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The Hanoitimes – All fields, except for security and national defense, must be open for investment, said Prime Minister Nguyen Xuan Phuc.

An open mindset is needed when it comes to drafting the Public-private partnership (PPP) Law to attract investment from all players, according to Prime Minister Nguyen Xuan Phuc.

Illustrative photo.

A specialized law on PPP is an urgent matter, Phuc said at a discussion session on the draft PPP law, which has been submitted to the National Assembly for consideration for the first time

According to Phuc, all fields, except for security and national defense, must be open for investment.

“A simplification of legal procedures would help maintain a positive investment environment, but an old mindset is restricting the country’s economic development,” said Phuc, adding foreign investors pay much attention to issues related to laws and regulations.

Meanwhile, Phuc said due to the lack of awareness about legal protection, domestic investors are still hesitant to pour money in PPP projects although locals hold huge idle resources.

“With the PPP projects, benefits would be divided among the state and investors. Prosperous people will lead to a strong country,” Phuc said.

Phuc also requested greater deregulation and transparency during the bidding process, as the state role in this case should be limited to drafting regulations and monitoring the process.

Nguyen Duc Kien, vice chairman of the Economic Committee under the National Assembly, said it is essential to maintain the principle of “the state is a fair partner of investors”, meaning that both the state and enterprises are on the “same boat” with equal risks and benefits.

However, a number of National Assembly deputies expressed concern over the risk sharing mechanism mentioned in the draft law.

The government proposed two options for risk sharing mechanism in terms of revenue. Firstly, the government would bear the maximum of 50% of losses between the actual revenue and the committed one in the contract. Secondly, the investors commit to share with the government not less than 50% of the difference in revenue between the actual and the committed figure.

A National Assembly deputy in Hanoi said such mechanism is unfair and inappropriate, as investors must bear all risks, if any, and should be applicable to special projects only.

Nguyen Van The, minister of Transport, said the risk sharing mechanism is necessary for PPP projects. In build-operate-transfer (BO) transport projects, investors normally request the government to ensure revenue and share risks, as well as a foreign currency exchange guarantee system.

The minister, however, said the percentage in the mechanism could be subject to further consideration.

Minister of Planning and Investment Nguyen Chi Dung said a guarantee mechanism for investors is one of the most controversial issues during the process of drafting PPP law.

Dung added it is vital to mobilize capital from private sources for major infrastructure projects as state capital is limited. “But if policymakers only think of the best for the state, it will be difficult to attract private investors,” asserted Dung.

“As concern about risks of a PPP project is not settled, the objective of raising funds from private investors would not be achieved, so a risk sharing mechanism is necessary,” Dung stressed.

Tran Thai Binh and Dao Manh Toan, lawyers at LNT & Partners

According to Section I, Item 3.2 of the letter, the target company receiving capital contribution or selling shares and contributed capital – instead of the foreign investor itself as regulated in the Law on Investment 2014 and the 2020 version – shall submit one dossier applying for mergers and acquisitions (M&A) approval to the investment registration authority.

However, the form used for the M&A approval procedure must be signed by both the foreign investor and the target company, and so we therefore opine that either or both of them could still submit the dossier in reality.

According to the letter, the dossier applying for the M&A approval currently requires more information and documents in comparison with the former regulations. This first consists of a written request for the M&A approval which includes specific information such as enterprise registration details of the target company, including name, enterprise code, enterprise form, head office address, business lines, charter capital, and current foreign investor if applicable.

This written request also requires information on founding shareholders, if any, and land use right certificate of the target company (if it uses land located in island, border, or coastal areas); the holding ratio of the foreign investor before and after making the investment; the transaction value; and information on the investment project of the target company (if any), which is new in comparison with the former regulations.

The second part of applying for approval consists of a valid copy of legal identity documents of both the foreign investor and the target company.

Third is a written agreement on capital contribution, purchase of shares, and contributed capital between the foreign investor and the target company, which is also new. Of note, from a practical aspect, the M&A approval must be obtained before the investor executes any capital contribution, purchase of shares and contributed capital. Therefore, this requirement may create confusion for both the foreign investor and the target company on whether they should submit the draft written agreement or the signed one to the investment registration authority.

In addition, if the foreign investor makes investment by way of contributing additional capital (not purchasing any shares or contributed capital from any current shareholder or member), it would be uncertain which kind of written agreement is required for submission.

The fourth and final part of this process is a written declaration on land use right certificate if the target company uses land located in island, border, or coastal areas. However, the letter does not provide any form or further guidance for this declaration so it is still uncertain whether the target company shall declare on the basis self-declaration and self-responsibility, or with confirmation/certification by a competent authority.

In terms of business lines and market access conditions applied for foreign investors, those investors shall be treated equally with local ones with respect to market access conditions, save for specific cases provided in the list of business lines restricted to foreign investors which will be issued by the government. However, it is still uncertain when such a list will be issued by the government.

