Major realty firms to be inspected

HANOI - The Ministry of Construction is going to inspect a dozen real estate companies, including major ones, a source told the Daily.

Through the periodical checks, inspectors of the ministry will clarify some issues concerning the operations of realty firms, such as their observance of law and policies on planning, quality management and real estate business in 2011-2016.

Reportedly, among the 12 property firms to be examined are those of significant scale such as Vingroup, Sun Group, FLC, Hoa Binh Group, Novaland, Muong Thanh Group, Tan Hoang Minh Group, Bitexco Group, Empire Group, Dai Quang Minh, Phu My Hung Corporation and Nam Thang Long (Cipurtra). Each of these enterprises will undergo a month-long inspection.

In particular, the ministry will look into projects of Muong Thanh Group in Hanoi and Khanh Hoa Province, Bitexco’s projects in HCMC, Cocobay Danang project of Empire, and Dai Quang Minh’s construction of four main roads in Thu Thiem New Urban Area in HCMC.

Such inspection is a regular activity of the Ministry of Construction. Nevertheless, this inspection plan has stoked public curiosity and attention since some real estate projects have recently stirred up public concerns. Particularly, Muong Thanh Group has just been examined, with a number of irregularities detected such as violating height limits.

Speaking at a review conference for 2016 last Friday, Deputy Minister of Construction Le Quang Hung said the Government had assigned his agency to review urban planning. The ministry has already ordered inspections into controversial projects in Hanoi this week.

Source The Saigon Times

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Foreign firms expand presence in retail market

HANOI – Foreign companies are establishing a stronger presence on the fast growing Vietnamese retail market, according to a report which the Ministry of Industry and Trade released last Friday.

Foreign direct investment enterprises now hold a 17% retail market share in the segment of shopping centers and supermarkets, 70% in convenience stores, 15% in minimarts, and around 50% in online, TV and phone shopping, said the report.

These percentages are not too high but the rising presence of foreign investors in the retail market can be seen in major cities. For instance, Thailand’s Central Group has taken over the entire stake of France’s Casino Group in Big C Vietnam, and another Thai conglomerate, TCC Holding, has acquired Metro Cash and Carry Vietnam.

Other foreign business groups such as South Korea’s Lotte and Japan’s Aeon have been steadily expanding, with plans to double or triple their stores in Vietnam in the coming years.

The swift expansion of foreign firms has piled pressure on local retailers. Domestic goods suppliers have also felt the pinch as foreign retailers are developing their own goods brands for sale at their stores.

According to the Ministry of Industry and Trade, total retail sales of goods and services last year rose 10.2% year-on-year to VND3,530 trillion (US$156.7 billion).

Business-to-customer (B2C) transactions were estimated to double from the US$2.2 billion recorded in 2013.

Source The Saigon Times

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Thailand issued the final determination in the antidumping investigation against imports of Certain stainless pipe and tube from certain countries including Vietnam

On 26 September 2016, Vietnam Competition Authority received the information from Vietnam Trade Office in Thailand that the Department of Foreign Trade (DFT) under Ministry of Commerce of Thailand published the final determination of the antidumping investigation against imports of Certain stainless pipe and tube from Korea, China, Taiwan and Vietnam

-  Date of initiation: 17 September 2015

- Subject product: stainless pipe and tube under HS: 7305.31.10.000; 7306.11.10.000; 7306.11.90.000; 7306.21.00.000; 7306.40.10.010; 7306.40.10.020; 7306.40.20.010; 7306.40.20.020; 7306.40.30.010; 7306.40.30.020; 7306.40.90.010; 7306.40.90.020; 7306.61.00.021 and 7306.61.00.022

In the final determination, the antidumping margin applicable to exporters of Vietnam is 310.74%.

Earlier, on 7 July 2016, DFT issued notice of essential facts and announced about holding a public hearing for the case.

Source Vietnam Competition Authority

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Australia Antidumping Commission (Department of Industry, Innovation and Science) initiation of an Investigation into Alleged Dumping and subsidisation on Zinc Coated (Galvanised) Steel Exported from the Republic of India, Malaysia and Vietnam

On October 7, according to the information received by Vietnam Competition Authority from Vietnam Trade Office in Sydney, Australia Anti-dumping Commission (Department of Industry, Innovation and Science) initiation of an Investigation into Alleged Dumping and subsidisation on Zinc Coated (Galvanised) Steel Exported from the Republic of India, Malaysia and Vietnam (Malaysia is subject to the anti-dumping investigation only).

Earlier, on 22 August 2016, an application was lodged by BlueScope Steel Ltd, a manufacturer of zinc coated (galvanised) steel (the goods) in Australia. The application seeks the publication of a dumping duty and a countervailing duty notice in respect of the goods exported to Australia from India, Malaysia and Vietnam.

