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Background In a high-value cross-border financing transaction, a foreign lender (the “Lender”), a foreign arranger (the “Arranger”), and a Vietnamese real estate developer (the “Borrower”) entered into a facility agreement (the “Facility Agreement”) under which the Lender agreed to extend a loan of up to USD 400 million. As consideration, the Borrower undertook to pay a total of USD 20 million in front-end and arrangement fees (the “Fees”). Each party signed a counterpart and exchanged scanned copies via email, but the Borrower never provided a wet-ink original. The Facility Agreement is governed by English law and includes a dispute resolution clause referring disputes to the Singapore International Arbitration Centre (SIAC). Separately, the Lender entered into guarantee agreements (the “Guarantee Agreements”) with the Borrower’s subsidiaries and major shareholder (the “Guarantors”), under which the Guarantors irrevocably and unconditionally guaranteed the Borrower’s obligations. These agreements are governed by Vietnamese law and similarly contain SIAC arbitration clauses. Following default by the Borrower and Guarantors, the Lender and Arranger initiated arbitration proceedings at SIAC and secured a favorable award (the “Award”), ordering the Borrower and Guarantors to pay the Fees jointly and severally. The Lender and Arranger applied for recognition and enforcement of the Award before the Hanoi People’s Court (the “Hanoi Court”). The Hanoi Court partially recognized the Award - enforcing it against the Borrower - but declined to recognize it against the Guarantors, citing (i) alleged deficiencies in the service of arbitration documents and (ii) references to real estate within the Guarantee Agreements. The decision was subsequently appealed by the Lender and the Borrower to the High People’s Court in Hanoi (the “High Court”). The appeal judge panel includes Mr. Dieu Van Hang, Mr. Bui Anh Thang, and Mr. Nguyen Phan Nam, of which Mr. Dieu Van Hang is the presiding judge of the panel. Legal Issues Raised The proceedings before the Vietnamese courts gave rise to two core legal questions: Is the Facility Agreement, executed in counterparts and exchanged via email - absent an original wet-ink signature - legally valid, binding, and enforceable? Whether references to real estate in the Guarantee Agreements trigger notarization or registration requirements under Vietnamese law - and if unmet, whether this affects the enforceability or arbitrability of related disputes? The High Court’s Reasoning and Decision On appeal, both the High Court and the High People’s Procuracy invoked Article 3.8 of Decree No. 30/2020/ND-CP, which defines an “original document” (bản gốc) as either a hard copy bearing a wet-ink signature or a digitally signed electronic document. The court and procuracy reasoned that, since the Facility Agreement was executed only through scanned copies exchanged via email and there was no evidence that the Borrower had signed a wet-ink original, the Facility Agreement lacked legal effect under Article 400.4 of the 2015 Civil Code. Consequently, the arbitration clause in Article 18 of the Facility Agreement was also deemed legally ineffective. With respect to the Guarantee Agreements, the High Court noted that there are provisions which referenced real estate assets. As the agreements were neither notarized nor registered as secured transactions, the Court found them to be in violation of Vietnamese legal requirements. Although the Court did not elaborate in detail on the consequences of this non-compliance, it appeared to imply - by citing Article 5.2 of the 1958 New York Convention and Articles 459.2(a) and 459.2(b) of the 2015 Civil Procedure Code - that disputes involving real estate fall under the exclusive jurisdiction of Vietnamese courts and are therefore non-arbitrable under domestic law. Furthermore, the lack of notarization and registration was deemed to contravene the fundamental principles of Vietnamese law. For these reasons, the High Court upheld the Borrower’s appeal and dismissed those of the Lender and Arranger, thereby declining to recognize and enforce the Award in its entirety. Commentary and Concerns The High Court’s ruling presents a series of jurisprudential and procedural concerns that merit close examination: Inappropriate Application of Governing Law: Notwithstanding the Facility Agreement’s express designation of English law as the governing legal framework, the Court proceeded to assess its validity under Vietnamese domestic law without articulating a principled justification for doing so. This departure from the parties’ contractual choice raises substantive concerns regarding the recognition of party autonomy in cross-border commercial transactions - a principle widely upheld in both international private law and Vietnamese conflict-of-law rules. Questionable Interpretation of Decree 30/2020/ND-CP: The invocation of the High Court and the High People’s Procuracy of Decree No. 30/2020/ND-CP as grounds to invalidate the Facility Agreement appears both substantively and procedurally flawed. Pursuant to Articles 1 and 2, the decree regulates document management practices applicable to state administrative bodies, political, and social organizations, and state-owned entities. It does not purport to apply to private commercial contracts between independent parties. Furthermore, the Borrower executed the agreement on 4 March 2020, one day prior to the decree’s entry into force on 5 March 2020. The application of the decree in this context appears legally unfounded. Departure from International Arbitration Norms: The validity of the arbitration agreement should have been assessed under Singapore law, which governs the arbitration proceedings. The Court’s reliance on Vietnamese law to invalidate the arbitration clause violates the 1994 Singapore International Arbitration Act, the 1958 New York Convention, and the 2010 Vietnamese Law on Commercial Arbitration. The decision disregards established principles such as the separability of arbitration clauses, the limited scope of judicial review on substantive grounds, and the recognition of arbitration agreements formed through digital means. Lack of Statutory Basis for Formality Requirements: The ruling failed to identify any statutory provision requiring notarization or registration of the Guarantee Agreements as a condition for their enforceability or arbitrability. This omission raises serious doubts about the legality of the High Court’s refusal to enforce the arbitral award.Ambiguous Analysis of Arbitrability: The Court’s conclusion that the underlying dispute is non-arbitrable due to the references to real estate lacks persuasive legal support. A more rigorous analysis would have been required to establish that the core dispute falls squarely within the narrow category of matters reserved exclusively to judicial resolution under Vietnamese law. Key Takeaways Under Vietnamese law, electronically executed contracts - especially those exchanged via email without a corresponding wet-ink original - may face enforceability challenges, depending on judicial interpretations of formal validity requirements. Additionally, where guarantees reference real estate and are subject to Vietnamese law, questions may arise concerning notarization, registration, and competent jurisdiction. These factors may affect not only the legal validity of the guarantee itself but also the arbitrability of any associated disputes. Conclusion The High Court’s reasoning reflects a notably restrictive interpretation of contractual enforceability and international arbitration frameworks. Beyond unsettling legal certainty, this ruling risks undermining Vietnam’s attractiveness as an investment destination, sowing doubt among foreign investors and dispute resolution practitioners alike. It highlights the urgent need for a more consistent, predictable judicial approach to applying international legal instruments. Although the High Court ceased operations on 1 July 2025, the adverse precedential impact of its decision may persist well beyond its institutional lifespan.

