Last reviewed: 21 August 2026 | Author: Vu Manh Quynh, Managing Partner, Attorney-at-Law, ECOVIS Vietnam Law
Summary
Vietnam’s Investment Law 143/2025/QH15 and Decree 96/2026/NĐ-CP now let foreign manufacturers establish an entity (ERC) before securing an Investment Registration Certificate (IRC) — reversing the old IRC-first sequence. Circular 38/2026/TT-NHNN, effective 18 August 2026, closed the resulting capital-account gap. Vu Manh Quynh, Managing Partner and Attorney-at-Law at ECOVIS Vietnam Law, advises international investors on FDI structuring, corporate governance, and regulatory compliance in Vietnam.
The Rule Just Changed — and Most Advisory Content Hasn’t Caught Up
Until early 2026, the sequence was fixed: no Investment Registration Certificate (IRC), no Enterprise Registration Certificate (ERC). A foreign manufacturer could not legally exist as a Vietnamese entity until the investment project itself had cleared registration. That was the framework this article described as recently as August 2026 — and it is now only half the picture.
Vietnam’s H1 2026 FDI performance shows why the pace of entity formation matters commercially. Registered FDI capital reached US$34.65 billion in H1 2026, up 61.0% year-on-year, with manufacturing accounting for US$17.91 billion — 63% of total registered capital (Vietnam Briefing, citing preliminary GSO/MPI data, July 2026). Newly registered capital alone rose 87.2% year-on-year to US$17.39 billion across 2,013 projects. That surge is exactly the environment in which the old IRC-first bottleneck — provincial DPI queues, sector pre-approvals, industrial zone allocation delays — became a genuine competitive cost. Investors who could not incorporate until their IRC cleared were losing negotiating time on land leases, equipment financing, and hiring while faster-moving competitors were not.
The legislature responded. What most foreign investors — and a fair amount of legal-adjacent content still online — have not fully absorbed is that the reform arrived in two separate steps, five and a half months apart, and the gap between those two steps created a real, well-documented compliance trap. Understanding both steps, and the trap in between, is now essential to structuring a Vietnam manufacturing entity correctly.
The Legal Framework: Three Instruments, Read Together
1. Investment Law No. 143/2025/QH15, effective 1 March 2026, is the primary legislation. It does not itself detail the new sequencing mechanism — that is left to implementing regulations.
2. Decree 96/2026/NĐ-CP, effective 31 March 2026, is the implementing decree. Article 72(1) and (4) contain the operative change: a foreign investor may now establish an economic organization (obtain the ERC) before obtaining the IRC, provided the establishment application includes a commitment to satisfy market access conditions for foreign investors. The organization then has 12 months from the date of establishment to complete IRC procedures for the investment project. Two restrictions matter in practice: the entity may not expand its registered business lines into new investment sectors until the IRC is issued, and it may not begin actual project implementation until the IRC is in hand. This is an additional lawful pathway, not a replacement for the traditional IRC-first sequence — for projects requiring investment policy approval (chấp thuận chủ trương đầu tư) at provincial or national level, or land allocation tied to IRC issuance, the IRC-first route often remains the more practical choice. The correct sequence is a structuring decision, not a default.
3. Circular 38/2026/TT-NHNN, issued 31 July 2026 and effective 18 August 2026, is the piece that made the new sequence actually workable. It replaces Circular 06/2019/TT-NHNN (as amended by Circular 03/2025/TT-NHNN) on foreign exchange management for FDI, and it is the instrument that resolved the gap described below.
A fourth, unchanged fact anchors all of this: Article 75 of the Enterprise Law (Law No. 59/2020/QH14, as amended by Law No. 76/2025/QH15, effective 1 July 2025) still requires charter capital to be fully paid in within 90 days of ERC issuance, regardless of which registration sequence the investor uses. Law 76/2025 amended a long list of Enterprise Law articles — 4, 8, 11, 13, 16, 17, 20–23, 25, 26, 31, 33, 52, 57, 112, 115, 128, 140, 141, 176, 207, 213, and 215–217 — and Article 75 is not among them. The 90-day clock is unaffected by the investment-law reform, and this is the single most consequential fact for any manufacturer using the ERC-first route.
The Gap That Existed Between 31 March and 18 August 2026
“For nearly five months, we had a Vietnamese legal system that told foreign investors they could establish a company before securing their IRC, while the foreign exchange rules banks actually operate under still assumed the IRC came first. Both statements were true at the same time — that is what made this a genuine compliance trap, not investor error.” — Attorney Vu Manh Quynh
Between Decree 96/2026 taking effect (31 March 2026) and Circular 38/2026 taking effect (18 August 2026), a foreign-invested entity that used the new ERC-first sequence faced a real conflict: banks required an IRC as the basis for opening a Direct Investment Capital Account (DICA), because the foreign exchange rules in force — Circular 06/2019/TT-NHNN — were written for the old, IRC-first world. Meanwhile the Article 75 charter-capital clock had already started running from the ERC issuance date. An entity could be legally established, legally obligated to contribute capital within 90 days, and structurally unable to open the account the law requires that capital to move through.
