Since the introduction in 2006 o both the Investment Law, which regulatesinvestments in Vietnam, and the Law on Enterprises, which sets out the types o

corporate vehicles investors may establish to carry out their investment projects,

additional legislation has been enacted to urther enhance both oreign invest-

ment and oreign invested business operations in Vietnam.

Together, the Investment Law and the Law on Enterprises create a more avour-

able and clearer legal ramework or doing business in Vietnam. Local and

oreign businesses alike enjoy a common legal regime or uture development in

Vietnam.

All types o companies must operate according to the same corporate governance

rules. This should create a level playing eld or doing business. The ailure tocomply with these corporate rules will lead to personal liability or directors or

ocers o a company, regardless o whether the company is oreign-owned,

Vietnamese-owned or State-owned. Similarly, the Investment Law also applies to

both local and oreign investors.


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2 Guide to Doing Business in Vietnam

Forms of Doing Business

WHAT KEY LAW GOVERNS INVESTMENTS IN VIETNA M?

Whether a oreign investor invests directly or indirectly in Vietnam, the

applicable law is the Investment Law. The Investment Law contains a signicant

number o investment guarantees and provides a roadmap or the conditions and

procedures or investment in Vietnam.

Direct investment is dened to include the ollowing:

Establishing wholly oreign-owned enterprises ( WFOE)

Establishing joint ventures between local and oreign investor(s) ( JV)

Investing pursuant to a contract: Business Cooperation Contract ( BCC),

Build- Operate, Build-Transer-Operate or Build-Operate-Transer or Build-

Transer Contract

Investing in developing a business (to expand the size or improve the capacity

o a project or to introduce new technologies, increase the quality o products

or reduce pollution to the environment)Purchasing shares o, or contributing capital to, companies or branches in

Vietnam to participate in management

Investing in a merger or acquisition o a company or branch and

Other orms o direct investment (to be set out in subsequent legislation)

Indirect investment is dened to include the ollowing:

Purchasing o shares, bonds and other valuable papers

Investing through securities investment unds and

Investing through other intermediary nancial institutions

The Investment Law requires an investor who invests directly to obtain

approval or the relevant project. Approval is given via the issuance o an invest-

ment certicate (IC). In respect o indirect investments, the Investment Law

stipulates that the investor needs to comply with the Securities Law and other

relevant laws.

I a oreign entity does not wish, or is not ready, to invest in Vietnam, but desires

to have a commercial presence in Vietnam, it may set up a representative oce.

WHAT ARE THE MOST COMMON BUSINESS FORMS FOR DIRECT INVESTMENT IN

VIETNAM?Most oreign investors will utilise either a WFOE, JV or BCC to carry out a

project in Vietnam.

A WFOE and JV are both Vietnamese corporate legal entities and thereore, in

each case, a Vietnamese corporate vehicle to carry out investment in these orms

must be established.

In a BCC, no legal entity is ormed. The parties to such arrangement may agree to

share prots and losses or conduct their business aairs in a particular manner,

in much the same way as a partnership; it is, in eect, a contractual JV.


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IN ORDER TO CARRY OUT A DIRECT INVESTMENT PROJECT IN VIETNAM IN

WFOE OR JV FORM, MUST AN INVESTOR SET UP A VIETNAMESE LEGAL ENTITY?

Yes, to carry out a business or an investment project in the WFOE or JV orm, an

investor must set up a Vietnamese legal entity.

In respect o oreign investors carrying out their rst project in Vietnam, the

incorporation o the Vietnamese company takes place simultaneously with the

licensing o their rst project. In other words, a oreign investor cannot incorpo-

rate a company without a project. However, subsequent to the rst project, they

have the option to carry out additional projects either using the established

corporate vehicle or setting-up new corporate vehicles.

WHAT TYPES OF VIETNAMESE LEGAL ENTITIES ARE AVAILABLE?

A oreign investor ( just like a local investor) may select the ollowing Vietnamese

legal entities to carry out a project:

A limited liability company (LLC) being either a single-member LLC (SLLC)

or an LLC with two-or more members (maximum o 50 members) (MLLC)A shareholding or joint stock company ( JSC) which is a company with at least

three shareholders but no maximum number o shareholders

A general partnership or a limited liability partnership

A private enterprise (akin to a sole proprietorship)

WHAT ARE SOME IMPORTANT DIFFERENCES BETWEEN AN LLC AND A JSC?

The key dierence is the ability o a JSC to mobilise capital by the sale o shares

and securities. Furthermore, a company that wishes to list on a public securities

exchange in Vietnam or conduct a public oering must be a JSC. In general,

shareholders o a JSC have the right to reely assign their shares. In contrast, inan LLC, the assignment o charter capital (equity) is subject to the right o rst

reusal by the members. Finally, the corporate governance structure o a JSC is

more complex than an LLC.

WHAT FACTORS SHOULD A FOREIGN INVESTOR CONSIDER IN DECIDING TO

CHOOSE A JV OR A WFOE?

The two main actors that lead a oreign investor to choose a JV are: (1) many

business sectors in Vietnam require a JV to establish a commercial presence in

Vietnam and (2) the Vietnamese party has a key asset, local know-how and

knowledge, or other actors that make the JV the necessary choice. For example,

in real estate development projects, the Vietnamese party usually has the land

use rights, which by law cannot be directly transerred to a oreign investor, but

may be contributed into a JV.

WHAT IS A REPRESENTATIVE OFFICE PERMIT TED TO DO?

A representative oce represents the oreign company in Vietnam, as the name

suggests. It is oten the rst step in establishing a commercial presence in the

country. A oreign company that wishes to establish a representative oce in

Vietnam must rst be duly established, or at least one year, in accordance with

the laws o its home jurisdiction.


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Representative oces have limited rights. They are permitted to engage only in

certain business activities, including business development and cannot engage in

activities that generate prot in Vietnam. The head o the representative oce is

permitted to sign economic or commercial contracts with Vietnamese businesses

on behal o the oshore company i he or she has specic legal authority or each

contract (i.e., a general authorisation is not permitted) rom the oshore com-

pany. Despite the limitations, a representative oce may play an important rolein acilitating operations and business objectives on behal o the oshore company.

Government Approvals

WHAT IS THE APPROVAL PROCESS FOR ESTABLISHING JVS AND WFOES?

In respect o oreign direct investment, whether it is in the orm o a WFOE, JV,

BCC or any other permitted orm, an IC must be obtained rom the relevant

licence issuing body.

To receive an IC, an investor will complete either a registration or an evaluation

procedure based on the size and type o project.

Registration applies to projects:

Under VND 300 billion (approximately USD 15,000,000 1) and

Not on list o conditional sectors

The time limit or issuance o an IC: 15 business days.

Evaluation applies to projects:

Over VND 300 billion or

On the list o conditional sectors

Time limit to issue an IC: 43 business days.

Conditional is dened to mean investment in sectors impacting:

National deence and security, social order and saety

Banking and nance

Public health

Culture, inormation, press and publishing

Entertainment services

Real estate

Survey, prospecting, exploration and mining o natural resources, environ-

ment or ecological

Development o education and training or

Other sectors as set out by law

1 VND 20,000/USD 1


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WHAT LEVEL OF THE VIETNAMESE GOVERNMENT MUST APPROVE A

PARTICULAR PROJECT?

