Vietnam

Bureau of Economic and Business Affairs
Report
July 5, 2016

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Executive SummaryShare    

Vietnam continues to work to improve its business climate in order to attract foreign direct investment (FDI), and has sustained registered FDI of roughly $18.5 billion per year over the last five years. In 2015 Vietnam successfully attracted new and additional investment in the IT sector and energy. Investors commonly cite Vietnam’s geographic proximity to global supply chains, political and economic stability, expected benefits from the Trans-Pacific Partnership (TPP) and other recently signed free trade agreements (FTA’s), and an increasing desire to diversify their manufacturing base in Asia away from China as reasons for investing in Vietnam. Vietnam is one of the few counties in Asia that has been able to sustain manufacturing growth. Fueled by a growing economy with a young, increasingly urbanized population and inexpensive labor, Vietnam could become the next manufacturing powerhouse of Asia. Last year was an important year for Vietnam as it made great strides in integrating into the global economy. In 2016 signed the Trans-Pacific Partnership (TPP) and in 2015 Vietnam signed the European Union FTA (EV-FTA), the Korea FTA, Eurasian Economic Union (EAEU), is a part of the newly formed ASEAN Economic Community (AEC).

Manufacturing dominated FDI inflows last year as investors continue to move large scale operations from other developing countries to Vietnam. In 2015, the investment influx to the textiles and apparel industries continued in anticipation of the conclusion of the Trans-Pacific Partnership. Information technology (IT) also attracted major investments from Samsung ($3 billion), LG ($1.5 billion), and Microsoft ($500 million). The FDI inflows to the IT sector are in line with Vietnam’s strategic efforts to shift FDI from low-end manufacturing to the high tech sector. Vietnam also continued to attract investment in infrastructure projects such as power generation, roads, railways and water treatment. Vietnam needs an estimated $170 billion in additional infrastructure development in order to meet growing economic demand. In energy alone, the Vietnam's General Statistics Office (GSO) estimates that electricity demand will continue to grow at a rate of 10 percent to 12 percent per year, rising from 169.8 terawatt hours in 2015 to 615.2 terawatt hours by 2030.

In 2015, Vietnam issued the underlying decrees to implement several key laws, including the Enterprise Law, the Investment Law, the Bankruptcy Law, Housing Law and Real Estate Business Law. The State Bank of Vietnam (SBV) executed its plan to strengthen the banking sector last year, and was successful in maintaining stability of the Vietnamese Dong (VND) despite a challenging global currency environment in the latter part of the year.

However, the new Investment Law failed to create a clearer licensing process, and reforms allowing foreigners access to property have failed to attract large-scale foreign investment in real estate. The state-owned enterprises (SOE) reforms also fell short of the Government of Vietnam’s (GVN) ambitious goal of equitizing over 500 SOEs by the end of 2015.

While Vietnam continues to attract increasing amounts of FDI, several challenges in the business climate remain, including: corruption and weak legal infrastructure, a shortage of skilled labor that can meet the demands of an increasingly sophisticated global market, low labor productivity, a weak judicial system, the need for better infrastructure, and a cumbersome bureaucracy that still focuses on monitoring and control rather than business facilitation.

Table 1

Measure

Year

Index or Rank

Website Address

TI Corruption Perceptions index

2015

112 of 168

transparency.org/cpi2014/results

World Bank’s Doing Business Report “Ease of Doing Business”

2015

90 of 189

doingbusiness.org/rankings

Global Innovation Index

2015

52 of 141

globalinnovationindex.org/content/page/data-analysis

U.S. FDI in partner country ($M USD, stock positions)

2015

$218.0

Vietnam General Statistics Office

World Bank GNI per capita

2014

$1,890

data.worldbank.org/indicator/NY.GNP.PCAP.CD

Millennium Challenge Corporation Country Scorecard

The Millennium Challenge Corporation, a U.S. Government entity charged with delivering development grants to countries that have demonstrated a commitment to reform, produced scorecards for countries with a per capita gross national income (GNI) of $4,125 or less. A list of countries/economies with MCC scorecards and links to those scorecards is available here: http://www.mcc.gov/pages/selection/scorecards. Details on each of the MCC’s indicators and a guide to reading the scorecards are available here: http://www.mcc.gov/pages/docs/doc/report-guide-to-the-indicators-and-the-selection-process-fy-2015 .

1. Openness To, and Restrictions Upon, Foreign InvestmentShare    

Attitude toward Foreign Direct Investment

Vietnam is focused on attracting foreign investment, especially in sectors that will bring advanced technology, increase the labor market skillset, and improve Vietnam’s labor productivity. Vietnam’s attractiveness as an FDI destination has grown as the country continues to make key legal reforms related to the business climate. Other FDI draws are Vietnam’s stable political system, strategic location near global supply chains and China, and an abundant labor force that is less expensive relative to China.

Foreign invested companies continue to play an important role in the economy. According to the Vietnam General Statistics Office (GSO) the FDI sector contributed 70 percent of total exports in 2015 (up from 47 percent in 2000) and foreign invested enterprises’ contribution to GDP increased to 18 percent from 13 percent over the same period. Vietnam has maintained registered FDI levels of around $18.5 billion per year over the last five years. Concluding the four FTA’s in 2015-2016 has already increased FDI in Vietnam. While Vietnam has made great strides to connect to the global supply chain and is committed to improving the business environment, it remains a developing economy with many areas for improvement. Key challenges include corruption and weak legal infrastructure, a shortage of skilled labor that can meet the demands of an increasingly sophisticated global market, low labor productivity, a weak judicial system, the need for better infrastructure, and a cumbersome bureaucracy that still focuses on monitoring and control rather than business facilitation.

In 2015, according to Vietnam’s Foreign Investment Agency (FIA), the United States was the 16th largest FDI source with a total investment of $224 million, down from 11th in 2014. Malaysia beat out Japan as the second largest FDI source in 2015 due to a large investment in the Duyen Hai 2 thermal power plant south of Ho Chi Minh City. The top three FDI sources in 2015 were South Korea, with newly registered capital of $2.7 billion in 702 projects, Malaysia with $2.4 billion in 27 projects, and Japan with $1.3 billion in 299 projects, according to the FIA. China FDI excluding Hong Kong increased to $744 million (10th largest source) in 2015 from $427 million in 2014. However, data may be inaccurate as some investment is registered through a third country.