Vietnam’s National Assembly has recently passed the Law on Personal Data Protection (“LPDP”) with overwhelming support. This landmark legislation, comprising 39 articles, will take effect on January 1, 2026, and will supplement and supersede the existing Decree No. 13/2023/ND-CP on personal data protection (“Decree 13”). Comprehensive Scope The LPDP introduces a framework that is more detailed than that of Decree 13 to govern the collection, processing, storage, transfer, disclosure, and deletion of personal data. It substantially clarifies and defines the roles and responsibilities of data controllers, processors, third parties, and enforcement authorities, as well as implementing much needed exceptions. The LPDP applies to: Vietnamese individuals and entities; foreign individuals and entities operating in Vietnam; and foreign entities processing personal data of Vietnamese citizens or individuals of Vietnamese origin residing in Vietnam with valid identification. The LPDP also simplifies and updates the definition of personal data, with further classification and guidance to be issued by the Government. Introduction of Specific Penalties The LPDP introduces significant enforcement mechanisms, including both administrative fines and criminal liability, depending on the severity of the violation. Entities must also compensate affected individuals for any damage resulting from their violations of the LPDP. For entities, the maximum fines for administrative violations include up to ten times the revenue from the sale of personal data, 5% of the previous year's revenue for cross-border data transfer violations, and up to 3 billion VND for other violations. For individuals, the maximum fines are half of those applicable to organizations. The Government will issue guidance on how revenue from violations is calculated. Similarities & Differences One of the most significant changes in the LPDP is the inclusion of exceptions to the previously absolute rights of data subject. Under the LPDP, several exceptions to the requirements to obtain consent for data processing are added and several others are clarified. The LPDP applies a more balanced approach, requiring that individuals do not obstruct or hinder the lawful rights and obligations of personal data controllers and/or processors when exercising their rights, nor infringe upon the legitimate rights and interests of organizations or other individuals. These clarifications help prevent the weaponization of data privacy rights against data controllers and/or processors and create a data processing environment that is more conducive to doing business. That said, the LPDP retains key compliance obligations from Decree 13, particularly regarding data processing, cross-border data transfers, and appointment of data protection department and personnel: Impact Assessments (“DPIA”) Under the LPDP, both Data Processing Impact Assessments (“DPIAs”) and Outbound Transfer Impact Assessments (“OTIAs”) remain mandatory. Data controllers and processors must prepare and retain DPIA reports within 60 days of commencing any personal data processing, while entities transferring personal data abroad must submit OTIA reports within 60 days of the first transfer. Both assessments must be updated every six months or immediately upon certain changes in business operations. The Government may evaluate the reports and request supplementation. However, the LPDP does outline some limited exemptions to the OTIA requirement, including transfers by authorized state agencies, use of cloud services for employee data, and self-transfers by data subjects. Appointment of data protection department and personnel Entities are responsible for appointing qualified personnel or departments to oversee personal data protection. However, under the LPDP, it is clear that entities may hire external individuals or entities to provide these services. Details of the qualifications and roles of the data protection department and personnel will be further specified by the Government. Additionally, in comparison to previous drafts, the LPDP no longer details administrative procedures, processes, or documentation requirements. Instead, it delegates authority to the Government, which is expected to issue detailed compliance regulations through future decrees and circulars. Businesses should prepare for additional guidance and operational requirements in the near term. Activity-Specific Rules The LPDP introduces detailed data protection obligations tailored to processing related to specific activities, including employment, healthcare and insurance, finance, advertising, and social media. These provisions go beyond the scope of Decree 13 and impose targeted compliance requirements on organizations operating in these domains or processing personal data related to these purposes. The key areas are as follows: 1.Employment & Recruitment For recruitment, organizations and individuals are permitted to collect only personal data that is necessary for recruitment purposes and must use such data in accordance with applicable laws. If a candidate is not hired, the collected data must be deleted or destroyed, unless otherwise agreed with the data subject. The LPDP states that employers must manage employee personal data in compliance with applicable laws, specifically the Labor Code, retain it only for the lawful or agreed duration, and delete it upon contract termination unless otherwise agreed or required by law. 2, Health and insurance Personal data may only be collected and processed with the explicit consent of the data subject. Healthcare organizations are prohibited from disclosing personal data to third parties without written consent. In the insurance sector, reinsurance contracts must clearly specify whether and how personal data will be transferred to external partners. 3. Finance Financial, banking, and credit information organizations must comply with regulations on sensitive data protection, obtain consent before using personal credit information for scoring, and notify data subjects in case of data breaches. Additionally, they must implement measures to prevent unauthorized access and ensure data security during collection, processing, and provision of credit information. 4. Advertisement Advertising service providers can only use personal data transferred by data controllers, data controllers / processors, or collected through their own business activities. They must obtain customer consent for data processing, provide clear mechanisms for individuals to opt out of receiving advertising communications, and comply with applicable laws on spam prevention. Notably, the LPDP prohibits the outsourcing of advertising services that involve the use of personal data. Providers are also responsible for demonstrating compliance with all data protection obligations. Additionally, for behavioral or targeted advertising, additional safeguards apply. 5. Social media Social media and online communication service providers must clearly inform users about the personal data collected. Providers must not collect unauthorized data or require images or videos of identification documents for account verification. The LPDP extends restrictions beyond personal data and explicitly prohibits providers from eavesdropping on calls and messages without consent. They must also publish privacy policies, offer mechanisms for users to access, edit, and delete data, and protect Vietnamese citizens' data during cross-border transfers. PREPARING FOR THE NEW LAW ON PERSONAL DATA PROTECTION The LPDP comes into effect on January 1st, 2026. Especially in light of the substantial penalties for non-compliance set out in the LPDP, businesses should begin taking proactive steps as soon as possible. These include: Preparing or reviewing and updating internal data protection policies, procedures, and contracts to align with new legal requirements. Conducting data mapping and risk assessments to identify personal data flows inside your organization and to evaluate potential vulnerabilities. Training employees on their responsibilities under the LPDP, including data subject rights and handling procedures. Staying informed about upcoming Government decrees/circulars that will provide additional, detailed guidance on compliance obligations. We are actively monitoring the release of implementation guidelines and will keep you updated as new information becomes available. In the meantime, VILAF is ready to support your transition and help you navigate the LPDP with tailored services. For further details, please contact Mr. Ngo Thanh Tung at [email protected].

