VAMC - New tool to resolve bad debts
The much expected Decree on setting up Vietnam Assets Management Company (VAMC) was finally issued on 18 May 2013 and will take effect from 9 July 2013. VAMC is expected to play a major role in resolving the massive amount of bad debts accumulated by Vietnamese banks. However, a quick review of the Decree indicates that in order for VAMC to be up and running many steps and decisions remain to be taken.
The Basic
VAMC is a non-profit State-owned enterprise and incorporated as a single-member limited liability company. VAMC has a chartered capital of VND 500 billion. The SBV is the representative of the State capital in VAMC.
How it works
Decree 53/2013 establishes a quite complicated mechanism to deal with bad debts of Vietnamese banks. Below is an example of how such mechanism works:
- Borrower B mortgages its house to borrow a loan of VND 100 billion (Secured Debt) from Bank A. Borrower B fails to repay the Secured Debt and the Secured Debt becomes bad debt of Bank A. Bank A has not set aside any reserve for the Secured Debt..
- VAMC issues special bonds (VAMC Bond) according to an issuance plan to be approved by the State Bank of Vietnam (SBV). VAMC Bond has a term of five years and carries no interest.
- Bank A sells the Secured Debt to VAMC in exchange of VND 100 billion VAMC Bond. This step requires the Secured Debt and Borrower B to satisfy certain conditions. As a result of the transfer, VAMC will become the owner of the Secured Debt and be entitled to the mortgage over the house of Borrower B (the Mortgage). The transfer is made by way of a contract between VAMC and Bank A. In some cases, the SBV may even force Bank A to sell its bad debts to VAMC if Bank A does not cooperate with VAMC.
- Bank A pledges VND 100 billion VAMC Bond with the SBV to obtain a recapitalisation loan from the SBV (SBV Loan). The amount and interest of the SBV Loan is subject to separate regulations.
- During the term of the VAMC Bond, Bank A needs to establish a reserve (Bank Bond Reserve) of at least 20% of the value of VAMC Bond each year.
- After taking over the Secured Debt and the VAMC will either directly or authorise Bank A to deal with Borrower B. Decree 53/2013 seems to offer substantial legal supports for VAMC to enforce the Mortgage. For example, Decree 53/2013 requires all competent authorities to cooperate with VAMC to allow VAMC to enforce the security interests that it holds.
- VAMC authorises Bank A to enforce the Mortgage and recover VND 50 billion (Recovered Amount) and VND 50 billion remains to be unpaid (Remaining Debt).
- Within five business days after the earlier of (1) the last day of the term of VAMC Bond or (2) the date on which the aggregate of the Bank Bond Reserve and the Recovered Amount is equal to VND 100 billion, Bank A must (2) repay the SBV Loan and get back the VND 100 billion VAMC Bond, and (3) sell back VND 100 billion VAMC Bond to VAMC in return of the Remaining Debt. VAMC will also return the Recovered Amount less the enforcement expenses and a haircut (to be decided) for VAMC to Bank A.
- After Bank A gets back the Remaining Debt and returns the VAMC Bond to VAMC, Bank A will need to use the Bank Bond Reserve to resolve the bad debt resulted from the VAMC Bond and to continue resolve the Remaining Debt.
As discussed in our previous post, we believe the pilot mechanism introduced under Resolution 171 will bring a significant improvement to the legal framework for commercial housing development in Vietnam. With the enactment of implementing Decree 75/2025, this pilot mechanism is now fully set up. In this post, we will highlight key takeaways from Decree 75/2025 and discuss potential implications for housing developers.
On 29 April 2025, the State Bank of Vietnam (SBV) has issued Circular 3 on the opening and using of VND account for conducting indirect investment in Vietnam (Circular 3/2025). From 16 June 2025, Circular 3/2025 will replace Circular 5 dated 12 March 2014 of the SBV (Circular 5/2014) guiding the opening and using of indirect investment capital account (IICA) for conducting indirect investment in Vietnam.
n a landmark reform for 2025, the Government of Vietnam has commenced a significant restructuring of its ministries. This major overhaul, approved by Resolution No 176 of the National Assembly dated 18 February 2025, aims to create a leaner, more efficient, and effective state apparatus to better support the nation's development.
