New Decree 31/2021 guiding the implementation of the Investment Law 2020 on the Market Entry of Foreign Investors

New Decree 31/2021 guiding the implementation of the Investment Law 2020 on the Market Entry of Foreign Investors The Government has issued Decree 31/2021/ND-CP (Decree 31/2021) which becomes effective on the signing date, 26 March 2021. Decree 31/2021 provides certain appreciable provisions guiding the negative list approach and the application of market entry conditions of the Investment Law 2020. These implementing provisions are expected to provide more certainty and transparency to foreign investors. Market Entry Condition List 1. Decree 31/2021 provides one list of business lines which foreign investors, including foreign-invested companies which are deemed as foreign investors under Article 23.1 of the Investment Law 2020, are not allowed to invest in (Prohibition List) and one list of business lines which foreign investors must satisfy market entry conditions to invest in (Market Entry List). Please see those lists in appendixes below. 2. The Market Entry List provides 58 specific business lines and one of opening item. The opening item allows the National Assembly, the Standing Committee of the National Assembly, the Government, the Prime Minister to issue pilot mechanisms on business lines which should be new business lines rather the business lines existing at the date of Decree 31/2021. As compared to the draft version, the catch-all item in the draft version (i.e., new sectors or businesses which have not been conducted in Vietnam on 1 January 2021) is removed and replaced with this opening item. Legally speaking, if there is no pilot mechanism on a business line which falls within neither the Prohibition List nor the Market Entry List, foreign investors will be treated as domestic investor in terms of market entry conditions when doing such business line. 3. The Market Entry List does not provide investment conditions or market entry conditions (used exchangeable), e.g., foreign ownership limitation, investment form, investor capacity. Instead, the Ministry of Planning and Investment (MPI) will coordinate with other authorities to review and collect all market entry conditions and publish such market entry conditions on the National Portal on Investment (see here). 4. Currently, the Ministry of Planning and Investment has published a consolidated list of investment conditions applicable to foreign investors in Vietnam (see here). However, it is not easy to read all different international treaties and various domestic regulations to specify applicable investment conditions. Moreover, in practice it could be difficult for investors to determine whether the scope of activities of their planned business fall within the business lines of the Market Entry List. Foreign investors would need to compare their business scope or nature to the description of business lines under Vietnam Standard Industrial Classification and Provisional Central Product Classification (see our post here).