[Vietnam] Prohibited and Conditional Business Sectors for Foreign Investors in Vietnam

Author - Sally Nguyen

Foreign direct investment (FDI) continues to be considered an important source of capital for Vietnam’s economy. According to the Ministry of Planning and Investment, for the first seven months of 2025, Vietnam had attracted nearly USD 13.6 billion, up 8.4% compared to 2024. This is the highest realized FDI for the first seven months over the past five years. As of 31 July 2025, total registered FDI was USD 24.09 billion. There were 2,254 new FDI projects, among of which, the manufacturing and processing industry attracted the largest amount of newly registered FDI (55.9%). The real estate business sector was the second largest (23.5%), while the remaining sectors represented 20.6%.

In light of the country’s socio-economic development, Vietnam’s government has introduced reforms to its policies and guidelines aimed at improving the efficiency of FDI attraction. These reforms have primarily focused on incentives for corporate income tax (CIT), import and export duties, and land access. In parallel, Vietnam has also undertaken significant reforms to its political and administrative apparatus, with the objective of streamlining the state machinery and enhancing administrative efficiency and effectiveness.

However, to invest effectively in Vietnam, foreign investors should first be aware of the business sectors and investment fields that are prohibited or subject to restrictions under Vietnamese investment law.

Which business sectors and investment fields are prohibited or restricted?

Under the Law on Investment No. 61/2020/QH14, which took effect on 1 January 2021 (LOI), foreign investors are subject to certain prohibitions and restrictions when investing in Vietnam. Following are two main categories:

1. Restricted (conditional) business sectors for foreign investors

These are sectors where foreign investors may invest but are subject to statutory conditions, such as:

• Investment form requirements (e.g., joint ventures with Vietnamese partners) with ownership limits (foreign ownership ratio caps). For example, services involving network infrastructure (i.e., telecommunication services, road passenger transport, maritime transport, etc.) may limit foreign ownership ranging from 49% to 65% of the charter capital. Foreign investors can establish joint ventures or 100% foreign owned in certain businesses (healthcare and social services, distribution services, insurance, etc.) but must satisfy statutory conditions set for respective business including charter capital, operational scope, facilities and others in accordance with guidance of relevant authorities.

• Business scope restrictions, under which foreign investors must meet conditions on charter capital, investment forms, and operational scope, often regulated by the Ministry of Industry and Trade.

• Other statutory conditions relating to security, defense, or public order.

The full list of conditional business sectors applicable to foreign investors is provided in Appendix IV of the LOI and may be further elaborated in international treaties to which Vietnam is a signatory.

2. Prohibited business sectors

Foreign and domestic investors are prohibited in these business sectors, which are: 

• Trade in chemicals and minerals.

• Trade in specimens of wild fauna and flora.

• Prostitution business.

• Human trafficking, sale of human tissues and body parts, and surrogacy services for commercial purposes.

• Business activities involving human cloning.

Final Thoughts

By clearly understand the applicable prohibitions and restrictions and carefully navigating Vietnam’s regulatory environment, foreign investors can effectively capitalize on the country’s strong economic growth and attractive market potential. Vietnam’s foreign investment regime is generally open but remains subject to significant regulation. While many sectors permit 100% foreign ownership, others require joint ventures with Vietnamese partners, impose foreign ownership caps, or prohibit foreign participation entirely.

TWL Law Group advises foreign investors on all aspects of Vietnam’s investment regulations, providing strategic legal guidance to ensure compliance and mitigate risks throughout the investment lifecycle.

About Author

Sally serves as the Managing Partner of TWLV and is based in Ho Chi Minh City. With over 15 years of experience, Sally has worked with prestigious institutions including a leading foreign bank, as well as international firms. She specializes in M&A, banking, foreign investments, corporate & commercial matters, labor issues, and dispute resolution. She is an appointed examiner for the Lawyer Apprenticeship Completion Examination of the Vietnam Bar Federation.