In Vietnam, a foreign investor is primarily defined as:
- A foreign individual — someone who holds a foreign nationality; or
- A foreign organization — an entity established under foreign law
…who/which carries out business investment activities in Vietnam.
Legal definition under the Law on Investment
Under Vietnam's Law on Investment (2020, and carried into the 2025 version), the core definition is:
"Foreign investor means an individual holding a foreign nationality or an organization established under foreign law that carries out business investment activities in Vietnam."
This is the baseline definition used for:
- Market access conditions
- Investment procedures (e.g., needing an Investment Registration Certificate in some cases)
- Sector-specific foreign ownership limits
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Talk to us →When a Vietnamese company can be treated "as a foreign investor"
A separate but related concept is the foreign-invested economic organization (FIE) — a company incorporated in Vietnam that has foreign shareholders. Whether such a company is treated as a foreign investor when it invests in other Vietnamese businesses depends on its ownership structure.
Under current practice and the Law on Investment, an economic organization incorporated in Vietnam is treated as a foreign investor (for purposes of investing in other companies or projects) if more than 50% of its charter capital is held by:
- One or more foreign investors; and/or
- Other Vietnamese economic organizations that themselves are treated as foreign investors (i.e., also >50% foreign-owned)
In practical terms, this means:
- A 100% foreign-owned LLC in Vietnam is a foreign-invested economic organization.
- If that LLC then invests in another Vietnamese company, it is generally treated as a foreign investor for that new investment structure, because it is >50% foreign-owned.
Older regulations sometimes referenced thresholds like 49% or 51%, and different ministries historically used slightly different formulations, but the current investment-law framework centers on the >50% foreign ownership test to determine whether a Vietnamese entity is subject to foreign-investor conditions when making further investments.
Comparison of the investment legal regimes in Vietnam
| Criteria | Group 1 — Domestic investors & enterprises with 50% or less foreign ownership | Group 2 — Foreign investors & enterprises with more than 50% foreign ownership |
|---|---|---|
| Classification of investors / enterprises | Individuals holding Vietnamese nationality, or economic organizations that do not have any foreign investor as a member or shareholder. Economic organizations in which foreign investors hold 50% or less of the charter capital. | Individuals holding foreign nationality and organizations established under foreign laws. Economic organizations in which foreign investors hold more than 50% of the charter capital (or which are held by an economic organization with more than 50% foreign ownership, or by a combination of such economic organization(s) and foreign investor(s) holding more than 50% of the charter capital). |
| Market access conditions | Subject to the same market access conditions as domestic investors. Investors are entitled to conduct investment and business activities in sectors and industries not prohibited by law. | Must satisfy market access conditions applicable to foreign investors in sectors and industries subject to restricted market access, including requirements relating to foreign ownership ratio, investment forms, scope of activities, capacity and other applicable conditions. |
| Investment Registration Certificate (IRC) | Not required to obtain an IRC for the investment project. The enterprise may implement the project after obtaining the relevant Investment Policy Approval (if applicable), or may voluntarily apply for an IRC. | Generally required to obtain an IRC before implementing the investment project, except for investments made through capital contribution, purchase of shares or purchase of capital contributions, or projects subject to special investment procedures. |
| Authority competent to issue the IRC | Not required to obtain an IRC (or, where the investor voluntarily applies for one, the IRC will be issued by the competent investment registration authority). | Management Boards of industrial parks, export processing zones, hi-tech parks and economic zones for projects implemented within such zones. Department of Finance for investment projects implemented outside the above-mentioned zones. |
| Capital contribution / share purchase / M&A | The investor may proceed directly with the relevant changes to members or shareholders with the Business Registration Authority, without first having to register the capital contribution or share purchase with the investment registration authority. | Registration of capital contribution, share purchase or purchase of capital contributions with the investment registration authority is required before changing members or shareholders where: the transaction increases the foreign ownership ratio in a business line subject to conditional market access; increases foreign ownership to more than 50%; or the target holds land on an island, in a border commune/ward/town, or in a coastal commune/ward/town. |
| Business Cooperation Contract (BCC) | A BCC entered into exclusively between domestic investors is governed by civil law and does not require an IRC. | A BCC involving a foreign investor or an economic organization subject to more than 50% foreign ownership is required to obtain an IRC. |
| Establishment of a new economic organization | The investor may proceed directly with the establishment of an enterprise in accordance with the Law on Enterprises. | Must satisfy the market access conditions applicable to foreign investors before proceeding with the establishment of the economic organization. |
| Enterprise registration application | Includes the application for enterprise registration, the company's charter, the list of members/shareholders, and copies of the legal documents of the relevant domestic individuals/organizations. | In addition to the standard documents, the application must include the Investment Registration Certificate (IRC). The list of members/shareholders must specify information relating to foreign investor members/shareholders. |
| Beneficial owner of the enterprise | The enterprise is responsible for collecting, updating, maintaining and declaring information on its beneficial owners upon establishment or whenever there is a change. | The same obligations to declare, maintain and update information on beneficial owners apply in accordance with the general regulations applicable to enterprises. |
Why this distinction matters
Market access
Some sectors are closed or restricted for foreign investors but open for domestic ones.
Approval process
Foreign investors often need additional approvals — e.g., Investment Registration Certificate, M&A clearance.
Ownership caps
Sector-specific foreign ownership limits (e.g., banks, airlines, securities companies) apply based on whether the investor is "foreign" under these rules.