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cambodia

E-Commerce

Notification No. 1143 dated 26th May 2021 “On the issuance of the permit or commercial license for e-commerce”.

According to the Law on Electronic Commerce and recent sub-decrees on the registration procedure, sole proprietorships, legal entities and foreign businesses that are involved in e-commerce activities must obtain a permit or commercial license from the Department of Business Registration of the Ministry of Commerce.  Businesses operating e-commerce activities without a license, are subject to having their activities terminated and fines imposed according to the law.

E-commerce business includes sale activities, exchange services as well as public services through an electronic system, online auction, online market service, mobile applications or computer applications.     Intermediary and financial institutions that provide online services are also considered as taking part in e-commerce.

Sole proprietorships, legal entities, and foreign businesses can acquire the application form and relevant documents from www.businessregistration.moc.gov.kh or www.moc.gov.kh.

Prakas No. 316 dated 12th May 2021 “On Penalty Fee issued by the Authority of Ministry of Commerce”.

According to the Prakas by Inter-ministerial, the penalty fee issued by the MOC shall apply to individuals that violate the Law on Commercial Rules and Register, Law concerning Marks, Trade Names and Act of Unfair Competitions, Law on Commercial Enterprises, Law on E-commerce and any other relevant legal documents.
The penalty fee ranges from 200,000 Riels to 10,000,000 Riels depending on the type of offense caused by the individual.

Energy

Notification of the Ministry of Mines and Energy No. 0026 RT GATT SCN dated 24th May 2021 “On the official letters of the Ministry of Mines and Energy.”

Per the notice, to prevent circulation of forged documents concessionaires, traders, and the public looking to get involved in a mine or energy business could request the ministry to authenticate official documents by filing the application form obtained from the one-window service at the MME. The service is free of charge.

Investments

Draft Law of the Royal Government of Cambodia “Draft Law on Investment”.

As the outcome of the meeting between the Council for the Development of Cambodia (CDC) and the Ministry of Commerce (MOC), the latest Draft Law on Investment was published on 1 March 2021.

This new draft law extends to the scope for all the qualified investment projects registered with the Council Development of Cambodia.  The New Draft Law regulates the relevant authorities, procedure and the protection for the investment projects in Cambodia for both local and foreign investors.  The new draft law also contains provisions on sales, purchases and merger of investment projects.

Employment

Notification No.022/21 dated 8 May 2021 on “On Returning to Work and Payment of Wages for Workers/Employees at Factories/Enterprise Resuming Operations After the End of Lockdown”.

On 8 May 2021, the Ministry of Labor and Vocational Training (“MLVT”) informs all employers of the factories/enterprises located at the yellow zone in Phnom Penh and Takmao Province to operate their business as usual.

Along with the resuming operations after the end of lockdown, those factories/enterprises also need to pay 50% wages for April and any other benefits to their employees. For employees that located in the dark-yellow or red zone, employers shall pay to their employee with online banking system.

Pandemic-related procedures and restrictions

Decision No.061 SSR dated 3 May 2021 on “the termination of lockdown period for Phnom Penh and Takmao from 06 May 2021 by replace with the new regulation from Phnom Penh Government on the preventing Covid-19”.

On 3 May 2021 the Royal Government of Cambodia (RGC) decided to termination of lockdown period for Phnom Penh and Takmao from 6 May 2021 by replacing with the new regulation from Phnom Penh Government on the preventing Covid-19. Within the scope of this decision, the RGC terminate the lockdown period that mentions in Decision No. 49 SSR on 14th April and Decision No. 54 SSR on 26th April 2021.

For any other regulatory measures on lockdown and prevention of Covid-19, it is the responsibility of the Phnom Penh government or respective authorities depend on the actual Covid-19 situation. Those measures must comply with the Sub-Decree No. 57 GNKR BK on the Administrative Measure to Prevent the Spreading of covid-19 and other spreading diseases.

laos

E-Commerce

Decree No. 296/GOV dated 12 April 2021 on “Electronic Commerce”.

