Vietnam is saturated with lively entertainment media and well-produced televisions. By law and policy, however, media and broadcasting activities are considered sensitive sectors in Vietnam and the scope for foreign participation in the same is very limited. The Vietnamese government controls all local media, which are managed either the Ministry of Information and Communications (“MIC”) or the Ministry of Culture, Sports and Tourism (“MCST”). This paper is to provide you with a ready reference sources for the laws and regulations governing the activities of televisions/broadcasting and other audiovisual services which foreign investors are permitted to engage in Vietnam and our legal analysis on the same.
A. PRIMARY LEGISLATION
Many of the laws and regulations governing the media sector were issued prior to Vietnam’s accession to the World Trade Organization (the “WTO”) (i.e. in January 2007). Following the WTO accession, a number of such laws and regulations on media and broadcasting have been amended accordingly.
• The Law on Cinematography No. 62/2006/QH11 passed by the National Assembly of the Socialist Republic of Vietnam dated 29 June 2006 as amended by The Law amending the Law on Cinematography (no. 31/2009/QH12) passed by the National Assembly dated 18 June 2009 (the “Cinematography Law”);
• The Law on Press passed by the National Assembly of the Socialist Republic of Vietnam dated 28 December 1989 (the “Press Law””) as amended and supplemented by the Law on Press No. 12/1999/QH10 dated 12 June 1999 (the “Amended Press Law”);
• The Law on Investment No. 59/2005/QH11 passed by the National Assembly of the Socialist Republic of Vietnam dated 29 November 2005 (the “Old Investment Law”), which is to be replaced by the Law on Investment No. 67/2014/QH13 passed by the National Assembly of the Socialist Republic of Vietnam dated 26 November 2014 from 01 July 2015 (the “New Investment Law”);
• Law on Enterprise No.60-2005-QH11 passed by Legislature X of the National Assembly at its 10th Session on 25 December 2001 and took effect from 1 July 2006 (the “Old Enterprise Law”), which is to be replaced by the Law on Enterprise No. 68/2014/QH13 passed by the National Assembly of the Socialist Republic of Vietnam dated 26 November 2014 from 01 July 2015 (the “New Enterprise Law”);
• Decree No. 54/2010/ND-CP dated 21 May 2010 of the Government detailing a number of articles of Cinematography Law No. 62/2006/QH11 and Law No. 31/2009/QH12 amending and supplementing a number of articles of the Law on Cinematography (“Decree No. 54”);
• Decree No. 51/2002/ND-CP dated 26 April 2002 of the Government detailing the implementation of the Law on Press and the Law amending and supplementing a number of articles of the Law on Press (“Decree No. 51”)
• Decision No. 20/2011/QD-TTg dated 24 March 2011 of the Prime Minister on promulgating regulation on management of paid television (“Decision No. 20”)
B. SPECIFIC ISSUES
I. TELEVISION CHANNEL/BROADCASTING SERVICE
1. Foreign Investment Form
Vietnam has one national television station (VTV), one national radio station (VOV) and four inter-provincial broadcasting stations. Vietnam’s broadcasting industry has developed rapidly in recent years with more than 90 percent of Vietnamese households have televisions.
Television (“TV”) is primarily a visual press in Vietnam and accordingly governed by the Press Law and the Amended Press Law. A “press agency” includes an organization/agency that broadcasts programs.
Press is defined as “the essential media for social life; the speaking agency of the Party’s organizations, State bodies and social organizations, and a forum for the people”. Accordingly, a press agency is defined as being the “voice” of government agencies, associations and agencies of the Party. Therefore, a broadcasting station is also considered a press agency and subject to the scope of application of the Press Law and the Amended Press Law and under the oversight of government agencies (i.e., government agencies, the Party’s agencies, and associations)
Current regulations provide that only press overseeing bodies are eligible to apply for a license to establish a press agency or become the management of agency of any press in Vietnam and therefore the establishment of TV channel/broadcasting project that is owned, established and operated by any foreign company in Vietnam appears unfeasible – i.e., this remains the preserve of press overseeing bodies/government agencies.
In short, cross ownership in the TV channel/ broadcasting project is currently not addressed by the regulatory regime of Vietnam and there is no precedent in this regard to-date.