Other Investment Policy Reviews

In the past three years, has the government/authority conducted an investment policy review (IPR) through:

  1. World Bank 2035 Report:
    http://www.worldbank.org/en/news/infographic/2016/02/23/vietnam-2035-toward-prosperity-creativity-equity-and-democracy
  2. Provincial Competitive Index:
    http://eng.pcivietnam.org/
  3. WTO review of Vietnam’s trade policies and practices, 2013
    http://www.wto.org/english/tratop_e/tpr_e/tp387_e.htm
  4. OECD’s Investment Policy Review, 2010.
    http://www.oecd.org/countries/vietnam/vietnam-investmentpolicyreview-oecd.htm
  5. UNCTAD’s Investment Policy Review, 2008. http://unctad.org/en/Docs/iteipc200710_en.pdf

Laws/Regulations on Foreign Direct Investment

In December 2014, Vietnam passed a new Investment Law with breakthrough changes aimed at improving the investment environment. Previously, Vietnam used a “positive list” approach, meaning that foreign businesses were only allowed to operate in a list of specific sectors outlined by law. Starting in July 2015, Vietnam implemented a “negative list” approach, meaning that foreign businesses are allowed to operate in all areas except for six prohibited sectors. Additionally, there are 267 sectors that are now open to foreign investment provided that the investor satisfies certain conditions.

Under the new Investment Law, businesses must apply for an investment license when establishing a new company, and update their business license when they: 1) make significant changes to an ongoing enterprise, such as increasing investment capital; 2) restructure the form of investment or investment ratios between foreign and domestic partners, 3) change the foreign management structure, or 4) add new business activities. The law also requires foreign and domestic investors to be treated the same in cases of nationalization and confiscation. However, foreign investors are subject to different business licensing processes and restrictions, and Vietnamese companies that have a majority foreign investment are subject to foreign investor business license procedures. In general the new Investment Law has not provided clearer and speedier processes for investors to complete necessary investment license paperwork.

Conformity with Economic Master Plans

As restated in the new Investment Law, most FDI projects must conform to one or more sectoral master plans. Master plans are economic development policies that set five- to ten-year targets for an industry. The requirement for projects to conform to relevant master plans can be problematic for foreign investors, as the grounds for assessing compliance with a particular plan are unclear, and master plans may overlap as they are issued by both ministries at the national and provincial level.

Business Registration

Vietnam is a member of the U.N. Conference on Trade and Development’s (UNCTAD) international network of transparent investment procedures: http://vietnam.eregulations.org/. Foreign and national investors may be able to find information on administrative procedures applicable to investment and income generating operations including the number of steps, name and contact details of the entities and persons in charge of procedures, required documents and conditions, costs, processing time, and legal bases justifying the procedures for the following provinces:

Danang - http://danang.eregulations.org
Ho Chi Minh City - http://hochiminhcity.eregulations.org
Binh Dinh - http://binhdinh.eregulations.org
Hai Duong - http://haiduong.eregulations.org
Phu Yen - http://phuyen.eregulations.org
Vinh Phuc - http://vinhphuc.eregulations.org
Hanoi - https://hanoi.eregulations.org

In reality, the business registration process is often longer than the standards mentioned online. Also, foreign investors are required to notarize their documents, creating an additional burden. The Ministry of Planning and Investment (MPI) has an Investment Promotion Department to facilitate all foreign investments, and several provinces and cities such as Hanoi also have investment promotion agencies.

In Vietnam micro enterprises are classified as those employing less than 10 employees. Small enterprises are those employing less than 50 employees and capital less than VND10 billion ($448,000) in trade and services, and businesses employing less than 200 employees with invested capital less than VND20 billion ($897,000) in other sectors. Medium sized enterprises employ between 50 and 100 employees with capital investment between VND10 billion to VND50 billion ($448,000 and $2.2 million) in trade and services, and businesses employing between 200 and 300 employees with invested capital between VND20 billion to VND200 billion ($897 thousand and $9.0 million) in other sectors. The government provides various mechanisms to assist SME’s through loan guarantees, low corporate income taxes and simplified accounting bookkeeping, and MPI is currently drafting a new law to better assist SMEs that is expected to go to the National Assembly this year. However, these benefits are not applied to foreign invested companies.

Industrial Promotion

Vietnam promotes foreign investment in certain priority sectors and geographic regions, such as mountainous and remote areas that have difficult economic and social conditions. The government encourages investment in the production of new materials, new energy sources, metallurgy and chemical industries, manufacturing of high-tech products, biotechnology, information technology, mechanical engineering, agricultural, fishery and forestry production, salt production, generation of new plant varieties and animal species, ecology and environmental protection, research and development, knowledge-based services, processing and manufacturing, labor-intensive projects (using 5,000 or more full-time laborers), infrastructure projects, education, training, and health and sports development.

Limits on Foreign Control and Right to Private Ownership and Establishment

The ratio of total foreign ownership permitted in a project depends on a number of factors, including Vietnam’s international commitments and the sector in question. There are also strict foreign ownership limits for certain listed companies and service sectors. Foreign investors must negotiate on a case by case basis with the government on market access in sectors that are not explicitly open through a trade or investment agreement.

In addition, the lack of substantive regulations on merger and acquisition (M&A) activities makes such transactions risky. For example, when a foreign investor buys into a local company through an M&A transaction, it is difficult to determine which business lines the acquired company is allowed to maintain. The reason for the lack of clarity is while the GVN allows foreign investors to invest in all but six prohibited sectors, and regulates investment in 267 sectors, there are more than 6,400 conditions relating to these sectors, of which 3,299 conditions will be unlawful from July 1, 2016. Therefore, if companies operate within the 267 conditional sectors, determining the potential status of foreign investors will be very difficult.

Privatization Program

Vietnam’s stated goal of equitizing (i.e. converting SOEs to joint stock companies) more than 432 SOEs between 2014 and 2015 was not met. While the Government of Vietnam classifies an SOE as equitized if it completes its equitization plan, in practice the only time an SOE is equitized is when the shares are sold to the private sector. Also, while foreign investors are allowed to buy shares in SOEs in accordance with WTO commitments, the majority of SOEs that were privatized in 2014-2015 offered such a small percentage (often just 2-3 percent) to private investors that most SOE’s failed to attract more than nominal interest from foreign investors.

Additional drawbacks to foreign investment in SOEs include an overall lack of transparency, weak corporate governance, and unclear management structure. Domestic and foreign investors are permitted to buy shares through a public auction, or invest as a strategic shareholder. However, Vietnam has had a difficult time attracting strategic shareholders due to specific requirements placed on these shareholders, such as the transfer of technology or expertise. Overall, the low equitization percentage of SOEs has led many to question whether equitization will indeed result in a level playing field for domestic and foreign companies, or bring substantive changes in SOE corporate governance.

Screening of FDI

Vietnamese authorities evaluate investment license applications using a number of criteria, including: 1) investor’s legal status and financial capabilities; 2) the project’s compatibility with Vietnam’s “Master Plan” for economic and social development and projected revenue; 3) technology and expertise; 4) environmental protection; 5) plans for land use and land clearance compensation; 6) project incentives including tax rates, and 7) land, water, and sea surface rental fees.

