The challenges of establishing residential housing projects on mixed-use land areas in Vietnam

Take a brief look at the figures of the residential housing market in Ho Chi Minh City in the last six months of 2019.[1] Compared to the same semester last year, there has been a massive decrease from 19 to 3 residential housing projects for which the developers have been recognized and received approval from both the Department of Construction and the People’s Committee. The number of projects proposed by the Department of Construction also dropped 82.2% from 56 projects in the first semester of 2018 to 10 projects in the same semester this year.

This article shall investigate and analyze some motives which may explain such severe restriction by the bodies. The examination of a few recent letters from the Ministry of Construction answering provincial level People’s Committees indicates the former’s concerns about the origin of the land use rights of the developer over the estate other than “residential purpose”, despite being located in residential areas according to the town planning.

The Law on Housing and Decree 99/2015/ND-CP (Decree 99) were drafted based on the historical background of the regulations on land and town planning over the past decades. However, the more numerous short-term planning changes, the more serious obstructions can be caused. They have induced a mix of different land types in many areas which are also different from the current urban planning in Ho Chi Minh City and its suburbs. It is extremely difficult to demonstrate exactly mixed-use land areas and no mechanism exists to convert them systematically without raising the market price. In practice, we have witnessed many cases where agricultural and commercial land areas have not been converted into residential ones corresponding to its town planning and how the landlord is disadvantageous in respect of the administrative procedure of conversion and the payment for the land using charges and taxes.

The permission for establishing a residential housing development project is granted by tender, auction or recognition of a certain developer, who is also the landlord under Article 22.2(c) of the Law on Housing and Article 18.2 of Decree 99. In the latter case, he must generally fulfil all requirements for a residential housing developer and a legitimate landlord in accordance with Articles 21 and 23.1, 23.4 of the Law on Housing respectively. Accordingly, he must either intrinsically or by way of transfer hold the land use right over the parcel on which a residential housing project may be allowed to be established.  

The landlord legitimately holding the land use rights over the mixed-use land parcel, even though he fulfils all abovementioned requirements for the developer and landlord of a residential housing development project, is still not allowed to retain their rights under Article 22.2(c) of the Law on Housing and Article 18.2 of Decree 99 in order to be recognized as a sole developer. These detailed provisions are likely to be interpreted  in an extremely rigid manner. The land parcel, at the time the landlord registers the land use right originally or receives the entitlement transfer, must have already been legally recognized as residential land. Since there is no administrative procedure of converting land type prior to the recognition of the developer, HoREA has proposed, according to the response from the Ministry of Construction,[2] that the recognition of the developer should a priori be granted if:

  • such land is planned to be a part of the residential areas,
  • the land is permitted to be converted into a residential area, or
  • the residential purpose has been mentioned in the decision on seizure, clearance of land;

and, the landlord satisfies the developer’s requirements in accordance with Article 21 of the Law on Housing without any further conditions.         

In fact, as of the date of this article, the People’s Committee of Ho Chi Minh City has not publicly responded to this proposal from HoREA. As a result, this grey area of the Law on Housing may increase financial risks to the developers since they must wait for the consideration and solution to be given by the People’s Committee of Ho Chi Minh City. The fact still remains that the distinct character of regulations on real estate has formed the basis for the course of history as mentioned above, so this may not be a simple task for the People’s Committee. First, she must determine the mixed-use land areas in the city and its suburbs which have been planned to be residential areas. Second, a simple procedure of land type conversion should be established in order to facilitate the recognition of residential housing project developer.

In respect of the same provisions of the Law on Housing and Decree 99, in case of a residential housing development project where the residential area intersperses with other types of land, over which one or more than one landlord is holding the land use right, the landlord of the residential area might not be recognized as the sole developer of the project due to these following hindrances. First, Article 22.2(c) of the Law on Housing and Article 18.2 of Decree 99 are interpreted in the ideal context where the full area of the project is for residential purposes despite the fact that there exists a lot of surrounding and mixed use land areas which are for agricultural, commercial or manufactural purposes.[3] Even if there is only one landlord holding the entitlement to all the land areas, the Ministry of Construction has not provided  any solution to integrate the pieces with different land types into a major residential one. Second, no administrative procedure has been established in order to allow the developer to register the conversion of such specific agricultural, commercial areas into residential ones like the rest of project area even if it is legitimately corresponding to the town planning. Third, if the entitlement to the other interspersing areas are held by different landlords who have not accepted the reimbursements of clearance and entitlement transfer, the major residential landlord can neither request for recognition as a sole developer nor for a bid in order to acquire the rest of the project areas. Furthermore, in the case of foreign developers, they cannot acquire the land use right directly from the individuals holding the land use right over such interspersing areas.

These are two typical situations in which residential housing developers may find themselves due to the differences between the urban planning and the current status of the land parcel as registered with agencies and bodies. For certain residential housing projects, it is required to carefully study the history of the land use right, land type and the area location in the current town planning. There is no formula for auditing land parcels in any residential housing development project. However, they are the basis for any commercial decisions of the investor in order to avoid the increased and long-term risks of legal costs, reimbursement for clearance and seizure and significant delays of the whole project. We are looking forward to hearing the good news from the People’s Committee in the near future. Her decision shall be the precedent for the other major cities in Vietnam and give us the final solution for the rigidity of Articles 23.1 and 23.4 of Law on Housing. Hopefully, these issues shall be resolved as soon as possible in order to maintain a strong and steady residential housing market in Ho Chi Minh City in the final semester of this year.

[1] Ho Chi Minh City Real Estate Association (HoREA), see

[2] Official Letter of HoREA No. 63/CV-HoREA dated 20 June 2019

[3] Official Letters of Ministry of Construction No. 229/BXD-QLN dated 08 October 2018 and No. 34/BXD-QLN dated 31 January 2019.

By Mr Tran Thai Binh – Managing Partner and Ms Mac Trang Anh

The article is also available on In-house Community.

Disclaimer: This article is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For legal advice, please contact our Partners.

New banking and loan security regulations in Vietnam

Real estate projects generally demand a large amount of capital from investors, especially for housing projects. The majority of housing projects are implemented in urban areas, where land use taxes and site clearance expenses are extremely high. Thus, financing is considered the most important factor in the development and operation of real estate projects.

Image result for bất động sản đang xây dựng

In Vietnam, there are two mechanisms to finance real estate projects: mortgages and the sale of off-the-plan houses to customers. However, both options pose risks that investors, banks, and buyers are rightfully concerned about, especially in a country where the regulating legal system is not well-developed. Those risks became very real during the financial crisis earlier this decade, followed by the freezing of the real estate market. That freezing could be attributed to the dysfunction in the legal system for financing real estate projects. The laws and regulations have since been upgraded to eliminate that Achilles’s heel, but the implementation of such provisions is still proving challenging.

Mortgage of housing construction projects

A housing construction project can be wholly or partly mortgaged if the following documents are provided: the approved project’s documents and technical designs, and the certificates or decisions on land assignment and land leases from authorities. An investor can also mortgage off-the-plan residences in his/her project if the foundations of the residences have been completed and have not been previously mortgaged by the investor. Depending on their capital requirements, investors can choose the most appropriate option to finance their projects.

Investors do not necessarily need a Certificate of land use rights and ownership of houses and other land-attached assets (the “Certificate”) to mortgage their investment projects. Nevertheless, this is where potential risks appear. The laws and regulations do not provide any mechanism for banks to protect their rights in case the State recovers the land from the investors.  Pursuant to the Land Law 2014, the competent authority may seize the land if the land user fails to fulfill its financial obligations with the State. If that occurs, even if the banks take the secured assets to make up for the loan, there is not much to take because the land, which is the most crucial asset to a housing project, was already seized by the Government.

Mortgage of future acquired assets on land

The investor can also mortgage off-the-plan residences in his or her project. Circular 26 requires the mortgagor of the future acquired properties to register the mortgage at the competent authority (land registration offices and their branches). However, in order to register the mortgage, the dossier must include a Certificate. Therefore, the investor must complete all the financial obligations regarding the land. That includes paying site clearance expenses, as well as making rent payments and paying registration fees. After meeting those obligations, the investor is able to mortgage the off-the-plan residences for a loan.

Recently, some provincial Departments of Natural Resources and Environment have published lists of mortgaged real estate projects registered in their localities. These actions are motivated by The Harmony residence’s incident, where nearly 600 people are at risk of losing their apartments, because the investor has mortgaged all the land and the future acquired assets on land since 2012. In 2016, only after the bank announced its intention to seize the residence for recovery of the investor’s loan, was the truth revealed to the residents.

Currently, in order to protect the consumers, lists of mortgaged projects are being announced by the authorities. Only projects which have been granted Certificates may register their mortgages, which led to the announcement of mortgaged projects. However, from the perspective of the investors affected, the announcement of their mortgaged projects could adversely impact potential sales because the projects have to be free of the mortgages (or parts of the mortgage) before selling any off-the-plan residences.

There are two disadvantages for investors if they choose to mortgage off-the-plan residences. The first one is that they need to obtain a Certificate, which means they have already spent a large amount of money for site clearance and land rental. The second disadvantage is the public announcement of mortgaged projects, which could make customers hesitant to purchase units. Based on these factors, investors tend to choose the first mechanism (mortgaging the housing project or a part of the project for a loan). In fact, only 10% of projects in large cities such as Hanoi or Ho Chi Minh City are registered for mortgages at the authority. For example, in Ho Chi Minh City in 2016, only seventy-seven of 600 projects had their mortgages registered. The majority of housing projects must be de facto financed from banks’ loans with secured properties. Therefore, the remaining projects are likely to have mortgages over their construction projects, but not over land use rights, or future acquired assets on land. Accordingly, the investors were not required to register the secured transactions.

Bank guarantee

Article 55 of the Law on Real Property Trading stipulates that investors, in order to sell off- the-plan houses to buyers, must obtain guarantees by commercial banks in case the investors fail to transfer the buildings on schedule as committed. Article 55 creates two issues:

  • For residential megaprojects, there is a question as to which bank will make the guarantee. For example, Royal City, a VinGroup real estate project in Hanoi, has a total investment capital of 18,000 billion VND, equivalent to 700 million US dollars. That amount surpasses the charter capital of thirty of thirty-three banks listed by the State Bank of Vietnam which are eligible to provide bank guarantees for housing construction projects;
  • The banks will only issue guarantees if the investors have assets with sufficient value to secure their obligations. The investors that already spent millions of dollars on construction may not be able to meet those requirements.

Due to the above obstacles, there are those who would rather violate the laws and run away with the consumers’ money when the project is not feasible anymore. In the end, the consumers are the ones who suffer.


Real estate project finance is a complex legal field that needs to be more fully developed, even though Vietnamese legislators and executive bodies have already made great efforts to do so. Sometimes, the law benefits investors, but creates great risks for banks and customers. And sometimes the exact opposite is true. Finally, some legal requirements appear impossible to meet, creating pressure to meet them through inappropriate responses, such as violating the law.

