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Legal Alert

Contents

ADVERTISEMENT

LAW ON ADVERTISING

BANKING AND FINANCE

BANKING CIRCULAR ESTABLISHES PAYMENT OF INTEREST ON DEPOSITS WITHDRAWN BEFORE MATURITY

INTEREST RATES ON DEPOSITS ARE DEDUCTED 9% PER YEAR

THE MAXIMUM INTEREST RATE OF SHORT-TERM LOANS IN VIETNAM DONG HAS BEEN AMENDED FROM 11 JUNE 2012

THE MINISTER OF FINANCE

THE GOVERNOR OF THE SBV PROMULGATES CHANGES TO THE COLLECTION OF ATM WITHDRAWAL TRANSACTION FEES THROUGH INTERNAL ATM SYSTEMS

BANKS ARE BANNED FROM DEPOSITING IN OTHER BANKS

NEW CIRCULAR GUIDING THE DECREE ON THE MANAGEMENT OF GOLD TRADING ACTIVITIES

NEW LAW ON DEPOSIT INSURANCE

INTELLECTUAL PROPERTY

PROTECTION OF COPYRIGHT AND RELATED RIGHTS IN THE INTERNET AND TELECOMMUNICATION NETWORKS ENVIRONMENT

LABOR

THE NATIONAL ASSEMBLY OF THE SOCIALIST REPUBLIC ISSUES THE NEW LABOR CODE

GOVERNMENT RESTRUCTURE THE ACTIVITIES OF STATEMENT, INVESTIGATION, STATISTICS AND REPORTS ON OCCUPATIONAL ACCIDENTS

LICENSING

THE BUSINESS REGISTRATION OF “RENTED HOUSING”, “PREMISES LEASE” FOR HOUSEHOLD BUSINESSES

PRICING

NEW LAW ON PRICING

NEW REGULATIONS ON ADMINISTRATIVE

July 2012

This month’s legal alert covers a wide spectrum of important legal reforms.

In the advertisement sector the National Assembly promulgates the Law on Advertising in an attempt to improve the protection of individuals and organizations participating in advertising activities.

In Banking & Finance, the State Bank issued an Official Dispatch for credit institutions and foreign bank branches, regarding changes to the payment of interest on deposits withdrawn prior to maturity, interest rates on deposits have been deducted, the governor of the SBV has amended the Circular stipulating the maximum interest rate for short term loans, a new circular has been issued regarding the interest rate of loans in investment credit and export credit, the SBV promulgates changes regarding the collection of ATM service fees, to regulate the operations of lending and borrowing among credit institutions and bank branches, a Circular has been issued to ban banks from depositing in other banks, amendments are made Gold Trading activities, furthermore, the National Assembly of social Republic of Vietnam issued the New Law on Deposit Insurance as of June 18 2012.

In Intellectual Property a Joint Circular has been promulgated to explain the duty of enterprises when providing intermediary services in the protection of copyright in internet and telecommunications network.

On the Labor front, the National Assembly issues a new Labour Code which will become effective on the 13th May 2013 and the Government restructures the activities of statement, investigation, statistics and reports on occupational accidents.

In Licensing, the Ministry of Construction provides new guidelines for the business registration of “Rented Housing” and “Premises Lease” For Household Businesses. Also, there is new regulation on pricing and real estate sector. The Law on Securities will be guided by a new decree under Securities sector while there other regulations on Tax, Telecommunication, and Fire Prevention.

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MEASURES IN THE FIELD OF PRICING.

REAL ESTATE/PROPERTIES/CONSTRUCTION

MANAGING THE OPERATION OF REAL ESTATE TRANSACTION FLOOR IN HO CHI MINH CITY

RESPONSIBILITY OF OWNERS, OR INVESTORS FOR MAINTENANCE OF CERTAIN CONSTRUCTION WORKS

MANAGEMENT OF CONSTRUCTION IN THE HANOI REGION

PROCEDURAL REFORM FOR PROCEDURE OF REGISTRATION OF EXECUTIVE OFFICE OF CONTRACTOR

SECURITIES

THE GOVERNMENT ISSUES A DECREE TO GUIDE AND REGULATE THE IMPLEMENTATION OF THE LAW ON SECURITIES

TAXATION AND CUSTOM

REMITTING LAND USAGE TAX

THE CUSTOM GENERAL DEPARTMENT RELEASED THE OFFICIAL LETTER ENTAILING DETAILS OF SUBMITTING THE CO

PAYMENT CURRENCY DECLARATION ON THE IMPORT CUSTOMS DECLARATION

TELECOMMUNICATION

CLASSIFICATION OF TELECOMMUNICATION SERVICES

OTHERS

SUPPLEMENTING THE FIGHTING PLANS UPON THE CHANGES RELATED TO FIREFIGHTING

FIRM NEWS

Articles

Vietnam Investment Review: The Draft Circular on Import & Export Rights In The Pharmaceutical Field - By LCT Partner Dr

Nguyen Anh Tuan LCT Lawyers’ Partner Nguyen Anh Tuan contributed an article to the Vietnam Investment Review (July 2012). The article discusses some of the possible shortcomings of the draft circular introduced by the Ministry of Health on import and export rights within the pharmaceutical field. The intentions of this draft circular is to expand business rights in trading pharmaceutical products overseas, however Dr Tuan has recognized some barriers which must be addressed before promulgation.

Vietnam Investment Review: M&A Landscape Needs Greater Clarity – By Nguyen Ha Quyen, Nguyen Xuan Thuy & Logan Leung

This article touches on the process of mergers and acquisition of domestic organizations in Vietnam by foreign investors. The process and requirements to apply for transfer, as stipulated by the relevant governing law appears to be of concern due to the complex nature of its procedure. LCT lawyers’ legal professionals bring to light the possible repercussions of deterring future foreign investors and offers solutions for consideration.

LCT Lawyers Features in Asian Legal Business – Employer of Choice Award LCT Lawyers is featured in the Thomson Reuters publication - Asian Legal Business for its Employer of Choice Award. The annual magazine features all the best law firms to work for in its respective regions and LCT Lawyers is proud to announce its second place award alongside two others in its jurisdiction. From the online survey, LCT Lawyers scored points for its “open workplace”, “interesting work to staff” and “highly rated management”. Affect complicate

LCT Lawyers

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ADVERTISEMENT

Law on Advertising

The National Assembly recently promulgated the Law on Advertising on 21st June 2012, replacing

the Ordinance on advertising No. 39/2001/PL-UBTVQH10 dated 16th November 2011.This Law

specifies the rights and obligations of organizations and individuals participating in advertising

activities and the States management of advertising. The political propagation and dissemination are

not regulated by this Law.

By promulgating this law, the State implements the policies of protecting the lawful rights and

interests of organizations and individuals conducting advertising activities, facilitating organizations

and individuals in developing advertising forms, improving the quality of advertising and expanding

the international co-operation within advertising.

This law also informs which products, goods and services are banned and any Prohibited acts when

advertising. In the case that an individual or organization commits violations of this Law or other

relevant law provisions, they will be liable depending on the following subjects:

Individuals will be disciplined, liable to administrative sanctions or criminal prosecution

depending on the nature and extent of the violations and must pay compensation for the

damage (if any) as prescribed by the law.

