By Lawyer Luu Thi Hue – UniLaw LLC

VIETNAMESE DONG INVESTMENT 2025 – UNILAW’S PERSPECTIVE

The landscape of foreign direct investment in Vietnam is undergoing a monumental shift as we progress through 2025. With new legal frameworks such as Law No. 57/2024/QH15 and Decree No. 19/2025/NĐ-CP coming into full effect, investors are navigating a system that increasingly prioritizes high-tech sectors, innovation, and streamlined administrative procedures. At Unilaw, we believe that understanding these changes is not just about compliance, but about seizing the competitive advantages offered by Vietnam’s evolving economy. This comprehensive analysis explores the current state of investing Viet Nam, drawing from recent court precedents and the latest statutory updates.

Lessons from the Courtroom: The Application of Investment Law in Joint Ventures

To understand the practical risks of investing Viet Nam, one must look at how the judiciary interprets investment contracts. A landmark case involved a dispute between Tan V Company and Duc M Company regarding an Investment Cooperation Contract (No. 01/HTĐT/TVA-ĐM) signed in 2010 for a residential project. The situation arose when Tan V failed to fulfill its commitment to clear the land and hand over the site to Duc M, despite having received 115 billion VND in capital contributions. Duc M eventually exercised its right to unilaterally terminate the contract and sued for the return of the capital plus damages.

The procedural history of this case was complex. The first-instance and appellate courts initially struggled with which law to apply—the Law on Commerce or the Law on Investment. Eventually, the Supreme People’s Court clarified a crucial point of law for all fdi vietnam stakeholders: disputes arising from investment cooperation contracts must be governed by the specialized Law on Investment, and where that law is silent, the Civil Code applies, rather than the Law on Commerce. The final verdict forced Tan V to return the 115 billion VND principal, pay late payment interest of over 112 billion VND, and pay an additional 115 billion VND in damages as per the contract’s penalty clauses. This case underscores the necessity of clear contractual terms and a deep understanding of which legal regime governs your foreign direct investment in Vietnam.

Defining the Foundation: Core Concepts of the Law on Investment

For any entity considering fdi to vietnam, it is essential to grasp the fundamental terminology defined in the current legal system. The Law on Investment (Law No. 61/2020/QH14, as amended) provides the following definitions:

“Article 3. Interpretation of terms

… 18. An investment project is a set of proposals for medium-term or long-term capital investment to carry out business investment activities in a specific area and for a determined period of time.

… 22. Business investment is the investor’s act of investing capital to perform business activities.

… 24. Market access conditions for foreign investors are the conditions that foreign investors must meet to invest in the sectors and trades on the List of sectors and trades with restricted market access for foreign investors…”

In plain language, these definitions establish that an “investment project” is your roadmap for putting money into the country over a set timeframe. “Business investment” is the actual act of spending that money to run a business. Most importantly, “market access conditions” are the specific rules or hurdles that you, as a foreigner, must clear before you can operate in certain sensitive industries in Vietnam.

Protections and Guarantees for Foreign Capital

A primary concern for Foreign Investment in Vietnam is the security of assets and the ability to repatriate profits. The Vietnamese State provides robust guarantees to encourage long-term commitment. Article 10 and Article 12 of the Law on Investment are the pillars of this protection:

“Article 10. Guarantee of property ownership

1. Lawful assets of investors shall not be nationalized or confiscated by administrative measures.

2. In cases where the State compulsorily purchases or requisitions property for reasons of national defense, security or for national interest… the investor shall be paid and compensated in accordance with the provisions of the law…”

“Article 12. Guarantee of the right to transfer assets of foreign investors abroad

After fulfilling all financial obligations to the Vietnamese State… foreign investors may transfer the following assets abroad:

1. Investment capital and investment liquidations;

2. Income from business investment activities;

3. Money and other assets under the lawful ownership of the investor.”

Essentially, the government promises not to take your business away through arbitrary administrative orders. If they ever need your property for a major national reason, they must pay you fairly for it. Furthermore, once you have paid your taxes, you are legally entitled to send your initial capital and all your earned profits back to your home country.

Market Access and the “Negative List” Approach

Vietnam has adopted a “negative list” approach to fdi vietnam, meaning that foreign investors are generally treated like domestic ones unless they are investing in a restricted sector. This transparency is a cornerstone of the 2025 investment environment. Article 9 of the Law on Investment outlines this principle:

“Article 9. Sectors, trades and market access conditions for foreign investors

1. Foreign investors are applied market access conditions as prescribed for domestic investors, except for the cases specified in Clause 2 of this Article.

