PetroVietnam Restructuring Plan

On 5 January 2013, the Prime Minister approved a restructuring plan for PetroVietnam (“PVN”), the national oil company. Under the restructuring plan, PVN is instructed to:

• equitise Dung Quat refinery, the only refinery in operation in Vietnam by 2015. PVN is required to retain at least 75% of the shares in Dung Quat refinery;
• equitise Ca Mau Fertilizer Plant which has an annual capacity of 800,000 tons by 2015. PVN is required to retain at least 51% of the shares in Ca Mau Fertilizer Plant;
• equitise PV Oil which is mainly in charge of the downstream operation of PVN including import and distribution of petrol after 2015. PVN is required to retain at least 75% of the shares in PV Oil;
• equitise  PV Power, the second largest electricity producer after Vietnam Electricity in Vietnam. PVN is required to retain at least 75% of the shares in PV Power;
• reduce its shareholding in PetroVietnam Insurance Company, the second largest non-life insurance, from 39% to 35% by 2015;
• divest entirely its shares in Ocean Bank by 2015; and
• continue studying a restructuring plan for PetroVietnam Finance Company (PVFC), a finance company with total assets of about US$ 4.5 billion. In August 2012, the Prime Minister has opined that PVN needs to divest from PVFC entirely. However, the fate of PVN’s 78% shares in PVFC has not been decided in the restructuring plan.

MPI’s views on foreign investment in certain service sectors

From time to time, the Ministry of Planning and Investment (MPI) comments on applications by foreign investors who want to invest in service sectors in Vietnam. It is interesting to know the MPI’s views on these applications as the MPI can take the same view when it comes to the same application in the future. Below is a summary of the MPI’s views from various official correspondences issued by the MPI in November and December 2012:

• “Services for construction of high-rise buildings (CPC 512) and for construction of civil construction works (CPC 513)” are permitted under the WTO Commitment;
• A foreign invested company may only register for “maintenance and repair services” as an after-sale service for the goods that the company sells to its customers. This is because the WTO Commitments only cover maintenance and repair services for personal and household goods (CPC 663);
•  “Freight transport agency service (including freight transportation brokerage services mainly making arrangements for transport or making schedules for transport on behalf of carrier or recipients), brokerage services for loading goods on to aircrafts, goods collection services, bulk goods transportation services; other supporting services for freight transportations; warehousing services; and road transportation services” are permitted in case the foreign investor only owns 51% of the charter capital of the project company;
• “Management consulting services and market research services” are permitted; and
• Foreign investment in “human resources consulting services” is not permitted but foreign investment in “human resources management consulting services” is permitted.

Vietnam Airlines Restructuring Plan

On 16 January 2013, the Prime Minister approved the restructuring plan for Vietnam Airlines, the national and largest carrier in Vietnam. The notable points of the restructuring plan include:

• Vietnam Airlines to be equitised within 2013. This may be an encouraging news for foreign investors interested in Vietnam Airlines who have waited for a long time since the intention to equitise Vietnam Airlines have been floated. However, the Prime Minister does not provide any further details on the proposed equitisation of Vietnam Airlines (e.g capital structure and how many shares will be owned by the Government after equitisation). This indicates that there are still works to be done;
• Vietnam Airlines to reduce its shareholding in Vietnam Air Petrol Limited Company (VINAPCO) from 100% to more than 50%. Vinapco is currently the only petrol company, which supplies fuel to commercial aircrafts in Vietnam;
• Vietnam Airlines to divest entirely from its holdings in various companies not relating to air transportation services including Techcombank (a large private joint stock bank with 20% investment from HSBC), Bao Minh Insurance Company, and Hoa Binh Securities Company; and
• Vietnam Airlines may adopt a sale and lease back arrangement for certain aircrafts currently owned by it.

General Director of single member LLC holding concurrent office

Under Article 70.3(b) of the Enterprise Law, the General Director of a limited liability company (LLC) with one member being organization must not be a related person of the members of the Members' Council. However, there is no provision that explicitly prohibits the General Director from holding the position of a member of Members’ Council itself. Therefore, technically, it is legally possible for the General Director of single member LLC to concurrently hold the position of a member of the Members’ Council of the LLC. That being said, if the General Director cannot be the related person of the members of the Members' Council (assuming for the purpose of avoiding conflict of interest), then logically, neither the General Director can be a member of Members’ Council.