The restructuring involves a series of complex mergers and transfers of functions between ministries. Based on the guiding decrees, the key changes include:
The Vietnamese government recently issued Decree 69/2025 (effective 19 May 2025), which amends Decree 01/2014 regarding foreign investor’s share purchase in Vietnamese credit institutions. Here are the main changes:
1. Scope of application
Decree 69/2025 clarifies that foreign-invested economic organisations (FIEOs) which are required to comply with investment conditions and procedures applicable to foreign investors must now follow the same rules (in Decree 01/2014 as amended by Decree 69/2025) applicable to foreign investors when buying shares in Vietnamese credit institutions.
Under the Investment Law 2020, these FIEOs refer to entities where foreign investors hold a majority of the charter capital (FIEO-F1). Notably, Decree 69/2025 does not explicitly state whether it applies to economic organisations majority-owned by an FIEO-F1, even though such economic organisations are also treated as foreign investors under the Investment Law 2020.
In criminal proceedings in Vietnam, civil claims (e.g., claims for compensation, repair of damaged property) often arise alongside criminal charges against criminals. The Criminal Procedure Code 2015 introduces the position of “civil claimants” (nguyên đơn dân sự) and “civil defendants” (bị đơn dân sự) to facilitate the handling of civil claims in Vietnamese criminal proceedings. However, other than creating these positions, the Criminal Procedure Code 2015 lacks detailed provisions on how these civil matters should be addressed in criminal proceedings. This legal gap, coupled with inconsistent judicial practices, makes the resolution of civil claims within criminal cases particularly complex and problematic. This post will explore the key challenges in resolving civil claims during criminal proceedings.
No clear procedures - Article 30 of the Criminal Procedure Code 2015 provides that civil matters in criminal cases are to be resolved during the adjudication of the criminal case. However, the Criminal Procedure Code 2015 provides no further instructions on the procedure for resolving civil claims within criminal proceedings. It remains unclear what procedural rules apply—whether the criminal court should follow its own process or adopt the procedures set out in the Civil Procedure Code 2015 to settle a civil claim during criminal proceedings. This uncertainty can lead to inconsistent judicial practices and procedural confusion.
Scope of civil claims - Article 64.1 of the Criminal Procedure Code 2015 defines a civil defendant as “an individual, agency, or organization that, as prescribed by law, is responsible for compensating for damages”. It appears from the definition of civil defendant that a civil claim during criminal proceedings only relates to the issue of compensation for damages. It is not clear whether other issues such as ownership of assets or return of illegal property could be covered in a civil claim during criminal proceedings. In addition, the court may also designate the person making or subjecting to a claim on civil issues which are not claim for damages to another position (e.g., person with related rights and obligations) during the proceedings.
Decree 125 of the Government dated 5 October 2024 (Decree 125/2024) introduces updated regulations for the education sector, including a requirement that a license must be obtained for establishing "other centres performing continuing education tasks" (trung tâm khác thực hiện nhiệm vụ giáo dục thường xuyên in Vietnamese and in the rest of this article, Other Continuing Education Centres). Crucially, the education law fails to clearly define these centres, creating significant ambiguity for education service providers, particularly those centres teaching K-12 subjects (e.g., math, literature).
First, the Education Law 2019 and Decree 125/2024 lack an explicit definition of Other Continuing Education Centres. Interpreting relevant provisions of the Education Law 2019, it appears that Other Continuing Education Centres are centres providing:
Following the issuance of the Law on Electricity 2024, Vietnam's Government has swiftly replaced its initial framework for Direct Power Purchase Agreements (DPPAs) under Decree 80/2024 by issuing Decree 57/2025 on 3 March 2025. Coming into effect immediately, Decree 57/2025 repeals Decree 80/2024, which had only been active since 3 July 2024. Decree 57/2025 largely maintains the two DPPA models introduced by Decree 80/2024 (1) via private line (Private DPPA) and (2) via the national grid (Grid-Connected DPPA), but introduces important changes impacting eligibility, pricing, and contractual details. Key changes include:
Flexible customer eligibility - Decree 57/2025 links customer eligibility (for initial participation and ongoing qualification) to a minimum consumption threshold (Minimum Take Amount) defined in the Wholesale Electricity Market Operation Regulations issued by the Ministry of Industry and Trade (MOIT). Decree 80/2024 instead used a fixed threshold (average ≥200,000 kWh/month). Accordingly, eligibility for participating in either DPPA model now depends on potentially dynamic wholesale market rules rather than a static figure, requiring ongoing monitoring of MOIT's regulations.
