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Many foreign-invested enterprises (FDI companies) operate in Vietnam without an internal legal department. Legal matters are often handled by headquarters overseas, delegated to accounting firms, or managed internally by non-legal staff.
At first, this approach appears efficient. Operations move quickly, costs are controlled, and major disputes may not arise immediately. However, the absence of a local legal department exposes FDI companies to specific and often underestimated legal risks in Vietnam.
This article explains where these risks come from, why foreign companies are particularly vulnerable without local legal support, and how ongoing legal consultancy helps FDI businesses operate safely and sustainably in Vietnam.
Vietnam’s legal framework is:
Highly procedural
Frequently updated
Strictly enforced through inspections and administrative penalties
For FDI companies, compliance is not just about understanding the law—it is about how the law is applied in practice by local authorities.
Without a legal department in Vietnam, many foreign companies rely on assumptions based on:
Global policies
Overseas legal advice
Past experience in other jurisdictions
Unfortunately, these assumptions often do not align with Vietnamese enforcement practice.
A common risk arises when FDI companies apply global or regional policies directly in Vietnam.
Examples include:
Employment policies that conflict with Vietnamese labor law
Termination procedures that violate mandatory notice requirements
Internal disciplinary rules that are unenforceable locally
Compliance frameworks that ignore Vietnam-specific obligations
In disputes or inspections, Vietnamese law prevails, regardless of internal corporate standards. Companies often discover this only after penalties or legal challenges arise.
Labor law is one of the most actively enforced areas in Vietnam and a major risk zone for FDI companies without legal support.
Common issues include:
Improper overtime and working hour arrangements
Invalid termination or redundancy procedures
Internal rules that contradict labor regulations
Incomplete or inconsistent employment documentation
Even when employment contracts exist, daily HR practices may still violate local law. Without a legal department reviewing HR operations regularly, risks accumulate quickly.
FDI companies frequently adjust their operations after establishment:
Adding new services or products
Expanding into new provinces
Changing operational models
However, licenses and investment registrations are often not updated accordingly.
Operating beyond registered scope or license conditions is one of the most common reasons FDI companies face administrative penalties. Authorities assess compliance based on actual activities, not business intent or internal approvals.
Without a local legal department, compliance responsibilities are often fragmented:
Accounting handles tax and reporting
HR manages labor matters
Operations deal with licenses
Management oversees contracts
No single function monitors legal risk holistically. As a result:
Reporting obligations are missed
Legal changes are not implemented
Compliance gaps go unnoticed until inspections occur
This fragmented approach creates structural risk.
Vietnamese laws and regulations change frequently, particularly in areas affecting FDI companies:
Investment and enterprise regulations
Labor and social insurance
Advertising, distribution, and consumer protection
Administrative procedures and reporting
Overseas legal teams rarely track these changes in real time. Without local legal monitoring, FDI companies may continue operating under outdated rules—unaware of new compliance requirements.
FDI companies without legal departments often experience inspections as stressful and disruptive events.
Common problems include:
Unprepared documentation
Inconsistent explanations to authorities
Misunderstanding inspection scope and procedures
Without legal guidance, inspections can escalate into penalties even when violations are minor or procedural.
Companies with ongoing legal support typically approach inspections with greater confidence and control.
Many FDI companies use global contract templates or rely on counterparty drafts without local adaptation.
Risks include:
Clauses unenforceable under Vietnamese law
Dispute resolution mechanisms that do not work in practice
Inadequate liability and termination provisions
Contracts that conflict with actual operations
When disputes arise, courts and arbitrators apply Vietnamese law—not corporate intent or overseas practice.
Foreign investors frequently express surprise when penalties occur, believing they acted in good faith or followed international standards.
In reality, enforcement decisions are based on:
Local legal requirements
Documentary evidence
Procedural compliance
Good faith and global standards do not replace local legal compliance.
Some FDI companies rely on lawyers only when:
Disputes arise
Inspections begin
Authorities issue notices
By then, key decisions and documents are already in place. Legal advice becomes reactive and limited.
FDI operations require continuous legal oversight, not occasional intervention.
For many FDI companies, the most effective solution is ongoing legal consultancy acting as an outsourced legal department in Vietnam.
This model provides:
Continuous legal advice aligned with daily operations
Monitoring of legal and regulatory changes
Review of contracts, HR practices, and compliance
Preparation and support for inspections
Local interpretation of Vietnamese enforcement practice
Legal risk is managed proactively rather than after problems occur.
Building an in-house legal team in Vietnam can be costly and inflexible. Ongoing legal consultancy offers:
Predictable monthly or retainer-based fees
Access to a team of legal professionals
Flexibility to scale support as operations grow
This makes it particularly suitable for FDI subsidiaries.
DEDICA provides ongoing legal consultancy services tailored specifically for foreign-invested enterprises operating in Vietnam.
As an outsourced legal department, DEDICA supports FDI clients by:
Advising on labor and employment compliance
Reviewing contracts and commercial arrangements
Monitoring licensing and regulatory obligations
Updating clients on legal changes affecting FDI operations
Supporting inspections and authority interactions
DEDICA’s approach is local, preventive, and business-focused, helping foreign companies navigate Vietnam’s legal environment with confidence.
Operating in Vietnam without a legal department may seem manageable at first, but for FDI companies, it creates hidden and compounding legal risks.
Most violations do not arise from bad intent—they arise from differences between global practices and local legal requirements, missed updates, and lack of continuous oversight.
By engaging ongoing legal consultancy as a local legal department, FDI companies gain the clarity, control, and compliance needed to operate safely and grow sustainably in Vietnam.
📞 Hotline: (+84) 39 969 0012 (Available via WhatsApp, WeChat, Zalo)
🕒 Working Hours: Monday – Friday (8:30 – 18:00)
Contact us today for a free initial consultation with our experienced lawyers!
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