In the first nine months of 2025, Vietnam has attracted approximately USD 28.54 billion in Foreign Direct Investment (FDI). This marks the highest FDI inflow in at least five years. The gradual liberalization of foreign ownership limits, streamlined registration and licensing process, and trade agreements help enhance market entry for foreign investors.
Like with any business expanding to new markets, it can be challenging to navigate Vietnam’s unique legal and regulatory environment. Although the government has launched initiatives to encourage FDIs, there are still sectors with foreign ownership caps and restrictions.
In this article, we will discuss the essentials of setting up a business in Vietnam as a foreigner. We will cover the legal framework of establishing a business as a foreigner. This includes foreign ownership restrictions, step-by-step process, and how to set up your company as a foreigner.
Understanding Foreign Ownership Regulations in Vietnam
The Investment Law 2020 is the primary legislation that governs foreign investment in Vietnam. It sets out key conditions for foreign investors (e.g. ownership thresholds, sector restrictions, etc.), defines investment forms, and specifies which sectors are open or restricted.
The Investment Law also guarantees protections for foreign investment. This includes equal treatment of both foreign and domestic investors, asset protection against nationalization or expropriation, rights to repatriate profits, and dispute resolution mechanisms.
Business Sectors that are Open to Foreigners in Vietnam
Vietnam allows 100% foreign ownership in a wide range of sectors provided that you fulfill standard incorporation requirements under the Enterprise Law. Here are sectors in Vietnam where you can own 100% of a company as a foreigner:
- Trading (Wholesale, Retail, and E-commerce)
- Manufacturing and Processing
- Information Technology Services
- Education Services (excluding higher education and specialized training)
- Consulting and Market Research
- Hospitality (Restaurants, Cafes, and Accommodation)
Foreign Ownership Restrictions in Vietnam
There are business sectors in Vietnam that are restricted because they carry strategic or sensitive economic or social implications. Each sector has its own set of limitations for foreigners such as ownership caps or required partnerships with local companies. Here are some examples of sectors that are limited to foreign ownership in Vietnam:
- Banking and Credit Institutions: Foreign ownership in commercial banks is generally capped at 30% and up to 49% with government approval. Non-bank credit institutions have a higher cap of 50%.
- Telecommunications: Foreign ownership is limited due to national security concerns. Different telecom activities have variable caps and require government approvals.
- Real Estate: Foreign investors can own up to 30% of condominium projects, but cannot own land outright since land is only leased under Vietnamese law.
Prohibited Sectors for Foreign Investment
While there are sectors that have eased restrictions on foreign investment, there are industries where it’s completely off-limits under the Investment Law Appendix I:
- Sectors directly related to national defense and security.
- Production and trade of explosive materials, chemicals, and weapons.
- Certain broadcasting services.
- Cultural and social activities that are protected for domestic control.
- Others are listed in the law’s negative list and periodically updated by the government.
For more information about foreign ownership limitations, consult with our local experts in Vietnam.
Preparations Before Establishing a Business in Vietnam
Before you establish a business in Vietnam, you need to decide what is the most suitable legal structure and prepare all the documents needed for incorporation. Thorough preparation mitigates risks of delays, non-compliance penalties, or rejection of registration applications.
Choosing the Right Business Structure
Under the Enterprise Law, you can choose from a variety of business structures in Vietnam. Your choice depends on your business activities, scale, capital, liability preferences, and regulatory requirements for a particular sector.
Here are different types of entities that are better suited for foreign ownership in Vietnam:
- Limited Liability Company (LLC): a popular business structure for SMEs (small and medium-sized enterprises) with limited liability coverage based on capital contribution. An LLC in Vietnam can be either a single-member or multi-member.
- Joint Stock Company (JSC): Suited larger companies or those who want to raise capital from public investors. Shares can be transferred or listed on stock exchanges subject to securities law compliance. You can own shares subject to foreign ownership limits in Vietnam but requires at least three shareholders and more complex governance structures.
- Branch Office: Extension of a foreign parent company that can conduct commercial activities but is not a separate legal entity. Allows you to conduct commercial activities within the scope defined by the parent company. This structure requires investment registration but is less flexible than independent companies.
- Representative Office (RO): Meant for non-commercial activities like market research and liaison. This structure cannot generate revenue or engage in profit-making activities. It is easier and faster to establish but limited in business scope.
Key Requirements to Start a Business in Vietnam as a Foreigner
The most common legal structure for foreigners in Vietnam is an LLC due to liberal ownership control, limited liability, and overall operational freedom. Under the Enterprise Law, here’s what you need to establish a foreign-owned company in the country:
- At least two shareholders: to establish an LLC, you need to have at least two shareholders (either as individuals or corporate entities). You can change the shareholder structure up to 50 shareholders after incorporation.
