Vietnam’s investment policy in 2026: Tightening controls or opening further?

Vietnam’s investment policy entered a significant new phase in 2026 with the official entry into force of the Law on Investment 2025 (Law No. 143/2025/QH15) on 1 March 2026. Replacing the previous legal framework, the new law is expected to unlock economic resources, enhance the investment environment, and strengthen Vietnam’s competitiveness in attracting both domestic and foreign investment.

Against the backdrop of increasing global economic uncertainty, foreign investors and local businesses alike are seeking a clear answer to an important question: Is Vietnam’s investment policy moving toward tighter regulatory control to mitigate risks, or toward greater openness to capture growth opportunities? The answer is not merely of academic interest. It has direct implications for market entry strategies, investment structuring, business expansion plans, and long-term compliance obligations.

This article examines the key changes introduced under the new investment framework and analyzes the broader policy direction reflected in the Law on Investment 2025. By understanding these developments, investors and businesses can better position themselves to seize emerging opportunities while navigating the evolving regulatory landscape in Vietnam.

1. Legal background: Why was reform necessary?

The Law on Investment 2020 played an important role in supporting Vietnam’s economic recovery and investment activities in the post-COVID-19 period. However, practical implementation over the past several years revealed a number of shortcomings. In particular, burdensome pre-licensing approval procedures often delayed project implementation, certain conditional business lines and investment conditions no longer reflected market realities, and the allocation of authority among state agencies lacked sufficient clarity and consistency.

When a company converts a debt relationship into an equity relationship, from a legal perspective, this involves the settlement of the loan agreement in parallel with the implementation of procedures for increasing the company’s charter capital. From a technical standpoint, this is a form of capital increase through the issuance of shares or capital contributions in exchange for outstanding debts owed by the company to individuals or organizations (creditors). Instead of repayment in cash, the company “repays” through ownership interests and economic rights in the company. If these two steps are not clearly separated and properly implemented in accordance with applicable regulations, the entire transaction may be exposed to the risk of invalidity or rejection by the competent authorities.

At the same time, competition for foreign direct investment (FDI) within Southeast Asia has become increasingly intense. Regional economies such as Indonesia, Thailand, and Malaysia have continued to introduce reforms aimed at improving their investment environments and enhancing investor confidence. In this context, Vietnam faced growing pressure to undertake comprehensive institutional reforms to maintain its attractiveness as an investment destination.

Against this backdrop, on 11 December 2025, during its 10th Session, the 15th National Assembly passed the amended Law on Investment with an approval rate of 89.85%, reflecting a strong political consensus in favor of investment reform. Subsequently, Decree No. 96/2026/ND-CP, dated 31 March 2026, was promulgated to provide detailed guidance on the implementation of the new legislation, thereby completing the legal framework governing investment activities for the 2026–2030 period.

These legislative developments demonstrate Vietnam’s intention not merely to amend individual procedures, but to fundamentally reshape its investment governance framework with a view to facilitating investment, enhancing regulatory efficiency, and strengthening the country’s competitiveness in attracting both domestic and foreign capital.

2. The convergence of two parallel trends: Liberalization and Regulatory tightening

The essence of Vietnam’s investment policy in 2026 does not lie in choosing between two opposing approaches. Rather, it reflects a shift toward a model that seeks to liberalize market access and simplify administrative procedures, while simultaneously raising regulatory standards and strengthening post-investment supervision.

2.1. The “Opening-up” trend: Reducing administrative barriers and streamlining pre-licensing procedures

The reforms introduced under the 2025 Law on Investment demonstrate a significant move toward a more service-oriented regulatory approach. This policy direction is reflected in several key aspects.

a. Significant reduction in conditional business lines

One of the most notable reforms is the removal of 56 conditional business lines that were deemed no longer necessary or appropriate. As a result, the total number of conditional business sectors has been reduced from 198 to 142.

This substantial narrowing of regulated business activities is expected to have far-reaching implications for investors. By reducing the number of sectors subject to special approvals and regulatory conditions, the new framework expands the scope of business freedom while lowering barriers to market entry.

From a practical perspective, fewer conditional business lines mean fewer licensing requirements, approvals, and compliance obligations that investors must satisfy before commencing operations. This reform is therefore expected to simplify administrative procedures, shorten project implementation timelines, and reduce unnecessary regulatory burdens.