In the list, the restricted sectors should comprise business lines that are not allowed, and conditional business lines for market access. The government will elaborate the market access conditions applied for the foreign investor in each sector in compliance with the applicable laws, resolutions, ordinances, decrees, and international treaties to which Vietnam is a signatory.

Before the application of the Law on Investment 2020, all valid dossiers submitted to the investment registration authorities shall be processed in accordance with the 2014 law. However, the 2020 version has already taken effect and replaced the previous one. Hence, the letter offers two circumstances under which the dossier shall be processed:

Firstly, if the deadline is overdue but there is still no result returned to the applicant, such a dossier shall be continuously processed pursuant to the Law on Investment 2014 and relevant regulations.

Alternatively, if the deadline is after January 1, 2021 the investment registration authority shall instruct the applicant to supplement missing required documents (if any) or amend the submitted dossiers for compliance with the Law on Investment 2020, and the procedure shall be conducted pursuant to the correspondent laws.

For the sake of implementation, the letter is issued together with application forms used for investment registration procedures. However, the letter is provisional guidance to ensure implementation of investment registration procedures in accordance with the Law on Investment 2020 from January 1, 2021 until an official decree guiding the same is issued by the government.

Projects such as Bunge’s agribusiness are expected to increase in number through stronger US ties. Photo: Le Toan

In his first few days in office five years ago, President Donald Trump withdrew from the Trans-Pacific Partnership, which was a pillar of the Barack Obama administration’s pivot towards Asia. The remaining 11 member states have since reframed the agreement as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and President Joe Biden’s commitment to rebuilding relations with allies has sparked speculation about the US returning to the fold.

Fitch Solutions under global ratings firm Fitch Group told VIR in a statement that Vietnamese trade would receive a surefire boost should new Biden decide to rejoin the CPTPP.

“Biden stated in 2019 that the US should renegotiate parts of the CPTPP and re-assemble a coalition to counterbalance China’s perceived expansionist policies. The Trump administration withdrew from the original deal in 2017 under the pretext that it would harm US workers. A scenario where the US rejoins the CPTPP would deliver substantial tailwinds to Vietnamese exports to the US from lower tariffs in major export categories,” Fitch said.

In fact, the CPTPP may offer great windfalls to the US. Statistics from law firm Duane Morris Vietnam LLC showed that the population of the CPTPP countries exceeded 513 million people as of October 2020. The CPTPP countries account for nearly 45 per cent of US total exports and 37.6 per cent of US general imports in 2014. By cutting over 18,000 taxes in regards to CPTPP, there would be a great benefit for American importers and exporters by enabling them to enter new markets.

As the United States International Trade Commission estimates, the US exports of goods and services to the world would expand by $27.2 billion by 2032 thanks to the CPTPP, while US imports would expand by $48.9 billion.

Oliver Massmann, general director of Duane Morris Vietnam LLC, pointed out various benefits for the US if it rejoins the CPTPP. He took public procurement as an example. “Dropping the CPTPP means that the US has lost access to government procurement of other CPTPP countries, which amounts to $1.47 trillion,” he said in a letter recently sent to President Biden.

Massmann cited the International Monetary Fund’s World Economic Outlook database in October 2019 as stating that in Vietnam, government procurement’s percentage of GDP in 2019 was 12 per cent or $40.87 billion.

The great advance of the CPTPP will be that even Vietnam, Malaysia, and Brunei, which have not agreed to coverage of their government procurement before and are currently not covered by an existing US free trade agreement or government procurement agreement of the World Trade Organization, have undertaken to do so.

“This is a key export opportunity for US goods producers and services companies. Currently Chinese companies profit the most. About 90 per cent of power, mining, manufacturing, ferrous, and chemical projects of state-owned companies in Vietnam are awarded to Chinese contractors,” Massmann noted.

Furthering ties

Early this month, Vietnam’s Deputy Prime Minister, Minister of Foreign Affairs Pham Binh Minh held phone talks with US Secretary of State Antony Blinken. Both sides agreed bilateral ties have advanced across fields over the past 25 years, and pledged to cooperate in deepening ties “in a more comprehensive manner, with a focus on economy-trade-investment, overcoming war consequences, enhancing maritime capacity, fighting COVID-19, and adapting to climate change.”

It is expected that in 2021, there will be more connections and talks between both nations’ high-level leaders, investors, and enterprises.

Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi (AmCham) told VIR that he expected US-Vietnam trade and investment cooperation to further flourish thanks to several reasons including the US new administration’s positive stance towards both nations’ bilateral ties.

“As major investors here, American companies have an interest in Vietnam’s continued success. It is a new year and we welcome the incoming leaders in both countries,” Sitkoff said. “American investors are optimistic about business prospects in Vietnam and we support efforts to create a modern economy that will attract future investment and high-paying jobs for Vietnamese people. We will continue to work on lowering barriers to trade, to help the Vietnamese government make it easier to do business, and to create a high-standard, transparent, and stable business environment to ensure that all investors have fair access to that opportunity.”

