"The Great Asian Sell-Off is under way. Plunging currencies from Seoul to Bangkok have slashed the values of Asian assets, from factories to office towers. Â‘Everything is for sale.'"
After nearly a quarter century of war and another of communist rule, Vietnam is now moving toward a market economy. The opportunities for lucrative business ventures there are numerous, but there are a number of challenges that will have to overcome in order to be successful.
First, success in Vietnam is directly related to the quality of your local contacts. Vietnam is anything but transparent in its business practice, and much depends upon knowing the right people at all levels of government. To get off on the right foot, you will want to consider the following:
1. Contact the Trade Commissioner at the Canadian Embassy in Vietnam at 31 Hung Vuong in Hanoi (tel:84-42-235-500; fax:84-42-235-333). Both they and the Department of Foreign Affairs and International Trade ("DFAIT") will be able to verify references for potential projects and management. They can also assist you in locating other interested parties or projects and have well-established contacts at the governmental level.
2. Be patient. The political system in Vietnam is based on consensus and is not hierarchical as it is in the west. Decisions take time and all projects valued at over $1 million eventually go before the Prime Minister. You will need someone on the ground who is intimate with the system, tough, reputable, and who understands well your requirements and expectations.
3. Build relationships at all levels of government; even national approval for a project doesn't guarantee approval in one of the provinces. Make sure all your permits are in order and have been properly executed, and obtain written assurances that these will not be changed without your consent. Be aware also that governments and officials change, and if your deal is too "political" it may be undone.
4. Plan for telecommunications costs to be three to five times higher than what you're used to in Canada. Until new infrastructure is in place you will have to factor in controls and mind the costs.
5. Prepare to deal with a legal system that is still in its infancy. There is no commercial code and very little case law. Litigation, therefore, to enforce an obligation may not be easy. Be sure that all your contracts provide for dispute arbitration outside Vietnam, but that awards remain enforceable in Vietnam.
This is a short list but it should give you a notion of where to start and what obstacles you may encounter along the way. There are a number of governmental bodies that can also help to guide you and/or get you signed on to an upcoming trade mission. They are the Ontario International Trade Corporation ("OITC") and the Program for Export Market Development ("PEMD"). I am also happy to introduce you to solicitors and agents in Singapore, Hong Kong, and Australia. These individuals have an understanding of western business practices as well as Vietnamese law and accounting.
Most important for success in your Vietnamese venture is to acquaint yourself to the greatest extent possible with local business customs and mores. Good luck.
THE SAXLAW REPORT has been prepared by Michael M. Sax for information purposes only and does not constitute a legal opinion. This representation is not intended to create, and the receipt of it does not constitute a solicitor-client relationship. Readers should not act upon this information without seeking professional counsel. This information is forwarded on the basis and understanding that Michael M. Sax, Barrister & Solicitor is under no responsibility or liability whatsoever in respect thereof.