Contract structure in a condo-hotel project in Vietnam

In a condo-hotel project, the hotel developer sells hotel rooms to investors and offers a rental pool program which will be managed by a hotel operator after the hotel is constructed. The contract structure of a condo-hotel could be very complicated since it needs to address and allocate the needs and risks among various parties including the hotel developer, condo owners, operator, and project lenders. In addition to these common issues, there are certain Vietnamese law issues for a condo-hotel project in Vietnam.

Stricter regulations on issuance of Vietnamese Government guarantees

Under Decree 4/2017, the Vietnamese Government imposes stricter regulations on issuance and management of Government guarantees. Government guarantees under Decree 4/2017 are guarantees issued on behalf of the Vietnamese Government (as the guarantor) in favour of foreign lenders to guarantee loans or bonds borrowed or issued by companies in Vietnam. Under Decree 4/2017:

New control on cross-border supplies of news in Vietnam

From May 2017, under Circular 38/2016, websites, mobile apps, search engines and social networks (offshore websites), which are located outside of Vietnam but have more than one million visits from Vietnamese users a month or have servers located in Vietnam must:

provide necessary contact details to the Ministry Communication and Information (MCI); and
at the MCI’s request, remove from the offshore websites information and news which are considered illegal under Vietnamese law by the MCI. If the offshore websites do not cooperate with the MCI, the MCI may apply technical measures to block the illegal information and news from being accessed by Vietnamese users.

Vietnamese telecommunication service providers are required to have the necessary technical equipment to implement MCI’s blocking order within three hours of receipt of the relevant order. Circular 38/2016 will apply to the most popular social networks in Vietnam such as Facebook, Google, and Youtube.

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Changes to long-term visa rules for foreign directors/managers in Vietnamese companies

Under the Law on Entry, Exit, Transit, and Residence of Foreigners in Vietnam, which came into effect on 1 January 2015, a “foreign investor” (nhà đầu tư nước ngoài) may be granted a long-term visa (or temporary resident permit) of up to five years. The problem is, however, that many foreign investors in Vietnam are companies, not individuals. Technically, the individual representatives of such foreign companies are not considered as foreign investors and are therefore not qualified for long-term visas to stay in Vietnam. In the past, individual representatives of foreign companies which invest in Vietnam may obtain a long-term visa on the ground that they enter into Vietnam to implement investment projects. Such regulations are now no longer valid. Accordingly, foreign directors/managers in Vietnamese companies who have obtained a long-term visa on the ground that they are representatives of foreign investors in the Vietnamese companies may now need to obtain a shorter visa on the ground that they are employees or staffs of the Vietnamese companies.

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Vietnam Business Law