Richard Luu is Managing Partner of Asia Legal – a business law firm in Vietnam. Where he specializes in cross-border M&A transactions and dispute resolution. In this interview with Asia Law Portal, Richard explains why Vietnam remains on top of investment destinations in Southeast Asia for foreign investors. And how he has helped many foreign investors to invest in Vietnam, represented for many foreign investors to resolve complex disputes with their partners, while utilizing his firm’s unique competitive advantages to consolidate his firm position as one of the leading business law firms in a quick changing legal market in Vietnam.
You lead Asia Legal as Managing Partner. Tell us more about the firm and your role within it.
Asia Legal is a business law firm in Vietnam, with strong expertise and in-depth knowledge of Vietnam’s political culture and legal developments. We combine deep local knowledge with international standards of expertise to provide local. And international clients with quality advice and consultancy services. We deliver in a wide range of practice areas including M&A, capital markets, inward investment, mining & energy. Along with real estate, employment & labor and dispute resolution.
At Asia Legal, we always try our best to get to know the clients’ business so as to fully understand their business. And work out the best solutions to help the clients achieve their goals, using our legal and advisory expertise, and commercial savvy.
With highly trained and experienced lawyers who have local understanding and international expertise, we are well positioned to be an ideally legal partner and advisor for a broad range of the clients including multinational corporations, foreign investors, banks and financial institutions, securities firms, funds and asset management companies, international organizations and SMEs.
As the Managing Partner of the firm, I am responsible for a number of key tasks: (i) day-to-day management of the firm; (ii) building and guiding the firm’s strategic direction; (iii) leadership of the firm in terms of the motivation of associates; (iv) hiring, training and supervision of associates, and determining attorney salaries and billing rates; (v) coordination and direction of marketing efforts and relations with the firm clients.
Your practice includes Corporate & Commercial, M&A, Dispute Resolution, and Inward Investment. Tell us more about this.
Under the laws of Vietnam, there are a number of ways where the foreign investors (the “Investor”) can invest into Vietnam. Setting up a new foreign invested company and acquiring shares/ equity in a local company in Vietnam are among typical ways for them to realize their goals to do business in Vietnam.
In terms of M&A, we advise and assist the clients in in-land. And/or cross-border M&A transactions in respect of different business sectors. Our involvement in a general M&A transaction would include:
- Drafting corporate charters and joint venture/shareholders agreements;
- Providing legal opinion on corporate bylaws, governance policies and regulatory compliance;
- Performing and overseeing due diligence;
- Preparing due diligence reports;
- Negotiating and drafting agreements for the acquisition of equity and assets;
- Providing legal advice on the laws of Vietnam regarding private equity, venture capital, initial public offerings, stock options, and so on;
- Deal and transaction structure advice;
- Due diligence investigations;
- Preparation and negotiation of acquisition agreements for equity and assets, merger agreements, and other transactional documents;
- Leveraged management buyouts and buy-ins;
- Corporate governance, director duties and disclosure;
- Governmental filings, approvals and registrations;
- Advice on taxation and related matters.
In terms of inward investment, we focus on:
- Market entry advice: legal research and legal assessment including legal due diligence;
- Investment structure and licensing matters: providing advice. And preparing legal documentation for obtaining investment license / approval for foreign owned companies, joint ventures, business cooperation contracts, and other business vehicles;
- Representing clients in negotiations;
- Working with government authorities and attending to administrative procedures;
- Handling post-licensed procedures for foreign invested projects;
- Advising on regulatory issues in connection with the operation of foreign invested projects in Vietnam;
- Investment liquidation and corporate restructuring.
In addition, we also provide general corporate and regular operational matters including structuring investments, incorporations of all corporate forms, advising various legal compliance matters from regular compliance on import/export, customs, labour, land and properties/assets, to more complex and tailored commercial arrangements including domestic or cross-border business transactions, franchising, distribution, agency and outsourcing.
Dispute Resolution is one of our firm’s key practice areas where we represent clients before courts and arbitration forums in Vietnam in commercial, corporate, international trade, construction, and labour disputes. Our lawyers and of counsels (litigation lawyers) have extensive experience in court proceedings in provinces and cities nationwide at all levels. And Richard is the leader, who is a Mediator of Center for Effective Dispute Resolution (UK), and Vietnam International Commercial Mediation Center. Associate of Chartered Institute of Arbitrators (UK), Arbitrator of Shanghai Arbitration Commission (China) and Southern Trade Arbitration Centre (Vietnam).