This was not a hypothetical. The Ministry of Finance’s Official Letter 5427/BTC-DNTN (29 April 2026) confirmed that establishment before IRC was permitted and required a market-access commitment in the application file — but it was silent on DICA and the capital-contribution timeline, leaving banks with no updated basis for account opening. The State Bank of Vietnam’s decision to draft a replacement circular was reported publicly from 23 April 2026, signalling the regulator had identified the gap; it took until 31 July 2026 for that circular to be issued.
As of 18 August 2026, Circular 38/2026/TT-NHNN has closed this gap. The circular:
- Permits newly established entities to open an investment capital account — now renamed “tài khoản vốn đầu tư nước ngoài tại Việt Nam” (foreign investment capital account in Vietnam), replacing the former “tài khoản vốn đầu tư trực tiếp” — before the IRC is issued.
- Restricts pre-IRC use of that account to three purposes: receiving charter capital and any interest earned, paying legitimate investment-preparation expenses, and returning capital if the IRC application is ultimately refused.
- Converts the account to full operational status once the IRC is issued.
- Requires banks to specify the transaction purpose on every transfer instruction, with tighter documentation standards than before.
For manufacturers who established an entity under the ERC-first route during the gap period (31 March – 18 August 2026) and have not yet resolved their capital account, this is the regulatory basis to take back to the bank now — in writing, addressed to the bank’s compliance or foreign-exchange desk, not resolved through a front-line teller.
Practical Implementation: Choosing and Executing the Right Sequence
When the traditional IRC-first sequence still makes more sense
Projects requiring investment policy approval (chấp thuận chủ trương đầu tư) at provincial or National Assembly level, projects in conditional sectors needing sector-specific pre-approval, and projects dependent on land allocation or industrial zone admission tied to IRC issuance are generally still better served by securing the IRC first. Decree 239/2025/NĐ-CP (effective 3 September 2025) shortened the statutory IRC processing time from 15 to 10 working days for projects that are not subject to investment policy approval and that meet all standard conditions (permitted sector, valid location, zoning compliance, market access conditions satisfied). For straightforward manufacturing projects in an established industrial zone, this makes the traditional sequence fast enough that the ERC-first route may add complexity without a corresponding speed benefit.
When the ERC-first route earns its complexity
It is most useful where the investor needs a legal entity in place quickly — to sign a lease, open preparatory banking relationships, or begin hiring key local staff — while the underlying project still requires site selection, detailed feasibility work, or a longer sector-specific review. The 12-month window under Decree 96/2026 Article 72 is a ceiling, not a target; deal teams should track it against the DPI or Industrial Park Management Board’s actual processing pattern for the specific sector and location, since a straightforward 10-day IRC review and an investment-policy-approval review measured in months sit inside the same 12-month clock very differently.
Province and zone-level reality to build into the timeline
Industrial Park/Export Processing Zone Management Boards (Ban Quản lý Khu công nghiệp) generally process IRC applications for projects located inside their zones faster than provincial Departments of Planning and Investment process out-of-zone applications, because the Management Board is typically the sole licensing authority for in-zone projects and does not need to coordinate land-use and zoning sign-off across multiple provincial departments. Investors comparing Ho Chi Minh City, Binh Duong, Dong Nai, and Long An should confirm current processing patterns directly with the relevant Management Board or DPI at the time of filing — occupancy pressure in established zones (particularly around Binh Duong’s first-ring industrial parks) has been redirecting new manufacturing entrants toward second-ring zones with different provincial processing rhythms and land-lease terms.
Common Mistakes We See in Practice
- Assuming the ERC-first sequence extends the 90-day capital deadline. It does not. Article 75 runs from ERC issuance regardless of which registration path was used — this is the single most common misunderstanding, including among some in-house counsel and bank staff during the gap period.
- Moving investment funds through an ordinary payment account and “re-labelling” them as capital contribution later. This does not satisfy the capital-transfer method the foreign exchange rules require, even where the funds genuinely originated abroad and genuinely reached Vietnam. Funds must move through the correct account under the correct transaction purpose.
- Accepting a verbal answer from a bank teller as the final word. DICA — now foreign investment capital account — decisions should be confirmed in writing from the bank’s compliance or foreign-exchange department, especially where a transitional regulatory basis (such as Circular 38/2026’s pre-IRC provisions) is being relied on.
- Conflating charter capital with project investment capital. They are distinct concepts under Vietnamese law — Decree 96/2026 confirms charter capital is not required to equal total project investment capital — and treating them as interchangeable creates downstream reporting and compliance errors.
