Gallery Library

FAQs

   

Vietnam updates July 2015 - Duane Morris

 

 

Duane Morris – Vietnam Update

 

 

 

Duane Morris Vietnam LLC

www.duanemorris.com

 

Hanoi Office

Pacific Place, Unit V1308

83B Ly Thuong Kiet Street,

Hoan Kiem District
Hanoi, Vietnam
P: 84.4.3.946.1310

F: 84.4.3.946.1311


gtcooper@duanemorris.com

omassmann@duanemorris.com

 

 

HCMC Office

Suite 1503/04, Saigon Tower
29 Le Duan Street, District 1
Ho Chi Minh City, Vietnam
P: 84.8.3824.0240
F: 84.8.3824.0241

 

gtcooper@duanemorris.com

motto@duanemorris.com

 

 

日本語でのお問い合わせ先

japanese@duanemorris.com

 

 

 

 

 

17 July 2015

 

Manfred Otto of Ho Chi Minh City office is quoted in the below article on foreign ownership in listed companies in Vietnam:

Quoted in "Vietnam Lifts Ownership Shackles on Listed Stocks," GlobalCapital/ASIAMONEY, July 2, 2015

 

Vietnam central bank ups credit growth targets at some banks

Source: Reuters

Vietnam central bank agreed on Thursday to lift the 2015 credit growth target ceiling for some lenders in a bid to boost economic growth and help stabilise the money market. The State Bank of Vietnam (SBV) allowed lending this year by Vietcombank, the biggest lender by market value, and VietinBank to increase 16 percent from the end of 2014, from their initial targets of 13 percent each, it said in a statement on its website. (sbv.gov.vn). It also adjusted lending targets at some other banks and branches, both domestic and foreign, without clarifying whether they were relaxations or restrictions. The move comes as the Southeast Asian country seeks to boost growth while managing the banking sector's ratio of non-performing loans (NPLs), which soared a few years ago when the property market froze, compounded by risky lending and non-core investments by state-run firms. Higher lending could help trim down the NPL ratio, which in May eased to 3.15 percent of total loans from 3.59 percent in February, a newspaper reported. That is closer to the target of 3 percent by the end of September. The SBV said on Wednesday it would temporarily ban domestic lenders from opening new branches, offices, cash machines, representative offices and offer new services until they cut their NPL ratios to below 3 percent by the end of September. Loans in Vietnam's banking sector grew 5.78 percent from the end of 2014 as of June 15, a rise of almost 19 percent from the same period last year and compared to the full-year target of 13-15 percent, the SBV said last month.

 

Questions raised on new property laws

Source: Vietnam Net Bridge

Two long-awaited amended laws on housing and real estate, effective from July 1 and expected to have a significant impact on the property market, may not be as effective. The two new laws were introduced amid the recovery of the property market starting from the end of last year, after seven years remaining frozen, with amendments to drive the market back on track. Still, market participants are awaiting further detailed instructions. As most of the documents instructing the implementation of the two new laws had not been promulgated, the Ministry of Construction on Thursday issued a document saying that decrees and circulars under the previous laws will remain in effect, as long as they do not conflict with the new laws. According to CBRE, the impact of the new laws might be significant and might mark an important step toward opening up the real estate market to overseas investment. The effects may not be felt immediately, CBRE said, adding that foreigners are likely to adopt a wait-and-see approach before making any decision. In fact, many property developers have begun to take advantage of amendments in the new laws such as getting guarantees from banks for under-construction projects and selling apartments to foreign buyers. Lawyer Nguyen Mai Phuong from Zicolaw observed that it was too early to affirm that the property market would thrive rapidly as the legal framework had not been completed.

Major amendments

Opening up the market to foreign buyers and Viet kieu (overseas Vietnamese): Foreigners are allowed to own houses in Viet Nam for 50 years. However, the number of apartments owned by foreigners in a building or houses in a ward-level zone must be less than 30 per cent. There is no limit on the number of houses that Viet kieu can own.

