VIETNAM Law and Practice Contributed by: Minh Duong, Phong Nguyen and Justin Gisz, Asia Counsel Vietnam Law Company Limited
• an Indirect Investment Account (IIA) is used for indirect investments like portfolio investments. The new Circular No 03/2025/TT-NHNN, effective from 16 June 2025, revises the shareholding threshold from 51% to 50% for distinguishing direct investment from indirect investment to align with the current Law on Investment. These accounts are crucial for various transac - tions, such as capital contributions, foreign currency exchange and profit repatriation. Foreign Exchange Vietnamese law regulates foreign currency use through the Foreign Exchange Ordinance 2005 (as amended). Activities include: • capital transactions – FDI, borrowing and debt repayment; • current transactions – payments and remittances related to trade or short-term loans; and • other activities – defined by law and the State Bank of Vietnam. Capital transactions may face limitations, such as requiring Vietnamese Dong for transfers between residents and non-residents. Generally, payments and contracts within Vietnam must use the local currency, with exceptions allowed by the State Bank. Violations can result in sanctions and invalidated transactions. Sector-Specific Regimes Investment limitations and requirements vary across sectors. The key sectors attracting foreign investment Vietnam establishes distinct regulations for domestic companies and FIEs, resulting in different treatments in terms of access to land and the scope of the real estate business activities that each type of entity can perform. Under Vietnam’s Land Law 2024 and Investment Law 2020, the following companies are “foreign-invested entities” (FIEs). include the following. Real estate business
• Direct ownership a company in which foreign investors hold more than 50% of its charter capital, being a “majority foreign-own company”. • Indirect ownership a company in which a majority foreign-owned company holds more than 50% of its charter capital. • Combined ownership a company in which foreign investors and a majority foreign-owned company hold more than 50% of its charter capital. Comparison of permitted real estate business activities between domestic organisations and FIEs Domestic entities and non-FIEs’ real estate business activities include the following: (a) purchase or lease-purchase of residential or construction projects for sale, lease, or lease- purchase; (b) lease of residential or construction projects for subleasing; (c) investment in housing or construction projects for sale, lease, or lease-purchase; (d) acquisition of all or part of a real estate project; (e) investment in technical infrastructure develop - ment for transfer or lease of land with infrastruc - ture; (f) acquisition of land-use rights with technical infra - structure within real estate projects for transfer or lease; and (g) lease of land-use rights with technical infrastruc - ture within real estate projects for subleasing. FIEs real estate activities include b), c), d), and e) only from the above list. Goods trading Government Decree 09/2018 mandates a trading licence for foreign investors involved in buying and selling goods. This includes activities such as retail - ing, wholesaling specific products and e-commerce. Obtaining this licence can be a lengthy and complex process. Retail facilities also require a separate outlet establishment licence. The government is proposing amendments to Decree 09/2018 to streamline the administrative procedures
730 CHAMBERS.COM
Powered by FlippingBook