Pursuant to the "Limited Market Access List" (Appendix I-B) of Decree 31/2021/ND-CP ("Decree 31") supporting the implementation of the new Law on Investment (LOI 2020), foreign shareholding in air transport enterprises is limited to 34%. On 18 November 2019, the Viet Nam government issued Government Decree 89/2019/ND-CP to change air transport business requirements with a view to creating favorable conditions for new enterprises. Under Government Decree 89/2019/ND-CP, foreign-invested airlines will be subject to a foreign ownership cap of 34 percent, higher than the previous 30% limit applied and which had been established since 2016. The decree entered into effect on 1 January 2020.
"Article 3. Definitions
For the purposes of this Law, the terms below are construed as follows: [...]
10. "market access conditions applied to foreign investors" mean those which must be satisfied by foreign investors to make investment in the List of business lines with prohibited and restricted market access (hereinafter referred to as "the Negative List for Market Access") specified in Clause 2 Article 9 of this Law.  [...]
19. "foreign investor" means an individual holding a foreign nationality or an organization established under foreign laws and carrying our business investment activities in Vietnam.
20. "domestic investor" means an individual holding Vietnamese nationality or a business organization whose members or shareholders are not foreign investors. 
[...]
Article 4. Application of the Law on Investment and relevant laws
1. Business investment activities in the territory of Vietnam [must] comply with the Law on investment [this Law] and other relevant laws.
2. If there is any discrepancy between the provisions of this Law and those of another law issued before the effective date of this Law in relation to the industries and trades in which business investment is prohibited, or industries and trades in which business investment is conditional, then the provisions of the Law on investment [this Law] shall prevail.
[...]
Article 9. Business lines with prohibited and restricted market access and market access conditions applied to foreign investors
1. Market access conditions applied to foreign investors are the same as those applied to domestic investors, except for the case specified in Clause 2 of this Article.
2. Pursuant to Laws and Resolutions of the National Assembly, Ordinances and Resolutions of the Standing Committee of the National Assembly, Decrees of the Government and international treaties to which the Socialist Republic of Vietnam is a signatory, the Government shall promulgate a Negative List for Market Access, including:
a/ Prohibited business lines; b/ Restricted business lines.
3. Market access conditions applied to foreign investors specified in the Negative List for Market Access include:
a/ Holding of charter capital by the foreign investor in a business organization; b/ Investment method; c/ Scope of investment; d/ Capacity of the investor; partners participating in the investment activities; dd) Other conditions specified in the Laws and Resolutions of the National Assembly, Ordinances and Resolutions of the Standing Committee of the National Assembly, Decrees of the Government and international treaties to which the Socialist Republic of Vietnam is a signatory.
[...]
Article 23. Implementation of investment activities by foreign-invested economic organizations
1. When making investment in establishment of other economic organizations; contribution of capital to, or purchase of shares or capital contributions at, other economic organizations; or investment in the form of BCC, economic organizations must meet the conditions and shall carry out investment procedures according to regulations applicable to foreign investors if falling into one of the following cases:
a/ Having over 50% of their charter capital held by a foreign investor/foreign investors, or having a majority of their general partners being foreign individuals, for partnerships;
b/ Having over 50% of their charter capital held by an economic organization/economic organizations specified at Point a of this Clause;
c/ Having over 50% of their charter capital held by a foreign investor/foreign investors and an economic organization/economic organizations specified at Point a of this Clause. [...]" (Law on Investment No. 61/2020/QH14 of 17 June 2020 [google translation])
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"Section 2. SECTORS, LINES AND MARKET ACCESS CONDITIONS FOR FOREIGN INVESTORS
Article 15. Sectors and trades restricted from market access for foreign investors
1. Sectors and trades with restrictions on market access for foreign investors and restrictions on market access for such industries and trades are prescribed in laws and resolutions of the National Assembly, ordinances and resolutions. of the National Assembly Standing Committee, Government decrees and international treaties on investment. The list of industries and trades with restrictions on market access for foreign investors is published in Appendix I of this Decree.
2. Market access conditions for foreign investors shall be applied in the forms specified in Clause 3, Article 9 of the Law on Investment and posted and updated according to the provisions of Article 18 of this Decree.
[...]
