Vietnam Issues Investment Incentives for SMEs

As the outbreak of COVID-19 hampers business activity, Vietnam introduced Decree No. 37/2020/ND-CP (Decree 37) on March 30 to update the list of sectors and industries access to investment incentives under Decree 118/2015/ND-CP. The move underlines the government’s efforts to support businesses and particularly small and medium-sized enterprises (SMEs) affected by COVID-19.

Decree 37 will take effect on May 15.

The regulation expands the list of business lines eligible for investment incentives. This includes four types of SME business lines which are:

  • Small and mediums sized enterprises (SMEs) supply chains;
  • Business incubators for SMEs,
  • Technical support facilities for SMEs; and
  • Co-working spaces of SMEs.

The aforementioned businesses will now be eligible for import duty exemptions on fixed assets as well as other exemptions based on location.

SMEs continue to play a major role in Vietnam, accounting for 98 percent of all enterprises, 40 percent of GDP, and 50 percent of employment or 1.2 million jobs. As per the Ministry of Finance, Vietnam has more than 600,000 firms, with nearly 500,000 private and 96 percent being small and micro-enterprises.

However, SMEs continue to face problems such as access to finance, market access, and competition with foreign firms. We highlight three issues faced by SMEs below.

Access to finance

Credit access is a major concern for the Vietnamese SMEs. Banks providing commercial loans prefer to allocate their resources to larger firms rather than SMEs. According to banks, higher default risks, lack of financial transparency, and lack of assets for a mortgage are the major factors for not providing loans to SMEs. SMEs have to increase transparency and introduce newer production technologies, to reduce risks and increase efficiency to increase their chances of acquiring commercial loans.

Global supply chains

A study by the International Finance Corporation shows that only 21 percent of Vietnamese SMEs are linked with global supply chains, much lower than 30 percent and 46 percent in Thailand and Malaysia respectively. Integrating further with global supply chains in terms of procurement, operations, and sales will allow firms to manage competition, reduce risks, and reduce production costs, which currently is 20 percent higher than those of neighboring countries, such as Thailand and China.

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This article is produced by Vietnam Briefing, a premium source of information for investors looking to set up and conduct business in Vietnam. The site is a publishing arm of Dezan Shira & Associates, a leading foreign investment consultancy in Asia with over 27 years of experience assisting businesses with market entry, site selection, legal, tax, accounting, HR and payroll services throughout the region.

COVID19 – Restriction on fee hike by private schools

In the wake of spread of COVID-19 pandemic, India is heading towards a new paradigm in conducting business, running offices, organising social distancing and managing supplies to needy and poor. The current lockdown is crippling Indian economy, making the state and industry coffers empty and also keeping the doors of learning institutions closed till further orders.

The educational institutions, especially private schools and colleges are, however, working overtime to adopt technology to bring online learning modules to the homes of their students. Most schools are conducting online classes, providing assignments, clearing doubts and assuring parents that students will not suffer academic loss. Schools are also continuing to pay staff salaries and raise school fee from parents albeit with various relaxations and with no late fee penalties. However, many parents are facing severe financial hardship which is further compounded by fee hikes announced by various schools. Thus, the Union Human Resource Minister, Mr. Ramesh Pokhriyal urged the private schools to reconsider their decision regarding the increase in the school fee during the academic session 20-21 and ease the fees burden by collecting it on a monthly basis during the lockdown period and directed the state education departments to come-up with a solution that works in the best interest of both the schools and the parents.

Followed by the above request, the Central Board of Secondary Education (“CBSE”) issued a notification dated April 17, 2020 regarding payment of fees by parents in private unaided schools during lockdown period (“CBSE Notification”). The CBSE Notification empowered the state education departments to examine the issue of lumpsum payment of school fees and teachers’ salaries and authorised the state education departments of all states and union territories to decide the manner in which the fees can be collected during the lockdown period.

Pursuant to the CBSE Notification, various state education departments have issued circulars/orders notifying private schools the manner in which they are entitled to charge fees from parents. Some of the circulars/orders issued by the state education departments are discussed herein below:

Haryana Education Department: The Directorate of Secondary Education, Government of Haryana issued the notification dated April 23, 2020 regarding collection of school fees during COVID-19 situation. The said notification directs the private schools to charge tuition fees on a per month basis from the students and other charges including building and maintenance funds, admission fees, computer fees and any other such funds and fees should not be charged from the parents.