Licensing authority decentralization to provincial authorities has in some cases streamlined the licensing process and reduced processing times. It has also, however, given rise to considerable regional differences in procedures and interpretations of investment laws and regulations. Insufficient guidelines and unclear regulations sometimes cause local authorities to consult national authorities, creating delays. In addition, the approval process is often much longer than the time frame mandated by law. Many U.S. firms have invested successfully, though a lack of transparency in the procedure for obtaining a business license at times makes investing riskier.

Investment projects that must be approved by the National Assembly include:

  • Projects with a large environmental impact;
  • Projects that change the land usage purpose in national parks;
  • Projects located in protective forests larger than 50 hectares; or
  • Projects that require relocating 20,000 people in remote areas such as mountainous regions.

Investment projects that require Prime Ministerial approval include:

  • Projects to build airports, seaports, or casinos; to explore, produce and process oil and gas; or to produce tobacco;
  • Projects having investment capital more than 5,000 billion VND ($233 million);
  • Projects with foreign investors in sea transportation, telecommunication or network infrastructure, forest plantation, publishing, or press; and
  • 100 percent foreign-owned scientific and technology companies or organizations.

Projects which are not approved by the National Assembly or the Prime Minister will be approved by the provincial People’s Committee.

Competition Law

The Vietnam Competition Administration (VCA) of the Ministry of Industry and Trade (MOIT) reviews transactions for competition-related concerns. In 2014 (latest available), the VCA launched 10 investigations related to competition restriction. The VCA continues to receive and process M&A cases in crucial sectors of the economy, such as food processing and trading; production, trading, and transmission of electricity; and import, export, and distribution of steel.

2. Conversion and Transfer PoliciesShare    

Foreign Exchange

Vietnam generally does not provide foreign currency conversion guarantees to foreign investors. The Vietnamese Dong (VND) remained stable until August 2015 as the State Bank of Vietnam (SBV) had prioritized exchange rate stability in order to reduce dollarization and the use of gold. The SBV published daily interbank reference exchange rate (only changed on an ad hoc basis), and maintained a narrow trading band of +/-1 percent for USD/VND transactions from February 2011 until August 2015. In 2015, the SBV adjusted the USD/VND interbank reference exchange rate down 3 percent and widened the trading band from +/- 1 percent to +/- 3 percent, effectively devaluing the Dong by 5 percent. While Vietnam still considers foreign reserve data a state secret, the SBV in recent years has been more forthcoming about the level of foreign reserves. In July 2015, the SBV Governor announced that foreign reserves reached $37 billion.

The SBV has adopted a new mechanism to determine the interbank reference exchange rate. In order to provide flexibility in responding to exchange rate volatility, the SBV now announces the interbank reference exchange rate daily. The rate is determined based on the previous day’s average interbank exchange rates, taking into account movements in the currencies of Vietnam’s major trading and investment partners.

As part of its efforts to de-dollarize the economy, the Government of Vietnam issued Decree 70 in 2014 to prohibit foreigners (residents and non-residents) from holding foreign currency denominated savings accounts. Foreigners are still allowed to have checking and investment accounts in any foreign currency and VND (previously foreigners were only allowed to have USD investment accounts).

According to the 2005 Ordinance on Foreign Exchange Control, currency transactions between residents must be conducted in VND. Exporters must remit all foreign currency earnings into a foreign currency account with an authorized credit institution in Vietnam. Retaining foreign currency earnings overseas requires SBV approval. Any resident or institution permitted to conduct offshore investment must open a foreign currency account at an authorized credit institution and register the account with the SBV.

Currency transfers are protected by Article VII of the International Monetary Fund (IMF) Articles of Agreement (http://www.imf.org/External/Pubs/FT/AA/index.htm#art7)

Remittance Policies

Vietnam allows foreign businesses to remit profits, capital contributions, and other legal investment activity revenues in hard currency. There are no time constraints on remittances and no limitations on the inflow or outflow of funds for remittances of profits or revenue. However, outward foreign currency transactions require certain supporting documents (such as import/foreign service procurement contracts and proof of tax obligation fulfillment, etc.). Foreign investors cannot remit through a legal parallel market, including utilizing convertible, negotiable instruments. There were no regulatory changes in investment remittance policies in 2015.

Vietnam is a member of the Asia-Pacific Group (APG), which assesses the implementation of anti-money laundering and counter-terrorist financing (AML/CFT) measures in Vietnam. While Vietnam is mostly technically compliant with the 2012 Financial Action Task Force’s (FATF) AML/CFT standards, and is not one of the FATF blacklisted countries, over the last year it has not demonstrated effectiveness in reducing AML/CFT.

Bureau of International Narcotics and Law Enforcement’s 2014 International Narcotics Control Strategy Report (INCSR) http://www.state.gov/j/inl/rls/nrcrpt/2014/database/index.htm.

3. Expropriation and CompensationShare    

Under the U.S.-Vietnam Bilateral Trade Agreement (BTA), Vietnam must apply international standards of treatment in any case of expropriation or nationalization of U.S. investor assets, which includes acting in a non-discriminatory manner with due process of law and with prompt, adequate and effective compensation. The U.S. Mission is monitoring four foreign investment expropriation cases without just compensation; however, expropriation of U.S. entities’ property is rare. Several foreign investors have reported that provincial or the national government pressured them to increase the pace of project development or to raise additional project capital or risk losing their investment license.

4. Dispute SettlementShare    

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts

The hierarchy of the courts in Vietnam is: (1) the Supreme People’s Court; (2) the High People’s Court; (3) Provincial People’s Courts; and (4) District People’s Courts. The People’s Courts operate in five divisions: criminal, civil, administrative, economic, and labor. The People’s Procuracy is responsible for prosecuting criminal activities as well as supervising judicial activities. The People’s Procuracy can protest a judgment or ask for a review of a case. In addition, Vietnam has a system of independent arbitration centers established under the Commercial Arbitration Ordinance of 2003 that can grant enforceable arbitral awards.

Vietnam’s legal system remains underdeveloped and ineffective in settling disputes. Negotiation between concerned parties is the most common means of dispute resolution. The Law on Arbitration does not allow a foreign investor to refer an investment dispute to a court in a foreign jurisdiction, and Vietnamese judges cannot apply foreign laws to a case before them, and foreign lawyers cannot represent plaintiffs in a court of law.

Vietnamese courts will only consider recognition of civil judgments issued by courts in countries that have entered into agreements on recognition of judgments with Vietnam or on a reciprocal basis. However, with the exception of France, these treaties only cover non-commercial judgments.

