Legal alert - Key highlights on Law on Investment 2025

The following legal update summarizes several key new highlights of the LoI 2025 that investors should take note of.

These highlights cover five areas:

1. The revised list of conditional investment and business lines
2. The official prohibition on trading electronic cigarettes and heated tobacco products
3. The establishment of enterprises prior to the issuance of an Investment Registration Certificate (IRC)
4. The codification of adjustments to the operational term of investment projects
5. The simplification of procedures for outward investment

1. Revised list of conditional investment and business lines (Appendix IV of the LoI 2025)

The list of conditional investment and business lines has been significantly streamlined, with the number reduced from 227 to 198.

• Revised scope: The scope of approximately 20 conditional investment and business lines has been revised to align with the orientation of improving the business environment.
• New conditional lines: To keep pace with digital transformation trends, several new conditional investment and business lines have been introduced. Examples include services related to crypto assets, data platform services and personal data processing.

Detailed regulations from the Government

The Government will issue more detailed regulations, including two lists:

• Licensing or certification list: conditional investment and business lines subject to licensing or certification requirements before investment and business activities can begin.
• Post-inspection list: business lines shifting from a pre-licensing mechanism to a post-inspection mechanism. Under this mechanism, enterprises only need to declare their compliance with applicable business conditions and requirements. They will then be subject to subsequent inspection by competent authorities.

Investment and business lines removed from the list

Certain investment and business lines have been removed from this list, such as:

• Employment services
• Labor outsourcing services
• Commercial inspection services
• Overseas study consultancy services
• Some services in the construction sector, including architectural services, construction works execution and construction activities of foreign contractors, etc.

However, some conditional lines were removed only because they are already governed by other specialized laws. For instance, construction activities of foreign contractors have been excluded from the list under the LoI 2025. These activities are subject to the market access mechanism for foreign investors and the provisions of the Law on Construction 2025.

What this means for investors?

To properly and fully assess the conditions for investment and business activities, investors should monitor subsequent guidance from the Government. They should also review relevant provisions under specialized laws at the same time.

2. Official prohibition on trading electronic cigarettes and heated tobacco products

From March 1, 2026, the trading of electronic cigarettes and heated tobacco products will be completely prohibited. Both fall under the list of prohibited investment and business lines pursuant to Article 6 of the LoI 2025.

3. Enterprises may be established prior to the issuance of an Investment Registration Certificate

• Under current regulations: Foreign investors investing in Vietnam through the establishment of an economic organization must first register the investment project and obtain an Investment Registration Certificate (IRC). Only then do they complete enterprise registration to obtain an Enterprise Registration Certificate (ERC).
• Under the LoI 2025: The LoI 2025 introduces a more flexible approach. Article 19.2 LoI 2025 allows foreign investors to establish an economic organization to implement an investment project before completing procedures for issuance or adjustment of the IRC. The condition is that market access conditions are met at the time of establishing the economic organization.

However, practical questions remain regarding the implementation of this new provision, such as:

• The timeframe for submitting the IRC application after enterprise establishment
• The operational status of the enterprise before IRC issuance
• Whether the enterprise would be required to cease its operation if the IRC is not granted

These issues are still awaiting further detailed guidance from the Government.

4. Codification of adjustments to the operational term of investment projects

• Under the LoI 2020: Only extensions of an investment project’s operational term were regulated, and only when the project was nearing expiry. In practice, competent authorities still approved adjustments to the operational term despite the absence of a clear legal basis.
• Under the LoI 2025: The LoI 2025 now formally recognizes the investors’ right to increase or decrease the operational term of a project during its implementation.
• Statutory limits: After adjustment, the project’s operational term must not exceed the statutory limits under the LoI 2025. These are generally:
  • 50 years for projects outside economic zones
  • 70 years for projects located within economic zones

5. Simplification of procedures for outward investment

The LoI 2025 has streamlined procedures for outward investment, specifically:

1. Elimination of National Assembly or Prime Minister approval for outward investment policy.
2. Narrowing the cases requiring an Outward Investment Registration Certificate. Only the following projects are required to obtain this certificate:
   • Projects with investment capital meeting the threshold prescribed by the Government; or
   • Projects in conditional outward investment sectors (banking, insurance, securities, real estate business, press, radio and television).

For other projects, investors are only required to register foreign exchange transactions with the State Bank of Vietnam to transfer capital abroad.

Overall, these new provisions are expected to facilitate outward investment activities. However, detailed guidance from the Government is still awaited to ensure consistent implementation in practice.

6. Conclusion

The above information provides a general overview of certain key highlights of the LoI 2025 and is not intended to replace specific legal advice. We will continue to monitor and update relevant implementation regulations. Should you require an assessment of the impact of these new provisions on a particular investment activity, please do not hesitate to contact us for further assistance.

How can we help?

Contact our Legal team to discuss how the Law on Investment 2025 applies to your investment and business activities in Vietnam.