The Socialist Republic of Vietnam, commonly referred to as Vietnam, is a country in Southeast Asia, that borders the Gulf of Thailand, Gulf of Tonkin and the East Sea, alongside China, Laos and Cambodia. Vietnam is a rapidly developing socialist-oriented market economy. Over the past thirty odd years, Vietnam has made a shift from a centrally planned economy to a socialist-oriented market economy. The economy has experienced rapid growth during the period of transition and today, Vietnam is not only integrating into the world’s economy but leading the way in many respects.

Vietnamese scholars argue that the history of Vietnam began in the mists of time with a legendary line of Kings called the Hung. These kings reigned before written records existed and it wasn’t until Chinese imperial authorities expanded their rule to the area of present day northern Vietnam that the history of what would eventually become what we now know as the country of Vietnam truly began.

Vietnam is one of the fastest growing economies in Asia. It weathered the 2008 global financial crisis quite well with signs of recovery observed in 2009. Vietnam’s membership in the ASEAN Free Trade Area (“AFTA”) in 1995 and entry into force of the US-Vietnam Bilateral Trade Agreement in December 2001 led to rapid changes in Vietnam’s trade and economic regime. US-Vietnam bilateral trade has grown from about USD220 million in 1994 to USD46.43 billion in the first seven months of 2020, transforming Vietnam into the second-largest source for US imports and 26th-largest destination for US exports.

The politics of the Socialist Republic of Vietnam are defined by a single-party socialist republic framework, where the President of Vietnam is the head of State and the Prime Minister of Vietnam is the head of government, in a one-party system led by the Communist Party of Vietnam.

The Vietnamese court system includes the Supreme People’s Court, the Superior People’s Court (first introduced by the new Law on Organization of People’s Court in 2014), the Provincial People’s Courts in cities and provinces, and the District People’s Courts.

The current legal system is similar to civil law jurisdictions in that its sources of law comprise only written legislation commonly referred to as legal instruments. These are laws and regulations enacted by state bodies which are binding on citizens and enforceable by the state. Court judgments are not officially considered a source of law as judges do not have the power to interpret the law and court judgments are not binding in subsequent cases.

Vietnam has embarked on a vast program to reform its legal and regulatory framework for investment to make it consistent with a market economy. A number of reforms were undertaken as prerequisite conditions for Vietnam’s formal accession to the WTO. Recent improvements in the legal and regulatory framework have affected numerous areas, including taxation, intellectual property, trade, price controls, accounting and foreign exchange controls. As far as foreign investors are concerned, a fundamental shift occurred in 2005, when Vietnam adopted a new Law on Investment (the “2005 Investment Law”) and Law on Enterprises (the “2005 Enterprise Law”). One of the key purposes of these two laws is to put all investors, regardless of their nationality, on a more equal footing. Breaking away from past practice, all investors are now subject to the same key laws, even though in practice differences in treatment remain.

The banking and financial system in Vietnam is made of various credit and financial institutions, including banks, non-bank credit institutions, microfinance institutions and people’s credit funds. Non-banking credit institutions include finance companies, finance-leasing companies and other non-banking credit institutions. The scope and contents of permitted activities of each credit institution are subject to the form of credit institution and specified in the license granted to it.

Vietnamese capital markets are divided into two categories: the primary market, where newly issued securities are bought and sold; and the secondary market, where securities are bought or sold after initial sale in the primary market.

In Vietnam, all land belongs to the people and is uniformly managed by the State. As such, the private ownership of land is not permitted. Organizations and individuals only have land use rights (“LUR”), which are presented and proved on LUR Certificates granted by the State (the local Department of Natural Resources and Environment). The LUR may be used only for the specific purpose for which it was granted. Failure to meet such condition can lead to the withdrawal of the LUR.

Vietnam’s labour legislation and its implementation in practice are well developed. In comparison to some other countries in the region, the position of employees is well protected. Vietnamese labour law is mandatory in a one-sided way: Employer and employee may not agree on terms that are less favourable to the employee than the conditions set out in labour legislation. They may, however, agree on terms that are more favourable.

As in the area of general investment and company regulation, Vietnam has embarked on a process to harmonize taxation for domestic and foreign companies as well as foreign individuals. It has also initiated a number of institutional and administrative reforms in order to improve the administration of taxation.

Vietnam has been a member of the World Intellectual Property Organization (“WIPO”) since 1976. It is a contracting party to a certain number of WIPO-related treaties or conventions, including the Bern, Brussels and Paris Conventions, the Madrid Agreement and the Patent Cooperation Treaty. The legal and regulatory framework for intellectual property rights (“IPR”) was overhauled and greatly improved in preparation for WTO accession. Most importantly, it adopted the first Law on Intellectual Property in 2005 (as first revised in 2009) (the “IP Law”). The IP Law is comprehensive in coverage and raises the legal IP framework to modern standards. The adoption of the IP Law was necessary in order to make Vietnam compliant with the WTO’s TRIPS agreement, to which Vietnam is a party. It was also needed for Vietnam to fulfill its commitments under the bilateral trade agreement with the US.

With its large population, Vietnam is recognized as a potential market offering many opportunities for foreign investors in the health sector. However, in comparison with finance, securities and real estate, the health sector remains less lively in the panorama of foreign investment in Vietnam.

Any disputes to which one disputing party is a foreign investor and any disputes between foreign investors can be referred either to a Vietnamese court, Vietnamese arbitration or foreign or international arbitration.