What are investment conditions for foreign investors in Vietnam?

What are investment conditions for foreign investors in Vietnam?

FDVN’s Opinion

Thank you for concerning FDVN’s legal services (FDVN). After studying the legal regulations, FDVN would like to send you our legal opinions:

According to Clause 6, Article 2 of Decree No. 118/2015/NĐ-CP guiding some articles of the Law on Investment (Decree No. 118/2015/NĐ-CP):

“Investment conditions applied to foreign investors are conditions that foreign investors must satisfy before making investment in the business lines subject to conditions applied to foreign investors specified in relevant Laws, Ordinances, Decrees, and international agreements on investment. Investment conditions applied to foreign investors are applied in the following cases:

a) Investment in the establishment of a business organization;

b) Investment in the form of capital contribution, purchase of shares/stakes in a business organization;

c) Investment in the form of a business cooperation contract;

d) Receipt of an investment project;

dd) Change or addition of business lines of a foreign-invested business organization.”

Investment conditions for foreign investor are stipulated in Article 10 of Decree No. 118/2015/NĐ-CP as follows

(1)  Ratio of the foreign investor’s charter capital in a business organization;

(2)  Investment method;

(3)  Scope of investment;

(4)  Vietnamese partners participating in the investment;

(5)  Other conditions specified in Laws, Ordinances, Decree, and international agreements on investment.

As such, not all cases of foreign investors investing in Vietnam need to take investment conditions into account. These investment conditions are only applied for conditional business lines applicable to foreign investors as prescribed by laws, Decree, and international agreements on investment such as real estate business regulated in the Vietnam - Japan Agreement on Freedom, Promotion and Investment Protection (Vietnam - Japan BIT) (2003), audio-visual services (cinema service, radio and television services, Film distribution services except for tapes, Film production except for professional tape services), transportation services ... Each industry has different investment conditions.

When conducting investment activities in Vietnam, foreign investors must consider whether the business line is a conditional investment field or not. Up to now, there is no unified document on the conditional investment lines for foreign investors, it is regulated sporadically in decrees, circulars, international treaties…

This is all FDVN’s opinion. Hopefully, it will be useful for you.

Ha Thi Hien

FDVN Law Firm

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