However, foreign radio/TV stations are allowed to supply foreign TV channels broadcasting on Pay TV or satellite TV in Vietnam for the purpose of business through authorized local broadcasting agencies in Vietnam to conduct registration for granting program channel and financial obligation to Vietnam’s State under Decision 20. Many U.S service providers such as American channels are present in Vietnam including movie channels, news channels, sports channels and kid channel. Example of major U.S channels in Vietnam include HBO, CNN, BCC, Bloomberg, Cartoon Network, etc..
Pay TV service means service applies telecommunications to transmit, distribute program channels, pay TV program and added value services on technology infrastructure for providing pay TV services to pay TV subscribers under service providing contract or equivalent constraint agreements (called as paid television service providing Contract). Pay TV may be provided directly (direct television service) or on request (requested television service) to paid television subscribers.
There are currently 40 foreign TV channels broadcasting on Pay TV available in Vietnam as of 13 March 2014. With 3.7 million Pay TV subscribers in a country with a population of 90 million, Vietnam is a promising destination for Pay TV service providers.
Pay TV includes cable TV service (analog, digital, IPTV), digital ground TV service (DVB-T), direct from the satellite TVservice (DTH) and mobile TV service. Decision No. 20 also specifies different licenses required to be obtained by Pay TV providers TV (i.e. Pay TV content providers, Pay TV translators and editors, Pay TV service providers, etc.), which must be established legally under the laws of Vietnam, to provide foreign TV channel on Pay TV. The following licenses required to be obtained for any activities in connection with Pay TV before conducting:
(i) Foreign TV broadcasting station agencies, through its authorized agent in Vietnam which is legally established under the laws of Vietnam, must register their provision of TV channels in Vietnam with the MIC to be issued with registration certificate. The documents for registration application are clearly provided under Article 12 of Decision No. 20.
(ii) Pay TV content providers, editors and translators are required to obtain visual press license. There are currently 40 foreign Pay TV channels licensed to provide edition service for Vietnam Television and Vietnam News Agency.
Only a limited number of organizations are permitted to receive signal of direct foreign television, foreign television channels from satellite including (i) State organizations at central and provincial levels (party, state and political groups); (ii) press agencies; (iii) foreign organizations in Vietnam; (iv) representative offices or residential offices of foreign press agencies in Vietnam; and (v) foreigners and organizations employing foreigners directly receiving foreign programs via satellite (if those program channels have not been supplied on Pay TV system of Vietnam in the local where such organizes, individuals install signal receivers).
The above organizations must implement the registration with the local Departments of Information and Communications where the direct foreign television signal receivers from the satellite are located. All documents required for application of registration and timeframe for issuance of registration certificates are provided in Decision No. 20.
• Under the Press Law and the Amended Press Law, the content of all programs broadcasting on Vietnamese TV, except for those from direct satellite, are subject to censorship by authorities.
• The content of foreign Pay TV channels must meet people’s demand and not violate the Press Law and the Amended Press Law.
• All foreign TV Pay channels broadcasting in Vietnam must be edited and translated into Vietnamese by editors and translators who are legally licensed.
II. CERTAIN AUDIOVISUAL SERVICES
1. Foreign Investment Form
Under the Schedule of Specific Commitments in Services annexed to the Protocol of Accession of the Socialist Republic of Vietnam to the WTO (the “WTO Commitments on Services”), foreign investors are allowed to invest in audiovisual services in Vietnam in the form of business cooperation contracts (“BCC”) or joint ventures (“JV”) with Vietnamese partners who are authorized to provide these services in Vietnam. Foreign capital contribution may not exceed 51% of the legal captial of the joint venture. However, please kindly note that specific to motion picture project service, Vietnam’s houses of culture, film projection place, public cinema clubs and societies and mobile project teams are not allowed to engage in business cooperation contract or joint venture with foreign service suppliers.
The Cinematography Law also provide that foreign entities/individuals are permitted to invest in the form of BCC or JV with local partners in Vietnam in this sector.
In short, foreign investors are allowed to become certain audiovisual service providers in Vietnam by ways of BCC or JV under of laws of Vietnam and international treaty.
Up to date, there are several foreign-invested companies which have been licensed in Vietnam such as Megastar, Lotte Cinema, etc….
Megastar was established by Mega Star Media JV Company (joint venture between Envoy Media Partners and Phuong Nam Culture Joint Stock Company). Megastar Vincom Cinema (belonging to Megastar system nationwide) was the first one which was set up in 2006 according to the international standards in Vietnam. In 2011, CJ-CGV Company (South Korea) took the control over Mega Star through acquisition of Envoy Media Partners and changes Megastar into CGV.
