[Vietnam Biz – Part 25] – Vietnam’s New Investment Law (2025)

In this edition, we would like to introduce Vietnam’s New Investment Law (Law on Investment 2025), which was revised last year and came into effect on March 1, 2025

① Shift Toward Prioritizing “Quality” in Investment Attraction

Previously, the focus was on quantity (FDI amount), but under the new law, the following sectors are set as preferential targets:

・High-tech (semiconductors, AI, etc.)

・Environmentally friendly (green investment)

・High value-added industries

② Simplification of Administrative Procedures

・Shortening of the investment approval process

・Introduction of a “Special Fast-Track Procedure” for certain projects

*Aiming to accelerate foreign capital entry and speed up project launches.

③ Clarification of Foreign Investment Restrictions

Clearly specifying prohibited sectors and conditional business sectors

=> Foreign investment restrictions are managed through “limits on foreign ownership ratios,” “joint venture obligations,” etc.

④ Maintenance of Basic Investment Forms

The four methods for foreign companies to expand into Vietnam remain as follows:

・100% foreign-owned enterprise

・Joint venture

・Share acquisition (M&A)

・Business Cooperation Contract (BCC)

⑤ Strengthening Incentives (Preferential Measures)

The main preferential measures are as follows:

・Corporate Income Tax (CIT) exemption/reduction

・Land rental incentives

・Incentives for special economic zones and industrial parks

*In particular, the following sectors are eligible for incentive measures:

・High-tech

・R&D

・Infrastructure

・Renewable energy

⑥ Investor Protection Framework

Under this new law, there are important reassuring factors for foreign investors, such as:

・Protection of property rights

・Freedom to remit profits abroad

・Availability of international arbitration

Summary

The essence of Vietnam’s new Investment Law is “foreign capital is welcome, but quality matters.” While the screening process will speed up, the selection criteria will become strictly defined. In other words, “technology level” is being given greater weight, whereas traditional “labor-intensive” industries, “simple processing,” “environmentally burdensome sectors,” and “businesses with limited technology transfer” are seeing a reduction in incentives.