Decree No. 108/2006/ND-CP dated 22 September 2006, which guides the

Investment Law, delegates the authority to issue ICs to the local Peoples

Committees (PCs) or most types o projects (including real estate) regardless o

size except or limited types o sensitive projects which require approval directly

rom the Prime Minister (e.g., casino projects and production o cigarettes).

However, even with respect to these sensitive projects, i the Prime Minister has

already approved the investment policies or investing in these sectors, the local

PCs are authorised to issue the IC.

Business Scope and Authority

WHAT IS THE SIGNIFICANCE OF A COMPANYS BUSINESS REGISTRATION

CERTIFICATE OR AN IC?

All validly existing private business enterprises in Vietnam must have either a

business registration certicate (BRC) or an IC. For oreign investors, the IC is

both the BRC and the approval to undertake the investment project. Foreign

invested enterprises (FIEs), which include WFOEs and JVs, always need to

obtain an IC. ICs are usually issued by the local PC with jurisdiction over the

matter. The ICs state the legal name o the company, the nature o the company

(LLC or JSC), its business lines, its legal representative, business address, the

amount o registered capital, and the details o any authorised project. Without a

valid IC, oreign business enterprises cannot legally do business in Vietnam.

WHAT IS A LEGAL REPRESENTATIVE OF A VIETNAM ESE COMPANY?

The legal representative is an ocer o a Vietnamese company who has the

primary responsibility and power to act on behal o the company in its dealing

with the State. Pursuant to the Law on Enterprises, either the chairman o the

company (in the case o some SLLCs) or the chairman o the members council (in

the case o some SLLCs and all MLLCs), chairman o the board o management

(in the case o a JSC), or the general director (regardless o corporate orm) must

be designated as the legal representative.

Legal representatives have the authority to bind the company in contracts and

are personally liable or the commission or omission o certain acts. For example,

in the context o an LLC, the legal representative o the company must notiy thebusiness registration body in writing o the progress o capital contribution

within 15 days rom the date undertaken or capital contribution, and must bear

personal liability or any damage to the company and to other persons due to late

notication or inaccurate, untruthul or incomplete notication. The legal

representative must reside in Vietnam.


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WHAT IS THE SIGNIFICANCE OF A VIETNAMESE COMPANYS BUSINESS LINES?

Unlike in most common law countries, a company in Vietnam is only permitted

to conduct business activities that are narrowly dened and mostly codied into

a State recognised and published list o business activities called business lines.

Generally, or FIEs, the permitted business lines must be closely tied to what is

considered necessary or that particular project. Furthermore, to obtain an IC,

the investor needs tangible plans, including a easibility study, detailing preciselywhat the investor will do. Broadly drated business lines such as doing any

lawul business permitted by law are not permitted.

WHEN DO CONTRACTS IN VIETNAM NEED TO BE NOTARISED?

Generally, all land related documents in Vietnam need to be notarised, including

those related to improvements upon land such as the construction o buildings

and houses. Most other contracts, including civil and commercial contracts, need

not be notarised.

Capital Structure

WHAT IS THE CAPITAL STRUCTURE OF AN FIE?

Generally, or FIEs, there is no per se net worth or capital structure requirement;

however, companies must have enough capital resources to successully realise the

business goals set out in their IC. The capital structure is stated in the IC, including

the total investment amount. In practice, generally, at least 20% o the total

investment amount should be contributed as equity (rather than rom loans). In the

case o a JSC, ounding shareholders o JSCs are required to register to subscribe

together or at least 20% o the number o ordinary shares oered or sale.

CAN THE C APITAL CONTRIBUTION IN AN FIE BE REDUCED, WHETHER BY

DISTRIBUTION OR OTHERWISE?

Yes, but there is a qualied waiting or a lock-in period. In an LLC, investors

may reduce their capital contribution i business operations have been carried out

or more than two years rom the date o business registration; and, at the same

time, ensure that debts and other property obligations o the company are able to

be paid in ull ater returning part o the contributed capital to the investors.

Note that this is not applicable to an SLLC, which is not legally permitted to

reduce its charter capital. In a JSC, within three years rom the date o issuance

o the IC, the shares o ounding shareholders cannot be sold except to other

ounding shareholders unless the sale is approved by the remaining shareholders.

Also, a JSC can only redeem no more than 30% o the total number o ordinary

shares sold and part or all o the dividend preerence shares sold.

WHAT ARE THE TIME LIMITS FOR CONTRIBUTING C APITAL?

Under the Law on Investment, investors must contribute their capital contribu-

tion in accordance with the schedule stated in their IC.

Members and owners o LLCs must pay in ull the capital registered or contribu-

tion within a maximum o 36 months rom the date o issuance o the IC o the

company.


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The ounding shareholders o a JSC are required to register to subscribe or at

least a combined 20% o the number o ordinary shares oered or sale and must

pay in ull or the shares registered or subscription within 90 days rom the date

o issuance o the IC o the company. At the time o establishment o a JSC, its

charter capital is equal to the total value o the issued shares that the ounding

shareholders and other shareholders have subscribed in the JSC. Accordingly, i

shareholders have subscribed to purchase all shares that can be issued, thecharter capital would be equal to the total nominal value o all shares that can be

issued. However, in case that the shareholders have committed only to purchase a

portion o the shares that can be issued, the charter capital would be the total

nominal value o subscribed shares and, in this case, a JSC may urther oer or

sale the remaining shares within 3 years ater obtaining the IC. Purchasers o

subscribed shares are required to pay or the shares within 90 days rom the date

o issuance o the IC. The charter capital o a JSC is the total par value o the

number o issued shares being the number o shares ully paid up to the company

by the shareholders.

ARE THERE LIMITATIONS ON THE AM OUNT OF EQUITY A FOREIGNER CANPURCHASE IN A DOMESTIC ENTERPRISE?

Not generally but there are the ollowing notable exceptions:

For publicly listed companies, the cap on ownership remains at 49%

The allowed ownership ratio in the ollowing sectors is restricted: banking,

petroleum, civil aviation, publishing, press, education, securities, legal ser-

vices, and insurance

The allowed ownership ratio or State owned enterprises undergoing equitisa-

tion or otherwise converting their orm is restricted

The ownership ratio or sectors set out in Vietnams WTO commitments must

ollow the restrictions set out therein

In practice, it should be noted that there are issues with licencing authorities

reusing to register and/or implement oreign acquisitions o domestic companies

doing business in certain sensitive sectors, such as real estate and distribution,

despite there being no limitations in the law.

Retail and Distribution

ARE THERE ANY FOREIGN OWNERSHIP LIMITATIONS IN THE RETAIL ANDDISTRIBUTION BUSINESS IN VIETNAM?

As rom 1 January 2009, WFOEs are allowed to engage in trading and distribu-

tion in Vietnam, thereby eliminating the last restriction on oreign investment in

this sector. Foreign investors directly investing in this business sector will still

need to apply or and obtain on IC, and are still limited in the ability to reely

establish retail outlets.


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WHAT ARE THE REQUIREMENTS TO ES TABLISH A RETAIL OUTLET?

