PART 1: DOING BUSINESS IN VIETNAM

What is the current business climate in your jurisdiction, including major political, economic, and/or legal activities on the horizon in your country that could have a big impact on businesses?

After a period of economic downturn from 2020 to 2023, Vietnam’s economy is showing signs of recovery. GDP growth is forecasted to reach 5.5% in 2024 and gradually rise to 6.0% by 2025. Industrial production has also shown signs of recovery, and exports are expected to increase by 3.5% in 2024, reflecting a gradual improvement in global demand.

Regarding recent developments in the legal landscape, the National Assembly of Vietnam has promulgated three laws related to the real estate sector: the Law on Land, the Law on Real Estate Business and the Law on Housing. The newly promulgated laws are expected to foster investments in the real estate sector and provide a better-functioning market.

The Law on Credit Institutions promulgated in January 2024 also introduces significant changes to banking and financial services regulations, aiming to enhance the safety and transparency of the banking system.

The new Law on E-Transactions is set to broaden the legal framework to cover all sectors involved in electronic transactions. It provides a comprehensive definition of data messages and introduces regulations for trusted services. This law marks a significant step in Vietnam’s journey towards full digital integration, affecting various service providers and fostering the growth of e-commerce.

From what countries do you see the most inbound investment? What about outbound?

In 2023, investors from 111 countries invested in Vietnam. In terms of investment capital amount, the top countries investing in Vietnam were Singapore, Japan, Hong Kong, China, and South Korea. China ranked first in terms of the number of projects.

In the first four months of 2024, investors from Vietnam invested in 14 countries, with the most outbound investments going to the Netherlands, Laos, and the United States.

In what industries/sectors are you seeing the most opportunity for foreign investment? 

Manufacturing and real estate present the most opportunities for foreign investment in Vietnam. Manufacturing is currently accounting for 66.4% of the total registered foreign direct investment, driven by its crucial role in Vietnam’s export-oriented economy. The promulgation of the Law on Land, the Law on Real Estate Business, and the Law on Housing, as well as rapid urbanization and economic development are anticipated to stimulate foreign investment in the real estate sector. 

The energy sector is also poised for dynamic development, especially with Vietnam’s focus on renewable energy and the recent approval of the country’s Power Development Plan VIII (PDP8), setting ambitious renewable energy goals for 2030.

What advantages and pitfalls should others know about doing business in your Vietnam? 

The country’s strategic location serves as a gateway to ASEAN and offers easy access to key global markets, making it a prime hub for international trade. Investors are also attracted to the young and skilled workforce, which provides a competitive edge in labor costs. Vietnam is also witnessing a rapid expansion of its middle class, which is a key driver of consumer spending. Moreover, the growth of export markets and the integration with global supply chains have been bolstered by long-term trade commitments, such as CPTPP, EU-Vietnam FTA, and UK-Vietnam FTA, further positioning Vietnam as an attractive investment destination. These factors, combined with a relatively FDI friendly environment and government’s tax and investment incentives, create a conducive environment for foreign capital.

While promising, foreign investment in Vietnam is not without challenges. Investors often face bureaucratic hurdles, language barriers and regulatory complexities, including a lack of transparency and consistency in the application of laws. The current enforcement of the intellectual property framework is inadequate to a certain extent, presenting significant risks for businesses that depend on proprietary technologies and brands. These challenges require careful navigation and strategic planning by foreign investors looking to capitalize on Vietnam’s growth potential.

What is one cultural fact or custom about your country that others should know when doing business in Vietnam? 

When doing business in Vietnam, it is important to understand the significance of hierarchy and respect for authority. The Vietnamese business culture places a strong emphasis on tradition, harmony, and maintaining reputation. Communication tends to be indirect and polite to avoid conflict and public disagreements are generally discouraged. Understanding these nuances can greatly facilitate smoother business interactions in Vietnam.

PART 2: ABOUT YOUR FIRM

What distinguishes your firm from others in your market? 

VILAF is one of the largest law firms in Vietnam with over 100 lawyers, including 15 partners. VILAF has had over 30 years of experience in the Vietnamese market, being one of the country's oldest and most prestigious full-service law firms. VILAF is recognized for its expertise in various legal practices including Banking & Finance, Corporate and M&A, Capital Markets, Infrastructure, Energy and Projects, and Dispute Resolution. VILAF’s lawyers have extensive international experience and in-depth knowledge of Vietnam’s political culture and legal developments. This combination of the global perspective and local expertise allows VILAF to effectively advise and assist clients with matters concerning Vietnamese laws.

What are three words that describe the culture of your firm? 

Expertise, Responsiveness, Growth

How does your firm participate in Corporate Social Responsibility (CSR) and/or Environmental, Social, and Governance (ESG) initiatives? 

VILAF is in the process of establishing a philanthropic venture aimed at supporting disadvantaged students (the VILAF Foundation). VILAF believes that education is a fundamental right and aspires to provide young minds with the resources for academic and personal success. This initiative is a testament to VILAF’s commitment to social equity and belief in the power of education to change lives. We look forward to sharing further developments of this initiative.

Another of VILAF’s key initiatives is its annual blood donation program, which not only encourages employees to partake in blood donation but also amplifies awareness of the critical need for this life-preserving contribution. This endeavor reflects VILAF’s profound dedication to nurturing the health and well-being of the wider community.

Are there any new and exciting initiatives, practice areas, or industry focuses in your firm? 

VILAF’s Digital Innovation & Cyber Law Practice Group is at the forefront of addressing the dynamic and rapidly evolving legal digital landscape in Vietnam. The group is dedicated to providing comprehensive legal services in areas such as e-commerce, data protection and cyber security, telecommunications, and all things in the digital environment. This group specializes in advising on proper implementation emerging technologies and compliance with regulations on existing technologies, such as biometrics. The group’s expertise extends to comprehensively cover legal aspects in the digital space, ensuring that clients are well-equipped to navigate the rapid technological advancements and digital adoption in Vietnam.