Investment conditions applicable to foreign investors when establishing a company in Vietnam

Vietnam has always been an attractive destination for foreign investors thanks to its dynamic business environment and open policies. However, to establish a company and operate legally here, foreign investors need to understand the specific conditions stipulated by Vietnamese law. Vietnamese HTC Law will clarify the most important conditions that foreign investors must meet when wishing to establish an economic organization in Vietnam, ensuring a smooth and lawful investment process.

1. The right of foreign consultants to establish economic organizations.

According to Article 22 of the 2020 Investment Law, foreign investors have the full right to establish economic organizations in Vietnam. After obtaining a Certificate of Business Registration or equivalent legal document, this economic organization will officially become the investor implementing the project as stipulated in the Investment Registration Certificate.

This opens up opportunities for foreign consultants to participate in the Vietnamese market in various forms of businesses such as:

- Limited Liability Company (single member or with two or more members)

- Joint Stock Company

- Partnership company

2. Prerequisites for foreign investors establishing a company.

The establishment of an economic organization by a foreign consultant must meet the following important conditions:

(1) Feedback on school access conditions

This is a core condition stipulated in Article 9 of the 2020 Investment Law. Foreign investors are subject to the same market access conditions as domestic investors, EXCEPT when the business sector is included in the "List of sectors and professions with restricted market access for foreign consultants". This condition regime may include:

- Capital ownership ratio: This regulation specifies the maximum percentage of shares a foreign consultant is permitted to hold in an economic organization across certain industries.

- Investment form: There may be limitations on the investment form (for example, joint ventures are allowed instead of 100% foreign ownership).

- Scope of investment activities: Limitations on the scope or geographical area of investment activities.

- Investor's capabilities; participating partners: Requirements regarding experience, financial capacity, or domestic partners in certain sectors.

- Other conditions: As stipulated by major laws, Government decrees, or international treaties to which Vietnam is a signatory.

(2) Having an investment project and an investment registration certificate (in some cases)

Before officially establishing an economic organization, foreign investors must have an investment project and go through the procedures for obtaining or amending the Investment Registration Certificate (IRC).

Exception: The requirement for a Certificate of Business Registration may be waived in the case of establishing a small and medium-sized enterprise (SME) for innovative startups and investing in innovative startups as stipulated by the law on supporting SMEs.

The Investment Registration Certificate is an important legal basis for foreign economic organizations and consulting firms to establish and develop projects in Vietnam.

c. Other general conditions

In addition to the two prerequisites above, foreign investors must also meet other general conditions related to investment activities in Vietnam:

- Investment areas not covered: Vietnam prohibits investment in projects that are dangerous and harmful to the nation, national security, public interest, historical and cultural relics, morality, public health, resources, the environment, or projects involving the handling of hazardous substances outside the country, or projects involving toxic chemical products that cause harm under international conditions.

- Specific conditions for each sector (manufactured products, trade, services):

+ Production sector: Ensure that the project site is suitable for the objectives, that there is sufficient financial capacity to implement the project, and that environmental and security conditions are met.

+ Commercial sector: Requires a suitable project location, financial capacity and experience, imported/distributed products must have HS codes and comply with WTO commitments, meet professional certification requirements, investment capital, registered capital (if any), and foreign ownership ratio.

+ Service sector: Only register specialized services that Vietnam committed to opening up the market for upon joining the WTO, meeting specific conditions according to the service description, having a project implementation location, and possessing certificates of capacity, experience, and financial resources.

Offering these conditions not only helps you complete all company formation procedures but also ensures your business operations in Vietnam run smoothly and securely. If you are a foreign consultant planning to invest in Vietnam and need in-depth advice on legal procedures, please contact HTC Vietnam Law Firm for the most professional and effective support.

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HTC Vietnam Law Firm operates with the motto of dedication – efficiency – credibility, and is committed to ensuring the quality of its services, as detailed in the following letter:

- Ensure that work is carried out according to the agreed schedule, adhering to proper procedures, legal regulations, and the code of ethics and conduct for Vietnamese lawyers.

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- Protect the information provided by customers and information related to customers.

We look forward to a long-term partnership and mutual growth with our valued customers.

Best regards!

(Author: Le Nguyen Phuong; Date: June 15, 2025)

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For detailed advice, please contact:

HTC Vietnam Law Firm

Address: 4th Floor, Multi-purpose Building, 169 Nguyen Ngoc Vu Street, Yen Hoa Ward, Hanoi City.

Phone: 0989.386.729

Email: hotmail@htcvn.vn

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