Why Vietnam, Why Now? A Legal Perspective for Foreign Businesses (with Insights for Indian Investors)
- loanlelawlinkvn
- 4 hours ago
- 3 min read
Vietnam has quickly moved from being an “emerging option” to a strategic destination for foreign businesses looking to expand in Asia — particularly Indian companies seeking diversification and regional growth.
Supply chain realignment, rising costs elsewhere, and deeper regional trade integration have pushed Vietnam into the spotlight. From a legal perspective, however, one message deserves to be stated clearly from the outset:
Vietnam is open for business — but it is no longer casual.
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Vietnam Welcomes Capital, Not Guesswork
Vietnam’s legal and regulatory framework today sends a consistent signal: the door is open, but expectations are higher than before.
In recent years, the Government has streamlined investment procedures, reduced licensing timelines, and actively promoted foreign investment. At the same time, enforcement has become more structured, more data-driven, and increasingly consistent across authorities.
For foreign investors — including Indian businesses — this means one thing: Vietnam is no longer a market where assumptions can substitute for legal planning.
Vietnam welcomes serious investors — those with long-term vision, operational substance, and compliance discipline.
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Why Foreign (and Indian) Businesses Are Looking at Vietnam
From a business standpoint, Vietnam offers clear attractions:
Strategic location in Southeast Asia
Participation in major trade agreements (RCEP, CPTPP, EVFTA)
A competitive workforce and improving infrastructure
A business culture familiar to Asian investors, combined with strong global integration
From a legal standpoint, however, Vietnam increasingly prioritizes real economic presence, not “paper investment.”
Authorities now pay closer attention to:
The investor’s operational plan
Capital adequacy
Business substance
Compliance readiness
Short-term or loosely structured market entries are becoming riskier — not because Vietnam is closing, but because it is maturing.
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Open Door, Tighter Rules: The Legal Reality
Vietnam has simplified market entry, but significantly strengthened post-entry compliance.
In practice, this means:
Clearer scrutiny of foreign ownership conditions
Tighter tax, accounting, and transfer pricing enforcement
Increased inspections and post-licensing checks
Higher expectations for transparency and reporting
Many foreign companies encounter issues not at incorporation, but months or years later — when operations scale, revenues increase, or profits need to be repatriated.
Silence from authorities should never be mistaken for approval.
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Common Misconceptions Foreign Investors Often Have
Based on our experience advising Indian and other foreign businesses, several assumptions frequently lead to avoidable legal exposure:
“Vietnam is cheaper and more flexible than other ASEAN markets.”
“A Representative Office is enough to test the market.”
“Tax and accounting issues can be fixed later.”
“Local partners will handle compliance for us.”
In reality, most legal problems in Vietnam do not arise from complex laws — they arise from misaligned expectations.
Most risks are created before the first license is issued.
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Why Legal Strategy Must Start from Day One
In Vietnam, legal structure is not a formality. It directly affects:
Scalability
Investment and fundraising potential
Profit repatriation
Exit options
Correcting an unsuitable structure later is often far more expensive — and disruptive — than designing it properly from the beginning.
Legal planning should be viewed not as a cost item, but as business infrastructure supporting growth, stability, and credibility.
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Looking Ahead
Vietnam remains one of the most promising destinations for foreign businesses in Asia. The opportunity is real — but it belongs to those who understand the rules of the game.
Doing business in Vietnam is not about entering fast — it’s about staying right.
What’s Next?
In the next article, we will explore Market Entry Options in Vietnam – What Works Best for Foreign Businesses?
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Article: Prepared by LLVN.
Image: LLVN
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Lawlink Vietnam (LLVN) is a business law firm providing world-class legal solutions to businesses, entrepreneurs on investment, corporate & business, Mergers & Acquisitions; Litigations and Dispute Resolution. We offer a complete range of consulting services from type of company/investment, operating models, licensing, contracts, capital structure and arrangement, and representation sevices.
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