I.   What are the market access requirements for foreign investors?

     Pursuant to the provisions of Article 3 of the Investment Law 2020, market access requirements for foreign investors are requirements that foreign investors must meet in order to invest in industries and trades on the list of industries and trades with restricted market access for foreign investors specified in Clause 2, Article 9 of the Law on Investment.

     Previously, when foreign investors registered to invest in industries and trades that had not yet committed to open the market, the local Departments of Planning and Investment could not make a decision on their own whether to approve foreign investors to register for that industries and accordingly, they were obligated to send a written request for guidance/approval from the Ministry of Planning and Investment. However, Decree 31/2021/ND-CP issued by the Government (Decree 31) has solved this complicated procedure. Accordingly, Decree 31 stipulates 02 lists: (1) List of industries and trades that foreign investors have not yet had access to the market and (2) List of industries and trades that foreign investors are entitled to conditional market access. Meanwhile, it is clearly stated that:

• Industries and trades that have not been able to access the market according to Section A, Appendix I of Decree 31: Foreign investors are not allowed to invest;
• Industries and trades with conditional market access under Section B, Appendix I of Decree 31: Foreign investors must meet the market access requirements posted on the National Portal; and
• Industries and trades that have not yet committed to market access: Foreign investors are allowed to access the market as prescribed for domestic investors.

​     New regulations related to market access requirements of foreign investors are introduced in the direction of the select - remove approach which is an advanced approach, untangling for foreign investors and at the same time, it also requires the state management agencies to be more specialized, strictly supervised, agile and effective.

II.  Market access requirements for industries and trades that have not yet committed to market access

     Article 9 of the Investment Law 2020 is specifically guided in Clause 1, Article 17 of Decree 31 as follows: Except for the industries and trades on the List of industries and trades with restricted market access for foreign investors specified in Appendix I of the Decree Decree 31, foreign investors are entitled to access to the market as regulated for domestic investors. That is, foreign investors shall be treated like domestic investors when operating in industries that are outside of Appendix I of Decree 31.

     The principles of application of regulations and market access requirements that have not been committed to foreign investors are as follows:

• In case the laws and resolutions of the National Assembly, ordinances and resolutions of the National Assembly Standing Committee, and decrees of the Government do not contain provisions restricting market access for such industries or trades, foreign investors are entitled to access the market as regulated for domestic investors;
• In case Vietnamese law already contains provisions on restrictions on market access of foreign investors for that industries or trades, the provisions of Vietnamese law shall apply;
• In case the promulgated laws and resolutions of the National Assembly, ordinances and resolutions of the National Assembly Standing Committee, the Government’s decrees (hereinafter referred to as newly promulgated regulations) contain provisions on the requirements for foreign investors’ market access for those industries or trades that Vietnam has not yet committed to, then:

• If the foreign investor has applied the requirements before the newly promulgated regulations, those requirements will continue to apply. Except in the following cases, the requirements of newly promulgated regulations shall apply:

1. Establishment of new economic organizations
2. Implementation of new investment projects
3. Receiving transfer of investment projects
4. Investment in the form of capital contribution, purchasing of shares or capital contribution from other economic organizations
5. Investment in the form of a contract
6. Adjusting and supplementing goals in industries and professions.

• If foreign investors carry out investment activities after the effective date of the newly promulgated regulations, they must meet the market access requirements for foreign investors in accordance with the provisions of that newly promulgated regulations.

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III. Requirements for foreign investors to access the market for industries and trades with restricted market access

     Industries and trades that are restricted from market access for foreign investors according to Clause 10, Article 3 and Clause 2, Article 9 of the Investment Law 2020 include: (i) Industries and trades that have not yet been able to access the market; and (ii) Industries and trades with conditional market access. The market access requirements for foreign investors include:

(1) Rate of ownership of charter capital of foreign investors in economic organizations. In which, the requirements on capital ownership ratio are specified in detail as follows:

• In case many foreign investors contribute capital, purchase shares or purchase capital contributions to an economic organization and are subject to one or more international treaties on investment, the total ownership ratio of all such foreign investors in that economic organization must not exceed the highest ratio as prescribed in an international treaty that stipulates the percentage of ownership by foreign investors in a particular industry or trade;
• In case many foreign investors from the same country or territory contribute capital, purchase shares or purchase capital contributions to an economic organization, the total ownership ratio of all such foreign investors must not exceed the ownership ratio which are stipulated in the international treaty on investment applying to such investors;
• For public companies, securities companies, securities investment fund management companies or securities investment funds, securities investment companies in accordance with the law on securities, if the securities law have different regulations on the ownership ratio of foreign investors, the provisions of the law on securities shall apply;
• In case an economic organization has many industries and trades that international treaties on investment have different provisions on the percentage of foreign investors’ ownership, the foreign ownership ratio in that economic organization must not exceed foreign ownership limit for industries and trades with the lowest foreign ownership limit.

(2) Investment form: Foreign investors are allowed to make investment in a certain form in some industries and trades. Investment forms may include establishment of economic organizations, implementation of investment projects; capital contribution, purchase of shares, contributed capital, business cooperation contracts...;

(3) Scope of investment activities: include certain permitted business activities;

(4) Capacity of investors and partners participating in investment activities;

(5) Using of land, labor, natural resources and minerals;

(6) Producing and supplying goods or public services or goods and services monopolized by state;

(7) Owning and trading houses and real estate;

(8) Apply forms of support and subsidies of the State to a number of industries and fields or to develop regions and territories;

(9) Participating in programs and plans for equitization of state-owned enterprises;

(10) Other requirements prescribed in laws, resolutions of the National Assembly, ordinances, resolutions of the National Assembly Standing Committee, decrees of Government and international treaties on investment permitting or restricting market access for foreign-invested economic organizations.

IV. The right to choose market access requirements

1. About the object of application:

• Decree 31 provides detailed guidance on subjects to apply the List of industries and trades restricted from market access, including:

(1) Foreign investors as prescribed in Clause 19 Article 3 of the Law on Investment 2020;

(2) Economic organizations specified at Points a, b and c, Clause 1, Article 23 of the Law on Investment 2020 when investing to establish other economic organizations; contributing capital, purchasing shares or capital contribution of other economic organizations; making investment in the form of BCC.

2.  Applying conditions:

• Decree 31 stipulates the selection of market access requirements and investment procedures as applicable to domestic or foreign investors as follows:

(1) An investor, who is a Vietnamese citizen and holds a foreign nationality when having investment and business activities in Vietnam, has the right to choose whether to apply market access requirements and investment procedures as provisions applicable to domestic or foreign investors. In case of choosing to apply market access requirements and investment procedures as prescribed for domestic investors, that investor (who is a Vietnamese citizen and simultaneously holds foreign nationality) is not allowed to rights and obligations for foreign investors.

(2) Foreign investors that are regulated by an international treaty on investment that provides for more favorable market access requirements for such investors than that of Vietnam’s law, such foreign investors are allow to the market access requirements under that treaty;

(3) Foreign investors subject to the application of international treaties on investment with different provisions on market access requirements may choose to apply market access requirements to all industries and professions under one of those treaties. If the investor has chosen to apply market access requirements under an international treaty on investment (including a treaty newly signed or amended or supplemented after the effective date of such treaty to which such investor is subject to application), foreign investors shall exercise their rights and perform their obligations in accordance with the entire provisions of that treaty.

3. Information disclosure

• The Ministry of Planning and Investment is presiding over and coordinating with ministries and ministerial-level agencies to review and gather market access requirements for foreign investors in the industries and trades specified in Appendix I to Decree 31 for posting that on the National Investment Portal. Submissions will include:

(1) Sectors and trades with restrictions on market access for foreign investors as prescribed in Appendix I to Decree 31;

(2) Legal ground for application of market access requirements for foreign investors as prescribed in Clause 1, Article 15 of Decree 31; and

(3) Requirements for market access for foreign investors as prescribed in Clause 3, Article 9 of the Law on Investment.

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