This article aims to provide a comprehensive and stringent regulatory compliance guide for companies planning to enter or have entered the Vietnamese market. We will delve into various key aspects of market access in Vietnam, including basic market access requirements, industry-specific regulations and licenses, tax compliance, labor regulations and other core areas. At the same time, we also pay attention to aspects such as intellectual property protection, foreign exchange management, and environmental protection that are crucial to corporate operations.

In the digital age, data privacy and cybersecurity have become important issues that companies cannot ignore, so we will specifically discuss Vietnam’s relevant regulations in this regard. In addition, in order to help enterprises establish a good business image and sustainable development in the Vietnamese market, anti-corruption and business ethics requirements will be introduced in detail , as well as Vietnam’s contract law and dispute resolution mechanism, to provide guidance for enterprises in legal disputes.

Basic requirements for market access

Entering the Vietnamese market is not an easy process, and companies need to meet a series of basic requirements to successfully conduct business. The first task is to choose the right form of investment. Vietnamese law allows foreign investors to enter the market in various forms, including 100% foreign-owned enterprises, joint ventures, representative offices, etc. Each form has its specific advantages and limitations, and companies need to make wise choices based on the nature of their business and long-term development strategies.

Registered capital is another key consideration. Although Vietnam has no minimum registered capital requirements for most industries, some specific industries, such as financial services, insurance and real estate, may have higher capital thresholds. Investors need to carefully evaluate the business size and industry characteristics to ensure that the registered capital not only meets legal requirements but also supports the company’s actual operational needs.

Business establishment in Vietnam also needs to go through strict approval procedures. This usually involves obtaining an Investment Registration Certificate (IRC) and an Enterprise Registration Certificate (ERC). Investment registration certificates are issued by the planning and investment department, while enterprise registration certificates are issued by the industrial and commercial administration departments. This process can take several months, depending on the size and complexity of the investment project. Therefore, enterprises should plan in advance, prepare sufficient documents and materials, and may need to hire local legal counsel to assist with the process.

In addition, Vietnam has restrictions on the business scope of foreign investors. Some industries may be completely closed to foreign investment, while others require cooperation with local companies. For example, industries such as advertising, tourism and logistics are relatively open to foreign investment, while telecommunications, banking and defense-related industries have stricter restrictions. Investors need to carefully study Vietnam’s foreign investment catalog to ensure that their business falls within the category that allows foreign investment.

Venue selection is also an important part of market access. The Vietnamese government encourages foreign-invested enterprises to settle in industrial zones and export processing zones, which usually provide more favorable policies and better infrastructure. However, companies also need to consider factors such as transportation convenience and labor supply, and make decisions after weighing the pros and cons.

Finally, businesses cannot ignore cultural and language barriers. Although this is not a legal requirement, it is critical to successful market entry. Building a local team and understanding Vietnam’s business culture and practices can greatly improve the company’s local operating efficiency and chances of success.

Industry-specific regulations and licenses

Although Vietnam’s investment environment is increasingly open, it still maintains a certain degree of industry control. The regulatory requirements and license application procedures faced by different industries may vary significantly, and investors need to have an in-depth understanding of the specific requirements of their own industry to ensure compliance.

In the field of manufacturing, the Vietnamese government has actively encouraged the development of high-tech and environmentally friendly industries in recent years. For example, companies that produce high-tech products such as smart equipment and new energy vehicle parts can enjoy more favorable land use rights and tax policies. However, these companies also face stricter environmental standards and technical requirements. Investors will need to obtain an industrial production license and may also need approval of an environmental impact assessment report.

The service industry, especially financial services, faces stricter regulations. The establishment of banks, insurance and securities companies requires special approval from the National Bank or the Ministry of Finance. It is worth noting that Vietnam has relaxed market access for foreign banks. According to the Amendment to the Credit Institutions Law that took effect in January 2020, foreign investors can now hold up to 30% of shares in Vietnamese commercial banks, an increase from the previous 20%. However, increases in this ratio require approval from the State Bank of Vietnam and are generally only available to reputable and technologically advanced foreign financial institutions.

In terms of financing, the Vietnamese government has introduced a series of policies to support foreign-invested enterprises. The new Investment Law implemented in June 2020 further simplifies investment procedures and expands the scope of industries that enjoy investment preferences. Specifically, investment projects in high-tech industries, education, health care and other fields can enjoy a 4-year tax holiday and a 50% income tax reduction for the following 9 years. In addition, Vietnam has also established a number of special economic zones, such as the Nai Special Economic Zone, to provide more favorable financing conditions and tax policies for settled companies.

The telecommunications and media industries remain relatively tightly regulated. If foreign-funded enterprises want to enter these fields, they usually need to form joint ventures with local enterprises, and the foreign shareholding ratio must not exceed 49%. At the same time, operations in these industries also require special permission from the Ministry of Information and Communication.

For the emerging e-commerce industry, the Vietnamese government implemented the new “E-commerce Activities Management Regulations” in 2021. The regulations require all e-commerce platforms operating in Vietnam to register with the Ministry of Commerce and Industry and impose stricter requirements on data storage and consumer protection. If foreign-funded enterprises want to carry out e-commerce business in Vietnam, in addition to a general business license, they also need to apply for an e-commerce business license.