2. Based on laws, resolutions of the National Assembly… the Government shall announce the List of sectors and trades with restricted market access for foreign investors…”

This means that you should assume you have the same rights as a local Vietnamese business owner unless the specific industry you are entering is on a “restricted list.” This list usually specifies things like how much of the company you can own (e.g., a 49% or 51% cap) or what specific forms of investment you must use.

These restrictions are often rooted in WTO Commitments. For example, in the advertising sector (CPC 871), while there is no limit on foreign ownership percentage, the investment MUST be in the form of a joint venture or a business cooperation contract with a Vietnamese partner who is already authorized to provide advertising services.

The 2025 Special Investment Procedure: A Fast Track for High-Tech

One of the most significant updates for 2025 is the introduction of “Special Investment Procedures” under Article 36a of the Law on Investment, detailed by Decree 19/2025/NĐ-CP. This is designed specifically for fdi to vietnam in strategic sectors. According to the updated Article 36a:

“Article 36a. Special investment procedures

1. …investors have the right to choose to register investment according to the provisions of this Article for projects in industrial parks, export processing zones, high-tech zones… in the following fields:

a) Investment in construction of innovation centers, research and development (R&D) centers; investment in the field of semiconductor integrated circuit industry, design technology, component manufacturing… chips, semiconductor materials;

b) Investment in high-tech fields prioritized for investment and development…”

This new rule creates a “priority lane” for companies making computer chips, high-tech materials, or starting research centers. If your project falls into these categories and is located in an approved industrial or high-tech park, you can choose a faster, more specialized registration process to get your business running sooner.

Under this procedure, the Management Board of the industrial park or high-tech zone becomes the primary authority for issuing the Investment Registration Certificate (IRC), often within a significantly shortened timeframe. However, this speed comes with a trade-off: investors must provide strong commitments regarding construction standards, environmental protection, and fire safety, and they bear “full responsibility” if these commitments are not met.

Establishing a Commercial Presence: From Projects to Entities

For most foreign direct investment in Vietnam, the standard route involves obtaining an IRC followed by establishing a legal entity. Article 22 of the Law on Investment clarifies this sequence:

“Article 22. Investment to establish an economic organization

1. … c) Before establishing an economic organization, the foreign investor must have an investment project and perform the procedures for granting or adjusting the Investment Registration Certificate…”

Simply put, as a foreigner, you cannot just register a company like a local can. You must first get your specific “investment project” approved and receive a certificate for it. Only after that can you go through the steps to officially form your company (the “economic organization”).

However, the 2025 amendments provide a progressive exception for strategic technologies. Foreign investors in innovation centers, R&D, 5G infrastructure, or other “strategic technologies” as decided by the Prime Minister are now permitted to establish their company before completing the IRC procedures. This is a major change intended to facilitate investing Viet Nam in the most critical parts of the modern economy by allowing the corporate structure to be ready before the project details are finalized.

Investment via Mergers and Acquisitions (M&A)

Not all Foreign Investment in Vietnam starts with a new project. Many investors choose to buy into existing Vietnamese companies. This is governed by Article 24 and Article 26 of the Law on Investment. For certain transactions, “M&A Approval” is required before the ownership change can be registered at the business registry.

“Article 26. Procedures for investment by contributing capital or purchasing shares…

2. Foreign investors shall perform procedures for registration of capital contribution or purchase of shares… in the following cases:

a) The capital contribution… increases the ownership ratio of foreign investors in economic organizations business in sectors and trades with conditional market access…

b) The capital contribution… leads to the foreign investor… holding more than 50% of the charter capital…”

In short, if your purchase of shares makes you the majority owner (over 50%) or if the company works in a “conditional” industry (like logistics or healthcare), you must get a green light from the investment authorities first. If you are just buying a small piece of a non-sensitive company, you can usually skip this “approval” step and go straight to updating the company’s list of owners.

A specific case handled by Unilaw involved a Korean investor seeking to acquire 30% of a Vietnamese auditing and financial consulting firm. Because auditing is a “conditional” industry, the transaction required a careful review of WTO commitments and local regulations on the number of practicing auditors required to maintain the firm’s license during the ownership transition.

Operating through Representative Offices and Branches

For those testing the waters of the Vietnam FDI market, a full company might not be necessary. Foreign traders have the right to establish Representative Offices (RO) or Branches, subject to specific conditions.

