As globalisation advances, Vietnam is increasingly recognised as an attractive and feasible destination for foreign investors to expand or establish operations.
Although relatively open and welcoming for foreign investment, investors still often underestimate the restrictions and licensing requirements that exist today within Vietnam’s legal framework.
WTO accession in 2007 opened up most sectors to foreign investment, with a large number of these unrestricted and open to 100% foreign investment. However, there are many sectors that have caps and other restrictions remaining.
Foreign investment in Vietnam
Companies in Vietnam – local and foreign – are only permitted to conduct activities for which they are licensed. As a result, company establishment is more than simply incorporating a company, but involves a more complicated licensing process. Where companies wish to conduct activities that are restricted in some way, the licensing application must take these restrictions into account or the application will likely fail.
Licensed activities in Vietnam can be broken down into different categories for foreign investors:
- Unrestricted: Foreign investors can own 100% of an enterprise.
- Conditional: Foreign investors can own 100% of an enterprise, however they may be required to satisfy other conditions (ie, staff holding certain accreditations, or the foreign investor being licensed for the same business activity in their home country)
- Restricted: Ownership limits exist for foreign investment, and
- Prohibited: Service lines that are prohibited for national security or other purposes
Examples on restrictions on foreign ownership in Vietnam
The following are examples of Business Lines for which foreign capital ownership is subject to certain caps/restrictions:
| Items | Business line | Permitted ratio of foreign capital ownership | Forms of enterprise | Remark |
|---|---|---|---|---|
| 1. | Advertising services (CPC 871, excluding advertising for cigarettes) | <100% | Joint-Venture (“JV”) | |
| 2. | Customs Clearance Services | <100% | JV | |
| 3. | Container Station and Depot Services | <100% | JV | |
| 4. | Travel agencies and tour operator services/td> | <100% | JV | |
| 5. | International maritime transport services | <100% | JV | |
| 6. | Storage and warehouse services (CPC 742) | <100% | JV | |
| 7. | Services incidental to agriculture, hunting and forestry | <51% | JV | |
| 8. | Road Transport Services | <51% | JV | |
| 9. | Motion picture production, Motion picture distribution, Motion picture projection service | <51% | JV | Vietnam’s houses of culture, film projection place, public cinema clubs and societies and mobile projection teams are not allowed to engage in business cooperation contract or joint-venture with foreign service suppliers |
| 10. | Container handling services | <=50% | JV | |
| 11. | Entertainment services (including theatre, live bands and circus services) | <=49% | JV | |
| 12. | Electronic games business | <=49% | JV | JV with Vietnamese partners who are specifically authorized to provide these services |
| 13. | Maritime Transport Services: Establishment of registered companies for the purpose of operating a fleet under the national flag of Vietnam | <=49% | JV | |
| 14. | Internal Waterways Transport | <=49% | JV | |
| 15. | Rail Transport Services | <=49% | JV | |
| 16. | Telecommunication Services | 50-70% | JV | Ownership ratio subject to specific services: For Non facilities-based services: up to 70%;For facilities-based services: up to 50% |
| 17. | Veterinary Services | To be granted to natural persons exclusively for the conduct of private professional practice and under the authorization by the veterinary authorities |