During the past 20 years, Vietnam has made it gradually easier for foreign investors. It has gradually modernized its laws, opened up trade, offered incentives, and reduced bureaucracy. As a result, Vietnam is one of the most accessible destinations for foreign investment in Southeast Asia. However, while it may have become easier to enter, Vietnam remains challenging to exit.
- Vietnam as “Easy to Enter”
There is now a wide range of incentives to attract foreign direct investment, including corporate income tax incentives, exemptions or reductions in import duties, removal of caps on foreign ownership, and preferential land rental rates. These incentives were codified in key legislation such as the Law on Investment 2020, then by the Law on Investment 2025. The law provides a structured framework for investment incentives based on sector, location, and scale.
In addition to financial incentives, Vietnam has simplified the process of market entry. Legal reforms under the Law on Investment 2020 and the Law on Enterprises 2020 streamlined and shortened the process to obtain an Investment Registration Certificate (IRC) and an Enterprise Registration Certificate (ERC). Licensing timelines are now clearly defined by law, making the process more transparent and predictable. The newly issued Law on Investment 2025 and its guiding Decree No. 96/2026/ND-CP have carried reform further by enhancing the digitalization of the investment licensing process, making market entry even more transparent and efficient.
Vietnam’s participation in major free trade agreements (FTAs) plays a crucial role. Agreements such as the EU–Vietnam Free Trade Agreement (EVFTA), and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) provide an incentive to invest in Vietnam. These FTAs together with Vietnam’s membership in the World Trade Organization (WTO), provide investors with preferential access to global markets, reduced tariffs, and strengthen legal protections. These factors have helped make Vietnam a strategic export hub.
- Certain Constraints Exist
While Vietnam has become a relatively easy market to enter, exiting can be complex. One of the main challenges lies in the process of dissolution. Under the current Law on Enterprises 2020, a company must have settled all outstanding obligations, including taxes, and social insurance before it can be dissolved. This process often involves multiple rounds of tax finalization and audits by tax authorities; this can significantly prolong the exit/divestment. Having previously maintained full and complete records of business operations, taxes, social insurance, etc. is important during the tax and audit settlement process.
Another difficulty arises in the transfer of capital or of a project. The transfer of shares in a foreign invested enterprise or transfer of the project itself, requires detailed documentation to substantiate the transaction value and the financial capacity of the buyer. In addition, depending on the deal structure and on the sector, transactions may require notification and in some cases approval by the licensing authorities under the Law on Investment 2025, or by the Vietnam Competition Commission under the Law on Competition 2018. These procedural requirements can create delays and increase costs.
Foreign exchange control is a key consideration. Under the Ordinance on Foreign Exchange 2005 and regulations of the State Bank of Vietnam, remittance of profits or repatriation of investment capital is subject to strict conditions. Investors must demonstrate that all financial obligations in Vietnam have been discharged, including tax liabilities, before funds can be transferred abroad.
- Nevertheless, Vietnam Remains a Compelling Destination for Foreign Investors
Vietnam has recently introduced important legal reforms that significantly improve its competitiveness and the investment environment.
In late 2025, Vietnam adopted a number of new laws which improve the legal framework for investment. A key development is the Law on Investment 2025 and its guiding Decree No. 96/2026/ND-CP; both came into effect in March 2026. They represent a significant evolution in Vietnam’s efforts to create a more transparent, efficient, and attractive investment climate. The new Law on Investment 2025 shifts the focus toward high-tech investment and improves the environment through radical administrative reforms. For example, it expressly provides investment incentives for AI data centers, semiconductor chip manufacturing, 5G infrastructure, and cloud computing. These incentives attract foreign technology investors to Vietnam. Vietnam is becoming a strategic option for many leading global technology corporations, including Intel, Samsung, Apple, Google, NVIDIA, Meta, Qualcomm, Foxconn, etc. These companies, many of which are long time investors in Vietnam, are heavily investing in component manufacturing, electronics, software, and AI research, transforming Vietnam into a high-tech manufacturing hub.
Legal reforms and regulations have simplified market entry by reducing the number of conditional businesses and adopting a shorter “negative list” for foreign investors. The Law on Investment 2025 shifts the management of many business conditions from a “pre-licensing” requirement to a “post-licensing” inspection, allowing businesses to start operations faster based on self-declared compliance. Notably, the new framework also allows a more flexible process in which investors may choose to obtain an ERC before completing the IRC step. This means that enterprises can start operations earlier.
At the same time, in 2025, the Vietnamese government has continued to improve corporate governance and its streamlined administrative procedures by issuing Decree No. 168/2025/ND-CP and Circular 68/2025/TT-BTC. These changes have helped to reduce time and costs.
Recent legal reforms go far to create a more investor-friendly environment. However, little change has been made in the process to dissolve or to close a company. The government needs to find a path to permit companies to close a business more easily. The path should be consistent with international practice.
