Vietnam: Regional 2024 Doing Business In Update

Published on Apr 23, 2024

2024 Vietnam Regional Update

Firm Name: VILAF
Esko Cate, Le Nguyen Mien Thao, Thuan Mai, Vo Thi Ngoc Hanh, Ngan Nguyen, Tung Nguyen

1. How is the political environment impacting business in or with your country?

Being a one-party state, Vietnam is one of Southeast Asia's more politically stable countries. The country is focusing on economic reform and sustainable growth. Foreign Direct Investment (FDI) continues to be vital to Vietnam. The government is progressing in reforming laws and policies to attract foreign investors.

Vietnam has trading relationships with more than 200 countries. To date, Vietnam has become a member of 19 FTAs, including the EU-Vietnam Free Trade Agreement (EVFTA), the related EU-Vietnam Investment Protection Agreement (EVIPA), Regional Comprehensive Economic Partnership (RCEP), and the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).

Vietnam is also making an effort to address bribery and corruption. The government has taken several concrete actions, including adopting and improving anti-corruption laws, developing anti-corruption strategies, and reducing bureaucracy and opportunities for corruption. Over the past two years, several high- profile arrests have occurred in the public and private sectors.

2. Which countries have you previously collaborated with and do you see potential for future collaboration with on cross-border matters within the region?

While the global recession has been louder, M&A activity in Vietnam has slowed down. Nevertheless, the government has put great effort in stabilizing the domestic economy and political climate to maintain foreign direct investment inflows.

As multinational corporations diversify their supply chains away from China and relocate their production to other countries, Vietnam becomes one of the ideal destinations. With this view, the M&A market in Vietnam is likely to continue solidly with foreign strategic investors, especially those from Thailand, Singapore, Japan, and South Korea, particularly in key industries such as financial services, consumer goods, retail, logistics, and renewable energy.

3. What legislation has recently changed or is changing that a potential international client should be aware of?

Recently, Vietnam has adopted certain new laws and policies, including the new Land Law, Housing Law, Law on Real Estate Business, the new Law on Credit Institutions, and the Power Development Plan 8 (PDP- 8). Noticeable points:

New Land Law: changes to regulations on land revocation, land auction, land acquisition, and dispute settlement regarding disputes relating to land. Effective date: January 2025, except for land reclamation and forestry land regulations, which will come into effect from April 2024.

New Housing Law and Law on Real Estate Business: the new laws are expected to solve some constant legal issues and enhance the sustainability and transparency of the Vietnam real estate market in the future. Key highlights include (1) tightening on launching a real estate project for sale, (2) clarification on the real estate business scope of the foreign-invested enterprise, (3) clarification on financial mobilization sources for residential housing developmentā€”effective date: January 2025.

New Law on Credit Institutions: (i) the reduction of shareholding ownership limits in a credit institution, (ii) schedule for reducing total balance of credit extension of commercial bank and foreign bank branches, and (iii) restrictions on capital contribution and share purchased by credit institutions.

In May 2023, PDP-8 was approved, aiming to boost wind and gas energy while reducing reliance on coal. Implementation plans are being developed to meet Vietnam's commitment towards net zero emissions by 2050.