By Senior Partner Duyen Ha Vo and Associate Chau Nguyen, VILAF In June 2025, Vietnam reached a major milestone in its digital transformation with the enactment of its first-ever law on digital assets, including tokenized assets, together with a suit of other related legal reforms to drive digital innovation and attract high-tech investment. These include the Law on Digital Technology Industry, the Amendment Law amending eight existing investment-related laws, and a new Law on Corporate Income Tax (collectively, the “New Laws”). The adoption of the New Laws is a key step in realizing Vietnam’s national digital strategy, as set forth in Resolution 57-NQ/TW of the Politburo and Resolution 71/NQ-CP of the Government. These Resolutions set ambitious targets for 2030, including: ranking among the top three in Southeast Asia for digital competitiveness and AI research and development (“R&D”), expanding 5G coverage to 99% of the population, and ensuring the digital economy accounts for at least 30% of national GDP. This article highlights key developments under the New Laws, with a focus on the establishment of digital technology parks, new investment incentives for digital technology and semiconductor projects (including supporting industries), and the legal framework for recognition of digital assets for the first time in Vietnam. KEY TAKEAWAYS A new chapter for innovation zones: “Digital Technology Park” (“DTP”) takes the idea of the traditional “information technology (“IT”) park” to the next level, offering more dynamic and supportive environments where innovation, digital technologies, and related industries can thrive. Compelling tax incentives and streamlined customs clearance for tech investments: Projects in cutting-edge sectors such as semiconductors, AI data centers, and key digital technology products may enjoy generous tax incentives, including corporate income tax (“CIT”) rates as low as 5% for qualifying large-scale projects. These sectors, regardless of scale, may also benefit from priority customs procedures, offering faster processing and simplified customs documentation. Projects in DTPs and other digital technology projects not eligible for the above CIT incentives in terms of sector or scale may enjoy a CIT rate of 10% or 17%. Accelerated project implementation: A wide range of strategic technology sectors and strategic technology products - including digital infrastructure development, AI assistants, AI analytics tools, industry-specific AI applications, cloud computing, large-scale data centers, and digital assets - has been added to the scope of projects eligible for the “special investment procedures.” These procedures allow investors to begin construction 9 - 12 months earlier by bypassing numerous standard licensing and approval requirements. AI and digital assets taking center stage: For the first time, AI and digital assets (including tokenized assets) are formally recognized. The New Laws establish a foundation for forward-looking sub-law regulations, paving the way for the development of regulated markets for digital assets and AI-driven services. 1.Digital Technology Parks (DTPs) Overview of DTPs While the concept is not entirely new, the New Laws significantly expand on the previous framework of “IT parks” by introducing the broader category of digital technology parks - DTPs.  DTPs encompass a wider range of activities, such as the production of new digital technology products and services, and the provision of infrastructure and non-digital-technology services to businesses operating within the DTP. A DTP is defined as a functional area dedicated to R&D, support, training, and innovation promotion, incubation of digital technologies and digital enterprises, production and trading of digital technology products and services, and provision of infrastructure and services to organizations, enterprises, and individuals operating in the DPT. Under the repealed regulations, “IT parks” had a narrower scope, focused mainly on R&D, training, and production of IT products and services. Existing IT parks will automatically be recognized as DTPs under the New Laws. Recognition of DTP’s “digital infrastructure” The Law on Digital Technology Industry formally acknowledges "digital infrastructure" as a component of DTPs' infrastructure facilities. This encompasses the telecommunications network, the Internet, information systems, data centers, as well as surveillance and information security systems. Potential for conversion of existing functional zone to DTP The relevant provincial People’s Committee may also approve the conversion of an existing digital technology-oriented functional zone into a DTP, provided it meets statutory criteria to be stipulated by the Government. Investment Models for DTPs The New Laws explicitly allow for three types of DTP investment models: State-invested, privately invested, and public-private partnership (PPP). 2. Key Tax Incentives The New Laws introduce robust tax incentives for projects in the digital and semiconductor sectors. Preferential Treatment Exemption of import duties on goods imported to form fixed assets and a preferential CIT rate of 17% for 10 years, with up to 2 years of CIT exemption followed by up to 4 years of 50% CIT reduction, would apply to the production of digital technology products other than key digital technology products. Especially Preferential Treatment Exemption of import duties on goods imported to form fixed assets and a preferential 10% CIT rate for 15 years, with up to 4 years of CIT exemption, followed by up to 9 years of 50% CIT reduction would apply to each of the following new investments: Investments within DTPs; Production of key digital technology products and services (those identified as “key” to be stipulated by sub-law regulations); R&D, design, production, packaging, and testing of semiconductor chip products; Establishment of AI data centers; Software development; and Production of supporting industrial products for the electronics and IT sector, including semiconductor design and manufacturing (per a priority list to be issued by the Government). Special Investment Incentive Mechanism Subject to the Prime Minister’s approval, the preferential CIT rate may be reduced to 5% for up to 22.5 years, and may be extended for an additional period of up to 15 years, with up to 6 years of CIT exemption followed by up to 13.5 years of 50% CIT reduction for the following projects, provided that they register a total investment capital of at least VND 6,000 billion, to be fully disbursed within five years from the date of issuance of the Investment registration certificate or in-principle investment approval: Production of key digital technology products: R&D, design, production, packaging, and testing of semiconductor chip products; and Establishment of AI data centers. For reference, where a preferential CIT rate is not applicable, the current standard CIT rate in Vietnam is 20% of the taxable profits. 3. Eligibility for the Special Investment Procedures The New Laws expand the scope of investment projects eligible for the “special investment procedures” introduced under the amended Investment Law, which came into effect earlier this year, to add: Development of infrastructure for large-scale data centers, cloud computing, and 5G or more advanced mobile networks; Other forms of digital infrastructure in strategic technology sectors, as designated by the Prime Minister; and Investment projects in strategic technology sectors and the production of strategic technology products, also as determined by the Prime Minister. The lists of strategic technology sectors and strategic technology products have been provided in Decision No. 1131/QĐ-TTg of the Prime Minister, which was also issued in June 2025.  The lists include, among others: AI assistants, AI analytical tools, industry-specific AI applications, cloud computing, large-scale data centers, digital assets, and blockchain infrastructure. The term “special investment procedures” refers to a fast-track licensing regime that allows eligible projects located within industrial parks, export processing zones, high-tech parks, DTPs, or free economic zones, to bypass several standard approvals under Vietnamese law.  This streamlined process enables investors to commence construction approximately 9 to 12 months earlier than under the conventional process. Specifically, eligible projects are exempt from the following approvals and permits: investment in-principal approval; technology appraisal; appraisal of environmental impact assessment reports; detailed master planning approval; construction-related permits; and fire safety permits. 4. Priority Customs Procedures Projects in the following sectors may benefit from priority customs procedures pursuant to the customs regulations: Production of key digital technology products; R&D, design, production, packaging, and testing of semiconductor chip products; Establishment of AI data centers; and Production of inputs directly supplied to projects involving the production, packaging, and testing of semiconductor chip products. Under the customs regulations, such priority rights may include exemptions from document checks and physical inspections, customs clearance based on provisional declarations (subject to subsequent submission of complete documentation), and priority processing in tax-related procedures. 5. Artificial Intelligence (AI) For the first time, AI is legally recognized and regulated under a specialized law. The followings are noteworthy provisions: High-risk or broad-impact AI systems: The Government is assigned to issue regulations for systems classified as high-risk or broad-impact, by sector. Transparency obligation: AI systems interacting directly with humans must disclose that the user is engaging with AI, unless it is already obvious. AI-generated products: Products listed under the forthcoming “List of Digital Technology Products Created by AI” must carry a visible identifier. This list will be issued by the Ministry of Science and Technology. 6. Digital Assets The Law on Digital Technology Industry is Vietnam’s first legislative instrument to formally recognize and regulate digital assets. These are defined as assets in digital form created, issued, stored, transferred, and authenticated via digital technology. This Law defines the following three categories of digital assets: Virtual assets: digital assets used for purpose of exchange or investment, excluding securities, digital forms of fiat money, and financial assets. Tokenized assets: digital asset that utilize encryption technology or equivalent digital technologies for authentication during their creation, issuance, storage, and transfer, excluding securities, digital forms of fiat money, and financial assets. Other digital assets. The Government will issue regulations to govern the following matters concerning digital assets: Creation, issuance, ownership, and transfer of digital assets; Legal rights and obligations of involved parties; Cybersecurity and anti-money laundering measures; Regulatory inspections and enforcement; and Licensing conditions for service providers related to tokenized assets. At this stage, relevant state authorities are working on the development of a proposed regulation on the pilot “tokenized assets” market. *** With the New Laws soon taking effect, Vietnam is signaling its strategic intent to become a competitive, innovation-driven economy.  By laying the legal foundation for the regulation of AI, digital assets, and advanced technology investments, the New Laws demonstrate the Government’s commitment to fostering a forward-looking and investor-friendly environment.  It also sends a message to both domestic and international stakeholders that Vietnam is ready to engage in and shape the digital future. *Note: The official version of the New Laws has not been released.  This article is based on the final draft of the New Laws submitted to the National Assembly for passage.

