Organization of conventions and trade shows holds immense potential, especially in the context of strong economic integration and the growing demand for brand and product promotion. However, to access this market, foreign investors need to have a thorough understanding of the specific legal framework, which is influenced by both Vietnam’s international commitments and domestic regulations.

This article will provide a detailed analysis of the legal aspects and practical advice for foreign investors looking to enter this sector.

1. Vietnam’s market commitments under international agreements

Vietnam is a member of numerous international trade agreements, offering market access opportunities for foreign investors, but also imposing specific restrictions on the Organization of conventions and trade shows:

• WTO (World Trade Organization): Under the WTO’s Schedule of Commitments, Vietnam has not yet committed to opening up the Organization of conventions and trade shows sector. This means that foreign investors are not entitled to the benefits and privileges stipulated in the agreement and must strictly comply with domestic laws and regulations
• AFAS (ASEAN Framework Agreement on Services): Under this agreement, foreign investors are allowed to provide this service through joint ventures with Vietnamese service providers. However, the content and subject matter of such services must be pre-approved by the competent authority. This requirement is mandatory to ensure compliance with domestic laws and regulations
• EVFTA (EU-Vietnam Free Trade Agreement): During the first five years since the EVFTA took effect (from August 1, 2020), the foreign investor’s capital contribution is limited to no more than 49%. After five years, this limit will be raised to 51%, and three years later, all capital contribution restrictions will be completely removed. As of now, foreign investors’ capital contribution remains capped at 49%, requiring investors to develop strategic partnerships with Vietnamese partners effectively.

2. Business conditions under Vietnamese regulations

In addition to international commitments, foreign-invested enterprises operating in this sector in Vietnam must comply with specific conditions and regulations under specialized laws:

Not classified under conditional business lines: According to Appendix IV of the Law on Investment, organizations engaged in the introduction and promotion of commercial products are not considered conditional business lines. However, for business operations, enterprises must still meet relevant legal requirements.

Sub-license: Foreign-invested enterprises must apply for a Business License to provide trade promotion services, except for advertising services. This ensures that the enterprise’s operations are regulated and comply with legal provisions.

Specific event licensing procedures: Depending on the type of event, enterprises must complete the corresponding legal procedures. For commercial promotion events, enterprises must notify the authorities of their promotional activities or obtain approval to organize promotional programs. For trade fairs and exhibitions, enterprises must apply for approval to organize trade fairs and exhibitions in Vietnam.

3. Advice for foreign investors

To operate effectively and comply with legal regulations in the field of Organization of conventions and trade shows, foreign investors should take note of the following points:

• Understand local and international legal frameworks: Clearly understanding legal regulations, from international commitments to local laws, is a decisive factor. Investors should consult legal experts or reputable consulting firms to ensure full compliance with legal requirements.
• Collaborate with local partners: In a context where networking opportunities are limited, finding reputable local business partners and understanding the market and regulatory processes in Vietnam can help minimize risks and increase success rates.
• Prepare documents and licensing procedures carefully: Due to the licensing requirements for each event, businesses should thoroughly prepare detailed plans and content for exhibitions or promotional programs. Proper implementation ensures events run smoothly and efficiently.
• Monitor market opening progress: With opportunities to expand investment under the EVFTA, investors need to closely follow important timelines for strategic investment decisions to maximize the benefits of the agreement.

Although Vietnam is a dynamic market, foreign investors often face difficulties during market entry and operations. A typical example is the limitation on the capital contribution ratio under the EVFTA, the complexity of licensing procedures, and lengthy approval processes for commercial promotion events. Additionally, inconsistencies in legal implementation and administrative procedures lead many investors to feel delayed, discouraged, and lose competitive advantages. These challenges require foreign investors to adapt and comply with legal regulations proactively.

Despite facing numerous challenges, Vietnam remains a highly promising market for foreign investors. With a rapidly growing economy, a young population, and increasing demand for brand promotion, the field of commercial introduction and promotion offers vast development opportunities. Restrictions on capital contribution ratios in agreements such as the EVFTA also encourage foreign enterprises to closely collaborate with local partners, creating opportunities to build strong business networks and leverage local partners’ market insights to minimize risks. Furthermore, the gradual market-opening policies under the EVFTA will enable foreign investors to strengthen control and expand their business operations in the near future. This makes Vietnam a worthwhile market for long-term investment, especially for businesses with well-structured strategies and thorough preparation.

Time of writing: 13/01/2025

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

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