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LEGAL UPDATE – FEBRUARY 2026 – THE LAW ON INVESTMENT 2025, EFFECTIVE FROM 1 MARCH 2026, INTRODUCES KEY CHANGES FOR INVESTORS AND ENTERPRISES

Published in February 2026

Nguyen H.Nhat Thi
Counsel

Trinh Nguyen Hoang
Legal Assistant

ABSTRACT:

The period from 2020 to 2025 has been marked by significant geopolitical volatility. Investment activities and global supply chains have undergone substantial restructuring. It is widely observed that investment flows in general, and next-generation foreign direct investment (FDI) in particular, are no longer primarily driven by low-cost advantages or short-term incentives. Instead, they are increasingly oriented toward jurisdictions offering stable investment environments, well-integrated political, social, environmental, and technological infrastructure, and a strong commitment to sustainable development standards.

In this context, despite the Law on Investment having been amended and promulgated in 2020[1] and subsequently revised three times (in 2022, 2024, and 2025), there remains an urgent need to enact a unified, stable, and transparent investment law with low compliance costs, capable of unlocking potential, fostering growth, and attracting both domestic and foreign investment resources.

In furtherance of Politburo of Vietnam’s Resolution No. 68-NQ/TW dated 4 May 2025 on private sector development, Conclusion No. 119-KL/TW dated 20 January 2025 on orientations for reforming and improving the law-making process, and Resolution No. 66/NQ-CP dated 26 March 2025 of the Government on the program for reducing and simplifying administrative procedures related to production and business activities for 2025–2026, the Law on Investment 2025[2] has been promulgated and takes effect on 1 March 2026, further enhancing the legal framework governing investment and business activities in Vietnam.

Key highlights of the Law on Investment 2025 that investors and enterprises should note include:

  • Further decentralization of authority to approve investment policy to local authorities, along with clearer identification of projects subject to such approval;
  • Expansion of the scope of application of special investment procedures (introducing a “post-audit” mechanism in lieu of “pre-approval”);
  • Introduction of provisions allowing foreign investors to establish economic organizations prior to obtaining an Investment Registration Certificate ;
  • Reduction in the number of conditional business lines;
  • Elimination of two cases in which investors are required to obtain approval for adjustments to investment policy;
  • Greater flexibility for investors in adjusting the operational term of investment projects; and
  • Simplification of procedures for outbound investment.

1. DECENTRALIZATION OF AUTHORITY FOR APPROVAL OF INVESTMENT POLICY

Previously, the amended Law on Investment 2020 categorized projects subject to investment policy approval based on the authority of competent bodies, namely the National Assembly, the Prime Minister, and provincial-level People’s Committees. The Law on Investment 2025 adopts a clearer and more practicable approach. Article 24 sets out an exhaustive list of 20 categories of projects subject to investment policy approval, while Article 25 delineates the approving authorities in hierarchical order, including the National Assembly, the Prime Minister, Chairpersons of provincial-level People’s Committees, and Management Boards of industrial parks, export processing zones, high-tech zones, and economic zones. A notable development is the stronger push toward decentralization of approval authority. This shift is expected to shorten the timeline for implementing investment procedures and alleviate the appraisal and approval burden at the central level.

Specifically, the National Assembly now retains authority only over “investment projects requiring the application of special mechanisms or policies that deviate from existing laws or resolutions of the National Assembly.” All other categories of projects that previously fell under its authority under the Law on Investment 2020, such as projects with significant environmental impact, projects involving large-scale conversion of agricultural land use, or projects requiring large-scale resettlement, have been reallocated to the Prime Minister.

In contrast, the Prime Minister continues to retain authority over eight categories of projects with substantial implications for national security, natural resources, and sensitive sectors, including, for example, investment projects involving betting and casino operations, as well as nuclear power plant projects, etc.

At the same time, the provincial People’s Committee[3] are granted broader authority compared to the Law on Investment 2020, with competence expanded to cover 13 categories of investment projects, up from 7 previously. Specifically, several categories of projects that were formerly under the authority of the Prime Minister, such as petroleum processing projects; airports and airfields; runways; passenger terminals of international airports; and new investment projects in air passenger transport services, have now been further decentralized to the Chairpersons of the provincial People’s Committees.

In addition to clarifying and decentralizing project categories subject to investment policy approval, the Law on Investment 2025 no longer prescribes detailed provisions on dossiers, procedures, and processes for such approval. These matters are instead delegated to the Government for detailed regulation. This approach is intended to enhance the stability of the law while ensuring greater flexibility in policy administration by the Government.

2. EXPANSION OF THE SCOPE OF APPLICATION OF SPECIAL INVESTMENT PROCEDURES

Previously, this mechanism had been applied on a limited basis since 15 January 2025, when one of the amendments to the Law on Investment 2020[4] introduced the option for investors to select a special investment procedure, provided that the project was implemented in designated areas such as industrial parks, export processing zones, high-tech zones, or functional zones within economic zones. Its application was further restricted to certain priority sectors relating to innovation and high technology, including investments in research and development (R&D) centers, semiconductor integrated circuit and semiconductor materials industries, as well as infrastructure for Big Data, cloud computing (iCloud), 5G, etc.

With effect from 1 March 2026, Article 28 of the Law on Investment 2025 significantly broadens the scope of this special investment procedure. It now applies to investment projects located in industrial parks, export processing zones, high-tech zones, centralized digital technology zones, free trade zones, international financial centers, and functional zones within economic zones, across all business sectors, except for “projects subject to investment policy approval as prescribed by the Government”.

This procedure allows investors to bypass the entire “pre-approval” appraisal process, which would otherwise take several months and include steps such as investment policy approval, technology appraisal, environmental impact assessment, preparation of 1/500 detailed planning, construction permitting, and fire prevention and fighting approval. Instead, competent authorities will assume responsibility for inspection, supervision, and evaluation of project implementation under a “post-audit” mechanism in accordance with applicable laws, as well as in line with Government guidance at the decree level.

From a regulatory and policy-making perspective, this represents a significant development under the Law on Investment 2025. It reflects a continued shift toward reducing ex ante licensing requirements for projects implemented in areas with well-developed and integrated infrastructure, while placing greater emphasis on reporting, evaluation, inspection, and supervision during project implementation.

In parallel, with the establishment of the Vietnam International Financial Center (VIFC), the special investment procedure is expressly extended to the VIFC, aligning with the Vietnamese Government’s policy of positioning it as an attractive investment destination for investors.

3. ALLOWING FOREIGN INVESTORS TO ESTABLISH ECONOMIC ORGANIZATIONS PRIOR TO OBTAINING AN INVESTMENT REGISTRATION CERTIFICATE

For the first time, the Law on Investment 2025[5] permits foreign investors to establish an economic organization and obtain an Enterprise Registration Certificate (“ERC”) prior to applying for an Investment Registration Certificate (“IRC”), provided that market access conditions are satisfied.

This reform is intended to address a longstanding bottleneck in foreign investment activities. Previously, in order to prepare an application for an IRC, foreign investors were required to undertake various preparatory steps, such as entering into office lease agreements, recruiting key personnel, opening bank accounts, or arranging work authorization for foreign employees, all while “lacking legal entity status”. Allowing the issuance of an ERC prior to IRC application enables foreign investors to shorten market entry timelines, reduce intermediary costs, and enhance proactiveness, transparency, and efficiency in structuring, negotiating, and implementing investment projects.

However, the practical implementation of this provision remains subject to further guidance at the decree level. In particular, appropriate regulatory solutions will be required to address scenarios where a foreign investor has obtained an ERC but is subsequently unable to secure an IRC.

4. REDUCTION OF THE LIST OF CONDITIONAL BUSINESS LINES

The Law on Investment 2025 further operationalizes the overarching policy of streamlining conditional business lines by reducing the list from 227 sectors to 198 sectors.

Specifically, certain sectors such as tax procedure services, customs procedure services, insurance auxiliary services, labor outsourcing services, architectural services, and data center services have been removed from the list.

At the same time, several new business lines reflecting emerging economic demands have been added, including services supporting transactions on the domestic carbon exchange (in line with Decree No. 29/2026/ND-CP on the domestic carbon trading platform) and mobile money services.

In addition, the Government is tasked with classifying these 198 conditional business lines and promulgating two separate lists:[6]

  • Business lines that require licensing or certification prior to commencing investment and business activities; and
  • Business lines for which the regulatory approach will shift from licensing or certification to a disclosure-based regime, whereby enterprises are required to publish applicable conditions and will be subject to post-audit supervision.

