Which Areas Are Incentivized For Investment in Vietnam Under Decree No. 37/2020

Investors are always interested in areas which government incentivize for investment in Vietnam, to enjoy benefits i.e. tax reduction, tax exemption, land usage…which give them some help to grow the business in areas which are not economically potential without the help from the government when setting up company in Vietnam.

According to the regulations on business investment in Vietnam in Decree No.118/2015/ND-CP, investment projects eligible for investment incentives are entitled to tax and land policies in their performance. Accordingly, for businesses that invest in industries or areas enjoying investment incentives, there will be many advantages related to tax and using land when performance business.

According to the provisions of Appendix I, Decree No.118/2015/ND-CP, the fields are preferentially invested in many fields such as science and technology, electronics, mechanics, material production, and information technology, agriculture, environmental protection, infrastructure construction, education, culture, sports, health activities of People’s Credit Funds and microfinance institutions are specified in Appendix I Decree no. 118/2015/ND-CP.

However, with the continuous development of the economy, along with the development projects of many small and medium-sized enterprises, besides start-up projects, it is more suitable to the market economy and start-up situation of many investors, on March 30th 2020, the Government has issued Decree No.37/2020/ND-CP supplementing the list of preferential investment industries which will take effect from May 15th, 2020.

According to the provisions of Decree No. 37/2020/ND-CP, for business investment activities in accordance with the Law on Support for Small and Medium Enterprises with the following business lines which will be added to the list of industries to enjoy incentives for investment in Vietnam, including business investment in the product distribution chain of small and medium-sized enterprises, business investment in incubation facilities for small and medium-sized enterprises, business investment in technical facilities supporting small and medium-sized businesses, investing in a common working area for small and medium-sized start-ups.

The investors who invest in Vietnam in the business lines above in supporting industries for small and medium-sized enterprises from May 15, 2020, will be entitled to specific tax and land incentives specifically as required by law. Domestic and foreign investors could utilize the opportunity to make investment to enjoy the incentives in Vietnam when conducting businesses.

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“The King of Emerging Markets” Mark Mobius: Few reliance on China will become a target, Vietnam emerged as a new address for the supply chain.

Companies will move their supply chains out of China after the Covid-19 crisis to minimize the impact from similar shocks that may occur in the future, and they might choose to invest in Vietnam.

According to Mark Mobius, a wave of displacement from China will erupt after the epidemic is under control. At the same time, the supply chain will be less dependent on the world’s second economy. The founder of Mobius Capital Partners also said the pandemic has caused businesses to rethink the way they should do to minimize future supply shocks.

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According to Mobius, lot of people are dependent on supply chains in China. However, they are becoming diversified into the supply chain as much as possible. Finding nearby supply chains becomes a new target. There will be some priorities for companies based in the US or regional markets like Mexico and Canada.

However, the diversification of these supply chains will move to places like Vietnam, Bangladesh, Turkey or even Brazil.

Not only Mobius, according to independent analyst Fraser Howie, Governments will seek to reduce their dependence on China, although no country can completely ignore Beijing’s role in supply chains.

Richard Martin of IMA Asia commented that although manufacturers in some industries began moving their operations out of China before Covid-19 broke out, the pandemic would trigger a second wave in which the Nationalism is used to consider supply chain restructuring.

Many industries, such as agri-pharmaceuticals and energy, have been under great pressure amid the global health crisis because of their reliance on economies such as China and logistics constraints. International pressure on the supply chain.

Booming from Wuhan, China in late 2019, Covid-19 has spread across the globe and crippled many economies, including the United States. The social distancing solution to prevent the virus from spreading is applied by a number of countries. The time of re-opening of the economies is still a big question mark when the epidemic has not been controlled yet.

Meanwhile, the price of oil in the US dropped sharply because the crisis led to a situation of supply exceeding demand, causing WTI oil futures delivered in May fell to negative level for the first time. However, low oil prices are a good sign for emerging markets like India and China, the energy importers.

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Why Da Nang is a Place for Setting up Business

Da Nang has been creating flexible policies, good environments attracting foreign investors setting up company, building factory, and developing service business.

Da Nang is a social and economic center of central area of Vietnam with the role as the center of industry, trade and tourism and service. It is a seaport city, an important transport hub for the transit of domestic and international transportation. Presently, Da Nang has been rising as a comprehensive and sustainability developing city.

With the advantages of geographical location, people and nature, the leader of Da Nang is planning to build the city becoming a major tourist center of the country, developing tourism industry with entertainment centers and luxury resorts in Vietnam.

In practice, Da Nang has been reducing administrative procedures, creating favorable conditions for investors in obtaining certificate for investment. In the meantime, the city also supports investors understanding the information and maintaining direct dialogue mode with businesses leaders and managers in order to promptly assist any difficulties encountered by investors in the process of project implementation. Da Nang’s leaders are famous in being proactive in providing the latest information about the law in investment, especially information on the process of changing investment certificate… to facilitate the investment plan of the investors whom are investing in Da Nang. For investment projects in infrastructure construction using ODA capital, the city has been quickly implemented the clearance and compensation in time to hand over the project site to the investors as planned.

To ensure the tourism environment and sustainable development, the city focuses on attracting projects in high technology industry, supporting industry and services with high added value i.e. information technology, education, healthcare and logistics…, especially favouring clean and quality projects rather than large projects but are likely to cause environmental issues.

