Choosing between a foreign invested company vs foreign contractor Vietnam route is a decision about permanence, control and exit, and it is often made on the basis of the first project alone. A project-by-project licence looks quick and light, yet it ends with the contract. A Vietnamese company takes longer to stand up, yet it can bid, hire, hold assets and carry a pipeline. Choosing wrongly means re-papering the structure mid-project, usually under time pressure. The right answer often turns on the sector: an airport terminal package, a factory, a solar farm and a resort rarely favour the same route.
The two entry routes in plain terms
Vietnamese law offers a foreign construction business two fundamentally different ways of working in the market. They sit in different legal instruments, follow different procedures and create different long-term positions.
- Route one: a foreign-invested company. The investor establishes a Vietnamese legal entity under the investment and enterprise regime (see the Law on Investment 2025). The company is a Vietnamese person for most operational purposes and can pursue many projects over time.
- Route two: a foreign contractor. The foreign company remains outside Vietnam as a legal person, and obtains a construction activity licence for a specific package after winning or being selected for it.
Both routes lead to the same site, but they diverge on almost every question that matters to a general counsel: who contracts, who employs, who pays tax, who holds equipment and who bears liability after handover.
Route one: the foreign-invested company
The investment framework changed on 1 March 2026 when the Law on Investment No. 143/2025/QH15 took effect. Under Article 19 of that law, a foreign investor may establish an economic organisation to implement an investment project before applying for or adjusting the investment registration certificate, but the investor must satisfy market access conditions when registering the organisation. This reverses the earlier sequence under which the project and investment certificate came first.
Article 20 then classifies the vehicle. An economic organisation in which foreign investors hold more than 50% of charter capital, directly or through another foreign-controlled entity, must meet the same conditions and procedures as a foreign investor. A company with foreign ownership of 50% or less follows the conditions and procedures that apply to domestic investors. Article 26 requires an investment registration certificate for projects of foreign investors and of companies in the first category.
According to DEDICA Law, which analyses Decree 96/2026/ND-CP, a foreign investor that has obtained an enterprise registration certificate has twelve months to apply for the investment registration certificate and may implement the project only after receiving it, with a processing period of ten working days. If correct, the twelve-month window needs a calendar owner from day one.
Market access: check the list; do not assume a ceiling
Article 8 of the Law on Investment applies domestic-investor treatment to foreign investors except in sectors on the Government’s published restricted list. Within that list, access can be conditional on matters such as equity ratio, form of investment, scope of operation or partner capability. DEDICA Law reports that the schedule to Decree 96/2026/ND-CP includes entries for construction and related engineering services and for construction activities of foreign contractors.
We do not state any ownership cap or specific condition for construction services here, because the specific conditions depend on the list and treaty commitments in force when the application is filed. For the underlying mechanics of incorporation, see our guide to setting up a foreign-owned construction company in Vietnam.
Route two: the foreign contractor licence
Article 88(3) of the Law on Construction No. 135/2025/QH15 requires a foreign contractor to comply with Vietnamese law and to obtain a construction activity licence from the state construction management authority. Decree 212/2026/ND-CP, effective 1 July 2026, sets out the detail in Articles 42 to 49.
The central conditions are these:
- A prior award or selection. The contractor must hold a decision awarding the contract or selecting it as the contractor or subcontractor. The licence follows the deal; it does not precede it.
- A Vietnamese partner. The contractor must form a joint venture with a Vietnamese contractor or use Vietnamese subcontractors, unless no Vietnamese contractor can perform any part of the package. The scope, volume and value of the Vietnamese share must be clearly delineated.
- A dossier in Vietnamese form. The file includes the application, the award or selection decision, corporate and professional documents, an experience report and audited financial statements for the last three years where applicable, and the joint venture or subcontract documents. Foreign documents require consular legalisation unless a treaty exempts them, with certified Vietnamese translations.
The provincial People’s Committee is the licensing authority, and for activity in two or more provinces it is the committee where the operating office will be located. The decree sets a period of six working days from receipt of a complete valid dossier. In practice, a licence application that depends on legalised foreign documents is normally limited by the time needed to prepare the file, not by the statutory processing period.
What the licence does not change
The licence authorises the foreign contractor to perform a particular contract. It expires when the contract has been completed and liquidated, or when the contract ceases to be effective for the reasons the decree lists. It does not create a standing presence, and it does not authorise the contractor to bid for unrelated work.
Article 49 puts a compliance burden on the counterparty: the owner, project owner or main contractor may sign the contract with a foreign contractor only after the licence has been issued. A foreign contractor that signs first and licenses later should expect its Vietnamese counterparty to resist, or to insist on a condition precedent. Our guide to the construction licence for a foreign contractor in Vietnam covers the licensing process in more detail.
Deciding how to enter the Vietnamese construction market? IVLF Advisors can run a confidential preliminary review of your project pipeline and the two routes under an NDA, so the structure fits your commercial plan.