The publication of these lists will provide greater clarity for investors, enabling them to distinguish between sectors that require the investor to comply with or require sub-licenses as a prerequisite for operation and those that, although conditional, may commence operations upon disclosure and be subject to subsequent “post-audit” regulatory.

Note: The list of conditional business lines under Appendix IV of the Law on Investment 2025 will take effect from 1 July 2026.

5. REDUCING THE NUMBER OF CASES REQUIRING ADJUSTMENT OF INVESTMENT PROJECTS

During the implementation of an investment project, investors are, in certain circumstances, required to carry out procedures for adjusting the investment project, including obtaining approval for adjustments to the investment policy. In practice, these procedures can be time-consuming, disrupt project implementation, and even cause investors to miss business opportunities or delay the adoption of new technologies, particularly in cases where the changes do not necessitate substantive regulatory intervention.

Article 33 of the Law on Investment 2025 addresses this issue by abolishing two cases in which adjustment of the investment policy was previously mandatory upon modification of an investment project, namely:

  • Changes to the total investment capital by 20% or more resulting in a change in project scale; and
  • Changes to technologies that had been appraised or consulted during the investment policy approval process.

Following this streamlining, Article 33 now retains only five cases in which investors are required to obtain approval for adjustments to the investment policy:

  • Amendments to or supplementation of contents or objectives that fall within the scope of investment policy approval as stipulated in the original approval decision;
  • Changes to the scale of land use as prescribed by the Government (previously defined as exceeding 10% or 30 hectares), or changes to the project location;
  • Extension of the project implementation schedule where the adjustment exceeds 24 months, as provided under Article 33.4 of the Law on Investment 2025;
  • Adjustment of the operational term of the investment project; and
  • Changes to the investor of a project that was approved concurrently with investor approval prior to project operation, or changes to investor conditions (if any).

Note: Although the two abolished cases no longer require adjustment of the investment policy, if such changes result in modifications to key contents recorded in the Investment Registration Certificate (IRC), investors are still required to carry out procedures to amend the IRC to reflect those changes.

6. GREATER FLEXIBILITY IN THE OPERATIONAL TERMS OF INVESTMENT PROJECTS

Unlike the Law on Investment 2020, the Law on Investment 2025 grants investors greater autonomy in managing the operational term of their investment projects.

Under the Law on Investment 2020, the prevailing interpretation limited investors to extending the operational term of a project only upon its expiry, and only where the investor wished to continue implementing the project.

By contrast, while the Law on Investment 2025 retains this mechanism, thereby preserving the right of investors to apply for an extension upon expiry, it further expands investor rights by allowing that, “during the course of project implementation … investors may increase or decrease the operational term of the investment project.”[7]

This provision establishes a mechanism providing investors with greater certainty in forecasting and managing the duration of their investment projects. Accordingly, during the course of project implementation, investors may proactively request an extension of the project’s operating term beyond the period previously approved, rather than having to wait until the expiry of the project term to initiate extension procedures.

Furthermore, for project transfers, the Law on Investment 2025 introduces the possibility of extending the operational term based on proposals from the transferee-investor, particularly where the remaining term of the project is insufficient to support the latter’s financial plan or business model.[8] Such proposals are to be submitted in conjunction with procedures for approval or adjustment of the investment policy, or for the issuance or amendment of the IRC during the project transfer process.

7. SIMPLIFICATION OF OVERSEAS INVESTMENT

The Law on Investment 2025 abolishes the requirement for investment policy approval for outward investment activities. Accordingly, investors are now only required to obtain an Outward Investment Registration Certificate in two cases: (i) the project involves an outward investment capital amount exceeding the threshold prescribed by the Government; or (ii) the project falls within conditional outward investment sectors as stipulated under Article 41.1 (i.e. banking, insurance, securities, press, broadcasting, television, and real estate business). For large-scale projects or those proposing special mechanisms or policies, the Ministry of Finance is required to report to the Prime Minister for consideration prior to the issuance or amendment of the Outward Investment Registration Certificate.

Projects that do not fall within the above cases are exempt from the requirement to obtain an Outward Investment Registration Certificate and are only required to register foreign exchange transactions in accordance with relevant laws.

8. KEY TRANSITIONAL PROVISIONS OF NOTE FOR INVESTORS

Pursuant to Article 52 of the Law on Investment 2025, several transitional provisions apply from 1 March 2026 as follows:

First, preservation of the legal validity of previously issued licenses.

All Investment Licenses, Investment Incentive Certificates, Investment Certificates, IRCs, and decisions on investment policy approval or approval in principle issued prior to the effective date of the Law on Investment 2025 shall remain valid and continue to be implemented in accordance with their approved contents.

Second, retention of more favorable market access conditions.

Economic organizations with foreign invested capital that are currently subject to more favorable market access conditions than those prescribed under Article 8 of the Law on Investment 2025 shall continue to enjoy such conditions as recorded in their issued IRCs. This ensures the stability of the investment environment and compliance with international investment treaties.

Third, continued processing of pending applications under the previous law.

Valid applications received in accordance with the Law on Investment 2020 prior to 1 March 2026 shall continue to be processed under the provisions of the Law on Investment 2020, except for the following two cases:

  • Where a project had been submitted to the Prime Minister for consideration of investment policy approval or adjustment prior to the effective date of the Law on Investment 2025 but fails to meet the conditions for approval or adjustment under the Law on Investment 2020, the Ministry of Finance shall transfer the project dossier, appraisal opinions, and appraisal report to the Chairperson of the provincial People’s Committee for handling in accordance with the authority prescribed under the Law on Investment 2025;
  • Where a project had not yet been submitted to the Prime Minister for consideration of investment policy approval or adjustment prior to the effective date of the Law on Investment 2025, the Ministry of Finance shall transfer the project dossier and appraisal opinions (if any) to the Chairperson of the provincial People’s Committee for handling in accordance with the authority prescribed under the Law on Investment 2025.

Fourth, continued validity of sub-licenses for abolished conditional business lines.

 For conditional business lines that were regulated under the Law on Investment 2020 but have been abolished under the Law on Investment 2025, organizations and individuals may continue to use licenses, certificates, practicing certificates, written confirmations, or other forms of approval for investment and business activities issued by competent state authorities until their expiry dates.

CONCLUSIONS:

Overall, the Law on Investment 2025 introduces substantial and fundamental changes in legislative approach and regulatory philosophy, moving toward a more progressive, modern, and innovation-driven framework. These changes reflect a clear shift from centralized to decentralized authority, from ex-ante licensing to ex-post supervision, and from detailed prescriptive rules to a principles-based legal framework. Such reforms are designed to further improve the legal regime governing investment activities, remove regulatory bottlenecks, align with international standards, and enhance Vietnam’s regional and global competitiveness.

Investors and enterprises should note these changes, develop a thorough understanding of the new provisions under the Law on Investment 2025, as well as closely monitor implementing decrees issued by the Government and Circulars from relevant ministries. Doing so will be critical to effectively leveraging these reforms and maximizing the benefits arising from the new legal framework.

[1] Law on Investment No. 61/2020/QH14 issued by the National Assembly dated 17/06/2020, effective date from 01/01/2021 (“Law on Investment 2020”).

[2] Law on Investment No. 143/2025/QH15 issued by the National Assembly dated 11/12/2025, effective date from 01/03/2026 (“Law on Investment 2025”).

[3] The Law on Investment 2025 has shifted the authority for investment policy approval at the provincial level from the provincial People’s Committee(s) to the Chairperson thereof.

[4] Law No. 57/2024/QH15 amending and supplementing certain provisions of the Law on Planning, Law on Investment, Law on Public-Private Partnership Investment and Law on Bidding, in force as from 15 January 2025.

[5] Article 19.2 of Law on Investment 2025.

[6] Article 7.1 of the Law on Investment 2025.

[7] Article 31.4 of the Law on Investment 2025.

[8] Article 52.6 of the Law on Investment 2025.

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BIZCONSULT AFFIRMS ITS INTERNATIONAL ROLE AT THE 2025 SHANGHAI GLOBAL INVESTMENT FORUM

11 March 2025

From February 22 to February 23, 2025, Bizconsult Law Firm had the honor of participating in the 2025 China Enterprises Going Global & Global Professional Services Forum, held in Shanghai, China. This prestigious international investment forum brought together leading experts across various fields to discuss the globalization trends of Chinese enterprises and propose legal, financial, and strategic solutions to optimize their expansion into international markets.

