20 Questions a Board Must Answer Before Approving Vietnam Railway FDI

Answer Capsule

Vietnam’s $67.34 billion North-South High Speed Railway is 100% state-funded — foreign equity in the project company is not permitted. The opportunity is real: consulting, technology supply, and specialist services are explicitly open to foreign firms.

Key Facts

Context: The Project That Changes Everything

Vietnam’s National Assembly approved the North-South High Speed Railway in November 2024. The headline numbers: 1,541 kilometres of track, VND 1.713 quadrillion (approximately USD 67.34 billion) in total investment, and a completion target of 2035. The entire project is funded through the state budget — no foreign loans, no ODA, no PPP concession for the main line.

The project is not an isolated infrastructure event. It signals Vietnam’s strategic decision to close a logistics performance gap that the World Bank quantifies at 6.2 percentage points: Vietnam’s logistics cost runs at 16.8% of GDP against a global average of 10.6%. For a country whose manufacturing export growth has averaged double digits over the past decade, that gap is a ceiling on competitiveness. The railway is how Vietnam intends to raise it.

Foreign investors and international contractors are paying close attention. The questions below are the ones their boards are asking — and the ones their legal advisers must answer correctly before any commitment is made.

Section A: Ownership and Investment Structure

Q1. Can a foreign company directly own shares in a Vietnam railway project company?

A board should expect the answer to be no for state-funded main-line projects. The National Assembly resolution approving the North-South HSR structures the project as 100% state-budget investment — no private or foreign capital in the project financing structure. This is the primary basis for the exclusion of foreign equity from the project company.

Separately, Railway Law 95/2025/QH15 (issued 27 June 2025, effective 1 January 2026) Art. 24(3)(b) prohibits investors from transferring a railway project or the project enterprise, capital, and assets formed during and after the investment process to any foreign organisation, individual, or foreign-invested organisation. This provision governs transfer of existing interests — not the initial structuring — and reinforces the ring-fencing of state-funded railway assets from foreign control at any stage.

The commercial opportunity lies upstream (technology, consulting, equipment supply) and in ancillary infrastructure, not in the project company.

Q2. Does PPP Law open a back door for foreign equity in the HSR project?

No. The North-South HSR is 100% public investment with no concession structure. PPP Law 64/2020/QH14 and its implementing Decree 35/2021/NĐ-CP govern concession projects — but the HSR National Assembly resolution explicitly structures this as state budget investment only. PPP structures remain available for urban metro extensions and freight corridors, but not for the HSR main line.

Q3. Can a foreign company hold the EPC contract for main line construction?

Restricted. Railway Law 95/2025/QH15 Art. 31(2) provides that project investors may select foreign contractors for consulting activities and pre-implementation work on railway projects. Main construction contracts are reserved for domestic entities; JV participation with a domestic lead contractor is the market practice mechanism for foreign firms seeking construction-phase involvement. A foreign EPC seeking to participate in HSR construction must structure through a Vietnamese-led consortium.

Q4. What does “consulting and pre-project activities” actually permit?

The category is meaningful. It includes: feasibility studies, environmental impact assessment, detailed engineering design, project management consulting, technology advisory, supervision consulting, and specialist technical studies. For international firms with railway expertise, this is a substantial — and genuinely open — market segment on a USD 67 billion project.

Section B: Technology and Intellectual Property

Q5. What technology transfer obligations will Vietnam impose on our firm?

Mandatory. Vietnam’s Law on Technology Transfer No. 07/2017/QH14 (as amended by Law 36/2018/QH14, Law 16/2023/QH15, Law 93/2025/QH15, and Law 115/2025/QH15, effective 1 April 2026) requires technology transfer commitments from all international contractors on state-funded infrastructure projects in strategic sectors. The National Assembly resolution approving the HSR project specifically includes technology transfer and human resource training as conditions for international contractor participation. Any MOU or early engagement that does not address technology transfer will be renegotiated.

Q6. Who controls the technology transfer approval process?

