Understanding the regulations on direct investment in Vietnam

Foreign direct investment (FDI) is important for Vietnam's economic growth. The government has regulations to attract and manage these investments. FDI can be in the form of wholly foreign-owned enterprises, joint ventures, business cooperation contracts, purchasing shares or contributing capital to Vietnamese enterprises, or investment in BOT, BTO, and BT projects. The legal basis for FDI includes the Investment Law 2020 and the Foreign Exchange Ordinance. Under the old regulations, foreign investors' investments in Vietnam were classified into direct and indirect investments. Through this article, TPM provides an overview of the current legal regulations on the form of direct investment in Vietnam. Foreign direct investment, FDI, plays an important role in promoting Vietnam's economic growth. The government has implemented various regulations and policies related to FDI to attract and manage these investment projects. A thorough understanding of these regulations is essential for foreign investors, helping them comply with the law and optimize the benefits of their investments. Content Indirect investment activities in Vietnam of foreign investors include the following forms. FDI stands for Foreign Direct Investment, translated into Vietnamese as Đạo Tư Trúc Thịnh Ngoạc Nguyễn. Below are some current regulations on FDI. According to Article 4 of Foreign Exchange Ordinance 2005, amended by Clause 1, Article 1 of the Ordinance amending the Foreign Exchange Ordinance 2013, there are provisions as follows. Foreign direct investment in Vietnam is the investor's business. Foreign investors invest capital and participate in managing investment activities in Vietnam. Accordingly, foreign direct investment, FDI, is a term used to refer to long-term investments by corporate investors in other countries' economies, thereby creating long-term interest and influence. Significant for foreign businesses According to Clause 22, Article 3 of the Investment Law 2020, our country's law generally regulates enterprises with foreign investment as follows. Economic organizations with foreign investment are economic organizations with investors. Foreign investors are members or shareholders. FDI enterprises according to the provisions of the Investment Law 2020 are considered economic organizations with foreign investment capital. Forms of foreign direct investment, FDI In Vietnam, the common forms of foreign direct investment, FDI, include establishing a wholly foreign-owned enterprise. Foreign investors can establish an enterprise in which they hold 100% of the capital. This enterprise operates as an independent legal entity in Vietnam. Joint ventures Foreign investors collaborate with local partners to establish a joint venture. The capital contribution ratio is agreed upon by the parties involved. Business cooperation contracts, BCC This form of cooperation between domestic and foreign investors does not involve the establishment of a new legal entity. Profits and risks are shared according to the capital contribution ratio or as agreed in the contract. Purchasing shares or contributing capital to Vietnamese enterprises Foreign investors can purchase shares or contribute capital to already established enterprises in Vietnam. This allows them to participate in management and benefit from the business activities of these enterprises. Investment in the form of BOT, BTO, BT, projects involving build-operate-transfer, BOT, build-transfer-operate, BTO, and build-transfer, BT, are common in sectors like infrastructure, transportation, energy, and public works. Legal basis Investment Law 2020 Decree 31-2021-NDCP Detailing and Guiding the Implementation of a Number of Articles of the Investment Law Foreign Exchange Ordinance 2005, Amended by Clause 1, Article 1 of the Ordinance Amending the Foreign Exchange Ordinance 2013