Bizconsult – A Strategic Bridge Connecting Chinese Enterprises to Vietnam

During the forum, in-depth discussions across different regions provided insightful perspectives on key investment markets. Experts analyzed legal, financial, tax, and compliance factors, offering essential guidance for businesses to:
✔ Develop well-structured market entry strategies
✔ Identify and capitalize on potential investment opportunities
✔ Plan and manage assets effectively
✔ Prepare for IPOs and address critical legal matters

As key speakers at the forum, Lawyer Tuan Nguyen and Lawyer Huyen Nguyen, representing Bizconsult Law Firm, delivered in-depth presentations, offering a comprehensive overview and sharing practical experiences in assisting Chinese enterprises to expand their investments and business operations in Vietnam. Their insights not only helped businesses gain a clearer understanding of Vietnam’s legal framework and investment policies, but also highlighted the competitive advantages that Vietnam offers within the region.

Bizconsult’s Leadership in the International Legal Arena

Bizconsult’s presence at the forum not only reinforced the firm’s leading role in legal and investment consultancy, but also contributed to solidifying Vietnam’s position as an attractive destination for foreign investors. With extensive experience in advising and assisting foreign businesses entering the Vietnamese market, Bizconsult has played a pivotal role in helping enterprises navigate regulatory complexities, maximize competitive advantages, and ensure legal compliance when investing in Vietnam.

This forum marks a significant milestone in Bizconsult’s international cooperation strategy, reaffirming the firm’s long-term vision and strong commitment to fostering a transparent, favorable, and sustainable investment environment.

With its meaningful contributions at the event, Bizconsult continues to assert its position as one of Vietnam’s leading law firms, constantly enhancing its expertise, expanding its global network, and facilitating strategic investment opportunities for clients and partners worldwide.

Below are some images of Bizconsult Law Firm’s lawyers delivering presentations at the International Forum.

LEGAL UPDATE – FEBRUARY 2025 – COMMERCIAL HOUSING PROJECTS DEVELOPING ON AGRICULTURAL, NON-RESIDENTIAL LAND: A LEGAL MILESTONE

Issue February 2025

Nguyen Bich Van
Partner

Nguyen H. Phuong Uyen
Associate

ABSTRACT:

On 30th November 2024, the 15th National Assembly deliberated and officially passed Resolution No. 171/2024/QH15, introducing a pilot framework for the implementation of commercial housing projects under agreements on acquiring land use rights or utilizing existing land use rights (“Resolution 171”). Resolution 171 marks a groundbreaking trial phase in Vietnam with notable keys as follows:

  • Flexible pilot mechanism: The Resolution enables commercial housing projects to be developed not only through agreements to acquire land use rights but also be applicable to non-residential land.
  • Commercial housing development: With the removal of longstanding legal barriers, the Resolution encourages a transformative boost in the real estate market, particularly in major urban centers with high-rise demand for housing.
  • Enhancing governance and transparency: The Resolution aims to provide a transparent and sustainable development of the real estate market.
  • Attracting investment: The Resolution opens up opportunities for investors to easily engage in commercial housing development.
  • Addressing housing challenges: Resolution 171 is expected to play a crucial role in remediating the housing shortage, especially for low and middle-income individuals in major urban centers.

1. SCOPE OF REGULATION

Resolution 171 is experimental applied nationwide to the following real estate investors/developers:

  • Projects involving the acquisition of land use rights;
  • Projects utilizing existing land use rights;
  • Projects combining both the utilization of existing land use rights and the acquisition of land use rights;
  • Projects established by entities who currently hold land use rights to develop commercial housing projects on the location that was previously used by such entities but are being requested to relocate due to environmental pollution issues or under the urban planning master-plan.

In line with the principles of consistency and alignment with the Law on Land, commercial housing projects developed by real estate business organizations who: (i) acquire residential land use rights or (ii) already hold residential land use rights, or a combination of residential and other land use rights, are not subjects to be regulated by Resolution 171 but will be governed by existing Land Law.

The agreements on acquiring land use rights for the pilot project shall be implemented through the transfer of land use rights in accordance with Land Law. In cases within the area where the pilot project is developed having partial land managed by state agencies that cannot be separated into an independent project, such land managed by the state entities shall be added to the total project area. The State will then reclaim allocate or lease to the investor without bidding procedures for acquiring land use rights.

2. SCOPE OF APPLICATION

Resolution 171 is applicable to three subjects: (i) state-owned authorities, (ii) real estate entities, and (iii) land users.  Applicable subjects implement their rights and obligations accordingly with related provisions of laws on land, housing, real estate business, investment, and other relevant legal regulations.

3. CONDITIONS FOR IMPLEMENTATION OF THE PILOT PROJECT

Conditions for land parcels:

  • Aligned with the district-level land-use plan or urban construction and development plan;
  • Aligned with approved local housing development plans, programs;
  • Under the list of land for pilot projects approved by the provincial People’s Council.

Conditions for project implementing entity (Real estate business entities):

  • Being qualified for the conditions as set out in the laws on land, housing, real estate business, investment, and other relevant legal regulations;
  • Having approval from the provincial People’s Committee regarding the agreement on the acquisition of land use rights for implementing pilot project for the circumstances mentioned in points (a) and (c) Section 1 above or approval from the Ministry of National Defense for defense lands and Ministry of Public Security for security lands.

Conditions for land types:

  • Agricultural land;
  • Non-agricultural land (non-residential land);
  • Residential land and other lands within the same parcel applied for agreement on land use right acquisition;
  • Defense and security land that have been reallocated for non-defense or non-security purposes according to planning.

4. CRITERIA FOR SELECTING PILOT PROJECTS

  • Being implemented in urban areas or areas planned for urban development;
  • The total residential land area within pilot projects (including existing residential land and land proposed for conversion to residential use) must not exceed 30% of the additional residential land within the planning phase (compared to the current residential land use) under the approved provincial land-use plan for 2021–2030;
  • Not fall under the projects specified in clause 4 Article 67 Law on Land;
  • For cases: (a) Section 1 above, the land designated for the pilot project should not be included in the list of land recovery projects approved by the provincial People’s Council as per Clause 5 Article 72 Law on Land.

5. EFFECTIVENESS AND IMPLEMENTATION

Resolution 171 takes effect from 01 April 2025 and shall remain in full force for 5 years. Upon its expiration, real estate business entities those are in the process of implementing pilot projects in accordance with their approved schedules may continue to execute their projects until completion. For individuals acquiring land use rights or ownership of assets attached to land under the pilot projects, their rights, and obligations will be governed by the provisions of laws applicable to land users and asset owners.

CONCLUSION:

Resolution 171 represents a groundbreaking milestone in reforming and enhancing efficiency within Vietnam’s real estate field. It opens new avenues for commercial housing projects while maintaining alignment with land regulations and ensuring fairness in project access for all involved parties. Simultaneously, Resolution 171 lays a foundation for stabilizing the supply of commercial housing and enhances the development of a transparent and sustainable real estate market.

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[𝐀𝐖𝐀𝐑𝐃𝐒 𝐀𝐍𝐃 𝐀𝐂𝐂𝐎𝐋𝐀𝐃𝐄𝐒] THE A-LIST – TOP 100 LAWYERS IN VIETNAM

10 February 2025

bizconsult Law Firm is proud to announce that 2024 is the fifth consecutive year that three of its Partners: Mr. Tuan Nguyen, Mr. Viet Nguyen, and Mr. Phong Le have been listed in the A-list of 100 lawyers notable for their adherence to best practices in Vietnam by the Asia Business Law Journal.

This list is forged from extensive research and nominations from in-house counsel primarily in Vietnam, but also Vietnam-focused partners with international law firms. Comments submitted to Asia Business Law Journal by the clients underscore their preference for seasoned lawyers who consistently uphold the highest ethical standards and maintain professionalism and enthusiasm in their interactions.

Congratulations to the lawyers! This achievement is not only a well-deserved recognition of their efforts and dedication but also reaffirms the solid position of bizconsult in the legal field. We believe that with their commitment, deep expertise, and continuous zest for innovation, the lawyers will keep on obtaining even more remarkable accomplishments ahead!

