In recent years, Vietnam has become a highly attractive investment market, paying substantial attention from foreign investors. Accordingly, Vietnam continues to be one of the most successful countries of foreign direct investment (FDI) in Southeast Asia and globally. However, alongside favorable investment policies, Vietnam also imposes certain restrictions on market access for foreign investors in specific sectors and industries to safeguard national security and maintain a fair competitive environment for domestic enterprises. The following article outlines the sectors and industries subject to market access restrictions and the entities to which these restrictions apply.
I. Entities subject to the list of sectors and industries with market access restrictions
According to Article 16 of Decree No. 31/2021/NĐ-CP, the List of Sectors and Industries with Market Access Restrictions applies to:
- Foreign investors as defined in Clause 19, Article 3 of the Law on Investment;
- Economic organizations specified at Points a, b, and c, Clause 1, Article 23 of the Law on Investment when investing to establish another economic organization; contributing capital, purchasing shares or capital contributions of another economic organization; or investing in the form of a Business Cooperation Contract (BCC).
(For the purposes of this Section, the entities specified at Points a and b above shall collectively be referred to as “foreign investors,” except where otherwise provided under this Decree.)
II. Sectors and industries with market access restrictions for foreign investors
When foreign investors conduct investment activities in Vietnam, they are generally entitled to the same market access conditions as domestic investors. However, not all sectors and industries afford foreign investors the same treatment. The Government has issued the list of sectors and industries with market access restrictions for foreign investors under Appendix I of Decree No. 31/2021/NĐ-CP, comprising:
- Sectors and industries not open to market access yet;
- Sectors and industries subject to conditional market access.
Sectors not open to market access yet are those in which foreign investors are prohibited from investing in Vietnam. Meanwhile, sectors with conditional market access are those in which foreign investors must satisfy certain statutory conditions to be eligible to invest.
Pursuant to Article 15 of Decree No. 31/2021/NĐ-CP, market access restrictions for foreign investors, as well as the extent of such restrictions, are provided under laws, resolutions of the National Assembly, ordinances and resolutions of the Standing Committee of the National Assembly, decrees of the Government, and international treaties on investment. The official list is published in Appendix I to the Decree.
According to Appendix I, there are currently 25 sectors and industries not yet open to foreign investors, including but not limited to:
- Trading in goods and services under the State monopoly in commerce;
- Press and news-gathering activities in all forms;
- Fishing and exploitation of marine resources;
- Security and investigation services.
Additionally, there are 59 sectors and industries subject to conditional market access, such as: Provision of broadcasting and television services; Insurance; Banking; Securities trading and related financial services; Postal and telecommunications services; and others.
III. Market access conditions for foreign investors
Under Clause 3, Article 9 of the Law on Investment 2020, when foreign investors engage in business activities falling within the List of Sectors and Industries with Market Access Restrictions, they must comply with the following conditions:
- The percentage of foreign ownership in the charter capital of an economic organization;
- The form of investment;
- The scope of investment activities;
- The investor’s capacity and its partners participating in the investment activities;
- Other conditions as prescribed by laws, resolutions of the National Assembly, ordinances, 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 member.
In addition to the above conditions, foreign investors and foreign-invested economic organizations must also satisfy certain requirements, where applicable, concerning:
- Land use, labor, natural resources, and minerals;
- Production and provision of public goods and services or those under State monopoly;
- Ownership and trading of housing or real estate;
- Access to State support, subsidies, or incentives for specific industries or localities;
- Participation in equitization programs of State-owned enterprises;
- Other restrictions or prohibitions on market access as prescribed under relevant laws and treaties on investment.
If foreign investors seek to invest in sectors or industries not yet covered by Vietnam’s market access commitments, the following principles shall apply:
- If Vietnamese law imposes no restrictions on such sectors or industries, foreign investors may access the market under the same conditions as domestic investors;
- If Vietnamese law provides specific restrictions, those domestic legal provisions shall prevail.
The foregoing article discusses sectors and industries subject to market access restrictions for foreign investors. It is essential that foreign investors carefully study the sectors they intend to invest in and familiarize themselves with current Vietnamese legal requirements to ensure smooth and lawful investment activities.
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