Stricter customer eligibility – A Large Customer in a DPPA arrangement which has been implemented for 12 months must ensure that in a calendar year, it has purchased from EVN the Minimum Take Amount for the 12 month periods ending on 31 October of the previous calendar year. Under Decree 80/2024, there is no requirement that the Minimum Take Amount must be purchased from EVN. It is not clear if this requirement will apply to a Private DPPA under which the customer purchases directly from the RE Generator.
Article 9 of the Investment Law 2020 provides for three kinds of business for foreign investors:
market-access-prohibited business lines (ngành, nghề chưa được tiếp cận thị trường in Vietnamese) (Prohibited Businesses);
business lines with conditional market access (ngành, nghề tiếp cận thị trường có điều kiện in Vietnamese) (Conditional Businesses); and
business lines which are not Conditional Businesses and Prohibited Businesses and are subject to the same market access treatment as domestic investors (Unrestricted Businesses).
However, Decree 31/2021 introduces another category of business lines being "business lines without market access commitment" (ngành, nghề Việt Nam chưa cam kết về tiếp cận thị trường in Vietnamese) (Uncommitted Business). It is unclear what the relationship between the Uncommitted Business and the Conditional Business under the Investment Law 2020 is.
Under Article 24.2 of the Investment Law 2020, offshore investors who intend to acquire equity in Vietnam-based companies must meet the land regulations on “conditions for receiving land use right” (LUR). However, the land law does not specify any conditions applicable to the offshore investors given that they are not a regulated land user.
Article 28.1(d) of the Land Law 2024 and its guiding provision, Article 9.1 of Decree 102/2024 only permit foreign-invested entities (FIEs), which can be established by offshore investors, to receive a transfer of equity being value of land use right originating from land allocation with land use fee payment or land lease with one-time rental payment to the State. Article 9.1 of Decree 102/2024 suggests that "equity being value of land use right " (vốn đầu tư là giá trị quyền sử dụng đất) (LUR Equity) is the equity in a company's charter capital created by contributing land use rights.
These provisions seem vague and can be interpreted differently, leading to varying conclusions.
In light of our earlier analysis of Decree 135/2024, we have further observations regarding the Decree's lack of clarity. This post is written by Le Thanh Nhat.
Firstly, the Decree lacks a clear definition of “self-generation and self-consumption rooftop solar power” (Self-Consumption RSP). This is crucial as only surplus power from Self-Consumption RSP systems may be sold to EVN, Vietnam's national electricity provider. Unfortunately, Decree 135/2024 only offers the rather ambiguous definitions for “self-generation and self-consumption power” and “rooftop solar power” (which are arguably the two ‘components’ of Self-Consumption RSP) separately, without clarifying their integration.
A new Data Law, passed in late November 2024 and set to take effect on 1 July 2025, focuses primarily on establishing a national general database and data centre for state use. However, it also introduces rules on digital data (data in the rest of this article) that concerns the private sector, such as, data products and services. The Government is also drafting three draft decrees detailing key issues under the Data Law, including Data-Related Products & Services Draft Decree, Core & Important Data Draft Decree and a Master Draft Decree.
This blog will discuss several key points under the Data Law and related draft decrees. This post is written by Ha Thanh Phuc and Trinh Phuong Thao.
1) The police will review and supervise your data activities
The Ministry of Public Security (MPS) again is authorized to regulate all activities relating to data except for data under the Ministry of Defence. Accordingly, it seems that Vietnam considers data as security issue and violation of data activities could result in significant liabilities. This could raise significant compliance costs for businesses and companies in Vietnam if they want to be fully comply with unclear rules (see discussion below).
