Business lines are not allowed to invest by foreign in Vietnam

In the economic development process of a country, the management and regulation of foreign investment capital is an important factor. In Vietnam, although there has been openness and attraction of foreign investment, there are still some industries that are not allowed to establish companies with foreign investment according to the provisions of law. These restrictions are intended to protect the interests and sustainable development of key industries, ensure security, safety and social order while promoting fair competition in the Vietnamese economy. In the following article, Viet An Law will introduce Business lines are not allowed to invest by foreign in Vietnam according to current legal regulations.

Legal basis

• Law on Investment 2020.
• Decree 31/2021/ND-CP guiding the Investment Law.
• Decree 94/2017/ND-CP on commercial goods and services on which monopoly is held by the state and geographical areas thereof.

Regulations on industries that do not have market access for foreign investors

Pursuant to Article 9 of the Investment Law 2020 regulates that market access conditions applied to foreign investors are the same as those applied to domestic investors, except for the case specified in the Negative List for Market Access, including:

• Prohibited business lines;
• Restricted business lines.

This list is specified in the Decree guiding the Investment Law No. 31/2021/ND-CP. Article 17 of Decree 31/2021/ND-CP on the principle of applying market access restrictions for foreign investors also stipulates:

1. Except the business lines on the Negative List for Market Access in Appendix I hereof, foreign investors have the same market access as that of domestic investors.

2. Foreign investors must not invest in the prohibited business lines specified in Section A of Appendix I hereof.

Accordingly, for the industries specified in the List in Appendix I of Decree 31/2021/ND-CP, investors are not allowed to establish foreign-invested companies to provide related services. This is a hard exception that is applied after investors consider and evaluate the market access conditions committed in the WTO, CPTPP, EVFTA or other international trade and investment agreements to which Vietnam is a member.

List of business lines are not allowed to invest by foreign in Vietnam

Section A Appendix I of Decree 31/2021/ND-CP regulates 25 business lines that limit market access for foreign investors, including:

1. Trade in goods and services on the list of goods and services under state monopoly.
2. Press activities and collection of news in any shape or form.
3. Catching or harvesting marine life.
4. Investigation and security services.
5. Administrative and judicial services, including judicial assessment services, bailiff services, property auction services, notary services, official receiver’s services.
6. Guest worker services.
7. Investment in construction of cemeteries for transfer of land use right and infrastructure thereon.
8. Direct collection of garbage from households.
9. Public survey services.
10. Blasting services.
11. Manufacture, sale of weapons, explosive materials and combat gears.
12. Import, dismantlement of used seagoing ships.
13. Public postal services.
14. Merchanting trade of goods.
15. Temporary import for re-export of goods.
16. Exercise of rights to export, import distribute goods on the list of goods to which foreign investors and foreign-invested business organizations do not have the right to export, import or distribute.
17. Collection, purchase, handling of public property at armed force units.
18. Manufacture of military equipment or materials; trade in military equipment, military weapons, specialized equipment and vehicles exclusively for used by the military and the police, specialized equipment and parts thereof, manufacture technology thereof;
19. Industrial property representative services and intellectual property assessment services.
21. a) Services that involve establishment, operation, sustainment and maintenance of maritime signals, water zones, water areas, public navigable channels and maritime routes;
22. b) Survey of water zones, water areas, public navigable channels and maritime routes serving the maritime announcements;
23. c) Survey, development and publishing nautical charts for water bodies, seaports, navigable channels and maritime routes;
24. d) Development and publishing of marine safety publications.
25. Maritime safety services in water zones, water areas and public navigable channels; electronic maritime information services.
27. a) Services that involve inspection (inspection and testing) and issuance of certificates to vehicles (including systems, assembled parts, devices and parts of vehicles);
28. b) Inspection and issuance of certificates of technical safety and environmental safety to vehicles, specialized equipment, containers, equipment for packaging dangerous goods used in transport;
29. c) Inspection and issuance of certificates of technical safety and environmental safety to vehicles and equipment used for exploration, extraction and transport of petroleum at sea;
30. d) Occupational safety inspection of equipment subject to strict occupational safety requirements on vehicles and equipment used for exploration, extraction and transport of petroleum at sea;
31. e) Fishing vessel inspection and registration services.
32. Services that involve survey, assessment and harvest of natural forests (including logging, hunting, trapping wild and rare animals, management of gene pools of plants, domestic animals and microorganisms used in agriculture.
33. Research or use of genetic resources of new domestic animals before evaluation by the Ministry of Agriculture and Rural Development.
34. Travel services, except international travel services for inbound tourists.

Goods and services are subject to state monopoly in the field of commerce

In the first industry group, goods and services under state monopoly are mentioned. This list is specified in Decree 94/2017/ND-CP. Accordingly, the Appendix of this Decree lists 20 goods/services subject to state monopoly, including:

1. Goods, services and geographical areas serving national defense and security;
2. Production, purchase, sale, export, import, temporary import, re-export, and transit of industrial explosive materials;
3. Production of gold bars;
4. Export and import for production of gold bar;
5. Issuance lottery;
6. Importing cigarettes and cigars (except for importing for duty-free goods);
7. Manage, import, export, purchase, sale, preserve and protection of goods on the list of national reserves;
8. Printing and molding cash;
9. Issuance Vietnamese postage stamps;

10 Production, purchase, sale, export, import, transport, storage of fireworks and services related to fireworks;

11. Transmission and dispatching of the national power system; Construction and operation of multi-purpose hydropower and nuclear power projects particularly important to the economy and society;
12. Public services to ensure maritime safety (Operating the lighthouse system; Operating the public navigable channel systems);
13. Management and operation of the coastal information station system providing coastal communication services;
14. Air navigation (Air traffic services; Aeronautical information notification; Search and rescue services);
15. State-invested national and municipal railroad infrastructure system management and operation; not including the maintenance and repair of railroad infrastructure;
16. Management and operation if assigned for irrigation system, inter-provincial and inter-district agricultural hydraulic engineering; stone revetment;
17. Providing forestry services in special-use forests (except for the landscape protected forests leased to the economic organization by the State for forest protection, development and combination of landscape business, resort, eco-environmental tourism);
18. Publishing publications (excluding printing and distribution activities);
19. Manage, maintain and exploit the public postal network;
20. Supplementation public services in press distribution activities.

Above are some current legal regulations related business lines are not allowed to invest by foreign in Vietnam. If you need advice on investment plans or establishing foreign-invested company in Vietnam, please contact Viet An Law Firm for the most effective support.