Guidance

Overseas business risk: Vietnam

Updated 25 February 2021

We aim to provide information on this page on the key security and political risks which UK businesses may face when operating in Vietnam

1. Political

Vietnam is a one-party state ruled by the Communist Party of Vietnam (CPV). The CPV provides strategic direction and decides all major policy issues which the government then implements. The country is led by the so-called “four pillars”: CPV General Secretary, State President, Prime Minister and National Assembly Chair. General Party Secretary Nguyen Phu Trong currently holds two positions, Head of the CPV, the most powerful position in Vietnam and to which he has been reselected for another five-year term (from February 2021), and the State Presidency, which he will relinquish later this year. Policy is made on a consensus basis by the Politburo and currently prioritises stability, retaining the political status quo, domestic economic development and international integration. Regional security, especially in relation to the South China Sea, is a major foreign policy priority.

Party leaders are selected every five years at the National Party Congress. The National Party Congress sets the general direction for government economic and social policy for Vietnam for the subsequent five years. The most recent Congress was held in February 2021. Following this later in 2021 the 500 Deputies will be selected who make up the National Assembly, Vietnam’s legislative body and the body that confirms the appointment of Government ministers.

1.1 Political Environment

Vietnam is one of the more politically stable countries in South East Asia. The CPV is in control. Alongside maintaining the one-party state system, safeguarding territorial integrity and maintaining social order, its main aim is economic growth. Its aim is for Vietnam to become a middle-income country by 2025, an upper-income country by 2030 and a developed, high-income country by 2045. Vietnam recognises it will require more economic reform and sustainable growth to achieve this. Legislation needs improving, as does IT, telecoms and transport infrastructure. Climate change, natural disasters and cyber security are key threats.

Vietnam’s leadership does not welcome political dissent. Internal conflict is strictly controlled and large-scale and/or politically sensitive protests quelled. Issues of particular sensitivity include land rights, the rising influence of China in the region including in the South China Sea, environmental disasters, multi-party elections and criticism of the CPV (including of now retired senior figures). There are strict restrictions on freedom of speech which can affect news broadcasts (the BBC’s Vietnamese language service is blocked) and internet usage, particularly the use of social media and personal blogs to which access can be blocked without notice. The Cyber Security Law, which took effect in January 2019, requires international service providers to provide information to the Government on request and to censor posts within 24 hours of the request. Failure to do so may result in servers in Vietnam being taken offline. Mainstream domestic media outlets remain fully under the control and direction of the CPV so many people follow independent bloggers for their news updates.

1.2 COVID response

Vietnam’s COVID response has been internationally recognised as effective. A robust track and trace system that favours effectiveness over privacy and quick government action to lock down any outbreaks have ensured a low death toll and popular confidence in the system. Vietnam closed its borders early. It has suspended visas and visa waivers. Entry into Vietnam for foreign nationals is tightly restricted to a small number of diplomats on official business, certain high-skilled workers, and some family members. Entry applications for these continue to be processed case by case and must be submitted by an employer or family member directly to central/provincial authorities to obtain permission to enter. The requirements and processes may differ between provinces and permission is not guaranteed. Quarantine (of at least 14 days) is mandatory and takes place in government centres and designated hotels. Costs must be met by those arriving or by their employer. Government measures to restrict COVID-19 are subject to change at short notice, e.g. where there is a new outbreak, and may be relaxed or made stricter depending on prevailing circumstances in-country. Vietnam has pushed ahead on procuring vaccines via the multilateral COVAX facility, bilateral deals, and through developing four domestic vaccine candidates. Vietnam expects to begin to roll out its vaccination programme from Q2 2021. It is not yet clear whether this will include foreign nationals. Healthcare professionals, frontline workers, and older and medically vulnerable groups will be prioritised. Vietnam has indicated that it might pursue vaccine passports as a method of opening up some (limited) international travel, but policy specifics remain scarce and are not expected before Q3 2021.

2. Economic and Trade

Vietnam has transformed since 1986, with millions taken out of poverty. It remains one of the fastest growing global economies despite the COVID-19 pandemic, achieving 2.9% GDP growth for 2020 (in 2019, Vietnam’s economy grew at 7%). The country’s GDP is estimated at US$341 billion, ranked 38th globally and 4th in ASEAN, according to the IMF. GDP per capita is estimated at US$3,500 and has more than doubled over the last decade.

Vietnam’s population is estimated at 97.5 million (2020). The median age is 31, and almost 40% of the country is under 25 years old. Over the past two decades, Vietnam has achieved significant improvements in general education and health. Vietnam ranked 38th in World Bank’s 2020 Human Capital Index, one of the highest scores in East Asia Pacific.

Vietnam has increasingly opened to global trade. Trade has almost quadrupled over the last decade and is now more than twice the size of the economy. The country has an extensive network of trade agreements with 15 signed FTAs including the recently signed RCEP (Regional Comprehensive Economic Partnership) – the largest FTA globally.

