Dear Clients and Partners,
The landscape of foreign direct investment (FDI) in Vietnam has undergone a tectonic shift. Since the full implementation of the Law on Investment 2025 (Law No. 143/2025/QH15) earlier this year, the traditional "IRC-first" bottleneck has been dismantled. For years, foreign investors were forced to navigate a rigid sequence: obtain an Investment Registration Certificate (IRC) first, and only then could they apply for an Enterprise Registration Certificate (ERC) to breathe life into their legal entity.
As of March 2026, the rules of the game have changed. You can now establish your company first, streamlining your entry into one of Southeast Asia's most dynamic markets. However, with this newfound flexibility comes a sophisticated set of compliance requirements. At BLaw Vietnam, we have closely monitored these legislative evolutions to ensure our clients can optimize their market entry strategies without falling into regulatory traps.
This guide explores the nuances of the "ERC-first" strategy and how you can leverage the 2025 Investment Law to your advantage.
1. Understanding the Fundamental Shift: Entity vs. Project
The 2025 Law on Investment fundamentally separates the legal existence of a company from the approval of an investment project.
Previously, the IRC served as a "birth certificate" for both the project and the entity. This meant that if your project approval was delayed due to environmental concerns or land-use complexities, your company could not legally exist. You were stuck in a "pre-incorporation" limbo, unable to hire staff or sign official leases.
Under the current framework:
- The ERC (Enterprise Registration Certificate) creates the legal entity. It gives your business a tax code, a seal, and a legal representative.
- The IRC (Investment Registration Certificate) approves the investment project. It defines what the company is allowed to do, where it will do it, and how much capital it will deploy.
By allowing the ERC to be issued first, the Vietnamese government has effectively decoupled corporate formation from project licensing. This allows you to "hit the ground running" while the more technical project approvals are processed.
2. Do You Still Need an IRC?
While the law allows you to start without an IRC pre-registration, it does not mean the IRC is optional for everyone. Whether you eventually need an IRC depends on your ownership structure and the nature of your business.
When an IRC is Mandatory
Based on the current 2025 framework, your business must obtain an IRC if:
- Foreign ownership is 50% or more of the charter capital.
- The foreign investor directly or indirectly exercises controlling rights over the entity.
- The project involves "conditional" sectors or requires investment policy approval from high-level authorities (such as the National Assembly or the Prime Minister).
When an IRC is Not Required
You may proceed with just an ERC and relevant sub-licenses if:
- Foreign ownership is less than 50% and you do not hold controlling rights.
- The investment is considered an indirect investment (capital contribution or share acquisition) that does not trigger new project registration requirements.
For a deeper dive into how these thresholds affect your specific setup, we recommend reviewing our analysis on IRC vs. ERC simplification.
3. The "ERC-First" Window: What You Can Actually Do
The primary benefit of the 2025 Law is the ability to use the ERC-only phase for preparatory actions. This "window" is a powerful tool for businesses that need to establish a physical and legal presence before their full project is greenlit.
During this phase, your company is a legally recognized person in Vietnam. You are empowered to:
- Open Capital Accounts: You can open a Direct Investment Capital Account (DICA) or a standard specialized bank account to facilitate the flow of initial funds.
- Secure Intellectual Property: Registering trademarks and patents under a local entity's name rather than an offshore parent company.
- Sign Preliminary Contracts: You can enter into Memorandums of Understanding (MOUs) or conditional office leases that become fully binding upon the issuance of the IRC.
- Execute Tax Registration: Obtain your tax code and digital signature, ensuring you are ready for compliance from day one.
Through the above actions, you can effectively start your FDI business in Vietnam with a leaner, more agile approach.
4. The Forbidden Zone: What to Avoid Before the IRC
It is a common misconception among new investors that "ERC-first" means they can begin full operations immediately. This is a high-risk assumption. If your project falls into the IRC-required category, you are legally barred from implementing the project until the IRC is granted.
Specifically, you must NOT:
- Commence Commercial Operations: You cannot issue VAT invoices for the core services or products intended for the project.
- Import Project Machinery: Customs will typically require an IRC for the duty-free import of machinery intended for a specific investment project.
- Break Ground on Construction: For manufacturing or infrastructure projects, the IRC (and subsequent permits) is a prerequisite for any physical site work.
- Deploy Full Operational Staff: While you can hire a management team, hiring a 500-person factory workforce before the IRC is issued is a massive regulatory red flag.
Violating these boundaries can lead to administrative fines and, more critically, the suspension of your project before it even begins.
5. A Strategic Roadmap for 2026 Market Entry
To navigate this new landscape efficiently, BLaw Vietnam recommends the following declarative roadmap:
Step 1: Market Access Verification
Before filing for an ERC, verify that your business lines are open to foreign investment. The 2025 Law maintains a "Negative List" approach. If your sector isn't on the restricted list, you have the same rights as a domestic company regarding the incorporation process.
Step 2: Incorporate the Legal Entity (ERC)
Submit your application to the Department of Planning and Investment (DPI). Since you are not yet applying for the project (IRC), the documentation focuses on the identity of the investors, the legal representative, and the company charter. This step is now significantly faster than the old combined process.
Step 3: Utilize the Preparatory Phase
With your ERC in hand, open your bank accounts and finalize your UBO disclosures. This is the time to finalize your Investment Project Proposal (IPP), which is the core of the IRC application.
Step 4: Apply for the IRC
Submit your project details, including capital scale, land use requirements, and environmental impact assessments. Because your company already exists, the DPI is often more collaborative, as they are dealing with an established local taxpayer rather than a distant offshore entity.
Step 5: Full Project Launch
Upon receiving the IRC, you are authorized to inject the full registered capital, import equipment, and begin generating revenue.
6. Why This Matters for Your Business Strategy
The "ERC-first" strategy is more than just a procedural change; it is a risk mitigation tool. It allows you to test the waters and secure your corporate identity without committing the full capital and resources required for a major project. It also provides a "safe harbor" to handle administrative tasks that previously caused months of delay.
However, the 2025 Law is a "double-edged sword." The government has simplified the entry, but they have increased the scrutiny on post-registration compliance. Failure to transition from ERC to IRC in a timely manner, or operating without the necessary project approvals, will lead to much harsher penalties than in previous years.
In addition to the procedural benefits, this law encourages transparency. By requiring the disclosure of control, Vietnam is aligning itself with international standards, making the market more attractive for institutional investors.
Conclusion: Partner with BLaw Vietnam for a Seamless Transition
The 2025 Investment Law offers an innovative pathway for your business to establish a foothold in Vietnam with unprecedented speed. By separating the entity from the project, you can optimize your timeline and enhance your operational readiness.
At BLaw Vietnam, we pride ourselves on being more than just legal advisors; we are your strategic partners. Our team of highly qualified professionals has a proven track record of navigating complex FDI regulations. Whether you are looking to streamline your initial setup or need a comprehensive audit of your current compliance status, we are here to support you.
We are thrilled to help you navigate this new era of investment. If you have questions about whether the "ERC-first" strategy is right for your upcoming project, or if you need assistance with the new 2026 filing requirements, please do not hesitate to reach out.
Contact BLaw Vietnam Today to schedule a consultation and ensure your investment is built on a solid legal foundation.
Through the above article, we hope to have provided you with a clear and actionable overview of the 2025 Investment Law's impact on company formation. For more updates on Vietnamese law, stay tuned to our Legal Blog.