Update: 18.05.2026
In the context of Vietnam entering an era of dynamic rise, with a strategic orientation towards rapid and sustainable development grounded in innovation, economic structural transformation, and deep international integration, foreign investment continues to serve as a critical driver of economic growth. In response to emerging practical demands and global capital flow trends, Vietnam’s investment legal framework has been and continues to be refined to enhance transparency, flexibility, and alignment with international best practices, with the aim of establishing a conducive, stable, and highly competitive investment environment. Accordingly, on 11 December 2025, at the 10th Session of the 15th National Assembly, the Law on Investment 2025 (hereinafter the “LOI 2025”, Law No. 143/2025/QH15) was adopted, effective from 1 March 2026, replacing Law on Investment 2020. The LOI 2025 was enacted amid Vietnam’s intensified competition to attract foreign direct investment (“FDI”) inflows, while shifting from a policy of attracting FDI “at all costs” to one of selective, high-quality FDI focused on technology transfer, advanced governance, and sustainable development.
Prior implementation of the Law on Investment 2020 revealed numerous practical challenges, particularly overlapping procedures, heavy pre-approval mechanisms, prolonged market entry timelines, and limited flexibility during project execution. Against this backdrop, the key question arises: do the new provisions of the LOI 2025 truly deliver substantial improvements to the investment procedures applicable to foreign investors?
I. LEGAL BASIS
- Law on Investment No. 61/2020/QH14 adopted by the National Assembly on 17 June 2020 (“LOI 2020”);
- Law on Investment No. 143/2025/QH15 adopted by the National Assembly on 11 December 2025 (“LOI 2025”);
- Draft No. 01 dated 13 January 2026 of the Decree detailing and guiding the implementation of certain provisions of the Law on Investment (“Draft Decree”).
II. NEW POLICIES ON FOREIGN INVESTMENT INTO VIETNAM
The LOI 2025 continues to recognize the fundamental forms of investment by foreign investors in Vietnam, including: (i) establishment of an economic organization; (ii) capital contribution, acquisition of shares or capital contributions; (iii) implementation of investment projects; and (iv) investment under contracts, in particular business cooperation contracts (BCCs). The retention of these forms of investment reflects an intention to maintain stability in the investment legal framework. In substance, the regulations governing forms (ii), (iii), and (iv) remain largely unchanged. The most notable change relates to investment procedures applicable to form (i), as analyzed in detail in Section II.1 below. In addition, the reforms introduced under the LOI 2025 mainly focus on simplifying procedures, processes, and market access mechanisms, rather than expanding or introducing new forms of investment.
- Permitting the establishment of an economic organization prior to obtaining an investment project
One of the most notable new features of the LOI 2025 is that it allows foreign investors to establish an economic organization to implement an investment project prior to carrying out the procedures for the issuance or amendment of the Investment Registration Certificate. Under the previous regime, foreign investors were required to obtain an Investment Registration Certificate (“IRC”) before completing enterprise registration procedures, which resulted in prolonged market entry timelines. The LOI 2025 now permits foreign investors to establish an enterprise first, provided that the applicable market access conditions for foreign investors are satisfied. It should be noted, however, that the implementation of the investment project may only commence after the IRC has been granted. This change enables foreign investors to be more proactive in their investment preparation, allowing them to establish a company at an early stage in order to open bank accounts, lease office space, and recruit personnel while awaiting the review and approval of the investment project. As a result, the investment and business environment becomes more open and attractive to foreign investors, promotes the attraction of investment capital, and ensures equal treatment between domestic and foreign investors in carrying out these procedures.
It is also worth noting that the LOI 2025 does not currently provide specific guidance on the deadline for completing IRC application procedures after the establishment of the project-implementing economic organization. A Draft Decree provides that, following establishment, the economic organization implementing the investment project must carry out the prescribed investment procedures and complete the IRC application within six (06) months from the date of establishment; failing which, dissolution procedures must be conducted in accordance with applicable laws. In the coming period, foreign investors will need to closely monitor and regularly update themselves on the contents and effective date of the official guiding decree in order to promptly obtain relevant information and arrange appropriate implementation plans.