Along with economic development, Da Nang also has activities and measures for environmental protection by investing in building projects to protect and improve the environment such as: modernization the sewer and wastewater treatment system (JICA), building east-west economic corridor (ADB)… to ensure sustainable and long term development of the economy.

An important element for economic development is the local security. Da Nang has done a great job in maintaining public security in order to guarantee investors a stable and safe political, social environment for investors.

It can be seen that Da Nang converges suitable elements and really is a promising land for investors both domestic and international, to invest in entertainment, real estate, tourism, IT, healthcare, education services.

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How To Set-up Trading Company in Vietnam

Investment in setting up trading company in Vietnam is considered as investment in conditional investment areas

Once an underdeveloped country, in the last two decades Vietnam has shown an incredible growth in the world economic scene, especially in the criteria of investment attraction. For a foreign company that is interested in expanding the business in a new country or region, Vietnam is a promising destination. In order to start a company or specifically a trading company in Vietnam, foreign investor should comprehensively understand the formality and function of the legal entity to be formed according to Vietnam Law. The consultancy and guidance of skilled and qualified lawyers in Vietnam law firm throughout the process shall mostly be needed.

The legal basis for a foreign company to set up a company in Vietnam is stated in the Enterprise Law of Vietnam: foreign organizations and individuals will be entitled to establish and manage enterprises in Vietnam in accordance with this law, with some exceptions. Foreign investors may invest in the form of 100% foreign- owned capital to establish limited liability companies, joint-stock companies, partnerships or private enterprises under the provisions of the Enterprise Law and relevant laws.

The foreign investor shall mostly needs to fulfill the investment registration procedures at provincial-level state agencies in charge of investment in order to be granted the investment certificates, in accordance with Vietnam law in investment. The dossier required for the investment registration shall comprise of an examination dossier, papers showing the capability to satisfy the conditions which the project is required by law to satisfy, for investment projects in conditional investment domains i.e. specific goods to be traded at HS code level, experience in trading area, how the trading procedures would be carried out, potential business in Vietnam.

In particular, for investment capital, it should be noted that, trading company needs to commit larger investment in terms of capital, since its function is to identify competitive suppliers, negotiate and purchase their products and sell them through a distribution network in Vietnam. In the meantime, the investor needs to have experience in trading to run the business smoothly and efficiently. The investor should explain why the company would contribute to the development in Vietnam when applying for investment license at Department of Planning and Investment, and Ministry of Trade and Commerce.

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How to Set-up Travel Services Business in Vietnam

Foreign investor could only set-up joint venture with Vietnam travel agency to set-up travel services business in Vietnam because transport of passenger belongs to investment areas with conditions applied to foreign investor inVietnam.

No one could deny that information technology has tremendously changed the way travel services business operates. The use of booking reservation system application on smartphone and internet are widespread that make travel has never been easier. Foreign investor would be interested to explore the travel services market. However, 100% foreign owned company is not allowed to set-up in travel services business in Vietnam. As this investment area is conditional, it is advised that a law firm in Vietnam should be consulted to ensure compliance with local regulations.

The application process and documents requirements are briefly as following:

I. Required documents:

-Application for the International Travel Business License (form);

-Certificate of business registration (copy – certified)

-Business plan for the international travel agency;

-Tour schedule

-Proof of at least 4 years of experience in international travel business operations

-Certified copies of the tourist guides’ cards whereby at least 3 international tourist -guides are required

-Confirmation of bank deposit (as per regulations);

Proof of office premises or legally registered place of business

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II. Business License Application Procedure

-Submission of the required documents to the correct authority (Department of Culture, Sports and Tourism of the province/city where the business is headquartered).

-The Department of Tourism of the province/city completes the records of appraisal and submits a written request with the agency’s records to the Minstry of Culture, Sports and Tourism in Vietnam within ten working days from the date of receipt of a valid application. When cases are not eligible for the proposed permit to the state agencies, the provincial tourism department shall cite the specific reasons for refusal.

-The state management agency of tourism (VNAT – Ministry of Culture, Sports and Tourism) is responsible for reviewing and licensing the international travel business within ten working days from the date of both receipt of the file and written request of the state agency of tourism in the province. In case of refusal, the ministry shall state the specific reasons to the state and provincial tourism authorities

III. Number of records

– Submission to the Department of Culture, Sports and Tourism: 01

– Tourism Authority Filed in: 01

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Con Vanh – Con Thu Urban and Tourist Area: An Important Highlight in Thai Binh Economic Zone

At the Conference of Thai Binh Provincial Party Committee discussing on the Con Vanh – Con Thu urban – tourist area and Ba Lat port planning taking place on April 2020, Secretary of the Provincial Party Committee Thai Binh emphasized: Con Vanh – Con Thu urban and tourist area is one of two important points of the modern urban towards the sea and high-class resort services in Thai Binh economic zone, towards attracting foreign investors to come and set up company in Thai Binh.

According to the planning plan, Con Vanh – Con Thu urban and tourist area includes 5 main functional areas: 36-hole golf course, casino and 5-star resort hotel, eco-spiritual tourist area, amusement park, and eco-tourism urban area. The planning of Ba Lat port includes a system of works with a unified whole: docking port and water area before the wharf, the system of yards and warehouses, auxiliary works, the system of isolated green trees… When completing construction investment, Ba Lat port will be one of the focal ports of the region, meeting the demand of import and export of goods for Thai Binh Economic Zone and surrounding areas.

