Abstract: Foreign-invested enterprises play an important role in Vietnam’s economic growth. However, receiving foreign investment projects needs be under strict control by the host country as it influences domestic market directly. Therefore, foreign investors should carefully study the investment conditions in Vietnam, which facilitates their investment activities.
Key words: foreign investors; investment projects in Vietnam.
Notices for business lines
Foreign investors are not allowed to invest in banned business lines. Investors must comply to the relevant regulations if they would like to conduct business in conditional business lines or business lines with prohibited and restricted market access.
Investments by foreign organizations are prohibited in banned business lines.
According to Article 6, the 2015 Civil Code of Vietnam and Article 10, Decree No. 31/2021/ND-CP elaborates some articles of the law on investment, the business investment activities are banned in Vietnam including:
- Business in narcotic substances specified in Appendix I hereof;
- Business in chemicals and minerals specified in Appendix II hereof;
- Business in specimens of wild flora and fauna specified in Appendix 1 of Convention on International Trade in Endangered Species of Wild Fauna and Flora; specimens of rare and/or endangered species of wild fauna and flora in Group I of Appendix III hereof;
- Prostitution business;
- Human trafficking; trade in human tissues, corpses, human organs and human fetuses;
- Business activities pertaining to asexual human reproduction;
- Trade in firecrackers;
- Provision of debt collection services.
Investors from abroad shall satisfy some specific conditions to do business in conditional business lines
The State stimulates List of conditional business lines in the circumstances where the achievement of defense, security, people’s life-relative objectives and other interests of the State and society specified in this Law should be guaranteed.
List of conditional business lines is contained under Appendix IV, the 2020 Investment Law of Vietnam. Conditions for making business investment in the aforementioned business lines are specified in Vietnamese Law and international treaties to which the Socialist Republic of Vietnam is a signatory.
Foreign investors making investment in the List of business lines with prohibited and restricted market access need satisfy the market access conditions.
Foreign investors have the same opportunity to access market as domestic investors, except for making investments in the following business lines:
- Prohibited business lines;
- Restricted business lines.
The List of business lines with prohibited and restricted market access was published on Appendix 1 Decree No. 31/2021/ND-CP.
Notices for holding of charter capital by the foreign investor in a business organization
Foreign investors may hold unlimited charter capital in a business organizations, unless oversea invertors invest in business lines on in the List of business lines with prohibited and restricted market access (specified in Appendix 1 Decree No. 31/2021/ND-CP), they must meet the holding conditions for each specific business line.
Additionally, restrictions on holdings of foreign investors prescribed by investment-related international treaties as follows:
– In case multiple foreign investors contribute capital to, purchase shares or stakes in a business organization that is regulated by one or some investment-related international treaties, the total holdings of the foreign investors in the business organization must not exceed the highest limit imposed by one of those international treaties on holdings of foreign investors in a specific business line;
– In case multiple foreign investors from the same country contribute capital to, purchase shares or stakes in a business organization, the total holdings of these investors must not exceed the limit prescribed by the international treaty applied to these investors;
– Securities laws that provide for foreign investors’ holdings differently shall apply to public companies, securities companies, securities investment fund management companies, securities investment funds or securities investment companies.
- Foreign investors’ holdings in public companies are 50% under Article 139 Decree No 155/2020/ND-CP;
- Foreign investors’ holdings in securities companies, securities investment funds or securities investment companies can reach 100% under Article 77 the 2017 Securities Laws.
– In case a business organization has multiple business lines that are regulated by investment-related international treaties that provide for foreign investors’ holdings differently, the foreign investors’ holdings in such business organization must not exceed the limit on foreign investors’ holding in the business line with the lowest limit.
Notices for the forms of land use
According to the 2013 Land Law of Vietnam, foreign investors are allowed to use land in Vietnam under the following forms:
Land allocation with land use levy
Foreign-invested enterprises are allocated land to implement investment projects for construction of houses for sale of for a combination of sale and lease.
Land lease
The State may lease land and collect an annual land rental or full one-off land rental for the entire lease period in case foreign investors use land for implementing investment projects in agriculture, forestry, aquaculture or salt production, for non-agricultural business and production purpose; for construction of public facilities for commercial purpose, and for implementation of investment projects on houses for lease.
Receive the transfer of investment capital with the value of land use right
Foreign-invested enterprises may receive the transfer of investment capital with the value of land use right from the current land user. The origin of the land is from land allocation with land use levy by State or from land lease with full one-off land rental for the entire lease period, but the land use right was capitalized into enterprise’s capital, except for the transfer of investment capital with the value of right to use agriculture or forestry land. Enterprises and members who are owners of enterprises, when transferring investment capital, shall determine the portion of capital which is the value of land use right in the total value of capital and shall fulfill tax, fee and charge obligations according to the provisions of law.
