Detailed guide on FDI investment licenses in Vietnam: types of investment projects, application process, incentives and key considerations for international investors.
Vietnam continues to be one of the most attractive FDI destinations in Asia with stable GDP growth, strong workforce, and increasingly open investment policies. This article provides international investors a comprehensive overview of Vietnam's FDI investment licensing system.
1. Vietnam's FDI Legal Framework
Vietnam's investment legal framework includes:
- Investment Law 2020 — core document
- Enterprise Law 2020 — about establishment and operation
- Decree 31/2021/NĐ-CP — detailing Investment Law
- WTO Schedule of Commitments — Vietnam's commitments since 2007
- FTAs — CPTPP, EVFTA, RCEP — preferential treatment
- BITs — bilateral investment treaties with many countries
2. Forms of FDI Investment
2.1. Establishing New Economic Organization
Setting up new company in Vietnam. Most common form. Includes:
- 100% foreign-owned (WFOE)
- Joint Venture with Vietnamese partner
2.2. Capital Contribution, Share Purchase
Buying shares of existing Vietnamese company. Faster than establishing new because company already has license and operations.
2.3. Public-Private Partnership (PPP)
Cooperating with state on infrastructure projects: BOT, BTO, BT, PPP. Long-term, large-scale projects.
2.4. Investment Cooperation Contract (BCC)
No legal entity establishment, just contract cooperation with Vietnamese partner. Suitable for short-term, low-risk projects.
3. Investment Project Approval
Some special projects require approval before IRC issuance:
3.1. National Assembly Approval
Mega projects significantly impacting environment and society:
- Investment capital over VND 5,000 billion
- Nuclear power projects
- Land conversion of forest, special zones
- Population resettlement over 20,000 people
3.2. Prime Minister Approval
Important projects:
- Airports, seaports
- Petroleum exploration and exploitation
- Casinos, betting
- Insurance, banking
- Telecom (state ownership)
3.3. Provincial People's Committee Approval
Other projects, including most regular FDI projects.
4. Industries with Foreign Ownership Restrictions
By WTO Schedule of Commitments, several industries have ownership ratio limits:
| Industry | Maximum Foreign Ownership Ratio |
|---|---|
| Advertising | Joint venture with Vietnamese partner required |
| Distribution (retail) | 100% (with ENT for >1 store) |
| Logistics | 49-100% by sub-industry |
| Securities services | 100% |
| Insurance | 100% |
| Banking | 100% (some conditions) |
| Telecom (with infrastructure) | 49% |
| Telecom (no infrastructure) | 65% |
| Audiovisual services | JV required, max 51% |
| Tourism (international tour operators) | 49% |
Note: ratios change with new commitments in CPTPP, EVFTA, RCEP — always check latest legal documents.
5. FDI Investment Incentives
5.1. CIT Incentives
- 10% for 15 years: high-tech enterprises, projects in difficult socioeconomic areas, special technology
- 20% standard rate for most other projects
- Tax exemption 2-4 years + 50% reduction next 4-9 years for incentive industries
5.2. Import Tax Incentives
- Tax exemption for imported fixed assets
- Tax exemption for materials for production for 5 years (some projects)
- Tax exemption for special incentive projects
5.3. Land Use Incentives
- Reduced land use rent for projects in difficult areas
- Land rent exemption for 3-15 years for incentive projects
- Faster land use rights certificate issuance in special economic zones
5.4. Other Incentives
- Free import-export tax for export goods
- Faster administrative procedures (one-stop shop in industrial zones)
- Personnel support: foreign worker recruitment, work permits
6. Areas with Highest Incentives
6.1. High-tech Zones
- Hoa Lac (Hanoi), Saigon Hi-Tech Park (HCMC)
- Da Nang High-tech Park
- Highest level of incentives
6.2. Economic Zones
- Phu Quoc EZ, Van Don EZ, Van Phong EZ
- 20-year tax incentives
6.3. Difficult Socioeconomic Areas
- Many provinces in Northern Midlands and Mountains, Central Highlands
- Tax + land + administrative incentives
7. IRC Application Process
- Step 1: Pre-investment assessment (2-4 weeks) - Confirm market access permission - Check sub-license requirements - Define optimal investment structure
- Step 2: Prepare documents (2-4 weeks) - Investor financial documents - Investment project documents - Office lease commitment
- Step 3: Submit IRC application (15-30 working days) - Submit at DPI of provincial People's Committee
- Step 4: Receive IRC - Apply for ERC within 5 days
- Step 5: Post-IRC procedures (4-8 weeks) - Open DICA, transfer investment capital - Apply for sub-licenses (if conditional) - Set up accounting, tax, social insurance systems
8. Important Notes for Foreign Investors
- Engage local counsel: critical for complex projects
- Plan 6-12 months: from initial study to commercial operations
- Properly use DICA: all capital injection and repatriation through this account
- Understand tax treaties: Vietnam has Double Tax Avoidance Agreements with 80+ countries
- Build relationships: with local authorities — important long-term asset
- Comply with reporting: quarterly investment reports to DPI
This article is for reference only. Please contact a lawyer for accurate advice on your specific investment situation.
Frequently Asked Questions
Can foreigners buy land in Vietnam?
Cannot directly buy land. However, FDI enterprises can lease land long-term (50-70 years) from State or sub-lease in industrial zones. Land use rights are pledgeable for loans like Vietnamese citizens. Individual foreigners can buy houses/apartments with conditions.
How can profits be repatriated abroad?
After paying CIT and meeting financial obligations, can transfer profits abroad through DICA. Must submit annual financial statements audited, declare profit transfer with Tax Department, exchange to USD/EUR at commercial banks. Process typically takes 1-2 weeks.
Do FDI enterprises need to hire Vietnamese workforce?
Yes by ratio. By law, foreign workers can only fill positions Vietnamese workers cannot. Each foreign hire needs work permit and reason explained. Some specialized positions are easier than others. Ratio is approximately 80% Vietnamese - 20% foreign for typical FDI enterprises.
Can FDI investment incentives be retained when project changes?
Sometimes. If changes are within originally approved project scope (small expansion, technology upgrade), incentives are retained. If material changes (new industry, doubled scale), may need re-registration and incentives reset by current law.
What protects FDI investors during commercial disputes?
Multiple layers: (1) Investment Law 2020 has compensation clauses if state expropriates property; (2) BITs/FTAs with home country typically have arbitration clauses (ICSID, UNCITRAL); (3) Choose arbitration in international contracts (SIAC, HKIAC). Combining these layers provides strong protection.