Short answer: Yes. Article 30 of the 2025 Investment Law requires investors to make an escrow deposit or obtain a bank guarantee for the escrow obligation — the two are alternatives, not cumulative obligations. However, the guarantee is only accepted if the issuing bank qualifies and the guarantee undertaking meets Circular 61/2024/TT-NHNN.
1. Legal basis for substitution
The 2025 Investment Law (No. 143/2025/QH15, effective 1 March 2026), Article 30, requires an escrow deposit or a bank guarantee for the escrow obligation to secure implementation of projects requesting State land allocation, land lease, or land use purpose conversion — except five exempt cases (winning land use right auction, winning bidding for land-using projects, receiving transfer of a project that already made escrow/capital contribution, receiving transfer of land use rights, winning mineral exploitation auction).
For the escrow amount used as the basis for the guarantee value, see our article on performance security deposits (progressive rates of 3%/2%/1% under Article 26 of Decree 96/2026/ND-CP).
2. Requirements for the issuing bank
Bank guarantees in this area follow Circular 61/2024/TT-NHNN (effective 1 April 2025, replacing Circulars 11/2022 and 07/2015). The guarantor must be a credit institution or foreign bank branch licensed to conduct guarantee business under State Bank regulations.
Special note: where the guaranteed party is a non-resident organization, Article 12 of Circular 61/2024 imposes additional conditions (100% cash collateral for the guarantee value, or the beneficiary being a resident, plus foreign exchange and credit risk management requirements). FDI companies should correctly determine the guaranteed entity’s residency status.
3. Required contents of the guarantee undertaking (Article 16, Circular 61/2024)
The guarantee undertaking issued by the guarantor to the beneficiary (here, the investment registration agency under the escrow agreement) must include:
- Applicable law (Vietnamese law if unspecified); undertaking reference number;
- Information on the parties to the guarantee relationship;
- Issue date, commencement date, and expiry date/circumstances of the guarantee;
- Guarantee amount and currency — must fully cover the project’s escrow obligation;
- Guaranteed obligation and conditions for performing the guarantee obligation;
- Dossier required to demand performance (with list of documents);
- Means for the beneficiary to verify the undertaking’s authenticity.
Amendment or cancellation of the undertaking is by agreement of the parties, consistent with the guarantee issuance agreement.
4. Independence of the guarantee — what investors must understand
A bank guarantee is an independent undertaking of the credit institution, separate from disputes arising under the underlying contract/agreement. When the investment registration agency demands performance in accordance with the committed conditions, the bank may not invoke disputes between the investor and the State agency to refuse payment.
5. What does the investment registration agency appraise?
When an investor submits a guarantee instead of a cash deposit, the agency appraises:
- The guarantor’s standing (licensed credit institution);
- Whether the guarantee amount fully covers the escrow level under Article 26 of Decree 96/2026;
- Completeness of the undertaking’s contents under Article 16 of Circular 61/2024 — particularly the performance conditions and validity period (which must span the entire escrow obligation period);
- Authenticity of the undertaking (verified through the issuing bank’s authentication channel).
6. Release of the guarantee
Once the project fulfills the secured obligations (on-schedule implementation, completed escrow duties), the guarantee is released under the escrow agreement and Articles 26–27 of Decree 96/2026/ND-CP. Investors should agree clearly on release conditions when signing the escrow agreement to avoid complications at project completion.
FAQ
Q: Is a guarantee issued by a foreign bank abroad acceptable?
A: Not absolutely excluded, but the investment registration agency will strictly appraise the guarantor’s standing, authenticity, and enforceability in Vietnam. In practice, guarantees issued by credit institutions operating in Vietnam (including foreign bank branches) are accepted more smoothly.
Q: Must the guarantee amount exactly equal the 3%/2%/1% escrow calculation?
A: In principle, the guarantee amount must fully cover the project’s escrow obligation under Article 26 of Decree 96/2026. See our escrow article for the detailed calculation.
Q: Can we switch from a cash deposit to a bank guarantee mid-project?
A: Yes, if the escrow agreement allows changing the security form and the investment registration agency approves — the escrow agreement must be amended in writing.
Legal sources
- Investment Law No. 143/2025/QH15 (Article 30) — effective 1 March 2026 — thuvienphapluat.vn
- Circular 61/2024/TT-NHNN (Articles 12, 16) — effective 1 April 2025 — thuvienphapluat.vn
- Decree 96/2026/ND-CP (Articles 26, 27) — thuvienphapluat.vn
This article is for general information only and does not constitute legal advice for any specific case. Drafted by AI and pending review by the QA Council (FLAW AI Legal Council); not reviewed by a human lawyer.
Read more: Performance security deposits for investment projects 2026: rates and procedures · Contact FLAT Law Firm