The real estate industry has always been a hot spot for foreign investors, but it also faces many restrictions. Foreign investors cannot purchase land directly and can only obtain land use rights through long-term leases. Enterprises engaged in real estate development need to obtain a construction license and a real estate business license. It is worth noting that the 2020 revision of the Investment Law relaxes some restrictions on foreign investors, allowing them to purchase apartments or villas under certain conditions, which opens up new opportunities for real estate investment.

Tax compliance

Tax compliance is one of the important challenges companies face when doing business in Vietnam. Vietnam’s tax system is relatively complex and has been updated frequently in recent years. Companies need to pay close attention to policy changes to ensure continued compliance.

Corporate income tax (CIT) is a tax that foreign investors need to focus on. Vietnam’s standard corporate income tax rate is 20%, which is relatively low in Southeast Asia. However, for companies engaged in oil and gas exploration and extraction business, the tax rate may be as high as 32% to 50%. It is worth noting that in order to attract foreign investment, the Vietnamese government provides preferential tax rates in certain areas. For example, projects invested in areas with particularly difficult socioeconomic conditions, or high-tech enterprises, can enjoy a preferential tax rate of 10% for 15 years. In addition, the Investment Law revised in 2020 further expanded the scope of tax incentives, including innovative and entrepreneurial projects, scientific research institutions, etc.

Value-added tax (VAT) is another important tax, with a standard rate of 10%. However, a 5% tax reduction rate may be applicable to certain goods and services, such as medical equipment, educational services, etc. It is worth mentioning that starting from February 1, 2022, the Vietnamese government has implemented a temporary VAT reduction policy, reducing the VAT rate for some goods and services from 10% to 8% to stimulate economic recovery . This policy was originally scheduled to end at the end of 2022, but was later extended to the end of 2023.

In terms of personal income tax, Vietnam adopts a progressive tax rate system with a maximum tax rate of 35%. For foreign employees, their income earned in Vietnam is usually subject to personal income tax, but if certain conditions are met, they can enjoy tax treaty benefits.

Regarding tax policies on financing, the Vietnamese government provides some preferential measures. For example, qualified small and medium-sized enterprises can enjoy a preferential corporate income tax rate of 17%. In addition, according to Decree No. 116/2020/ND-CP that takes effect in January 2021, innovative and entrepreneurial enterprises that meet certain conditions can enjoy a corporate income tax holiday of up to 4 years, and a 50% tax reduction for the next 9 years.

It is worth noting that the Vietnamese government is actively promoting the development of financial technology. In 2020, the State Bank of Vietnam issued a decision on the FinTech Regulatory Sandbox, allowing FinTech companies to test innovative products and services in a controlled environment. Although this does not directly involve taxation, it provides a more flexible operating environment for fintech companies and indirectly affects the tax strategies of these companies.

In terms of transfer pricing, the Vietnamese tax authorities have increased supervision in recent years. Decree No. 132/2020/ND-CP implemented in 2020 introduced stricter transfer pricing regulations, including expanding the definition of related party transactions and requiring companies to prepare contemporaneous documentation. This is particularly important for multinational companies with subsidiaries in Vietnam, which need to pay special attention to pricing strategies for internal transactions.

For foreign contractors, Vietnam implements the Foreign Contractor Withholding Tax (FCWT) system. This is a special tax system that combines value-added tax and corporate income tax, with tax rates varying by industry. For example, for the services industry, the standard withholding rates are 5% VAT and 5% corporate income tax.

Vietnam is advancing tax digital reform. From July 1, 2022, all businesses must use electronic invoices. This move aims to improve the efficiency of tax management and reduce tax losses, but also brings new compliance requirements for enterprises.

Labor regulations

Vietnam’s labor regulatory system has undergone significant changes in recent years, aiming to balance the rights and interests of employers and employees while improving the competitiveness of the country’s overall labor market. The new Labor Law, which came into effect on January 1, 2021, has become the key to understanding Vietnam’s current labor environment. This law not only stipulates basic issues such as employment relationships, working hours, and salary standards, but also introduces some new concepts and requirements, bringing new challenges and opportunities to the human resources management of enterprises.

In terms of employment relations, the new law allows employers and employees to sign labor contracts electronically, which opens the way for remote working and digital human resources management. However, the legal effect of electronic contracts is equivalent to that of written contracts, and companies need to ensure the security and compliance of electronic signature systems. In addition, the new law also provides for more flexible types of labor contracts, including indefinite-term contracts, fixed-term contracts of 1-3 years, and seasonal or specific work contracts. It is worth noting that for foreign employees, companies need to obtain a labor permit, which is valid for up to 2 years and can be renewed once.

Working hours and overtime regulations have also been adjusted. Standard working hours remain at no more than 48 hours per week, but the new law allows for more flexible working hours in certain special industries. The annual overtime limit has been increased from 300 to 400 hours, providing companies with greater flexibility. However, this also requires companies to manage employee working hours more carefully to ensure that labor regulations are not violated.