Organizations will be liable to administrative sanctions depending on the nature and extent

of the violations and pay compensation for the damage (if any) as prescribed by the law.

Other than the provisions of sanctions, this Law also provides the rights and obligations of

organizations and individuals in advertising activities, including:

Rights and obligations of advertisers

Rights and obligations of advertising service providers

Rights and obligations of advertisement publishers

Rights and obligations of the lessor of means and place of advertising

Rights and obligations of advertisement recipients

This law also defines means of advertising, which includes:

Newspapers

Websites, electronic equipment, terminal devices and other telecommunication devices

Print media, audio records, video records and other technological equipment

Billboards, banners, signboards, advertising screens

Means of transportation

Fairs, seminars, conventions, events, exhibitions, sports events and cultural programs

Advertisement conveyors; objects of advertisements

Other means of advertising as prescribed by law

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This law also provides the requirements for advertisement contents, which are briefly described

below:

Advertisement contents must be truthful, accurate and clear without causing damage to

producers, traders and advertisement recipients

The Government shall specify the requirements for the advertisement contents of special

products, goods and services.

Advertising conditions

Certificate of business registration is required when advertising goods and services.

When advertising products, goods and services, the documents proving their conformity

and qualification must be presented.

The ownership certificate or the use right certificate is required when advertising property.

The advertisements of special products, goods and services must satisfy the special

conditions provided in this law.

This law also provides advertising with foreign elements as follows:

Foreign organizations and individuals operating in Vietnam are entitled to advertise their

products, goods, services and operation in Vietnam as prescribed in this Law.

Foreign organizations and individuals that are not operating in Vietnam, with the intent to

advertise their products, goods, services and operation in Vietnam must hire an

advertising service provider in Vietnam.

Foreign organizations and individuals are permitted to cooperate with Vietnamese

advertising service providers in the form of joint ventures or business association

contracts, provided that the foreign investment and cooperation in advertising comply with

the regulations on investment.

This Law takes effect on January 01, 2013.

BANKING AND FINANCE

Banking Circular Establishes Payment Of Interest On Deposits Withdrawn Before Maturity

On 21 June 2012, the State Bank issued Official Dispatch No. 3772/NHNN-CSTT addressed to

credit institutions and foreign bank branches regarding the payment of interest on deposits

withdrawn prior to maturity.

This Official Dispatch No. 3772/NHNN- CSTT is addressed to credit institutions and foreign bank

branches since 08 June 2012. The State bank of Vietnam promulgates Circular No. 19/2012/TT-

NHNN (the “Circular 19”) to amend and supplement various articles of Circular No. 30/2011/TT-

NHNN (the “Circular 30”), dated September 28, 2011 regarding the maximum interest rates of

deposits in Vietnam dong of organizations and individuals at foreign bank branches and credit

institutions. Accordingly, the interest rate of deposits with a term of 12 months and above will be

fixed by branches of foreign banks and credit institutions based on the supply-demand of the capital

market.

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However, some credit institutions have developed a product with flexible principals in the withdrawal

of deposits (deposit interest rate that is based on the term applied to the actual deposit). Some credit

institutions receive deposits over 12 months and the depositor receives interest rate over 12 months

when withdrawing before maturity (after 1 month or 3 months of making a deposit).

The State Bank deems these as violations of the provisions on the interest rates applied in cases

where organizations and individuals withdraw prior to term deposits at the credit institution.

The credit institution shall:

Undertake strict observations on the regulations for maximum interest rate for deposits in

Vietnam dong, pursuant to Circular 19 and Circular 04 of the State Bank Governor,

prescribing the interest rate applicable in the case of organizations and individuals

requesting to withdraw the deposit prior to maturity (“Circular 04”);

Not provide any form of deposit products to avoid the interest rate as stipulated in the

Circular 19 and Circular 04.

Be required to (a) publicize in the regulations on depositing in their own system at the

mobilization site as prescribed in the regulations on savings deposits issued together with

Decision No. 1160/2004/QD-NHNN on 13 September 2004; (b) clearly list the interest

rates applicable to deposits withdrawn before maturity, the penalty fee (if any) for

withdrawal of deposit prior to maturity and applied circumstances, the minimum notice

period of depositors required to withdraw before maturity and the level of charges for

services related to depositing.

Interest Rates on Deposits are Deducted 9% per Year

On 8 June 2012, the Governor of the State bank of Vietnam promulgates Circular No. 19/2012/TT-

NHNN to amend and supplement a number of articles of Circular No. 30/2011/TT-NHNN dated

September 28 2011, regarding the maximum interest rates of deposits in Vietnam dong of

organizations and individuals at branches of foreign banks and credit institutions.

The maximum interest rate of demand deposits and deposits made within 1 month is 2% per year.

The maximum interest rate of deposits with a term of 1 to 12 months is 9% per year. For peoples

credit funds, the maximum interest rates of deposits with a term of 1 to 12 months is 9.5% per year

and the interest rate of deposits with terms of 12 months and over, will be fixed by branches of

foreign banks and credit institutions based on the supply-demand of the capital market. The types of

deposits and bonds or other forms of receiving deposits from individuals and organizations

(excluding branches of foreign banks and credit institutions) are prescribed in Clause 13, Article 4 of

the Law on credit institutions.

The foregoing interest rates are presented in the following table:

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Inapplicable interest rates Applicable

interest rate

Circular No. 30/2011/TT-NHNN

Circular No.

05/2012/TT-

NHNN

Circular

08/2012/TT-

NHNN

Circular No.

17/2012/TT-

NHNN

Circular

19/2012/TT-

NHNN

Interest rate of

demand

deposit and

deposits with a

term under 1

month

6%/year 5%/year 4%/year 3%/year 2%/year

For the

branches of

foreign banks

and credit

institutions

14%/year 13%/year 12%/year 11%/year 9%/year

For

fundamental

peoples credit

funds

14,5%/year 13,5%/year 12,5%/year 11,5%/year 9.5%/year

The interest

rates of

deposits with

term from 12

months and

above

Fixed by

branches of

foreign

banks and

credit

institutions

on the

basis of the

supply-

demand of

the capital

market

Effective

From 01 October

2011

To

13 March 2012

From

13 March

2012

To

11 April

2012

From

11 April

2012

To

28 May 2012

From

28/05/2012

To

11 June

2012

From

11 June

2012

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The interest rates of term deposits in VND that are made prior to the effective date of this Circular

will be fixed until such terms expire. If organizations or individuals do not withdraw the deposits when

the term expires, branches of foreign banks and credit institutions shall fix the interest rates as

prescribed in this Circular.

The Maximum Interest Rate of Short-Term Loans In Vietnam Dong Has Been Amended From 11 June 2012

On June 08 2012, the Governor of the State Bank of Vietnam has issued Circular No. 20/2012/TT-

NHNN to amend and supplement articles from Circular No. 14/2012/TT-NHNN dated May 4 2012,

which stipulates the maximum interest rate of short-term loans in VND of the credit institutions and

foreign bank branches for loan customers, in order to meet the capital needs of a number of

economic sectors.

