Vietnam investment regulations – Direct investment v.s. indirect investment
Under the Investment Law, direct investment means a form of investment whereby the investor invests its invested capital and participates in the management of the investment activity. On the other hand, indirect investment means a form of investment through the purchase of shares, share certificates, other valuable papers or a securities investment fund and through other intermediary financial institutions and whereby the investor does not participate directly in the management of the investment activity.
The confusing point here is what “participating in the management” of investment activity. If having purchased shares of a listed company in Vietnam, a foreign investor attends the shareholders meeting of such company and exercises its voting rights then arguably the investor has “participated in the management” of the company in Vietnam. A more relevant example is a foreign investor purchases a minority stake in a domestic joint stock company and nominates its personnel to hold position in the Board of Directors of such company. In such case, it is not clear if the investor could be deemed to have “participated in the management” of the company in Vietnam.
The consequences of being treated as a direct investment and an indirect investment may be material. If an investment is an indirect investment then the parties may not need to obtain an Investment Certificate and must settle the transaction in Vietnamese Dong through a VND capital contribution account. If an investment is a direct investment then the parties may need to obtain an Investment Certificate and could settle the transaction in foreign currency.
It would have been clearer if the Investment Law replaces the concept of “participating in the management” with “control”. In such case, an investor will be deemed to make a direct investment if it has “control” of the investment activity. In other cases, the investor will be deemed to make an indirect investment.
Following the issuance of the Law on Electricity 2024, Vietnam's Government has swiftly replaced its initial framework for Direct Power Purchase Agreements (DPPAs) under Decree 80/2024 by issuing Decree 57/2025 on 3 March 2025. Coming into effect immediately, Decree 57/2025 repeals Decree 80/2024, which had only been active since 3 July 2024. Decree 57/2025 largely maintains the two DPPA models introduced by Decree 80/2024 (1) via private line (Private DPPA) and (2) via the national grid (Grid-Connected DPPA), but introduces important changes impacting eligibility, pricing, and contractual details. Key changes include:
Flexible customer eligibility - Decree 57/2025 links customer eligibility (for initial participation and ongoing qualification) to a minimum consumption threshold (Minimum Take Amount) defined in the Wholesale Electricity Market Operation Regulations issued by the Ministry of Industry and Trade (MOIT). Decree 80/2024 instead used a fixed threshold (average ≥200,000 kWh/month). Accordingly, eligibility for participating in either DPPA model now depends on potentially dynamic wholesale market rules rather than a static figure, requiring ongoing monitoring of MOIT's regulations.
Stricter customer eligibility – A Large Customer in a DPPA arrangement which has been implemented for 12 months must ensure that in a calendar year, it has purchased from EVN the Minimum Take Amount for the 12 month periods ending on 31 October of the previous calendar year. Under Decree 80/2024, there is no requirement that the Minimum Take Amount must be purchased from EVN. It is not clear if this requirement will apply to a Private DPPA under which the customer purchases directly from the RE Generator.
Article 9 of the Investment Law 2020 provides for three kinds of business for foreign investors:
market-access-prohibited business lines (ngành, nghề chưa được tiếp cận thị trường in Vietnamese) (Prohibited Businesses);
business lines with conditional market access (ngành, nghề tiếp cận thị trường có điều kiện in Vietnamese) (Conditional Businesses); and
business lines which are not Conditional Businesses and Prohibited Businesses and are subject to the same market access treatment as domestic investors (Unrestricted Businesses).
However, Decree 31/2021 introduces another category of business lines being "business lines without market access commitment" (ngành, nghề Việt Nam chưa cam kết về tiếp cận thị trường in Vietnamese) (Uncommitted Business). It is unclear what the relationship between the Uncommitted Business and the Conditional Business under the Investment Law 2020 is.
Under Article 24.2 of the Investment Law 2020, offshore investors who intend to acquire equity in Vietnam-based companies must meet the land regulations on “conditions for receiving land use right” (LUR). However, the land law does not specify any conditions applicable to the offshore investors given that they are not a regulated land user.
Article 28.1(d) of the Land Law 2024 and its guiding provision, Article 9.1 of Decree 102/2024 only permit foreign-invested entities (FIEs), which can be established by offshore investors, to receive a transfer of equity being value of land use right originating from land allocation with land use fee payment or land lease with one-time rental payment to the State. Article 9.1 of Decree 102/2024 suggests that "equity being value of land use right " (vốn đầu tư là giá trị quyền sử dụng đất) (LUR Equity) is the equity in a company's charter capital created by contributing land use rights.
These provisions seem vague and can be interpreted differently, leading to varying conclusions.
In light of our earlier analysis of Decree 135/2024, we have further observations regarding the Decree's lack of clarity. This post is written by Le Thanh Nhat.
Firstly, the Decree lacks a clear definition of “self-generation and self-consumption rooftop solar power” (Self-Consumption RSP). This is crucial as only surplus power from Self-Consumption RSP systems may be sold to EVN, Vietnam's national electricity provider. Unfortunately, Decree 135/2024 only offers the rather ambiguous definitions for “self-generation and self-consumption power” and “rooftop solar power” (which are arguably the two ‘components’ of Self-Consumption RSP) separately, without clarifying their integration.
