The document provides an overview of doing business in Vietnam presented by Dr. Oliver Massmann of Duane Morris Vietnam LLC. It discusses Vietnam's strong economic growth, integration into regional trade agreements, attractive investment environment including tax incentives, and labor market. Specific topics covered include Vietnam's GDP, exports, free trade agreements like CPTPP and EVFTA, sectors seeing foreign investment, procedures for investment and M&A, and taxation. The presentation encourages investors to take advantage of opportunities in Vietnam.

1. www.duanemorris.com
©2010 Duane Morris LLP. All Rights Reserved. Duane Morris is a registered service mark of Duane Morris LLP.
Duane Morris – Firm and Affiliate Offices | New York | London | Singapore | Los Angeles | Chicago | Houston | Hanoi | Philadelphia | San Diego | San Francisco | Baltimore | Boston | Washington, D.C.
Las Vegas | Atlanta | Miami | Pittsburgh | Newark | Boca Raton | Wilmington | Cherry Hill | Princeton | Lake Tahoe | Ho Chi Minh City | Duane Morris LLP – A Delaware limited liability partnership
DR. OLIVER MASSMANN - Partner, General Director
DUANE MORRIS VIETNAM LLC
DOING BUSINESS IN VIETNAM
What in-house counsels must know

2. www.duanemorris.com
AGENDA:
• AMAZING FACTS ON VIETNAM
• VIETNAM’S INTERGRATION TO REGIONAL AND
WORLD’S ECONOMY
• INVESTMENT ENVIRONMENT IN VIETNAM
• GUIDE TO MAKE SUCCESSFUL INVESTMENT IN
VIETNAM
2

3. www.duanemorris.com
Vietnam 2018 Economy at a glance
• GDP: US$220.3 billion
• GDP per capita: US$2,385
• GDP Growth: 7.08% (record breaking since
2008)
• Inflation: 3.54%
• Population: About 96.2 million (April 2019)
• Labor force aged 15 and above: 55.4 million
• Total export and import turnover: : >US$482
billion (14% increase compared with 2017)
• Regional Minimum wage (Region I): VND 4.180
million (US$ 180) per month (Jan 2019)
• Vietnam’s average age: 31 years old
3

4. www.duanemorris.com
Welcome to the most dynamic country on this
planet : Vietnam!
4
Growing middle-class
(doubled by 2020 to
33 million people
according to Boston
Consulting Group)
96 million people
Fastest-growing ASEAN economy
in 2018 and 2019, as in 2017 –
Standard Chartered Bank predicts

5. www.duanemorris.com
Increasing Foreign Direct Investment
5

6. www.duanemorris.com6

7. www.duanemorris.com
Vietnam’s super rich population is growing
faster than anywhere else….
7
… and is on track to continue leading
the growth in the next decade

8. www.duanemorris.com
Communist Vietnam Has More Millionaires
Than Capitalist Philippines
8

9. www.duanemorris.com
Female Business Ownership
9
11stst
in Asia, 6in Asia, 6thth
/53 surveyed countries/53 surveyed countries
1818thth
in terms of women’s advancement outcomes,in terms of women’s advancement outcomes,
knowledge assets, financial access and supportingknowledge assets, financial access and supporting
entrepreneurial conditions*entrepreneurial conditions*
* Similar to Thailand, Hong Kong and Switzerland
Women hold 25% of CEO or board-level positionsWomen hold 25% of CEO or board-level positions
in Vietnam**in Vietnam**
** Far above Singapore, Myanmar and Indonesia
Source: Mastercard Index of Women Entrepreneurs 2018

10. www.duanemorris.com
VIETNAM’S INTEGRATION TO
REGIONAL AND INTERNATIONAL
ECONOMY
10

11. www.duanemorris.com
Vietnam’s Free Trade Agreements
11
ASEAN - China
ASEAN - Korea
ATIGA
ASEAN - India
ASEAN – Australia –
New Zealand
ASEAN - Japan
RCEP
Vietnam - Chile
Vietnam - Korea
Vietnam – Eurasian
Economic Union
Vietnam - EU
Vietnam - EFTA
CPTPP
ASEAN – Hong Kong
Vietnam - Israel
Vietnam - Japan
Signed
In negotiation/
Negotiation concluded
In negotiation

