Industries and businesses that are permitted for foreign investment ? Licensing procedures?

Projects in which Foreign Investors are allowed to invest in Vietnam

Under the provisions of the Law on Investment 61/2020/QH14, Investors have the right to conduct business investment activities that are not in the banned list as follow:

  • a) Trade in the narcotic substances specified in Appendix I hereof;
  • b) Trade in the chemicals and minerals specified in Appendix II hereof;
  • c) Trade in specimens of wild flora and fauna specified in Appendix 1 of Convention on International Trade in Endangered Species of Wild Fauna and Flora; specimens of rare and/or endangered species of wild fauna and flora in Group I of Appendix III hereof;
  • d) Prostitution;
  • dd) Human trafficking; trade in human tissues, corpses, human organs and human fetuses;
  • e) Business activities pertaining to asexual human reproduction;
  • g) Trade in firecrackers.
  • h) Provision of debt collection services.

Besides, there are some industries that foreign investors are not allowed to access the market or restricted to access the market, see the list hereunder.

List of industries Foreign investors are not allowed to access the market

1. Trading in goods and services on the list of goods and services exercised exclusively by the State in the field of commerce; 

2. Press activities and information gathering in any form;

3. Fishing or harvesting seafoods; 

4. Investigation and security services; 

5. Administrative and judicial services, including judicial assessment service, redundancy service, property auction service, notary service, liquidator service; 

6. Services of sending laborers to work abroad under contracts; 

7. Cemetery construction, cemetery service and burial service; 

8. Public opinion polling service (public opinion polling); 

9. Blasting service; and manufacture and trade in weapons, explosives and supporting tools; 

10. Inspection and certification services for means of transport; 

11. Importing and dismantling used ships; 

12. Public postal services; 

13. Services of surveying, constructing and publishing nautical charts for water areas, seaports, navigational channels and maritime routes; development and distribution of marine publications; 

14. Goods border-gate transfer business; 

15. Producing and trading in outdoor lamps. 

List of industries and trades Foreign investors are restricted to access the market:

1. Production and distribution of cultural products, including video recordings; 

2. Producing, distributing, and showing television programs and works of music, theater, and cinema; 

3. Providing radio and television services; 

4. Insurance, banking, brokerage, securities trading and other related services; 

5. Post and telecommunications services; 

6. Advertising service; 

7. Publication printing and publishing services; 

8. Measurement and mapping; 

9. Educational services; 

10. Exploring, exploiting and processing natural resources, minerals, oil and gas; 

11. Hydroelectricity, offshore wind power and nuclear energy; 

12. Transport of goods and passengers by rail, air, road, river, sea, pipeline; 

13. Aquaculture; 

14. Forestry and hunting; 

15. Betting business, casino; 

16. Industrial property related services; 

17. Security service; 

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. Tourist services; 

26. Health and social services; 

27. Sports and entertainment services; 

28. Paper production; 

29. Manufacture of transport means of more than 29 seats; 

30. Development and operation of traditional markets; 

31. Commodity Exchange; 

32. Domestic retail collection services; 

33. Auditing, accounting, bookkeeping and tax services; 

34. Valuation services, valuation consulting services for equitization; 

35. Services related to agriculture, forestry and fishery; 

36. Manufacturing and manufacturing aircraft; 

37. Manufacturing and manufacturing railway locomotives and wagons; 

38. Manufacture of tobacco; 

39. Publisher's Activity; 

40. Building and repairing ships; 

41. Acquisition, purchase and handling of military goods and defense and military works; 

42. Sales of military equipment, military for the armed forces, military weapons, equipment, techniques, weapons, specialized means of military and police, components, parts, spare parts, objects special equipment and equipment, and specialized technologies for their manufacture; 

43. Waste collection services, environmental monitoring services; 

44. Commercial arbitration services, arbitration mediation; 

45. Business logistics services; 

46. Coastal sea transport; 

47. Cultivation, production or processing of rare crops, breeding rare wildlife and the processing and handling of these animals or plants, including live animals and preparations. products from them; 

48. Production of construction materials, including construction glass, clay bricks, equipment for cement production, bricks, fresh concrete, crushed stone; 

49. Motorcycle assembly; 

50. Art activities, performing arts, fashion shows, beauty and model competitions; 

51. New lines of business that have not been implemented in the Vietnamese territory at the time of the Investment Law at the time of implementation. 

