Business conditions for advertising services for foreign investor in Vietnam have become a notable topic in recent times. With the rapid development of the economy and market opening, Vietnam has attracted significant interest from foreign investors who want to participate in the advertising and communication field. However, before entering this market, foreign investors shall have a clear understanding of the business conditions for advertising services in Vietnam to ensure success and compliance with legal regulations. The specific details are outlined below.

1. Market access requirements

Therefore, Foreign investor can engage in advertising services in Vietnam through the following forms:
– Form 1: Foreign investor can purchase shares or contribute capital in Vietnamese companies registered for advertising activities. It is important to note that only a portion of the shares or capital can be acquired, without acquiring the entire company to become the sole owner.
– Form 2: Foreign investor can establish joint ventures with Vietnamese partners (registered in the advertising industry), with foreign capital contribution of less than 100%.
The procedures for conducting advertising business in Vietnam will have different between the form of presence by the investor (refer to sections 2 and 3 below for further details).

2. The procedure for Foreign investor to purchase shares or contribute capital in a Vietnamese company (Form 1) is as follows

In this form, Foreign investor is allowed to acquire a portion of shares or capital in a Vietnamese company without any specified limit, but the investor is not permitted to acquire the entire shares or capital. After completing the share or capital acquisition process, foreign investor will become shareholders or members of the Vietnamese Company.

The process for Foreign investor to become shareholder or member of a Vietnamese company involves the following basic steps:

Step 1: Identifying a Vietnamese company that operates in the advertising services field.

In practice, acquiring shares or capital means that Foreign investor will inherit the rights and obligations associated with the transferred shares or capital. To exclude their own liability for the company’s issues, which foreign investor may not accurately assess, such as legal compliance and obligations regarding debts, investor often chooses to establish a new company. Accordingly, the investor’s partner will establish a 100% Vietnamese-owned company in the advertising field, and then the investor will acquire the maximum permissible share or capital in that Vietnamese company.

Step 2: Submitting an application for approval to purchase shares or contribute capital.

The enterprise receiving the investor shall submit relevant documentation for registering the capital contribution or share purchase to the Department of Planning and Investment (DPI). The DPI will consider the investor’s capacity and the scope of the Vietnamese company’s industry to consider approving the investor’s capital contribution or share purchase in the Vietnamese company.

Step 3: The enterprise performs the procedures for changing members, shareholders, and owners.

After receiving an application for approval in Step 2, the enterprise submits the required documents to update the enterprise information at the Business Registration Office of the Department of Planning and Investment. Within a period of three working days from the date of receiving the documents, the Business Registration Office is responsible for reviewing the validity of the documents and issuing a new Certificate of Business Registration. With this step, the investor’s information as a new member and shareholder will be updated on the national business information portal.

3. Foreign investor establishing a joint venture with a Vietnamese partner for advertising business in Vietnam (Form 2)

This form entails the establishment of a new enterprise by the foreign investor and the Vietnamese partner, which is considered a foreign-invested enterprise. To engage in advertising services in Vietnam through the establishment of a new enterprise, the investor shall follow the steps below:

Step 1: Applying for an Investment Registration Certificate (Investment Project Registration)

In this case, the investor is understood to be directly conducting investment activities in Vietnam through the establishment of an enterprise. For direct investment activities, the investor shall submit a dossier to apply for an Investment Registration Certificate at the Department of Planning and Investment (DPI). The usual processing time is approximately 15 working days. However, if the newly established company, in addition to the advertising sector, is engaged in other sectors that Vietnam has not committed to, the DPI shall seek opinions from the relevant specialized management agency.

Step 2: Applying for a Business Registration Certificate

After completing the investment registration process and obtaining the Investment Registration Certificate, the investor submits the required documents to establish the enterprise. The processing time is three working days, and the result will be the issuance of a Business Registration Certificate. This document acknowledges the legal entity status of the investment project management organization according to the granted Investment Registration Certificate. Upon receiving the Business Registration Certificate, the investor proceeds with the procedures to create the company’s seal and announce the seal specimen.

Please note that the aforementioned steps are the fundamental ones. Additionally, to contribute capital and issue invoices to clients, the investor and the newly established enterprise shall fulfill additional procedures concerning bank accounts and initial tax registration and declaration

4. Prohibited advertising of Products, Goods, and Services in Vietnam

After completing the necessary procedures to engage in business activities in Vietnam, the investor and enterprise shall be aware of several types of products, goods, and services that are prohibited from being advertised in Vietnam. Specifically:

• Goods and services prohibited from trading according to the provisions of the law.
• Tobacco products.
• Alcoholic beverages with an alcohol content of 15 degrees or higher.
• Substitute milk products for children under 24 months old, nutritional supplements for children under 6 months old, feeding bottles, and artificial nipples.
• Prescription drugs; non-prescription drugs that are restricted or require monitoring by medical professionals as recommended by the competent state authorities.
• Products and goods with aphrodisiac properties.
• Hunting guns and ammunition, sporting weapons, and other products and goods with provocative and violent characteristics.
• Other products, goods, and services prohibited from advertising as stipulated by the Government in case of occurrence in practice.

