As Vietnam continues to affirm its position as an attractive destination for international capital flows - particularly amidst the trend of supply chain shifting and business expansion in Southeast Asia - investment regulations are being constantly refined to ensure transparency, stability, and alignment with international practices.
The reform of administrative procedures in the investment sector, especially for foreign investors, has become a primary focus to enhance the competitiveness of Vietnam’s investment environment. Consequently, the question of whether foreign investors are mandatory required to obtain an Investment Registration Certificate (IRC) prior to corporate formation is a pivotal legal issue for many investors. This is not merely a matter of procedural order; it directly impacts market entry timelines, compliance costs, and operational flexibility when deploying business activities in Vietnam.
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1. Definition of Foreign Investors
According to the Law on Investment 2025, a “foreign investor” is defined as an individual holding foreign nationality or an organization established under foreign laws that conducts business investment activities in Vietnam. In essence, foreign investment into Vietnam involves overseas investors (entities or individuals) deploying assets or investment capital into Vietnam through legally prescribed forms.
2. Definition of Economic Organizations
Under the Law on Investment 2025, an “economic organization” refers to an entity established and operating under Vietnamese law, including enterprises, cooperatives, cooperative unions, and other organizations that perform business investment activities.
3. Is an IRC Mandatory Prior to the Establishment of an Economic Organization?
Pursuant to Clause 2, Article 19 of the Law on Investment 2025:
"Foreign investors are permitted to establish economic organizations to implement investment projects prior to performing procedures for the issuance or amendment of an Investment Registration Certificate. Such investors must satisfy the market access conditions applicable to foreign investors as stipulated in Article 8 of this Law when performing procedures for the establishment of the economic organization."
This is further guided by Clauses 1 and 2, Article 72 of Decree No. 96/2026/ND-CP, which provides detailed regulations and guidelines for the implementation of the Law on Investment:
The Law on Investment 2025 marks a shift from the traditional approach by no longer strictly requiring foreign investors to have an active investment project before company formation. Consequently, in certain cases, investors may establish a legal presence first and apply for the IRC subsequently.
This regulation offers significant practical advantages, allowing investors to quickly establish a legal footing to conduct preparatory activities such as leasing premises, recruiting personnel, negotiating contracts, or deploying business activities that do not immediately require a formal investment project. This contributes to shortening market entry time and facilitating the capture of business opportunities. However, the IRC remains a mandatory requirement for project-based investment activities and is not abolished from the legal system.
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4. Procedural Guidelines
Based on the aforementioned provisions, the Ministry of Finance has provided guidance on the registration of enterprises and cooperatives in Official Dispatch No. 5427/BTC-DNTN dated April 29, 2026.
In cases where a foreign investor establishes an economic organization prior to the issuance of an IRC, the registration dossier:
Conclusion:
Current investment law grants foreign investors greater flexibility in choosing their procedural sequence, including the option to establish an economic organization before obtaining an IRC in specific circumstances. Nevertheless, the IRC remains a compulsory requirement for investment projects as prescribed by law.
Therefore, foreign investors must clearly determine the nature of their investment activities to select the appropriate procedural path. It is essential to ensure full compliance with market access conditions and relevant legal regulations to mitigate legal risks during project implementation in Vietnam.