More broadly, the reduction of conditional business sectors reflects Vietnam’s continued commitment to improving the investment climate by enhancing transparency, predictability, and ease of doing business. It also helps minimize compliance costs and administrative burdens that do not directly serve essential public policy objectives, thereby creating a more favorable environment for both domestic and foreign investors.

b. Narrowing the scope of projects subject to investment policy approval

The Law on Investment 2025, effective from 1 March 2026, adopts a more restrictive and clearly defined approach to determining which projects are subject to investment policy approval. Rather than prescribing approval requirements through multiple provisions based on the approving authority, Article 24 of the new law provides a comprehensive and exhaustive list of 20 categories of projects that must obtain investment policy approval, thereby significantly reducing procedural requirements for ordinary investment projects.

This amendment reflects the State’s policy direction toward administrative reform and greater decentralization in investment management. Instead of allocating resources to the prior review of a large number of projects, competent authorities will focus their assessment on projects that may have significant implications for national defense, security, the environment, large-scale land use, or other matters affecting the public interest.

As a result, investment preparation timelines are expected to be shortened, compliance costs reduced, and enterprises provided with greater flexibility to implement projects more efficiently.

c. Foreign investors are no longer required to have an investment project before establishing an enterprise

Under the Law on Investment 2020, specifically Clause 1 Article 22 as amended by Law No. 90/2025/QH15 amending the Law on Bidding, the Law on Investment in the Form of Public-Private Partnership, the Customs Law, and the Law on Value-Added Tax:

“A foreign investor may establish an economic organization to implement an investment project before carrying out the procedures for issuance or amendment of the Investment Registration Certificate…”

Currently, Clause 2 Article 19 of the Law on Investment 2025 allows foreign investors to establish an enterprise without having an investment project in advance, provided that the applicable market access conditions are satisfied. Specifically:

“2. A foreign investor may establish an economic organization to implement an investment project before carrying out the procedures for issuance or amendment of the Investment Registration Certificate and must satisfy the market access conditions applicable to foreign investors as prescribed in Article 8 of this Law when carrying out the procedures for establishment of the economic organization.”

This change provides foreign investors with significantly greater flexibility in establishing their legal presence, opening bank accounts, and entering into commercial contracts. It also substantially reduces the time and costs associated with market entry, bringing Vietnam’s investment regime closer to international practice.

2.2. The “Tightening” trend: Standardizing project quality and enhancing compliance responsibilities

The expansion of investment freedom and the reduction of administrative procedures under the Law on Investment 2025 do not signify a relaxation of State management over investment activities. On the contrary, the new investment framework demonstrates a policy shift from controlling the number of applications at the licensing stage to improving the quality of investment projects and strengthening investors’ compliance responsibilities throughout the entire project lifecycle.

a. A significant shift from “pre-licesing review” to “post-licensing supervision”

The greater flexibility introduced during the licensing stage under the 2025 Law on Investment is accompanied by increased responsibilities for investors during project implementation.

Accordingly, rather than focusing on the prior review and approval of a large number of investment projects, competent authorities are expected to strengthen their supervision of project implementation after licenses have been granted. Such supervision includes monitoring compliance with capital contribution schedules, implementation of projects in accordance with registered objectives and commitments, fulfillment of investment reporting obligations, and compliance with sector-specific regulations relating to land, construction, environmental protection, labor, and taxation.

This approach reflects a broader transition from a procedure-based regulatory model to a performance- and compliance-based regulatory model, under which the effectiveness of project implementation and the investor’s actual level of compliance become the primary focus of regulatory oversight.

b. Stricter control over sensitive sectors and activities with significant public interest implications

While the Law on Investment 2025 reduces the number of conditional business sectors, it also introduces or maintains enhanced regulatory oversight for sectors that may pose greater risks to public health, data security, digital assets, culture, national security, or other public interests.

For example, the Law on Investment 2025 adds three prohibited business lines, namely: (i) trading in national treasures, (ii) exporting relics and antiques for commercial purposes, and (iii) trading in electronic cigarettes and heated tobacco products. In addition, certain emerging sectors, such as data-related services, crypto assets, and personal data processing activities, have been brought within the scope of conditional business sectors and are therefore subject to specific regulatory requirements.

These developments indicate that Vietnam’s investment policy is not merely pursuing broader market liberalization. Rather, it is adopting a more selective and risk-based approach, under which activities that may have significant social, technological, public health, or national security implications are subject to closer scrutiny and stricter regulatory control.

c. Standardizing investors’ legal responsibilities in project amendments, transfers, and extensions

The Law on Investment 2025 adopts a more streamlined approach to certain project amendment procedures. For example, compared to the Law on Investment 2020, several cases that previously required approval for amendments to investment policy approval are no longer subject to such procedures.

