Vietnam is becoming an increasingly attractive investment destination for foreign investors (FDI). However, foreign investors are not freely permitted to register a company or hold $100\%$ capital ownership in every business sector.
According to the Law on Investment and its guiding decrees, the list of sectors with market access restrictions for foreign investors is divided into two distinct groups: NOT ACCESSIBLE (Prohibited) and ACCESSIBLE WITH CONDITIONS.
Below is a detailed overview that businesses should thoroughly understand before applying for an Investment Registration Certificate (IRC):
Group 1: PROHIBITED Sectors for Foreign Investment (Not Accessible)
For this group, foreign investors are NOT ALLOWED to contribute capital, purchase shares, or establish business organizations in any form. Typical sectors include:
- Press, Media & Publishing: Press activities, news gathering in any form, and publishing.
- Fisheries & Seafood Exploitation: Catching or exploiting marine and aquatic resources.
- Security & Investigation: Investigation, detective, and security/guard services.
- Judicial Administration: Notary, bailiff, judicial expertise, property auction, and asset management services.
- State Monopoly Trading: Trading goods and services under state monopoly (e.g., industrial explosives, national electricity transmission).
- Forestry & Genetic Resource Exploitation: Survey, evaluation, and exploitation of natural forests; research/use of rare plant and animal genetic resources.
- Tourism: Domestic travel services (Foreign investors are only allowed to operate international travel services bringing foreign tourists into Vietnam).
Group 2: Sectors with Conditional Access (Special Requirements)
Foreign investors ARE PERMITTED to establish a company or contribute capital, but must satisfy certain legal barriers. The most common restrictions include:
A. Foreign Ownership Caps (Foreign Room Limits):
- Advertising: Must be established as a Joint Venture or Business Cooperation Contract with a Vietnamese partner who already holds the advertising business sector.
- Transportation (Road, Maritime, Aviation): Ownership percentage is restricted (usually capped at $49\%$ to $51\%$ depending on the sub-sector).
- Telecommunications & Postal Services: Ownership limits depend on whether network infrastructure is operated.
B. Investment Form & Sub-licenses Conditions:
- E-commerce (E-commerce platforms, Shopping apps): Must obtain a Business License from the Ministry of Industry and Trade and meet cybersecurity requirements for large-scale digital platforms.
- Retail (Opening retail stores, supermarkets): Registering import-export business is straightforward, but opening a second retail outlet onwards requires passing a strict Economic Needs Test (ENT).
- Education & Training: Minimum investment capital requirements apply (e.g., minimum 20 million VND/student for kindergartens, 50 million VND/student for general education schools).
- Real Estate: Foreign investors are only allowed to engage in real estate business under specific forms (such as constructing houses/buildings for sale, lease, or operating real estate exchange services), and cannot receive direct land use right transfers from individuals.
Important Notes for FDI Businesses
- Check VSIC Codes & WTO Commitments: Before registration, cross-reference intended business codes with WTO Commitments and Decree 31/2021/ND-CP to determine the exact allowed foreign ownership percentage.
- Choose an Appropriate Investment Structure: If ownership is restricted, investors should seek a reputable Vietnamese partner to establish a Joint Venture with a clear shareholders’ agreement.
- Execute Capital Contribution Flow Correctly: Capital contributions must be transferred directly from the foreign individual/company bank account into a Direct Investment Capital Account (DICA) opened at an authorized bank in Vietnam.
Comprehensive Work Permit Services at Wacontre
With over 10 years of experience supporting Japanese and FDI enterprises in Vietnam, Wacontre provides comprehensive end-to-end solutions:
- Service Classification: Accurately determine whether your personnel fall under the Reporting or Confirmation Approval category.
- Handling Complex Cases: Support fast consular legalization and draft explanations for specialized job positions.
- Legal Representation: Work directly with the Department of Labor and Industrial Zone Management Boards.
- Post-Licensing Support: Assist with Temporary Residence Cards (TRC), Visa extensions, and periodic labor usage reporting.
For any inquiries, contact Wacontre Accounting Services via Hotline: (028) 3820 1213 or email info@wacontre.com for prompt assistance. With a team of experienced professionals, Wacontre is committed to providing dedicated and efficient service. (For Japanese clients, please contact Hotline: (050) 5534 5505).
