The Flow of Korean FDI into The Central Region and Highlands of Vietnam

According to the Foreign Investment Agency (Ministry of Planning and Investment), nearly 4.4 billion USD has been invested by Korean businesses in the Central Region and Highlands so far.

In mid-December 2020, LG Electronics (Korea) put LG VS Research Center into operation at DITP building – Trung Nam Land (Da Nang). This is the third center in Vietnam that LG has established, after the centers in Hanoi and Ho Chi Minh City.

 

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According to Vice Chairman of Da Nang City People’s Committee, recently, the city has received the attention of Korean businesses and investors. The most recent is the ICT Vina II medical equipment factory project of ICT Vina Company in Da Nang Hi-Tech Park, with a total investment of 60 million USD. This is one of the typical foreign direct investment (FDI) projects of Korean investors in the Central Region – Highlands of Vietnam.

According to the director of the Korea Trade-Investment Promotion Agency (Kotra) in Da Nang, in previous years, Korean businesses were interested in investing in the tourism sector in Da Nang, but in recent years, they pay much attention to the field of processing, manufacturing and outsourcing technology.

In Da Nang, as of November 2020, Korea is the foreign investor with the most number of projects, with 232 projects, total registered capital of 376 million USD, focusing in the fields of services, real estate, industrial production and information technology.

In fact, in terms of FDI inflows from Korea in the Central Region, it must be mentioned the appearance of the Doosan Vina brand in Dung Quat Economic Zone (Quang Ngai). This is the first FDI enterprise, also the most successful enterprise today in the heavy industry sector in Quang Ngai.

With the estimated revenue of 200 million USD/year, Doosan Vina makes a great contribution to the budget revenue and enhances the export value of Quang Ngai. Doosan Vina is creating jobs for about 2,000 employees, of which over 85% are Quang Ngai citizen.

Binh Dinh is also a locality that has been interested by Korean businesses recently. According to the Center for Investment Promotion of Binh Dinh Province, the projects coming from Korean investors are the 70 million USD solar power projects invested by QN Korea Energy Company; Project of high-tech pork farm of New Hop Livestock Company Limited, invested nearly 5 million USD; Wesbrook Vietnam wood processing factory project, invested USD 2.5 million…

In the Central Region – Highlands of Vietnam, in the first 9 months of 2020, Korea is the leading partner in terms of total registered capital in the region, reaching 79.41 million USD with 23 new projects, focusing on processing sectors, manufacturing, technological expertise, accommodation and catering services.

Accumulated to date, Korea is second only to Singapore in this area. Korean enterprises are present in most of the strong sectors and fields of localities such as heavy industry, real estate, tourism, textiles, manufacturing, processing and investment in industrial zone infrastructure.

With the potentials of strategic location, natural resources, abundant human resources, an increasingly complete infrastructure system, the advantage of developing tourism real estate with a series of cultural heritages, long and beautiful coastlines… Combined with new strengths such as trade and investment agreements, breakthrough investment incentive mechanisms and policies, many provinces in the Central Region – Highlands are becoming trust and safety investment destinations of foreign investors, especially Korean businesses.

 

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What Are New in Real Estate Trading Business From 2021?

The Law on Investment 2020 takes effect from January 1, 2021 with many new highlights, including theamendment of conditions for real estate business in the Law on Real Estate Trading 2014.

 

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Specifically, amending regulations on real estate business conditions in the Law on Real Estate Trading 2014 as follows: “Any organizations and individuals trading in real estate must set up enterprises or cooperatives (hereinafter referred to as an enterprise), except for the case specified in Clause 2 of this Article. ”

Clause 1, Article 10 of the 2014 Law on Real Estate Business stipulates that “Any organizations or individuals wish to conduct real estate trading shall set up enterprises or cooperatives (hereinafter referred to as enterprises) and have legal capital not smaller than VND 20 billion, excluding cases prescribed in Clause 2 of this Article.”

