Are you planning to engage in guarantee investment in Vietnam? Are you seeking legal insights on investment regulations, investment forms, conditions, and procedures? NPLaw will be a dedicated legal advisor, delivering accurate, comprehensive, and useful information to help clients confidently enter the highly promising market. The following article addresses related questions, helps you avoid legal risks, and assists in maximizing investment returns.
I. Current demand for guarantee investment among investors
Vietnam's financial market is rapidly expanding, driving a significant increase in demand for financial guarantee instruments. It has created a strong undercurrent that creates the significant appeal of the guarantee investment sector, giving attractive opportunities for foreign investors.
Main factors contributing to the rise of guarantee investment in Vietnam include:
- Vietnamese enterprises are actively seeking preferential credit sources to expand production and business operations and enhance their international presence.
- Guarantee investment allows foreign investors to easily access the Vietnamese market and capitalize on free trade agreements (FTAs) and economic cooperation opportunities.
- The Government of Vietnam continuously fosters a favorable investment market through tax incentives, land use advantages, and streamlined administrative procedures.
II. Legal provisions on guarantee investment for foreign investors in Vietnam
1. Are foreign investors permitted to engage in guarantee investment in Vietnam?
According to Article 9 of the Law on Investment 2020, foreign investors are permitted to conduct guarantee investment activities in Vietnam, except in sectors prohibited or restricted from foreign market access. Guarantee services fall under the finance and banking sectors, which are subject to market access conditions (Appendix I of Decree No. 31/2021/ND-CP). Accordingly, investors must satisfy requirements related to capital, financial capacity, and licenses to obtain approval.
Thus, foreign investors are allowed to invest in guarantee activities in Vietnam, reflecting the government’s openness and favorable policy toward foreign capital.
2. What forms can foreign guarantee investment take in Vietnam?
Pursuant to Article 21 of the Law on Investment 2020, foreign investors may engage in guarantee investment through the following forms:
- Establishment of an economic organization: Under Article 22, such a form is commonly chosen when a foreign investor intends to create a new legal entity for long-term cooperation. Such organizations must operate in compliance with the Law on Enterprises 2020 and related regulations.
- Capital contribution, share purchase, or contributed capital purchase: As regulated under Article 24, such a flexible investment method allows foreign investors to participate in the business operations of existing enterprises without establishing a new entity.
- Business cooperation contract (BCC): Defined in Article 27, it is a contract signed between investors for joint business operation and profit/product distribution without establishing a legal entity. It suits projects with defined goals and timeframes.
3. Which sectors are off-limits to foreign guarantee investment in Vietnam?
Foreign investors must pay close attention to business sectors prohibited under Article 6 of the Law on Investment 2020 (as amended by Clause 2, Article 2 of the 2024 Amending Law) and sectors restricted or subject to specific conditions under Section A, Appendix I of Decree 31/2021/ND-CP, such as debt collection services and certain administrative judicial services.
III. Questions on guarantee investment regulations
1. Can foreign investors engage in guarantee investment by US dollars?
According to Clause 1, Article 4 of Circular No. 06/2019/TT-NHNN, foreign investors are allowed to make capital contributions for guarantee investment in foreign currencies (e.g., USD) or in Vietnamese dong, as specified in their Investment Registration Certificate (IRC).
Therefore, foreign investors may contribute capital in USD or VND according to their registered investment capital, subject to Vietnam's foreign exchange control regulations.
2. Which authorities are responsible for issuing guarantee investment licenses?
Under Article 37 of the Law on Investment 2020, the authority to issue Investment Registration Certificates (IRC) for foreign-invested projects depends on the project's scale, nature, and location. The competent authorities include:
- Provincial People's Committees: For projects outside industrial zones, export processing zones, hi-tech parks, and economic zones (except where the authority belongs to management Boards or Departments of Planning and Investment).
- Management Boards: For industrial zones, export processing zones, hi-tech parks, and economic zones for projects within these areas.
- Departments of Planning and Investment: For projects outside the zones mentioned above.
- Investment registration authority at the project location: For projects implemented in two or more provinces, in and outside the above zones, or where no management Board is established.
3. What are the conditions for foreign investors to implement guarantee investment in Vietnam?
As per Article 38 of the Law on Investment 2020, unless the project requires investment policy approval by the National Assembly, the Prime Minister, or provincial-level People's Committees, the foreign investor will be granted the Investment Registration Certificate if the following conditions are met:
- The project does not fall under the prohibited business sectors (Article 6, Law on Investment 2020).
- The investment site is clearly identified and legally obtained.
- The project aligns with the national, regional, and provincial planning frameworks under the Law on Planning.
- It meets land-use intensity and labor-use requirements, if applicable.
- The investor satisfies Vietnam’s market access conditions and international commitments.
4. What investment incentives are available for foreign investors in guarantee investment?
Under Article 15 of the Law on Investment 2020, foreign investors engaged in guarantee investment may be eligible for incentives in the following areas:
- Corporate income tax: Reduced rates or tax exemptions.
- Import duties: Exemptions for imported goods used in fixed asset formation, raw materials, and supplies.
- Land use fees, land rent, and land use tax: Potential waivers or reductions.
- Accelerated depreciation and increased deductible expenses for tax purposes.
Specific incentives depend on the investment sector, location, project scale, and other factors.
5. What are the timeline and procedures for obtaining a guarantee investment license?
The duration and procedures for applying the Investment Registration Certificate for guarantee investment projects are governed by Article 38 of the Law on Investment 2020 and Decree 31/2021/ND-CP:
- For projects requiring investment policy approval and investor selection (per Article 35, Decree 31): the Investment Registration Certificate must be issued within 5 working days of receiving the approval decision.
- For projects that have been approved for investment policy and the investor has won the auction or bid; projects subject to investor approval and subject to issuance of the Investment Registration Certificate (Article 35 of Decree 31/2021/ND-CP), the Certificate shall be issued within 05 working days from the date the investment registration agency receives the request.
- For projects not subject to investment policy approval (Article 36): the Investment Registration Certificate must be issued within 15 working days of receiving a complete and valid dossier.
General licensing procedures (Articles 35, 36, 39, 40 of Decree 31/2021/ND-CP) include:
1. Investor prepares a dossier per legal requirements.
2. Submission of the dossier (online or in physical form) to the competent investment registration authority.
3. Authority verifies the dossier’s validity and notifies the investor if corrections are needed.
4. The dossier is appraised (if required).
5. The authority issues the Investment Registration Certificate upon confirming all legal conditions are satisfied.
IV. NPLaw’s legal consultancy services on guarantee investment
NPLaw provides comprehensive legal consultancy services for guarantee investment, supporting foreign investors with:
- Feasibility analysis and risk assessment of investment projects;
- Legal advisory on guarantee investment regulations;
- Preparation and drafting of investment application dossiers;
- Representation before competent state authorities;
- Dispute resolution throughout the investment process.
Looking to ensure a smooth guarantee investment project in Vietnam? Contact NPLaw via our hotline or website today for expert legal support and optimal solutions.