The United States has recently formalized a trade agreement with Vietnam that introduces a 40% tariff on goods transshipped via Vietnam, targeting products rerouted from other countries to avoid existing US trade barriers. In exchange, a 20% tariff (substantially reduced from the tariff announced in April) will apply to Vietnamese-manufactured goods under the new framework. While the full implementation details have not yet been released, the agreement is expected to take effect shortly and may include provisions for stricter rules of origin, enhanced certification requirements, and joint enforcement mechanisms between US and Vietnamese customs authorities. This update aims to clarify the concept of transshipment and outline the practical implications for Vietnamese exporters. Context of the US – Vietnam Agreement Historically, transshipment has been a longstanding concern for the US government, particularly during the first Donald Trump administration. Since 2017, the Trump administration raised alarms about the growing practice of tariff circumvention by transshipment through Vietnam, which intensified amid the US – China trade war. Many manufacturers that had previously been manufacturing in China established shell operations or light assembly lines in Vietnam to exploit its favorable trade status with the US. By re-exporting goods under a Vietnamese label without substantial processing, they sought to bypass high US tariffs on Chinese-origin products. This had led to increased scrutiny by Vietnamese customs, especially targeting Chinese goods falsely declared as Vietnamese. The new US – Vietnam agreement is likely is intended to close loopholes that enable tariff evasion and encourage genuine investment in Vietnam’s manufacturing sector, rather than superficial operations set up solely for transshipment purposes. As a result, we anticipate that Vietnamese customs authorities may continue to tighten enforcement of rules of origin for Vietnam originating goods, which may include: Enhanced scrutiny of import-export documentation; Increased on-site inspections of manufacturing facilities; and Closer monitoring of supply chains linked to high-risk jurisdictions (notably China). Exporters whose goods involve components or inputs from third countries must be prepared to demonstrate substantial transformation through detailed production records, bills of materials, and value-added calculations. Understanding Transshipment Under Vietnamese Law Since the full text of the US-VN agreement has not yet been released, it remains unclear exactly what goods will be classified as “transshipment items.” Under Vietnamese law, transshipment is defined under Decree 59/2018/ND-CP as follows: "Transshipment goods are transported by sea from abroad to a transshipment area at a seaport, then exported abroad from the same transshipment area or transferred to a transshipment area at another port for further export. Transshipment goods moved between seaports must be transported via inland waterways or by sea. Transshipment goods are entirely exported abroad either once or multiple times." In the context of the new agreement, this would mean that goods originating from third countries and routed through Vietnam to the US via specified transshipment areas or ports would be subject to the 40% tariff. However, a more likely scenario would be that “transshipped goods” also in terms of the agreement may be more broadly defined to include goods that are imported into Vietnam from third countries and subsequently undergo only minimal processing before being exported to the US, as discussed in the context above. These goods fail to meet the rules of origin required to be classified as Vietnamese-origin and thus retain their original country of origin for customs purposes. Generally, there are two main rules of origin under international and Vietnamese laws: Local Value Content (LVC) Rule, which requires that a minimum percentage (typically 30%) of the goods’ value must be derived from local materials and processing activities within Vietnam. Change of Tariff Classification (CTC) Rule, which requires that non-originating materials used in the production of a good must undergo a change in tariff classification, usually at the 4-digit level of the Harmonized System (HS), during processing in Vietnam, indicating substantial transformation. Until the full details of the agreement are disclosed, businesses must exercise caution when exporting goods through Vietnam that do not meet the established rules of origin, as these items may be classified as transshipment goods and subject to the 40% tariff. Implications for Vietnamese Exporters The imposition of a 40% tariff on transshipments can have significant operational and strategic consequences for Vietnamese exporters. Exporters must ensure their goods meet Vietnam’s rules of origin to avoid punitive tariffs. This may involve more rigorous documentation, audits, and verification procedures. Exporters may consider engaging legal and trade compliance experts to audit their operations for this purpose. Moreover, businesses may need to adjust their supply chains and invest in deeper manufacturing capabilities within Vietnam to ensure substantial transformation occurs within Vietnam. How VILAF Can Assist At VILAF, we are committed to helping our clients adapt to these evolving trade regulations. We support our clients by reviewing their manufacturing processes to assess their production workflows and determine whether their goods may be classified as transshipments. We also provide guidance and representation during customs inspections to ensure our clients’ goods meet the rules of origin requirements. For further details, please contact Mr. Ngo Thanh Tung at [email protected].