Richard has also attended a number of international arbitration training courses including ICC Institute of World Business Law Program of the Institute for the Development of Arbitration Training by ICC International Court of Arbitration; Advanced Arbitration Training Program in Paris by International Academy for Arbitration Law (Arbitration Academy). We mainly represent the foreign clients, including foreign-invested companies in Vietnam in such disputes.
What unique opportunities and challenges does the Vietnamese market hold for Investors?
In Southeast Asia, Vietnam is considered as an attractive destination for the Investors from various countries after 3 years of Covid-19 pandemic. Foreign direct investment attraction recovered, newly registered capital and additional registered capital increased again, showing that the Investors continuously believe in Vietnam’s investment environment. Till May 2022, there will 38,898 valid projects with a total register capital of nearly 426.14 billion USD. This realize capital of foreign direct investment projects get estimatation at 259.31 billion USD. It is equal to 60.9% of total valid registered capital with Korea being ranked first, Singapore second, followed by Japan, Taiwan and Hong Kong (Source: Foreign Investment Agency (2022), The situation of attracting foreign investment in Vietnam in the first 5 months of 2022).
To illustrate the above, we list out 9 reasons why the Investors select Vietnam as their potential investment destination:
First, Vietnam has a particularly favorable geographical position with the possession of a long coastline (3,260 km) and many deep-water seaports, as well as a gateway to international goods trade by sea. Besides, the mainland is touching the border with China, one of the world’s top economies today.
Vietnam’s political stability is one of the most attractive factors for the Investors to Vietnam. And this get highly appreciation by international friends. If you look at a number of countries in the region, you can see that most countries had political coups or crisis. Meanwhile, Vietnam’s politics is always stable, ensuring consistency in economic development policy and in attracting foreign investment.
Third, Vietnam is a country with a stable and dynamic economy
Despite the general difficulties of the world economy, in the first 9 months of 2019, Vietnam is still a country with the leading stable and fast-growing economy in the region and the world. Specifically, GDP in the first nine months of 2022 gets and increase of 8.83%, the highest compared to the same period in the last 9 years. Processing and manufacturing increased by 10.69%. Consumption market is expanding, supply of goods is abundant.
Total retail sales of consumer goods and services increased 21%; international tourist arrivals are 16.4 times higher than the same period of 2021. Total export and import turnover were at 382.72 billion USD, of which export turnover of goods reached 282.52 billion USD, an increase of 17.3% and trade surplus was 6.52 billion USD (Source: General Statistics Office of Vietnam (2022), Report on socio-economic situation in the third quarter and 9 months of 2022).
Fourth, Vietnam has open foreign investment policy
Vietnam always opens its market and encourages and attract the Investors through administrative procedure reform and investment incentives. Typically, the Law on Investment 2020 and Law on Enterprises 2020, coming into force from January 1, 2021 further strengthens Vietnam’s open foreign investment policy by cutting some administrative investment procedures.
Fifth, the business environment is constantly improving
In 2019, many indicators on the business environment and competitiveness of Vietnam are improved. 4.0 competitiveness jumped by 3.5 points (from 58 points to 61.5 points), increased 10 places (from 77th to 67th) (Source: World Economic Forum (2019), Global Competitiveness Report 2019). The Global Innovation Index (GII) increased 3 places with 6/7 key groups gaining points. Competitiveness in travel and tourism increased 4 places (from 67th to 63rd). Ministries and other state authorities have become increasingly aware of their responsibilities and actively participated in improving scores and index rankings in the business areas which are under their state management.
Sixth, young and abundant labor force
Vietnam is a country with a young population structure, with nearly 88% of the population aged 25-59 joining the workforce, of which nearly 40% graduated from high school; 23.1% have been trained with a degree or certificate (Source: General Statistics Office of Vietnam (2019), Press release on population and housing census results in 2019). In addition, the Vietnamese workforce is also appreciated for its hard work, high level of education and ease of training. Vietnam has also been and will continue to invest more in education and training than other developing countries. This is one of Vietnam’s competitive advantages compared to other labor markets in the region.