Under the 2005 Civil Code, all contracts are “civil contracts” subject to uniform rules. In foreign civil contracts, parties may choose foreign laws as a reference for their agreement, provided that the application of the law does not violate the basic principles of Vietnamese law. In addition, commercial contracts between businesses are regulated by the 2005 Commercial Law.

Bankruptcy

In 2014 Vietnam revised its Bankruptcy Law to make it easier for companies to declare bankruptcy. The new law clarifies the definition of insolvency as an enterprise that is more than 3 months overdue in meeting its payment obligations. The new law also provides provisions for when creditors can commence bankruptcy proceedings against an enterprise, and created for the first time procedures for credit institutions to file for bankruptcy. The new bankruptcy law is important as 71,400 companies suspended operations in Vietnam in 2015, up 22 percent over 2014. According to the World Bank’s 2016 Ease of Doing Business report, it takes on average five years to conclude a bankruptcy case in Vietnam, and the recovery rate is only 14 percent.

Investment Disputes

In January 2014, the Prime Minister named the Ministry of Justice (MOJ) the government’s legal representative in dealing with international investment disputes, while the Ministry of Finance (MOF) resolves disputes related to government loans, debts, and guarantees. The Vietnam International Arbitration Center (VIAC) handled 99 cases in 2013, up from 16 cases in 2003.

Under the investment chapter of the U.S.-Vietnam Bilateral Trade Agreement, U.S. investors have the right to choose a variety of third-party dispute settlement mechanisms in the event of an investment dispute with the government.

International Arbitration

The arbitration regime in Vietnam is still developing and awaits the issuance of implementation guidelines and regulations for the Arbitration Law. In 2014, the Ho Chi Minh City Economic Court recognized and enforced an arbitral award in Vietnam against an SOE, and the ruling was upheld on appeal. Although several other cases are pending, this is considered a healthy precedent.

The Law on Commercial Arbitration took effect in 2011. At present, there are no foreign arbitration centers in Vietnam, though the Arbitration Law permits foreign arbitration centers to establish branches or representative offices. Foreign and domestic arbitral awards are legally enforceable in Vietnam, although in practice it can be very difficult.

ICSID Convention and New York Convention

Vietnam has not yet acceded to the Convention on the Settlement of Investment Disputes between States and Nationals of other States (ICSID). The Ministry of Planning and Investment (MPI) has submitted a proposal to the government to join the ICSID, but this is still under consideration.

Vietnam is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, meaning that foreign arbitral awards rendered by a recognized international arbitration institution should be respected by Vietnamese courts without a review of cases’ merits. Only a limited number of foreign awards have been submitted to the Ministry of Justice (MOJ) and local courts for enforcement so far, and almost none have successfully made it through the appeals process to full enforcement.

As a signatory to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Vietnam is required to recognize and enforce foreign arbitral awards within its jurisdiction, with very few exceptions. However, in 2012, dozens of Vietnamese companies signed purchase contracts with U.S. cotton suppliers but failed to execute the contracts when world cotton prices fell. In compliance with standard contract provisions, international cotton traders referred the defaults to the International Cotton Association (ICA) for arbitration. The ICA rendered arbitration awards for the defaults valued at $76 million, but Vietnamese courts have not recognized the validity of these awards.

Duration of Dispute Resolution

The court system in Vietnam works slowly. International arbitration awards, when enforced, may take years from original judgment to payment. Between 2005 and 2014, 24 out of 52 applications for recognition and enforcement in Vietnam were dismissed.

5. Performance Requirements and Investment IncentivesShare    

WTO/TRIMS

When Vietnam joined the World Trade Organization in 2007, it established minimum commitments on market access for U.S. goods and services, as well as treatment for Vietnamese and foreign companies. Vietnam undertook commitments on goods (tariffs, quotas, and ceilings on agricultural subsidies) and services (provisions of access to foreign service providers and related conditions). It has also committed to implement agreements on intellectual property (TRIPS), customs valuation, technical barriers to trade, sanitary and phytosanitary measures, import licensing provisions, anti-dumping and countervailing measures, rules of origin.

As part of its WTO accession, Vietnam also committed to remove performance requirements that are inconsistent with the TRIMS agreement. The new Investment Law specifically prohibits the following requirements: giving priority to the purchase or use of domestic goods or services; compulsory purchase of goods or services from a specific domestic firm; export of goods or services at a fixed percentage; restricting the quantity, value or type of goods or services that may be exported or that may be sourced domestically; fixing import goods at the same quantity and value as goods exported; requirements to achieve certain local content ratios in manufacturing goods; stipulated levels or values on research and development activities; supplying goods or services in a particular location; or mandating the establishment of head offices in a particular location.

In addition, Vietnam has excluded certain products from its WTO distribution services commitments, including rice, sugar, tobacco, crude and processed oil, pharmaceuticals, explosives, news and magazines, precious metals, and gemstones.

Investment Incentives

Foreign investors are exempt from import duties on goods imported for their own use and which cannot be procured locally, including: machinery, vehicles, components and spare parts for machinery and equipment, raw materials, inputs for manufacturing, and construction materials that cannot be produced domestically. Remote and mountainous provinces are allowed to provide additional tax breaks and other incentives to prospective investors.

In addition, projects in high tech, research and development, new materials, energy, clean energy, renewable energy, energy saving products, automobile, software, waste treatment and management, primary or vocational education; or projects located in difficult areas or economic and projects in industrial zones are entitled to investment incentives such as lower corporate income tax, exemption of import tariffs, or land rental.

Vietnam has instituted policies to attract investment by its diaspora community. Vietnam recognizes dual citizenship for Vietnamese expatriates, who are allowed to choose their status as either domestic or foreign investors. A 2008 law required that Vietnamese citizens who emigrated overseas before 2009 register their intent to retain Vietnamese citizenship with the Vietnamese Embassy in their country of residence by July 1, 2014. In April 2014, the Prime Minister agreed to postpone the deadline for registration for an additional five years, until July 1, 2019. U.S. citizens of Vietnamese descent may be treated as Vietnamese nationals unless they have formally renounced their Vietnamese citizenship.

The Law on High Technology came into force in 2009 to encourage investment in areas such as informatics, biotechnology, new materials and automation, and a number of companies now receive these incentives.

Research and Development

The list of high tech products that are given investment priority is updated on an ad hoc basis, and companies investing in research and development for items on the list are entitled to the highest tax incentives and may be eligible for funding from the National High Tech Development Program. Companies that develop infrastructure for high tech parks will also receive land incentives.

