FOREIGN INVESTMENT IN VIETNAM: UPDATED FOR 2024

FOREIGN INVESTMENT IN VIETNAM: UPDATED PROCEDURES AND REQUIREMENTS FOR 2024

Overview of Foreign Investment in Vietnam

Vietnam has grown into a key destination for foreign investors looking to establish a presence in Southeast Asia. The Vietnamese government actively encourages foreign investment through policies and incentives aimed at economic growth and international cooperation. To successfully initiate an investment project, foreign investors must comply with the Law on Investment and the Law on Enterprises, with recent updates effective from 2020 and detailed in relevant decrees in 2021 and beyond​​.

Definition of Foreign Investors and Legal Framework

According to Vietnam’s Law on Investment, a foreign investor includes individuals or entities with foreign nationality or origin engaging in business or investment activities within Vietnam. The legal foundation for foreign investment in Vietnam is shaped by two primary laws:

1. Law on Investment (No. 61/2020/QH14) – Governing conditions, scope, and forms of foreign investment​.
2. Law on Enterprises (No. 59/2020/QH14) – Outlining the establishment, management, and registration processes for foreign-invested companies​.

Forms of Foreign Investment in Vietnam

Vietnam permits various investment forms to facilitate foreign participation. These include establishing joint ventures with Vietnamese partners, 100% foreign-owned companies, and project-specific investment contracts such as Business Cooperation Contracts (BCCs).

Foreign investors can also invest in Vietnamese enterprises through equity acquisitions, allowing ownership across a wide range of industries while adhering to specific capital contribution limits in sectors such as finance, banking, and real estate. Such restrictions aim to balance foreign control with national interest, aligned with international trade agreements that Vietnam is a signatory to​.

Steps for Establishing a Foreign-Invested Company in Vietnam

The process for establishing a foreign-invested company consists of several mandatory steps, as outlined below:

Step 1: Obtain an Investment Registration Certificate (IRC)

The Investment Registration Certificate (IRC) grants permission for foreign investment and is a prerequisite for foreign investors to launch projects in Vietnam. This certificate confirms the investment’s legal scope, funding details, and compliance with Vietnam’s sector-specific laws. Steps include:

• Submitting required documents to the investment registration office.
• Receiving the IRC, generally issued within 15 working days if all requirements are met.

For certain projects, approval may involve an investment policy decision by the government, particularly for investments in restricted or sensitive sectors​.

Step 2: Obtain an Enterprise Registration Certificate (ERC)

Following the IRC, the investor must apply for an Enterprise Registration Certificate (ERC) to establish a legal business entity, such as an LLC or joint-stock company. The ERC issuance involves:

• Filing the application with Vietnam’s business registration authority.
• Receiving the ERC within three working days, given the application’s compliance.

The ERC validates the entity’s legal standing, allowing it to perform commercial operations within Vietnam​​.

Step 3: Post-Registration Procedures

Upon obtaining both the IRC and ERC, the investor must complete additional procedures to operationalize the business:

• Seal Registration: Registering the enterprise’s seal design with the business registration office for official documentation.
• Tax Code Registration: Enrolling the company with the tax authority and acquiring a tax code.
• Announcement of Business Registration: Publishing the entity’s business registration on the national business registration portal.

Failure to comply with post-registration procedures may lead to penalties or revocation of registration status​.

Key Updates for Foreign Investors in 2024

Vietnam’s regulations continue to evolve to streamline foreign investment processes. Key updates relevant to foreign investors include:

• National Database Integration: Foreign-invested enterprises are now required to update and maintain accurate records on the National Business Registration Portal, which integrates with tax and social insurance databases for streamlined compliance​.
• Online Submission and Tracking: Investors are encouraged to use Vietnam’s online platforms, such as the National Foreign Investment Information System, for submission and tracking of investment-related documents​.
• Sector-Specific Compliance: Sectors like finance, real estate, and media may have foreign ownership caps, reflecting Vietnam’s adherence to commitments under international trade agreements, including WTO and CPTPP.

Legal Compliance and Additional Permits

In addition to the IRC and ERC, foreign-invested enterprises may require additional licenses, such as business permits for operations in specific sectors like import-export or retail. Compliance with these regulations ensures alignment with both national laws and international agreements on market access.

Support Services for Foreign Investors

Foreign investment in Vietnam is intricate, involving multiple stages and sector-specific requirements. Unilaw, a leading Vietnamese law firm, offers comprehensive legal services for foreign investors. The firm provides expertise in securing necessary permits, ensuring regulatory compliance, and navigating Vietnam’s evolving legal landscape​.

Benefits of Foreign Investment in Vietnam

Vietnam’s attractive economic incentives for foreign investors include:

• Corporate Income Tax Incentives: Preferential tax rates are available in certain sectors and regions.
• Land Use and Infrastructure: Special Economic Zones (SEZs) offer reduced land-use fees and access to high-quality infrastructure.
• Labor and Workforce Support: Vietnam’s labor force is young and skilled, providing a competitive advantage for sectors like manufacturing and technology.

These benefits, coupled with Vietnam’s stable economy and favorable trade relations, continue to draw global investors seeking a strategic presence in Southeast Asia.

Conclusion: Foreign Investment in Vietnam

For foreign investors, foreign investment in Vietnam presents vast opportunities backed by government incentives, robust legal frameworks, and streamlined registration processes. Staying compliant with the latest legal updates in 2024 ensures a smooth investment journey. Investors are encouraged to engage experienced legal advisors to navigate complex regulations and capitalize on Vietnam’s investment potential.

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