Renewable energy investment in Vietnam is opening up golden opportunities for investors from solar and wind power to biomass with high-profit potential and attractive incentive policies. However, the legal framework is complex and requires careful preparation to mitigate risks. NPLaw offers a comprehensive solution including precise legal advice, expedited investment licensing, and optimization of tax and land-use incentives. Discover how to succeed in renewable energy investment with NPLaw in the detailed article below and contact us today to turn your green vision into reality!

I. Current demand for renewable energy investment in Vietnam

Renewable energy investment is becoming a focal point in Vietnam as the country commits to achieving net-zero emissions by 2050. Energy sources such as solar, wind, biomass, and small hydropower are drawing strong interest from foreign investors due to Vietnam’s abundant resources and favorable policies. Under Article 5 of the Investment Law 2020, Vietnam encourages and facilitates business investment activities that promote sustainable economic sectors of which renewable energy investment is a prime example. It reduces reliance on coal and oil and supports sustainable development.

However, the legal landscape for renewable energy investment is intricate. Without a deep understanding, investors may face risks such as licensing delays, land disputes, or violations of environmental regulations. A single misstep can lead to significant losses in time and cost. For example, many solar power projects in Ninh Thuan have been subjected to inspection and clarification under recommendations by the Government Inspectorate.

II. Legal provisions on foreign investment in renewable energy in Vietnam

1. Can foreign investors invest in renewable energy in Vietnam?

According to Article 9 of the Investment Law 2020, foreign investors are permitted to invest in Vietnam in all sectors not listed as prohibited or restricted. Renewable energy is strongly encouraged under Article 5 and is not subject to market access restrictions for foreign investors (Appendix I of Decree 31/2021/ND-CP). However, investors must meet requirements concerning capital, clean technology, and environmental permits.

It reflects Vietnam’s broader efforts to attract global green capital. For instance, the Copenhagen Infrastructure Partners (CIP) has signed a wind power agreement worth approximately 200 million USD in Vietnam, and the Prime Minister has encouraged further collaboration in building a renewable energy industry, aligning with major policies of the Vietnamese Party and State.

2. What investment forms are available to foreign investors?

Foreign investors may invest in Vietnam’s renewable energy sector via the forms listed in Article 21 of the Investment Law 2020:

  • Establishment of an economic organization: As stipulated in Article 22, this is often chosen when the investor wants to establish a new legal entity for long-term cooperative investment. The establishment and operation of such organizations must comply with the Law on Enterprise 2020 and other relevant laws.
  • Capital contribution, share purchase, purchase of capital contributions: Under Article 24, such a flexible form allows foreign investors to participate in the business of existing enterprises without establishing a new legal entity.
  • Business Cooperation Contract (BCC): As per Article 27, a BCC is signed between investors to cooperate in business, share profits and products without establishing a legal entity. It suits projects with specific objectives and timeframes.

Licensing Authority: The competent investment registration agency issues Investment Registration Certificates for:

  • Projects spanning two or more provinces;
  • Projects both inside and outside industrial zones, export processing zones, high-tech zones, or economic zones;
  • Projects located in such zones where a management board has not been established.

3. Are there any prohibited sub-sectors in renewable energy for foreign investors?

According to Article 6 of the Investment Law 2020 amended by Clause 2, Article 2 of the amended Law 2024, there is no renewable energy industry prohibited for foreign investors.

While renewable energy is prioritized under Clause 1, Article 16, indirectly related activities may be restricted, such as:

  • The production of hazardous chemicals (e.g., certain battery components), listed in Appendix II;
  • Illegal resource exploitation (e.g., certain small hydroelectric projects under Point c, Clause 1, Article 6. 

III. Questions on renewable energy investment regulations

1. Can foreign investors invest using USD?

Under Clause 1, Article 4 of Circular 06/2019/TT-NHNN, foreign investors may contribute capital in foreign currencies (e.g., USD) or Vietnamese Dong in accordance with their registered capital in the Investment Registration Certificate (IRC), subject to Vietnam’s foreign exchange regulations.

2. Which authority grants renewable energy investment licenses?

Under Article 37 of the Investment Law 2020, licensing authority depends on project scale and location:

  • Provincial People’s Committees: For projects outside industrial parks, export processing zones, high-tech zones, economic zones, and not under other authorities.
  • Management Boards: For projects inside such zones.
  • 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 conditions for foreign renewable energy investment?

Under Article 38 of the Investment Law 2020, foreign investors will be granted an Investment Registration Certificate if they meet the following conditions:

  • The project is not in a prohibited sector;
  • The investment site is legal and clearly defined;
  • The project aligns with national, regional, and provincial planning;
  • Land-use and labor-use efficiency is ensured (where applicable);
  • Market access conditions for foreign investors are satisfied.

4. What incentives are available to foreign renewable energy investors?

According to Article 15 of the Investment Law 2020, incentives may include:

  • Corporate income tax reductions or exemptions;
  • Import duty exemptions for fixed assets, raw materials, etc.;
  • Land lease and land use fee reductions or exemptions;
  • Accelerated depreciation and increased deductible expenses.
  • Specific incentives depend on the sector, location, project scale, and other factors.

5. What is the licensing duration and process?

As provided in Article 38 of the Investment Law and Decree 31/2021/ND-CP:

  • Projects requiring investment policy approval and investor approval: Investment Registration Certificate will be issued within 5 working days after receiving approval decisions.
  • Projects that have been approved for investment policy and the investor has won the auction or bid: Investment Registration Certificate will be issued within 5 working days after submission of application.
  • Projects not subject to policy approval: Investment Registration Certificate will be issued within 15 working days upon receipt of a valid application.

General licensing process (Articles 35, 36, 39, 40 – Decree 31/2021/ND-CP):

1. The investor prepares application documents;

2. The investor submits online or in hard copy to competent authority;

3. The Investment Registration Authority checks application validity and notifies investor if incomplete;

4. The Investment Registration Authority appraises the application (if required);

5. The Investment Registration Authority shall issue the Investment Registration Certificate.

IV. NPLaw’s legal advisory services for renewable energy investment

NPLaw offers legal consulting services to support foreign investors in renewable energy projects:

  • Project feasibility and legal risk assessment;
  • Legal consultation on current investment regulations;
  • Complete preparation of investment registration dossiers;
  • Representation in dealings with government authorities;
  • Efficient resolution of legal disputes.

Want your renewable energy investment in Vietnam to be smooth and successful? Contact NPLaw today via our hotline or website for expert legal consultation and optimal investment solutions.