Article 16. Subjects of application of the List of industries and trades restricted from market access
1. The list of industries and trades with restricted market access applies to:
a) Foreign investors as prescribed in Clause 19, Article 3 of the Law on Investment ;
b) The economic organization specified at Points a, b and c, Clause 1, Article 23 of the Law on Investment when investing in the establishment of other economic organizations; make capital contribution, purchase shares, purchase capital contribution portion of other economic organizations; investment in the form of BCC contract.
(In this Section, the subjects specified at Points a and b of this Clause, hereinafter collectively referred to as foreign investors, unless otherwise provided for by this Decree).
[...]
Article 17. Principles of applying restrictions on market access for foreign investors
1. Except for the industries and trades on the List of industries and trades with restricted market access for foreign investors specified in Appendix I of this Decree, foreign investors are entitled to market access as prescribed for domestic investors.
2. Foreign investors are not allowed to invest in industries and trades that have not yet been able to access the market as prescribed in Section A, Appendix I of this Decree.
3. For industries and trades with conditional market access for foreign investors as prescribed in Section B, Appendix I of this Decree, foreign investors must satisfy the conditions for market access according to the provisions of Article 18 of this Decree.
4. Market access conditions for industries and trades that Vietnam has not yet committed to market access to for foreign investors are applied as follows:
a) Where laws and resolutions of the National Assembly, ordinances and resolutions of the National Assembly Standing Committee, decrees of the Government (hereinafter referred to as Vietnamese law) do not contain provisions restricting access to the market for that industry or trade, foreign investors may access the market as prescribed for domestic investors;
b) Where Vietnamese law already contains provisions on restricting foreign investors' market access for such industries or trades, the provisions of Vietnamese law shall apply. [...]
7. Foreign investors belonging to countries or territories that are not members of the WTO and conducting investment activities in Vietnam are entitled to the same market access conditions as those applicable to national investors. a territory that is a member of the WTO, unless otherwise provided for by Vietnamese law or an international treaty between Vietnam and that country or territory.
[...]
B. BUSINESS LINES WITH RESTRICTED MARKET ACCESS [...]
13. passenger by rail, air, road, river, sea, pipeline [...]"(Government Decree on the Elaboration of Some Articles of the Law on Investment No. 31/2021/ND-CP of 26 March 2021 [google translation] (Decree 31), which provides guidance on the implementation of the new Law on Investment [google translation])
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"INDUSTRY, SECTOR | CONDITIONS LIMITED MARKET ACCESS | LEGAL BASIS [not reproduced here] [...]
13. passengers by rail, air, road, river, sea, pipeline [...]
13.2.1. Transportation services by air ((a) Passenger transport (CPC 731); b) Freight transport (CPC 732)) |
1. CPTPP:
a) Appendix NCM I-VN-37: Air transport, including international and domestic air transport services:
The total capital contribution or shares held by foreign countries is limited to less than 30% of the total charter capital or shares of a Vietnamese airline. A Vietnamese individual or Vietnamese legal entity that is not a foreign-invested enterprise must hold the largest share of charter capital or shares in that airline.
At least 2/3 of the total number of members of the Executive Board of a foreign-invested airline must be Vietnamese. The general director (or director) and legal representative of a foreign-invested airline established in Vietnam must be Vietnamese.
b) Appendix NCM II-VN-7: Services related to air transport Vietnam reserves the right to maintain or enact any measure relating to:
- Special flight services (except for commercial flight training);
- Ground operations;
- Airport operation service.
2. Vietnamese law:
Foreign-invested air transport enterprises must satisfy the following conditions:
a) Foreign investors account for no more than 34% of the charter capital;
b) There must be at least one Vietnamese individual or one Vietnamese legal entity holding the largest share of charter capital;
c) In case a Vietnamese legal person has foreign investment capital contributing capital, the foreign capital contribution shall not exceed 49% of the charter capital of the legal person. [...]" (Government of Viet Nam, List B: List of occupations with conditional market access for foreign investors: Conditions (updated 2020), webpage [google translation])
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"Article 1. Amending and supplementing a number of articles of the Government's Decree No. 92/2016 / ND-CP dated July 1, 2016, providing for conditional business lines and trades in the field of civil aviation as follows:[...]
4. To amend and supplement Article 7 as follows:
"Article 7. Organizational conditions
1. Having an organized apparatus to implement a system of safety and security management, aircraft operations, aircraft maintenance, flight training, ground exploitation.