By Quang Le and Kim-Cuong Le, LNT & Partners

Disclaimer: This article is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us at or visit the website: Http://

Legal Update on Real Estate Law in Quarter 1 of 2017

Change in Land Rental in Economic Zones

Image result for khu công nghiệp

The Government has recently issued Decree No. 35/2017/NĐ-CP dated 3 April 2017 providing regulations on collection of land use fee, rental of land surface and water surface in economic zones and hi-tech parks (Decree 35).

As from 20 June 2017, the collection of land use fee and land rental in economic zones shall be no longer governed by Decree No.45/2014/ND-CP providing regulations on collection of land use fee (Decree 45) and Decree No. 46/2014/ND-CP providing regulations on collection of rental of land surface and water surface (Decree 46) but in accordance with Decree 35 with the highlighted points for the investors as follows:

  • The percentage for calculating land rent unit price in case of annual payment shall be from 0.5% to 3% subject to specific area or route corresponding to the investment and publicly announced annually.
  • The land rental is determined with land price adjustment coefficients. Subject to the specific area, route and location of the land corresponding to the land use purpose, the Provincial People’s Committee shall issue the land price adjustment coefficients annually with the minimum rate at 1.0 applicable from 1 January each year.
  • The land use for development of social housing for employees in accordance with approved projects shall be subject to land use fee exemption. The developer must conduct the administrative procedure for the exemption in this regard.

Land price adjustment coefficients applicable from 1st January 2017 in Ho Chi Minh City

Image result for giá đất

On 23 March 2017, the People’s Committee of Ho Chi Minh City has just issued Decision No. 19/2017/QD-UBND providing the land price correction coefficient applied in 2017 in Ho Chi Minh City (Decision 19). The outstanding application for determining the land use fee or land rental in Ho Chi Minh City from 1 January 2017 shall be subject to the regulations of Decision 19.

The coefficients are applied for determining (i) the annual land rental for the first period; (ii) the adjustment to unit price of annual land rental for the following period and (iii) the unit price for annual land rental in case of acquiring the assets attached to land shall be from 1.0 to 2.0. In which, the land used for development of residential housing for leasing shall be subject to the maximum coefficient of 2.0 corresponding to the location of the project.

The coefficients applied for determining (i) the land use fee without land use right auction or in case of conversion of land use purpose, (ii) the one-off payment of land rental without land use right auction and (iii) the unit price of land rental in case of changing from leasing with annual rental to leasing with one-off payment for land rental shall be from 1.2 to 2.0 subject to the location of the project.

The land price adjustment coefficients mentioned above can be higher subject to the location with more than two (02) road fronts and the land use ratio.

The Ministry of Construction requesting the issuance of regulations on the condotel and officetel

Image result for condotel

“Condotel” and “Officetel” have been new types of real estate development in Ho Chi Minh City since 2008.  In recent years, these kinds of real estate developments become more popular in the real estate market, particularly condotel type is more applied in coastal and tourist cities like Nha Trang, Da Nang, or Vung Tau. However, despite its popularity and more transactions on the properties, regulations or guidance from the competent authorities on the investment and management of the condotel and officetel are still unclear and confusing, and therefore potentially risky to the buyers as well.

For example, the concept of “officetel” describes apartments in residential buildings which may be used for both residential and office purpose. However, the Law on Residential Housing as well as guidance from the Ministry of Construction prohibits using residential apartments for office use. Furthermore, the guidance from the Ministry of Planning and Investment does not allow using residential apartments for business registration either.  Another legal issue to these kinds of properties is how to properly recognize the ownership to the properties because, in the Land Law, land use right duration for commercial purpose is 50 years and indefinite term for residential purpose.

Recently, the Ministry of Construction has given instructions and responses that (i) the regulations on condominiums are applied for the condotel/officetel with function as residential housing and (ii) the regulations on hotel are applied for the condotel/officetel without function as residential housing. This is actually confusing to the owners as well.

Therefore, the Ministry of Construction (MoC) recently had Dispatch No.381/BXD-QLN dated 28 April 2017 for report and proposal of the issues in relation to the management of condotel, officetel, or  resort projects to the competent Deputy Prime Minister for decision.

In which, MoC proposed (i) the amendment to law on land with respect to the classification and the usage of mixed use land (for both residential and commercial purposes) and issuance of the certificate of land use right, ownership of residential housing and other assets attached to land in this regard and (ii) clarification of the financial obligation for such mixed use land and (iii) the regulations on the management of the condotel and officetel.

The issuance of regulations in respect of condotel and officetel mentioned above will provide detailed legal framework for the development and management of condotel and officetel projects. Accordingly, (i) the investors will have firm legal basis for development and management of condotel and offictel and (ii) the buyers will have basis for considering their investment in the business model of condotel and officetel.

New model real estate business – Hometel

Image result for Hometel

Besides the officetel and office which become popular in real estate market, “hometel” is a new concept of tourism real estate just launched in the beginning of 2017. Hometel is the combination of “home” and “hotel” function.  Similar to condotel, hometel is fitted out and operated with the luxury standards as hotel under the management of a hotel operator.

However, hometel has some features different from condotel, typically (i) the homebuyers shall have an indefinite-term ownership of hometel with the certificate of land use right, ownership of residential housing and other assets attached to land and (ii) the homebuyers can decide the leasing program of the hometel without sharing profit with the developer, it means that the homebuyers will directly deal with the hotel operator for the operation and maintenance of standard of the hometel as hotel.

From legal perspective, (i) hometel must be constructed on residential land for the indefinite-term ownership; (ii) the development of hometel project must be in accordance with Law on Residential Housing because hometel is classified as residential housing and (iii) the construction of hometel must be in accordance with regulations on construction of residential housing under Law on Construction.

The management and operation of hometel is not clear to be treated as a condominium or not. As a residential housing, the hometel should be managed as a condominium with the organization of the Management Committee as required by laws.

However, the hometel must be operated and maintained with hotel standard which must be managed by a hotel operator. In case the management of hometel must be in accordance with regulations on management of condominium, the Management Committee must deal with the hotel operator for ensuring the standards applied to the hometel buiding as a hotel.

In addition, there should be amendments to Law on Land in relation to the classification of the land on which the hometel project located. Similar to the land used for developing condotel project, the land in this regard should be residential land without establishment of residential area.

As such, due to lack of legal grounds for such properties, the owners’ use right and ownership rights over these properties may be potentially restricted (for example, in terms of use duration or use functions).  This cannot be resolved in near future since amendments to several laws are required as well.

Disclaimer: This legal update does not constitute and should not be taken as a legal advice for a matter. For more information and clarification, please contact Mr. Tran Thai Binh, Partner of LNT & Partners, Head of Real Estate Practice Group via email: or his cell phone: 84-913629191.


Mr. Tran Thai BinhPartner 

LNT & Partners

The real estate market in Vietnam has seen a quite lot of growth in the last two years, with foreign investors returning, and many busy M&A transactions in real estate.  Some local developers have sought to transfer their incomplete projects in order to do internal re-structuring for better growth.

For foreign investors, investing in Vietnam is challenging, especially in real estate investment due to differences in the legal framework for land and real estate, as well as transaction practices and other factors.

Below are some notes for property project buyers (especially foreign buyers) to overcome challenges in acquiring real estate projects in Vietnam.

Deal Structure

Acquiring a real estate project may be done one of two ways: by a “project transfer deal” where the project is transferred to the buyer, or through a “share transfer deal” where the buyer would acquire the shares held by the sellers in the company that owns the real estate project. The Law on Real Estate Business now allows for a partial or whole of transfer of the real estate project. With regards to the “the project transfer deal”, under the applicable law, the transferor is required to complete their project infrastructure development as a condition precedent for transferring the project. The assessment of the completion of infrastructure development is a lengthy process and somewhat subjective. It may be time consuming to get the getting necessary approvals for a project transfer, and many business opportunities may pass by in the mean time.

Therefore, another way for the parties to get to the desired outcome is for the buyer to acquire all shares and/or equity held by the sellers in the company that owns the real estate project. The Law on Investment now sets out a clear legal framework to allow foreign buyers to acquire shares or equity in local companies. Accordingly, a foreign buyer may directly acquire shares or equity from the sellers. This approach is more favorable for acquisition in certain cases.

 Buyers often prefer to use a “project transfer deal” rather a “shares transfer deal”. However, things are not always as accessible in reality due to legal limitations and restrictions.

Due Diligence of the project company or the real estate project

Either way, a due diligence report, which is a process of checking and finding out any legal and financial issues of the project and project company (or the developer), is always essential. The due diligence process is designed to find out any legal or financial liabilities that the sellers may have with respect to the real estate project and/or of the developers. The process vets any risks in the business operation of the developer or with implementing the project, the possibility of licenses being revoked, as well as any other factors that mayimpact on the transaction.

As for legal liabilities, the buyer is required to review all approvals, permits or licenses for the project, for example: the issuance of the land use rights certificate, the suitability of the land use purpose for the development of the project, licenses and permits relating to the designs and construction of the project, the developer’s legal compliance in implementing the project and/or in corporate operations, and so on.

As for financial liabilities, the buyer needs to review the performance of all financial obligations to the Government and/or to third parties by the developer with respect to land use rights, rights of third parties in the land use rights and/or the company, encumbrances to the land use rights and/or the project and/or the company’s assets, current liabilities or debts by the developer, as well as undertakings and commitments by the developer, and so on.


Illustrating image

Negotiations on the terms and conditions of the deal

Based on the findings from the due diligence report of the project and/or the project company, the buyer needs to define the conditions precedent for entering into or completing the transaction. Setting such conditions requires skill and tact in order to limit them to a reasonable but sufficient extent. This helps to avoid difficulties and controversies in negotiations that may become deal-breakers to the sellers feelings of distrust from the buyers.

Foreign buyers are usually familiar with using lengthy agreements that are tens or hundreds of pages long, but not with local sellers. Therefore, a lengthy agreement with unnecessary terms or clauses may lead to an end of the transaction due to long negotiations (which may sometimes be unnecessary), as well as concerns from the sellers. The agreement may use precedents from the common-law system. However, a simple copy of the terms and conditions of the transaction documents for deals in Vietnam is sometimes not only legally impractical, but can also cause difficulties to the parties when completing the deal.

Deal Closing

The buyers need to agree on a payment schedule that is proper for closing the deal. In practice, the seller usually requests the buyer to deposit an amount to secure the buyers’ performance of the deal. The buyer may have concerns on legal and financial liabilities arising from the deal due to inadequate awareness by the sellers. Therefore, a bank will be engaged as an agent to manage the deposit amounts. The parties may agree on the release of payment by the bank upon the seller’s fulfillment of certain conditions. Therefore, an agreement on payment must also be strict, and requires a local insight on the assessment of the closing to mitigate the buyers’ risks.

As for the “share transfer deal”, the buyer will want to hold a reasonable retention amount to cover obligations or financial liabilities of the enterprise or of the project, and the seller usually wants to receive all payments upon the transfer of the project to the buyer. In practice, it is not so easy for the parties to reach such an agreement.