VILAF warmly congratulates SCG Packaging Public Company Limited (SCG Packaging), a subsidiary of Siam Cement Group, on the successful acquisition of the remaining 30% shares in Duy Tan Plastics Manufacturing Corporation (Duy Tan Plastics), making SCG Packaging the sole shareholder of Vietnam’s leading manufacturer of rigid plastic packaging products.  The transaction was made at USD108.6 million. SCG Packaging previously acquired 70% of the shares of Duy Tan Plastics in 2021. The strategic buy-out underscores SCG Packaging’s continued commitment to strengthening its presence in Vietnam – a market recognized for its dynamic economic growth and increasing appeal as a regional hub for foreign investment. VILAF Partners Ngoc Luong Trinh and Hien Tran led the legal advisory for SCG Packaging in this buy-out transaction, with key support from Senior Associate Hanh Vo, Associates Truc Ta, Nguyen Dang, and Hoang Nguyen. Related article: Thailand’s SCG Packaging becomes sole owner of Vietnam’s leading plastics firm Duy Tan

VILAF extends our congratulations to the Agence Française de Développement (AFD) and the National Power Transmission Corporation (EVNNPT) on the signing of the €67 million (approximately USD75 million) loan agreement for the funding of the expansion and modernisation of power transmission grids in Vietnam. The official signing ceremony was held last week, during the official visit of French President Emmanuel Macron to Vietnam. The loan will support the development of the construction of two new 500kV substations and associated transmission lines in Binh Duong and Dong Nai provinces.  This marks the first international funding Vietnam has received through the Just Energy Transition Partnership (JETP), which was established in 2022 to support emerging economies to achieve their climate, green transition and sustainable development goals. VILAF’s Partner Tung Nguyen and Associate Chau Nguyen are advising AFD in this transaction. Related article: EVNNPT and AFD sign agreement to expand and modernize the power transmission grid

VILAF is pleased to congratulate HSBC Vietnam, Mizuho Bank, Sumitomo Mitsui Banking Corporation (SMBC), UOB Vietnam, and Gamuda Land on the successful financial close of the VND3,750 billion (USD 144.4 million) green club loan facility extended to Tam Luc Real Estate Corporation, a subsidiary of Gamuda Land. The five-year loan facility will finance the development of Eaton Park, a landmark green residential project in Ho Chi Minh City.  Eaton Park is a premium residential complex located in District 2, spanning 3.75 hectares with a planned 2,000 apartments. The project has achieved the prestigious EDGE green building certification from the International Finance Corporation (IFC), underscoring its commitment to sustainable and energy-efficient design. VILAF acted as legal counsel to HSBC Vietnam in its roles as facility agent, coordinating arranger, joint mandated lead arranger, and joint green coordinator, and to the other club lenders participating in the transaction. The VILAF team advising this transaction was led by Partner Duyen Ha Vo, alongside Partner Tung Nguyen, Counsel Hanh Hien Nguyen, and Associates Nhi Nguyen and Mai Phan.

With more than 35 years of foreign investments in Vietnam, various land-use projects, particularly those with less than 50-year term, are approaching expiry. With the new land law and investment law, it is crucial for the investors to understand the regulations on the adjustment/extension of the project operation duration and proactively manage and plan for adjustment/extension application process or even to liquidate the project. Operation duration of investment projects using land According to law, (i) the operation duration of an investment project in an economic zone must not exceed 70 years and (ii) the operation duration of an investment project outside an economic zone must not exceed 50 years, unless such investment project is located in a geographical area meeting with difficult socio-economic conditions or in a geographical area meeting extremely difficult socio-economic conditions or has a large investment capital amount but capital recovery is slow, the operation duration may be longer, but must not exceed 70 years. Both the Law on Investment 2020 and the Land Law 2024 unify the provisions on limitation of the project’s operation duration/land-use term for a project using land. In principle, the land-use term of a project using land will be determined based on the project’s operation term of such project. Amendments to the operation duration of land-use projects with less than 50-year term Legally speaking, an investor of a project using land is vested with the rights to adjust or extend the project’s operation duration, provided that the limitation of the project’s operation duration/land-use term for a project using land is ensured. Adjust the operation duration According to Article 27.2 of Decree 31/2021/ND-CP, an investor may apply to the authority for adjusting (whether increasing or reducing) its project term at any time during the term. Based on the objectives, size, location, and operation requirements of the investment project, an authority competent to approve investment policy and investment registration authority shall consider and decide whether to adjust the operation duration of the project or not. After approval is issued, the investor will apply to the land authority for a corresponding adjustment of the land-use term. Extend the operation duration Article 44.4 of the Law on Investment 2020 provides that: “Upon the expiration of an investment project’s operation duration, if the investor wishes to continue implementing the investment project and satisfies conditions as specified by laws, the project’s operation duration may be considered for extension, but must not exceed the maximum duration specified in Article 44.1 or 44.2 of the Law on Investment, except: (a) Investment projects using outdated technologies, potentially causing environmental pollution or being resource-intensive; (b) Investment projects in the cases where the investors are required to transfer assets to the Vietnamese State or Vietnamese partner without compensation.” The phase “Upon the expiration of an investment project’s operation duration” in Article 44.4 of the Law on Investment 2020 may be interpreted that the extension right is likely vested to an investor having an investment project whose operation duration are nearing expiration. On the other hand, Article 55.3 of Decree 31/2021/ND-CP provides that: “For a land-using investment project, the investor shall carry out procedures for extension of operation duration of the investment project according to Article 55.2 at least 06 months before the expiration of the project’s operation duration.” This provision only sets out the minimum time limit for extension procedures but there is no explicit time limitation when the investor may apply for extension procedures. On a practical note, the timeline for obtaining approval for project operation duration extension may be very time-consuming, and the investor must obtain such approval before the deadline of submission of application dossier for extension of land-use term. Specifically, Article 172.3 of the Land Law 2024 provides that: “The extension of land use term shall be carried out in the last year of the term…land users wishing to extend the land use term shall submit dossiers of request for extension of land use term at least 6 months before the land use term expires”. Based on the above, it appears that the investor may apply for an extension of the project's operational duration approximately 2 to 3 years before its expiry, without needing to wait until the project is close to expiration. For example, Mercedes-Benz Vietnam Co., Ltd. (MBV) has implemented Mercedes-Benz Automobile Assembly Plant Project since 1995 and the project completion date is on 14 April 2025. In September 2021 (around 03 years before the expiry date of the project’s operation duration), MBV initiated the extension process. It was only in late 2024 that the Ho Chi Minh City People’s Committee approved a 5-year extension to the project's operational duration, along with a corresponding extension of the land use term, subject to annual rental payments. Payment of land use levy and land rental upon extension of land use term and adjustment of land use term Article 156.2 of the Land Law 2024, after land-use term is extended or adjusted, if land users are liable to land use levy or land rental, they shall pay land-use levy or land rental for the extended or adjusted land use term. As further detailed in Article 35 of Decree 103/2024/ND-CP on land use levy and land rental, it appears that the land payment method (i.e. whether annual payment or