The schools were further directed not to increase the monthly tuition fee and not to include any hidden charges in the monthly tuition fees. The schools were directed not to charge transportation fee from the parents during the lockdown period and no changes will be made in the school uniforms, text-books, work-books, practice books and practical files. Non-payment of fee should not lead to striking off the name of any student from the school or to deny any student from receiving online education.

Any school found violating the above directions would be liable to penal action under rule 158 of Haryana Education Rules, 2003.

Madhya Pradesh Education Department: The Madhya Pradesh education department has also issued its notification dated April 24, 2020 directing the schools to provide extension of time to parents to pay school fees if they were unable to pay during the last quarter of the academic session 2019-2020 till June 30, 2020 without any late fee charges. The private schools were further directed not to increase the school fees for the academic session 2020-21 and strike off the name of the students from its register due to the inability of parents to pay the school fees. Further, the school will not be allowed to charge additional fee for providing online classes to the students at home.

West Bengal Education Department: The West Bengal education department has also issued the notification dated April 10, 2020 advising the private schools in West Bengal not to increase the annual fee during the current academic year considering the current lockdown situation and to consider the matter of non-payment of school fees by the parents, if any, sympathetically.

Delhi Education Department: The Directorate of Education, Government of the National Capital Territory of Delhi vide its notification dated April 18, 2020 also directed all private unaided schools to only charge tuition fees on a monthly basis from the parents during the lockdown period. No other charges can be levied during the lockdown period as the expenses with respect to co-curricular activities, sport activities, transportation and other development related activities are almost nil due to the prevailing lockdown. The private unaided schools have also been directed to ensure that all students are provided access to the online classes and education materials regardless of the inability of the students to pay the school fees due to financial crisis. Non-compliance of the aforesaid order by the Director of Education will invite penal actions under the Delhi School Education Act and Rules, 1973.

Others: The Maharashtra and Uttar Pradesh education departments have also issued orders directing private schools not to hike school fees during the current pandemic. The Karnataka state education department has also issued a notification dated April 24, 2020 imposing restriction on increasing school fees.

Considering the unprecedented situation where most schools were unprepared for this eventuality but quickly geared up to provide continuous learning engagement through online education to their students and the continuing expenditure towards staff salaries, infrastructure, service providers on the one hand and the economic hardships faced by parents on the other hand, the need of the hour is balancing of interests by the government of both the educational institutions and the parents. This is to ensure continuity of education to students as well as survival of educational institutions across India.

For Covid 19 related legal updates, please refer to https://lexcounsel.in/newletters/newsletters-2020/ and Mondaq at https://resources.mondaq.com/mir/articles.aspx and for Covid 19 related articles, please refer to https://lexcounsel.in/articles-2020/

HONG KONG HK

Osborne Clarke latest firm to exit HK market

UK firm Osborne Clarke is set to close its Hong Kong office, with operations scheduled to come to an end by June – the second international firm to announce that it would shutter its office in the city in just over a month.

Recently, U.S. firm Orrick, Herrington & Sutcliffe announced it would wind down its Hong Kong operations by the end of August.

Osborne Clarke has had a presence in Hong Kong for over five years. The firm launched its office there – its first foray in Asia – after hiring two Bird & Bird partners, Marcus Vass and John Koh, who established the associated Hong Kong firm Koh Vass & Co. Since February 2019, the firm had been trading as Osborne Clarke.

However, the last 12 months have been very disruptive for law firms in Hong Kong, with first the political protests, and then the coronavirus pandemic, negatively impacting business conditions.

Osborne Clarke’s Hong Kong office has eight members, including two partners and two associates.

Following the closure of Hong Kong operations, the firm will refocus its regional growth plans on its Shanghai and Singapore offices, as well as its association with Indian firm BTG Legal.

singapore

SIAC registers record number of new cases in 2019

The Singapore International Arbitration Centre (SIAC) has set a new annual record for new cases after notching up 479 new filings in 2019.It marked the third consecutive year in which SIAC registered more than 400 cases. SIAC recorded 452 and 402 in 2017 and 2018, respectively. About 95 percent of the cases, while the remainder were ad hoc appointments.Additionally, in 2019, SIAC’s total sum in dispute was S$10.91 billion ($8.09 billion), a 14.6 percent increase compared to the amount in the previous year.The year saw parties from 59 jurisdictions arbitrate cases at the SIAC. According to the centre, “while India, China and the U.S. retained their top foreign user rankings, other significant contributors to SIAC’s caseload included new entrants from Brunei, the Philippines, Thailand, Switzerland, UAE and the UK, which is testament to SIAC’s global appeal to users from diverse legal systems and cultures.”

