he 20th anniversary edition of the Global 2000 ranking the world’s largest companies shows just how much has changed since the early years of the 21st century. The top three slots on the list in 2003 belonged to Citigroup, General Electric and American International Group. New York money center bank Citigroup is still ranked in the top 25, but once dominant AIG and GE have fallen far in the rankings. Show
Among the companies that have taken their place in the top 10 are this year’s No. 1, JPMorgan, three giant-sized state-owned Chinese banks and technology giants like Apple and Alphabet. JPMorgan, America’s biggest bank with $3.7 trillion in assets, is at the top of the list for the first time since 2011 and has emerged stronger from this spring’s regional banking crisis, with more deposits and an opportunistic acquisition of the failed First Republic Bank. Last year’s No. 1, Warren Buffett’s Berkshire Hathaway, fell to No. 338 due to unrealized losses in its investment portfolio. The Global 2000 ranks the largest companies in the world using four metrics: sales, profits, assets and market value. As a group, the companies on the 2023 list account for $50.8 trillion in sales, $4.4 trillion in profits, $231 trillion in assets and $74 trillion in market value. Cumulative profits, assets and market value are all down slightly from last year, though this is the first time total revenue has surpassed $50 trillion. There are 58 countries represented by the publicly traded companies on the list. The U.S. leads the way with 611 companies on the ranking, and China comes in second with 346 Global 2000 companies. We used the latest 12 months of financial data available to us as of May 5, 2023 to calculate the factors used in our ranking. Foreign direct investment (FDI) continues to be of vital importance to Vietnam as an economic growth driver. The government has policies in place that are broadly conducive to FDI, particularly for enterprises engaged in export-oriented manufacturing. Factors that attract the interest of foreign investors include political stability, strong economic growth, a young and increasingly urbanized and educated population, competitive labor costs, a growing number of trade agreements, and an affordable, stable power supply. According to the Ministry of Planning and Investment (MPI), which oversees investment activities, Vietnam’s FDI stock stood at $274 billion at the end of 2022. At the 26th United Nations Climate Change Conference (COP26), Prime Minister Pham Minh Chinh made an ambitious pledge for Vietnam to reach net zero emissions by 2050. In December 2022, Vietnam entered the Just Energy Transition Partnership (JET-P) with a coalition of international partners, including the United States, Japan, United Kingdom, and European Union that will mobilize at least an initial $15.5 billion for Vietnam’s energy transition efforts. In May, the government approved Power Development Plan 8 (PDP-8), Vietnam’s national master plan for the development of the power sector, but it does not describe how to implement this commitment. Implementation plans are being developed – a process likely to take two years. Vietnam’s recent moves forward on free trade agreements (FTA) make it easier to attract FDI by providing better market access for Vietnamese exports and encouraging investor-friendly reforms. The EU-Vietnam Free Trade Agreement (EVFTA) entered into force August 1, 2020. The UK-Vietnam Free Trade Agreement entered into force May 1, 2021. The Regional Comprehensive Economic Partnership (RCEP) entered into force January 1, 2022, for 10 countries, including Vietnam. These agreements may benefit U.S. companies operating in Vietnam by reducing barriers to inputs from and exports to participating countries, but also make it more challenging for U.S. exports to Vietnam to compete against contenders benefiting from preferential treatment. Vietnam is a founding member and active participant in ongoing Indo-Pacific Economic Framework for Prosperity (IPEF) negotiations involving the United States and 13 regional partners. In February 2021, the 13th Party Congress of the Communist Party of Vietnam (CPV) approved a 10-year economic strategy that calls for shifting foreign investment to high-tech industries and ensuring such investment meets higher standards relating to environmental protection. At the beginning of 2021, Vietnam’s new Securities Law and Labor Code, which the National Assembly originally approved in 2019, came into force. The new Securities Law formally states the government’s intention to remove foreign ownership limits for investment in most industries. The new Labor Code includes several updated provisions that support greater contract flexibility, grant formal recognition to a greater part of the workforce, and allow workers to join independent workers’ rights organizations, though key implementing decrees remain pending. In June 2020, Vietnam passed a revised Law on Investment and a new Public-Private Partnership Law, both of which are designed to encourage foreign investment in large infrastructure projects, reduce the burden on the government to finance such projects, and increase linkages between foreign investors and the Vietnamese private sector. Despite having a relatively high level of FDI net inflows as a percentage of GDP compared to regional peers, Vietnam faces some significant challenges with its investment climate. These include widespread corruption, the entrenched position of state-owned enterprises (SOEs) in certain sectors, regulatory uncertainty in key sectors, a weak and opaque legal regime, poor enforcement of intellectual property rights, a shortage of skilled labor, restrictive labor practices, and slow government decision-making processes. With high reliance on inputs from the People’s Republic of China, Vietnamese manufacturing is vulnerable to forced labor risks in supply chains, though the government and industry are actively working to address these concerns. Although Russia’s war of aggression against Ukraine has had minimal impacts on Vietnam’s economy to date, fertilizer shortages caused by extended hostilities may pose food security challenges. Table 1: Key Metrics and Rankings Measure Year Index/Rank Website Address TI Corruption Perceptions Index 2022 77 of 180 http://www.transparency.org/research/cpi/overview Global Innovation Index 2022 48 of 132 https://www.globalinnovationindex.org/analysis-indicator U.S. FDI in partner country ($M USD, historical stock positions) 2021 USD 2,696https://apps.bea.gov/international/factsheet/World Bank GNI per capita 2021 USD 3,590 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD Policies Towards Foreign Direct InvestmentFDI continues to play a key role in driving Vietnam’s economic growth and development. Vietnam’s customs authority reported that so-called FDI companies exported $274 billion worth of goods in 2022, representing 74 percent of total goods exports. The government, at both central and municipal levels, actively seeks to attract FDI. The Politburo issued Resolution 55 in 2019 to increase Vietnam’s attractiveness to foreign investment, aiming to attract $50 billion in new foreign investment by 2030. In 2020, the government revised laws on investment and enterprise, in addition to passing the Public-Private Partnership Law, to further the goals of Resolution 55. The revisions encourage high-quality investment, the development and use of advanced technologies, and environmental protection mechanisms. While Vietnam’s Law on Investment says the government must treat foreign and domestic investors equally, foreign investors have complained about facing extra hurdles to get ordinary government approvals. The government continues to have foreign ownership limits (FOLs) in industries Vietnam considers important to national security. In January 2020, the government removed FOLs on companies in the electronic payments sector