Decree 31/2021/ND-CP This is an important legal document that concretizes the provisions of the 2020 Investment Law, creating a favorable environment for business activities in Vietnam. Until 2026, the regulations in this decree will remain a guiding principle for domestic and foreign investors when implementing projects in the Vietnamese market. This article will provide a comprehensive overview of the new points, the list of restricted sectors, and investment procedures under current regulations.
Overview of Decree 31/2021/ND-CP guiding the Investment Law
The issuance of Decree 31/2021/ND-CP has created uniformity in the understanding and application of regulations. Investment Law 2020 Nationwide. This is not just a purely technical guidance document, but also an important tool for the Government to regulate and attract capital flows into priority development sectors in the new phase.
Scope of regulation and subjects of application
Based on Article 1 of Decree 31/2021/ND-CP, this document focuses on detailing investment and business activities in Vietnam as well as investment activities from Vietnam abroad. Key points that investors need to be aware of include:
- This regulation details the terms and conditions regarding investment incentives and forms of investment support for businesses.
- The sequence and procedures for issuing, amending, and revoking Investment Registration Certificates for each type of project.
- State management of investment activities and establishment of a system for periodic information reporting through National portal for business registration.
The subjects to which Decree 31/2021/ND-CP applies include domestic investors, foreign investors, economic organizations with foreign investment capital, and relevant competent state agencies.
Coordination between the 2020 Investment Law and Decree 31
The promulgation of Decree 31/2021/ND-CP has thoroughly addressed the legal gaps that the 2020 Investment Law only stipulated in principle. The most significant breakthrough is the transparency of the list of business sectors through the "exclusion" method. This approach helps investors clearly identify what they are not allowed to do, thereby enabling them to be more proactive in planning their business in accordance with regulations. Enterprise Law 2020 without having to wait for additional explanatory texts.
Industries with restricted market access according to Decree 31/2021/ND-CP
One of the biggest contributions of Decree 31/2021/ND-CP is the public disclosure of the list of sectors where foreign investors are restricted from entering. This eliminates ambiguity and creates a healthier competitive environment.
List of industries that have not yet accessed the market.
In Appendix I of Decree 31/2021/ND-CP, the Government details 25 sectors that foreign investors are absolutely not allowed to enter. These sectors mainly relate to national security, social order and safety, and essential public interests, such as:
- Activities related to journalism, radio, television, and information gathering in all forms.
- Investigation, security, and protection of state secrets services.
- Trading in goods that are subject to state monopoly in the field of commerce.
List of industries and professions with conditional market access.
Besides the prohibited sectors, Decree 31/2021/ND-CP also stipulates 59 sectors with conditional market access. For this group, foreign investors are only allowed to operate when they meet strict standards regarding:
- The percentage of charter capital owned by foreign investors in an economic organization (commonly known as the foreign ownership room).
- The investment forms applied include joint ventures or the establishment of foreign-owned economic organizations (100%).
- Requirements include financial capacity, operational experience, and specialized licenses.
Investors can refer to the comparison table below to quickly grasp the core regulations of Decree 31/2021/ND-CP regarding restricted sectors:
| Classification criteria | Underserved industries | Conditional access occupations |
|---|---|---|
| Number of occupations | 25 professions | 59 occupations |
| Right to participate in investment | Absolutely not allowed. | Allowed when the criteria are met. |
| Specific legal basis | Appendix I – Section A | Appendix I – Section B |
Note: This list is regularly updated on the National Investment Portal. Investors should check the specific industry code (VSIC) for the most accurate information before submitting their application.
Investment incentive policies are based on Decree 31/2021/ND-CP.
Decree 31/2021/ND-CP not only sets out control regulations but also opens up many opportunities for support through extremely attractive investment incentive packages to promote sustainable economic growth.
Target groups and geographical areas eligible for investment incentives.
The support policies in Decree 31/2021/ND-CP are strongly focused on areas with particularly difficult socio-economic conditions (according to Appendix III). In addition, the Government gives special priority to projects in the fields of high technology and environmental protection, specifically including:
- Research and development (R&D) activities in innovation centers.
- Manufacturing new materials, electronic components, and renewable energy.
- The project applies circular economy principles and modern waste treatment methods.
Forms and procedures for receiving preferential treatment.
According to Decree 31/2021/ND-CP, investors will enjoy benefits regarding corporate income tax, import tax exemptions and reductions, and land lease fees. The biggest advantage is the self-determining mechanism for incentives. Instead of having to go through the "request-and-grant" procedure, investors only need to compare their project with the conditions in the law to self-declare and enjoy incentives right from the tax settlement stage, helping to optimize working capital for the business.
Procedures for implementing investment projects according to Decree 31/2021/ND-CP
The standardization of procedures in Decree 31/2021/ND-CP has helped businesses significantly shorten the time needed to prepare and implement projects in practice.
Authority to approve investment policies
Depending on the nature and scale of the capital, the authority to approve investment policies is clearly decentralized from the National Assembly and the Prime Minister to the People's Committees at the provincial level (as stipulated in Articles 33 to 36 of Decree 31/2021/ND-CP). By 2026, most steps in submitting applications and receiving results will be carried out electronically, especially the application processing process. Investment registration certificate to optimize time.
Adjusting and terminating investment projects
Decree 31/2021/ND-CP provides a flexible legal framework for adjusting project objectives, scale, or progress. However, authorities will also closely monitor and have the right to terminate projects if investors fail to fulfill their commitments regarding progress or violate regulations on environmental protection and land use.
Notes on deposit and reporting according to Decree 31/2021/ND-CP
To ensure the project is implemented effectively, investors need to pay special attention to their financial obligations and responsibilities in providing information to regulatory authorities.
Project implementation is guaranteed by a deposit.
This is a mandatory regulation aimed at screening out investors who lack sufficient financial capacity. According to Articles 25 and 26 of Decree 31/2021/ND-CP, investors must deposit a security deposit or provide a bank guarantee:
- The progressive deposit amount ranges from 1% to 3% of the total investment capital, depending on the project scale.
- Cases exempt from deposit include projects that win land auctions or projects where the State allocates land free of charge.
Periodic reporting and monitoring system
Compliance with the law under Decree 31/2021/ND-CP is also demonstrated through reporting responsibilities. Investors have the obligation to:
- Submit periodic quarterly and annual reports on project implementation progress.
- Update data directly to the National Investment Information System as stipulated in Article 102.
Please note that delays in reporting can result in administrative penalties of up to 100 million VND and directly affect the investor's reputation when undertaking subsequent projects.
Assessing the impact of Decree 31/2021/ND-CP on the economy.
Since its promulgation, Decree 31/2021/ND-CP has significantly contributed to improving the national investor confidence index. The public disclosure of the exclusion list has reassured large corporations when developing long-term strategies in Vietnam. Experts predict that, with the stability of this legal framework, high-quality FDI will continue to flow strongly into core technology sectors during the 2026-2030 period.
Frequently Asked Questions about Decree 31/2021/ND-CP
Will Decree 31/2021/ND-CP remain in effect in 2026?
How can I quickly look up the list of restricted occupations?
What is the penalty for failing to report investment activities?
Conclude
Decree 31/2021/ND-CP is not only a professional guidance document but also a "compass" to help investors navigate safely through the legal labyrinth. Understanding and complying with regulations on industries, incentives, and procedures will help businesses optimize resources, minimize risks, and achieve sustainable development in the Vietnamese market.
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Content is moderated by: Mr. Le Hoang Tuyen – Founder & CEO of Man, CPA Vietnam Auditors With over 30 years of experience in accounting, auditing, and financial consulting...