“Article 18. Obligations of a Representative Office

1. Not to perform direct profit-making activities in Vietnam.

2. Only to perform commercial promotion activities within the scope permitted by this Law.”

If you set up a Representative Office, its job is strictly limited to doing research, meeting potential partners, or promoting your brand. It is legally forbidden from actually selling anything or making money directly in Vietnam. If you want to sign contracts and earn revenue, you need a Branch or a full Subsidiary (Company).

Unilaw assisted a German construction materials company, Knauf, in establishing a Representative Office in Hanoi to coordinate its expanding operations in the north after it had already built a factory in Haiphong. This office served as a crucial hub for “market research and investment opportunity promotion” without engaging in the actual sale of gypsum boards, which was handled by the factory.

Dispute Resolution: Arbitration vs. The Vietnamese Courts

When investing Viet Nam, one must plan for the worst-case scenario. The Law on Investment provides multiple venues for resolving conflicts, depending on the parties involved. Article 14 distinguishes between purely domestic disputes and those involving foreign elements:

“Article 14. Resolution of disputes in business investment activities

… 3. Disputes between investors in which at least one party is a foreign investor… shall be resolved through one of the following agencies and organizations:

a) Vietnamese Court;

b) Vietnamese Arbitration;

c) Foreign Arbitration;

d) International Arbitration;

đ) Arbitration established by the disputing parties.”

This means if you are a foreign investor, you have the luxury of choice. You can agree in your contract to use an international arbitration center (like SIAC in Singapore) or a local one (like VIAC in Vietnam) instead of going to a local Vietnamese court. This flexibility is a key protection for Foreign Investment in Vietnam.

However, investors must be careful. A case between Vit. B.V. (Netherlands) and DTH Textile Company (Vietnam) showed the importance of following the rules for “Foreign Arbitral Awards.” After Vit. B.V. won an arbitration case in the UK (ICA), they had to apply to a Vietnamese court to have that win officially “recognized and enforced” in Vietnam. DTH attempted to block this, claiming they never received the proper notices from the UK arbitrator. The Binh Duong Provincial Court eventually ruled in favor of Vit. B.V., but the process took years of additional litigation, highlighting that winning an arbitration case abroad is only half the battle.

Land Rights for Foreign-Invested Enterprises

Land ownership in Vietnam is unique; the land belongs to “all the people” and is managed by the State. Foreigners and fdi vietnam companies can only hold “Land Use Rights” (LURs) through leasing or specific allocations. The 2024 Land Law (Law No. 31/2024/QH15) clarifies the rights of these entities.

“Article 41. …Economic organizations with foreign investment…

… 2. … [those] leased land with annual rental payment have the rights and obligations:

… b) Mortgage assets under their ownership attached to the land at credit institutions permitted to operate in Vietnam;

… c) Contribute capital with assets under their ownership attached to the land during the lease term…”

In simple terms, if your company rents land and pays the rent every year, you don’t “own” the land, but you do own the factory or office building you build on it. You can use that building as collateral to get a bank loan, or you can “contribute” that building as your part of a new business deal with a partner. You cannot, however, mortgage the land itself if you only pay annual rent.

Unilaw recently advised a French investor involved in a dispute over a high-end apartment project (Cosmo City). The case involved “repatriating” investment capital after the developer failed to deliver the final ownership certificates (Pink Books). This illustrates the critical importance of performing due diligence on the land and project legal status before investing Viet Nam in real estate.

Tax Incentives and Financial Policies for 2025

The Vietnamese government uses tax policy as a powerful tool to attract Foreign Investment in Vietnam into specific regions and industries. For 2025, the focus remains on large-scale projects and high-tech production. Decree No. 31/2021/NĐ-CP and various tax laws define these benefits.

“Article 19. Objects entitled to investment incentives

… 3. Investment projects with an investment capital scale of 6,000 billion VND or more… when meeting the following conditions:

a) Disburse at least 6,000 billion VND within 03 years…

b) Have a total minimum revenue of at least 10,000 billion VND per year… or employ more than 3,000 regular employees…”

If you are planning a “mega-project” with over 6 trillion VND (approx. \$240 million USD) in capital, you can get significant tax breaks. However, you must move fast—you have to actually spend that money within three years and either hit high revenue targets or hire thousands of local workers shortly after starting.