Through discussions, the delegates all agreed that the planning of Con Vanh – Con Thu urban and tourist area and Ba Lat port planning was modern, practical and guaranteed high feasibility, consistent with General planning of Thai Binh economic zone, obeying natural laws.

Con Vanh – Con Thu urban and tourist area is one of the two important points of the modern urban towards the sea and high-class resort services in Thai Binh economic zone. This is a green urban and tourist area, combining urban with natural environment landscape, mangrove forest, casuarina forest, construction items and non-works will create a highlight and impress visitors. If it is invested appropriately, this place is not only an attractive resort destination for the whole northern coastal area but also for the whole country.

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Investor State Dispute Settlement between Foreign Investor and Host State under CPTPP Agreement and EVIPA Agreement

New-generation FTAs not only limit the field of goods and services but also expand regulation of scope of invesment. The majority of these FTAs include liberalization principles of investment and protection of investor through regulation on dispute settlement mechanism between investor and state (ISDS). The two agreements that have recently been paid attention to are the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with Chapter 9 of Investment taking effect from January 14th, 2019 in Vietnam and EU – Vietnam Investment Protection Agreement (EVIPA) (from EU-Vietnam Free Trade Agreement – EVFTA) whose all member states are going to ratify before taking effect.

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Firstly, in regard to transparency rule of the dispute settlement, both of CPTPP and EVIPA have provision improving the transparency of the proceedings. Accordingly, all documents (submitted by parties, decision of arbitral tribunal) except for protected information shall be made available to the public. Hearings shall be conducted open to the public for relevant parties to attend. EVIPA has applied the UNCITRAL Transparency Rules while CPTPP does not apply this Rules but only some regulation specified in Article 9.24 (Article 9.24 of CPTPP and Article 3.46 of EVIPA).

Secondly, EVIPA has established a permanent tribunal being different with the ad-hoc tribunal in CPTPP. In EVIPA, investment tribunal system includes two tribunals: Tribunal and Appeal Tribunal. This is the first time there is permanent tribunal in a Investment Protection Agreement of Vietnam.

Thirdly, award of tribunal. In EVIPA, final award shall be obeyed by the parties without appeal, review, set aside, annulment or any other remedy. Vietnam is extended for a period of 5 years following the date of entry into force of this Agreement, or a longer period determined by the Committee. In that time, if Vietnam is the respondent, recognition and enforcement of a final award shall be conducted pursuant to the New York Convention of 1958 (Article 3.57). When 5-year period is expired, recognition and enforcement shall be conducted pursuant to ICSID Convention (without domestic procedures of recognition and enforcement). Diplomatic protection shall not be applied unless one party has failed to abide by and comply with the award (Article 3.58). Meanwhile, according to Article 9.29, CPTPP still allow revision or annulment of award. CPTPP has more enforcement mechanism than EVIPA, including ICSID Convention (without domestic procedures of recognition and enforcement), the New York Convention or the Inter-American Convention (with domestic procedures of recognition and enforcement).

Finally, both EVIPA and CPTPP improve the independence, impartiality and quality of arbitrators or members of the tribunal while issuing a code of conduct them. In EVIPA, this code of conduct is specified in Annex 11, while in CPTPP, this code is not specified but shall be provided later by contracting parties on the basis of Code of Conduct for Dispute Settlement Proceedings under Chapter 28 (Dispute Settlement) (Paragraph 6, Article 9.22 of CPTPP).

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Socio-economic development goals of Vietnam in the period of 2021-2025

On April 14, 2020, the Prime Minister issued Directive 18/2020/CT-TTg on Vietnam’s socio-economic development plan for the period of 2021-2025. The Directive summarizes the results achieved during period of 2016-2020 and sets development goals for the period of 2021-2025.

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The Directive identifies the results achieved in the period of 2016-2020, along with focusing on analyzing the quality of economic growth, implementing restructuring of each industry, each field and development competitiveness of each region.

In addition, the goal in the period of 2021-2025 is to improve labor productivity, competitiveness, improve business environment, support and develop businesses, create new business environment applying information technology, increase production capacity. Accordingly, set a common goal of achieving the country’s average economic growth rate from 5 years from 2021 to 2025 by about 7%, but agencies and localities depending on the actual situation to make their appropriate growth. In addition, the Directive also clearly stipulates the target of average GDP in this period is 3,200-3,500 USD/person, in which the proportion of industry and services in GDP by the end of the period reaches 85%, the rate of trained labour reaches 65-70%.

Regarding the direction of social development, the Directive plans to complete a number of projects such as the project “Strengthening the capacity of arbitration in resolving trade and investment disputes in service of international integration”, Project “Promoting cashless payment for the period 2016-2020”, Project on “Developing Vietnam’s environmental industry to 2025”, “Project on domestic coordination mechanisms to solve problems environment in Free Trade Agreements (FTA)”.

In addition, the Directive also sets out the goal of promoting the construction of synchronous infrastructure such as transportation, seaports, energy, information and communication technology, urban areas, agriculture, etc. develop urban areas in line with the trend of smart, green, environmentally friendly urban centers, adapting to climate change, focusing on improving urban quality.

With the goals achieved in the period of 2016-2020 and the goals were set in the period of 2021-2025, Vietnam hopes to achieve the socio-economic benefits set out in order to further develop the country, bringing development life to all aspects and bringing Vietnam to compete with other countries in the world.

