Current trends shaping Vietnams legal market in 2014 have been outlined by Kent Wong, Partner and Head of Banking, Insurance & Capital Markets at VCI Legal in a new book by this author entitled A Comprehensive Guide to the Asia-Pacific Legal Markets. Below are excerpts from Wong’ analysis:
Despite some negative trends, foreign investment continues to flow into Vietnam:
“Despite some financial gloom in real estate, construction and capital markets (which is largely due to a weak banking system which is still undergoing restructuring, since regulations were promulgated in 2011[1]) and recent unrest as a consequence of the Vietnam-China territorial sea dispute, foreign investor interest in Vietnam has remained high. Foreign investment continues from around the world, the Asia-Pacific region, and in particular, from Japan, Korea and Singapore.”
Vietnam’s law firms will expand regionally:
There is a large imbalance in demographic allocation. Over 3,000 lawyers are based in Ho Chi Minh City and 2,000 in Hanoi. Over 80% of the country’s lawyers are located in these two main cities. This geographic distribution of lawyers will begin to change as 5,000 law students graduate each year. Along with 1,000 attending the judicial academy for lawyer training. As the legislative framework in Vietnam develops, the fragmented small practices will decrease.
Solo practitioners and small law offices will merge to minimize office overheads and reach critical mass by scaling up headcounts. They will do this in order to woo larger clients (especially with the ‘equitization’ of Vietnam’s state-owned enterprises). And become increasingly specialized as boutiques in specific practice areas. As the local market intensifies with competitiveness Vietnamese investment will make an outbound shift. Following their clients, Vietnamese law firms will expand their presence to include branch offices in neighboring Thailand, Myanmar, Cambodia and Laos, as well as South East Asian hub, Singapore.”
A pushback by local law practices to introduce tighter restrictions for global entrants to the market:
Foreign lawyers have been present in Vietnam since 1990. Vietnam first opened its legalservices market to international law firms in 2007, when it joined the WTO. Vietnams legal markets remain one of the most liberalized in Asia, with over 50 foreign law firms. As part of Vietnam’s WTO commitments, the Ministry of Justice has allowed foreign law firms to hire Vietnamese lawyers and practise local Vietnamese law, but has prohibited them from appearing in court and engaging in legal documentation and certification services. Recent debates have flared up over the Law on Lawyers[2] following pushback by local law practices to introduce tighter restrictions for global entrants to the market.
The Trans-Pacific Partnership (TPP) and other trade and investment liberalization trends will buoy sentiment for more foreign investment:
“Looking ahead, the signs are encouraging for Vietnams legal market. The imminent signing of the Trans-Pacific Partnership will buoy sentiment for foreign investment. It will similar to post-2007, upon Vietnam’s accession to the WTO. Likewise, expect investors to ride this wave of ‘positive sentiment’ with Vietnam finalizing bilateral treaties with individual countries, the Regional Comprehensive Economic Partnership (RCEP) and the implementation of the ASEAN Framework Agreement in Services (AFAS). Which, together with the ASEAN Economic Community (AEC), will be in full force in 2015. Vietnam will join South East Asia, in discovering the advantages of eliminating tariffs and encouraging goods free flow. Becoming an integrated, competitive economy; a cross-cultural bloc, with a single market and production base; and equitable economic development.
With a challenging regulatory environment, increased global trade, GDP growth continuing at over 5.5%, a young population, a rising middle class and with foreign interest remaining high the signs bode well for the Vietnams legal market.”
[1] Decree No. 123/2013/ND-CP, guiding some articles and implementation measures of the Law on Lawyers (No. 65/2006/QH11, as amended, by Law No. 20/2012/QH13).
[2] Decision No. 254/QD-TTg dated March 1, 2012 of the Prime Minister, approving the Project of restructuring the credit institutions system in the period 2011-2015.
Follow these links to learn more about Kent Wong, partner and Head of Banking, Insurance & Capital Markets at VCI Legal. Or the new book by this author entitled A Comprehensive Guide to the Asia-Pacific Legal Markets.