As a result of the new circular, the interest rate is 13% maximum per year and for the people's credit

fund, the basis set for the short-term interest rate in VND is 14% per year maximum.

The interest rate of loans applied to credit contracts signed previously to the effective date of this

Circular will continue to comply with the credit contract signed in accordance with the provisions of

law at the time of signing the contract.

This Circular takes effect on June 11, 2012.

The Minister of Finance

On June 25 2012, the Minister of Finance issued Circular No. 104/2012/TT-BTC, regarding the

states interest rate of loans for the investment credit, export credit and the difference of the interest

rate calculated for support after investment. Details of which are listed below:

The interest rate for loans of investment credit of the State in Vietnam dong is 12% per

year;

The interest rate for loans of export credit of the State in Vietnam dong is 14% per year;

The difference of the interest rate calculated for support after investment for the loan

project in Vietnam dong is 2.4% per year and

The interest rate of loans on investment credit and export credit of the State and the

difference of the interest rate is calculated for support after investment applies to the

disbursement of loan capitals of the investment credit and export credit of the State from

the date this Circular takes effect.

The foregoing interest rates are presented in the following table:

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Inapplicable interest

rate

Circular No.

201/2011/TT-BTC

Applicable interest

rate

Circular No.

104/2012/TT-BTC

The interest rate of the

loan on investment credit

of the State in Vietnam

14%/year 13%/year

The interest rate on loan

of the export credit of the

State in Vietnam dong

14.4%/year 14% /year

Effective

From

15 February 2012

To

25 June 2012

From

25 June 2012

From the date of signing, this Circular will replace Circular No. 201/2011/TT-BTC dated 30

December 2011.

The Governor of the SBV Promulgates Changes To The Collection of ATM Withdrawal Transaction Fees Through Internal ATM Systems

On 28 June 2012, the Governor of the State Bank of Vietnam promulgated the Official Letter No.

3933/NHNN-TT, sending to the bank card associations of Vietnam and card swift companies

regarding the collection of ATM service fees.

For the purpose of implementing the policy on the current development of non-cash payments, the

State Bank of Vietnam requires bank card associations to cease the collection of ATM withdrawal

transaction fees through internal networks and amended ATM transaction fees. through external

networks with respect to the card user in 2012.

Furthermore, swift card companies are not required to amend the switching fee with respect to the

bank card association. The bank card association must announce publicly the card service fee

scheme for customers and must be available to answer any customer questions.

The Governor of the State Bank of Vietnam assigns the Settlement System Department, the

municipal and provincial branches of the SBV to be responsible for monitoring and supervising the

ATM service fee collection of credit institutions in their locality, detecting and dealing with all cases

incompliant with the general regulations.

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The bank card association of Vietnam will closely cooperate with the State Bank of Vietnam to

research and create a roadmap and guidelines of reasonable fees for ATM services to ensure the

interests of both card users and bank card associations which is to be initiated in 2013.

Banks Are Banned From Depositing In Other Banks

On 18 June 2012, the State Bank of Vietnam issued Circular No. 21/2012/TT-NHNN regulating the

operations of lending and borrowing; term purchase and sale of valuable papers with term among

foreign credit institutions and bank branches.

According to this Circular, foreign credit institutions and bank branches are not permitted to perform

the deposit operation and receipt of deposit (excluding payment deposits) in other foreign credit

institutions and bank branches. Upon conducting the transaction of lending and borrowing, the

foreign credit institutions and bank branches must be conducted at the head offices of the credit

institutions and foreign bank branches. The time limit of lending between foreign credit institutions

and bank branches is a maximum of one year. This regulation removes the medium term (1-5

years) and long term (5 years plus) in interbank transactions.

The interest rate on issued loans will be agreed upon by the foreign credit institutions and banking

branches. In the case of unexpected changes to banking activities, the State Bank will stipulate the

interest rate for the foreign credit institutions and foreign branches to be implemented.

For transactions made prior to the effective date of this circular, based on the contracts of lending,

borrowing, purchasing and sales and the terms stated in the certifying papers and contracts of the

deposit and receipt of deposits, that is signed by foreign credit institutions and banking branches

must comply with the agreements as signed.

This Circular shall take effect on 1 September 2012.

New Circular Guiding The Decree On The Management Of Gold Trading Activities

The State Bank of Vietnam has issued Circular No.16/2012/TT-NHNN, to guide Decree No.

24/2012/ND-CP on the management of gold trading activities. The implementation of Circular 16 and

Decree 24 has been effective in maintaining the agencies commitment to the legal framework of gold

trading activities. There is a six month time limit for transitions of business purchases and sales of

gold bars from the effective date of Circular No.16/2012/TT-NHNN that is 10 July 2012. After the

transition period, organizations and individuals are only permitted to buy and sell gold with firms or

credit institutions whose licenses are issued by SBV. For an enterprise to qualify for a license in gold

trading, the following strict requirements must be met;

a) Its registered chartered capital must meet the minimum of 100 billion VND;

b) The amount of tax paid for gold trading will be a minimum of 500 million VND per year in

the last two consecutive years (certified by tax authorities);

c) It must have trading stores in a minimum of three provinces or central cities;

For financial institutions, the following conditions must be met;

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a) Its registered charter capital should meet 3,000 billion VND minimum;

b) Registered business lines of gold;

c) Must have trading stores in a minimum of five provinces or central cities

In light of the above provisions, the Vietnam Gold Trading Associations estimates the number of

enterprises licensed to conduct gold trade which will be reduced from approximately 12,000 to

selected enterprises and/or credit institutions. According to the Banks’ observers, 90% of gold

trading enterprises will not qualify to trade gold due to their limited charter capital of 1-2 billion.

Enterprises must meet the requirements with respect to tax payments of 500 million per year. The

company must also be profitable of 2 billion minimum. Companies whose scale of capital charter is

from 1-2 billion will find it difficult to meet such criteria. Therefore, it is necessary to introduce specific

guidelines and simple procedures as per Circular 16 and Decree 24, in order to maintain efficiency

and avoid clutter in the gold market.

New Law on Deposit Insurance

On 18 June 2012, Law No. 06/2012 regarding Deposit Insurance has been passed by the National

Assembly of the Socialist Republic of Vietnam which will come into effect on 01 January 2013.

The subjects affected by this Law from the ‘Subject of Application Article’ includes; the insured

person of a deposit, deposit insurance participating organization, deposit insurance organization and

other entities relevant to deposit insurance activities. This Law has a specific definition for deposit

insurance participating organizations which are defined as credit institutions and banking branches

established and operating under the Law on Credit Institutions that are entitled to receive deposits of

individuals.

Furthermore, as stipulated in Article 5.1 of this Law, the deposit insurance is a mandatory form of

insurance therefore, all subjects affected by this law (as specified above) must apply the deposit

insurance.

To become a deposit insurance participating organization under the Law on Insurance Deposit, such

organizations must obtain the required Certification. This Law outlines the procedures to obtain this

Certificate which are prescribed under Article 14.3 of the Law on Deposit Insurance.

