What Is an FDI Enterprise? Legal Requirements for Establishing a Foreign-Invested Company in Vietnam
Vietnam has become an attractive destination for foreign direct investment (FDI), thanks to its open-door policies, competitive labor costs, and strategic location within the global supply chain. As a result, many international investors are exploring the opportunity to establish FDI enterprises in Vietnam. However, not everyone clearly understands what constitutes an FDI enterprise or the legal requirements involved in setting up a foreign-invested company.
In this article, DEDICA LAW provides a comprehensive guide on the definition, conditions, and procedures for establishing an FDI enterprise in Vietnam.
1. What Is an FDI Enterprise?
According to the Law on Investment 2020, a Foreign Direct Investment (FDI) enterprise is a company that includes foreign capital, established by foreign investors or by companies that already have foreign capital, through:
Capital contribution,
Share purchase,
Or direct investment in Vietnam.
Based on the level of foreign ownership, FDI enterprises are categorized as:
100% foreign-owned enterprises
Joint venture enterprises (a combination of Vietnamese and foreign investors)
Vietnamese enterprises with foreign ownership below 50%
📌 Note: The percentage of foreign ownership affects market access rights and investment procedures. For example, if a foreign investor owns 50% or more of the charter capital, the enterprise may be subject to conditions applicable to foreign investors under Vietnamese law.
2. Legal Conditions to Establish an FDI Enterprise in Vietnam
To legally operate in Vietnam, a foreign-invested company must meet the following requirements:
✅ 1. Foreign investor eligibility:
Must have full legal capacity according to the laws of their home country.
Must have a specific investment project in Vietnam.
✅ 2. Permitted business sectors:
Must comply with Vietnam’s WTO commitments and other international treaties.
Must not fall into prohibited or restricted sectors for foreign investment.
✅ 3. Clear source of investment capital:
Must prove lawful funding through financial documents or bank statements.
Some sectors (e.g., real estate, finance) require statutory capital.
✅ 4. Project location:
Must have a valid lease or office rental agreement in Vietnam.
The chosen location must align with local zoning and investment plans.
3. Procedures for Establishing an FDI Enterprise in Vietnam
Depending on the investment method (e.g., forming a new company, contributing capital, or purchasing shares), procedures may vary. For new FDI enterprises, the process involves two main steps:
🔹 Step 1: Apply for the Investment Registration Certificate (IRC)
Submit the application to the Department of Planning and Investment (DPI) where the enterprise’s headquarters will be located.
🔹 Step 2: Apply for the Enterprise Registration Certificate (ERC)
Once the IRC is approved, the investor must submit a standard company registration dossier.
⏱ Processing time: Approximately 15–30 business days, depending on the investment type and location.
4. Important Notes for Setting Up an FDI Company in Vietnam
Investors should research sector-specific conditions for foreign investment before proceeding.
It is recommended to authorize a legal representative (e.g., a law firm or investment consultancy) to handle paperwork to ensure compliance and save time.
Some business sectors require additional licenses or may need a Vietnamese partner.
Conclusion
FDI enterprises play a vital role in Vietnam’s economic development and offer significant opportunities for foreign investors. However, to establish a foreign-invested company in Vietnam successfully, investors must clearly understand the legal framework and be well-prepared with complete and compliant documentation.
Contact DEDICA Law Firm for expert legal consultation!
📞 Hotline: (+84) 39 969 0012 (Available on WhatsApp, WeChat, and Zalo)
🏢 Head Office: 144 Vo Van Tan Street, Vo Thi Sau Ward, District 3, Ho Chi Minh City
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