CONDITIONS FOR INVESTMENT IN TELECOMMUNICATIONS SERVICES ADDED VALUE FOR FOREIGN INVESTORS

CONDITIONS FOR INVESTMENT IN TELECOMMUNICATIONS SERVICES ADDED VALUE FOR FOREIGN INVESTORS

Telecommunications services are an investment industry with great potential for profits. In particular, Vietnam is a developing country, so the demand for telecommunications services in our country is increasing. Grasping that trend, domestic and foreign investors increasingly focus on the field of investment in telecommunications services. Telecommunications business includes trading in telecommunications services and trading in telecommunications goods. Telecommunications service business is an investment in public telecommunications infrastructure and telecommunications services for profit. Telecommunication services include basic telecommunications services and value-added telecommunications services. Telecommunication services are related to information security and security, so this is a conditional industry. Therefore, foreign investors who want to invest in value-added telecommunications services in Vietnam need to comply with the following conditions according to regulations.

Conditions for investment in value-added telecommunications services with foreign investors

Legal bases

• Investment Law 2020;
• Telecommunications Law 2009;
• Free Trade Agreements (FTAs);
• ASEAN Framework Agreement on Services (AFAS);
• Vietnam’s commitments in the World Trade Organization (WTO);
• Decree 25/2011/ND-CP details and guides the implementation of some articles of the Law on Telecommunications  

Scope of application

• Voicemail (CPC 7523**);
• Email (CPC 7523**);
• Code and protocol conversion;
• Electronic Data Interchange (EDI) (CPC 7523**);
• Online information and database access (CPC 7523**);
• Online information and data processing (including transaction processing) (CPC 843**);
• Value-adding facsimile services, including storage and transfer, archiving, and recovery (CPC 7523**);
• Internet Access Services (IAS): Services that provide Internet access to end customers.

     Investment conditions

WTO, AFAS, VJEPA, VKFTA, EVFTA

WTO, VKFTA, VJEPA

For value-added services:  No restrictions, except:

• Services without network infrastructure: Business cooperation or joint venture. The foreign side’s capital contribution in the joint venture does not exceed 65%.
• Services with network infrastructure: Business cooperation or joint venture with telecommunications service providers licensed in Vietnam. The foreign side’s capital contribution in the joint venture must not exceed 50% of the legal capital.

AFAS

For value-added services: No restrictions, except:

• Services without network infrastructure: Business cooperation or joint venture. The foreign side’s capital contribution in the joint venture does not exceed 70%.
• Services with network infrastructure: Business cooperation or joint venture with telecommunications service providers licensed in Vietnam. The foreign side’s capital contribution in the joint venture must not exceed 50% of the legal capital.

EVFTA

For value-added services: No restrictions, except:

• Services without network infrastructure: Business cooperation or joint venture. The foreign side’s capital contribution in the joint venture does not exceed 65%. 5 years from the date of entry into force of the Agreement, the limit on contributed capital increases to 100%.
• Services with network infrastructure: Business cooperation or joint venture with telecommunications service providers licensed in Vietnam. The foreign side’s capital contribution in the joint venture must not exceed 50% of the legal capital. 05 years from the date of entry into force of the Agreement, the limit on contributed capital increased to 65%.

• CPTPP

Annex NCM I-VN-7: Telecommunication services

• Services without network infrastructure: Foreign investment is not allowed to provide services without network infrastructure unless through joint ventures or share purchases of Vietnamese enterprises, with the capital contribution of foreign parties not exceeding 65%, or 70% in the case of private virtual networks. After no more than 5 years from the entry into force of the TPP Agreement, Vietnam will remove restrictions on the capital contribution ratio.
• Services with network infrastructure: No foreign investment is allowed to provide services with network infrastructure except for joint ventures or purchase shares of licensed Vietnamese enterprises, with the capital contribution of foreign parties not exceeding 51%. After no more than 5 years from the entry into force of the TPP Agreement, Vietnam will raise the foreign capital contribution limit to 65%.
• Foreign service providers are allowed to own up to 100% of the undersea fiber optic cable transmission capacity docked at undersea fiber optic cable stations issued in Vietnam and can sell that capacity to any licensed telecommunications carrier in Vietnam, including internet service providers in Vietnam.

Annex NCM II-VN-13: Telecommunications services

Vietnam reserves the right to adopt and maintain any measures related to investment, construction, operation, and exploitation of telecommunications networks and services serving ethnic minorities in rural and remote areas in Vietnam.

Laws of Vietnam

• Foreign investors may invest in the form of joint ventures or business cooperation contracts to provide value-added telecommunications services. Particularly for telecommunications service providers with network infrastructure, Vietnamese partners must be telecommunications enterprises that have been granted licenses to establish telecommunications networks in Vietnam.
• An organization or individual that already owns more than 20% of the charter capital or shares in a telecommunications enterprise may not own more than 20% of the charter capital or shares of another telecommunications enterprise doing business in a telecommunications service market on the list of telecommunications services stipulated by the Ministry of Information and Communications.
• Conditions on legal capital and investment commitment level for establishing fixed terrestrial telecommunications networks; terrestrial mobile telecommunications networks; satellite fixed telecommunications networks and satellite mobile telecommunications networks specified in Articles 19, 20, and  21 of Decree 25/2011/ND-CP detailing and guiding the implementation of some articles of the Law on Telecommunications.

Siglaw Law Firm

Phone: (+84) 961 366 238

Email:

• vphn@siglaw.com.vn
• vphcm@siglaw.com.vn

Headquarters: Floor 12A Sao Mai Building, 19 Le Van Luong Street, Nhan Chinh Ward, Thanh Xuan District, Hanoi City.

Southern branch: No. 99 Cong Hoa, Ward 04, Tan Binh District, Ho Chi Minh City.

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