The Lao government recently passed the Decree on Electronic Commerce that came into effect on 4 June 2021, implementing its commitment under the ASEAN Agreement on Electronic Commerce, which was signed by the ASEAN member states on 4 March 2019.

The Decree on Electronic Commerce defines three types of e-commerce business activities:

  • Electronic commerce vending;
  • Vending on the electronic marketplace; and
  • Electronic marketplace service providing.

As per the said decree, a foreigner can hold a maximum of 90% of equity interest in the e-commerce business and for foreigners to invest in such business, the total equity capital must be LAK10 billion (USD1 million approx.) or more.

The entry of international e-commerce players and the rise of local players in the e-commerce sector has prompted the Lao government to regulate the sector and to improve the local online business environment.  The Lao PDR has already promulgated several legislations such as the Law on Economic Dispute Settlement (2010); Consumer Protection Law (2010); Electronic Transaction Law (2012); Law on ICT (2016); Law on Electronic Data Protection (2017); Online Payment System Law (2017) to strengthen the country’s IT infrastructure and associated cybersecurity requirements.

Public-Private Partnerships

Decree No. 624/GOV dated 21 December 2020 on “Public-Private Partnerships”.

The Laos government issued Decree No. 624 to promote the participation of both domestic and foreign investors in the development of infrastructure and public service delivery projects through private-public partnerships (PPP).

The Decree came into effect on 28 January 2021, after it was published in the Lao Official Gazette on 13 January 2021. The Decree categorizes joint investment into the following formats:

  1. Design, build, finance and operate (DBFO);
  2. Design, build and operate (DBO);
  3. Build, operate and transfer (BOT);
  4. Build, own, operate and transfer (BOOT);
  5. Build, own and operate (BOO);
  6. Build, transfer and operate (BTO);
  7. Build, lease and transfer (BLT);
  8. Operate and maintenance (O&M);
  9. Other forms as approved by the government.

The Decree stipulates that any PPP project with an investment value of more than US$300 million must be approved by the National Assembly. In addition, all joint investment projects with a government contribution of LAK20 billion or more must get approval from the National Assembly; and joint investment projects with a government contribution of below LAK20 billion must get approval from the People’s Assembly.

Further, all types of PPP projects, including projects proposed by a private enterprise for development, will be subject to public bidding. Article 26 of the PPP Decree states as follows:

“Private sector that submits the unsolicited proposal or consulting firm that is selected as the entity responsible for survey and study of the sectors will not have the automatic right to be the direct project developer, which shall be done through bidding. In the event that the related party is not successful in the bidding, it will receive reimbursement for costs in the preparation of the unsolicited proposal from the successful bidder…”

Investment Incentives

Instruction No. 0760/MPI dated 14 May 2021 on “Granting of Investment Incentives on Profit Tax and Rental Fee or State Land Concession Fee”.

The Ministry of Planning and Investment issued the Instruction to implement and further clarify the provisions under the Article 9, Article 10, Article 11 and Article 15 of the Amended Investment Promotion Law No. 14/NA dated 17 November 2016 (the “Investment Promotion Law 2016”).

Under the Instruction, enterprises investing in the Lao PDR willing to apply for incentives on profit tax and rental fee or state land concession fee must meet the following conditions:

  • A business sector (such as high and modern technology application, plantations, hospitality, development of public infrastructure, policy banks and micro-finance institutions, modern commercial centers) that has granted incentives as provided in Article 9 of the Investment Promotion Law 2016;
  • Investment of at least 1.2 billion kip or using 30 Lao technicians or using Lao workers with a labor contract of at least 1 year or more;
  • A registered capital must be contributed in full through certification with the Bank of the Lao PDR;
  • Conduct business regularly and fulfill all taxes and other obligations in accordance with the relevant laws and regulations;

Comply the environmental obligations in accordance with the law strictly.

