A Thorough Look at the Relationship Between BCC (Business Cooperation Contracts) and Foreign Ownership Ratio Restrictions in Vietnam Market Entry

01 - Ownership Ratio Restrictions as Set Out in Vietnam's WTO Schedule of Commitments
Vietnam's WTO Schedule of Commitments expressly caps foreign ownership ratios in joint ventures (e.g., 49%, 51%), and for certain sectors permits market entry only through a "joint venture or BCC." Whether the same caps also apply to BCCs is a point on which interpretations differ.

02 - The Distinction Between Capital Contribution Under a BCC and Equity Investment
A BCC is a contract-based form of cooperation that does not involve incorporating a new legal entity, so mechanically applying the joint-venture concept of an "ownership ratio cap" to it is inconsistent with the underlying legal framework.

03 - Analysis from the Perspective of the 2020 Law on Investment
Article 9 of the 2020 Law on Investment frames ownership ratio restrictions as applying to "economic organizations" (legal entities). Since a BCC has no separate legal personality, it can in theory be interpreted as falling outside the scope of these restrictions.

04 - Practical Treatment and the Authorities' Position
Informally, the authorities take the position that ownership ratio restrictions apply in principle only to joint ventures and not directly to BCCs, and this flexible approach is reflected in actual practice.

05 - Legal and Practical Considerations
In specialized sectors such as telecommunications and film exhibition, separate restrictions may exist to prevent de facto foreign control, and where foreign control is clearly substantive, there is a risk that the authorities will require the structure to be revised.

Conclusion: Ownership ratio caps apply in principle to legal entities and not directly to BCCs. However, because review risk varies depending on the specific structure adopted, consulting a lawyer when drafting the contract is recommended.