On April 1st, 2021, Decree 50/2021/ND-CP (“Decree 50”) came into force amending specific provisions of Decree 37/2015/NĐ-CP (“Decree 37”) on detailed regulations on construction contract, bringing about broad changes which will considerably affect new projects which utilize state funds (including ODA and PPP projects). In particular, Decree 50 expands the mandatory scope of application compared with Decree 37, amends and supplements many provisions related to contracts for design, procurement of materials and equipment and engineering procurement and construction (EPC), changes to provision of ..read more

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1. Why should a credit institution under special control be restructured? The Global Financial Crisis caused the collapse of many financial and banking institutions and, without tracing every step in the economic domino theory, adversely affecting the system of Vietnamese credit institutions. By the end of 2011 the Vietnamese market saw stressful liquidity; a large number of credit institutions were unable to pay debts, leading to a high risk of insolvency, damaging the system and destabilizing the financial market; the competition for capital mobilization among credit institutions became inte ..read more

On 17 June 2020, the National Assembly of Vietnam passed the Law on Investment (LOI 2020), five years since the current Law on Investment 2014 (LOI 2014) came into effect. The LOI 2020 takes effect from 1 January 2021, but many provisions of this new law reflect the policy movements introduced one year earlier in the Politburo’s Resolution 50/NQ-TW dated 20 August 2019 on foreign investment policy towards 2030 (Resolution 50). Resolution 50 is a special effort to help make Vietnam more selective in attracting foreign investments. Overall, the new law provides significant changes in terms of in ..read more

The status quo Under the applicable legal provisions on corporate financial transactions,[1]  enterprises other than credit institutions are allowed to lend their idle money to other enterprises, provided that this is a sporadic activity and does not form part of the lender’s ordinary business operation. Taking advantage of these provisions, companies, especially parent companies and its subsidiaries, often use interest-free loans to provide financial support to each other. These loans are not usually subject to interest to ensure that the lending activity does not generate profit and con ..read more

What is new? On 25 September 2020, the Government issued Decree no. 114/2020/ND-CP (“Decree no. 114”) guiding implementation of the National Assembly’s Resolution no. 116/2020/QH14 (“Resolution no. 116”) on reduction of corporate income tax (“CIT”) payable in 2020. Accordingly, where a company’s total revenue in 2020 is less than or equal to VND 200 billion, such enterprise is entitled to a 30% reduction in its CIT payable for the financial year 2020 (“Financial Year 2020”). [1] A company’s total revenue in Financial Year 2020 for the purposes of Decree no. 114 includes proceeds fr ..read more

Overview of Vietnam’s corporate bond market For the past few years, the corporate bond market has experienced a surge in issuance value. This was mainly attributed to Decree 163/2018/ND-CP (“Decree 163”), which was promulgated to encourage corporate bond issuance, hence containing relatively lax requirement for bond issuances. However, such lenient policy has resulted in abuse, with bonds being issued without securitization and on high risk terms in mass numbers.  Companies have turned this instrument into a relatively unregulated new credit channel without being subject to strict lending ..read more

During the last few months, foreign investors have faced new challenges in applying for the authorities’ approval (M&A Approval) for acquiring share capital in Vietnamese companies operating in the manufacturing sector (Target). In particular, to obtain an M&A Approval in the manufacturing sector, a foreign investor must now also submit an extensive explanation on the followings for the authorities’ assessment: (a) Technologies; (b) Machinery; (c) Labor uses; (d) Sources of input materials; (e) Market(s) for products; and (f) Environmental protection. This is a new requi ..read more