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"This is a good opportunity for long-term investment and business expansion in Vietnam because of the falling price and cheaper local cost," says a practitioner, who also notes that investors are moving away from the US and European markets and starting to look to Vietnam. Particularly in the first quarter of 2009, investors began to pump money into the Vietnamese market, and investment plans that had stalled during the economic downturn began to pick up....

"This is a good opportunity for long-term investment and business expansion in Vietnam because of the falling price and cheaper local cost," says a practitioner, who also notes that investors are moving away from the US and European markets and starting to look to Vietnam. Particularly in the first quarter of 2009, investors began to pump money into the Vietnamese market, and investment plans that had stalled during the economic downturn began to pick up.

The country's refining, power and real-estate sectors are benefiting the most from this resurgence. In addition to a continued flow of infrastructure work, law firms have been busy with land funding and tourism-related project financing work that not only comes from foreign investors, but increasingly from local companies. "For real estate, we are seeing domestic investors taking a more aggressive role. There have been a few cases where they have bought-out foreign investors," says a lawyer. Construction activities have also been rising as the banks start lending again, with a number of property projects launching recently.

The national government is also ready to seize upon interest from local and foreign investors, issuing regulations in April 2009 to relax the foreign ownership cap on the ownership and trading of shares in Vietnam's securities market. The Ministry of Finance has also provided clearer rules governing foreign securities investment.

On the back of these changes, practitioners have seen increasing activities in bond issuances. "The bond market is quite active now. There have been a number of credit institutions and corporate bonds issued during the past five months," says one lawyer.

Although foreign investors are able to acquire an increased number of shares in Vietnamese companies, partners note that it is not yet a straightforward process. "We continue to see challenges in foreign acquisitions of more than 49% of the share capital in local companies," says a lawyer. "There is currently a lack of clarity in implementing this, even though the right to acquire more than 49% is already legally available."

Some partners have a "cautiously optimistic" view of the market. "From my perspective, the biggest difficulty is lack of clear law around many of the products and services that we would like to offer to institutional clients in Vietnam," says a foreign investor.

This echoes the thoughts of banking lawyers. "The market has seen a number of new products such as equity- or debt-linked instruments that are either offered by or invested in Vietnamese banks [for example, deposits linked to government bonds or foreign corporate bonds], but there is no clear legal framework regulating such products," says a lawyer.

The lawyer adds that more Vietnamese banks are entering into Isda (International Swaps and Derivatives Association) arrangements with foreign banks, and that there is little regulation in the area.