ISSUING L/C BY "CPTPP" BANKS TO RESIDENTS IN VIETNAM

Scenario: An institutional resident in Vietnam intends to open an at sight L/C at a Japanese bank (Offshore L/C Issuer) to import equipment into Vietnam. Can the Offshore L/C Issuer issue the Offshore L/C to the Vietnamese client under Vietnamese laws?

Short answer: Yes, subject to our discussions at 1.2 and 1.3 below.

1.1. The Offshore L/C Issuer should be able to issue a L/C to a resident in Vietnam if the Offshore L/C Issuer is not regarded as regularly conducting banking business in Vietnam (see 1.2). This is because:

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Mechanism for Calculation of Electricity Generation Price Bracket and Its Implication for Transitory Solar/Wind Energy Investors

On 3 October 2022, the Ministry of Industry and Trade (MOIT) issued Circular 15 on the mechanism for setting up an electricity generation price (EGP) bracket applicable to transitory (chuyển tiếp) solar and wind power plants (Circular 15/2022), which took effect from 25 November 2022.

Determining EGP bracket under Circular 15/2022 will cause significant impact to the selling price of the transitory solar and wind energy projects in Vietnam. To be specific:

Circular 15/2022 only applies to solar and wind power plant developers (Developers) who have entered into PPAs with Vietnam Electricity (EVN) before 1 January 2021 (for solar power Developers) or 1 November 2021 (for wind power Developers) but failed to meet the requirements to apply the preferential EGP administered by the Prime Minister under Decision 13/2020 (for solar powers) and Decision 39/2018 (for wind powers) (Transitory Projects);
Circular 15/2022 requires the Developers of the Transitory Projects to provide Feasibility Study Reports or Engineering Designs of their power projects to EVN.
Based on data submitted by the relevant power plants, EVN will calculate and build up an EGP bracket of a standard solar and wind power plant (Maximum EGP Bracket), and obtain an approval from the MOIT for such Maximum EGP Bracket. The approved Maximum EGP bracket will be published on the website of the MOIT and the Electricity Regulatory Authority. The mechanism for calculation of the Maximum EGP Bracket is illustrated in the diagrams at the end of this post. Details on this mechanism are discussed in this document.
The price for selling generated power by the Developers of Transitory Projects to EVN cannot exceed the approved Maximum EGP Bracket. Accordingly, the data provided by the Developers may affect their profit in the future.

On 7 January 2023, the MOIT already issued Decision 21 which approves the Maximum EGP Bracket calculated in accordance with the mechanism specified in Circular 15/2022 (see the bar chart below) which will serve as a basis for EVN to agree on the selling price with the Developers of Transitory Projects:

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Comparison: Investment inside vs. outside an industrial park/industrial cluster in Vietnam

As Vietnam is on its way to become a new global manufacturing hub, many investors now consider the country as a new destination for their manufacturing business. However, finding the right location to implement the proposed project may be a vexed question.

In general, the following options are available for the investor:

Option 1: Acquisition of land inside industrial manufacturing-oriented zones, which include industrial park (IP) and industrial cluster (IC); and
Option 2: Acquisition of land outside the industrial manufacturing-oriented zones.

In this article, we discuss and compare the available options based on specific criteria and from both legal and practical perspectives to assist investors in making their best decision.

With respect to the industrial manufacturing-oriented zones, the law distinguishes between IP and IC based on certain criteria. In addition, the legal frameworks applied to investment in the IP and IC may sometimes be different. Accordingly, doing investment inside the IP and IC will be discussed separately as two potential options, where applicable.

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NOTABLE CHANGES IN FOREIGN LOAN BOROWING AND REPAYMENT REGULATIONS

Pending the issuance of a new Circular to replace existing Circular 12/2014 on borrowing and repayment of foreign loans of enterprises, on 30 September 2022 (New Foreign Loan Circular), the State Bank of Vietnam (SBV) issued Circular 12/2022/TT-NHNN guiding the management of foreign exchange in respect of the borrowing and repayment of foreign loans by enterprises (Circular 12/2022) which replaced Circular 03/2016/TT-NHNN from 15 November 2022 (as amended) (Circular 03/2016).

Circular 12/2022 is expected to improve the legal framework on enterprises’ borrowing and payment of foreign loans not guaranteed by the Government, simplify the administrative formalities, and provide guidance for certain matters which may be addressed in the New Foreign Loan Circular.

We discuss below some key changes introduced by Circular 12/2022.

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Vietnam Business Law