Foreign investment plays a pivotal role in Vietnam’s socio-economic development by providing capital, technology, and employment opportunities. However, alongside these benefits, violations of foreign investment regulations have been increasingly frequent and complex. Understanding the relevant legal provisions not only helps investors avoid unnecessary legal risks but also contributes to building a transparent and sustainable investment environment. 

I. Current situation of violations of foreign investment regulations

In the context of deep international economic integration, Vietnam has become an attractive destination for foreign investors. The steady growth of FDI inflows over the years demonstrates the international community’s confidence in Vietnam’s development potential. Nevertheless, in practice, many foreign investors and foreign-invested enterprises have failed to fully comply with, or have even intentionally violated, legal regulations.

Violations occur in various forms, ranging from failure to properly register investment procedures, breaches of capital contribution schedules, and project implementation inconsistent with licensed content, to more sophisticated acts such as “shadow” or “nominee” investments in restricted sectors. Additionally, violations concerning reporting regimes, environmental compliance, and labor regulations are not uncommon. Such misconduct not only causes economic damage and affects the rights of relevant parties but also erodes the integrity of Vietnam’s investment and business environment. 

II. Legal provisions governing violations of foreign investment regulations

To effectively manage and regulate investment activities, Vietnamese law has provided detailed provisions identifying specific violations and corresponding penalties.

1. What constitutes a violation of foreign investment regulations?

A violation of foreign investment regulations refers to any act or omission by individuals or organizations engaged in investment activities in Vietnam that fails to perform, incorrectly performs, or incompletely performs the obligations and provisions set out in the Law on Investment 2020 and its implementing instruments. Such acts may be intentional or unintentional, infringing upon the order of state management in the field of investment.

2. Common types of violations of foreign investment regulations

According to Decree No. 122/2021/NĐ-CP on administrative sanctions in the field of planning and investment, common violations include:

  • Breaches of registration procedures for the establishment, operation notification, or changes in registration content of foreign-invested economic organizations;
  • Violations in project implementation: Failure to commence the project after obtaining investment approval; non-compliance with the registered capital contribution schedule; failure to amend investment registration certificates when project contents change;
  • Violations of market access conditions for foreign investors: Investment in restricted or prohibited sectors, or failure to meet statutory conditions;
  • Violations related to reporting obligations for investment activities in Vietnam or outbound investments from Vietnam;
  • Provision in false or inaccurate information or documents to competent State authorities during investment procedures;
  • Other violations such as transferring investment projects without proper conditions or non-compliance with regulations on investment appraisal and supervision.

3. Sanctions for enterprises violating foreign investment regulations

Depending on the nature and severity of the violation, enterprises may be subject to the following sanctions under Decree No. 122/2021/NĐ-CP:

  • Primary sanctions: Warnings or monetary fines, which may reach several hundred million VND for serious violations;
  • Supplementary sanctions: Suspension of project operations for six to twelve months; confiscation of infringing materials or means;
  • Remedial measures: Mandatory return of illicit gains, rectification of investment procedures, or restoration of the original state prior to violation.

4. Competent authorities for handling violations of foreign investment regulations

The authority to impose administrative sanctions in the investment sector is provided under the Law on Handling of Administrative Violations 2012 (amended in 2025) and Decree No. 122/2021/NĐ-CP. Competent bodies include:

  • Chairpersons of People’s Committees at all levels;
  • Specialized Inspectorates of the Ministry and Departments of Planning and Investment;
  • Other state management agencies within their assigned functions and authority when detecting relevant violations.

III. Questions on violations of foreign investment regulations

1. Can investors who have violated foreign investment regulations continue to participate in other projects in Vietnam?

Administrative sanctions do not automatically deprive investors of the right to participate in future investment projects. However, it is a critical factor considered by licensing authorities when assessing new applications. Investors with prior violations, especially serious ones, may face greater scrutiny or even rejection of new project proposals.

2. How are disputes arising from violations of foreign investment regulations resolved?

It is important to distinguish between administrative handling of violations and dispute resolution between parties.

  • For violations, the investor will be sanctioned under administrative or criminal procedures;
  • For disputes between investors and partners, enterprises, or among investors themselves, resolution may be sought through negotiation, mediation, commercial arbitration, or court proceedings.

In addition, bailiff’s minutes serve as a source of evidence that can record events or acts and may be considered by the court when resolving disputes under Vietnamese law.

3. Will investors who voluntarily remedy their violations still be taken sanctions? 

Under the Law on Handling of Administrative Violations, voluntary remediation or compensation before an official decision is issued is regarded as a mitigating circumstance.

It means that while sanctions may still apply, the investor could receive a lighter sanction, such as a reduced fine or a warning instead of a monetary fine. However, voluntary remediation does not exempt the investor from legal liability.

4. Will enterprises violating foreign investment regulations be forced to terminate ongoing projects?

Pursuant to Article 48 of the Law on Investment 2020, investment registration authorities may terminate an investment project if the investor engages in investment activities based on sham civil transactions or violates land or planning laws without the ability to remedy such violations.

5. Can violations of foreign investment regulations lead to criminal prosecution?

If the violation meets the elements of a criminal offense under the Penal Code 2015 (amended 2017), the investor may be prosecuted under criminal law. Relevant offenses may include: smuggling (Article 188), tax evasion (Article 200), fraud and appropriation of property (Article 174), violations of land management regulations (Article 229), or causing environmental pollution (Article 235), among others.

IV. Legal consultancy services on violations of foreign investment regulations

Compliance with investment law is crucial to the success and sustainability of any project. To minimize risks and avoid unnecessary losses, obtaining assistance from a professional legal consultancy firm is essential.

With a team of experienced lawyers and experts in investment and corporate law, NPLaw proudly offers comprehensive legal services, including:

  • Legal advisory on foreign investment regulations to help enterprises develop effective compliance strategies;
  • Assistance with legal procedures for obtaining and amending Investment Registration Certificates, Enterprise Registration Certificates, and other relevant licenses;
  • Representation of clients in dealings with competent State authorities concerning violation resolution;
  • Advisory on remedial measures to minimize adverse sanctions;
  • Protection of clients’ legitimate rights and interests in disputes before courts or arbitral tribunals.

For any inquiries or legal assistance concerning violations of foreign investment regulations, please contact us for timely and professional support.