The Ministry of Science and Technology (MoST) reviews and approves technology transfer agreements in restricted technology categories. For railway technology specifically, the scope of what qualifies as “restricted” should be confirmed with Vietnamese counsel before MOU signing — the list is updated periodically and the HSR project involves technology categories (high-speed rail systems, signalling, rolling stock) that are likely to be designated as strategically sensitive.

Q7. Can we protect our IP while complying with the technology transfer requirement?

Yes, but it requires careful structuring. The technology transfer obligation does not require transfer of full IP ownership — it requires transfer of know-how sufficient for Vietnamese entities to operate and maintain the transferred technology. A properly structured technology licence agreement, with limited scope, geographic restriction to Vietnam, and defined end-of-contract reversion, can satisfy the legal requirement while protecting core IP. This is a negotiation, not a blanket disclosure.

Q8. Is the rolling stock supply market open to foreign manufacturers?

The supply of rolling stock is treated differently from construction contracting. Foreign manufacturers can bid on supply contracts. However, Decree 04/2026/NĐ-CP establishes selection criteria for domestic railway industry providers — including financial capacity, qualified personnel, technical experience, and product quality requirements — for state-funded programmes. This creates a preference architecture for domestic suppliers that foreign manufacturers need to understand and plan around, including through local manufacturing partnerships.

Section C: Legal and Regulatory Framework

Q9. What is the current governing law for railway projects in Vietnam?

Railway Law 95/2025/QH15, issued 27 June 2025 and effective 1 January 2026, is the current governing statute. (Certain provisions on design methodology and investment methods entered into force earlier, on 1 July 2025, per Art. 58 — this partial early-entry date is based on the law’s published text; gazette confirmation of the specific Art. 58 provisions is recommended before citing operationally.) The 2025 law replaced the 2017 Railway Law. Content or legal advice relying on the 2017 law is outdated.

Q10. What is the PPP framework if we are looking at urban metro or freight, not HSR?

PPP Law 64/2020/QH14, in force since 1 January 2021, and Decree 35/2021/NĐ-CP are the primary instruments. Resolution 164/NQ-CP has introduced a “contract-based mechanism” (cơ chế khoán) with 22 specific policies applicable to railway investment projects. Urban metro and freight corridor projects structured under PPP remain legally open to foreign equity participation, subject to the standard conditions applicable to the PPP sector.

Q11. Is there a concession decree specific to the railway sector?

No — and this is a common misconception. Decree 04/2026/NĐ-CP is sometimes cited in this context, but its actual scope is the selection of domestic railway industry service and goods providers for state-funded programmes. It is a procurement regulation, not a concession instrument. The PPP Law and Decree 35/2021 remain the correct concession framework for any PPP-structured railway project.

Q12. What licences and registrations does a foreign firm need before it can provide consulting services on Vietnamese railway projects?

At minimum: (a) an Investment Registration Certificate (IRC) via the National Investment Portal if setting up a project office or permanent presence; (b) a foreign contractor registration if providing services under a foreign contractor contract (Circular 10/2015/TT-BXD for construction; separate licensing under sector-specific regulations for railway consulting); (c) sector-specific qualification certificates as required by the Ministry of Transport for railway consulting work.

Section D: Commercial and BD Positioning

Q13. How do we identify which project packages will be procured in the next 12 months?

The Ministry of Transport and Vietnam Railways Corporation (ĐSVN) publish procurement plans for individual project components. The key procurement pipeline to monitor covers: (a) consulting packages for pre-feasibility and feasibility studies (now underway); (b) detailed engineering design for segments commencing preparation; (c) equipment specification studies. Engagement with AHK Vietnam, EuroCham’s Infrastructure Working Group, and JCCI provides early access to procurement signals before formal advertising.

Q14. Which segments of the supply chain are genuinely open to foreign firms right now?

Q15. How does Vietnam’s market position compare to ASEAN peers for this type of project?

Vietnam is the most restrictive ASEAN comparator on foreign participation in state-funded railway projects. India permits 100% FDI via the automatic route in railway infrastructure (excluding operations and defence), as confirmed by India’s DPIIT FDI policy. Indonesia permits foreign participation in railway under Government Regulation 56/2009 and its amendments; specific ownership caps and participation modalities vary by sub-sector and project structure. Thailand’s PPP Act B.E. 2562 (2019) opened railway infrastructure to private participation without sector-specific foreign ownership caps; BOI railway projects receive enhanced incentives.

