With Vietnam developing as the new 'hot spot' for foreign investment, Allens Arthur Robinson is expanding its recently acquired offices in the country

Vietnam is rapidly becoming a regional favourite with Asian investors, after the country took centre stage by becoming the 150th member of the WTO. Combined with an overhaul of its legal framework and securing a permanent normal trade relations status with the US, investment levels have surged to new heights, pushing registered FDI capital for 2006 to a record level of US$10.2bn.

Most high-level investment into Vietnam comes from major Asian corporations based in Japan, Malaysia and Singapore, and Korea in particular.

The decision of Allens Arthur Robinson to enter the country when it took over two offices in Hanoi and Ho Chi Minh City from Phillips Fox in January this year, was therefore well timed. As a result of the buoyancy in the Vietnamese market, Allens has grown its Vietnam operations to 23 lawyers and expects to add a further three or four.

The new additions are a mixture of internal and lateral moves, said Jim Dunstan, executive partner of Allens' Asian offices, in an interview with ALB. The firm has enlisted several Vietnamese lawyers educated in Australia. "They were born in Vietnam, went to university in Australia and are now going back to Vietnam to work for Australian law firms," he said. "They're a small but very powerful force for us, because culturally they fit into the Australian operations and they're also fluent Vietnamese speakers."

Allens has profited especially from growth in areas such as financial services and property. "There's an absolute tidal wave of investment in property," said Dunstan. "We're talking about people who want to develop not only new houses but whole suburbs and all the infrastructure that goes with it: hotels, sports grounds, the lot." The firm has also acted on various privatisation projects, in which the government has sold 10-15% stakes in state-owned banks and insurance companies.

Tough times
Despite the buoyant climate for investment in Vietnam, foreign firms that have already established a presence in the country predict a tough time ahead for newcomers. "A lot of firms have put a sign out here in the past and have people based in Singapore, but it isn't easy to start up a practice here nowadays - the law has become complicated," said Fred Burke, partner with Baker & McKenzie in Vietnam. Over the past 15 years, according to Burke, firms have come in well funded, lost money for two or three years and then decided it was not for them.

Two Australian firms that have tried to penetrate the Vietnamese market are Freehills and Deacons. Freehills handed over its activities to Frasers Law Company in 2005 and maintains an alliance with the firm. Deacons' operations merged with local firm Vision & Associates, although Deacons still has a partner, Charlene Yuen, on the ground.

Upcoming local firms will make the entry of foreign firms into Vietnam even harder. In fact, it is the local firms such as YKVN, Vision & Associates, Velif and Indochine Counsel that are seen as the key players in the market, as their sophistication and capabilities on cross-border deals continue to increase.

Asian presence
Allens' Asian activities have seen steady growth; revenues and profit margins have increased on average by 25% per annum in the last five years, according to Dunstan.

Singapore is the firm's largest Asian office, housing 50 lawyers - if the recently concluded joint venture with TSMP Law Corporation is included. Although it attracts local work in areas such as fund management and REITs, the office's main role is to function as the regional centre for the other Asian offices. It focuses particularly on cross-border M&A and financial services work. Gavin MacLaren, managing partner of the Singapore office, expects growth to continue. "We certainly would be happy ... to become the largest foreign law firm in Singapore," he said.

AUSTRALASIANS IN VIETNAM
 * Allens has two integrated offices: Ho Chi Minh City and Hanoi
 * Deacons is active in Vietnam through local firm Vision & Associates, which took over Deacons' Vietnam operations. Partner Charlene Yuen works with Vision and has over five years' legal experience in Vietnam. The firm's head office is in Hanoi
 * Freehills had operations in Vietnam until 2005, when Frasers Law Company took over its offices. Freehills maintains an alliance with Frasers