and reformed electronic payments procedures for foreign firms. Some U.S. investors report that these changes have provided more regulatory certainty, which has, in turn, instilled greater confidence as they consider long-term investment opportunities in Vietnam. U.S. investors continue to cite concerns about confusing tax regulations and retroactive changes to laws and regulations, including with respect to tax rates, tax policies, and preferential treatment of state-owned enterprises (SOEs). U.S. companies also report facing difficulties in extending and renewing investment certificates, citing prolonged periods of non-responsiveness from government agencies. In 2021, a survey by the American Chamber of Commerce (AmCham) in Hanoi identified the need for “administrative reforms that streamline regulations and promote transparency” as the most important element of a roadmap for sustainable growth in Vietnam. The Ministry of Planning and Investment (MPI) is the country’s national authority charged with promoting and facilitating foreign investment; most provinces and cities also have local equivalents. MPI and local investment promotion offices provide information and explain regulations and policies to foreign investors. They also inform the prime minister and National Assembly on trends in foreign investment. However, U.S. investors should still consult legal counsel or other experts regarding issues pertaining to investment. Vietnam’s senior leaders often meet with foreign governments and private sector representatives to emphasize Vietnam’s attractiveness as an FDI destination. The semiannual Vietnam Business Forum includes meetings between foreign investors and Vietnamese government officials. The U.S.-ASEAN Business Council, AmCham, and other U.S. associations also host missions for their U.S. company members, which allow for direct engagement with senior government officials. Foreign investors in Vietnam have reported that these meetings and dialogues have helped address obstacles. Limits on Foreign Control and Right to Private Ownership and EstablishmentBoth foreign and domestic private entities have the right to establish and own business enterprises in Vietnam and engage in most forms of legal remunerative activity in non-regulated sectors. Vietnam has some statutory restrictions on foreign investment, including FOLs or requirements for joint partnerships, projects in banking, network infrastructure services, non-infrastructure telecommunication services, transportation, energy, and defense. New regulations introduced in March 2021 identify 25 business lines in which foreigners are prohibited to invest and 59 other business lines subjected to market access requirements. By law, the prime minister can waive FOLs on a case-by-case basis. In practice, however, when the government has removed or eased FOLs, it has done so for a whole industry or sector rather than for a specific investment. The level of foreign ownership or control allowed in a particular sector generally depends on the strategic importance of the sector to the Vietnamese economy and the government’s policy objectives. The government of Vietnam periodically reviews and adjusts FOLs based on its economic development goals and investment needs. MPI plays a key role with respect to investment screening. All FDI projects require approval by the People’s Committee in the province in which the project would be located. By law, large-scale FDI projects must also obtain the approval of the National Assembly before investment can proceed. MPI’s approval process includes an assessment of the investor’s legal status and financial strength, the project’s compatibility with the government’s long- and short-term goals for economic development and government revenue, the investor’s technological expertise, environmental protection concerns, and plans for land use and land clearance compensation, if applicable. The government can, and sometimes does, stop foreign investment if it deems the investment harmful to Vietnam’s national security. Certain types of FDI projects require the prime minister’s approval, including those for airports; seaports deemed strategic by the government; casinos; oil and gas exploration, production, and refining; telecommunications and network infrastructure; forestry; publishing; and projects that need approval from more than one province. Other Investment Policy ReviewsIn the past five years, Vietnam has undergone a number of third-party investment policy reviews, including by the WTO , World Bank , and OECD . Business FacilitationThe government of Vietnam has several initiatives in progress to implement administrative reforms, such as building e-government platforms and single-window services. In April 2023, USAID and the Vietnam Chamber of Commerce and Industry (VCCI) released the Provincial Competitiveness Index (PCI) 2022 Report . This annual report provides an independent, unbiased view on the provincial business environment by surveying thousands of domestic private firms on a variety of business issues. Overall, Vietnam’s median PCI score improved, reflecting the government’s efforts to improve economic governance and the quality of infrastructure, as well as a decline in the prevalence of corruption. Vietnam’s nationwide business registration website is available here . Information on Vietnam’s investment regulations can be found online via the government’s portal for foreign investment procedures . The website provides information to investors regarding administrative procedures applicable to investment and income-generating operations. Outward InvestmentThe government does not have a clear mechanism to promote or incentivize outward investment. Domestic investors wishing to invest abroad face a number of procedural regulations. Singapore, Laos, the United States, Australia, and Germany are the most popular destinations for outward Vietnamese FDI. Vietnam has trading relationships with more than 200 countries. According to UNCTAD, Vietnam has 50 bilateral investment treaties in force and is party to 26 treaties with investment provisions. Vietnam is also a member of 15 FTAs, including the EU-Vietnam Free Trade Agreement (EVFTA) and the related EU-Vietnam Investment Protection Agreement (EVIPA). EVIPA replaces 21 signed bilateral investment treaties between Vietnam and individual European countries. Vietnam is a member of regional FTAs with investment chapters, including the Regional Comprehensive Economic Partnership (RCEP), and the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). Vietnam is a member of the OECD Inclusive Framework on Base Erosion and Profit Shifting. Vietnam is also party to the Inclusive Framework’s October 2021 deal on the two-pillar solution to global tax challenges, including a global minimum corporate tax. Vietnam has signed double taxation avoidance agreements with 80 countries. Some agreements have not come into force, including a U.S.