By Vu Manh Quynh, Managing Partner, ECOVIS Vietnam Law | Last reviewed: 16 July 2026
Executive Summary
Many foreign investors treat their Investment Registration Certificate (IRC) as a permanent license once issued. In fact, the Law on Investment 2025 gives the investment registration authority – the Department of Planning and Investment or the relevant Industrial Zone Authority – the power to terminate a project on nine specific grounds set out in Article 36.2. Most of these grounds are not “serious violations” in the ordinary sense; they are the consequence of not tracking administrative deadlines closely enough: 24 months for operational-target progress, 6 months to adjust the investment site, 12 months for maintaining contact with the licensing authority. This article consolidates all nine grounds, ranks them by real-world relevance to manufacturing investors, and links to the deep-dive articles on each key ground.
Business Context
For German and European groups expanding manufacturing operations in Vietnam, an investment project typically runs through several phases – securing the site, construction, machinery import and installation, trial operation, expansion – and each phase can inadvertently trigger one of the nine termination grounds if it is not actively monitored. Unlike commercial contract risk, which can be negotiated or mediated, termination risk under Article 36 is a unilateral administrative decision by a state authority. An investor who only discovers the issue after receiving a termination notice is already in a reactive, weaker position.
Legal Framework
Article 36 of the Law on Investment 2025 (No. 143/2025/QH15), effective from 1 March 2026, replaces Article 48 of the (now superseded) Law on Investment 2020. It contains two groups of grounds:
Clause 1 – Investor-initiated termination: (a) the investor decides to terminate the project; (b) termination under conditions agreed in a contract or the enterprise’s charter; (c) expiry of the project’s operating term.
Clause 2 – Authority-initiated termination (in whole or in part):
| Point | Ground (summary) | Deadline to track |
|---|---|---|
| (a) | The project falls within a suspension case under Article 35.2-35.3 that the investor cannot remedy | Per the specific suspension decision |
| (b) | More than 24 months have passed since the deadline to complete an operational target (whole project or a phase) without it being met, and no schedule extension has been granted | 24 months |
| (c) | The investor no longer has the right to use the investment site and has not adjusted the site | 6 months from the date the right to use the site is lost |
| (d) | The project has been suspended and, beyond the deadline, the registration authority cannot reach the investor | 12 months from the date of suspension |
| (dd) | The project is subject to land recovery under land law | Per the land recovery decision |
| (e) | The investor fails to place, or fails to secure, the deposit required for a project subject to a performance-guarantee obligation | Per the committed deposit schedule |
| (g) | The investor carries out the investment on the basis of a sham civil transaction (nominee arrangement) | No fixed deadline – typically surfaces via inspection or dispute |
| (h) | Pursuant to a court judgment/decision or an arbitral award | Per the litigation/arbitration timeline |
| (i) | The economic organization has been dissolved but the project has not been terminated/transferred | No fixed deadline |
Procedurally, Clauses 4-7 of Article 36 add: a terminated project must be liquidated under the law on asset liquidation (Clause 4); land and attached assets are handled under land law (Clause 5); the registration authority revokes the IRC when a project is fully terminated under Clause 2 (Clause 6); and the Government prescribes the detailed order and procedure (Clause 7).
Transitional Law Note
The Law on Investment 2020 ceased to be effective from 1 March 2026 (Article 51.4 of the 2025 Law). Article 52 (transitional provisions) allows projects/licenses issued before that date to continue under their existing paperwork, and exempts certain projects from re-obtaining investment-policy approval. However, our internal verification memo did not find a specific provision answering the question: if conduct or a transaction arose before 1 March 2026 but is reviewed for termination after that date, does the authority apply the old law’s grounds or the new law’s? This is a question requiring dedicated legal analysis for the specific fact pattern – it is not addressed by this general article.
Practical Guidance
Build a “project deadline calendar” from the moment the IRC is issued – tracking separately: the due date for each operational target/phase (for point b), the legal status of the investment site and its lease term (for point c), and the deposit schedule if the project is subject to a performance-guarantee obligation (for point e). These three grounds carry the highest real-world probability for an operating manufacturing project – unlike the remaining grounds, which typically involve a dispute or a clear-cut violation.
