Vietnam is considered a potential market for foreign investors in the field of advertising services. However, to conduct business in this sector, investors must comply with certain legal conditions. In the following article, Apolat Legal will analyze the regulations that foreign investors must adhere to when engaging in advertising services business in Vietnam.
1. Conditions on Investment Forms and Foreign Ownership Ratio in Advertising Services
According to Vietnam’s Schedule of Specific Commitments in Services under the World Trade Organization (“WTO Commitments Schedule”), advertising services (CPC 871, excluding tobacco advertising services) are a sector that Vietnam has committed to open. However, this sector is subject to market access restrictions for foreign investors.
Accordingly, foreign service providers may invest in Vietnam to provide advertising services through the following two forms:
First form: Establishing a joint venture with a Vietnamese partner without restriction on the foreign ownership ratio in the joint venture.
A joint venture is an investment form in which a foreign investor and a Vietnamese investor contribute capital to establish a new enterprise in Vietnam.
Second form: Entering into a Business Cooperation Contract (“BCC”) with a Vietnamese partner that has been licensed to provide advertising services.
A BCC is a cooperation model between a foreign investor and a Vietnamese partner without establishing a new legal entity. Therefore, to engage in advertising services business in Vietnam, foreign investors are required to enter into and sign a BCC with a Vietnamese investor who is duly licensed to provide advertising services. It is worth noting that the capital contributed by a foreign investor under a BCC arrangement cannot constitute 100% foreign ownership.
As such, under the WTO Commitments Schedule, foreign investors from WTO member countries are not permitted to establish a wholly foreign-owned enterprise to provide advertising services in Vietnam. This restriction is also specifically provided under Article 40.1 of the 2012 Law on Advertising, which states:
“Foreign organizations and individuals may cooperate and invest with Vietnamese advertising service providers in the form of joint ventures and business cooperation contracts.”
This regulation plays a crucial role in limiting foreign control over Vietnam’s domestic advertising industry. Furthermore, as advertising is closely related to culture, media, and public opinion orientation, the State seeks to impose strict controls to prevent complete foreign dominance, ensuring that advertising content aligns with social ethics, economic interests, and national security.
2. Licensing Requirements and Investment Procedures
Foreign investors investing in Vietnam under either of the two aforementioned forms must apply for an Investment Registration Certificate before establishing a joint venture or signing a BCC, as prescribed under Article 27.2 and Article 22 of the 2020 Law on Investment.
For further details on the application for an Investment Registration Certificate, please refer to the following article: https://apolatlegal.com/vi/blog/giay-chung-nhan-dang-ky-dau-tu/
3. Conditions on the Scope of Advertising Activities
After obtaining the Investment Registration Certificate and completing the registration of the advertising service business code (VISC 7310) for the joint venture or the BCC, the foreign investor may officially conduct advertising service business in Vietnam.
However, foreign investors must ensure compliance with the requirements and conditions stipulated in the Law on Advertising, particularly regarding prohibited advertisements and the advertising of special products, goods, and services as prescribed under Articles 7 and 20 of the 2012 Law on Advertising.
Overall, while Vietnam presents a promising market, foreign investors in the advertising services sector face certain legal barriers. Compliance with investment forms, ownership restrictions, licensing requirements, and operational conditions is essential to ensure the legality and efficiency of business activities. Therefore, foreign investors should carefully study the current legal framework and develop appropriate cooperation strategies with Vietnamese partners to maximize investment opportunities and business development in this sector.
See more:
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2/ Legal framework when registering for drug advertising content confirmation
Disclaimers:
This article is for general information purposes only and is not intended to provide any legal advice for any particular case. The legal provisions referenced in the content are in effect at the time of publication but may have expired at the time you read the content. We therefore advise that you always consult a professional consultant before applying any content.
For issues related to the content or intellectual property rights of the article, please email cs@apolatlegal.vn.
Apolat Legal is a law firm in Vietnam with experience and capacity to provide consulting services related to Business and Investment and contact our team of lawyers in Vietnam via email info@apolatlegal.com.
