Vietnam continues to attract foreign investors with its rapid economic growth, favorable trade agreements, and expanding consumer base. But before launching operations, one of the most critical steps for any foreign business is obtaining the proper licenses to operate legally. Vietnam’s business licensing process can be complex, multilayered, and highly industry-specific—requiring foreign investors to navigate regulatory hurdles that are often unfamiliar.

This legal guide provides a comprehensive overview of business licensing in Vietnam, highlighting the required steps, types of licenses, common pitfalls, and best practices for a smooth market entry.

Understanding the Business Licensing Framework in Vietnam

Vietnam’s business licensing system is governed by several key legal documents, including the Law on Investment, the Law on Enterprises, and various sector-specific regulations. Licensing is not a one-size-fits-all process but rather a sequence of approvals that depend on your business model, investment type, and industry.

Key regulatory authorities involved include:

  • Department of Planning and Investment (DPI): Oversees general business registration at the provincial level.
  • Ministry of Planning and Investment (MPI): Handles larger or national-level investments.
  • Specialized ministries: Depending on the sector, you may need separate approvals from ministries such as Health, Industry and Trade, or Information and Communications.

In short, Vietnam’s licensing framework is multi-tiered and sector-specific, requiring careful coordination with both national and provincial authorities depending on the nature of the investment.

Types of Licenses Required for Foreign Investors

1. Investment Registration Certificate (IRC)

Foreign investors must first obtain an IRC, which grants permission to invest in Vietnam. This certificate includes critical information such as:

  • Total investment capital
  • Scope and objectives of the project
  • Operational duration and location

The IRC is a prerequisite for forming any foreign-invested enterprise (FIE), even for minority ownership.

2. Enterprise Registration Certificate (ERC)

Once the IRC is issued, the next step is to apply for the ERC, which legally establishes the business entity. It covers:

  • Company name and charter
  • Legal representative
  • Registered office address
  • Business lines (activities)

This certificate functions similarly to a business license in other jurisdictions.

3. Conditional Business Licenses

Certain sectors are deemed “conditional” and require additional approvals. Examples include:

  • Logistics and freight forwarding
  • E-commerce platforms
  • Advertising and media
  • Education and healthcare services

These approvals may come from specialized ministries and often require proof of technical qualifications, minimum capital thresholds, or local partner involvement.

4. Sector-Specific Sub-licenses

Depending on your industry, additional licenses may be needed post-incorporation. These can include:

  • Food hygiene and safety certificates
  • Retail licenses (for trading activities)
  • Environmental impact assessments
  • Fire safety and construction permits

Understanding which licenses apply to your business model is crucial to avoid delays and ensure full compliance from incorporation through operation.

Market Access for Foreign Investors: What You Can and Cannot Do

Vietnam does not offer open access to every sector for foreign investors. Instead, access is governed by Vietnam’s commitments under trade agreements such as the WTO, CPTPP, and EVFTA. Understanding market access is essential before planning your business structure.

Unconditional Sectors

These are fully open to foreign investment with no equity restrictions or additional approvals. Examples include software development, consulting services, and certain manufacturing lines.

Conditional Sectors

These sectors require special licenses, local partnerships, or are subject to equity caps. Examples include:

  • Logistics
  • Education and training
  • E-commerce
  • Advertising

Foreign investors may be asked to demonstrate qualifications or form joint ventures with Vietnamese partners.

Prohibited Sectors

Some sectors are entirely off-limits to foreign investors. These include:

  • Military and defense production
  • Press and news agencies
  • Forestry and genetic research involving endangered species

Foreign investors should consult Vietnam’s Negative List and Schedule of Commitments to determine sector eligibility.

Timeline and Procedures

While timelines vary by location and industry, here is a general overview:

  • IRC: 15–20 working days
  • ERC: 3–7 working days
  • Sub-licenses: Varies significantly (from 2 weeks to several months)

The process includes document preparation, notarization/legalization (for foreign papers), and multi-agency coordination. Delays are common if paperwork is incomplete or unclear.

Mistakes to Avoid When Applying for a Business License in Vietnam

One common error foreign investors make is registering business activities that do not accurately reflect the company’s actual operations. This mismatch can lead to legal complications, including regulatory fines or operational restrictions.

Another frequent issue is selecting the wrong legal structure for the business. For example, choosing a joint stock company (JSC) when a limited liability company (LLC) would be more suitable for ownership, tax planning, or governance purposes may complicate future operations or restructuring.

Improper documentation is another major hurdle. Submitting incomplete applications or poorly translated documents often causes delays, repeated rejections, and reputational concerns with local authorities.

Lastly, many investors assume that receiving an ERC is sufficient to begin operations. In reality, sector-specific sub-licenses are often required post-incorporation, and failing to secure them can halt business activities or result in penalties.

Post-licensing Obligations

Securing the necessary licenses is only the beginning. Once the business is officially registered, foreign investors must comply with a range of ongoing administrative and regulatory requirements to maintain legal status and avoid penalties. These obligations are critical for ensuring smooth operations, building trust with local authorities, and setting the foundation for long-term success in Vietnam.

Foreign-invested enterprises (FIEs) are expected to:

  • Register their tax code with the local tax department to fulfill corporate tax obligations and receive a tax identification number (TIN), which is required for issuing invoices and conducting financial transactions.
  • Open a corporate bank account at a licensed Vietnamese bank to manage operational capital and facilitate payments to employees, suppliers, and the government.
  • Complete labor registration, including enrolling employees in Vietnam’s compulsory social insurance programs and notifying the Department of Labor, Invalids and Social Affairs (DOLISA) of their workforce.
  • Comply with environmental protection measures and obtain relevant safety certifications, such as fire prevention and control licenses, where applicable based on industry or facility.
  • Submit annual reports to authorities detailing the company’s business activities, financial performance, and compliance with Vietnamese regulations.

Neglecting these post-licensing steps can result in administrative fines, suspension of operations, or difficulties in renewing key licenses or expanding business activities. Foreign investors are encouraged to work closely with legal and accounting advisors to ensure compliance from the outset.

Conclusion

Navigating the business licensing process is one of the most important early steps for any foreign investor entering Vietnam. From selecting the right legal structure to securing all necessary approvals, each stage plays a critical role in shaping your ability to operate compliantly and efficiently in the market. Whether your business operates in a heavily regulated industry or in a general service field, a deep understanding of Vietnam’s licensing requirements can help prevent costly delays, legal issues, and operational risks.

At Corporate Counsels, we help foreign investors navigate Vietnam’s complex licensing environment with clarity and confidence. Recognized by Chambers, Legal500, and Benchmark Litigation, our Corporate Lawyers offer tailored support from licensing to long-term compliance. For expert legal guidance on business licensing in Vietnam, contact us at letran@corporatecounsels.vn.