Directly land leasing from private landlord outside an industrial zone

Traditionally, a foreign investor in Vietnam may acquire land use rights by either from the State or from a developer of industrial zone. Article 93 of the old Land Law 2003 suggests that a foreign invested company may lease land directly from a private landlord being an economic organisation even if the landlord is not an industrial zone developer. However, there is no clear for a foreign investor to follow this direct leasing option. And in practice, few foreign investors can actually lease land from an economic organization outside of industrial zones.

The new Land Law 2013 and its implementing regulations also contain a similar provision allowing a foreign invested enterprise to direct lease land from an economic organization outside of industrial zones easier. In addition,

• The new Land Law 2013 specifically encourage an investor which presumably includes foreign invested enterprises to directly lease land from economic organizations in the event they do not want to lease land from the State or the industrial zones;
• Direct land leasing from economic organizations must satisfy the following conditions, among others: (i) complying with the approved district-level annual land use plan; and (ii) there is no other “clear” land in the relevant neighborhood available for the project. Both of these conditions are not clear and may be difficult to comply with in practice; and
• The land lease contract with the private owner must be registered with the land registration office. Upon registration, the land lease shall be recorded in the corresponding land use right certificate already granted to the landlord but no separate land use right certificate will be issued under the name of the lessee. 

Music or movies on-demand streaming or webcast in Vietnam

Online streaming or providing webcast of music or movies starts becoming popular in Vietnam. This could raise some interesting points from copyright law perspective. A broadcaster under the Intellectual Property Law may broadcast music without obtaining approval of the relevant right holders as long as the broadcaster pay certain royalty fees to the copyright holder. It is not clear if a provider of online streaming or webcast of music or movies could qualify as a broadcaster under the Intellectual Property Law. This is because:

• “Broadcasting” is defined as the transmission of sound or image or both sound and image of a work, performance, audio and visual recording or broadcast to the public by wireless or landline means including satellite transmission, in such a way that the public may access such work from any place and time the public select. It is not clear if the delivery of a musical recording through the internet could qualify as the transmission of a recording by wireless or landline means. The Intellectual Property Law seems to distinguish the internet from wireless or landline means. However, Decree 100 seems to consider the internet as a part of wireless or landline means; and

• Broadcasting organisation is defined as the organisation which initiates and carries out broadcasting. In the case of on-demand music service, it is not clear whether the service provider or the end-user could be considered as the organisation which initiates the broadcast.

Cross border supply of online advertising services into Vietnam

For online advertising, placing advertisement through big US internet companies such as Google or Facebook is a must for many Vietnamese companies. Under the WTO Commitments, Vietnam undertakes to allow cross-border supply for advertising services (CPC 871, excluding advertising for cigarettes) with no limitation. As such, a foreign company should be able to provide online advertising services to Vietnamese customers without having to set up a commercial presence in Vietnam.

That being said, Decree 181/2013 does not allow Vietnamese organisations or individuals to place their online advertisement directly on overseas server-based website. Instead, online advertisement with foreign internet companies must be placed via a local advertising service provider in Vietnam. In addition, 15 days before the placement of the local advertiser’s advertisement on its website, the foreign publisher is required to report the corporate information and key business lines of the authorised local advertising service provider to the Ministry of Culture, Sports and Tourism.

On the other hand, under the Advertising Law, foreign organisations or individuals not having a commercial presence in Vietnam must conduct the advertisement of their products, goods or services in Vietnam via an advertising service provider in Vietnam. In theory, these restrictions may be viewed as contrary to Vietnam’s undertaking under the WTO Commitments which allow cross-border supply for advertising services without limitation. However, it is not clear if one can successfully invoke the WTO Commitments.

New Bankruptcy Law in Vietnam – Some new points

A new Bankruptcy Law has been issued and will become effective from 1 January 2015. The law contains various new points which hopefully will make it easier for a company to enter and exit bankruptcy process in Vietnam. In particular,

• The law for the first time introduces the use of receiver which is a private company with certain professional qualification to manage the bankruptcy process. Under the old regulations, the bankruptcy process is managed directly by the court through an asset management and liquidation unit.
• The insolvency status is defined as the inability to pay overdue debt for three months instead of the inability to pay overdue debt when due. The revised definition could help to reduce abuse of bankruptcy process to settle individual disputes.
• There is now a process for a higher court to review a decision to commence or not to commence a bankruptcy process issued by a lower court.
• Interests can continue to accrue from the time of the decision to commence a bankruptcy process to the time of the decision to declare bankruptcy. Under the old regulations, interests cease to accrue as soon as there is a decision to commence a bankruptcy process. The new provision is more protective to creditors as the bankruptcy process may well last for a couple of years;
• A secured creditor may not be able to enforce its security if the secured assets need to be used for the business recovery plan approved by the unsecured creditors.
• In terms of liquidation preference, it is now clear that taxes owed to the Government have same liquidation preference as other unsecured creditors. Debts arising from the business recovery plan have higher liquidation preference to other unsecured creditors. If the bankrupt company is a credit institution then deposits or monies paid by deposit insurance institution will have higher liquidation preference and special loans given the bankrupt credit institutions during the special control process will have the highest liquidation preference.
• The voidable preference may now extend to 6 months  (instead of 3 months) or, in the case of related persons, 18 months before commencement of a bankruptcy process and to sale transaction conducted not at market price or transaction outside the scope of business of the relevant company. There is also a process to review a court’s decision to void a transaction under the voidable preference regime.
• A bank where a company which is subject to a decision to declare bankruptcy has an account is expressly prohibited from paying debts unless approved by the court. 
• There are detailed procedures for liquidating assets of a bankrupt company.