Legal Update: Streamlined Investment Procedures for Foreign Investors in Vietnam

Vietnam has introduced a significant change to its foreign investment framework under the new Investment Law and Decree No. 96/2026/NĐ-CP (effective from 31 March 2026), further clarified by Official Letter No. 5427/BTC-DNTN issued by the Ministry of Finance on 29 April 2026.

Under the new framework, foreign investors are no longer required to obtain an Investment Registration Certificate (“IRC”) before incorporating a company in Vietnam. Investors may now choose between: (i) the traditional approach of obtaining the IRC first and then establishing the company, or (ii) incorporating the company first and completing the IRC procedures afterwards.

For the new “company-first” approach, the incorporation dossier no longer requires an IRC. Instead, the foreign investor must provide a commitment confirming compliance with applicable market access conditions and foreign ownership restrictions

Practical impact

This change confirms that the Enterprise Registration Certificate (“ERC”) and IRC are now separate procedures. Foreign investors may establish and operate a company before completion of the IRC process, allowing faster market entry and greater structuring flexibility.

However, investors should carefully assess whether this mechanism is suitable for their project. For manufacturing, real estate, or projects involving land or factory leases, incorporation before IRC approval may create commercial exposure. Accordingly, lease obligations and operating costs may commence before the project is fully approved. If the IRC is delayed or denied, the company remains legally bound to these commitments with limited exit options. This creates a scenario where investors bear full commercial costs for facilities they cannot utilize, while also facing potential difficulties dissolving the Vietnamese entity.

In addition, certain operational limitations may also remain before the IRC is issued. In practice, banks may still request the IRC for opening a Direct Investment Capital Account (DICA), which could affect capital contribution procedures. In addition, sectors subject to foreign ownership restrictions or sector-specific approvals remain fully regulated notwithstanding the simplified incorporation process.

Conclusion

Overall, the new framework offers a more flexible route for straightforward investments, while the traditional IRC-first approach may still be preferable for regulated or infrastructure-heavy projects.