Under the current regulations governing electronic games in Vietnam, foreign service providers of online games are required to establish local enterprises to offer their services within the country.
According to Vietnam’s WTO commitments, these foreign investors can only own up to 49% of the charter capital of such game companies. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) permits foreign investors from member countries to own up to 51% of the charter capital in game companies since 2019.
Effective from January 14, 2024, foreign investors from CPTPP member countries will be allowed to have complete ownership, up to 100% of the charter capital, in game companies operating in Vietnam.
“Starting January 14, 2024, foreign investors from CPTPP member countries can own 100% of electronic game companies in Vietnam.” Sophie Dao, Senior Partner at GBS – Global Business Services LLC told reporter
Presently, under Decree No. 72/2013/ND-CP (as amended by Decree No. 27/2018/ND-CP), foreign service providers of online games are obligated to establish local entities to provide their services in Vietnam. This implies that cross-border provision of online games from outside Vietnam is prohibited. Any foreign company wishing to offer game services in Vietnam must establish an entity in the country and locally publish their games. The foreign ownership ratio in such game companies must comply with international treaties that Vietnam is a party to.
According to Vietnam’s WTO commitments, a local game company must be set up as a joint venture with a Vietnamese partner specifically licensed to provide online gaming services. The foreign capital contribution must not exceed 49% of the joint venture’s charter capital.
As Vietnam is a member of the CPTPP, foreign investors from CPTPP member countries can apply market access conditions outlined in the CPTPP instead of those in the WTO commitments. In the electronic game sector, the market access conditions for foreign investors, as stated in Annex 1 of Vietnam’s CPTPP commitments, are:
- Foreign investment of up to 51% of the charter capital is allowed in enterprises providing electronic game services over the Internet.
- Five years after the CPTPP’s entry into force for Vietnam, foreign ownership restrictions for electronic game services will be eliminated.
Given that the CPTPP entered into force for Vietnam on January 14, 2019, the five-year period expires on January 14, 2024. Consequently:
- From January 14, 2019, foreign investors from CPTPP member countries may own up to 51% of the charter capital in Vietnam companies providing electronic games over the Internet.
- From January 14, 2024, foreign investors from CPTPP member countries may own up to 100% of the charter capital in game companies providing electronic games over the Internet.
In practice, licensing authorities in Vietnam have already been applying the new market access conditions under the CPTPP in other sectors, such as advertising services. The application of these conditions to online electronic games is anticipated in the near future.