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Promote Vietnam-Canada investment under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

Within the framework of CPTPP, Vietnam and Canada organized a “Business in Vietnam” Workshop organized by the City of Toronto and the Canada-Vietnam Trade Council in Toronto, Canada to promote investors to invest in Vietnam and set up company and factory.

Through the workshop, the participants discussed the topics “Looking back on a year of implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and opportunities in Vietnam” and “sharing business experience in Vietnam”. The parties assessed the investment opportunities in the field of aviation, information technology, telecommunications, agricultural products and services in Vietnam by Canadian investors.

The Export Development Canada Agency (EDC) representative affirmed that with the favorable demographics and the growing in middle class, the Vietnam economy brings many opportunities for Canadian businesses. Besides, before entering the market in Vietnam, enterprises should prepare to invest time and resources to build sustainable relationships in the local and recommend that Canadian exporters should choose a local representative to import/distribute their products.

The agencies like EDC and TCS (trade support agencies, under the Department of Global Affairs, which has than 1,000 Canadian trade experts) could play an important role in assisting businesses with go to the new market during the term of business. In 2019, Vietnam continues to be Canada’s largest trading partner in Southeast Asia, with two-way trade turnover estimated at CAD 7.8 billion (USD 5.98 billion).

Participants mentioned the potential of cooperation between Vietnam and Canada in the field of finance, in the context of the value of financial services import into Vietnam reaching 523 million USD in 2018. Vietnam’s investment in transport infrastructure – an area where Canada has many strengths – is expected to increase to USD 11 billion by 2020 and USD 17 billion by 2025. This is considered to be “expected land” that businesses of the two countries should promote exploitation.

Representative of Canada-Vietnam Trade Council opined that this seminar attracted the attention from the Canadian Government, the provincial Government of Ontario and especially Canadian businesses because they received many opportunities in Vietnam, a country with a stable economy and strong growth. As part of a cooperation agreement between Toronto and Ho Chi Minh City, the Canada-Vietnam Trade Council in collaboration with the Toronto city is planning a business trip to explore the market of Ho Chi Minh City to facilitate connecting Toronto businesses to access Vietnam market, set up company in Vietnam.

The participants expressed their desire to further promote investment opportunities from both countries. Thereby, it is hoped that in 2020, there will be more Canadian investors investing in Vietnam, which will help the parties improve the effectiveness of long-term cooperation in the future.

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What Procedures an Enterprise Complies on Publishing Business Information?

Provisions on announcing of business information are stipulated in the Law on Enterprise and other decrees which company has to comply as part of compliance procedures.

After being granted an enterprise registration certificate, under the Enterprise Law, an enterprise must publicly announce it on the National Business Registration Portal according to the order, procedures and pay fees as required. The application for publication of enterprise registration information is a compulsory procedure, made at the time an enterprise submits its enterprise registration dossier. Information about publication of enterprise registration information is posted on the National Business Registration Portal. The content to be published includes the contents on the enterprise registration certificate and the lines of business. In addition, for joint stock companies with foreign investors, a list of founding shareholders and foreign investors is required. In case of changes in enterprise registration contents, the corresponding changes must be publicly announced on the National Business Registration Portal.

Provisions on form, time and content of announcement are different from those in the Law on Enterprise, specifically, within a period of thirty days from the date of being granted an enterprise registration certificate, an enterprise must publish information in one of the forms posted on the business information network of the business registration agency or one of the written or electronic newspapers in three consecutive issues. The main content to be published includes: Company’s name; Address of the head office of the enterprise, branch or representative office; Lines of business; Charter capital of limited liability company and partnership company; number of shares and value of contributed capital and number of shares to be issued with joint stock company; initial investment capital for private enterprises; legal capital for enterprises conducting lines of business requiring legal capital; Full name, address, nationality, ID card number, passport or other legal personal identification number, establishment decision number or business registration code of the owner, member or shareholder foundation; Full name, permanent address, nationality, ID card number, passport number or other legal personal identification of the legal representative of the enterprise; Place of business registration.

For publication fees, according to the provisions of Circular no. 47/2019/TT-BTC stipulating the rates, collection, payment, management and use of information provision charges of enterprise information that takes effect from the date of On September 20, 2019, the enterprise registration fee and the enterprise registration content announcement fee are VND 100,000/time, instead of the VND 300,000/time as stipulated in Circular no. 215/2016/TT-BTC regulating the rates, collection, remittance, management and use of charges for provision of enterprise information and enterprise registration fees.

In addition, there are some enterprises that do not need to publish their business information on the National Business Registration Portal before going into operation, but make other forms of announcement. For example, for a law-practicing organization, within thirty days after being granted operation registration papers, law-practicing organizations must publish on daily newspapers of central or local registry of law practice or newspaper for three consecutive issues. For credit institutions, foreign bank branches, representative offices of foreign credit institutions and other foreign institutions engaged in banking activities, they must be published on the State Bank’s media, and in a daily newspaper written in 03 consecutive issues or an electronic newspaper of Vietnam at least thirty days prior to the scheduled date of operation of opening information as prescribed in Article 25 of the Law on Credit Institutions 2010.