12. www.duanemorris.com
Comprehensive and Progressive Trans-Pacific
Partnership (“CPTPP”)
• On 8 March 2018, the CPTPP was finally signed in Chile. The
CPTPP accounts for 495 million people representing 13.5% of the
world total economic output - worth a total of $10 trillion.
• CPTPP will lead to an increase of 1.32% in Vietnam’s GDP
• Vietnam will have access to newer markets and can expand their
exports to countries such as Canada, Mexico, and Peru with whom
it does not have a trade agreement.
• Opportunity for Vietnam to re-structure the export market
portfolio, not rely too much on the United States.
12

13. www.duanemorris.com
Investor-state dispute settlement (ISDS)
• Through binding arbitration
• Arbitral awards are final, binding and fully enforceable in CPTPP
countries
13

14. www.duanemorris.com14

15. www.duanemorris.com15

16. www.duanemorris.com
AEC Market Snapshot – Asia’s main
investment hub
• Population: 620 million, 60% under the age of 35
• AEC % of world GDP: ~3.3%
• AEC % of world population: 9%
• AEC’s merchandise exports: US$1.2 trillion - ~54% of total
ASEAN GDP and 7% of global exports
• If ASEAN were one economy, it would be the 7th largest in
the world – 4th largest by 2050 if growth trends continue
16

17. www.duanemorris.com
CPTPP and AEC intersection
17
Thailand
Malaysia
Brunei
CanadaAustralia
Cambodia
Indonesia Myanmar
Peru
Philippines
Japan
Laos
Mexico New Zealand
Singapore
Vietnam
Chile
AECAEC
CC
PP
TT
PP
PP

18. www.duanemorris.com
Why doing business in ASEAN – Investors’
perspective
18
Source: Economic Corporate Network

19. www.duanemorris.com
EU – Vietnam Free Trade Agreement
19

20. www.duanemorris.com
EVFTA AND IPA
• The EVFTA is a new generation free trade agreement between Vietnam
and 28 EU member countries
• On 2nd December 2015, both Vietnam and the EU concluded the
negotiations.
• On 26 June 2018, the EVFTA was divided into 2 agreements in terms of
trade and investment following the European Court of Justice’s opinion
on the EU – Singapore FTA
• The EVFTA will cover trade issues while investment protection and
investment-related dispute settlement will be under the IPA.
• On 30th June, the EVFTA and the IPA were signed in Hanoi.
• The EVFTA is the first comprehensive and ambitious trade and
investment agreements that the EU has ever concluded with a
developing country in Asia
20

21. www.duanemorris.com
EVFTA – Main features
§ Symmetrical elimination of nearly all tariffs (over 99%)
§ Removal of almost all export duties and cap on remaining
ones
§ Services commitments going beyond GATS
21

22. www.duanemorris.com
Government Procurement
• Average government procurement in the EU is about 16%
• Vietnam has one of the highest government procurement
rates of all countries worldwide (with about 39%)
• Vietnam is not a member of the Government Procurement
Agreement of the WTO
• Vietnam undertakes to transparency and procedural fairness
regulations
• Investors will get access to a huge market of government
procurement
22

23. www.duanemorris.com
EVFTA – Benefits for Vietnam
• Vietnam’s annual economic expansions rate may grow an additional 15%
every year (said Tomaso Andreatta, representative of the European Business
Association in Vietnam (EuroCham), at the Vietnam Business Forum 2014)
• Tariffs for most of Vietnamese export product to the EU will gradually
reduce to 0% and Vietnam’s export to EU is expected to grow about 35%
for next few years
• The real wages of skilled laborers may increase by up to 12% while real
salary of common workers may rise by 13%
• The EVFTA is the legal framework for a more stable relationship in bilateral
trade for Vietnam when competing in the international market
• The EVFTA will generate greater effects, e.g. increased quality of investment
flows from EU, acceleration of the process of sharing expertise and transfer
of green technology and the creation of more employment activities
23

24. www.duanemorris.com
EVIPA
• Applies to covered investment and its investors
“Investment” means every kind of asset which is owned or controlled,
directly or indirectly, by an investor of EU/ Vietnam in the territory of
Vietnam/ EU, which has the characteristics of an investment (for
example, commitment of capital or other resources, the expectation of
gain or profit, the assumption of risk and a certain duration).
• Investment protection
• Investor-to-State dispute settlement mechanism (“ISDS”)
• EVIPA will replace all bilateral investment agreements between
Vietnam and other EU members
24

