Understanding Investment Licensing in Vietnam: IRC, ERC, and Beyond

Foreign investors entering Vietnam are required to navigate a licensing framework that is both specific to foreign capital and highly procedural. At the core of this framework are two foundational documents: the Investment Registration Certificate (IRC) and the Enterprise Registration Certificate (ERC).

These two licenses serve distinct legal functions and are often followed by additional sector-specific permits depending on the business activities.

The investment registration certificate: Gateway to foreign capital

The IRC is the legal document that authorizes a foreign investor to contribute capital and operate a business in Vietnam. It outlines the scope of the proposed investment, including the registered capital, the investment project’s location, the anticipated duration, and the permissible business lines. This certificate is issued by the Department of Planning and Investment (DPI) and is mandatory for most foreign-invested enterprises, whether wholly foreign-owned or joint ventures with Vietnamese partners.

Without this approval, foreign capital cannot be legally injected into a Vietnamese entity.

The IRC is not required for domestic companies or those with nominal foreign ownership falling below the statutory threshold. However, once foreign shareholding crosses a certain limit — typically above 50 percent or in sectors subject to foreign ownership caps — the IRC becomes compulsory.

The enterprise registration certificate: Establishing legal identity

Once the IRC has been issued, the next step is to register the company as a legal entity in Vietnam through the Enterprise Registration Certificate (ERC). The ERC functions as the business license and establishes the company’s legal presence. It contains essential corporate details such as the company name, charter capital, registered address, legal representative, and type of entity — whether a limited liability company or a joint-stock company.

Unlike the IRC, the ERC is not specific to foreign investors; it is required for all companies operating in Vietnam, regardless of ownership. However, for foreign investors, the ERC can only be obtained after the IRC is granted.

The two certificates are sequential and interdependent in foreign investment cases but serve fundamentally different purposes: the IRC approves the investment project, while the ERC formalizes the legal existence of the company.

Licensing obligations beyond IRC and ERC

Depending on the nature of the business, investors may be required to obtain further approvals or operational permits after the IRC and ERC are issued. These licenses are industry-specific and typically administered by the relevant ministry or local authority.

For example, companies engaging in trading activities must secure a trading license, while those involved in manufacturing must register their production facility and obtain environmental or construction-related permits. Businesses in finance, logistics, education, or healthcare are subject to additional scrutiny and licensing from the appropriate regulatory bodies.

The scope and complexity of additional licensing depend entirely on the business activity and location. In special economic zones or high-tech parks, separate licensing frameworks may apply, adding another layer to the approval process.

Investors should assess these requirements early in the planning phase, as the need for sectoral licenses can impact both the timeline and feasibility of the investment.

Structuring choices and their licensing implications

The choice of investment vehicle plays a major role in determining which licenses are required.

A representative office, for example, does not conduct commercial activity and therefore does not require an IRC, but it is limited in scope and cannot generate revenue. A limited liability company or joint-stock company, on the other hand, is structured for full business operations and must go through the full licensing process, including both IRC and ERC.

For investors seeking full operational control and scalability, an LLC or JSC is often the preferred structure. However, where the goal is market research or liaison functions, a representative office may suffice.

This decision should be made early, as changing from one structure to another after incorporation can be complex and may require re-licensing.

Managing the licensing timeline and compliance risks

The licensing process for foreign investors typically takes 30 to 45 working days, although timelines may vary depending on the complexity of the investment, location, and required sectoral approvals. Once the IRC is granted, the ERC application can proceed. If additional operational licenses are required, they will be obtained upon completion of corporate registration.

After incorporation, companies are required to comply with ongoing obligations, including timely capital contribution under the registered schedule, submission of investment activity reports, and proper registration with tax, labor, and social insurance authorities.

Non-compliance with these obligations can result in administrative penalties, restrictions on business activities, or even revocation of licenses in severe cases.

This article first appeared on ASEAN Briefing, our sister platform.