Key reforms foreign investors should know under Vietnam’s Investment Law 2025

Politburo Resolution No. 66-NQ/TW dated 30 April 2025 places the elimination of the “ask-grant” (discretionary approval) mechanism at the core of Vietnam’s institutional reform agenda, treating it as a key lever to accelerate development in the new era. It also sets out clear quantitative targets: (i) abolish at least 30% of unnecessary business conditions; (ii) reduce administrative processing time by at least 30%; and (iii) cut businesses’ administrative compliance costs by at least 30%.

Against that backdrop, the Law on Investment 2025 (passed on 11 December 2025 and effective 1 March 2026) introduces several structural changes that if implemented consistently in guiding decrees materially improve market entry timelines and project execution certainty for foreign investors.

Below is a practical, investor-facing overview of the most relevant changes and what they mean for assessing market entry conditions for foreign investors.

1. Conditional business lines: from a single “licensing model” to a two-track regime

What changes

The new law moves away from treating all “conditional business lines” the same. Instead, it sets up two regulatory tracks:

a. Pre-approval track (ex-ante licensing)
Businesses must obtain the relevant licence/certification before operating—similar in spirit to the Law on Investment 2020 approach.

b. Disclosure and post-audit track (ex-post enforcement)
Businesses may operate after publicly declaring compliance with published conditions, with the state focusing on inspections and enforcement after market entry.

Why this matters to foreign investors

• Potential upside: faster time-to-market and lower initial compliance cost (especially for activities that can be moved into the post-audit track).
• Key risk shift: the compliance burden moves to the operation phase. If the conditions are interpreted incorrectly or supporting documentation is not maintained, investors may face surprise inspections and sanctions.

Practical takeaway

This reform is only as strong as the Government’s forthcoming lists and implementing rules which conditional sectors remain “license-first”, which are eligible for “declare-and-operate” and what evidence businesses must maintained to pass the post-audit inspections.

2. Incorporation first, project approval later: foreign investors can set up the vehicle before applying for IRC

Under the Law on Investment 2020, foreign investors commonly had to obtain an Investment Registration Certificate (IRC) first, then proceed to enterprise registration (ERC). The Law on Investment 2025 reverses that logic to allow foreign investors establish an enterprise first, and apply for the IRC for the project later, while still meeting market access conditions at the incorporation stage.

However, the project company does not automatically allow:

• On-the-ground project implementation (construction/land use)
• Operation of conditional business lines without the required approvals.

Those remain governed by the project’s IRC (where required), land, construction, environment, fire safety, and sector-specific licenses.

Investor-facing benefits

Under the new process, investors may establish the project company first. This company will then be eligible to purchase and use a digital signature, allowing full compliance with digital‑signature requirements for the subsequent IRC application.

Investor-facing risk

Implications of Approval Delays: If the project approvals later stall (IRC / in-principle approval / land allocation), the company may exist legally but remain commercially inactive, creating:

• Ongoing maintenance costs
• Tax and reporting obligations
• Reputational risk if timelines slip

Compressed Capital Contribution: Circular 06/2019 requires an IRC as part of the dossier for opening a DICA. As a result, even though the company has already been established and obtained its ERC, it cannot open a DICA and must wait until the IRC is issued. A fixed 90-day deadline from ERC issuance to contribute capital, which now must also cover time to get the IRC and open a DICA.

Practical takeaways

Article 19.2 of the Law on Investment 2025 still requires that market access conditions be satisfied at the time the investor establishes the enterprise. In practice, this may result in the business registration authority requesting explanations or evidence of compliance with market access conditions (such as ownership caps, scope of permitted activities, form of investment, etc.) already at the incorporation stage. This approach is, in substance, not materially different from the IRC approval process under the 2020 Law on Investment.

This raises several practical questions:

• Article 19.2 of the Law on Investment 2025 provides that foreign investors may establish an economic organization before applying for an IRC. The question is whether this should be interpreted as an optional pathway for investors, alongside the traditional sequence in which the IRC is obtained before the ERC.
• To what extent will market access conditions be substantively reviewed at the ERC application stage?
• Will the investment registration authority continue to assess compliance with market access conditions at the IRC stage, or will such review be limited or eliminated?
• How will coordination between the business registration authority and the investment registration authority be structured to avoid overlapping review or a “ping‑pong” process between agencies?

These issues remain unclear and will largely depend on the forthcoming Government Decree providing detailed implementation guidance, which we expect to play a decisive role in determining whether the intended procedural simplification is realized in practice.

3. Investment policy approval: clearer project mapping and deeper decentralisation

The 2025 Law on Investment reorganises the policy approval framework by:

• Listing policy-approval projects more clearly
• Reallocating approval authority across four levels:
  • National Assembly (narrowed significantly)
  • Prime Minister
  • Provincial People’s Committee Chairperson (instead of the collective Provincial People’s Committee as under the 2020 framing)
  • Management Boards of industrial/export processing/high-tech/economic zones (for eligible projects within zones).

This re-design is intended to make it easier for investors to answer two key questions early:
(i) does my project require in-principle approval? and (ii) which authority decides?

Four-tier approval authority (and why it matters)

Compared to the 2020 framework, the Law on Investment 2025 significantly recalibrates approval authority into four levels:

• National Assembly

• • The scope is substantially narrowed: it now focuses mainly on projects requiring special mechanisms or policies that differ from existing laws/resolutions of the National Assembly.
  • Practical impact: fewer projects are placed in the highest and most time-sensitive review track which helps reduce uncertainty associated with legislative review and scheduling.