When buyers are foreign investors, attention should also be paid to Vietnamese regulations and requirements on foreign exchange controls. Specifically, the buyer should require the project company to open a direct investment capital account through which the payments can be made. This will ensure the investor’s capital withdrawal at a later stage. Although it is the seller’s obligation, the buyers should request for documentation of the seller’s income tax fulfillment for filing and submitting to the authority later.

Completing the deal requires registration with the authority. As such, foreign investors must apply for approval from the competent authority for the transfer deal with respect to real estate projects, and will be granted M&A approval.

Regardless of the closing of the deal, some seller’s representations and warranties still live on. What if the buyers, after taking-over of the project, discover these representations and warranties are inaccurate or noncompliant? This issue should be foreseen by the buyers to ensure that security measurements (e.g. right to sell back or or claim for damages) are in place.

Other issues

It is necessary for the parties to agree on a legal regime to settle disputes or conflicts arising during the deal, and in case of failure, on the competent jurisdiction. According to Vietnamese commercial law, the parties may choose either the court or arbitration for settlement. In practice, the parties often prefer arbitration due to its simple and non-public procedures.  Arbitration awards are as binding and enforceable as a court decision, even though arbitration fees are higher than that of a court’s.

The buyer must pay attention to the handover of project documents as well as to the rights to control and run the company. Some buyers, after taking over the company, have faced difficulties in operating the company due to a lack of corporate documentation.

Sellers may also have promises to favor the buyers’ financial interest in the acquisition such as possible adjustment of the planning and construction criteria. However, in some cases, such adjustments are impossible due to the requirements of the master plan. Foreign investors therefore, should pay attention to these requirements.


#Legal #Insight #RealEstate #Merge #Acquisition #Projects #Vietnam

Roadmap to tighten the real estate: Credit is “loosen” until 2018

State Bank of Vietnam (“SBV”) has officially issued Circular 06/2016 to amend some articles of the previous Circular  36/2014, which will ease the real estate credit-tightening roadmap till 2018. However, many enterprises in HCMC have repeatedly sought for foreign capital to reduce the dependence on bank loans.

Credit-tightening on real estate has not been executed this year.

Circular 06/2016 was officially issued by SBV on 27th May 2016. It is the result of several suggestions, positive arguments from experts and the relevant authorities. This Circular will not immediately tighten the credit flowing into the real estate market, but it will stretch out the implementation.

According to Circular 06/2016, the ratio for short-term capital use of commercial banks for medium and long term loans is still at 60%. That ratio will remain at 50% in 2017 and will go to 40% in the beginning of 2018. The period of credit-tightening is delayed a year in comparison with the former draft. The risk index of receivables for real estate business will increase from 150% to 200% in the next year (instead of the increasing the rate of 250% as stated in the former draft).

Mr. Dinh Duy Trinh, CEO at Ban Viet Land, stressed that fact that the SBV has received opinions from the association, as well as from professionals is remarkable. Not only enterprises,  but buyers are also getting more confident to make investments.To respond to the petition of the HCMC Real Estate Association (HoREA), concerning  proposals to amend Circular 36/2014, SBV’s HCM City branch has also confirmed that the purpose of the amendment is to ensure the safety of bank credit activity and limit risks due to the enormous credit growth in real estate. However, there should be a roadmap to deploy the plan (1- 2 years) to prevent risks arising from the policy and affecting to bank activities negatively.

 The acceleration of foreign capital

In HCMC, from the beginning of this year, there are at least six foreign investment funds that have announced their new investment cooperation in several projects. Other signed projects have already been deployed.

Phat Dat, An Gia Investment and Creed Group (Japan) signed a joint investment in River City project with the scale of US$500 million, which is a typical case. Nam Long signed with Nishi Nippon Railroad and Hankyu Realty (Japan) to invest in the Fuji Residence investment projects. Tien Phat Corp and Sanyo Homes Corporation (Japan) have joined in a strategic cooperation project with their first product being the Ascent Lakeside project. Thu Duc House has cooperated with Pavo – the investment fund to invest in more than five projects in the near future. SynGience (Singaporean Investment Fund) poured 400 billion VND into Tham Luong Depot Metro project.

Mr. Pham Le Tuan, General Director of JSC Real Estate Investment Hung Loc Phat shared thatwhen the SBV began sending out their first message of credit-tightening, many enterprises worried about seeking for new sources of funding. In particular, investment capital from foreign funds is the most attractive channel to enterprises.

“Those enterprises that have not found a reliable source in replacement when banks starts to tighten the credit are forced to be more cautious in their business plan. As for our company, the ultimate criterion is to guarantee the stable development in our business. The proportion of loans in different projects is only 15% – 20%, so we are assured to implement several projects without considering seeking foreign capital “– Mr. Tuan Pham shared.

Besides the fact that domestic enterprises want to reduce their dependence on domestic banks through  foreign capital, Partner Thai Binh Tran at LNT & Partners Law Firm said that there are many reasons that lead to increasing foreign investment. Particularly, it is due to the openness of regulations on investment,  and capacity to own local real estate for foreigners. Savings rates in some countries, such as Japan and Singapore, are less attractive compared to the interest rate expectations in Vietnam’s real estate market.

Credit: VietnamNet

#Legal #RealEstate #Circular #Amendent

How to select the right real estate investor?

Mr. Tran Thai Binh – Partner heading the real estate practice group at LNT & Partners gave his comments regarding how to choose a reliable investor when investing in real estate. Here is what recorded on Tuoitre online:

Various solutions have been stipulated in Housing Law and Real Estate Law to protect the rights of home buyers. For example, one investor must accomplish the legal procedures to establish the project. Then foundation has to be built up and notification of the local housing authority must be obtained. Only then is the investor permitted to sign the upcoming sales contract and mobilize the deposit from home buyers.

In addition, the real estate projects must be qualified and guaranteed by the commercial bank. In case the investor does not handover the sold houses as promised, the bank will organize a refund to the buyer.


(Source: Internet)

The remaining problem lies in whether the implementation of this provision is serious or not. For example, the authority checks to ensure the investor follows their commitments, or timely “blow the whistle” if the investor executes the illegal house sale without guarantying the legality. However, buyers themselves should conduct research about the investor and the legality of the project.

As a rule, when investors want to sign a sales contract with buyers, they must be certified by the local construction department that they are eligible to sell houses. Home buyers should remember to ask investors to present such certification. It is more difficult for the project to raise capital when all the necessary conditions are lacking and it is not certified by the authority, which makes the project hard to complete with the given timelines and commitments.

Meanwhile, the qualified investors are in a better position to accomplish the project. Those investors who have had many qualified products on the market rarely violate the legislation or hands over products late.

If investors want to earn buyers’ trust, they have to present evidence, such as: the right of land use certificate of the project, the design approval, the construction approval, the guarantee letter from the commercial bank, the acceptance document to execute the project from the construction department, and allowance of investors to mobilize capital from buyers.

In general, buyers will recognize reliable investors.


Partner Binh Tran gave comments on the “Harmona Apartment purchasing” case

Disputes over out of the “Harmona apartment in Tan Binh district, Ho Chi Minh city” case  has got the community’s attention recently. To build a finance basement for the project, the investor mortgaged the right of land use and the property forming in the future at North Branch BIDV Saigon. After the implementation period of the project, the investor signed a sale contract for home buyers, did handover and home buyers also moved in. The main point is that home buyers have  fully paid for the investor. However, in May, the Bank announced that it will handle the mortgaged property as the mortgagor is an investor has violated the obligation to repay the debt. This made the resident there feel very nervous. Therefore, how is the rights of  people in the apartment protected ?

Let’s watch the video to see that how Mr. Binh Tran – Partner in charge of Real Estate practice group at LNT & Partners comments on this case along with FBNC:


Vietnam: Real Estate Investment Luncheon

Mr. Binh Tran (Partner at LNT & Partners) was at the “Real Estate Investment Luncheon” to deliver a speech on May 18th 2016, which is regarding to the insight of investing in real estate in Vietnam and how to utilize the legal framework to leverage the real estate business up .


Mr. Binh Tran is delivering his speech.

Mr. Binh Tran and General Director at Colliers International Vietnam did successfully share about:

  • Operating a real estate firm in Vietnam: How far foreign investors can go under the current legal framework?
  • What you as a foreign developer should pay attention in developing a Residential project or large real estate project in Vietnam?
  • Acquiring a real estate project, what specifics and details should you be aware of?


The audiences

We would like to say the warmest thank-you for the cooperation of BBGV and our partner from Colliers International Vietnam.

#RealEstate #Vietnam #Legal

Legal briefing February, 2016

Please click here to download our report: Legal Briefing October _ LNTpartners

I. Circular No. 20/2015/TT-BTP giving details and providing guidelines for implementation of a number of articles of the Decree 23/2015/ND-CP dated 16 February 2015 issuing copies from masters registers, certification of true copies from originals, authentication of signatures and contracts (Circular 20)

Sector: Administrative

Effective date: 15 February 2016


Circular 20 has provided the guidelines for implementation of a number of articles on certification of true copies from originals, authentication of signatures, notarization of contracts, transactions, in particular:

Decree 23 has simplified the procedure on notarization of contracts. However, due to the unfamiliarity with new administrative procedures, some of local authorities themselves invent additional provisions or require additional documents in the notarization dossier. The Circular 20 has addressed this shortcoming: in receipt and settlement of the notarization requests, the notary is not allowed to invent any additional step, or request for more documents other than those stipulated in the Decree 23. Circular 20 also regulates that if the notary fails to settle the notarization requests within 15 hours and fails in producing results within one day or having to extend the settlement schedule under Article 21, 33, 37 of Decree 23, a clear appointment letter is required to be sent to the requester.

Besides the cumbersome in notarization, Decree 23 has not also detailed the template of testimonies on document of legacy inheritance, document of legacy refusal.  Consequently, the competent authorities were confused and even refused to authenticate. Therefore, Circular 20 has given details for this matter in Article 3.1 and issued a template attached with the Circular. In addition, Circular 20 also attached a sample of authentication testimony of signatures to ensure the consistency of application of the Circular.


Circular 20 expectedly settles the problems arising from implementation of Decree 23 such as the lack of templates and inconsistency of required dossier.

II. Circular No. 59/2015/TT-BLDTBXH detailing and guiding the implementation of some articles of the Law on Social Insurance on compulsory social insurance (Circular 59)

Sector: Insurance

Effective date: 15 February 2016


Circular 59 has various remarkable points as follows:

(i) Circular 59 supplements the provision on the payment of compulsory social insurance drawing from the monthly wage, allowances (from 1st January 2016 to 31th 2017), in which such allowances are the ones to offset the factors of working conditions, the complexity of work, activity conditions, level of labor attraction for which the agreed wage in labor contract is not calculated or incompletely calculated such as allowances of position, title, responsibility, heaviness, hazardousness, dangerousness, seniority, region, mobility, attraction and the like. Besides, the monthly wage paid for compulsory social insurance shall not include the other benefits and welfare, initiative bonus, meals between shifts, gasoline, telephone, travel, accommodation and child care allowances; assistance upon the death of employees’ relatives, the marriage of employees’ relatives, employees’ birthday, subsidy to the employees in difficult situation in case of work accident, occupational disease and other allowances and assistance recorded in separate items in the labor contract.