Performance Requirements

On 03 February 2016, the Government issued Decree No.11/2016/ND-CP guiding a number of articles of the Labor Code on foreigners working in Vietnam (“Decree No. 11”). Decree No. 11 will take effect on April 1, 2016 and replace Decree No. 102/2013/ND-CP (“Decree No. 102”) and Resolution No. 47/NQ-CP of the Government dated 8 July 2014 (“Resolution No. 47”). The Decree proposes major changes, many of which represent positive developments from the viewpoint of the business community including changes to the conditions, paperwork, and timeline for work permit applications and exemptions. The most prominent feature of this decree is to clarify that the requirement for a work permit or an exemption certificate does not apply to foreigners coming to work for less than 30 days and whose cumulative working time does not exceed 90 days in a year.

Another encouraging point of Decree 11 is that it extends the time frame for lodging the re-issuance of work permits. Accordingly, work permit re-issuance applications will be accepted from 45 days prior to the expiry date, instead of the 15 days as per current regulations. Hence, foreigners have sufficient time to renew visas or obtain residence cards after the granting of the new work permit. The simplified terms of eligibility for work permit for individuals who have been previously granted such documents in Vietnam are also appreciated by the business community.

Data Storage

The Ministry of Information and Communications (MIC) is the lead agency for administrative enforcement of cyber-related regulations, including data storage requirements. The Ministry of Public Security’s cyber division may also get involved if there is a suspected criminal violation of data storage rules. MIC’s Decree 72/2013 on Management, Provision, and Use of Internet Services and Information Content Online, which came into effect on September 1, 2013, is the primary legal document establishing data storage requirements.

Decree 72 requires all organizations establishing “general websites,” or social networks and companies providing online gaming services or services across mobile networks to maintain at least one server inside Vietnam. It also establishes requirements on the type of data that these companies must store (personally identifiable information of users, user activity logs, etc.) but it is unclear if that information must be stored on a local server.

Circular 09/2014/TT-BTTTT “Detailing Management, Provision and Use of Information on Websites and Social Networks,” which guides implementation of Decree 72, requires Vietnamese companies that operate general websites and social networks, including blogging platforms, to locate a server system in Vietnam and to store posted information for 90 days and certain metadata for up to two years. To date, enforcement of the decree appears to be very limited, and the MIC has not released guidance on how the decree will apply to foreign cross-border service providers.

6. Protection of Property RightsShare    

Real Property

State protection of property rights is still evolving, as the state can expropriate land for socio-economic development. Under the new Housing Law and Real Estate Business Law passed by the National Assembly in November 2014, land can only be taken if it is deemed necessary for social-economic development in the public or national interest, and is approved by the Prime Minister or the National Assembly, as well as the Provincial People’s Council. However, ‘socio-economic’ development is loosely defined, and there are many outstanding legal disputes between land owners and local authorities. Disputes over land rights are a significant driver of social protest in Vietnam. Foreign investors also may be exposed to land disputes through M&A activities when they buy into a local company.

Real estate rights in Vietnam are divided into collective land ownership by the government, and land-use and building rights, which can be held privately. All land in Vietnam is collectively owned and managed by the state, and as such neither foreigners nor Vietnamese nationals can own land. The majority of land in Vietnam (94.5 percent) has been issued a land use rights certificate. Vietnam is building a national land registration database, and some localities have already digitized their land records.

In addition to land, collective property includes “forests, rivers and lakes, water supplies, wealth lying underground or coming from the sea, the continental shelf and the air, the funds and property invested by the government in enterprises and works in all branches and fields - the economy, culture, society, science, technology, external relations, national defense, security - and all other property determined by law as belonging to the State.”

The new Housing Law and Real Estate Business Law extended “land-use rights” to foreign investors, allowing title holders to conduct real estate transactions, including mortgages. Foreign investors can lease land for renewable periods of 50 years, and up to 70 years in some poor areas of the country. Certain foreigners can own apartments, durable construction, durable trees and planted forests for production purposes in Vietnam.

Some investors have encountered difficulties amending investment licenses to expand operations onto land adjoining existing facilities. Investors also note that local authorities may intend to increase requirements for land-use rights when current rights must be renewed, particularly in instances when the investment in question competes with Vietnamese companies.

Intellectual Property Rights

The legal basis for property rights includes the 2005 Civil Code, the 2005 Intellectual Property Law as amended in 2009, and implementing regulations and decrees. Vietnam has joined the Paris Convention on Industrial Property and the Berne Convention on Copyright and has worked to meet its commitments under these international treaties. In 2009, Vietnam revised the Intellectual Property (IP) Law and IP-related provisions in the Criminal Code with respect to criminal penalties for certain acts of IPR infringement or piracy. However, enforcement agencies still lack clarity in how to impose criminal penalties on IPR violators and continue to wait for further implementing guidelines.

Although Vietnam has made progress in establishing a legal framework for IPR protection, very significant problems remain and new challenges are emerging. The country remains on the Special 301 Watch List. In 2015 Vietnam had mixed results in its efforts to protect intellectual property rights (IPR). Vietnam’s continued integration with the global economic community through the conclusion of the Trans-Pacific Partnership (TPP) trade agreement negotiations and the European Union-Vietnam Free Trade Agreement negotiations were seen as harbingers of positive change. Nevertheless, infringement and piracy remained commonplace and the impact of digital piracy and increasing prevalence of counterfeit goods sold online continued to undermine the IPR environment. The increasingly sophisticated capabilities of domestic counterfeiters coupled with developing smuggling routes through Vietnam’s porous borders were also worrisome trends.

Customs officers have authority to seize and destroy counterfeit goods and can charge the counterfeiter with the expenses for these activities. Vietnam’s IPR agencies track and report seizures of counterfeit goods, although trend data may be difficult to discern due to varying data collection methods, cross-over from joint actions, and differing contributions from Vietnam's 63 provinces. Individual agencies have made efforts to improve their enforcement tracking in recent years, but coordination among them to aggregate data is very weak.

The Ministry of Science and Technology (MOST) inspectors carried out 55 inspections in 2015, 9 less than the previous year. However, the inspectors discovered almost the same number of violations (41 compared to 42 the previous year) and issued 37 fines, equaling the number of fines levied in 2014. MOST inspectors also reported destroying 17,000 articles of counterfeit clothing, labels and fashion accessories and removed the infringing aspects of 73,000 infringing goods, primarily food, cosmetics, and pharmaceutical products. In May 2015, the MOST inspectorate discovered an establishment in Hanoi producing 1,607 fake hand bags and belts of well-known brands including Dior, Hermes, and Louis Vuitton. The case was transferred to the police for further criminal investigation.

