Vietnam continues to attract foreign direct investment (FDI), yet entry is not completely open. Certain lines of business are classified as “conditional” for foreign investors, meaning market access is subject to restrictions to protect national interests, public health, or cultural values. Understanding these limits is essential for investors planning projects in sensitive areas.
1. Legal Basis
The principal framework is the Law on Investment 2020, supported by Decree 31/2021/NĐ-CP and Decree 239/2025/NĐ-CP.
- Article 9 divides business sectors into: (i) prohibited; (ii) conditional for all investors; and (iii) conditional specifically for foreign investors.
- Appendix I of Decree 31 lists 84 sectors with market-access conditions (modified by Clause 28, Article 1, Decree 239/2025/NĐ-CP) for foreigners, ranging from telecommunications and logistics to banking and education.
Vietnam also implements its WTO Schedule of Commitments and market-opening provisions in free trade agreements (e.g., CPTPP, EVFTA, RCEP), which sometimes provide more favorable access than domestic law alone.
2. Common Forms of Restrictions
Market-access conditions vary by sector but typically include:
- Equity Caps: Foreign ownership is limited, e.g., 34% in air transport services; 49% in passenger transportation services. If the business sector falls under the list of conditional business lines but specific regulations have not yet been issued, the maximum foreign ownership limit is 49%.
- Form of Investment: Foreigners may be required to establish a joint venture with a Vietnamese partner (e.g., advertising services, travel agencies handling inbound tourism).
- Licensing and Approval: Beyond the Investment Registration Certificate (IRC), conditional sectors often require specialized licenses from line ministries (e.g., education, banking, securities).
- Geographical or scope limits: Some activities—like press agencies or fishery exploitation—are off-limits entirely.
3. Interaction with International Commitments
Vietnam’s commitments under the WTO and new-generation FTAs create a layered system. Where treaty schedules are more liberal than domestic law, they prevail (Article 5, Investment Law 2020). For example, the EVFTA allows up to 70% foreign equity in freight forwarding, exceeding the 51% limit previously applied under domestic regulations. However, investors must evidence treaty eligibility (e.g., proof of EU nationality) when registering projects.
4. Compliance Procedure
Foreign investors must declare intended business lines in their IRC application. The licensing agency (Department of Planning and Investment or Management Board of an industrial zone) will review compliance with the market-access list. Projects in conditional sectors cannot proceed until:
- The investor satisfies ownership and form requirements.
- All specialized licenses are granted.
- The enterprise is registered with an appropriate charter capital structure.
Violating conditions – such as exceeding equity caps through nominee arrangements – can lead to revocation of the IRC or fines under Decree 122/2021/NĐ-CP.
5. Reform Trends
Vietnam is gradually liberalizing sensitive areas to attract high-quality FDI, particularly under CPTPP and EVFTA commitments. Nevertheless, some sectors (e.g., land use rights trading, press activities, or defense services) are expected to remain closed due to sovereignty or security concerns. Policymakers are also exploring clearer guidance on how equity limits interact with cross-border M&A transactions.
6. Conclusion
While Vietnam offers broad investment opportunities, conditional business sectors remain subject to ownership caps, joint-venture requirements, and additional licensing. Diligent review of the market-access list, treaties, and implementing decrees is critical before committing capital. Legal due diligence and early engagement with authorities help investors structure transactions that comply with Vietnam’s evolving regulatory landscape.
📞 CONTACT LEGAL CONSULTANT:
TLA Law is a leading law firm with a team of highly experienced lawyers specializing in criminal, civil, corporate, marriage and family law, and more. We are committed to providing comprehensive legal support and answering all your legal questions. If you have any further questions, please do not hesitate to contact us.
1. Lawyer Vu Thi Phuong Thanh, Ha Noi Bar Association
Email: vtpthanh@tlalaw.vn
2. Lawyer Tran My Le, Ha Noi Bar Association
Email: tmle@tlalaw.vn
NHM