(ii) Circular 59 provides conditions to enjoy an one-time subsidy upon birth giving as follows: (a) In case only the father participates in the social insurance, the time of payment must be from full 06 months or more within the period of 12 months before birth giving; (b) For the husband of the mother requesting surrogacy, the social insurance payment must be from full 06 months or more within a period of 12 months to the time of child receipt.

(iii) Under Circular 59, when applying monthly pension, a rate of 2% of monthly pension shall be reduced for each year of retirement prior to the prescribed age, which is higher than the rate of 1% under Circular 03/2007//TT-BLDTBXH.

(iv) The rate of entitlement to enjoy one-time social insurance of the employees having the time of social insurance payment of less than 01 year is equal to 22% of the rates of monthly wage of social insurance payment; the maximum rate is equal to 02 months of the average monthly wage of social insurance payment.


Circular 59 has provided a means for realization of the Law on Social Insurance and Decree No. 115/2015/ND-CP. The Circular is expected to protect tens millions employees and financial resources of entities engaging in social insurance.

III. Circular No. 09/2015/TTLT-BCA-BYT-BTC guiding implementation of health care insurance applicable to employees, students, relations of solider of People’s Public Security of Vietnam (Circular 09)

Sector: Insurance

Effective date: 11 February 2016


Noticeably, Circular 09 details the scope of employees whose health insurance is contributed by the local Public Security and the employee themselves, and the ones whose health insurance is contributed by state budget. Accordingly, the relations of soldier, students of Public Security cultural school and foreign students who are granted scholarship at Public Security school shall enjoy the health insurance covered by the state budget.

Regarding the contribution responsibility in special cases, Circular 09 prescribes that within the time of sick leave from 14 days onward, in which the sick leave benefit is applicable, employees and their employers are not required to contribute into the health insurance while the health insurance benefit is still applicable.

Circular 09 provides that within the time of detention, in custody or temporarily suspended from their work before being investigated or judged guilty or not guilty of their offences, ratio applicable to health care insurance contribution shall be 4.5% of 50% of the monthly salary subject to social insurance contributions as stipulated by laws. The remaining contribution shall be contributed in case it is concluded that there is no violation accordingly.

Employees who are currently living and working abroad are not subject to health care insurance contribution within the period of being aboard. The period of being abroad shall be counted as uninterrupted in application of health care insurance contribution.


This Circular has come into effect from 11 February 2016. However, the provisions on contribution level, contribution liability, and contribution method in respect of health insurance have been effective since 1 January 2015.

IV. Decree No. 11/2016/ND-CP providing guidelines for implementation of Labor Code on foreigners working in Vietnam (Decree 11)

Sector: Labor

Effective date: 1 April 2016


The scope of foreigners who are exempted from work permit is extended to include experts, individuals being the chief executive officials or those holding management positions or technicians who work in Vietnam for less than 30 days per period and the total accumulated working day in Vietnam is no more than 90 days per year. Further, method for determination of an expert, a chief executive official and management positions is also detailed in this Decree.

Confirmation of demand for use of foreign employees by Chairman of provincial people’s committee is not required in particular cases, noticeably for foreign employees with abovementioned working period in Vietnam.


With respect to the application for obtaining work permit, in case a foreigner has been residing in Vietnam, only criminal record issued by competent authority in Vietnam is required. However, there is still no further clarification for applying this provision, i.e. how to determine that a foreigner has been residing in Vietnam. In addition, processing time for the issuance of work permit is shortened from 10 to 7 working days from full submission.


Decree 11 simplifies the process of work permit and facilitates favorable conditions for foreigners working in Vietnam.

V. Circular No. 36/2015/TT-NHNN on restructuring of credit institutions (Circular 36)

Sector: Banking and Finance

Effective date: 1 March 2016


Inheriting positive points of Circular 04 and being amended, supplemented to qualify requirements on restructuring of bank system and sustainable development of credit institutions system, Circular 36 has the following notable points:

  • The Circular 36 applies to credit institutions being commercial banks and finance companies only.
  • In addition to merger and consolidation, conversion of legal form of credit institutions is also be governed as one of restructuring form. Accordingly,
  • a commercial bank or finance company may convert from a limited liability company into a shareholding company, or vice versa; and a commercial bank or finance company may convert from a single member LLC into a multiple member LLC, or vice versa.
  • In case of conversion, the credit institution must have a conversion plan approved by its competent body and satisfy other requirements in accordance with laws.

It is strictly prohibited to disperse assets in any form.


Circular 36 is expected, by supplementing regulations regarding conversion of legal form of credit institution and improving regulations regarding merge and consolidation of credit institution, to create a bank system fully complying with current market principles.

By Vietnam Law Insight

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us at

Important Notes for Foreigners in Buying Residential Houses in Vietnam

Housing Law 2014 of Vietnam has created more favorable conditions for foreigners to own houses in Vietnam. However, buying a residential house in Vietnam is not actually an easy matter to foreigners given its legal complexity in real estate.   The following notes from Mr. Tran Thai Binh, a partner from LNT & Partners, may be useful to a foreign buyer who is thinking of possessing a residential house in Vietnam.

Firstly, the buyer must be qualified under the applicable laws. According to the Housing Law, the condition is now so relaxed that a foreigner who lawfully enters Vietnam can be eligible to own residential houses. As such, the buyer needs to prove that his entrance is permitted.

Secondly, it is advisable that the buyer should keep a track record for the money he brings to Vietnam for buying the house.  This would be better for the buyer in remitting the money back after selling the house later on.  For this purpose, he should open an account at a bank in Vietnam to which the money will be transferred and from which the payments for the house should be made. In case the money is his salary or income earned from working or doing business in Vietnam, he should keep document supporting for the money.

Thirdly, the buyer should get to know which property projects that he or she is permitted or not permitted to buy in order to avoid future risks.  Please note that foreign buyers are only permitted to buy houses from new housing development projects, not in existing residential quarters. This job is not difficult to foreign buyers if he or she consults with a reputable property agent such as Savills or Collier.

Fourthly, on contracting with the property developers, the foreign buyers should make sure that the property developers are qualified for signing housing sale and purchase agreements with the buyers.  In principle, the property developers are allowed to enter into housing sale and purchase agreements once (i) the housing project is properly approved; (ii) the foundation work of the house is completed, and (iii) the terms and conditions of the agreement for selling  a condo have been registered at Vietnam Competition Authority (under the Ministry of Trade and Industry).  An agreement may be void if failing to meet one of these conditions, and thus, the interests of the buyer may not be properly protected.

Fifthly, it should be noted with the implementation of a housing sale agreement with housing development projects since this may be not similar to the transaction practice in the buyer’s country.  For example, in Vietnam the housing developers usually do not give notice to the buyer of making the payments under the contract. It is the obligation of the buyer to follow the payment schedule as contracted. This ambiguity may lead to late payments by the buyers which may result in late payment penalty and/or early termination of contract by the seller (housing developer).  The buyers may get advice from lawyers to avoid these risks.

Sixthly, according to the Housing Law, foreigner housing owners have full rights as Vietnamese have over the house, such as the right to lease, donation or capital contribution, inheriting to others, etc. with their house. However, it should be noted that the foreign owner can exercise these rights only after he or she has obtained a “land use right certificate and/or property ownership” to the real estate. Therefore, in the respective contract, the obligation to apply for the certificate of ownership and/or the land use rights by the seller should be clearly stipulated. Also, when leasing the real estate, the foreigner owners must register the lease agreements with the local government (district-level administration committees), and properly declare his income tax for the earned rents. By complying these requirements, the foreign buyers’ incomes will be treated as legitimate income which can be remitted abroad. In addition, when renting or a house, it is also required that the owners must register temporary residence of the tenants with the relevant local authorities. Currently, it is still not clear how foreigners, as house-owners, carry out this registration procedure. Some foreigners are afraid that if they do not regularly live in Vietnam, how can this obligation be implemented? Actually, this difficult task may become easier if the foreign owners can engage a real estate management company to take care of these, and on behalf of the foreign owners, to perform the management and administrative procedures involved.

Seventhly, if the foreign owners no longer want to own the house, what can they do? Can they sell it to other foreigners or Vietnamese? Yes, they can according to the Housing Law.  However, currently there is no clear guidance from the State Bank of Vietnam that how the foreign owners can remit abroad the sale proceeds from selling the house.  However, my opinion is that if they can prove the money that they used to buy the house is of legal sources and relevant taxes have been fully paid, he or she is surely permitted to transfer their gains abroad.  Again, this should be consulted with a lawyer in real estate for getting through the procedure.

By Vietnam Law Insight

The article contributed by Mr. Tran Thai Binh, Head of Real Estate Practice Group of LNT & Partners with more than 15 years in real estate practice. Its contents do not constitute legal advice. For more information, please contact the  lawyers via email: Thank you.

Công bố toàn văn Hiệp định Đối tác xuyên Thái Bình Dương (TPP)

(MOIT) – Theo thông lệ đàm phán thương mại quốc tế, một hiệp định sẽ chỉ được công bố sau khi các Bên tham gia đàm phán đã hoàn tất thủ tục rà soát pháp lý. Tuy nhiên, trước nhu cầu tìm hiểu thông tin rất lớn của người dân và doanh nghiệp, các nước tham gia đàm phán Hiệp định Đối tác xuyên Thái Bình Dương (TPP) đã quyết định công bố toàn văn Hiệp định TPP mặc dù thủ tục rà soát pháp lý vẫn chưa hoàn tất.

Các nước TPP đã thống nhất giao Niu Di-lân (nước được giao nhiệm vụ lưu chiểu văn kiện của Hiệp định) công bố toàn văn Hiệp định vào chiều ngày 05 tháng 11 năm 2015 (giờ Hà Nội).

Bộ Công Thương xin trân trọng công bố toàn văn Hiệp định TPP (bản tiếng Anh) đã được các nước TPP thống nhất. Do quá trình rà soát pháp lý vẫn đang tiếp tục nên bản công bố lần này chưa phải là bản cuối cùng. Bản cuối cùng có thể sẽ có một số thay đổi nhưng chỉ là các chỉnh sửa về mặt kỹ thuật, không ảnh hưởng đến nội dung cam kết.

Ngoài các nội dung cam kết trong Hiệp định, trong quá trình đàm phán các nước TPP cũng đạt được một số thỏa thuận song phương. Do các thỏa thuận này chỉ liên quan đến các Bên ký kết nên sẽ được các Bên ký kết công bố riêng. Bộ Công Thương xin công bố kèm theo đây các thỏa thuận song phương mà Việt Nam đã thống nhất với một số nước TPP. Các thỏa thuận này sẽ có hiệu lực cùng thời điểm với Hiệp định TPP.