In addition to disclosing corporate information, there is also a procedure for disclosure of information on the stock market that is applicable to public companies and bond issuers (except for government bond issuers and bonds), government-guaranteed bonds and local government bonds), securities companies, fund management companies, branches of foreign fund management companies in Vietnam, public funds. These companies and organizations must comply with the law on securities in the Securities Law announcing on the company’s website and information disclosure system of the State Securities Commission.

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How Business Information Could Be Searched in Vietnam?

Provisions on announcing of business information are stipulated in various laws and degrees in Vietnam, allowing the interested party to be searching for business purpose for information in regard to investment registration certificate number, business registration certificate number and others information.

In particular, after the enterprise being granted an enterprise registration certificate, it shall carry out procedures to publish it on a portal as per procedures and pay the related fees for administration. The application for publication of enterprise registration information is a compulsory procedure, made at the time an enterprise submits its enterprise registration dossier. The content to be published includes the contents on the enterprise registration certificate and the lines of business. In addition, joint stock companies with foreign investors will need to provide information including founding. In case of changes in enterprise registration contents, the corresponding changes must be publicly announced.

Also, an enterprise must publish information in one of the forms posted on the business information network of the business registration agency or one of the written or electronic newspapers in three consecutive issues. The main content to be published includes: Company’s name; Address of the head office of the enterprise, branch or representative office; Lines of business; Charter capital of limited liability company and partnership company; number of shares and value of contributed capital and number of shares to be issued with joint stock company; initial investment capital for private enterprises; legal capital for enterprises conducting lines of business requiring legal capital; Full name, address, nationality, ID card number, passport or other legal personal identification number, establishment decision number or business registration code of the owner, member or shareholder foundation; Full name, permanent address, nationality, ID card number, passport number or other legal personal identification of the legal representative of the enterprise; Place of business registration.

For publication fees, the enterprise registration fee and the enterprise registration content announcement fee are VND 100,000/time.

There are some enterprises that do not need to publish their business information on the portal before going into operation, but make other forms of announcing i.e. on newspaper or other media. For instance, law-practicing organizations must publish on daily newspapers of central or local registry of law practice or newspaper for three consecutive issues. For credit institutions, foreign bank branches, representative offices of foreign credit institutions and other foreign institutions engaged in banking activities, they must be published on the State Bank’s media and in a daily newspaper written in 03 consecutive issues or an electronic newspaper of Vietnam at least thirty days prior to the scheduled date of operation of opening information.

In addition to disclosing corporate information, there is also a procedure for disclosure of information on the stock market that is applicable to public companies and bond issuers (except for government bond issuers and bonds), government-guaranteed bonds and local government bonds), securities companies, fund management companies, branches of foreign fund management companies in Vietnam, public funds complying with law on securities detailing information disclosure, announcing on the company’s website and information disclosure system of the Securities Commission.

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Can Employer Terminate the Labor Contract with Employee Due To Covid 19 Outbreak?

Due to intricate occurrence of Covid 19, many enterprises are forced themselves to reduce the number of employees for maintaining the operation financially. Specifically, the employer has to make difficult decision to terminate the labor contract with the employee. The termination of the labour contract has to be considered carefully because of potential legal risks brought up which dispute lawyers in labour should be consulted before execution. Within this post, we are not trying to resolve all cases but only aiming to brief some matters of concern for preparation.

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The employer could refer to the regulation in the Labor Code which allows “an employer may unilaterally terminate a labor contract if as a result of natural disaster, fire or another force majeure event as prescribed by law, the employer, though having applied every remedial measure, has to scale down production and cut jobs. Force majeure in this case is understood as (i) Enemy-inflicates destruction, epidemics (ii) Relocation or narrowing of the production and business sites, at the request of competent State agencies.

In particular, after applying corrective measures, over the time, considering enterprise’s financial potential is insufficient as well as the business production is reduced significantly due to epidemic, the employer may consider unilaterally terminate labor contract with employee. However, employer still have to abide by or ensure the rights to employee regarding the interests which employee is entitle to receive when being unilaterally terminated labor contract includes salary, severance allowance, social insurance, payment for untaken leave days, the tax payment which employer must paid for employee. Besides, employer also is subject to pay a compensation if consented by both sides are employer and employee.

Firstly, employer is obliged to pay salary to employee timely and fully as in the agreed labor contract by both parties;

Secondly, employer is responsible for paying the severance allowance to employee whom has worked regularly for full 12 months or longer at the rate of half of a month’s wage for each working year.

Thirdly, social insurance, employer is responsible for the fulfill payment of social insurance and perform the closing insurance book for employee after terminate the labor contract according to the law of social insurance.

Fourthly, if the income of employee subject to personal income tax, employer must extract from the income of employee to submit the tax to tax agency according to law on personal income tax.

If the client needs any other information or requires for further advice, our lawyers at ANT Lawyers in Vietnam will be available for service.

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What are common investment methods in Vietnam?

In Vietnam laws, there are a number of investment methods such as establishing economic organizations; investment in the form of capital contribution, purchase of shares or capital contributions in business organizations; Business Cooperation Contract or Public Private Partnership. Investment in establishing economic organizations, capital contribution, purchase of share or capital contributions are most common in our opinion.

Investment in establishing economic organizations

For investment in the establishment of economic organization, an investor invests capital to carry out the establishment of an enterprise, cooperative, cooperative union or other organization to carry out business investment activities. This is a way of direct investment in which investors directly invest capital and directly participate in management activities.

Forms of establishment of economic organizations include two types: Establishing company with 100% foreign capital; or establishing joint ventures between domestic investors or the Government of Vietnam with foreign investors.