Davinder Singh, SC, SIAC chairman, said, “We are delighted that so many from around the world have placed their trust in us. We remain committed to ensure that SIAC will provide the best service ever in this field.”

Rajah & Tann Asia “The Lawyers Who Know Asia”

KPMG adds to Asia legal presence

The KPMG Global Legal Services network is pleased to announce that it has expanded its legal capabilities in Asia Pacific by establishing a new law firm in Hong Kong, known as SF Lawyers.

SF Lawyers is the newest member of the KPMG’s Global Legal Services network. It will initially commence operations with four senior hires and two senior associates joining either now or over the next few months, and with plans for around 20 lawyers in the first year. The four senior hires are Shirley Fu, Rodney Chen, Leo Tian and David Murray, and they will be supported by Alex Ma and Sherman Wong as senior associates. Brief details of the senior hire profiles are included below. An additional launch of legal services in Shanghai is expected in 2019.

Honson To, Chairman of KPMG Asia Pacific and China, says: “We warmly welcome SF Lawyers as the newest member of the KPMG Global Legal Services network, which has grown by 30 percent in 2018 alone, and has significant growth ambitions just beginning to be realised across the Asia Pacific region.”

“With increased global connectivity and the digitalisation of many business functions, SF Lawyers will be uniquely positioned to deliver on the needs of both domestic clients (including going outbound) and multinational clients entering or transacting in the Chinese market. Working in conjunction with KPMG, SF Lawyers will provide clients with legal services in key areas such as M&A and deals, and infrastructure projects. It will also offer technology enabled legal services, while leveraging significant investments in robotics, artificial intelligence and other technologies developed globally and in China through the KPMG Digital Ignition Centre.”

“The firm will also help provide clients with global legal solutions, leveraging our legal services practices across 76 jurisdictions, together with KPMG’s presence in 154 countries around the world”, To adds.

SF Lawyers will be operating in association with KPMG Law in Australia, which is led by Stuart Fuller, the former Global Managing Partner of King & Wood Mallesons.  Fuller has recently moved to KPMG where he occupies the role of Asia Pacific Regional Leader for Legal Services.

Fuller says: “We are excited about the association between KPMG Law in Australia and SF Lawyers in Hong Kong, which is reflective of the increasingly important trade and business flows between the two jurisdictions. We are not trying to be a traditional law firm. Our approach is different, with a focus on offering our clients integrated global legal advice and solutions, where we are able to work seamlessly with existing KPMG clients who are looking for local and multijurisdictional counsel. As someone who has lived and worked in Hong Kong for 6 years, I am proud to see SF Lawyers as the newest entry to the network in Asia.”

Simmons & Simmons Opens Office in Shenzhen, China

Simmons & Simmons has opened an office in southeastern Chinese city Shenzhen.

The new office is Simmons’ third in the country, alongside its operations in Beijing and Shanghai.

The new office will focus on telecommunications, media and technology (TMT)—areas in which the firm already advises Shenzhen clients.

TMT partner Jingyuan Shi is moving from the firm’s Beijing office to lead the outpost. She will be the office’s sole partner but will work closely with the firm’s international TMT teams led by London-based partner Alexander Brown.

“Shenzhen is rapidly growing as a force in the technology industry and plays a pivotal role as a global innovation powerhouse,” Shi said in a statement.

Paul Li, who is the head of Asia for the firm, noted that China is currently the world’s second most important TMT market after the U.S. “This move enables us to build on our existing presence in the country,” he said. ”We are committed to continuing investment in this market, working under The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA).”

Shenzhen officially became a city in 1979 and in 1980 was established as China’s first special economic zone, which has made it more attractive to foreign and domestic firms. The city, sometimes called China’s new Silicon Valley, is now home to some of the best-known Chinese technology companies, including Huawei Technologies Co. Ltd., ZTE Corp. and Tencent Holdings Ltd. Shenzhen is officially one of the world’s fastest-growing cities.

Other global law firms, especially those with a strong intellectual practice, have opened offices in Shenzhen. Chicago-based IP shop Brinks Gilson & Lione was the first, opening its Shenzhen office at the very end of 2017. Fish & Richardson and the hybrid virtual law firm Rimon Law each launched an office there earlier this year.

Earlier this month, Simmons also expanded its presence in France with the hire of two lawyers for its Paris office.