Under this Law, the insured deposit must be in Vietnam Dong and in the form of term deposit, sight

deposit, savings deposit, certificate of deposit, bill of exchange, bill of credit and other type of deposit

pursuant to provisions of the Law on Credit Institutions, excluding deposits stipulated in Article 19 of

the Law on Deposit Insurance.

Matters arising from premium payments include:

From the time the State Bank of Vietnam sends the credit organization (which is an

deposit insurance participating organization) a “document to terminate the special

control” or a “document to terminate the application of measures to restore the

solvency” however, such credit organization remains bankrupt; or

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From the time the State Bank of Vietnam sends “document to identify that the foreign

banking branch” (which is a deposit insurance participating organization) are unable to

make payment of deposits to the depositors.

The limit of premium payment will be stipulated by the Prime Minister. In case the deposit of the

insured persons exceeds the limit of premium payment, it shall be settled in the process of assets

treating of the deposit insurance participating organization. The procedures for premium payment

are stipulated under Article 26 of Law on Deposit Insurance.

INTELLECTUAL PROPERTY

Protection of Copyright And Related Rights In The Internet And Telecommunication Networks Environment

On 19 June 2011, the Ministry of Information and Communication (the “MIC”) and the Ministry of

Culture, Sport and Tourisms (the “MCST”) jointly issued Joint Circular No. 07/2012/TTLT-BTTTT-

BVHTTDL (“Joint Circular 07”), explaining the duty of enterprises when providing intermediary

services in the protection of copyright and related rights of the internet and telecommunication

networks environment.

For the purpose of this Joint Circular, “intermediary services” (the “Services”) include

telecommunications, internet service, online social networking, digital information search and leasing

digital information storage space service.

And “content of digital information” means works, performances, phonograms and video recordings,

broadcast programs published or supplied in the Internet and telecommunication network

environment.

During the provision of intermediary services, enterprises are required to conduct the following

duties: (1) removing and deleting contents of digital information that violate copyrights and other

related rights, cutting, stopping and suspending the internet line and telecommunication line upon

the written request of the MIC or the MCST; (2) providing information of customers as requested by

the MIC and the MCST; and (3) refusing the provision of Services which goes against the law on

copyright and other related rights.

In addition, enterprises providing intermediary services shall be responsible for the compensation of

damages due to violations of copyright and other related rights as prescribed by the law on

intellectual property rights, if it falls within the following circumstances:

i. It is the original source to start publishing, transmitting or supplying contents of digital

information without prior consent of copyright owners and related right owners (the

“subject having right”).

ii. It edits, truncates and copies content of digital information in any manner without

permission from the subject holding the permitting rights.

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iii. It intentionally cancels or disables technical measures performed by the subject with the

rights for protection of copyright and other related rights;

iv. It operates as a source of secondary distribution of the content of digital information

thereby violating the copyright or other related rights.

In addition to the above duties, enterprises providing an online social networking service are also

required to request service users to ensure the legal use of contents of any digital information

uploaded onto the Internet or telecommunication network system, as well as to inform service users

of liability and applicable sanction in the event of violating the copyright and other related rights.

LABOR

The National Assembly Of The Socialist Republic Issues The New Labor Code

On June 25th, the National Assembly of the Socialist Republic of Vietnam issued the new Labor

Code which becomes effective on 1 May 2013. The new labor code is highly favorable towards

employees in respect to probation salary, maternity leave and maximum permitted working hours.

The new labor code will adopt the following changes:

The New Labor Code will replace the Labor Code dated 23 June 1994, the Law amending and

supplementing a number of articles of Labor Codes;No.35/2002/QH10, No.74/2006/QH11and

No.84/2007/QH11, which will become the first legal document to sufficiently contain labor

regulations.

a) Female employees are entitled to take leave prior to birth and after for the total duration of

6 months. In the case that more than one child is born at one given time, the mother is

entitled to one additional month of leave, per extra child

b) Time period of holiday and Tet leave will be increased from nine days to ten days. Foreign

employees who are working in Vietnam are also entitled to take an additional day of

traditional Tet and 01 day of their country’s National Day.

c) The overtime hours of the employee shall not exceed 50% of the normal workinghoursof01

day.

d) Labor outsourcing has been officially addressed in the new Labor Code for the first time,

with substantial requirements and restrictions put in place.

e) The time limit of the work permit for foreign nationals working in Vietnam is 02 years

maximum (will be reduced from three years to two years).

f) Foreign citizens working in Vietnam for less than three months shall not be granted the

work permit. This applies only to foreign workers who solve technical or complicated

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issues that cannot be solved by Vietnamese experts or foreign experts already in the

country.

Government Restructure The Activities Of Statement, Investigation, Statistics And Reports On Occupational Accidents

On 21 May 2012, the Ministry of Labor, War Invalids and Social Affairs (“MOLISA”) issued Joint

Circular No. 12/2012/TTLT-BLDTBXH-BYT, guiding the statement, investigation, statistics and

reports on occupational accidents to replace Joint Circular No. 14/2005/TTLT-BLDTBXH-BYT-

TLDLDVN and will come into effect on 4 July 2012.

The Joint Circular mainly focuses on the definition, classification, producing statements of

occupational accidents in the provided forms and templates which will be applied for enterprises that

use labor in Vietnam or enterprises which send Vietnamese labor to work overseas.

The Joint Circular also sets out provisions for the establishment of Occupational Accident

Investigation Commission (“OAIC”) for the purpose of the above mentioned scope of this Joint

Circular, in particular the OAIC will have the authority to investigate and resolve occupational

accidents.

LICENSING

The Business Registration Of “Rented Housing”, “Premises Lease” For Household Businesses

Recently, the Ministry of Planning and Investment has consulted with the Ministry of Construction by

Dispatch No. 3453/BKHDT-DKKD, dated 17 May 2012, enquiring MOC’s guidelines on the business

registration of “rent housing” or “site lease” for household businesses.

Such enquiry is derived from the discrepancy between the Law on Real Estate Business in 2006 and

the Law on Residential Housing in 2005 with regard to the business registration of “rented housing”.

The household business is permitted to operate “rented housing” (for the clients who are Vietnamese

citizens or foreigners) without the establishment of an enterprise or other supporting organization.

However, the “rented housing”, or the “site lease” business can only be operated by an enterprise, or

a cooperative organization which is registered upon the fulfillment of legal capital of six billion

(6,000,000,000) Vietnamese Dong.

In response to the enquiry, Dispatch No. 995/BXD-QLN dated 20 June 2012 of MOC provides the

following guidelines:

Due to the provisions of the Law on Residential Housing, Vietnamese households or Vietnamese

individuals are permitted to register the business line of “rent housing” for residential purposes in the

form of household businesses, without the establishment of enterprises or cooperative organizations

and without the fulfillment of legal capital as mentioned above. Meanwhile, the business of “site

lease” and other activities of “rental housing” that are not for residential purposes (e.g. for

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commercial purposes, or for offices) must be operated by an enterprise or a supporting organization

provided that they encompass the prescribed legal capital.

PRICING

New Law on Pricing

On June 20, 2012 the National Assembly voted to adopt the Law on Price (the “LOP”) in response to

the public demand for an effective legal framework to control price manipulation from dominant

enterprises in the gasoline and electricity sectors. LCT Lawyer partner Nguyen Anh Tuan describes

the law’s main features and provides some insights into its potential impacts on the Vietnamese

economy.

