The Ministry of Finance has recently collected opinions on a new draft of the Business Investment Law, which proposes certain changes to the current Investment Law 2020. The draft law is expected to take effect from 1 July 2026. We discuss some key changes proposed in the draft Business Investment Law.

Lack of bold reforms directed by the Politburo

Earlier this year, the Politburo of the Communist Party of Vietnam (the highest decision- making authority in Vietnam) issued Resolution 68/2025 on developing the private business sector. At the time, Resolution 68 was widely reported as a bold move to start a “new dawn” for Vietnam private business sector (see here for example). Following Resolution 68, the National Assembly duly issued Resolution 198/2025 to make Resolution 68 the law of the land. However, since Resolution 198/2025 simply copied and pasted from the text of Resolution 68, it is difficult to know how the instructions and reforms directed by the Politburo are to be implemented in practice. The National Assembly nevertheless requires complete changes to the “investment law” to implement the instructions from the Politburo by December 2025 which includes a reduction of at least 30% of business conditions.

One would expect that the amendments to the Investment Law will provide further implementation and guidance to Resolution 198/2025. However, it appears this is not the case. For example, the new draft Business Investment Law has 212 areas of conditional business a reduction of mere 10% (not 30%). The new draft Business Investment Law retains the investment licensing procedures introduced 30 years ago under the Foreign Investment Law 1987 with some unclear tinkering.

Changes To Licensing Sequence For Greenfield Projects by Foreign Investors

The draft new Business Investment Law now requires a foreign investor who wants to implement a green field investment project to set up a project company by obtaining an Enterprise Registration Certificate (ERC) first and then to obtain an Investment Registration Certificate (IRC). Under the current law, the order is reversed. The foreign investor must obtain an IRC for the investment project first and then set up the project company. The change to the licensing sequence is presumably intended to be a positive change by allowing a foreign investor to have a commercial presence in Vietnam even before it has an investment project. However, this change raises several questions:

What are the rights and obligations of the project company pending the issuance of the IRC? Can the project company conduct business activities without the IRC? If so what is the purpose of the IRC?
If the application for the IRC is later rejected, then will the foreign investor be required to liquidate the project company? In other words, will all foreign investors be prepared to incur costs and time for maintaining a commercial presence in Vietnam without certainty that its primary business activities will be authorized?

In practice, many foreign investors have avoided the need for obtaining an IRC by acquiring an existing Vietnamese company and obtaining an “M&A Approval” instead. While this change introduces serious new uncertainties for investors pursuing greenfield projects, its overall impact could be muted, as it may simply push more investors to favor the M&A route to avoid these very risks.

Delegation and Increased Flexibility for the Government

The draft Business Investment Law proposes to remove many detailed regulations on investment conditions and procedures, which will instead be promulgated by the Government. While this approach is intended to grant the Government greater flexibility, it may reduce long-term legal predictability for investors, as key regulations could be altered through government decrees rather than the more stable legislative process.

Examples of matters proposed for Government promulgation include a list of conditional business investment lines and categories of investment incentives, methods for contributing capital and purchasing shares/capital contribution by an economic organization, procedures to apply for investment policy approval (IPA) and offshore investment, rate of deposit to secure project implementation, etc.

New exceptions to Investment Principle Approval (IPA) procedure

The proposed Article 26 of the draft Business Investment Law specifies several cases that are not required to follow the IPA procedure, including:

investment projects for which the project’s key details (name, scale, objective, location, investor, schedule, and duration) have been specifically determined in the national sector or provincial planning;
investment projects where investors are selected through land use right auction or bidding for projects using land;
investors who win the auction for mineral exploitation rights; and
investors assigned to invest in the construction of technical infrastructure for industrial clusters.

The draft Business Investment Law reserves the IPA requirement only for projects that significantly affect or impact the environment, national defense and security, land use conversion, mass resettlement of people, and investment projects in sensitive sectors such as projects in betting, casinos (excluding electronic games for foreigners), or nuclear power plants.

Significantly, the draft Business Investment Law delegates all projects currently under the authority of the National Assembly to the Prime Minister, stipulating that only the Prime Minister and the provincial-level People's Committee retain the authority to approve IPA.

Top Communist Party Officials and Power To Grant Investment Rights Directly

A novel provision of the new draft Business Investment Law is to allow top officials and authorities of the Communist Party of Vietnam to grant investment rights relating to projects with “national interests” directly to an investor without a public auction. While this power could potentially accelerate crucial investment decisions, its lack of clear implementation guidelines raises significant concerns about legal uncertainty and its potential to hinder private sector investment. Key questions include:

Verification and Validity: How could a third party verify that a decision from a CPV official is genuine and has been validly issued? Decisions by state bodies are typically validated through legislative or administrative processes. Without a formal validation mechanism, it would be difficult to confirm a decision's legitimacy. For example, how would a conflict between two decisions from two different senior CPV officials be resolved?
Undermining Competitive Bidding: How can an investor interested in bidding for a project be certain that it won't be arbitrarily awarded to another entity by a CPV official? This uncertainty would likely deter many investors from participating in bidding processes altogether, ultimately limiting Vietnam's ability to attract the most suitable investor for a project.
Can the granted investment rights be revoked by the same or higher CPV’s officials or authorities?

Higher thresholds for offshore investment registration certificate (OIRC)

The draft Business Investment Law introduces new, higher monetary thresholds for projects requiring an OIRC. Projects with investment capital below VND 20 billion would no longer require an OIRC. For these exempted projects, only foreign exchange transaction registration with the State Bank of Vietnam would be required to transfer money abroad.

This post is written by Le Minh Thuy and Nguyen Quang Vu.

Vietnam Business Law