Vietnam: New draft regulations on market access applicable to foreign investors

In brief

Under the new Investment Law 2020, which will take effect on 1 January 2021 (“New Investment Law”), the most notable change is the introduction of the “negative list” approach, according to which foreign investors will be entitled to market access conditions applicable to domestic investors for any sectors not included in the list of sectors, which foreign investors are restricted from accessing ("List of Restricted Sectors"). 

The government recently released a draft regulation that guides market access by foreign investors and provides the List of Restricted Sectors applicable to the foreign investors, which is to be included in the decree guiding the implementation of New Investment Law (“Draft Decree”).


Contents

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

  1. Application of the List of Restricted Sectors

The Draft Decree also provides that the List of Restricted Sectors is applicable to foreign investors and foreign foreign-invested economic organizations in the following cases, when they make investments by way of establishing a new economic organization, acquiring shares and capital contribution in an existing entity, or entering into business cooperation contracts:

  • Having foreign investors holding more than 50% of the charter capital, or having the majority of the partners being are foreign individuals if the business organization is a partnership (“Foreign Majority Entity”);
  • Having the Foreign Majority Entity holding more than 50% of the charter capital; 
  • Having foreign investors and the Foreign Majority Entity holding more than 50% of charter capital.
  1. Principles of applying the List of Restricted Sectors
  • Foreign investors will be entitled to market access conditions applicable to domestic investors for any sectors not included in the List of Restricted Sectors.
  • Foreign investors conducting investment activities in different sectors must satisfy all market access conditions applicable to those sectors.
  • 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.
  • In cases where foreign investors are subject to international treaties and the market access conditions applied for such foreign investors are more favorable than that of Vietnamese law, then the foreign investors are allowed to apply the market access conditions of the international treaty.
  • For 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, such  foreign investors are able to choose to apply the conditions according to one of the treaties, except where the relevant international treaties provide otherwise.

List of Restricted Sectors

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

  1. Trading in goods and services that fall under the list of goods and services subject to state monopoly
  2. Press activities and activities on gathering news, broadcasting and television in any form
  3. Fishing 
  4. Investigation and security services
  5. Judicial administrative services, including judicial verification services, bailiff services, property auction services, notarization services and asset management services
  6. Services of sending workers abroad
  7. Business in cemeteries and cemetery parks
  8. Public opinion polling services (opinion polls) (CPC 86402)
  9. Blasting services
  10. Testing and certification services for transportation vehicles
  11. Importing and dismantling of used ships

B. Sectors where market access is conditional

  1. Production and distribution of cultural products, including video records
  2. Production, distribution and projection of television programs and cinematographic works
  3. Radio and television
  4. Insurance, banking, brokerage, securities trading, monetary and other related services
  5. Telecommunication services
  6. Advertising services
  7. Print services, publication distribution services
  8. Land surveying and mapping
  9. Educational services
  10. Exploration, exploitation and processing of natural resources, minerals, oil and gas
  11. Hydroelectric and nuclear energy
  12. Passenger transportation and freight transportation by railroad, airway, road, river, sea and pipeline
  13. Aquaculture
  14. Forestry and hunting
  15. Betting business, casino
  16. Services related to industrial property
  17. Guard services
  18. Manufacture of military materials or equipment
  19. 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. Sporting and recreational services
  28. Manufacture of paper
  29. Manufacture of transportation vehicles having more than 29 seats
  30. Development and operation of traditional markets
  31. Commodity trading exchange
  32. Service of collecting inland retail goods
  33. Auditing, accounting, bookkeeping and tax services
  34. Valuation services, consulting services of valuating enterprises for equitization
  35. Services related to agriculture, forestry and fishery
  36. Manufacture of aircraft
  37. Manufacture of locomotives and railroad carriages
  38. Manufacture of cigarettes
  39. New business lines that do not exist in the territory of Vietnam at the time the Investment Law becomes effective
Contact Information

Copyright © 2022 Baker & McKenzie. All rights reserved. Ownership: This documentation and content (Content) is a proprietary resource owned exclusively by Baker McKenzie (meaning Baker & McKenzie International and its member firms). The Content is protected under international copyright conventions. Use of this Content does not of itself create a contractual relationship, nor any attorney/client relationship, between Baker McKenzie and any person. Non-reliance and exclusion: All Content is for informational purposes only and may not reflect the most current legal and regulatory developments. All summaries of the laws, regulations and practice are subject to change. The Content is not offered as legal or professional advice for any specific matter. It is not intended to be a substitute for reference to (and compliance with) the detailed provisions of applicable laws, rules, regulations or forms. Legal advice should always be sought before taking any action or refraining from taking any action based on any Content. Baker McKenzie and the editors and the contributing authors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The Content may contain links to external websites and external websites may link to the Content. Baker McKenzie is not responsible for the content or operation of any such external sites and disclaims all liability, howsoever occurring, in respect of the content or operation of any such external websites. Attorney Advertising: This Content may qualify as “Attorney Advertising” requiring notice in some jurisdictions. To the extent that this Content may qualify as Attorney Advertising, PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME. Reproduction: Reproduction of reasonable portions of the Content is permitted provided that (i) such reproductions are made available free of charge and for non-commercial purposes, (ii) such reproductions are properly attributed to Baker McKenzie, (iii) the portion of the Content being reproduced is not altered or made available in a manner that modifies the Content or presents the Content being reproduced in a false light and (iv) notice is made to the disclaimers included on the Content. The permission to re-copy does not allow for incorporation of any substantial portion of the Content in any work or publication, whether in hard copy, electronic or any other form or for commercial purposes.