In terms of salary, Vietnam implements a minimum wage system and is divided into four levels according to region. The government adjusts the minimum wage every year based on economic development. Starting from July 1, 2023, Vietnam will increase the minimum wage by 6%, which is the first adjustment since 2020. For example, the monthly minimum wage in Category 1 areas such as Hanoi and Ho Chi Minh City reaches VND 4,680,000 (approximately US$200). Companies need to pay close attention to these changes and adjust their compensation policies in a timely manner.

Social insurance is another important aspect of labor regulations. According to current regulations, employers are required to pay social insurance equivalent to 17.5% of total wages, 3% medical insurance and 1% unemployment insurance for Vietnamese employees. From January 1, 2022, foreign employees will also be included in the compulsory social insurance system, which increases the company’s labor costs, but also provides better social security for foreign employees.

Trade union rights have been further strengthened in the new Labor Law. Enterprises need to provide necessary support for union activities, including providing paid time for union cadres to engage in union work. In addition, companies also need to pay a fee equal to 2% of total wages to the union fund. These regulations are intended to enhance labor-management dialogue and promote harmonious labor relations.

Regarding the resolution of labor disputes, the new law introduces a mandatory mediation procedure that requires mediation before filing a lawsuit. This measure aims to reduce the burden of court cases and promote dialogue between labor and management to resolve issues. Enterprises should establish an internal communication mechanism to handle employees’ complaints and suggestions in a timely manner to reduce the occurrence of labor disputes.

In terms of financing, although labor regulations themselves do not directly involve financing policies, the Vietnamese government has provided some related support to encourage employment and skills training. For example, according to Decree No. 61/2015/ND-CP, companies that provide vocational training for employees can enjoy tax deductions. Specifically, companies can deduct the cost of employee training from taxable income, which indirectly reduces the company’s human resource costs.

In addition, the Vietnamese government also provides preferential loans to enterprises through the National Employment Fund to create job opportunities and carry out vocational training. According to Decree No. 74/2019/ND-CP, eligible enterprises can apply for low-interest loans with a term of up to 5 years. These measures not only help companies reduce human resource costs, but also improve labor quality and enhance corporate competitiveness.

Intellectual property protection

Vietnam has made significant progress in intellectual property protection in recent years, which is reflected not only in the continuous improvement of its legal framework, but also in the continuous strengthening of law enforcement. As a member of the World Trade Organization (WTO) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Vietnam is committed to aligning its intellectual property protection system with international standards. The new amendments to the Intellectual Property Law that took effect on January 1, 2022 mark an important step in Vietnam in this field, providing a more solid legal basis for enterprises to protect their innovations in the Vietnamese market.

In terms of patent protection, Vietnam adopts the “first-to-file” principle. The protection period of invention patents is 20 years, utility model patents are 10 years, and design patents are 5 years (renewable twice for 5 years each time). It is worth noting that the new law introduces a partial review system, which greatly shortens the patent review time and enables companies to obtain patent protection faster. However, inventions in the fields of biotechnology, pharmaceuticals and chemistry still need to be fully scrutinized. For foreign applicants, applications must be submitted through an IP agent registered in Vietnam, which increases the complexity of the procedure but also ensures the accuracy and compliance of the application.

Trademark protection is also highly valued in Vietnam. Trademark registration adopts the Nice classification system, with a protection period of 10 years and unlimited renewal. The new law strengthens the protection of well-known trademarks, allowing objections to infringements even in unregistered goods or service categories. This is particularly important for multinational companies to protect their brand image. In addition, Vietnam also recognizes sound trademarks and three-dimensional trademarks, providing enterprises with a wider range of brand protection options.

Copyright protection faces new challenges in the digital age, and Vietnam is also actively responding to them. The new law clarifies the responsibilities of Internet service providers, requiring them to promptly delete infringing content after receiving notice of infringement. The author’s works are protected during his lifetime and 50 years after his death. For film and television works, the protection period is 50 years after the first disclosure. It is worth mentioning that Vietnam has joined the Berne Convention, which means that works first published in other member countries are automatically protected in Vietnam without additional registration.

In terms of law enforcement, Vietnam is increasing its efforts to combat intellectual property infringement. Administrative penalties, civil litigation and criminal prosecution are all available enforcement avenues. The new law increases penalties for repeated infringements, with fines up to five times the value of the infringing goods. In addition, Vietnam has also established specialized intellectual property courts to improve the efficiency and quality of hearing intellectual property cases.

For high-tech enterprises and innovative companies, intellectual property protection and financing support are closely linked. The Vietnamese government has launched a series of policies aimed at encouraging innovation and protecting intellectual property rights. For example, under Decree No. 13/2019/ND-CP, companies engaged in high-tech R&D can enjoy a number of tax incentives, including a four-year tax holiday and a 50% corporate income tax reduction for the subsequent nine years. This not only reduces the operating costs of enterprises, but also provides financial support for the creation and protection of intellectual property rights.

