Due to the rapid changes in the economy and current investment patterns, enterprises and investors should take advantage of the benefits of the Investment on Law 2020 in order to integrate, grow, and attract investment capitals, to expand production and business and increase competitiveness.

Specifically, on January 1, 2021, Investment on Law 2020 has taken effect, replacing the Investment on Law 2014 as well as other revised and supplemented legal documents. The overview below would include some key points in order to assist investors and businesses in accordance with understanding and applying the law:

1. New regulations on Business lines

a. Adding new banned business lines (Article 6)

Law on Investment 2020 adds the following business lines to the list of banned business lines:

  • Provision of debt collection services;
  • Trade-in human fetuses, corpse.

b. Qualification to conduct conditional business lines (Appendix 4)

The conditions shall be applied through the requirement of the following:

  • Licenses;
  • Certificates;
  • Credentials;
  • Vritten confirmation or written approval;
  • Other requirement that must be satisfied by individuals and business entities to conduct business investment activities without obtaining written confirm form a competent authority.

The addition of this regulation is meant to increase the efficiency in implementing the princible to ensure the right to freedom of investment of individuals and enterprises in business lines that the law not prohibit with conditions.

c. Removal of some conditional business lines (Appendix 4)

According to the provisions of the investment on Law 2020, in Appendix IV- List of conditional business lines under the provisions of Vietnamese law in 2021 currently includes only 227 conditional business lines (previously is 243 industries in accordance with the Law on Investment No. 03/2016 / QH14 – Law amending, supplementing Article 6 and Appendix 4 on the list of sectors and trades subject to conditional business investment effective from 01 / 01/2017. The following lines of business were removed from the List of conditional business lines:

  • Commercial arbitration service activities;
  • Debt sale and purchase services;
  • Manufacturing and repairing liquefied gas cylinders (LGP cylinders);
  • Import and export of electricity;
  • Franchising;
  • Logistic service business;
  • Shipping agent;
  • Providing condominium operation and management training services;
  • Business real estate training services;
  • Urban planning services provided by foreign organizations and individuals;
  • HIV testing services;
  • Tissue banking services;
  • Reproductive support services, storing sperm, storing embryos;
  • Testing microorganisms causing infectious diseases;
  • Trading in vaccination services;
  • Use alternative medicine for drug addiction treatment;
  • Providing surrogacy services;
  • Chemicals, insecticides and disinfectants used in the medical household sector of business;
  • Trading in food under the specialized management field of the Ministry of Health;
  • Operation of medical equipment classification facilities;
  • Medical equipment testing services;
  • Intellectual property assessment services (including: assessment of copyright and related rights, industrial property assessment and assessment of rights to plant varieties);
  • Trading helmets for mortorcyclists and motorbikes;
  • Business advertising services;
  • Trading in bio-products in waste treatment;
  • Producing film.

No longer exists “Debt sale and purchase” because Debt trading service is just a service to support, promote debt purchase and sale transactions. Meanwhile, the result of the debt sale and purchase transaction does not change the debt repayment obligation or debt, but only the subject performing that obligation. It can be seen that, the implementation of debt trading as well as debt trading services only related to the participating entities, with no effect on the public interests listed in the clause 1 Article 7 of Law on Investment 2020.

The removal of “Import and export of electricity” from the list of conditional business lines 2020 contributes to increase capacity, contributes an important part in the national power source structure compared to this period of operation which is restricted by national law. The above regulation has helped to increase electricity imports when traditional electricity sources such as domestic coal-fired thermal power are increasingly difficult to build due to environmental problems, fuel sources and the ability to mobilize investment capital.

d. Adding new conditional business lines to management requirements and practices and ensure consistency with relevant laws

