I am intending to implement an investment project in Vietnam. As I’m an overseas Vietnamese, what forms of investment can I make? And what conditions do I need to satisfy if I wish to establish a new enterprise in the country?
Under the 2020 Investment Law (the Law), investors are defined as organizations or individuals carrying out business investment activities, including domestic investors, foreign investors and foreign-invested economic organizations. Foreign investors are subsequently defined as foreign nationals or organizations established under foreign laws that carry out business investment activities in Vietnam; and domestic investors as Vietnamese nationals or economic organizations without any members or shareholders being foreign investors[1].
As specified in the Law, forms of investment in Vietnam include investment to establish economic organizations; investment to contribute capital or purchase shares or capital contributions; implementation of investment projects; investment in the form of business cooperation contract (BCC); and new forms of investment and new types of economic organizations under the Government’s regulations[2].
So, you may choose one of the above investment forms, then register investment in the capacity as a foreign investor, if you have been naturalized in a foreign country, or domestic investor, in case you still hold Vietnamese citizenship.
Specifically, in order to make investment in Vietnam, you may establish a new enterprise in the country by one of the following methods:
(i) If you are qualified to register your project in the capacity as a domestic investor:
In this case, you may establish an economic organization in accordance with the law on enterprises and other laws relevant to each type of economic organization[3], and are entitled to choose the application of market access conditions[4].
(ii) If you are considered a foreign investor:
In this case, if wishing to establish an economic organization, you have to satisfy the market access conditions applicable to foreign investors[5].
You may be entitled to application of the market access conditions like domestic investors, unless you invest in a sector or trade in which market access by foreign investors is not yet permitted or in which foreign investors are subject to conditional market access in accordance with laws or resolutions of the National Assembly, ordinances or resolutions of the National Assembly Standing Committee, decrees of the Government, and treaties to which the Socialist Republic of Vietnam is a contracting party[6].
The market access conditions applicable to foreign investors specified in the list of sectors and trades in which foreign investors are subject to market access restrictions include:
- Charter capital holding rate of foreign investors in economic organizations;
- Form of investment;
- Scope of investment activities;
- Capacity of investors; partners participating in investment activities;
- Other conditions specified in laws or resolutions of the National Assembly, ordinances or resolutions of the National Assembly Standing Committee, decrees of the Government, and treaties to which the Socialist Republic of Vietnam is a contracting party.
Since the economic organization you establish is granted an enterprise registration certificate or another paper of equivalent legal validity, it will act as the investor implementing your investment project in Vietnam in accordance with the investment registration certificate.
(iii) Investing in the capacity as a foreign-invested economic organization previously established in Vietnam[8]:
You have to satisfy the conditions and carry out investment procedures applicable to foreign investors when establishing another economic organization; contributing capital to, or purchasing shares or capital contributions from, other economic organizations; or making investment in the form of BCC, if your foreign-invested economic organization:
- Has over 50 percent of its charter capital held by a foreign investor/foreign investors, or has a majority of its general partners being foreign individuals, in case it is a partnership;
- Has over 50 percent of its charter capital held by an economic organization/economic organizations;
- Has over 50 percent of its charter capital held by a foreign investor/foreign investors and an economic organization/economic organizations.
If your foreign-invested economic organization has a new investment project, it may carry out procedures for implementing such project without having to establish a new economic organization.
What sectors and trades can I invest in? And is there any restriction?
As per Article 5 of the Law, you may carry out business investment activities in any sector or trade not banned by the Law. For sectors and trade subject to conditional business investment[9], you have to satisfy the law-specified business investment conditions.
Please note that the following business investment activities are prohibited in Vietnam[10]:
- Trading in narcotic substances specified in Appendix I to the Law;
- Trading in chemicals and minerals specified in Appendix II to the Law;
- Trading in specimens of wild fauna and flora species specified in Appendix I to the Convention on International Trade in Endangered Species of Wild Fauna and Flora, which are exploited from the nature; specimens of endangered, precious and rare forest fauna and flora species and aquatic species of Group I specified in Appendix III to the Law, which are exploited from the nature;
- Prostitution;
- Trafficking in humans or human tissues, corpses, organs or fetuses;
- Business activities related to human cloning;
- Trading in firecrackers;
- Provision of debt collection services.
