International trade has been severely impacted by the Covid-19 pandemic. Not only have consumer habits changed—through an increased use of e-commerce to purchase goods once bought in brick and mortar stores—but new medicines and vaccines require new capabilities in the logistics sector to be properly delivered and stored. The challenges presented by these changes are forcing the logistics sector to adapt. As for Vietnam, a market with nearly 100 million potential customers—60% of whom access the internet and all of whom will need the Covid-19 vaccine—the need for large scale logistics services continues to grow. Investment, specifically in logistics related real estate, will only serve as a profit center for foreign investors who understand the legal requirements to enter into the sector.

On 31 December 2020, the Government issued Decree No.155/2020/ND-CP (“Decree 155”) elaborating the Law on Securities 2019, which came into effect on 1 January 2021. Most of the provisions in Decree 155 follow Decree No. 58/2012/ND-CP, Decree No. 60/2015/ND-CP, and Circular No. 162/2015/TT-BTC, though some provisions are revised and supplemented to constitute a stricter legal framework. This Special Alert will discuss the changes with significant impact to the securities market of Vietnam.

The rules in respect of personal data protection have been stipulated and scattered in a number of laws of Vietnam such as the Civil Code, the Law on Protection of Consumers’ Rights, the Cybersecurity Law, the Law on Cyber Information Security, etc. Many of the provisions in those laws are unclear and overlapped without any precise and effective mechanism for understanding personal data protection. This lack of clarity has caused the treatment of personal data in Vietnam to become extremely insecure and the data itself vulnerable.

Cross-border advertising is ultimately governed by the Law on Advertising No. 16/2012/QH13, as amended by the Law No. 35/2018/QH14 (the “Advertising Law”), and Decree No. 181/2013/ND-CP dated 14 November 2013 providing details for the implementation of a number of articles of the Advertising Law (“Decree 181”). Practical application, however, has found that the existing provisions for cross-border advertising services in Vietnam are either infeasible or inconsistent or insufficient and has caused difficulty and ineffectiveness in its management. To alleviate these problems, the Government is likely to amend Decree 181.

Following the issuance of Law on Enterprises No. 59/2020/QH14 dated 17 June 2020 (the “2020 Enterprise Law”), the Government has issued Decree No. 01/2021/ND-CP on enterprise registration (“Decree 01”) to reinforce the spirit of reducing “unnecessary” licensing procedures and to provide specific instructions and guidelines. The decree came into force as of 4 January 2021, and replaces Decree No. 78/2015/ND-CP as amended by Decree No. 108/2018/ND-CP (“Decree 78”).

The use of non-cash payments has been more common and increasingly favored in Vietnam. The Government of Vietnam encourages its development, especially the payment method of bank cards. Switching from traditional cash payment to payment via bank card helps simplify the transaction procedures but raises challenges for the management of payments by the Government, especially in monitoring and preventing transactions not in compliance with law.

The COVID-19 pandemic deleteriously affected the labor market and is predicted to continue negatively influencing employment trends across Asia in the upcoming year. At the beginning of 2020, it was predicted that the unemployment rate in Asia-Pacific would remain on the low side, standing at about 4.1%. The situation changed dramatically, however, and many experts anticipate a raise in that figure. 

On 4 December 2020, the State Bank of Vietnam (the “SBV”) has issued Circular No. 16/2020/TT-NHNN (“Circular 16”) amending Circular No. 23/2014/TT-NHNN on opening and using payment accounts at institutions providing payment services (“Decree 23”). Circular 16 clarifies and supplements regulations on dossiers, procedures and agreements on opening and using payment accounts. It also provides new regulations on opening payment accounts of individuals by electronic method (the “e-method”). Most importantly, the e-method provides for electronic compliance with anti-money laundering (“AML”) legislation that requires financial institutions to proceed with “know your customer” or KYC (the e-method of KYC: “eKYC”).

On 15 October 2020, the Government has issued Decree No. 122/2020/ND-CP on the coordination of different state authorities for dealing with registration procedures for new company and other corporate setups (“Decree 122”). For years the Government of Vietnam has been working to eliminate redundancies and conflicts within the laws governing corporations and, in particular, corporate setup. Decree 122 is part of the Government’s effort to reduce procedures, information required to be declared, and the number of related agencies.

As the world wages its battle against the novel coronavirus Covid-19, it also continues to feel its terrible effects.