  • Insurance auxiliary services;
  • Business architecture services;
  • Data center service business;
  • Construction inspection services;
  • Providing domain name registration and maintenance services;
  • Electronic identification and authentication services;
  • Import newspapers release service business;
  • Registry of fishing ships;
  • Training and retraining for fishing vessel crew members;
  • Smoking cessation, HIV / AIDS treatment, care for the elderly, people with disabilities, and children;;
  • Raising and planting wild flora and fauna species in CITES Appendices and the list of endangered, precious, and rare wild plants, animals and aquatic animals.
  • Conventional farming of wild animals;
  • Export, import, re-export, transit and import from the sea of ​​wild specimens of species on CITES Appendices and the List of Endangered Forest Plants, Animals and Aquatic Products, rare;
  • Export, import and re-export of specimens of animals that are reproduced, raised or artificially propagated in CITES Appendices and the list of endangered forest plants, animals and aquatic animals, rare;
  • Trading in farm animals;
  • Trading in cattle and poultry slaughtering;
  • Trading in bio-products, microorganisms, chemicals, substances for environmental treatment in aquaculture and animal husbandry;
  • Intellectual property assessment services (including copyright and related rights assessment, industrial property assessment and plant variety rights assessment);
  • Technology assessment, appraisal and appraisal services;
  • Processing, trading, transporting, advertising, displaying and storing specimens of species of plants, animals and animals on the list of endangered, precious and rare forest plants, animals and aquatic animals. ;
  • Providing payment services without using the customer’s checking account;
  • Trading in clean water (domestic water).

For the first time, the investment on law 2020 included “Insurance ancillary practices” in the list of conditional business lines, which would lead to tighter rules on qualifications and qualifications of participants, improve the quality of insurance ancillary services.

The Additional provision “Smoking cessation, HIV/AIDS treatment, care for the elderly, persons with disabilities, and children” seek to strictly control, as well as set high standards for the health of people who need special attention.

Expand the reach of “construction inspection facilities” not only to tighten quality control, inspection, and auditing, but also to control the failure cause, valid, and other requirements of construction materials, building parts, or construction works, etc. combined with calculation and examination.

Appendix IV expands the managable scope of “Domain name registration and maintenance services” compared to the amended investment on law 2016, “Domain name registration and maintenance services” .vn “” certainly require for many other adomain names when registering the domain name of the business.

Adding the breeding farm in the “services of testing and assaying biological products, microorganisms, chemicals, and environmental treatment substances”.

If the investment on law 2014 only stipulates “Intellectual property rights representative service business”, now it has specified that the objects under the authority to be represented as “industrial property agent and representative of rights to plant”.

“Provision of payment services without using a customer’s current account” has specific conditions according to Circular No. 38/2019 / TT-NHNN Regulations on the provision of payment services. via the customer’s checking account at the public postal service provider and related documents.

e. List of business lines allowed in the market with conditions and market across conditions applied to foreign investors (Article 9)

The Government announced the regulations on the list of business lines that consisted of

  • Prohibited business lines that foreign investors have not been granted access to their market yet;
  • Business lines that foreign investors are granted access conditionally to their market.

Aside from this list, foreign investors shall invest in market access conditions as those applied to domestic investors.

Accordingly, market across conditions depending on the percentage of charter capital owned by foreign investors, the type of investment, capability, and other factors.

f. Supplements Business lines for investment incentives

  • University education
  • Manufacturing and development of from science and technology products in accordance with regulations of law on science and technology;
  • Manufacturing of products on the List of prioritized supporting products;
  • Storage of medicinal products, manufacturing of medical equipment;
  • Manufacturing of goods and provision of services for the purposes of creating or participating in value chains and industrial clusters.

2. Procedures in investment by establishing a business entity (Article 22)

Not require foreign investors need to have an investment project and apply for an Investment Registration Certificate before establishing a small and medium-sized enterprise in the start-up department.

Law on Investment 2020 supplements regulation that the business entity establish by a foreign investor become the investor from the date on which the enterprise registration certificate or an equivalent document is issued. The business entity established by foreign investors is the investors implementing investment projects according to the provisions of the investment registration certificates.

The business entity having more than fifty percent (50%) of its charter capital held by foreign investors must meet the requirements and conduct investment procedures in accordance with the regulations applied to foreign investors making investments. (Article 23 Investment law).

