1. Introduction – Investment Opportunities in Vietnam’s Manufacturing Sector

Vietnam has increasingly asserted its position as an attractive destination for foreign investors in the manufacturing sector. With a stable business environment, a young and highly skilled workforce, and a strategic geographic location near leading emerging East Asian economies, Vietnam offers numerous competitive advantages for international businesses. According to the Ministry of Planning and Investment, in 2024, the processing and manufacturing industry led in attracting foreign direct investment (FDI), accounting for 66.9% of total investment capital, demonstrating strong interest from international investors. Vietnam’s active participation in new-generation free trade agreements also facilitates market access and export growth. These factors, together with the government’s commitment to improving the investment climate, make Vietnam an ideal choice for establishing joint ventures or manufacturing facilities.

On April 10, 2025, the Vietnam–Spain Business Forum will take place in Ho Chi Minh City, focusing on promoting cooperation in manufacturing, materials, and technology. The forum is organized on the occasion of the official visit to Vietnam by the Prime Minister of Spain, Mr. Pedro Sánchez-Castejón. During the forum, businesses will have the opportunity to explore the investment environment, new projects, and public-private partnership initiatives in sectors such as infrastructure, rail transport, agriculture, renewable energy, environment, information technology, textiles, and tourism.

2. Common Establishment Models (Article 21 of the Law on Investment)

2.1 Establishing an Economic Organization
(Articles 21–23 of the Law on Investment, Article 63 of Decree 31/2021/ND-CP)

Joint Venture with a Vietnamese Partner

Advantages:

• Leverage the local partner’s network, market experience, and legal and cultural understanding.
  
• Easier access to land, administrative procedures, and local customers.
  
• In certain conditional business sectors, foreign investors are required by law to form joint ventures (Article 9 of the Law on Investment, Appendix I of Decree 31/2021/ND-CP).
  

Risks:

• Potential conflicts of interest and differences in corporate culture during operations.
  
• Limited control over operations without a controlling interest.
  
• A clear agreement on capital contribution ratios, management rights, and profit distribution must be set out in the company charter.
  

100% Foreign-Owned Enterprise

This model is suitable when investors want full control over production-business operations and development strategies. It is appropriate for sectors without mandatory joint venture requirements or foreign ownership limits and when the investor has relevant market experience and confidence in operating independently in Vietnam.

Note:

• In the early stages, investors may face challenges due to a lack of local support networks.
  
• Investors must fully meet conditions related to capacity, experience, and sectoral planning.
  

2.2 Capital Contribution to an Existing Vietnamese Company
(Articles 24–26 of the Law on Investment)

Forms:

• Contributing capital or purchasing shares in a joint stock company, limited liability company (LLC), or partnership;
  
• Acquiring capital contributions from existing members.
  

Mandatory Conditions:

• Must meet market access conditions applicable to foreign investors (Article 9 of the Law on Investment);
  
• Must comply with national defense and security regulations;
  
• Must follow land law regulations, especially in sensitive areas such as islands, border zones, and coastal areas.
  

Types of Contributions or Acquisitions:

Capital Contribution:

• Purchase of initial or additional shares in a joint stock company;
  
• Capital contribution to an LLC or partnership;
  
• Contributions to other economic organizations.
  

Acquisition:

• Purchase of shares from the company or existing shareholders in a joint stock company;
  
• Purchase of capital contributions to become a member of an LLC;
  
• Purchase of capital contributions to become a contributing partner in a partnership;
  
• Acquisition of interests in other economic organizations.
  

3. Project-Based Investment

Key Characteristics:

• Binding commitments regarding location, scale, and investment sectors specified in the project documentation.
  
• Typically applied in large-scale industries or sectors requiring land use, natural resources, or special technical conditions.
  
• Can be implemented by 100% foreign-owned enterprises, joint ventures, or individual investors.
  

Depending on the scale and sector, investors may need to undertake the following steps:

• Apply for investment policy approval (if required under Articles 30, 31, or 32 of the Law on Investment);
  
• Register for an Investment Registration Certificate (IRC);
  
• Establish an economic organization in Vietnam (if not already established);
  
• Apply for additional permits such as construction permits, business registration, environmental licenses, etc.
  

4. Investment in the Form of a BCC Contract

(Articles 27–28 of the Law on Investment)

This is a flexible model that does not require the establishment of a new legal entity. Parties contribute capital and share profits according to their agreement. It is suitable for specific industries or pilot business models.

If involving a foreign element, an Investment Registration Certificate must be obtained.

The parties will establish a coordination committee to implement the contract, with roles and powers defined by mutual agreement.

5. Legal Issues to Note

1. Investment and Licensing Procedures: IRC and ERC

• Investment Registration Certificate (IRC): Under Article 38 of the 2020 Law on Investment, foreign investors must obtain an IRC when investing in Vietnam.
  