Read more at https://bit.ly/4hpB1BH

For more information, please refer to http://www.bizconsult.vn/ and https://www.linkedin.com/company/bizconsult-law-firm-02

LEGAL UPDATE – DECEMBER 2024 – LEGAL REFORM FOR CONSUMER RIGHTS PROTECTION: THE 2023 LAW AND DECREE NO. 55/2024/ND-CP

Issue December 2024

Quoc Tran
Partner

Nguyen Ngoc Ly
Senior Associate

Consumers have always been a crucial demographic that drives socio-economic development in any country. Consumer rights protection therefore should be a priority, as it serve as a key resource and driving force for enterprises’ sustainable business growth. However, in practice, consumers often face disadvantages in transactions involving goods and/or services with enterprises or individuals due to the lack of information or optionality. This situation creates an imbalance of rights, adversely affecting consumers. Hence, the legal framework must be adjusted, and State surveillance is required to ensure a balance of interests among consumers and organizational and/or individual businesses, thus helping to ensure fair treatment for consumers, granting them access to accurate information and protection against illegal business practices.

The revised Law on Consumer Rights Protection was approved by the 15th National Assembly on June 20, 2023, and took effect on July 1, 2024 (the “2023 Law“), replacing the Law on Consumer Rights Protection No. 59/2010/QH12 (the “2010 Law”). These amendments aim to align with global trends and international legal standards, updating and refining the regulations in the Law, which consists of 7 chapters and 80 articles, adapting to modern consumption and business trends. Additionally, Decree No. 55/2024/ND-CP, issued on May 16, 2024 and taken effect from July 1, 2024 (“Decree 55“), replaces Decree No. 99/2011/ND-CP and focuses on consumer rights protection in the digital environment, safeguarding vulnerable groups, and organizing Vietnam Consumer Rights Day. The goal of these amendments is to enhance consumer rights protection in the context of Vietnam’s broad and rapidly growing consumption market, particularly during the Fourth Industrial Revolution (4IR), which is characterized by the rise of technologies such as AI, blockchain, and the Internet of Things (IoT).

A. KEY POINTS OF THE REFORM

1. General Provisions

a. Scope of Application

The 2023 Law expands its scope of application (Article 2) to include the Vietnam Fatherland Front, socio-political organizations, and social organizations. Notably, for cross-border and online transactions, the Law is also applicable to foreign agencies, organizations, and individuals relevant to consumer rights protection. The definition of “consumer” (người tiêu dùng, in Vietnamese) in the 2023 Law (Article 3.1) now includes the phrase “not for commercial purposes” to emphasize its focus only on the consumption of goods and services. However, the 2023 Law keeps the term “person” (người, in Vietnamese) to define consumers, leaving ambiguity about whether organizations or household businesses can be considered consumers.

b. Influencers

The 2023 Law introduces new definitions for “influencers” (Article 3.9), which is clarified in Article 2.1 of Decree 55. An influencer is construed as an expert, a prestigious individual, or someone receiving societal attention in a specific field, sponsored by organizational and/or individual businesses for the use of their images, advices, or recommendations to promote commercial activities or encourage consumption. Specific cases include (i) experts or experienced individuals recognized by competent authorities or organizations in specific fields or industries; (ii) prominent or prestigious individuals with notable contributions and societal acknowledgment, certified by competent agencies or organizations; and/or (iii) individuals attracting societal attention or a significant number of followers, particularly on social media or digital platforms, qualified for engaging in advertising or online business. This regulation aims to ensure transparency in the role of influencers in advertising activities and to protect consumer rights in the modern business environment.

Additionally, under Article 22 of the 2023 Law, influencers are vested with the following obligations:

  • Provide accurate and complete information about products, goods, and/or services to consumers and request organizational and/or individual businesses for evidentiary documents of the information.
  • Bear joint liability for any inaccurate or incomplete information provided, unless they can prove that all reasonable measures were taken to verify the information.
  • Notify consumers of sponsorship to provide information on products, goods, or services.

c. Vulnerable consumers

The concept of “vulnerable consumers” draws inspiration from legal frameworks in other countries – particularly developed ones – and standards set by international organizations like the United Nations and the Organization for Economic Cooperation and Development (OECD), whose laws and regulations have been established with standards for protecting vulnerable consumers. The term is defined in Article 8.1, aiming to safeguard seven groups of consumers that are potentially disadvantaged in consumption transactions, such as the elderly, disabled, children, pregnant women, populations in remote or challenging areas, etc. At the same time, Article 8 requires organizational and/or individual businesses to prioritize protecting vulnerable consumers’ rights during transactions, ensuring their ability to file complaints and resolve disputes. Traders must receive and address protection requests from these groups directly and may not transfer them to third parties unless such third parties hold relevant responsibilities.

If there is any delay, refusal to prioritize, or denial of such requests, traders shall compensate vulnerable consumers pursuant to civil law (Article 8.2). Traders shall also develop and publicize procedures to protect the rights of this consumer group, safeguarding the right to file complaints, resolve disputes, and publicizing these at their headquarters, business locations or on websites and/or applications (Article 8.3).

d. Specific transactions

Compared to the 2010 Law, the 2023 Law provides detailed explanations for specific transactions (Article 3.8), aiming for consumer protection in the context of 4IR, including:

  • Remote Transactions: transactions conducted via networks, electronic means, or other methods where consumers cannot directly inspect goods and/or services prior to transactions (Article 3.5);
  • Continuous Service Provision: services provision for a term of three months or longer or for an indefinite term, such as telecommunications, internet, cable television, etc. (Article 3.6);
  • Direct Sales: organizational and/or individual businesses actively reaching out to consumers to promote and sell products and/or services through: (i) Door-to-door sales: selling products and/or services at consumers’ residences or workplaces; (ii) Multi-level marketing: selling goods through a multi-level network where participants earn commissions from their sales and those of others in the network; and (iii) Sales not conducted at regular transaction locations: selling goods and/or services at locations that are not fixed retail outlets (Article 3.7).

The 2010 Law, through Decree No. 99/2011/ND-CP dated October 27, 2011 (“Decree 99”), has previously provided the concepts of “Distance contracts”, “Continuous service contracts,” and “Door-to-door sales” (Article 3 of Decree 99), however, the earlier legal framework focused primarily on traditional transactions. On the other hand, the 2023 Law adapts to the new trends by emphasizing remote and online transactions, fulfilling the needs of consumer rights protection in the digital era, and helping to reduce risks when conducting transactions where they cannot inspect products and/or services firsthand.

e. Prohibited acts

Article 10 of the 2023 Law details and expands the list of prohibited acts in consumer rights protection, adding the following in particular:

  • Failing to compensate, refund, or exchange products, goods, or services to consumers due to mistakes of organizational and/or individual businesses, or when the products, goods, or services are inconsistent with the registered, disclosed, listed, advertised, introduced, or committed information.
  • Committing bait-and-switch or fraudulence involving products, goods, or services during goods delivery or service provision to consumers.
  • Failing to notify in advance of sponsorships towards influencers for use of their images, advices, or recommendations to promote commercial activities or encourage consumption of goods and/or
  • Preventing consumers from inspecting products, goods, or services unless otherwise stipulated by law.
  • Requesting consumers to purchase additional products, goods, or services as a precondition for contract conclusion contrary against their wills.
  • Including unlawful terms in contracts with consumers, model contracts, or general trading conditions.
  • Illegally collecting, retaining, using, modifying, updating, or destroying consumer information.

The 2023 Law also lists additional prohibited acts of specific nature for multi-level marketing and establishment, operation and/or service provision of digital platforms, such as:

  • Multi-level marketing (Article 10.2): requiring deposits or product purchases to join the network; providing false information; operating without certification; multi-level marketing for services or forms that are not sales of goods; developing the network not through sale of goods transactions. In which, several acts mentioned are similar to Decree No. 40/2018/ND-CP on managing multi-level marketing businesses (“Decree 40”);
  • Digital platforms (Article 10.3): coercing or preventing consumers from using other intermediary platforms as a precondition to services usage; restricting product optionality without disclosing selection criteria; misrepresenting consumer feedback on products and/or services; preventing registrations or reviews from consumer protection organizations; preventing software removal or requiring unnecessary software installation.

2. Rights and obligations of consumers

The 2023 Law enhances the role of consumers in modern consumption context, as well as ensuring balance between their rights and obligations. The new consumer rights include the right to protection of dignity, honor, and information (Article 4.1), the right to choose a healthy and sustainable consumption environment (Article 4.9), and the right to protection when using public services under regulations of the law (Article 4.10). In addition, Article 5 introduces obligations of consumers, including compliance with conditions, guidance regarding the transportation, preservation, and use of products, goods, or services; regulations on inspection, environmental protection, sustainable consumption (Article 5.3), and obligations in providing information related to transactions between consumers and organizational and/or individual businesses (Article 5.5) and other obligations as required by law.

