To realize the potential of offshore wind development in Vietnam, the National Assembly of Vietnam will likely need to issue a new law which provides for a more comprehensive and consistent legal framework supporting an offshore wind project. This is because (1) the existing legal framework is not adequate for an offshore wind development, and (2) the issues under the existing legal framework need to be addressed by the National Assembly being the highest law-making authority in Vietnam. In particular,

· The existing legal framework does not confer any property right relating the sea area required for an offshore wind development. Decree 11/2021 deals with the allocation of sea areas to investors to implement offshore investment projects including offshore wind development. However, under Decree 11/2021, the investor is not allowed to transfer the allocated sea area, and does not have exclusive right to use the sea area. In other words, the Government may allocate the same sea area to other investors to develop other projects as long as such projects do not “conflict” with the offshore wind projects. The allocation of sea area is made via an administrative decision which could technically be revoked by the Government.

· Investors will likely be extremely reluctant to invest significant sum of money in a sea area which they cannot transfer, mortgage, or prevent others from using. To address this issue, the National Assembly will need to issue a law establishing property right over sea area granted to investors in an offshore wind development. The new law could follow the provisions of Land Law which confer “land use right” to investors of onshore investment projects. Under the Land Law, investors of onshore investor projects could lease land from the relevant provincial People’s Committee. The investors will then have land use right over the relevant land area which, in many cases, can be transferred or mortgaged.

· The existing legal framework does not work well in an area which does not belong to any specific province. Vietnam is divided into 63 provinces each of which has its administrative boundaries. However, while there are clear land boundaries between provinces in Vietnam, sea boundaries between provinces have not been clearly delineated. In addition, sea area which is beyond six nautical miles from the shoreline or sea area in the exclusive economic zone of Vietnam do not belong to any specific province.

· Most law in Vietnam are implemented and enforced by provincial authorities. Most licenses and permits in Vietnam are issued by provincial authorities. For example, investment registration certificates, fire fighting permit, or construction permits are issued by provincial authorities. Accordingly, if an offshore wind development does not fall into the administrative area of a province, then it may be difficult to know exactly which authorities have the “jurisdiction” over an offshore wind development. While in some cases, the central authority can step in, the National Assembly should have a new law to establish a clear coordination between several authorities for an offshore wind development. The new law could follow the Law on Oil and Gas which establishes a legal framework on offshore oil and gas development.

This post is written by Nguyen Quang Vu.

Vietnam Business Law