In addition, the Ministry of Science and Technology of Vietnam has established the National Technology Innovation Fund (NATIF) to provide low-interest loans and financial subsidies to high-tech enterprises and innovative projects. According to Decree No. 76/2018/ND-CP, the fund can provide enterprises with preferential loans of up to 70% of the total investment, with a term of up to 12 years. These funds can be used for research and development, technology transfer and intellectual property protection, effectively supporting the innovative activities of enterprises.

The Vietnamese government also promotes the commercialization of intellectual property through intellectual property asset evaluation. According to Notice No. 35/2015/TT-BTC, companies can include their patents, trademarks and other intangible assets into company valuation, which opens up new avenues for intellectual property-based financing. For example, companies can use their intellectual property as collateral to apply for loans from banks, which is especially beneficial for asset-light technology companies.

It is crucial for foreign investors to understand and make full use of Vietnam’s intellectual property protection system. It is recommended that enterprises start planning their intellectual property strategies before entering the Vietnamese market, including timely registration of trademarks and patents, establishing internal confidentiality systems, and establishing cooperative relationships with local intellectual property agents. At the same time, enterprises should also actively take advantage of various support policies provided by the government and combine intellectual property protection with financing strategies to maximize the commercial value of innovation results.

In general, Vietnam’s intellectual property protection environment is constantly improving, providing enterprises with increasingly reliable legal protection. However, challenges remain, particularly with regard to the consistency and efficiency of enforcement. Businesses need to remain vigilant and actively protect their own rights and interests while also respecting the intellectual property rights of others to achieve sustainable development in Vietnam, a dynamic market.

Foreign exchange management

Vietnam’s foreign exchange management system has undergone significant changes over the past few years, reflecting the country’s determination to promote foreign investment and international trade. However, as an emerging market, Vietnam still maintains relatively strict foreign exchange controls to ensure the stability of the country’s economic and financial system. As the central bank, the State Bank of Vietnam (SBV) is responsible for formulating and executing foreign exchange policies, and its management scope covers all aspects from daily transactions to large capital flows.

In terms of daily operations, foreign-funded enterprises are allowed to hold foreign currency accounts in Vietnam, which greatly facilitates cross-border transactions. However, it is worth noting that Vietnamese law requires all domestic transactions to be settled in Vietnamese Dong (VND). This means that foreign-invested enterprises need to frequently convert between foreign currencies and local currencies, so understanding the current exchange rate policy is crucial. Vietnam adopts a managed floating exchange rate system. The SBV publishes a reference exchange rate daily, and commercial banks can fluctuate up or down a certain percentage (currently ±3%) on this basis. While this mechanism provides a certain degree of flexibility, it also brings challenges to corporate financial planning.

For foreign-invested enterprises, capital entry and exit is a key issue. According to Decree No. 06/2019/ND-CP, as revised in 2019, foreign investors are free to remit investment capital, but must do so through a dedicated Capital Investment Account (CIA). This account must be opened within 90 days of obtaining the investment license. It is worth noting that capital remittances must also be made through the same account, which provides regulators with the convenience of tracking the flow of funds.

In terms of profit repatriation, foreign investors are, in principle, free to remit their legitimate profits in Vietnam after completing their tax obligations. However, in practice this process can be complex. According to Decree No. 06/2019/ND-CP, companies need to provide a series of documents, including audit reports, tax settlement certificates, etc., in order to remit profits. Additionally, repatriation of profits is not allowed if the business has accumulated losses. These regulations are intended to prevent capital flight, but they also increase compliance costs for foreign-invested enterprises.

Regarding cross-border loans, the Vietnamese government has implemented relatively strict controls. According to Notice No. 12/2022/TT-NHNN, which takes effect on December 30, 2022, enterprises borrowing from abroad must register with the SBV, and the total amount of borrowings must not exceed the enterprise’s unused investment quota. This provision is an important consideration for businesses that rely on overseas financing. It is worth noting that the notice also stipulates that the annual repayment amount of medium- and long-term foreign debt (maturity of more than one year) shall not exceed 25% of the balance of short-term foreign debt in the previous year. This measure is intended to control companies’ foreign debt risks, but it may also limit companies’ financing options.

In terms of financing, the Vietnamese government has launched a series of policies in recent years aimed at attracting foreign investment and supporting the development of key industries. For example, according to the Investment Law revised in 2020, investment projects in high technology, new materials, clean energy and other fields can enjoy preferential foreign exchange policies. Specifically, these projects may receive higher foreign debt limits or enjoy simplified procedures for profit repatriation.

In addition, Vietnam is also actively promoting the internationalization of its financial market. In July 2022, the Vietnamese stock market officially launched the KRX trading system, which not only improved the technical level of the market, but also laid the foundation for the introduction of more international investors in the future. This is undoubtedly a positive sign for foreign companies considering financing through Vietnam’s capital market.

