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What are the challenges?

Challenges and risks when doing business with Vietnam

Vietnam is ranked 70th out of 190 countries in the World Bank’s 2020 Ease of Doing Business Index (the UK ranks 8th): http://www.doingbusiness.org/en/data/exploreeconomies/vietnam.

The main challenges of doing business with Vietnam are:

  • corruption

  • bureaucracy

  • grey areas of Vietnamese law

  • lack of Intellectual Property Rights (IPR) enforcement

  • inadequate infrastructure

  • lack of skills

  • language barrier (so translators and interpreters are often needed)

You should ensure you take the necessary steps to comply with the requirements of the UK Bribery Act. See: https://www.gov.uk/government/publications/bribery-act-2010-guidance, and see the Foreign and Commonwealth Office’s Overseas Business Risk report for Vietnam at: https://www.gov.uk/government/publications/overseas-business-risk-vietnam/overseas-business-risk-vietnam for up-to-date advice.

[Source – FCO Overseas Business Risk: Vietnam, gov.uk, World Bank]

Bribery and corruption

Bribery is illegal. 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.

Corruption remains an issue in Vietnam and you are likely to encounter, or hear of, corruption in one form or another, such as facilitation payments, bribes and giving and receiving expensive gifts in order to develop business relationships.

Corruption remains a serious issue in the court system as there is little judicial independence in Vietnam.

In Transparency International's latest 2018 Corruption Perceptions Index (announced January 2019), Vietnam is ranked 117th out of 180 countries (the UK ranks 11th): https://www.transparency.org/country/VNM. This is a slight improvement over a few years ago and, although modest, reflects the government’s renewed efforts to tackle corruption, including a new Law on Access to Information. However, the score has begun to drop in the last couple of years and the government’s efforts have only translated into limited action on the ground, as prevention and enforcement activity remain weak.

The British Embassy, the Vietnam Chamber of Commerce and Industry (VCCI) and IBLF Global (a UK-based NGO) are working together under the FCO’s Prosperity Fund in order to devise the Government-Business Integrity Initiative, allowing businesses to work more closely with the government to address private sector corruption and to increase business integrity.

For more-detailed up-to-date information on bribery and corruption in Vietnam, see the FCO’s Overseas Business Risk pages on gov.uk at: https://www.gov.uk/government/publications/overseas-business-risk-vietnam/overseas-business-risk-vietnam#bribery-and-corruption.

[Source – FCO Overseas Business Risk: Vietnam, gov.uk]

Intellectual property (IP)

IP rights are territorial, which means that they only give protection within the countries where they are registered. You should therefore consider registering your IP rights (if necessary) in all your export markets.

Vietnam is ranked 77th out of 140 countries for IP protection in the World Economic Forum’s Global Competitiveness Report 2018. See: http://reports.weforum.org/global-competitiveness-report-2018/country-economy-profiles/#economy=VNM.

Vietnam has the regulations in place to protect IPR. However, enforcement is not strong, so you should take measures to protect your IP before exporting.

Trademarks, designs, patents and copyrights are the principal forms of Intellectual Property protection available under Vietnamese law, and are all governed by legislation. The common law also provides protection against a person passing off goods or services as those of another, as well as protection for confidential information or trade secrets.

The Intellectual Property Office of Vietnam (NoIP) has responsibility for IP registration. See: http://www.noip.gov.vn/en/web/english/home, and the National Copyright Office of Vietnam (NCO) at: http://cov.gov.vn/ for copyright issues.

Businesses in specific industry sectors are encouraged to research information about IP issues that are relevant to them. Defensive measures should be enforced early when planning to enter the Vietnamese market.

The UK Intellectual Property Office’s (IPO) IP attachée based in Singapore has a specific focus on providing support and advice to UK companies in Vietnam and Southeast Asia. Email: christabel.koh@fco.gsi.gov.uk for information. They also have a guide to IP protection in Vietnam, available at: https://www.gov.uk/government/publications/intellectual-property-rights-in-vietnam.

In addition, the FCO has up-to-date information on the latest IP issues as well as top IP tips for UK businesses on their Overseas Business Risk pages of gov.uk. See: https://www.gov.uk/government/publications/overseas-business-risk-vietnam/overseas-business-risk-vietnam#intellectual-property.

Cyber security

Vietnam’s new law on cyber security came into force on 1st January 2019, introducing requirements on data localisation, business presence and user information storage and authentication.

The law requires businesses to provide information to Vietnamese authorities when requested, and to prevent and delete certain content within 24 hours. Detailed guidance on the implementation and enforcement of the law has not yet been adopted.

If you are planning to provide services to customers in Vietnam over telecom networks or the internet (e.g. social networks, search engines, online advertising, online streaming/broadcasting, e-commerce websites/marketplaces, internet-based voice/text services (OTT services), cloud services, online games, and online applications), you should seek legal advice about compliance with the law, and contact the DIT team in Vietnam at: https://www.gov.uk/world/organisations/department-for-international-trade-vietnam#contact-us.

Natural disasters

Tropical cyclones can occur along the eastern coastal regions, usually during May to November, although they may happen outside of this season. The resultant rainfall and strong winds can cause flooding and travel disruption.

You should monitor approaching storms on the National Center for Hydro-Meteorological Forecasting website at: http://www.nchmf.gov.vn/Web/en-US/70/102/Default.aspx and follow the advice of the local authorities, including any evacuation orders.

Localised flooding, flash floods and landslides are relatively frequent occurrences due to Vietnam’s tropical monsoon climate which produces large amounts of rainfall in a short time. You should take particular care when trekking through rural and mountainous areas.

The UK Government has guidance at: https://www.gov.uk/guidance/tropical-cyclones on what to do if you are caught in a tropical cyclone.

[Source – FCO Overseas Business Risk: Vietnam, FCO Foreign Travel Advice: Vietnam, gov.uk]

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