Vietnam's 2026 Foreign Investment Law Updates: What Has Changed

Vietnam's investment framework is the product of two competing pressures. The first is the country's commitment to integration: membership of the WTO since 2007, ratification of EVFTA in 2020, accession to CPTPP and RCEP, and a network of more than 60 bilateral investment treaties. Each of these instruments imposes liberalisation obligations that the domestic framework must accommodate.

The second pressure is the government's desire to retain regulatory tools in sensitive sectors — defence, security, certain digital and data-intensive services, education, healthcare, and segments of the energy and telecommunications industries. The compromise has historically been the conditional business lines mechanism: a positive list of activities that are open subject to conditions (foreign-ownership caps, sub-licensing, capital requirements) which can be adjusted without legislative amendment.

The 2025-2026 package responds to a third factor: the maturity of Vietnam's domestic economy. Sectors that were liberalised in earlier rounds have now produced domestic champions, and the policy preference has shifted from broad foreign capital attraction to selective foreign capital attraction — favouring high-tech, high-value-added, and export-oriented activities, while the regulatory grip has tightened in consumer-facing and data-intensive sectors.

The practical implication is that the framework is no longer a single fixed obstacle to clear at market entry. It is a moving target that requires periodic re-examination, particularly when major commercial decisions (capital increases, new product lines, M&A activity, exit) come up.

The headline amendments to the Investment Law 2020, adopted in late 2025 and effective from 1 January 2026, fall into four groups.

First, procedural streamlining for selected priority sectors. Investments in semiconductors, renewable energy generation above 100 MW, advanced biotechnology, and certain logistics and digital infrastructure activities now benefit from a fast-track approval procedure under Article 32a. Where the qualifying conditions are met, the investment registration certificate (IRC) can issue in as little as 15 working days, against the 30-45 working days typical for ordinary cases.

Second, tighter substance requirements for general cases. Article 9 of the Investment Law has been amended to require investors to demonstrate not only that the proposed activity falls within the conditional or unconditional categories, but also that the investor has sufficient operational substance to carry out the activity. In practice, this has translated into more rigorous scrutiny of the parent's industry track record, the proposed local management team, and the realism of the business plan.

Third, expanded grounds for revocation. The grounds on which an IRC may be revoked have been expanded to include sustained failure to contribute charter capital, material misstatement in the application, and serious breach of sectoral conditions identified within the first three years of operation. Existing investors should not assume that an issued IRC is unconditionally durable; periodic review of compliance is now more important than before.

Fourth, codification of the appeals procedure. Investors whose IRC applications are refused or whose certificates are revoked now have a clearer administrative-appeal route under Article 75a, with defined time limits and a transition into administrative-court litigation if the appeal is unsuccessful. The route is not yet road-tested in practice, but the formalisation is welcome.

The conditional business lines list (Appendix IV to the Investment Law, as supplemented by Decree 31/2021/ND-CP and most recently amended by Decree 18/2026/ND-CP) is the operational heart of the foreign-investment framework. The list identifies activities that foreigners may carry out only subject to specified conditions — typically foreign-ownership caps, minimum capital, sub-licensing, or qualification requirements.

Activities added to or tightened on the list. Several digital-services activities have been brought within or moved up the conditional list: cross-border data services, digital advertising platforms exceeding defined revenue thresholds, certain cloud services hosting personal data of Vietnamese individuals, and aspects of generative-AI services delivered to Vietnamese users. The conditions in each case typically combine a sectoral approval (issued by the Ministry of Information and Communications or its successor agencies), data-localisation or data-flow obligations, and in some cases a foreign-ownership cap.

Activities relaxed. A smaller group of activities has moved in the opposite direction. Selected manufacturing activities — particularly in semiconductors, advanced electronics, electric-vehicle components, and renewable-energy equipment — have been removed from the conditional list or had their conditions eased. Foreign-ownership caps in these sectors have been lifted to 100% (where they previously required a Vietnamese partner) and minimum-capital thresholds have been reduced.

Activities clarified. A persistent source of friction has been definitional ambiguity — activities that fall on the boundary between conditional and unconditional categories, or that span multiple sub-sectors with different conditions. The 2026 implementing decree introduces clearer definitions for several frequently litigated activities, including retail (clarifying the threshold between wholesale, which is generally unconditional, and retail, which has sectoral conditions), logistics services, and educational services.

Banking and financial services. No headline change to the foreign-ownership cap (which remains generally at 30% for Vietnamese commercial banks, with a recently approved exception of up to 49% for banks taking on a 'mandatory transfer' of a weak bank under State Bank restructuring). However, the conditions on foreign branch establishment and on representative-office activities have been clarified, and the licensing process for new fintech sub-sectors (e-wallet, payment-aggregation, BNPL) is now consolidated under a single sandbox framework.

