Regulations on business lines with prohibited and restricted market access in Vietnam

Regulations on business lines with prohibited and restricted market access in Vietnam (Internet image)

Regarding this issue, LawNet responded as follows:

1. Regulations on business lines with prohibited and restricted market access in Vietnam

Regulations on business lines with prohibited and restricted market access in Vietnam according to Article 15 of Decree 31/2021/ND-CP are as follows:

-  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 list of business lines with prohibited and restricted market access (Negative List for Market Access) is provided in Appendix I of Decree 31/2021/ND-CP.

- Market access conditions shall be applied in the manners specified in Clause 3 Article 9 of the Law on Investment, published and updated in accordance with Article 18 of Decree 31/2021/ND-CP.

- In addition to the market access conditions mentioned in Clause 1 and Clause 2 of Article 15 of Decree 31/2021/ND-CP, 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;

 Other conditions 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 that prohibit or restrict market access by foreign-invested business organizations.

2. Rules for application of market access restrictions in Vietnam 

Rules for application of market access restrictions according to Article 17 of Decree 31/2021/ND-CP are as follows:

- Except the business lines on the Negative List for Market Access in Appendix I of Decree 31/2021/ND-CP, foreign investors have the same market access as that of domestic investors.

- Foreign investors must not invest in the prohibited business lines specified in Section A of Appendix I of Decree 31/2021/ND-CP.

- For restricted business lines specified in Section B of Appendix I hereof, foreign investors shall fulfill the conditions that are published in accordance with Article 18 hereof.

- Conditions for market access by foreign investors in business lines without market-access commitment of Vietnam shall be applied as follows:

+ In case the Laws and Resolutions of the National Assembly, Ordinances and Resolutions of Standing committee of the National Assembly, Decrees of the Government (hereinafter referred to as “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.

- In case new Law or Resolution of the National Assembly, Ordinance or Resolution of Standing committee of the National Assembly, or Decree of the Government (hereinafter referred to as “new legislative document”) contains regulations on market access by foreign investors in the business lines without market-access commitment of Vietnam mentioned in Clause 4 of Article 17 of Decree 31/2021/ND-CP:

+ Foreign investors to whom the conditions for market access mentioned in Clause 4 of Article 17 of Decree 31/2021/ND-CP have been applied before the new legislative document takes effect make carry on their investment activities under the said conditions.

In case of establishment of a new business organization, execution of a new investment project, receipt of an investment project, purchase of stakes/shares of another business organization under a contract, or change to the objectives or business lines that is subject to fulfillment of market access conditions prescribed by the new legislative documents, such conditions must be fulfilled.

In this case, the competent authority shall not reconsider the conditions for market access in the business lines that has been granted to the investor previously;

+ Foreign investors that carry out investment activities after the effective date of the new legislative document shall fulfill the market access conditions prescribed by such document.

- A foreign investor that carries out investment activities in different business lines specified in Appendix I of Decree 31/2021/ND-CP shall fulfill all market access conditions applied to those business lines.

- Foreign investors from countries that are not WTO members shall apply the same conditions for market access by investors from countries that are WTO members, unless otherwise prescribed by the law of Vietnam or international treaties between Vietnam and those countries.

- Foreign investors that are regulated by an investment-related international treaty which prescribes more favorable conditions for market access than those prescribed by the law of Vietnam, the former may be applied.

- A foreign investor that is regulated by investment-related international treaties which prescribe different market access conditions may apply the conditions prescribed by any of those treaties to all of the investor’s business lines.

Once the conditions prescribed by one of the international treaties have been chosen (including new treaties and treaties that are revised after their effective dates which include the investor in their regulated entities), the foreign investor shall perform their rights and obligations in accordance with the chosen treaty.

- Restrictions on holdings of foreign investors prescribed by investment-related international treaties:

+ In case multiple foreign investors contribute capital to, purchase shares or stakes in a business organization that is regulated by one or some investment-related international treaties, the total holdings of the foreign investors in the business organization must not exceed the highest limit imposed by one of those international treaties on holdings of foreign investors in a specific business line;

+ In case multiple foreign investors from the same country contribute capital to, purchase shares or stakes in a business organization, the total holdings of these investors must not exceed the limit prescribed by the international treaty applied to these investors;

+ Securities laws that provide for foreign investors’ holdings differently shall apply to public companies, securities companies, securities investment fund management companies, securities investment funds or securities investment companies.

+ In case a business organization has multiple business lines that are regulated by investment-related international treaties that provide for foreign investors’ holdings differently, the foreign investors’ holdings in such business organization must not exceed the limit on foreign investors' holding in the business line with the lowest limit.

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