Pursuant to the WTO, Vietnams commitment on wholesale trade and retailing

services states: The establishment o outlets or retail services (beyond the rst

one) shall be allowed on the basis o an Economic Needs Test (ENT). In turn, the

ENT is explained as: Applications to establish more than one outlet shall be

subject to pre-established publicly available procedures, and approval shall be

based on objective criteria. The main criteria o the ENT include the number oexisting service suppliers in a particular geographic area, the stability o the market

and geographic scale. What this means in practice is that the licensing o FIE

retail stores, beyond the rst one, is at the discretion o the Vietnamese authorities.

ARE THERE ANY RESTRICTIONS ON WH AT PRODUCTS MAY BE SOLD?

Although the retail and distribution sector has been urther liberalised to permit

more oreign investment, there are still restrictions on the distribution o certain

products. Oten these restrictions relate back to the restrictions on the importa-

tion o certain products discussed in more detail below. Foreign investors should

consult the relevant product lists prescribed by Vietnam in accordance with itsWTO commitments in order to determine whether certain products may be

imported and sold in Vietnam.

Taxation

WHAT ARE THE CORPORATE INCOME TAX (CIT) R ATES?

The uniorm CIT rate is 25%. However, this CIT rate is not applicable to enter-

prises operating in the ollowing sectors:

For prospecting, exploring and mining o petroleum and gas and other rare

and/or precious natural resources, the CIT rates applicable to these sec-

tors are rom 32% to 50%, depending on each specic project and business

establishment

For education and training, occupational training, health care, culture, sport

and environmental related sectors, the CIT rate applicable to these sectors is

10%

There is a special incentive CIT rate o 10% or a period o 15 years (calculated

rom the rst year in which the enterprise has turnover) or newly established

businesses that have investment projects in areas with specially dicult socio-

economic conditions, in economic zones and in high-tech zones; and, or newly

established businesses with investment projects in the sectors o high technology,

scientic research and technological development, investment in development o

specially important inrastructure acilities o the State, and production o

sotware products. Furthermore, there are tax exemptions or holidays available

or a maximum o our years (calculated rom the rst year the business has

taxable income) ollowed by a 50% reduction in the amount o corporate income

tax payable or a maximum o nine subsequent years or the same types o projects.


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There is also a special incentive CIT rate o 20% or a period o 10 years rom the

rst year in which the enterprise has turnover or newly established businesses

with projects in areas with dicult socio-economic conditions. There are also

tax exemptions or holidays available or a maximum o two years ollowed by a

50% reduction in the amount o corporate income tax payable or a maximum o

our subsequent years or these types o projects.

WHAT ARE THE VALUE ADDED TAX (VAT) R ATE S?

There are three VAT rates: 0%, 5%, and 10%, depending on the nature o the

transaction.

WHO IS SUBJECT TO PERSONAL INCOME TAX (PIT) AND WHAT ARE THE RATES?

Persons who are considered resident individuals are subject to PIT. Non-

residents are also subject to PIT, i the income is derived in Vietnam, irrespective

o where the income is paid.

Foreigners who all under the ollowing categories are considered to be resident

individuals o Vietnam or the purpose o PIT:

Those who are physically present in Vietnam or a period o 183 days out

o one calendar year or 12 consecutive months rom the date o entry into

Vietnam or

Those who maintain regular residence in Vietnam, including registered tem-

porary residents or those who have leased a residential premises in Vietnam

or a term o 90 days or more within a tax year

The taxable income o resident individuals includes income arising rom both

within and outside the territory o Vietnam, irrespective o where the income is

paid, i.e., resident individuals are subject to global taxation.

The applicable PIT rates are progressive and are set out below.

Monthly Income PIT Rate in %

up to USD 250 5

rom USD 250 to USD 500 10

rom USD 500 to USD 900 15

rom USD 900 to USD 1,600 20

rom USD 1,600 to USD 2,600 25

rom USD 2,600 to USD 4,000 30

over USD 4,000 35


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TheRighttoPurchaseForeignCurrencyandRemitProts

MAY A FOREIGN INVESTOR PURCHASE FOREIGN CURRENCY IN VIETNAM?

Yes. The Investment Law specically allows oreign investors to purchase oreign

currency at credit institutions licensed to trade in oreign currency in Vietnam to

meet their non-capital transactions and other permitted transactions (such as

repayment o o shore loans, and remittance o dividends abroad) as set out inthe oreign exchange laws. The law sets out a broad range o permitted transac-

tions. The banks are in charge o oreign exchange compliance and will guide

their customers accordingly. As long as the proper documentation is provided to

the bank, remittance o shore is not a problem. There is no prots remittance tax.

Although all enterprises have the right to convert currency, there is no guarantee

o the availability o any particular oreign currency in Vietnam except or

important projects in certain elds.

IS IT POSSIBLE TO REPATRIATE INVESTMENT FROM VIETNAM?

Yes. The Investment Law provides that a oreign investor, ater it has met itsnancial obligations to the State, may remit the ollowing rom Vietnam:

Prots derived rom business activities (prots may be remitted on an annual

basis)

Payments received rom the provision o technology and services and rom

intellectual property

Principal o and any interest on o shore loans

Invested capital and proceeds rom the liquidation o investments

Other sums o money and assets legally owned by the investor

WTO and Foreign Investment in Vietnam

HOW DOES VIETNAM S WTO ENTRY BENEFIT FOREIGN INVESTMENT IN

VIETNAM?

While the WTO Agreements are not specically ocused on investment terms and

conditions, as a condition to entry into the WTO, Vietnam agreed to open up a

number o previously restricted or closed service sectors to greater oreign

investment, including distribution and retail services, architectural and engi-

neering services, construction, banking and education services. Except or alimited number o sectors not bound under WTO Agreements, most service

sectors are currently open to ull oreign investment by way o establishing

commercial presence in the orm o a JV, a BCC or a WFOE. The presence o

natural persons is unbound except or measures relating to entry and temporary

stay o natural persons who all in certain categories, or example, intra-corpo-

rate transerees, service salespersons, persons responsible or setting up a

commercial presence, contractual service suppliers, etc. Establishment o a

branch by a oreign company is still limited. In practice, only oreign banks, law

rms, ranchising service companies and construction and related engineering

service companies are permitted to set up branches.


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WILL VIETNAM LIVE UP TO ITS W TO COMMITMENTS?

Ultimately, this is a political question. The WTO rules are complex and demand-

ing and many developing countries have trouble complying with all o them.

However, Vietnam has many good reasons to comply. First, non-compliance

would subject Vietnam to compulsory dispute resolution pursuant to WTO rules

and could result in retaliatory measures by the oended nation. Second, the

Vietnamese leaders seem to recognise the benets that WTO membershipprovides and have issued laws prior to and ater WTO accession that have

overhauled the legal system to make it more transparent, predictable, air,

investor riendly, and in line with Vietnams compliance obligations set out in its

WTO commitments.

Import / Export

MAY A FOREIGN INVESTED COMPANY FREELY IMPORT ITS GOODS INTO

VIETNAM?Generally, most goods may be imported into Vietnam. Some goods are prohib-

ited, some are restricted and subject to permission rom the Ministry o Industry

and Trade, and some others are subject to other regulation (such as health and

ood products, or example). Even without a physical presence in Vietnam, a

oreign company may import goods into Vietnam, but this would require obtain-

ing a certicate o registration o the right to export and import.