Do các nước TPP vẫn đang tiến hành thủ tục rà soát pháp lý, khối lượng tài liệu phải biên dịch lại rất lớn nên Bộ Công Thương và các Bộ, ngành chưa thể công bố kèm theo bản dịch tiếng Việt của Hiệp định TPP. Để đáp ứng yêu cầu của người dân và doanh nghiệp, Bộ Công Thương sẽ tích cực phối hợp với các Bộ, ngành nhanh chóng hoàn tất công việc dịch thuật và công bố bản dịch tiếng Việt trong thời gian sớm nhất.

Sau khi công bố toàn văn Hiệp định, các nước TPP sẽ nhanh chóng hoàn tất thủ tục rà soát pháp lý để chuẩn bị cho việc ký kết Hiệp định. Mỗi nước, theo quy định của pháp luật nước mình, sẽ dành thời gian nhất định để người dân nghiên cứu Hiệp định trước khi ký kết, dao động từ 60 đến 90 ngày. Sau khoảng thời gian này, các nước TPP sẽ tiến hành ký kết chính thức. Thời điểm ký kết chính thức Hiệp định hiện chưa được xác định nhưng dự kiến sẽ không muộn hơn quý I năm 2016. Sau khi ký chính thức, các nước sẽ tiến hành thủ tục phê chuẩn Hiệp định theo quy định của pháp luật nước mình.

Please follow the links for full text of TPP released today.

  1. Chapter Texts and Associated Annexes
  2. Market Access Offers and Country-Specific Annexes
  3. Side Instruments between Viet Nam and TPP countries


Specific links

I. Chapter Texts and Associated Annexes

II. Market Access Offers and Country-Specific Annexes

III. Side Instruments between Viet Nam and TPP countries

Theo Website chính thức của Bộ Công Thương

By Vietnam Law Insight

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us at

Legal briefing October, 2015

Please click here to download our report: Legal Briefing October _ LNTpartners

I. Decree number 84/2015/ND-CP on investment monitoring and evaluation (“Decree 84”)

Sector: Investment_ Enterprise

Effective date: 20 November 2015


Decree 84 clarifies implemented subjects and stipulates the principles of monitoring and evaluation of investment activities. In addition, Decree 78 expands its scope of application, including objects and sorts of monitored investment.

  • As of the effective date, not only investment projects, but also investment programs would be monitored and evaluated;
  • Various kinds of monitored and evaluated investment are supplemented, such as: PPP investment projects; a list of investment programs and projects using State capital- without limiting the minimum capital rate; the offshore direct investment and community evaluation now stipulated in this Decree;
  • The responsibilities of monitoring become an initial part beside the regulations on content of such activities, which are allocated to the investors, authorities and related specialized agencies; and
  • Separated chapters regarding cost and capability of organizations and individuals performing monitoring consultants in evaluation of investment projects are newly stipulated;


This Decree provides new and innovative detailed guidelines for monitoring and evaluating investment, in comparison to the old Decree No. 113/2009/ND-CP on investment monitoring and evaluation.

Such clearer regulations can practically increase the responsibilities of investors and relevant authorities; also guarantee the effectiveness of monitoring and evaluation activities.

II. Decree No. 83/2015/ND-CP on stipulation of outbound investment (Decree 83)

Sector: Investment_ Enterprise

Effective date: 25 September 2015


Following the Law on Investment 2014, Decree 83 has been issued to provide detailed guidance for outbound investment activities as follows:

  • Each investment project is granted a project number, which shall be also outbound investment certificate number;
  • Appraisal process is removed. Project registration procedure is divided into 2 types: projects subject to outbound investment policy of the Prime Minister (PM) and projects not subject to outbound investment policy of the PM. Procedure for projects required outbound investment policy of the PM is similar to appraisal process under the Law on Investment 2005. Projects not subject to outbound investment policy shall require confirmation of SBV if their capitals transferring to foreign countries are: (i) in foreign currencies, and (ii) equal to 20 billion VND;
  • Investors are entitled to transfer money, assets to foreign countries to establish investment project before receiving Investment Registration Certificate. However, the value of such money and assets is restricted to be less than 5% of project capital or 300.000 USD (whichever is smaller); and
  • Investors have to report about the implementation of projects quarterly and to more authorities.


Procedure of registration is simplified and investors can transfer capital and assets to foreign countries before receiving IRC. This shall allow investment projects to be implemented more quickly and effectively.

However, investors are now obliged to frequently report the implementation of the project in writing as well as through online update. This might create more responsibilities for the investors.

III. Decree No. 78/2015/ND- CP dated 14 September 2015 on Enterprise Registration (Decree 78)

Sector: Investment_ Enterprise

Effective date: 1 November 2015


Decree 78 provides guidelines for enterprise registration procedures under the Law on Enterprise 2014. Some notable points of the Decree are as follows:

  • Online registration is now available. As such, the entire procedures for registering the formation of an enterprise or the changes in enterprise information may be carried out at the National Business Registration Portal (
  • The timeline for enterprise formation registration and for registration of changes in enterprise information is significantly reduced (from 5 to 3 working days).
  • The registrar agency must not request the enterprise to submit additional documents other than registration documents prescribed by laws.


Decree 78 is expected to significantly remove the administrative burdens from the backs of the investors and enterprises and improve the investment climate of Vietnam

IV. Decree No. 76/2015/ND-CP providing detailed regulations on the implementation of a number of articles of the law on real estate business (Decree 76)

Sector: Real estate

Effective date: 01 November 2015


Below are some salient points of Decree 76:

  • Legal capital required for real estate trading is minimum VND20 billion for all types of projects. Financial statement or bank acknowledgement is no longer required to prove the financial capacity with respect to the fulfilment of legal capital;
  • Model contracts for key real estate transactions are enclosed in the Decree for the parties to follow; and
  • Regarding transfer of the entirety or part of the project, procedures and detailed forms for application dossier and timeline for the approval process are specified.


Procedures for registration of the real estate business and project transfer are simplified and less time-consuming

The model contracts, while causing no restriction to freedom of contract, will help reduce disputes in the market.

V. Decree No. 82/2015/ND-CP dated 24 September 2015 regarding visa exemption for Vietnamese people residing overseas and foreigners who are spouses, children of Vietnamese people residing overseas or of Vietnamese citizens (Decree 82)

Sector: Civil

Effective date:15 November 2015


Decree 82 provides detailed guidance for procedures of issuance of visa exemption certificates and its conditions:

  • Regarding conditions for visa exemption, the applicant’s visa or equivalent document must be valid for at least one year;
  • Regarding the format of certificate, it shall be granted in the passport or a detached certificate in some certain circumstances;
  • The competence and processing procedures of authorities are more detailed than before. For example, processing procedure of overseas authority is separated from the Immigration Administration; and
  • The duration of certificate of temporary residence for people using certificates of visa exemption is extended to 6 months.


Although the processing time stays the same as Decision 135/2007/QD-TTg on the promulgation of the regulation on visa exemption for Vietnamese residing overseas, the procedure is now much clearer for applicants to follow.

The extension of certificate of temporary residence from 90 days to 6 months is considered to be a big support for Vietnamese people residing overseas to come back home country.

VI. Decision No. 41/2015/QD-TTg on selling shares in blocks (Decision 41)

Sector: Governmental management/ Corporate

Effective date: 15 September 2015


Decision 41 deals with withdrawal of state capital of unlisted public companies from joint-stock companies that have not been listed or registered on Upcom (Hanoi Stock Exchange), the ownership of which is represented by Ministries, ministerial agencies, Governmental agencies , People’s Committees of central-affiliated cities and provinces, state-owned corporations, and companies whose 100% charter capital is held by the State. The striking features of Decision 41 can be summarized as follow:

  • the sales of shares in blocks must be implemented via Stock Exchange by audit method with the following information: number and price of each block, status of investors attending audit, solutions in case of an unsuccessful audit. Each block must not be less than 5% of the company’s charter capital;
  • Starting price of the block, which is determined by a valuation organization, equals to the starting price of a share multiplied by the quantity of shares in a block; and
  • According to the Decision to approve the plan for selling shares in blocks issued by a competent authority and regulations on selling shares in blocks, the owner’s representative agency, the Chairperson of the Board of members, the President of the enterprise shall request the representative to cooperate with Stock Exchange in formulating the enterprise’s own statute on selling shares in blocks.


Decision 41 sets out a clear procedure and conditions for the withdrawal of the state in joint-stock companies, which is considered to be a concession of the Government in intervening into the market. As a result, a free market without control of the Government is constructed step-by-step.

VII. Decree 79/2015/ND-CP on  penalties for administrative violations against regulations on vocational training (Decree 79)

Sector: Administrative

Effective date: 01 November 2015


Decree 79 provides detailed regulations of administrative fines upon the violations related to: vocational school establishment; organization of vocational education quality control; vocational education organizations, student recruitment, program syllabus, class size, bridge programs and educational association in vocational education; test, examination; issue and utilization of certificates, degrees.

  • The limitation for the maximum fine is maintained at 75,000,000 VND for individuals, 150,000,000 VND for organizations;
  • There are not many changes in the rate of fines imposed on the violation of regulations, except for some certain violations in registration of vocational activities, maintenance of ratio of full-time teachers/ lecturers, and others; and
  • Beside a number actions which are newly added to the scope of administrative fine application, Decree 79 provides more remedial measures applicable to the violators, such as transferring illegal benefits obtained from the violations, cancellation of the decisions on admission, returning collected amounts to learners.


Financial penalties seem not to be strong enough to prevent individuals and organizations from violating regulations on vocational training. Hence, Decree 79 imposes more intensive preventative measures to violators to enhance the protection for the rights of learners as well as vocational education organization.

VIII. Circular No. 139/2015/ TT –  BTC providing guidance on guarantee for foreign loans on lent by the Government (Circular 139)

Sector: Banking and finance

Effective date: 01 November 2015


Circular 139 provides detailed guidance on the procedures for guarantee of loans, settlement of secured assets, and responsibilities of relevant Parties concerning the  foreign loans on-lent by the Government with the following remarkable regulations:

  • The execution of a guarantee contract depends on the involvement of the Ministry of Finance (MOF). If the MOF directly undertakes on-lending, a credit institution satisfying certain conditions set out by this Circular shall be nominated by the obligor to act on behalf of the Ministry of Finance (MOF) to perform loan guarantee operations. Upon approval by the MOF, a Security Service Agreement shall be executed between the MOF, the obligor and the credit institution.  If the MOF authorizes an on-lending agency to perform on-lending, the loan guarantee contract shall be signed between such agency and the obligor under the scope of on-lending authorization between the MOF and the agency;
  • The total value of secured assets must be equivalent to 100% of the loan; and
  • A loan guarantee contract must be registered with competent authority by the obligor regardless of the secured assets not required to be registered by the laws. If the obligor fails to register, either the disbursement process might be suspended or the total loans might be immediately recovered before the due date.


Decree 78/2010/ND-CP on on-lending of the Government’s foreign loans took effect as of 2010 with only one article on the loan security causing numerous issues during its implementation. On the other hand, Circular 139 offers solutions for this issue by forming a detailed legal basis for guarantee for foreign loans on-lent by the Government.