  • In 2015, the MOCST Inspectorate cooperated with the Ministry of Public Security (MPS) to carry out inspections for software licensing compliance on 89 individuals and companies throughout the country, the same inspection rate compared to 2014. The Authorities discovered 81 violations that resulted in fines of $114,500, a 40% increase over 2014. MOCST officials reported that the copyright compliance rate of inspected companies was higher than in previous years. The inspectors also carried out five inspections of individuals and companies selling art and photography and found no infringement.
  • During 2015, the Copyright Office of Vietnam (COV) handled 31 copyright-related complaints (a 24 percent increase from 2014). In addition, COV reported that it issued 5,510 copyright certificates in 2015, a 17 percent increase from the previous year.
  • In 2015, the National Office of Intellectual Property (NOIP) received 93,985 total IP applications, an increase of 20 percent in comparison to 2014.

Most often, authorities use administrative actions such as warnings and fines to enforce IPR protection because they are less demanding on enforcement time and resources. The United States and other countries have conducted training for enforcement agencies, prosecutors and judges. Some businesses and rights holders have started to assert their rights under the law more forcefully. One positive sign is the growth of Collective Management Organizations (CMO), particularly for the music and publishing industries. Vietnam’s most successful CMO, the Vietnam Center for the Protection of Musical Copyrights (VCPMC), boasts a membership of over 90 percent of Vietnam’s music composers and collected nearly $1 million in royalties on behalf of its members in 2015. However, the ability of other CMOs to protect their members IP and collect royalties on their behalf remains weak. In recent years, the government pledged and but only partially implemented a plan to rid government offices of pirated software.

Vietnamese enforcement bodies have investigated, and in some cases raided and fined, businesses suspected of using pirated software. According to statistics from the Business Software Alliance, Vietnam reduced its online piracy rate by almost 20 percent over the last decade, one of the largest reductions for any country during that time period. However, Vietnam still has one of the highest rates of online piracy in the world (over 80 percent in 2013). Rights holders continue to seek additional enforcement actions against websites containing infringing digital content. To date, however, very little enforcement action has been taken to punish or prevent digital and internet piracy.

Substantial compensation for IPR violations is only available under the civil remedies section of the IP Law. Vietnam has yet to establish specialized IP courts, and knowledge on IP issues within the judiciary remains low. Significant improvements are still needed, but legal experts are optimistic that the court system is slowly improving its ability to handle civil IP cases. Criminal offenses are prosecuted under the Criminal Code, and criminal proceedings are regulated under the Criminal Procedure Code. In practice, however, criminal prosecutions are rarely used to prosecute IPR violations.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

Resources for Rights Holders

NAME of IP Economic Officer: Heather Rogers
TITLE: Economic Officer
TELEPHONE NUMBER: (84 4) 850 5027
EMAIL ADDRESS: RogersH@state.gov

Local lawyers list: http://vietnam.usembassy.gov/list-of-attorneys---hanoi-consular-district.html
AmCham Hanoi: http://www.amchamhanoi.com/
AmCham Ho Chi Minh City: http://www.amchamvietnam.com/
U.S. ASEAN Business Council Vietnam: https://www.usasean.org/countries/vietnam

7. Transparency of the Regulatory SystemShare    

Vietnamese regulations in general have low transparency which in turn leads to different interpretation by government authorities. Legislative quality is uneven, and often requires subordinate legal documents to be effective. Vietnam has its own national accounting standards which are being improved to match international norms. Publicly listed companies adhere to the national accounting standards.

The Law on the Promulgation of Legal Normative Documents requires all legal documents and agreements to be published online for comments for 60 days, and published in the Official Gazette before implementation. The strong presence of business associations and chambers of commerce, the availability for online commentary on draft laws and regulations, and the biannual Vietnam Business Forum all open up opportunities for direct dialogue between the foreign business community and Vietnamese government officials. However, when issuing more detailed implementing guidelines, government entities regularly issue circulars without public notification or with little advance warning or opportunity for comment by affected parties, arguing that these binding decisions are not legal documents. In several cases authorities just receive comments for the first draft, and then make subsequent draft versions unavailable to the public.

8. Efficient Capital Markets and Portfolio InvestmentShare    

Challenges to raising capital domestically include Vietnam’s weak and poorly regulated financial system, low transparency, and non-compliance with internationally accepted accounting standards. While the government has acknowledged the need to strengthen both the capital and debt markets, there has been no substantial progress, leaving the banking sector as the primary capital source for Vietnamese companies.

Vietnam has two stock exchanges: the Ho Chi Minh City Stock Exchange (HOSE) and the Hanoi Stock Exchange (HNX). As of March 2016, 348 stocks were listed on the HOSE with total market capitalization of approximately $19.6 billion, and 380 companies were listed on the HNX with total market capitalization of approximately $6.8 billion. A trading floor for unlisted public companies (UPCOM) was launched at the Hanoi Securities Center in 2009. As of March 2016, 272 companies were listed on UPCOM, with total market capitalization of approximately $3.7 billion. Government bonds are traded on the HNX. UPCOM is important because equitized SOEs first list on the UPCOM (due to lower transparency requirements) before moving to an exchange.

Money and Banking System, Hostile Takeovers

The State Bank of Vietnam’s (SBV) actions in the wake of the economic downturn – injecting cash into banks, arresting bank CEOs, merging weaker banks with stronger banks, and taking over three failed banks, have resulted in a stronger banking sector that is better positioned for increased competition from the ASEAN Economic Community (AEC) formation at the end of last year.

However, Vietnam’s banking sector continues to be concentrated at the top and fragmented at the bottom. State-owned or majority state-owned banks accounted for 45 percent of total assets and 35 percent of equity capital in the banking sector as of March 2016. Vietnam’s 28 joint stock commercial banks are all smaller than the state-owned commercial banks, but are gradually gaining market share, and the government has plans to reduce the number of private banks to 15-17 by the end of 2017. In 2015, SBV took over 3 joint stock banks (Construction Bank, Ocean Bank and GP Bank) at zero cost and placed Dong A Bank under special supervision. The SBV assigned some personnel from the state-owned banks (Vietcombank, Vietinbank and BIDV) to take charge of management of the failing banks. There was no run on the banks and no systemic failure occurred.

This year, the SBV for the first time allowed a joint venture bank (VID Public Bank) to convert to a 100 percent foreign owned company. Currently, the ceiling for total foreign ownership in a Vietnamese bank remains at 30 percent, but can be raised by approval of the Prime Minister.

Despite progress, most domestic banks remain under-capitalized and have high non-performing loan (NPL) levels that continue to drag on economic growth. By law, banks must maintain a minimum chartered capital of VND3 trillion (roughly $134 million). The SBV continues to underreport the level of NPLs, and accurate data is not available. Other issues in the banking sector include state-directed lending by state-owned commercial banks, cross-ownership and related-party lending under non-commercial criteria, and preferential loans to SOEs that crowd out credit to SMEs.

