Vietnam’s New Law on Investment 2025: Key Changes and Insights

By Vilaf Lawyers

Thu, January 1, 2026 | 8:00 am GMT+7

The Law on Investment 2025 represents a significant step in Vietnam’s ongoing efforts to enhance its investment climate. As noted by senior partner Anh Dang and associate Linh Dao at Vilaf Law Firm, this legislation is designed to simplify administrative procedures and create a more favorable legal framework for both domestic and foreign investors.

Context and Significance

Passed by the National Assembly on December 11, 2025, the Law on Investment 2025 is a reflection of Vietnam’s commitment to institutional reform. It aims to streamline the investment process, alleviate administrative bottlenecks, and boost competitiveness in attracting investment. The new law consists of seven chapters and 52 articles and comes into effect on March 1, 2026, with certain provisions starting from July 1, 2026.

Streamlined Regulations for Foreign Investors

A notable change in the Law on Investment 2025 is the reduction of regulatory barriers for foreign investors. Previously, foreign entities were required to have an approved investment project before establishing an economic organization. Starting July 1, 2026, foreign investors will be allowed to establish an organization before obtaining the Investment Registration Certificate (IRC). This flexibility reduces administrative burdens and accelerates market entry.

However, foreign investors must still meet market access conditions, including foreign ownership limits and investment forms. This shift aims to expedite preparatory stages and ease capital contributions to cover initial expenditures without the lengthy process of securing an IRC.

In-Principle Approval Changes

Article 24 of the Law outlines specific investment projects requiring In-principle Approval (IPA), now reduced to 20 categories. This includes projects in sensitive sectors such as seaports and telecommunications. Furthermore, three specific circumstances have been introduced under which certain projects may not require IPA, marking a beneficial reduction in administrative processes.

The decision-making authority for IPA has also been centralized, diminishing the role of the National Assembly in approving investment projects that don’t require special mechanisms. This centralization streamlines the approval process, allowing faster decision-making and increased efficiency.

Reduction of Conditional Business Lines

The Law has notably reduced the number of conditional business activities, removing 38 lines from the list, such as tax and customs procedure services. This reform lowers compliance costs and fosters a business-friendly environment, allowing projects in these previously conditional areas to enter the market without additional licensing hurdles.

Adjusted Procedures for Investment Project Modifications

With changes to Article 33, only five specific circumstances will now necessitate adjustments to investment projects. This change reflects a move towards enhancing the autonomy of investors while still holding them accountable for their venture’s outcomes. The state aims to minimize unnecessary regulatory hindrances, enabling businesses to operate more intuitively.

Expanded Scope of Special Investment Procedures

Article 28’s modifications provide greater flexibility for investors. Projects in designated zones such as industrial parks and free trade zones can now take advantage of special investment procedures without the burdensome process of IPA or other approvals previously required. Instead, they must simply comply with relevant legal requirements, streamlining the initiation of investment activities.

Revised Investment Incentives Framework

Significantly, the structure of investment incentives has been transformed. Instead of an exhaustive list of incentivized sectors, the Law now emphasizes policy objectives in sectors like technology, renewable energy, and infrastructure. This paradigm shift aligns incentives with broader developmental goals, encouraging diverse projects that contribute to Vietnam’s economic landscape.

Changes in Outbound Investment Regulations

The Law also abolishes the approval process for outbound investment policy. New regulations governing capital flows will independently handle issues like profit repatriation. Additionally, only select projects engaging in conditional outward investments will be subject to registration processes, thereby simplifying outbound investment activities.

Mandatory Termination of Investment Projects

Lastly, Article 36 introduces conditions under which investment projects might mandatorily be terminated, including cases of land revocation. This provision raises concerns for investors, especially as it can occur without any fault on their part. The ambiguity surrounding obligations and rights related to project terminations emphasizes the importance of forthcoming regulations to clarify these processes.

In summary, the Law on Investment 2025 is a progressive step that reflects Vietnam’s commitment to fostering a robust investment environment. By simplifying procedures and improving clarity, it positions the country to attract greater investment while aiming for sustainable economic growth. However, the practical implications will rely heavily on the swift creation and dissemination of effective implementing regulations.