• Enterprise Registration Certificate (ERC): Once the IRC is granted, the investor must register for the ERC under Article 27 of the 2020 Law on Enterprises to establish a legal entity in Vietnam.
  

2. Conditional Business Sectors – Especially in Technology, Equipment, and Materials

• Article 7 of the 2020 Law on Investment lists sectors where investors must meet specific conditions due to national defense, security, public order, morality, and public health. In fields such as technology, equipment, and materials, investors must carefully review these conditions (Appendix IV of the Law).
  
• Article 9 of the same law mandates compliance with the List of Sectors with Market Access Restrictions for Foreign Investors (Appendix I of Decree 31/2021/ND-CP), which includes:
  
  • Prohibited sectors;
    
  • Conditional access sectors, such as those with ownership caps, required investment forms, or mandatory Vietnamese partners.
    

3. Tax Incentives and Industrial Parks

• Investment in Industrial Parks (IPs): Investors are entitled to a preferential corporate income tax (CIT) rate of 17% for ten years from the first year of revenue generation (Point a, Clause 3, Article 15, Decree 218/2013/ND-CP).
  
• Investment in Socialized Sectors within IPs: Exempt from CIT for four years, then a 50% reduction for the following nine years starting from:
  
  • The first year of taxable income; or
    
  • The fourth year from the first year of revenue (if there was no taxable income in the first three years) (Point b, Clause 1, Article 16, Decree 218/2013/ND-CP).
    
• Other Fields in IPs (excluding socio-economically advantaged areas): Two-year CIT exemption and 50% reduction for the following four years, calculated as above (Clause 3, Article 16, Decree 218/2013/ND-CP, amended by Clause 6, Article 1, Decree 91/2014/ND-CP).
  
• Deductible Expenses: Investment, operation, housing, and public utility expenses for workers in IPs/EZs are deductible when calculating taxable income under the Corporate Income Tax Law (Clause 4, Article 22, Decree 35/2022/ND-CP).
  

4. Cooperation Contracts, Capital Contribution, and Company Charter

• Business Cooperation Contract (BCC): (Article 28 of the Law on Investment)
  Main contents include:
  
  • Parties involved and project location;
    
  • Objectives and scope of business activities;
    
  • Capital contributions and profit distribution;
    
  • Timeline and duration;
    
  • Rights, obligations, and responsibilities of each party;
    
  • Amendments, transfer, and termination;
    
  • Dispute resolution mechanism.
    
• Capital Contribution Agreement: (Article 385 of the Civil Code, Article 34 of the Law on Enterprises)
  A civil agreement for the transfer of assets to jointly conduct business. It usually specifies:
  
  • Value and type of capital;
    
  • Contribution timeline;
    
  • Rights and obligations of the parties.
    
• Company Charter: (Article 24 of the Law on Enterprises)
  The charter includes the initial version and any amendments. Main contents:
  
  • Company name, address, business sectors;
    
  • Charter capital, member/shareholder information, ownership details;
    
  • Rights, obligations, organizational structure, legal representative;
    
  • Decision-making, dispute resolution, compensation mechanisms;
    
  • Regulations on capital repurchase, profit distribution, dissolution, and charter amendments.
    

Required signatures:

• At registration: founding members/shareholders and legal representative;
  
• For amendments: owner or legal representative depending on the company type.
  

5. Labor – Safety – Environment: Mandatory Standards for Factories

• Occupational Safety: Under the 2015 Law on Occupational Safety and Hygiene, businesses must ensure safe and hygienic working conditions and implement preventive measures for occupational accidents and diseases.
  
• Environmental Standards: Apply environmental management systems like ISO 14001 to control pollution and protect the environment during production.
  

6. Common Practical Risks

• Approval delays: Often due to incomplete documentation or procedural errors.
  
• Internal disputes: Especially in joint ventures when the company charter lacks clarity or consensus.
  
• Asset protection deficiencies: Issues such as land use rights or equipment can lead to loss or disputes without strong legal grounding.
  

7. Legal Advisory Solutions

• Investment Structuring: Guidance on choosing between joint venture, 100% ownership, or M&A, depending on objectives and sector.
  
• Drafting & Legal Review: Preparation and review of charters, capital contribution agreements, and land lease contracts to minimize disputes.
  
• Legal Representation: Support in working with government authorities throughout the licensing process.
  
• Post-Investment Support: Ongoing legal advice on compliance, corporate governance, and commercial contracts.
  

8. Conclusion

Establishing a joint venture or manufacturing plant in Vietnam requires thorough preparation, not only from a commercial but also a legal standpoint. The legal team at Harley Miller Law Firm has successfully supported numerous FDI projects in the manufacturing sector and stands ready to assist investors from initial planning to stable operation.

Contact us for a free preliminary consultation or to schedule a direct meeting with an expert.