Employment

Instruction No. 01666/SSO dated 11 May 2021 on “Implementation of the unemployment benefit policy for insurers in the social security scheme affected by the COVID-19 outbreak”.

The Lao Social Security Organization issued Instruction No. 01666 specifying the unemployment benefit policy and procedures to apply for such policy for insurers in the social security scheme.

Notice No. 1532/MOLSW dated 5 May 2021 on “Increased prevention, control and comprehensive preparedness to prevent the outbreak of COVID-19 in the workplace”.

The COVID-19 Taskforce Committee of the Ministry of Labor and Social Welfare issued Notice No. 1532 ordering all labour units to comply with the reinforcement measures as provided in the Prime Minister’s Order No. 15/PM dated 21 April 2021; the notice stipulates that the following requirements:

  • Assistance allowance might be given to workers from businesses that were not allowed to operate since the lockdown, upon the condition that the employee has paid the social security for at least 6 months to 12 months from April 2021 backwards;
  • Businesses that are still paying salaries to their employees at the moment are required to continue to pay the social security fund. In case of difficulties, deferral payment is allowed upon a request letter to the NSSF;
  • Businesses who suspended operations and are not paying salaries to their employees are allowed to temporarily suspend payments to the NSSF;

No termination of an employment agreement can be made without prior meeting and agreement between the employer, the employee and the Ministry of Social Welfare and Labour.

Tax

Instruction No. 0819/MOF dated 10 February 2021 on “Implementing the Income Tax Law dated 18 June 2019”.

The Instruction reemphasizes that the final annual profit tax payment must be declared and paid when the financial statements are submitted, i.e. by 31 March 2021.

Although the Income Tax Law and its Instruction allow taxpayers to prepay their annual profit tax in two installments based on three options (option 1 – the actual profit incurred in the first or second six months, if the accounting report can be prepared; option 2 – the annual business plan; or option 3 – 50% of the previous year’s profit tax payment), with any balance to be paid by 31 March, the Instruction imposes a 50% penalty on the balance if it is in excess of 10% of the total profit tax prepaid in the two installments.

Instruction No. 1939/MOF dated 12 April 2021 on “Implementing the VAT Law dated 20 June 2018”.

The Minister of Finance issued Instruction No. 1939/MOF to implement and further clarify the provisions under the Amended VAT Law No. 48/NA dated 20 June 2018.

Pandemic-related procedures and restrictions

Notice No. 0378/MOIC.IHD dated 21 May 2021 on “Increase measures to prevent, control and solve the outbreak of COVID-19 in industrial and handicraft factories”.

The COVID-19 Taskforce Committee of Ministry of Industry and Commerce issued the Notice ordering all industrial factories and employees or workers who working in the industrial factories to follow all government measures concerning the control of the virus as provided in the Prime Minister’s Order No. 15/PM dated 21 April 2021, the Notice No. 528/PMO dated 20 May 2021 and the Notice No. 0488 dated 20 May 2021.

Notice No. 532/PMO dated 20 May 2021 on “Policies to Reduce the Economic Impact of the COVID-19 Pandemic”.

In order to reduce and relieve the economic impact from the second wave of the COVID-19 pandemic in the Lao PDR, the Prime Minister’s Office has issued Notice No. 532/PMO dated 20 May 2021 specifying policies for further implementation by the relevant governmental authorities.

Notice No. 528/PMO dated 20 May 2021 on “Reinforcement Measures on Containment, Prevention and Comprehensive Response to the COVID-19 Pandemic in the period of 21 May to 4 June 2021”

The Prime Minister’s Office issued the Notice to require to make continually comply to the reinforcement measures as provided in the Prime Minister’s Order No. 15/PM dated 21 April 2021, the Notice No. 406/PMO dated 26 April 2021 and Notice No. 462 dated 5 May 2021; and decided to extend the lockdown for 15 more days from 21 May to 4 June 2021.