one-off payment) for the extended or adjusted land-use term will follow the previous land payment method before extension or adjustment. Legal procedures for adjusting or extending the project’s operation duration Provisions on legal procedures, process, and application dossier for adjusting or extending the project’s operation duration are further provided in Article 55 of Decree 31/2021/ND-CP. Generally speaking, the adjustment procedure/dossier is likely similar to the normal procedure for amendment of contents of an existing investment project, while the extension procedure/dossier is likely similar to applying for a new investment project. Even though the licensing result is the same (i.e. the project’s operation duration after adjustment or extension is 50 years), it appears that the extension application dossier is more complicated than the adjustment dossier. For instance, when applying for extension, the investor must carry out a procedure to certify that its project does not use outdated technologies, potentially causing environmental pollution or being resource-intensive under Decision 29/2023/QD-TTg. This difference may be important to the investors of production projects when the relevant projects may have potential impacts to the environment or resources and such investors should be aware of those issues and choose the suitable method when amending the project’s operation duration. Possible options for land-use projects having 50 years’ operation duration Taking into consideration of Article 44 of the Law on Investment 2020, it appears that: (a) For a project using land already having 50 years’ operation duration and located in an economic zone or located outside the economic zone but in a geographical area meeting with difficult socio-economic conditions or in a geographical area meeting extremely difficult socio-economic conditions or an investment project which has a large investment capital amount but capital recovery is slow: the investor of such investment project may apply for extension of project’s operation duration but must not exceed 70 years; (b) For a project using land having 50 years’ operation duration and not subject to any case specified in point (a) above or a project using land already having 70 years’ operation duration, the investors of those investment projects are not permitted to apply for extension of project’s operation duration because the maximum operation duration is 50 years or 70 years respectively. Consequently, the investor(s) will have to terminate the expired investment projects and carry out the procedures for liquidation of investment projects under regulations on investment. A question may be raised as to whether or not the investor may use its currently operating assets to apply for a new investment project at the same project location. The answer is likely positive but the question remains whether this investor is given any preferential right as the existing land user or not in case there are other (new) investors interested is unclear. It is expected that there will be further guidance from the competent authority in this regard. Authored by Bui Ngoc Anh and Pham Thanh Tung

VILAF is delighted to announce two significant promotions with effect on 1 January 2025: New Partner                   Ngan Nguyen                 Real Estate, Capital Markets, and Corporate/M&A New Counsel                 Hanh Hien Nguyen      Banking & Finance, Capital Markets, Aviation The promotion raises the number of VILAF partners to 16. About Ms Ngan Nguyen Ngan Nguyen joined VILAF in 2017 after her legal practice at a Singapore law firm.  She was recognized as one of ALB Asia's 40 Under 40 in 2023, a testament to her exceptional talent and contributions to the legal profession. Ngan holds an LL.M. Degree (2011) from the National University of Singapore. VILAF Senior Partner Tung Ngo, her direct supervisor, remarked: "Ngan has demonstrated exceptional dedication, legal acumen, and leadership abilities. She consistently exceeds expectations, managing complex cases with precision and fostering strong relationships with our clients." Ngan has recently advised the following significant transactions: Gamuda Land in the acquisition of several real estate projects in Ho Chi Minh City; Sojitz Corporation and Vietnam Livestock Corporation in a joint venture project; Mitsui & Co., Ltd. in acquiring an equity stake in Aker Horizons ASA; Vietnam National Aviation Insurance and Saigon–Hanoi Insurance Corporation in their divestments to DB Insurance; and Mavin Group and Tan Long Group in a private placement of shares to IFC. About Ms Hanh Hien Nguyen Hanh Hien has been part of VILAF for most of her legal career, starting as a trainee associate.  She was awarded an ALB Rising Star in 2023 and has been consistently ranked as an IFLR1000 Rising Star for several years. She holds an LL.M. Degree (2018) in International Banking and Finance Law from the University of Leeds, UK. VILAF Senior Partner Duyen Ha Vo, her direct supervisor, commended her: “Hien’s stellar reputation in Vietnam’s financial sector is well-earned, thanks to her exceptional deal management and negotiation skills. Her ability to consistently deliver timely and impactful results has cemented her role as an indispensable asset to our firm.” Hanh Hien has recently advised the following significant transactions: Nexif Energy’s US$605 million sale of its renewable energy asset portfolio to Ratch Group; Strategic Value Partners’ acquisition of debt in a Japanese Operating Lease structure for three aircraft leased to Vietnam Airlines; Mekong Energy Company Limited’s end-of-term transfer of the Phu My 2.2 BOT Gas-fired Power Plant to the Government; The financing of the acquisition of FV Hospital by Thomson Medical Group, which has been the largest hospital M&A deal in Vietnam to date; and A series of private bond offerings of Nam Long Group.

Valuing life with a climate change countering motto ‘save our planet’ ambitions remain on top priority for the world, enabling action at COP29 hosted by Baku for 2024. COP29 President-Designate letter describes the 2024 UN Climate Change Conference in Azerbaijan as “a litmus test” for the Paris Agreement, global climate action, and cooperation, with a new collective quantified goal (NCQG) on climate finance as its “centerpiece” with an active engagement of global, regional, national, and subnational groups by adopting an advanced “holistic view” of sustainable development with an exclusive process that delivers inclusive outcomes. At COP29, the participating countries will be further reporting on their respective actions post COP28 and reaffirming their commitments towards climate change objectives while exploring opportunities. Diversified Partnering Options Vietnam signed the Just Energy Transition Partnership (JETP) on 14 December 2022 with G7 countries and as it maintains momentum, there are challenges pertaining to mobilization stream when it gets elevated considering economic instability posed to due fluctuating global economic and security dynamics. On one hand, Vietnam focusses on integrating the local industry as a trend towards its Industrial Revolution 4.0, while modernising and digitalising the power systems and networks by embracing smart technologies. In its green journey the country acknowledges and emphasize on the importance of integrating renewable energy sources such as wind, solar, and hydropower when in parallel it promotes its energy security with other sources of electricity generation. On the other hand, financing remains a riddle that is yet to be solved. Although, international commitments, green funds, bonds, and credit sources are in abundance to ensure a sustainable energy transition, but bankability consistently strikes as a boulder to support non-recourse financing instruments that highly rely on leveraging risks among the international players. On the investment front, mainly, there are two options for Vietnam to realise its planned targets under the Power Development Plan VIII for 2021-2030, with a vision to 2050 (PDP-8), one option being public-private partnerships which is seen to be more suitable for large-scale projects and this way invites participation of the state-owned enterprises, while the other option is through the Investment Law that supports private independent power producers. Vietnam’s Policy Movements and Regulatory Restructuring There has been progress made by Vietnam on the policy formulation since the last reporting at COP28 and which is evident from the release of the PDP-8 Implementation Plan in April 2024 and thereafter the much awaited regulatory framework for the Direct Power Purchase Agreement (DPPA) mechanism that entered in effect from July 2024 and rooftop solar specific regulation in October to address unresolved