New legislative changes to foster growth across various sectors: lawyer

The National Assembly, Vietnam's legislature, in late November 2024 passed 18 new and amendment laws, along with 21 resolutions. Anh Dang, a senior partner at Vilaf law firm, offers an insight into key aspects of several new laws that will come into force in 2025 and their potential impact on business activities.

The initiatives introduced in the new and amendment laws, effective from 2025, are reportedly aimed not only at alleviating challenges in business activities but also at providing a legal framework for emerging issues such as data management, digital technology development, and the growth of nuclear and offshore energy sectors.

New Law on Electricity

One of the laws that garnered significant public attention is the new Law on Electricity (Law on Electricity 2024), which will take effect and replace the Law on Electricity 2004 (as amended) from February 1, 2025.

Under the Law on Electricity 2024, the State retains its monopoly over the dispatch of the national electricity system and operating the transmission grid, except for those built by non-state entities.

Additionally, the new law expressly provides that the State now holds a monopoly on investing in and operating nuclear power plants, multi-purpose strategic hydropower plants, and key transmission networks of 220 kV and above, as specified by the Prime Minister.

Compared to previous regulations, the Law on Electricity 2024 clarifies procedures for master planning, investment approval, and investor selection.

Specifically, three main methods of selection of investors for electricity business investment projects include: (i) selection of investors not through either land auction or bidding procedures, which shall apply to certain special projects like projects under state monopoly, emergency power projects – a concept newly introduced under the new law, and offshore wind projects; (ii) selection of investors through bidding procedure pursuant to regulations on bidding, including the recently-issued Decree No. 115/2024/ND-CP dated September 16, 2024 of the Government; and (iii) selection of investors through land use rights auctioning pursuant to the laws and regulations on land.

The Law on Electricity 2024 prioritizes the development of gas-fired power plants using domestic gas resources and liquefied natural gas (LNG) to gradually establish it as key energy sources, supporting the regulation of the electricity system.

The new law also outlines a high-level development policy for nuclear energy, and an amendment to the 2008 Law on Nuclear Power is expected soon to strengthen the legal framework for this sector.

Additionally, the Law on Electricity 2024 promotes investment in “new energy electricity” such as green hydrogen, green ammonia, and wind and solar power projects combined with energy storage systems.

Notably, the new law outlines a section on offshore wind energy development, which encourages state investment in this sector by exempting wholly state-owned enterprises from investment project guarantee requirements and offering favorable credit limits for their investment in offshore wind projects.

While earlier drafts proposed restrictions on foreign investment, project transfers, and equity transfers in offshore wind projects, these have been removed in the final version.

However, the Law on Electricity 2024 stipulates that the government will provide detailed guidance on these issues, meaning further clarification is needed regarding the State’s stance on offshore energy and foreign investment opportunities.

New Law on Data

On November 30, 2024, the National Assembly passed the highly anticipated Law on Data 2024, which will take effect from July 1, 2025.

This landmark legislation establishes a comprehensive legal framework for data management and use, reflecting Vietnam’s commitment to developing its digital government infrastructure and advancing economic and societal growth.

The Law on Data 2024 establishes comprehensive regulations to streamline data collection, processing, storage, and sharing across state agencies, political-social organizations and other organizations.

It clearly defines the rights and responsibilities of key stakeholders, including data subjects, data owners, data custodians, and data users, to ensure accountability and transparency in data-related activities.

A central component of the Law on Data 2024 is the establishment of the National Data Center (“Trung tâm Dữ liệu Quốc gia” in Vietnamese), which will act as a hub for centralized storage, management and exploitation of the National Integrated Database (“Cơ sở Dữ liệu Tổng hợp Quốc gia” in Vietnamese).

Data to be collected, updated, and synchronized into the National Integrated Database include open data and shared data from national and specialized databases, proprietary data collected upon the Prime Minister’s decision to serve critical national objectives and tasks, open data published by governments of other countries and international organizations, as well as data acquired through international cooperation on data-related activities.

The Ministry of Public Security will lead the establishment of the National Data Center and coordinate with other ministries and agencies to set the operation framework for the center.

The new law also emphasizes the protection of important data and core data which could significantly affect national defense, security, economic activities, social stability, public health, and safety if unlawfully shared or processed.

Access to such data must be managed strictly through technical measures that can log timestamps and details of accessed data and allow authentication of the individual or entity accessing data.

Additionally, cross-border transfer of these data requires prior approval from competent state authorities and will be subject to continuous impact assessment and monitoring to prevent confidentiality risks.

