Unlocking a New Growth Cycle: The Revised Investment Law

Localities are seeking new momentum, businesses are expecting a more favorable investment environment, and international investors are closely monitoring Vietnam’s institutional reforms to make decisions.

In this context, the draft amended Investment Law (recently submitted by the Government to the National Assembly at the ongoing 10th Session) is seen as a strategically significant step to establish a transparent, open, and modern investment-business environment. This is not just an investment law but a crucial foundation for how the economy operates in the coming years.

Practical bottlenecks demanding change

Looking back at the recent period, it is evident that complications in investment procedures and the lack of synchronization in the legal system have created significant barriers to development. This is not a subjective perception but a reality consistently reflected by many localities, businesses, and research institutions.

First, procedural delays are too extensive. According to feedback from many localities, some projects take 12 to 24 months to complete the investment approval process, even when there are no major legal issues with the application. A provincial leader shared, “We have the capacity, but procedures delay progress beyond our control. Many investors return to ask why it takes so long for pre-inspection procedures.” The Provincial Competitiveness Index (PCI) reports in recent years also show that “administrative procedures and legal overlaps” are consistently among the top three barriers to the business environment.

Second, business conditions remain complex and outdated. Despite efforts to reduce them, some industries no longer requiring strict management are still listed as conditional businesses. This inadvertently maintains the “ask-and-give” mechanism, increases informal costs, and hinders the emergence of new business models. VCCI and experts have repeatedly recommended significantly reducing business conditions in many industries, as current regulations are deemed no longer suitable for practical needs.

Third, the current policy framework is not attractive enough for high-tech industries. In the global race for semiconductors, AI, green technology, and low-carbon manufacturing, countries design highly flexible incentive mechanisms and legal frameworks. Many large investors state, “We highly value Vietnam’s potential but desire incentives and procedures compatible with the technology sector’s pace.” Without timely reforms, Vietnam risks missing out on high value-added capital—a key factor for future growth.

Fourth, overlapping laws create procedural loops. An investment project must comply with the Investment Law, Land Law, Planning Law, Environmental Protection Law, Fire Prevention and Fighting Law, and Procurement Law, among others. Even a single inconsistency—such as delayed planning approval, land price determination, or environmental criteria—can stall the entire project. Some localities frankly note, “It’s not that we don’t want to move quickly, but we must wait for procedures from various laws.”

These realities are not just issues for businesses or localities but affect national competitiveness. If not addressed promptly, the opportunity cost to the economy will be significant. Thus, this amendment to the Investment Law is urgent: it must not only resolve individual issues but also redesign the entire investment process, creating a seamless legal foundation for the country’s new development phase.

Key Innovations in the Amended Investment Law

Long-standing bottlenecks highlight the urgent need to restructure the investment process, shifting focus from “input control” to “risk management and efficiency enhancement.” The draft amended Investment Law embodies this spirit with five key reform groups, fundamentally transforming the economy’s operational model.

1. Drastically reduce pre-inspection procedures, accelerating project deployment. A major innovation is significantly narrowing the group of projects requiring investment approval, retaining only those with significant impacts on land, environment, defense-security, or strategic resources. Most projects, especially in manufacturing, trade, and services, shift to registration and post-inspection mechanisms.

This change is foundational because: (a) Project preparation time is significantly reduced, helping businesses seize timely opportunities. Each month of procedural reduction frees up trillions of dong for production and business; (b) It avoids “opportunity delays,” a major risk in the context of intense FDI competition and supply chain shifts; (c) It reduces “ask-and-give” opportunities and administrative harassment by minimizing unnecessary contact points; (d) It signals stability and transparency to domestic and foreign investors—a top priority in their location choices.

This reform not only accelerates project implementation but also reflects a critical shift in mindset: the State moves from a controlling gatekeeper to an enabler and transparent supervisor.