- Registered business address: all companies in Vietnam must have a registered business address via lease or ownership documentation. If you plan to establish a remote company, Emerhub can help you set up a virtual office that meets local requirements.
- Capital Requirements: there is no set minimum capital requirements for LLCs but you must provide proof of financial capability or capital contribution attesting that you can support your company in Vietnam. The typical benchmark is approximately ~USD 10,000 but may vary depending on your business activity or location. The full amount of the investment must be paid within 90 days after incorporation.
- Corporate Officers Present in Vietnam: you would need to appoint a legal representative residing in Vietnam who will be responsible for your company’s compliance and daily management. This individual can be local or foreign provided they have a valid work permit in the country.
Step-by-Step Registration Process for Foreign-Owned Companies
Company registration in Vietnam is handled by the Department of Planning and Investment (DPI) where the company is located. The DPI employs a two-step registration process for foreign-invested enterprises where you need to apply for the right to invest in Vietnam (IRC) followed by obtaining incorporation documents (ERC).
Step 1: Investment Registration Certificate (IRC)
The IRC is the first official approval granting you the right to invest in Vietnam and is essential before establishing a company. It certifies the ownership structure, capital, and business objectives. The IRC also defines the investor’s rights and obligations during the project lifecycle. To apply for an IRC, you would need the following:
- Application for the implementation of the investment project including detailed information about the proposed investment scope, location, capital, and duration.
- Clear outline of the proposed investment project including lease agreements or land use requirements.
- Proof of financial capacity:
- Financial statements for the last two years of operation (for existing companies).
- Or a bank statement proving that the investor(s) have sufficient funds exceeding the planned charter capital contribution in the Vietnam subsidiary.
- In absence of financial statements, confirmation of tax obligation fulfillment may be required.
- Incorporation certificate (for corporate investors)
- Passport or identification documents (for individual investors) such as valid IDs and passports.
Step 2: Enterprise Registration Certificate (ERC)
After obtaining the IRC, you can then apply for ERC which legally establishes your company as a domestic legal entity. It is a critical document for any foreign-owned business, granting you legal identity to operate within Vietnam.
To process an ERC, you would need to submit a full registration dossier with the following documents:
- Company charter
- List of members/shareholders with their details
- Appointment letter of legal representative
- Notarized identification documents of founders and representatives.
Step 3: Additional Licenses and Permits
After obtaining an IRC and ERC, you need to apply for additional permits and licenses depending on your business activity. For example, additional environmental permits or an Environmental Impact Assessment Report (EIAR) is needed for large manufacturing and industrial projects.
Another example is trading, manufacturing, and importing regulated goods ((e.g. food and cosmetics). You need to register with the Vietnamese Food and Drug Administration and obtain the correct type of FDA certificates based on the product you want to register.
Post-Registration Compliance
Obtaining an IRC and ERC is just the beginning. There are a number of post-registration requirements that you need to comply with to legally operate your business:
- Opening a corporate bank account in Vietnam is mandatory for capital transactions and operations.
- File annual tax returns, financial statements, and sectoral reports as required by law.
- If you are employing foreign employees, you are required to sponsor and process their work permits, and visas, subject to local labor regulations.
- Maintaining a valid physical office and having a legal representative in Vietnam is mandatory for business continuity and government communications.
Together with our experienced local experts in Vietnam, we can help you establish a legal entity in the country with our end-to-end incorporation services. We will handle all the complex administrative and legal steps and act as your legal representative in the country.
Contact our local experts in Vietnam for a free consultation by filling out the form below!
FAQs About Starting a Business in Vietnam as a Foreigner
The processing time to obtain an IRC in Vietnam is about 15 to 45 working days from the date of submitting a complete application. This timeline can extend longer for projects involving sensitive sectors, complex regulatory requirements, or special investment approvals. Once the IRC is granted, an ERC can be obtained within 3 to 5 working days upon submission of all required documents.
A foreigner can act as a legal representative of a company in Vietnam, but they must have a valid visa or temporary residence card and hold a work permit. The legal representative bears the highest legal responsibility for the company’s compliance with Vietnamese laws. If the representative is absent from Vietnam for more than 30 days, written authorization must be given to a resident to act temporarily on their behalf.
If you are operating a business that requires a tangible address such as in manufacturing, retail, distribution or hospitality, it is critical to have a physical address. Usually a lease or ownership documentation is required in order for you to register your business. On the other hand, service-based businesses can register a virtual office instead.
If you are repatriating profits from Vietnam, you must notify the local tax authorities at least 7 days before the transfer (provided that there’s no pending tax liabilities). The repatriation process generally occurs once per fiscal year after completing your financial statements and tax finalization declarations.
You need to make sure that all tax and financial obligations (e.g. Corporate Income taxes, VAT, etc.) are settled before you repatriate your profits. Transfers of profits must be done through authorized commercial banks using designated investment capital accounts.
