copyright ©2013– 2014 vci legal all right reserved. this presentation and its contents are...
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Copyright ©2013– 2014 VCI Legal All right reserved. This presentation and its contents are copyrighted under applicable Vietnamese and international laws. Contents of this Presentation, in whole or in part, could not be used without the authorization of the author in writing. Any unauthorized use is subject to be penalized under applicable laws and regulations
Local Insights Meet International Expertise
voted “Vietnam Corporate Law Firm of The Year” by
Tuan A. PHUNG Esq.Managing Partner |VCI LegalHon. General Consul | Finnish Consulate HCMC
DOING BUSINESS
WITH A SMILE
Investment & Opportunities In Vietnam
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voted “Vietnam Corporate Law Firm of The Year” by
Business Law Firm providing “In-house Counsel Service”, specialized legal services for business and some Key Practice Areas • Corporations, M&A & Securities• Investment and restructuring• Banking, Finance & Capital Markets• Insurance• Real Estate & Construction• Petroleum, Mining & Energy • Infrastructure, Transport & Logistics • Trade Policy & Competition• Tax & Transfer Pricing • Labor, HR Management & Compliance• Alternative Dispute Resolution: Mediation, Arbitration
VCI LEGAL INTRODUCTION
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LOCAL INSIGHTS MEET INTERNATIONAL EXPERTISE
A full service law firm with a seasoned team of multi-disciplinary professionals
in-depth understanding of the legal system, business environment, and cultural background in Vietnam.
Offices: Hanoi and Ho Chi Minh City Professional staff: 25 Languages: Vietnamese, English, ,
Japanese, French, Chinese, Korean
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VIETNAM CORPORATE LAW FIRM OF THE YEAR
Legal500, Chambers & Partners, IFLR 1000, Asialaw Profiles and Legalese’s Tax Director Handbook (global legal directories & ranking agencies) and international professional magazines list VCI Legal among the top law firms in Vietnam for: M&A, competition law, banking and corporate, insurance, taxation, intellectual property, investment,
Acquisition International Magazine: • Vietnam Corporate Law Firm of the Year 2012-2014, • M&A Vietnam Law Firm of the Year 2013, • Real Estate Law Firm of the year 2012-2013
ACQ Global Magazine:• Vietnam Banking & Finance Law Firm of the Year 2012-2013• Vietnam Capital Markets Law Firm of the Year 2012-2013• Vietnam Corporate Law Firm of the Year 2012-2013• Vietnam M&A Law Firm of the Year 2012-2013
Finance Monthly – Law Firm of the Year 2011-2013 Corporate LiveWire – M&A Vietnam Law Firm of the Year 2012-2013 Asialaw- Highly Recommended Firm for the Year 2014
INTERNATIONAL AWARDS
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SERVICES OVERVIEW Full-service business law firm: firm with
specialized business-oriented service packages: Finance, Legal & Stock Market Engineering
Service™ Investment Structuring & Placement® Legal, Compliance & Risk Management
Service®; Intellectual Properties Strategic Management
Service® IP Enforcement Service®
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SERVICES OVERVIEW | 1 Corporate, Finance, Tax and Litigation on the “In-
house Counsel Services”® platform• Legal and Financial Advisory Services• Project and Contract Negotiation• Drafting & Translation• Due Diligence• Registration procedures• State & Local Government Relations• Regulatory Compliance• In-house training & workshops• Project Planning and Management• Daily Operations
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WHAT SETS VCI LEGAL APART? A “Can Do” Attitude combining with a “Know How” Capacity True sense of “Lawyer for business” independent legal
professionals who were trained & practiced in international environment
Most key personnel are lawyers with in-house counsel experience and deep “local” business insights,
Not only legal practitioners but also business managers who are willing to bring “some skin in the game”;
Strong professional & cultural background; Committed to provide not only the best legal services but
also the most effective & practical business solutions; Team player and partnering with clients in resolving
business issues
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INDEX