-Vietnam double taxation avoidance agreement. Over the last several years, U.S. and other foreign companies have disputed retroactive government tax audits. U.S. businesses generally attribute these cases to unclear, conflicting, and amended language in investment and tax laws, combined with the government’s desire for revenue to reduce chronic budget deficits, and they complain that these retroactive tax cases make it difficult to predict their eventual tax liability. In some cases, the government has complained publicly that some foreign investors, including some from the United States, engage in transfer pricing abuse. Transparency of the Regulatory SystemU.S. companies continue to report that they face frequent and significant challenges with inconsistent regulatory interpretation, irregular enforcement, and an unclear legal framework. U.S. companies have consistently voiced concerns that Vietnam lacks a fair legal system for investment, which affects U.S. companies’ ability to do business in Vietnam. The 2021 PCI report documented companies’ difficulties in accessing land and post-registration procedures. Accounting systems are inconsistent with international norms, and this increases transaction costs for investors. The government had previously said it intended to have most companies transition to International Financial Reporting Standards by 2020. Unable to meet this target, the Ministry of Finance in March 2020 extended the deadline to 2025. In Vietnam, the National Assembly passes laws, which serve as the highest form of legal direction, but laws often lack specifics. Ministries provide draft laws to the National Assembly. The prime minister issues decrees, which provide guidance on the implementation of laws. Individual ministries issue circulars, which provide guidance on how a ministry will administer aspects of a law or decree within its area of responsibility. After implementing ministries have cleared a particular law for transmittal to the National Assembly, the government posts the law for a 60-day comment period. However, in practice, the public comment period is sometimes truncated. Foreign governments, NGOs, and private-sector companies can, and do, comment during this period, after which the responsible ministry may redraft the law. Upon completion of the revisions, the ministry submits the legislation to the Office of the Government for approval, including the prime minister’s signature, and the legislation moves to the National Assembly for committee review. During this process, the National Assembly can send the legislation back to the originating ministry for further changes. The Politburo reserves the right to review special or controversial laws. In practice, drafting ministries often lack the resources needed to conduct adequate data-driven assessments. Ministries are supposed to conduct policy impact assessments that holistically consider all factors before drafting a law, but the quality of these assessments varies. The Ministry of Justice (MOJ) oversees administrative procedures for government ministries and agencies. The MOJ’s Regulatory Management Department oversees and reviews legal documents after they are issued to ensure compliance with the legal system. The Law on the Promulgation of Legal Normative Documents requires all legal documents and agreements to be published online and open for comments for 60 days, and to be published in the Official Gazette before implementation. Business associations and various chambers of commerce regularly comment on draft laws and regulations. However, when issuing more detailed implementing guidelines, government entities sometimes issue circulars with little advance warning and without public notification, resulting in little opportunity for comment by affected parties. In several cases, authorities have allowed comments for first drafts only and did not provide subsequent draft versions to the public. The centralized location where key regulatory actions are published can be found here . The Ministry of Finance has implemented annual disclosure requirements for public companies with respect to their environmental, social, and governance policies. In 2016, the State Securities Commission, in cooperation with the International Finance Corporation, published an Environmental and Social Disclosure Guide that encourages independent external audits. While almost all public companies in Vietnam now perform an environmental and social impact assessment when investing in new projects, many see this exercise as merely procedural. While general information is publicly available, Vietnam’s public finances and debt obligations (including explicit and contingent liabilities) are not sufficiently transparent. Official public debt figures exclude the debt of certain large SOEs. Vietnam could improve its fiscal transparency by, among other things, making its executive budget proposal, including budgetary and debt expenses, widely and easily accessible to the general public before the National Assembly enacts the budget and ensuring greater transparency of off-budget accounts. International Regulatory ConsiderationsVietnam is a member of ASEAN, a 10-member regional organization that works to advance economic integration through cooperation in economic, social, cultural, technical, scientific, and administrative fields. Within ASEAN, the ASEAN Economic Community (AEC) has the goal of establishing a single market across ASEAN nations (similar to the EU’s single market), but member states have not made significant progress. To date, AEC’s greatest success has been in reducing tariffs on most products traded within the bloc. Vietnam is also a member of the Asia-Pacific Economic Cooperation (APEC), an inter-governmental forum for 21 member economies in the Pacific Rim that promotes free trade throughout the Asia-Pacific region. APEC aims to facilitate business among member states through trade facilitation programming, senior-level leaders’ meetings, and regular dialogue. Vietnam is party to the WTO’s Trade Facilitation Agreement (TFA) and has been implementing the TFA’s Category A provisions. Vietnam submitted its Category B and Category C implementation timelines in August 2018. According to these timelines, Vietnam will fully implement the Category B and C provisions by the end of 2023 and 2024, respectively. Legal System and Judicial IndependenceVietnam’s legal system mixes indigenous, French, and Soviet-inspired civil legal traditions. Vietnam generally follows an operational understanding of the rule of law that is consistent with its top-down, one-party political structure and traditionally inquisitorial judicial system, though in recent years the country has begun gradually introducing elements of an adversarial system. The hierarchy of Vietnam’s courts is, in descending order of authority: the Supreme People’s Court; High People’s Courts; Provincial People’s Courts; and District People’s Courts. The People’s Courts operate in five divisions: criminal, civil, administrative, economic, and labor. The Supreme People’s Procuracy is responsible for prosecuting criminal activities as well as supervising judicial activities. Military tribunals at various levels also exist. Vietnam lacks an independent judiciary, and there is no separation of powers in the legal system. For example, Vietnam’s chief justice is also a member of the CPV’s Central Committee. According to Transparency International, there is a significant risk of corruption in judicial rulings. According to one public report, nearly one-fifth of surveyed Vietnamese households that have been to court declared that they had paid bribes at least once. Many businesses try to avoid Vietnamese courts as much as possible. The judicial system continues to face additional problems. For example, many judges and arbitrators lack adequate legal training and are appointed through personal or political contacts with party leaders or based on their political views. Regulations or enforcement actions are appealable, and appeals are adjudicated in the national court system. Through a separate legal mechanism, individuals and companies can file complaints against enforcement actions under the Law on Complaints. The Commercial Law regulates commercial contracts between businesses. Specific regulations prescribe distinctive forms of contracts, depending on the nature of particular deals. If a contract does not contain a dispute resolution clause, courts will have jurisdiction over a dispute. Vietnamese law allows dispute resolution clauses in commercial contracts explicitly through the Law on Commercial Arbitration. The law follows the United Nations Commission on International Trade Law model law as an international standard for procedural rules. Vietnamese courts will only consider recognition of civil judgments issued by courts in countries that have entered into agreements on recognition of judgments with Vietnam or on a reciprocal basis. However, except for a treaty with France, these treaties only cover non-commercial judgments. Competition and Antitrust LawsThe Vietnam Competition and Consumer Authority (VCCA) within the Ministry of Industry and Trade (MOIT) reviews transactions for competition-related concerns. In 2021, VCCA reported that 125 merger control notifications, most of which were related to real estate, have been submitted since 2019. 