In the past when Vietnam was operating as a centrally-planned economy, the state controlled prices

and outputs of enterprises and collectives by direct administrative orders. This price control

mechanism has been gradually abolished since 1986 upon the introduction of the Renovation (“Doi

Moi”) policy, which set forth principles for the socialist-oriented market economy in Vietnam.

However, at the beginning of the renovation process, the state was still indirectly regulating market

prices by controlling the price of goods and services of the state-owned enterprises (SOEs). Later,

as the privately-owned enterprises become more significant in terms of quantity and contribution to

the national economy there was the need to enact a legal framework for the state’s regulation of the

market price. As a result, the ordinance was passed in response to such demands.

However, during 10 years of its enforcement, the ordinance was unable to provide an efficient legal

mechanism that would control the prices of commodities and essential goods in the markets as its

intended purpose. Consequently, due to a lack of competition in the markets, particularly with those

dominated by the SOEs such as gasoline, telecommunication and civil aviation, consumers have to

suffer allegedly unreasonable prices set by the market players.

As such, while the intended purpose is to meet the requirements of innovation management

practices, in line with the price mechanism of the market economy and encourage price competition,

whilst ensuring the role of prices in the economic market mechanism, the LOP has established a

means for state intervention that will stabilize prices of certain goods and services.

Remarkable features of the LOP

The law has abolished some previous contents of the ordinance that have been adjusted in the

specialized legislation, such as regulations on anti-dumping and monopoly control. These are also

specified in the Ordinance on Anti-dumping of imported products into Vietnam and the Competition

Law. In addition, the LOP removed price stabilization measures which are impractical and

contravening to the WTO’s requirement, such as subsidiary for agricultural products.

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The LOP also inserts important principles in the management of the state in Article 5, under which

the state will manage the market price mechanism (Item 1) and regulate prices under the LOP, to

review the implementation of price stabilization (Item 2).

Such regulations have significantly limited the scope and manner of state intervention in pricing

decisions of the business. Particularly, the state will only be permitted measures to stabilize prices

for the goods as stipulated in Article 15.2 and determine prices for goods and services as specified

in Article 19.3. Accordingly, goods and services subject to price stabilization are those essential to

production and human lives that are prescribed in two criteria, namely (a) raw materials, fuel,

materials and services for production and circulation and (b) goods and services that meet the basic

needs of human sustenance.

Meanwhile, the state will determine the price or set a price limit for (a)goods and services under a

state monopoly in sectors of production and business, (b)important natural resources and (c)

national reserve, products, services and public service industry using the state budget. These goods

specified in Article 19 of the law include land lease, electricity supply and communication services. In

the case that items must be added or to stabilize prices, the government must submit to the National

Assembly Standing Committee for approval.

According to Article 16, the state may only carry out the price stabilization measure when (a) the

price of goods and services on the list specified in Article15.2 of the law shows normal fluctuations or

(b) the modified price level affects economic and social stability. Although clarification is required to

establish which circumstances constitute as affecting the economic and social stability, the provision

creates an essential framework for limiting the scope of the state management of pricing, based on

which consumers and businesses can capture and predict the adjustment measures of the state

when prices fluctuate in the market. In addition, the LOP stipulates relatively specific methods to

stabilize prices (Article 17) as well as the principles and basis for price valuation (Articles 21 and 22).

Does the LOP truly meet the market demand?

While the provisions of the ordinance could hardly play the role of the price controller, the efficiencies

as well as necessity of the LOP remain a valid question. From an economic perspective, the

abolition of the Price Ordinance is necessary. However, replacing it by the LOP seems to go against

basic principles of a market economy which is operating under the laws of supply and demand

where businesses are the price takers. To ensure that the markets function efficiently and stable, the

state can utilize a variety of instruments such as the macro fiscal policy, monetary and removal of

natural barriers, technical barriers for businesses to enter and exit from the market as opposed to the

direct intervention of price determination of businesses through administrative measures, such as

providing the specific price, maximum and minimum price or price brackets for the goods and

services not under state monopoly.

If these measures are not executed under strict control, this will lead to state pricing decisions for the

business as the centrally-planned economy. Furthermore, if the state controls only the output price of

particular items and does not guarantee the price of inputs, then businesses will face the risk of

losses as production costs are not covered by the stated price.

16

Meanwhile, if the state implements other measures to encourage healthy competition such as

removing barriers, reducing transaction costs for businesses, then these would be a more efficient

form of management in terms of price. Since the enterprises will be permitted to compete for profits

and establish prices that most consumers will accept to maintain and expand markets, this has been

proven when the government implemented an open door policy for the importation of motorcycles

and telecommunications services.

Consumers benefit directly from falling costs of goods and services due to fierce competition

between manufacturers and suppliers. Similarly, in the field of pharmaceuticals, if foreign investors

are granted the right to import and distribute drugs directly to Vietnam, drug prices can be lowered

by reductions in transactional costs. Thus, by removing the technical barriers, the state has created

conditions for the free market economy adjusting its defects.

It can be seen that the issuance of the LOP partially meets the expectations of consumers in the

establishment of management mechanisms, regulate prices of some essential commodities in daily

life and production, the law enforcement needs to be performed carefully and selectively to avoid the

abuse of state administrative measures to intervene directly in business activities of enterprises.

New Regulations On Administrative Measures In The Field Of Pricing.

The new Circular No.78/2012/TT-BTC has been released to guide a number of articles of Decree

No.84/2011/ND-CP dated September 20, 2011 of the governments regulations in handling

administrative violations within the field of pricing. This Circular guides the sanctioning of

administrative violations in the field of pricing (hereinafter referred to as the Decree No.84/2011/ND-

CP), with mentions to specific violations in sanction levels, sanctioning competence, procedures of

collection, payment and use of fines of administrative violations (including valuation and pricing).

The application of the principles of sanctioning administrative violations in the field of pricing is as

follows:

a) The individuals and organizations committing acts of administrative violations in the field of

prices will be sanctioned under the provisions of Decree No.84/2011/ND-CP. In case the

administrative violations are not regulated in Decree No.84/2011/ND-CP, provisions of the

Government’s other Decrees will be applied on the sanctioning of administrative violations

in the field of the concerned state management to handle.

b) When forming the decisions to sanction violations of individuals and organizations,

persons who are competent to sanction must be based on the nature and seriousness of

the violations, aggravating and extenuating circumstances prescribed in Article 4 of the

Decree No.84/2011/ND-CP.

c)

d) A violation made by the same individual or organization at the same time for various goods

and services shall be sanctioned only once. Organizations and individuals with many

administrative violations in the field of prices shall be sanctioned for each violation. If

organizations and individuals commit together an administrative violation in the field of

prices, each violating individual and organization is sanctioned.

17

e) Where a violation in the field of prices is a consequence of another violation in this field,

only the most severe violation will be sanctioned.

The specific provisions of this Circular:

Acts of violating regulations on price stabilization.

Application of remedial measures for the act of failing to comply with prices decided by the

competent agency.

Acts of violating regulations on pricing plans for goods and services.