1. Why Do Business in Vietnam ?2. Potential Opportunities3. Legal Framework for Business4. Barriers to Business | Emerging Economy5. Our Team of Experts
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COUNTRY OVERVIEW - 1
Population: 89.71 million (2013)
Median Age: 28.2 years (2012)
• Labor Force: 53.09 million (2013)
• Unemployment Rate: 2.37% (2013)
Global Competitiveness Index 2013-2014: Rank 70
GDP Growth: • 5.5% (forecast 2014)• 5.42%(2013)• 5.25% (2012)• 5.9% (2011)• 6.8% (2010)
GDP by sector (2013):• Agriculture: 18,4%• Industry: 38,3%• Services: 42.3%
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10 Source: CIA World Fact Book, Index
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COUNTRY OVERVIEW- 2
FDI: 21,6B in 2013 (↑ 55% compared to 2012)
Public Debt: • 49.6% of GDP (2013)
• 48,2% of GDP (2012)
• 48.3% of GDP (2011)
Inflation: • 5.6% (2013)
• 9,2% (2012)
• 23% (2011)
Export:
• USD 132.2B
• Growth of 15.4% in 2013 Import:
• USD 131.3B (2013)
• Growth of 15.4% in 2013
IMPORT EXPORT PARTNERS (2013)
Import Export
China (up 26.7 %) UE (↑ 18%)
South Korea (up 34.1%)
US (↑ 20.3)
Japan (down 0.18) Japan (↑ 3.8)11
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WHY VIETNAM ? - 1• Member of WTO since 2007
• Fast Growing Economy• FDI inflows forecast remains strong• Inflation is at moderate rate • Exchange rates are stable• Stock of reserve within the SBV has doubled in the
2 past years• Political stability• Country risk is at its lowest since the economic
crisis.
* Eurocham Whitebook 2014
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• Key partner country with ASEAN, Japan, Korea and Taiwan: transfer of high-tech skills and know-how.
• Privatization of SOES and liberalization of the banking sector: new entry points for foreign investors.
• Large, skilled and low-cost workforce
• Vietnam proximity to China and South East Asia: good base for foreign companies to export to the rest of Asia, and beyond.
• ASEAN coordinator for relations with the EU until 2015.
WHY VIETNAM ? - 2
BMI Vietnam Commercial Banking Report 2012
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WEF GLOBAL COMPETITIVENESS REPORT
INDEX PARAMETER 2012-2013 Ranking 2013-2014 Ranking
Burden of Government Regulations
112 106
Infrastructure 95 82
Higher education & training 96 95
Financial market development
88 93
Technology readiness 98 102
Trade barriers 128 104
Intellectual Property Protection
123 116
*Source: WEF Global Competitiveness Report 2013-2014; Rank out of 148 economies
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FDI 2013 IN FIGURES Vietnam attracted USD 21.6B FDI (increase of 54.5%).
It is the highest level since 2008
12 000 new FDI projects have been licensed
South Korea, Japan and Singapore are the main sources of FDI
Sectors of Investment:
• Manufacturing: USD 16.6B• Energy: USD 2B• Other industries: USD 3B
* General Statistic Office of Vietnam
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16
RECENT LANDMARK PROJECTS
Source: FIA
Electronic:• Samsung Electronics - opens a 2nd plant in Thai Nguyen Province - USD 2B-
full production to be reached in 2015 Manufacturing:
• Pagasus Company- Japanese Subsidiary- is opening a new Factory at Long Duc Industrial Park - USD 20 M
Real Estate:• Rose Rock Group and Vung Ro Petroleum.Co plan to create the “Vung Ro
Bay”, residential and hotel project in south central coast of Vietnam-USD 2.5B
• Asian Coast Development (ACDL)- Canadian company- opened “Ho Tram Strip”, the largest tourism and recreation complex of Vietnam in Bac Ria Province-4.2 B
Retail:• Aeon- Japanese company- Opened first Vietnamese mall in Tan Phu HCMC-
USD 100 M 16
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INFORMATION TECHNOLOGY
8.4% growth in 2013 and forecast of 15.5% growth in 2014 Report IDC Vietnam ICT 2014”:
• Homegrown Smartphone brands will be more competitive
• Mobile gaming to explode
• Vietnam desktop PCs continue to grow in 2014
• Reform 2G frequency for 3 G networks
• Telecommunication Companies will seek mutual partnership with OTTPs
• Local enterprise mobility partner ecosystem starting to form
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REAL ESTATE
Property prices have begun to firm up and such as commercial retail prices have begun to rise.