5. Specific conditions for performing the advertising activities

Corresponding to each form of advertising, the products, and services being advertised, as required by the law, the enterprise shall fulfill certain individual conditions, as follows:

– Advertising for business activities involving goods and services shall possess a business registration certificate.

– Advertising for certain types of products, goods, and services shall provide documents proving their compliance and conformity with the regulations of the law.

– Advertising assets, for which the law stipulates the requirement of ownership or usage rights certification, shall possess a certificate of ownership or usage rights for those assets.

– Advertising for special products, goods, and services shall meet specific conditions, including:

• Advertising for medicines allowed to be advertised in accordance with health laws shall possess a valid circulation license in Vietnam and an approved usage guide issued by the Ministry of Health.
• Advertising for cosmetics shall have a product announcement form in accordance with health laws.
• Advertising for chemicals, insecticides, and antibacterial agents used in household and medical fields shall possess a registration certificate for circulation issued by the Ministry of Health.
• Advertising for milk and nutritional products for infants, which are not regulated under Article 7, Clause 4 of the 2012 Advertising Law, shall possess a standard certification and a food safety certification for domestically manufactured nutritional products. For imported nutritional products, they shall have a product quality certification from the competent authority of the producing country and a circulation permit.
• Advertising for food products and food additives shall possess a certification of registered quality and food safety for the respective food products and food additives that fall under the category requiring quality and food safety registration, or a document acknowledging the acceptance of standards declaration issued by the competent state authority for food products and food additives falling under the category requiring standards declaration.
• Advertising for medical examination and treatment services shall possess a certificate of professional standards issued by the healthcare sector in accordance with the provisions of the law.
• Advertising for medical equipment shall have a circulation permit for domestically manufactured medical equipment or an import permit for imported medical equipment.
• Advertising for plant protection drugs, plant protection materials, and plant protection supplies shall possess a registration certificate for plant protection drugs. Advertising for beneficial organisms used in plant protection must possess a plant quarantine permit issued by the Ministry of Agriculture and Rural Development.
• Advertising for veterinary drugs and veterinary supplies shall have a product circulation license and a summary of product characteristics.
• Advertising for fertilizers, bio-products for cultivation, animal feed, and bio-products for livestock shall possess a certification of product quality or a self-declared document of product quality.

6. License for Advertising Service business (Notification ò Advertising Products) applied in certain cases:

– When advertising special products, goods, and services as stated in Article 20, Clause 4 of the Advertising Law.

– When advertising on billboards and banners:

• Placing billboards and banners shall comply with regulations on the protection areas of historical and cultural relics, traffic safety corridors, dike systems, and national power grids; they shall not obstruct traffic signal lights and public signage; they shall not cross over traffic lanes and shall adhere to the advertising planning of the local area and the technical standards issued by the competent authority.
• Advertising products displayed on billboards and banners shall clearly state the name and address of the advertiser.
• Advertising on billboards and banners with propaganda and promotion content related to politics and social policies shall adhere to the following regulations:

1. 1. The symbols, logos, and trademarks of the advertiser’s goods shall be placed at the bottom for vertical billboards and banners, and on the right side for horizontal banners.
   2. The area occupied by the symbols, logos, and trademarks of the advertiser’s goods shall not exceed 20% of the billboard or banner area.

• The duration for hanging banners shall not exceed 15 days.
• When constructing advertising structures, businesses only shall apply for a license for advertising service business when constructing:

1. 1.  Outdoor advertising screens with a single-sided area of 20 square meters (20m²) or more.
   2. Signboards and billboards with a single-sided area of 20 square meters (m²) or more, structurally attached to pre-existing buildings.

The business conditions for advertising services in Vietnam not only provide favorable conditions for foreign investors to expand their operations but also contribute to innovation and the improvement of advertising quality in the domestic industry. By participating in this market, foreign investor can bring advanced values, technologies, and advertising methods, contributing to elevating the advertising industry in Vietnam to new heights.

However, to achieve sustainable success in this field, foreign investor shall not only comply with legal regulations but also have a thorough understanding of the culture, market, and needs of Vietnamese clients. This requires research, interaction, and adaptation to a diverse and fast-paced business environment.

Time of writing: 20/05/2023

The article contains general information which is of reference value, in case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer at info@cdlaf.vn

You can refer for more information:

• Establishment of Enterprise in Vietnam, What Foreign Investors Need to Consider (Part 1)
• Establishment of Enterprise in Vietnam, What Foreign Investors Need to Consider (Part 2)
• Procedure for Foreign Investor to contribute capital, purchase shares in the enterprise in Vietnam.
• The enterprise with opening and using direct investment capital account
• Avoiding the risks when leasing the office in Vietnam – some recommendations
• Foreign Investors provide Employment Services in Vietnam
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• Franchise in Vietnam (Part 2)
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• Conditions and procedures for foreign investor to operate Financial management consulting services in Vietnam
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• Conditions for operating insurance business for foreign investor in Vietnam