Vietnam’s legal market in 2022 – a regional and local perspective
This article reflects on legal market trends and developments in the fast-developing Vietnam market. The information below is primarily based on the in-depth telephone interviews Chambers has conducted with lawyers located in Vietnam and abroad during the most recent research for the Asia-Pacific guide.
Rising Interest in Vietnam' s Legal Market
As the pandemic-related cloud has slowly started to lift, the socio-economic recovery process has begun. But are we seeing a return to pre-pandemic behaviours in the Asian markets?
Many international investors have taken the opportunity to reassess the global market, trying to capture opportunities as quickly as possible after coming out on the other side of the pandemic. While China remains indisputably one of the world's fastest growing economies, several South-East Asian countries also harbour great potential. Many foreign investors continue to show strong interest in the South-East Asian region, and particularly Vietnam in recent years.
Vietnam's economy is indeed on the rise, it has expanded by 5.03% in Q1 of 2022 in comparison to the same of year of 2021, according to General Statistics Office of Vietnam.
- It surpassed China's 4.8% growth
- In the same period of time. "Vietnam leaps out", one market source remarked during our 2023 research, adding: "I think it is at the perfect point in its development - it is viable for international companies to go into, but is still at a low price point."
Investments have come pouring into Vietnam. Consensus among sources is that "the manufacturing business is growing, because there is a lot of talk of moving manufacturing from China to Vietnam," and market players notice that "investors are asking law firms for more advice on this." Manufacturing is not the only sector that is blooming. "We have seen a lot of activity in logistics," highlights another interviewee, "so back to the Trump administration and the China trade war, Vietnam has been a so-called beneficiary of that, in terms of manufacturers trying to diversify their supply chains."
Many recent interviewees have informed Chambers that "they have seen a lot of the big players doing deals in Vietnam and that they expect that to continue." The volume of outbound activities certainly brings business to many law firms, with sources confirming that "they have helped a number of companies looking to relocate significant portions of their supply chain activity out of China and into Vietnam." Speaking with Chambers, market insiders also note: "We see more companies are exiting the PRC market to South-East Asia, mainly Thailand and Vietnam, and until recently, Myanmar."
Law firms establishing offices and presence in Vietnam's Legal Market
Several prominent law firms have proven to be forerunners in the market, establishing their offices and a firm footing in Vietnam's legal market during recent years. Speaking with Chambers, sources highlight their competitors' moves, noting: "We are seeing Japanese law firms putting out representative offices in the regional centres, including Singapore, Vietnam and China." Several Japanese law firms including Mori Hamada & Matsumoto, Anderson Mori & Tomotsune, Nagashima Ohno & Tsunematsu and Nishimura & Asahi have set up offices in Ho Chi Minh City and Hanoi. Korean law firms are also active in this fast-growing market, with reputed law firms such as Kim &Chang, Bae, Kim & Lee, Lee & Ko, Yulchon and Jipyong having on-the-ground presence in Ho Chi Minh City and Hanoi. We have also observed the entry into the market of other notable regional and international law firms, such as Allen & Gledhill and Dentons.
Not only have we seen law firms entering the Vietnamese legal market and setting up offices, but there are also lawyers based locally with experience advising Chinese clients. Vu Thi Que of Rajah & Tann Singapore is one example of this trend, the Ho Chi Minh City-based and Mandarin-speaking lawyer is sought after by Chinese clients in relation to inbound investments and acquisitions in Vietnam.
Vietnam's Domestic Legal Market - Trends And Developments
The foreign investment outlook remains positive in Vietnam and the wider South-East Asian market. But one mustn't forget, when stepping out of the lingering Covid-19 cloud, other important local factors at play. This includes Vietnamese regulatory practices, improvement of the business environment and effectiveness of removing obstacles and difficulties faced by investors.
A topic attracting global attention, and also pertinent to Vietnam, is climate change. Sources reflect on Vietnam's attendance at COP26 and the nation's proposed Power Development Plan 8 (PDP8). A source looks forward: "If PDP8 comes in the next quarter, then offshore wind will get exciting quite quickly, but it is very contingent on that plan." Vietnam continues to grapple with how to combine solar, wind and possibly hydrogen energy, alongside coal and LNG, and this is something that seems likely to be a continuing dilemma for the nation, with knock-on effects for lawyers' activities and areas of focus. On a related note, a commentator reflects on "the Vietnam government's recent announcement that they want a sustainable and clean economy, which includes improving employee rights and standards."
Employment trends are somewhat dominated by pandemic-linked remote working, whilst interestingly also including employers' attempts to attract workers back to the major cities as lockdown has eased. Dispute resolution is picking up activity, especially in terms of shareholder and construction/energy related cases. Tying this aspect together with overall GDP growth, a source reflects that "it is kind of counter-intuitive, but the fact that the country is doing well means people are more litigious."
From a transactional perspective, our most recent Chambers Vietnam research indicates that M&A activity, including private equity, is on the rise in Vietnam, after a temporary lull at the height of the pandemic. A source remarks: "Covid-19 obviously affected the market, but we are already seeing that transaction volumes and levels are getting back to pre-Covid levels."
Key sectors to monitor in Vietnam's Domestic Legal Market
The key sectors to monitor include industrial and logistics, manufacturing and real estate, as well as FinTech, banking, retail, infrastructure and renewable energy. In the finance sector, Vietnam is making moves to align with international standards, including in relation to compliance with Basel regulations. As a source reports, "Vietnam has one of the fastest growing economies in the region, and the fastest growing GDP, so the banking sector has continued to grow." An interviewee summarises another key aspect of Vietnam's recent growth: "In Vietnam, we have around 70 million people with Internet connection, and 60 million people using smartphones. So this is a big opportunity for e-payment services. We expect to see more activity in this area." Market commentators note related areas of interest, such as the taxation of the digital economy, data protection concerns and new regulations to strengthen Vietnam's IP system.
Chambers Evolving Coverage of Vietnam
Chambers and Partners continues to focus on reflecting Vietnam's fast-changing legal trends by conducting in-depth research and evolving our coverage. In the Chambers Asia-Pacific Guide 2022, we awarded 123 law firm department rankings and 142 individual lawyer rankings. Chambers Vietnam coverage continues to grow and evolve in line with the rapid development of the legal market.
For the current 2022 rankings, published on Chambers.com in December 2021, we added five additional law firms to our Corporate/M&A rankings, which is our largest practice area table. These were Lexcomm Vietnam LLC, Asia Counsel Vietnam Law Company Limited, ACSV Legal, Dilinh Legal and DL & Partners.
In recent years, Chambers has added dedicated ranking tables for Employment and Tax law and continues to seek out any additional areas warranting further coverage.
Our next Vietnam rankings will be published on Chambers.com in December 2022, based on research conducted this year.
New legal rankings and analysis for the legal market in Asia
The Chambers Asia-Pacific guide 2022 was released on December 16. Watch the Chambers Asia-Pacific Launch webinar here.