Is small FDI (under 1 billion VND) feasible? This is a question raised by many foreign investors when they first explore setting up a business in Vietnam. In reality, many foreign individual investors or small and medium-sized enterprises (SMEs) wish to start at a modest scale to test the market before injecting large capital. The question is: does current Vietnamese law allow small FDI under 1 billion VND, and if so, what procedures and conditions must be complied with? The article below provides a comprehensive analysis of the regulations on small FDI under the Law on Investment 2025 and Decree No. 96/2026/ND-CP – the latest legal documents effective from March 1, 2026 – to give foreign investors a clear legal basis before making their decisions.
LEGAL BASIS
- Law on Investment No. 143/2025/QH15 dated December 11, 2025 (effective from March 1, 2026, hereinafter referred to as the Law on Investment 2025);
- Decree No. 96/2026/ND-CP dated March 31, 2026, of the Government detailing and guiding the implementation of a number of articles of the Law on Investment (hereinafter referred to as Decree No. 96/2026/ND-CP);
- Law on Enterprises No. 59/2020/QH14 dated June 17, 2020 (hereinafter referred to as the Law on Enterprises 2020).
I. LEGAL REGULATIONS ON CHARTER CAPITAL AND INVESTMENT CAPITAL OF FDI IN VIETNAM
1.1. Concept of FDI enterprises and investment capital under current law
According to Clause 22, Article 3 of the Law on Investment 2025, “a foreign-invested economic organization (FDI) is an economic organization that has a foreign investor as a member or shareholder.” Thus, FDI enterprises are not classified based on a minimum capital contribution ratio; they only require at least one foreign investor participating in contributing capital, purchasing shares, or capital contributions.
Meanwhile, according to Clause 34, Article 4 of the Law on Enterprises 2020, “charter capital is the total value of assets contributed or committed to be contributed by company members or owners upon the establishment of a limited liability company or partnership; or the total par value of shares sold or registered for purchase upon the establishment of a joint-stock company.” These are two distinct concepts that must be clearly distinguished when evaluating the feasibility of small FDI.
1.2. The Law on Enterprises 2020 does not regulate a minimum charter capital
An important point that many investors are not fully aware of is that the Law on Enterprises 2020 does not stipulate a minimum charter capital level when establishing a business for most types of companies. Investors – including foreign investors – have full autonomy to decide on a charter capital level that suits their financial capacity and business objectives, provided that they meet the legal capital requirements (if any) in certain specialized sectors such as banking, insurance, real estate business, specialized healthcare…
This means that, in principle, foreign investors can completely register a charter capital of under 1 billion VND when establishing an economic organization in Vietnam, unless that specific business line requires higher legal capital according to specialized regulations.
1.3. Distinguishing charter capital and investment capital of an FDI project
According to the regulations in Article 72 of Decree No. 96/2026/ND-CP, an important new point is clarified: “the charter capital of an economic organization established by a foreign investor to execute an investment project does not necessarily have to equal the investment capital of the investment project.” The economic organization established by the foreign investor shall contribute capital and mobilize other capital sources to execute the investment project according to the schedule specified in the Investment Registration Certificate (IRC).
This is a very beneficial regulation for small FDI: foreign investors can fully establish an economic organization (registering for an Enterprise Registration Certificate – ERC) with a small charter capital, while registering a larger total project investment capital in the IRC and mobilizing additional capital sources (bank loans, counterpart capital from Vietnamese partners…) for actual implementation.
II. PROCEDURES FOR ESTABLISHING A SMALL FDI ENTERPRISE UNDER 1 BILLION VND UNDER THE LATEST LAW
2.1. Two methods for establishing a new economic organization under the Law on Investment 2025
Clause 2, Article 19 of the Law on Investment 2025 has created a breakthrough compared to the Law on Investment 2020 by allowing foreign investors to choose one of two methods to establish an economic organization, which is detailed in Article 72 of Decree No. 96/2026/ND-CP:
- Method 1 (New) – Issuance of ERC first, IRC later: Foreign investors are permitted to establish the enterprise (apply for an ERC) first, and then complete the procedures to apply for the Investment Registration Certificate (IRC) within 12 months from the date of establishment. When executing this method, the ERC must include a commitment to meet market access conditions for foreign investors as prescribed by law.
