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PART II
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ROADMAP OF OPENING VIETNAM SERVICE MARKET UNDER WTO COMMITMENTS
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After twelve (12) years of negotiation, economic reforms, improvement of the legal system in consistent with the transparency & liberalization policies of WTO, Vietnam got the nod from the WTO in November 7, 2006 and has secured the full capacity of a member as of January 11, 2007. The outcomes of the negotiation between Vietnam and WTO members on freeing its service market attracted a good deal of attention of foreign and local investors. Vietnam’s Schedule of Specific Commitments in Services (“Commitments”) recognizes 11 Sections and 155 sub-sections of services through negotiation and agreement.
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1.Business services:
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From January 11, 2007, there will be no restrictions on market access and national treatment for foreign investors within the following services: accounting, auditing and accounting books, taxes, architecture, technical consulting services, overall technical consulting services, computer services and other related services, research and development services, leasing services without operators. 100% foreign investment in market research services, management services and services related to management consulting are authorized as of January 1, 2009.
With respect to advertising services (except tobacco advertising), foreign investors is entitled to invest in forms of a business cooperation contract or joint venture without restriction on their capital contribution as of January 1, 2009. For services related to the mining exploitation, as of January 11, 2010, foreign investors is allowed to own up to 51% of charter capital of joint ventures, and as of January 11, 2012, foreign investors will be allowed to establish WFOC. For services related to scientific and technological consultancy, after January 11, 2011, foreign investors were entitled to establish WFOC. From January 11, 2010 to January 11, 2015, a foreign investor has been allowed to establish a joint venture in order to provide services relating to manufacture, of which the foreign investors may own up to 50% of the charter capital of the joint venture. After January 11, 2015, Vietnam authorizes a WFOE to be established. For services of machinery, equipment maintenance and repair (excluding repairing and maintaining of ship, aircraft, or other vehicles and transportation equipment), a foreign investor has been allowed to establish a joint venture and to own up to 51% of charter capital of joint ventures company as from January 11, 2010 until before January 11, 2012, and after January 11, 2012, a foreign investor is allowed to establish a WFOC. Foreign investors wishing to provide services related to agriculture, hunting and forestry in Vietnam will be permitted to invest under the BCCs or to establish joint-ventures with a cap of 51% of charter capital of a joint venture on their capital contributions. |
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2.Distribution services:
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Foreign investors are entitled to establish WFOC providing wholesale trade, retail services and commission agent services and franchising services with some exceptions in Vietnam as of January 1, 2009. A WFOC is entitled to act as an agent for a commission, to conduct wholesale and retail of all products manufactured in Vietnam and legally imported into Vietnam after January 11, 2010. However, Vietnam does not have commitments to goods such as tobacco & cigarettes, books, newspapers & magazines, recorded articles, precious metals & gemstones, pharmaceuticals, explosives, rude oils and processed oils, rice, sugar (from cane or turnip). Foreign service providers were entitled to establish branches providing franchise services in Vietnam after January 11, 2010.