3. Investment procedures in case of contributing captital, buying shares, or buying capital contributions. (Article 26)

a. Additional case where investment procedures is required (Point c Clause 2 Article 26)

Law on Investment 2020 supplements regulation that foreign investors making capital contribution to, purchasing shares, purchasing capital contribution in enterprises having land use right certificate for the land on island, land in coastal communes, wards, towns; land in ares relating to national defense, security must conduct procedures to register such capital contribution, shares purchase, capital contribution purchase with the authorities.

b. The case where investment procedures is not required (Point a Clause 2 Article 26)

The foreign invetsors making capital contribution to, purchasing shares, purchasing capital contribution in enterprises operating business lines that are conditional for foreign investors, without increasing the ratio of ownership of foreign investor in such enterprises, are no longer required to conduct procedures to register the capital contribution, shares purchase, capital contribution purchase with the authorities.

c. Changes on the ratio of chater capital of the business entity held by the foreign investors/ business entity (Point b Clause 2 Article 26)

The foreign investors shall conduct the register the capital contribution, purchase of shares, or capital contributions, that make the ratio of the foreign investor’s charter capital in the business entity more than fifty percent (50%) (Instead of from fifty one percent (51%) as regulated in Law on Investment 2014).

4. Adjusting the investment registration certificate (Article 41)

Providing more detail and clarification of the cases required to obtain approval for amending investment policy if the adjustment to the investment project changes the contents of the investment registration certificate.

5. Procedures to issue the approval for investment policies by the National Assembly and Prime Minister (Article 35)

The Investment Law 2020 amends procedures for appraisal of those investment projects which are under the jurisdiction of the National Assembly’s investment policy approval as an effort to simplify the procedures to seek, to inspect the opinion of relevant Ministry, agency, and to abolish the repeated procedure of two steps seeking for an opinion.

Regarding procedures to obtain investment policies approval from the National Assembly, the application of the investment project shall be submitted to the Ministry of Planning and Investment.

Regarding the procedure to obtain investment policies approval from the Prime Minister, Law on Investment 2020 states that the application of the investment project shall be submitted to the Ministry of Planning and Investment, unlike the general wording of Law on Investment 2014.

6. Frequency of reports on investment (Article 72)

  • The regulation about submitting monthly periodic reports is abolished.
  • Investors, business entities, investment registration authorities, the provincial People’s Committees shall submit quarterly and annual periodic reports.

7. The outward Investment

a. Business lines banned from outward investment. (Article 53)

The Law on Investment 2020 adds a number of provisions on industries and trades banned from offshore investment, including:

  • Business lines specified in Article 6 and relevant international treaties;
  • Business lines with technologies and products banned from export in accordance with the law on foreign trade management law.
  • Business lines banned from business investment in accordance with laws of the host countries.

The regulation about business lines subject to conditional outward investment:

  • Banking,
  • Insurance,
  • Securities,
  • Newspapers, radio, television,
  • Real estate business.

When operating such business lines for outward investment, investors must obtain the approval of competent State agency for satisfying the requirements of outward investment in accordance with the relevant specialized laws (if any).

b. Use of profit for outward investment (Article 67.1)

Law on Investment 2014 regulates only that the investor shall use profit

delivered from outward investment in the two cases: (a) Increasing capital, expand outward investment; or (b) Executing a new outward investment  project.

Besides, Law on Investment 2020b regulates that investor is entitled to retain profit derived from outward investment for reinvestment in the folowing cases

  • Continuing making capital contribution in case the contribution has not been made fully;
  • Increasing outward investment capital;
  • Carrying out a new outward investment project.