matters hindering smooth development of self-produced and self-consumed rooftop solar power sources throughout the country. However, there is surely more focused approach required to match with the global pace and for which the work is in progress to ensure a higher economic performance for 2026 evaluation of the current government. Further, the country is determined to reaffirm its commitments at the COP29 in November 2024. Planned Generation Capacities under the PDP-8 Implementation Plan It is pertinent that the PDP-8 Implementation Plan sets out ambitious targets for 2030 to support a diversified energy mix for Vietnam when the focal point remains to boost investments while securing its energy needs in the long run, the electricity generation capacities planned from various sources are as below: Source Total Capacity (MW) Prioritised Domestic Gas 14,930 LNG 22,400 Coal 30,127 Co-generation (residual heat and flue gas) 2,700 Hydropower (medium and large) 29,346 Pumped storage hydropower 2,400 Renewable Energy (RE) Offshore Wind 6,000 Onshore Wind (incl. nearshore) 21,880 Small Hydro 29,346 Biomass 1,088 Waste-to-Energy 1,182 Rooftop Solar (off grid) 2,600 Battery Storage (hybrid power sources prioritised) 300 Other Flexible 300 Import (Laos) 5,000 increase up to 8,000 RE Export (central and south) 5,000 - 10,000 RE to produce Hydrogen, Green Ammonia for domestic and export Up to 5,000 (mainly offshore wind source) It is ought to be noted that the above stated capacities are under re-consideration in accordance with the Planning Law and accordingly, PDP-8 is expected to see some shifts in target capacities allocation to make sure that the targeted goals are duly achieved within the planned timeframe. In contrast a noteworthy concern persists in relation to the strict timeline i.e. by 2030, leaving the industry and the government with around 6 years to fulfill accomplishments. DPPA In order to support the PDP-8 the government of Vietnam had passed Decree 80 in July 2024, laying down regulations on direct electricity trading mechanism between renewable energy generators and large electricity users. Decree 80 is applied to the renewable energy generation units comprising different sources, namely, solar, wind, small hydro, biomass, geothermal, tidal… and rooftop solar systems with electricity operation license as applicable based on the source generation capacity or an exemption from the same as per the existing regulations laid under Circular 21/2020 of the Ministry of Industry and Trade (MoIT). Decree 80 provides for the following two options: Private line sale and purchase of power among RE generation units and large electricity consumers. In this option the power purchase agreement (PPA) price could be mutually agreed among the generator and the consumer. Except where the generation unit performs retail as well, combining power purchase from the national grid and on-site for retail, here, pricing shall be as per the MoIT release. Sale and purchase of power through the national grid includes the below: Grid connected solar and wind generation units with a capacity of 10MW and above, participating in competitive wholesale electricity market (Trading cycle – 30 minutes each, per trading day). In here that transmission loss is recognized and the payment cycle is 1 month (on the electricity market), from 1st day of each month. Industrial consumers buying power from Vietnam Electricity (EVN)/retailers with connection voltage level being 22kV or above, with an output of 200,000 kWh/month (average on preceding 12 months); Power retailers in zones, clusters authorized by large consumers for production purposes, buying electricity from EVN through a forward contract with the RE generation units. In addition to detailing on the power generation and sale models, Decree 80 appendices provide templates for Model PPAs applied for the option no.2 stated above. The said templates mention on renewable energy certificates (REC’s) and carbon credits for which Vietnam has a plan to initiate a pilot program that will transition to formulation of a full-fledged market in the upcoming years. Rooftop Solar for Self-produced and Self-consumed Supporting the green transition, the government of Vietnam released Decree No. 135/2024 on 22 October 2024 (“Decree 135”) laying down regulations to encourage the development of self-produced and self-consumed rooftop solar power was initialed, effective. Categories Rooftop solar power sources (“RTS Sources”) are divided into two main criteria’s i.e. (a) RTS Sources connected to the national grid (hybrid sources supplying electricity on-site or at discretion surplus supply to the national grid), development of such RTS Sources shall be less than or equal to the total installed capacity of the existing load and consistent with past 12 months of electricity consumption. Prior to installing such RTS Sources having capacity of less than 1MW, a notice from the investor, developer/user need to be sent together with the design documents to the provincial construction, fire prevention and fighting, local electricity unit and the Department of Industry and Trade (DoIT) for monitoring. Grid connected RTS sources should obtain certification from the competent authority being the provincial DoIT. (b) RTS Sources not connected to the national grid (private power generation for either self-consumption or sale behind the meter). Such RTS Sources are not required registration as per Decree 135, however, a notice from the investor, developer/user need to be sent together with the design documents to the provincial construction, fire prevention and fighting, local electricity unit and the DoIT for monitoring. It further promotes uncapped generation capacity development for such sources. Capacities of such RTS Sources connected to the national grid shall adhere to the approved thresholds under the PDP8 (including its implementation plan, as to be revised), excluding RTS Sources in island districts and communes having grid but not integrated with the national power system. It further bans import of used PV panels and DC to AC convertors to develop such sources. Grid connected RTS sources willing to pump surplus electricity to the national grid, with the installed capacity from 100 kW or above, to negotiate mutually and agree on the equipment for collection, monitoring and control system to ensure grid safety. Incentives for RTS Sources RTS Sources not connected to the national grid are prioritized with uncapped capacities while being exempt from electricity operation license. Further, grid connected RTS Sources equipped with anti-backflow are prioritized without any capacity cap. Surplus electricity from RTS Sources having capacity ≥1MW are subject to electricity operation license. Land repurposing is not inclined for development. For constructions identified as public assets, the RTS Sources shall be treated as technological equipment attached to construction works. Energy storage is permitted, paving way for BESS while ensuring administrative ease. Grid connected RTS Sources falling within the PDP8 approved capacities, with less than 100 kW can pump surplus power to the grid, but not exceeding 20% of the actual installed and registered capacity, to receive payments from Vietnam Electricity (EVN) at a price equal to the average electricity market price in the previous year. Including such RTS Sources installed on public property, not purchasing or selling surplus electricity. Households are exempt from any adjustments to their relevant licenses. PPA Term Power Purchase Agreement term for surplus electricity trading from RTS Sources is limited to five (05) years initially, from the commercial operation date of the RTS Source, and is subject to extension upon mutual agreement among the signing parties, in accordance with the then effective regulations. Transitional Provisions Investors whose RTS Sources are operational prior to 01 January 2021 are not permitted to connect or register to install additional RTS Sources at the same location. Whereas, for the households, individuals and public offices those who have developed RTS Sources from 1 January 2021 are required to notify to the DoIT for the purpose of recording the capacity and coordinates. Restructuring of State-Owned Enterprises In August 2024, the National Load Dispatch Center (A0) departed from EVN Group umbrella and sparked a new balanced beginning as the National Power System and Market Operation LLC (NSMO) with the MoIT, while the Commission for Management of State Capital at Enterprises (CMSC) maintains supervision. This restructuring is a critical for Vietnam to support the roadmap for its electricity market development plans originating from December 2013, which is planned in a phased manner as follows: It is true that the