Acts of violating regulations in specific business operations with conditions as prescribed

by the Government.

Acts of violating the price registration and declaration of goods and services.

Acts of violating the listing of prices of goods and services.

Acts of excessively increasing price.

Acts of providing false information on markets, prices of goods and services.

Sanction of administrative violations on valuation for valuation enterprises.

Sanction of administrative violations on valuation for organizations and individuals to use

state budget to purchase assets required to valuate in accordance with provisions of the

law.

Sanction of administrative violations on valuation for the organization functioning in

training and the retraining of valuation professional skills.

REAL ESTATE/PROPERTIES/CONSTRUCTION

Managing The Operation Of Real Estate Transaction Floor In Ho Chi Minh City

Recently, the People’s Committee of Ho Chi Minh City issued Directive No. 18/2012/CT-UBND on

the operation management of real estate transaction floor, pursuant to which the Department of

Construction (the “DOC”) is required to guide and disseminate legal documents on real estate

dealing and real estate service dealing for relevant subjects, particularly, the brokerage, valuation

and management of real estate transaction floor, in order to ensure the healthy development of the

real estate market.

The PC required the DOC to strictly handle violations within their competence or propose competent

authorities in accordance with the law and to upload a list of real estate transaction floors under

operation and name of those in breach of provisions of the law onto the DOC’s website.

18

Additionally, the DOC is required to coordinate with other relevant authorities to strengthen the

inspection of organizations and individuals that are operating in the field of real estate dealing. It is

also required to propose a policy for regulating and improving the quality of real estate transaction

floor service; set out criteria to review the real estate transaction floor and provide annual reports to

the PC on the evaluation and classification of real estate transaction floor.

Moreover, it is the responsibility of the Department of Planning and Investment (the “DPI”) to

coordinate with the DOC in providing information on the activities relating to the real estate dealing

and real estate service dealing in Ho Chi Minh City. Particularly, every 6 months, the DPI is required

to provide the DOC with the list of enterprises that has been granted the new business registration

certificate (“BRC”) or investment certificate (“IC”); enterprises dissolved, enterprises suspending their

operation or banned from operation; and enterprises revoked the BRC or IC with respect to real

estate dealing and real estate service dealing.

The PC also requires other relevant authorities such as the Department of Natural Resources and

Environment, the Department of Finance, the Department of Tax, the Department of Statistics and

the People’s Committee at district level to strictly perform activities relating to the field of brokerage

and real estate dealing within the scope of their management.

Responsibility of owners, or investors for maintenance of certain construction works

For the purpose of guiding Decree no.114/2010/ND-CP on the maintenance of construction works,

Circular no.02/2012/TT-BXD (“Circular 02”) has been promulgated by the Ministry of Construction

dated 12 June 2012, and will come into force from 1 August 2012. However, this Circular only

provides for the maintenance of some construction works, including: civil works (except for the

cultural-historical monuments), building materials for industrial works and urban technical

infrastructure works (the “Works”). The maintenance of other construction works will be regulated as

per the instruction of other Ministries (e.g., the cultural-historical monuments shall be maintained

under guidelines of the Ministry of Culture, Sports, and Tourism).

According to Circular 02, the responsibility for maintaining the Works in good condition falls to the

owners, or the investors of such Works. That responsibility may transfer to the other organizations or

individuals who use the Works upon the agreements between the parties of the matter hereof. In the

case of BOT (Built – Operate – Transfer) projects, the legal representative of the enterprise

conducting such projects shall perform the maintenance until the transfer of projects to the State of

Vietnam. With regard to the Works owned by more than one owner (e.g., the condominiums), the

owner shall be liable to maintain the part of Works jointly owned by all of the owners beside the part

of Works owned separately by him or her.

Maintenance of the Works is provided in the following forms:

Observing the whole or a part of Works during the operation (Article 3)

This provision applies to the cases of those Works listed in the Appendix 1 of Circular 02, and the

Works having signs of cracking, sinking, tilt, or other abnormal signs that may cause the collapse of

Works. Such Works shall be observed for their main bearing structural system which may lead to the

19

collapse of Works in the event of damage. The organizations or individuals conducting the

observation shall fulfill the capacity requirements as required for the organizations, or individuals

conducting the survey of construction, or the inspection of quality of the Works.

Evaluating on the feasibility of further operation to the expired Works (Article 4)

The expired Works are those with the terms of service that is more than the designed terms as

stated in the designing documents. Upon the expiry date, the Works will be evaluated on their

current quality, and may be repaired in the case of damages. In the case of Works in level III, or IV,

the organizations/ individuals being in charge of maintenance will decide on the further use of Works

at their discretion in accordance with laws on quality control of construction works.i However, for the

Works in level II or above, a report shall be submitted to the State authority for the approval of further

operation. Subject to such approval, the Works may (i) be continued to be used with or without any

limitation, (ii) have its functions changed, (iii) be repaired if necessary; (iv) be ceased to be used.

Management of Construction in The Hanoi Region

To strengthen the management of the basic investment construction, to improve the efficiency of

using capital and to ensure that the constructions and projects of basic investment construction meet

the requirements of technical and planned progress, on 21 May 2012, the People’s Committee of

Hanoi City issued Decision No. 09/2012/QD-UBND (“Decision 09”) providing some contents on

managing and constructing the investment projects in the area of the City on 02 Jul 2012. This

Decision takes effect after 10 days from the date of signing. This Decision shall replace Decision No.

37/2010/QD-UBND (“Decision 37”) dated 20 August 2010 issued by the People's Committee of

Hanoi City providing some contents on managing the investment and the construction of the projects

in the area of Hanoi. The provisions on investing and constructing of the People's Committee of

Hanoi which are contrary to the provisions of this Decision shall be annulled.

This Decision stipulates a number of contents on the progress, the procedures and the

responsibilities of organizations, individuals who join in investment activities and implement

managing the investment construction for the local projects in the area of Hanoi including: the

investment projects using State budget of the City, the investment projects using State budget

capital and the foreign investment projects in the form of Build - Operation - Transfer (BOT) or Build -

Transfer - Operation (BTO) or Build - Transfer (BT), the investment projects implemented in the form

of public - private partnership (PPP) (including both of the domestic investment projects and the

foreign investment projects).

In comparison to Decision 37, Decision 09 has some new points which are explained below:

Firstly, with regard to the applicable scope and subjects, Decision 09 stipulates particularly to the

investment projects in the area of Hanoi that belong to the applicable scope of this Decision

including: the investment projects using State budget of the City, the investment projects using the

capital outside of State budget and the foreign investment projects in the form of Build – Operation -

Transfer (BOT) or Build - Transfer - Operation (BTO) or Build - Transfer (BT), the investment projects

implemented in the form of public - private partnership (PPP) (including both domestic investment

projects and foreign investment projects). With respect to the investment projects using State budget

20

which are managed by the central agencies when implementing the investment activities, building

the constructions in the area of the City, the municipal People's Committees shall have a state

management on planning, land, environment, basic design, connecting infrastructure, quality of

constructions and other contents under the law. And, these projects shall include the domestic

investment projects and the foreign investment projects.

