5 Popular Forms of FDI Investment in Vietnam (Updated 2025)

Date: 2025.09.19

Vietnam continues to assert itself as a strategic investment destination in the Asia-Pacific region. With a stable political environment, competitive labor costs, and flexible incentive policies, Vietnam has been attracting a growing number of foreign investors, particularly from Japan. To succeed, FDI enterprises must clearly understand the legal forms of investment permitted under the 2020 Investment Law and its 2025 amendments.

Here are the 5 most common forms of foreign investment in Vietnam:

1. Capital contribution, Share purchase, or Equity acquisition in a Vietnamese Enterprise

Definition:

This refers to the practice where foreign investors contribute capital or acquire shares/equity in a Vietnamese business, thereby gaining ownership or participation in its operations.

Example:

Acquiring a 30% stake in a Vietnamese logistics company to expand market access.

This is a preferred method among Japanese investors for rapid market entry without setting up a new legal entity.

Advantages:

– Fast access to the local market via existing enterprises

– Reduced initial risk

– Leverage existing customer networks, partners, and workforce

Legal note for 2025:

*Certain sectors require prior approval from the investment authorities, especially if foreign ownership exceeds the stipulated threshold.

2. Establishing a 100% Foreign-Owned Enterprise

Definition:

The foreign investor sets up a new legal entity in Vietnam, wholly owned without Vietnamese capital participation.

Example:

A Japanese corporation establishes an electronics manufacturing company in Bac Ninh Industrial Park.

Ideal for long-term investment in sectors like manufacturing, high-tech, and specialized services.

Advantages:

– Full control over strategy and operations

– Freedom to build governance structures and corporate culture

– Eligible for tax and land incentives when investing in encouraged sectors or industrial zones

Process Update (2025):

The procedures for obtaining the Investment Registration Certificate (IRC) and Enterprise Registration Certificate (ERC) are largely digitalized, reducing processing time to approximately 15–20 working days.

3. Business Cooperation Contract (BCC)

Definition:

This is a contractual agreement between a foreign investor and a Vietnamese partner without forming a new legal entity. Both parties contribute capital, share profits, and assume responsibilities based on agreed ratios.

Example:

A partnership between a Vietnamese tech startup and a Japanese venture capital firm to co-develop an AI platform.

Advantages:

– Flexible cooperation

– Low initial cost

– Suitable for pilot projects, short-term collaboration, or restricted sectors

Common Use Cases:

+ AI and digital transformation projects

+ Production-distribution partnerships in the food industry

4. BOT, BTO, BT Contracts (for Infrastructure Projects)

Definition:

Public-private partnerships (PPP) where a foreign investor collaborates with the government to develop infrastructure or public services based on the principle: “invest – operate – transfer.”

Example:

A Japanese investor builds and operates an expressway for 20 years before transferring it to the state.

Sector Focus: Ideal for transportation, water supply, electricity, and waste treatment.

2025 Trend:

*The Vietnamese government encourages private investment in clean energy and smart urban transport. BOT and BT remain top choices for investors with strong capital and technical expertise.

5. Investment via Investment Funds or Fund Management Companies

Definition:

Institutional investors allocate capital to Vietnam through financial investment funds, without direct business operations.

Example:

Investing in a venture capital fund that supports Vietnamese startups in fintech and edtech.

Advantages:

– Flexible and diversified risk

– No need for operational involvement

– Suitable for strategic or startup-focused investors (e.g., fintech, edtech)

2025 Regulatory Note:

*The State Securities Commission and the State Bank of Vietnam are tightening transparency and anti-money laundering regulations for foreign capital flows.

Conclusion

Choosing the right investment model helps FDI enterprises maximize their potential in the Vietnamese market while ensuring compliance and operational efficiency.
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