Notice No. 378/DH dated 10 May 2021 on “Permit to Travel In and Out Vientiane Capital during the Lockdown period up to 20 May 2021”

The Division of Health of Vientiane Capital issued Notice No. 378/DH requiring that those wishing to travel in and out of Vientiane Capital must apply for a permit from the COVID-19 Taskforce Committee to travel during the lockdown period up to 20 May 2021, or a further lockdown period if it is extended.

myanmar

Banking & Finance

Directive-6/2021 dated 7 May 2021 of the Central Bank of Myanmar (“CBM”) on a temporary amendment to the minimum reserve requirement

The directive reduces temporarily banks’ minimum reserve requirement in MMK from the previous 3.5% to 3% of customer deposits. The directive sets the specific duration for applying the said reduced rate from (28 April 2021-25 May 2021) to (15 September 2021-12 October 2021).

If banks are not able to maintain the reduced minimum reserve requirement on the last day of the specified duration, a penalty will be imposed by the CBM. However, the CBM will consider imposing a lower penalty depending on a bank’s collaboration in implementing the State’s policies, such as digital payment operations, transfer transactions using CBM Net, and cheque clearing operations status.

Directive-7/2021 dated 7 May 2021 of the CBM on amending the liquidity ratio calculation

The directive amends the liquidity ratio calculation guideline for banks to include 100% of the treasury bonds held by them with more than one year maturity, in the calculation. This is a change from previous 90% and 50% requirements, amended by Directive No. (03/2021) and (07/2020) respectively. Following the new requirement, the banks now have to include all of their treasury securities in the calculation. This directive will come into effect from the directive date (07 May 2021) till 30 September 2021.

Imports

Ministry of Commerce No. 08/2021 dated 4 May 2021 on the Extension of the Relaxation of Import License and Endorsement Requirements

Ministry of Commerce issued Notification Nos. 03/2021 and 04/2021 to temporarily relax import license application requirements.

  1. The import licenses for medicines with expired DIAC and DRC registration certificates can be applied for with the Food and Drug Administration’s approval explaining that extension applications for those expired certificates have been submitted.
  2. For the importation of Cut-Make-Pack (“CMP”) items, import licenses can be applied for without the approval of Myanmar Garment Manufacturers Association (“MGMA”).

The temporary relaxation mentioned in item 1 is extended to 11 June 2021. For item 2, the import license application process will recommence as usual as the MGMA has resumed issuing endorsements.

Transport and Communications

Informational letter of the Ministry of Transport and Communications (“MOTC”) dated 13 May 2021 to airlines on the reporting obligations for citizens leaving the country by special/relief flight

The letter states that airlines must give 10 days prior notice to the Ministry of Home Affairs (“MOHA”) about the departure of Myanmar citizens by special/relief flights.

Directive No. 1/2021 of the MOTC dated 14 May 2021 on the restriction on possessing satellite television receivers

The directive specifies the following:

  1. Section 8 of the Television and Video Law (“TVL”) states that any person who wishes to possess a satellite television receiver must comply with the order and directives relating to the import, possession, use, transfer, sale, issuance of license, determination of license fee and license conditions, issued from time to time by the MOTC.
  2. The MOTC issued licenses for the possession of satellite television receivers under its Order-1/1993. However, such license-related matters were stopped under Resolution No. 14/2014 of the Economic Committee Meeting of the Union Government. Therefore, of satellite television receivers that are currently being used, only receivers of organizations approved by the Ministry of Information (“MOI”) are legal, and those that are not registered or are not licensed can be deemed illegal to have;

Anyone who possesses an illegal satellite television receiver must turn it to the relevant township or district General Administration Department within 30 days from the date of issuance of this directive.