Secondly, with regard to providing information and solving the administrative procedures, additionally

the Department of Planning and Investment shall act as the provision of information. Decision 09

also stipulates details of the responsibilities and the powers of relevant departments and branches

such as the Department of Architecture and Planning, the Department of Construction, the

Department of Agriculture and Rural Development, the Department of Transportation, the

Department of Natural Resources and Environment and the Department of Finance.

Thirdly, with regard to specific provisions on the investment projects, if Decision 37 was divided into

chapters on the preparing procedures of investment, the implementation of the investment projects,

the monitor and the evaluation of the investment to stipulate the investment projects in general,

Decision 09 is divided into chapters on the investment projects using State budget of the City, the

investment projects using the capital outside of State budget and the foreign investment projects in

the form of BOT, BTO or BT, the investment projects implemented in the form of PPP. Accordingly,

in each chapter, Decision 09 shall state separately the progress and the procedures of investment

for each project, such as the implementation of regulations, the establishment, the approval and the

declaration of the list of projects choosing investors. These new provisions have contributed to make

the progress and the procedures on managing and investing projects to be more detailed and

specified which facilitate the application of the law on practical.

Finally, related to the transitional provisions, with respect to the investment projects using State

budget, the approval of conditions for allocating plans of preparing investment shall continue to be

valid within 12 months for the projects of group B, C and within 18 months for group A. The next

procedures of the projects shall be complied with Decision 09. With respect to the investment

projects the capital outside of State budget, in the investment projects where the People's

Committee of the City approves the investors researching on establishing and implementing the

projects or approves the proposal of a project which has not yet been registered for/granted the

Investment License or approval of the investment (the project of developing houses) or approving

the projects in accordance with the provisions of law on investment, construction (for the projects

which do not have to register for/grant the Investment License or approval of investing the projects of

developing houses) or decide to permit the investment (for the projects of new urban) to be

continuously implemented within 12 months from the date that this Decision takes effect. In other

cases, during the implementation, the municipal People’s Committees of the City considers specific

decisions. The next procedures of the project shall be implemented under this Decision.

Procedural reform for procedure of registration of executive office of contractor

To instruct the implementation of the registration of the executive office, on 25 June 2012, the

Ministry of Construction served the Official Letter No. 1016/BXD-HDXD on the Department of

Construction of Hanoi. Accordingly, from 26 June 2012 (Circular No. 01/2012/TT-BXD dated 8 May

2012 regarding the procedure of granting contractor permit and the management of foreign

21

contractor in construction activities in Vietnam makes effect) after registering the addresses,

telephone and fax numbers, and e-mails of their executive offices and representatives for contract

performance with related agencies according to regulations of the People's Committees of the

provinces or centrally run cities which accommodate contracted projects (Contractors performing

packages of construction planning, construction investment project formulation, construction survey

or work construction designing may register the above-mentioned contents in localities other than

those accommodating the contracted projects), contractors shall only notify such information directly

or by post to the Ministry of Construction, the Ministry of the Police, the Ministry of Finance; the

Ministry of Industry and Trade; the State Bank of Vietnam and the People's Committees of the

centrally provinces and cities in which the construction locate in order to follow up and manage

without the requirement of the confirmation of the Department of Construction.

SECURITIES

The Government Issues A Decree To Guide And Regulate The Implementation Of The Law On Securities

On 20th July 2012, the Vietnamese Government issued Decree 58/2012/ND-CP providing detailed regulations and guiding the implementation of some provisions of the Law on Securities. This decree includes 9 chapters and 94 Articles in which there are some new provisions applied to direct foreign investors in the field of securities which are as follows:

Foreign investors may purchase shares or contributed capital to own up to 49% of charter capital of securities organizations which are in operation. However, foreign organizations may also be permitted to own up to 100% of charter capital of securities organizations which are in operation if they meet the following conditions:

To be an organization operating in banking, securities, insurance and operating at least 2 years prior to when such organizations participated in capital contribution for establishment and purchased shares;

To be under regular and continuous control of overseas supervising and management authority in such fields as banking, securities, insurance and to be approved in writing by such authority for contributing capital to establish securities organizations in Vietnam;

To be a legal entity that is not in the process of consolidation, merger, division, separation, dissolution, bankruptcy and in the absence of the right to establish and manage enterprises in accordance with business law;

To conduct profitable business activities in 02 previous years without accumulated losses. In case these organizations are commercial banks, insurance companies, securities organizations, they are not in the status of operational control, special control or other warning status, and concurrently satisfy all conditions to be permitted to make capital contribution and investment under the provisions of specialized laws.

For other economic organizations, the following regulations must be met:

To be in operation for at least 05 consecutive years prior to the year when contributed to

22

capital to establish securities organization;

After deducting long-term assets, the remainder of the equity is at least equal to the capital expected to be contributed;

Working capital is at least equal to the capital expected to be contributed.

To use equity and other lawful sources of capital and under the provisions of specialized laws, there will be no exception in the most recent audited financial statement. In addition to the conditions above, foreign organizations are permitted to establish new securities organizations if they satisfy the following additional condition: Overseas supervising and management authority in such fields as banking, securities, insurance and the State Securities Commission has signed a bilateral or multilateral cooperation agreement on information exchange, management cooperation, inspection and supervision of securities activities and securities market. However, the purchase of shares or contributed capital to establish securities organizations of foreign investors must comply with the guidelines of the Ministry of Finance. This means that until the Ministry of Finance issues such guidelines on this issue, the ratio of 49% shall be applied. The decree also specifies the operating conditions of a real estate investment fund. This decree shall take effect on 15th September 2012.

TAXATION AND CUSTOM

Remitting Land Usage Tax

Remitting Land Usage Tax concerns both residents and authorities particularly when a person owns

many land spots. On April 20 2012, the Thai Nguyen Department of Tax passed an Official Letter to

the General Department of Tax (“the GDT’). In response to this, the GDT issued the Official letter

No. 2334-TCT-CS regarding tax on using non-agricultural land. According to the Official Letter, when

the individual’s land spot has been issued the Land Use Right Certificate (“LURC”), the square on

which the tax is calculated is the one specified in the LURC.

If at the time of issuing the LURC, Thai Nguyen PC has not issued the maximum square of the

granted land, the maximum square of recognizing the land as residential, then the total number

specified in the LURC is determined as the land square within the limitation. In case a LURC

contains many residential land spots granted to a taxpayer, they can be listed in a sole Declaration

for the entire residential land square referred in the LURC.

The Custom General Department Released The Official Letter Entailing Details of Submitting the CO

The Custom General Department released The Official Letter No. 3164/TCHQ-GSQL, which will be

sent to the Export-Import Department (Ministry of Industry and Trade), Tax Policy Department and

23

the Legal Department (Ministry of Finance). Its contents relate to the submission of the C/O which

has become invalid. This is shown below:

Goods shall be settled in accordance with the tax-free treatment under the tax policy of

investment incentives during import procedures. However, through the testing after

customs clearance or inspection, those that are defined as goods could be domestic and

therefore shall not be exempt from import tax.

Goods that are imported raw materials in order to comply with the processing deal contractor

in the form of export production. The demand of enterprises shall be converted from the

form of processing import, export production to become the business which will be

consumed into domestic.

