Legal Update: Vietnam’s New Law on Investment in 2025

The National Assembly of Vietnam passed the Law on Investment No. 143/2025/QH15 in December 2025 (the “LOI 2025”), replacing the Law on Investment No. 61/2020/QH14 (the “LOI 2020”). The LOI 2025 introduces significant changes to Vietnam’s foreign investment regime and will take effect on 1 March 2026, with provisions on conditional business lines effective from 1 July 2026. 

Overall, the law signals a major shift toward faster market entry and streamlined approvals, while also introducing new uncertainties for greenfield investors pending further governmental guidance. We highlight below the key changes introduced under the LOI 2025:

Significant change of establishment process

Feature	LOI 2020	LOI 2025
Licensing steps	IRC before ERC	ERC can be obtained before IRC – subject to further guidance
Incorporation flexibility	Entity tied to project	Legal entity can be set up before project approval
Pre-incorporation arrangements	Limited flexibility	Through early-established legal entity (e.g. office lease, hiring key personnel)
Time to market	Longer timelines due to certain approvals	Potentially faster market entry

We note that foreign investors must still meet market access conditions at incorporation, and the IRC remains a mandatory requirement for the investment project. While the change is intended to facilitate earlier market entry, it gives rise to unsettled issues - particularly where an IRC application is ultimately rejected, including the handling of the project company and its charter capital after contribution. Further guidance under the implementation decree from the Government is therefore expected.

Reduction of conditional business lines: 

The LOI 2025 introduces a significant simplification of the List of Conditional Business Investment Lines, which has historically posed a major barrier to market entry. Effective from 1 July 2026, the law abolishes 38 conditional business lines and narrows the scope of 20–27 others, reducing the total number of conditional sectors from 237 to 198. This reform aims to achieve a 30% reduction in unnecessary business conditions.

Special investment procedures: 

Investors in designated zones—such as industrial parks, export processing zones, high-tech parks, and international financial centers—may benefit from streamlined investment procedures, allowing eligible projects to bypass certain pre-approval steps. Further guidance on eligible sectors is expected, with the aim of shortening approval timelines for high-quality FDI projects.

Investment In-Principle Approval (IPA): 

The LOI 2025 further decentralizes IPA authority. The National Assembly will approve IPAs only in exceptional cases, while the Prime Minister retains authority over eight specific project categories. Provincial People’s Committee Chairpersons and zone management boards are allowed to grant IPAs for defined project categories and projects consistent with approved master plans.