This content is from: Local Insights

Vietnam: The investment conditions list

Both foreign and domestic investors who wish to engage in highly-regulated business in Vietnam must satisfy certain statutory conditions in order to be licensed

Ha Hoang LocTruong Huu Ngu
Both foreign and domestic investors who wish to engage in highly-regulated business in Vietnam must satisfy certain statutory conditions in order to be licensed. Such conditions may include possessing a minimum amount of equity capital, employing qualified personnel, and having sufficient facilities.

However, some conditions are applicable only to foreign investors. For example, for logistics companies, foreign ownership is capped at a certain threshold depending on the specific logistic business area; for foreign-owned distribution companies, the business scope is narrower than for domestic distribution companies; and, for foreign investors wishing to provide advertisement services in Vietnam, such investors must partner with a local advertiser.

Foreign investors need to consider conditions applicable to investment in different pieces of local legislation and in bilateral and unilateral international treaties to which Vietnam is a member. This can be a headache for foreign investors wishing to invest in Vietnam. In an attempt to reduce this burden, Vietnamese ministries are working hard on a draft governmental decree elaborating on the new Investment Law (effective from July 1 2015), which will introduce a list comprehensively enumerating all investment conditions applicable to foreign investors. Interestingly, the ministries have prepared the list by reviewing and compiling investment conditions provided not only under local laws, but also under Vietnam's WTO (World Trade Organisation) Commitments on Services, regional treaties such as the ASEAN Comprehensive Investment Agreement (ACIA), and free trade agreements such as the bilateral investment treaty between Vietnam and Japan.

If the list is released as is ambitiously contemplated, it will definitely save foreign investors time and effort, since they will only need to look for applicable conditions in a single list, rather than searching for them throughout various pieces of legislation. The list will be a map leading foreign investors through the jungle of laws when they are considering sowing their investment seeds in the country.

Ha Hoang Loc & Truong Huu Ngu

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