Vietnam: Draft Decree guiding the Investment Law 2020

Vietnam’s New Investment Landscape

In brief

Following the release of the abridged version of the decree guiding the implementation of the Investment Law 2020 ("New Investment Law") in July 2020, the government has now developed a more elaborated version ("Draft Decree"). When the Draft Decree is passed by the government, it will replace Decree No. 118/2015/ND-CP guiding the implementation of the Investment Law 2014 (“Decree No. 118”).

The Draft Decree has seven chapters and 93 articles, which provides guidance on the implementation of the New Investment Law, including the following:

  • guidance on procedure of online submissions for investment registration
  • extension of the list of sectors which foreign investors are restricted from accessing ("List of Restricted Sectors")
  • principles of applying the List of Restricted Sectors
  • requirements to meet in order to enjoy investment incentives regimes
  • guidance on investment security deposit for the implementation of investment projects
  • new regulations on the amendment of the investment project
  • termination of investment projects based on forged transactions
  • new business lines eligible for investment incentives


While the Draft Decree remains a work in progress, investors looking for opportunities in Vietnam should keep track of how this Draft Decree develops as they consider the necessary steps, requirements and restrictions relevant to their projects.

In depth

  1. Guidance on procedure of online submissions for investment registration

Article 34 of the Draft Decree provides the process and procedures for the online submission of the application dossier for granting and modifying investment registration certificates (IRCs) on the National Investment Information System (NIIS).

In more detail, under the Draft Decree, the investor can submit the online application for investment registration or modification through NIIS. If the application is eligible for issuance or modification of the IRC, the investment registration authority will notify the investor. The investor is still required to submit a hard copy of the registration documents to the investment registration authority in order to get the IRCs or the amended IRC.

  1. The expansion of the List of Restricted Sectors

The Draft Decree provides the List of Restricted Sectors detailing: (i) the sectors where market access is not yet allowed; and (ii) the sectors where market access is conditional. Following the draft decree version released in July 2020, the List of Restricted Sectors has been expanded, from 11 to 15 for sectors where market access is not yet allowed, and from 38 to 51 for sectors subject to market access conditions.

The List of Restricted Sectors is attached in the appendix of this client alert.

  1. Principles of applying the List of Restricted Sectors
  • Foreign investors will be entitled to market access conditions applicable to domestic investors for any sector not included in the List of Restricted Sectors.
  • Foreign investors are not allowed to invest in sectors where market access is not yet allowed.
  • Foreign investors conducting investment activities in different sectors must satisfy all market access conditions applicable to those sectors.
  • In the business lines for which Vietnam has not yet committed to national treatment according to international treaties of investment and Vietnamese laws do not have provisions on restrictions applicable to foreign investors — the foreign investors are able to apply the market access conditions as prescribed for domestic investors.
  • Foreign investors in territories that are not WTO members conducting investment activities in Vietnam are eligible for the same investment conditions as investors from WTO member countries or territories, except where law and international treaties between Vietnam and such country or territory provide otherwise.
  • In case a foreign investor is subject to an amendment to a treaty on investment and the market access conditions for such investor under such international treaty are more favorable in comparison with Vietnamese law, investors are entitled to apply market access conditions in accordance with international treaties on such investment.
  • Foreign investors who are subject to the application of different international treaties with different regulations about the market access conditions in the same business line are able to choose to apply the conditions according to one of the treaties, except where the relevant international treaties provide otherwise.
  • In case laws, resolutions of the National Assembly, ordinances or resolutions of the Standing Committee of the National Assembly, decrees of the government (“New Regulations”) regulate market access conditions for foreign investors, and such conditions have not yet been updated or supplemented in the List of Restricted Sectors, then the conditions in New Regulations will apply.
  1. Requirement to meet in order to enjoy investment incentives regimes

One of the notable changes under Article 15.1 of New Investment Law is the investment incentive regimes applicable to small and medium-sized enterprises (SMEs), start-ups, national innovation centers, R&D centers, investment in SMEs’ incubators, and co-working spaces serving SMEs and startups.

The Draft Decree provides in more detail the requirements that these businesses must meet in order to enjoy such investment incentive regimes. Those requirements include, among others, the nature of the business that such enterprises engage in, as well as conditions on personnel, facilities and technology.

For example, in order to enjoy the investment incentive under the New Investment Law, co-working spaces supporting SMES and creative start-ups must satisfy the conditions on: (i) location (priority areas near universities, economic and financial organizations); (ii) facilities and infrastructures (i.e., office space that is sufficient to supply at least 10 innovative start-ups, conference rooms, etc.); (iii)  information technology; (iv)  training, coaching, consulting, investment connections for SMEs and startups; and (v) professional management team (at least three experts) to provide coaching and advisory services.

SMEs’ incubators must satisfy various conditions on: (i) facilities (i.e., head office associated with training and research institutions, spaces for at least 10 SMEs’ incubation projects, laboratories or experimental production rooms, conference rooms, etc.); (ii) domestic and international database search service; (iii) personnel (i.e., at least five members having experience in incubating SMEs, one consultant, etc.).

  1. Guidance on investment security deposit for the implementation of projects

The Draft Decree provides further guidance on Article 43.1 of the New Investment Law on the investment security deposit for the implementation of certain investment projects.