1) Conditional Business Lines
Amendments to the Investment Law 2020 in late 2024 now require businesses involved in (i) data intermediary products and services, (ii) data analysis and synthesis, or (iii) data platform services to meet certain conditions. The Data Law suggests that:
a. data platform services may be restricted to state enterprises and public providers, potentially excluding private companies; and
b. only providers of data analysis and synthesis services that potentially harm national defence, national security, social order, safety, social ethics, or public health, which have been detailed under the Data-Related Products & Services Draft Decree, will be subject to these conditions.
Under the Data-Related Products & Services Draft Decree, businesses in these sectors are subject to strict requirements. Notably, all such businesses must maintain an escrow of at least 5 billion VND at a Vietnamese commercial bank to cover compensation and expenses in the event their licenses are revoked.
In a criminal case involving a business, from time to time, the courts will need to decide on the civil liability of the criminal and other persons including those who are not aware of the crime relating to the case. For example, if A commits a fraud against B and uses the monies obtained from B to repay a debt between A and C who is not aware of A’s crime. In addition to deciding on whether A is guilty or not, the court will need to decide whether (1) requesting A to compensate B for the loss that B suffers or (2) requesting C to return the monies C receives from A to B (assuming that A is convicted). However, it appears that the court does not have a consistent approach. In this post, we discuss the approaches that the courts took in some significant criminal cases for the last decade.
Huyen Nhu Case – 2014
Huynh Thu Huyen Nhu was the head of a transaction office of Vietinbank (a large State-owned bank). Huyen Nhu has offered high interest rate (exceeding the interest rate cap provided by law) to various companies to convince them to deposit their monies with a branch of Vietinbank. After those companies made the deposit under instructions of Huyen Nhu, Huyen Nhu used fake documents and payment instruction to cause Vietinbank to transfer the deposit to Huyen Nhu’s designated accounts. Huyen Nhu used most of the amount obtained through her fraud to repay her debts to several individuals. The damages caused by Huyen Nhu is reported to be around VND 4000 billion (about US$ 200 million at such time), being largest bank fraud at the time.
In addition to convicting Huyen Nhu of the crime of committing fraud to appropriate properties (lừa đảo chiếm đoạt tài sản), the court also requested Huyen Nhu to compensate all the relevant companies for the losses that such companies suffer. The relevant companies took the view that they are not victim of Huyen Nhu’s fraudulent acts but Vietinbank is. Therefore, the relevant companies requested Vietinbank to repay them the deposits they made with Vietinbank. However, the court rejected such view and considered those companies to be victims of Huyen Nhu’s fraudulent acts. The court confiscated the amount of interests that Huyen Nhu paid her lenders but did not require these lenders to return the entire amount they received from Huyen Nhu.
On 22 October 2024, the Government of Vietnam issued Decree 135/2024 on mechanisms and policies incentivising the development of “self-generation and self-consumption rooftop solar power” (Self-Consumption RSP). Unfortunately, there is still a great deal of ambiguity in the provisions of Decree 135/2024 that might create unnecessary confusion in applying and administering the implementation of Decree 135/2024. Please see our discussion of a few ambiguous provisions of Decree 135/2024 below.
1) Potential risk from Decree 135/2024’s scope of application – Decree 135/2024 is said to only govern Self-Consumption RSP [systems] that are installed on the roof of construction works that were invested and constructed in strict compliance with law, including regulations on investment, construction, land, environment, safety, firefighting and fire prevention. As such, any noncompliance of the underlying building may cause the rooftop solar system to not be recognised as a Self-Consumption RSP system and therefore cannot enjoy the incentives policies under Decree 135/2024. It is unclear (i) whether mitigated noncompliance in the past (before the Self-Consumption RSP system is installed) would cause the building to be considered not “invested and constructed in strict compliance with law” and therefore prevents the installation of Self-Consumption RSP system on said building, and (i) whether noncompliance that arises after the Self-Consumption RSP system is installed and operated would affect the applicability of Decree 135/2024 to such system and what the outcome would be.