Strong demand for retail has kicked in Q3 and Q4 2013. Commercial office demand rise in Q3 and Q4 2013 Residential property began to thaw, especially social
housing Luxury sector is expected to thaw. Expected to benefit from VAMC, increase of ownership cap,
credit growth policies, inflation control and low interests* Colliers International “the Top 7 real Estate Trends”
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SECURITIES 34% jump of Vietnam’s stock exchange between Nov 2012
and April 2013 Increase of foreign investment cap in local companies VND has been stable for 3 years ( VND 21,000 for 1 USD) Inflation is decreasing and has not exceeded 25% In late 2014 or early 2015, Bill Stoops, (Dragon’s Chief
investment officer) believes Vietnam’s economy will turn a corner. When the stock market rises, he believes the skepticism about Vietnam’s markets will fade and investors will rush in. Those who invest before the rise will experience the greater benefit.
Pharmaceutical and consumer productsExport
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RETAIL Young population Consistent economic growth and rising level of disposable
income Favorable policy for retailer: Circular 8 provides an exception
to the ENT process, clearer licensing process, new export rights.
WFOE will be allowed to enter Vietnam retail market in 2015 Vietnam retail Market Forecast 2014: “Vietnam total retail
market was forecasted to see an annual growth rate of 23%” “Vietnam retail Market Outlook 2017”: retail sale of goods and
services will continue to grow at a double digit rate in coming future with food retailing to account for 2/3 of the market”.
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TRANSPORT, LOGISTICSAND INFRASTRUCTURE
Has been significantly expanded these past years 10% of GDP has been invested in transport,
telecommunications, energy, water and sanitation in recent years
Vietnam gives first priority to infrastructure in 2014 Budget allocated of USD 34 M From Jan 2014 WFOE are permitted to provide almost all type
of logistics services in Vietnam, including Storage and warehouse services and freight transport agency but excluded container handling services and road transport services.
WB reports: “ Efficient logistics: a key to Vietnam’s competitiveness”
Preferential policies for infrastructure development
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IMPORT/EXPORT Growth of 15.3% in 2013 surpassing the target of USD 126 B TPP agreement engaging 12 countries is being finalized FTA with UE expected to be signed in 2014 Export Strength in Agricultural products, leather and coffee Rebound of garment and textile shipment in 2013 HSBC: “we expect export to rise by 20% in 2014”
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ENERGY With 90 M inhabitants, Vietnam is in need of dependable
electricity supply and integrated energy solution. In 2006 Government approved a road map to restructure and
establish a competitive energy market National Power development Plan 2011-2020: energy security,
energy efficiency, power quality and establishing a competitive market
Opportunities:•Building of New Power Station: USD 83B budget allocated to
build 90 new coal fire plant by 2020.•Transmission and Distribution Grid Update: USD 730M has
been allocated from 2012 to 2020•Energy Efficiency & Smarter Grids: high levels of energy
wastage drives towards energy saving.
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BANKING S&P report:
• Expect banks to benefit from stable macroeconomic conditions in 2014
• Challenge of low asset quality, low profitability and weak capitalization
• Bank profit will remain low: ROA forecasted at 0.8-1%• Liquidity of VN banks is forecasted to remain stable in 2014
From Feb 2014: limit for foreign strategic investors in credit institution is increased to 20% instead of 15%. This cap may be lifted by the Prime Minister in special cases to help weak banks “restructure and ensure their safety”.
The door is now potentially open for foreign investor to be a strategic investor in more than 1 local credit institution.