2. Reduce dozens of conditional business sectors—expanding the space for free enterprise. A mature economy must reduce reliance on business conditions and enhance transparency, competition, and post-inspection. The amended Law rightly: abolishes about 25 industries no longer needing conditionalization (with the Government reviewing to potentially abolish at least 50 more); narrows the scope of 20 other industries to eliminate outdated, vague, or unsuitable criteria.

This change is significant. It respects the constitutional right to free enterprise, the foundation of a market economy; increases creativity and competition for businesses, especially SMEs heavily affected by complex conditions; and reduces “soft barriers”—where informal costs and market distrust often arise.

This step aligns with the international trend of managing less but more effectively.

3. Strongly prioritize high-tech, innovation, and green economy. For the first time, high-tech, digital economy, and green economy sectors are established as the focus of investment incentives. This reflects long-term vision: Vietnam’s future breakthroughs depend on knowledge, technology, and innovation.

These priorities enhance Vietnam’s appeal to leading firms in semiconductors, AI, biotechnology, and low-carbon technology; open opportunities for Vietnamese businesses to deeper integrate into shifting global value chains; and embrace green development—an increasingly important criterion in international trade, investment, and market access.

This shift moves from broad capital attraction to high value-added resources, aligning with the country’s long-term development goals.

4. Facilitate foreign investors—boosting Vietnam’s competitiveness. Allowing foreign investors to establish businesses before completing investment registration procedures aligns with OECD and international practices.

This reduces market entry costs, especially in technology, digital services, and e-commerce; increases administrative predictability, helping investors plan more effectively; and enhances Vietnam’s image as an open, innovation-friendly economy.

In intense regional competition, procedural speed and clarity are strategic advantages.

5. Strengthen enforcement discipline—protecting public resources and market order. Alongside “opening the way,” the law “tightens” necessary areas to ensure resource efficiency. New regulations on project timelines, extensions, and transfers filter out incapable investors, prevent project speculation or prolonged land hoarding, enhance land and public resource use, and protect genuine investors.

Balancing “input relaxation” with “enforcement tightening” creates a healthy, stable, and sustainable investment environment.

Early Adoption: Benefits for the Next Decade

Promptly finalizing and enacting the amended Investment Law will not only resolve immediate issues but also create strategic ripple effects for the 2025-2035 development phase. Reform speed can determine the nation’s ability to seize opportunities.

1. Drive short-term economic recovery and acceleration. Streamlined procedures and clarified processes will immediately “activate” numerous projects in industry, urban development, infrastructure, and services. Many localities predict that reducing investment approval procedures alone could shorten project preparation by months, creating jobs, increasing output, and significantly contributing to economic growth.

2. Simultaneously unlock private and FDI resources. A stable, transparent legal framework empowers localities in project approvals. For private businesses, legal clarity boosts confidence to expand production and launch new projects. For FDI, an improved investment environment sends a “green signal” that Vietnam is ready for large-scale, high-tech projects.

3. Strengthen market confidence—key to sustainable recovery. Amid global economic volatility, businesses highly value policy stability and predictability. Early National Assembly approval of the amended Investment Law will provide crucial psychological support, affirming the State’s reform commitment and bolstering business confidence in recovery prospects.

4. Enhance competitiveness in attracting future technology sectors. The investment shift is strongly moving toward markets offering fast procedures, transparent institutions, and clear high-tech priorities. Timely reforms position Vietnam as a top destination for semiconductor, AI, and green technology firms. Delay risks ceding opportunities to regional competitors.

A Law to Pave the Way for the Future

The amended Investment Law is not just about improving procedures or resolving immediate challenges. More importantly, it lays the foundation for Vietnam’s new development model—where speed, transparency, and business creativity drive growth.

Early adoption of this law demonstrates the State’s reform resolve, partnership with businesses, and long-term vision for the nation’s future. When institutions are clear, capital will flow; when confidence is strong, the economy’s power will surge.