In addition, the Law on Investment 2020 also amends regulations on the competence to permit the transfer of all or a portion of real estate projects. For real estate projects approved by investors or granted an investment registration certificate in accordance with the Law on Investment, the competence and procedures for the transfer of all or a portion of the project comply with regulations of the Law on Investment. For real estate projects not falling into the above cases, the competence to permit the transfer of all or a portion of real estate projects is as follows: Provincial People’s Committee decides to allow the transfer of all or a portion of the real estate projects for projects decided by the provincial People’s Committee to invest; The Prime Minister shall decide to permit the transfer of all or a portion of real estate project to projects for which the investment is decided by the Prime Minister.

In case organizations, households or individuals sell, transfer, lease, or lease purchase real estate on a small scale, rarely, it is not required for real estate enterprise to be set up, but they must declare and pay taxes according to the provisions of law.

 

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Da Nang and Korea cooperate in investment

On December 3, 2020, the representative of Da Nang city held an online investment promotion conference called “Investing in Da Nang” for Korean investors and businesses. The conference with the participation of more than 100 Korean investors and businesses has helped investors and businesses have a new view in their investment implementation in Da Nang market.

 

The conference has promoted and introduced the business environment and cooperation opportunities investment in Da Nang in the fields of high technology, information technology, services, and smart city support. Recently, in the context of investment capital inflows from Korea tends to shift to Southeast Asia due to the influence of the Covid-19 epidemic and the US-China trade war, Vietnam is considered to be a country which meet enough political, economic, labor and technological conditions to make the shifting investment in an easy way.

At the conference, representatives of Da Nang city affirmed that foreign investment is one of the important resources for the socio-economic development of the city. For many years, the city has always set the goal of attracting investment as the top target, in addition, the city has actively improved the investment environment, issued many preferential policies and supported foreign investors who invest in the city.

In 2020, despite the impact of the Covid-19 pandemic, there are still many investment projects of Korean investors making investments in Da Nang. Until November 2020, Korea is the country which has the most number of projects in Da Nang with 232 projects, and ranked 4th in terms of capital, with a total registered investment capital of more than 376 million USD, episode medium in the fields of services, real estate, industrial production and information technology.

In the current period, with the selection of a politically stable investment location, high quality labor, reasonable investment costs and good disease control ability, Vietnam is the top destination for Korean investors to set up company, set up factory, and make investment in Vietnam. Currently, many large enterprises in Korea have signed Memorandum of understanding with Da Nang city as the first step of cooperation and investment development in Da Nang in the coming years.

We are a law firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or services request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529

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How Cross-Border Supply of Services Works?

Bilateral or multilateral free trade agreements between countries are formed majorly based on the WTO agreement system. In particular, GATS as an Agreement under the WTO system, is the first and only set of multilateral rules governing international trade in services. Ways or modes of trading services are basic provisions of GATS, including: Cross-border supply (mode 1), Consumption abroad (mode 2), Commercial presence (mode 3), Presence of natural person (mode 4). The categorization of modes covering its own regulations depends on the territorial presence of the supplier and the consumer at the time of the transaction. 

 

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According to GATS, cross -border supply means supply of a service from the territory of one Member into the territory of any other member, and supplier and consumer of a member do not present within the territory of other member. Consumption abroad means supply of a service in the territory of one Member to the service consumer of any other member. Presence of natural person means supply of a service by a service supplier of one member, through presence of natural persons of a member in the territory of any other member. It should be noted that cross-border supply of services is defined depending on each Agreement. Under CPTPP, cross-border supply includes modes 1, 2 and 4 above. In this article, cross-border supply is equivalent to mode 1, under GATS.

When participating in GATS, members make commitments for market access with respect to each mode of service supply and sub-sector. The GATS provides a set of general principles that all WTO members must adhere to, which there is no unnecessary barriers applied to trade. However, GATS expressly recognizes the rights of member governments to manage and regulate the supply of services in pursuit of their own policy objectives. GATS also does not interfere in internal affairs ad policies of members. Therefore, the governments absolutely have the right to decide and adopt their trade policies. The enterprise of a member must comply with domestic regulations in the territory of other member where they conduct business and trade in services and refer to that Member’s Schedule of Specific Commitments to understand market access obligations and national treatment.

