The National Assembly of Vietnam passed a new Investment Law on 17 June 2020 which will become effective on 1 January 2021 (LOI 2020) and replace the current Investment Law 2014 (LOI 2014). In this post, we briefly discuss some new key points of LOI 2020.
1. Market entry conditions and a potential “negative list” for foreign investors
1.1. For the first time, the LOI 2020 distinguishes between (1) market entry conditions which apply to foreign investors or Deemed Foreign Investors (defined below), and (2) investment conditions which apply to all investors.

Regarding market entry conditions, under the LOI 2020, foreign investors are entitled to the same market entry conditions as applicable to domestic investors except for the areas which are subject to market entry conditions and are to be published by the Government (Market Entry List). This “negative list” approach is one of the applaudable changes in LOI 2020 and is similar to the approach that Vietnam adopts when it signed the CPTPP in 2018 (see here). The catch, however, is when and how the Government will publish the negative list promised under the LOI 2020.

1.2. The new approach, if implemented correctly, could save time for both foreign investors and licensing authorities in determining and appraising investment proposals and applications for registration of merger and acquisition activities (M&A Approvals). That said, it is not easy for the Government to review all treaties, laws, and regulations to produce an exhaustive and complicated Market Entry Lists applicable to foreign investors from all jurisdictions who may have different treatment levels under relevant bilateral treaties and/or multilateral treaties. Currently, the Ministry of Planning and Investment has published a consolidated list of investment conditions applicable to foreign investors in Vietnam (see here). If the Market Entry List is similar to the list published by the MPI, then it could be difficult to determine what belongs to the Market Entry List and what does not.

1.3. Moreover, there is no deadline for the Government to issue the Market Entry List. Until the Government produces a clear Market Entry List, the licensing authorities would still keep their practice of seeking opinions from relevant authorities if foreign investors propose investments in business lines that are not clearly opened to foreign investors under the WTO Commitments on Services of Vietnam. In practice, the application of bilateral treaties and multilateral treaties like CPTPP is not straight-forward procedures.