Not since Vietnam’s corporate and investment law were overhauled to prepare for accession to the World Trade Organisation (“WTO”) in 2007 has Vietnam seen as many legal changes as in 2015. A new Law on Enterprises and a new Law on Investment each took effect on 1 July 2015, and represent an effort to harmonise investment and licensing procedures for foreign and domestic enterprises. Since Vietnam’s accession to the WTO nearly 10 years ago, the National Assembly has passed numerous laws and governmental authorities have promulgated a significant number of regulations to implement Vietnam’s WTO commitments and strengthen the basic framework crafted by the 2005 Law on Enterprises and Law on Investment. As anticipated, this has not always been a linear path forward, as conflicting interpretations between local regulators in different provinces, and between different ministries, have created confusion over key issues, such as requirements of foreign investors to obtain an investment certificate when making minority investments in existing Vietnamese enterprises.
The new corporate and investment laws effective this year are designed to rectify deficiencies of the prior legislation and establish distinct procedures for registration of foreign investment and corporate business licensing. While the new laws are now effective, the Government has not yet introduced implementing regulations, and the devil is in the details when it comes to Vietnamese law and its implementation.
Vietnam also ushered in a new Law on Real Estate Business and Law on Residential Housing, both of which became effective on 1 July 2015, in an effort to stimulate the real estate market and in particular, increase foreign investment in the residential real estate market.
Decree 60 of the Government, effective 1 September 2015, represents a significant step towards enhancing liquidity for listed companies. Decree 60 now provides that, subject to certain exceptions, foreign ownership in publicly traded companies can reach 100%. In addition to stimulating liquidity on the Hanoi and Ho Chi Minh City bourses, this welcome change should increase M&A and private equity activity by offering more attractive exit options through listings and public offerings.
2015 has also been a busy year for Vietnam with respect to negotiating bilateral and multilateral treaties. In addition to trade agreements within ASEAN, Vietnam has signed free trade agreements (“FTAs”) with the United States, Japan, Chile, South Korea and the Eurasian Economic Union. Vietnam is also currently negotiating the Trans-Pacific Partnership (“TPP”) accords with other nations across the Pacific basin in Asia, Oceania, and the Americas. The TPP would further open the Vietnamese
legal framework to foreign investors.