3. Specific transactions

a. Remote transactions

The concept of “cyber transactions” is mentioned within “remote transactions”, in which organizational and/or individual businesses in cyberspace include (Article 39.1 of the 2023 Law):

  • Organizational and/or individual businesses selling products, goods, or services via their established information systems or digital platforms;
  • Organizations establishing and/or operating intermediary digital platforms.

While the 2023 Law does not define “digital platform” or “intermediary digital platform”, this Law continues to provide regulations related to organizational and/or individual businesses selling, establishing and/or operating “digital platform” provisions, including a list of prohibited acts (Article 10.1, Article 10.3), responsibilities towards consumers (Article 38, Article 39 of the 2023 Law; Article 22, Article 23 of Decree 55). Additionally, Decree 55 later introduces the concept of a “large digital platform” as a platform servicing electronic transactions that satisfies one of the following criteria: (i) having at least 3 million active user accounts annually in Vietnam, and organizational and/or individual businesses shall self-determine their user account numbers; (ii) being an intermediary digital platform of large or very large scale facilitating electronic transactions.

b. Continuous service provision

In Section 2, Chapter III of the 2023 Law, the responsibilities of organizational and/or individual businesses providing continuous services and the contract form for this mode of service are respectively detailed in Articles 41 and 42 of the 2023 Law, with key points including:

  • Organizational and/or individual businesses providing continuous service in Vietnam must disclose information on their legal representative in Vietnam. If there is no legal representative, they must appoint an authorized representative and publicize the information thereof. This representative must implement the provisions of the consumer protection laws. However, this regulation may leave room for ambiguity in the course of regulation enforcement, posing challenges for organizational and/or individual businesses when applying in specific cases such as: whether it is application for organizations with business presences or foreign organizations; and the role of the authorized representative (whether it is personnel of the organization or an individual appointed through an authorization agreement?), etc.
  • Organizational and/or individual businesses providing continuous service, under contracts, must notify consumers of (i) paying fee to continue use of service, at least 07 working days before the end of service term; (ii) contract expiration, at least 07 working days before the contract expires.

b. Direct sales

  i, Multi-level marketing

The 2023 Law puts the definition of “multi-level marketing” under the category of “direct sales” (Article 3.7.b) and the obligations of organizations and individuals conducting multi-level marketing. However, except for new obligations regulated in Article 45, the 2023 Law largely aligns with those currently remaining in effect of Decree 40. However, since the 2023 Law applies to multi-level marketing sellers in their relationship with consumers, unlike Decree 40 which applies to all multi-level marketing sellers, there are potential overlaps of obligations imposed on multi-level marketing sellers.

  ii, Sales not conducted at regular transaction locations

The 2023 Law introduced a new concept of “sales not conducted at regular transaction locations” (Article 3.7.c), including the presentation and sale of products, goods, or provision of services at venues that are not fixed retail locations where products, goods, or services are regularly sold or provided.

According to Article 47, organizations, individuals doing business at temporary venues, when selling goods, providing services with a total value exceeding VND 10 million must comply with:

  • Notification to the commune-level People’s Committee: Provide detailed sales organization information, including methods, dossier, and the responsibilities of the People’s Committee as guided by Articles 26 and 27 of Decree 55. The forms for notification and for amendments and/or supplements are provided in Annexes 10 and 11 of Decree 55.
  • Publicly displaying information at the sales location.
  • Maintenance of contact information for grievance redressal during and after the transaction.
  • Provision of complete and honest information about the products, services, and business organizations.
  • Acceptance of returns within 30 days, provided that items remain intact with seals, labels, packaging, and within their expiration dates.
  • Issuance of bills and/or invoices for every transaction.
  • For written contracts, a copy must be sent to consumers, who have 03 working days to perform or terminate the contracts then notify the other party; during which no deposits, payments or performance may be required unless otherwise specified by law.

4. Dispute resolution mechanisms

The 2023 Law retains four mechanisms for resolving disputes between consumers and organizational and/or individual businesses including negotiation, mediation, arbitration, and court proceedings.

a. Negotiation

Regarding negotiation, the 2023 Law additionally establishes the right for consumers to request assistance from state management authorities and consumer protection organizations to negotiate when their legitimate rights are violated (Article 56.3). This provision seeks to enhance the effectiveness of negotiation in dispute resolution between consumers and organizational and/or individual businesses. Additionally, the 2023 Law introduces more explicit provisions on the format of negotiation, allowing it to be conducted online to accommodate modern technological trends, thereby facilitating convenience and efficiency for the parties involved (Article 54.3). It also supplements detailed procedures, timelines, and obligations of the parties during negotiation, reducing arbitrariness and enhancing accountability (Article 57), while clarifying the rights and obligations of the parties engaged in negotiation (Article 59).

 b. Mediation

 The 2023 Law, while not explicitly defining “mediation” as the 2010 Law did, references other laws such as the Law on Grassroots Mediation, the Law on Mediation and Dialogue at Court, and the Decree on commercial mediation. The 2023 Law supplements a new prohibition of mediation in cases involving commitment of legal prohibitions or violation of social ethics (Article 54.2). Mediators must possess the necessary competence, moral characters, and mediation skills; especially, there must be suitable mediators for disputes involving ethnic minorities (Article 64). The 2023 Law mandates the preparation of a written agreement acknowledging the outcome of a successful mediation, with detailed requirements for its contents. If negotiation is unsuccessful, no documentation is required (Article 65). The Law also establishes a mechanism to recognize the outcome of a successful mediation and imposes obligations to fulfill the terms within the agreed timeline (Article 66). Collectively, these refinements in the 2023 Law provide greater regulatory clarity, enhance the effectiveness of mediation, and safeguard the rights and interests of all parties involved.

c. Court proceedings

For dispute resolution through court proceedings, the 2023 Law improves the regulations on expedited proceedings applicable to civil cases involving consumer rights protection, to be specific, cases with transaction value under VND 100 million (~$4,000) (Article 70.2) are eligible for expedited proceedings without the need for fulfillment of conditions under Article 317.1 of the 2015 Civil Procedure Code. Damages awarded in civil cases involving consumer rights protection initiated by social organizations for public interest, to which a specific beneficiary cannot be identified, will be allocated to general activities benefiting consumers as per Government regulations or submitted to the state budget (Article 73.2 of the 2023 Law). If a social organization initiates a lawsuit involving multiple provinces, compensation is allocated to the central budget; for single-province cases, it is allocated to the local budget (Article 28 of Decree 55). These updates reinforce the role of social organizations in consumer rights protection, ensuring fairness and transparency in managing awarded damages.

B. CONCLUSION

The 2023 Law on Consumer Rights Protection and Decree No. 55/2023/ND-CP mark significant advancements in protecting consumer rights in Vietnam. Enacted amidst the 4IR with rapid technological growth and the rise of digital transactions which deeply affects consumer rights, the two instruments illustrate significant improvements over previous regulations.

The 2023 Consumer Protection Law has broadened the scope of protection, especially for consumers in electronic transactions and e-commerce, while previous regulations mainly focused on traditional transactions. The 2023 Law also clarifies the responsibilities of organizations and individuals in the provision of goods and/or services and ensures the quality and safety for consumers, as well as enhancing the role of consumer rights protection organizations, contributing to fostering consumers’ trust for them to gain accessibility of legal support upon violations of rights and interests. The 2023 Law mandates that organizations and individuals providing goods and/or services ensure transparency of information, while simultaneously assuming responsibility for protection of consumers’ personal data and preventing breaches of privacy. These provisions keep up with the growing emphasis on information security in an increasingly digitalized world.

Furthermore, Decree No. 55/2023/ND-CP supplements enforcement mechanisms and provides detailed regulations on matters such as grievance redressal, dispute resolution, and measures to address violations related to consumer rights protection. This Decree clarifies the responsibilities of state management authorities, organizations, and individuals in supporting and resolving disputes concerning consumer rights; as well as the processes for handling complaints and disputes arising in online transactions.

Overall, the systematic upgrade of the laws on consumer rights protection in 2023 reflects the alignment of legal framework with the development of the digital economy, representing a significant step forward in enhancing consumer rights protection and adapting to the transformative changes of the 4IR era.