2. Persons appointed to the position in charge of the system of safety and security management, aircraft operation, aircraft maintenance and flight training must have at least 3 consecutive years' experience working in the field. be appointed, have diplomas and certificates issued or recognized in accordance with the civil aviation law.
3. For a foreign-invested enterprise, the number of foreign members must not exceed one-third of the total number of members participating in the executive apparatus. The executive apparatus used to calculate the rates required by this Clause includes:
a) General Director (Director), Deputy General Directors (Deputy Directors);
b) Chief accountant;
c) Persons in charge of: safety management system; aircraft operators; aircraft maintenance; flight crew training and equivalent position holders determined by the organizational apparatus of the business."
5. To amend and supplement Article 8 as follows:
"Article 8. Capital conditions [...]
3. A foreign-invested air transport enterprise must satisfy the following conditions:
a) Foreign investors account for not more than 34% of the charter capital [previously capped at 30%];
b) Must have at least one Vietnamese individual or one Vietnamese legal entity holding the largest share of the charter capital;
c) In case a Vietnamese legal person with foreign invested capital contributes capital, the foreign capital contribution shall not exceed 49% of the charter capital of the juridical person."
[...]
14. To amend and supplement Article 14 as follows:
"Article 14. Conditions for granting airport business licenses [...]
2. Meet the following capital requirements:
a) Minimum capital amount to establish and maintain an airport enterprise: 100 billion Vietnam Dong;
b) The capital ratio of foreign investors does not exceed 30% of the charter capital. "
15. To amend and supplement Article 16 as follows:
"Article 16. Conditions for the grant of an airport service provision license at an airport or airport [...]
3. For enterprises providing passenger terminal operation services, cargo terminals, aviation petrol and oil services, services for ground-based commercial and technical services, flight zone operation services, capital ratio contribution of foreign individuals and organizations must not exceed 30% of the charter capital of the enterprise. "
[...]
Effect of implementation
1. This Decree takes effect from January 1, 2020.[...]" (Government Decree No. 89/2019/ND-CP AMENDING A NUMBER OF ARTICLES OF THE GOVERNMENT'S DECREE NO.92 / 2016 / ND-CP DATED JULY 1, 2016 REGULATING CONDITIONED BUSINESS SECTORIES IN THE FIELD OF CIVIL AIRPORT AND DECREE NO.30 / 2013 / ND-CP DATED APRIL 8, 2013 OF THE GOVERNMENT ON AIR TRANSPORTATION AND GENERAL AIR ACTIVITIES [google translation])
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"Article 5. Eligibility requirements for air transport service business
1. Conform to the air transport development plan.
2. Meet requirements concerning plans to ensure availability of aircraft for operations, organizational machinery, capital, business plans and product development tactics referred to in Article 6, 7, 8, 9 hereof.
3. Obtain an air transport business license issued by the Ministry of Transport according to the Prime Minister's permission.
4. Regulations laid down in this Chapter shall not apply to training, coaching or mentoring services provided to crew members, and coaches.
[...]
Article 8. Requirements concerning capital
3. A foreign-invested airline must conform to the following requirements:
a) Foreign ownership shall not exceed 30% of the charter capital;
b) There is at least one Vietnamese natural or legal entity owning the highest share of charter capital. In cases where a Vietnamese legal entity has foreign investment capital, the foreign share of equity participation shall not exceed 49% of the charter capital of that entity." (Decree 92/2016/NĐ-CP providing for conditional business sectors or activities in the civil aviation industry [unofficial translation])
Law on Investment No. 61/2020/QH14 of 17 June 2020 [google translation]
Government Decree on the Elaboration of Some Articles of the Law on Investment No. 31/2021/ND-CP of 26 March 2021 [google translation]
Government of Viet Nam, List B: List of occupations with conditional market access for foreign investors: Conditions (updated 2020), webpage [google translation]
Government Decree No. 89/2019/ND-CP AMENDING A NUMBER OF ARTICLES OF THE GOVERNMENT'S DECREE NO.92 / 2016 / ND-CP DATED JULY 1, 2016 REGULATING CONDITIONED BUSINESS SECTORIES IN THE FIELD OF CIVIL AIRPORT AND DECREE NO.30 / 2013 / ND-CP DATED APRIL 8, 2013 OF THE GOVERNMENT ON AIR TRANSPORTATION AND GENERAL AIR ACTIVITIES [google translation]
Decree 92/2016/NĐ-CP providing for conditional business sectors or activities in the civil aviation industry [unofficial translation]
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