ALB marks 15th edition of Japan Law Awards in style

The 15th ALB Japan Law Awards, held at the Grand Hyatt Tokyo on June 13, was a resounding success, with the who’s-who of the Japanese legal industry, including in-house counsel, private practice lawyers and corporate executives, gracing the event.

The event saw Nishimura & Asahi, walk away with the biggest award of the night – the Japan Law Firm of the Year. The firm won in six categories, as did fellow Japanese Big Four firms Nagashima Ohno & Tsunematsu and Mori Hamada & Matsumoto.

Nishimura also claimed the titles of Young Lawyer of the Year (for Yuki Oi), Japan Deal Firm of the Year, and Restructuring and Insolvency Law Firm of the Year. Meanwhile, Nagashima Ohno won Dispute Resolution Lawyer of the Year (for Oki Mori), Healthcare and Life Sciences Law Firm of the Year, Real Estate Law Firm of the Year and Regulatory and Compliance Law Firm of the Year. Mori Hamada & Matsumoto’s haul included Banking and Financial Services Law Firm of the Year, Japan Intellectual Property Law Firm of the Year and Tax and Trusts Law Firm of the Year.

Among international firms, Herbert Smith Freehills claimed two titles, including the International Arbitration Law Firm of the Year. Davis Polk & Wardwell won International Deal Firm of the Year, and was also recognised for its role in three award-winning deals, while Morrison & Foerster was declared the International Intellectual Property Law Firm of the Year.

In the individual categories, Clifford Chance’s Reiko Sakimura won the BMW Award Woman Lawyer of the Year. Hiroo Atsumi of Atsumi & Sakai walked away with Managing Partner of the Year award while the Dealmaker of the Year title was claimed by Akifusa Takada of Baker & McKenzie (Gaikokuho Joint Enterprise).

And in the in-house categories, the T&D Associates Award Innovative In-House Team of the Year award went to Softbank Group while the Baker McKenzie Award Japan In-House Team of the Year award was won by IBM Japan. IBM also won the title of In-House Lawyer of the Year for Anthony Luna.

Dentons adds Malaysia’s Zain to its global network

Thirty-lawyer Malaysian firm Zain & Co. has become a member of Dentons. The firm joins existing Dentons member firms in Myanmar and Singapore to form the newly established Dentons ASEAN Region.

The 13-partner Zain was established in 1970. Led by managing partner Zain Azlan Zain Azahari, its key practice areas are banking and finance, corporate, dispute resolution, real estate, and intellectual property. It has also established a number of new practice areas, including cybersecurity, blockchain technology, IP litigation, high net worth Islamic estate planning, and film and media. Zain has been part of Dentons’ NextLaw referral network since last year. ”

The launch today of our expansion in Malaysia with one of the best firms there will help us build on our currently strong South East Asia presence,” said Philip Jeyaretnam SC, Dentons’ global vice-chair and ASEAN CEO, in a statement.

Dentons, which operates as a Swiss verein, now has a presence in 74 countries globally and it is currently finalising a combination with Indonesia’s Hanafiah Ponggawa & Partners.

Latham & Watkins

Clifford Chance loses Korea head

Kim Hyun-suk, the head of Clifford Chance’s Korea office, will soon leave the firm, marking the latest in a series of exits from the UK firm’s Seoul operation. The Korea practice will now be led by Hong Kong-based partner Richard Lee and Seoul-based counsel Bong-Sang Cho, Clifford Chance confirmed to ALB. Kim has been based in Seoul since Clifford Chance established an office there in 2012, becoming one of the first international firms to do so.  He began his relationship with the firm in 2009 while based in Hong Kong, where he progressed to partner.

Since last year, Clifford Chance has lost four lawyers who focus on the Korea market, including Kwangwoo Kim, a former associate who is now an executive director at Goldman Sachs, and Angela Ryu who was based in Hong Kong, but is now with Allen & Overy in the UK. The firm, which assists international corporations, banks and financial institutions, and regulatory bodies in Korea, now has three counsels based in Seoul, according to its website. There has been a fair amount of movement with Seoul’s legal market recently.

Last year, Simpson Thacher & Bartlett closed its Seoul office, while US firms Shearman & Sterling and Arnold & Porter have also reportedly gained licenses to establish Korea offices this year. Korea opened up its legal market in 2012, following free trade agreements with the US and the European Union – agreements which are now under scrutiny as the possibility of no-deal Brexit approaches.  There are currently five UK-headquartered firms operating in Korea.