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[𝐀𝐖𝐀𝐑𝐃𝐒 𝐀𝐍𝐃 𝐀𝐂𝐂𝐎𝐋𝐀𝐃𝐄𝐒] 𝐈𝐏 𝐄𝐗𝐏𝐄𝐑𝐓 𝟐𝟎𝟐𝟒 𝐈𝐍 𝐕𝐈𝐄𝐓𝐍𝐀𝐌

02 December 2024

bizconsult Law Firm is honored that its Managing Partner – Mr. Tuan Nguyen and Senior Associate – Ms. Ly Nguyen are listed as two of the 50 Intellectual Property (IP) lawyers recommended by Asia IP for the Vietnam region for the year 2024.
This list is part of the annual review by Asia IP based on their extensive editorial research and feedback from corporate counsel worldwide in identifying the leading lawyers in the field of intellectual property across Asia and the Pacific.
This is a well-deserved recognition for outstanding contributions in the field of IP, affirming the position and prestige of our team in the international legal community. bizconsult is proud to carry on its company with its Valued Clients, readers, and partners on the path of protecting and developing their IP assets.

LEGAL UPDATE – AUGUST 2024 – New regulation on ESOP in Vietnam: Looser control?

Issue August 2024

Hai Ha
Partner

Phan Thi Minh
Senior Associate
Preface:

With effectiveness from 12 August 2024, implementation of the Employee Stock Ownership Plan in Vietnam shall no longer be required to register with the State Bank of Vietnam

Employee Stock Ownership Plan (ESOP) is a benefit policy for key employees working in multinational companies, in which employees will have a chance to become shareholders of holding companies by way of receiving bonus shares or purchasing shares with preferential terms. In Vietnam, ESOP issued by foreign companies to Vietnamese employees is regulated as a form of indirect foreign investment and subject to the foreign exchange control of the State Bank of Vietnam (SBV).

Implementation of ESOP issued by foreign companies to Vietnamese employees is currently governed by the Decree No. 135/2015/ND-CP of the Government and Circular No. 10/2016/TT-NHNN of the SBV (“Circular 10”). On 28 June 2024, the SBV issued the Circular No. 23/2024/TT-NHNN (“Circular 23”) to amend some provisions of the Circular 10 with respect to the ESOP implementation, which will be in force from 12 August 2024 and aims to release administrative burdens for local entities while maintaining strict foreign exchange management.

Release of registration requirement

The most significant change introduced by the Circular 23 is the removal of the requirement for registration of ESOP implementation with the SBV. Accordingly, ESOP-implementing local entities that implement the ESOP issued by foreign companies to Vietnamese employees will no longer be required to obtain SBV’s approval prior to ESOP implementation. However, the management of ESOP implementation will be mainly vested in local merchant banks where the ESOP-implementing accounts are opened. Pursuant to the Circular 23, banks may request the ESOP-implementing local entity to submit documents related to ESOP for their examination, including: (i) documents evidencing relations between the foreign company and the ESOP-implementing local entity; (ii) documents describing features of ESOP such as the share awarding form, vesting period, and list of Vietnamese participants; and (iii) other relevant documents. Thus, local banks may challenge the legality of ESOP and, at their sole discretion, refuse transactions to be conducted through ESOP-implementing accounts.

Tighten reporting obligation

The Circular 23 imposes a new requirement for local employers to file monthly reports on ESOP implementation status to the SBV, replacing the previous quarterly reporting requirement outlined in the Circular 10. These reports must be made in regulatory form, containing foreign currency amounts of dividends or proceeds from the sale of shares remitted to Vietnam for paying the local employees, and enclosed with the local banks’ acknowledgement. The deadline for filing reports is the 12th day of the month immediately following the reported month. Reports must be sent both electronically via email to the SBV’s designated email address (i.e., [email protected]) and in hard copy to the SBV’s office.

Restriction of transferring ESOP funds out of Vietnam

This restriction is not explicitly addressed in the existing provisions of the Circular 10. However, in practice, it is very difficult to get approval from the SBV for the awarding form of “stock option with preferential terms” as the remittance of money out of Vietnamese territory is strictly controlled by the SBV. Many ESOPs were refused or took a long time to explain, demonstrate to obtain SBV’s acceptance due to a viewpoint that ESOP may be considered as a method of mobilizing capital from Vietnamese employees.

Under the Circular 23, the transfer of ESOP funds out of Vietnam is clearly restricted. The Circular 23 clearly provides for two forms of share awarding, which are:

  • Directly awarding shares to the employees: The employees are awarded and own shares without any payment;
  • Other forms of awarding overseas shares without any cash outflows from Vietnam.

Accordingly, an employer may implement ESOP as long as no foreign currency is remitted out of Vietnam.

Outlook

With the restriction of transferring ESOP funds out of Vietnam, the State Bank of Vietnam loosens their control over ESOP implementation by removing the registration requirement as a precedent condition for launching ESOP for Vietnamese employees. The form of directly awarding stocks to the employees has become more straightforward, while the form of selling stocks to Vietnamese employees with payment originated from Vietnam is restricted.

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LEGAL UPDATE – AUGUST 2024 – LAW ON ELECTRONIC TRANSACTIONS 2023

Issue August 2024

Le Hong Phong
Partner

Nguyen Hoang Quan
Senior Associate

With the rapid growth of the digital economy, electronic transactions are becoming more common and increasingly important. This has presented the need for a sound legal framework to safeguard the legal rights and interests of parties in electronic transactions. Therefore, the Law on Electronic Transactions 2023 was promulgated on June 22, 2023 and took effect on July 01, 2024 with many new regulations and major adjustments that not only enlarge the current legal framework but also create more favorable and safer conditions for parties participating in electronic transactions. With an emphasis on personal data protection, authentication of electronic signatures and detailed regulations on electronic contracts, the new law promises many positive changes. This article aims to list out the key changes in the Law on Electronic Transactions 2023 along with its impacts and legal considerations for businesses and individuals.

A. NEW KEY HIGHLIGHTS OF THE LAW ON ELECTRONIC TRANSACTIONS 2023

1. Electronic Signatures

One of the highlights of the Law on Electronic Transactions 2023 is the provision on electronic signatures. To ensure its legality and security, electronic signatures must meet certain technical standards such as: security standards, authentication standards, traceability standards, and legal standards. Compared to past regulations, these new points are better oriented to improved security standards, specifically stipulating the implementation of two-factor authentication and strong encryption algorithms that will bolster the security of electronic signatures. This regulation also contributes to stricter identity verification, by mandating that electronic signatures be authenticated only by licensed authentication service providers after rigorous identity verification processes. Furthermore, the provisions of the Law on Electronic Transactions 2023 also improve the traceability of electronic signatures, by requiring that every electronic signing system keeps a record and stores signing history for transparency and verifiability. Finally, the new regulations clearly affirm that an electronic signature has equal legal status to a handwritten signature and shall thus be admissible in court.  In addition to new regulations on electronic signatures, the Law on Electronic Transactions 2023 also clearly stipulates that organizations providing electronic signature services must be licensed by a competent authority, and electronic signatures must be authenticated by these organizations to enjoy the same legal validity as hand-written signatures.

2. Data Protection and Privacy Rights

a. Data Management

The Law on Electronic Transactions 2023 sets out strict regulations on the collection, storage and processing of personal data to protect user privacy:

  • Data Collection: Organizations and businesses may only collect personal data with the user’s express consent, unless provided otherwise by the law.
  • Data Storage: Personal data must be stored securely, using encryption and security measures to prevent unauthorized access, loss or leakage of data.
  • Data Processing: The processing of personal data must comply with security principles, and may only be carried out for purposes that have been consented to by the user.

b. User Rights

Users have the right to access, modify and request the deletion of their personal data. Businesses must provide clear and convenient mechanisms for users to exercise these rights, ensuring personal data is thoroughly managed and protected.

3. Electronic Contracts

While regulations on electronic contracts have been in place since the Law on Electronic Transactions 2005, the formation of electronic contracts currently remains quite limited. This is partly due to a lack of specific guidelines for the formation of electronic contracts. Moreover, the formation of electronic contracts was previously based on mutual agreement between the parties, making it difficult to ensure the integrity of the contracts that were entered into. Compared to the provisions of the Law on Electronic Transactions 2005, which focused on establishing the legal basis for recognizing electronic contracts as having the same legal status as paper contracts, including regulations on the content and form of electronic contracts, the Law on Electronic Transactions 2023 expands and fleshes out the regulations on electronic contracts. This includes requirements for recording and storing transaction history, protecting data integrity, and mechanisms for dispute resolution.

a. Form and Content

An electronic contract must be in the form of an electronic document and must meet the same content requirements as a traditional paper contract. This includes basic terms, rights and obligations of parties and dispute resolution terms.

b. Legal Evidence

An electronic contract has the same legal status as a paper contract and can be admissible in court. This demands that every party strictly follow the signing and storage procedures of electronic contracts in order to preserve their legality.

