Understanding Decree No. 239/2025/ND-CP: A New Era for Investment in Vietnam

The recent enactment of Decree No. 239/2025/ND-CP by the Vietnamese government marks a pivotal shift in how foreign investors can navigate the licensing landscape in Vietnam. Effective from September 3, 2025, this decree brings forth several significant modifications aimed at streamlining the process of obtaining Investment Registration Certificates (IRCs). Let’s break down what these changes entail and how they could benefit foreign investors in Vietnam.

Overview of the Two-Tier Administrative System

With the adoption of a two-tier administrative structure, there has been a pressing need for a regulatory framework that can accommodate local governance changes more effectively. Decree 239 addresses these inconsistencies, particularly in defining investment incentive areas and simplifying procedures at the commune level.

Investment Incentives for Local Administrative Units

One of the primary adjustments brought about by Decree 239 is the clarification in the definition of investment incentive areas. Previously, incentives were only allocated at the district level, creating a disconnect when administrative updates occurred.

Under the new decree:

• Commune-Level Adjustments: Newly formed communes (through mergers or upgrades) will retain their investment incentives based on socio-economic conditions.
• Majority Classification Rules: If communes with differing classifications are combined, the new unit will receive incentives based on majority status, simplifying management for local authorities.

This shift allows for clearer guidelines and helps align investment with local needs.

Removal of the 10-Year Equipment Age Restriction

Another significant amendment concerns the previous 10-year restriction on machinery and equipment used in investment projects. Prior legislation was seen as unrealistic, as many pieces of equipment exceed this age yet remain operationally efficient.

New Eligibility Criteria

• Performance-Based Assessment: Rather than a fixed age limit, machines will now be evaluated based on national technical regulations concerning safety, efficiency, and environmental standards.
• Operational Efficiency: Equipment that operates below 85% of its designed capacity or exceeds resource consumption by more than 15% will be deemed ineligible.

This change opens the door for businesses to make use of existing, efficient machinery, thereby reducing costs and improving operational flexibility.

Infrastructure Investment in Industrial Zones

Decree 239 presents an overhauled approach to infrastructure development within various industrial settings—such as industrial parks, high-tech zones, and export processing zones.

Key Updates Include:

1. Adherence to Approved Plans: All infrastructure developments must align with pre-approved master plans.
2. Public Service Provisions: In underprivileged areas, provincial authorities have the latitude to propose public service units as potential infrastructure investors.
3. Flexible Leasing and Usage Fees: Investors can build and lease factories, offices, and warehouses, and set their rental frameworks and service fees, subject to regular updates.

These provisions foster a more robust investment climate, promoting growth in industrial sectors.

Streamlined Investment Licensing Procedures

This decree also emphasizes operational efficiency for foreign investors, particularly in the realm of IRC applications.

Reduced Application Dossier Requirements

• One Original Set: Investors now need to provide only one original dossier along with a digitally signed electronic copy.
• Digital Signature Validity: The law stipulates that electronic signatures must comply with national and international regulations, ensuring their acceptance in administrative processes.

Shortened IRC Issuance Timeline

The timeline for IRC issuance has slashed from 15 days to an expedited 10 days post-application submission.

Enhanced Investment Incentives List

New categories have been added to the list of areas eligible for investment incentives, particularly focusing on:

• Economic and High-Tech Zones: These areas will now enjoy incentives akin to those available in regions marked as having extremely difficult socio-economic conditions.

Proactive Engagement for Compliance

As these regulations unfold, businesses and investors must take proactive steps to ensure compliance. Engaging with the new framework will not only position entities to leverage available incentives but also optimize their operational strategy amidst changing legal landscapes.

The Broader Context

Decree 239 represents a progressive move towards refining Vietnam’s investment climate. The strategic alterations in regulations signify the government’s responsiveness to the evolving economic landscape and the demands of foreign investors. By simplifying licensing procedures and clarifying incentive structures, Vietnam is poised as an increasingly accessible and attractive destination for investment, facilitating a robust economic framework for future growth.

For investors aiming to navigate these changes, it’s advisable to stay informed through ongoing reporting and analysis. Engaging with local advisors may also offer valuable insights into effectively maneuvering through Vietnam’s investment ecosystem.