Conditional business lines in Vietnam - what the foreign investors should be aware of?

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When investing in conditional business lines in Vietnam, the foreign investors need to consider whether the industry in which they intend to invest in Vietnam is a conditional business line or not. Under the law of Vietnam, there are two types of conditions applied, including: (i) Market access conditions for the foreign investors; and (ii) Conditions for doing business. 

1. Market access conditions for the foreign investors 

The market access conditions for the foreign investors are pre-check conditions which will be appraised by the investment registration authority of Vietnam before granting Investment Registration Certificate to the foreign investors. 

According to Article 9 of the applicable Law on Investment, the foreign investors are entitled to the market access conditions applicable to the domestic investors, except for the business lines included the list of industries and trades subject to market access restriction for the foreign investors promulgated by the Government. This list is built on the basis of laws and resolutions of the National Assembly, ordinances, resolutions of the Standing Committee of the National Assembly, decrees of the Government and international treaties that Vietnam is a member. Market access conditional business lines include two groups: (i) Conditional market access ones; and (i) Non-market access ones. 

If the foreign investors invest in a conditional market access business lines, they must satisfy all conditions applied. Subject to specific conditional business lines, the conditions may consist of one of or all the followings:   

  • Holding of charter capital by the foreign investor in an enterprise; 
  • Investment method; 
  • Scope of investment; 
  • Capacity of the investor; partners participating in the investment activities; 
  • Other conditions specified in the laws and resolutions of the National Assembly, Ordinances and resolutions of the Standing Committee of the National Assembly, decrees of the Government and international agreements to which the Socialist Republic of Vietnam is a signatory. 

If the foreign investors invest in the non-market-access business lines, the investment registration authority will consult the Ministry of Planning and Investment and relevant Ministries to consider and decide on allowing investors to invest in Vietnam in those industries. This consultation will normally take a long time and in many cases, the Ministries may reject the investor's investment in the above-mentioned industries for specific reasons. 

The foreign investors can refer to the list of industries and trades restricted from market access promulgated by the Government. Pending the issuance of this list by the Government, the foreign investors can refer to Vietnam's Schedule of Specific Commitments on Trade in Services in the WTO, and the investment agreements that Vietnam and Japan are signatories, domestic laws of Vietnam; or consult the National Foreign Investment Portal at http://dautunuocngoai.gov.vn. 

2. Conditions for doing business 

When conducting business in conditional business lines, the foreign investors must satisfy all business conditions in accordance with the applicable Law on Investment and ensure that those conditions for business investment are maintained throughout the course of their business operations. These conditions shall be applied generally to all organizations and individuals doing business in Vietnam, including foreign-invested enterprises. The list of sectors and trades subject to conditional business investment is listed in Appendix IV of the applicable Law on Investment and detailed in laws, resolutions of the National Assembly, ordinances and resolutions of the Standing Committee of National Assembly, Government decrees and international treaties to which the Socialist Republic of Vietnam is a signatory. 

Business conditions to be fulfilled are those specified in: 

a) Licenses; 

b) Certificates; 

c) Practicing certificate; 

d) Credentials; 

e) Written confirmation or written approval; 

g) Other requirements that must be satisfied by individuals and business entities to conduct business investment activities without obtaining written confirmation from a competent authority. 

Examples of some conditional business lines include insurance business, security service business, casino business, petroleum business, alcohol business,... 

Our suggestion is that before investing in Vietnam, the foreign investors need to check whether the industries they intend to invest in Vietnam are industries with market access conditions for the foreign investors or not or consult with the local business law firms.  

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