IX. Circular No. 15/2015/TT-NHNN guiding foreign currency transactions on foreign currency market for credit institution permitted to make foreign currency transactions (Circular 15)

Sector: Banking and Finance

Effective date: 05 October 2015


Circular 15 replaces a numbers of decisions providing guidance on foreign exchange transaction to regulate the exchange rates, terms, means and documents of the transaction, form of the transacting agreement as well as the responsibility of the authorized credit institutions and departments belonging to the State Bank of Vietnam concerning the foreign exchange transactions.

The most important point of the new Circular is the stipulation on the latest payment date of foreign exchange transactions. Particularly, regarding the spot transaction in swap transaction, the parties could agree on the payment date which is subject to be within two days from the transacting date. Meanwhile, regarding the forward transaction in the swap transaction, the payment date must not be later than the last date of transacting term which lasts from 3 to 365 days from the transacting date.


Circular 15 shall deter the foreign exchange hoard in financial market.

X. Decree No. 85/2015/ND-CP providing detailed regulation on a number of articles of the Labor Code on policies for female employees (Decree 85)

Sector: Labor

Effective date: 15 November 2015


Decree 85 provides in details state policies on female employees, which requires employers employing multiple female employees to conduct necessary works with the purpose of improving the working conditions, healthcare and also supporting female employees in taking care of their children.

In return, employers may enjoy notable policies as follows:

  • Employers investing in building nurseries, kindergartens and healthcare facilities which meet statutory requirements may be entitled to enjoy incentives under the current policies encouraging socialization in education, occupational training and medical health as provided by the laws, e.g. exemption of land lease fees or corporate income tax incentives (tax rate, tax exemption and reduction);
  • Employers may also be entitled to incentives as stipulated in the Law on Residential Housing if investing in constructing residential housing for employees; and
  • Additional expenses for female employees may be included in deductible expenses for income tax purposes as provided by the laws.


Decree 85 shows the effort of the Government in encouraging employers to practically ensure and improve working conditions for female employees, through which employers may receive preferential support from the State of Vietnam, by ways of. tax incentives, upon satisfaction of certain conditions stipulated by the laws.


By Vietnam Law Insight

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us at

Conditions and Steps for Foreigners Buying a House under the New Laws and Regulations

Conditions and Steps for Foreigners Buying a House under the New Laws and Regulations


Conditions for foreign individuals that wish to buy a house in Vietnam:

A foreigner must comply with the conditions for foreign individuals to own residential housing in Vietnam. In particular, foreign individuals must be permitted to enter into Vietnam and not fall into the category that entitles them to preferential treatment rights, diplomatic or consulate immunities in accordance with the law[1].

After satisfying all the conditions under the law, foreign individuals are required to undertake the following procedures to own a house in Vietnam

I. Step 1: Foreign individuals enter into housing purchase and sale contracts (“PSC’) with developers under an investment project.

Prior to the execution of the purchase of housing and individual residential houses, the developer may require the foreign individual to make a deposit of an amount of money for a period of time in writing as agreed by both developer and the foreign individual as security for entering into, and performance of the PSC.

In this context, the term “residential housing” refers to apartments and individual residential houses developed in investment projects for the construction of residential housing[2].

The PSC must be made in writing and contain the following items[3]:

  1. Full name of the individual, name of the developer and addresses of the parties;
  1. Description of house’s characteristics, and characteristics of the parcel of residential land attached to such residential house;

In respect to a contract for the sale and purchase of an apartment, the parties must specify the areas that are under common use and under common ownership; the areas for use under private ownership; the floor area of the apartment; and the use purpose of the areas under common use and under common ownership in the apartment building in accordance with the originally approved design purposes.

  1. Value of the residential house transaction if it is agreed in the contract;
  1. Time and method of payment;
  1. Time of delivery and receipt of the residential house; period of warranty of the residential house;
  1. Rights and obligations of the parties;
  1. Undertakings of the parties;
  1. Other agreements;
  1. Effective time of the PSC;
  1. Date of signing of the PSC; and
  1. Signatures and full names of the parties.

II. Step 2: Foreign individuals making payment for the residential housing.

Foreign individuals shall make payment for the residential housing as agreed in the PSC.

For payments under which the foreign individual will purchase residential housing to be built in the future may be made in instalments, in which, the 1st payment must not exceed 30% of the value of the PSC, and subsequent payments must comply with the schedule for construction of the residential house, but the total amount must not exceed 70% of the value of the PSC of the house that has not been handed over to the client yet. In case foreign individuals have not been issued with the Certificate of land use rights and ownership of residential house and other assets attached to land, the maximum payment shall be 95% of the value of the PSC, the remainder of the PSC shall be paid when the competent authority has issued such Certificate for the foreign individual[4].

III. Step 3: Developers hand-over the residential house as agreed in the PSC for foreign individuals.

The time of transfer of ownership of the residential house is the time when the developer hands over the residential house to the foreign individuals, or when the foreign individual has made full payment to the developer, except when otherwise agreed by the parties[5].

IV. Step 4: Obtain Certificate of land use right and ownership of residential house and other assets attached to land.

The developers have the obligation to conduct procedures for the issuance of Certificate of land use right, ownership of the residential house and other assets attached to land, and deliver such certificate to foreign individuals within 50 days from the handover date of the residential house to foreign individuals[6].


Term of ownership of residential house of foreign individuals: 50 years from the date of issuance of the Certificate of land use right and ownership of residential house and other assets attached to land which may be extended in accordance with Government regulations[7] (the extended period shall be 50 years according to latest draft of Decree providing guidance on the implementation of the Law on Residential housing 2014).

Foreign individuals married to Vietnamese citizens or to Vietnamese residing overseas may own residential houses on a stable, long-term basis, and have the same rights as residential house owners that are Vietnamese citizens.

Limit on the residential houses in which the foreign individuals are entitled to buy: the residential houses which foreign individuals have entitled to own shall not be more than 30% of the number of apartments in case purchasing residential houses in apartment building and no more than 250 houses, comprising of villas and terraced houses, in one area with the population size equivalent to that of an administrative unit at the ward level in case purchasing individual residential houses.

[1] Art 160.3, Law on Residential housing 2014

[2] Art 159.2(b), Law on Residential housing 2014

[3] Art 121, Law on Residential housing 2014

[4] Art. 57, Law on Real Estate Business 2014

[5] Art. 19.5, Law on Real Estate Business 2014

[6] Art. 16.7 Decree 71/2010/NĐ-CP. Note: This old guidance on Law on Residential housing 2005 is still in effect until the issuance of new guidance on Law on Residential housing 2014.

[7] Art 161.2(c), Law on Residential housing 2014

By Vietnam Law Insight (LNT & Partners)

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact Mr Binh Tran at:

The Most Important Documents Regulating Bank Guarantee

Circular No. 07/2015/TT-NHNN on Bank guarantee

On 25 June 2015, the State Bank of Vietnam issued Circular No. 07/2015/TT-NHNN on bank guarantee which is considered as one of the most important documents regulating bank guarantee applied to domestic credit organizations, branches of foreign banks for foreign customers. The Circular is to replace the previous one, namely Circular No. 28/2012/TT-NHNN on 03 October 2012 issued by the State Bank of Vietnam on bank guarantee.

The Circular No. 07 has formulated a full and basic legal framework on procedures for, and dossiers on activities of bank guarantee of credit organizations and branches of foreign banks.

The Circular is also expected to create a new legal framework to ensure that the international standards on bank guarantee are met as well as to help appropriately synchronize with other relevant laws and to minimize limitations and weaknesses of the current operations on bank guarantee. Furthermore, the Circular is to enhance the effectiveness, safety and smooth operations of bank guarantee activities of credit organizations and branches of foreign banks operating in Vietnam.

The Circular has a number of progressive contents. First of all, it supplements the definition of “symmetry guarantee party” and “guarantee confirming party” in order to specifically regulate those parties, including foreign credit organizations. In addition, the Circular gives the definition of “customer” to determine clearly which party customers are in guarantee relationship. From that, it is easier to calculate guarantee issuing balance, symmetry guarantee, guarantee confirming and as basis for considering conditions and requirements to customers for accepting bank guarantee.

Secondly, the Circular abolishes the provision that required the acceptance by the State Bank of Vietnam in bank guarantee.

Relating to supplying forex services, in order to conform to Circular No. 21/2014/TT-NHNN, Circular No. 07 has amended the relevant content. Accordingly, branches of foreign banks are not allowed to give guarantees in foreign currencies for customers operating overseas, except in case of that customers are guaranteeing party and symmetry guaranteeing party that are overseas credit organizations and guaranteed party doing business in Vietnam.

In real estate business, the Circular has clarified the Law on real estate business and Law on residential housing in terms of bank guarantee that are assigned the authority for detailing to the State Bank. To be more specific, the Circular requires the investor of a real estate project to undertake that the guarantee for selling, leasing future residential houses will be effective at least 30 additional days since the date of the delivery of the houses, basing on the agreement between the investor and customer. However, Mr. Tran Thai Binh, Lawyer of LNT & Partners, on an article published on Vietnamnet Online Newspaper, believes that many questions are not appropriately answered. For instance, such questions are; whether banks pay penalties for customers, if the housing sales and purchase agreement mentions; Or according to the Circular No. 07, guarantee agreement comes into effect to the time of at least ending 30 days since the date of the delivery of housing, but the customer is still awaiting (or not bewaring), leading to that those 30 days are overdue, then, this customer loses his/her rights for claiming guarantee. Many people say that a period of 30 days is short.[1]

In light of this Circular, there are a number of side-effects arising. Therefore, understanding provisions are necessary to avoid unfavorable consequences in doing business in general.

The Circular will come into effect on 09 August 2015 and replaces the Circular No. 28/2012/TT-NHNN granted on 03 October 2012. Hopefully, after its promulgation, the Circular will establish a solid legal framework for all domestic credit organizations, branches of foreign banks and customers in bank guarantee activities.

[1] Real Estate Guarantee: Questions awaiting guidance,–ban-khoan-cho-huong-dan.html, retrieved on 25 August 2015.

By Vietnam Law Insight (LNT & Partners)

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://

Conditional Acceptance of the Construction Works for Commissioning

The Law

On 15 May 2015 the Government issued Decree No. 46/2015/ND-CP (Decree 46) to provide further guidance on the Law on Construction 2015 with respect to quality management and maintenance of construction works, pointing out:

“The responsibility for the quality of the works remains with the survey construction contractors, design contractors, and supply contractors, even after their work has been inspected and accepted by the employer, or after the defect liability period has expired. This means that these contractors may be held liable for damages evidenced to be caused by the quality of their works.”

What does it mean for businesses?

Under Decree 15/2013/ND-CP, acceptance of construction works for commissioning into use when they have not satisfied all requirements of the design, of national technical regulations, of standards applicable to the construction works, and the technical specifications and other requirements of the employers specified in the agreements is generally not allowed.

However, Decree 46 entitles the employer to conditionally accept the construction works for commissioning into use, if the issues with respect to quality of construction works do not affect the weight-bearing capacity, the life cycle and the functions of the works and if the construction works conform to the safety requirements.

