Lawyer in Vietnam Oliver Massmann - Legal Update April 2016

1. Circular No. 05/2016/TT-NHNN issued by the State Bank of Vietnam (“SBV”) amending and supplementing a number of articles of SBV’s Circular No. 03/2016/TT-NHNN guiding some contents with respect to foreign exchange management applicable to foreign loans and foreign loan repayment by enterprises

Issuance date: 15 April 2016

Effective date: 15 April 2016

Circular No. 03/2016/TT-NHNN guiding the forex management of borrowing and repayment of overseas loans applied to enterprises had been issued on 26 February 2016. Nevertheless, on 15 April 2016, this Circular was amended and supplemented to the aim of creating favorable conditions for enterprises to pay foreign loans in the form of importing goods with deferred payment, and supporting credit institutions’ business activities.

Accordingly, the SBV has amended and supplemented Circular No. 03/2016/TT-NHNN, as follows:

(i) Revising Article 4 on principles of management of offshore loans in the form of importing goods with deferred payment;

(ii) Revising Point 2, Article 24 on borrowing and payment account, applied for borrowers being foreign direct investment (“FDI”) enterprises.

(iii) Revising Article 28 on changing account for implementation of offshore loans.

(iv) Revising Article 32 on transferring money to pay foreign loans in the form of importing goods with deferred payment.

(v) Revising Point 2 Article 34 on payments relating to offshore loans which are not implemented through loan borrowing and payment accounts.

2. Joint Circular No. 05/2016/TTLT-BKHCN-BKHDT issued by the Ministry of Science and Technology and the Ministry of Planning and Investment detailing and guiding the handling of cases where enterprises’ names violate industrial property rights

Issuance date: 5 April 2016

Effective date: 20 May 2016

The determination of whether enterprises’ names violate industrial property rights is concluded by the competent agencies for settling violations or competent persons for sanctioning administrative violations in the field of industrial property in accordance with intellectual property regulations.

Enterprises whose names violate industrial property rights will be forced to change their names or remove violation elements from their names if they do not stop using the violating enterprises’ name on goods, means of business, means of services provision, signboards, transaction documents or not conduct the registration procedure to change the violating enterprises’ names.

In case of not performing such remedies, the violating enterprises’ Enterprise Registration Certification will be revoked.

3. Draft Decree detailing the Commercial Law regarding goods purchase and sale activities or goods purchase and sale related activities of foreign-invested enterprises in Vietnam

In this Draft Decree, the Ministry of Industry and Trade supplements many important regulations applicable to goods purchase and sale activities and goods purchase and sale related activities of foreign-invested enterprises in Vietnam.

Specifically, according to the proposal of the Ministry of Industry and Trade, foreign-invested enterprises which were licensed to implement investment targets, business lines not under the sectors of goods purchase and sale activities or goods purchase and sale related activities will be permitted to perform the following activities: Import, export, export or import entrustment, on-spot export or import, temporary import then re-export, temporary export then re-import of goods for implementation of the permitted investment targets, business lines; Goods processing, goods processing order in accordance with the permitted investment targets, business lines; Goods import for marketing, promotion; Service provision enclosed with imported goods or domestically purchased goods in accordance with the permitted investment

targets, business lines; Goods liquidation in the form of export, sale, giving, destruction; etc. The mentioned enterprises will not be subject to the procedures for grant of Business license, License for establishment of wholesale units, retail units for these activities.

In addition, the Ministry of Industry and Trade also tightens the conditions for granting the Business license. Specifically, apart from satisfying the previous regulations, the foreign-invested enterprises must have sufficient financial source to do the business activities; have ability, experience in goods purchase and sale activities or goods purchase and sale related activities; etc.

Foreign-invested enterprises which were licensed with the distribution right will be permitted to establish the first wholesale unit, the first retail unit without having to conduct the procedures for grant of License for establishment of wholesale unit or retail unit. However, the establishment of the next wholesale units or retail units must go through the procedures for grant of License for establishment of wholesale units or retail units with specified conditions in this Draft Decree.

4. Draft Decree on automobile transport business and its business conditions

Under this Draft Decree, enterprises doing passenger transport business by taxis and calculating fare by e-software application (such as Uber or Grab taxis) must satisfy all requirements applicable those doing passenger transport business by taxi and calculating fare by the taximeter.

Taxis using e-software application connected to e-devices of passengers must provide passengers with trips information, including: plate number, places of departure and destination; itinerary, distance; starting and ending time of the trip and fare.

These new regulations will put forms of transport business by taxi under strict control of relevant state agencies, avoid losses for the State Budget and especially, create a fair, competitive business environment for passenger transport business enterprises, protect the rights of consumers.

This Draft Decree also prescribes detailed regulations on the liability level of goods transport business persons when they have to compensate for damaged, lost or deficient goods and new regulations on conditions for automobile transport business.

5. Draft Circular guiding the implementation of some articles of Government’s Decree No. 11/2016/ND-CP detailing the implementation of a number of articles of Labor Code 2012 regarding foreign employees working in Vietnam.

This Draft Circular clearly regulates the assignment of authority between the Department of Employment under the Ministry of Labor, War Invalids and Social Affairs (“MOLISA”) and the Provincial Departments of Labor, War Invalids and Social Affairs, the Management Boards of industrial parks, economic zones, export processing zones, hi-tech zones. Accordingly, the approval of demand for foreign employee use; certification of exemption from work permit; grant, re-grant, withdrawal of work permit, etc., for people working for enterprises, investors, contractors, law practicing organizations, cooperatives, cooperative associates, business households, business individuals shall be handled by Provincial Departments of Labor, War Invalids and Social Affairs, the Management Boards of industrial parks, economic zones, export processing zones, hi-tech zones. Other circumstances are subject to competence of the Department of Employment under MOLISA.

In addition, this Draft Circular also issues several new forms replacing current forms which are used under MOLISA’s Circular No. 03/2014/TT-BLDTBXH.

Document proving that foreigner is a specialist will only include one of the following papers:

(i) Labor contract;

(ii) Written certification of the employer;

(iii) Decision on recruitment of foreign employee; or

(iv) Certificate of tax payment or insurance premium payment of foreign employee.

This Draft Circular no longer requires a foreign employee submit an engineer, bachelor degree, higher degree or an equivalent degree and have at least 5-year working experience in the trained major relevant to the working position he/she expects to perform in Vietnam. ***

Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC. THANK YOU !