By Vu Manh Quynh, Managing Partner, ECOVIS Vietnam Law | Last reviewed: 16 July 2026
Executive Summary
Unlike grounds tied to a clear-cut violation (sham transactions, court judgments), the ground under Point (b) touches a very common situation: a project running behind the schedule committed to in its investment-policy approval document or IRC. For manufacturing, a 24-month delay is not an unusual event – construction, machinery import and installation, and staff recruitment and training can all extend well beyond plan for reasons outside the investor’s control. This article examines the legal mechanism behind this ground and, more importantly, the “schedule extension” mechanism the law allows – the only proactive tool available to avoid termination exposure.
Business Context
A typical manufacturing project for a European investor in Vietnam moves through: obtaining the IRC, obtaining construction permits, building the factory, importing and installing machinery, recruiting and training staff, trial operation, commercial operation. The investment-policy approval document or the IRC usually sets deadlines for “operational targets” (e.g., complete construction within 18 months, reach production capacity X within 36 months). When one of these milestones slips more than 24 months past the original commitment without a schedule-extension procedure, the project – or the unmet portion of it – becomes exposed to termination.
This risk is particularly acute for projects dependent on global supply chains: German and European investors importing specialized machinery routinely face 6-12 months of unplanned delay from manufacturing, shipping, or customs procedures – layered on top of construction time, the 24-month mark can arrive sooner than the investor expects.
Legal Framework
Article 36, Clause 2, Point (b) of the Law on Investment 2025 (No. 143/2025/QH15) provides that the investment registration authority terminates a project’s operation where: “More than 24 months have elapsed from the deadline for completing the project’s operational targets or the operational targets of each phase (if any) as set out in the investment policy approval, the Investment Registration Certificate, or an amended investment policy approval/amended Investment Registration Certificate, and the investor still has not achieved these operational targets and has not been granted a schedule extension as prescribed, except for the case provided under Point (đ) of this Clause.”
In practice, the registration authority (Department of Planning and Investment / Industrial Zone Authority) tracks project progress through periodic investment-monitoring reports the investor is obligated to file – this is usually where a delay is first formally recorded, before it can mature into a termination ground.
Practical Guidance
Pin down precisely what “operational target” and corresponding deadline are recorded in the investment-policy approval document and the IRC – not every project expresses its targets the same way (some are tied to a construction-completion date, others to a date for reaching operating capacity).
File periodic investment-monitoring reports on time, proactively – this is both a distinct legal obligation and the official channel through which an investor records the reason for delay (objective or otherwise) with the authority, building a supporting record for a future extension request if needed.
File the schedule-extension request before the 24-month deadline arrives, not after being prompted – the law’s exclusion for cases “granted a schedule extension as prescribed” means this is an affirmative procedure that must be initiated; it does not apply automatically merely because the cause was objective.
For multi-phase projects, track each phase’s deadline separately – Point (b) applies to “operational targets of each phase (if any),” meaning a specific phase can be terminated while other phases of the same project remain unaffected.
Business Risks
- Legal risk: partial or full termination under Point (b), independent of whether the project is commercially performing well – this is a compliance risk, not a business-performance risk.
- Supply-chain risk: for investors dependent on imported specialized machinery/equipment, unplanned delay in global supply chains is a common cause of schedule slippage – but an objective cause does not by itself provide an exemption absent an accompanying extension procedure.
- Monitoring risk: late filing of periodic investment-monitoring reports can leave the authority unaware of the reason for delay, increasing the likelihood the project is reviewed for termination rather than considered for an extension.
Recommendations
- Build a tracking calendar for the 24-month deadline for each target/phase from the moment the IRC is received – ranked as the highest-priority, low-cost recommendation.
- File investment-monitoring reports on time and in full, even while behind schedule – transparency with the authority is preferable to silence.
- Proactively file for a schedule extension as soon as slippage becomes apparent, rather than waiting until close to or past the 24-month mark.
- Before publishing or applying this to a specific client, add research on the specific extension procedure and conditions (not covered in this article) and clarify the relationship with Point (đ).
Frequently Asked Questions
1. From what point is the “24 months” measured? From the deadline for achieving the operational target (whole project or a phase) as set in the investment-policy approval document or the IRC (including any amended version) – not from the date the IRC was first issued.
2. If a project has already obtained one schedule extension, can it apply again? This has not been verified in this article – the law only states “not granted a schedule extension as prescribed” as an exclusion condition and does not specify a maximum number of extensions in the passage cross-checked. Consult implementing guidance or seek separate advice.
3. Is delay caused by force majeure (natural disaster, epidemic) exempted? This article has not verified a dedicated force-majeure mechanism for this ground – this requires further research and should not be assumed to provide an automatic exemption.
4. If only one phase of a project is delayed, are the other phases affected? Per the verbatim text, the ground applies to “operational targets of each phase (if any)” – in principle, the portion of the project corresponding to the delayed phase could be terminated, but the mechanism for delineating exactly which part is terminated requires separate advice based on the project’s specific file.
Related Articles
- Termination of Investment Projects in Vietnam: 9 Risks Foreign Investors Must Know Under Article 36 of the 2025 Law on Investment – overview of the 9 grounds (pillar article) – published
- (Series) Loss of the investment site – the 6-month deadline under point (c) – in progress
Related Services
Investment-project schedule-compliance monitoring and representation for schedule-extension applications 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 schedule compliance, 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 citation to Article 36.2(b) of the Law on Investment 2025 in this article is currently held at medium-to-high confidence and should be verified by a lawyer before being applied to a specific situation. The schedule-extension mechanism has not been fully researched in this article.
