Vietnam's government has submitted a draft amendment to the Investment Law that would remove 56 sectors from the country's list of conditional business lines — industries requiring special licenses or operating permits — while simultaneously proposing an outright ban on commercial sales of nitrous oxide for recreational use. The proposal was reviewed by the National Assembly Standing Committee on July 15, marking a significant push to reduce the regulatory burden on investors.
Cutting the Conditional Business List
The existing Investment Law maintains a long annex of sectors in which operators must satisfy specific state-imposed conditions before they can legally trade. Under the proposed revision, that list would shrink by 56 entries, with the scope of regulation adjusted for a further 14 sectors. The draft was presented to the Standing Committee by Finance Minister Ngo Van Tuan, who framed the deregulation as a continuation of reforms already embedded in the 2025 Investment Law.
The Ministry of Industry and Trade contributed two additional deletions: it recommended removing the conditional classification for foreign-service providers engaged in goods trading and directly related commercial activities inside Vietnam. That move could lower the compliance threshold for offshore firms seeking to operate distribution networks in the country.
Balancing the cuts, the Ministry of Public Security requested one new addition to the conditional list — visa services offered by foreign investors. The addition signals that while the government is opening most commercial doors wider, it intends to keep tighter control over services with direct national-security implications.
Regulatory Quality Over Quantity
The National Assembly's combined Economics and Finance Committee, chaired by Phan Van Mai, broadly endorsed the direction of reform. The committee noted that many of the conditions being removed had become redundant given improvements in post-market supervision and industry self-regulation. Rather than front-loading compliance requirements, the new framework is expected to rely more heavily on inspection after the fact.
The review also flagged a broader design question: whether conditional licensing is the right tool at all in sectors where downstream oversight — spot checks, penalties, sector-specific rules — could achieve the same public-interest goals at lower cost to business. That debate is likely to shape the final version of the annex before the law goes to a full vote.
The Laughing-Gas Ban
The amendment's most attention-grabbing provision is the proposed ban on selling nitrous oxide (N₂O) to the public for inhalation outside of medical settings. Known colloquially as "laughing gas" and delivered in balloons, N₂O has been widely sold at entertainment venues across Vietnam despite existing controls. The government cited data from the Bach Mai Hospital Poison Control Centre showing a steady stream of hospitalizations among recreational users.
The Ministry of Health's assessment, included in the government submission, linked recreational N₂O inhalation to paralysis, sensory disorders, psychiatric disturbances, spinal cord damage, and reduced fertility. The ministry also noted that the gas acts on the brain through a mechanism similar to opioid drugs such as heroin, raising concerns that balloon use can serve as an entry point to harder substance dependency. Vietnam would join the United Kingdom, the United States, Japan, the Netherlands, Germany, and New Zealand in restricting or banning recreational sales.
Implementation Concerns
The Standing Committee's review raised practical objections to how the ban is framed. Drafting a prohibition based on end-use — recreational inhalation versus legitimate industrial or medical application — creates enforcement ambiguity. Inspectors would need to determine intent at the point of sale, which is difficult to establish and could generate inconsistent application of the law.
Committee members also pointed out that N₂O has entirely lawful roles in food processing, scientific research, industrial calibration, and medical anesthesia. Legislators called for the final text to draw a sharper line between prohibited conduct and permissible commercial activity, so that legitimate manufacturers and distributors are not caught by an overly broad prohibition. Several members questioned why strengthened licensing conditions for N₂O distributors — rather than an outright sales ban — had been ruled out as an alternative.
Investment Law Context
The proposed amendment fits into a pattern of regulatory streamlining that Vietnamese policymakers have accelerated since 2023, as the government has sought to lift GDP growth toward its 8 percent annual target. Reducing the number of conditional business sectors directly lowers the cost and time required to launch or expand operations, a metric that consistently ranks among the top concerns in foreign investor surveys on Vietnam's business climate.
For companies already operating in Vietnam or assessing market entry, the removal of conditional classification in goods trading and distribution is the most commercially significant element. It suggests the government intends to make it easier for foreign service providers to build out supply chains without navigating a separate licensing layer — a friction point that has complicated retail and wholesale expansion strategies for regional and multinational firms alike.