Recently, Lotte Cinema owned by Lotte Cinema Vietnam Co., Ltd (South Korea) was licensed to establish in Vietnam.
Foreign direct investments in Vietnam come under the investment regulatory regime of the the Investment Law and the Enterprise Law.
Under the Old Investment Law, foreign investors making direct investment in Vietnam are required to apply for and obtain an investment certificate for the establishment of the project and the entity. This investment certificate concurrently serves as the enterprise registration certificate.
It is important to note that as the audiovisual services is considered a “conditional sector” under the Old Investment Law, it will be subject to the appraisal procedure for obtaining the investment certificate and the Government (via local Department of Planning and Investment or other competent authority) will have discretion to consider and approve or reject the application. The appraisal process may take 30 working days after receiving all the required documents. However, that process in practice may take longer than that time since the sensitive service sectors which will be reviewed carefully by the relevant competent authorities. The documents and procedures for certificate application are provided in the Investment Law and the Cinematography Law, depending the form of enterprise to be established.
Under the New Investment Law which takes effect from 01 July 2015, foreign investors investing in Vietnam and establishing an entity must obtain two separate certificates: investment certificate pursuant to the New Investment Law and enterprise registration certificate pursuant to the New Enterprise Law. The process of applying for investment certificate may take up to 15 days (instead of 45 days under the Old Investment Law) from the receipt of a sufficient dossier but it may take longer in practice.
Moreover, the New Investment Law narrows down the scope of conditional business sectors. Particularly, only paid audiovisual services and requested TV services are considered “conditional sectors”. However, the appraisal procedure no longer applies. Foreign investors are obliged to comply with the conditions set out for these respective sectors and the competent authority will at their discretion carry out the inspection to check the compliance. The specific conditions are expected to be stipulated in the implementing documents of the new Investment Law in the upcoming months.
3. Restrictions under international treaties
• Under WTO Commitments on Services on audiovisual services, foreign investors are allowed to hold up to a maximum 51% stake in a local company engaged in the audiovisual sector which means that all these services are subject to 51% foreign ownership limitation. (Sound recording is also included but recorded as “unbound”, meaning that Vietnam has not committed to allow any particular foreign investment in that area and any investment is at the complete discretion of the Government.)
• We note that the 51% cap applied for foreign capital contribution in an audiovisual services company is also imposed under Article 13.2 of the Law on Cinematography according to which “foreign organization/ individual is allowed to carry out investment cooperation with motion picture production companies, motion picture distribution companies and motion picture popularization (i.e. should include motion picture projection) in the form of business cooperation contract or establishment of joint venture enterprises. For the form of joint venture enterprise, the capital contribution of foreign investor(s) shall not exceed 51% of the legal capital.”
• The Cinematography Law provides that the JV must have a minimum amount of the charter capital if licensed to engage in motion picture production. Specially, the legal capital must be at least VND 1 billion (approximately USD 50,000).
• It is also important to note that with regard to motion picture production, distribution and projection services for the purpose of these business activities, it is stipulated in the WTO Commitments on Services that all films must have their content censored by Vietnam’s competent authorities. In particular, under Article 37 of the Cinematography Law, each motion picture will be subject to a “License for popularization” (including film projection) issued by the competent authority for the purpose of distribution and popularization.
• Another condition for motion picture enterprises, in general, is that the General Director of a motion picture enterprise must be a person having expertise and experience in motion picture activity.
• Vietnam and the EU are finalizing the EVFTA and it is expected to be concluded this year. With the entry into force of this new agreement, members of the EU will enjoy more preferential conditions when investing in audiovisual services businesses. Implementation process of the EVFTA will be monitored and updated in the mean time.
Foreign TV channel/broadcasting are permitted by the laws of Vietnam to supply in Vietnam through authorized agencies provided that it meet satisfy conditions required by the MIC and relevant authorities.
As for production media-related services, pursuant to the WTO Commitments and the conditions, it take the form of a BBC or JV. However, it is subject to the ownership ratio, legal capital and appraisal procedure.
If you have any questions, please contact Oliver Massmann under email@example.com;
Oliver Massmann is the General Director of Duane Morris Vietnam LLC.