30 percent of cases notified involved offshore transactions. VCCA has clarified that the Vietnamese merger control regime seeks to regulate only relevant transactions that may have an anticompetitive impact on Vietnamese markets, especially those that enable enterprises to hold a dominant or monopoly position and heighten the risk of an abuse of dominance. Expropriation and CompensationUnder the law, the government of Vietnam can only expropriate investors’ property in cases of emergency, disaster, defense, or national interest, and the government is required to compensate investors if it expropriates property. Under the U.S.-Vietnam Bilateral Trade Agreement, Vietnam must apply international standards of treatment in any case of expropriation or nationalization of U.S. investor assets, which includes acting in a non-discriminatory manner, with due process of law and with prompt, adequate, and effective compensation. Dispute SettlementICSID Convention and New York ConventionVietnam is not a party to the International Centre for Settlement of Investment Disputes (ICSID) Convention. MPI has submitted a proposal to the government to join the ICSID Convention, but the government has not moved forward on this initiative. Vietnam is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Investor-State Dispute SettlementVietnam has signed 67 bilateral investment treaties, is party to 26 treaties with investment provisions, and is a member of 15 free trade agreements in force, some of which include provisions for investor-state dispute settlement (ISDS). Technically, foreign and domestic arbitral awards are legally enforceable in Vietnam; however, foreign investors in Vietnam generally prefer international arbitration for predictability. Vietnamese courts may reject foreign arbitral awards if an award is contrary to the basic principles of domestic law. According to UNCTAD, since 2013 there have been several ISDS cases brought against Vietnam under the U.S.-Vietnam Bilateral Trade Agreement. An arbitral tribunal decided in favor of Vietnam in one case, and the parties decided to discontinue the other. Vietnam is the respondent in several ongoing ISDS cases involving investors from the United States, the People’s Republic of China, South Korea, and the UK. International Commercial Arbitration and Foreign CourtsVietnam’s courts are often ineffective in settling commercial disputes due to Vietnam’s underdeveloped legal system. Negotiation between concerned parties or arbitration are the most common means of dispute resolution. The Law on Commercial Arbitration does not allow a foreign investor to refer an investment dispute to a court in a foreign jurisdiction. Vietnamese judges cannot apply foreign laws to a case before them, and foreign lawyers cannot represent plaintiffs in a court of law. There are no readily available statistics on how often domestic courts rule in favor of SOEs. In general, the court system in Vietnam works slowly. International arbitration awards, when enforced, may take years from original judgment to payment. Many foreign companies, due to concerns related to time, costs, and bribery-related risks, have reported that they have turned to international arbitration or have asked influential individuals to weigh in. Bankruptcy RegulationsUnder the Bankruptcy Law, bankruptcy is not criminalized unless it relates to another crime. The law defines insolvency as a condition in which an enterprise is more than three months overdue in meeting its payment obligations. The law also contains provisions allowing creditors to commence bankruptcy proceedings against an enterprise and procedures for credit institutions to file for bankruptcy. The Credit Information Center of the State Bank of Vietnam provides credit information services for foreign investors concerned about bankruptcy risks with respect to Vietnamese partners. Investment IncentivesForeign investors are exempt from import duties on goods imported for their own use that cannot be procured locally, including machinery, vehicles, components and spare parts for machinery and equipment, raw materials, inputs for manufacturing, and construction materials. Remote and mountainous provinces and special industrial zones are allowed to grant additional tax breaks and other incentives to prospective investors. Investment incentives, including lower corporate income tax rates, exemption of some import tariffs, and favorable land rental rates, are available in the following sectors: advanced technology, research and development, new materials, energy, clean energy, renewable energy, energy saving products, automobiles, software, waste treatment and management, and primary or vocational education. The government rarely issues guarantees for financing FDI projects. When it does so, it is usually because the project is connected to a national security priority. Joint financing with the government occurs when a foreign entity partners with an SOE. The government’s reluctance to guarantee projects reflects its desire to stay below a statutory 65 percent public debt-to-GDP cap and a desire to avoid incurring liabilities from projects that would not be economically viable without the guarantee. This has delayed approval of many large-scale FDI projects. MOIT is seeking to implement a USAID-assisted Direct Power Purchase Agreement (DPPA) pilot scheme which would enable renewable energy generators to directly sell clean electricity to private sector customers. Although the project was planned to begin in 2022, as of May it remains on hold pending government approval. Under current electricity regulations in Vietnam, Electricity Vietnam has a statutory monopoly over the transmission, distribution, wholesale, and retail of electricity and is also the sole offtaker in the market. Foreign Trade Zones/Free Ports/Trade FacilitationVietnam has prioritized efforts to establish and develop different kinds of foreign trade zones (FTZs) over the last decade. Industrial zones (IZs) are dedicated areas for industrial activities; export processing zones (EPZs) are a specific kind of IZ, focused on export-oriented production and activities. Vietnam currently has more than 350 IZs and EPZs. Many foreign investors report that it is easier to implement projects in IZs than in other types of zoned land because they do not have to be involved in site clearance and infrastructure construction. Enterprises in FTZs pay no duties when importing raw materials if they export the finished products. Customs warehouse companies in FTZs can provide transportation services and act as distributors for the goods deposited. Companies operating in these economic zones are able to take advantage of certain tax incentives not available elsewhere in Vietnam. Additional services relating to customs declaration, appraisal, insurance, reprocessing, or packaging require the approval of the provincial customs office. In practice, the time involved for clearance and delivery of goods by provincial customs officials can be lengthy and unpredictable. Performance and Data Localization RequirementsThe Law on Investment (LOI) establishes a number of limitations on the state’s ability to impose certain conditions or requirements on investors. The LOI and related regulations identify sectors “with market entry restrictions” and “with conditions” for foreign investors. Market entry requirements and limitations for foreign investment in “conditional” sectors are specified in the LOI and other specialized laws. All investors, foreign or domestic, must obtain formal approval, in the form of business licenses or other certifications, to satisfy “necessary conditions for reasons of national defense, security or order, social safety, social morality, and health of the community.” In addition to market access conditions, the LOI places two additional conditions on foreign investors investing in or acquiring stakes in a Vietnamese company: the investment must not compromise national defense and security of Vietnam, and the investment must comply with the conditions relating to the use of sea-lands, borderlands, and coastal lands in accordance with applicable laws. The term “national defense and security” is not defined under the LOI, requiring investment projects to go through Ministry of National Defense and Ministry of Public Security (MPS) for appraisal. This ambiguity gives regulatory agencies considerable flexibility to restrict investment activities in sensitive sectors or locations. For existing investment projects, the extension of allowed investment terms will not be granted to any project using outdated technology, having any potential negative impact on the environment, or involving any exploitation of natural resources. The Law on Cybersecurity came into effect in 2019. Implementing regulations that went into effect in August 2022 require all domestic companies, including foreign-invested subsidiaries in Vietnam, to store a copy of Vietnamese user data on servers located within Vietnam and establish a physical office in Vietnam that would be under the jurisdiction of Vietnamese law enforcement. If foreign firms, which are nominally exempt from the requirement, are found to be in “violation of Vietnamese laws,” MPS could force the firms to localize their data as well. Vietnam enacted the Personal Data Protection Decree (PDPD) in April 2023. The PDPD applies to domestic and foreign entities directly engaging in data processing in Vietnam, regardless of industry or business. The PDPD defines “basic personal data” but only vaguely defines “sensitive personal data” as personal data that, when violated, affects an individual’s rights. The PDPD requires organizations to implement data protection programs, including appointing a data protection officer or department, conducting data protection impact assessments for cross-border data transfers, and mandatory reporting of data privacy violations. The PDPD does not impede free cross-border data flow. Industry experts have raised concerns about the decree’s broad scope, extra compliance burden for businesses, and required annual review mechanism. While the PDPD has effect from July 2023, it stipulates a two-year grace period for small- and medium-sized businesses to implement data protection programs. Real PropertyThe state collectively owns and manages all land in Vietnam. Neither foreigners nor Vietnamese nationals can own land. However, the government grants land use and building rights, often to individuals. According to the Ministry of National Resources and Environment (MONRE), as of December 2021 the government has issued land use rights certificates for 96 percent of land in Vietnam. If land is not used according to the land use rights certificate or if it is unoccupied, the rights revert to the government. If investors do not use land leased within 12 consecutive months or delay land use by 24 months from the original investment schedule, the government is entitled to reclaim the land. Investors can seek an extension but not for more than 24 months. Vietnam is building a national land registration database, and some localities have already digitized their land records. State protection of property rights is still evolving. The law does not clearly specify circumstances in which the government may invoke eminent domain. Under the Housing Law and Real Estate Business Law, the government can take land if it deems it necessary for socio-economic development in the public or national interest and the prime minister, National Assembly, or Provincial People’s Council approves such action. However, the law loosely defines “socio-economic development.” Disputes over land rights continue to be a significant driver of social protests in Vietnam. Foreign investors also may be exposed to land disputes through merger and acquisition activities when they buy into a local company or implement large-scale infrastructure projects. Foreign investors can lease land for renewable periods of 50 years, and up to 70 years in some underdeveloped areas. This allows titleholders to conduct property transactions, including mortgages on property. Some investors have encountered difficulties amending investment licenses to expand operations onto land adjoining existing facilities. Investors also note that local authorities may seek to increase requirements for land use rights when current rights must be renewed, particularly when the investment in question competes with Vietnamese companies. Intellectual Property RightsVietnam remains on the Watch List in 2023. Vietnam does not have a strong record on protecting and enforcing intellectual property (IP) rights. Fractured authority and lack of coordination among ministries and agencies responsible for enforcement are the primary obstacles, and capacity constraints related to enforcement persist, in part, due to a lack of resources and IP expertise. Vietnam has no specialized IP courts or judges and continues to rely heavily on administrative enforcement actions, which prioritize ending infringing behavior rather than imposing penalties on violators, and have consistently failed to deter widespread counterfeiting and piracy. There have been some positive developments since 2020, such as the issuance of a national IP strategy, public awareness campaigns and training activities, and reported improvements on border enforcement in some parts of the country. Vietnam’s IP Law was amended in 2022 and took effect at the beginning of 2023. The law brings Vietnam’s IP regulations into line with its commitments under the CPTPP and EVFTA. However, IP enforcement remains a challenge, and the United States is monitoring the implementation of the IP provisions of the CPTPP and EVFTA. The United States is closely monitoring and engaging with the Vietnamese government on the ongoing implementation of amendments to the Penal Code, particularly with respect to criminal enforcement of IP violations. Counterfeit goods are widely available online and in physical markets. Issues persist with online piracy (including the use of piracy devices and applications to access unauthorized audiovisual content), book piracy, a lack of effective criminal measures for cable and satellite signal theft, and both private and public sector software piracy. Vietnam’s system for protecting against the unfair commercial use and unauthorized disclosure of undisclosed tests or other data generated to obtain marketing approval for pharmaceutical products needs further clarification. In its international agreements, Vietnam has committed to strengthen its IP regime. In September 2019, Vietnam acceded to the Hague Agreement Concerning the International Registration of Industrial Designs, and the United States is monitoring implementation of that agreement. Vietnam officially joined the World Intellectual Property Organization (WIPO) Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure in June 2021, the WIPO Copyright Treaty in November 2021, and the WIPO Performances and Phonograms Treaty in April 2022. In July 2022 Vietnam released a roadmap to implement the Budapest Treaty. The United States, through the U.S.-Vietnam Trade and Investment Framework Agreement (TIFA) and other bilateral fora, continues to urge Vietnam to address IP issues and provide interested stakeholders with meaningful opportunities for input as it proceeds with these reforms. The United States and Vietnam signed a Customs Mutual Assistance Agreement in December 2019, which will facilitate bilateral cooperation in IP enforcement. For more information, please see the following reports from the Office of the U.S. Trade Representative:
