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INVESTMENT POLICIES IN VIETNAM - INVESTMENT SECTORS
Investment Policies in Vietnam - Investment sectors
1. Sectors opening for investment
The Vietnamese State has opened most production, business, and service activities to investors. The investment environment makes no distinction between domestic and foreign investors. Investors are free to invest and decide on investment formality, investment capital, production, and business plans (there is no requirement on minimum investment capital, on the number of employees, etc.), except for following cases: Business activities banned from investment such as trading in the narcotic substances, toxic chemicals, wild fauna, firecrackers, provision of debt collection services, prostitution v.v; (i) Sectors with market access conditions applied to foreign investors: Under current Vietnam's WTO accession commitments, market access restrictions apply to some areas such as distribution (tobacco, rice, pharmaceuticals ...); transport; telecommunication; film production, distribution, and screening; entertainment service; travel and tour operations, etc. According to that, foreign investors may not be entitled to access the market; or only be permitted to access the market with conditions, be limited in terms of investment forms, ownership ratios, the scope of operations, or have to meet capability requirements when investing in Vietnam. (ii) Conditional business lines: Investors are required to meet conditions in accordance with applicable laws.
2. Conditional business lines
Conditional business lines are the business lines in which the business investment must satisfy certain conditions for reasons of national defense and security, social order and security, social ethics, or public health. Investment projects in conditional business lines normally are required to meet conditions such as investor’s experience, financial capacity and qualification, investment capital amount, staffs’ qualification, etc. These projects are required to meet conditions regulated by laws or required to obtain an operation license, certificate, acceptance, or approval granted by competent authorities. Law on Investment 2020 stipulates 227 conditional business lines. Below are some examples:
- Finance sector: Banks, securities, insurance, price valuation services, credit rating services .
- Transport: Road transport, manufacture and import of automobiles, motor vehicle inspection, automobile driver training, maritime safety; seaport operation, air transport.
- Real estate: Real estate business, brokerage, management and consultation
- Construction: Construction survey, construction design, construction design assessment
- Communication: Telecommunications network services, internet-based games, pay radio and television services, data centers, network information security services.
3. Business lines and areas entitled to investment incentives
The Government of Vietnam encourages investment in priority fields and business lines depending on each stage of economic development. The following are business lines that are entitled to investment incentives under Law on Investment 2020: (i) Hi-tech activities, hi-tech ancillary products, research, manufacturing and development of from science and technology products in accordance with regulations of law on science and technology; (ii) Manufacturing of new materials, new energy, clean energy, renewable energy; manufacturing of products with an added value of 30% or more; energy-saving products; (iii) Manufacturing of key electronics, mechanical products, agricultural machinery, automobiles, automobile parts; shipbuilding; (iv) Manufacturing of products on the list of prioritized supporting products; (v) Manufacturing of IT products, software products, digital contents; (vi) Breeding, growing and processing of agriculture products, forestry products, aquaculture products; afforestation and forest protection; salt production; fishing and fishing logistics services; production of plant varieties, animal breeds and biotechnology products; (vii) Collection, treatment, recycling or re-use of waste; (viii) Investment in development, operation, management of infrastructural works; development of public transportation in urban areas; (ix) Pre-school education, general education, vocational education, higher education; (x) Medical examination and treatment; manufacturing of medicinal products and medicinal materials, storage of medicinal products; scientific research into preparation technology and biotechnology serving creation of new medicinal products; manufacturing of medical equipment; (xi) Investment in sports facilities for the disabled or professional athletes; protection and promotion of value of cultural heritage; (xii) Investment in geriatric centers, mental health centers, treatment for agent orange patients; care centers for the elderly, the disabled, orphans, street children; (xiii) People's credit funds, microfinance institutions; (xiv) Manufacturing of goods and provision of services for the purposes of creating or participating in value chains and industrial clusters. 26 Clause 1 Article 16 Law on Investment 2020.
4. Areas eligible for investment incentives
Vietnam encourages project investing in the following regions: (xv) Disadvantaged areas and extremely disadvantaged areas, such as mountainous regions, remote or island regions). (xvi) Industrial zones, export-processing zones, hi-tech zones and economic zones (“industrial zones” or “IZ”, “industrial parks” or “IP”).
5. Projects eligible for special investment incentives
In addition to investment incentives by sectors and geographical areas, the State of Vietnam also applies special investment incentives and support to encourage the development of a number of investment projects which have a great impact on social-economic development, including: (i) Projects on the establishment (including the expansion of such establishment project) of innovation centers and research and development centers with a total investment capital of at least VND 3,000 billion and disbursing at least VND 1,000 billion within 03 years from the issuance date of the investment registration certificate or the investment pre-approval; the National Innovation Center established under the Prime Minister's decision; 29 Clause 2 Article 20 Law on Investment 2020 (ii) Investment projects in the business line eligible special investment incentives with an investment capital of at least VND 30,000 billion and disbursing at least VND 10,000 billion within 03 years from the issuance date of the investment registration certificate or the investment pre-approval.
