FDI

Foreign Investment in Vietnam: How has Legal Framework Changed?

Trường Lăng

August 27, 2019

Foreign Investment in Vietnam: How has Legal Framework Changed?

After 30 years of reforming and opening, Vietnam has become an attractive destination for foreign investors. Accordingly, Vietnamese law system have also changed in compliance with new demands.
Foreign Investment in Vietnam: GlobalVietnam has been quite successful in completing its legal system such as promulgating the law on foreign investment in Vietnam in late 1987, then the law on investment in 2005, recently the new Law on Investment and new law on Enterprise which became effective on 1 July 2015 so that Vietnamese laws are able to step closer to international standards. These efforts were made to eliminate limitations in invested sectors, the ownership limits in Vietnamese companies, complication in investment procedures.
Until very recently, individuals and companies were just allowed to register specific business listed in their enterprise registration certificates or investment certificates. However, it changed into the right to freely conduct any business activity not prohibited or restricted by the law (according to the new constitution in 2013). In addition, the number of prohibited or restricted sectors was reduced.
In the past, the foreign ownership in a Vietnamese company with respect to certain restricted sectors remained limited to 49% of all issued shares. However, according to Decree 60, foreign investors can acquire up to 100% of shares in a public company except for categories where foreign ownership restrictions still remain.
According to the 2005 Law investment, foreign investors were required to obtain an investment licence, and then registering a local entity to do their business, but now these documents are merged into one document: the investment certificate.
The completion of the legal framework showed that the policy for FDI have been flexible to suit this development period.

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