Bank guarantees for future property projects

Following Article 56 of the Law on Real Estate Business, property developers, before selling or leasing unfinished or future property, must obtain guarantees from commercial banks as assurances of their financial obligations to buyers. The regulation is expected to protect the rights of home buyers, as well as contribute toward cleaning up the realty market.

Minimum legal capital of property firms increased

The minimum legal capital requirement for property firms has been raised from VND6 billion (US$284,000) to VND20 billion ($945,000). Existing firms, which had not met the requirement, must raise their legal capital within one year since the law comes into force. This is aimed at enhancing the financial capacity of property developers.

Transactions through property trading floor not compulsory

The Law on Real Estate Business 2014 removed the compulsion of property transactions conducted through trading floors as the regulation proved ineffective after years of implementation.

 

FDI mainly poured in manufacturing, processing

Source: VGP

The Foreign Direct Investment (FDI) are being poured mainly into processing, manufacturing, real estate and retail sales in Viet Nam. Accordingly, total newly-registered and additional capital reached US$1.19 billion in June, bringing the total figure in the first half of the year to US$5.49 billion, as much as 80.2% of the same period last year. Of the figure, the newly-registered FDI attained US$3.83 billion while the additional FDI achieved US$1.65 billion, equal to 79% and 83% of the same period last year. The total FDI disbursement was estimated at US$6.3 billion, a year-on-year increase of 9.6%. According to the statistics of the Foreign Investment Agency, under the Ministry of Planning and Investment, the processing and manufacturing industry attracted 338 newly-registered FDI projects and had 190 ones added capital, worth US$4.18 billion, accounting for 76.2%. The real estate sector ranked second with 18 FDI projects, valued at US$465.5 million, making up 8.5%. The retail sales occupied the third place with total newly-registered and additional capital of US$276.5 million in 145 projects, accounting for 5%.

 

FTAs bear both opportunities and challenges for footwear sector

Source: Vietnam Plus

The signed and pending free trade agreements (FTAs) will not only provide benefits for the Vietnamese footwear and bag sector, but also a number of challenges due to export goods now requiring clear information on product origin, a conference in Ho Chi Minh City heard on July 15. In the past five years, the Vietnamese Government has actively negotiated FTAs with numerous countries, with most of them impacting significantly on the development of the footwear sector, including the Trans-Pacific Partnership agreement and FTAs with the European Union and the Eurasian Economic Union. According to the Deputy Head of the Ministry of Industry and Trade’s Import-Export Department Tran Thanh Hai, the footwear sector will be a priority during the negotiation process since it is one of Vietnam’s three key exports to the EU and the US. In 2014, these two markets accounted for 67 percent of Vietnam’s total exports. However, the export tax currently imposed on footwear by the US remains high at 60 percent, and 3-17 percent in the EU. Once the agreements are signed, export tax could be eliminated entirely, opening up more opportunities for the sector to increase its exports and expand its market shares, Hai said. Additionally, the Association of Southeast Asian Nations (ASEAN), which includes Vietnam, has also signed FTAs with China, Japan, the Republic of Korea, India, Australia and New Zealand, and is currently negotiating a Regional Comprehensive Economic Partnership (RCEP) with the six aforementioned countries. This will establish a free trade area comprising 16 states and a total population of over 3 billion. As such, Vietnam will also have the chance to boost its exports to these countries. Deputy Minister of Industry and Trade Ho Thi Kim Thoa suggested businesses anticipate and grasp the opportunities provided by the signed and pending FTAs to expand their export markets. Furthermore, Vietnamese footwear businesses should observe the domestic market, since supply only meets 50 percent of demand at present. According to the ministry, the sector’s export turnover is estimated at 7.35 billion USD in the first half of 2015, up by 18 percent compared to the same period last year. Vietnam’s footwear export value totalled 5.9 billion USD and bag exports accounted for the remaining 1.45 billion USD. Vietnam is the world’s third largest exporter of leather and footwear products, following China and Italy. Vietnamese products are available in more than 50 countries and territories throughout the world. The ministry approved a master plan on the development of the sector until 2020 with a vision to 2030, with a focus on developing the support industry. Accordingly, several footwear and material processing industrial zones and complexes will be built with the purpose of providing materials and increasing the sector’s competitiveness.

