Scenario: an FDI company starts providing logistics services while its sectoral license is still ‘in process’, reasoning that the investment registration certificate is enough. It is not: the IRC authorizes the investment project, but each conditional business line needs its own license — operating without it exposes the company to an escalating ladder of sanctions.
The escalation ladder: fines, suspension, criminal liability
Vietnam’s sanction system for unlicensed conditional business operates in tiers:
- Administrative fines: Decree 122/2021/ND-CP on investment sanctions sets the framework fines for investment-condition violations, and each sectoral sanction decree (commerce, construction, transport, information and communications, and others) sets specific fines for operating without the required license — commonly tens to hundreds of millions of dong depending on the sector.
- Suspension and license consequences: authorities may suspend operations, and the violation record follows the enterprise into subsequent licensing applications.
- Criminal liability: for certain lines (banking, securities, insurance conducted without licenses), the Penal Code provides criminal liability for illegal business operations — the administrative fine is then only the beginning.
For prohibited lines the regime is harsher still: VND 200–300 million fines plus forced termination and disgorgement under Article 16 of Decree 122/2021/ND-CP.
The ‘license in process’ defense does not work
A recurring argument — ‘our dossier is being processed’ — has no legal effect. The law distinguishes the filed dossier from the issued license; operating in the gap is operating without a license. Courts and inspectors apply this strictly because the conditional-license regime exists precisely to keep unqualified operators out of sensitive sectors.
The only safe sequencing: complete the sectoral license before commencing the conditional activity. Where business pressure demands early revenue, restructure the launch so the early activities fall outside the conditional scope — for example, preparatory and marketing work that does not constitute the licensed service itself.
How inspectors find violations
Violations surface through routine sectoral inspections, competitor complaints, tax-data cross-checks (revenue booked against an unlicensed activity code), and — increasingly — the licensing authority’s own database matching business registration lines against issued licenses. Foreign-invested enterprises face the same inspection regime as domestic ones; there is no grace period for newcomers.
Frequently asked questions
1. Is the IRC enough to start a conditional business?
No. The IRC covers the investment project; each conditional line needs its sectoral license before operations begin.
2. Does ‘dossier submitted’ protect us?
No. Only the issued license authorizes operations; a pending dossier has no legal effect.
3. What are typical fine levels?
They vary by sectoral decree — commonly tens to hundreds of millions of dong — plus possible suspension; check the specific sanction decree for your sector.
4. Can violations lead to criminal charges?
Yes, for certain financial and sensitive lines operated without licenses, under the Penal Code’s illegal-business provisions.
5. How can we launch early without violating?
Sequence activities so pre-license work stays outside the licensed scope (preparation, marketing), and start the licensed activity only after the license issues.
