Vietnam is an attractive market for foreign investors (“FIs”) in the advertising services sector. However, to invest in advertising services in Vietnam, investors must comply with certain requirements.
In this article, BLawyers Vietnam would like to present the conditions for FIs providing advertising services in Vietnam.
1. Conditions on the form of investment in advertising services business
According to Vietnam’s Service Commitment Schedule when joining the WTO on 2006 (“WTO Commitments”), Vietnam does not restrict market access for FIs in the advertising services sector (CPC 871, excluding tobacco advertising services).
However, since Vietnam joined the WTO (11 July 2006), FIs have been only allowed to establish joint ventures or participate in business cooperation contracts (also known as BCC) with Vietnamese partners who are licensed to do business in advertising services.
Thus, FIs are not allowed to form a 100% foreign-owned company in Vietnam to operate a business in advertising services and should note that:
- A joint venture between enterprises means an act in which two or more enterprises jointly contribute part of their property, rights, obligations, and legal interests to form a new enterprise .
- BCC is a contract between investors for business cooperation and distribution of profits or products without the establishment of a business organization .
2. Conditions for the ownership ratio in a joint venture
WTO Commitments are regulated as follows: “From the date of accession, joint ventures shall be allowed to be established in which the foreign capital contribution does not exceed 51% of the legal capital of the joint venture. From 01 January 2009, there shall be no limitation on the foreign capital contribution in the joint ventures.”
This means that the capital contribution ratio of FIs in a joint venture could be up to 99.99%.
3. Scope of advertising activities
After completing the procedure for registering the advertising industry code (VISC 7310) for a joint venture or via a BCC, FIs are permitted to conduct advertising service business in Vietnam. The Fis must meet the requirements and conditions under the Law on Advertising 2012 when conducting advertising activities in the following areas:
- Advertising for medicines that are allowed to be advertised;
- Advertising for cosmetics;
- Advertising for domestic and medical chemicals, pesticides and antiseptics;
- Advertising for milk and nutritional products for young children (excluding substitute milk products for children under 24 months old, supplementary nutritional products for children under 6 months old; artificial feeding bottles and pacifiers);
- Advertising for food and food additives;
- Advertising for medical examination and treatment services;
- Advertising for medical equipment;
- Advertising for plant protection medicines, plant protection drug materials, plant protection supplies, beneficial organisms used for plant protection;
- Advertising for veterinary medicines and veterinary supplies;
- Advertising for fertilizers, biological preparations for farming, animal feed, and biological products for breeding.
In summary, while investing in advertising services in Vietnam, FIs are not allowed to establish a 100% foreign-owned company or purchase stakes in a domestic enterprise that does business in the advertising industry. Accordingly, FIs are only permitted to form joint ventures or business cooperation contracts.
The above information is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at firstname.lastname@example.org. BLawyers Vietnam would love to hear from you.
Date: 13 October 2023
Writer: Tinh Nguyen and Chi Huynh