Vietnam’s National Assembly has approved a new Investment Law (the Law), marking a major overhaul of the country’s investment regime.  Replacing the 2020 Investment Law (as amended), the Law will take effect in March 2026, subject to certain provisions taking effect at later dates.

The Law introduces some significant reforms aimed at streamlining investment procedures, recalibrating investment incentives, and aligning investment policy with Vietnam’s strategic economic priorities.  Key developments are highlighted below.

Preferential Investment Sectors

The list of preferential investment sectors – i.e. sectors eligible for tax and land-related incentives regardless of project location – has been simplified. The Government is granted broader authority to elaborate the statutory list and designate additional preferential sectors in line with national strategies.

Key changes, which are subject to further detailed elaboration on scope by the Government regulations, include:

1. Upgrade of “software development and digital content” to “digital transformation, the digital technology industry, and the semiconductor industry.”
2. Addition of policy-driven sectors, including the green economy, circular economy, sharing economy, digital economy, and the promotion of new economic models.
3. Removal of several manufacturing and infrastructure-related sectors, including:

• manufacturing of electronic products, key mechanical products, agricultural machinery, automobiles, and shipbuilding (unless later classified as “priority mechanical industries” by Government regulations);
• waste collection, treatment, recycling or reuse; development, storage, and restoration of water resources; and
• development of urban public passenger transport.

With respect to limb (b), the Prime Minister approved the plan for development of circular economy (CE) in Vietnam in 2022 with Decision 687/QD-TTg.   This plan seeks to scale up adoption of the CE by strengthening awareness and investment from domestic and foreign stakeholders, and using CE models to “green” key sectors of the economy.  By 2025, CE projects are expected to deliver measurable economic, social, technological, and environmental benefits, with the targets of treating/recycling 85% of generated plastic waste, cutting marine plastic litter by 50%, and reducing non-biodegradable plastic bags and single-use plastics, alongside expanded organic waste recycling capacity.  By 2030, CE projects are intended to become a major driver of primary energy savings and greater renewable-based energy self-sufficiency, with the additional targets of compliant collection and treatment of 50% of urban municipal waste through CE models, recycling 100% of urban and 70% of rural organic waste, and eliminating direct landfilling of CE-generated municipal waste in urban areas.

Vietnam does not yet have a single, comprehensive statute dedicated to the sharing economy.  Instead, sharing economy models are governed through overarching policy direction and sector-specific legislation, often with controlled pilot or “sandbox” regimes that may later be scaled into a more mature framework.

In practice, Vietnam’s laws have (i) recognised ride-hailing platforms and regulated them largely within the existing taxi and road-transport framework, (ii) regulated e-commerce intermediary platforms and intermediary payment services that facilitate user-to-user transactions, and (iii) permitted short-term accommodation rental models subject to compliance with applicable business, safety, tax, and local administration requirements. More recently, Vietnam has also introduced a regulatory sandbox for selected fintech models, including a pilot regime for peer-to-peer (P2P) lending platforms.

Overall, these changes reflect a shift from broad sector-based incentives toward a more targeted, strategy-driven approach.

Preferential Geographic Areas

The scope of preferential geographic areas – where investments are eligible for incentives regardless of sector – has been expanded to include high-tech agricultural zones, free trade zones, and international financial centers, reflecting the emergence of new forms of special investment zones under recent legislation.  It also retains on the list “dedicated digital technology parks,” which had been added under the Investment Law amendments earlier this year, and other conventional special investment zones which had been covered in prior laws such as industrial parks and export processing zones.

Conditional Investment Sectors

The Law removes 38 sectors from the list of conditional investment sectors, significantly easing market entry in various service industries.  

Examples of sectors being removed from the list include customs declaration services, commercial appraisal services, temporary import-for-export business, employment and labor outsourcing services, auto repair services, shipbuilding and ship repair services, multimodal transport services, architectural and construction-related consultancy services, apartment building management, data center services, overseas study consulting services, IT infrastructure development, jewelry businesses, and archive services.

For reference, conditional sectors are sectors conducted in Vietnam for which investment and business activities may only be carried out upon satisfaction of necessary conditions for reasons of national defense, national security, public order and safety, social morality, or public health.  The new Law requires the Government to publish (i) the list of conditional sectors that require prior licensing or certification before commencement, and (ii) the list of conditional sectors for which the management approach will be shifted from pre-licensing/certification to the publication of applicable conditions, to be supervised under a post-operation inspection regime.

Special Investment Incentives

The framework for special investment incentives – reserved for a limited number of highly prioritised projects – has been expanded.  Eligible projects may benefit from exceptional incentives, including corporate income tax (CIT) rates of 5% for up to 37 years, together with enhanced land-related incentives.  By comparison for background, the lowest CIT rate under current standard incentives is 10% for 15 years, with the standard rate of 20% where no incentives are applicable.

Eligible projects now expressly include:

• large-scale data center infrastructure, cloud computing infrastructure, 5G-and-above mobile infrastructure, and other strategic digital infrastructure as determined by the Prime Minister and the Government;
• projects in strategic technologies and strategic technology products, subject to minimum capital and disbursement thresholds to be prescribed by the Government; and
• projects for key digital technology products, semiconductor research and development, design, manufacturing, packaging and testing, and artificial intelligence data centers, in accordance with the law on the digital technology industry.

Formation of Companies by Foreign Investors

Foreign investors are permitted to establish a company in Vietnam prior to obtaining an Investment Registration Certificate for a specific investment project, fundamentally changing the sequencing of market entry.

Investment In-Principle Approval (IPA)

The Law maintains the recent decentralisation of IPA authority, under which most projects fall within the competence of provincial People’s Committees or Industrial Park Management Authorities.  Only a limited number of projects remain subject to the Prime Minister’s IPA, such as projects involving the conversion of forest land above specified thresholds (currently subject to the National Assembly’s IPA), betting or casino projects, nuclear power projects, and certain foreign-invested projects, namely telecommunication infrastructure, forest plantation, and press.  Approval by the National Assembly is now required only in exceptional cases involving proposed deviations from the National Assembly’s legislative instruments.

Further, industrial cluster infrastructure development projects and other projects as prescribed by sub-law Government regulations are now exempt from the IPA requirement altogether.

The Law also revises the treatment of projects in national defense sensitive areas.  Rather than focusing on investor nationality, IPA is now generally required for any project involving land allocation, lease, or land-use purpose conversion in areas with potential national defense or security implications, regardless of whether the investor is domestic or foreign.

Renewal of Project Term

Subject to implementing guidance, the Law clarifies that EACH renewal of a project’s term must not exceed the statutory maximum of 50 years or 70 years, as applicable. This means that, reaching the maximum term through a prior renewal does not prevent investors from applying for further renewals upon expiry, provided legal conditions continue to be met, since the maximum term is now applied to EACH renewal.

Overseas Investments

The Law removes the requirement to obtain National Assembly’s or Prime Minister’s IPA for large-scale overseas investment projects or projects in sectors subject to conditions on overseas investment.

In addition, overseas investment projects with capital below thresholds to be prescribed by the Government and overseas investments by State-owned enterprises are exempt from the requirement to obtain an Overseas Investment Registration Certificate. These projects will instead only need to complete foreign exchange transaction registrations under applicable foreign exchange regulations.

Sectors subject to conditions on overseas investment continue to include banking, insurance, securities, press, radio broadcasting, television, and real estate.

** The official version of the new Law has not been published.  This article is based on the final version submitted to the National Assembly for approval.