Pandemic related procedures and restrictions

Letter number 406/2021 issued by Ministry of Health and Sports (“MOHS”) on the quarantine procedures to be followed by foreigners coming to Myanmar dated 3 May 2021

The letter specifies that foreigners who are coming back to Myanmar for domestic projects, businesses, constructions and other departmental projects need to follow below instructions:

  1. To show Negative test result which was issued within 72 hours by relevant countries;
  2. To stay in 10 days Facility/Hotel Quarantine when they arrive to Yangon;
  3. To take swab test after 3 days in Quarantine and 2nd test after 7days in Quarantine; and
  4. To be free from Quarantine

After 10 days from Quarantine, to be free from Quarantine once 2 swab tests are negative.

Extension of Covid-19 pandemic restrictions

Notice of the National-Level Central Committee on Prevention, Control and Treatment of Covid-19 issued on 29 May 2021 specifies to extend the restrictions till 30 June 2021.

Extension of Covid-19 pandemic restrictions by Ministry of Foreign Affairs (“MOFA”)

On 31 May 2021, MOFA issued an announcement on extension of the restriction of travelers’ entry into Myanmar and visa issuance process till 30 June 2021. For foreigners (including ambassadors and employees of organizations under the United Nations) who are required to enter into Myanmar by special/relief flight for government’s duties or for urgent and inevitable matters, the exemption of visa restrictions shall be applied to the nearest Myanmar embassy/consular office. All travelers  entering into Myanmar need to follow the existing directives on Covid-19 pandemic restrictions promulgated by the MOHS.

vietnam

Employment and Pensions

Decision No. 526/QD-LDTBXH dated May 6, 2021 by the Ministry of Labor, War Invalids and Social Affairs issues the “announcing revised administrative procedures in the employment sector.”

Among other things, the Decision sets out the contents of the application package for work permit extension for foreign workers.

Foreign Investment

Circular No. 03/2021/TT-BKHDT dated 9 April 2021by the Ministry of Planning and Investment “prescribing samples of documents and reports related investments in Vietnam, outward investments and investment promotion activities.”

According to this Circular, new samples or templates are issued under the 2020 Investment Law and the Decree No. 31/2021/ND-CP. Below are several ones applicable to investors:

Sample A.I.1: Written request for implementation of investment project according to point a of clause 1 of Article 33 in the Investment Law, and clause 1 of Article 36 in the Decree No. 31/2021;

Sample A.I.2: Recommendation about investment project (applicable to those projects subject to requirements concerning approval of investment policies that are prepared by competent state authorities) according to point b of clause 2 of Article 33 in the Investment Law;

Sample A.I.3: Recommendation about investment project (applicable to those projects subject to requirements concerning approval of investment policies that are proposed by investors) according to point d of clause 1 of Article 33 in the Investment Law;

Sample A.I.4: Recommendation about investment project (applicable to those projects not subject to requirements concerning approval of investment policies) according to clause 1 of Article 36 in the Decree No. 31/2021;

Sample A.I.5: Written request for approval of investors according to clause 3 of Article 29 in the Investment Law; clause 1 and 2 of Article 30 in the Decree No. 31/2021;

Sample A.I.6: Written request for investment registration certificate according to clause 2 and 4 of Article 35 in the Decree No. 31/2021.

The Decree No. 31/2021/ND-CP, dated 26 March 2021 by the Government “prescribing details and instructions about implementation of the 2020 Investment Law.”

The List of sectors and industries receiving investment incentives in the Appendix II to this Decree contains several additional sectors and industries. Below are several subsectors of the agriculture sector that are added to the List:

  • Manufacturing of biological crop protection products;
  • Production of organic fertilizers; Scientific researches and technology transfers for development of organic fertilizers;
  • Cultivation and processing of agricultural, forestry and aquatic products in the form of links in the product chain or in the form of organic agricultural production;
  • Manufacturing of handicrafts, bamboo and rattan, ceramic, glass, textile, fiber, embroidery, knitting products;
  • Scientific research and technological development in the science and technology sector;
  • Stocking and rearing original breeds and preserving precious and rare livestock genetic sources and local livestock breeds.

Construction

Decree No. 50/2021/ND-CP dated 1 April 2021 by the Government “amending the Decree No. 37/2015/ND-CP regarding construction contracts.”

