Two foreign investors forming a company together in Vietnam often assume they are avoiding the complexity of a local joint venture. In reality they trade one kind of complexity for another: the company remains a foreign-invested enterprise under Vietnamese law, while the local knowledge a Vietnamese partner would have brought simply disappears.
The legal framework
Under Investment Law 143/2025/QH15, an economic organisation established by two foreign investors in Vietnam is still a foreign-invested economic organisation and must satisfy the market-access conditions of its planned sector like any other FDI project; shareholder nationality does not turn it into a domestic enterprise for investment-condition purposes.
Market access is assessed per investor and can differ by nationality, because Vietnam’s commitments under trade agreements with different countries and blocs are not identical; a sub-sector opened wider for investors of one bloc is not necessarily opened the same way for investors of another, so a two-foreign-shareholder structure must be checked nationality by nationality.
Changes between the two foreign investors, such as one buying out the other so that foreign ownership crosses or stays above 50 percent of charter capital, fall within the transactions to be screened for capital contribution and share purchase registration under Decree No. 96/2026/ND-CP, with payment through the investment capital account under Circular No. 38/2026/TT-NHNN.
Applied analysis and a practical example
The real advantage of the two-foreign-investor model is shared governance DNA: similar reporting, audit and compliance standards usually make charter design and internal policy far quicker than in a venture with a local partner. The two sides also tend to bring cleanly complementary strengths, one holding technology or brand, the other a regional network and Southeast Asia operating experience.
The weakness is the local gap: neither side arrives with provincial government relationships, local labour market knowledge or domestic distribution channels, and both must hire or build these capabilities from zero. Many foreign-foreign ventures look excellent on paper yet touch the ground slowly on sub-licences, land and hiring local managers.
On governance, the specific risk is double distance: decisions wait on two headquarters in two time zones, and when the market moves fast, a two-foreign-shareholder structure can decide more slowly than a venture with an on-the-ground partner holding wide authority. The charter should delegate operations clearly to the Vietnam-based executive team with transparent escalation thresholds.
Practical example: A European machinery group and a Japanese trading house formed a wholly foreign joint venture in Haiphong to serve industrial parks. Formation was smooth, but the venture’s first service contracts stalled because neither parent had Vietnamese-language tendering capability; adding a Vietnamese commercial director with delegated signing authority unblocked the pipeline within one quarter.
Action checklist
- Check market-access conditions per investor nationality
- Confirm the company remains a foreign-invested organisation
- Delegate on-the-ground operating authority to the Vietnam team
- Plan the local-capability build: staff, advisers, distribution
- Set governing law, language and dispute forum between the parties
- Screen registration duties when one side buys out the other
Deeper notes
An often-skipped question is holding structure: should the two foreign investors contribute directly or through a joint holding company in a third country. The choice affects transfer taxes on exit, double tax treaty availability and Vietnamese registration procedure, so it must be settled before the investment file is lodged, not after operations begin.
Disputes between two foreign investors also need bespoke design: international arbitration in a neutral language usually fits better than the courts of either party’s home country, yet mandatory Vietnamese steps such as enterprise registration changes must still be performed with Vietnamese authorities whatever the award says.
Frequently Asked Questions
What is different about a joint venture between two foreign investors in Vietnam?
The biggest difference is human and capability-based, not legal: both models are foreign-invested enterprises in Vietnam, but a venture between two foreign investors lacks the ready local capability of a Vietnamese partner — government relations, land and distribution — while usually being more aligned on governance standards, reporting and charter design speed. The one significant legal difference is that market-access conditions must be checked against each foreign investor’s own nationality and treaty position.
Is it still considered an FDI enterprise?
Yes. A company established and held by two foreign investors in Vietnam remains a foreign-invested economic organisation under Investment Law 143/2025/QH15, subject to market-access conditions, investment procedures and reporting duties like any other FDI enterprise. Having no Vietnamese shareholder does not make it a domestic enterprise and does not exempt it from any conditional-sector investment conditions.
What are the pros and cons versus a joint venture with a Vietnamese partner?
Advantages are aligned governance standards, faster charter and compliance design, and cleanly complementary strengths such as technology paired with a regional network. Disadvantages are the absence of ready local capability, potentially slower decisions dependent on two overseas headquarters, and both sides being outsiders to provincial administrative practice. Versus a Vietnamese-partner venture, the model suits sectors with low dependence on land and local relationships, and suits poorly those needing fast ground-level access.
This article has been quality-reviewed by the FLAW AI Legal Council