B. IMPACT OF THE LAW ON ELECTRONIC TRANSACTIONS AND LEGAL  CONSIDERATIONS FOR INDIVIDUALS AND ORGANIZATIONS

As the Law on Electronic Transactions 2023 takes effect amid continuous development in the digital economy, businesses should focus on investing in technological security solutions, including two-factor authentication, data encryption and management systems for electronic signatures. This not only helps businesses comply with legal regulations but also protects them from cybersecurity risks. Additionally, businesses should establish and maintain data protection policies to ensure compliance with security regulations and customer privacy. This includes educating staff on new regulations and developing necessary security measures.

For individuals, it is necessary to raise awareness on the protection of personal information online. This includes using security measures such as two-factor authentication, taking care to not share personal data via unsecured channels and regularly assessing access rights to personal data. Users should be clearly informed of their rights to access, modify and delete personal data, as well as their rights to demand enterprises to exercise these rights. This contributes to the protection of individual rights and ensures that personal data is managed securely.

CONCLUSION

The Law on Electronic Transactions 2023 provides clear and detailed regulations about the protection of the rights and interests of parties participating in electronic transactions, and creates a safe and transparent digital business environment. New provisions on identity authentication, data protection and privacy rights, electronic signatures, and electronic contracts not only guarantee the legitimacy of transactions but also enhance trust among users in online activities. Businesses and individuals should fully comply with and implement these regulations to ensure the safety and efficiency of electronic transactions, thereby contributing to the sustained development of the digital economy of Vietnam.

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LEGAL UPDATE – AUGUST 2024 – NEW REGULATIONS OF 2023 HOUSING LAW ON THE MANAGEMENT AND USE OF APARTMENT BUILDINGS

Issue August 2024

Hai Ha
Partner

Nguyen T.Lien Lien
Associate

On June 29, 2024, the National Assembly adopted the Law No. 43/2024/QH15 on amendment and supplementation of a number of articles of the Land Law No. 31/2024/QH15, the Residential Housing Law No. 27/2023/QH15, the Law on Real Estate Business No. 29/2023/QH15, the Law on Credit Institutions No. 32/2024/QH15, among these, it notably highlights that the Residential Housing Law No. 27/2023/QH15 dated November 27, 2023 (the “2023 Housing Law”) comes into effect on August 01, 2024, five months earlier than its previous effective date. With the expectations and directives of the National Assembly to address the backlog of issues of the Residential Housing Law No. 65/2014/QH13 dated November 25, 2014 (the “2014 Housing Law”), the 2023 Housing Law codifies certain provisions from guidance documents and introduced numerous clearer regulations for the management of residential house construction investment projects. Regarding the management and use of apartment buildings, the 2023 Housing Law introduces the following new provisions:

Firstly, while the 2014 Housing Law only prohibits improper use of apartment buildings and encroachment upon common space, the 2023 Housing Law specifically categorizes prohibited acts in the management and use of apartment buildings, with several new prohibitions added.

Compared to the 2014 Housing Law, the 2023 Housing Law introduces numerous new prohibitions, aimed at enhancing the management and protection of the living environment of residents; specifically, the 2023 Housing Law acknowledges that failure to pay maintenance fees and misuse of operational management and maintenance fees are strictly prohibited acts. This provision ensures that the financial funds for the maintenance and operation of the apartment buildings are collected and used for the right purposes, thereby maintaining the quality and safety of the construction works, and protecting the interests of other apartment building owners who comply with regulations. The 2023 Housing Law also prohibits acts that affect the order and landscape of the apartment buildings, including painting, decorating the exterior in contravention of regulations on design, architecture, and keeping or releasing livestock or poultry, and slaughtering livestock within the apartment area, contributing to protecting the common living environment, ensuring order and aesthetic harmony, creating a civilized, clean and beautiful living environment for all apartment owners.

In addition, the 2023 Housing Law also strictly prohibits the division of apartments without the permission of competent state authorities (“State Authority”). This prohibition helps to ensure the structural safety of the apartment buildings, maintain consistency in the planning, prevent infrastructure overload, and address other safety issues during the use of apartment buildings.

Secondly, the Housing Law 2023 introduces a number of specific regulations in construction of parking spaces of apartment buildings, as well as codified a number of provisions in the Regulations on management and use of apartment buildings to ensure the legality in practical application and implementation.

Design of apartment buildings must allocate the area for each type of vehicle: While the 2014 Housing Law generally requires ensuring the construction of parking spaces in accordance with approved design and construction standards, the 2023 Housing Law codifies the provisions in the Regulations on management and use of apartment buildings, specifically detailing that parking spaces can be arranged in the basement levels or other areas inside or outside the apartment buildings. Additionally, the 2023 Housing Law requires the developers of investment projects of apartment building construction (referred to as the “Developer”) to allocate the area for each type of vehicle in the design of the apartment buildings. These specific requirements aim that the State Authority shall have a more comprehensive and accurate assessment of the quality and safety of the construction works, evaluate the impact of the apartment building project on the transportation system in the surrounding area, prevent Developer from changing the use purpose of designated parking areas contrary to the approved design, and ensure the common ownership and use of the apartment owners for parking space (aside from car parking space).

Regulations on charging area: In addition to the regulations on the allocation of separate parking spaces for each type of vehicle, the addition of requirements on charging area for electric motor vehicles to be arranged in compliance with the construction standards is a notable new point, demonstrating the preparation of the 2023 Housing Law for the development of new technologies, meeting the increasing social demand and trend for electric vehicles. However, this provision of the 2023 Housing Law is not yet sufficiently specific on whether all apartment buildings’ designs must include electric charging areas as a mandatory requirement or not. Given the current situation where residents charge electric vehicles haphazardly without ensuring fire safety and considering recent incidents of fires caused by explosions during charging, it is very urgent to provide explicit guidance and standards for designing electric charging areas in apartment buildings. Currently, the Ministry of Science and Technology has developed and issued 11 Vietnamese standards for electric vehicle charging stations (including 9 standards for charging stations and 2 standards for electric vehicle battery exchange); additionally, the Ministry is in the process of revising legal regulations and proposing additional 18 standards related to electric vehicle charging stations and associated electric equipment (as mentioned in Official Letter No. 149/BKHCN-TDC dated January 18, 2024 of the Ministry of Science and Technology). These standards provide clear guidelines and frameworks for Developer to implement and adhere to when constructing and designing electric charging areas within apartment buildings, ensuring the safety of property and lives of residents in these areas.

Developer is required to publicly disclose the investment costs for the construction of car parking spaces: The 2023 Housing Law clearly stipulates that in cases where apartment buyers do not purchase or rent a car parking space, this car parking space is under the management of the Developer and the investment cost for construction of these parking spaces shall not be included in the apartment selling price. Also, the 2023 Housing Law requires the Developer to publicly disclose the investment cost for constructing car parking spaces, to help the apartment buyers understand whether the composition of the apartment selling price paid includes the cost for the construction of car parking spaces. This regulation aims to address the practical issue where Developer of some residential housing projects designate car parking spaces as their private property without clearly specifying whether the investment costs for constructing these spaces are allocated into the apartment sale price for apartment buyers. However, there is a need for more specific guidelines on the timing and method for the Developer to publicly disclose the cost of construction of car parking spaces so that buyers can be informed before deciding to sign the apartment sale and purchase contract.

Thirdly, the 2023 Housing Law introduces a method to determine the area of loggia when determining the use area of apartments and other areas in the apartment buildings.

Accordingly, the area of the loggia is measured as the entire floor area from the inner edge of the common wall or the apartment partition walls. This specific regulation helps determine the accurate calculation method for the loggia area within apartments in the apartment, and reduces the Developer’s ambiguity in the calculation method to increase the area of the apartment when determining the selling or leasing price of apartments.

Simultaneously, under this provision, the 2023 Housing Law clearly stipulates the ownership right of equipment and components attached to the balcony and loggia of the apartment. In the event of equipment and components attached to balconies and loggias but are the parts of the vertical surface of the construction works according to the design documents, such equipment and components shall be determined as under the common ownership of the apartment buildings. This regulation facilitates both Developer and buyers in clearly distinguishing between private ownership and common ownership when equipment and components are attached to the parts under private ownership, addressing the ambiguity under the 2014 Housing Law where the definition of private ownership includes technical equipment systems exclusively used or attached to the apartment or to other areas of private ownership.

Fourthly, the 2023 Housing Law removes some additional costs from the service fee for management and operation of apartment building compared to the 2014 Housing Law. 