This Decree applies to organizations and individuals involved in the establishment and management of construction contracts under construction investment projects funded by public investment or foreign capital. public-private partnership and construction contract between PPP project enterprise and construction contractors implementing bidding packages of investment projects in the form of public-private partnership (referred to as PPP projects).

Compared to the existing one, the Decree No. 37/2015 sets out several new regulations, including:

  • Clear regulations state that construction contracts may be revised even during the extended terms.
  • As for unit price contracts, contractual unit prices will be adjusted if:
    • The State changes policies, directly affecting the performance of the contract, unless the contracting parties agree otherwise;
    • The revised project affects the contract, unless the contracting parties agree otherwise;
    • Any force majeure event prescribed by laws occurs.
  • Lump-sum contracts will be adjusted if:
    • The State changes policies, directly affecting the performance of the contract, unless the contracting parties agree otherwise;
    • The revised project affects the contract, unless the contracting parties agree otherwise.

High technology company

Decision No. 10/2021/QĐ-TTg dated 16 March 2021 by the Prime Minister “on the criteria for determining a high technology company.”

The Decision sets out the requirements applicable to companies to be deemed “high technology companies”, including the following:

  • Manufacturing products which belong to the list of high technology products which are encouraged to be developed under the Law on High Technology;
  • Applying environmental-friendly and energy saving solutions, ensuring the product quality to meet the applicable Vietnamese standards or technical requirements, or international standards.
  • Revenues generated from high tech products must account for at least 70% of total annual net revenues.
  • Subject to the investment scale, Research and Development (“R&D”) expenditure must be equal at least 0.5% to 2% of net revenue minus the input value. This means the R&D expenditure ratio shall only be based on the added value of the enterprise. Previously, the input value of material and component purchased domestically or from overseas was not deducted from the net revenue to determine the ratio.
  • The ratio of employees directly participating in R&D activities, who are educated to college level or above and enter into a labor contract with the company for 1 year at least, over the total number of employees should be at least 1% to 5%, subject to the investment scale.
  • Previously, only employees being educated to university level and above could be included to determine the ratio.

Decision 10 takes effect from 30 April 2021 and replaces the Decision No. 19/2015/QĐ-TTg dated 15 June 2015.

Tax

Circular No. 31/2021/TT-BTC, dated 17 May 2021 by the Ministry of Finance, “prescribing risk management as part of tax administration activities.”

According to this document, a taxpayer will be kept under the special tax supervision if they have one of the following signs:

  • They are selected from the list of taxpayers ranked as not complying with tax legislation, the list of taxpayers ranked as posing very high risks, high risks and those failing to give explanation and add more information, or those doing so but failing to meet the requirements concerning full information and duration stated in written notices of tax authorities.
    (This is a new regulation that was not envisaged in the current regulation)
  • Their bank transaction has suspicious signs in accordance with regulations of laws on prevention and control of money laundering activities related to tax evasion or tax fraud.
  • They or their legal representatives are under investigation for their violations related to taxes, invoices and evidencing documents.
  • They have signs of high tax-related risk to the extent of being classified as subjects of special supervision or need to be kept under tax supervision through information collected for the tax authority’s administration.

Official Dispatch No. 05/CD-TCT dated 20 April 2021,” requesting the imperative implementation of the Decree No. 52/2021/ND-CP on extension of deadlines for payment of taxes and land rents accrued in 2021.”

According to this document, taxpayers eligible for tax payment deferral can submit application for such deferral once for all terms of taxes under discussion on the date of filing of tax returns.

The deadline for submission of application for such deferral is July 30, 2021.