New Law on Fire Prevention, Firefighting, Rescue and Salvage

On November 29, 2024, the National Assembly passed the new Law on Fire Prevention, Firefighting, Rescue and Salvage (the Law on FPF 2024), which shall take effect from July 1, 2025 and replace the Law on Fire Prevention and Firefighting 2001 (as amended) (the Law on FPF 2001).

It has been reported that the prevailing purpose of the Law on FPF 2024 is to streamline the administrative procedures and ease the business conditions in fire prevention and firefighting (FPF) activities.

In general, there are no major differences between the Law on FPF 2024 and old regulations regarding key FPF permits and requirements with which a facility must comply.

Mirroring the Law on FPF 2001, the Law on FPF 2024 requires that projects, construction works, and transportation vehicles (subject to their types and scale) have their own FPF design appraised (“thẩm duyệt thiết kế phòng cháy chữa cháy” in Vietnamese), conduct the FPF acceptance (“nghiệm thu phòng cháy chữa cháy” in Vietnamese) based on the appraised design before being put into operation and commercial exploitation, and fulfill other FPF requirements, such as (i) equipping the FPF, rescue and salvage vehicles and systems, (ii) setting up the FPF, rescue and salvage plan, and (iii) establishing the FPF, rescue and salvage forces at the facility level.

The Law on FPF 2024 introduces additional requirements for residential houses, mandating that those in areas with inadequate transportation infrastructure or water sources for firefighting in the five centrally-governed cities must equip fire extinguishers and fire alarm communication devices, in accordance with the schedule set by the Government.

Furthermore, residential buildings used for production and business must meet the following conditions: (i) display prohibition, warning, and guidance signs for fire prevention, rescue, and salvage; (ii) separate or protect areas with fire or explosion risks from residential spaces; and (iii) other conditions (such as equipping fire alarms, ventilation solutions, and gas leak detection devices for combustible or toxic gases in accordance with statutory standards and technical regulations) in case of involving production and business of goods that are hazardous in terms of fire and explosion.

Amended Law on Pharmacy

In the purpose of amending and supplementing several articles of the Law on Pharmacy 2016 (as amended), on November 21, 2024, the National Assembly officially passed the Law on Amendments and Supplements to the Law on Pharmacy (the Amended Law on Pharmacy 2024), which will take effect from July 1, 2025, except for specific provisions that will take effect from January 1, 2025.

The most critical changes introduced by the Amended Law on Pharmacy 2024 is the official recognition of (i) online sales of drugs and drug materials as a legitimate business activity; and (ii) pharmacy chains, defined as systems of pharmacies operated by the same entity under a unified quality management system and a single trade name, as a distinct type of pharmaceutical business.

It is anticipated that these recognition and regulations would solidify the legal framework on emerging business models and present investors in the pharmaceutical sector with new opportunities. It should be noted that:

- Online sales of drugs and drug materials must be conducted through an e-commerce trading platform, e-commerce sales application, or e-commerce website with an online ordering function.

Moreover, the online sale of drugs is permissible for (a) the retail of over-the-counter drugs (except in cases of quarantine for infectious diseases in Group A that have been officially declared under applicable laws on disease prevention and control); and (b) the wholesale of drugs and drug materials not subject to special control. Any businesses engaging in e-commerce sales of drugs must notify relevant authorities, offer online consultation on drug use, and ensure proper delivery to buyers in accordance with laws.

- Each pharmacy/drugstore within the chain must obtain a separate Certificate of Eligibility for Pharmaceutical Business (CEPB) while the entity organizing the pharmacy chain shall be issued with the CEPB upon meeting legal requirements, including having at least two pharmacies/drugstores in the chain with their own CEPB.

Moreover, the person responsible for pharmaceutical expertise of the entity organizing the pharmacy chain must meet conditions required for the same position in a drug wholesale establishment, while the person responsible for pharmaceutical expertise at each pharmacy/drugstore in the chain must meet conditions for the same position in a drug retail establishment.

Before the Amended Law on Pharmacy 2024, the rights and obligations of foreign-invested enterprises (FIEs) in pharmaceutical sector are scattered across regulations like Decree No. 54/2017/ND-CP and Circular No. 34/2013/TT-BCT, which limit FIEs’ scope of activities to importing drugs and drug materials not on the List of drugs prohibited from import and distributing those produced in Vietnam by such FIEs.

The Amended Law on Pharmacy 2024 has clarified the rights and obligations of FIEs engaging in trading pharmacy, producing or importing drugs and drug materials, and the new law has also expanded FIEs’ scope of activities to also include, among others, selling drugs that they import, produce, contract for manufacturing, or transfer technology in Vietnam to specific transferees as specified at laws.