For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ . Capital Markets and Portfolio InvestmentThe country has two stock markets: the Ho Chi Minh City Stock Exchange (HOSE), which lists publicly traded companies, and the Hanoi Stock Exchange (HNX), which lists bonds and derivatives. The Law on Securities states that Vietnam Exchange, a parent company for both exchanges, with board members appointed by the government, will manage trading operations. By the end of June 2025, HNX plans to complete transferring all its listed stocks to HOSE and focus on bonds and derivatives; HOSE will focus on listed stocks, fund certificates, warrants, and stocks for the unlisted public company market (UPCoM), which is currently managed by HNX. Morgan Stanley Capital International (MSCI) classifies Vietnam as a frontier market, primarily due to FOLs as well as deficiencies related to equal rights for foreign investors, information flow, foreign exchange liberalization, and market infrastructure. The frontier market designation precludes some of the world’s biggest asset managers from investing in Vietnam. Vietnam did not meet its goal to be considered an “emerging market” in 2020 and pushed back the timeline to 2025. Foreign investors often face difficulties in making portfolio investments because of cumbersome bureaucratic procedures. Furthermore, in the first three months of 2021, surges in trading frequently crashed the HOSE’s decades-old technology platform, resulting in investor frustration. Vietnam put into place an interim trading platform in July 2021 that has addressed HOSE’s overload issues while it awaits a new trading system. The new system is expected to begin official operations in mid-2023, which will help meet market requirements for Vietnam’s stock trading, including with respect to market information, market surveillance, clearing, settlement, and registration and depository. There is sufficient liquidity in the market to enter and maintain sizable positions. Combined market capitalization at the end of 2022 was approximately $295 billion, equal to 73 percent of Vietnam’s GDP, with the HOSE accounting for $170 billion, the Hanoi Stock Exchange $11 billion, and the UPCoM $41 billion. Bond market capitalization reached over $74 billion in 2022, the majority of which comprised government bonds held by domestic commercial banks. Vietnam complies with International Monetary Fund (IMF) Article VIII. The government notified the IMF that it accepted the obligations of Article VIII, Sections 2, 3, and 4, effective November 8, 2005. Local banks generally allocate credit on market terms, but the banking sector is not as sophisticated or well-capitalized as those in advanced economies. Foreign investors can acquire credit in the local market, but both foreign and domestic firms often seek foreign financing since domestic banks do not have sufficient capital at appropriate interest rate levels for a significant number of projects. Money and Banking SystemVietnam’s banking sector has been stable since recovering from the 2008 global recession. Nevertheless, the State Bank of Vietnam (SBV), Vietnam’s central bank, estimated in 2022 that 30 percent of Vietnam’s population is underbanked or lacks bank accounts due to a preference for cash, distrust in commercial banking, limited geographical distribution of banks, and a lack of financial acumen. The World Bank’s Global Findex Database 2017 estimated that only 31 percent of Vietnamese over the age of 15 had an account at a financial institution or through a mobile money provider. The COVID-19 pandemic increased strains on the financial system as a growing number of debtors were unable to make loan payments. This strain has continued, though Vietnamese banks broadly reported stable financial results in 2022. At the end of 2022, SBV reported that the percentage of non-performing loans in the banking sector was 1.92 percent, up from 1.9 percent at the end of 2021. By the end of 2022, the banking sector’s estimated total assets stood at $739 billion, of which $312 billion belonged to seven state-owned and majority state-owned commercial banks, accounting for 42 percent of total assets in the sector. Though classified as joint-stock (private) commercial banks, the Bank of Investment and Development Bank (BIDV), Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank), and Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) all are majority-owned by SBV. In addition, SBV holds 100 percent of Agribank, Global Petro Commercial Bank (GPBank), Construction Bank (CBBank), and Oceanbank. Currently, the total FOL in a Vietnamese bank is 30 percent, with a five percent limit for non-strategic individual investors, a 15 percent limit for non-strategic institutional investors, and a 20 percent limit for strategic institutional partners. SBV has proposed lifting the foreign ownership limit to 49 percent from the existing cap of 30 percent for banks that acquire or participate in restructuring “weak” banks. At the same time, SBV has proposed other measures to tighten other ownership limits in the banking sector. The U.S. Mission in Vietnam did not find any evidence that a Vietnamese bank had lost a correspondent banking relationship in the past three years; there is also no evidence that a correspondent banking relationship is currently in jeopardy. Foreign Exchange and RemittancesForeign ExchangeThere are no legal restrictions on foreign investors converting and repatriating earnings or investment capital from Vietnam. A foreign investor can convert and repatriate earnings, provided the investor has the supporting documents required by law, proving that they have completed financial obligations, including with respect to corporate income tax declarations and payments. SBV sets the interbank lending rate and announces a daily interbank reference exchange rate. SBV determines the latter based on the previous day’s average interbank exchange rates, while considering movements in the currencies of Vietnam’s major trading and investment partners. Remittance PoliciesVietnam mandates that in-country transactions be made in Vietnamese dong. The government allows foreign businesses to remit lawful profits, capital contributions, and other legal investment earnings via authorized institutions that handle foreign currency transactions. Although foreign companies can remit profits legally, sometimes these companies find bureaucratic difficulties, as they are required to provide supporting documentation (e.g., audited financial statements, import/foreign-service procurement contracts, proof of tax obligation fulfillment, etc.). SBV also requires foreign investors to submit notification of profit remittance abroad to tax authorities at least seven working days prior to the remittance; otherwise, there is no waiting period to remit. The inflow of foreign currency into Vietnam is less constrained. There are no recent changes or plans to change remittance policies that either tighten or relax access to foreign exchange for profit remittances. Sovereign Wealth FundsThe wholly state-owned State Capital Investment Corporation (SCIC), established in 2005, acts as a sovereign wealth fund for Vietnam. SCIC has been under the supervision of the Committee for Management of State Capital at Enterprises (CMSC) since November 2018. SCIC does not follow the Santiago Principles, nor does it participate in the International Forum of Sovereign Wealth Funds. 