Vietnam Foreign Investment Approval
By Michael Lee, Helen (Trang) Nguyen
A foreign investor cannot open a factory, sign a long-term lease, or put staff on payroll in Vietnam until it holds the right license. FDI licensing in Vietnam follows a two-step approval process under the Law on Investment (Law No. 61/2020/QH14) and the Law on Enterprises (Law No. 59/2020/QH14). Miss the first step at the planning stage, and the second can stall for months.
This guide sets out how the two core licenses work, the statutory timelines, and the points in the process most likely to move a deal closing date.
Why the license comes before the capital
A foreign-invested enterprise ("FIE") in Vietnam may only operate within the business scope written into its licenses. Acts outside that scope can be void and can trigger fines or suspension. So the license is not paperwork that follows the deal — it defines what the deal can do.
Two approvals sit at the center of the process: the Investment Registration Certificate ("IRC") and the Enterprise Registration Certificate ("ERC"). A greenfield FIE needs both. Some projects need a third approval before either is issued.
The two core licenses — IRC and ERC
Investment Registration Certificate (IRC)
The IRC is the foreign investor's authorization to invest. It is issued by the provincial Department of Planning and Investment ("DPI") or by the management board of the relevant industrial, export-processing, high-tech, or economic zone where the project is located.
The application turns on a business plan or feasibility study plus the legal basis for the investment. The licensing authority reviews three things: foreign-ownership limits, the adequacy of the committed capital, and the feasibility of the plan.
Expect iteration. Authorities routinely return dossiers with requests for more detail. Each round adds time, so the quality of the first submission directly affects the timeline.
Enterprise Registration Certificate (ERC)
The ERC creates the company itself. After the IRC issues, the investor applies for the ERC under Decree No. 01/2021/ND-CP on Enterprise Registration to establish the legal entity that carries out the project. Processing usually takes one to two weeks from submission.
In short, the IRC says the foreign investment is approved; the ERC says the company now legally exists.
When you need a Decision on Investment Policy first
Some projects must clear an additional gate before the IRC — a Decision on Investment Policy ("DIP"). The DIP is issued by the National Assembly, the Prime Minister, or the Provincial People's Committee, depending on the project.
A DIP is required where the project has a significant environmental or social impact, or falls within specific sectors reserved for higher-level review. The decisive point for a deal team is sequencing:
- If a DIP is required, the IRC is issued within 5 working days of the DIP being granted.
- If no DIP is required, the authority must process the IRC dossier within 15 calendar days of submission.
Whether a DIP applies is the single biggest variable in the timeline. Settle that question first — before signing anything that assumes a fast close.
Sector classification changes the whole approach
Vietnam classifies investment activities as encouraged, conditional, prohibited, or permitted. Since joining the WTO in 2007, Vietnam has opened many sectors to foreign investment, but the right to invest in sectors outside its WTO commitments still depends on domestic law.
Around 228 "conditional" sectors carry extra requirements — minimum capital, professional qualifications, or sector-specific licenses. Conditional sectors mean longer, harder, less predictable approvals. Banking, securities, insurance, real estate, education, and transport all sit on that list.
Confirm the target activity's classification before committing to a structure or a timeline. A project that looks routine can become a multi-ministry exercise once a conditional line is involved.
Greenfield versus acquisition — two licensing routes
How you enter Vietnam decides which licenses you need. There are two routes, and they are not interchangeable.
Route 1 — Greenfield FIE
Set up a new company: obtain the IRC, then the ERC (and a DIP first, if triggered). This route gives full control over the entity but front-loads the licensing work.
Route 2 — Buying equity in an existing company
Acquiring a stake in a Vietnamese company follows the Vietnam M&A approval process instead. No IRC is required. After M&A approval from the DPI, the investor registers its interest by amending the target's ERC.
M&A approval is required where, after the deal, any of the following applies:
- the target would be 50% or more foreign-owned;
- the target operates in a conditional sector for foreign investors; or
- the target holds land use rights in border, coastal, or other locations affecting national defense and security.
In practice, the authorities expect an M&A approval filing whenever a foreign investor takes an equity stake. Build that step into the deal calendar rather than treating it as a formality.
Post-licensing steps that affect your funds flow
Two licenses do not finish the job. Several post-licensing steps follow, and one of them shapes how capital reaches the company:
- Corporate seal — the company makes its own seal. Registering the seal with the authorities is no longer required.
- Bank account and DICA — the FIE opens a corporate account, and a Direct Investment Capital Account ("DICA") where foreign ownership is 51% or more. Charter capital and offshore loans flow through the DICA, so it must be open before capital is injected.
- Work permits — foreign employees need a work permit and a temporary residence card, with limited exemptions for certain owners and managers.
- Social insurance — the FIE registers with the social insurance authority for its employees.
What this means for your deal timeline
For investors and deal teams planning a Vietnam entry, the licensing chain drives the closing schedule. Five actions keep it on track:
(1) Resolve the DIP question first. Confirm whether the project needs a Decision on Investment Policy before you commit to any closing date. This is the largest swing factor in the timeline.
(2) Classify the target activity early. Check whether it is encouraged, conditional, or restricted, and cross-check against Vietnam's WTO commitments. A conditional line changes both timing and structure.
(3) Choose the route deliberately. Greenfield means IRC plus ERC; acquisition means M&A approval plus an ERC amendment. The choice affects scope, control, and speed.
(4) Invest in the first submission. A robust business plan and clear capital evidence reduce the rounds of correspondence that stretch the 15-day and 5-day statutory windows in practice.
(5) Open the DICA before funding. At 51% or more foreign ownership, capital must move through the DICA. Sequence account opening ahead of any capital call.
Handled in order, FDI licensing in Vietnam is predictable. Handled out of order, it is where deals lose months. For guidance tailored to your project, see Dilinh Legal's Corporate and Licensing services.
For advice on structuring your Vietnam entry and sequencing the IRC and ERC approvals, contact Dilinh Legal at contact@dilinh.com.
About the author
Michael Lee is a Partner at Dilinh Legal, bringing over a decade of experience from two international law firms in Vietnam. He advises on Corporate & M&A, FDI, and regulatory matters. Michael was ranked by Chambers Asia and Legal500 as a leading lawyer in Corporate & M&A from 2014 to 2019.