Vietnam has officially moved to ban the investment and commercial activities related to e‑cigarettes and heated tobacco products, following a decisive vote in the National Assembly on the morning of December 11. The prohibition is codified in the newly revised Law on Investment, which adds e‑cigarettes and heated tobacco to the list of industries barred from investment and business operations.
What’s banned and when it takes effect
- Scope: The law explicitly prohibits investment in and business of e‑cigarettes and heated tobacco products. This places these products alongside other prohibited sectors such as narcotics, certain chemicals and minerals, wild fauna and flora specimens sourced from the wild, prostitution, human trafficking and trade in human tissues or fetuses, human reproductive cloning, explosive fireworks, debt collection services, trade in national treasures, and export of relics and antiquities.
- Effective dates: The revised Law on Investment takes effect March 1, 2026, with certain provisions coming into force on January 1, 2026 and July 1, 2026.
Transitional rule for export‑only manufacturing
- The National Assembly tasked the Government with setting out how to handle existing or registered projects that manufacture electronic devices for e‑cigarettes or heated tobacco exclusively for export. This applies to projects that have been registered, approved, or authorized in writing by competent state authorities before January 1, 2025. In short: domestic business in vape products will be banned, but the Government will clarify treatment of pre‑2025 export‑only manufacturing projects.
Regulatory approach tightened, with targeted streamlining elsewhere
- Business conditions review: Presenting the report on absorbing comments and finalizing the draft law, Finance Minister Nguyen Van Thang said ministries reviewed conditional business lines to distinguish those requiring “pre‑check” licensing from those that can shift to “post‑check” oversight via technical standards and regulations.
- Cutbacks: The law cuts, amends, or supplements conditional business lines, including removing 38 lines that no longer meet criteria.
- Transparency: The Government will publish (1) the list of conditional business lines that still require licenses/certificates before operation and (2) the list of lines transitioning to post‑check management via publicized requirements. All conditional lines and conditions must be posted on the National Business Registration Portal, with detailed rules on publication and compliance control to follow.
Outbound investment: license thresholds to be set by Government
- Streamlined cases: The law adds cases where outbound investors will not need an outbound Investment Registration Certificate, but must complete foreign‑exchange transaction registration under FX regulations.
- Rationale: Lawmakers aim to make outbound investment a clearer tool for Vietnam’s external economic strategy, supporting Vietnamese companies’ global expansion and competitiveness.
- Scale today: By end‑June 2025, Vietnam had 1,916 valid outbound projects totaling over USD 23 billion. About 67.4% of projects are under VND 20 billion (roughly small in value, ~1.7% of total capital), while ~28% exceed VND 20 billion and account for approximately 98.3% of total capital. The remainder are micro projects under VND 1.2 billion (~USD 50,000).
- Approvals to date: Such projects have generally required Prime Ministerial policy approval or outbound investment certificates; none to date needed National Assembly‑level approval. Based on these statistics, the Government will define capital thresholds that trigger licensing.
What this means for the vape industry
- Domestic market closure: From 2026, companies will be barred from investing in, importing, distributing, or retailing e‑cigarettes and heated tobacco in Vietnam’s domestic market.
- Supply chain impact: Firms involved in device/component production located in Vietnam will need to align with the export‑only carve‑out—and only if their projects were registered or approved prior to Jan 1, 2025—pending detailed Government guidance.
- Compliance timelines: Businesses should prepare for cessation of domestic vape‑related operations before the law’s effective dates and monitor forthcoming decrees for compliance specifics, particularly around inventory run‑down, advertising prohibitions, and enforcement.
- Regional context: Vietnam’s move places it among the more restrictive markets in Asia for next‑generation nicotine products, diverging from regulated‑sale models seen in some neighboring economies.
Key dates to watch
- Jan 1, 2025: Cut‑off for projects eligible under the export‑only transitional handling.
- Jan 1/Mar 1/Jul 1, 2026: Staggered effective dates; e‑cigarette business prohibition takes effect with the revised Law on Investment on March 1, 2026, with some provisions earlier or later as specified in forthcoming guidance.
What’s next
- The Government will issue detailed implementing decrees on: treatment of pre‑2025 export‑only projects; publication and enforcement of conditional business lines; and capital thresholds and procedures for outbound investment.
- Industry participants—manufacturers, traders, logistics, and retail—should conduct legal reviews, update contracts and supply plans, and prepare exit or reorientation strategies for the Vietnam market in 2026.
