What Foreign Investors Need to Know When Contributing Capital to a Tourism Company in Vietnam
Tourism is one of Vietnam’s key economic sectors. Especially after the pandemic, the trend of investing in this field has become increasingly dynamic. With great growth potential, tourism companies in Vietnam are attracting significant interest from foreign investors. However, investing in a Vietnamese tourism company is not just a business issue; it also requires a thorough understanding of legal frameworks and specific regulations in this market. This article will help foreign investors grasp the essential points when contributing capital to a tourism company in Vietnam, from legal barriers and market entry conditions to strategies for safeguarding investment capital.
Legal Framework Governing Foreign Investment in Tourism
Foreign capital contribution to Vietnamese enterprises, including tourism companies, is regulated by various legal documents, most notably the Law on Investment 2020, the Law on Enterprises 2020, and international commitments that Vietnam is a party to.
Regulations on Conditional Business Lines
International travel services are conditional business sectors and subject to strict control over foreign ownership ratios. For companies operating inbound services (serving foreign tourists visiting Vietnam), foreign investors are permitted to contribute capital without ownership restrictions. However, for outbound services (taking Vietnamese tourists abroad), foreign investors cannot establish 100% foreign-owned companies. They may only contribute capital or acquire shares subject to limits under WTO and CPTPP commitments.
Forms of Investment and Approval Authority
Foreign investors may invest by contributing capital to an existing company or establishing a joint venture with a Vietnamese partner. In all cases, registration or approval procedures with the competent authority—typically the Department of Planning and Investment of the province/city where the company is based—are required. Investments may be rejected if they violate national security, exceed ownership limits in conditional sectors, or involve restricted investors.
Key Legal Considerations
Legal Due Diligence: Investors should thoroughly review business licenses, international travel permits, financial status, commercial contracts, tax and labor compliance, and check whether the company faces administrative penalties or legal disputes.
Corporate Governance and Control: Success depends heavily on control rights. Investors should negotiate company charters carefully, covering voting rights, director appointments, access to financial information, independent audit rights, dispute resolution, and exit strategies.
Strategies for Safe and Effective Investment
Choosing a Reliable Partner: Select reputable Vietnamese partners with financial capacity and industry experience. Independent legal advisors can assist with negotiations and partner assessment.
Proper Capital Registration: Failing to register capital contributions properly can prevent profit repatriation or recognition of ownership rights. Correct registration ensures smooth financial management and future capital transfer.
Tax and Reporting Compliance: Investors must comply with tax obligations, including capital gains tax, contractor tax (if applicable), and periodic reporting to foreign investment authorities.
Vietnam offers abundant opportunities for foreign investors in tourism, but success requires careful legal and strategic preparation. Capital contribution is not only a financial decision but also a process of building trust and managing risks proactively.
DEDICA Law Firm specializes in advising foreign investments in Vietnam, particularly in conditional sectors such as tourism, education, and technology. With extensive experience and a team of lawyers well-versed in international law, we are ready to support your safe and effective investment journey in Vietnam.
Contact DEDICA Law Firm for specialized legal advice!
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