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ENTRY METHODS AND LEGAL STRUCTURES
Direct Investment• Establish a representative office • Establish a branch in Vietnam• Establish a Wholly Foreign-owned enterprise (WFOE)• Establish a Joint venture with a local company (JV)• Investing pursuant to a contract: BCC, BO,BTO and BT• Investing in business development• Purchasing share or contribute to capital to participate in
the management of the company• M&A
Indirect Investment• Purchasing shares, bonds or other valuable papers• Investing through security investment funds• Investing through other intermediary financial institutions
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INVESTMENT SECTORS Prohibited sector include:
• Projects detrimental to national security• Projects which harm peoples’ health or destroy natural
resources Conditional sectors of investment include:• Banking and Finance• Public health• Real Estate• Mining
Sectors subjects to investment incentives include:• High technologies and Bio-technologies• Agriculture, forestry and Aquaculture• Infrastructure
Indirect Investment• Purchasing shares, bonds or other valuable papers• Investing through security investment funds• Investing through other intermediary financial
institutions
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COMPANY FORMATION Formation is relatively complex in Vietnam Different procedures for:
• Domestic investment project below VND 15B• Domestic investment project between VND 15 B and VND 300 B• Foreign invested Project of less than VND 300B• Foreign invested Projects of more than VND 300B• Foreign and Domestic projects in the list of conditional sectors
Registration dossier may include:• Legal Status of investor• Objectives, business plan, locations of the project• Invested capital and implementation schedule• Land Use rights• Proposal for investment incentive ( if any)• Report on investor financial ability• JV contract or BCC and Charter of enterprise ( if any)
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LAND Land owned by the People LUR entitles the holder to exclusively use the land LUR Acquisition:
•Lease from State or permitted lessors
•As capital contribution from VN party to a JV Land Lease duration: 50-70 yearsMortgage and sub-lease of land Impossible but possible to
Mortgage and sub-lease LUR
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31
TAXES• Corporate Income Tax
(CIT)• Standard rate 22% • Tax holiday - CIT exemption up to 4
years from the date of issuance of investment certificate followed by a period of 50% Taxes.
• 10% and 20% tax rates for investments in encouraged sectors
• Import and export duties• Investors meeting certain
conditions are entitled to incentives on import duties for initial fixed assets
• Land rental, land usage fees• Applicable to investors with
investments in an encouraged sector or region
• Exemption or reduction from land taxes, land use fees and water surface rentals.
• Allocation of land with or without land use fees
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CAPITAL MARKETS & SECURITIES
FIE may sell shares to either foreign or local citizen or entitiesFIE sell all its shares to foreigners: Amendment of ICFIE sells all its shares to local: IC changes into Enterprise
Registration Certificate (ERC) 2 stock exchanges: HSX & HNXProposal to merge into a unique Vietnam Stock ExchangeSecurities law 2006:
•US$ 480 000 to be listed •Minimum of 100 investors
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INTELLECTUAL PROPERTY IPR system is divided into 3 areas:
• Copyright and related rights- administered by the Copyright Office of Vietnam
• Industrial Property Rights: administered by the NOIP• Right to plant varieties: administered by the Plant Variety
protection Office Administrative action: fines, seizure and destruction of
counterfeit goods, business license suspension and re-exportation of infringed imported, etc
Civil Action: Preliminary injunctions and compensation for damage are available through the civil courts
Criminal prosecution: government authorities or right owners can bring prosecutions: fines, imprisonment and even death penalty in serous, organized or business-related cases.
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RECENT FAVORABLE POLICIES FOR FDI-1
Foreign ownership in Vietnamese listed companies is limited to 49% instead of 30%.
Foreign ownerships in local banks is loosened:
• Individual investor: 5% cap
• Organizations: 15% cap
• Strategic investors: 20% cap
• Related parties: 20% cap
• Aggregate foreign ownership applicable to commercial banks: 30%
• Aggregate foreign ownership applicable to finance and financial leasing companies: 49%
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RECENT FAVORABLE POLICIES FOR FDI-2
Equitization of SOE (573 SOE by 2015):
• Foreign investors are eligible to buy a limited amount of share in an SOE
• Share acquistion are limited to 3 strategic investors
• Strategic investors must hold their shareholding for a minimum of 5 years
Establishment of VAMC in July 2013 to resolve USD 470 M of bad debt
Tax allowances:
• CIT reduction from 25 to 22% from Jan 2014
• 20% reduction from Jan 201635
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TRADE AGREEMENTSWTO Vietnam is the 150th
member of the WTO as of January 2007
Market access opened for WTO members subject to WTO market opening schedule (3-7 years)
AFTA, CEPT: reduction of tariffs between ASEAN countries of 0-5%
APEC: member of the Asia Pacific Economic Co-operation Forum
Bilateral Trade Agreement 2006 (“BTA”) : USA – Vietnam
Economic Partnership Agreement 2008: Japan -Vietnam
Bilateral Investment Treaty 2004 (“BIT”): Japan - Vietnam
Partnership and Co-operation Agreement 2012(“PCA”): EU -Vietnam
Early Harvest Agreement 2004 : EU – Vietnam
TPP Negotiation launched in 2010: Regional free trade agreement.