Background:

1. Petitioner: BlueScope Steel Ltd.

2. Subject product:

- Zinc coated/ galvanized steel

- HS: 7210.49.00, 7212.30.00, 7225.92.00 and 7226.99.00.

3. Period of investigation of dumping and subsidisation: 01/7/2015 – 30/06/2016

4. Period of investigation of injury: từ 01/7/2012

5. Alleged dumping margin: 27,2%

6. Estimated subsidy margin: Above negligible level

7. Investigated subsidy programs: preferential import tariff rates, support for projects manufacturing priority industrial products; incentives contingent upon export performance; incentives for domestic businesses; incentives for foreign invested enterprises; export promotion; trade promotion; preferential credit; assistance for commercial development in mountainous, island and ethnic minority areas;assistance to enterprises facing difficulties due to objective reasons; incentives for investment projects in science and technology; incentives on corporate income tax; incentives on non-agricultural land.

8. Injury: The application alleges that the goods have been exported to Australia at prices less than their normal value and were in receipt of countervailable subsidies and that the dumping and subsidisation has caused material injury to the Australian industry through: price suppression, reduced sales revenue, reduced profit and profitability, reduced employment,  reduced return on investment

This is the 7th dual anti-dumping and anti-subsidy cases against exports of Vietnam in recent years since 2009, and the 2nd dual anti-dumping and anti-subsidy investigations by Australia against exports of Vietnam

Source Vietnam Competition Authority

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Special mechanism for Long Thanh airport project gets thumbs-up

HCMC – Prime Minister Nguyen Xuan Phuc has told the Ministry of Transport to design a special compensation, support and resettlement mechanism for the Long Thanh airport project in Dong Nai Province, the Vietnam News Agency reports.

The ministry should coordinate with the Ministry of Natural Resources and Environment, the government of Dong Nai Province, and relevant agencies to map out a plan for compensation, support and resettlement, treat it as a separate component, and report results to the PM.

The special plan should be submitted to the National Assembly (NA) before the NA passes the feasibility study for the big-ticket airport project.

The Transport Ministry will work with authorities of Dong Nai to devise a policy framework for compensation and resettlement assistance.

The project would affect around 4,700 households with nearly 15,000 people in Binh Son, Suoi Trau, Cam Duong, Long An, Long Phuoc and Bac Can communes.

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Around 40 kilometers from HCMC and 30 kilometers from Bien Hoa City, the airport would meet 4F standards of the International Civil Aviation Organization (ICAO).

Phase one of the project is scheduled to get off the ground in 2019, with one runway and one terminal to be put into operation by 2025 to handle 25 million passengers and 1.2 million tons of cargo a year.

One more runway and terminal would be built in the second phase to increase the airport’s annual capacity to 50 million passengers and 1.5 million tons of cargo. The airport would handle 100 million and five million tons a year after phase three is complete.

More than VND336.76 trillion (over US$16 billion) will be needed for the project, including nearly US$5.5 billion for the first phase. The funding will be sourced from the State budget, official development assistance (ODA) loans, investment of enterprises, proceeds from equitization of State-owned enterprises and other sources.

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Chinese contractors sue Vietnam hydropower project owner

HANOI - A consortium of Chinese contractors has filed a case against the Vietnamese owner of the Upper Kon Tum hydroelectric project for termination of the contract, according to a report which the Government has passed to the National Assembly.

The report deals with two hydropower projects – Song Bung 4 and Upper Kon Tum. Vinh Son-Song Hinh Hydropower JSC (VSH) is the owner of the Upper Kon Tum hydropower project on the Dak Nghe River, the upstream tributary of the Sesan River.

The consortium comprising East China Investigation and Design Institute under China Hydropower Engineering Group and China Railway 18th Bureau Group has sent a petition against VSH to the Vietnam International Arbitration Center (VIAC).

This move comes after VSH cancelled the contract with the Chinese contractors and reclaimed the entire contract execution and advance payment guarantees.

The termination of the contract resulted from “serious delays” in the construction of the plant and power lines, as well as from the “unfriendly behavior” of the contractors, says the report.

VIAC set May 23, 2016 as the date for verbal argument, with a ruling by the arbitration council expected to come out by the end of this year.

Due to the complexity of the case, the completion of necessary papers, the gathering of evidence and the addition of legal documents must be sufficiently and carefully done. The verbal argument was rescheduled to April 20, 2017, and the ruling is expected in the middle of next year.

The Government says in the report that after the Chinese contractors filed the case, VSH filed a self-protection statement and a proposal to VIAC seeking arbitration in the consortium’s breach of contract terms.

VSH signed a legal consulting service contract with local and international law firms, namely YKVN Singapore with a branch in Vietnam and EP Legal Vietnam. After a review of the records, the two legal consultants proposed VHS invite Singapore’s Drew & Napier LLC to join the case.