• Prime Minister
  The Prime Minister continues to retain authority for projects typically viewed as nationally sensitive or strategically significant, such as:
  • Large-scale conversion of forest land and two-crop rice land
  • Casino projects; nuclear power plants
  • Foreign-invested projects in sensitive sectors (e.g., telecoms with network infrastructure, afforestation, publishing/press)
  • Very large-scale resettlement thresholds
  • Projects affecting core heritage / high-sensitivity zones.

Practical impact: for investors in these sectors/contexts, central review remains the norm, and early timeline planning should assume a Prime Minister-level pathway.

• Chairperson of the Provincial People’s Committee (PPC Chairperson)
  This is one of the most commercially meaningful shifts. Instead of being decided by the collective PPC (as a Government body), the 2025 law moves a wide range of approvals to the PPC Chairperson, with an expanded project scope, including:
  • Projects involving land allocation/lease without auction or bidding, or change of land use purpose (a very common trigger in Vietnam)
  • Housing / urban area projects where the investor already holds land-use rights through permitted mechanisms (e.g., land aggregation/negotiated acquisition)
  • Projects such as golf courses, industrial zone infrastructure, concentrated digital technology zones, ports/airports, air passenger transport, and petroleum processing—many of which were previously “pushed upward” to central authorities in practice.

Practical impact for foreign investors:

• • Investors are likely to engage more directly with provincial authorities and zone regulators, rather than waiting for a full central-ministry consolidation process.
  • For certain project types, particularly housing/urban development and industrial zone infrastructure this decentralisation can materially shorten timelines that previously could extend into multiple years, due to the need for Prime Minister approval following inter-ministerial consultation.

• Management Boards of Industrial Zones / Export Processing Zones / High-Tech Zones / Economic Zones (Zone Management Boards)
  For projects that would otherwise fall under provincial-level in-principle approval, if the project is located within a zone (IZ/EPZ/HTZ/EZ) and is consistent with the applicable planning framework, the relevant Management Board may approve the in-principle approval.

Practical impact: this strengthens “one-stop” handling inside zones and may reduce fragmentation across local departments.

4. Fewer triggers for “adjusting investment policy approval”

For projects that already obtained an in-principle approval, the 2025 law reportedly narrows the cases requiring a formal policy-adjustment approval down to a shorter list (e.g., changes to core approved objectives/contents, location/land scale, major schedule extensions beyond a threshold, project term, and certain investor changes before operation).

It also removes two frequently problematic triggers:

• Large capital increases based on a percentage threshold
• Changes to technology previously subject to appraisal

Why this matters

Investors often face project evolution (capex, engineering optimisation, vendor-led technology updates). Reducing “policy adjustment” triggers can:

• Prevent minor modifications from reopening a major approval track
• Reduce schedule risk and administrative burden midstream

5. Expanded “special investment procedure”: broader eligibility and new locations (including international financial centre)

The “special investment procedure” is a notable step forward in Vietnam’s investment policy framework. It is designed to streamline administrative processes and foster a more facilitative investment environment particularly for high-tech manufacturing, innovation-driven projects, and the semiconductor value chain, which Vietnam increasingly treats as key growth engines in the digital economy.

Unlike the conventional “pre-approval” model, the special investment procedure is built on a post-audit (ex post) approach. Instead of requiring investors to complete all construction, environmental, and fire-safety approvals upfront, it allows investors to commit to compliance and proceed with implementation, while authorities verify compliance through inspections and enforcement during and after execution. In practical terms, this shift from “licence-first” to “commit-and-verify” can materially shorten approval timelines and improve project deployment efficiency, helping investors bring projects into operation earlier.

What changes

The “special procedure” (a fast-track model leaning heavily on post-audit compliance) is expanded in two main ways:

a. Wider geographic coverage
It can be elected for projects in various priority zones (industrial zones, export processing zones, high-tech zones, concentrated digital-tech zones, free trade zones, functional areas of economic zones, and notably international financial centre areas).

b. Less reliance on a narrow sector list
The 2025 approach appears to focus more on where the project is located and whether it falls into excluded categories (e.g., projects still required to obtain policy approval under Government rules), rather than restricting special procedure to a small set of industries.

What investors gain

In qualifying cases, the special procedure may allow investors to avoid multiple “front-loaded” approvals (e.g., certain pre-approvals relating to construction/environment/fire safety), replacing them with:

• Investor undertakings/commitments
• Technical documentation and third-party verification
• And heightened inspection and enforcement after commencement.

The trade-off

This is essentially a swap: Speed at entry ⇄ Higher compliance exposure post-entry.

If the investor’s undertakings or technical files do not withstand post-audit review, consequences can include:

• Administrative penalties
• Suspension
• Even termination in severe cases

With the 2025 reforms, Investors gain early operational capability, fewer regulatory hurdles, and a streamlined pathway for high‑value sectors.

Rizwan Khan – Managing Partner – r.khan@Vieter.com

Thao Nguyen – Senior Manager – Licensing and Corporate Secretarial – thao.nguyen@Vieter.com

Huy Nguyen – Supervisor – Licensing and Corporate Secretarial – huy.nguyen@Vieter.com