Regulations on investment licenses for foreign-invested projects

In the current context, investment licenses for foreign-invested projects play a crucial role in attracting capital and ensuring lawful project implementation. Obtaining an investment license helps safeguard investors’ rights while demonstrating compliance with legal requirements in Vietnam. However, many enterprises continue to face difficulties due to insufficient information or a lack of understanding of the necessary legal procedures.

I. The impact of investment licenses for foreign-invested projects in the current period

In the context of global integration and the increasingly strong attraction of foreign investment, investment licenses for foreign-invested projects play a pivotal role in ensuring the legality, transparency, and efficiency of investment activities in Vietnam. Such licenses help determine investors’ legal rights, operational basis, tax and land incentives.

[At present, licensing in accordance with proper procedures also enhances investor confidence and contributes to local socio-economic development. Nevertheless, many investors still encounter difficulties due to a lack of understanding of environmental requirements, capital contribution obligations, or feasibility reporting procedures.

II. What is an investment license for a foreign-invested project?

1. Concept of an investment license for a foreign-invested project

Pursuant to Clause 11, Article 3 of the Law on Investment 2020, an Investment Registration Certificate (also known as an Investment Certificate) is a document in paper or electronic form recording the investor’s registered information regarding an investment project.

In other words, it is the official investment license issued by a competent authority to recognize all project-related information, including the scope of operations, scale, location, investment capital, implementation schedule, and other relevant matters. It serves as a prerequisite for investors to be recognized and protected by Vietnamese law in the implementation of investment projects, particularly foreign investors.

2. Why is an investment license required for foreign-invested projects?

Obtaining an investment license for a foreign-invested project is a mandatory requirement for foreign investors wishing to conduct investment activities in Vietnam for the following reasons:

• Legal validity and legitimacy of the project: The investment license serves as the legal basis confirming that foreign investors are permitted to operate in Vietnam in accordance with current laws.
• Protection of investors’ lawful rights and interests: Project registration enables investors to enjoy state protection over ownership rights, operational rights, and the right to remit profits abroad.
• Implementation of subsequent administrative procedures: The investment license is a necessary condition for carrying out further procedures such as applying for an Enterprise Registration Certificate, opening an investment capital account, leasing land, constructing factories, registering environmental compliance, etc.
• Management and supervision by competent authorities: Through the investment license, regulatory authorities can monitor investment activities, assess project effectiveness, and handle violations if any.

In summary, the investment license is not only a mandatory legal requirement but also an instrument to protect investors’ interests and promote transparent, efficient, and sustainable foreign investment activities in Vietnam.

III. Legal regulations on investment licenses for foreign-invested projects

1. What is the procedure for applying for an investment license for a foreign-invested project in Vietnam?

The procedure for issuance of an Investment Registration Certificate in 2024 is carried out in accordance with Article 38 of the Law on Investment 2020 and Articles 35 and 36 of Decree No. 31/2021/ND-CP, specifically as follows:

- Procedure for issuance of the Investment Registration Certificate:

The issuance or amendment of an Investment Registration Certificate for an investment project approved in principle together with investor approval and subject to the requirement for an Investment Registration Certificate shall be carried out as follows:

• Based on the Decision on Investment Policy Approval or the Decision on Adjustment of Investment Policy, the investment registration authority shall issue or amend the Investment Registration Certificate within 05 working days from the date of receipt of such decision.
• For investment projects falling under the authority of two or more provincial-level People’s Committees for investment policy approval, based on the proposal of the Ministry of Planning and Investment, the Prime Minister shall assign the Department of Planning and Investment of one province or centrally governed city where the investor implements the project or establishes or plans to establish an executive office to issue the Investment Registration Certificate.
• For investment projects that have been approved in principle and where the investor has won a land auction or bidding process; projects subject to investor approval under Clause 3, Article 29 of the Law on Investment 2020 and required to obtain an Investment Registration Certificate, the investor shall submit a written request for issuance of the Investment Registration Certificate to the investment registration authority, which shall issue the certificate within 05 working days from the date of receipt of the request.
• For investment projects where the investor is approved by an Economic Zone Management Board, such Management Board shall approve the investor concurrently with the issuance of the Investment Registration Certificate.
• For investment projects not subject to mandatory issuance of an Investment Registration Certificate, where the investor wishes to obtain such certificate, the investor shall submit a written request, together with certified copies of the Decision on Investment Policy Approval and the Decision on Investor Approval (if any), to the investment registration authority, which shall issue the Investment Registration Certificate within 05 working days from the date of receipt of the request.

(Pursuant to Article 35 of Decree No. 31/2021/ND-CP)

- Time limits for issuance of the Investment Registration Certificate:

The investment registration authority shall issue the Investment Registration Certificate within the following time limits:

• Within 05 working days from the date of receipt of the decision approving the investment policy concurrently with investor approval, for projects subject to issuance of an Investment Registration Certificate;
• Within 15 days from the date of receipt of the investor’s request for issuance of the Investment Registration Certificate.