Before establishing an economic organization, the foreign investor must have an investment project and carry out the procedures for the grant of an investment registration certificate. Besides, the conditions for the charter capital ownership and the conditions prescribed by international treaties to which Vietnam is a member need to be met. Regarding charter capital, foreign investors are allowed to hold unlimited ownership in economic organizations, except for cases where the investors operate in fields related to listed companies, public companies, securities trading organizations and securities investment funds in accordance with the law on securities; State owned enterprises equitized or transformed under other forms. In addition, investors must check international treaties to which Vietnam is a signatory.

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It should be noted that depending on the amount of investment capital of a foreign investor, the legal status of an economic organization after its establishment will be determined differently. If the foreign investor holds 51% or more of charter capital, the economic organization after its establishment will have to carry out the procedures applicable to foreign investors. Conversely, if foreign investors hold less than 51% of the charter capital, the regulations applicable to economic organizations after their establishment are applied as domestic investors.

Investment in the form of capital contribution, purchase of shares or capital contributions in business organizations

Foreign investors who wish to access the Vietnamese market but do not want to establish an economic organization can contribute capital, buy shares or buy capital contributions to business organizations operating in Vietnam.

With this form, the investor will become a member or shareholder of that economic organization. It requires investors to meet a conditions similar to the form of establishment of economic organizations. Having said that, it must meet the conditions for the charter capital ownership and the conditions prescribed by international treaties to which Vietnam is a member. Depending on each specific case, the investor must follow the procedures for registration of capital contribution, purchase of shares or capital contribution in an economic organization and send to the competent agency for recognition of legal investment.

Understanding the regulations are important for investors to enter the Vietnam market and consulting with Vietnam lawyers would help investors make informed decision for their business plan in Vietnam.

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How to Resolve Disputes in Employment in Vietnam?

A labor dispute is a dispute over rights, obligations and interests arising between parties in employment relationship. Labor disputes include individual labor disputes between employees and employers, and collective labor disputes between labor collectives and employers. When a labor dispute occurs, the competent agency, organization or individual will settle it on the basis of the measures and principles of labor dispute settlement prescribed in Chapter XIV of the Labor Code 2012.

Measures for resolving labor disputes include: negotiation, grassroots conciliation, settlement of individuals and organizations competent to settle labor disputes.

For individual labor dispute resolution, labor conciliator, People’s Court is an individual or organization competent to resolve disputes. Labor conciliator; Chairman of the district People’s Committee; The People’s Court is competent to resolve collective labor disputes over labor rights and conciliators; The Labor Arbitration Council is competent to settle collective labor disputes about benefits.

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Negotiation is a method of resolving a dispute in which the parties to a dispute deal directly with each other in order to reach an agreement on the settlement of the dispute. In fact, this is the most widely used solution. During the negotiation process, the parties will discuss issues related to the dispute, and propose solutions to resolve that dispute. The decision is made on the basis of agreement between the parties themselves and is not the result of any external pressure.

Unlike negotiation, conciliation is a method of resolving disputes involving third parties but not third parties make decisions but only support and guide the parties to negotiate. Under the provisions of Clause 1, Article 201 of the Labor Code 2012, individual labor disputes must go through the conciliation procedure of a labor conciliator before requesting a court to settle them, except for labor disputes on disciplinary measures in the form of dismissal or disputes over the unilateral termination of the labor contract; compensation for damages, benefits when terminating a labor contract; between domestic servants and employers; on social insurance in accordance with the law on social insurance, on health insurance in accordance with the law on health insurance; on compensation for damages between laborers and enterprises and non-business units that send laborers to work abroad under contracts. If the two parties reach an agreement, the labor conciliator shall make a record of successful conciliation. On the contrary, the two parties cannot reach an agreement, and the labor conciliator issues a conciliation plan for the two parties to consider and if the two parties accept the conciliation plan, the labor conciliator shall make a record of successful conciliation. In case the two parties do not accept the conciliation plan or a disputing party has been duly summoned for the second time but still absent without plausible reasons, the labor conciliator shall make a record of unsuccessful conciliation.

Dispute resolution by the Chairman of the district People’s Committee is the method to be applied when there is a request for resolving a collective labor dispute on rights. Chairpersons of district-level People’s Committees shall base themselves on labor laws, collective labor agreements, registered labor rules and legal regulations and agreements to consider and settle labor disputes. dynamic.

The Labor Arbitration Council is the competent authority to settle collective labor disputes about benefits. At the meeting of the Labor Arbitration Council, there must be representatives of both parties to the dispute. The Labor Arbitration Council has the responsibility to assist the parties in self-negotiation. In case the two parties reach an agreement or accept the mediation plan, the Labor Arbitration Council shall make a record of successful mediation and issue a decision recognizing the agreement of the parties. In case the two parties fail to reach an agreement or one of the disputing parties has been duly summoned for the second time but still absent without plausible reasons, the Labor Arbitration Council shall make a record of unsuccessful mediation and after within 03 days, the labor collective has the right to carry out the procedures to go on strike.

Trial is a mode of resolving individual labor disputes and collective labor disputes over rights, in which the Court will issue a judgment or decision to resolve the case. The settlement of labor disputes in court is generally the final settlement activity after the dispute has been settled at other stages with no results. The settlement of labor disputes at the Court is done by a judicial body with special state power, proceeding according to the strict procedures and procedures prescribed in the Civil Procedure Code 2015. The greatest advantage of this method of dispute resolution is that the court’s decisions on labor disputes are guaranteed to be enforced by state coercive measures.