In the aforesaid Decree, the extended periods of payment of taxes and land rents in 2021 include:

  • An extension of 5 months will be applied to VAT accrued from March to June in 2021 and the first and second quarter of 2021;
  • An extension of 04 months will be applied to VAT accrued in July 2021; an extension of 03 months will be applied to VAT accrued in August 2021;
  • An extension of 3 months will be applied to advance corporate income tax of the first and second quarter in the corporate income tax term of 2021;
  • Sole-proprietorship households and individuals must pay VAT and PIT accrued in 2021 by December 31, 2021 at the latest;
  • An extension of 06 months will be applied to land rents payable in the first term of 2021.

The Decree No. 52/2021/ND-CP dated 19 April 2021 by the Government “on extension of deadlines for payment of VAT, CIT and PIT and land rents in 2021.”

This Decree reveals the following beneficiaries of tax deadline extension:

  • Enterprises, organizations, business households or individuals involved in manufacturing activities in the following economic sectors:
    • Publishing; cinematography, television program production, music recording and publishing;
    • Extraction of crude oil and natural gas (except CIT on crude oil, condensate, natural gas that is collected under agreements or contracts);
    • Beverage production; printing, copying recordings of all kinds; motorbike and motorcycle production;
    • Water drainage and wastewater treatment.
  • Enterprises, organizations, business households or individuals involved in business activities in the following economic sectors:
    • Radio and television broadcasting; computer programming, consulting services and other activities related to computers; Information services;
    • Mining support services.

Renewable energy

Draft Circular on DPPA for Renewable Energy Project to collect public opinions

The Ministry of Industry and Trade of Vietnam (MOIT) released the second draft circular regarding the implementation of the pilot program for direct power purchase agreement (DPPA) mechanisms between renewable energy developers/power generation companies and private power buyers/consumers (“Draft Circular “).

According to this Draft Circular, renewable energy generation companies and power consumers satisfying the following requirements can register with the MOIT to participate in the pilot DPPA Program:

  • For renewable energy generation companies: they must (i) own a grid-connected solar or wind energy project having an installed capacity of more than 30 MW that has been included under the approved power development master plan; (ii) commit to put the relevant power plant into commercial operation and participate in the Vietnam Wholesale Energy Market (“VWEM”) within 270 working days after being selected for pilot DPPA program; and (iii) having documents of the financial and credit institutions to provide finance for the power plant.
  • For energy consumers: they must (i) purchase electricity for industrial manufacturing purposes at the voltage level of 22 kV or higher, (ii) commit to using renewable energy, and (iii) commit to annual renewable energy consumption supplied by the participating power generation company equivalent to at least 80% of that supplied by EVN in the first 3 years participating in the pilot DPPA program.

In terms of application, the Draft Circular still sets a tight timeline for submission of applications by consumers and the power generation companies. Within 45 working days from the date of the MOIT’s opening of the pilot DPPA program on its website, the power generation companies and power consumers who wish to participate will be required to prepare and submit their registration applications via the electronic information portal.

The Draft Circular provides a list and templates of application documents required to be completed and submitted to the MOIT in order to participate in the DPPA pilot program (provided under Annex 1).

Under the proposed mechanism, the power generation company will not directly sell the generated electricity to the power consumer. Instead, through the VWEM and in accordance with the relevant power purchase agreement (PPA), it will sell all generated electricity to Vietnam Electricity (EVN), which in turn will sell such electricity to the power consumer.

The sale and purchase of electricity on the VWEM will be conducted at the spot market price in accordance with the MOIT’s regulation on the operation of VWEM (that is, current Circular No.45/2018/TT-BCT dated November 15, 2018, as amended). As for the purchase of electricity from PC, the power consumer must pay EVN additional DPPA services fees (including transmission fees, distribution fees, market operation and dispatch charges, and auxiliary services fees) which are calculated on each kWh.

In addition, the power generation company and the power consumer will enter into a DPPA in the form of   Contract for Differences with a term decided by the parties which shall be at least 10 years but not more than 20 years. The contract mainly governs the power supply commitments of the power generation company; and the strike price which the power consumer agrees to pay the power generation company.

The launch date of the DPPA pilot program is expected to be released soon this year.