FDI Entry Strategy in Vietnam under the 2025 Investment Law: Choosing Between Greenfield Investment and M&A

As Vietnam continues to maintain its position as one of the most attractive destinations for international investment flows in the Asia-Pacific region, selecting an appropriate market entry structure has become a strategic decision for foreign investors. Beyond commercial considerations and business strategy, this decision is also significantly influenced by the legal framework governing foreign investment in Vietnam.

The 2025 Investment Law, which takes effect on 1 March 2026, largely preserves the regulatory structure of the Investment Law 2020 while introducing reforms aimed at increasing flexibility for investors, reducing administrative barriers, and gradually shifting from an ex-ante licensing regime toward a more effective ex-post supervision framework. Within this evolving regulatory landscape, the two most common methods for foreign investors entering the Vietnamese market — establishing a new enterprise (Greenfield investment) and acquiring equity in an existing Vietnamese company (M&A investment) — continue to play a central role in investment structuring.

The choice between these two approaches depends not only on business objectives but also on different legal requirements relating to investment licensing, market access conditions, and post-investment compliance obligations.

1. Greenfield Investment – Establishing a Foreign-Invested Enterprise

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Greenfield investment refers to the establishment of a new legal entity in Vietnam by a foreign investor for the purpose of implementing an investment project. This model is widely used by multinational corporations seeking to build manufacturing facilities, service centers, or long-term commercial operations in the Vietnamese market.

Under Vietnam’s traditional investment regulatory framework, establishing a foreign-invested enterprise through a Greenfield structure typically involves two main steps: (i) obtaining an Investment Registration Certificate (IRC) for the investment project, and (ii) obtaining an Enterprise Registration Certificate (ERC) for the company that will implement the project.

The 2025 Investment Law maintains the central role of the IRC as the legal instrument recording the foreign investor’s investment project. However, one notable development is the introduction of greater flexibility in the sequence of licensing procedures. In certain cases, foreign investors may establish the enterprise first and subsequently register the investment project, rather than following the fixed IRC–ERC sequence traditionally applied.

This flexibility is particularly relevant for strategic investors, especially multinational groups seeking to establish a local holding company or operational platform in Vietnam before launching multiple investment projects.

While Greenfield investment provides investors with full control over the enterprise and its investment project, this approach often requires a longer preparation period due to the various licensing procedures and regulatory approvals that may be required, including those relating to land use, environmental compliance, and construction permits.

2. M&A Investment – Capital Contribution or Share Acquisition in Vietnamese Companies

In addition to establishing new companies, many foreign investors choose to enter the Vietnamese market by acquiring equity in existing Vietnamese enterprises. This approach enables investors to gain immediate access to the market by leveraging the existing infrastructure, operational capacity, and customer base of the target company.

From a legal perspective, M&A transactions involving foreign investors are governed by both investment law and corporate law. In certain circumstances, foreign investors must complete the registration procedure for capital contribution or share acquisition with the investment authority before completing the transaction.

The 2025 Investment Law continues to maintain this regulatory mechanism as a tool for monitoring foreign participation in Vietnamese companies, particularly in sectors subject to market access restrictions or where the transaction may significantly alter the foreign ownership structure of the enterprise.

However, for transactions that do not fall within the cases requiring registration under investment law, foreign investors may proceed with the M&A transaction by completing the procedures for updating shareholder or member information at the business registration authority without obtaining a separate approval from the investment authority.

Compared to Greenfield investment, M&A transactions often allow investors to enter the market more quickly. Nevertheless, such transactions typically require comprehensive legal due diligence to assess risks relating to the target company’s business operations, financial obligations, land use rights, and regulatory licenses.

3. Comparing the Two Market Entry Approaches

Choosing between Greenfield investment and M&A investment depends on a variety of factors, including business strategy, the level of control desired by the investor, and the characteristics of the relevant industry.

Greenfield investment is generally suitable for long-term investment projects, particularly in sectors such as manufacturing, infrastructure, or high technology, where investors seek full operational control over the enterprise and the implementation of the investment project.

In contrast, M&A investment is often preferred in service-oriented sectors such as commerce, technology, and consumer services, where acquiring an existing enterprise may allow investors to access the market more rapidly and benefit from established operational capabilities.

From a regulatory perspective, Greenfield investment typically involves more investment licensing procedures and post-investment reporting obligations, whereas M&A investment focuses more on transaction structuring, market access conditions, and share transfer procedures.

4. Investment Regulatory Trends under the 2025 Investment Law

One of the notable policy trends reflected in the 2025 Investment Law is the continued effort to improve the investment environment by simplifying administrative procedures and strengthening post-investment supervision.

This is reflected in clearer rules regarding cases requiring investment approval and in the simplification of certain procedures relating to the adjustment of investment projects.

For foreign investors, these reforms provide greater flexibility when entering the Vietnamese market, while at the same time placing greater responsibility on enterprises to ensure compliance with applicable laws and regulations during their operations.

5. Brief conclusion

As Vietnam’s investment legal framework continues to evolve toward greater transparency and flexibility, choosing the appropriate market entry structure has become an essential component of the investment strategy of international businesses.

Both Greenfield investment and M&A investment offer distinct advantages and challenges. Greenfield investment provides full operational control and is particularly suitable for long-term projects, while M&A investment enables investors to access the market more rapidly by leveraging existing enterprises.

Under the regulatory framework of the 2025 Investment Law, a clear understanding of these two investment approaches and their associated legal requirements will help foreign investors structure their investments more effectively and mitigate legal risks when operating in Vietnam.