Furthermore, the Amended Law on Pharmacy 2024 streamlines the licensing procedures regarding Certificate of Drug Free Sale and Certificate for Drug Material Free Sale and eliminates requirements for drug information content confirmation. Certain regulations on price management and declaration have also been revised to align with the laws and regulations on pricing.

Amended Law on Health Insurance

On November 27, 2024, the National Assembly adopted the law amending and supplementing a number of articles of the Law on Health Insurance 2008 (as amended) (the Amended Law on Health Insurance 2024), which is set to take effect on July 1, 2025.

A key highlight of the Amended Law on Health Insurance 2024 is the alignment with regulations under the Law on Social Insurance regarding (i) participants of the health insurance scheme, (ii) timeframes to make contributions to the health insurance fund, (iii) basis for calculation of contribution to the health insurance fund in case an employee has contracts with multiple employers, and (iv) cases considered as late or evaded contribution to the health insurance fund and penalties in those cases.

These changes will streamline the procedures for employers to make contributions to different mandatory insurance funds, making the system more efficient and accessible to employers.

The Amended Law on Health Insurance 2024 also extends health insurance coverage to more medical services. Notably, it includes treatments for strabismus and refractive errors for individuals under the age of 18 years old, extending coverage from the current limitation for those under the age of 6 years old.

The amended law also improves insurance coverage for patients seeking care outside their registered facilities and without complying with regulations on referral of patients between medical facilities.

Key improvements include full coverage within the entitlement limits for emergency treatments at any medical facility nationwide, as well as full coverage within the entitlement limits for treatment of rare diseases, serious illnesses, or advanced surgical procedures at any medical facility with basic or intensive expertise.

In addition, patients visiting a medical facility with basic expertise will receive full coverage for inpatient treatments within the entitlement limits.

Another important update is the reallocation of the health insurance fund. The proportion allocated to medical services has been increased from 90% to 92%, while the contingency reserve has been reduced from 10% to 8%.

This change ensures that a larger share of the health insurance funds is directed towards patient care, reflecting the government’s focus on improving access and quality of healthcare services.

Law amending, supplementing the Law on Planning, the Law on Investment, the Law on Private-Public Partnership Investment, and the Law on Bidding

With the purpose of facilitating the decentralization and delegation of authority for meeting administrative reform requirements and practical situations, on November 29, 2024, the National Assembly adopted the Law on amendments and supplements to the Law on Planning 2017, the Law on Investment 2020, the Law on Private-Public Partnership (PPP) Investment 2020, and the Law on Bidding 2023 and their respective amendments (the Amendment to 04 Laws).

Regarding amendments to the Law on Investment 2020, one of the most revolutionary aspects under the Amendment to 04 Laws is the introduction of a new special investment procedure for projects which are (i) in certain eligible sectors (such as the construction of innovation centers, research and development centers, and projects in industries like semiconductor integrated circuits, technology design, and component manufacturing); and (ii) located in industrial parks, export processing zones, high-tech zones, and functional areas within economic zones.

In the absence of an Investment Policy Decision (IPD) from the National Assembly is required in accordance with the Law on Investment 2020, these projects would benefit from an exemption from IPDs and key permits such as environmental, construction, and FPP ones. Instead, investors can directly apply for an investment registration certificate at the management board of the special zone where the project is located. This groundbreaking change is expected to encourage investments in emerging sectors.

Under the Amendment to 04 Laws, the authority to approve IPDs for (i) projects of constructing and trading industrial zone and export processing zone infrastructure; and (ii) projects of constructing new ports and wharves at specialized seaports with investment capital up to VND2,300 billion ($90.62 million) has been transferred from the Prime Minister to the provincial People’s Committees.

Additionally, to ensure compliance with national level master planning, the Amendment to 04 Laws now requires the appraisals for issuing IPDs to include an assessment of the project’s alignment with zone planning, in addition to national, regional, urban, and special economic plannings. If zone planning is not available, the conformity with the general plan must be evaluated instead.

Regarding amendments to the Law on Planning 2017, the Amendment to 04 Laws introduces a streamlined procedure specifically for adjustment of plans in several circumstances (such as for implementing resolutions of the National Assembly, its Standing Committee, or the Government regarding administrative unit reorganization or national important projects that trigger planning adjustment), allowing for quicker revisions without altering core principles.

Additionally, the Amendment to 04 Laws promotes decentralization by shifting the appraisal of provincial planning tasks to the Ministry of Planning and Investment, while provincial People’s Committees now manage the issuance of schemes for implementing provincial plans. Finally, the amendment law revises the approach to priority projects in national and regional plans, shifting from fixed lists to proposed priority projects to provide greater flexibility.

Regarding amendments to the Law on PPP Investment 2020, the Amendment to 04 Laws expands the sectors eligible for PPP investment to include all public investment sectors aimed at providing products or services, excluding those under State monopoly or related to national defense, security, public order.