Seventh, competitive labor costs
Despite the annual increase in the regional minimum wage, Vietnam remains a low labor cost country. Wages in Vietnam are still less than half the wages in China. The rise in wages in China has forced manufacturers to look for a market with lower labor costs. Vietnam with a low minimum wage and a growing economy is a low-cost alternative to China.
Eighth, the synchronization of infrastructure and technology
Previously, the limited technical infrastructure, especially the transport infrastructure, was identified as one of the reasons creating an invisible barrier in the process of attracting foreign investment capital into Vietnam. However, in recent years, to remove these barriers, the government and localities have been actively deployed to attract all resources to invest well in infrastructure, traffic roads, circuits, airports, routes to border gates, economic zones, industrial zones, hi-tech parks, …
Ninth, Vietnam is a member of many trade agreements
Another evidence to prove Vietnam’s economic openness is that Vietnam has been participating in many bilateral and multilateral free trade agreements with many countries and regions to attract foreign investment into Vietnam such as the bilateral trade agreements with the US, Korea, Japan, ASEAN Economic Community, CPTPP, etc.. and more recently the Free Trade Agreement between Vietnam and the European Union (EVFTA).
However, there remain challenges for Vietnam to attract the Investors, and some of them include:
Firstly, regulatory environment: While the Vietnamese government has taken various steps to liberalize its economy and attract foreign investment, regulations can still be complex and difficult to navigate. The Investors may face bureaucratic hurdles, legal uncertainties, and other obstacles that can slow down their investment process in Vietnam.
Secondly, labor issues: Although Vietnam’s labor force is relatively young and growing, there are concerns about worker productivity, skills development, and the availability of skilled labor in certain sectors. Additionally, labor laws and regulations can be complex and difficult to navigate.
Thirdly, 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 77th out of 140 countries for IP protection in the World Economic Forum’s Global Competitiveness Report 2018. Vietnam has regulations in place to protect IPR. Specifically, trademarks, designs, patents and copyrights are the principal forms of Intellectual Property protection available under Vietnamese law and are all governed by legislation. However, enforcement is a key issue in Vietnam.
As such, 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.
How do you keep Asia Law competitive amid significant competition between law firms in Vietnam?
we usually focus on the practice areas which we have strong expertise and experience. We only stand out in a crowded legal market by specializing in a particular area of law. By focusing on niche practice areas, we can establish ourselves as an expert in that field and attract clients seeking specialized services. In Vietnam, we specialize in some key practice areas only and we only do what we are really good at.
we put our clients first and let client priorities take precedence. We serve as trustworthy advisors for our clients. And have dedication to being partners with our clients, not merely vendors. That means we focus on client needs as we are aware that understanding and addressing the needs of clients is crucial to retaining them and attracting new ones. By doing that, we can differentiate ourselves by providing customized solutions that meet the specific needs of clients.
we continuously improve quality of service. We understand that providing high-quality legal services is also crucial to retaining clients and attracting new ones. This can achieve by investing in training and development of lawyers and support staff. As well as implementing systems and processes to ensure consistency and efficiency in service delivery. In Asia Legal, we have at least 12 internal training courses annually to improve skills. And knowledge for our lawyers and support staff. Our lawyers and support staff also encourage to join various external training courses. They are bring forward by professional bodies in Vietnam including Vietnam Bar Federation or other training institutions in Vietnam.
we try to offer value-added services. By collaborating with other law firms or professional services providers in complementary areas such as tax and finance, we can expand our reach and service offerings, offer additional services that complement its legal expertise, and provide a more comprehensive services to its clients, helping the clients to address its business matters in a wider range.
How can potential clients contact you?
Richard: Our firm headquarter is in Level 7, Rural Today Newspaper Building, Lot E2, Duong Dinh Nghe Road, Cau Giay District, Hanoi, Vietnam.
Potential clients can contact me via email: firstname.lastname@example.org. For urgent need, they can contact me via our firm’s hotline: +8484 400 8484. This number is also available for WhatsApp/ Telegram/ Viber/ WeChat/ Line communication.