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KEY TRADE REGULATIONSVarious regulations:
WTO commitments 2007: Market opening and equal treatment between foreign and domestic investors.
Bilateral / Multinational Trade Agreements
Local regulations for FDI firms, commercial laws, etc.,
foreign traders sell through local agents (importer, distributor)
Representative Office + Local Agents (invoicing & logistics)
Vietnam encourages the import of • hi-tech products and
items that Vietnam does not produce
• input materials for manufacturing
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39
Bank’s bad depts:
• Non performing loans
• lack of capital and technology to sustain high credit growth and Opaque financial accounts of many banks
Weak Infrastructures:
• Inadequate roads, railways and ports to cope with the markets economic growth and the interaction with the world.
Corruption:
• According to Transparency International's 2013 Corruption Perceptions Index, Vietnam ranks 116 out of 177countries.
Source: BMI Report Q2 2012
HOLD BACKS
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WTO COMMITMENTS & IMPLEMENTATIONS
Implementation of Vietnam’s WTO commitments delayed due to administrative and procedural obstacles .
Concerns have been raised during the WTO trade policy review in 2013, including:• Lack of transparency of the regulatory and institutional
framework• Tariff and non-tariff measures• Technical standards and sanitary and phytosanitary
measures• Number of SOEs
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LEGAL HOLD BACKS
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Intellectual Property Rights (“IPR”)• Local IPR regulations are largely standardized with international
norms• Counterfeit, copycats, IPR infringements still common• Grassroots enforcement is not yet efficient and is very time
consuming; • Inconsistent decisions on IPR infringements by Vietnam courts• Low penalties for IPR infringement• Lack of transparency: no accurate and complete records of all
administrative fines, product confiscation or destruction and other administrative sanctions
• Unclear provisions regarding the agency responsibility for handling IPR violation
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LEGAL HOLD BACKS-1
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M&A & Foreign Indirect Investment (“FII”)• Foreign M&A often held up, delayed or blocked due to
unclear rules and regulations• Certain limited or conditional sectors delay the whole
application; • Complex licensing procedure• Discrepancies in transfer price interpretation • Unclear distinction between capital assignment and
security transfer• Slow decision of Vietnam competition Administration
Department
Immigration Law
• Restrict foreign employment in Vietnam• More complex VISA and WP procedures
Copyright ©2013– 2014 VCI Legal All right reserved. This presentation and its contents are copyrighted under applicable Vietnamese and international laws. Contents of this Presentation, in whole or in part, could not be used without the authorization of the author in writing. Any unauthorized use is subject to be penalized under applicable laws and regulations
Local Insights Meet International Expertise
voted “Vietnam Corporate Law Firm of The Year” by
MANAGEMENT TEAM
Tuan A. Phung, Esq. Managing Partner | Corporate & Legal
Le Trong Nhi Managing Director | Banking & Capital Markets
Kent Wong, Esq. Partner | Head of Banking & Capital Markets
Copyright ©2013– 2014 VCI Legal All right reserved. This presentation and its contents are copyrighted under applicable Vietnamese and international laws. Contents of this Presentation, in whole or in part, could not be used without the authorization of the author in writing. Any unauthorized use is subject to be penalized under applicable laws and regulations
Local Insights Meet International Expertise
voted “Vietnam Corporate Law Firm of The Year” by
MANAGEMENT TEAM
Thanh Q. Duong, Esq. Managing Counsel | DRP Head | Hanoi
Son Nguyen, Esq.Director| Banking & Corporate
Thang Dang, Esq. Of Counsel | Banking & Corporate
LOCAL INSIGHTS MEET INTERNATIONAL EXPERTISES
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BANKS & FINANCIAL INSTITUTIONS
LOCAL INSIGHTS MEET INTERNATIONAL EXPERTISES
