Not recommended.
According to the Ministry of Planning and Investment, real estate business is a sector where overseas investment is discouraged. The Ministry has provided some statistics to explain this amendment. Accordingly, the majority of projects in the real estate business are registered by individuals. There are 262 projects with a total registered capital of approximately 390.9 million USD. The purpose is to transfer assets or to obtain long-term residency abroad. This situation is on the rise, posing many risks as well as the loss of national resources.
The drafting agency stated that, based on international experience, China began restricting overseas investment in this sector in 2018. Therefore, setting conditions to control overseas investment in the real estate business is necessary to ensure resources for domestic investment.
Besides the US, Vietnamese people are now also interested in investing in real estate in several other countries such as Australia, Canada, Japan, South Korea, and Singapore. According to current regulations, Vietnamese law does not prohibit citizens from buying property abroad, but there are controls on transferring money overseas. Specifically, to invest directly abroad, individual investors must obtain a certificate of overseas investment, open a direct investment capital account at an authorized credit institution, and register with the State Bank of Vietnam.
In addition, Vietnamese citizens are allowed to take foreign currency abroad for legitimate purposes such as: studying, medical treatment; business trips, tourism, visiting relatives; paying various fees and charges; providing financial support to relatives; transferring inheritance money to beneficiaries abroad; and transferring money in cases of settling abroad.
Speaking to a reporter from the Nguoi Lao Dong newspaper on September 22nd, Mr. Nguyen Van Dinh, Deputy Secretary General of the Vietnam Real Estate Association, argued that restricting overseas real estate investment is anti-market and affects the freedom of business and home ownership of Vietnamese citizens abroad. “Why don’t other countries restrict our investment in their countries, while we restrict our citizens and businesses from investing abroad? From a market perspective, this is unreasonable,” Mr. Dinh questioned.
Real estate business has been added to the group of conditional overseas investment sectors. (Image for illustrative purposes only)
There should be a control mechanism.
According to the Ministry of Planning and Investment, regulations on sectors prohibited from Vietnamese investment abroad and sectors subject to conditional investment abroad have not been updated or systematized to ensure transparency and meet state management requirements. Therefore, regulating prohibited sectors and sectors subject to conditional investment abroad will help the state strengthen its management capacity in certain areas that need control.
Nevertheless, Mr. Nguyen Van Dinh believes that the demand for overseas investment by real estate investors is entirely legitimate. This is a legitimate investment channel that the state can manage. 'If it cannot be managed and is instead restricted or banned, it will lead to illegal and clandestine investments, which will have even greater consequences, increasing the risk of asset transfers and making it more difficult to control capital flows,' Mr. Nguyen Van Dinh warned.
Meanwhile, in an interview with a reporter from the Nguoi Lao Dong newspaper, financial expert Nguyen Tri Hieu agreed with the proposal to discourage overseas real estate investment. He argued that the benefits of such investments usually accrue to individual investors, while the benefits to the nation are not yet clearly evident. According to Mr. Hieu, overseas real estate investment could become a tool for money laundering and the concealment of assets obtained through corruption and illegal activities.
While agreeing that investing in real estate abroad is a market demand, Mr. Nguyen Tri Hieu emphasized the need for mechanisms to control it. He noted that the majority of real estate buyers abroad are individuals, and while businesses also participate, their involvement is still insignificant. 'For businesses, our tax control system still has loopholes,' Mr. Hieu added. However, he also suggested that some segments of this sector, such as industrial real estate, could be considered for overseas investment.
Lawyer Truong Quoc Hoe (Hanoi Bar Association) also agrees with the view that real estate business abroad should not be encouraged. According to him, Vietnam currently lacks the necessary conditions for individuals or businesses to freely conduct real estate business overseas, including loopholes in the legal system. Mr. Truong Quoc Hoe also worries about the potential for illegal asset transfer through overseas real estate investments.
'Under current conditions, it's not encouraged, but in the long run, when the necessary conditions are met, I think the state management agencies will be more open in this area,' lawyer Hoè stated.
Can it be managed (?!)
Responding to concerns from the Ministry of Planning and Investment about the transfer of assets abroad when investing in real estate, Mr. Nguyen Van Dinh stated that Vietnam already has a sufficient legal system to control the flow of money and foreign currency, so it is entirely possible to manage it; the issue lies in how the law is enforced.
According to Mr. Dinh, if market principles are followed, investors will invest if they see a profit opportunity, and the state controls the process from the investment licensing stage, meaning it has control over the 'roots,' then there is nothing to worry about.
According to The Laborer
