Foreign investment methods in Vietnam

Investment means an investor carries out business activity through investment methods prescribed in the Law on Investment in Vietnam. Vietnam is becoming a “fertile land” attracting foreign investors in many fields such as transport, tourism,… Therefore, investors always care about investment methods. Viet An Law would like to present the investment methods by the Law on Investment 2020 as follows:

According to the Law on Investment 2020, these investment methods include Investment in establishing business organizations; Investment in the form of capital contribution or purchase of shares or stakes; Execution of an investment project; Investment in the form of BBC contract; Investment forms, New forms of investment and types of business entities prescribed by the Government’s regulations.

1. Establishing business organizations:

Foreign investors have two choices:

• Establish a 100% foreign enterprise;
• Cooperate with local investors or the Government.

Before establishing a business organization, foreign investors must have the investment project, perform the procedures for issuance of the Certificate of Investment Registration and satisfy the conditions on capital ownership proportion as prescribed by the Law on Securities, the Law on Equitization and Transfer of state enterprises and other international agreements to which Vietnam is a member.

2. Investment in the form of capital contribution or purchase of shares or stakes; Execution of an investment project:

This is an indirect way for foreign investors to invest. With this method, foreign investors do not have to manage the business but please notice that some procedures and formalities have to be followed.

3. Execution of an investment project:

Foreign investors can sign investment contracts under the public-private partnership contracts (PPP contracts). This is an investment method implemented based on term cooperation between the state and private investors through the signing of a PPP contract to attract private investors to participate in the implementation of PPP investment projects. 

4. Investment in the form of BBC contract:

BCC contracts are those signed by investors to cooperate, divide revenues or products without creating any new legal entity. This one could help investors run their business immediately without wasting time and money for creating and managing a new legal entity.

If BCC contracts are signed by local investors, the Civil Code shall be applied. If BCC contracts are signed by at least one foreign investor, the Certificate of Investment Registration is required.