25. www.duanemorris.com
IPA - Conflict Resolution
• IPA secures a modern reformed investment dispute resolution standard
• A standing international and fully independent investment tribunal will
be competent to all conflicts about investment protection provisions
• Decisions of the Tribunal can be appealed to a permanent Appeal
Tribunal
• UNCITRAL rules on transparency in treaty-based investor-state
arbitration are implemented which guarantees a high standard of juridical
transparency
• A final award must be enforced and cannot be questioned by local
jurisdiction
• 5 year transitional period for Vietnam. However, you could include a
change-law-provision in the contract for future settlement
25

26. www.duanemorris.com
ISDS under EVIPA and CPTPP – What are the
differences? (1)
26
Is arbitration the
only option to
settle the dispute?
Consultation Mediation
* The EVIPA has more detailed and clearer regulations on amicable resolution in
general and consultation in particular than the CPTPP.
* Amicable measures in the CPTPP are traditional and similar to existing international
investment agreements while EVIPA contains more new points.

27. www.duanemorris.com
ISDS under EVIPA and CPTPP – What are the
differences? (2)
27
Arbitration
CPTPP EVIPA
• Flexibility in choice of forum and
governing rule
• One- stage arbitration (i.e., final
award
• The final award is enforced
automatically (under ICSID
Convention) or must be
recognized (under 1958 New
York Convention and Inter-
American Convention). No
transitional period applies for
Vietnam.
• No choice of forum or governing
rule
• Two-stage arbitration (Tribunal
and Appeal Tribunal) (similar to
the WTO dispute settlement
system)
• The final award is binding as if it
were a final judgement of a court
in each party. 5-year transitional
period applies for Vietnam
according to 1958 New York
Convention.

28. www.duanemorris.com
INVESTING IN VIETNAM
28

29. www.duanemorris.com
FOREIGN INVESTMENT IN VIETNAM
REGIONAL COMPARISON OF COMPETIVENESS
ON MARKET ACCESS
Vietnam ties in first place with Singapore
• *Typical restrictions: number of opened sectors, JV requirement,
limits on foreign-owned shares, permission requirement
29
Country Limitation of market
access*
Country Limitation of
market access*
Malaysia medium Myanmar high
Indonesia medium Cambodia medium
Philippines medium Laos medium
Singapore low India high
Thailand medium China medium
Brunei high Vietnam low

30. www.duanemorris.com
Investment environment in Vietnam
• Main governing laws: Investment Law, Enterprise Law and their
implementing documents
• Forms of doing investment in Vietnam:
– Economic entity establishment;
– Business cooperation contract: a contractual arrangement
between two or more investors without creating a legal entity
– Public-Private Partnership; a contractual agreement
between competent state authorities and investors, an
enterprise project in order to implement an investment
project;
– purchase of shares or capital contribution.
30

31. www.duanemorris.com
Investment environment in Vietnam
• Forms of enterprises in Vietnam
– Limited liability company: members are liable to the extent of their
capital contributed
– Shareholding Company: charter capital (authorized share capital) is
divided into shares and members are liable to the extent of their capital
contributed
– Partnership: established between two or more partners;
– Business Cooperation Contract: an agreement without constituting a
legal entity and each party is individually responsible for paying taxes.
– Branch: a branch of a foreign company permitted to conduct
commercial activities
– Representative Office: represents the parent company, no actual
business operations. A suitable tool for market research
31

32. www.duanemorris.com
Negative List under 2014 Investment Law
• All non-prohibited business activities are permitted
“Investors are entitled to conduct business investment activities in
industries and trades which are not prohibited by this Law.”
• Reduction of conditional and prohibited activities
32

33. www.duanemorris.com
Investment procedure under 2014 Investment Law
• Under the Investment Law and Enterprise Law: 2 separate steps - Application
for Investment Registration Certificate (“IRC”) and Application for Enterprise
Registration Certificate (“ERC”)
• Step 1: IRC
– IRCs for projects required to obtain preliminary approval of the National
Assembly/ People’s Committee are issued within 05 working days upon
issuance of such approval
– For other projects, IRCs are issued within 15 days (instead of 35 days as in
the old law) upon receipt of the application dossier
• Step 2: ERC
– Submit an application dossier to the licensing authority upon issuance of the
IRC
– ERCs are issued within 03 working days upon receipt of the application
dossier
33