9. Competition from State-Owned EnterprisesShare    

According to the 2014 Law on Enterprises, a state-owned enterprise (SOE) is an enterprise in which the state holds 100 percent of its equity, a definition that does not follow international standards and obscures the true number of SOEs in Vietnam. The TPP defines an SOE as an enterprise that is principally engaged in commercial activities in which the government directly owns more than 50 percent of the share capital.

In 2015, Central Institute for Economic Management (CIEM), a government think tank, reported there were 2,000 SOEs in Vietnam where the state retained a majority interest, and 781 SOEs where the state retained 100 percent ownership (the World Bank 2035 report estimated over 3,000 total SOEs under majority state control), employing around 1.5 million people, and accounting for 15 percent of all enterprise employees. Although the wholly state-owned enterprises accounted for just 0.2 percent of the total number of enterprises in Vietnam at the end of 2014, they accounted for 28-29 percent GDP (slightly lower than the World Bank 2035 report’s estimate of one-third of GDP) and control the majority of natural resources and land. SOEs do not operate on a level playing field with domestic companies and continue to benefit from preferential access to resources such as land, capital, and political largesse.

OECD Guidelines on Corporate Governance of SOEs

In 2015, the GVN issued Decree 81/2015/ND-CP in order to improve corporate governance and transparency. The decree requires SOEs to implement strict information disclosure procedures in accordance with listed company requirements. However, as there is no clear punishment for violations, SOEs have little incentive to follow the decree.

According to the World Bank, SOEs would benefit from a “modern corporate governance system that separates state ownership rights from regulatory functions and implements an objective and transparent mechanism for the selection of Chief Executive Officers (CEOs) and board members.” The government framework for 100 percent SOEs is fragmented and incoherent, and the management of SOEs is not in line with sound corporate governance. Part of the issue is Vietnam does not have one ministry or agency that has oversight over all SOEs. Central SOEs (those that fall under the central government) are overseen by a specific ministry. Local SOEs (those that fall under provincial authority) are controlled by the provincial government. The State Capital Investment Capital manages the state share in equitized SOEs. While SOE senior officials do not typically retain their government positions, they still retain their links to the Vietnamese government and may return to government service once they terminate their employment with the SOE.

State management of equitized SOEs falls under Section 1 of Chapter III of the 2014 Law on Enterprises. The organization and management of 100 percent state-owned enterprises must comply with Section 2 of Chapter III. In additions, ministries/provincial governments that have ownership in an SOE can have their own regulations over the SOEs under their ownership. In additions, ministries/provincial governments that have ownership in an SOE can establish their own regulations.

10. Responsible Business ConductShare    

The government issued regulations intended to protect individuals from adverse business impacts in relation to labor rights, consumer protection, and environmental protection. However the enforcement of these laws is very weak. The new Enterprise Law allows shareholders to take court action against the management of a company and can nullify fully or partly a resolution of a shareholder general meeting through a court order or an arbitration decision. Companies are required to publish their corporate social responsibility activities, corporate governance work, information of related parties and transactions, and compensation of the management. Companies must also announce extraordinary circumstances such as changes to management, dissolution or establishment of subsidiaries within 36 hours of the event.

Most multinational companies implement Corporate Social Responsibility (CSR) programs that contribute to improving the business environment in Vietnam, and awareness of CSR programs is increasing among domestic companies. However, currently only the largest Vietnamese companies have CSR programs. The Vietnam Business Forum (VCCI), which is the Vietnam Chamber of Commerce, conducts CSR training and has a web page dedicated to CSR: http://www.csr-vietnam.eu/. In 2015, the U.S. American Chamber of Commerce started a Corporate Social Responsibility Group that organizes events and activities to raise awareness of social issues, and hosts a yearly awards ceremony to honor U.S. companies who excel in CSR in Vietnam. (http://www.amchamvietnam.com/amcham-corporate-social-responsibitly-group/)

Vietnam is an observer in the Extractive Industries Transparency Initiative (EITI). In 2015, there were public debates calling for Vietnam to prepare an EITI report, but to date Vietnam has not agreed to do so. Payments made to governments for projects related to the commercial development of oil, natural gas, or minerals are not made public; only aggregate contributions to the state budget from oil and gas sector are published together.

11. Political ViolenceShare    

The only incident of violence against foreign investors in Vietnam was against China in May 2014. The GVN successfully maintained public order and worked with investors to offer mutually negotiated compensation packages.

12. CorruptionShare    

Vietnam’s 2005 Anti-Corruption Law requires government officials to declare their assets and sets strict penalties for corrupt practices. However, enforcement remains problematic. Vietnam ratified the UN Convention on Anti-Corruption in 2009, but has not signed the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

The Government has tasked various agencies to deal with corruption, including the Central Steering Committee for Anti-Corruption (led by the Prime Minister), the Government Inspectorate, and line ministries and agencies. The Central Steering Committee for Anti-Corruption was formed in 2007 and since February 2013 has been under the CPV Central Commission of Internal Affairs.

Corruption is due in large part to a low level of transparency, accountability, and media freedom, as well as low pay for government officials and inadequate systems for holding officials accountable for their actions. Competition among agencies for control over business and investments has created overlapping jurisdictions and bureaucratic procedures that in turn create opportunities for corruption. Anti-corruption efforts are localized and have a limited overall impact on corruption. In 2015, on the national level anti-corruption campaigns were focused on the banking sector, culminating in the arrest of then CEO of PetroVietnam (PVN) Nguyen Xuan Son for alleged corruption during his tenure at Ocean Bank, which was taken over by the State Bank of Vietnam last year. The PVN CEO was the only high profile arrest for corruption of a government official in 2015.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Vietnam signed the UN Anticorruption Convention in December 2003 and ratified it in August 2009.

Resources to Report Corruption

Contact at government agency or agencies are responsible for combating corruption:

NAME: Mr. Phan Dinh Trac
TITLE: Chairman
ORGANIZATION: Communist Party Central Committee Internal Affairs
ADDRESS: 6 Ba Huyen Thanh Quan, Ba Dinh District, Hanoi
TELEPHONE NUMBER: (84) 0804-3557

Contact at NGO

NAME: Ms. Dao Thi Nga
TITLE: Executive Director
ORGANIZATION: Towards Transparency
ADDRESS: 12B Floor, Machinco Building, 444 Hoang Hoa Tham, Tay Ho, Hanoi
TELEPHONE NUMBER: 84 (04) 3715-3532
EMAIL ADDRESS: DaoNga@towardstransparency.vn

13. Bilateral Investment AgreementsShare    

Bilateral Taxation Treaties

Vietnam does not have a bilateral investment treaty with the United States. Vietnam has 58 bilateral investment agreements with the following countries and territories: Algeria, Argentina, Armenia, Australia, Austria, Belarus, Belgium and Luxembourg, Bulgaria, Burma, Chile, China, Cuba, Czech Republic, Cambodia, Denmark, Egypt, Finland, France, Germany, Hungary, Iceland, India, Indonesia, Italy, Iran, Japan, Kazakhstan, Korea, Kuwait, Laos, Latvia, Lithuania, Malaysia, Mongolia, Mozambique, Netherlands, North Korea, Oman, Philippines, Poland, Qatar, Romania, Russia, Singapore, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Tajikistan, Thailand, Ukraine, United Kingdom, Uruguay, Uzbekistan, United Arab Emirates, and Venezuela.

