RHTLaw Vietnam July Newsletter: Laws on Investment and Enterprises - Updates and Key Considerations

Law on Investment No. 61/2020/QH14 Last 17 June 2020, the National Assembly, following their thorough consideration, finally approved the promulgation of Law No. 61/2020/QH14 on Investment (the “New LOI”) which will replace the current Law No. 67/2014/QH13 on Investment (the “Current LOI”) since 1 January 2021.

The New LOI provides for numerous changes to the contents of the Current LOI which cover, among other things, matters of conditional businesses, investment conditions and forms, investment licensing procedures and termination of investment projects. This newsletter focuses on the following new changes in the New LOI that the investors should pay attention to.

1. Industry and Trade being Prohibited and Subject to Conditions 

The notion of Conditional Industry or Trade remains unchanged under the new LOI while defining such industry or trade as the
one in which the conduct of investment, business activities must satisfy certain conditions for the reasons of national
defence or security, social order and safety, social ethics and community health.

To adapt to the development of the society and changes to the business lines, the new LOI revised the List of Conditional Industry, Trade by:

▪ removing 22 business lines including, inter alia, the sale and purchase of debt; logistics services; foreigners’ consultancy urban planning; franchising; commercial arbitration activities, classification and examination of medical equipment; training relating to real estates;

▪ revising details of 25 business lines notably covering: registration and maintenance of domain business which will apply to all domains instead of limiting to “.vn” domain only as before; limiting conditional businesses to activities of film release and distribution instead of film production as in the Current LOI.

▪ supplementing 7 more business lines including: freshwater business; architecture services; data centre services; trade on imported newspapers and magazines; fishing vessel registry; training fishing seafarers; electronic identification and authentication services.

There is no notable change to the List of Prohibited Industry, Trade except for the supplement of the activity of “debt
collection service” into the list. It is clear that as from the date of effectiveness of the New LOI, the investors shall be prohibited
to invest into sector of “debt collection”. This may be considered as the prevention by the State against the abuse by the
criminals of this kind of activity to conduct usury and black credit activities.

2. Market Access Conditions Applied to Foreign Investors Under the New LOI, the investment conditions applicable to foreign investor shall be known as market access conditions. Those conditions include:
(i) capital ratio held by foreign investors;
(ii) form of investment;
(iii) scope of investment scope;
(iv) capability of the investor and its partner participating in the investment;