Telecommunications and digital infrastructure. The headline 49% foreign-ownership cap on facilities-based telecommunications services persists, but the cap on non-facilities-based services has been raised to 65% in line with CPTPP commitments. Data-centre operations remain open to 100% foreign ownership, but with new data-sovereignty conditions for centres hosting personal data of Vietnamese individuals.

Real estate. Foreign investment in real-estate trading remains conditional under Decree 02/2022/ND-CP, with sectoral capital requirements that the 2026 amendments have not changed. However, the procedure for foreign-invested enterprises to acquire shares in domestic real-estate developers has been clarified, with explicit treatment of approval thresholds.

Education and healthcare. Both sectors remain heavily conditional, with foreign-ownership caps preserved for tertiary education at the bachelor's level, and additional approval requirements for healthcare facilities. The 2026 amendments have eased conditions on certain specialist medical services (telemedicine, certain diagnostic services) but not on general practice.

Retail and e-commerce. The Economic Needs Test (ENT) for retail outlets above defined size and after the first outlet remains in place, but its application has been narrowed in major cities under EVFTA. E-commerce platforms hosting third-party sellers are now expressly conditional, with new licensing requirements for foreign-invested platforms exceeding revenue or user thresholds.

Vietnam's treaty network is now the most important external constraint on the conditional business lines framework. EVFTA (in force since August 2020) commits Vietnam to phased liberalisation across financial services, telecommunications, professional services, distribution, and other categories. CPTPP (in force since January 2019) and RCEP (in force since January 2022) overlap with and in some areas exceed EVFTA commitments.

The interaction with the conditional list. Where a treaty commitment is more liberal than the conditional list, the treaty controls — but only for investors qualifying under that treaty (i.e., investors of the relevant treaty party with the qualifying nationality and substance). Investors structuring their Vietnam holding through a treaty-favourable jurisdiction can secure treaty benefits even where their ultimate beneficial owner is not a treaty national, subject to anti-circumvention rules and substance requirements.

EVFTA developments. The five-year phasing schedule built into EVFTA has now produced its first round of triggered liberalisations. As of August 2025 and August 2026, additional sub-sectors in financial services and telecommunications have moved to higher liberalisation thresholds. Investors who structured at the start of EVFTA may now have access to expanded scope without restructuring.

CPTPP investor-state dispute settlement. CPTPP includes ISDS provisions that allow qualifying investors to bring direct claims against Vietnam for treaty breaches. The mechanism has not yet produced a published Vietnam-related award, but the framework is now mature, and investors with material exposure should structure to qualify for these protections.

RCEP and supply-chain integration. RCEP's principal value to foreign investors in Vietnam is in trade rather than investment — particularly in rules-of-origin frameworks that allow Vietnamese-manufactured products to access RCEP markets at preferential tariffs even where inputs come from other RCEP countries. Investors structuring Vietnamese manufacturing should ensure their supply chain qualifies.

For investors entering Vietnam now. Re-run the sectoral-access analysis against Decree 18/2026/ND-CP — do not rely on prior memoranda. Verify whether your intended activities qualify for the fast-track procedure under Article 32a (semiconductors, renewables, biotech, certain logistics and digital infrastructure). Evaluate treaty-based holding structures: an EVFTA, CPTPP, or BIT-eligible holding company may provide both improved sectoral access and a layer of treaty protection. Build the substance requirements of Article 9 into your application — operational track record, management plan, business-plan realism.

For investors already operating. Conduct a compliance review against the new framework: are your activities still classified the same way? Have new conditions become applicable to existing operations? Are any of your activities now eligible for relaxed conditions (a reduced foreign-ownership cap, a removed minimum-capital threshold)? In some cases, restructuring to take advantage of liberalised conditions is worthwhile.

For investors considering exit. The sharpened revocation grounds in the 2025 amendments mean that buyers will conduct more rigorous diligence on the seller's compliance history. Sellers planning an exit should pre-empt diligence findings: address any documented capital-contribution defects, confirm sub-licensing currency, and resolve any sectoral-condition gaps before going to market.

For investors in priority sectors. Article 32a's fast-track procedure is genuinely useful but rewards preparation. A complete application — with all substance documentation, financial commitment evidence, and sectoral-condition analysis — moves quickly. An incomplete application is bounced back to the standard procedure.

The checklist below distils the practical work flowing from the 2025-2026 changes. It is calibrated for an existing foreign-invested enterprise; entry-stage investors should adapt accordingly.

Investors who run through this checklist with senior counsel typically identify two to three meaningful items requiring attention. The cost of the review is modest; the cost of missing a sharpened revocation ground or a tightened sectoral condition is substantially higher.