Business lines with prohibited and restricted market access applied to foreign investors

In recent years, Viet Nam is receiving considerable attention from foreign investors as an potential destination for their investment projects as evidenced by the fact that Viet Nam is still one of the countries attracting the biggest FDI capital in Southeast Asia. However, besides creating favorable conditions to attract FDI, Viet Nam also sets out some regulations restricting business lines for foreign investors in order to ensure national security and limit competition for domestic enterprises. The following article will provide you with information about Business lines with prohibited and restricted market access.

Entities applying the Negative List for Market Access

As stipulated in Article 16 Decree No. 31/2021/ND-CP, The Negative List for Market Access applies to:

a) The foreign investors specified in Clause 19 Article 3 of the Law on Investment;

b) The business organizations specified in Points a, b and c Clause 1 Article 23 of the Law on Investment 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 entities specified in Points a and b of this Clause are below collectively referred to as foreign investors, unless otherwise prescribed by this Decree).

Business lines with prohibited and restricted market access

Except the business lines on the Negative List for Market Access in Appendix I hereof, foreign investors have the same market access as that of domestic investors when making investment in Viet Nam. The Government shall promulgate the List of business lines with prohibited and restricted market access (Negative List for Market Access), include:

• Prohibited business lines;
• Restricted business lines.

In which, prohibited business lines are those in which foreign investors are not allowed to invest. Restricted business lines require foreign traders must meet the conditions set forth by Vietnamese law in order to be able to invest in that business lines.

It is provided in Article 15 Decree No. 31/2021/ND-CP that business lines with prohibited and restricted market access and the restrictions are specified in the Laws and Resolutions of the National Assembly, Ordinances and Resolutions of Standing committee of the National Assembly, Decrees of the Government and investment-related international treaties. The Negative List for Market Access is provided in Appendix I hereof.

According to Appendix I, there are 25 prohibited business lines such as: Trade in goods and services on the list of goods and services under state monopoly; Press activities and collection of news in any shape or form; Catching or harvesting marine life; Investigation and security services….and 59 restricted business lines such as: Manufacture and distribution of media products, including video recordings; Manufacture, distribution, broadcasting of TV programs, stage performances and cinematic works; Provision of audio and television broadcasting services; Insurance; banking, securities trading and relevant services…

Market access conditions applied to foreign investors

Clause 3 Article 9 Law on Investment 2020 specifies that Market access conditions applied to foreign investors specified in the Negative List for Market Access include:

• 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.

Besides the above-mentioned conditions, when making any investment activities in Viet Nam, foreign investors and foreign-invested business organizations also need to fulfill the following conditions (if any) when carrying out business investment activities in Vietnam:

• Use of land, employ workers; natural resources, minerals;
• Manufacture, supply of public services, goods or goods and services under state monopoly;
• Ownership, trade of housing, real estate;
• Application of assistances, aids of the State in certain industries, sectors or geographical areas;
• Participation in state-owned enterprise equitization programs or plans;

In case the foreign investors making investment in business lines without market-access commitment of Viet Nam, conditions for market access shall be applied as follows:

• In case the law of Vietnam do not restrict market access in those business lines, foreign investors have the same market access as that of Vietnamese investors;
• In case the law of Vietnam has restrictions on market access by foreign investors in those business lines, the law of Vietnam shall apply.

Above are Vietnamese regulations regarding Prohibited and Restricted business lines applied to foreign investors. Foreign investors need to thoroughly study the business lines intending to invest in Viet Nam as well as the applicable laws in order to ensure the investment activities are carried out smoothly.

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