plans have been severely delayed due to several economic, political and security variations that not only relates solely to Vietnam but worldwide and it is not the only country which is impacted by the same but this has been witnessed as a global trend when the countries are reassessing their policy transition visions to cope up with the market swings. Stability Sustainability Suitability Battery Energy Storage System (BESS) Decision 1009/2023 of the Prime Minister allowed Vietnam Electricity (EVN) for a pilot BESS project of 50MW. The said pilot project aims to explore ancillary services and inform pricing design and technical standards. The pilot BESS project is proposed to be installed at a substation in the North of Vietnam, serving two functions: peak shifting and frequency control. The proposed project is an initiative designed for public benefit, assigning EVN for implementation and during the implementation of the said pilot project the country plans to have an on ground experience to base its policy formulation prior to commercializing BESS. Electricity Law Amendment and Prospective Developments In parallel to the above stated, the Electricity Law amendment is on the cards and is expected to be passed in 2025 by the National Assembly. Certainly, Vietnam stands committed to speed up its policy and regulatory framework movements together with the support from the international partners and the industry and hopefully we will see a positive path ahead to fulfill its greener dreams while smoothly delivering to its international commitments. Hydrogen Shift and Carbon Credit Market In line with the current and planned developments, there are also ongoing considerations for hydrogen shift strategy in the near future, as well as carbon market development with formulation of refined regulations, while amending the relevant key pieces from the existing ones. Author: VAIBHAV SAXENA

On December 22, 1992, South Korea and Vietnam established diplomatic relations with a joint statement.For Hanoi, its economic interests and foreign policy of “diversification and multilateralization” were pivotal in fostering closer ties with Seoul. In 2002, the two countries upgraded their relationship to a “comprehensive partnership in the 21st century,” which was further elevated to a “strategic cooperative partnership” in 2009. Most recently, in December 2022, they announced the formation of a comprehensive strategic partnership. The current bond between Vietnam and Korea is built on a foundation of mutual trust, growing people-to-people connections, and strong economic collaboration. Major Korean conglomerates such as Samsung, SK, LG, Lotte, and Hyundai have significantly expanded their operations in Vietnam, deepening economic ties. As of March 2024, Samsung's investment in Vietnam totals $22.4 billion. The trend of Korean companies moving their manufacturing to Vietnam has accelerated recently, driven by the need to diversify supply chains amid global disruptions. Vietnam’s stable economic environment and favorable foreign direct investment policies make it an attractive destination for Korean investors while supporting its Industrial Revolution 4.0. This growing economic relationship is also supported by Korea’s New Southern Policy (NSP), which aims to enhance ties with ASEAN member states and India to match the level of relationships Korea maintains with the USA, China, Japan, and Russia. From ASEAN, Vietnam is considered a central focus of the NSP. Bilateral Trade Korea is Vietnam’s third-largest trade partner and second-largest import market, underscoring the importance of their economic ties the partners established a strong trade relationship. One prime example of this is the Vietnam-Korea Free Trade Agreement (VKFTA), having its effectiveness from December 20, 2015, with the aim to promote trade, services, and investment without replacing the ASEAN-Korea FTA (AKFTA). VKFTA establishes precise rules for origin of goods, including the regulations for special goods and Certificate of Origin exemptions for lower-value imports. Additionally, VKFTA commitments include National Treatment (NT) and Most Favored Nation (MFN) treatment in trade services, with additional sector openings compared to WTO and AKFTA commitments. Investment protections under VKFTA also include NT and MFN treatments, along with mechanisms for dispute resolution through administrative courts and arbitration. Besides that, the Double Taxation Avoidance Agreement (DTA) between the nations, which came into force on September 11, 1994 also contributed in facilitating economic cooperation with the primary objective of providing clear guidance on tax and preventing double taxation, the DTA helps shape a safer and better tax environment between the countries, promoting cross-border trade and investment, enhancing economic ties between Vietnam and Korea. In recent decades, the bilateral relationship between Vietnam and Korea has made remarkable strides with total trade between the two countries growing from $2 billion in 2010 to an impressive $86.5 billion in 2022. Further, both nations stay committed to further enhancing bilateral trade, aiming for a target of $150 billion by 2030. Comparatively, in May 2024, Korea’s exports to Vietnam surged significantly in contrast to May 2023. According to OEC data, exports increased by $846 million (19.8%), rising from $4.28 billion to $5.12 billion while imports from Vietnam also grew during this period with an additional $118 million (6.13 percent), reaching $2.04 billion from the previous figure at $1.92 billion. This upward trend reflects the futuristic ties between the two nations. Furthermore, in the fifth month of this year, Korea’s exports to Vietnam saw a significant boost, driven by increased shipments of mineral fuels, mineral oils, and related products, as well as perfumery, cosmetics, and fertilizers. Meanwhile, Korea’s imports from Vietnam grew due to higher imports of non-knitted clothing accessories, machinery, mechanical appliances, and footwear. In the first half of 2024, trade turnover between Vietnam and Korea reached $38.4 billion, marking a substantial increase from the previous year. Burgeoning Investment prospects Within the past decade, Korea’s investment into Vietnam played a crucial role in the development of the country’s economy, ranking in a high place of Vietnam’s foreign investors. In 2023, there were approximately 500 investment projects from Korean investors with the total value of over $5 billion. In addition, over the last six months of 2024, Vietnam received $1.4 billion investment from Korean investors. This marks an increase of 16% as compared to 2023, making Korea the 4th largest foreign investor in Vietnam. The investment of Korea places its focus on processing, manufacturing industry that accounts for more than 70% of Korea's total investment capital in Vietnam. Besides that, real estate sector also receives attention from Korea, with the investment capital accounting for over 12%. The remaining sectors of interest for Korea are construction, energy, accommodation and food services, accounting for about 3%. The Vietnamese government has encouraged Korean companies to invest further, particularly in advanced technology, electronics, semiconductors, AI, renewable energy, and human resource development. Notable Korean investments include: Samsung: With an investment of $22.4 billion and employing around 90,000 people in Vietnam. Additionally, 310 Vietnamese firms are part of Samsung’s supply chain, and its R&D center in Hanoi employs about 2,500 staff. Hyundai Motor: Investing over $410 million in green transportation and local supplier integration, aiming to support Vietnam’s domestic industries and technological progress. Lotte Group: Participating in Vietnam’s smart city and sustainable tourism initiatives, emphasizing opportunities in urban sustainability and tourism sector growth. Hyosung Corporation: Planning to expand its presence with a new data center in Ho Chi Minh City. These investments reflect the growing economic integration and collaborative opportunities between Vietnam and Korea. Envisioning Ever since the elevation to Comprehensive Strategic Partnership, Vietnam and Korea have developed their relationship in many ways. Notably, in the beginning of July 2024, Vietnam made its first high level visit to Korea since the said elevation. During the visit, Prime Minister Han Duck-Soo stated that Vietnam is a key partner in implementing foreign policies in the region, including the Indo-Pacific Strategy and the Korea-ASEAN Solidarity Initiative (KASI). It is pertinent that the future remains bright with commitments and foundations laid for strategic-economic collaboration between Vietnam and Korea. Authors: Vaibhav Saxena and Quang Anh Nguyen, Lawyers