8. The investment incentives

a. Forms of investment incentives (Article 15)

  • Supplements the forms accelerated depreciation: increasing the deductible expenses upon calculation of taxable income.
  • Apply corporate income tax rates lower than normal tax rates for a period of time or for the entire investment project implementation period; tax exemption, reduction and other incentives in accordance with corporate income tax on law;
  • Exemption, reduction of land use levy, land rent, land use tax;
  • Under Law on Investment 2020, one of the forms of incentives is exemption of import tax on goods imported as fixed assets; raw materials, supplies, and parts used for manufacturing in accordance with law on export – import tax. (Law on Investment 2014 does not mention the following provisions)

b. The beneficiaries of investment incentives (Article 15)

  • The Law on Investment 2020 adds a number of beneficiaries of investment incentives in order to unify the beneficiaries of investment incentives with the tax laws and other relevant laws:
  • Investment projects capitalized at VND 6,000 billion or more, implements at least VND 6,000 billion within 3 years from the date of being granted Investment Registration Certificate or approved investment policy, concurrently have one of the following criteria: have a minimum total revenue of 10,000 billion VND per year within the latest 03 years since the year of revenue or employ more than 3,000 employees;
  • Social housing construction investment projects; investment projects in rural areas employing 500 workers or more; investment projects employing disabled workers according to the provisions of law on persons with disabilities;
  • Projects involving technology transfer on the List of technologies encouraged to transfer;
  • Science and technology enterprise incubators prescribed by the law on high technologies and law on science and technology, enterprises manufacturing and providing technologies, equipment, products, and services with a view to satisfaction of environment protection requirements,
  • Start-up project; national innovation centers and research and development centers, and social housing construction projects; business investment in small and medium-sized enterprises’ product distribution chain.

The commercial housing construction projects in accordance with law on housing shall not be granted in investment incentives.

c. Special investment incentives and assistance (Clause 1 Article 20, 75)

The Government shall decide to apply special investment incentives and assistance with a view to encouraging the development of some investment projects that exert significant socio-economic effects

  • Projects on establishment (including the expansion of such establishment project) of innovation centers and research and development centers with a total investment capital of at least VND 3,000 and disbursing at least VND 1,000 billion within 03 years from the issuance date of the investment registration certificate or the approval for investment guidelines; the National Innovation Center established under the Prime Minister’s decision;
  • Investment projects in the business line eligible special investment incentives with an investment capital of at least VND 30,000 billion and disbursing at least VND 10,000 billion within 03 years from the issuance date of the investment registration certificate or the approval for investment guidelines.

The Investment Law 2020 also amends the incentives for these projects in the CIT law (including reducing the preferential tax rates, increasing the time to apply the preferential tax rates, exemptions and reductions). The specific level will be determined by the Prime Minister.

9. Authority to issue approval for investment policy

a. The Prime Minister’s authority to issue approval for investment policy (Article 31)

Supplementing a number projects of the Government’s Authority to issue approval for investment policy

Investment projects on construction of: airports and aerodromes; runways of airports and aerodromes; international passenger terminals; cargo terminals of airports and aerodromes with a capacity of at least 1 million tones per year.

Investment projects on construction of ports and wharves of special seaports; ports and wharves in which investment is at least VND 2,300 billion within the category of Class I seaports;

Supplementing a number of housing projects, urban areas in some cases requiring the Prime Minister’s approval for investment policy (Article 31.1.g).

Supplementing the authority to decide on investment policies for investment projects at the same time being under the authority to approve investment policies of at least 02 provincial People’s Committees;

Abolishing the regulation that the Prime Minister approves investment policy with respect to (Article 31.1, 2, 3):

  • Golf course construction and trading projects;
  • Manufacture of cigarettes;
  • Trading in electronic games with prizes for foreigners;
  • Project with capital scale from VND 5,000 billion;
  • Oil and gas exploration and exploitation projects.
  • A project to develop functional areas in a business entity.
  • Projects of foreign investors in the fields of shipping business;
  • Establishment of science and technology organizations, science and technology enterprises with 100% foreign capital;

b. The provincial People’s Committees’s authority to issue approval for investment policy (Article 32)

Supplementing the authority to decide on:

  • Projects on construction of residential housing (for sale, lease or lease purchase) and urban areas that use at least 50 hectares of land or less than 50 hectares of land but with a population of at least 15,000 people in an urban area; or that use at least 100 hectares of land or less than 100 hectares of land but with a population of at least 10,000 people in a non-urban area; or investment projects regardless of the area of land used or population within a restricted development area or within an historic inner area (determined in accordance with urban area planning projects) of a special urban area;
  • Investment projects on construction and operation of golf courses;
  • Investment projects of foreign investors and foreign-invested business entities executed on islands or in border or coastal communes; in other areas affecting national defense and security.