VHS is now working with counsels over evidence and documents to prepare a testimony.

The Government said this case is complex with many potential risks. Since the ruling of the arbitration council is slated for mid-2017, the progress and efficiency of this project will be certainly affected.

The Government report notes that VHS has reassessed the remaining workload for the power transmission lines and hydropower plant, which is actually the job of the Chinese contractors. Currently, new contractors have taken over the job of constructing the transmission lines and plant.

The Government says the total investment cost of this project is VND7.4 trillion.

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What Are the Forms of Public Private Partnership (PPP) in Vietnam?

Public  Investment  Law  No.  49/2014  /  QH13  issued on  June  18th,  2014,  effective  January  1st, 2015 and Decree No. 15/2015 / ND-CP on investment  in the  form of public-private partnership issued February 14th, 2015, effective April 10th, 2015 has been expected to help overcome one of the  biggest  obstacles  in  the  attraction  of  investment  in  private  sector,  from  both  domestic  and foreign investment in public-private partnership (PPP) projects.

The key matter is that the new laws would share the  risks that investors face in terms of capital, fees  structures  and  fees  amount  determination. It  is  important  that  the  regulation  has  been changed  that  only  requires  the  minimum  of  owner’s  equity  of  not  less  than  15%  of  the  total investment  of  the  regular  project;  and  not  lower  than  10%,  if  the  project  investment  is  over  15 trillion  VND.The  investors  may  transfer  part  or  all  rights  and  obligations  under  the  project contract  to  the  lender  or  other  investors  if  the  transfer  does  not  affect  the  objectives,  scope, technical  standards,  progress  of  the  project,  and  must  meet  the  conditions  for  investment  and business in accordance with provisions the law on investment and other conditions agreed  in the project contract signed with the competent state agency.

Investment  in  PPP  has  now  been  expanded  to  vast  areas  requiring  significant  investment including transportation infrastructure, power plant, water, health, the environment management, education,  vocational  training,  culture,  sports  and  science  and  technology  projects,  economic zones, industrial zones.

The  investment  contracts  in  the  form  of  public-private  partnership  are  defined  in  Vietnam  as following.

BOT Contract

“Build – Operate – Transfer contract” (referred to as BOT contract) means a type of contract to build  an   infrastructure  project  between  a   competent  state  agency  and  an   investor;  after completing the construction, the  investor shall  be entitled to operate it  for a  specified period of time; eventually, the investor shall transfer it to the Vietnam competent state agency.

BTO Contract

“Build – Transfer – Operate contract” (referred to as BTO contract) means a type of contract to build  an   infrastructure  project  between  a   competent  state  agency  and  an   investor;  after completing  the  construction,  the  investor  shall  transfer  it  to the  competent  agency,  and  shall  be entitled to operate it for an agreed period of time.

BT Contract

“Build –  Transfer  contract”  (referred  to  as  BT  contract)  means  a  type  of  contract  to build  an infrastructure  project  between  a  regulatory  agency  and  an  investor;  after  completing  the construction, the investor shall transfer it to the competent agency, and then the investor will be allotted a land parcel used for carrying out another project.

BOO Contract

“Build – Own – Operate contract” (referred to as BOO contract) is a type of contract to build an infrastructure  project  between  a  competent  agency  and  an investor;  after  completing  the construction, the investor shall take ownership of this project and have the right to operate it for a specified period of time.

BTL Contract

The Build – Transfer – Lease contract (referred to as BTL contract) means a type of contract to build an infrastructure project between a competent agency and an investor; after completing the construction, the investor shall transfer it to the regulatory agency and shall be entitled to provide services  on  the  basis  of  operation  of  such  project  for a  specified  period  of  time;  the  competent agency shall lease and make payment for the investor’s services.

BLT Contract

“Build –  Lease –  Transfer  contract”  (referred  to  as  BLT  contract)  means  a  type  of  contract  to build an infrastructure project between a competent agency and an investor; after completing the construction,  the  investor  shall  have  the  right  to  provide  services  on  the  basis  of  operation  of such  projector  a  specified  period  of  time;  the  competent  agency  shall  lease  and  make  payment for the investor’s services according to the regulation; when the lease term expires, such project shall be transferred to the competent agency.

O&M Contract

“Operation & Management contract” (hereinafter referred to as O&M contract) means a type of contract to operate the project between a competent agency and an investor for a specified period of time.

The  law  on  Public  Private  Partnership  in  Vietnam  creates  an  important  legal  basis  in  the management of public investment. However, this is only the beginning of an inevitable trend that attract resources from private sectors.  The laws has been evolving and there will be changes in the coming time which ANT Lawyers will monitor and provide relevant update.

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