Conditions for foreign investors to access the market?

These are the conditions that foreign investors must satisfy when conducting investment activities in sectors subject to conditional investment for foreign investors as prescribed in laws, ordinances, decrees, and international treaties on investment. 

Conditions on the proportion of foreign investors' ownership in charter capital of a business organization 

Foreign investors are entitled to own unlimited charter capital in a business organization. Except for the following cases: 

  • Foreign ownership ratio in listed companies, public companies, securities trading organizations and securities investment funds in accordance with the law on securities. 
  • The ownership ratio of foreign investors in state-owned enterprises that are equitized or converted to other forms comply with the provisions of the law on equitization and transformation of state-owned enterprises. 
  • Foreign investors' ownership ratio which does not fall into the above two cases shall comply with other provisions of relevant laws and international treaties to which the Socialist Republic of Vietnam is a signatory. 

See more: Regulations on the ratio of foreign investors' capital in Vietnam 

Conditions of investment form 

When investing in Vietnam, direct or indirect investment can be made. Forms of foreign investment in Vietnam include: 

  • Investment in establishing economic organizations. 
  • Capital contribution investment, share purchase, capital contribution purchase. 
  • Implementation of an investment project. 
  • Investment in the form of BCC contract. 
  • New forms of investment and new types of economic organizations according to the Government's regulations. 

Each form will have its own requirements. 

See more: Forms of foreign investors contributing capital to Vietnamese companies

Scope of investment activities 

For industries and sub-sectors to which Vietnam has committed to which foreign investors meet the investment conditions of that industry, the investment registration agency shall consider, decide to grant, modify the Certificate of investment registration or registration of capital contribution, purchase of shares or capital contributions of foreign investors in accordance with the Law on Investment. 

For service sectors and sub-sectors that have not yet committed or are not specified in Vietnam's Schedule of Commitments in international treaties on investment, but the law of Vietnam already has provisions on investment conditions for investors, foreign investors shall comply with the provisions of Vietnamese law. 

Vietnamese partners to participate in investment activities 

In many business lines when choosing to invest, foreign investors are required to enter into joint ventures with Vietnamese enterprises that have been licensed to operate in that field. For example, in Advertising field: 

According to the WTO accession commitments, from the date of accession, foreign service suppliers may establish joint ventures or enter into business cooperation contracts with Vietnamese partners who have been licensed to provide services. 

Article 40 of the Law on Advertising 2012, lawizes this commitment: “Foreign organizations and individuals are allowed to cooperate and invest with Vietnamese advertising service providers in the form of joint ventures and business cooperation contracts." 

Based on these regulations, foreign investors are not allowed to freely invest in the advertising business, but only invest in the form of a joint venture or a business cooperation contract with an approved Vietnamese partner who has the authority to license advertising activities. 

Licensing procedures

Step 1: Apply for an investment registration certificate 

Before establishing an enterprise in Vietnam, regardless of the business lines or fields of investment, the proportion of capital held by foreign investors (ie from 1% to 100%), an investment project must be obtained by foreign investors and must go through the procedures for an investment registration certificate. 

Within 15 days from the date of receipt of a complete and valid application, the Department of Planning and Investment will issue the Investment Registration Certificate. If refusing to issue, it will reply in writing, clearly stating the reason. 

For the form of foreign investment in Vietnam through the capital contribution and share purchase by foreign investors in the Vietnamese company for conditional business lines applicable to foreign investors; or the contribution of capital, purchase of shares or capital contributions leads foreign investors to own 51% of the charter capital of the enterprise, the Company need to carry out the procedures for registration of capital contribution purchase with the Department of Planning and Investment without necessarily carrying out procedures for issuing investment registration certificates. 

Just do the reporting procedure using form I.13 in Circular No. 16/2015 / TT-BKHDT. The contents of the report include: Name of investment project, investment objectives, investment scale, investment capital, location, duration, investment schedule, labor demand, investment incentives (if any). 

Step 2: Register the establishment of a foreign-invested enterprise 

After being granted the investment registration certificate, the foreign investor shall carry out the registration of establishment of a foreign invested company. The foreign investor prepares a complete dossier and submits it to the Provincial Business Registration Office where the company is located. After 05 - 07 working days, the Business Registration Office will issue the Business Registration Certificate to the investor. 

See further guidance here