Goods shall apply the HS code which will correspond with that tax rate of 0% at the time of

importation. After clearance from customs, those must be applied to the other HS code

with a higher tax rate of 0% (e.g. 3%).

Goods applying the HS code with a MFN tax rate lower than the special preference tax

rate of the FTAS and the options of enterprises will be its payment to comply with the level

of tax rate of MFN. However, according to the results of the test, the HS code of the goods

were altered therefore the goods will be applied the higher rate of tax (possibly higher than

the initial tax rate of FTAs).

The imported goods are kept in the bonded warehouses for the duration of over one-year

(not exceeding 1.5 years) after which their requirement shall be imported on domestic.

Until the enterprise proposes to submit the supplemented C/O, the duration will be over one (01)

year until which the enterprise must have submitted the C/O in accordance with the provisions of the

FTAs Agreement (With regard to the ATIGA: Item 1 Article 13, Annex 7 of the Circular No.

21/2010/TT-BCT dated 17/05/2010) and when the enterprise has not a written letter to propose the

deferred submission of the C/O at the time the import of goods specified in Item 5.2, Section II of the

Circular 45/2007/TT-BTC.

Payment Currency Declaration on the Import Customs Declaration

In order to solve the issues about declaring the payment currency on the Import Customs

Declaration, on 13 June 2012, the General Department of Customs has issued the Official Letter No.

2935/TCHQ-TXNK regarding the declaration of the payment currency.

According to this Official Letter, in case that an enterprise signs in a foreign trade contract and

commercial invoice in Vietnam Dong, when the currency of payment declared on the Customs

Declaration is Vietnam Dong but the currency paid for partner in practice is the foreign currency, the

rate of foreign exchange of payment shall be based on the agreement made between the Buyer and

the Seller, under the provisions on foreign exchange management of the State of Bank and it shall

not be conflicting with the Law on Commerce.

24

In case the contract shows that the currency of transaction is in Vietnam Dong and shows the value

of foreign exchange, the enterprise can declare only Vietnam Dong as the payment currency on the

Customs Declaration. This shall be in line with the instructions on how to write the criteria on the

Import Declaration under Decision No. 1257/2001/QD-TCHQ dated 4 December 2001, issued by the

General Department of Customs on promulgating the export goods declaration and import tax notice.

This Official Letter became effective from 13 June 2012.

TELECOMMUNICATION

Classification of Telecommunication Services

On 18 May 2012, the Ministry of Information and Communication (“the MIC”) has issued Circular No.

05/2012/TT-BTTTT on classifying the telecommunication services. The below table demonstrates

which type of telecommunication service is formally listed in the Circular:

25

(i) Transmission protocol of telecommunications network based on technological features

Fixed telecommunication services Mobile telecommunication services

On ground

Telecommunication services

supplied via grounded fix

telecommunication network

Via satellite

Services

supplied via

satellite

fixed

telecommun

ication

network.

On ground

Services supplied via

grounded mobile

telecommunication

network.

Via

satellite

Telecommuni

cation

services

supplied via

satellite

telecommuni

cation

network

Maritime

Telecommuni

cation

services

supplied via

landed radio,

ship radio

and electric

radio set up

on fishing

ships to

secure

communicati

ons for users

on board.

Airplane

Telecommuni

cation

services

supplied via

grounded

radios, air-

plane radios

to secure

communicatio

ns for users

in airplanes

Local:

Service

s of

sendin

g,

Domest

ic:

Service

s of

sending

Internati

onal:

Services

of

sending,

Services

on

grounde

d mobile

informat

Trunk

televis

ion

Text

servi

ce

26

transmi

tting,

receivin

g and

proces

sing

informa

tion

among

users

in a

provinc

e

,

transmit

ting,

receivin

g and

process

ing

informat

ion

among

users in

different

provinc

es

transmitti

ng,

receiving

and

processin

g

informati

on of

users

from

Vietnam

to other

countries

or vice

versa

ion

Basic

services

Telephone

(telephoning

, fax, data

transmissio

n in tapes),

data

transmissio

n, text,

Value

Added

services

E-mails,

voicemails,

value added

fax, Internet

access via

narrow

bandwidth,

of which

download

Additional

services

showing incoming

numbers, hiding

numbers,

catching

numbers, waiting

calls, transferring

calls, blocking

calls, speed

dialing and other

value added

Basic services

Telephoning, fax,

data transmission,

image transmission,

text and other basic

telecommunication

services regulated

by the MIC.

Value Added

services

E-mails, voice

mails, value

added fax,

Internet

access via

narrow

bandwidth, of

which

download rate

is lower than

Additional services

Display of incoming

numbers, hiding numbers,

catching numbers, waiting

calls, transferring calls,

blocking calls, speed

dialing and other value

added services regulated

by the MIC.

27

picture

transmissio

n,

videoconfer

ence,

personal

paid

channel,

rate is lower

than 256Kb/s

and broad

bandwidth,

of which

download

rate is above

256Kb/s and

other value

added

services

regulated by

the MIC.

services

regulated by the

MIC

256Kb/s and

broad

bandwidth, of

which

download rate

is above

256Kb/s and

other value

added

services

regulated by

the MIC.

(ii) Based on the method of paying service charge

Pre-paid service

Users pay service charge before using it according the

agreement between the supplier and user

Post-paid service

Users pay service charge after using the service according to the

agreement made between supplier and user

(iii)Based on communication range

Internal network service

Services of sending, transmitting, receiving and processing

information among users of a network

External network service

Services of sending, transmitting, receiving and processing

information amongst users of different networks. Different

networks mean telecommunication of an enterprise or different

enterprises

28

This Circular has a more profound impact on the internet market in Vietnam. Since this regulation

was imposed, all types of Internet supply with a download rate lower than 256Kb/s, is considered

“narrow bandwidth Internet access supply”.

This regulation is the basis for the classification of telecommunication services, for producing policy

prices

OTHERS

Supplementing The Fighting Plans Upon The Changes Related To Firefighting

On 22 May 2012, the Government issued Decree No. 46/2012/ND-CP, amending and

supplementing a number of articles of the Government's Decree No. 35/2003/ND-CP of 4 April 2003

detailing the implementation of a number of articles of the Law on Fire prevention and fighting and

the Government's Decree No. 130/2006/ND-CP of 8 November 2006 on the compulsory fire and

explosion insurance regime.

Accordingly, the Decree regulates the firefighting plans which must be promptly supplemented and

adjusted upon the changes in the nature and characteristic of the inflammability, explosiveness,

toxicity and the conditions related to firefighting.

Fire departments are responsible for internal firefighting plans and the plans for residential areas

that mobilize forces, including the necessary means from the Fire departments and multiple

agencies, organizations or localities.

LCT Lawyers Level 21, Bitexco Financial Tower

No.02 Hai Trieu Street

District 1

Ho Chi Minh City

Vietnam

Tel: +84 8 3821 2357

Fax: +84 8 3821 2382

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Vietcombank Tower

198 Tran Quang Khai Street

Hanoi City

Vietnam

Tel: +84 4 6278 2768

Fax: +84 4 6278 2766