WHAT ITEMS ARE PROHIBITED FROM IMPORT?

Currently, the list o goods prohibited include: cigars, petroleum, specialised

newspapers and magazines, disks and videos, aircrat and rockets, weapons and

ammunition, certain types o second hand consumer goods, materials and

transport acilities. This list is not exhaustive and is subject to change rom time

to time.

Litigation in Vietnam

WHAT IS THE STRUCTURE OF THE VIETNAMESE COURT SYSTEM?

The court hierarchy o Vietnam has three tiers: at the top is the Supreme Court,

then the Provincial Courts, and then the District Courts.

The Supreme Court is composed o one Council o Supreme Court Judges and

separate special courts, namely the Central Military Court, the Criminal Court,

Civil Court, Economic Court, Labour Court, Administrative Court and respective

appellate courts. The Supreme Court is empowered to hold supervisory and/or

review trials o cases with judgments which have already taken legal eect but

have been protested.

In limited cases, the Supreme Court has the power to take up and review judg-

ments o rst instance in the immediate lower courts, which have not yet taken

legal eect but have been appealed or protested.

The Council o Supreme Court Judges is the highest body or trials that apply

supervisory and review procedures (highest body or trying supervisory and

review cases) and the supreme authority on guiding courts on the uniorm

application o laws.


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Under the procedural laws o Vietnam, a supervisory trialis a hearing that

reviews judgments that have been rendered but have been protested or a possible

serious violation o law. A serious violation o law is dened as (i) conclusions in

the judgment do not refect the objective acts; (ii) a serious violation o proce-

dural laws; and (iii) a serious mistake in the application o the law.

Areview trialis a hearing o judgments which have been rendered but have been

protested based on the discovery o new acts that can materially aect the

contents o those judgments.

Protestis the procedure (or the right o the Procures Oce or Superior Courts) in

which the procures oce (prosecution oce) or the superior court makes an

appeal or objection to the judgment o a court. There are two types o protests.

First, the Procures Oce o the same level or higher may protest a judgment by

requesting an appellate court hear the case ollowing the appellate procedure.

The Procures Oce may appeal a judgment o a court o rst instance to the

court o appeal regardless o the parties wishes. Second, the Procures Oce or

Superior Court may protest the judgment by requiring a competent court hear

the case via supervisory or review procedure.

A Provincial Court is composed o one Committee o Provincial Court Judges and

separate special courts, namely the Criminal Court, the Civil Court, the

Economic Court, the Labour Court, and the Administrative Court.

A Provincial Court is empowered:

To hold rst-instance trials o cases according to the provisions o the Code o

Civil Procedure which include:

Transportation agreements via airway or sea way, sales o securities, dis-

putes in investment, banking, insurance, intellectual property, and company

Cases where a concerned party to the dispute is living abroad or the

disputed property is located abroad

Cases that a Provincial Court takes rom a District Court where it deems

necessary

To conduct appellate trials o cases where the rst-instance judgments and/or

rulings o lower courts have not yet taken legal eect but have been appealed

and/or protested against according to the provisions o the procedural law

To supervise, review cases where judgments and/or rulings o lower courts

have already taken legal eect but have been protested, according to provi-

sions o the procedural law

The Committee o Provincial Court Judges has the power to hold supervisory and

review trials which have already taken legal eect but have been protested.

Generally, a District Court has the power to hold rst-instance trials in civil,

commercial, and labour cases except or when the Provincial Courts deem it

necessary to exert jurisdiction over a matter.


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WHAT ARE THE QUALIFICATIONS OF JUDGES IN VIETNA M?

According to the 2002 Law on Organisation o the Peoples Courts and

Ordinance on Judges and Peoples Assessors, to be appointed as a judge a person

must meet the ollowing conditions:

(a) Be loyal to the Fatherland and the Constitution o the Socialist Republic o

Vietnam

(b) Have good qualities and virtue

(c) Be incorruptable and honest, determined to protect the socialist legality

(d) Have a bachelors degree in law and have been trained in the Judicial Academy

(e) Have engaged in practical work or a period o time prescribed by law

( ) Have the adjudicating capability

(g) Have good health to ensure the ullment o assigned tasks

The required time set out in point (e) above is our years or a District Court.

To become a Provincial Court judge, a person must have been a District Court

judge or at least ve years or i not appointed as a District Court judge, a person

must have worked in the legal proession or at least 10 years.

To become a Supreme Court judge, he must have been a Provincial Court judge

or at least ve years or i not appointed as a Provincial Court judge, he must have

worked in the legal proession or at least 15 years.

The term o oce or every judge is ve years. Upon the termination o the term,

a Judge Selection Council will review the perormance o a judge and decide i he

is qualied or reappointment. The components o the Judge Selection Council

are dierent according to the level o a judge, i.e., District or Provincial or

Supreme Court judge.

IS THE ROLE OF JUDGES SIMIL AR TO OTHER CIVIL LAW JURISDICTIONS IN

THAT THEY TAKE THE LEAD IN INV ESTIGATING THE CASE?

The revised Code o Civil Procedure has introduced some eatures o a more

adversarial litigation system, including: burdens o proo and requiring parties to

take the initiative in adducing evidence to support their case. Thereore, it has

lessened the judges role as the lead investigator in the case. However, it is a civil

law system and the rule or the parties right to discovery is not comprehensive.

WHAT IS THE SYSTEM FOR ENFORCING COURT JUDGMENTS?

From 1 July 2009, an order to execute a civil judgment is governed by the Law on

Execution o Civil Judgments. Once a judgment is obtained, it is given to the civil

judgment executing bodies who must issue a decision to execute the judgment.

The executors must allow the debtor at least 15 days, counting rom the date o

decision to execute the judgment, to voluntarily comply with the judgment.

However, in situations where it is necessary to prevent the judgment debtors rom

dispersing, destroying or hiding executable assets rom execution, the teen day

wait period is not applicable.


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The executors are entitled to apply, among other things, the ollowing measures

to eect a judgment:

Seizure o account deposits, seizure o money, recovery o valuable papers o

the judgment debtors

Seizure o incomes o the judgment debtors

Blockade o accounts, property o the judgment debtors at banks, credit

organisations, State treasuries

Detaining, or handling o the assets o the judgment debtors, including their

assets being held by the third persons

Forced handover o houses, transer o land use rights or handover o objects

or other assets

Banning judgment debtors rom doing certain types o work/employment or

orcing judgment debtors to do certain types o work/employment

The time rame rom ling a lawsuit to obtaining a judgment is 90 days or more,

depending on the complexity o the case and the court workload. Ater the

judgment, the losing party has 15 days to appeal. Add to this the 15 days to await

voluntary execution, most judgment creditors will likely wait at least one 120 days

rom the date o ling the civil petition or a decision to orce judgment execution.

The actual execution o the decision by executors may take additional time.

In order to reduce the workload o the state judgment-executing agencies, on 19

February 2009, the Prime Minister issued Decision No. 224/QD-TTg to approve

the establishment o the private baili system. Pursuant to this decision, several

pilot baili oces will be set up in Ho Chi Minh City. The baili oce is not

intended to be part o a state body. Rather, it is to be a private enterprise. A baili

has, among other powers, the power to execute court judgments. However, the

eectiveness o the private baili system in executing judgments remains to beseen because the Government is in the process o drating legislation to guide the

operation o the private baili system and, consequently, baili oces are

currently not in operation.

