Vietnam is increasingly becoming a magnet for foreign direct investment (FDI), thanks to its stable growth, strategic location, and expanding consumer market. However, like any emerging economy, Vietnam presents a unique set of challenges for foreign investors.
In this article, we’ll explore the top 5 challenges you may face when starting or operating a foreign-owned company in Vietnam — and offer practical solutions to overcome them.
1. Regulatory Complexity and Licensing Delays
Vietnam’s legal system is continuously evolving. While the country has made strides in improving its investment environment, regulations can be vague, overlapping, or inconsistent, especially across different provinces.
Common Issues:
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Different interpretations of laws by local authorities
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Delays in obtaining the Investment Registration Certificate (IRC) or Enterprise Registration Certificate (ERC)
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Changes in licensing requirements without prior notice
Solution:
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Work with a local legal advisor or a company formation specialist who understands the nuances of both central and local policies.
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Ensure your application documents are fully compliant and professionally translated.
2. Foreign Ownership Restrictions in Certain Sectors
While many industries are open to 100% foreign ownership, others fall under the “conditional investment list” and require additional approvals or local partnerships.
Examples of Restricted Sectors:
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Advertising and media
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Logistics and transportation
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Education and training
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Fintech and insurance
Solution:
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Conduct a pre-investment legal feasibility study before setting up your company.
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Consider Joint Ventures or nominee structures (with caution and legal safeguards).
3. Human Resources and Talent Retention
Vietnam’s labor market is young and dynamic, but there’s a shortage of skilled professionals in areas like management, technology, and finance — especially those fluent in English.
Common HR Challenges:
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High turnover rate
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Talent drain to multinational companies
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Skill gaps in leadership and compliance
Solution:
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Offer training and development programs for local employees
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Partner with a local HR agency to recruit qualified candidates
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Build a strong employer brand early on
4. Accounting, Taxation & Compliance Obligations
Vietnam has strict requirements for monthly tax filings, invoicing (e-invoices), annual audits, and foreign currency reporting. Many foreign business owners struggle to stay compliant.
Risks:
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Fines for late tax filings
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Misunderstandings due to differences in accounting standards (VAS vs IFRS)
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Miscommunication with local tax authorities
Solution:
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Engage a licensed accounting and tax advisory firm experienced with FDI companies
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Use modern accounting software approved in Vietnam
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Set up internal compliance systems from Day 1
5. Cultural and Communication Barriers
Vietnamese business culture values relationships (guanxi), patience, and subtle communication. Foreign investors may face friction if unfamiliar with local customs and expectations.
Examples:
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Negotiations may take longer than expected
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Indirect communication can cause misunderstandings
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Business decisions may be influenced by personal rapport
Solution:
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Invest in cross-cultural training for foreign managers
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Build trust with local partners and employees
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Learn basic Vietnamese phrases to break the ice
Turn Challenges into Opportunities
Understanding these challenges is the first step to building a successful business in Vietnam. With the right legal partner, local guidance, and cultural adaptability, you can navigate the landscape smoothly and position your business for long-term success.
How FDIinVietnam.com Can Help
At FDIinVietnam.com, we specialize in helping foreign entrepreneurs:
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Navigate legal procedures
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Set up companies in compliance with Vietnamese law
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Handle accounting, taxes, and HR
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Overcome operational and cultural hurdles
Over 300 FDI clients trust us as their strategic partner in Vietnam.
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