(Pursuant to Clause 1, Article 38 of the Law on Investment 2020)

- Conditions for issuance of the Investment Registration Certificate:

For investment projects not subject to investment policy approval, investors shall be granted an Investment Registration Certificate if the following conditions are satisfied:

• The investment project does not fall within prohibited business sectors;
• The project has a defined implementation location;
• The project is consistent with planning as prescribed in Point a, Clause 3, Article 33 of the Law on Investment 2020;
• It satisfies requirements on investment capital per land area and number of employees (if any);
• It satisfies market access conditions applicable to foreign investors.

(Pursuant to Clause 2, Article 38 of the Law on Investment 2020)

- Procedure for issuance of the Investment Registration Certificate:

The procedure for issuance of the Investment Registration Certificate for projects not subject to investment policy approval is prescribed in Article 36 of Decree No. 31/2021/ND-CP as follows:

The investor shall submit one set of application documents for issuance of the Investment Registration Certificate, containing the information prescribed in Clause 1, Article 33 of the Law on Investment 2020, to the investment registration authority.

Where the investment project is implemented in two or more provincial-level administrative units, the investor shall submit the application dossier to the Department of Planning and Investment of one province or centrally governed city where the project is implemented or where the investor establishes or plans to establish an executive office.

For investment projects already in operation, the investor shall submit the dossier in accordance with Clause 1, Article 36 of Decree No. 31/2021/ND-CP, in which the investment project proposal is replaced by a report on the project implementation status from the commencement date to the date of application for the Investment Registration Certificate.

The investment registration authority shall issue the Investment Registration Certificate within 15 days from the date of receipt of a valid dossier, provided that the project satisfies the conditions for issuance.

2. Are there any special environmental requirements when applying for an investment license for a foreign-invested project?

When applying for an investment license for a foreign-invested project in Vietnam, certain environmental requirements should be noted:

• Environmental classification of projects:
• Projects are classified into Group I or II pursuant to Article 28 of the Law on Environmental Protection 2020 if they are likely to cause significant environmental impacts (wastewater, emissions, hazardous solid waste, proximity to residential areas or water sources, etc.)
• Projects in Groups III and IV must also comply with environmental standards, although the requirements are less stringent.
• Environmental Impact Assessment (EIA) or Preliminary Environmental Impact Assessment (PEIA):
• Group I and II projects are required to prepare an EIA report to assess impacts and propose mitigation measures.
• In addition, projects must conduct a Preliminary Environmental Impact Assessment (PEIA) under Article 29 of the Law on Environmental Protection 2020 during the pre-feasibility stage or when preparing the investment proposal.
• Environmental permits and waste management: After completion of the EIA, the project must obtain an environmental permit, including permits for wastewater, emissions, or hazardous waste treatment prior to operation. Investors are also required to conduct periodic inspections, monitoring, and environmental reporting in accordance with regulations.

An investment license must not only reflect capital, scale, and project location, but also ensure strict compliance with environmental protection regulations. Conducting EIA/PEIA, obtaining environmental permits, and implementing proper waste treatment measures not only help investors avoid license refusal but also contribute to sustainable development and fulfillment of obligations to the community and the State.

3. Sanctions for violations related to investment licenses for foreign-invested projects

- Administrative sanctions:

Violations of regulations on investment licenses for foreign-invested projects are subject to administrative sanctions under Decree No. 122/2021/ND-CP.

Common violations and corresponding sanctions include:

• Failure to implement the project in accordance with the contents of the Investment Registration Certificate: Fines of up to 60,000,000 VND;
• Failure to submit investment reports or submission of inaccurate information: Fines ranging from 5,000,000 VND to 20,000,000 VND;
• Failure to amend the Investment Registration Certificate upon changes: Fines ranging from 10,000,000 VND to 30,000,000 VND.

In addition, competent authorities may suspend or terminate the project in cases of serious violations.

- Additional measures:

In addition to monetary fines, investors may be subject to:

• Revocation of the right to use the Investment Registration Certificate, leading to project suspension or withdrawal;
• Mandatory termination of operations, return of the license, or disgorgement of unlawfully obtained profits.

- Criminal liability:

In cases of serious violations such as falsification of investment documents, false declarations, or intentional continuation of projects after license revocation, competent authorities may:

• Suspend the project or revoke the Investment Registration Certificate;
• Impose criminal liability if the conduct involves document forgery, corruption, or causes serious consequences.

These measures, ranging from administrative fines and suspension to license revocation and criminal prosecution, are intended to ensure strict enforcement of laws governing foreign investment activities in Vietnam. Investors are advised to fully comply with regulations, submit timely reports, and strictly adhere to the contents of the Investment Registration Certificate to avoid sanctions.

IV. Questions regarding investment licenses for foreign-invested projects

1. Is there any difference between an investment license and an investment certificate?

In essence, an Investment License and an Investment Certificate refer to the same document, differing only in terminology across different legislative periods (the term “investment license” was used in 1987, amended to “investment certificate” in 2005, and currently referred to as the Investment Registration Certificate).

Specifically, pursuant to Clause 1, Article 77 of the Law on Investment 2020, documents such as Investment Licenses, Investment Certificates, and Investment Registration Certificates are all recognized as legally equivalent, and those issued prior to the effective date of the Law remain legally valid.

