Vietnam conditional business lines for foreign investors

Vietnam conditional business lines are sectors where a company may operate only after it meets set legal conditions, such as a license or a certificate. The Law on Investment, number 61/2020/QH14, lists them in an annex. The law takes effect on 1 January 2021, so the list now applies to new and existing firms.

This article shows how the system works, what extra rules foreign investors face, and where to check the official text before you plan a project.

What a conditional business line is

Most business lines in Vietnam are open. You register the company and start work. A conditional business line is different. The state allows it, but only for firms that meet stated conditions, for reasons such as security, public order, social ethics or public health.

The law also names a short list of prohibited lines. A few activities, such as trading in illegal drugs, are banned outright. Conditional lines are legal, but they come with a gate to pass.

Annex IV of the 2020 law names the conditional lines. The annex lists each line by name, and the detailed conditions sit in other laws, decrees and circulars.

Sources: Law on Investment No. 61/2020/QH14, National Assembly of Vietnam, adopted 17 June 2020, Article 7 and Annex IV.

The forms the conditions take

The law says conditions can take several forms. Knowing the form tells you what paperwork to prepare.

• A business license, for example in some financial and education lines.
• A certificate of eligibility, often for lines such as food service or security.
• A professional practice certificate for named staff.
• Proof of professional liability insurance or of financial capacity.
• Other requirements, set by the rule for that line.

A firm must meet the conditions throughout the time it operates, not only on the day it applies. Ministries must publish the conditions for the lines they manage. They cannot add conditions that the law has not authorized.

Sources: Law on Investment No. 61/2020/QH14, Article 7 on conditional business lines and their forms.

Extra rules for foreign investors

Foreign investors face a second layer on top of the conditional lines. This layer is called market access. Article 9 of the law says that foreign investors must meet market access conditions in some sectors. These conditions can cover the share of foreign ownership, the form of investment, the scope of activity, and the partner or approval needed.

The list of sectors where foreign investors are limited or barred comes from Decree 31/2021/ND-CP. The Government issued it on 26 March 2021 to guide the law. It also builds on Vietnam's commitments in the World Trade Organization and in trade agreements it has signed. A foreign firm should therefore read three things together: the law, the decree and the specific commitment for its sector.

A domestic firm and a foreign firm can face different rules in the same line. Always check which rule applies to your ownership structure.

Sources: Law on Investment No. 61/2020/QH14, Article 9; Government of Vietnam, Decree 31/2021/ND-CP of 26 March 2021 guiding the Law on Investment; WTO, Vietnam schedule of specific commitments in services.

Where to find the official list

Start with the text of the law itself, which carries Annex IV. The National Assembly and the Government publish the law and its decrees in the national legal database. Decree 31/2021/ND-CP is published the same way.

Next, look at the national business registration portal. It is run by the state, and the law says the conditions are published there. The licensing authority for your line, such as a ministry or the provincial department, also publishes its own conditions.

Check the original text too, because a summary like this one can fall behind. Rules change often, and a circular can add detail. Use the original text and note its date.

Sources: Law on Investment No. 61/2020/QH14, Article 7 on publication of conditions; Ministry of Planning and Investment, national business registration portal.

A simple checklist before you invest

1. Write down your exact business activity in plain words.
2. Match it to a line in Annex IV. If it matches, find the rule that sets the conditions.
3. If you are a foreign investor, check the market access list in Decree 31/2021/ND-CP.
4. List each license, certificate and staff qualification, and the time each one takes.
5. Ask the licensing authority to confirm, in writing where possible.
6. Ask a Vietnamese lawyer to review the plan before you sign a lease or hire staff.

Plan for the time licenses take. A project can lose months if the conditions are found late.

This article gives general information, not legal advice. Read the original texts, then ask a Vietnamese business lawyer to confirm your plan.

Sources: Law on Investment No. 61/2020/QH14; Decree 31/2021/ND-CP.

Sources

• Law on Investment No. 61/2020/QH14, National Assembly of Vietnam, 17 June 2020.
• Decree 31/2021/ND-CP, Government of Vietnam, 26 March 2021.
• World Trade Organization, Vietnam schedule of specific commitments.