HOW INDEPENDENT OF POLITICS IS THE VIETNAMESE COURT SYSTEM?

Independence o the judiciary system rom politics is guaranteed under the laws

o Vietnam. However, in practice, most members o the judiciary system are

members o the Communist Party and will seek its advice on sensitive matters.

POLITICAL ISSUES APART, HOW WELL DO VIETNAMESE COURTS WORK?Anecdotal evidence indicates that litigants are oten dissatised with the quality

o the judicial system in Vietnam. The common cause seems to be the lingering

perception that the judicial system is not transparent or accountable. Moreover,

since the hearing process may encompass stages o rst instance, second

instance, appeal, supervision, and review, reaching a nal judgment is oten quite

long and rustrating. Nonetheless, with recent and pending legislation, the

situation is improving and will hopeully continue to improve.


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mayer brown jsm 15

IS ARBITRATION IN VIETNA M PREFERABLE TO LITIGATION?

In Vietnam, because o the appeal rules and the lack o practical independence

o the judiciary, arbitration is sometimes preerable to court action. However, in

cases where a dispute must be resolved by a Vietnamese court, such as those

involving land use rights, arbitration is not possible.

The enactment o the Law on Commercial Arbitration replacing the 2003

Ordinance on Commercial Arbitration has improved the terms o commercial

arbitration. One benet o the Law on Commercial Arbitration is that, or dis-

putes that all within its scope, an arbitral award arising pursuant to it may be

brought directly to an enorcement agency or enorcement unless such award is

cancelled by a Vietnamese court.

The ollowing are the salient points which are set orth under the Law on

Commercial Arbitration which address deects o the 2003 Ordinance on

Commercial Arbitration:

A oreign arbitrator may now be appointed to comprise an arbitration tribunal

in Vietnam.There is no limitation with respect to the qualication o an arbitrator as

regards the possession o a bachelors degree

An arbitration tribunal now has the power to impose interim relie measures

to prevent changes in the status quo ante

The use o Vietnamese language is no longer required and the parties to

an arbitration can choose to use the most convenient language during the

proceedings

As the Law on Commercial Arbitration was only issued recently, its implementa-

tion has yet to be tested.

IS OFFSHORE ARBITRATION POSSIBLE?

Yes, under the Law on Investment the parties may choose oshore arbitration.

The Code o Civil Procedure sets out guidelines on the recognition and enorce-

ment o oreign arbitral awards in Vietnam. Vietnam has been a party to the New

York Convention on the Recognition and Enorcement o Foreign Arbitral Awards

since 28 July 1995. It should be noted that enorceability is oten an issue with

oreign arbitral awards because the awards must not be contrary to the unda-

mental principles o Vietnamese law. According to some published Vietnamese

court opinions, any violation o Vietnamese law could be construed as being as

against the undamental principles o Vietnamese law. This means Vietnamesecourts are given a second chance to review a decided arbitral award which may

rustrate the party seeking to enorce such award.

ARE FOREIGN JUDGMENTS ENFORCEABLE IN VIETNAM?

Generally, oreign judgments are not enorceable in Vietnam. Under the Code o

Civil Procedure, Vietnamese Courts will only consider the recognition o judg-

ments issued by Courts in countries that have entered into a judicial agreement

with Vietnam. To date, most o the countries that have entered into a judicial

agreement with Vietnam are socialist regimes.


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With regard to countries that have not signed a judicial agreement with Vietnam,

the recognition o the judgements issued by the courts in those countries may be

considered or recognition on a reciprocal basis. However, in practice, ew

judgements issued by courts in oreign countries (most o them socialist coun-

tries) have been recognised by the Courts o Vietnam.

Real Estate Law

IS IT POSSIBLE FOR FIES TO OWN LAND IN VIETNAM?

Technically, no. In Vietnam, land belongs to the people and the right to use the

land is administered by the State or the people. Ownership is reerred to as a

right to use land (LUR) and evidence o such right is a land use right certicate

(akin to a title deed) (the LUR Certifcate) which sets out the term and the

purpose o the land use. LURs can be granted on a long-term basis (i.e., without

a specic term o use) or or a limited term. In general, long-term use LURs are

only granted or a number o very limited purposes such as or residential,personal use, or households and individuals that have already been granted

long-term LURs to use or the amilys production, business purposes, or

national security purposes, etc.

While a LUR Certicate is similar to a deed in most countries, some dierences

and uncertainties should be noted. For example, LUR may be used only or the

specic purpose or which it was granted. Failure to do so can lead to withdrawal

o the LUR. In general, the State is required to provide compensation i it with-

draws or reclaims the land. However, there are circumstances when no

compensation is required. For example, the Government may withdraw land:

When the term in the LUR Certicate has expired and no extension is given:

Regarding land and the assets on land, no compensation will be paid

When the land or an investment project has not been used or 12 consecutive

months or when the implementation schedule has been delayed or 24 months

rom the date committed to in the project authorisation documents ater the

date the land was handed over and no approval is granted or such delay:

No compensation is payable in respect o land

Government will issue (but has not yet done so) legislation on compensa-

tion or assets on land

Furthermore, the term or duration o the LUR or oreign investors is usually 50,and may be up to 70 years (in the case o residential land and in special circum-

stances), but not in perpetuity. However, pursuant to Decree No. 84/2007/

ND-CP, oreign developers o residential land may obtain a land lease or 70 years

which may be extended without limit, each time or an additional period o 70

years without being required to pay additional rental ees or the extended

duration.


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mayer brown jsm 17

There are our orms o LUR: The rst two comprise an allocation with or

without payment o a land use ee (LUF); and the last two comprise a lease with

payment annually or a lump-sum payment or the whole o the lease term.

Previously, oreign individuals and organisations were entitled only to: (1) receive

a lease (and could not receive an allocation) rom the State or (2) obtain land as

capital contribution by a Vietnamese party into a JV with a oreign company.

Currently, under Article 24 o Decree No. 84/2007/ND-CP, the law allows theassignment o projects using land rom domestic economic organisations (e.g.,

domestic companies) to oreign invested companies in a variety o circumstances,

providing oreign investors additional avenues to acquire land in Vietnam.

CAN A FOREIGN COMPANY OR INDIV IDUAL OWN IMPROVEMENTS AND OTHER

ASSETS ON LAND IN VIETNAM?

Yes, when a oreign developer builds assets on land or which it has a LUR, it has

an ownership interest in the assets provided the developer registers the assets.

However, with regard to purchasing existing assets on land, the answer is more

complex.

Generally, the law does not allow a oreign investor to directly purchase assets,

such as buildings or the sole purpose o buying, selling, or leasing assets on the

land. It does, however, allow a oreign investor to invest in an existing asset to

improve it. The extent o the improvement needed to satisy this requirement is

still unclear.

ARE THERE ANY CONDITIONS IMPOSED ON A DEVELOPER SEEKING TO RAISE

CAPITAL FOR DEVELOPING RESIDENTIAL HOUSING?