Abolishing projects subject to investment policy decision of the People’s Committee of the province under the Law on Investment 2014: Projects using technology on the List of technologies restricted from transfer in accordance with the law on technology transfer.

The Law on Investment 2020 excludes the case of investment policy decision of the People’s Committee of the province: Investment projects of family households or individuals requesting for land to be allocated, leased, or approved to change the land use purpose are not subjected to the approval for investment policy by the provincial People’s Committee

10. Term of project operation

a. New regulations on term of Business investment operation

Upon the expiration of the operation duration of an investment project, if the investor want to continue implementing the investment project and satisfies the conditions prescribed by law, may be considered for extension of the project’s investment operation term, but not exceeding the maximum limit time specified in the Investment Law, except for the following investment projects:

– Investment project using outdated technology, potentially causing environmental pollution and resource intensive;

– An investment project in which an investor has to transfer assets without compensation to the State of Vietnam or a Vietnamese party.

b. Operation termination of Project Investment

Adding new cases where the investment registration authority shall terminate an investment project in part or in full, including:

  • The investor fails to pay the deposit or obtain a bank guarantee as prescribed by law if a project execution guarantee is required;
  • The investor conducts the investment activities on a basis of a sham civil transaction.

The investment project may be terminated entirely in some specific cases, according to Article 48.2 of the Investment on law 2020, “The investment registration agency terminates or partially terminates the operation of the investment project in the cases”.

In the following cases, the outward investment registration certificate shall be invalidated if the investor fails to execute or is unable to execute the investment project in line with the schedule registered with the regulatory agency within twenty four (24) months from the date of issuance of the outward investment registration certificate and fails to follow the procedures for adjusting the execution schedule of the investment project

c. Extension of investment projects’s term

Upon the expiry of an investment project’s term if the investor wishes to continue conducting such investment project, the term of such investment project may be extended but it shall not exceed the maximum amount of time provided under Clause 44.1 and Clause 44.2 of Law on Investment 2020, except for the investment projects under Clause 44.4(a) and Clause 44.4(b) of Law on Investment 2020.

11. Other amendments and supplements to the Investment Law 2020

a. Subjects of application under Law on Investmen (Article 2)

The subjects under Law on Investment 2020 are expanded to include agencies involved in investment activities together with investors, organizations and individuals involved in investment activities

b. Adding regulations on the assessment of the value of investment capital appraisal of investment capital value, appraisal of machinery, equipment, technology lines (Article 45)

Supplementing regulations on the determination of investment capital, assessment of investment capital value to ensure the performance of state management in science and technology or to determine tax bases, limit transfer pricing, and evade tax.

c. Methods for the selection of investors to execute investment projects (Article 29)

Law on Investment 2020 provides principles, conditions applying to the selection of investors, including the methods for selecting the investors such as

  • Holding land use right auction,
  • Bidding to select an investor,
  • Approving an investor in special cases as prescribed by law; and other details when implementing such principles.

d. Guarantee for investment project execution of projects using lands that were allocated, leased, or approved to change the land use purpose by the State (Article 43)

The investor shall pay a deposit or have a bank guarantee for assurance of investment project execution if the project uses land allocated or leased out by the State to allocate or lease out land or is permitted by the State to repurpose land.


The above is the entire analysis regarding to the major changes in Law on investment 2020 that the investors and enterprises need to pay attention. For detailed advice and implementation support, please contact LawPlus via phone +84 2862 779 399 or email





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