It is worth mentioning that Vietnam is piloting a new foreign exchange management mechanism. According to Decision No. 210/QD-TTg announced in March 2023, the government will pilot a more relaxed foreign exchange policy in certain special economic zones, including allowing the use of foreign currencies in specific transactions and simplifying procedures for cross-border capital flows. Although this policy is still in the pilot stage, it reflects Vietnam’s determination to gradually relax foreign exchange controls.

For foreign-invested enterprises operating in Vietnam, it is crucial to establish a sound foreign exchange management system. This includes not only compliance with relevant regulations, but also effective exchange rate risk management. Companies can consider using financial derivatives, such as forward contracts or swaps, to hedge exchange rate risks. However, it should be noted that according to the regulations of SBV, derivatives transactions by enterprises must be based on actual commercial needs and purely speculative transactions are not allowed.

Generally speaking, Vietnam’s foreign exchange management system is relatively strict, but it is developing in a more open and flexible direction. For foreign-invested enterprises, fully understanding these regulations and maintaining good communication with local financial institutions are the keys to ensuring compliance operations and effective financial management. At the same time, pay close attention to policy changes, especially those preferential policies targeting specific industries or regions, which may bring new opportunities to companies. In this rapidly changing environment, flexibility and proactive planning will become key factors for business success.

Environmental protection regulations

Environmental issues are an issue that the Vietnamese government is paying increasing attention to . Through the formulation and improvement of a series of laws and regulations, it strives to build a more sustainable development model. The new Environmental Protection Law, passed in 2020 and effective on January 1, 2022, marks an important step in Vietnam’s environmental governance and provides a clearer guidance framework for enterprises’ environmental compliance in Vietnam.

A distinctive feature of the new Environmental Protection Law is its comprehensiveness and systematicness. The law covers everything from air and water pollution control to waste management to biodiversity protection. For companies operating in Vietnam, especially those in high-pollution industries such as manufacturing, chemicals, and mining, special attention needs to be paid to the provisions of the law regarding environmental impact assessment (EIA). Under the new law, companies must conduct a comprehensive environmental impact assessment and obtain approval from relevant authorities before starting a project. This is not only an administrative procedure, but also an important tool for corporate environmental risk management.

Water management is another focus of the new law. Vietnam faces serious water pollution problems, and the new law imposes stricter regulations on industrial wastewater discharge standards. Companies need to install online monitoring systems to report wastewater discharge data to environmental authorities in real time. Companies that violate emission standards will face heavy fines, and in serious cases they may even be ordered to suspend production for rectification. For enterprises in water-intensive industries such as textiles and papermaking, this means that they need to increase investment in environmental protection facilities.

In terms of air quality management, the new law introduces stricter emission standards and monitoring requirements. Especially for key pollution sources such as thermal power plants and cement plants, continuous emission monitoring systems (CEMS) are required to be installed. In addition, the new law also strengthens the control of volatile organic compounds (VOCs), which has a direct impact on companies in petrochemical, paint and other industries.

Solid waste management is another focus area of ​​the new law. The law clearly stipulates the requirements for waste classification, collection, transportation and treatment, and emphasizes the concept of circular economy. For businesses that generate large amounts of solid waste, such as electronics manufacturing, they need to develop detailed waste management plans and ensure cooperation with qualified waste disposal companies.

The new law also places particular emphasis on companies’ environmental information disclosure responsibilities. Listed companies and large enterprises are required to include environmental compliance in their annual reports, which not only increases corporate transparency, but also provides investors and the public with a basis for evaluating corporate environmental performance.

In terms of law enforcement, the new law gives greater powers to environmental law enforcement agencies. Environmental inspections can be carried out without prior notice, and illegal companies will face more severe penalties, including high fines, forced production shutdowns, and even criminal liability. This requires companies to establish a more complete environmental management system and conduct regular internal audits to ensure continued compliance.

It is worth noting that the new law also introduces an environmental damage compensation system. If a company causes environmental pollution, it not only has to bear the responsibility for governance, but may also face huge compensation. This greatly increases the environmental risks of enterprises and highlights the importance of environmental insurance.

In terms of financing, the Vietnamese government is actively promoting the development of green finance and providing support for environmental protection projects and clean technology enterprises. According to Decree No. 02/2018/ND-CP promulgated in 2018, companies engaged in environmental protection-related businesses can enjoy a number of preferential policies. Specifically, these companies can obtain preferential loans of up to 70% of the total investment, with a loan term of up to 12 years. In addition, you can also enjoy land use tax exemptions, accelerated depreciation and other benefits.

As a policy bank, Vietnam Development Bank (VDB) plays an important role in supporting environmental protection projects. According to Decision No. 997/QD-TTg, VDB is authorized to manage the National Environmental Protection Fund and provide low-interest loans to eligible environmental protection projects. The interest rate can be as low as 50% of the ordinary commercial loan interest rate, which provides strong financial support for enterprises to upgrade environmental protection technology.

In addition, the Vietnam Securities Commission (SSC) is actively promoting the development of the green bond market. In 2021, the SSC issued green bond issuance guidelines to encourage companies to finance environmental protection projects through the issuance of green bonds. This provides a new financing channel for companies with large-scale environmental protection projects.

