SOME CONDITIONS FOR FOREIGN INVESTORS TO INVEST IN VIETNAM

Vietnam is one of the developed markets and many opportunities for foreign investors. So what does a foreign investor need to do to be able to invest in Vietnam?

Conditions for foreign investors to invest in Vietnam

Pursuant to Clause 1, Article 9 of the Law on Investment 2020, foreign investors are entitled to apply market access conditions as prescribed for domestic investors, but there are still specific regulations on:

- List of industries and trades restricted from market access for foreign investors:

- Industries and trades restricted from market access announced in Appendix I of Decree 31/2021/ND-CP;

- Foreign investors are not allowed to invest in industries and trades that have not yet accessed the market as prescribed in Section A Appendix I of Decree 31/2021/ND-CP;

- For industries and trades with conditional market access for foreign investors as prescribed in Section B Appendix I of Decree 31/2021/ND-CP.

1. Conditions on the form of foreign investment in Vietnam

- Investment in the establishment of economic organizations.

- Invest in capital contribution, purchase shares, purchase contributed capital.

- Implementation of investment projects.

- Investment in the form of BCC contract.

- New forms of investment and types of economic organizations according to the Government's regulations.

2. Conditions on the ratio of ownership of charter capital of foreign investors

Pursuant to Clause 10 Article 17 of Decree 31/2021/ND-CP stipulating restrictions on the ownership ratio of foreign investors as prescribed in international treaties on investment are applied as follows: 

– In case many foreign investors contribute capital, purchase shares, purchase capital contributions to an economic organization and are subject to one or more international treaties on investment, the total ownership ratio of all foreign investors in that economic organization must not exceed the highest percentage prescribed by a treaty International regulations on the percentage of foreign investors' ownership of a specific industry or trade;

– In case many foreign investors belonging to the same country or territory contribute capital, purchase shares or purchase capital contributions to economic organizations, the total ownership ratio of all such investors must not exceed the ownership ratio specified in international investment treaties applicable to such investors;

– For public companies, securities companies, securities investment fund management companies or securities investment funds, securities investment companies, the capital ownership ratio for foreign investors shall comply with the provisions of the law on securities

– In case economic organizations have many industries, business lines in which international treaties on investment have different provisions on the ownership ratio of foreign investors, the foreign investor's ownership ratio in such economic organizations shall not exceed the restrictions on the foreign ownership ratio for the industry, the profession has the lowest foreign ownership rate restrictions.     

Note: In case the law provides otherwise for the ownership ratio of foreign investors, it shall comply with the provisions of that law.

3. Conditions on the scope of investment activities

Investors investing in Vietnam shall comply with the provisions of the Investment Law for industries to which Vietnam has committed and for industries which have not yet been committed or not specified in international treaties on investment but which Vietnamese law has provided for shall apply according to the provisions of Vietnamese law.

4. Conditions on the investor's capacity

- On the legal status of the investor;

- Financial capacity of the investor or technical capacity, technology used in the investment project (if any).

5.Other conditions

Other conditions as prescribed in laws, resolutions of the National Assembly, ordinances and resolutions of the National Assembly Standing Committee, decrees of the Government and treaties to which the Socialist Republic of Vietnam is a contracting party.     

Above is an article that provides some basic information about Vietnamese legal regulations, some conditions for foreign investors to invest in Vietnam.

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For more information, please contact:

Hoang Pham (James) / Managing Partner at: hoang.pham@vselawyers.com

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Attention: This legal update is not an advice and should not be treated as such.