Decree 15/2013/ND-CP allows the employer and contractor to freely agree on the minimum amount of the warranty fee retained by the employer. However, to the extent of State owned works, this has been restricted by Decree 46. Accordingly, the warranty fee for State owned works must not be less than 3% of the contract value for works of grade 1 or special grade, and 5% of contract value for the works of other grades.

Decree 46 stipulates that survey contractors should pay significant attention to the quality of their works. Therefore, we suggest that survey contractors to provide sufficient and eligible resources to ensure their works are compliant with the technical plan, as this is required by Decree 46. We would also warn that the Decree also entitles the employer to completely suspend the construction survey works upon finding them not compliant with the technical plan, or the construction survey agreement.

Decree 46 will take effect from 01 July 2015

By Vietnam Law Insight.

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://

Construction Master Planning: More Defined Procedures

Decree No. 44/2015/ND-CP Clarifies Construction Master Planning

What does the law say?

On 6 May 2015, Government issued Decree No. 44/2015/ND-CP, providing guidance for a number of regulations on construction master planning (“Decree 44”). This Decree provides detailed regulations on a number of articles in the Law on Construction No. 50/2014/QH13, including the formulation, evaluation and approval of construction master planning, as well as master planning implementation and planning permits.

What does this mean for businesses?

More defined procedures for construction industry and investors

Firstly, specific functional areas with the scale over 500 ha shall be put under the general planning category, to ensure the suitability for provincial planning, urban planning, and to form a basis for zoning, and detailed planning.

Secondly, areas (over and below 500 ha) inside specific functional areas shall be put under the general planning category, ensuring its suitability for provincial planning, urban planning, and again to form a basis for zoning planning and detailed planning.

Thirdly, Areas inside specific functional areas upon instruction shall be placed under the detailed planning category, in order to ensure that the general planning framework, and zoning planning is more rigid, and to form a basis for issuance of the construction permit.

Fourthly, in the event that a single investor undertakes a construction project of less than 5 ha, (or under 2 ha if it is an apartment building project), the project must be created without the formulation of a detailed construction planning. Drawings of the general site plan, architectural plan, solutions to technical infrastructure in the fundamental design must comply with zoning plans or planning permits, ensuring the connection with technical infrastructure and compliance with architectural space in the area.

Finally, the planning permit shall be issued to investors who are qualified for implementing the investment in the construction project. The maximum period of a planning permit with respect to a concentrated construction project is 24 months from the date of issuance, until the detailed planning is approved. The maximum period for a planning permit with respect to a separate construction project is 12 months from the date of issuance until the construction project is approved.

Streamlined instruction on planning permits

The following functional areas directly related to the issuance of the planning permit are detailed in Decree 44: (i) procedures for the issuance of planning permit; (ii) application for obtaining planning permit; and (iii) contents of the planning permit. For any construction planning project with the planning tasks being approved before the effective date of this Decree, the formulation, evaluation and approval shall be conducted under the Government’s Decree No. 08/2005/NĐ-CP dated 24 January 2005 on construction planning.

Decree 44 shall take effect from 30 June 2015.

By Vietnam Law Insight.

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://

Receiving Advance Payments from Home Buyers: Correct Interpretation and Clarification is Necessary

Law on Residential Housing stipulates that generally, developers shall not be entitled to receive any advance payments from home buyers who purchase residential houses to be developed in the future before the foundation work of the property is completed.

This provision has been interpreted by competent authroties that any amount received by developers from their home buyers prior to the completion of the foundation, shall be deemed illegal and such transactions may be invalid.

However, the business in practice is very various by nature, the developers, in some cases, expect to know how many purchases have committed to buy houses in their projects. Therefore, deposit agreement is a method to secure the housing purchase and sales contracts. The amounts received from such deposit agreements may be at the risk of being regarded as a violation of the aforementioned provision.

In reality, some developers who collected payments from their potential buyers in the form of a “deposit”, or “goodwill amount”, and etc were imposed with administrative sanctions.

Deposits or Advance Payments?

From a legal perspective, there are some aspects that need to be considered in relation to this issue as follows:

Pursuant to regulations stipulated in the Civil Code, a deposit agreement means an amount of money delivered by one party to another party as a security for its performance of the further steps of the contemplated transaction. In the mentioned case, the transaction between the developer and a home buyer is the execution of a housing purchase and sales contract. Therefore, the deposit agreement between developers and its potential buyers prior to the completion of the foundations contains the provision that potential buyers pay a deposit amount to secure their performance commitments. Such buyers shall enter into the housing purchase and sales contracts with the developers when the projects have met the required conditions; in case the buyers do not fulfill their commitments, they shall forfeit their deposits…In our opinion, such agreements is in compliance with the Civil Code regarding deposit agreements.

The Law on Residential Housing provides that developers shall not be entitled to receive an “advance payment” from the buyers prior to the completion of the foundation. This intended provision is justified in avoiding the possibility that developers do not have the sufficient financial capacity to complete the property projects, which may adversely affect the interests of buyers ultimately. This provision is intended for the protection of buyer’s interests, but how should it be interpreted correctly?

In our opinion, the fact that developers receive deposit amounts from their home buyers is not supposed that they have received “advance payment” because the two transactions are different in legal nature: one is the deposit transaction, while the other is the housing purchase transaction. Indeed, from an accounting perspective, deposit amounts cannot  be entered to the accounts as the payments from buyers, because the developers always have an obligation to return deposits (including deposit penalties as agreed) to buyers in the event of any breach of agreement by the developers. Therefore, up to this point, the developers and the potential buyers have still not conducted in house purchase transactions. If such advance payments are supposed to be payments according to housing purchase and sale contracts, such payments shall accounted as revenue of the developers.

A unified interpretation by authorities needed

Relevant competent authorities usually suppose that “receiving deposits” and “receiving advance payments” are the same, and consequently presuming that the developers have breached regulations if receiving deposit amounts, and the related transactions are likely to be canceled due to its invalidity.

The provision of Law on Residential Housing mentioned above for the purpose of protection for interests of buyers is essential and justified. However, the assurance required to enable developers (as businesses) to be advantageous in their doing business within the legal framework is also necessary.

Currently, Law on Residential Housing 2014 and Law on Real Estate Business 2014 provides quite sufficiently regulations in order to remove incapable developers. For example, Law on Real estate requires a developer’s performance of housing project must be guaranteed by a reputable bank.  And furthermore, the developers are entitled to receive advance payments from the buyers up to 50 % or 70% of the housing sale price, and etc. All of these regulations, in our view,  secure enough the interests of home buyers.

Therefore, the further expanded interpretation of competent authorities is neither consistent with the spirit of the Civil Code, nor necessary in practice. Furthermore, such interpretations may adversely affect trading transactions between parties.

It is necessary to have guidance, or a specific confirmation from the Ministry of Construction regarding the fact that developers can receive deposit amounts (prior to the completion of the foundation) is consistent with applicable laws, in order to remove the “hanging verdict” for developers due to different interpretations of the relevant authorities at the local level.

By Vietnam Law Insight.

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://

The article contributed by Mr. Tran Thai Binh, LNT & Partners. Its contents do not constitute legal advice. For more information, please contact lawyers via email:

Regulations of Construction Contracts

Decree 37/2015/ND-CP dated 22 April 2015 on detailed regulations of construction contracts (“Decree 37”)

The Government issued Decree 37/2015/ND-CP dated 22 April 2015 on detailed regulations of construction contract (“Decree 37”). Decree 37 replaces Decree 48/2010/ND-CP dated 7 May 2010 on contracts in construction activities (as amended by Decree 207/2013/ND-CP dated 11 December 2013). Decree 37 will take effect on 15 June 2015.

Under Decree 37, there are many substantial changes that have been stipulated, these key changes include:

  • Supplementing some types of contracts in accordance with the nature of these contracts, and the subsequent relationships between parties and the contracts. Accordingly, with respect to their nature, contracts for supplying human resources, work machinery and equipment have been added. Depending on the relationship of the parties to the contracts, Decree 37 stipulates that construction contracts with four main contracts including a main contract, sub-contract, fixed rate contract and foreign construction contract.
  • Stipulating clearly the principles of signing contracts. The most important principle is that at the time of signing, the contractors must meet conditions for practice and performance qualification, as prescribed in the Law on Construction. This principle is aimed at making sure that the contracts are suitable for providing construction services and to limit risks associated with the quality of building construction undertaken by disqualified contractors.
  • Amendments to the rate of advances for construction contracts as follows: With respect to the consultancy contract, rates are divided in two levels, namely 20% of the contract value for a contract valued up to VND 10 billion and 15% of the contract value for a contract valued over VND 10 billion (instead of 25% of the contract value for every contract as stipulated in the previous decree).
  • Decree 37 requires the employers under construction contracts to provide payment guarantee in order to protect the rights and interests of contractors. Accordingly, the employers are responsible for proving their capabilities to perform payment obligations under the signed contract via such forms as approved by the capital arrangement plan, bank or credit organization guarantee and credit supply contract, or loan agreement with financial institutions.

By Vietnam Law Insight.

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://

Kỳ 3: Những lưu ý khi mua nhà trả góp

( Mua Bán Nhà Đất đã bắt đầu phối hợp với Vision21 và kênh truyền hình HTV7 phát sóng các chương trình tư vấn bất động sản. Luật sư Trần Thái Bình với 15 năm kinh nghiệm chuyên môn, đặc biệt ở lĩnh vực bất động sản, thuộc công ty luật LNT & Partners, đã tham gia tư vấn về vấn đề Mua Nhà Góp Vốn.

BTV Phi Yến: Giả sử như hai vợ chồng quyết định sẽ mua dự án đang xây dựng thì anh có thể nói gì về những rủi ro mà họ có thể gặp phải?

Luật sư Trần Thái Bình: Quả thật tình huống trên vẫn xảy ra hàng ngày. Đa phần đối với những căn hộ đang hình thành, nghĩa là chủ đầu tư đang xây dựng, dĩ nhiên những căn hộ như vậy sẽ không có giấy tờ pháp lý hoàn chỉnh. Thật ra, luật pháp đã cho phép chủ đầu tư bán nhà đang hình thành trong tương lai. Người mua nhà thường chỉ hiểu đơn giản rằng họ phải ứng tiền trước cho chủ đầu tư xây nhà rồi sau đó mới bàn giao nhà cho họ. Tuy nhiên, về mặt pháp lý thì có hai khác biệt cơ bản giữa việc góp vốn đầu tư và mua bán nhà hình thành trong tương lai.

Cẩn thận “tiền mất tật mang” với chủ đầu tư không uy tín.