100 percent of SCIC’s portfolio is invested in Vietnam, and its investment of dividends and proceeds does not appear to have any ramifications for U.S. investors. SCIC’s financial statements are audited and can be found on its website . The 2020 Enterprises Law, which came into effect at the beginning of 2021, defines an SOE as an enterprise that is more than 50 percent owned by the government. Vietnam does not officially publish a list of SOEs. In 2018, the government created CMSC to manage SOEs with increased transparency and accountability. CMSC’s goals include accelerating privatization in a transparent manner, promoting public listings of SOEs, and transparency in the overall financial management of SOEs. SOEs do not operate on a level playing field with domestic or foreign enterprises and continue to benefit from preferential access to resources such as land, capital, and political largesse. Third-party market analysts note that a significant number of SOEs have extensive liabilities, including pensions owed, real estate holdings in areas not related to SOEs’ ostensible remit, and a lack of transparency with respect to operations and financing. Privatization ProgramVietnam officially started privatizing SOEs in 1998. The process has been slow because privatization typically transfers only a small share of an SOE (two to three percent) to the private sector, and investors have had concerns about the financial health of many companies. Additionally, the government has inadequate regulations with respect to privatization procedures. Companies are required to publish their corporate social responsibility activities, corporate governance work, information of related parties and transactions, and compensation of management. Companies must also announce extraordinary circumstances, such as changes to management, dissolution, or establishment of subsidiaries, within 36 hours of the event. Most multinational companies implement corporate social responsibility (CSR) programs that contribute to improving the business environment in Vietnam, and awareness of CSR programs is increasing among large domestic companies. VCCI conducts CSR training and highlights corporate engagement on a dedicated website in partnership with the United Nations. AmCham also has a CSR group that organizes events and activities to raise awareness of social issues. Non-governmental organizations collaborate with entities such as VCCI and MOLISA to promote business practices in Vietnam in line with international norms and standards. The Extractive Industries Transparency Initiative was introduced to Vietnam many years ago, but the government has not officially participated in it. Overall, the government has not defined responsible business conduct (RBC), nor has it established a national plan or agenda for RBC. The government has yet to establish a national point of contact or ombudsman for stakeholders to get information or raise concerns regarding RBC. The new Labor Code, which came into effect at the beginning of 2021, recognizes the right of employees to establish their own representative organizations, allows employees to unilaterally terminate labor contracts without reason, and extends legal protection to non-written contract employees. For a detailed description of regulations on worker/labor rights in Vietnam, see the Department of State’s 2022 Human Rights Report. Vietnam has participated in the OECD Southeast Asia Regional Program since its launch in 2014 and has cooperated in several OECD-led policy reviews. Vietnam also participates in the OECD-Southeast Asia Corporate Governance Initiative. Vietnam does not have any domestic measures requiring supply chain due diligence for companies that source minerals that may originate from conflict-affected areas or inputs that may be produced using forced labor. Vietnam’s Law on Consumer Protection is largely ineffective, according to industry experts. A consumer who has a complaint on a product or service can petition the Association for Consumer Protection (ACP) or district governments. ACP is a non-governmental, volunteer organization that lacks law enforcement or legal power, and local governments are typically unresponsive to consumer complaints. The Vietnamese government has not focused on consumer protection over the last several years. Vietnam allows foreign companies to work in private security. Vietnam has not ratified the Montreux Documents, is not a supporter of the International Code of Conduct or Private Security Service Providers and is not a participant in the International Code of Conduct for Private Security Service Providers’ Association. Vietnamese legislation clearly specifies businesses’ responsibilities regarding environmental protection. The amended Environmental Protection Law, which came into effect at the beginning of 2022, states that environmental protection is the responsibility and obligation of all organizations, institutions, communities, households, and individuals. The law also specifies that manufacturers bear responsibility for waste treatment and recycling. The Penal Code includes a chapter with 12 articles regulating different types of environmental crimes. Penalties for infractions carry a maximum of 15 years in prison and a fine equivalent to $650,000. However, enforcement remains a problem. To date, no complaint or request for compensation due to damages caused by pollution or other environmental violations has ever been successfully resolved in court due to difficulties in identifying the level of damages and proving the relationship between violators and damages. In the past several years, there have been high-profile, controversial instances of impacts on human rights by commercial activities, particularly over the revocation of land rights for real estate development projects. Government suppression of these protests ranged from intimidation and harassment via the media (including social media) to imprisonment. There are numerous examples of government-supported forces beating protestors, journalists, and activists covering land issues. Victims have reported they are unable to press claims against their attackers. Additional Resources Department of State
Department of the Treasury
Department of Labor
Climate IssuesAt COP26, the prime minister announced Vietnam’s commitment to net zero emissions by 2050. Following COP26, Vietnam established a National Steering Committee on Implementation of COP26 Commitments headed by the prime minister. The prime minister has requested all relevant ministries to study and develop programs to fulfill Vietnam’s commitments. In 2022, Vietnam issued a new climate strategy valid until 2050 to reflect its net zero commitment. Vietnam also updated its Nationally Determined Contributions in 2022 in line with its net zero emissions commitment. In October 2021, Vietnam issued its National Strategy on Green Growth for 2021-2030. The strategy sets specific goals on greenhouse gas reductions and tasks various ministries to develop specific plans and strategies. The strategy also sets targets for green content requirements in public procurement. In February 2022, Vietnam issued its National Biodiversity Strategy for 2021-2030. Vietnam will increase the size of its protected and restored natural eco-systems under the new strategy, aiming to conserve and use biodiversity as a sustainable response to the effects of climate change. Vietnam is developing a National Action Plan on the Circular Economy which is expected to be issued by the government by the end of 2023. The action plan will provide guidance on implementation of the circular economy in Vietnam as defined in the 2020 Law on Environment Protection. Vietnam has laws to combat corruption by public officials, and they extend to all citizens. CPV General Secretary Nguyen Phu Trong has made fighting corruption a key focus of his administration, and the CPV regularly issues lists of party and other government officials who have been disciplined or prosecuted. Trong’s anti-corruption campaign extends to include “anti-negativity,” described loosely as acts that can