Investment Violations: Sanctions

Scenario: an FDI company holds an IRC for a factory: VND 500 billion total investment, 24-month completion. Reality: after 30 months only 200 billion contributed, the factory unfinished, and part of the leased land sublet as warehousing without IRC amendment. Inspectors find three simultaneous violations: off-schedule capital contribution, off-target project implementation, missing investment reports. Each violation its own fine — and serious breaches can mean IRC revocation. Investing in Vietnam is a “contract” with the State via the IRC; breaching the IRC breaches that contract.

Common violations

Non-compliant IRC implementation: capital, contribution schedule, project timeline, location, objectives/scale — everything in the IRC is a commitment;
Unamended changes: investor changes, capital increases/decreases, relocations, objective expansions without amendment procedures;
Missing investment reports: no periodic project-implementation reports;
Unauthorised project transfers: transferring projects without approval;
Off-licence operations: conditional business lines operated without meeting conditions.

Administrative sanctions

Fines: under the investment-sanctions decree (Decree 122/2021/ND-CP) — scaled by nature and gravity, up to hundreds of millions of VND;
Remedies: forced IRC alignment, forced commitment performance, temporary suspension;
IRC revocation: for serious cases (long-suspended “hanging” projects, grave commitment breaches) — the project’s “death penalty”;
Cumulation: simultaneous violations are each penalised — three breaches, three decisions.

Prevention: manage the IRC like a contract

Quarterly IRC reviews: reconcile actuals (contributed capital, progress, location, objectives) against the IRC;
Amend before acting: every change (capital increases, plant expansions, new lines) — amend the IRC first, act after;
Reporting calendar: put periodic investment reports in the compliance calendar;
Delayed projects: proactively report difficulties and seek timeline extensions (if granted) instead of silent overruns — good faith counts at sanctioning.

FAQs

Penalties for project delays?

Possible — off-schedule IRC implementation is a violation. Proactively report difficulties and amend/extend timelines before expiry.

Relocating without IRC amendment?

An administrative investment violation — fines plus remedies (amend the IRC or cease off-site operations).

When is an IRC revoked?

Serious cases: long-unimplemented “hanging” projects, grave commitment breaches, or competent-authority decisions with legal grounds.

Missing periodic investment reports?

A standalone violation, separately fined — and the easiest to avoid with a compliance calendar.

Note: This article is for reference only. Contact FLAT Law Firm.