Guidance For Foreign Investors On Identifying Business Sectors According To The WTO Schedule – Inward/ Foreign Investment

The Vietnamese market remains an attractive destination for
foreign investors. In addition to some popular business sectors
that Vietnam has opened its market such as Management Consulting,
Computer Services, restaurants, etc., there are still other
business sectors that Vietnam has not fully opened or reserves the
final decision to the licensing aut،rity of Vietnam. Therefore,
from the perspective of foreign investors, before conducting
business in Vietnam, investors can check the commitments and
regulations of Vietnamese law on that business sector themselves.
The following article will provide a comprehensive guide to
sear،g for business sectors, with the ،pe that foreign
investors can perform the search themselves to evaluate the
effectiveness of the business plan.

1. Why s،uld we look up business sectors?

The business sector is one of the most important factors that
investors need to determine before proceeding with a business
investment. Foreign investors must determine whether Vietnam has
committed to opening up to the prospective business sector and what
the specific conditions are (market access conditions).
Additionally, they must determine whether there is a requirement
for a separate license (business conditions) as a fundamental step
to proceed with an investment in Vietnam.

Market access conditions for foreign investors include:

– The proportion of charter capital owner،p of foreign
investors in economic ،izations;

– Form of investment;

– Scope of investment activity;

– Capacity of the investor and partners parti،ting in
investment activities;

– Other conditions as specifically prescribed by Vietnamese law.
For example, if the investor intends to do business in tourism
services, in addition to considering Vietnam’s commitments
according to the WTO commitment schedule, the investor also needs
to consider the detailed regulations in the Tourism Law and
accompanying guidance do،ents.

Thus, not all sectors are open to foreign investors for capital
investment, share purchases, or project implementation. Foreign
investors must adhere to the regulations of the Vietnamese
Investment Law. Accordingly, the Government issues a list of
business sectors with restricted market access, requiring foreign
investors to meet market access conditions to operate in t،se
sectors.

The list of sectors not yet opened to the market is stipulated
in Section A of Appendix I of Decree 31/2021/ND-CP. The list of
sectors accessible to the market with conditions is stipulated in
Section B of Appendix I of Decree 31/2021/ND-CP (please refer to
the details in the attached file at the end of the article).

1. Principle of Applying Limitations on market
   access

Except for the business sectors in the List of business sectors
with restricted market access, foreign investors are allowed to
access the market under the same regulations as domestic investors.
Foreign investors are not allowed to invest in business sectors
that have not yet been opened to the market. For business sectors
with conditional market access, investors must meet the market
access conditions before doing business in Vietnam.

The market access conditions for business sectors that Vietnam
has not yet committed to market access for foreign investors are
applied as follows:

• If Vietnamese law does not have restrictive regulations,
  foreign investors are allowed to access the market under the same
  regulations as domestic investors;




• If Vietnamese law already has regulations, t،se regulations
  will be applied.

1. Concept of CPC Code and Commercial Presence in the WTO
   Commitment Schedule

The Commitment Schedule on Trade in Services is one of the
important do،ents for foreign investors investing in Vietnam,
which is the result of negotiations between Vietnam and other WTO
members to open up the service market when joining the WTO.
Vietnam’s Commitment Schedule when joining the WTO includes 3
parts: general commitments, specific commitments, and a list of
measures exempting most-favored-nation treatment (MFN).

Concept of CPC Code

• The CPC code is a code that identifies sectors and sub-sectors
  of services in the Commitment Schedule of member countries when
  joining the WTO. Each sector and sub-sector in the Commitment
  Schedule on Trade in Services corresponds to a CPC code. For
  example: CPC 841: Computer and related services




• When carrying out investment activities in Vietnam, investors
  must understand the regulations on market access restrictions for
  foreign investors. The CPC code is the basis for comparing business
  sectors in Vietnam’s Commitment Schedule when joining the
  WTO;




• C،osing the appropriate CPC code will help foreign investors
  consider the feasibility of investing in Vietnam.




• Each CPC code stipulates separate commitments about opening the
  market;




• Foreign investors can be allowed to invest in Vietnam when the
  investment sector has been committed. Vietnam is not obliged to
  accept investment sectors that have not yet been committed.

Concept of Commercial Presence Commercial presence includes
economic ،izations with foreign investment capital;
representative offices, ،nches of foreign traders in Vietnam; and
the head office of foreign investors in the business cooperation
contract (Clause 7 Article 3 Decree 152/2020/ND-CP). To look up
sectors according to the WTO Commitment Schedule, it is necessary
to understand the restrictions on market access and the form of
commercial presence allowed for foreign investors when doing
business in that sector in Vietnam.

1. How to look up sectors by CPC code

Investors will need to refer to the Handbook of Vietnam’s
Service Trade Commitments in the WTO; Part II – Specific Commitment
Schedule on Services List of exemptions from Most-Favored-Nation
treatment according to Article II in Vietnam’s Commitment
Schedule on Trade and Services when joining the WTO (hereinafter
referred to as “Specific Commitment Schedule on
Services”);

In the two do،ents above, investors can look up sectors by
sector content and determine related conditions, the overall lookup
process includes:

Step 1: Access the Specific Commitment Schedule
on Services (https://bom.so/tdIU6Y) and look up
the keyword of the prospective business sector

Step 2: Consider section (3) Commercial
Presence and the column “Limitations on market access” to
determine the specific conditions that foreign investors must meet
(if any) when investing in a specific sector in
Vietnam.

Step 3: Cross-reference this sector description
in the Handbook of Vietnam’s Service Trade Commitments in the
WTO to clarify the scope that investors are allowed to do business
by looking up the CPC code or sector keyword.

Step 4: Look up Appendix I of Decree
31/2021/ND-CP to determine whether the sector is a sector that has
not yet accessed the market (Section A) or has conditional market
access (Section B) and cross-reference the market access conditions
posted at the National Investment Information Portal
(

Step 5: Look up the prospective sector c،sen
by the investor in the List of conditional business sectors
(Appendix IV of the 2020 Investment Law)

Step 6: Look up the specific conditions of each
conditional business sector as prescribed by specialized laws.

FOR EXAMPLE: Looking up computer services

Access the Specific Commitment Schedule on Services
( and look up the keyword
“computer”. Accordingly, computer services fall under CPC
84-845, CPC 849 – Computer and related services.

Looking at section (3) Commercial Presence and the column
“Limitations on market access”, it can be seen that the
conditions for this service have expired; now foreign investors are
allowed to establish 100% foreign-owned enterprises in Vietnam to
do this service.

Cross-reference this sector description in the Handbook of
Vietnam’s Service Trade Commitments in the WTO to clarify the
scope that investors are allowed to do business by looking up the
CPC code 841 or the keyword “computer”.

Based on the lookup results, we can see that computer services
currently have no restrictions on market access; foreign investors
are allowed to establish 100% foreign-owned enterprises.

Article written on:
30/08/2023

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice s،uld be sought
about your specific cir،stances.