- Treating “reduce charter capital, then increase it again” (the Article 75 fallback for missed 90-day deadlines) as a routine tool rather than a last resort. It is a lawful mechanism, not a workaround, and it creates a temporary mismatch between registered charter capital and the underlying project investment capital that should be avoided where the timeline can instead be met directly.
FAQ
Does a foreign manufacturer now have to establish the entity before getting an IRC?
No. Decree 96/2026/NĐ-CP Article 72 makes ERC-before-IRC an additional lawful option; it does not eliminate the traditional IRC-first sequence. Which sequence to use is a structuring decision based on the project’s sector, location, and approval requirements.
How long does a foreign investor have to obtain the IRC after establishing the entity under the new sequence?
Twelve months from the date of establishment (Decree 96/2026/NĐ-CP, Article 72(4)). During that period, the entity cannot expand into new investment sectors beyond its registered business lines and cannot begin actual project implementation.
Does using the ERC-first sequence give more time to contribute charter capital?
No. Article 75 of the Enterprise Law still requires full charter capital contribution within 90 days of ERC issuance, irrespective of which registration sequence was used.
Can a newly established entity open a capital account before its IRC is issued?
Yes, as of 18 August 2026 under Circular 38/2026/TT-NHNN. The account may be used pre-IRC only to receive charter capital and interest, to pay legitimate investment-preparation expenses, and to return capital if the IRC is refused. It becomes fully operational once the IRC is issued.
What happened between 31 March and 18 August 2026, and does it still matter?
For that period, Decree 96/2026 permitted ERC-before-IRC establishment, but the foreign exchange circular then in force (06/2019/TT-NHNN) had not been updated to match, creating a documented gap in DICA account access. Circular 38/2026 has now closed that gap. It still matters for any entity established during that window whose capital account situation was never formally resolved — those cases should be revisited now under the new circular.
How fast can an IRC actually be obtained?
For projects not subject to investment policy approval and meeting all standard conditions, Decree 239/2025/NĐ-CP shortened the statutory processing time to 10 working days. Projects requiring provincial or National Assembly-level investment policy approval, or falling in conditional sectors, take materially longer and should not be planned against the 10-day figure.
Is Vietnamese ownership required to set up a wholly foreign-owned manufacturing entity?
For non-conditional sectors, no Vietnamese shareholder is required, and the investor may establish a single-member LLC, multi-member LLC, or joint-stock company. The trade-offs between these vehicles are set out in our guide to company setup in Vietnam for foreign investors.
What happens if charter capital is not fully contributed within 90 days?
Article 75 requires the entity to register a reduction of charter capital to the amount actually contributed within 30 days of the deadline lapsing, with the option to increase charter capital again later. This is a lawful fallback mechanism, not a preferred outcome — it creates a temporary gap between registered charter capital and project investment capital that is best avoided through direct timeline management.
Implementation Checklist
- ☐ Confirm project sector, location, and approval category before choosing IRC-first or ERC-first sequencing
- ☐ If using ERC-first: include the market-access-conditions commitment required in the establishment application (Decree 96/2026, Art. 72)
- ☐ Calendar the 12-month IRC deadline from the date of ERC issuance, benchmarked against the Management Board/DPI’s realistic processing pattern for the sector
- ☐ Calendar the 90-day charter capital contribution deadline from ERC issuance date (Enterprise Law Art. 75) — independent of the IRC timeline
- ☐ Confirm capital account status directly with the bank’s compliance/foreign-exchange desk under Circular 38/2026/TT-NHNN, in writing
- ☐ Route all capital contributions through the correct account under the correct declared transaction purpose — never through an ordinary payment account
- ☐ Distinguish charter capital from total project investment capital in all internal and bank-facing documentation
- ☐ If a 2026 entity was established under the ERC-first route before 18 August 2026, revisit its capital account status now under Circular 38/2026
Related Reading
- Vietnam FDI Legal FAQ Hub — Questions Every International Investor Asks
- Vietnam Investment Monitoring Report: The 5-Year Compliance Gap That Triggers IRC Revocation and Freezes Profit Remittance
- Vietnam M&A in Industrial Parks: Why Post-Acquisition IRC Compliance Is Not Optional — and the Tax Trap If You Skip It
- Vietnam Factory Setup FAQ (Q11–Q20): Legal Structure and Incorporation
Author Attribution
Vu Manh Quynh is the Managing Partner and Attorney-at-Law of ECOVIS Vietnam Law, advising international investors on Foreign Direct Investment (FDI), corporate governance, and regulatory compliance in Vietnam. ECOVIS Vietnam Law is part of the ECOVIS International network, present in more than 90 countries.
For a complimentary 30-minute consultation on structuring an IRC/ERC sequence for a manufacturing project, 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.
