Why do many foreign direct investment (FDI) projects in Vietnam face delays despite strong government support for foreign investors? In practice, legal barriers—ranging from licensing procedures and land issues to sector restrictions and compliance gaps—are the main reasons FDI projects fail to progress on schedule. This article analyzes the most common legal obstacles slowing down FDI projects in Vietnam and how investors can proactively manage these risks.
Vietnam remains one of the most attractive FDI destinations in Southeast Asia, thanks to its stable political environment, strategic location, and participation in major free trade agreements such as CPTPP, EVFTA, and RCEP. However, favorable policies do not eliminate legal complexity.
Many FDI projects are delayed not because Vietnam is “closed,” but because investors underestimate regulatory procedures, sector-specific conditions, and post-licensing compliance obligations. Legal delays can occur at every stage of an FDI project, from pre-investment approval to operational execution.
Understanding these legal barriers early is critical for investors seeking timely project implementation.
Vietnam’s investment laws are generally investor-friendly. However, practical implementation often depends on:
Interpretation by local licensing authorities
Coordination among multiple government agencies
Sector-specific regulations that overlap or conflict
Local land-use and planning policies
This gap between legal framework and administrative practice is a major source of delay for FDI projects.
The most common delays occur before the project even begins.
For most FDI projects, obtaining an Investment Registration Certificate (IRC) is mandatory. Delays often arise due to:
Overly broad or unclear business scopes
Misclassification of business lines
Incomplete explanation of project objectives
Lack of clarity on foreign ownership eligibility
Authorities requesting additional documents not initially listed
Projects in conditional sectors—such as advertising, logistics, education, fintech, healthcare, and real estate—are subject to deeper scrutiny, significantly extending approval timelines.
Many FDI delays stem from investors misunderstanding foreign ownership rules under:
Vietnam’s Law on Investment
WTO commitments
Sector-specific regulations
Common issues include:
Attempting 100% foreign ownership in restricted sectors
Failing to structure joint ventures correctly
Ignoring nationality-based or service-based restrictions
Underestimating the impact of negative lists
When ownership structures do not comply, licensing authorities often require restructuring, causing significant delays.
Land-related legal barriers are among the most serious causes of FDI delays.
Foreign-invested companies cannot own land in Vietnam and must rely on:
Land leases from the State
Subleases in industrial zones
Leases from qualified Vietnamese entities
Delays often occur when:
Land-use rights are unclear or disputed
Land zoning does not match project objectives
Lease agreements are signed before licensing approval
Industrial zones lack proper infrastructure approvals
Without legally valid land-use arrangements, licensing authorities may refuse to issue or amend investment approvals.
FDI projects involving factories, warehouses, or large facilities must comply with:
Environmental impact assessment (EIA) requirements
Fire prevention and safety approvals
Construction permits
Local planning regulations
Failure to sequence these approvals correctly often results in project suspension or re-application.
Even after obtaining IRC and ERC approvals, many FDI projects stall due to post-licensing compliance issues.
Vietnam strictly regulates foreign capital flows. Common delays arise when:
Capital is not transferred through a Direct Investment Capital Account (DICA)
Capital contribution deadlines are missed
Funding sources cannot be adequately explained
Capital structure changes are not reported
Improper capital contribution may lead to penalties or forced amendments to investment licenses.
FDI projects often rely on foreign experts during early stages. However, delays frequently occur due to:
Late work permit applications
Misclassification of job positions
Failure to justify the need for foreign labor
Non-compliance with localization requirements
Without proper work permits, foreign staff cannot legally work—directly affecting project timelines.
Vietnam’s legal system is evolving rapidly to meet international standards. While this is positive, it also creates uncertainty.
Recent changes affecting FDI projects include:
New data protection regulations
Stricter cybersecurity compliance
Revised environmental standards
Enhanced transfer pricing rules
Increased scrutiny of sensitive industries
Projects approved under older regulations may need adjustment to comply with new requirements, causing unexpected delays
Although laws are issued at the national level, implementation may vary by province. Investors often face:
Different documentation requirements
Inconsistent interpretation of the same regulation
Additional approval layers imposed locally
This inconsistency makes timeline prediction difficult without local legal expertise.
Administrative delays are frequently caused by documentation issues rather than substantive legal problems.
Foreign documents must be:
Notarized
Consular legalized
Translated into Vietnamese
Notarized in Vietnam
Errors in any step—especially for corporate documents—can lead to rejection and resubmission, delaying the entire project.
Many FDI projects are delayed because internal documents such as:
Shareholder resolutions
Power of attorney documents
Corporate charters
do not align with Vietnamese legal requirements or project structure.
Legal barriers are often compounded by strategic missteps.
Some investors attempt to:
Hire staff before obtaining licenses
Sign contracts before legal establishment
Operate under incorrect business lines
These actions may trigger inspections, penalties, or forced suspension—significantly delaying projects.
Skipping early legal review often leads to:
Unworkable investment structures
Incorrect partner selection
Underestimated compliance costs
Licensing rework after project launch
Preventive legal planning is far more efficient than corrective action.
DEDICA Law provides strategic legal support designed to prevent FDI project delays rather than merely react to them.
Pre-investment legal feasibility assessments
Structuring FDI projects to comply with ownership and sector rules
Preparing and negotiating IRC and ERC applications
Land-use and real estate legal review
Capital contribution and banking compliance advisory
Work permit and labor compliance support
Regulatory change monitoring and risk mitigation
Our lawyers have experience working with international law firms, multinational corporations, and complex FDI projects across multiple industries.
Deep understanding of Vietnam’s FDI regulations and enforcement practices
Practical, solution-oriented legal advice
Strong coordination with licensing authorities
Clear timelines and transparent processes
Long-term legal partnership throughout the project lifecycle
DEDICA Law helps investors move from approval to operation efficiently and legally.
Vietnam remains a highly attractive destination for FDI—but legal barriers can significantly delay projects if not properly managed. From licensing complexity and land-use issues to compliance gaps and regulatory changes, understanding and anticipating these obstacles is essential for successful investment.
Are you facing delays or planning a new FDI project in Vietnam?
Contact DEDICA Law for strategic legal guidance to accelerate your project and minimize regulatory risks.
📞 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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