The establishment of retail stores (other than the first one) of WFOC will be considered based on economic needs test (ENT). The main criteria for ETN include the number of service providers presenting in a geographic area, the stability of the market and the geographic size. Although the Commitments clearly states the roadmap for freeing distribution services, in practice, the licensing process of investment in distribution services and of establishment of retail stores involves the approval of the MOIT on each specific case. Therefore, foreign investors still face with impediments from technical barriers when accessing the market of distribution services. |
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3.Financial services:
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a. Insurance and related services
In line with the Commitment, insurance enterprises with 100% foreign investment capital are allowed to provide compulsory insurance services from January 1, 2008, but the foreign investors are required to meet the conditions on operation term in their home countries (at least ten (10) years) and the minimum total assets (approximately USD 2 billions). Foreign insurance enterprises will be entitled to establish non-life insurance branches in Vietnam after January 11, 2012. b. Securities services Foreign securities service providers are permitted to set up representative offices or to contribute up to 49% of charter capital of joint-venture securities companies in Vietnam, and as of January 11, 2012 they are allowed to establish WFOC or branches. However, branches of foreign securities service providers could only provide some services such as asset management services, investment fund management, custody, clearings and balances, provision and transfer of financial information, consulting and brokerage activities and other supports relating to securities.... c. Banking Services and Other Financial Services The foreign commercial banks are allowed to establish 100% foreign owned banks or branches in Vietnam if they satisfy the conditions on minimum total assets. From the date of January 1, 2011, branches of foreign banks will be entitled to receive deposits in Vietnamese Dong with the same cap as with that of domestic banks. In addition, a branch of a foreign commercial bank is not allowed to open transaction offices other than its head office. Foreign investors can purchase shares, but no more than 30% charter capital, of joint-stock commercial banks in Vietnam or the equitized state-owned banks of Vietnam. |
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4.Transportation service:
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a. Maritime Transport Services
Vietnam’s commitments on the maritime transport services are considered as more favorable than that of other countries when having joined WTO before, including China. As from January 11, 2009, foreign maritime transporters are allowed to establish a joint-venture, with the total foreign capital contribution of no more than 49% of total charter capital of the joint-venture to operate a fleet under the national flag of Vietnam. As from January 11, 2012, foreign shipping companies are allowed to establish 100% foreign-invested enterprises supplying international maritime transport services in connection with those cargoes carried by them. b. Air Transport Services The main air transport services committed by Vietnam include marketing and sales of airline-related products services, computer-based reservation services and aircraft maintenance and repair services. Before January 11, 2012, a foreign investor can only establish a joint-venture to provide aircraft maintenance and repair services with a cap of 51% of the total charter capital. However, after that a foreign investor will be permitted to set up a WFOC. Foreign service-providers must use public telecommunication network under the management of Vietnam telecommunication authority to supply the computer-based reservation services. Foreign airlines are permitted to provide marketing and sales of airline-related products service in Vietnam through their ticketing offices or agents in Vietnam. c. Internal Waterways Transport and Rail Transport Services Foreign service-providers are permitted to establish a joint-venture and are entitled to own up to 49% of charter capital of the joint-venture providing internal waterways transport and rail transport services in Vietnam. d. Road Transport Services Given that the local road transport market is at the initial stage of development, Vietnam’s commitments regarding these services are quite limited and try to protect local business for a long term. According to the Commitment, foreign service-providers are entitled to own up to 49% of the charter capital of joint ventures. Subject to the market demand, the said ratio would be considered to be increased up to 51% after January 11, 2010. e. Services Auxiliary to all Modes of Transport The foreign capital contribution in a joint-venture providing services auxiliary to all modes of transport will be increased gradually. After January 11, 2014, foreign service-providers are permitted to set up 100% foreign-invested enterprises providing storage and warehouse services and freight transport agency services. No limitations will be imposed on foreign capital contribution in a joint-venture providing other services auxiliary to all modes of transport, except for container handling services. |
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5.Communications services:
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a. Courier service