Vietnam is one of the most dynamic countries in the East Asia region and it has seen dramatic growth in the financial technology (Fintech) industry over the past few years. It has attracted 36% of regional investment, second only to Singapore with 51% . The Fintech regulatory framework in Vietnam is still in its early years of development, however, and most of Fintech services have not been formally regulated under the current laws of Vietnam. This has created several obstacles in terms of State management. The operation of certain Fintech services raises concerns over black credit operations, money laundering, terrorism financing, cybersecurity and data breach, and consumer rights protection.

On 14 August 2020, the Government promulgated Decree No. 91/2020/ND-CP on anti-spam text messages, emails and calls (“Decree 91”), effective as of 1 October 2020 and replacing Decree No. 90/2008/ND-CP as amended by Decree No. 77/2012/ND-CP dated 5 October 2012 (“Decree 90”) which has proven insufficient for effective management of spam messages in light of rapid development of advertising and marketing technologies.

Vietnam’s National Assembly has ratified the EU-Vietnam Free Trade Agreement (EVFTA) which entered into force on August 1, 2020.

With significant growth in internet usage and online commercial activities, domain names and websites have become important marketing and business tools through which companies can promote their entities, brands, products, and services and conduct commercial and non-commercial activities on a global scale. Typically, a company uses its own trade name or trademarks for determining its website address making it easy for customers to identify the company and its goods and services as well as developing a consistent and unique identification for the company.

On 6 August 2020, the Government promulgated Resolution No. 115/NQ-CP ("Resolution 115”) on solutions to promote the development of supporting industries of the following branches of industry: electronics, key engineering, automobile production and assembly, textiles, footwear, high-tech and military industries. Resolution 115 addresses difficulties related to supporting industries; regulates policies and responsibilities of governmental agencies on improving the investment environment to attract investment capital flows and opportunities of shifting production of multinational companies; and creates favorable conditions for upgrading competitive capacity of enterprises operating in supporting industries and processing and manufacturing industries (the "Supporting Industry Enterprises”).

The last few months have seen a bevy of changes in the enterprise audit environment in Vietnam. From a new decree outlining internal audit activities to the creation of an audit committee under the new 2020 Enterprise Law to the announced conversion from Vietnam Accounting Standards (VAS) to International Financial Reporting Standards (IFRS) the very foundations of audit in the country have been shaken. In an effort to keep you up to date on the most important changes, this special alert will review the big changes in the wind.

On 24 June 2020, the Government promulgated Decree No. 68/2020/ND-CP ("Decree 68") amending Article 8.3 of Decree No. 20/2017/ND-CP dated 24 February 2017 regulating tax management of enterprises with related transactions [transfer pricing] (“Decree 20”) in respect of the total of deductible loan interest when assessing taxable income for corporate income tax (“CIT”) purposes. Decree 68 took effect on 24 June 2020, and will be applied to enterprises having related transactions from the fiscal year 2019 onwards.

On 3 July 2020, the Ministry of Information and Communications (the “MOIC”) issued Circular No. 13/2020/TT-BTTTT on determining process-qualified software product manufacturing activities (“Circular 13”), and replacing Circular No. 16/2014/2020 dated 18 November 2014 of the MOIC (“Circular 16”).

With a view to further improve the regulatory framework for investment and businesses, and to make Vietnam a more attractive investment destination, on 17 June 2020, the National Assembly of Vietnam has passed Law No. 61/2020/QH14 on Investment (the "New Investment Law") and Law No. 59/2020/QH14 on Enterprises (the “New Enterprise Law”), which both will come into effect on 1 January 2021 and respectively replace Law No. 67/2014/QH13 on Investment (the “Current Investment Law”) and Law No. 68/2014/QH13 on Enterprises (the “Current Enterprise Law”). Some remarkable changes introduced under the New Investment Law and the New Enterprise Law are discussed below

In compliance with Resolution No. 35/NQ-CP dated 16 May 2016 on enterprise development policy to 2020, the Government has promulgated Decree No. 163/2018/ND-CP on 4 December 2018 on issuance of corporate bonds (“Decree 163”). For the last two and a half years since its promulgation, Decree 163 has supported enterprises in capital mobilization to develop business activities. According to the Ministry of Finance, from 1 February 2019 to the end of 2019, enterprises nationwide have conducted 848 issue tranches of corporate bonds with the total raised capital of VND259.377 billion. The implementation of Decree 163, however, has shown certain limitations affecting the publicity and transparency of capital mobilization through corporate bonds, the stable development of a corporate bonds market, and rights and benefits of investors.