On 26 March 2021, the Government of Vietnam issued Decree No. 31/2021/ND-CP, effective on the same day, to detail and guide the implementation of a number of articles of the Law on Investment 2020 (“Decree 31/2021”).
This Decree has concretized the provisions of the Law on Investment 2020 on the principle that foreign investors shall have access to the Vietnamese market as domestic investors, except for investments in the market access restriction list for foreign investors. Accordingly, the business lines in Vietnam can be divided into 03 groups depending on the conditions for access to the Vietnamese market of foreign investors as follows:
1. Group 1: Business lines in the list of business lines with prohibited market access for foreign investors
According to Section A of Appendix I of Decree 31/2021, foreign investors are not allowed to invest in 25 business lines (1), including some business lines such as:
Trade-in goods and services on the list of goods and services under state monopoly;
Press activities and collection of the news;
Catching or harvesting marine resources;
Guest worker services;
Public survey services;
Merchanting trade of goods;
Temporary import for re-export of goods;
Export, import, distribute some goods on the list of goods which foreign investors and foreign-invested enterprises do not have the right to export, import or distribute;
Industrial property representative services and intellectual property assessment services;
Travel services, except international travel services for inbound tourists;
And some other business lines.
2. Group 2: Business lines in the list of business lines with restricted market access for foreign investors
According to Decree 31/2021, there are 59 business lines with conditional market access for foreign investors, listed in Section B of Appendix I. To be able to invest in these business lines in Vietnam, foreign investors will have to meet the market access conditions posted on the National Investment Portal (2). These business lines include to mention a few:
Manufacture and distribution of media products;
Provision of audio and television broadcasting services;
Insurance; banking; securities trading and relevant services;
Postal and telecommunications services;
Transport of goods and passengers by rail, air, road, river, sea, pipeline;
Real estate business;
Health and social services;
Sports and entertainment services;
Audit, accounting, and tax services;
And some other business lines.
Decree 31/2021 also stipulates that in the case where Vietnamese law and international treaties on investment have stipulated market access conditions for foreign investors but such conditions have not been updated on the Market Access Restriction List for Foreign Investors and have not been published as prescribed, the provisions of Vietnamese law shall be applied (3).
3. Group 3: The remaining business lines
For business lines not in the lists of group 1 and group 2 mentioned above, according to Decree 31/2021, foreign investors shall have access to the market as domestic investors if Vietnamese law does not have regulations restricting market access of foreign investors to such business lines. Conversely, if Vietnamese law has provisions on restricting market access of foreign investors to such business lines, foreign investors are only allowed to invest in Vietnam if they meet the conditions of Vietnamese law (4).
This regulation can be considered as more progressive and favourable for foreign investors when investing in Vietnam than the provisions of the Law on Investment 2014, in which, the Law on Investment 2014 and its guidance document stipulate that “With regard to sectors and sub-sectors excluded from commitments or not specified in Vietnam’s WTO Schedule of Commitments and other international treaties on investment if investment conditions applied to foreign investors are also not provided for in Vietnamese law, the investment registration authority shall consult with the Ministry of Planning and Investment and relevant Ministries” (5).
In cases where the foreign investors have met the conditions of market access in accordance with Vietnamese law and then the Vietnamese law has new regulations on market access conditions, the foreign investors may continue to carry out investment activities under the previous conditions. If the foreign investors wish to conduct additional forms of investment or adjust and supplement the investment objectives and business lines of the approved forms of investment, which must meet the conditions of market access under the new regulations, the foreign investors must meet the conditions under the newly issued regulations. In this case, the competent state agency shall not reconsider market access conditions for business lines in which foreign investors have been approved to invest (6).
(1) Clause 2 Article 17 of Decree No. 31/2021.
(2) Clause 3 Article 17 of Decree No. 31/2021.
(3) Clause 3 Article 18 of Decree No. 31/2021.
(4) Clause 4 Article 17 of Decree No. 31/2021.
(5) Point d, Clause 2, Article 10, Decree No. 118/2015/ND-CP dated 12 November 2015.
(6) Clause 5 Article 17 of Decree No. 31/2021.
Source: CCIPV / BROSS & Partners