Article 9 of the Investment Law 2020 provides for three kinds of business for foreign investors:

• market-access-prohibited business lines (ngành, nghề chưa được tiếp cận thị trường in Vietnamese) (Prohibited Businesses);

• business lines with conditional market access (ngành, nghề tiếp cận thị trường có điều kiện in Vietnamese) (Conditional Businesses); and

• business lines which are not Conditional Businesses and Prohibited Businesses and are subject to the same market access treatment as domestic investors (Unrestricted Businesses).

However, Decree 31/2021 introduces another category of business lines being "business lines without market access commitment" (ngành, nghề Việt Nam chưa cam kết về tiếp cận thị trường in Vietnamese) (Uncommitted Business). It is unclear what the relationship between the Uncommitted Business and the Conditional Business under the Investment Law 2020 is.

The Uncommitted Businesses are defined as business lines which, pursuant to international treaties on investment, Vietnam

• did not make (không cam kết in Vietnamese)/has not made (chưa cam kết in Vietnamese) any commitments, or

• has reserved the right to issue measures inconsistent with the obligations on market access, obligations regarding national treatment or non-discrimination as between domestic investors and foreign investors as regulated in such international treaties on investment.

Under Decree 31/2021, the market-access requirements applicable to Uncommitted Businesses are as follows:

• If Vietnamese law does not have any provision restricting market access to said Uncommitted Businesses, then the foreign investor may enjoy the same market access requirements applicable to Vietnamese investors; or

• If Vietnamese laws already have provision(s) on restricting foreign investor’s market access to said Uncommitted Businesses then Vietnamese law applies.

The requirements under Decree 31/2021 give rise to several issues:

• First, it is not clear how to determine a business line which Vietnam did not make any commitments. For example, under GATS treaty of the WTO, Vietnam only made commitments regarding the service sectors specified in the Schedule of Specific Commitments of Vietnam. Therefore, one could argue that (1) Vietnam did not make any commitment regarding all the service sectors not provided in the Schedule of Specific Commitments of Vietnam, and (2) all such service sectors should be considered as Uncommitted Businesses; and

• Second, it is not clear whether (1) the relevant foreign investor will be entitled to determine whether it complies with the market-access access requirements applicable to Uncommitted Businesses by itself or (2) the relevant foreign investor will need to go through a licensing process (e.g., obtaining an M&A Approval) so that the authority could verify the same.

The treatment applicable to a foreign investor planning to conduct Uncommitted Businesses is not clear and seems to include treatments applicable to Prohibited Businesses, Conditional Businesses and Unrestricted Business. Accordingly, the introduction of “Uncommitted Business” line may (i) pose some challenges for foreign investors to understand their legal obligations when investing into Vietnam and (ii) cause different authorities to apply the same regulations differently.

This post is written by Le Thanh Nhat and edited by Nguyen Quang Vu.