With its large population, Vietnam is a potential market which offers great opportunities for foreign investors in the health sector. However, in comparison with finance, securities and real estate, the health sector remains less lively in the panorama of foreign investment in Vietnam.

According to the WTO Commitments, foreign medical service suppliers are permitted to provide services through the establishment of 100% foreign-invested medical establishments, joint-ventures with Vietnamese partners, and through a business cooperation contract.

Also under the WTO Commitments, the minimum investment capital for a foreign-invested project in hospital services must not be less than:

• USD20 million for a hospital;
• USD2 million for a policlinic unit; and
• USD200,000 for a specialty unit.

In addition to the requirements for an IRC and ERC, a foreign investor is required to obtain an operating license before providing health care services. The requirements for an operating license include, among other things:

• To meet national technical regulations on hospitals;
• To have sufficiently qualified practitioners; and
• The manager responsible for professional and technical operations of hospitals must have his/her experience of at least 36 months.

Telecommunications

Current laws on telecommunications dismantle the monopoly of State-owned enterprises over the telecommunication network infrastructure. However, the law establishes a distinction between non-facilities-based telecom services and facilities-based services. Non-facilities-based service suppliers are service suppliers which do not own transmission capacity but contract for such capacity including submarine cable capacity, from a facilities-based supplier.

The facilities-based vs. non-facilities-based distinction forms the basis of Vietnam’s commitments under the WTO to liberalize its telecommunications market. As from January 2010, foreign investors are allowed to own up to 51% of the legal capital of JVs with non-facilities-based operators. Foreign ownership of facilities-based operators, in turn, is capped at 49%. The Government seems determined to keep control of facilities-based operators and there is no sign of laxity of this approach.

Trading Activities

Foreign-invested enterprises (e.g., WFIEs) in Vietnam that meet statutory conditions may engage in trading activities. In principle, trading activities or trading rights include: (i) export right; (ii) import right; and (iii) distribution rights.

Export right allows a foreign-invested enterprise to export the goods to be imported and purchased domestically by themselves. However, it is not permitted to establish any facilities or trading networks for exporting.

Import right allows a foreign-invested enterprises to import goods from overseas into Vietnam and sell such imported goods to Vietnamese business entities (i.e., wholesalers). It is not permitted to organize or participate in any distribution network of import goods in Vietnam.

Distribution rights include the rights of wholesaling, retailing and agency, and franchising.

Wholesaling right allows a foreign-invested enterprise to sell goods, including goods manufactured in Vietnam and goods imported to Vietnam, only to traders or other organizations (i.e., wholesalers) but not to end-consumers.

Retail right allows a foreign-invested enterprise to sell goods, including goods manufactured in Vietnam and goods imported to Vietnam, directly to end-consumers. Vietnam restricts the establishment of additional retail sales outlets after the first outlet. Further retail sales outlets are considered on a ‘case-by-case’ basis based on an economic needs test (ENT) of the locality and based on the following criteria: (i) number of retail outlets; (ii) market stability; (iii) population density; and (iv) size of the district where the retail outlet is proposed to be set up.

Franchising, as defined by the 2005 Commercial Law, means a commercial arrangement in which a franchisor grants the franchisee the right to carry out the business of selling its goods or supplying services in Vietnam under agreed conditions. Under the WTO Commitments, as from 1 January 2009, foreign investors are permitted to set up 100% foreign-owned companies or branches engaging in franchising activities.

Agency means the commercial act in which a foreign-invested enterprise is allowed to conduct the sale or purchase of goods, in its own name, in return for remuneration from its customer(s).