Foreign investors are permitted to set up a joint-venture and own up to 51% of charter capital of the joint venture conducting the business of courier services. After January 11, 2012, foreign investors are permitted to set up 100% foreign-invested enterprises. However, Vietnam reserves several activities of courier services commercially crucial to local enterprises, including express delivery of document-package weighed less than 2,000 grams with the price capped at 10 times the tariff for the handling of a standard domestic letter in the first weight level for domestic shipments and less than US$9 for international shipments. b. Basic telecommunications services Before January 11, 2010, foreign investors are permitted to own up to 51% of charter capital of a joint-venture with telecommunications service suppliers which have been duly licensed in Vietnam to provide non facilities-based services. As from January 11, 2010, foreign investors can freely select partners and contribute up to 65% of charter capital of a joint-venture. Regarding the business of facilities-based services, foreign investors can contribute up to 49% of charter capital of the joint ventures with telecommunications service suppliers duly licensed in Vietnam.c. Value-added services Especially non facilities-based value-added telecommunication services, foreign investors are entitled to own up to 51% of charter capital of a joint venture with telecommunications service suppliers which have been duly licensed in Vietnam. As from January 11, 2010, the ratio of foreign capital contribution in a joint venture was increased to 65%. Regarding facilities-based services, foreign investors are entitled to contribute up to 50% of charter capital of a joint venture with telecommunications service suppliers which have been duly licensed in Vietnam.d. Virtual private network (VPN) In relation to non facilities-based VPN services, foreign investors can freely select partners for a joint venture, in which foreign capital contribution may not exceed 70% of charter capital. Regarding facilities-based VPN services, foreign investors are permitted to establish a joint venture, in which foreign capital contribution is capped at 49% of charter capital. Furthermore, according to the Commitments, foreign service-suppliers will be permitted to control fully-owned submarine cable transmission capacity and to provide such capacity to international facilities-based service suppliers licensed in Vietnam.e. Audiovisual Services Foreign investors can select to invest in form of a business cooperation contract or a joint venture with Vietnamese partners who have been licensed to provide these services in Vietnam, and foreign capital contribution may not exceed 51% of the charter capital of the joint venture. |
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6. Educational services
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Foreign investors are allowed to set up 100% foreign-invested education entities to provide higher education services, adult education and other education services.
Foreign investors are allowed to set up foreign owned education entities or invest in form of business cooperation contract in the educational field including from pre-school to secondary education, but all services will be provided to foreigners who live or work in Vietnam only. High school education services designed for both foreigners and Vietnamese are being piloted in the form of JV or business co-operation contracts in Ho Chi Minh City and Hanoi. |
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7.Environment services:
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A joint-venture with foreign investors to provide following environmental services are licensed: (i) wastewater treatment services, (ii) waste treatment services, (iii) exhaust gases purification services; (iv) noise abatement services and (v) environmental impact assessment services. Foreign capital contribution will not exceed 51% of legal capital of the joint venture. As of January 11, 2011, foreign investors are entitled to establish 100% foreign-invested enterprises providing said services in Vietnam.
Vietnam reserves the services supplied in the exercise of governmental authority as defined in Article I: 3(c) of GATS. |
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8. Tourism and related services
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According to the Commitments, with respect to travel agencies and tour operator services, foreign service-suppliers are permitted to provide such services in the form of a joint venture with Vietnamese partners with no limitation on foreign capital contribution. The foreign owned enterprises can only provide inbound services and domestic travel for those inbound tourists as an integral part of inbound services. Before January 11, 2015, foreign investment in restaurants should be made in conjunction with investment in hotel construction, renovation, restoration or acquisition (yet investment in hotels is not compulsory to be in parallel with investment in restaurant).
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9. Construction and related engineering services
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As of January 11, 2007, foreign investors were permitted to establish 100% foreign-invested enterprises in Vietnam to conduct the business of construction and related engineering services, and was permitted to establish their branch after January 11, 2010.
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10. Health related and social services
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Foreign service-suppliers are permitted to provide services through the establishment of 100% foreign-invested hospital, a joint venture with Vietnamese partners or through business cooperation contract. Under the Commitments, the minimum investment capital for a commercial presence in hospital services must be at least US$20 million for a hospital, US$2 million for a policlinic facility and US$200,000 for a specialty facility.
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11.Recreational,
cultural and sporting services |
Foreign investors are allowed to invest in form of a business cooperation contract or a joint ventures with Vietnamese partners who have been licensed to provide electronic games. Foreign capital contribution cannot exceed 49% of the charter capital of the joint ventures. Regarding entertainment services, including theatre, live bands and circus services foreign investors are permitted to own up to 49% of charter capital of joint ventures after January 11, 2012.
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