cause public anger or reputational harm to the CPV. Nevertheless, corruption remains rife. Corruption is due in large part to low levels of transparency, accountability, and media freedom, as well as poor remuneration for government officials, and inadequate systems for holding officials accountable. Competition among agencies for control over businesses and investment projects has created overlapping jurisdictions and bureaucratic procedures that, in turn, create opportunities for corruption. The government has tasked various agencies to deal with corruption, including the Central Steering Committee for Anti-Corruption, chaired by the General Secretary Trong, the Government Inspectorate, and line ministries and agencies. Formed in 2007, the Central Steering Committee for Anti-Corruption has been under the purview of the CPV Central Commission of Internal Affairs since February 2013. The National Assembly provides oversight on the operations of government ministries. Civil society organizations have encouraged the government to establish a single independent agency with oversight and enforcement authority to ensure enforcement of anti-corruption laws and regulations. Resources to Report Corruption Contact at the government agency or agencies that are responsible for combating corruption: Mr. Phan Dinh Trac Chairman of Communist Party Central Committee Internal Affairs 4 Nguyen Canh Chan, Ba Dinh, Hanoi Tel: +84 0804-3557 Contact at a watchdog organization: Ms. Nguyen Thi Kieu Vien Executive Director of Towards Transparency Floor 4, No 37 Lane 35, Cat Linh Street, Dong Da, Hanoi, Vietnam Tel: +84-24-37153532 Fax: +84-24-37153443 Email: [email protected] Vietnam is a unitary single-party state, and its political and security environment is largely stable. Protests and civil unrest are rare, though there are occasional demonstrations against perceived or real social, environmental, labor, and political injustices. In August 2019, online commentators expressed outrage over the slow government response to an industrial fire in Hanoi that released unknown amounts of mercury. Other localized protests in 2019 and early 2020 broke out over alleged illegal dumping in waterways and on public land, and the perceived government attempts to cover up potential risks to local communities. Citizens sometimes protest actions of the People’s Republic of China (PRC), usually online. In June 2019, when PRC Coast Guard vessels harassed the operations of Russian oil and gas company Rosneft in Vietnam’s highest-producing natural gas field, Vietnamese citizens protested via Facebook and, in a few instances, in public. In April 2016, after the Formosa Steel plant discharged toxic pollutants into the ocean and killed a large number of fish, affected fishermen and residents in central Vietnam began a series of regular protests against the company and the government’s lack of response to the disaster. Protests continued into 2017 in multiple cities until security forces largely suppressed the unrest. Many activists who helped organize or document these protests were subsequently arrested and imprisoned. Although Vietnam has made some progress on labor issues in recent years, including, in theory, allowing the formation of independent unions, the sole union that has any real authority is the state-controlled Vietnam General Confederation of Labor (VGCL). Workers will not be able to form independent unions legally until the Ministry of Labor, Invalids, and Social Affairs (MOLISA) issues guidance on implementation of the 2019 Labor Code, including decrees on procedures to establish and join independent unions, and determines the level of autonomy independent unions will have in administering their affairs; this guidance remains pending as of May. Vietnam has been a member of the International Labor Organization (ILO) since 1992 and has ratified nine of the core ILO labor conventions (Conventions 100 and 111 on discrimination, Conventions 138 and 182 on child labor, Conventions 29 and 105 on forced labor, Conventions 155 and 187 on occupational safety and health, and Convention 98 on rights to organize and collective bargaining). The EVFTA requires Vietnam to ratify Convention 87 on freedom of association and protection of the right to organize by the end of 2023. Labor dispute resolution mechanisms vary. Individual labor disputes and rights-based collective labor disputes must go through a defined process that includes labor conciliation, labor arbitration, and a court hearing. Only interest-based collective labor disputes may legally be pursued via demonstration, and only after going through conciliation and arbitration. However, in practice, wildcat strikes organized by ad hoc groups are not uncommon and are usually resolved through negotiation with management. In 2022 there were 157 wildcat strikes nationwide, 50 more than in 2021, mostly related to disputes over wages and allowances. According to Vietnam’s General Statistics Office (GSO), in 2022 the country’s labor force of those aged 15 and above stood at 51.7 million people participating in the formal labor force. The average labor force participation rate for 2022 was 68.5 percent. The unemployment rate was 2.3 percent. Youth unemployment (ages 15-24) stood at 7.7 percent. Vietnam’s labor force is relatively young, with workers 15-39 years of age accounting for half of the total labor force. 62 percent of working-age women participate in the labor force, in comparison to 74 percent of working-age men. Estimates on the prevalence of informal employment in Vietnam vary depending on underlying methodologies, but the ILO estimates that upwards of 70 percent of workers are in informal employment. Informal employment has been gradually declining over time, according to ILO figures. An employer is permitted to dismiss employees due to technological changes, organizational changes (in cases of a merger, consolidation, or cessation of operation of one or more departments), when the employer faces economic difficulties, or for disruptive behavior in the workplace. There are no waivers on labor requirements to attract foreign investment. U.S. firms across multiple sectors report challenges finding workers with necessary skills. Despite having a high educational universalization rate, Vietnam has a relatively low-skilled workforce compared to other countries in the region. Data by Manpower Group show that in 2022, less than 12 percent of the labor force comprised skilled workers, a level almost unchanged from three years previously. Only five percent of Vietnamese workers can speak English, relatively low to the other countries in the region. Labor productivity is also low compared to regional peers. As of 2019, the average annual income of foreign expatriates working in Vietnam was higher than the world average, $78,750 compared to $75,996 worldwide. However, since 2019, getting and renewing work permits for foreign expatriates has become more difficult due to a new requirement that all foreign expatriates hold a bachelor’s degree as well as at least three years of working experience abroad in specialized training suitable for the expected job position in Vietnam, or else at least five years of working experience abroad and a practicing certificate suitable for the intended job position. The Overseas Private Investment Corporation (OPIC), the predecessor of the U.S. International Development Finance Corporation (DFC), signed a bilateral agreement with Vietnam in 1998. DFC currently has several active projects in Vietnam representing over $254 million in commitments. DFC biggest transaction provides up to $200 million loans to Southeast Asia Commercial Joint Stock Bank (SeABank) to expand the bank’s lending portfolio to small and medium-size enterprises (SMEs) among renewable energy, green finance, and women-owned SME customers. DFC is actively pursuing new financing and investment opportunities. |