Foreign invested company vs foreign contractor Vietnam: side-by-side comparison
The table sets out the structural differences between the two routes.
| Question | Foreign-invested company | Foreign contractor with licence |
|---|---|---|
| Legal personality in Vietnam | Vietnamese legal entity | Foreign entity; no Vietnamese entity is created |
| Legal basis | Law on Investment, Arts 8, 19, 20, 26; enterprise regime | Law on Construction, Art 88(3); Decree 212/2026/ND-CP, Arts 42 to 49 |
| When it can start | After establishment and, for qualifying projects, the investment certificate | After an award or selection decision and the licence |
| Scope of activity | Within registered business lines; can pursue many projects | The specific package named in the licence |
| Vietnamese partner requirement | Not as such; depends on market access conditions | Joint venture or Vietnamese subcontractors, unless none can perform any part |
| Presence on site | Registered office and branches as the company chooses | Operating office at the project location for the contract term; seal returned at the end |
| Lifespan | Indefinite, subject to the charter and exit planning | Ends on completion and liquidation of the contract |
| Capacity record | Self-disclosure on the national construction database (Art 88(6); Decree 212/2026/ND-CP, Art 41) | Experience and financial evidence in the licence dossier |
| Employees | Under Vietnamese labour rules; individual credentials for named roles | Under labour law; only managers and skilled workers Vietnam cannot supply may be brought in |
| Tax | Not analysed here; confirm with tax advisers | Not analysed here; confirm with tax advisers |
Operating consequences of the contractor route
Article 48 of Decree 212/2026/ND-CP is the practical heart of the foreign contractor route, and it deserves a careful read before bid submission. A licensed foreign contractor must, in outline:
- set up an operating office where the project is located, which exists only for the life of the contract (consultancy work may be run from the owner’s premises or without an office);
- register a seal and return it when the contract ends;
- register and pay tax under Vietnamese law, keep accounts and open bank accounts in line with the guidance of the Ministry of Finance and the State Bank;
- recruit Vietnamese and foreign workers in line with labour law, bringing in only the managers and skilled workers that Vietnam cannot supply;
- complete import and export procedures for materials and equipment, and re-export temporarily imported equipment on completion;
- buy the insurance appropriate to the work, such as professional liability for consultants and the relevant policies for construction;
- have imported materials and equipment checked for quality, and equipment checked for safety, and then deliver completion records, warranty, settlement of imported materials, contract liquidation and notice of completion.
The tax obligations in particular should be modelled before price submission. We have not analysed the tax treatment of either route in this article, and the answer can swing the economics. Obtain tax advice early, and treat any assumption about withholding, profit taxation or treaty relief as provisional until a tax adviser has confirmed it.
Contract and dispute implications
The structure shapes how the construction contract itself is papered. Decree 210/2026/ND-CP, effective 1 July 2026, classifies construction contracts and expressly recognises contracts with a foreign element. Its detailed numeric rules on advance payments, payment periods, termination periods and penalty caps apply to public investment and PPP projects only. On private projects the parties agree these matters, which is a real advantage for a foreign sponsor with commercial leverage.
Three points affect the choice of route:
- Currency. Article 87(2)(c) of the Law on Construction provides that the payment currency is the Vietnamese dong, and that foreign currency may be used only in compliance with foreign exchange law. A company holding a Vietnamese bank account is better placed to manage this than a contractor operating remotely.
- Disputes. For public investment and PPP projects, Article 86(5) of the Law on Construction gives priority to domestic arbitration institutions, with international dispute models available where a treaty requires or the investment decision-maker permits them and the contract provides for them. Check how that rule affects a foreign contractor bidding for such work.
- Procurement. The Law on Bidding 2023 and the PPP law govern selection on public work. We have not analysed them in this article. A licence-based contractor typically needs a Vietnamese joint venture partner to bid at all.
Lenders will also ask who the contracting party is. A lender usually prefers a counterparty that holds Vietnamese assets and accounts, which tends to favour a locally established company for long programmes.
Foreign invested company vs foreign contractor Vietnam: joint ventures and subcontracts
Even a foreign-invested company frequently partners locally, and a licensed foreign contractor is required to unless no Vietnamese contractor can perform any part of the package. The partner arrangement needs clear allocation of scope, price, credentialed personnel and liability. Vietnamese contract law treats a main contractor as responsible to the owner for its own work and that of its subcontractors under the contract rules, so the foreign party should not assume that a subcontract limits its exposure to the owner.
A practical decision framework
The following criteria usually decide the question.
- Pipeline. A single awarded project points towards the licence route. A pipeline of three or more projects, or a plan to become a standing market participant, points towards a company.
- Speed. If you have an award in hand and a mobilisation date, the licence is the faster path. Establishing a company in time may be unrealistic.