File for a schedule extension through the proper procedure before the 24-month deadline arrives, rather than waiting to be flagged – the law allows for an extension in certain cases (point b excludes cases “where a schedule extension has been granted as prescribed”), but this is an affirmative procedure the investor must initiate; it does not apply automatically.
When changing the investment site (lease ending, relocating the factory, industrial-zone restructuring), complete the site-adjustment procedure on the IRC within 6 months – this is a hard deadline, with no extension mechanism referenced in the provision.
Business Risks
- Overlooked operational risk: most companies track project progress from a business/production standpoint without simultaneously tracking IRC-compliance milestones – this gap is the primary source of exposure.
- Partial or full termination: Article 36 allows termination of “part” of a project (e.g., a specific target/phase not met), not necessarily the whole project – but the financial and reputational consequences remain significant either way.
- Administrative-contact risk: ground (d) shows that failing to keep the licensing authority updated on contact details/legal representative can itself become a termination ground, independent of the project’s actual operating status.
Recommendations
- Establish a quarterly monitoring mechanism for the Article 36 deadlines, especially points (b), (c), and (e) – ranked as the highest priority, lowest-cost step, preventing the bulk of the risk.
- Before a triggering event occurs (schedule slippage, site change), proactively engage the registration authority for a proper adjustment rather than waiting silently to be discovered.
- For projects with more complex fact patterns (sham transactions/nominee arrangements, disputes leading to litigation or arbitration), consult the deep-dive articles in this series.
Frequently Asked Questions
1. Does project termination always mean losing the entire investment? Not necessarily – Article 36 distinguishes full termination from partial termination, and even on full termination, assets/land are still handled through a liquidation procedure (Clauses 4-5), not automatically forfeited.
2. Who has the authority to terminate a project under Clause 2? The investment registration authority that issued the IRC for the project – typically the Department of Planning and Investment or the relevant Industrial/Economic Zone Authority.
3. Can a termination decision be appealed? Yes – this is an administrative decision, and the investor has the right to lodge an administrative complaint or lawsuit under the relevant legislation. This article does not analyze that appeal process – separate advice is needed for a specific case.
4. Is Article 36 of the 2025 Law materially different from Article 48 of the 2020 Law? Based on our initial verification, the termination grounds are substantively similar – the main change is the article/clause/point numbering. This article has not performed a point-by-point comparison between the two laws; that could be a separate analysis if needed.
5. Can this article be used to advise directly on a specific project? Not yet – this is an overview article based on a citation at MEDIUM-HIGH confidence that has not undergone final verification by a lawyer against the original statutory text. Separate advice is required for any specific situation.
Related Articles
- (Series) Schedule delay beyond 24 months – termination risk under point (b) – in progress
- (Series) Loss of the investment site – the 6-month deadline under point (c) – in progress
- (Series) Performance-guarantee deposit obligations under point (e) – in progress
- Nominee arrangements and sham transactions (point g) – published
Related Services
Investment-project schedule compliance advisory, IRC termination-risk review, and representation before the investment registration authority – ECOVIS Vietnam Law.
About ECOVIS Vietnam Law
ECOVIS Vietnam Law is a member law firm of ECOVIS International, providing legal and tax advisory services to foreign investors in Vietnam, combining local legal expertise with the international standards of the ECOVIS network across more than 90 countries.
Attorney Vu Manh Quynh is the Managing Partner of ECOVIS Vietnam Law, advising international investors on Foreign Direct Investment (FDI), corporate governance, and regulatory compliance in Vietnam.
For a complimentary 30-minute consultation on your investment project’s compliance posture, contact Attorney Vu Manh Quynh at vietnam@ecovislaw.com.
Disclaimer
This material is for general informational purposes only and does not constitute legal, tax, or professional advice. Investors should seek specific advice based on their business sector, ownership structure, and investment location in Vietnam. The citations to Article 36 of the Law on Investment 2025 in this article are currently held at medium-to-high confidence (three independent secondary sources in agreement, not yet checked against the original Official Gazette text) and should be verified by a lawyer before being applied to a specific situation.