Total trade in goods and services between the UK and Vietnam was £5.7bn in 2019 of which UK exported £0.9bn and imported £4.8bn. Key UK exports to Vietnam include pharmaceuticals, machinery and equipment. The UK was the 15th largest investor by accumulated investment in Vietnam and 14th largest investor in 2020.

The UK- Vietnam Free Trade Agreement came into effect on 1 January 2021. It is currently being provisionally applied. It will enter into force after ratification expected in Q1 2021. This continues the benefits of the EU-Vietnam FTA. Under the UK-Vietnam FTA, companies will benefit from reduced tariffs on imports and exports, and from increased access to services, as well as from the protection of key British and Vietnamese products. 65% of all tariffs have already been eliminated on UK-Vietnam trade. This will increase to 99% of tariffs by the time of full implementation of the FTA. Vietnam stands to benefit from tariff savings of £114 million on Vietnamese exports. For UK exports, this figure will be £36 million. See the UKVFTA full text.

In February 2021, the UK formally requested to accede to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), of which Vietnam is a founding member. UK accession to CPTPP would further strengthen the UK-Vietnam bilateral trading relationship and complement the UKVFTA.

Vietnam is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, otherwise known as the New York Convention. Its provisions are incorporated into Vietnamese law. However, unofficial statistics suggest that international arbitration awards are recognised in only approximately 50% of cases within the country. The UK is working with Vietnam to improve this, including through better legislation and legal training.

Vietnam is ranked 70th (out of 190) in the World Bank’s (WB) “Doing Business 2020” (PDF, 1,793KB), a drop of one place from the 2019 report but a big improvement over the past decade

Read the World Bank’s more in-depth publication on the issues of Doing Business in Vietnam.

3. Business and Human Rights

The right to freedom of association and to collective bargaining remains restricted in Vietnam. The new Labour Code (2021) has key provisions on working hours (48 hours per week, or under an agreed overtime deal 12 hours a day, 40 hours a month and 200 hours a year, with some exception for industries with seasonal orders – e.g textiles, electronics, footwear - where there is an overtime cap of 300 hours); on labour contracts (two types: indefinite term and definite term up to three years, renewable once) and work permits; on termination (grounds and notice – 30 days definite term and 45 days indefinite); on unions (independent trade unions allowed with state permission; retirement age (62 for men and 55 for women with some exceptions); on discrimination; on sexual harassment; and on minimum wages. As with much legislation in Vietnam there are likely to be issues over implementation, particularly over some of the elements such as independent trade unions. Vietnam has also passed a resolution on collective bargaining. Female participation in the workplace is high but women still face institutionalised discrimination. Women are much more likely to be employed in vulnerable employment, in particular among ethnic minority communities. Job advertisements for senior positions often indicate a gender preference for men despite this being illegal. Vietnam has one of the highest male-to-female birth ratios in the world

Vietnam is one of the more progressive countries in South East Asia for LGBT rights. In 2015 Vietnam abolished regulations that prevented same-sex marriage. Vietnam has also passed a law allowing trans-gender individuals to receive gender reassignment surgery and to register under their preferred gender. But despite the legal reforms, cultural discrimination of the LGBT community still persists.

4. Bribery and Corruption

Under the UK Bribery Act 2010, it is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to offer a bribe anywhere in the world.

In addition, a UK commercial organisation can be considered liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

British companies should not engage in any activities regarded as corruption under the UK Bribery Acts. Not only are there issues of business integrity to bear in mind, but it is also illegal. Invariably, corruption is related to lack of professionalism and control, all of which are damaging to long-term business.

Corrupt practices are widespread in Vietnam Corruption is particularly prevalent in relation to infrastructure projects, customs procedures and land rights. Anyone engaged in business in Vietnam may encounter, and at the very least should prepare for, the challenges of corruption in one form or another. Practices such as facilitation payments, bribes and giving and receiving expensive gifts in order to develop business relationships are still common. There is also very little judicial independence in Vietnam and corruption remains a problem in the court system. There is also little oversight of assets and investigative journalism is limited by media controls.

The Party Leadership and Government have publicly committed to addressing corruption. They have taken a number of concrete actions, including adopting and improving anti-corruption laws, developing anti-corruption strategies, strengthening relevant institutions, reducing bureaucracy and opportunities for corruption and ratifying the UN Convention against Corruption (UNCAC). There have been a number of high-profile arrests both in the public and private sector. Vietnam’s score on Transparency International’s 2020 Corruption Perceptions Index, however, was down one point to 37 out of 100, putting Vietnam 104th out of 180 countries and territories. Prevention and enforcement activity remain weak, public sector salaries low and opportunities for corrupt practices many.

The business community, civil society, UNDP, Vietnam Chamber of Commerce (VCCI) and Government Inspectorate (GI) and the British Embassy and Consulate General are working together to promote business integrity in Vietnam. Under a UK-funded programme, the private sector has been incorporated into Vietnam’s anti-corruption law and training conducted on codes of conduct and developing international standards of business integrity in Vietnam’s business community.