Employees as well as the labor collective and employers should pay attention to selecting the most appropriate and optimal resolution solution when labor disputes occur. It is also suggested to consult with labour lawyers of law firm speacializing in employment matters for efficiency.

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Issuing Investment Certificate for Foreign Investors

Foreign investors whom wish to carry out business in Vietnam need to have investment project proposal prepared for submission to State Authority in Vietnam. Investment projects of foreign investors and projects of economic organizations with 51% or more foreign owned capital (except for cases of capital contribution, purchase of shares or capital contributions of economic organizations) need to follow procedures for issuing Investment Registration Certificate (IRC).

Investment registration certificate records information of an investor’s registration of an investment project. In Vietnam, the agency which has competent to grant, adjust and revoke investment registration certificates is the Department of Planning and Investment or the Management Board of Industrial Parks, Export Processing Zones, High-Tech Zone and Economic Zone depending on the specific project details. The time limit for issuing investment registration certificates for each project is usually 15 days from the date of receipt of a complete application dossier submitted by the investors.

When the investors need to change the scope, purpose of an investment registration certificate, he must carry out the procedures for adjusting the investment registration certificate corresponding to the changed content. Within 10 days, this procedure will have results based on the records that investors submit to the competent authorities.

The existence of an investment project permitted by the State for an investment project in an economic zone shall not exceed 70 years; investment projects outside economic zones shall not exceeding 50 years; investment projects implemented in geographical areas with difficult socio-economic conditions, areas with exceptionally difficult socio-economic conditions or projects with large investment capital but with slow capital recovery, the term can be granted longer but not more than 70 years.

In some cases, to ensure the project implementation in Vietnam, the State issues regulations that require obligations of investor. During the operation of a project, for projects that are allocated or leased land, permitted to change the purpose of land use by the State, investors must make a deposit from 1% to 3% of the project investment capital to ensure project implementation based on the scale, property and implementation schedule of each specific project. This deposit is returned to the investor according to the progress of the investment project, unless otherwise refunded. In addition, investors are responsible for ensuring the quality of machinery, equipment, technology lines to execute investment projects in accordance with law by themselves.

In case of subjective or objective reasons, the investor is entitled to transfer the investment project, delay the investment schedule, suspend the operation of the investment project, or terminate the investment project’s operation.

It is always challenging to navigate the Vietnam regulations, especially with real estate, energy, infrastructure, manufacturing projects involving the use of land, with large scale of investment involving the authorities at provincial levels and therefore at ANT Lawyers our lawyers and consultants would assist the clients from the early stages to work with state government agencies, landlords being industrial parks, industrial processing zone to work out the land lease contract, project appraisal process, and setting up company corresponding to the needs of the investors, and finally assist the investors in obtaining Investment Certificate.

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What Activities Being Allowed Under Social Isolation in Vietnam in Directive No. 16?

On Mar 31st, 2020, the Vietnam Prime Minister has issued a directive on social isolation to implement some urgent measures to prevent and control Covid-19 epidemic. There have not such incidents in the past therefore it is unclear on enforcement in legal implementation. In our opinions, this directive is more about suggested voluntary actions of each individual.

In summary, according to the directive, social isolation is applied throughout Vietnam from Apr 1st to Apr 15th, 2020. It is not prohibited to go out of the house but it is suggested only people with real needs should go out i.e. to buy food, gas, medicine and other emergencies. Government officer will be working from home. Private enterprises are also suggested to let people to work from home. There are business places allowed to be opened for providing essential products, and services. If the manufacturing sites and offices need to be opened to continue its production or business activities, they have to follow safety instructions i.e. not gathering more than two people, keep the distance of minimum 2m, always wear masks, clean hands frequently, disinfect the work place.

From legal aspects, there will be many unforeseen negative issues and subsequent legal consequences in disputes in labour relations, disputes in contract performance, disputes in business transactions, disputes between individuals and government authorities… arisen due to conflicts resulted from the social isolation. It is suggested that parties refer to the contracts, regulations and prepare for proper actions. In this case, disputed parties consider to negotiate to achieve common grounds with each others. If negotiation fails, disputes lawyers could be referred to for prior consultations and further steps.

To learn more about the directive of the Vietnam Prime Minister, please refer to our translated version below by associates of ANT Lawyers.

DIRECTIVE on the implementation of urgent measures to prevent and control Covid-19 epidemic

The Covid-19 epidemic broke out globally, affecting over 72,000 people, nearly 3.5 million people died in over 200 countries and territories and there was no sign of stopping. In Vietnam, the number of cases is increasing rapidly day by day and there is a high risk of infection in the community. It is predicted that the disease will spread rapidly on a large scale, seriously threatening human life, human health and socio-economic of the country.