 

Vietnam to develop seven logistics centers in 2020

Source: VietnamNet Bridge

Seven large-scale logistics centers will be up and running in different parts of the country in the next five years as envisaged in a master zoning plan for national logistics development until 2020 and with a vision towards 2030. According to the zoning plan approved by the Prime Minister, the logistics centers will be located in the north of Hanoi, on the economic corridors of northern and central regions, Danang, at the economic zone in provinces northeast of HCMC, the Red River and the Mekong deltas.

The centers will help develop the country’s logistics system to meet the demand for production and transport of domestic goods as well as goods exports and imports. The facilities are expected to make the most of potential for logistics service development in the country. According to the plan, annual logistics service growth is estimated at 24-25% and the sector will contribute 10% to the country’s gross domestic product (GDP), post outsourcing service growth of around 40%, and cut logistics cost to 20% of GDP by 2020. The respective targets for 2030 are 34-35%, 15%, 65% and 15-17%.

 

HCM City seeks to improve business environment

Source: Vietnam Plus    

The HCM City government will focus on improving the business environment and streamline administrative procedures this year and next to make life easier for investors, the Saigon Times Daily reported. According to the Daily, in a plan issued last week, the city will reduce the time for tax payment to no more than 121.5 hours per year, goods export to 13 days and goods import to 14 days, business registration to three days, and business closure from 60 months to 30 months. These reforms will be carried from now to the year-end. Next year the time needed for registering for rights to ownership and use of assets will be brought down from 57 days to 14 days, settling trade disputes from 400 days to 200 days, and processing a bankruptcy request from 60 months to 24 months. According to the city government, the competitiveness of the city is still lower than a lot of other provinces in the country. Of the 10 sub-indexes in the Provincial Competitive Index (PCI), namely entry costs, land access and security of tenure, transparency, time costs, informal charges, proactivity of the provincial leadership, policy bias, business support services, labour training policy and legal institutions, HCM City has seven below average. After 10 years in the PCI Survey, HCM City got into the top five of the best-governed provinces and cities in Vietnam. But its ranking was still below Da Nang, Dong Thap and Lao Cai though it is an attractive destination for many domestic and foreign investors.

 

Businesses confused about new regulations in Vietnam

Source: VietnamNet Bridge

The business registration division of the HCM City Planning and Investment Department has been overloaded for several days answering questions about new procedures to set up new businesses under the amended Enterprise and Investment Laws which took effect one week ago. Article No 29 of the 2014 Enterprise Law stipulates that there is need to write down business fields in business registration certificate. However, the businesspeople said the provision can only help ease business registration agencies’ works, while businesses cannot benefit from this. In fact, when registering, enterprises have to enumerate all of their business fields and then declare the encoded fields. Le Duc Hien, the owner of a business reporters met at the HCM City Planning and Investment Department, complained that he le encountered trouble when adding one more business field to his business registration certificate. Hien, after spending time checking legal documents, decided that the business field should be encoded as 6312. However, the agency refused his registration and said the business field should be 8299. Nguyen Ngoc Tuan, director of Viet A Tax, Accountancy and Law Service JSC, also said that it was difficult for businesses to encode their business fields when making declarations. “The problem is that we don’t have information about the codes of business fields. We have been told to check the list of business fields released by the General Statistics Office. However, it is really difficult to find the right ones among the thousands of codes given,” Tuan said. “The work should be done by state’s officers rather than businesspeople,” one businessman said. Most of the business people who were interviewed said they could not understand how the new law was ‘open’ and ‘clear’ as described by state agencies. Lam Phong, who provides business registration service, said many new regulations remained enigmatic to businessmen. The new law stipulates that businesses have the right to determine their stamps provided that they register the stamp samples on the national business information portal. However, businesses cannot use their stamps immediately, but can only do so three days later. Another businessman said he had to go to several places to ask about the procedures to change the business’s legal representatives. “When I went to the investment division, I was told to go to the business registration division. But when I met an official of the business registration, I was told to go back to the investment division,” he said.