The 2023 Housing Law additionally excludes two types of fees from the service fee for management and operation of apartment building including (i) fee for purchasing fire and explosion insurance, and (ii) remuneration to the apartment building Management committee. This new provision aims at clearly separating the service fee for management and operation of apartment building from expenses related to the operations of the Management committee, whereby the Management Board’s remuneration will be decided by the apartment building general meeting and be separately contributed, to avoid affecting the decision-making, contribution, and use of the service fee for management and operation, and potential disputes related to the service fee for management and operation of apartment building.

The 2023 Housing Law also supplements the responsibility of the provincial-level People’s Committee in promulgating a framework for the service fee for management and operation of apartment buildings to serve as a reference for parties involved and in cases where an agreement on service fees cannot be reached, the service fee under such framework promulgated by the provincial-level People’s Committee will be applied.

Fifthly, the 2023 Housing Law adds specific regulations on the handover of infrastructure works in the apartment buildings area.

The 2014 Housing Law lacks of regulations on the handover of infrastructure works, and the timing and method for handing over infrastructure works from the Developer to the State Authority. The 2023 Housing Law adds specific regulations on this issue. Accordingly, in case of handing over infrastructure works according to the approved design/project policy, the infrastructure works must be handed over to the State Authority after the acceptance of the construction works and upon the request of the Developer. The handover process must be recorded in writing between the Developer and the State Authority. The provisions of Articles 157 and 158 of the 2023 Housing Law also clearly define the responsibility for the maintenance of technical infrastructure works; accordingly, in case the technical infrastructure works have not yet been handed over to the State Authority, the Developer remains obligated to maintain, manage and operate it according to the approved project specifications, ensuring that the works do not adversely affect the community and living environment of the apartment building residents.

The above contents represent notable new points introduced by the 2023 Housing Law concerning the management and use of apartment buildings, contributing to enhance clarity and transparency in the management of apartment buildings, increasing the responsibilities of involved parties, and contributing to a good, safe, and sustainable living environment for residents, and aligning with the National Assembly’s direction when enacting and promulgating the 2023 Housing Law. However, for these new regulations to be effectively implemented in practice and aligned with the realities in Vietnam, it is required to have specific implementation guidelines from the Government and relevant Ministries and agencies in the coming time.

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LEGAL UPDATE – MARCH 2024 – Vietnam – Key compliance requirements on personal data protection

Issue March 2024

Nguyen Anh Tuan
Managing Partner 

Phan Thi Minh
Senior Associate

Preface:

“With effectiveness from 01 July 2023 for compliance, acts related to personal data in the territory of Vietnam, acts of using cyberspace, electronic devices, equipment, or other forms to transfer personal data of a Vietnamese citizen to a location outside the territory of Vietnam or using a location outside the territory of Vietnam to process personal data of a Vietnamese citizens are subject to compliance with regulations on personal data protection set forth in Government’s Decree 13”

One of the latest and most fundamental legal instruments in place governing the protection of personal data in Vietnam is Decree No. 13/2023/ND-CP (“Decree 13”). This long-awaited Decree 13 was issued by the Government on 17 April 2023.

Decree 13 introduces, inter alia, new requirements with respect to the protection of personal data, which apply to any domestic or foreign organizations or individuals that directly participate in or are involved in processing personal data in Vietnam. Those requirements under Decree 13 take effect on 01 July 2023, save small and medium-sized enterprises are afforded a grace period of two years with regard to the obligation of appointing a data protection officer and/or department. As such, it is highly recommended for businesses to review their internal privacy policies and compliance practice to identify the incompatibilities with Decree 13 and take immediately actions to ensure compliance with Decree 13.

Key compliance requirements in Decree 13 are outlined hereunder.

1. Identifying role in processing personal data

Decree 13 clearly distinguishes between the different roles of parties involves in the processing of data and provides respective responsibilities for each role. Specifically:

Data Controller refers to an organization or individual that decides the purpose and means of processing personal data. The Data Controller has the highest responsibility to comply with data protection requirements, including obtainment of the data subject’s prior consent for all processing activities, receipt of the data subject requirements and carrying out notification of any personal data breach to the Ministry of Public Security (“MPS”).

Data Processor refers to an organization or individual that process personal data on behalf of the Data Controller through a contract with the Data Controller. Data Processor is responsible for notifying the Data Controller of any personal data breaches and process personal data in accordance with a contract entered into with the Data Controller.

Data Controlling and Processing Party is a hybrid role of both Data Controller and Data Processor.

Third Party refers to individuals or entities other than the data subject, Data Controller, Data Processor or Data Controlling and Processing Party that are allowed to process personal data. The Third Party is responsible to archive personal data in forms in conformity with its operation and adopt measures for protecting the personal data as prescribed by law.

Accordingly, it is crucial for businesses to identify their exact roles in processing personal data to determine their responsibilities in the course of processing personal data.

2. Obtainment of the data subject’s consents

Decree 13 requires the obtainment of the individual’s prior consent in all activities of data processing, save for a few exceptions. The consent by a data subject will be valid only when (i) it is freely given, and (ii) the data subject fully knows information about the type of personal data, purpose of data processing, parties processing the data, and the data subject’s rights and obligations. Noted that, the consent must be expressed by written instrument, by voice, by ticking the consent box, in the syntax of consents through text messages, by selecting technical settings to consent, or by another action that expresses the same.

A silence or non-response from the data subject shall not be deemed as their consent. In case of dispute, Data Controller and Data Controlling and Processing Party bears the burden of proving the data subject’s consent.

3. Assessment of the impact of personal data processing

All Data Controller and Data Controlling and Processing Party must form and store their personal data processing impact assessment dossier (“Impact Assessment Dossier”) since the commencement of processing personal data. Impact Assessment Dossier must be submitted to A05 within 60 days from the date of processing of personal data for A05’s review and made available at all times for the inspection and evaluation by the MPS.

The Impact Assessment Dossier must include:

  • Information on Data Controller, Data Controlling and Processing Party and their internal data protect officer;
  • Purposes and types of personal data processed;
  • Recipients of personal data, including overseas entities;
  • Cases of cross-border transfer of personal data;
  • Retention period; expected time for deletion or disposition of personal data (if any);
  • Description on measures of personal data protection applied;
  • Assessment of the impact of personal data processing; potential and unwanted consequences and/or damage, and measures for minimization or elimination thereof.

Data Processor also may be subject to the requirement of conducting and maintaining Impact Assessment Dossier if so required by a contract signed with Data Controller.

4. Cross border data transfer requirements

Decree 13 however allows the transferor (including Data Controller, Data Controlling and Processing Party, Data Processor and the Third Party) to transfer the personal data of the Vietnamese citizens to a third country, subject to the following requirements:

  • The transferor must prepare a cross-border personal data transfer processing impact assessment dossier. The dossier must include mandatory contents such as a description of types of personal data transferred overseas, descriptions and explanations of the objectives of the personal data processing of Vietnamese citizens, a document showing the binding and responsibilities between the transferor and the recipient of transferred personal data of Vietnamese citizens.
  • The impact assessment dossier must be available at any time for review and inspection by MPS. The transferor must submit an original of the impact assessment dossier in prescribed form to MPS within 60 days from the date of processing of personal data. MPS may require the transferor to complete the impact assessment dossier in the event of improper dossier;
  • Upon the successfully transfer of data, the transferor must submit a written notification on the data transfer and contact detail of person in-charge to MPS.

MPS retains the discretion to suspend any cross-border transfer if the transferor fails to satisfy such above requirements or violates interests and national security of Vietnam or has Vietnamese citizen’s personal data leaked or lost.

5. Personal data breach notification requirement

In the event of inspecting any personal data breaches, (i) Data Processor is required to notify the Data Controller immediately of a breach occurring, and (ii) Data Controller and the Data Controlling and Processing Party are required to notify MPS (Department of Cybersecurity and Hi-tech Crime Prevention) within 72 hours of the breach occurring. Notification must be made in a prescribed form with compulsory contents.  In case of notifying after 72 hours, Data Controller and Data Controlling and Processing Party is required to provide reasons for delay or late notification.

A comprehensive administrative penalty on violations against personal data protection regulations may not be available at the effectiveness of Decree 13. However, there are certain sanctions imposed on violations against regulations on collection, use, updating, alteration and removal of personal information and the assurance of security of personal information in cyberspace, with administrative fines ranging from VND 10 million to VND 70 million or be prosecuted under Penal Code for serious cases of violations.

Outlook

Requirements set forth in Decree 13 place significant burdens to parties involved in the personal data processing, especially multi-national businesses. Given such requirements are broadly worded, it is expected that MPS would issue further guidance on interpretation and enforcement of provisions stipulated in Decree 13.

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