Vietnam: A Rising Star in Foreign Investment
Vietnam has quickly become one of the most attractive destinations for foreign investment in Asia. With its robust economic growth, advantageous geographic location, and continuous reforms, the country offers a promising landscape for investors. Yet, while market access is increasingly open, foreign investors must navigate specific regulations regarding ownership limits, corporate structure, and sector-specific restrictions.
Business Structures Available for Foreign Investors
In Vietnam, foreign investors have the option to establish a presence through various legal forms. When forming a company rather than setting up a representative or branch office, an Enterprise Registration Certificate (ERC) is required. The most common forms include:
- Limited Liability Company (LLC)
- Branch Office (BO)
- Representative Office (RO)
Limited Liability Company (LLC)
An LLC is a legal entity where liability is limited to the capital contributed, and shares cannot be issued. There are two types of LLCs in Vietnam:
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Single-member LLC: Owned by one individual or corporate entity. This structure allows for simplified decision-making focused on the owner’s interests.
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Multiple-member LLC: Comprising between two and 50 investors, this structure involves a more formal governance setup, including a members’ council and collective decision-making.
Establishing an LLC can take approximately eight to 16 weeks.
Branch Office (BO)
A BO is not a separate legal entity and is typically available for foreign investors in specific service sectors, such as banking and finance. While BOs can hire employees and remit profits abroad, they are limited to conducting activities within the licensed scope of their parent companies. The establishment process generally takes around 12 weeks.
Representative Office (RO)
Unlike BOs, ROs cannot engage in profit-generating activities. Instead, they are usually established for market research, promotion, and liaison purposes. RO licenses are valid for five years and are renewable, with a setup timeline of about six to eight weeks.
Investment Capital and Bank Accounts
In Vietnam, there are typically no statutory minimum capital requirements, though regulated sectors like banking and insurance do have specific financial thresholds. In common sectors such as manufacturing, trading, construction, and engineering, investment capital is determined based on business scale and operational needs.
Foreign investors are required to open a Direct Investment Capital Account (DICA) with a licensed commercial bank in Vietnam. This account enables them to contribute registered capital and conduct all related transactions. Each foreign-invested enterprise may maintain only one DICA, which can be denominated in Vietnamese Dong (VND) or another currency as specified in its Investment Registration Certificate (IRC). All registered charter capital must be fully deposited within 90 days following the ERC’s issuance.
Understanding Vietnam’s Conditional Business Sectors
Vietnam’s legal framework under the Law on Investment No. 61/2020/QH14 (LOI 2020) identifies specific business sectors as conditional for foreign investment. These sectors require meeting certain market access conditions or obtaining statutory approvals. For instance, in logistics, foreign ownership may be limited to 49% or 51%, depending on the specific service. Telecommunications services involving network infrastructure generally cap foreign ownership at 49%, aligned with both Vietnamese law and international commitments.
What’s New Under the Law on Investment 2025
In a significant update, the National Assembly passed the Law on Investment No. 143/2025/QH15 (LOI 2025) on December 11, 2025. This law marks a considerable change in Vietnam’s investment policy, narrowing the focus to just 20 specified projects and removing 38 conditional business lines. It allows foreign investors to establish enterprises without needing to secure an IRC beforehand, facilitating a more streamlined entry process into the market.
LOI 2025 will repeal LOI 2020 starting March 1, 2026. Provisions regarding conditional business lines, outlined in Appendix IV, will come into effect on July 1, 2026. The Ministry of Finance will serve as the central authority overseeing investment activities in the country.
Conclusion
Vietnam provides an exciting and dynamic landscape for foreign investment, supported by a continually evolving regulatory framework. While broad market access exists, foreign investors, especially in regulated sectors, should remain vigilant in adhering to national and specific sector requirements. The introduction of LOI 2025 signals a commitment towards simplifying procedures without overlooking the necessary regulatory safeguards.