Regulations on foreign advertising service providers in Vietnam

Since Vietnam joined WTO on January 11 2007, it has been permissible for foreign investors to cooperate and invest with Vietnamese enterprises operating in advertising services through joint venture establishment or Business Cooperation Contract (BCC).

Vietnam enables foreign investors investing in the country to provide advertising services, specifically as follows:

Form of investment

According to commitments made to join WTO, foreign investors desiring to pursue an advertising service business in Viet Nam may not set up a wholly foreign-owned enterprise; they are only given permission to establish a joint venture or cooperate under a BCC. In addition, commencing from 1st January 2009, restriction on foreign investors’ capital contribution percentage has been lifted. As a consequence, any capital contribution percentage less than 100% is acceptable in a joint venture with Vietnamese partner.

Conditions

The Vietnamese partner must satisfy the conditions of being an enterprise that has registered to operate in advertising sector and possess documents proving its experience in such service, e.g. contracts signed with other partners and financial reports.

As of the foreign investor, certain documents confirming their legal status are compulsory, e.g. valid copies of the Establishment Decision, Certificate of Business Registration, or other equivalent documents.

Procedures

Foreign investors and their Vietnamese partners are required to carry out investment registration procedures at the Investment Registration Office of the provincial Department of Planning and Investment or at the Management Board of industrial parks, export processing zones, high-tech zones or economic zones.

The mandatory procedures include:

● Registering for investment project establishment without the procedure of enterprise establishment under the BCC

● Or setting up an investment project in the form of a joint venture established by domestic and foreign investors.

The Vietnamese economic code of advertising services is 7310, corresponding to CPC 871, which includes the sub-sectors of Sale or leasing services of advertising space or time (CPC 8711); Planning, creating and placement services of advertising (COC 8712) and Other advertising services (CPC 8719). Such joint ventures are permitted to provide advertising services for all types of products, except for cigarettes. Furthermore, while advertising for liquor products is equally approved, such service must strictly comply with Vietnamese regulations.

Clarification

Financial penalty: Fines ranging from VND 70 million to 80 million shall be imposed on enterprises who proceed to implement their project without an Investment Certificate.

In order to form a joint venture or cooperate under a BCC, foreign investors must start an investment project. It is important to stay informed that investment registration shall be consulted by the Ministry of Culture – Sports and Tourism.

Apart from the abovementioned forms of investment, in certain cases where foreign investors fulfill conditions specified by Vietnam’s law, they may invest by purchasing shares or contributed capital of the Vietnamese enterprise whose advertising activity has been registered for business.

Additionally, setting up an investment project is not the only way that enables businesses in advertising sectors in Vietnam. Another alternative worth considering is providing advertising services on cross-border electronic information pages.

PLF – LAW FIRM

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