Articles
2011 The Year Ahead

24 - 02 - 2011
By Dang The Duc*

Vietnam's economic growth in 2010 is on track to reach 6.7%, exceeding the government's target of 6.5%. The country is also benefiting from the recovery of the world economy. Going forward, Vietnam is projected to continue its growth in 2011 at nearly the same pace as that seen last year, which the year's economic growth target 7 - 7.5%. The country's new socio-economic development strategy for the next 10 years, scheduled to start in 2011, will be adopted at the 11th National Congress of the Communist Party of Vietnam, to be held in the first half of January in Hanoi. Among others, the key areas are to address infrastructure bottlenecks, deficiencies in the legal and regulatory framework for the private sector, inefficiencies and corporate governance problems at state-owned enterprises, and shortages of skilled labour.

Globally, the amount of deals increased in 2010, offering law firms a more fruitful year than seen in 2009. Though the year ahead will surely be full of new challenges for law firms in Vietnam, 2011 will undoubtedly be a year of specialisation for most firms. Vietnam is an emerging economy for which the legal rules are being designed accordingly. Energy, transport and infrastructure projects, as well as oil and gas sectors, are performing well, therefore legal instruments have been recently promoted in order to secure and carry out these complex operations.

Some important laws adopted in 2010 include: the amended Law on State Bank of Vietnam, the amended Law on Credit Institutions, the new Mining Law, the amended Securities Law, and the new Law on Environment Protection Tax. And on 9 November 2010 Vietnam's Prime Minister issued the long-awaited legal framework for Public-Private Partnership (PPP) in Vietnam, Decision No. 71/2010QD-TTg providing the regulations on pilot investment using PPP model. These PPP regulations will take effect from 15 January 2011, and are expected to promote the development of PPP projects in Vietnam for the next few years.

Moreover, real estate and manufacturing projects as well as capital markets transactions have been increasing substantially, pointing out the need for firms to provide their clients with a more specialized and up-to-date legal services. To acquire this expertise, firms will gain experience by expending their networks and their in-depth knowledge in the areas of practice targeted.

In addition, increasing demand for expertise will require highly skilled lawyers. Developing this workforce will be a big challenge for law firms this year. Indeed, hunting highly talented lawyers, offering them attractive remuneration and keeping them will be a big issue. Firstly, lawyers numbers in Vietnam are still not high  and secondly, offering high salaries is not easy for local firms, whereas it is far more affordable for foreign firms. Furthermore, firms based in Vietnam remain exposed to the attractiveness of positioning offered by international law firms running their Vietnamese practices out of the key financial hubs, Hong Kong and Singapore.

This year will also bring many challenges concerning the need for local firms to increase their international resources. While international law firms have strong networks of offices throughout the world, local firms are still trying to link up with foreign firms not yet established in Vietnam. More internationalization of local firms will allow them to upgrade their management abilities and boost their technical capabilities. Being part of a global network is also the best way to gain more clients and expand business.

The development of the legal market in Vietnam is going ahead as fast as the economy. There is no doubt that 2011 will demonstrate this and be a decisive year for law firms.

(*) Please contact the author at duc.dang@indochinecounsel.com or one of our partners if you wish to have more information or specific advice for the topic of this article.

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