The Vietnamese State has opened most production, business, and service activities to investors. The investment environment makes no distinction between domestic and foreign investors. Investors are free to invest and decide on investment formality, investment capital, production, and business plans (there is no requirement on minimum investment capital, on the number of employees, etc.), except for following cases: Business activities banned from investment such as trading in the narcotic substances, toxic chemicals, wild fauna, firecrackers, provision of debt collection services, prostitution v.v; (i) Sectors with market access conditions applied to foreign investors: Under current Vietnam's WTO accession commitments, market access restrictions apply to some areas such as distribution (tobacco, rice, pharmaceuticals ...); transport; telecommunication; film production, distribution, and screening; entertainment service; travel and tour operations, etc. According to that, foreign investors may not be entitled to access the market; or only be permitted to access the market with conditions, be limited in terms of investment forms, ownership ratios, the scope of operations, or have to meet capability requirements when investing in Vietnam. (ii) Conditional business lines: Investors are required to meet conditions in accordance with applicable laws.
2. Conditional business lines
Conditional business lines are the business lines in which the business investment must satisfy certain conditions for reasons of national defense and security, social order and security, social ethics, or public health. Investment projects in conditional business lines normally are required to meet conditions such as investor’s experience, financial capacity and qualification, investment capital amount, staffs’ qualification, etc. These projects are required to meet conditions regulated by laws or required to obtain an operation license, certificate, acceptance, or approval granted by competent authorities. Law on Investment 2020 stipulates 227 conditional business lines. Below are some examples:
- Finance sector: Banks, securities, insurance, price valuation services, credit rating services .
- Transport: Road transport, manufacture and import of automobiles, motor vehicle inspection, automobile driver training, maritime safety; seaport operation, air transport.
- Real estate: Real estate business, brokerage, management and consultation
- Construction: Construction survey, construction design, construction design assessment
- Communication: Telecommunications network services, internet-based games, pay radio and television services, data centers, network information security services.
3. Business lines and areas entitled to investment incentives
The Government of Vietnam encourages investment in priority fields and business lines depending on each stage of economic development. The following are business lines that are entitled to investment incentives under Law on Investment 2020: (i) Hi-tech activities, hi-tech ancillary products, research, manufacturing and development of from science and technology products in accordance with regulations of law on science and technology; (ii) Manufacturing of new materials, new energy, clean energy, renewable energy; manufacturing of products with an added value of 30% or more; energy-saving products; (iii) Manufacturing of key electronics, mechanical products, agricultural machinery, automobiles, automobile parts; shipbuilding; (iv) Manufacturing of products on the list of prioritized supporting products; (v) Manufacturing of IT products, software products, digital contents; (vi) Breeding, growing and processing of agriculture products, forestry products, aquaculture products; afforestation and forest protection; salt production; fishing and fishing logistics services; production of plant varieties, animal breeds and biotechnology products; (vii) Collection, treatment, recycling or re-use of waste; (viii) Investment in development, operation, management of infrastructural works; development of public transportation in urban areas; (ix) Pre-school education, general education, vocational education, higher education; (x) Medical examination and treatment; manufacturing of medicinal products and medicinal materials, storage of medicinal products; scientific research into preparation technology and biotechnology serving creation of new medicinal products; manufacturing of medical equipment; (xi) Investment in sports facilities for the disabled or professional athletes; protection and promotion of value of cultural heritage; (xii) Investment in geriatric centers, mental health centers, treatment for agent orange patients; care centers for the elderly, the disabled, orphans, street children; (xiii) People's credit funds, microfinance institutions; (xiv) Manufacturing of goods and provision of services for the purposes of creating or participating in value chains and industrial clusters. 26 Clause 1 Article 16 Law on Investment 2020.
4. Areas eligible for investment incentives
Vietnam encourages project investing in the following regions: (xv) Disadvantaged areas and extremely disadvantaged areas, such as mountainous regions, remote or island regions). (xvi) Industrial zones, export-processing zones, hi-tech zones and economic zones (“industrial zones” or “IZ”, “industrial parks” or “IP”).
5. Projects eligible for special investment incentives
In addition to investment incentives by sectors and geographical areas, the State of Vietnam also applies special investment incentives and support to encourage the development of a number of investment projects which have a great impact on social-economic development, including: (i) Projects on the establishment (including the expansion of such establishment project) of innovation centers and research and development centers with a total investment capital of at least VND 3,000 billion and disbursing at least VND 1,000 billion within 03 years from the issuance date of the investment registration certificate or the investment pre-approval; the National Innovation Center established under the Prime Minister's decision; 29 Clause 2 Article 20 Law on Investment 2020 (ii) Investment projects in the business line eligible special investment incentives with an investment capital of at least VND 30,000 billion and disbursing at least VND 10,000 billion within 03 years from the issuance date of the investment registration certificate or the investment pre-approval.
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