For smaller projects, particularly in software production, the incentives are also generous. Companies can enjoy a 0% VAT rate on software products and a Corporate Income Tax (CIT) holiday (e.g., 4 years of tax exemption, followed by 9 years of 50% reduction). Unilaw has helped numerous tech firms from Japan and Europe structure their operations to maximize these “software production” incentives.

Employment and Labor Compliance

Operating a successful fdi vietnam company requires a rigorous approach to labor law. Vietnam’s labor market is heavily regulated to protect workers. Investors must understand the requirements for both local and expatriate staff.

“Article 85. Sending Vietnamese laborers to work at investment projects abroad

1. Investors may only send Vietnamese laborers to work at their investment projects abroad in accordance with the labor laws of Vietnam and of the country…”

While this article specifically addresses outward investment, the reverse applies to inward investing Viet Nam. Foreign-invested firms must register internal labor rules, sign formal employment contracts, and contribute to Social Insurance, Health Insurance, and Unemployment Insurance (totaling approximately 21.5% of the salary fund for the employer). For foreign experts, obtaining a Work Permit or a Work Permit Exemption is a non-negotiable requirement before they can apply for a Temporary Residence Card (TRC).

Unilaw assisted a Chinese logistics firm (Jinjiang Shipping) with regular labor compliance, including drafting “Internal Labor Regulations” and “Confidentiality and Non-Compete Agreements” to protect the company’s proprietary data while ensuring all employee rights were respected according to the 2019 Labor Code.

Reporting and Transparency Obligations

Post-investment compliance is where many Foreign Investment in Vietnam projects encounter difficulties. The Law on Investment mandates a strict reporting regime through the National Investment Information System (fdi.gov.vn).

“Article 72. Reporting regime on investment activities in Vietnam

… 2. …foreign-invested economic organizations shall report to the investment registration agency… on the implementation of investment projects, including: investment capital realized, business results, information on labor, payment to the state budget… [Source: Law on Investment]”

This means your job isn’t over once you get your license. You must log in to the government’s portal every quarter and every year to report on how much money you’ve actually spent, how many people you’ve hired, and how much profit you’re making. Failing to do this can lead to fines or even the revocation of your investment certificate.

In a case involving Haein Information System (Korea), the company faced administrative penalties because it had neglected its “statistical reporting regime” and had failed to fully contribute its registered charter capital within the committed timeframe. Unilaw helped the client rectify these records and successfully apply for an adjustment to their license after the capital contribution was finalized.

The 2025 Outlook: A New Era for Investors

As we look toward the remainder of 2025 and into 2026, the investing Viet Nam story is one of targeted growth. The government is clearly moving away from generic manufacturing and toward high-value, sustainable projects. The abolition of certain market access restrictions for WTO members and the introduction of “Special Procedures” for semiconductors and R&D are strong signals of this intent.

However, the Tan V vs. Duc M case serves as a sober reminder that the “legal environment” is only as good as the contracts and due diligence that support it. Whether you are establishing a 100% foreign-owned factory in Haiphong or entering a joint venture in Ho Chi Minh City, success depends on a proactive legal strategy. At Unilaw, we are committed to providing that strategy—combining deep local knowledge with a global perspective to ensure your foreign direct investment in Vietnam is both secure and profitable.

For detailed inquiries regarding specific sectors or the new 2025 special procedures, please contact our team at Unilaw.

• Case: Tan V vs. Duc M (Investment Contract Dispute) – Source: – Laws: Law on Investment (Art. 3, 21, 23); Civil Code (Art. 426).
• Case: Vit. B.V. vs. DTH (Enforcement of Foreign Arbitral Award) – Source: – Laws: Civil Procedure Code (Art. 31, 37, 458, 459); New York Convention 1958.
• Case: Haein Information System (Compliance and Capital Contribution) – Source: – Laws: Law on Investment; Decree 53/2007.
• Case: Hanvina Eng (Supplementing Business Sectors) – Source: – Laws: WTO Commitments; Decision 10/2007/QĐ-BTM; Law on Investment.
• Case: KAM International (Establishment of Subsidiary) – Source: – Laws: Law on Investment; Law on Enterprise; WTO CPC 8672.
• Case: Nidec Nissin (Ownership Restructuring) – Source: – Laws: Law on Investment; Law on Enterprise; Law on CIT (Tax on capital transfer).
• Case: Jinjiang Shipping (Internal Governance and Labor) – Source: – Laws: Labor Code 2019; Law on Social Insurance.