Most sub-sectors do not restrict market access and national treatment for foreign suppliers providing cross-border services in Vietnam (legal, accounting, auditing, tax, architecture, advertising, management consulting, …). Although the market access is not restricted, it does not mean that the foreign suppliers freely provide services in Vietnam without satisfaction of conditions or without the consent of the competent state authorities. To consider this mater and have a correct understanding, the national treatment principal should be reviewed, it requires that each member shall accord to services and service suppliers of any other member the treatment no less favourable than that it accords to its own like services and service suppliers. Having said that, in the event that a member maintains business conditions for the domestic services and service suppliers, these conditions may also apply to the foreign services and service suppliers.

Such as accounting service business, foreign service suppliers are not restricted in market access and national treatment under the Schedule of Specific Commitments in Services. It means that a foreign accounting firm can provide accounting services to a Vietnamese enterprise. However, accounting service is a conditional business applicable to domestic firms. According to the national treatment principle, Vietnam has the right to impose similar conditions on foreign suppliers. Reference to the provisions of Vietnamese laws, the foreign accounting firm must fully meet the conditions of head office and personnel to be licensed its business in Vietnam. Further, there are tax liabilities arisen which obligations of registration and declaration depend on particulars of transactions. It is suggested that international trade lawyers are consulted to avoid potential disputes or non-compliance of cross-border supply of services.

We are a law firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or services request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529

 

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Processing and Manufacturing Industry Attracts Foreign Capital

Although the amount of registered and disbursed FDI capital was lower than the same period in 2019 due to the influence of Covid-19, the reduction has been significantly improved.

 

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The latest report of the Foreign Investment Department (Ministry of Planning and Investment) shows that, as of November 20th 2020, the total newly registered capital, adjusted and contributed capital to buy shares of foreign investors reached 26.43 billion USD, equaling 83.1% compared to the same period in 2019. The realized capital of foreign direct investment projects was estimated at 17.2 billion USD, equaling 97.6% compared to the same period in 2019.

Also according to the report, the processing and manufacturing industry is still the field attracting foreign capital, when there are 12.7 billion USD invested in this field, accounting for 48.2% of total registered investment capital. The field of electricity production and distribution ranked second with total investment capital of over 4.9 billion USD, accounting for 18.7% of total registered investment capital. Followed by the real estate business, wholesale and retail with a total registered capital of nearly 3.8 billion USD and 1.5 billion USD.

In terms of investment partners, Singapore is leading with a total investment of nearly 8.1 billion USD, accounting for 30.6% of total investment in Vietnam; Korea ranked second with a total investment of 3.7 billion USD, accounting for 14% of total investment capital. China ranked third, with a total registered investment capital of 2.4 billion USD, accounting for 9.1% of total investment capital. Followed by Japan, Taiwan, Thailand…

In terms of the number of new projects, Korea ranked first (573 projects); China ranked second (311 projects); Japan ranked third (251 projects); Hong Kong ranked fourth (164 projects)…

Commenting on the foreign investment situation, the Foreign Investment Department assessed that, due to the impact of the Covid-19 pandemic, production and business activities were affected, the implemented investment capital of foreign investment projects in 11 months, although decreasing compared to the same period in 2019, but the decrease rate has improved. Many FDI enterprises are gradually recovering, maintaining good production and business activities, creating momentum for faster growth in the last months of 2020.

Considering the strong decline in global investment due to the effects of the Covid-19 pandemic, this result is better than many other countries, demonstrating Vietnam’s attractiveness in the eyes of international investors.

The Foreign Investment Department forecasts that there are still many foreign investors who are interested, confident and want to invest in Vietnam. But due to the influence of Covid-19, the movement of investors, as well as new investment decisions and the expansion of the scale of foreign investment projects, continue to be affected.

 

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Temporary residence card in Vietnam

If a foreigner have been sponsored work permit in Vietnam to work or he/she decides to set up a company in Vietnam, he/she could be granted temporary residence card to live in Vietnam instead of applying and re-newing business or travel visas every three months.

 

We detail here some procedures which help foreigners to prepare for before applying for temporary residence card.