The logo and trademarks are belong to our clients and its legitimate owners, our listing them here is for information purpose only. These show the our lawyer’s experience in working with these companies and yet provide no endorsement or implication on VCI Legal service. While VCI Legal is proud to report these reputable companies in its clientele, all goodwill associated with these logos and devices solely belong to their lawful owners
MINING & ENERGY
LOCAL INSIGHTS MEET INTERNATIONAL EXPERTISES
The logo and trademarks are belong to our clients and its legitimate owners, our listing them here is for information purpose only. These show the our lawyer’s experience in working with these companies and yet provide no endorsement or implication on VCI Legal service. While VCI Legal is proud to report these reputable companies in its clientele, all goodwill associated with these logos and devices solely belong to their lawful owners
TECHNOLOGY & HEAVY INDUSTRY
LOCAL INSIGHTS MEET INTERNATIONAL EXPERTISES
The logo and trademarks are belong to our clients and its legitimate owners, our listing them here is for information purpose only. These show the our lawyer’s experience in working with these companies and yet provide no endorsement or implication on VCI Legal service. While VCI Legal is proud to report these reputable companies in its clientele, all goodwill associated with these logos and devices solely belong to their lawful owners
REAL ESTATE & CONSTRUCTION
LOCAL INSIGHTS MEET INTERNATIONAL EXPERTISES
The logo and trademarks are belong to our clients and its legitimate owners, our listing them here is for information purpose only. These show the our lawyer’s experience in working with these companies and yet provide no endorsement or implication on VCI Legal service. While VCI Legal is proud to report these reputable companies in its clientele, all goodwill associated with these logos and devices solely belong to their lawful owners
FMCG & LOGISTICS
LOCAL INSIGHTS MEET INTERNATIONAL EXPERTISES
The logo and trademarks are belong to our clients and its legitimate owners, our listing them here is for information purpose only. These show the our lawyer’s experience in working with these companies and yet provide no endorsement or implication on VCI Legal service. While VCI Legal is proud to report these reputable companies in its clientele, all goodwill associated with these logos and devices solely belong to their lawful owners
HEALTHCARE, NUTRITION, GOVERNMENT & NGOs
LOCAL INSIGHTS MEET INTERNATIONAL EXPERTISES
The logo and trademarks are belong to our clients and its legitimate owners, our listing them here is for information purpose only. These show the our lawyer’s experience in working with these companies and yet provide no endorsement or implication on VCI Legal service. While VCI Legal is proud to report these reputable companies in its clientele, all goodwill associated with these logos and devices solely belong to their lawful owners
FRANCHISING, IPR & LICENSING
Copyright ©2013– 2014 VCI Legal All right reserved. This presentation and its contents are copyrighted under applicable Vietnamese and international laws. Contents of this Presentation, in whole or in part, could not be used without the authorization of the author in writing. Any unauthorized use is subject to be penalized under applicable laws and regulations
Local Insights Meet International Expertise
voted “Vietnam Corporate Law Firm of The Year” by
MORE QUESTIONS?
Tuan A. PHUNG, Esq. Managing PartnerWebsite: www.vci-legal.com
Email: [email protected]: (84) 908 168 275
Tel.: (84) 38 8272 029 Fax: (84) 38 8 234 43
Ho Chi Minh City:Suite 501, 5/F, Sailing Tower111A Pasteur Street District 1, Ho Chi Minh City, Vietnam
HanoiSuite 501, North Asia Tower9 Dao Duy Anh StreetDong Da District, Hanoi, Vietnam
Copyright ©2013– 2014 VCI Legal All right reserved. This presentation and its contents are copyrighted under applicable Vietnamese and international laws. Contents of this Presentation, in whole or in part, could not be used without the authorization of the author in writing. Any unauthorized use is subject to be penalized under applicable laws and regulations
Local Insights Meet International Expertise
voted “Vietnam Corporate Law Firm of The Year” by