You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

May 14, 2021

Vietnam’s Decree 21 Updates Regulations on Security for Performance of Obligations

Subscribe to Updates

On May 15, 2021, Decree No. 21/2021/ND-CP of the Government of Vietnam dated March 19, 2021, guiding the implementation of the Civil Code of 2015 on security for performance of obligations (Decree 21) will come into effect and replace Decree No. 163/2006/ND-CP of the Government dated December 29, 2006, on security transactions, as amended by Decree No. 11/2012/ND-CP (together, “Decree 163”).

One of the most significant changes of Decree 21 in comparison to Decree 163 is the new system of terminology in relation to security for performance of obligations. In particular, the new decree provides new definitions for existing terms such as “guarantor” and “guarantee” and sets out the definitions of newly added terms such as “secured obligator,” “security contract,” and “reasonable duration.” This change reflects the intention of the legislators to unify the relevant terminology in accordance with the Civil Code of 2015.

Article 4 of Decree 21 lists out principles for the application of laws and the parties’ agreements on security for performance of obligations. Accordingly, in cases where the laws on specialized areas such as land, housing, insurance, banking, aviation, or intellectual property have provisions on security assets, establishment and implementation of means of security, or enforcement of security assets, the provisions of the specialized laws will prevail. Moreover, if the parties have agreements that are different from provisions in Decree 21 but do not violate (i) fundamental principles of civil law or (ii) conditions for a civil transaction to be valid or (iii) limitations on the exercise of civil rights in accordance with the Civil Code or other relevant laws, such agreements may be enforced.

Decree 21 devotes an entire chapter to regulations on security assets (collateral) which includes definitions and descriptions of security assets and detailed provisions on 10 types of security assets including land use rights and assets attached to land, objects, valuable papers, etc. Notably, Decree 21 no longer provides that a security asset may not be attached by the courts or authorities to perform the guarantor’s other obligations if the security transaction is valid and effective against third parties and the laws do not regulate otherwise, as provided under Decree 163. This change makes the new decree consistent with the existing regulations on enforcement of civil judgments which state that mortgaged or pledged assets may still be attached for the purpose of enforcement of civil judgments, provided that the applicable conditions are satisfied.

The new decree provides detailed regulations on the establishment and implementation of means of security and enforcement of security assets. Accordingly, a means of security may be established based on the agreement of the parties via a security contract or a lien. For enforcement of security assets, Decree 21 goes into detail on the enforcement of future assets or invested mortgaged assets for the first time.

Decree 163 will still be applicable to security agreements or security interests which were established and implemented prior to May 15, 2021. The parties to such security agreements or security interests which have not been implemented or have been implemented but contain provisions different from provisions under Decree 21 may, but are not required to, agree to amend the existing security agreements or security interests to comply with the new decree.