I. Subjects to be granted temporary residence card

-Members of foreign representative agencies and their accompanying relatives (father, mother, wife, husband, children under 18 years old).

-Foreigners who work with the Institute of the Supreme People’s Procuracy, the Supreme People’s Court, the ministries, ministerial-level agencies, agencies attached to the Government and People’s Committees of provinces and cities directly under the Central Government and the Central offices of mass organizations, mass organizations.

-Foreigners who work in projects already approved by competent state agencies licensed in Vietnam.

-Foreigners who work with businesses in Vietnam has the work permit valued more than 01 year.

-Persons on the payroll of foreign representative offices and branches of economic organization, culture and other professional organizations of foreign non-governmental organizations based in Vietnam.

-Foreigners staying in Vietnam for other purposes.

II. Conditions for implementation

+ Time to stay in Vietnam more than 01 year;

+ Valid passport more than 01 year;

III. The composition, the number of records

1) The composition profile, including

-A written request of agencies, organizations and individuals offering, guarantee and propose for temporary residence card;

-01 declaration of information of foreigners who apply for temporary residence, with photos and sealed by the agency or organization: A written request for temporary residence card (Form N7A); a declaration about Foreigners applying for temporary resident card (Form N7B)

-02 3 x4 cm size photographs;

-01 copies of passport, valid visa, immigration cards (bring original for comparison);

-01 copies or photo (bring the original for comparison) proof of purpose to stay in Vietnam.

As the case may file appropriate documents: investment licenses, permits the establishment of enterprises, work permit in Vietnam, certificate of board members and permits the establishment of representative offices, marriage/birth registration.

2) The number of records: 01 (one).

IV. Implementing agencies administrative procedures:

Immigration management Department, Police provinces and cities directly under the Central Government.

V. Implementation time: 05 to 07 days;

VI. Subjects performed:  by organizations and individuals;

We are a law firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or services request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529.

 

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Vietnam Marriage and Family Act 2014

The Vietnam Family and Marriage Act 2014 has officially been passed and will take effect from Jan 1st, 2015.  The Vietnam law on Marriage and Family in 2014 has the following notable update:

Same-sex marriage is not banned but not yet officially recognized

The Law on Marriage and Family in 2014 abolishes the regulations that “prohibit marriage between people of the same sex,” but specifically “does not recognize marriages between people of the same sex as stipulated in clause 2 Article 8 “.  Accordingly, people of the same sex can get married but their marriage will not be protected by law when disputes occur.  This is however considered a development in the law taking consideration of the situation in Vietnam.

 

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Raising the age of marriage

The new law defined marriage age for women from the age of 18 or more for women and men from all 20 years or older. The reason for this change is because if the minimum age of marriage for women is just about to turn 18, the rules are not consistent with the Vietnam Civil Code and the Civil Procedure Code.   According to the Vietnam Civil Code, person under 18 years old is a minor, as such requires the legal representative agreement in civil transactions.  According to the Vietnam Civil Procedure Code, people of at least 18 years old will have full capacity for civil conduct proceedings.

Surrogacy arrangement is accepted

The Vietnam Marriage and Family Law 2014 officially allows surrogacy for humanitarian purposes. The surrogacy is applied only when the adequate conditions for both surrogate mothers and intended parents are met. In particular, the law only allows relatives from husband or wife to be surrogate mother.  This will also be considered as a development in the Vietnam Marriage and Family Law 2014.

Assets division during marriage

Law in developed countries recognize the prenuptial agreement which is signed between people before getting married.  Vietnam law does not consider marriage as a contract.  In the meantime, the current regulations of Vietnam Marriage and Family law are unclear on ownership of common and private assets and properties.  It mainly refers to land issues while other assets such as securities and share ownership in the enterprise are not mentioned, making it difficult to resolve the disputes arisen.  The Law on Marriage and Family 2014 specifically regulates the agreement between people before getting married on the assets and properties. Such agreement must be in writing, notarized or authenticated before marriage. This agreement could be changed during the marriage.

We at ANT Lawyers, a law firm in Vietnam provide advice and services on marriage and family laws.  We could be reached at office +84 28 730 86 529 or email ant@antlawyers.vn.

 

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