In particular, Article 23.7 of the Draft Decree suggests that an investor may be entitled to delay paying the deposit if it has a guarantee from a credit institution legally operating in Vietnam. Upon a request from the investment authority, the bank must pay the security amount (as secured under the bank guarantee) to the state budget within 30 days from the date of request. This provision aims to create more flexibility for the investor in performing the obligation of security deposit, especially the investors of real-estate projects where the registered total investment capital and the required investment security deposit can be significant. 

  1. New regulations on the amendment of the investment project

The Draft Decree has introduced new regulations on the procedures for the amendment of investment projects in certain cases, which include, among others: division, consolidation, merger of investment project(s), use of the land use right belonging to the project as capital contribution to other enterprises, receiving transfer of investment projects, which comprise bad debts of credit institutions, and change of land use purpose of the whole or part of the project land. The foreign investor must carry out relevant procedures to amend the investment registration certificates or the in-principle approval (if applicable) as regulated in each case.

  1. Termination of investment projects based on fraudulent transactions

Article 48 of the New Investment Law had vested the investment registration authority with the right to terminate the investment projects deemed to be made based on forged transactions pursuant to civil laws.

Under the Draft Decree, the investment registration authority shall be entitled to terminate the operation of an investment project, if there is written confirmation by a competent authority of a forged civil transaction. It is noted that, pursuant to the Civil Code, the confirmation of a forged civil transaction must be based on a court decision or an arbitral award.

  1. New business lines eligible for investment incentives

In comparison with Decree No. 118, the new Draft Decree has supplemented new business lines eligible for investment incentives in its Appendix II, including, among others, as follows:

  1. investing in utilizing excess heat of exhaust gas for power generation by building material manufacturing facilities to save energy and protect the environment
  2. investment in the treatment and use of waste from thermal power plants, chemical fertilizer plants and metallurgical plants to make construction materials
  3. investment in the treatment and use of domestic waste as fuel in the production of building materials
  4. investment in the production of equipment, materials and spare parts for the cement production industry; glass; ceramic tiles; and refractory materials
  5. production and supply of environmental monitoring equipment, on-site domestic wastewater treatment equipment, eco-friendly products and fluids certified with Vietnam eco label in accordance with the law on environmental protection
  6. activities related to publishing electronic publications
  7. investment in SMEs’ product distribution chain; investment in SME incubators; investment in technical establishments supporting SMEs; investment in co-working spaces serving SMEs and start-ups as prescribed by the laws and regulations on supporting SMEs
  8. investment in start-ups

List of Restricted Sectors

A. List of sectors where market access is not yet allowed

  1. trading goods and services on the list of goods and services on which monopoly is held by the state
  2. press activities and information gathering in any form
  3. fishing
  4. security and investigation services
  5. judicial administration services, including judicial assessment services, poste restante services, property auction services, notary services, liquidator services
  6. overseas contracted employment agency services
  7. construction of cemeteries, cemetery services and funeral services
  8. public opinion polling services (CPC 86402)
  9. blasting services; and manufacture and trade in weapons, explosives and supporting tools
  10. inspection and certification services for vehicles
  11. import and dismantling of used seagoing vessels
  12. public postal services
  13. services of surveying, constructing and publishing nautical charts for waters, seaports, navigational channels and maritime routes; development and distribution of marine publications
  14. goods transshipment
  15. producing and trading of sky lanterns

B. Sectors where market access is conditional

  1. production and distribution of cultural products, including visual recordings
  2. producing, distributing and showing of television programs and music, stage performance and motion picture works
  3. supply of radio and television services
  4. insurance, banking, securities brokerage and trading and other related services
  5. post and telecommunications services
  6. advertising services
  7. printing, publication, and release services
  8. measurement and mapping
  9. educational services
  10. exploration, extraction and processing of natural resources, minerals, oil and gas
  11. hydropower, offshore wind power and nuclear energy
  12. transport of goods and passengers by railway, airway, road, waterway and pipeline
  13. aquaculture
  14. forestry and hunting
  15. betting business, casinos
  16. services related to industrial property
  17. security services
  18. manufacture of military materials or equipment
  19. construction, operation and management of river ports, seaports and airports
  20. real estate business
  21. legal services
  22. veterinary services
  23. distribution services
  24. technical inspection and analysis services
  25. travel services
  26. health and social services
  27. sports and entertainment services
  28. paper production
  29. manufacture of transport vehicles with more than 29 seats
  30. development and operation of wet markets
  31. commodity exchanges
  32. domestic LCL collection services
  33. auditing, accounting, bookkeeping and tax services
  34. valuation services, consulting services on corporate valuation for equitization
  35. services related to agriculture, forestry and fishery
  36. aircraft manufacturing
  37. manufacturing of railway locomotives and wagons
  38. tobacco production
  39. publishers' activities
  40. ship building and repair
  41. collection, purchase and handling of military goods, defense and military works
  42. trading in military equipment and supplies for the people's armed forces, military weapons, technical equipment, ammunition and specialized vehicles used for the army and police; components, accessories, spare parts, supplies and specialized equipment and technology used for production thereof
  43. waste collection services, environmental observation services
  44. commercial arbitration services, arbitration mediation services
  45. logistics services
  46. coastal shipping
  47. cultivation, production or processing of rare crops, breeding of rare wild animals, processing and handling of these animals or plants, including live animals and products thereof
  48. production of construction materials, including construction glass, clay bricks, equipment for cement production, bricks, as-placed concrete, crushed stone
  49. motorcycle assembly
  50. art activities, performing arts, fashion shows, beauty and model contests
  51. new business lines not yet implemented in the Vietnamese territory at the effective time of the New Investment Law
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