Introduction
The Ministry of Finance of Vietnam (“MOF“) has released a draft decree (“Draft Decree“) proposing amendments to Decree No. 31/2021/ND-CP, which guides the implementation of the existing Law on Investment of Vietnam.
As part of the ongoing public consultation process, Rajah & Tann LCT Lawyers has reviewed the Draft Decree and submitted our formal comments to MOF. This Update summarises the key changes proposed in the Draft Decree, along with our legal observations on their potential impact on the investment landscape in Vietnam.
Streamlining Investment Procedures
The Draft Decree seeks to reduce the number of hard-copy dossiers required in most investment procedures from four to eight sets of dossiders on a case-by-case basis to only one set. It is also proposed that the processing timelines for various stages such as consultation, appraisal, and approval be shortened.
Our Comments:
We strongly support these reforms as they align with international best practices and effectively reduce administrative burdens on both investors and regulators. In addition to reducing hard-copy requirements and shortening processing timelines, we recommend the concurrent implementation of digital data conversion and a comprehensive e-one-stop mechanism. These measures will help ensure procedural consistency across provinces, increase transparency, and enhance the overall efficiency of Vietnam’s investment registration system particularly for large-scale and cross-sectoral projects.
Clarification on Investment Authority and Inter-provincial Coordination
The Draft Decree proposes to reassign the state management responsibility from the Ministry of Planning and Investment to the Ministry of Finance, and from provincial Departments of Planning and Investment (DPIs) to local Departments of Finance. It also introduces new procedures for projects spanning more than one province. Specifically, the Draft Decree provides guidance on how an investment project spanning multiple provinces will obtain in-principle investment approval. Instead of investors having to work individually with each provincial People’s Committee, the Draft Decree will allow dossiers to be submitted to a single focal point namely, the province where the majority of the project’s land area is located or main construction works are carried out. This province will then be responsible for coordinating and soliciting opinions from the relevant provinces. This change is expected to significantly expedite the preparation and implementation process for large-scale, complex projects.
Our Comments:
While this reallocation of authority is substantial, inconsistencies remain. As an example, Article 31 of the Draft Decree still refers to MPI and DPIs. Although this may seem like a minor drafting oversight, we recommend reviewing the Draft Decree for any inconsistency and correcting any drafting errors. It is also proposed that the Draft Decree provide clear coordination procedures among local and central authorities.
Expansion of Incentive Sectors
The Draft Decree proposes to add strategic high-tech sectors including artificial intelligence (“AI“), semiconductors, digital infrastructure, and smart data centres to the list of incentivised industries.
Our Comments:
This expansion is timely and strategic, as it aligns with Vietnam’s national digital transformation agenda and its ambition to attract high-value, technology-driven investments. However, we recommend that the Draft Decree specify clear eligibility criteria such as thresholds for research and development (R&D) spending, technology content, or localisation commitments, to prevent overlaps or conflicts with emerging sector-specific laws such as the Law on Digital Technology Industries and the proposed regulations on AI and semiconductors. Doing so will provide greater certainty for investors and improve regulatory coherence across the digital economy framework.
Technology Screening and Sustainability Commitment
The Draft Decree seeks to introduce quantitative criteria to identify outdated technologies (e.g. machinery age >10 years, and efficiency <85%). In this regard, the Draft Decree provides that projects using such technologies shall not be granted extension of time to continue with the projects. In addition, if projects using technologies listed as prohibited for being transfered into Vietnam from foreign sources, it shall be identified as projects using outdated technologies.
Our Comments:
We endorse this approach, which reflects the Government’s increasing emphasis on sustainable and responsible investment. To further strengthen the legal framework, we suggest referencing global best practices in Green Foreign Direct Investment (FDI) Screening such as environmental due diligence standards, emissions benchmarking, and lifecycle assessments. This will help ensure consistency with Vietnam’s commitments under its National Green Growth Strategy and international climate obligations, while providing clearer expectations for investors.
Oversight of Foreign-invested Enterprises (“FEIs”)
The Draft Decree requires FIEs to align their registered business lines strictly with their licensed investment scopes.
Our Comments:
We suggest balancing regulatory control with business flexibility to avoid unnecessary procedural barriers that may deter foreign investment. Instead of imposing ex-ante limitations on the expansion of business lines, we recommend adopting a post-audit or post-licensing supervision mechanism. This approach would allow regulators to monitor compliance effectively while still enabling FIEs to adapt swiftly to market changes, particularly in dynamic sectors such as digital services, fintech, and logistics.
Legislative Drafting Recommendations
Regarding the drafting aspect of the Draft Decree, we recommend as follows:
- include a comparative table showing current and draft provisions;
- align investment and tax incentives with the amended Corporate Income Tax Law and small and medium enterprises (SMEs) development policies under Resolution 198/2025/QH15; and
- clarify jurisdiction over administrative-economic zones to ensure coherence with the Law on Local Government Organization.
Conclusion
The Draft Decree represents a comprehensive and forward-looking step towards improving Vietnam’s investment environment. The proposed reforms, from streamlining procedures and re-structuring administrative authority to prioritising sustainable, high-tech sectors and aligning legal frameworks, are critical to enhancing Vietnam’s attractiveness and global competitiveness.
However, the effectiveness of these reforms will depend significantly on implementation clarity, cross-agency coordination, and the ability to balance regulatory oversight with business adaptability. Investors are therefore encouraged to closely monitor these developments, assess potential compliance impacts, and prepare strategic adjustments where needed.
We will continue to track legislative progress and are available to advise clients on how these upcoming changes may affect their business operations and investment planning in Vietnam.
If you have any queries on the above or need further assistance, please feel free to contact any of our team members.
This Update was authored by Dr Le Hong Phuc and Nguyen Thi Thu Huong.
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