34. www.duanemorris.com
M&A procedure under 2014 Investment Law
§ Appears to be simple under the new Investment Law !!!
Only registration required, no more Investment
Registration Certificate
ü Satisfy the requirements for investment
ü Submit application dossier
ü Assessment by the licensing authority and decision after 15
days
34

35. www.duanemorris.com35

36. www.duanemorris.com
How to get deals done (1)
• Check whether the target company operates in a
conditional business sector.
• Determine the total charter capital foreign investor(s) will
hold in the target company (51% or more?).
• It then decides whether the foreign investor must file a
registration application to the local DPI or the target
company only needs to conduct procedures to change
members/ shareholders at local DPI.
36

37. www.duanemorris.com
How to get deals done (2)
• Conduct a careful Due Diligence
(including legal and financial)
• Make sure all business lines of the target entity are
transferred to the new entity upon the deal completion
• Note that M&A activities are administered by the Foreign
Department under the Department of Planning
Investment and dossiers are subject to very strict
examination
37

38. www.duanemorris.com
INVESTMENT INCENTIVES
Items 2019
Inside SEZ Outside SEZ
Tax rates 10% for first 15 years 20%
CIT Holidays 04 years 2 years
CIT reduction 50% for subsequent
09 years
50% for subsequent
04 years
38
• Carrying forward losses
• Reduction or exemption of land rental, land use fee
• Incentives for enterprises employing female workers

39. www.duanemorris.com
Personal Income Tax
– Subjects:
Ø Vietnam residents: those individuals residing in
Vietnam for 183 days or more in a calendar year, or in
12 consecutive months from the first date of arrival
Ø Non-residents: an individual staying in Vietnam from
90 to183 days in a tax year
- Tax rates: varied for employment and non-employment
income (employment income: graduated tax rates from 5-
35%; non-employment income: depending on each type
of income)
39

40. www.duanemorris.com
Taxation in Vietnam
• Value-added Tax (“VAT”)
– Tax applied to goods and services used for
production, trading and consumption in Vietnam
(including goods and services purchased from abroad)
– Tax rate: 0-10% depending on types of goods and
services
• Other taxes: special sales tax (applied to luxury goods or
amusement places), natural resources tax, land and
housing tax, etc.
40

41. www.duanemorris.com
Labor and Employment
• Minimum regional wages: ranging from US$125 –
US$180/month
• Social security:
– both employer and employee have to contribute to social fund (social
insurance, health insurance, unemployment insurance)
– The Fund covers the employees’ benefits during sick leave, maternity leave,
retirement, allowances for work related accidents and occupational diseases,
and survivors’ benefits
• Pension: Monthly pensions are provided from the Social
Insurance Fund where an individual has contributed social
insurance for more than 20 years and when they reach 60 years
of age for men, or 55 years of age for women.
41

42. www.duanemorris.com
INVEST IN VIETNAM NOW!!!
42

43. www.duanemorris.com
CONNECTIONS ARE BUSINESS
PLEASE CONNECT WITH ME ON
LINKEDIN:
OLIVER MASSMANN
43

44. www.duanemorris.com
WHEREVER YOU ARE - BE ALL THERE
Jim Elliot
44

45. www.duanemorris.com
DUANE MORRIS VIETNAM LLC
Thank you very much!
HANOI OFFICE HO CHI MINH CITY OFFICE
Pacific Place, Unit V1307/08, 13th Floor, Suite 1503/04, Saigon Tower
83B Ly Thuong Kiet, Hoan Kiem District 29 Le Duan Street, District 1
Hanoi, Vietnam Ho Chi Minh City, Vietnam
Tel.: +84 24 39462200 Tel.: +84 28 3824 0240
Fax: +84 24 3946 1311 Fax: +84 28 3824 0241
Contact email:
omassmann@duanemorris.com
45

46. www.duanemorris.com
References (1)
46

47. www.duanemorris.com
References (2)
47

48. www.duanemorris.com
References (3)
48

49. www.duanemorris.com
References (4)
49