Legal Regulations for Foreign Investors in the E-Commerce Sector in Vietnam

With rapid growth and an increasingly expanding market size, e-commerce in Vietnam is becoming an attractive destination for foreign investors. However, this is also a sector subject to strict regulation under Vietnamese law, especially in the context of increasing concerns over data misuse, market control, and national security issues.

The following article provides an in-depth analysis of the current legal framework, market access conditions, and mandatory legal procedures applicable to foreign investors when investing in the e-commerce sector in Vietnam.

1. Market access conditions for foreign investors in the e-commerce sector

According to Section B.55, Appendix I issued together with Decree No. 31/2021/ND-CP, e-commerce activities fall under the list of sectors subject to market access conditions for foreign investors. This means that foreign investors are not automatically allowed to enter the market but must comply with specific restrictions and requirements under international treaties and Vietnamese law.

Accordingly, foreign investors must first fully understand the market access conditions for the e-commerce sector in Vietnam as stipulated by international treaties to which Vietnam is a member as well as Vietnamese law.

(i) Under international treaties:

While the WTO does not provide commitments related to market access in the e-commerce sector, the CPTPP specifically stipulates that Vietnam reserves the right to apply and maintain any measures inconsistent with Vietnam’s obligations under Article XVI of the WTO General Agreement on Trade in Services (GATS). Therefore, it can be understood that in the e-commerce sector, Vietnam may set out market access conditions that foreign investors must comply with.

(ii) Under Vietnamese law:

Pursuant to Article 67c of Decree 85/2021/ND-CP, foreign investors wishing to invest in the e-commerce sector in Vietnam must satisfy two conditions:

- First, on investment form:

Although e-commerce activities may be carried out on internet platforms or mobile devices, foreign investors are not permitted to provide e-commerce services into Vietnam solely through cross-border means. Instead, investors must invest through a Vietnamese legal entity via one of the following forms:

(i) Establish a new economic organization in Vietnam; or(ii) Contribute capital, purchase shares, or acquire capital contributions in an existing Vietnamese enterprise.

Accordingly, Business Cooperation Contracts (BCC) between foreign investors and Vietnamese enterprises are not permitted in this sector. The requirement to establish a Vietnamese legal entity aims to control the provision of online platforms, user data, payment systems, and cybersecurity—areas the State deems “sensitive” to digital sovereignty.

- Second, national security appraisal (when a foreign investor controls an e-commerce enterprise)

If a foreign investor controls one or more enterprises among the top 5 leading enterprises in Vietnam’s e-commerce market, a national security appraisal opinion from the Ministry of Public Security is required prior to investment. When is an investor considered “controlling”?

Under Clause 3, Article 67c of Decree 85/2021/ND-CP, a foreign investor is considered to be in control if falling into at least one of the following cases:

1. Owning more than 50% of charter capital or voting shares;

2. Having the right to decide senior personnel, including appointing/dismissing the majority or all members of the Board of Directors, Members’ Council, or Director/General Director;

3. Having the right to decide key business matters, such as choosing technology platforms, business models, business lines and operating locations, operating scale, capital mobilization and allocation.

According to Clause 5 Article 1 of Circular 01/2022/TT-BCT, the Ministry of Industry and Trade will annually publish the list of market-leading enterprises in e-commerce before March 15. Currently, the regulation does not specify the channel or medium for such publication. However, investors may refer to e-commerce reports or annual E-Commerce White Books issued by the Vietnam E-Commerce and Digital Economy Agency under the Ministry of Industry and Trade. In 2023, the “Vietnam E-Commerce Report 2023” identified the top 05 enterprises in the e-commerce market as: Baemin, Be, Gojek, Grab, and Lazada.

– Cross-border provision of e-commerce services (without direct investment):

Another issue investors should note comes from Clause 2, Article 67a of Decree 85/2021/ND-CP, specifically:

Foreign traders or organizations operating websites providing e-commerce services into Vietnam (i.e., cross-border provision without establishing a Vietnamese legal entity) must:(i) Register e-commerce activities with the Ministry of Industry and Trade; and(ii) Establish a representative office in Vietnam or appoint an organization/individual as their authorized representative in Vietnam.

However, investors should note that this regulation applies only to foreign traders/organizations with websites providing e-commerce services into Vietnam via cross-border supply without direct investment. Where direct investment takes place, foreign investors must establish an economic organization in Vietnam or contribute capital/share purchase as mentioned above.

2. Sub-licenses and legal procedures for each type of e-commerce activity

In addition to being a sector requiring foreign investors to meet market access conditions under Section 59, Appendix IV of the 2020 Law on Investment, e-commerce is also categorized as a conditional business sector. Therefore, foreign-invested enterprises (FIEs) wishing to operate in this field must comply with several specialized permits, specifically:

(i) Business License – mandatory initial requirement

After completing the establishment of an FIE or contributing capital/purchasing shares, enterprises providing e-commerce services must obtain a Business License under Point h Clause 1 Article 5 of Decree 09/2018/ND-CP. This is the first legal requirement allowing enterprises to participate in e-commerce service provision in Vietnam, functioning as a compulsory “entry pass.”

(ii) Each e-commerce model – its own legal procedures

Under Decree 52/2013/ND-CP (as amended by Decree 85/2021/ND-CP), e-commerce consists of five main models, each accompanied by distinct legal requirements and sub-licenses:

- E-commerce websites selling goods (enterprise sells its own products): If the website has online ordering functions, the enterprise must notify the Ministry of Industry and Trade of its e-commerce website selling goods.

- E-commerce trading floor/platform (intermediary platform connecting transactions): FIEs must carry out two procedures simultaneously: Obtain a License to establish a Commodity Exchange (if operating under the commodity exchange model); and/or Register the establishment of a website providing e-commerce trading floor services. This is the most strictly regulated type due to its involvement in connecting multiple parties, processing transaction data, and operating online platforms.

- Online promotion activities (traders conducting promotions such as discounts, gifts, vouchers via websites or EC apps): Enterprises must notify or register promotional programs in accordance with the Law on Commerce and Decree 81/2018/ND-CP, depending on the type of promotion. For example: discounts or gifts require notification; lucky-draw or game-based programs require registration.

- Online auctions: Enterprises conducting online auctions must:(i) Obtain a License to conduct asset auction activities (under the Law on Asset Auction); (ii) Register the establishment of a website providing online auction services under Decree 52; (iii) Ensure their technical system meets requirements in Articles 62–63 of Decree 52, including: secure access, storage of auction history, publication of all asset information, and anti-fraud mechanisms.

- Electronic contract authentication (e-contract certification services): Enterprises must register the establishment of a website providing e-commerce services with the Ministry of Industry and Trade. Additionally, they must meet technical standards regarding: data integrity, contract storage, two-factor authentication, timestamping, and enabling contract retrieval when needed.

Thus, e-commerce activities in Vietnam offer significant opportunities for foreign investors but come with a complex system of permits and legal requirements. Investors must accurately identify the e-commerce model they intend to operate, thereby preparing the appropriate business license and sub-licenses to ensure compliance prior to operation.

The above outlines key considerations for foreign investors entering the e-commerce sector in Vietnam, related to market access conditions and required procedures/permits when investing in this sector.