Yes, Decree No. 71-2010-ND-CP stipulates the ollowing methods that a devel-

oper may use to raise capital or residential housing and the conditions in each

case that must be observed.

By entering into loan agreements with credit institutions, investment unds or

issuing bonds. The developer may not grant an option to purchase the residen-

tial unit to the lender /bondholder

By entering into a capital contribution or an investment co-operation agree-

ment with a secondary developer to transer the LUR over the development

site. These agreements may only be entered into once site clearance has been

completed and the construction o the technical inrastructure works has

commenced. The transer o the LUR may only take place once the technical

inrastructure works have been completedBy entering into a capital contribution or an investment co-operation agree-

ment with entities under which the entity may share in the development

prots by receiving cash or shares or completed housing units. These agree-

ments may only be entered into once the development has been approved, the

construction o the housing works has commenced and prior written notica-

tion given to the Department o Construction


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By entering into a business co-operation contract with entities that unction

as real estate enterprises under which development prots may be distributed

by way o cash, shares or completed housing units. These contracts may only

be entered into only ater the development has been approved, site clearance

has been completed, the minutes o handover o the site boundary land-

marks completed and prior written notication given to the Department o

ConstructionBy entering into pre-sale contracts with individuals eligible under Vietnamese

law to own residential houses in Vietnam. These contracts may only be

entered into once the technical design or the project has been approved,

construction o oundations has been completed, procedures or sales via a

real estate trading foor completed and prior written notication given to the

Department o Construction

ARE THERE ANY RESTRICTIONS ON RE SIDENTIAL UNITS THAT CAN BE

DISTRIBUTED AS PROFIT UNDER CAPITAL CONTRIBUTION / BUSINESS

CO-OPERATION AGREEMENTS?

Yes, only up 20% o the units in a project may be dealt with in this way and

agreements can only be entered into with investors who are permitted under

Vietnamese law to own housing units. These units need not be transacted via a

real estate trading foor but conrmation is needed rom the Department o

Construction or each unit intended to be distributed in this way. Once the

oundations are completed the developer and investor should enter into a sale and

purchase agreement or the unit.

ARE THERE ANY LIMITS ON THE ADVANCE AMOUNTS A DE VELOPER MAY

REQUEST FROM A PURCHASER OF RESIDENTIAL HOUSING?

Payment by the purchaser o installments o the purchase price must be consis-

tent with the construction schedule and not more than 70% o the purchase price

may be paid beore handover to the purchaser.

HOW IS THE LAND USE FEE (LUF) AN D LAND RENTAL CALCULATED AND WHEN

IS IT PAYABLE?

LUF and land rental are based on the published land price list issued by the

Peoples Committee o each city or province setting out the value o land, taking

into account matters such as the use o the land and its location. I at the time o

the allocation, or lease, the published price list is not considered to refect the

lands market value then the LUF, or land rental, will be based on what thePeoples Committee considers to be the actual market value.

LUF is payable when the land is allocated (with some time extensions available

or low income earners). Land rental is payable annually or in one lump-sum

payment. I paid annually the rental is generally 1.5% o the land value, but a

higher rate o not more than 3% may be applied or high yield land, and a lower

rate o not less that 0.75% applied or low yield or agricultural land. Where the

rental is paid in one lump-sum the amount is generally the same as i the land

had been allocated rather than leased.


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mayer brown jsm 19

MAY LAND BE MORTGAGED AND IS REGISTRATION OF A MORTGAGE REQUIRED?

In respect o an investor leasing land rom the State, the land may only be mort-

gaged i the land rental is paid, in advance, in a lump-sum. Furthermore, the land

may only be mortgaged to credit institutions licensed to operate in Vietnam, not

to o shore lenders or shareholders.

Registration o a mortgage is required and registered at Land Use Right

Registration Oces. The procedures or registration are airly clear and LUR

Registration Oces have prescribed time periods to carry out registration

ormalities.

Enorcement o a mortgage is based on the contract. I enorcement cannot be

carried out under the contract, the mortgagee may sell the land or request a State

body to sell the land by auction and commence proceedings.

CAN FOREIGN INDIVIDUALS OWN AN APARTMENT IN VIETNAM?

Yes, under a 5 year pilot program, individuals who have permission to reside in

Vietnam or more than one year have the right to purchase and own apartmentsor a maximum period o 50 years i they meet the ollowing criteria:

An individual who invests directly in Vietnam or is working in a managerial

position o an enterprise

An individual whose contribution to Vietnam has been rewarded with a

decoration or medal rom the State President and made special contribution

to Vietnam as decided by the Prime Minister

An individual who currently works in the socio-economic sector and holds a

bachelors or higher degree rom a university and possesses special technical

knowledge and/or technical skills which Vietnam requires

An individual who has married a Vietnamese citizen

A oreign individual may own only one apartment. The oreign individual will be

issued a home ownership certicate and, i the apartment is sold, devised or

donated, the new owner obtains the apartment or an additional term o 50 years

i the purchaser is oreign, and or an unlimited term i the purchaser is

Vietnamese. A oreign-owned apartment may be mortgaged.

Internet

WHO REGULATES INTERNET RELATED BUSINESSES?

Internet Service Providers (ISPs) must be licensed by the Ministry o

Inormation and Communication (MIC), and licences once issued will be valid

or up to ten years. Internet Content Providers (ICPs), dened as a body, organi-

sation or enterprise that provides inormation on the Internet through an ISP,

must also be issued a licence by the MIC. It seems to be the case that ICPs only

need to obtain a one-time permit to post inormation on the Internet instead o a

permit on every occasion. Further, these organisations are subject to governmen-

tal control by MIC and Ministry o Public Security.


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DOES VIETNA M HAVE LAWS RELATING TO ELECTRONIC COMMERCE?

Yes, Vietnam has laws governing electronic commerce. The MIC is the

Governmental authority responsible or presiding over electronic transaction

activities. The law stipulates the legal validity o data messages and electronic

signatures, signing and perormance o electronic contracts, and security, saety,

protection and condentiality in electronic transactions.

DOES VIETNA M CENSOR CERTAIN TYPES OF CONTENT THAT MAY BE PLACED

ON INTERNET WEBSITES?

Yes, under Vietnamese law an ICP cannot publish content on websites that may

oppose the State and/or the Communist Party, cause people to rebel against the

State and/or the Communist Party, inringe upon the ethics and customs o

Vietnam, or disclose national secrets. Misuse o the internet can result in nes

that range rom VND 100,000 to VND 100,000,000 and/or criminal charges.

Labour

WHAT APPROVALS DO EXPATRIATES NEED TO LEGALLY WORK IN VIETNAM?

