Decree 31/2021/ND-CP: Forthcoming Moves of New Investment Law
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Publishing date:
June 30, 2021

On 26 March 2021, the Vietnamese Government issued Decree No. 31/2021/ND-CP (“Decree 31”) providing guidance on the Law on Investment No. 61/2020/QH14 (“LOI 2020”). Decree 31 took effect from the same date and replaces instruments regulating similar matters, i.e. Decree No. 118/2015/ND-CP on onshore investment (“Decree 118”) and Decree No. 83/2015/ND-CP on offshore investment.

Below are some noteworthy amendments introduced by Decree 31.

1. Investment Conditions

(i) Different categories of industries and trades for foreign investors:  Following the List of Conditional Industries and Trades applicable to all investors (domestic and foreign) under LOI 2020, Decree 31 issued two lists solely applicable to foreign investors, namely (i) the prohibition list (list of 25 industries and trades which are not open to foreign investors), and (ii) the market entry list (list of 59 industries and trades entry to which is conditional to foreign investors). The lists are expected to provide further guidance to foreign investors venturing into Vietnam.

(ii) Business and investment conditions for foreign investors are now available on public domain. The Ministry of Planning and Investment (“MPI”), in coordination with other ministries and ministry-level agencies, has created a database on market entry and business conditions for foreign investors. Business conditions are now publicly available on the National Portal of Business Registration (, while investment conditions can be found on the National Portal of Foreign Investment (

(iii) No requirement on consultation with relevant line ministries regarding the foreign investment. Formerly, Article 10.2(e) of Decree 118 stipulates that local-level departments of planning and investment (“DPI”) shall consult with the MPI and relevant line ministries in cases where (a) the business line in question is not committed under Vietnam’s WTO Commitments or any international treaties to which Vietnam is a party, and (b) domestic laws are also silent on the market entry conditions for foreign investors regarding such business line. This provision has been removed under Decree 31. The elimination is expected to speed up the processing time at DPIs since they shall only rely on the three lists of businesses and trades mentioned above (i.e. the general list, the prohibition list and the market entry list) to, at their discretion, decide on whether to approve the investment projects and the relevant conditions (if any). Nevertheless, it is unclear whether DPIs are still allowed to consult the relevant line ministries. In practice, DPIs will likely reserve the right to seek opinions from the line ministries if they consider it necessary.

2. Investment Incentives and Supporting Policies

The beneficiaries eligible for investment incentives under Decree 31 is noticeably more extensive than the list under Decree 118. Notable additions include, inter alia, (i) production of network security products and provision of network security services under cybersecurity laws; production of products derived from technological advances in accordance with science and technology laws; (ii) development, operation and management of technical infrastructure in industrial complexes; (iii) treatment and use of wastes from thermal power plants, chemical fertiliser plants and metallurgical plants to make building materials; (iv) manufacture and sale of products obtained from findings of science and technology companies; and (v) innovative start-ups.

3. Investment Projects Subject to Compulsory Termination

An investment project shall be compulsorily terminated by the investment registration agency if (i) the agency is unable to contact the investor; (ii) the investor conducts investment activities on the basis of a forged civil transaction under civil laws; or (iii) termination is ordered by a court’s judgment or decision, or an arbitral award.

4. Merger & Acquisition Approval (“M&A Approval”) application and procedure

Decree 31 now extends the authority to appraise M&A Approval applications to DPIs and management boards of industrial zones, export processing zones, high-tech zones, and economic zones where the target company is located. This change is expected to enhance consistency among investment registration procedures, and reduce unnecessary overlap and complexity where the target company is located in industrial zones, export processing zones, high-tech zones, and economic zones.

It is worth noting that Decree 31 requires the application to include the estimated transaction value and in-principle sales and purchase agreement, in addition to information of the investor(s) and target company. This additional information is intended to assist the authorities’ evaluation of the economic effects of the transaction during the appraisal process.

Another new provision in Decree 31 is the guidance on procedures for M&A Approval in target companies whose land use right certificates concern lands located on islands; in border or coastal communes, wards, towns; or in areas affecting national defense and security. When appraising M&A Approval application regarding these locations, the competent authorities must seek opinions from the Ministry of National Defense and Ministry of Public Security on the satisfaction of national defense and security conditions.

5. Outward investment

Pursuant to Decree 31, Vietnamese investors are now permitted to use their shares, capital contribution or investment projects in Vietnam to pay or exchange for their acquisition of of shares, capital contribution in or investment project of an overseas entity. In such case, the Vietnamese investor shall first obtain an outward Investment Registration Certificate for their contemplated acquisition. The foreign investor shall then proceed with their investment procedures in the entity/project of the Vietnamese investors in Vietnam.

Additionally, Decree 31 also requires that the investment capital used for outward investment by enterprises having more than 50% foreign ownership must be the owners’ equity, which does not include capital for implementing projects in Vietnam.

It is undeniable that Decree 31 not only clarifies certain provisions of the LOI 2020 relating to investment conditions, business lines and market access conditions applicable to foreign investors, but also contributes to resolving overlaps and complications in managing and implementing investment projects in Vietnam, making the local investment environment more transparent and attractive.

To facilitate the implementation of Decree 31, MPI issued Circular No. 03/2021/TT-BKHDT providing templates to be used in onshore and outward investment activities in Vietnam, which took effect from 9 April 2021.


Several important legal instruments have also come into force in June 2021.

  1. Official Letter No. 4356/BYT-KHTC guiding COVID-19 testing price and payment method dated 28 May 2021 of the Ministry of Health. Subject to sections I.3 and II.2 of Official Letter 4356, each Health Insurance card holder who undergoes a Real Time – PCR COVID-19 test shall be reimbursed up to VND 734,000 per testing sample. Rapid lateral flow tests which cost VND 238,000 per test are not eligible for reimbursement.
  2. Decree 38/2021/ND-CP of the Government on penalties for administrative offences in cultural and advertising sectors, effective from 1 June 2021. Decree 38 increased the fine from VND 40-50 million to VND 50-70 million for advertising (i) tobacco; (ii) wine with 15% alcohol content and above; (iii) formula milk for babies under 24 months of age, dietary supplements for children under six months of age, baby bottles and pacifiers; (iv) prescription drugs or OTC drugs that are recommended by competent authorities to be used limitedly or under supervision of a physician; and (v) other goods and services banned from advertising.
  3. Decree 54/2021/ND-CP of the Government, regulating preliminary environmental impact assessment (“EIA”), effective from 21 May 2021. Projects subject to EIA requirements include: (i) public investment projects (except urgent ones, those belonging in the national target program, or constituent projects of projects in which decisions on investment policies, investment preparation and planning objectives have been approved by competent authorities); (ii) public – private partnership projects; (iii) projects subject to in-principle approval requirements; and (iv) projects subject to investment registration certificate requirements.
  4. Decree 23/2021/ND-CP of the Government, detailing the Employment Law regarding employment service centers and businesses, effective from 1 June 2021. In addition to the conditions applicable to the legal representative(s) of enterprises wishing to operate in the employment service sector, Decree 23 requires these enterprises to (i) deposit VND 300 million, and (ii) have their head offices or branches located at a property which they own or have leased for at least three years.

This briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For legal advice, please contact our Partners.
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