Vietnam is becoming an ideal destination for foreign direct investment (FDI) thanks to its stable political environment, youthful population, and open investment policies. However, not every investor fully understands the current FDI investment forms and how to choose the best model that aligns with their business goals. This article helps you get a better understanding of the most common FDI investment forms in Vietnam and provides useful advice to optimize investment effectiveness.

Current FDI Investment Models in Vietnam

In Vietnam, foreign investors can participate in the economy through different forms. Each form has its own legal characteristics, administrative procedures, and level of control.

Establishing a Foreign-Invested Enterprise

This is the most popular form chosen by many investors. Under the provisions of the Investment Law 2020 and the Enterprise Law 2020, foreign investors can establish:

A 100% foreign-owned enterprise
A joint venture with local partners

Establishing an FDI enterprise gives investors full control over business operations, plus the ability to enjoy investment incentives depending on the industry and location.

However, to ensure compliance with Vietnamese law, investors need to prepare a complete dossier including: Investment Registration Certificate, legal documents of the investor (individual or entity), office lease agreement, draft charter, etc. This process requires close coordination with competent authorities, and having legal consultants alongside can significantly save time.

Contribution of Capital, Purchase of Shares or Equity Holdings

If an investor does not wish to set up a new company but wants to participate in an existing business in Vietnam, capital contribution or share/equity purchase is an ideal option.

According to regulations, investors may:

Contribute capital to a limited liability company (LLC) or partnership
Purchase newly issued shares or transfer shares of a joint stock company
Acquire equity contributions of members in an LLC

This form is fast and less time-consuming, allowing investors to quickly enter the market and leverage existing operational systems. However, to ensure legal safety and avoid future disputes, performing due diligence and drafting clear purchase agreements is essential.

Business Cooperation Contract (BCC)

A BCC is an FDI model that does not form a new legal entity; instead, the parties agree on profit allocation, costs, and responsibilities during the cooperation.

This form is often used in sectors with stringent investment requirements such as telecommunications, energy, and mining, where foreign investors want to explore the market but are unable to establish an independent legal entity in Vietnam.

BCC suits projects that require fast implementation but demands clarity on obligations and rights within the contract to avoid conflicts of interest.

Public–Private Partnership (PPP)

For large infrastructure projects like transportation, energy, healthcare, and education, the PPP model allows private investors to partner with the State to implement projects.

Under the Public–Private Partnership Investment Law 2020, investors sign contracts with authorized State agencies to invest, operate, and subsequently transfer or continue operation.

PPP is a complex model requiring high financial and technical capacity as well as deep understanding of legal regulations. However, it is a significant opportunity for investors with long‑term strategies in Vietnam.

How to Choose the Most Appropriate FDI Investment Model?

Depending on business objectives, investment budget, and risk control capability, investors need to carefully evaluate before selecting an FDI model in Vietnam. Here are some suggestions from the DEDICA legal team:

Clarify investment goals and timeline
If you want to enter the market quickly, share/equity purchase is more suitable than forming a new enterprise. On the other hand, if you aim to build a long‑term brand in Vietnam, consider the foreign-invested enterprise model.
Evaluate industry and investment conditions
Some sectors in Vietnam are restricted or require specific conditions for foreign investors (e.g., education, healthcare, logistics, real estate). Understanding the list of preferential or conditional sectors is crucial to define the right legal strategy.
Consult legal and tax experts
Investment procedures, such as applying for the investment registration, obtaining permits, or adjusting investment certificates, require in-depth knowledge of law and administrative processes in Vietnam. DEDICA recommends investors collaborate with experienced lawyers to avoid unnecessary risks.
Optimize benefits and comply with Vietnamese law
Each FDI form offers different incentives in taxation, customs, and land. However, non-compliance may lead to suspension or administrative sanctions. Creating the right investment strategy from the start helps save costs and time later.

DEDICA – Your Trusted Legal Partner in All Investment Decisions

With many years of experience advising numerous foreign investors and FDI enterprises in Vietnam, DEDICA proudly stands as a reliable legal partner, helping investors realize efficient and compliant business projects. We provide comprehensive services from investment registration, enterprise establishment, cooperation contract consultation to supporting dispute resolution arising during operation.

Let DEDICA accompany you on a sustainable investment journey in Vietnam.

Contact DEDICA Law Firm for expert legal advice!
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