VIETNAM
5.2 Explain any local content or local participation requirements relevant to foreign investors. As a member of the WTO, Vietnam is bound by the Agreement on Trade and Investment Related Measures. Accordingly, no requirement on local content or local participation applies.
5.3 How difficult is it for foreign investors to secure expatriate visas for shareholder representatives and workers? Business visas for temporary stays in Vietnam are relatively simple. However, employment visas for foreign workers are getting tougher to obtain. Recently, Vietnam changed the visa laws. Any company planning to employ foreign workers must now undergo a rigorous review process before the foreign worker can apply for a work permit and resident card. The term for a work permit was reduced from three to two years.
5.4 What foreign currency or exchange restrictions should foreign investors be aware of? Vietnam has strict foreign exchange control measures. Apart from very few exceptions, all transactions in Vietnam must be conducted in the local currency – the Vietnam dong – or risk being invalidated.
5.5 Does the country prohibit domestic companies from doing business in any foreign jurisdictions? Vietnam does not prohibit its domestic companies from doing business in any foreign jurisdiction, but requires the company to obtain an offshore investment licence.
6. Legal and regulatory framework
6.1 Are there any other FDI-specific laws that foreign investors must be aware of? The key pieces of legislation governing FDI are the Law on Enterprises and the Law on Investment. In addition, foreign invested companies are subject to compulsory annual financial audits.
6.2 What challenges if any do investors find in getting certainty around local law and regulation? Vietnamese laws are sometimes vague, ambiguous, and inconsistent. In such cases, the relevant authorities should be consulted to assist with interpretation.
Vietnam is a signatory to the New York Convention on the Recognition of Arbitral Awards. Therefore, recognition and enforcement of foreign arbitration awards may be sought in Vietnam. Arbitration awards from countries that are not members of the Convention may be recognised and enforced if there is reciprocity between Vietnam and the country from which the judgment was rendered.
7.3 Are judgments and arbitration awards from the FDI jurisdiction generally enforceable in other jurisdictions? The issue of whether court judgments from Vietnam are enforceable in other jurisdictions is case specific, depending on the laws of the enforcing country. Judgments in Vietnam are rendered after the parties have presented their arguments in a hearing on the merits. Under such circumstances, many courts around the world would typically enforce the judgment subject to typical grounds for non-recognition such as fraud or the local laws require reciprocity. Vietnam is not a signatory to any treaty on the recognition of foreign judgments.
In contrast, Vietnam is a member of the New York Convention on the Recognition of Arbitral Awards, meaning such awards from Vietnam should readily be recognised and enforced in other member jurisdictions.
7. Dispute resolution
7.1 How efficient are local courts’ enforcement and dispute resolution proceedings, and are there any procedural idiosyncrasies foreign investors must be aware of? Commercial disputes can be resolved in court or, if agreed by the disputing parties, through arbitration. While it usually takes two rounds of court review (trial and appeal) before a judgment is considered final, an arbitration award is immediately final and binding when rendered.
During court proceedings, Vietnamese is the required language of communication, both verbally and in writing. The application of foreign law is not allowed. Meanwhile, arbitrations allow the use of foreign languages during the proceedings, and the application of non-Vietnamese laws.
The courts usually hear and decide cases within 24 months or less. The length of arbitration proceedings varies depending on the parties’ terms of engagement and the governing arbitration rules.
The enforcement of judgments or arbitration awards is governed by the Law on Civil Judgment Enforcement. In practice, enforcement may be delayed due to lack of qualified personnel and any back logs.
7.2 Do the courts of the FDI jurisdiction respect foreign judgments and are arbitration awards enforceable in the jurisdiction? A judgment granted by a foreign court can be recognised and enforced in Vietnam on a reciprocal basis, so long as the judgment does not violate basic principles of Vietnamese law.
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IFLR REPORT | FOREIGN DIRECT INVESTMENT 2014
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