Market access restrictions for foreign investors in Vietnam

Keywords: market access, foreign investors, investment conditions, business sectors, investment in Vietnam.

1. Prohibited Business Sectors

One of the first steps in assessing an investment is to determine whether the intended business line falls within the list of prohibited sectors. These are sectors in which Vietnamese law does not allow any investor—whether domestic or foreign—to engage in investment or business activities.

Prohibited sectors typically relate to fundamental state and societal interests, such as national security, public order, social ethics, and public health. As such, the law imposes an absolute prohibition to prevent high-risk activities that could cause significant and uncontrollable harm, rather than regulating them through licensing or conditional requirements.

According to Article 6.1 of the Law on Investment 2025 (effective from March 1, 2026), prohibited sectors include, among others: trading in narcotic substances; certain hazardous chemicals and minerals; specimens of endangered wild fauna and flora; prostitution; trading in human beings, body parts or tissues; activities relating to human cloning; trading in explosive firecrackers; and debt collection services.

Compared to the Law on Investment 2020, the Law on Investment 2025 expands the scope of prohibited sectors by adding several new areas, such as trading in national treasures, export of relics and antiques, and electronic cigarettes and heated tobacco products. This expansion reflects a stricter regulatory approach toward sectors involving cultural–historical sensitivity and products that may pose risks to public health.

In practice, any application for business registration in these sectors will be rejected. If investors proceed with such activities regardless, they may face administrative sanctions or even criminal liability, depending on the nature and severity of the violation.

2. Market Access Conditions for Foreign Investors

After excluding prohibited sectors, foreign investors must assess whether their intended business line is accessible under Vietnam’s market access regime. This is a critical step in determining the feasibility of an investment.

In principle, Vietnam applies a “negative approach”[1], under which foreign investors are treated the same as domestic investors unless the sector falls within the list of restricted market access sectors. This approach is codified in Article 17 of Decree 96/2026/ND-CP, which identifies three main categories:

2.1. Business sectors not subject to market access restrictions

Where a foreign investor conducts business activities in sectors not included in the list of market access restrictions, such investor is entitled to market access conditions equivalent to those applicable to domestic investors, without being subject to any additional or specific requirements. These sectors represent areas in which foreign investors may freely invest and operate without conditional constraints, reflecting Vietnam’s ongoing trend toward market liberalization and openness.

2.2. Business sectors not yet open to foreign investors

Where a foreign investor intends to conduct business activities in sectors classified as not open to market access, the competent authorities will refuse to grant approval, and accordingly, such investor is not permitted to invest in those sectors in Vietnam. The list of sectors not open to foreign investors is set out in Appendix I of Decree 96/2026/ND-CP (effective from March 31, 2026). Unlike prohibited business sectors—which apply to both domestic and foreign investors—this category imposes restrictions specifically on foreign investors only.

2.3. Conditional market access sectors

Foreign investors may participate, subject to specific conditions, which may include:

• Foreign ownership limits;
• Investment form (e.g., joint venture requirements);
• Scope of permitted business activities;
• Investor or partner qualifications;
• Other conditions under domestic laws or international treaties.

In addition to the three core categories outlined above, Article 17 also clarifies the treatment of sectors that are not covered by international commitments/treaties or not expressly regulated under Vietnamese law. In such cases, if Vietnamese law does not impose any restrictions, foreign investors may access the market under the same conditions as domestic investors; conversely, where restrictions exist, those limitations must be complied with.

Importantly, Vietnam recognizes the principle of “commitments/treaties precedence.” Where international agreements/treaties to which Vietnam is a party provide more favorable market access conditions, foreign investors may apply those provisions. In cases where multiple treaties apply, investors may choose one applicable framework, provided it is applied consistently across the investment.

In addition, for multi-sector businesses, foreign investors are required to satisfy all applicable market access conditions corresponding to each business line. Where different foreign ownership caps apply, the most restrictive threshold will prevail.

Therefore, market access should not be viewed as a simple “permitted or not permitted” determination, but rather as a multi-layered regulatory framework, requiring foreign investors to align domestic laws, international commitments, and regulatory practice in a consistent manner.

3. Conditional Business Sectors

In addition to market access conditions, foreign investors must also comply with applicable business conditions during the course of operations (where required). These conditions apply equally to both domestic and foreign investors.

Such requirements typically relate to operational licenses, professional certifications, technical qualifications, financial capacity, or minimum capital thresholds, depending on the specific sector. The list of conditional business sectors is set out in Appendix IV of the 2025 Law on Investment (effective from July 1, 2026).

Notably, compared to Law on Investment 2020, the number of conditional business sectors has been reduced from 227 to 198 (a reduction of 29 sectors). This reflects a regulatory trend toward simplifying business conditions, lowering market entry barriers, and promoting a more transparent and investor-friendly environment.

For investment activities in Vietnam, when operating in conditional sectors, foreign investors are required not only to satisfy initial market access requirements but also to ensure ongoing compliance with all applicable business conditions throughout the lifecycle of the investment.

In practice, legal risks arise not only at the stage of investment approval, but also from the failure to maintain required licenses, operational standards, or qualification criteria under relevant sectoral regulations.

Accordingly, continuous compliance review and maintenance are critical to ensuring stable operations and mitigating potential legal risks.

4. Conclusion

Vietnam’s legal framework on market access for foreign investors is structured through multiple layers of control, reflecting a selective approach to market liberalization. This requires foreign investors to conduct a comprehensive assessment from the early stages of investment planning.

A proper understanding of these regulatory requirements is not only important from a legal perspective but also critical for the effective execution of investment strategies. In practice, investors should:

✅ Determine whether the intended business sector is prohibited.
✅ Assess market access conditions applicable to foreign investors.
✅ Review operational business conditions relevant to the sector.
✅ Establish a compliance framework to ensure ongoing legal adherence throughout the investment lifecycle.