- Control. A wholly or majority-owned company gives direct control of staffing and assets. A joint venture inherent in the licence route shares control by design.
- Exit. A company can be sold or wound down. A licence simply lapses with the contract, which is clean but leaves no residual value.
- Tax and repatriation. This varies with the structure. Model it with a tax adviser before choosing.
- Market access. If the restricted list or international commitments impose conditions on a company for your construction activity, the licence route may be the only practical way to start.
Many sponsors sequence the two. They begin with a licensed first project to prove the market and then incorporate once the pipeline justifies it. If you plan this, preserve the experience record and the Vietnamese partner relationships so that the later company can use them.
People and credentials under both routes
Neither route removes the personal credential rules. Article 88(1) of the Law on Construction requires practising certificates for the leads of survey, design, design verification, supervision and cost functions, and Article 88(2) imposes capacity and experience conditions on site commanders and project management directors. According to DEDICA Law, a company established in Vietnam is not a foreign contractor for the purposes of Decree 212/2026/ND-CP, so its foreign employees are dealt with through the individual credential rules rather than the contractor chapter. Work authorisation requirements are separate, and we have not analysed them here.
Foreign Invested Company vs Foreign Contractor Vietnam: Which Route Fits Which Project Type
Think of the route as a tool matched to the pipeline you expect, not as a permanent identity.
Infrastructure and transport: single large packages favour the licence
A single large package, such as a terminal or a rail-station contract on a State-led programme like The North–South high-speed railway (about 1,541 km from Hanoi to Ho Chi Minh City through 15 provinces and cities, design speed 350 km/h, per press reports of 9 October 2026), or Long Thành International Airport, whose phase 1 passenger terminal works began on 31 August 2023 and whose phase 1 commercial operation is expected from 24 December 2026 per press reports, can suit the foreign contractor licence if the employer and procurement rules allow a foreign prime.
These projects are often public or PPP, depending on the funding source of each project. A licence ends with the contract and typically needs a Vietnamese partner or subcontract unless no local contractor can perform a part.
Heavy industry and FDI factories: repeat clients favour a local company
Industrial owners often build in phases and in several provinces. A foreign-invested company can bid for the next phase, employ site staff and hold equipment, which a one-contract licence cannot. Private factory contracts follow the parties’ agreement, so the route matters mainly for continuity, guarantees and exit.
Renewable energy and power: fact-specific routes
Onshore solar and wind programmes with repeat sites may justify a company. Offshore wind, subsea cables and other offshore energy work may be a single-package, specialist-vessel scope better suited to a licence or a consortium, depending on ownership and the power-purchase structure.
Real estate: a pipeline of private clients favours a company
Resorts, hotels, urban areas, mixed-use complexes and housing give a steady flow of private work, including fit-out for international operators. A company can build relationships and record; a licence tied to one project cannot. Check payment security in each developer contract, because land and real-estate rules may affect it.
| Sector | Typical contract or risk feature | Route indicator |
|---|---|---|
| Infrastructure and transport | Few large, often public or PPP packages | Licence or joint venture for a single package |
| Heavy industry and factories | Phased private work for repeat owners | Company for continuity |
| Energy and power | Mixed: repeat onshore sites, one-off offshore scope | Company onshore; licence or consortium offshore |
| Real estate | Steady private pipeline | Company for relationships and record |
Conclusion
The foreign invested company vs foreign contractor Vietnam choice should follow your pipeline, your timetable and your tax model, not habit. A licence suits a single awarded contract; a company suits a standing business. Our practical next step is to list your confirmed and probable projects for the next three years, check the restricted list and your treaty position for construction activity, and take tax advice, before you decide. Then compare the routes against the matrix above.
Frequently Asked Questions
Can a foreign contractor work in Vietnam without a Vietnamese company?
Yes, if it obtains a construction activity licence for a specific package after being awarded or selected for it. It normally needs a Vietnamese joint venture partner or subcontractors.
Is a foreign-invested company treated as a foreign contractor?
According to DEDICA Law, no. A company established in Vietnam is outside the foreign contractor definition in Decree 212/2026/ND-CP.
Which route is faster to start?
The licence is usually faster where an award already exists, with a statutory period of six working days for a complete dossier. Preparing legalised documents often takes longer.
Does foreign ownership above 50% change the rules for a company?
Yes. Under Article 20 of the Law on Investment, a company with foreign investors holding more than 50% of charter capital must meet the conditions and procedures applicable to foreign investors.
Which route has the better tax position?
We have not analysed tax for this article. The answer depends on the structure and current rules, so obtain advice from a tax adviser before you decide.
Disclaimer: this article provides general information, not legal advice for any specific matter. It reflects the law as understood on 22 October 2026. Please obtain advice on your own facts before acting.
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This article is provided for general information only and does not constitute legal advice for any specific case. Regulations may change – please consult a qualified professional before acting. Should further analysis be required, please contact one of our lawyers below.
