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Does vietnam allow foreign ownership?

There is no single law regulating acquisition and investment by foreign nationals and investors based on national interest in Vietnam. The Law on Real Property in Vietnam applies to all types of property. A foreign owner can purchase a flat, a house, a villa or a plot of land. Foreign ownership in certain sectors is restricted (or prohibited) under domestic law or international treaties (such as WTO commitments or free trade agreements).

In some sectors, foreign investors must work with a Vietnamese party to set up joint ventures. If international treaties and domestic laws are silent, it is at the discretion of the licensing authority to decide whether or not to allow foreign investment in the sector. Vietnam allows 100 per cent foreign ownership of a company in most sectors. These include trade, IT, manufacturing and education.

However, there are restrictions on foreign ownership in some industries. Examples include advertising, logistics and tourism. In such cases, foreign investors need a Vietnamese joint venture partner. Why do we need to invest in Vietnam now?

Moreover, Vietnam is on its way to becoming a production centre for international companies, as it offers the advantage of cheap labour costs and a well-developed infrastructure. Vietnamese customs and import procedures are complex; find out how to import products into Vietnam when even the most stringent requirements are met. Foreign individuals and foreign companies are not allowed to own more than 30 er shares in a building or more than 250 properties in the same district. Now Viet Kieu (Vietnamese citizens living abroad), foreigners with a visa, and foreign legal entities can purchase real estate in Vietnam just like Vietnamese citizens.

This amendment will have a significant impact on tiered corporate structures where the holding company is an FIE with more than 50 and less than 51 foreign shares and is therefore treated as a Vietnamese investor with respect to its investment and shares in the operating subsidiary. Foreign investors and public enterprises have encountered two main difficulties in relation to the foreign shareholding cap due to the above regulations. The second difficulty is the unclear mechanism by which public enterprises comply with the business conditions regulations when the proportion of foreign ownership in these enterprises changes. This change represents a major shift in the approach of Vietnamese regulators to foreign investment and is expected to increase transparency and consistency in the authorities’ approach to foreign investment and the overall approval process.

This will allow you to protect and maintain control over your investments without setting up a business in Vietnam. The cap on foreign ownership of public enterprises is mainly regulated by the Law on Securities (LOS), the Law on Investment (LOI) and their implementing regulations. In addition, the amended LOI now requires M&A approval for foreign investment in target enterprises if they use land in maritime, border and coastal areas or other areas that may affect national defence and security. Accordingly, based on existing Vietnamese laws and international treaties, the government will issue two lists of business sectors and lines of business that are restricted and conditional for foreign investors.

The amended MOU provides welcome clarification on the circumstances under which a foreign investor must obtain M&A approval for its investment in a Vietnamese target company.

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