For foreign-invested enterprises, it is crucial to fully understand and comply with Vietnam’s environmental protection regulations. It is recommended that enterprises take the following measures:

• Establish a sound environmental management system and conduct regular internal environmental audits.
• Actively investing in environmental protection technology and equipment is not only for compliance, but also a necessary means to improve competitiveness.
• Pay close attention to policy changes, especially industry-specific environmental standards and requirements.
• Consider purchasing environmental liability insurance to reduce potential environmental risks.
• Explore green financing opportunities and take advantage of various preferential policies provided by the government to support corporate environmental protection projects.

Data privacy and cybersecurity

In the context of the rapid development of the digital economy, the Vietnamese government has paid more and more attention to data privacy and network security issues in recent years. The Law on Cybersecurity (Law on Cybersecurity), passed in June 2018 and effective on January 1, 2019, marks an important step in Vietnam’s legal framework in this field. This law not only puts forward new requirements for network security, but also has a profound impact on data privacy protection, bringing new challenges and opportunities to companies operating in Vietnam, especially multinational companies and technology companies.

The core goal of the Cybersecurity Law is to protect national security and social order, and also involves the protection of personal data. The law requires companies that provide services in Vietnam, especially social media platforms and e-commerce websites, to establish a representative office or branch within Vietnam. This provision is intended to ensure that these companies can respond promptly to government requests for data and information. However, this has also resulted in additional operating costs and compliance pressures for many multinational companies.

Data localization is one of the most controversial provisions of the Cybersecurity Law. The law requires that certain types of data, specifically the personal information of Vietnamese users, be stored on servers located in Vietnam. This requirement poses significant challenges to the data management strategies of cloud service providers and multinational enterprises. Although the implementation details of the law have not yet been fully clarified, many companies have begun to adjust their data storage and processing strategies to ensure compliance.

In terms of personal data protection, Vietnam currently does not have a specific personal data protection law, but the government is actively promoting relevant legislation. In February 2021, the Vietnamese government announced a draft of the “Personal Data Protection Act”, which is expected to be officially promulgated in the near future. This draft draws on some core concepts from the EU’s General Data Protection Regulation (GDPR), such as data subject rights, legal basis for data processing, etc., showing Vietnam’s determination to align with international standards in personal data protection.

Notable in the draft is the special protection of sensitive personal data. Biometric data, health data, financial data, etc. are classified as sensitive data, and the processing of such data requires stricter conditions, including obtaining the data subject’s explicit consent and taking additional security measures. This has put forward higher data management requirements for enterprises in medical, financial and other industries.

In terms of law enforcement, the Cybersecurity Law gives law enforcement agencies broad powers. For example, under certain circumstances, businesses may be required to provide user data or remove certain content deemed harmful. Such regulations raise concerns about government overreach and restrictions on free speech. For companies, how to strike a balance between complying with the law and protecting user privacy has become a thorny issue.

It is worth mentioning that Vietnam is strengthening the protection of critical information infrastructure. Decree No. 53/2022/ND-CP, which will take effect in August 2022, details the identification, protection and response measures for critical information systems. This is particularly important for companies in key fields such as finance, energy, and transportation, which need to invest more resources in strengthening network security protection.

For cross-border data transfer, the Cybersecurity Law and the upcoming Personal Data Protection Act have set higher thresholds. When enterprises conduct cross-border data transfers, they may need to conduct a data impact assessment and obtain approval from relevant departments. This is a significant challenge for multinational companies that rely on global data flows, which may require redesigning their data processes and architecture.

At the practical level, companies need to take a series of measures to ensure compliance:

• Establish a comprehensive data mapping and classification system. Understanding the types, sources, uses and flows of data processed by your company is the basis for developing an effective data protection strategy. In particular, sensitive personal data is identified and specially protected.
• Implement strong technical and organizational security measures. This includes but is not limited to encryption technology, access control, regular security audits, etc. Considering that the Vietnamese government attaches great importance to network security, companies may need to invest more resources to strengthen network defense capabilities.
• Develop clear data handling policies and procedures. This includes mechanisms for obtaining user consent, data retention and deletion policies, data subject rights response procedures, etc. With the introduction of the Personal Data Protection Act, these policies may need to be further adjusted and improved.
• Strengthen employee training and awareness raising. Data breaches often result from human error, so it is vital to ensure that all employees understand the importance of data protection and related procedures.
• Consider appointing a Data Protection Officer (DPO) or similar role. Although Vietnamese law currently does not mandate the establishment of a DPO, considering the complexity and importance of data protection, establishing a dedicated person in charge can help coordinate and manage related work.
• Pay close attention to legal developments and regulatory trends. Vietnam’s data protection and cybersecurity regulations are still being improved, and companies need to remain vigilant and adjust compliance strategies in a timely manner.

Anti-corruption and business ethics

Vietnam has made significant progress in fighting corruption and improving business ethics in the past few years, which is reflected not only in the improvement of the legal framework, but also in the strengthening of law enforcement and the improvement of social awareness. The new “Law on Anti-Corruption” (Law on Anti-Corruption) passed in 2018 and came into effect on July 1, 2019 marks an important step in Vietnam in this field and provides enterprises with compliance operations in the Vietnamese market. Clearer guidance.

