The current situation of Vietnam

To materialize its goal of reaching the Emerging Market status by 2025, great efforts, including the conclusion of back-to-back-to-back Free Trade Agreements with powerful allies, issuance of new laws to promote the market, have been made by Vietnam in the recent years. However, according to the latest Market Classification issued by Morgan Stanley Capital International (MSCI), Vietnam continues to be classified as a Frontier Market. According to the MSCI, Vietnam remains a Frontier Market for the following reasons:

1. Foreign Ownership Limit Level: Limited foreign ownership, ranging from zero to fifty-one percent, applies to companies operating in specific sensitive and restricted industries. Still, over ten percent of the Vietnamese equities market is impacted by these restrictions.
2. Foreign Room Level: As the foreign ownership limit level remains for some sensitive sector, the foreign room level is deemed as low and the equity market is significantly impacted accordingly.
3. Equal Rights to Foreign Investors, Information Flow, Market Regulations: Lack of readily available English information/regulations for foreign investors.
4. Foreign Exchange Market Liberalization Level: Both the onshore and offshore currency markets are restricted (for example, foreign exchange transactions need to be connected to securities transactions).
5. Investor Registration & Account Set Up: Registration for security trading, as a mandatory procedure, can be time-consuming and costly. Further, account setup requires the approval of the Vietnam Securities Depository and Clearing Corporation.
6. Clearing and Settlement: Funding of trade must be done in advance, and there are no overdraft facilities.

Recommended action plan

To address MSCI’s concerns as well as foreign investors’ concerns, the following action plan should be carefully considered by the competent authorities of Vietnam:

1. To make the optimal use of the already-concluded Free Trade Agreements (i.e. CPTPP, EVFTA, EVIPA), the Government should do its homework and ensure that foreign investors receive the best possible treatment when they make their decisions to invest in Vietnam. In other words, amendments of the laws and legal reforms regarding the security market, security trading, investment procedure, foreign ownership limitation, etc. should be taken into consideration to reflect the agreement reached in the recent Free Trade Agreements.
2. To require organizations to adopt English as one of the primary language regarding information flow for foreign investors to grasp the idea of the market easily. This action can either be regulated under relevant laws or can be implemented directly by competent authorities.
3. To consider translating the new legal regulations into English on its issuance date for foreign investors to understand the laws as soon as they can.
4. To seek the support of international commercial experts

For Vietnam to reach its goal of an Emerging Market – Duane Morris Vietnam LLC, led by Dr. Oliver Massmann with almost 25-year working experience in Vietnam, could support the Government in this process.


Please do not hesitate to contact Dr. Oliver Massmann at if you have any questions. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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