No table of contents available
Cases of foreign investors being defrauded in Vietnam are no longer rare. Why do many foreign investors still “fall into traps” despite being cautious? Do the loopholes lie in the law, in local partners, or in initial overconfidence? This article provides a comprehensive overview and helps investors find a safer path forward.
Vietnam is an attractive destination for FDI thanks to its dynamic business environment, competitive costs, and open-door policies. However, alongside these opportunities, cases of foreign investors being defrauded in Vietnam are becoming increasingly common, with more sophisticated and unpredictable schemes.
Many investors share a similar story: everything looks “perfect” at first—friendly partners, promising projects, and seemingly legal documents. Only after capital is disbursed, control is restricted, or disputes arise do they realize they have entered a “legal maze.”
Foreign investors defrauded in Vietnam often face one of the following situations:
Capital contribution through “shell” entities: Vietnamese partners establish companies solely to receive capital, with no real business activities.
Profit commitments without legal basis: agreements are based on verbal promises or poorly drafted contracts that are unenforceable.
Nominee arrangements and loss of control: foreign investors are not allowed to hold assets, shares, or management rights due to so-called “legal reasons.”
Falsification or concealment of information: financial statements and the legal status of projects are misrepresented.
A common factor is that foreign investors often rely on personal relationships while failing to fully assess legal risks.
Many ask why cases of foreign investors being defrauded in Vietnam are so prevalent. The reasons lie not only in dishonest partners but also in objective barriers:
Language differences and legal culture gaps make it difficult to understand contracts and regulations.
Vietnam’s legal framework, especially in investment and enterprise law, changes frequently.
The mindset of “moving fast to seize opportunities,” leading to insufficient legal due diligence.
Lack of corporate lawyers accompanying investors from the beginning, resulting in reactive handling when risks arise.
As a result, when disputes occur, foreign investors are often in a weaker position—losing money, time, and sometimes global reputation.
In practice, foreign investors being defrauded in Vietnam can be prevented if proper legal advice is provided from the outset. Vietnamese law is not closed to foreign investors, but it requires thorough understanding and careful preparation.
The most critical step to avoid risks is legal due diligence, which many investors overlook or perform superficially.
A proper due diligence process should clarify:
The legal status and operating history of partners.
The legal status of projects, land use rights, and licenses.
Tax obligations, hidden liabilities, and existing disputes.
The legality of the investment structure for foreign investors.
This helps investors identify risks early and avoid falling into traps that cause increasing cases of foreign investment fraud in Vietnam.
A common mistake is using template contracts or agreements prepared solely by local partners, which poses significant risks.
Corporate lawyers should be involved to:
Design appropriate investment structures in line with ownership ratios and voting rights.
Clearly define control over cash flow, personnel, and assets.
Include investor-protection clauses such as penalties, exit mechanisms, and dispute resolution.
Select effective dispute resolution mechanisms (courts or arbitration).
A good contract is not just for signing—it is for enforcement when issues arise.
Many foreign investors are defrauded in Vietnam because they seek legal assistance only when it is “too late.” At that point, dispute resolution costs are often far higher than preventive legal costs.
An effective solution is ongoing legal advisory services for enterprises, helping to:
Control legal risks throughout the investment process.
Stay updated on legal changes related to FDI.
Take early action when warning signs appear.
This is also a growing trend among multinational corporations seeking sustainable investment in Vietnam.
With extensive experience in advising and resolving investment disputes for international clients, DEDICA Law Firm understands the risks that lead to foreign investors being defrauded in Vietnam.
DEDICA not only assists when disputes arise but also accompanies clients from the early stages, including:
Company establishment and investment registration.
Legal due diligence of partners and projects.
Drafting and negotiating investment and M&A contracts.
Representing clients in litigation or arbitration.
DEDICA’s legal team is highly experienced and reputable, with a deep understanding of foreign investors’ perspectives and Vietnam’s legal environment.
Foreign investors being defrauded in Vietnam is not due to a lack of opportunities, but rather a lack of appropriate legal strategy. Sound investment decisions combined with professional legal advice help protect capital, reputation, and long-term growth.
Are you facing a similar issue?
Are you concerned about legal risks when investing or doing business in Vietnam?
Contact DEDICA Law Firm for in-depth legal consultation.
📞 Hotline: (+84) 39 969 0012 (WhatsApp, WeChat & Zalo supported)
🕒 Working hours: Monday – Friday (8:30 – 18:00)
Contact us now for a free initial consultation with our professional lawyers.
Select a platform to view details
