New Decree to Drive Digital Transformation
Late last month, we talked about how – despite being the third-most popular market in Southeast Asia in the value and volume of start-up investment – Vietnam continues to face legal bottlenecks to unlocking the true potential of the sector.
In short, despite the positive headline investment figures, the sector remains in need of more capital. However, venture capital (“VC”) investors have been highlighting for some time the difficulties foreign investors face in exiting companies or transferring capital overseas.
Now, the government is developing a new Decree which it hopes will promote greater innovation and encourage more entrepreneurs to set up companies in Vietnam as part of its broader digital transformation agenda, which we have written about before.
Speaking this week, the Deputy Minister of Science & Technology highlighted the need for a ‘proper legal framework’ for start-up enterprises. Until now, start-ups have been regulated under the Law on Small and Medium-Sized Enterprises (“SMEs”).
However, there are considerable differences between start-ups and SMEs in terms of their risk tolerance, development strategies, capital requirements, and commercial operations, according to the Deputy Minister.
Therefore, start-ups require a specific legal framework with definitions and provisions tailored to these kind of enterprises. The decree being developed will aim to build upon the 3,000 start-up enterprises operating in Vietnam and improve the legal framework to create an enabling environment for innovation.
APFL will continue to monitor this decree as it develops and keep our clients updated with its implications for their investment projects and commercial operations. For more information, just contact our team on: contact@apflpartners.com
Disclaimer: This article and its content are for information only and are not given as legal or professional advice. they do not necessarily reflect all relevant legal provisions with respect to the subject matter. Readers should seek legal or professional advice before taking or refraining to take any action.