Foreigners rom the age o 18 who are qualied to act as managers, executive

directors or experts under Vietnamese laws and wish to work in Vietnam or

three months or more need to apply a work permit. Such an application must

include:

Registration slip regarding the proposed recruitment o the oreigner (stan-

dard orm o the Ministry o Labour, Invalids and Social Aairs (MOLISA))

Legal record issued by the authorised body o the country where the or-

eigner resided prior to coming to Vietnam but i the oreigner has currently

resided in Vietnam or 6 months or more, then a legal record issued by the

Vietnamese Department o Justice o the locality where the oreigner is resid-

ing will suce

Health certicate issued overseas or health certicate issued in Vietnam in

accordance with the regulations o the Ministry o Health

Certication o specialist or highly technical qualications o the oreigner

but or some occupations, this can be replaced by some other documents as set

out in the regulations and

Photographs o the oreigner

A work permit will allow them to work in Vietnam or up to 36 months. However,

a work permit may be extended in the ollowing cases:

When an employer has a labour plan to train a Vietnamese worker to replace

the oreign employee in such position but the Vietnamese worker is not yet

capable o perorming the required task; or

When a oreigner enters Vietnam to work in the elds o economics, com-

merce, nance, banking, insurance, science and technology, culture, sports,

education or medicine and the time required or such work exceeds 36 months


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mayer brown jsm 21

The ollowing categories o persons are exempt rom obtaining a work permit or

his or her employment in Vietnam:

Those entering Vietnam to work or a period o less than three months

Those who are a member o a MLLC

Those who are the owner o a SLLC

Those who are a member o the board o management o a JSC

Those who are entering Vietnam to oer services

Those who are entering Vietnam to resolve an emergency situation, such

as a breakdown or a technically or technologically complex situation which

Vietnamese or oreign experts in Vietnam are unable to adequately deal with.

However, even in such situations, i the required emergency work exceeds

three months, a work permit must be obtained

Foreign lawyers to whom the Ministry o Justice has issued a certicate to

practise law in Vietnam

Those who are appointed as head representatives o a commercial presence or

NGOs in Vietnam

Those who move internally within the scope o activities o a specic enter-

prise providing services in accordance with the Vietnams commitments to

WTO

Those who work or an ODA project

Foreign journalists to whom the Ministry o Foreign Aairs has issued a

certicate to doing work in the press sector in Vietnam.

In response to requests or tender, oreign tenderers must prioritise Vietnamese

workers or ordinary work and i the employment o proessional oreigners will

be necessary, the plan o such employment must be stated clearly during thetendering application phase.

WHAT ARE THE KEY CONDITIONS FOR AN EMPLOYMENT CONTRACT IN

VIETNAM?

All workers, both oreign and Vietnamese, must have an employment contract

that covers a number o general issues, including the nature o the work, working

hours, breaks, salary, location and duration, etc. I an employee is called or

military or public service, the employment contract shall be suspended or the

duration o that particular service.

Normally, the employment contract must be signed by the employer and theemployee, though an authorised person may sign on behal o a group o workers.

The employment contract may take one o three orms:

A contract or an indenite term

A contract or a denite term o 12 to 36 months or

A seasonal or xed term o less than 12 months


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A contract or a denite term or seasonal term is automatically converted into an

indenite term contract i at the expiry o the contract the employee continues to

work or the employer and the parties ail to sign a new contract within 30 days

rom the date o expiry. In addition, a denite term contract may only be

extended on one occasion; thereater, the employee must either be released or

employed on an indenite term basis.

ON WHAT GROUNDS MAY AN EMPLOYER TERMINATE AN EMPLOYEE?

An employment contract shall terminate upon the ollowing:

Employment contract has expired

Work/assignment in accordance with the employment contract has been

completed

By mutual agreement between employer and employee

By court decision in respect o employees prison sentence or prohibition o the

employees resumption o work

By the employees death/or declaration by the court that the employee is missing

It is dicult or an employer to unilaterally terminate an employment contract. A

simple termination notice, no matter how ar in advance, is not by itsel permis-

sible unless the employee agrees. Otherwise, an employer may only unilaterally

terminate an employment contract in limited and dened circumstances as

ollows:

The employee is legally dismissed

The employee repeatedly ails to perorm the work required as per the employ-

ment contract

The employee suers illness or injury and remains unable to work ater having

received treatment or a period as stipulated by law

Reasons o orce majeure orcing the employer to scale down production and

reduce the number o employees

The enterprise ceases its operation

Dismissal is only permitted when the employee has committed one or more o the

ollowing acts:

Thet

Embezzlement

Disclosure o technological and business secrets

Any act that causes severe losses to the companys assets and interests

Repeating a breach while on a disciplinary sanction or an earlier breach

Repeating a breach ater being demoted or the earlier breach

Absence or ve working days or more in a month or 20 working days in a year

without justiable reasons


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mayer brown jsm 23

Prior to termination the employer must send a notice o termination to the

employee as ollows:

45 days prior to the last day o work or an indenite term contract

30 days prior to the last day o work or a denite term contract o between 12

months and 36 months

3 days prior to the last day o work or a seasonal or xed term o contract less

than 12 months

Environmental L aw

WHAT ENVIRONMENTAL REPORTS OR STUDIES MUST B E SUBMITTED FOR

INVESTMENT PROJECTS IN VIETNAM?

There are two kinds o documents that anyone wishing to invest in Vietnam may

be required to submit: an environmental impact assessment report (the EIA

Report) and an environmental protection undertaking (EPU). An investor,

depending on their investment sector and/or their scope o investment, may have

to prepare one or the other.

The content o the EIA Report must include:

Specications o the project

Operational technology o the project

Measures to minimise any negative eects on the environment; an undertak-

ing to apply environmental protection measures during the construction and

operation phases and

Opinions o the local PC and the community where the project is carried out

The contents o the EPU report must include:

The project site

The orm and scale o production, trading and services, materials and raw

materials used or the project

Likely waste to be produced rom the project and

The undertaking to apply measures to minimise and treat waste and comply

with the laws on the environment

The undertaking must be registered with the local district PC where the project is

located beore commencement o the project.


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WHAT ARE SOME OF THE POSSIBLE ENV IRONMENTAL RELATED FINANCIAL

OBLIGATIONS AN INVESTOR MAY FACE IN VIETNAM?

An investor may ace the ollowing environmental related nancial obligations:

Environment tax: On 1 January 2012, the Law on Environmental Protection

Tax will enter into orce. Under such law, there are a variety o products/goods

having negative environmental and health consequences, such as gasoline, oil

and grease and petroleum, that will be subject to this tax

Environmental protection fees: These must be paid by organisations or

individuals discharging waste that could be harmul to the environment

Natural resource exploitation and restoration funds: An organisation or

individual that exploits natural resources must give a deposit to a credit

institution operating in Vietnam or to the environment protection und where

the exploitation is taking place

Environment protection funds: The State and each o its provinces have nan-

cial agencies to protect the environment. These agencies are unded by the

government and are charged with protecting the environment rom urther

damage

Bankruptcy Law

WHO MAY FILE BANKRUPTCY IN VIETNAM?

The bankruptcy law recognises liquidation and re-organisation o enterprises,

co-operatives and alliances o cooperatives established and operating pursuant to

the law. There is no individual bankruptcy legislation. Moreover, certain enter-

prises are subject to special treatment under the bankruptcy law.

WHICH COURT HAS JURISDICTION OVER A BANKRUPTCY?

There is no separate bankruptcy court. Depending on where the business is

registered, it will be under the jurisdiction o the District Peoples Court or the

Peoples Court in a province or a city under the Central authority. The Court o

Appeal under the Peoples Supreme Court has jurisdiction to review any appeal.

The judge has the power to collect evidence, investigate, convene, and chair

meetings o the creditors. Real estate is not treated dierently than other assets

in insolvency proceedings.