A notable feature of the new Anti-Corruption Law is its expanded scope of application. Compared with the old law, the new law not only applies to the public sector, but also explicitly includes the private sector within the scope of supervision. This means that all enterprises operating in Vietnam, whether state-owned or private, local or foreign-owned, must comply with the provisions of this law. This change reflects the Vietnamese government’s recognition of the importance of the private sector in the fight against corruption, while also imposing higher compliance requirements on businesses.

The new law defines “corrupt behavior” more comprehensively and specifically. In addition to bribery in the traditional sense, the law also clearly lists conflicts of interest, abuse of power, misappropriation of public funds and other behaviors as corruption. Of particular note is the law’s emphasis on the management of “conflicts of interest”. Companies need to establish mechanisms to identify, declare and manage potential conflicts of interest. This is particularly important for multinational companies, which may face more complex networks of interests.

In terms of preventing corruption, the new law requires companies to establish sound internal control systems. This includes formulating anti-corruption policies, establishing reporting mechanisms, and conducting regular risk assessments. For large enterprises, especially listed companies, the law also requires the establishment of a special anti-corruption department or the designation of a dedicated person to be responsible for anti-corruption work. These requirements are intended to embed anti-corruption awareness and measures into a business’s day-to-day operations, rather than simply being a reactive response to specific incidents.

The new law also places particular emphasis on the importance of transparency and information disclosure. Enterprises need to regularly disclose information such as their organizational structure, operations, and financial status. Information disclosure requirements are more stringent for companies that participate in public projects or use public funds. This regulation not only helps prevent corruption, but also provides investors and the public with an important basis for evaluating corporate integrity.

On the enforcement side, the new law gives law enforcement agencies greater powers and more tools. For example, the law allows the use of special investigative techniques to investigate complex corruption cases and increases penalties for corruption. For companies, this means that once they are involved in a corruption case, they may face more serious legal risks and reputational losses.

It is worth noting that the new law also introduces the concept of “effective repentance”. Companies may receive lighter penalties if they proactively report corruption before it is discovered and actively cooperate with investigations. This regulation aims to encourage companies to proactively disclose and correct internal violations, while also providing companies with certain risk mitigation opportunities.

In terms of business ethics, although Vietnam does not yet have a specific business ethics law, relevant requirements have been integrated into multiple laws and industry norms. For example, the Enterprise Law requires enterprises to abide by business ethics and respect the legitimate rights and interests of competitors and consumers. The Labor Law stipulates the ethical responsibilities of employers, including prohibiting discrimination and protecting employees’ rights and interests.

Industry self-discipline is also an important part of Vietnam’s business ethics system. Many industry associations have developed their own codes of ethics, such as the Vietnam Banks Association’s Banking Code of Ethics, which provide more specific behavioral guidance for member companies. Although these self-regulatory measures are not legally binding, they play an important role in shaping industry norms and corporate reputation.

For multinational companies operating in Vietnam, special attention needs to be paid to the differences and intersections between local laws and home country or international anti-corruption laws (such as the US Foreign Corrupt Practices Act or the UK Bribery Act). In many cases, businesses may need to adhere to more stringent standards to ensure global compliance.

At a practical level, companies need to take a series of measures to ensure anti-corruption compliance and maintain business ethics:

• Establish comprehensive anti-corruption policies and procedures. This should include clear codes of conduct, detailed operational guidance and effective oversight mechanisms. Policies should be written in Vietnamese and other languages ​​used by the business to ensure they are fully understood by all employees.
• Conduct regular risk assessments. Companies need to identify high-risk areas of their business, such as interactions with government officials, procurement processes, use of third-party intermediaries, etc., and develop specific prevention and control measures for these areas.
• Strengthen employee training and awareness raising. Anti-corruption and business ethics training should be a mandatory part of employee onboarding and regular training. The training content should be combined with actual cases to help employees understand the specific application of legal requirements and company policies in daily work.
• Establish an effective reporting mechanism. Businesses should provide employees and external stakeholders with safe and confidential reporting channels and ensure adequate protection for whistleblowers. At the same time, clear investigation procedures should be established to ensure that every report is handled seriously.
• Strengthen third-party management. Many corruption risks come from third parties, such as agents, suppliers, joint venture partners, etc. Businesses need to conduct due diligence on these third parties and include anti-corruption clauses in contracts.
• Regularly review and update compliance procedures. Given the changing legal environment and business risks, companies need to regularly assess the effectiveness of their anti-corruption and business ethics measures and make adjustments as necessary.

Contract Law and Dispute Resolution

Vietnam’s contract law system has experienced significant development and improvement over the past few decades, especially with the opening up of the country’s economy and the acceleration of internationalization. The new Civil Code passed in 2015 and came into effect on January 1, 2017 has become the cornerstone of Vietnamese contract law, providing a more modern and flexible legal framework for commercial transactions. This code not only unifies contract provisions that were previously scattered in various laws, but also introduces some new concepts and principles to make Vietnam’s contract law more consistent with international practices.

