Classifying business lines under VSIC and Provisional CPC

Under the current forms applicable to investment procedures to obtain an Investment Registration Certificate or a registration of an acquisition by a foreign investor, the foreign investor and the target company must specify the business lines of the target company according to both Vietnam Standard Industrial Classification (VSIC) and Provisional Central Product Classification (Provisional CPC). The VSIC is based on the International Standard Industrial Classification, not the Provisional CPC. Therefore, there might be some discrepancies among the scope of services under the VSIC and the Provisional CPC. In other words, when registering business lines, foreign investors might face the issue where the scope of a class under one classification might not be covered by a corresponding one under the other classification.

In such cases, it is reasonable for foreign investors to decide to comply with one classification only. For example, a Japanese investor who provides repair services of electric lighting equipment can classify their business into (i) “Repair of electrical equipment” (VSIC 3314); and (ii) “Repair services of personal and household” (CPC 6330). If the investor wishes to further provide repair services of electrical machinery apparatus, such an investor should not be required to register additional business lines. This is because:

  • “repair services of electrical machinery apparatus” has already been covered under the registered business lines of such investor, which is VSIC 3314; 

  • in the case there are inconsistencies between VSIC and CPC, there is nothing at law which requires that the stricter one would apply. In fact, by relying on the principle that enterprises are entitled to conduct business lines which are not prohibited by law, it is arguable that a company can decide to follow the broader scope of activities as long as they are not prohibited. In other words, unless the authorities have a different view in the future, it is not necessary for the Japanese investor to update its business lines in this case; and

  • under the Vietnam-Japan BIT 2003 and the CPTPP, these services are not listed as services that Vietnam reserved to open its market. Therefore, Japanese investors should be allowed to provide these services.

This post is written by Nguyen Thu Giang and edited by Nguyen Quang Vu.

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Written by Nguyen Quang Vu On In ,