Another notable change is the reinstatement of Build0Transfer Contract (BT) model, which was removed from permissible PPP project models in 2021 due to issues with inaccurate valuation and inadequate quality.

Compared to existing regulations which limit the State capital contribution to a PPP project to 50% of the total project investment with no exceptions, the Amendment to 04 Laws now permits the Prime Minister or the provincial People’s Council (as the case may be) to increase the cap up to 70%, provided that the projects fulfill conditions required by laws.

Furthermore, the Amendment to 04 Laws outlines certain changes to facilitate PPA investments, including (i) abolishing minimum total investment requirements for PPP projects, (ii) increasing the investment capital threshold requiring IPDs from VND10,000 billion to VND30,000 billion ($1.18 billion), and (iii) delegating the provincial People’s Committees with authority to approve IPDs for PPP projects within their local jurisdiction with total investment capital equivalent to those of Group B projects and not using state capital.

Regarding amendments to the Law on Bidding 2023, the Amendment to 04 Laws introduces additional scenarios that are eligible for the method of contractor selection by competent authorities.

These scenarios include, among others, (i) the selection of legal counsel to provide services for the protecting rights and interests of the Vietnamese State and state agencies at foreign agencies investigating the application of trade remedies and at international and foreign dispute resolution bodies, and (ii) bidding packages for services from international credit rating agencies, global financial transaction platforms exclusively provided by SWIFT, and services from companies providing financial and monetary information and trading platforms.

Notably, the Amendment to 04 Laws now allows (i) foreign contractors to participate in domestic bidding for packages involving ODA funds or concessional loans from foreign sponsors, (ii) multiple direct procurement transactions for the purchase of retail drugs at medical examination and treatment facilities, and (iii) the adoption of either single-stage two-envelope or single-stage one-envelope method for selection of contractor in non-consultancy services, goods procurement, construction, and mixed bidding packages requiring advanced technical expertise. Previously, only the single-stage two-envelope method was permitted in such cases.

Law amending, supplementing the Law on Securities 2019 and other 8 different laws

On November 29, 2024, the National Assembly passed the Law on amendments and supplements to nine laws including, among others, the Law on Securities 2019 (as amended) (Amendment to 09 Laws).

Among the amendments introduced by the Amendment to 09 Laws, specific changes to the Law on Securities 2019 are expected to attract foreign investment on securities market, as well as to enhance market transparency and investor protection following the uncovering of recent stock manipulation cases.

In particular, foreign individuals and entities are now automatically classified as “professional securities investors” (“nhà đầu tư chứng khoán chuyên nghiệp” in Vietnamese), without being subject to any additional requirements. Institutional professional securities investors will be entitled to trade all privately-placed corporate bonds.

Meanwhile, individual professional securities investors will be entitled to trade privately-placed corporate bonds of which the relevant issuers (i) have been credit-rated and (ii) have provided secured assets to back the bond issuance or obtained guarantees from a credit institution.

The scope of prohibited manipulative activities in the securities market under Article 12.3 of the Law on Securities 2019 has been expanded to cover acts such as (i) trading securities without actual transfer of ownership or within a closed group of traders in an attempt to establish artificial demand and/or supply and prices, (ii) trading securities at mass volume to manipulate opening and/or closing prices, and (iii) disseminating opinions on securities and/or issuers to influence securities prices while holding them.

Stricter requirements for companies seeking to go public or maintain public company status have also been introduced. Applicants for an initial public offering or public company designation must provide audited reports of their contributed charter capital for the past 10 years.

If they have been incorporated for less than 10 years, an audited report from the date of incorporation must be submitted. Public companies must maintain a minimum equity capital of VND30 billion ($1.18 million), failure to do so may result in revocation of their public company status.

These measures address issues such as those seen in FLC Faros scandal, where fabricated capital contributions were used to inflate the company’s valuation during its public offering in 2016.

Concluding words

While the recent legislative changes passed by the National Assembly of Vietnam in late November 2024 represent considerable progress in addressing contemporary challenges and fostering growth across various sectors, businesses and investors remain eager for further clarity.

Many of the newly introduced laws, such as the Law on Electricity 2024, require additional guidance through updated decrees and circulars, particularly regarding the practical application of key provisions.

For example, while the Law on Electricity 2024 sets the stage for offshore energy development, it delegates the responsibility of detailing the conditions for foreign and private sector participation to the Government.

This gap highlights the need for more specific regulations to ensure that businesses can fully leverage the opportunities presented by these legislative reforms. As the government finalizes these details, stakeholders will be watching closely to understand the full scope of these laws’ impact on investment and business operations.