However, where the proposed changes materially affect the nature of the investment project, investors are still required to complete the relevant approval or amendment procedures. Such cases include, among others, changes to project objectives that fall within the scope of investment policy approval, changes to project location, land-use scale, significant extensions of the project implementation schedule, adjustments to the project term, or changes of investors in certain circumstances.

This reflects a more selective regulatory approach. Rather than regulating every technical or administrative modification, the authorities focus their oversight on changes that may materially affect the project’s feasibility, land-use rights, implementation progress, project ownership, or the investment commitments originally approved by the competent authorities.

Accordingly, while investors may benefit from greater procedural flexibility for routine project adjustments, they remain subject to rigorous regulatory scrutiny where proposed changes could have a substantial impact on the underlying characteristics or public-interest implications of the investment project.

3. Overall legal assessment: “Selective liberalization” – a more mature regulatory model

From a broader perspective, Vietnam’s investment policy in 2026 cannot be characterized simply as either “tightening” or “opening up” in absolute terms. Rather, it reflects a transition from a broad-based administrative management model to a more sophisticated and risk-based regulatory framework – one that is more mature in its legal philosophy and more closely aligned with modern international practices.

Under this approach, Vietnam seeks to create a more favorable environment for bona fide investors with advanced technology, strong financial capacity, and long-term sustainable development strategies. At the same time, the regulatory framework is designed to impose stricter scrutiny on, or exclude, investment projects that present elevated legal, social, environmental, or public-interest risks, or that are primarily aimed at regulatory arbitrage and short-term gains.

In other words, the focus of investment regulation is no longer on the number of licenses, approvals, or administrative procedures that an enterprise must obtain before commencing operations. Instead, the emphasis has shifted toward whether the investor fulfills its commitments and complies with its legal obligations after being granted investment rights.

This policy direction demonstrates Vietnam’s intention to balance investment facilitation with effective regulatory oversight. By reducing unnecessary administrative barriers while strengthening compliance monitoring and post-investment supervision, the new framework aims to promote higher-quality investment, improve regulatory efficiency, and enhance the sustainability of Vietnam’s investment environment in the long term.

4. What should investors prepare for under the new investment policy framework?

For foreign investors, the simplification of market entry procedures does not mean that investment preparation can be taken lightly. In practice, as post-investment supervision becomes increasingly important, deficiencies in investment structuring, capital contribution arrangements, fund flow management, reporting compliance, or adherence to applicable business conditions may give rise to significant legal and operational risks during the implementation and operation of an investment project.

Accordingly, businesses and investors should pay particular attention to the following matters:

First, carefully assess market access conditions and conditional business sectors at the investment planning stage. Market access restrictions and sector-specific requirements applicable to foreign investors remain important regulatory tools through which the State manages investment activities in sensitive sectors. A thorough legal assessment at the outset can help investors select an appropriate investment structure and avoid delays during project implementation.

Second, establish a robust compliance management framework from the commencement of project operations. As the regulatory focus shifts toward post-investment supervision, investors should ensure effective internal controls and compliance mechanisms covering investment obligations, taxation, foreign exchange management, labor and employment matters, social insurance obligations, environmental compliance, and periodic reporting requirements.

Third, regularly review and monitor changes affecting the investment project. Many enterprises focus primarily on obtaining the Investment Registration Certificate but pay insufficient attention to amendment procedures when changes arise in relation to project objectives, scale, location, investors, or capital structure. In practice, failure to properly update and adjust project approvals remains one of the most common sources of legal risk for operating enterprises.

Conclusion: A clear understanding of the dual nature of Vietnam’s investment policy – simultaneously promoting investment liberalization while strengthening regulatory oversight – will enable investors not only to mitigate legal risks but also to develop sustainable business strategies aligned with Vietnam’s evolving economic and regulatory landscape. Investors who proactively adapt to this new regulatory approach will be better positioned to capitalize on emerging opportunities and achieve long-term success in one of Southeast Asia’s most dynamic investment destinations.

Submission date: 20/06/2026

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Disclaimers:

This article is for general information purposes only and is not intended to provide any legal advice for any particular case. The legal provisions referenced in the content are in effect at the time of publication but may have expired at the time you read the content. We therefore advise that you always consult a professional consultant before applying any content.

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Apolat Legal is a law firm in Vietnam with experience and capacity to provide consulting services related to Business and Investment and contact our team of lawyers in Vietnam via email info@apolatlegal.com.

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