Intellectual Propert y

WHAT LAWS PROTECT INTELLECTUAL PROPERTY IN VIE TNAM?

The Civil Code and the Law on Intellectual Property codiy the bulk o the

regulations on intellectual property. Vietnam is also a signatory to the Paris

Convention, the Madrid Agreement and the Stockholm Convention o 1967, the

Berne Convention or the Protection o Literary and Artistic Works, and the

Geneva Convention or the Protection o Producers o Phonogrammes against

Unauthorised Duplication o their Phonogrammes.

Industrial property and copyright are regulated separately. Industrial property is

administered principally by National Oce o Intellectual Property and copy-

right is regulated by the Copyright Oce.


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mayer brown jsm 25

IS REGISTRATION REQUIRED TO PROTECT INTELLECTUAL PROPERTY?

Yes, registration is generally required except or copyright. Registration o

copyright will create prima acie evidence or protection. Generally, or other

intellectual property rights, the rights are protected upon registration on a rst to

le priority basis. Exceptions to the rst to le rule are trade secrets, geographic

indications, and trade names which are entitled to legal protection upon ull-

ment o their own conditions or ormation and usage.

WHAT IS THE DURATION OF PROTECTION FOR PATENT, COPYRIGHT, TRADE

MARK, INDUSTRIAL DESIGN AND TRADE NAME?

Technology Transfer

WHO HAS THE RIGHT TO TRAN SFER TECHNOLOGY?

The ollowing organisations and individuals have the right to transer, the right

to use (by licensing/sub-licensing) or the ownership o technology:

The owner o the technology

Any organisation or individual being permitted by the owner o the technol-

ogy to transer the use or ownership o the technology

A technology transer must be implemented on the basis o a written contract

that includes specic terms required by law. The technology transer contract is

not required to be registered with the competent State body. However, the

transeror and transeree may agree to register in order to enjoy incentives

stipulated by law.

Type Brie Legal Description Duration o Protection

PATENT Atechnological solution presenting

worldwide novelty, an inventive step

applicable in socio-economic elds

20 years rom the date o

application

COPYRIGHT Rights o an organisation or individual

to works which such organisation or

individual created or owns works

means a creation o the mind in theliterary, rst artistic or scientic sectors,

expressed in any mode or orm

Authors lie plus 50

years except or movies,

photographs, plays,

applied ne artsworkswhich enjoy only 50years

protection rom date o

publication

TRADE MARK Marks used to distinguish goods or

services odiferent organisations and

individuals. They may take the orm

o words, images or anycombination

presented in one or more colours


application, renewable or

successive 10 year periods

without limit

INDUSTRIAL

DESIGN PATENT

The outward appearance o a product

embodied in three dimensional

conguration, lines, colours or a

combination o such elements


application, renewable

or anadditional two

periods o5 years up to a

maximum o 15years

TRADE NAME The designation o an organisation or

individual used inbusiness activities in

order to distinguish thebusiness entity

bearing such trade name rom other

business entities in the samebusiness

sector and area

Entire duration o use


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WHAT KIND OF TECHNOLOGY MAY BE TR ANSFERRED?

The legal objects o technology transer are:

Technical know-how

Technical knowledge in the orm o technological plans, technical solutions,

ormulae, technical parameters, design drawings, technical plans, computer

programs, and data inormation about the transerred technologySolutions or rationalisation o production and renovation o technology,

licences or special business rights and other objects as provided in the Law

on Technology Transer

In situations where the technology is also subject to protected intellectual

property rights, the transer o such technology must be conducted together with

the transer o intellectual property rights in accordance with the Law on

Intellectual Property.

WHAT TECHNOLOGY TRA NSFERS ARE PROHIBITED?

The ollowing technologies are not permitted to be transerred:

Technology that does not meet the regulations o the law on occupational

saety, occupational hygiene, ensuring the health o people, or on protection o

the environment

Technology that adversely aects culture, security and social saety

Technology which ails to have technical, economic or social eciency

Technology which serves national security or deence, but the permission o

the authorised State body has not been obtained

WHAT APPROVALS OR PROCEDURES SHOULD BE FOLLOWED IN ORDER TOTRANSFER TECHNOLOGY IN VIETNAM?

The transer o a technology which is restricted by law requires an approval and a

permit rom the Ministry o Science and Technology (MOST).

Any entity with a need to receive or to be transerred a restricted technology

must submit to the MOST an application or approval o transer o such technol-

ogy. I the entity receives a written approval rom MOST, the entity will be

permitted to enter into a technology transer contract, and thereater le an

application to the MOST or a technology transer permit.

CAN A FOREIGN INVESTOR CONTRIBUTE CAPITAL BY WAY OF TECHNOLOGY TOAN INVESTMENT PROJECT

Foreign investors can contribute capital by way o technology to an investment

project and the value o such capital contribution will be agreed by the parties in

the technology transer contract.

Government of Vietnam and Charts of Major State Agencies

OVERVIEW OF THE GOVERNMENT OF VIETNAM

The Socialist Republic o Vietnam is a single-party state. Only political organisa-tions aliated with or endorsed by the Communist Party are permitted to

contest elections. The President o Vietnam is the titular head o state and the


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mayer brown jsm 27

nominal commander in chie o the military o Vietnam, chairing the Council on

National Deence and Security. The Prime Minister o Vietnam is the head o

government, presiding over a council o ministers.

The National Assembly o Vietnam is the unicameral legislature o the govern-

ment, composed o 498 members. It is superior to both the executive and judicial

branches. All members o the council o ministers are derived rom the National

Assembly. The Supreme Peoples Court o Vietnam, which is the highest court o

appeal in the nation, is also answerable to the National Assembly. The General

Secretary o the Communist Party is perhaps one o the most important political

leaders in the nation, controlling the partys national organisation and state

appointments, as well as setting policy.

The ollowing charts show the general organisational structure o the Socialist

Republic o Vietnam.

NATIONAL STRUCTURE

National Assembly

Supreme Peoples Court

Local Peoples Court

Government

Ministries

Supreme Peoples Procuracy

Local Peoples Procuracy

GOVERNMENT OF VIETNAM

Prime Minister

Deputy PrimeMinister





Ministry ofFinance

Ministry ofLabour, WarInvalids andSocial Aairs

State Bank ofVietnam

Committeeon EthnicMinorityAairs

Ministry ofJustice

GovernmentInspectorate

Ministry ofForeign Aairs

Ministry ofPlanning andInvestment

GovernmentOffice

Ministry ofInterior Aairs

Ministry ofHealth

Ministry ofNationalDefence

Ministry ofPublic Security

Ministry ofNatural

Resources &Environment

Ministry ofAgriculture

and RuralDevelopment

Ministry ofIndustry and

Trade

Ministry ofConstruction

Ministry ofTransport

Ministry ofEducation and

Training

Ministry ofInformation andCommunication

Ministry ofScience andTechnology

Ministry ofCulture, Sports

and Tourism


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LOCAL STRUCTURE

Provincial PeoplesCommittee

Department of Trade

Department of Agriculturaland Rural Development

Department of Justice

Department of Planning andInvestment

Department of Science andTechnology

Department of Construction

Department of Finance

Department of NaturalResources and Environment

Other Departments


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