In the context of globalization and international economic integration, attracting foreign investment has become a key objective of Vietnam’s economic development strategy. However, to ensure sustainable growth and protect the interests of stakeholders, regulations on industries, occupations, and market access conditions for foreign investors (FIIs) must be clearly and transparently defined.
– The foreign investors (Clause 19 Article 3 of the Law on Investment 2020);
– The business organizations (Points a, b and c Clause 1 Article 23 of the Law on Investment 2020) upon establishing a business organization; making investment by contributing capital, purchasing shares or purchasing stakes in a business organization; making investment under a business cooperation contract.
“The business organizations specified in Points a, b and c Clause 1 Article 23 of the Law on Investment 2020:
a) Over 50% of its charter capital is held by a foreign investor(s) or, in case of a partnership, the majority of its general partners are foreigners;
b) Over 50% of its charter capital is held by a business organization(s) mentioned in Point a of this Clause;
c) Over 50% of its charter capital is held by a foreign investor(s) and a business organization(s) mentioned in Point a of this Clause.”
The Law on Investment 2020 is great news for foreign investors! It means that they will be subject to the same market access conditions as domestic investors, with just a few exceptions. These exceptions are listed on the Negative List for Market Access for foreign investors.
So, what does this mean for foreign investors? Well, it means that they can participate in many different fields and occupations, ensuring compliance with current legal regulations.
Pursuant to Laws and Resolutions of the National Assembly, Ordinances and Resolutions of the Standing Committee of the National Assembly, Decrees of the Government and international treaties to which the Socialist Republic of Vietnam is a signatory, the Government shall promulgate a Negative List for Market Access.
Negative List for Market Access for foreign investors includes:
– Prohibited business lines: Foreign investors cannot invest in Vietnam in most areas related to defense and security.
Example:
– Restricted business lines: Foreign investors must meet specific conditions on market access for these industries and professions.
Example:
– Holding of charter capital by the foreign investor in a business organization;
– 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 treaties to which the Socialist Republic of Vietnam is a signatory.
The above conditions and regulations protect the interests of domestic investors while creating opportunities for foreign investors to participate effectively in the Vietnamese economy. Understanding these regulations will help foreign investors optimize their investment activities and exploit the potential of the Vietnamese market.
In case you still have questions related to the legal matters of establishing a Company in Vietnam, please contact TPM via our website or contact TPM directly at hotline (+84) 28 3505 1800 for the fastest support.
Legal Basis:
Duong Nguyen
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