In carrying out the call of the General Secretary, President Nguyen Phu Trong, with the spirit of putting great importance to the health and life of the people above all, to continue to proactively prevent and control epidemics, Prime Minister The Government requested ministries, ministerial-level agencies, government-attached agencies and People’s Committees of provinces and centrally-run cities to concentrate on implementing the proposed epidemic prevention measures, especially Directive No. 15/CT-TTg March 27, 2020, in compliance with the instructions of the National Steering Committee for Covid-19 prevention and control, effective implementation of the following urgent measures:

1.To perform social isolation within 15 days from 0:00 on April 1st, 2020 on a national scale according to the principle that the family is isolated from the family, the village is isolated from the village, the commune is isolated from the commune, the district is isolated from the district, the province is isolated from the province, workshops, manufacturing plants must ensure a safe distance, wear masks, disinfect according to regulations. Request people to stay at home, only to go out in case of necessity such as buying food, medicine, emergency, working at factories, production establishments, service-providing establishments and essential goods without being shut down and other emergency cases; strictly observe the minimum distance of 2m when communicating; do not concentrate more than 2 people outside the workplace, school, hospital and in public places.

The Prime Minister asked the entire population to voluntarily abide by the requirements, measures to prevent and control epidemics, actively participate in voluntary medical declaration, to fully implement measures to protect themselves and their families and participate responsibly with the prevention and control activities of functional agencies and the community; the heads of enterprises, production establishments, and goods and service business establishments are responsible for applying epidemic prevention and control measures at their establishments, ensuring the health and safety for employee.

2.The Ministry of Health, the Ministry of Public Security, the People’s Committee of Hanoi City and the People’s Committee of Ho Chi Minh City must be speedy, determined, mustering all resources and all measures to thoroughly handle “outbreak”at Bach Mai Hospital (Hanoi), Buddha Bar (Ho Chi Minh City); enlist every hour and every minute to trace and apply appropriate measures to all cases of risk, contact with patients and passers “outbreak”; continue to urge people to go back and forth through these “outbreaks” of medical reports and contact requests for testing. Request the Ministry of Public Security to coordinate with the health sector to make a list of people involved in the activities of Truong Sinh Company at risk of infection to monitor health, supervise, quarantine and promptly handle thoroughly source of the disease.

Relevant People’s Committees of provinces and cities closely coordinate with Ministries and 2 Cities to perform this task well. Carry out family isolation, medical declaration for classification, testing and concentrated isolation if necessary for those who have been to and from Bach Mai Hospital since March 12th, 2020; assign grassroots administrations to organize close supervision at each family.

The Ministry of Public Security and the provincial People’s Committee continue to urgently carry out medical review and examination, update the health status of people who have entered from March 8th, 2020 but have not applied isolation; make a list of people who have direct contact and close contact to classify screening, apply appropriate isolation measures (concentrated isolation, at home, accommodation establishments).

3.State agencies and units shall arrange for officials, public servants and public employee to use information technology working at home; only those cases that are really necessary such as combat duty, duty of the agency, supply of essential goods and services, processing confidential documents and other necessary tasks are required to work at the office; strengthen online meeting organization. The head of the organization is responsible for the infection of officials and employees because of not strictly observing the regulations on prevention and control of epidemics at the workplace.

4.The Ministry of Transport and People’s Committees of provinces and cities shall direct basically stop public passenger transport activities. Minimize the movement from one locality to another; stop moving from epidemic areas to other localities, except for special cases due to official duties and cases of provision of food, foodstuffs, necessities, shuttle buses for workers and experts of businesses, transporting production materials.

5.To assign the Ministry of Health:

a) Direct hospitals to implement strict procedures and management to avoid cross-contamination in hospitals; strictly control, require mandatory medical declaration for patients, family members, caregivers; only one carer per patient; stop visiting patients at health facilities. There are strict rules on admitting patients, not allowing an infected individual to affect the operation of the entire hospital.

b) Propose specific mechanisms and policies to support domestic enterprises in manufacturing medical equipment and instruments, especially ventilators, patient monitors, infusion machines, dialysis machines, reporting Deputy Prime Minister Trinh Dinh Dung directed.

c) Report to the Prime Minister the options, scenarios and emergency response in case of epidemic emergencies in the afternoon of March 31st, 2020.

d) Organize and arrange the continuation of medical examination and treatment at Bach Mai Hospital (Hanoi), ensuring safety for health workers, health workers and people at the request of the Steering Committee and the Ministry of Health.

d) Review and handle the recommendations of the Hanoi People’s Committee, support and create conditions for Hanoi to control epidemics in the locality.

6.The Ministry of Health shall synthesize and periodically publish 2 times/day positive test results in localities, ensuring accuracy.

7.Temporarily close the main and secondary border gates for passersby from 00:00 April 1, 2020 on the border lines with Laos and Cambodia. Strictly control the entry through international border gates on road border routes; All immigrants from Laos and Cambodia must be concentrated in isolation for 14 days.

8.The Ministry of Defense shall direct, organize and expand concentrated isolation facilities, separate new and isolated cases which are not isolated; strengthening the management of trails and openings on border routes.

9.The Ministry of Public Security shall intensify directing the assurance of order and security, preventing crimes, especially in rural areas.

10.The Ministry of Finance shall direct the General Department of Customs to handle problems related to the export of cloth masks; Require insurance businesses not to introduce and deploy insurance packages related to Covid-19 epidemics.

11.The ministries, branches, localities and the press agencies continue to promote information and propaganda in support of the people’s health protection policy, rectify a number of headlines that cause confusion and misunderstandings. The person in charge of prevention and control of non-verbal epidemic causes panic among the people.

12.The Ministry of Industry and Trade and the People’s Committees of localities pay attention to ensuring essential commodities, food and foodstuffs for the people.

Signed by Vietnam Prime Minister

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