Vietnam’s restrictions are not unique in the global context of strategic infrastructure — China, Japan, and South Korea maintain similar state-priority structures for high-speed rail — but they distinguish Vietnam sharply from its immediate ASEAN competitors for mobile capital.

Section E: Governance and Risk

Q16. What are the main political risk factors specific to Vietnam railway investment?

Three risks merit board-level attention. First, procurement integrity: large-scale Vietnamese state infrastructure projects have historically been subject to regulatory investigation during and after implementation (the Hanoi Metro Cat Linh–Ha Dong project is the most cited example). Second, schedule risk: Vietnam’s infrastructure delivery record involves substantial delays; the 2035 HSR target should be modelled with a range, not as a fixed date. Third, scope creep and policy revision: the technology transfer and domestic content requirements may be tightened as the project progresses, particularly if geopolitical pressure on China-supplied components increases.

Q17. How should we structure our internal governance for a Vietnam railway engagement?

At minimum, the board should address two critical Vietnam-specific compliance requirements alongside standard international practice.

First, railway contracts with Vietnamese state entities require compliance with Vietnam’s anti-corruption framework — Law on Anti-Corruption 36/2018/QH14 (as amended) applies to contractor personnel engaged with state bodies. Whistleblower protections, gift and hospitality limits, and disclosure obligations under that law govern your staff’s conduct in procurement interactions, not only your home-country anti-corruption statute.

Second, before signing any engagement letter, map your internal approval chain against the “22 specific policies” in Resolution 164/NQ-CP. Several of those policies require ministerial-level sign-off on the Vietnamese government side — meaning your counterpart’s authority to commit may be more limited than their title suggests. Engaging without that clarity creates commitment risk.

Q18. What is the repatriation risk for profits generated from Vietnamese railway contracts?

Vietnam maintains a free repatriation framework for foreign-earned profits under Investment Law 61/2020/QH14, subject to completion of tax obligations and audit confirmation. The risk is not repatriation restriction per se — it is the tax structuring of intercompany fees, royalties, and management charges within the contractor structure, which is subject to Vietnamese transfer pricing rules (Decree 132/2020/NĐ-CP). Vietnamese tax authority scrutiny of intercompany arrangements in large foreign contractor structures has increased materially in the past three years.

Q19. What happens to our assets and contracts if the project is delayed or restructured by the Vietnamese government?

Foreign contractor contracts on state-funded projects are governed by Vietnamese law. Dispute resolution in most state-funded railway contracts defaults to Vietnamese arbitration or court jurisdiction. The Cat Linh–Ha Dong project’s contractor disputes — still active after more than a decade — illustrate the enforcement risk of domestic resolution alone.

For consulting and technology supply contracts with state entities, boards should require ICC arbitration (Singapore seat, Vietnamese law as governing law) over domestic arbitration. This should be a non-negotiable drafting requirement, not a fallback position. Assess also whether the relevant asset or contract falls under any bilateral investment treaty (BIT) Vietnam has in force with the investor’s home country, as BIT protections may provide an additional enforcement avenue for qualifying investments.

Q20. What is the single most important thing a board can do before approving a Vietnam railway commitment?

Appoint experienced local counsel — and do it before the commercial team engages. The regulatory framework governing Vietnam railway investment changed materially with Law 95/2025/QH15 (issued 27 June 2025, effective 1 January 2026). The distinction between what is open, what is restricted, and what is prohibited has shifted. A board relying on market intelligence gathered before July 2025 — or on counsel without current Vietnamese railway law experience — is making decisions on an outdated map.

Boards considering Vietnam railway engagement are invited to request ECOVIS Vietnam Law’s Vietnam Railway Legal Readiness Review — a structured assessment of entry options, regulatory risk, and optimal engagement structure under Law 95/2025/QH15.