Đối với trường hợp góp vốn đầu tư, người mua nhà sẽ cùng đầu tư với chủ dự án. Trái lại, với trường hợp mua bán nhà hình thành trong tương lai, chủ đầu tư sẽ ký hợp đồng mua bán nhà đối với căn nhà đang xây và người mua nhà sẽ thanh toán theo tiến độ xây dựng. Điểm khác biệt giữa hai hình thức này là đối với hình thức góp vốn đầu tư, chủ đầu tư chỉ cần được phê duyệt dự án đó là có thể tiến hành kêu gọi góp vốn đầu tư; đối với trường hợp ký hợp đồng mua bán nhà thì chủ đầu tư phải khởi công xây dựng dự án, phải hoàn thành phần móng của công trình rồi thì mới được phép ký hợp đồng và nhận tiền. Như vậy, đối với trường hợp góp vốn đầu tư, sẽ có nhiều rủi ro hơn so với trường hợp ký hợp đồng mua bán nhà. Những người mua nhà nên cân nhắc điều này.

Chậm tiến độ dự án là một rủi ro không hiếm gặp.

BTV Phi Yến: Như vậy, liệu có thể hiểu rằng đối với một dự án đang xây dựng, có đầy đủ giấy tờ và tính pháp lý thì người mua nhà có thể hoàn toàn yên tâm không?

Luật sư Trần Thái Bình: Sẽ vẫn có những rủi ro khác. Ví dụ, chủ đầu tư không có kinh nghiệm, uy tín và năng lực thực hiện dự án theo đúng tiến độ, khiến cho việc hoàn thành dự án kéo dài. Một rủi ro khác là mặc dù đúng là họ có dự án đó, nhưng khi huy động vốn rồi lại sử dụng vốn cho những mục đích khác, khiến cho sau đó họ lại không có khả năng hoàn thành dự án ban đầu. Rủi ro thứ ba là khi chủ đầu tư không có kinh nghiệm dẫn đến việc thực hiện dự án không đúng quy định pháp luật và dự án bị thu hồi bởi cơ quan nhà nước.

Người mua cần tìm hiểu kỹ về uy tín và năng lực của chủ đầu tư.

BTV Phi Yến: Tuy nhiên, cũng không thể phủ nhận một số ưu điểm của phương án này so với việc chọn mua căn hộ đã hoàn thành rồi, ví dụ như phương thức thanh toán chẳng hạn. Rõ rang là số tiền phải bỏ ra đầu tư với hình thức này sẽ thấp hơn nhiều. Phải có lý do giải thích việc những dự án thế này rất thu hút người mua nhà hiện nay. Vậy nếu cặp vợ chồng ở trên quyết định chọn mua dự án thì luật sư có lời khuyên nào dành cho họ cũng như quý vị khán giả?

Tính pháp lý của chủ đầu tư và dự án rất quan trọng khi tìm thông tin mua nhà.

Luật sư Trần Thái Bình: Dĩ nhiên, việc mua nhà đã có giấy tờ hoàn thiện cũng có những thuận lợi riêng. Tuy vậy, việc ký hợp đồng mua bán, giao dịch với cá nhân bán nhà sẽ có nhiều bất lợi so với giao dịch với công ty bất động sản. Người mua cũng sẽ phải kiểm tra xem nhà đó có thế chấp chưa, có ràng buộc, tranh chấp với bên thứ ba hay không. Không phải chỉ cần có giấy tờ nhà là đã thuận lợi rồi. Ngược lại, khi mua nhà đang hình thành trong dự án cũng không chỉ toàn rủi ro. Vẫn có những thuận lợi như lịch thanh toán kéo dài theo tiến độ xây dựng của dự án (khoảng 2 – 3 năm) sẽ giúp cân bằng khả năng tài chính của người mua tốt hơn, giảm áp lực thanh toán một lần. Vấn đề là người mua nhà có biết phải tìm hiểu để yêu cầu chủ đầu tư tuân thủ hay không. Ví dụ, pháp luật quy định chủ đầu tư chỉ được phép ký hợp đồng mua bán nhà đang hình thành khi dự án đã hoàn thành phần móng. Nếu người mua nhà không biết mà vẫn đưa tiền cho chủ đầu tư trước khi phần móng hoàn thành thì giao dịch đó sẽ không có giá trị và pháp luật không thể lấy lại tiền cho người mua. Vì vậy, người mua nhà cần phải hiểu rõ quyền lợi của mình để đảm bảo chủ đầu tư đáp ứng đúng theo như vậy.

BTV Phi Yến: Cảm ơn anh. Như vậy, rõ ràng là mặc dù nhận được sự hỗ trợ hay có quyết định như thế nào trong việc mua nhà thì vai trò nắm bắt thông tin của chính người tiêu dùng cũng đặc biệt quan trọng. Một lần nữa, xin cảm ơn anh đã tham gia chương trình.

New rules ease Public-Private Partnerships (PPP) implementation

The government recently released Decree 15 to provide a comprehensive legal framework for public-private partnership projects, replacing the old regulations. Net Le and Loi Huynh of LNT & Partners took a closer look.

In November 2010, a pilot scheme of public-private partnerships (PPP) was introduced (Decision 71), which was expected to boost PPP projects in Vietnam. As of 2014, there were 38 PPP infrastructure development projects proposed to the government. However, none of them were implemented. From a legal perspective, Decision 71 seems to have failed in providing a realistic framework for the operation of PPP projects. It also confused investors with a dizzying array of government decrees on build-operate-transfer (BOT), build-transfer-operate (BTO), and build-transfer (BT) models, outlined in Decree 108 (November 2009) which provided several amendments. Indeed, most of the infrastructure projects in Vietnam have been carried out in accordance with Decree 108 rather than Decision 71. As such, the government issued Decree 15 on 14 February to finally provide a comprehensive legal framework for PPP projects, replacing Decision 71 and Decree 108. Apart from regulations that remain unchanged, Decree 15 introduces new regulations which may encourage the development of PPPs.

Eligible projects for PPP

The list of the eligible projects for PPP under Decree 15 emphasises the need for the government to develop an integrated infrastructure which has the potential to foster national economic development. Decree 15 describes PPP as an investment arrangement between an authority, investor, and project company to perform, manage, and operate infrastructure and public service projects including:

– Transport infrastructure works and related services;

– Lighting systems; clean water supply systems; drainage systems; waste and waste water collection and treatment systems; social housing; resettlement housing and cemeteries;

– Power plants, transmission lines;

– Health, education, vocational training, culture, sports infrastructure works and related services; offices of state agencies;

– Science and technology, weather forcasting, economic zones, industrial parks, hi-tech zones, information technology parks; the application of information technology;

– Agriculture and rural development infrastructure and services associated with processing and consumption of agricultural products; and

– Other areas as decided by the prime minister.

The government has released Decree 15, intended to clean up sometimes perplexing and contradictory regulations

Financial structure

Excluding operate-manage (OM) projects and projects mentioned above, a PPP project shall have a minimum total investment capital of VND20 billion. Decree 15 allows the investors and the state to allocate financial resources and share the financial risks without a cap, whilst each stakeholder shall be subject to statutory conditions.

Private participation

Private participation shall comprise of the investor’s equity capital and other funding sources which the investor is responsible for raising.

The investor’s equity capital shall be not lower than 15 per cent of the total investment capital. In case the total investment capital is higher than VND1,500 billion ($71 million), the equity capital shall not be lower than 15 per cent for the portion under 1,500 billion Vietnam dong, and for the portion above 1,500 billion Vietnam dong, it shall not be lower than 10 per cent.

Regarding the loan capital, Decree 15 is unclear as to whether the investor may  receive a state guarantee. Previous legislation specifically set out that any loaned capital shall be raised without increasing the burden of public debt. Article 57 of Decree 15 reads that the government may mandate an agency on behalf of the government to guarantee the material supply, product, and service consumption as well as other obligations of the investor, the project company, or other companies participating in the PPP project.

State funding

Before Decree 15, state participation in a PPP projects was capped at 30 per cent under Decision 71, and 49 per cent under Decree 108. These caps had the effect of rendering PPP projects less attractive to investors, as they will have to shoulder a higher risk burden than the state. Decree 15 removes these caps. However, state funding is limited to the following purposes:

– Capital contributions for construction works of projects with business and fee collection from end-users, yet the collection is not sufficient for return on investment and profit;

– Payment for investors providing services in accordance with build-transfer-lease (BTL), build-lease-transfer (BLT), and similar contracts; and

– Support for construction of auxiliary works, site clearance, compensation, and resettlement.

State funding shall include funds from the state budget, central government bonds, local government bonds, official development assistance, and incentive loans from foreign sponsors.

Legal Perspective

Forms of PPP contract

Decree 15 expands on the number of PPP forms available, laying the legal foundation for contracts of build-operate-transfer (BOT); build-transfer-operate (BTO); build-transfer (BT); build-operate-own (BOO); build-transfer-lease (BTL); build-lease-transfer (BLT); and operate-manage (O&M) models. Subject to these forms of contract, the authority that has the power to sign and implement a PPP contract may propose other similar contracts for the review and approval of the prime minister. Previously, Decree 108 only governed BOT, BTO, and BT models, while Decision 71 was silent on the forms of PPP contract.

Governing law

Decree 15 allows parties to choose applicable foreign laws to govern project contracts and contracts guaranteed by the government. Under either scenario, the choice of foreign governing law will not have jurisdiction over Vietnamese regulations on the application of foreign law.

From this perspective, it is possibly the first time that domestic legislation refers to a specific regulation rather than the general term “fundamental principle of Vietnamese laws” which has no definition under the law.

Dispute Resolution

Disputes in a PPP project may be resolved by court or via arbitration subject to agreement by the parties. Decree 15 makes it clear that disputes which are resolved by arbitration in accordance with the project contract and related contracts are commercial disputes. Vietnamese laws only have regulations on commercial arbitration, thus, if the dispute is not commercial, the choice of arbitration would be null and void. Under Decree 15, the resolution schemes are different depending on if the state agency is disputing with a local or a foreign investor.

Protection of lender

Decree 15 provides the lender with the authority to designate a capable organisation to take over all or part of rights and obligations of the investor or the project company in case the investor or the project company fails to perform on its obligations under the PPP project contract or loan agreement. An agreement on such a takeover shall be made between lender and the competent authority or parties of the PPP contract. Decree 15 also allows the investor to assign all or part of its rights and obligations under the PPP project contract to the lender or another investor. In this case, an assignment agreement shall also be made between the assignee and the parties to the PPP project contract.

PPP flow chart

Below is a general flow chart showing the process from initiative to execution of the PPP project contract. It is still a lengthy process for an investor to pursue. Decree 15 allows a conversion from a public project into a PPP project provided that it satisfies the requirements under Decree 15. However, further guidance is expected since it is not yet clear whether such a conversion would require stakeholders to perform all the processes shown below.

This Legal Alert is not a Legal Advice. For more information about this article, please contact the author: Dr. Net Le, Tel: +84909759 699 Email:

LNT & Partners is a leading full-service independent local law firm based in Vietnam with offices in Ho Chi Minh City, Hanoi, San Francisco and an affiliated presence in Hong Kong. The firm is among Vietnam’s most prominent, representing a wide range of multinational and domestic clients, including Fortune Global 500 companies as well as well-known Vietnamese listed companies on a variety of business and investment matters

By Vietnam Law Insight, LNT & Partners

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://