Vietnam completed the negotiation of a Double Taxation Avoidance Agreement with the United States in 2015. The two countries are finalizing the steps for entry into force.

14. OPIC and Other Investment Insurance ProgramsShare    

The Overseas Private Investment Corporation (OPIC) has a bilateral agreement with Vietnam. Vietnam joined the Multilateral Investment Guarantee Agency (MIGA) in 1995.

15. LaborShare    

Vietnam’s labor force is large (over 54.5 million people), literate (94 percent literacy rate), inexpensive, and young (nearly 66 percent of the population is under 40).

Minimum wage varies geographically. In 2016, the minimum wage for workers in businesses ranges from VND 3.5 million ($ 157) to VND 2.4 million ($ 107) monthly. Businesses in urban districts of Hanoi, Ho Chi Minh City, and neighboring areas are subject to a higher minimum wage.

The Vietnam General Confederation of Labor (VGCL) reported 262 strikes for 11 months of 2015 compared with 278 strikes in the same period last year However, all strikes are unofficial (due to the impracticality of a legal strike under Vietnamese labor law), making data reliability questionable. Approximately 61 percent of strikes took place in foreign invested enterprises (FIEs) and the remaining 39 percent in domestic private companies. The majority of strikes (80 percent) took place in Ho Chi Minh City and surrounding provinces where most FIEs are located, particularly in the garment, footwear, and furniture sectors. The government rarely takes direct action against “illegal” strikers, but has prosecuted independent labor organizers.

Labor Code

The 2012 revised Labor Code introduced a process of mediation and arbitration for labor disputes, and stipulates that strikes can only be held if they relate to collective labor disputes about benefits. The code still requires that at least 50 percent of workers in the workplace must vote for strikes. The new labor code introduced several other revisions, including increasing maternity leave from four months to six months, restricting labor outsourcing services, and reducing the validity of foreign worker permits from three to two years.

Trade Union code

The Trade Union code was also revised in 2012. In principle employers are not obliged to establish trade unions at their workplace, but if a trade union is established the employer must provide a workspace and amenities to conduct trade union activities. In order to be legally recognized, all labor unions must register with the VGCL, a state-run organization under the Communist Party-affiliated Vietnam Fatherland Front that labor expert’s note has weak capacity at the provincial and enterprise level. Employers have to contribute two percent of their payroll to support trade union budgets regardless of whether trade unions exist at their workplace. Employees who are members of the trade union must also contribute one percent of their payroll.

ILO

Vietnam has been a member of the International Labor Organization (ILO) since 1992, and has ratified five of the core ILO labor conventions (Conventions 100 and 111 on discrimination, Conventions 138 and 182 on child labor, and Convention 29 on forced labor). Vietnam has not ratified Convention 105 dealing with forced labor as a means of political coercion and discrimination or Conventions 87 and 98 on freedom of association and collective bargaining, although the GVN is currently taking steps toward ratification. Under the 1998 Declaration on Fundamental Principles and Rights at Work, however, all ILO members, including Vietnam, have pledged to respect and promote core ILO labor standards, including those regarding association, the right to organize and collective bargaining.

16. Foreign Trade Zones/Free Ports/Trade FacilitationShare    

In recent years Vietnam has worked hard to establish free trade zones (FTZs). Vietnam currently has approximately 300 industrial zones (IZs) and export processing zones (EPZs). Many foreign investors note that it is easier to implement projects in industrial zones because they do not have to be involved in site clearance and infrastructure construction, and enterprises pay no duties when importing raw materials if the end products are exported.

Customs warehouse keepers in FTZs can provide transportation services and act as distributors for the goods deposited. Additional services relating to customs declaration, appraisal, insurance, reprocessing, or packaging require the approval of the provincial customs office. In practice the time involved for clearance and delivery can be lengthy and unpredictable.

Most import or export pending goods can be deposited in bonded warehouses under the supervision of the provincial customs office. Exceptions include goods prohibited from import or export, Vietnamese-made goods with fraudulent trademarks or labels, goods of unknown origin, and goods dangerous or harmful to the public or environment. The inbound warehouse leasing contract must be registered with the customs bond unit at least 24 hours prior to the arrival of goods at the port. Documents required are a notarized copy of authorization of the holder to receive the goods, a notarized copy of the warehouse lease contract, the bill of lading, a certificate of origin, a packing list, and customs declaration forms. Owners of the goods pay import or export tax when the goods are removed from the bonded warehouse.

17. Foreign Direct Investment and Foreign Portfolio Investment StatisticsShare    

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

 

Host Country Statistical source*

USG or international statistical source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

Economic Data

Year

Amount

Year

Amount

 

Host Country Gross Domestic Product (GDP) ($M USD)

2014

186,200

2014

186,200

www.worldbank.org/en/country

Foreign Direct Investment

Host Country Statistical source*

USG or international statistical source

USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)

2015

11,301

2014

1,473

BEA data available at http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Host country’s FDI in the United States ($M USD, stock positions)

2015

N/A

2014

126

BEA data available at http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Total inbound stock of FDI as % host GDP

2015

13%

2014

N/A

N/A

* General Statistic Office of Vietnam – Pledged FDI, not disbursed.

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data

From Top Five Sources/To Top Five Destinations (US Dollars, Billions)

Inward Direct Investment

Outward Direct Investment

Total Inward

24.1

100%

Total Outward

N/A

100%

South Korea

6.9

29.0%

     

Malaysia

2.4

10.0%

     

Japan

1.8

7.4%

     

Taiwan

1.4

6.0%

     

Samoa

1.3

5.7%

     

"0" reflects amounts rounded to +/- $ 500,000.

Source: Vietnam’s Foreign Investment Agency under the Ministry of Planning and Investment (MPI)

Table 4: Sources of Portfolio Investment

IMF Coordinated Portfolio Investment Survey data are unavailable for Vietnam.

18. Contact for More InformationShare    

NAME: Brett Rose
TITLE: Economic Officer
TELEPHONE NUMBER: (84-4) 3831-5151
EMAIL ADDRESS: InvestmentClimateVN@state.gov