The new Civil Code emphasizes the principle of freedom of contract and gives the parties greater autonomy to determine the content of the contract. This change is particularly important for foreign investors as it provides greater flexibility for cross-border transactions. It is important to note, however, that this freedom is not absolute. The contract must still not violate laws, social ethics, nor damage national interests, public interests or the legitimate rights and interests of third parties. This requires companies to fully consider Vietnam’s legal environment and social background when drafting contracts.

In terms of contract form, Vietnamese law allows oral contracts, but for certain types of contracts, such as real estate transfer, intellectual property licensing, etc., written form is still required. It is worth mentioning that the amendments to the Investment Law implemented in 2020 further simplify the contract requirements for foreign investment projects and allow more types of investment contracts to be signed electronically, which greatly improves transaction efficiency, especially in the current global in the context of modernization and digitalization.

Regarding the performance of contracts and liability for breach of contract, the new Civil Code adopts a more flexible and balanced approach. For example, the law introduces the “change of circumstances” principle, which allows the court to request the court to modify or terminate the contract when the conditions for performance of the contract have significantly changed. This provision is particularly important during the COVID-19 epidemic, providing legal support for companies to cope with unforeseen market changes.

Vietnam offers diverse options when it comes to dispute resolution. Traditional court litigation is still the main way, but in recent years, with the implementation and continuous improvement of the 2010 Commercial Arbitration Law, commercial arbitration has developed rapidly in Vietnam. Arbitration is often the more popular option for foreign investors as it offers greater flexibility, confidentiality and professionalism.

It is worth noting that Vietnam acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) in 2014, which greatly enhanced the enforceability of foreign arbitral awards in Vietnam. However, in practice, the enforcement of foreign arbitral awards still faces some challenges. For example, courts may refuse to recognize foreign arbitral awards on the grounds that they “violate fundamental legal principles of Vietnam.” Therefore, companies need to carefully weigh various factors when choosing a dispute resolution method.

Vietnam has some special regulations for financing-related contracts. The Credit Institutions Law of 2010 and its subsequent amendments provide the basic framework for the contractual relationship between financial institutions and borrowers. In addition, a number of notices and guidelines issued by the State Bank of Vietnam (SBV) have further standardized the specific requirements for financing contracts. For example, Notice No. 39/2016/TT-NHNN stipulates in detail the necessary terms of the loan contract, including interest rate, term, guarantee method, etc.

In terms of financing dispute resolution, Vietnam has established specialized economic courts to handle complex commercial and financial disputes. The amendments to the Civil Procedure Law implemented in 2019 have further improved the trial procedures for financial disputes and improved the efficiency and professionalism of case handling.

Regarding cross-border financing, the Vietnamese government has taken a series of measures in recent years to attract foreign investment and simplify procedures. Decree No. 42/2019/ND-CP of 2019 simplifies the registration procedures for medium and long-term foreign debt, providing convenience for enterprises to obtain international financing. However, companies still need to pay attention to the relevant regulations on foreign debt limit management. For example, Decree No. 96/2018/ND-CP in 2018 set clear limits for companies to borrow foreign debt.

In actual operation, enterprises need to pay special attention to the following points:

The choice of contract language is crucial. Although Vietnamese law allows contracts in foreign languages, in the event of a dispute, Vietnamese courts may require a Vietnamese translation. Therefore, it is recommended to adopt bilingual versions in important contracts and clearly stipulate which language version has priority.

Care must be taken in selecting the governing law of a contract. Although Vietnamese law allows parties to choose foreign law as the governing law of a contract, certain mandatory provisions (such as labor law, land law, etc.) still apply to contracts performed in Vietnam and cannot be circumvented by choosing foreign law.

In financing contracts, special attention needs to be paid to interest rate provisions. Vietnamese law has strict limits on the maximum interest rate, and interest rate terms that exceed the legal upper limit may be deemed invalid. For example, according to the Civil Code, the interest rate for loans between non-financial institutions shall not exceed 50% of the maximum interest rate for loans set by the National Bank for the same period.

For financing contracts involving guarantees, attention should be paid to Vietnam’s restrictions on foreigners and foreign organizations holding land use rights and other real estate interests. This may affect the effectiveness of certain security arrangements.

When choosing a dispute resolution method, it is recommended to clearly stipulate an arbitration clause in the contract and choose a reputable arbitration institution. The Vietnam International Arbitration Center (VIAC) is a popular choice because it is not only familiar with Vietnamese law but also has extensive experience in international arbitration.

Vietnam’s contract law and dispute resolution mechanisms are constantly improving, providing businesses with a clearer and more predictable legal environment. However, given the particularity and complexity of the Vietnamese legal system, companies are advised to seek the assistance of professionals with extensive Vietnamese experience when drafting contracts and handling disputes. By in-depth understanding of Vietnam’s legal framework and business environment, companies can better protect their own interests, reduce legal risks, and lay a solid foundation for long-term success in the Vietnamese market.