Trade-offs the Tables Hide

Vietnam’s restriction on foreign project ownership does not make the market less valuable — it makes the strategy different. The commercial opportunity is real, but the access route is through long-term service relationships, technology partnerships, and JV structures, not through direct investment in project assets. Firms that have built a Vietnamese partner network and a registered presence before procurement launches will have a material advantage over those arriving at the RFP stage.

The technology transfer requirement is widely understood as a barrier. Less well understood is that it is also a negotiation lever. A foreign firm that tables a substantive technology transfer and training commitment early in the engagement — before others have done so — signals alignment with Vietnamese strategic priorities. That alignment matters in a procurement process where technical evaluation scores are not the only factor.

Options, ranked strongest to weakest:

1. Consulting services with registered Vietnamese presence — lowest regulatory barrier, earliest market entry, builds track record for later procurement phases. Risk: fee pressure in competitive consulting markets.
2. Technology supply + technology transfer partnership with Vietnamese manufacturer — open market, aligns with government priorities, protects IP through licence structure. Risk: partner selection and IP discipline require careful due diligence.
3. JV with Vietnamese-led construction consortium — permits participation in construction packages not otherwise accessible to foreign firms. Risk: legal liability structure in JV requires careful negotiation; partner financial capacity must be verified.
4. PPP equity participation in urban metro / freight (not HSR) — genuinely open for PPP-structured projects; government is actively seeking private capital for secondary lines. Risk: revenue risk and VGF certainty depend on individual project terms.

Under Railway Law 95/2025/QH15, foreign companies cannot hold equity in Vietnam’s state-funded High Speed Railway, but may provide consulting, technology supply, and specialist services under direct contract — making entry strategy, not eligibility, the primary board decision.

Frequently Asked Questions

Can a foreign company be the sole contractor on a Vietnam railway project?

Not for main construction on state-funded projects. Railway Law 95/2025/QH15 (issued 27 June 2025, effective 1 January 2026) Art. 31(2) provides that project investors may select foreign contractors for consulting activities and pre-implementation work. Main construction requires a Vietnamese-led consortium. Technology supply and consulting contracts can be held directly by foreign firms.

Is the North-South HSR open to PPP investors?

No. The National Assembly resolution approving the project structures it as 100% state budget investment with no PPP concession for the main line. PPP is available for urban metro and freight corridor projects under PPP Law 64/2020/QH14 and Decree 35/2021/NĐ-CP.

What changed with the new Railway Law in 2025?

Railway Law 95/2025/QH15, issued 27 June 2025 and effective 1 January 2026, replaced the 2017 law. The 2025 law introduced clearer restrictions on foreign participation in project ownership via the transfer prohibition in Art. 24(3)(b), updated foreign contractor scope limitations in Art. 31(2), and reinforced technology sovereignty principles in Art. 4(6). All legal analysis should be confirmed against the 2025 law, not the superseded 2017 version.

Does Vietnam have a BIT with Germany, Japan, or South Korea that protects railway investments?

Vietnam’s BITs with Germany, Japan (via EPA investment chapter), and South Korea (via VKFTA investment chapter) are in force. Standard investment protections (expropriation, fair treatment, repatriation) apply to qualifying investments. Whether a specific railway engagement qualifies requires fact-specific analysis by investment treaty counsel.

Who should we contact to understand the current procurement pipeline?

The Ministry of Transport’s procurement portal (muasamcong.mpi.gov.vn), AHK Vietnam (German Chamber), and EuroCham publish railway procurement notices. Legal counsel with MoT relationships can provide pre-publication regulatory intelligence. The JCCI infrastructure working group serves as a further channel for Japanese and broader international investors monitoring early-stage procurement signals.

About the Author

Vu Manh Quynh is Managing Partner of ECOVIS Vietnam Law and has advised foreign investors on Vietnamese FDI, infrastructure regulatory compliance, and technology transfer requirements for over 15 years. This article reflects Railway Law 95/2025/QH15 as issued 27 June 2025 (effective 1 January 2026).

ECOVIS Vietnam Law is a member of ECOVIS International, the global accounting and legal network present in more than 90 countries.

This article is for general information purposes only and does not constitute legal advice. For advice specific to your situation, please contact ECOVIS Vietnam Law.

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