Vietnam continues to be one of the most attractive destinations for foreign investment, supported by a stable political environment, strong economic growth, and an increasingly transparent investment legal framework. However, before deciding on the investment location, business sector, or project scale, one of the first questions foreign investors should address is which investment structure is most suitable for their business objectives.
Keywords: investment forms, investment project, BCC contract, investment in Vietnam, capital contribution, acquisition of capital contribution.
I. LEGAL FRAMEWORK ON INVESTMENT FORMS IN VIETNAM
Under Article 18 of the 2025 Law on Investment, investors may conduct investment activities in Vietnam through various investment forms. The choice of investment form not only determines the applicable licensing procedures but also has a direct impac on the investor's management rights, level of control over the investment project, capital contribution mechanism, legal obligations, and long-term business expansion strategy.
Vietnamese law currently recognizes five principal forms of investment available to foreign investors:
1. Establishment of an economic organization; 2. Capital contribution, acquisition of shares in, or acquisition of capital contributions of an existing economic organization; 3. Implementation of an investment project; 4. Investment under a Business Cooperation Contract (BCC); and Other investment forms and types of economic organizations may be prescribed by the Government.
In practice, there is no single investment structure that is suitable for every investor. The most appropriate option depends on various factors, including the intended business sector, applicable market access conditions, the desired level of corporate control, investment scale, financing strategy, and the investor's long-term business objectives in Vietnam.
II. INVESTMENT STRUCTURES AVAILABLE TO FOREIGN INVESTORS IN VIETNAM
1. Establishment of an economic organization
Establishing an economic organization is the most common form of direct investment for foreign investors entering the Vietnamese market for the first time. Under this investment structure, the investor establishes a new legal entity in Vietnam to directly implement the investment project and conduct business operations.
In most cases, before obtaining an Enterprise Registration Certificate (ERC), the investor is required to obtain an Investment Registration Certificate (IRC) in accordance with the Law on Investment 2025, except for certain cases where the IRC requirement is exempted by law.
Depending on the market access conditions applicable to each business line, foreign investors may choose one of the following structures:
(i) 100% foreign-owned enterprise: This structure is available where the intended business line is not subject to foreign ownership restrictions or where Vietnam has fully opened the relevant sector under its international treaty commitments.
(ii) Joint venture with a Vietnamese partner: This structure is required where the intended business line is subject to foreign ownership limitations or where Vietnamese law or an international treaty to which Vietnam is a party requires the participation of a domestic investor.
This investment structure allows investors to establish their preferred corporate governance framework, operating model, and long-term business strategy from the outset. However, compared to other investment structures, establishing a new economic organization generally requires a more extensive licensing process, as investors must complete all investment and corporate registration procedures prescribed by Vietnamese law.
2. Capital Contribution, Share Acquisition, and Acquisition
In addition to establishing a new company, foreign investors may also enter the Vietnamese market by investing in an existing enterprise. This investment route is widely used in mergers and acquisitions (M&A), particularly where investors seek to accelerate market entry by leveraging an established business with existing customers, operational infrastructure, regulatory licenses, workforce, or supply chain.
Under the 2025 Law on Investment, foreign investors may invest through one of the following methods:
(i) Acquiring shares in a joint stock company; (ii) Making capital contributions to, or acquiring equity interests in, a limited liability company; (iii) Acquiring capital contributions in a partnership or other forms of economic organizations as permitted by law.
However, not all transactions can be completed immediately. In certain circumstances—particularly where the transaction results in a change in the foreign ownership ratio in sectors subject to market access conditions, or falls within cases prescribed by law—the foreign investor must complete the registration procedure for capital contribution, share acquisition, or acquisition of equity interests with the competent investment authority before the transaction can proceed.
Compared with establishing a new enterprise, this investment structure generally enables investors to enter the Vietnamese market more quickly and capitalize on an existing business platform. Nevertheless, investors should conduct comprehensive legal due diligence before completing the transaction to identify potential legal, regulatory, financial, tax, and operational risks associated with the target company. A well-executed due diligence process not only facilitates transaction structuring but also helps minimize post-acquisition liabilities and ensures the investment proceeds on a legally compliant basis.
3. Implementation of Investment Project(s)
In addition to investment through business entities, the 2025 Law on Investment recognizes the implementation of an investment project as a separate form of investment. Under Article 20 of the Law on Investment 2025, investors may carry out investment projects in accordance with the Law on Investment and other relevant laws.
In practice, this form is commonly used for medium- and large-scale projects, where investors are required to complete a series of investment and sector-specific licensing procedures, depending on the nature and scale of the project. These may include obtaining investment policy approval, an Investment Registration Certificate (IRC), land allocation or lease approvals, environmental approvals, construction permits, and other specialized licenses where applicable.
Given the complexity of these procedures, investment projects are generally subject to ongoing compliance obligations throughout their implementation, including capital contribution schedules, project implement implementation milestones, and periodic investment reporting requirements.
4. Business Cooperation Contract (BCC)
A Business Cooperation Contract (BCC) is an investment vehicle under which two or more investors cooperate in conducting business and share profits or products without establishing a separate legal entity.
Under this arrangement, each party retains its independent legal status and directly exercises its rights and performs its obligations in accordance with the terms of the BCC. A BCC is commonly adopted where investors wish to combine their respective strengths to implement a specific investment project or business activity without incorporating a new company. In practice, this investment structure is particularly suitable where:
1. The parties jointly implement a specific investment project or business activity; 2. Each party contributes its respective strengths, such as capital, technology, expertise, or market access; and 3. The investors seek to reduce administrative and operational costs by avoiding the establishment and management of a separate legal entity.
Where a BCC involves a foreign investor, the investment project is generally required to obtain an Investment Registration Certificate (IRC) in accordance with the 2025 Law on Investment before implementation.
5. Other Forms of Investment as Prescribed by the Government
In addition to the investment forms expressly provided under the 2025 Law on Investment, Article 19 also authorizes the Government to introduce new investment models and new types of economic organizations when necessary to meet the country's socio-economic development objectives.
This flexible approach enables Vietnam's investment legal framework to adapt more effectively to emerging business models, technological innovation, and evolving international investment practices without requiring frequent amendments to the Law on Investment. As a result, foreign investors may benefit from a more dynamic and forward-looking legal environment as new investment structures are introduced in line with market developments.
III. CONCLUSION
Vietnam's investment legal framework allows foreign investors to access the market through various investment structures, including establishing a new enterprise, making capital contributions or acquiring equity interests in existing companies, implementing investment projects, and entering Business Cooperation Contracts (BCCs). Each investment vehicle has its own legal characteristics, eligibility requirements, and procedural framework, making it suitable for different business objectives, investment scales, and market entry strategies.
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The article is written by experts from Asia Legal – a law firm with many years of experience in mergers and acquisitions (M&A), capital markets, foreign investment, mining and energy, real estate, labor, personal data protection, and dispute resolution.
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