Vietnam - A Future International Competitor in Wind Energy?

Potential of Wind Energy Industry in Vietnam

Vietnam has a significant potential for wind energy with an average wind speed of more than 6m/s, surpassing that of all neighbouring Southeast Asian countries. With more than 3,000 km coastline and plenty of islands, the total potential of wind energy in Vietnam is estimated to be as high as 713,000 MW – 510,000 MW on land and 203,000 MW in islands. In comparison, this is 200 times more than the production volume of the largest hydropower plant, Son La (Vietnam), in Southeast Asia and 10 times larger than the projected total capacity of the electricity industry in 2020.

Engaging in securities service business in Vietnam

According to the commitments made to the World Trade Organization (WTO) during its 2007 accession, Vietnam only allow the foreign investor to enter into Vietnamese market in respect to the service under the list up which Vietnam committed to open. In the case of not subject to the list, Vietnam has the right to decide to allow a foreign investor to access the market or not on the basis of case by case. That is subject to the approval of the Prime Minister or the managing Ministries depending on the investment capital scale, type of service.

At present, Vietnam did commit on opening up securities service sector under the WTO commitments, accordingly, after 5 years from the date of accession (i.e. January 11th 2007), the foreign investor is allowed to engage in securities service business with establishment of 100% foreign invested capital enterprises and for some limited services, the branches of foreign securities services suppliers shall be permitted. Therefore, the foreign investor from a WTO member country generally speaking, can freely acquire minority/majority shares in domestic enterprises; establish a wholly – owned subsidiary or a branch in Vietnam.

Regulatory background on telecommunication

Telecommunication sector in Vietnam is generally regulated by the below legal documents:

- WTO commitment on telecommunication services

- Law on Telecommunication No. 41/2009/QH12 of the National Assembly

- Law on Information Technology No. 67/2006/QH11 of the National Assembly

- Law on Electronic Transactions No. 51/2005/QH11of the National Assembly

- Decree 25/2011/ND-CP of the Government guiding Law on Telecommunication

Under Vietnam’s WTO commitments, telecommunication services are classified into Basic telecommunication services (e.g. Voice telephone services; Packet-switched data transmission services; Circuit-switched data transmission services) and Value-added services (e.g. Electronic mail; Voice mail; On-line information and database retrieval; Electronic data interchange (EDI))

Organization of international conferences and seminars in Vietnam

According to the regulations of Vietnam on the organization and management of international conferences and seminars, international conferences and seminars are defined as foreign-involved meetings held directly in the territory of Vietnam or held online with at least one end being in the territory of Vietnam, including the conferences and seminars organized by Vietnamese agencies or organizations and attended or sponsored by foreign parties and conferences and seminars organized by foreign agencies or organizations licensed by a Vietnamese authority to operate in the territory of Vietnam.

F&B investors enter Vietnamese market via side door

VietNamNet Bridge - F&B investors enter Vietnamese market via side door

VietNamNet Bridge – Vietnam will have to open its food & beverage (F&B) market beginning in January 2015 under its WTO (World Trade Organization) commitments.  However, dozens of F&B brands have been present in Vietnam for years, some entering through the “front door”, and others through the “side door”.

The opening of the first Starbucks shop in Vietnam earlier last year, for example, was a surprise to many lawyers.

Under its WTO commitments, Vietnam does not have to fully open its F&B market to foreign investors until eight years after WTO accession. Vietnam officially joined the WTO in January 2007.

The establishment of travel representative office in Vietnam

At the present, the tourism activities in general and the operation activities of the foreign travel company’s representative office (RO) are regulated by the Law on Tourism No. 44/2005/QH11 dated 14 June 2005 and its’ implementing regulations. Those legal documents are the main basis for the tourism industry in Vietnam.

Even the Decree No. 72/2006/ND-CP regulates the operation activities in Vietnam of the branch, representative office of foreign businesses, the law on tourism is the specialized legal document and will be applied first when there is the inconsistence between this Decree and the laws on tourism. The regulations on travel-related RO is a separate regimes applied for the foreign businesses in the tourism industry.

Sale and purchase activities of goods for the FIEs in Vietnam

Implementing the route and the commitments of Vietnam in the accession of World Trade Organization (“WTO commitments”), the Ministry of Industry and Trade (“MOIT”) issued Circular No. 34/2013/TT-BCT dated 24 December 2013 (“Circular No. 34”) announcing the schedule for implementation of the sale and purchase activities of goods and activities directly related to the purchase and sale of goods by enterprise with the foreign invested enterprises in Vietnam (“FIEs”).  This Circular No. 34 took effect from 05 February 2014 and replaced the Decision No.10/2007/QD-BTM on 21 May 2007 of the Ministry of Commerce announcing the schedule for implementation of the sale and purchase activities of goods and activities directly related to the purchase and sale of goods (“Decision No.10”). 

Regulations on Foreign investment in E-commerce in Vietnam

E-commerce service is a new concept in Vietnam and under WTO’s commitment, Vietnam does also not clearly have any commitment about opening the E-commerce services to the foreign investor and in this regard, Vietnam is free to decide on whether to open its’ market or not and has the sole discretion on promulgating the regulation on management and licensing of E-commerce.

We understand from the applicable regulations on E-commerce of Vietnam that E-commerce activity means conducting part or the whole of the process of commercial activity by electronic means connected to the Internet, mobile telecommunications network or other open networks. Therefore, the E-commerce activities are quietly large, mixed with other telecommunication, internet or even computer and related services and need to be classified into detailed activities.

Market access of the foreign investor into logistic services in Vietnam

Under the WTO accession commitment of Vietnam, there is no definition of logistic service and Vietnam committed to open the market access into the services auxiliary to all modes of transport which are classified by the CPC system of the United Nations.

In details, from January 2014, the foreign investor may joint venture with the Vietnamese company without any capital limitation or establish its’ wholly owned company in Vietnam to engage in the following services auxiliary to all modes of transport:

i.           Storage and warehouse services (CPC 742)

ii.        Freight transport agency services (CPC 748) including freight forwarding services.

Limitation of foreign investment in real estate business in Vietnam

Under the applicable law on real estate business, generally, there is no limitation on the percentage of foreign involvement in a company which engages in the real estate business.  The 100% foreign invested enterprise is entitled to engage in the real estate business except for real estate advertising services on which the foreign investor must create a joint venture with a Vietnamese advertising service provider pursuant to limitations under Vietnam's Commitments on WTO’s accession.

Under Vietnam's Commitments on WTO’s accession, Vietnam did not commit to take any specific action relating the participation of foreign investment in real estate business. Therefore, it means that Vietnam has to authority to decide to open or not the access of foreign investment into this market and basically, the domestic laws or regulations will be applied to foreign investment.