The European Chamber of Commerce in Vietnam (EuroCham) has raised a series of concerns and recommendations to the Vietnamese government in a bid to improve the country's business environment.
Jean-Jacques Bouflet, vice chairman in charge of advocacy at EuroCham, said at the 2024 Whitebook launch in Hanoi on Tuesday that EuroCham supports the Vietnamese government’s endeavors in environmental protection and the development of a circular economy, especially for the Extended Producer Responsibility (EPR) regulations.
However, EuroCham sector committees including Green Growth, Mobility, Nutritional Foods, and Wine and Spirits are still concerned about the fact that the current proposed total recycling cost per unit weight is still high compared to the actual recycling situation in Vietnam, and is failing to follow the circular economy principles by not deducting recoverable materials value, which in turn leads to increased product costs and negatively impacts consumers.
Regarding the timeline, they are concerned about paying an advance contribution (estimated at many trillion VND, VND1 trillion = $41 million) to the Environmental Protection Fund from the beginning of 2024, while this money will be in the fund until the end of 2025 before being actually disbursed, which will put huge burdens on businesses.
Thus, they propose that businesses should start submitting their contributions by 2025 based on the actual import and production finalization of 2024 to facilitate businesses to overcome difficulties, in line with Decree 08 regulations.
Regarding intellectual property (IP) rights, EuroCham noted that there are various challenges related to IP enforcement in Vietnam. Guidance on criminal prosecution of IP infringement is essential. They suggest that expert opinions from Vietnamese IP organizations should be used only as a reference, and recommend flexibility in considering alternative proof of copyright ownership due to the complexity of the registration process.
They also recommend removing the requirement for content-related summaries in works and clarifying the commitment section for deceased authors. For trademarks, they recommend expediting the trademark registration process and defining conditions for accepting the Letter of Consent (LOC).
Regarding legal issues in the real estate sector, they endorse legal reforms to promote investments in condotels, hometels, and officetels. They also suggest clear guidelines on land-use terms, and the granting of Land Use Right Certificates (LURCs), which may augment the interest of foreign investors to put money into Vietnamese real estate.
Additionally, to further the protection of foreign investors’ rights, the chamber recommends expediting the issuance of LURCs in practice. This also pertains to the publication of a “Foreign Ownership Prohibited Projects List” that will increase the transparency of the Vietnamese real estate market for foreign investors.
In terms of mergers & acquisitions (M&A), EuroCham says that Vietnam’s legal system provides for ESG regulations that are partly incoherent and should be integrated in a clear and comprehensive legal framework.
“This is particularly crucial regarding the attraction of sustainable investments and meeting the prevalent net-zero-carbon commitments,” it notes.
The country’s efforts to modernize and streamline its Merger Control are very welcome to foreign investors that seek to pour their money into Vietnamese M&A deals. However, despite those efforts, the underlying system still requires further clarity and resources.
They thus recommend amending the legal framework in a way that promotes Vietnam as a sustainable and ESG-compliant investment destination. This particularly includes the improvement of antitrust laws, especially concerning merger control and internal corporate reorganization.
In Public-Private Partnership (PPP), identifying concrete projects that are open to PPP investment, which are properly prepared, and announced to the market (whether greenfield or brownfield) should be the highest priority to kick-start Vietnam’s PPP program.
In the domain of PPP, it remains crucial to provide clear, concise, and predictable guidance to potential investors, which aims at making long-term commitments to infrastructure and the economy. It is of utmost importance to address the existing issues related to institutional capacity and inter-authority coordination.
Such measures promise to increase investor interest and the competitiveness of the Vietnamese legal ecosystem overall. Implementing clear guidance regarding the PPP law and aligning these with international standards will significantly enhance the appeal of Vietnamese PPP projects for foreign investors.
At the event on Tuesday, representatives from Vietnamese government agencies responded to EuroCham's concerns and asserted that the would continue to hold dialogue to better the business environment.