Related Professionals

Practices

Banking and Finance

Corporate/M&A

Location

RELATED INSIGHTS​ 

September 29, 2025
In September 2019, the government of Vietnam issued Decree No. 75/2019/ND-CP on Administrative Sanctions in the Field of Competition (Decree 75) to address the urgent need for clear sanctioning mechanisms following the implementation of the new Law on Competition in July 2019. However, after five years of enforcement, various gaps and inconsistencies have been exposed that hinder its application. These shortcomings have reduced the deterrent effect of the sanctioning regime, and created legal uncertainty for market participants. A recent case involving Duc Giang – Lao Cai Chemicals’ acquisition of another chemical company—one of the first cases of economic concentration violation to be sanctioned by the National Competition Commission (NCC) since the Law on Competition took effect—highlights the practical difficulties under Vietnam’s competition law enforcement regime. In this case, although the transaction exceeded the statutory notification thresholds of economic concentration set out in the law, the parties failed to submit the required notification. This violation resulted in the NCC imposing aggregate fines of VND 1,423,982,880 (approximately USD 54,770) on the companies in September 2024. On appeal, Duc Giang – Lao Cai Chemicals argued that the chairman of the NCC was legally entitled to issue a warning as the key punishment instead of a monetary penalty. However, the chairman rejected the appeal, citing Article 14 of Decree 75, under which the specific penalty and level for “failure to notify economic concentration” is a fine, not a warning. While the chairman of the NCC is generally empowered to impose penalties, a warning cannot be applied if the specific regulation for a particular violation does not provide for it as a sanction. This example shows the inadequacy and inconsistency of the regulations on penalties for violations of competition law, and underscores the need for an amendment of Decree 75 to resolve such conflicts
Read More
September 26, 2025
As Vietnam accelerates its digital transformation, data centers have emerged as critical infrastructure supporting the shift toward a digital government, digital economy, and digital society. For businesses targeting Vietnam’s rapidly growing data center market, a clear understanding of the evolving regulatory landscape, compliance obligations, and government incentives is key to successful market entry and operation. This article provides a strategic overview of investment opportunities and key compliance requirements in Vietnam’s dynamic data center sector. Investment Incentives to Boost Data Center Growth Since July 1, 2024, organizations and individuals across all economic sectors have been encouraged to invest in and contribute to the development of data centers. By law, there are no restrictions on shareholding ratios, capital contributions, or foreign investor participation in data center and cloud computing services under business cooperation contracts. Currently, investment in AI data centers is classified as a specially incentivized industry, qualifying for preferential treatments and incentives in terms of investment, taxation, land use, and other related areas. Large-scale data centers, together with AI and cloud computing, are currently considered as strategic technologies and products for which Vietnam offers significant fiscal, tax, and land incentives to promote investment. Additionally, these large-scale projects may receive direct financial support from local development budgets for facility construction, technical infrastructure, and equipment procurement, subject to state budget provisions and applicable laws. AI data center construction projects also enjoy preferential treatment under customs regulations. Regulatory Approvals for Providing Data Center Services The 2023 Telecom Law and its guiding documents marked a significant milestone by classifying data center services as value-added telecom services. Under the law, a data center service is defined as a telecom service that enables users to process, store, and retrieve information via a telecom network through the leasing of part or all of a data center. A
Read More
September 24, 2025
On September 12, 2025, the Bank of Thailand (BOT) officially released its AI Risk Management Guidelines for Financial Service Providers, building upon the draft guidelines issued in June 2025. The guidelines reflect a balanced approach, encouraging innovation while safeguarding financial stability and consumer protection. The guidelines are targeted at all financial service providers, including financial institutions and special financial institutions under the Financial Institution Business Act, as well as payment providers under the Payment Systems Act. The guidelines apply to both AI systems developed in-house and those developed by third parties that are adopted for use by financial service providers. AI Risk Management Guidelines The two main pillars in managing AI risk are (1) governance of AI system implementation and (2) AI system development and security controls, consisting of the following key elements: 1. Governance Stakeholder roles and responsibilities. Boards and senior management assume accountability for decisions and operations involving AI systems, and are responsible for defining roles and responsibilities for AI oversight. This includes establishing an AI system usage policy, designating personnel responsible for AI risk management, and building awareness of AI-related risk within the organization. Organizations are expected to foster internal capabilities to use AI securely and avoid overreliance that could compromise business continuity or customer service. AI system usage policy. Policies governing AI usage should align with organizational goals, regulatory obligations, and recognized responsible AI frameworks—such as the FEAT principles (fairness, ethics, accountability, and transparency). These policies should be reviewed regularly to respond to technological advancements and evolving risk profiles. Risk management throughout the AI lifecycle. Risk management should encompass the entire AI lifecycle, from establishing risk appetite to implementing continuous risk assessment and control measures tailored to specific use cases. Financial service providers should assess risks and impacts of AI usage on operations and customer services.
Read More
September 19, 2025
Over the past two years—particularly since Thailand announced incentives for EVs, including tax exemptions and reductions—there has been a clear trend of manufacturers relocating their facilities to Thailand. This shift is reshaping the country’s industrial landscape and creating significant opportunities in the real estate sector for companies looking to establish or expand EV manufacturing operations in Southeast Asia. Incentive-Driven Market Transformation The government’s tax exemptions and reductions have proven effective in attracting foreign investment, with Chinese manufacturers currently dominating the market. Most EV parts and car manufacturers operating in Thailand are from China, reflecting the prominence of Chinese EV brands that have already established a presence in the country. The sector encompasses manufacturers of electrical equipment as well as companies seeking to establish facilities for producing electric vehicle components, parts, and accessories. The surge in activity is evident across Thailand’s EV manufacturing sector, with legal practices handling these transactions experiencing unprecedented demand. Industrial Real Estate Framework and Market Dynamics Thailand’s industrial real estate framework provides compelling advantages for foreign manufacturers, who typically face restrictions on foreign land ownership under the Land Code. However, foreign investors can benefit from exemptions to these restrictions if the land is located within industrial real estate zones designated by the Industrial Estate Authority of Thailand (IEAT) or they obtain investment promotion from the Board of Investment (BOI) if the land is located outside an industrial estate area governed by the IEAT. Both the IEAT and BOI provide special tax and nontax incentives, including foreign land ownership, with even greater incentives available for land situated within the country’s Eastern Economic Corridor (EEC). This regulatory advantage has sparked a parallel trend in land development. Industrial real estate developers in the EEC are actively consolidating land into large plots to develop new industrial estate projects, recognizing that
Read More