A new Data Law, passed in late November 2024 and set to take effect on 1 July 2025, focuses primarily on establishing a national general database and data centre for state use. However, it also introduces rules on digital data (data in the rest of this article) that concerns the private sector, such as, data products and services. The Government is also drafting three draft decrees detailing key issues under the Data Law, including Data-Related Products & Services Draft Decree, Core & Important Data Draft Decree and a Master Draft Decree.
This blog will discuss several key points under the Data Law and related draft decrees. This post is written by Ha Thanh Phuc and Trinh Phuong Thao.
1) The police will review and supervise your data activities
The Ministry of Public Security (MPS) again is authorized to regulate all activities relating to data except for data under the Ministry of Defence. Accordingly, it seems that Vietnam considers data as security issue and violation of data activities could result in significant liabilities. This could raise significant compliance costs for businesses and companies in Vietnam if they want to be fully comply with unclear rules (see discussion below).
1) Conditional Business Lines
Amendments to the Investment Law 2020 in late 2024 now require businesses involved in (i) data intermediary products and services, (ii) data analysis and synthesis, or (iii) data platform services to meet certain conditions. The Data Law suggests that:
a. data platform services may be restricted to state enterprises and public providers, potentially excluding private companies; and
b. only providers of data analysis and synthesis services that potentially harm national defence, national security, social order, safety, social ethics, or public health, which have been detailed under the Data-Related Products & Services Draft Decree, will be subject to these conditions.
Under the Data-Related Products & Services Draft Decree, businesses in these sectors are subject to strict requirements. Notably, all such businesses must maintain an escrow of at least 5 billion VND at a Vietnamese commercial bank to cover compensation and expenses in the event their licenses are revoked.
In a criminal case involving a business, from time to time, the courts will need to decide on the civil liability of the criminal and other persons including those who are not aware of the crime relating to the case. For example, if A commits a fraud against B and uses the monies obtained from B to repay a debt between A and C who is not aware of A’s crime. In addition to deciding on whether A is guilty or not, the court will need to decide whether (1) requesting A to compensate B for the loss that B suffers or (2) requesting C to return the monies C receives from A to B (assuming that A is convicted). However, it appears that the court does not have a consistent approach. In this post, we discuss the approaches that the courts took in some significant criminal cases for the last decade.
Huyen Nhu Case – 2014
Huynh Thu Huyen Nhu was the head of a transaction office of Vietinbank (a large State-owned bank). Huyen Nhu has offered high interest rate (exceeding the interest rate cap provided by law) to various companies to convince them to deposit their monies with a branch of Vietinbank. After those companies made the deposit under instructions of Huyen Nhu, Huyen Nhu used fake documents and payment instruction to cause Vietinbank to transfer the deposit to Huyen Nhu’s designated accounts. Huyen Nhu used most of the amount obtained through her fraud to repay her debts to several individuals. The damages caused by Huyen Nhu is reported to be around VND 4000 billion (about US$ 200 million at such time), being largest bank fraud at the time.
In addition to convicting Huyen Nhu of the crime of committing fraud to appropriate properties (lừa đảo chiếm đoạt tài sản), the court also requested Huyen Nhu to compensate all the relevant companies for the losses that such companies suffer. The relevant companies took the view that they are not victim of Huyen Nhu’s fraudulent acts but Vietinbank is. Therefore, the relevant companies requested Vietinbank to repay them the deposits they made with Vietinbank. However, the court rejected such view and considered those companies to be victims of Huyen Nhu’s fraudulent acts. The court confiscated the amount of interests that Huyen Nhu paid her lenders but did not require these lenders to return the entire amount they received from Huyen Nhu.
On 22 October 2024, the Government of Vietnam issued Decree 135/2024 on mechanisms and policies incentivising the development of “self-generation and self-consumption rooftop solar power” (Self-Consumption RSP). Unfortunately, there is still a great deal of ambiguity in the provisions of Decree 135/2024 that might create unnecessary confusion in applying and administering the implementation of Decree 135/2024. Please see our discussion of a few ambiguous provisions of Decree 135/2024 below.
1) Potential risk from Decree 135/2024’s scope of application – Decree 135/2024 is said to only govern Self-Consumption RSP [systems] that are installed on the roof of construction works that were invested and constructed in strict compliance with law, including regulations on investment, construction, land, environment, safety, firefighting and fire prevention. As such, any noncompliance of the underlying building may cause the rooftop solar system to not be recognised as a Self-Consumption RSP system and therefore cannot enjoy the incentives policies under Decree 135/2024. It is unclear (i) whether mitigated noncompliance in the past (before the Self-Consumption RSP system is installed) would cause the building to be considered not “invested and constructed in strict compliance with law” and therefore prevents the installation of Self-Consumption RSP system on said building, and (i) whether noncompliance that arises after the Self-Consumption RSP system is installed and operated would affect the applicability of Decree 135/2024 to such system and what the outcome would be.