New measures to address non-performing loans in Vietnam

The National Assembly has just passed an important resolution specifically addressing non-performing loans (NPLs) held by credit institutions (NPL Resolution). The NPL Resolution takes effect for a period of five years from 15 August 2017. The NPL Resolution only applies to (1) NPLs arising before 15 August 2017 or (2) NPLs arising after 15 August 2017 from loans which have been extended before 15 August 2017. The NPL Resolution does not make clear whether a credit institution may acquire NPLs from other non-bank entities and use the powers under NPL Resolution to enforce such NPLs.

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Written by Nguyen Quang Vu On In

COOPERATION MECHANISM IN PROCESSING APPLICATIONS FOR INVESTMENT AND ENTERPRISE REGISTRATION OF FOREIGN INVESTORS IN VIETNAM

Circular 2/2017 taking effect from 15 June 2017 regulates the cooperation mechanism in processing applications for investment registration and enterprise registration of foreign investors (cooperation mechanism). Under the cooperation, a foreign investor submits its applications for investment registration and enterprise registration and receives its registration certificates at applicable Department of Planning and Investment (DPI). Therefore, the procedure of investment registration and enterprise registration under the cooperation mechanism may reduce significantly the licensing workload of foreign investors compared to the original separate procedures of investment registration and enterprise registration  (separate procedure).

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Written by Lawyers VNLaw On In ,

INCORPORATE BY REFERENCES IN LABOUR CONTRACTS IN VIETNAM

In practice, instead of providing rights and obligations of the employees specifically in the labour contract, an employer may cross-refer to its existing “internal regulations” (quy chế) to impose such internal regulations on the employees. Unfortunately, there is no clear definition of the internal regulations as well as a legal basis for issuing the internal regulations by an employer under labour law. However, there are various provisions, which suggest that employer has rights to issue the internal regulations (such as bonus regulations, regulation on raising wage grade, recruitment, etc).

Article 5.2(b) of the Labour Code 2012 provides that employees have obligation to be subject to the lawful management by the employer. From the view of the employer, one may argue that the issuance of internal regulations is to manage the employees. Theoretically, a labour contract which cross-refers to the employer’s internal regulations will be valid if:

·         The employees have agreed with the contents of such internal regulations before entering into the labour contracts; and

·         The contents of such internal regulations comply with relevant laws.

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Written by Lawyers VNLaw On In

Classification of non-performing loans in Vietnam

A foreign investor interested in investing in non-performing loans (NPL) in Vietnam should at first know which type of NPL exists in Vietnam. Depending on the types of the existing lenders, NPLs can be classified into:

  • NPLs held by onshore credit institutions (Bank NPL). A foreign entity may acquire and transfer Bank Loans in general. The legal framework for investing in Bank NPLs is most advanced. There are separate regulations of the State Bank of Vietnam (SBV) on transfer of bank loans and there has just been a special resolution of the National Assembly dealing with Bank NPLs incurred before 15 August 2017 (NPL Resolution). In theory, a Bank Loan transferred to a foreign entity could be considered as a foreign loan and be subject to foreign loan regulations. However, the SBV has indicated that a Bank NPL sold to a foreign entity is not regarded as a foreign loan;
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Written by Lawyers VNLaw On In ,