- Narrowing the scope of investment policy approval
The LOI 2025 continues to narrow the scope of projects required to undergo investment policy approval procedures, retaining only projects of large scale, projects in sensitive sectors, projects involving proposed land use, or projects with significant environmental impacts, among others. This approach significantly reduces the number of projects that must go through lengthy pre-approval procedures.
- Expansion of projects eligible for special investment procedures – the “Green Channel” Mechanism
Special investment procedures, or the “green channel” mechanism, are not newly introduced, as they were previously provided for under Article 36a of the LOI 2020. Investment projects registered under this mechanism are not required to undergo investment policy approval, technology appraisal, preparation of environmental impact assessment reports, detailed planning, issuance of construction permits, or other approval, consent, or licensing procedures in the fields of construction and fire prevention and fighting. Instead, investors are only required to submit a written undertaking to comply with applicable legal conditions, standards, and technical regulations.
Previously, this mechanism applied only to certain investment projects in the fields of science and technology located in industrial parks, export processing zones, high-tech parks, concentrated digital technology parks, free trade zones, and functional zones within economic zones, which were entitled to opt for registration under the special investment procedure (the green channel).
Under the LOI 2025, however, the scope of projects eligible for the “green channel” mechanism has been expanded to cover all projects located in industrial parks, export processing zones, high-tech parks, concentrated digital technology parks, free trade zones, and functional zones within economic zones, without restrictions as to industry or sector. The application of this mechanism is expected to significantly shorten procedural processing times and enhance the competitiveness of Vietnam’s investment environment.
- Changes to conditional business lines and sectors
The LOI 2025 assigns the Government the authority to publish and regulate investment and business conditions applicable to the list of conditional business lines and sectors, including: (i) a list of conditional business lines and sectors that are required to obtain licenses or certificates prior to the commencement of investment and business activities; and (ii) a list of conditional business lines and sectors for which the management approach is to be shifted from licensing and certification to the disclosure of business requirements and conditions, subject to post-licensing (ex post) supervision. Currently, most conditional business lines set out in Appendix IV of the LOI 2020 are subject to a pre-approval regime, under which a license must be obtained before business operations may commence. In practice, certain business lines may not require control under a pre-approval mechanism and could instead be managed under a post-approval (ex post) supervision regime. The clear division into the two aforementioned lists is expected to simplify procedures, reduce market entry barriers for enterprises, and promote freedom of business.
In addition, the LOI 2025 removes a number of conditional business lines, such as tax procedure services, customs procedure services, employment services, labor outsourcing services, automobile warranty and maintenance services, and certain other business lines. This change is of significant importance in eliminating market entry barriers and promoting foreign investment into Vietnam.
- The “One-Stop” mechanism, electronic procedures, and their impact on foreign investors
The LOI 2025 continues to strengthen the “one-stop” mechanism and the implementation of investment procedures through the National Investment Information System. Procedures for project registration, project amendment, and investors’ reporting obligations are integrated, thereby reducing paper-based documentation and limiting fragmented handling by multiple authorities. However, in parallel with the simplification of pre-approval procedures, the post-approval (ex post) supervision mechanism is enhanced, requiring foreign investors to place greater emphasis on legal compliance throughout the entire project implementation process. In addition, during the initial phase of implementation, the risk of inconsistent application among local authorities and the dependence on the timely issuance of guiding regulations remain factors that warrant close monitoring.
III. Conclusion
From the foregoing analysis, it can be seen that the LOI 2025 demonstrates a clear effort to reform and simplify investment procedures applicable to foreign investors, by substantially reducing restrictions, revising market entry procedures, strongly shifting from a pre-approval mechanism to a post-approval (ex post) supervision regime, and enhancing the digitalization of administrative procedures. Nevertheless, the practical effectiveness of these new provisions will still depend significantly on their implementation and consistent application in practice.
In the initial phase of implementation of the LOI 2025, foreign investors should approach the new regulations in a proactive yet cautious manner, while regularly monitoring and updating themselves on guiding and implementing regulations, in order to ensure effective investment, legal compliance, and the minimization of legal risks when investing in Vietnam.
ADK Vietnam Lawyers