Statistics from Vietnam’s Ministry of Planning and Investment showed that as of January 20, US investors registered over $9.51 billion in Vietnam for more than 1,000 valid projects, making the US the 11th-largest foreign investor in the Southeast Asian nation. In January alone, the US ranked fourth in investment in Vietnam, with total newly-registered capital of $122.2 million.

Currently many US firms are exploring opportunities in Vietnam, such as Morgan Stanley, ACORN International, General Dynamics, Nue Capital LLC, BlackRock’s Asian Credit, Lockheed Martin International, Smart City Works, Google, Columbia University, and USTelecom.

Positive impacts

Fitch Solutions believed that the incoming Biden administration will have largely positive implications for Vietnam.

“The impact on Vietnam’s trade growth should be positive, given that Biden will take a more pragmatic approach towards Vietnam’s growing trade surplus with the US, which means a lower risk of punitive trade tariffs than under Trump’s currency policies,” the Fitch Solutions statement read.

“Trump-era trade tariffs on Chinese exports and rising geopolitical tensions between China and the West have also set in motion a relocation of manufacturing to Vietnam, which is likely to continue. Should the US decide to join the CPTPP in the coming years, Vietnam would also benefit from accelerated trade expansion with the US.”

Fitch Solutions further explained that Biden is likely to take a more pragmatic view towards trade developments with its economic partners.

“In particular, we believe that the Biden administration will come to understand that Vietnam’s trade surplus with the US will grow as more manufacturers relocate to the Southeast Asian nation due to the ongoing US-China trade war. Furthermore, while there is bipartisan support in the US for a hardline stance on trade with China, we believe that a desire by the Biden administration to rebuild its relations with its allies would see an easing of the trade tensions with allied countries generated by the Trump administration. Therefore, we believe that the Biden administration will entail lower risk of further US tariffs on Vietnamese exports.”

In 2020, total export-import turnover between Vietnam and the US was $90.1 billion, up from $76 billion in 2019.

Hurdles need removing

Sitkoff from AmCham in Hanoi told VIR that though Vietnam and the US have many common foundations to further cement their trade and investment ties, he hoped Vietnam’s government will take more drastic action to remove obstacles currently facing investors.

“It is critical that US companies and investors here in Vietnam encounter an equal, level, and predictable playing field as a solid foundation, not only to attract new investment, but also to maintain and grow the investment that is already here,” Sitkoff said.

“In addition, we recommend that foreign investment limitations, an overly restrictive legal framework, and burdensome administrative procedures should be carefully reviewed and selectively relaxed to encourage increased US investment,” he suggested. “In our view, by opening its market to more US goods and services, Vietnam can help to rectify the growing trade imbalance between the two countries in a manner that benefits both countries.”

According to AmCham, one of the biggest hurdles for foreign firms including US ones in Vietnam is the tax system.

“While Vietnam’s corporate income tax rate of 20 per cent is competitive, data shows that filing and paying taxes in the country is still too high a burden compared to neighbouring countries. Too many companies are also suffering from what seems to be unfair and non-transparent reassessments with penalties and interest,” said an AmCham statement recently sent to the government. “We hope to see real progress on advanced pricing agreements which create the stability and predictability necessary for integrating into global supply chains.”

VNA

Hanoi (VNA) – A campaign seeking ideas for Hanoi’s street decoration and lighting for this year has been launched by the municipal Department of Culture and Sports.

According to the organisers, the campaign aims to create a joyful and exciting atmosphere for citizens on national holidays and major anniversaries of the nation, in addition to aiding the political and decorative tasks of the city.

It is also set to contribute to preserving and promoting the national cultural identity and typical values of Hanoi as a thousand-year-old capital, creative city and city for peace, as well as meet the increasing demands of cultural enjoyment of citizens.

Themed ‘Hanoi – Creative City ‘ and ‘Hanoi Congratulates the Party and Celebrates a New Spring’, designs must be of high aesthetic, suitable to surrounding landscape, lightning systems and architecture. They are also expected to contain elements of creativity and follow modern decoration trends.

Entries with the use of new technologies, appropriate materials, elegant colours and safety insurance will be prioritised.

The winning designs will be used for decoration of major streets in Hanoi’s downtown such as Trang Tien, Trang Thi, Ba Trieu, Hai Ba Trung, Ly Thuong Kiet and Tran Hung Dao, among others, at the celebration of the new year of 2022.

The contest is open for contestants of any nationality who can submit unlimited designing plans for various places, provided that they comply with copyright protection law.

The works qualified for the competition must be those which have not been submitted to other contests or introduced to the public in any form.

One special prize, one first prize, two-second prizes, third prizes and five consolation prizes will be given to the best entries.

The submitted designs for street decoration and lighting must be drawn on the A4-sized paper, and then sent to Hanoi’s Department of Culture and Sports from August 24 to 31./.

VNA