BUSINESS RESTRICTIONS FOR FOREIGN INVESTORS IN VIETNAM
Foreign investors have been flocking to Vietnam in recent years. Close to global supply chains, the country is seen as an attractive alternative to manufacturing in China, where wages are on the rise. Other benefits include its relative political stability and inclusion in the Trans-Pacific Partnership.
Thanks, particularly to Vietnam’s accession to the WTO, market access for foreign companies in the country, is being liberalized. That said, in certain sectors foreign direct investment continues to be restricted.
With the enactment of the Law on Investment and the Law on Enterprises, however, the country is moving in the direction of such a Negative List system. The two laws, in addition to various other laws and regulations, feature lists with industries that are termed ‘conditional’. When investing in conditional industries, the government examines the investment proposal and may choose to impose additional requirements.
In this article, Doanh Tri will take a closer look at what business restrictions for foreigners are in place in Vietnam.
I. Legal basis
-Law on Enterprise 2020 No. 59/2020/QH14;
-Law on Investment 2020 No. 61/2020/QH14;
-Land Law 2013 No. 45/2013/QH13.
II. Prohibited sectors for foreign investments
The prohibited industries according to the new national Law on Investment have been reduced from 51 sectors to 6 industries:
- Drugs and narcotics;
- Hazardous chemicals and minerals;
- Range of specimens of endangered flora and fauna;
- Human trafficking, sale of human body parts and tissue;
- Human cloning or asexual reproduction.
III. Business restrictions under the WTO agreement
Under Vietnam’s WTO Commitments, several certain sectors to foreign investments could be restricted in VN, as following:
- Courier services;
- Advertising services;
- Equipment maintenance and repair (except for ships);
- Film production, distribution, and screening;
- Travel agents and tour operators;
- Services related to manufacturing and mining;
- Telecommunication services;
- Electronic games;
- Road and rail transport;
- Maritime transport, and container handling;
- Aircraft repair and maintenance.
IV. Conditional businesses
A recently – amended Law on Investment which is effective from early 2021 has supplemented several new conditional business lines:
- Accounting and Auditing services;
- Tax agency service;
- Customs related business: Customs agency services, Trading duty-free goods, bonded warehouse or container freights stations;
- Securities-related business;
- Insurance/Reinsurance/Insurance brokerage/Insurance agency/Insurance auxiliary services;
- Price valuation service;
- Other financial businesses: Lotteries business, Debt collection services, Credit rating services, Prize-winning electronic games for foreigners, Casino business.
V. Restrictions on the property and land ownership
The law in Vietnam allows foreigners with legal entities to buy land and properties such as an apartment, villa, and house, just like other Vietnamese citizens. However, foreigners are prohibited from owning more than 250 properties in the same district or from possessing more than 30% share of a building.
To gain in-depth knowledge about business restriction in Vietnam, please contact Doanh Tri Law Firm via:
Hotline: (+84) 911.233.955 - (024) 6293 8326
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