Vietnam is a country of ambivalence. Although it is politically oriented towards socialism, its economy increasingly reflects free market principles. Even the Constitution acknowledges the importance of market forces and the need to internationalise the economy. This dual approach has been surprisingly successful and has resulted in staggering development over the last 20 years. However the question now is, how far is the government willing and able to push further reforms?
This newsletter is intended to assist new foreign investors to weigh the opportunities and the risks of investing in Vietnam.
The rules that relate to land ownership and usage in Vietnam are complex. A variety of cultural, economic and political considerations have influenced the way land use regulations have evolved.
There are 2 fundamental principles which all investors must understand in regards to Vietnam's land law system. First, under Vietnamese law the land itself and any building or "asset" attached to the land are deemed to be two different things which are subject to different regulations.
Second, all land in Vietnam is officially collectively owned by the "People." Land cannot be privately owned by a single individual or organisation. Moreover the State is empowered to "manage" the land on behalf of the "People". In practice this means that the State grants or leases land use rights to eligible individuals and organisations for a set period of time and purpose.
Thus a foreign investor who requires land for their factory, warehouse etc must lease the land use rights to their preferred site from the State. Foreigners who are not licensed to operate in Vietnam cannot obtain such a lease. When the lease expires, the right to use the land and any infrastructure connected on the land reverts to the State with no compensation. A foreign investor can only lease land directly from the State. A foreign investor can not sublease land from a private individual/enterprise.
If a foreign investor only requires a ready made building for their investment project e.g. office space, then this may be leased from the State or a private individual or enterprise.
Foreigninvested joint venture banks and branches of foreign banks in Vietnam are allowed to take security over Vietnamese land and buildings.
It is common practice for the Vietnamese partner in a joint venture to contribute their capital in the form of landuse rights. There have even been cases where the Vietnamese partner has been allocated the land by the State for the express purpose of enabling them to participate in a joint venture.
- Intellectual Property
Vietnam has signed a number of international treaties on intellectual property protection, including:
- the Paris Convention;
- the Madrid Agreement; and
- the Patent CoOperation Treaty.
Vietnam law protects inventions, utility solutions (which are similar to inventions but without the creative element), industrial designs, trademarks and copyrights. Appellations of origin, business secrets, geographical indications and trade names are also protected. All intellectual property rights, including trademarks, business secrets, geographical indications and trade names, must be registered with the National Office of Intellectual Property. Unregistered trademarks are not protected unless they are "recognised wellknown marks".
Registration of copyrights is not compulsory but it is highly recommended. Such registration comes under the Ministry of Culture and Information. Protection is on a firsttofile basis. Copyright protection arises from the time the work is created in a definite form or, in the case of foreigners, created in a definite form in Vietnam or when it is first published or broadcast in Vietnam.
Vietnam is not a signatory to the Berne Convention. Accordingly, the legal framework for business secrets, geographical indications and trade names is currently very basic.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.