Foreign investors will only be restricted when doing business accordingly the provisions of Vietnamese law or international treaties to which Vietnam is a contracting party. To understand the limitations of foreign investors and what are the restricted areas, let’s follow this article from LSX Lawfirm.
Legal grounds
Investment Law 2020
Conditions for foreign investment to invest in Vietnam
Vietnam is and has become a strong point to attract foreign investment. The strength of Vietnam that foreign investors often invest in is the processing and manufacturing industry; with a total investment capital of over 175 billion USD. The reasons that foreign investors invest in Vietnam are:
- Vietnam has a favorable geographical position with world trade.
- Vietnam has a stable political and security situation.
- Advantage of abundant and quality workforce
- Vietnam joining the ASEAN economic community will have a good opportunity to connect Vietnam with the world market;
- With the law and transparency of Vietnam, it will create conditions for investors to be assured of convenient and long-term operation.
Limitations of foreign investors as prescribed by law
Vietnam is one of the countries that attracts investment from abroad, but there are also many limitations for investors according to the provisions of Vietnamese law or international treaties that the Socialist Republic of Vietnam has agreed to. Nam is a member.
Limit on business lines
According to Investment Law, investors have the autonomy to conduct business investment activities, through which the sectors and trades banned from investment include: Trading in all kinds of food; wild animals on the prohibited list; trading in narcotic substances; trading in people, human body parts; prostitution; firecrackers; business activities related to human cloning.
Limit on capital ownership ratio
In the Investment Law, the current investment law of Vietnam allows foreign investors to own unlimited charter capital in companies in Vietnam. Except for the following cases:
Firstly, the percentage of foreign investors’ ownership in public, listed companies, securities trading organizations and securities investment funds as prescribed by law.
Secondly, foreign ownership ratio in equitized state-owned enterprises; or change ownership in other forms as prescribed by law.
Lastly, he percentage of foreign investors’ ownership shall comply with other provisions of relevant laws and treaties to which the Socialist Republic of Vietnam is a contracting party.
List of conditional investment fields
As mentioned in the above section, Vietnam prohibits or restricts investment in a number of sensitive sectors, but these restrictions are scattered in international treaties to which Vietnam is a member or in other countries. specialized legal documents. Therefore, the competent authorities have gathered the lists of business lines that are eligible for investment and business in the form of legal documents and an online portal system, creating more favorable conditions for businesses investors in determining applicable restrictions.
Industries that restrict foreign investors
3 groups of industries that restrict foreign investors to note
Group 1: Occupations related to law and legal status. For example, the production of seals, mostly under the management of the Ministry of Public Security, is very limited to foreign investors.
Group 2: Occupations that are significant to politics, national defense and security, such as business activities and production support tools such as explosives, security devices, etc.
Group 3: Foreign investors are also not allowed to print, print, publish, or distribute publications so as not to affect the culture and education in Vietnam.
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Related questions
Foreign investors can withdraw capital through two methods:
– Transfer of shares to another person.
– Ask the company to buy back its shares.
Firstly, conditions on the rate of ownership of charter capital of foreign investors in economic organizations.
Secondly, conditions on the form of investment.
Thirdly, conditions on the scope of investment activities.
Fourly, conditions on Vietnamese partners participating in investment activities.
Lastly, other conditions as prescribed in laws, ordinances, decrees and international treaties on investment.
Firstly, forms of investment by establishing economic organizations
Secondly, form of investment by capital contribution, purchase of shares, capital contribution to economic organizations
Thirdly, investment form under PPP contract (Public Private Partnerships)
Lastly, investment form under BCC contract (Business Cooperation Contract)
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