In conclusion, in terms of nature and legal validity, there is no difference among these terms. “Investment License”, “Investment Certificate”, and “Investment Registration Certificate” all refer to a document certifying investment information such as the investor, capital, duration, location, objectives, scale, and conditions for project implementation.

2. If an investment project requires additional capital, is a new investment license required?

Where an investment project requires additional capital, the investor must amend the Investment Registration Certificate if the additional capital results in changes to the information registered in the original license.

Pursuant to Article 41 of the Law on Investment 2020, any changes related to investment capital, scale, objectives, or location require amendment of the Investment Registration Certificate. Article 47 of Decree No. 31/2021/ND-CP provides detailed guidance on amendment procedures, which must be completed within 10 working days from submission of a valid dossier. If the increase in investment capital is 20% or more, or involves capital mobilized from external sources, amendment is mandatory.

3. What legal support can foreign investors seek when applying for an investment license?

Foreign investors applying for an investment license in Vietnam may seek the following legal support:

• Consultation on selection of business lines and investment forms: Lawyers analyze conditional investment sectors and assist in choosing suitable enterprise models such as limited liability companies, joint-stock companies, or representative offices.
• Consultation on licensing conditions: Including requirements on capital, project location, financial capacity and experience of the investor, technology transfer commitments (if any), and environmental protection regulations.
• Drafting and reviewing investment dossiers: Lawyers assist in preparing applications for the Investment Registration Certificate (IRC), Enterprise Registration Certificate (ERC), and related documents in compliance with law.
• Representation before state authorities: Lawyers act on behalf of investors in dealings with the Department of Planning and Investment, Industrial Zone/Economic Zone Management Boards, or relevant licensing authorities.
• Post-licensing legal consultation: Guidance on tax, accounting, labor, social insurance, seal registration, bank account opening, and timely capital contribution.
• Support in complaints, amendments, or license extensions: In cases of license refusal or project modification, lawyers assist with amendment or explanation procedures in accordance with the Law on Investment.

Having legal counsel accompany the investor helps minimize risks, save time, and ensure legal compliance throughout the investment process in Vietnam.

4. What conditions must be satisfied to obtain an investment license for a foreign project?

Pursuant to Article 60 of the Law on Investment 2020, to obtain an Investment Registration Certificate for outward investment, the investor must satisfy the following conditions:

• The outward investment activity complies with the principles set forth in Article 51 of the Law on Investment 2020;
• It does not fall within prohibited outward investment sectors under Article 53 of the Law on Investment 2020 and satisfies conditions applicable to conditional outward investment sectors under Article 54;
• The investor has a commitment to arrange foreign currency on its own or through a licensed credit institution for the outward investment;
• There is a decision on outward investment in accordance with Article 59 of the Law on Investment 2020;
• There is written confirmation from the tax authority regarding fulfillment of tax obligations by the investor, issued no more than 03 months prior to the date of dossier submission.

5. Can an investment license for a foreign-invested project be extended, and what is the procedure?

Foreign investors may apply for an extension of the Investment Registration Certificate (i.e., extension of the project’s operation term) if they satisfy the conditions under Clause 4, Article 44 of the Law on Investment 2020 and Clause 4, Article 27 of Decree No. 31/2021/ND-CP. 

Pursuant to Clause 9, Article 27 and Clause 2, Article 55 of Decree No. 31/2021/ND-CP, the procedure is as follows:

- Step 1: Preparation of dossier

The investor prepares 04 sets of documents, including:

• Application for extension of the project’s operation term;
• Copy of the Investment Registration Certificate;
• Report on project implementation status;
• Documents evidencing the reasons and necessity for extension;
• Documents evidencing financial capacity (if required);
• Documents relating to land use rights (if any).

- Step 2: Submission of dossier

Submission to:

• The Ministry of Planning and Investment (for projects subject to investment policy approval by the Prime Minister);
• The Department of Planning and Investment or the Industrial Zone/Economic Zone Management Board (for projects not subject to such approval).

- Step 3: Dossier processing

Within 03 working days from receipt of a complete and valid dossier, the investment registration authority shall send the dossier to land management authorities and other relevant agencies for opinions.

Within 10 working days from receipt of the dossier, consulted agencies must issue written responses on extension conditions.

Within 15 working days from receipt of the dossier, the investment registration authority prepares an appraisal report and submits it to the competent authority for investment policy approval.

Within 03 working days from receipt of the appraisal report, the competent authority issues a decision on extension of the project’s operation term.

For projects not subject to investment policy approval, the investment registration authority shall conduct appraisal and issue the extension decision under the simplified procedure stipulated in Clause 2, Article 55 of Decree No. 31/2021/ND-CP.

V. Should investors seek legal counsel for effective support in investment license procedures?

Applying for an investment license for a foreign-invested project involves numerous specialized regulations on investment, enterprises, land, and foreign exchange management. Therefore, engaging legal counsel is essential to ensure an efficient, compliant process and to minimize the risk of refusal or procedural delays.

The support of NPLaw’s lawyers not only saves time and effort but also ensures solid legal compliance throughout the implementation and operation of foreign-invested projects in Vietnam.