5. Terrorism Threat

There is a low threat from terrorism, but you should be aware of the global risk of indiscriminate terrorist attacks which could be in public areas, including those frequented by foreigners.

See our Reduce your risk from terrorism while abroad page.

6. Protective Security Advice

Read the information provided on our Protective Security page.

7. Intellectual Property

When exporting to Vietnam, it is essential to register your rights there as soon as possible in order to be able to defend and enforce them. IP rights are territorial in nature which means that registrations in the UK or another country’s jurisdiction are not automatically enforceable in others.

Following accession to the World Trade Organisation (WTO) in January 2007 Vietnam has updated its IP laws to comply with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). Vietnam is a signatory to the following:

• the Paris Convention - for the protection of industrial property
• the Madrid Protocol - Protocol relating to the Madrid Agreement concerning the International Registration of Marks
• the Rome Convention - for the protection of Performers
• the Patent Cooperation Treaty (PCT) - International Convention for the Protection of New Varieties of Plants
• the Berne Convention - for the protection of Literary and Artistic works

Vietnam is amending its IP law to comply with new treaty requirements under recently signed FTAs including the EU-Vietnam Free Trade Agreement (EVFTA), the UK-Vietnam Free Trade Agreement (UKVFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Regional Comprehensive Economic Partnership (RECP).

Under the UKVFTA, Vietnam commits to a high level of protection, going beyond the standards of WTO TRIPs agreement. With this agreement, innovations, artworks and brands will be better protected against being unlawfully copied, including through stronger enforcement provisions.

Among others, the UK pharmaceutical sector will benefit from improved data protection and of the possibility to get an extension of the patent up to two years if there are delays in the marketing authorisation. In a specific annex on pharmaceutical products, the Parties have agreed to a set of other provisions facilitating trade in these products. Vietnam has also taken commitments concerning procurement of pharmaceutical products and has allowed foreign-invested companies to import and sell medicines to distributors and wholesalers within the country.

As a replacement to the EVFTA post Brexit, the UKVFTA is expected to contribute to improvement of IP protection in Vietnam in line with the UK’s best practice. There are still concerns, however, in particular on enforcement. Some surveys have identified deficient enforcement and coordination between IPR enforcement agencies, lack of trained IPR officials and awareness of consumers and public still as the main weaknesses of the system.

Vietnam is actively trying to address concerns by raising awareness of intellectual property rights and the penalties attached to infringements, through its work with international partners. Mainly enforcement on IPR is done through administrative measures and now Vietnam is putting in place heavier fines and penalties for copyright infringement.

However, concern is rising among rights holders that Vietnam’s IP enforcement system has not yet developed sufficiently to control the rapid growth of piracy and counterfeiting despite the substantial legislative work completed over the past several years. Vietnam is a priority country for UK co-operation to strengthen IP. Under a UK-funded programme, UK experts have worked with IP Vietnam to improve the IP legal framework and IP enforcement. A manual on IP enforcement for Vietnam – supporting ASEAN’s IPR Action Plan - was published in June 2020. The manual was distributed by the British Chamber of Commerce in Vietnam.

7.1 IP Top Tips for businesses:

• most IP disputes are handled by administrative authorities instead of courts (although Vietnam is looking to develop and increase IP courts). However, the expertise to deal with complex cases is limited and it is important to obtain expert legal opinion to facilitate the resolution of any case that might arise

• certain objects, such as logos, can be protected as both a copyright and a trademark – this can give an extra avenue to enforce IP rights

• Vietnam works under a “first to file system”, meaning the first person to file an IP right there will own that right when granted. This means an earlier user may find they are infringing a later filed registration

• Vietnam is part of the ASEAN Patent Examination Co-operation (ASPEC), a regional patent work-sharing programme among 9 participating ASEAN Member States (AMS). The purpose of this programme is to share search and examination results between the participating offices to allow applicants in participating countries to obtain corresponding patents faster and more efficiently. ASPEC is free of charge and operates in English

• customs registration in Vietnam is relatively simple and can be effective. As levels of counterfeiting and piracy can be high, it is recommended that businesses register with Vietnamese customs

Businesses are generally encouraged to learn more about IP issues relevant to their specific industry sector and to consider defensive measures early in their plans to enter the Vietnamese market.

The UK Intellectual Property Office has IP attachés based in Singapore with specific focus on providing support and advice to UK companies in Vietnam.

7.2 Useful information can also be found at:

• the Intellectual Property Office - a UK Government agency providing free and impartial advice on protecting and registering your IP in the UK and abroad

• Guidance on protecting your UK intellectual property abroad

• the Intellectual Property Office of Vietnam

• the National Copyright Office of Vietnam (NCO)

8. Contact

For more information on exporting to Vietnam, please contact the Department for Business and Trade’s (DBT) Vietnam office.