- Method 2 (Traditional) – Issuance of IRC first, ERC later: This is the previous workflow: foreign investors must apply for an IRC first, and after being issued the IRC, they proceed to register the enterprise establishment (ERC). This remains a popular and safer method because it avoids the risk of over-investing before the possibility of licensing is certain.
2.2. Market access conditions for small FDI
According to Article 8 of the Law on Investment 2025, foreign investors must meet market access conditions when conducting investment activities in Vietnam. The list of sectors and trades with restricted market access is specified in Appendix I of Decree No. 96/2026/ND-CP, which includes 62 sectors and trades (with the addition of construction activities of foreign contractors compared to old regulations).
If the investment field does not fall under the restricted or banned lists, foreign investors can invest with any capital scale, including small FDI under 1 billion VND, without having to apply for investment policy approval from state authorities (except for cases belonging to the 20 project groups listed in Article 24 of the Law on Investment 2025).
2.3. Dossier and procedural sequence
For small FDI projects that do not require investment policy approval, foreign investors follow this standard sequence:
- Step 1 – Apply for an Investment Registration Certificate (IRC): The investor submits the dossier to the Investment Registration Authority (usually the Management Board of Industrial Zones or the Department of Planning and Investment of the province/city where the project office is located). The dossier includes: investment project proposal, documents proving the legal status of the foreign investor, and other relevant documents as prescribed. The time limit for issuing an IRC is 15 working days from the date of receiving a complete and valid dossier.
- Step 2 – Register for Enterprise Establishment (ERC): After obtaining the IRC (or following the new method, in parallel with applying for the IRC), the investor proceeds to register the enterprise establishment at the Business Registration Office under the Department of Planning and Investment. The time limit for issuing an ERC is 03 working days from the date of receiving a valid dossier.
- Step 3 – Complete post-establishment procedures: After obtaining the ERC, the FDI enterprise needs to complete procedures such as making an official seal, opening a direct investment capital account at a commercial bank, initial tax registration, labor registration (if any), and specialized sub-licenses as required by the business lines.
III. PRACTICAL ISSUES WHEN IMPLEMENTING SMALL FDI UNDER 1 BILLION VND
3.1. Business lines suitable for small FDI
Small FDI under 1 billion VND is best suited for business lines that do not require legal capital, do not fall into restricted or banned investment fields, and do not demand large infrastructure or equipment. Some typical sectors include: consulting services, e-commerce, software and information technology, education and training services (certain types), design services, marketing, and media.
Conversely, small FDI under 1 billion VND will not be suitable for business lines with mandatory legal capital, such as: real estate business (minimum 20 billion VND according to the Law on Real Estate Business), banking services, insurance, or specialized healthcare fields that have minimum investment capital requirements according to specialized regulations.
3.2. Legal risks to note when choosing the ERC first – IRC later method
Although the method of establishing the ERC before obtaining the IRC (the new method under Article 72 of Decree No. 96/2026/ND-CP) creates more flexibility for small FDI, investors need to be clearly aware of the risks:
- First, the economic organization is only allowed to execute the investment project after completing the procedures for IRC issuance. Therefore, investors cannot actually deploy the project immediately after obtaining the ERC.
- Second, investors can only adjust business registration contents to add other business lines after being issued the IRC. This means that without an IRC, the enterprise’s scope of operations will be limited to the initially committed business lines.
- Third, investors must complete the IRC application procedures within 12 months from the date of enterprise establishment. Failure to do so on time may lead to legal troubles regarding capital flow and charter capital contribution obligations. Risks arising from preparing and implementing the investment project prior to IRC issuance are solely borne by the investor.
3.3. Investment incentives for small FDI under Decree No. 96/2026/ND-CP
Decree No. 96/2026/ND-CP has added many groups of beneficiaries eligible for investment incentives, including high-tech enterprises, science and technology, and strategic sectors. However, it should be noted that most special incentives (such as corporate income tax exemption for multiple years, land support…) usually apply to projects with certain capital scales and technology requirements.
For small FDI under 1 billion VND, investors can still enjoy incentives if the project falls under the encouraged investment sectors in Appendix II of Decree No. 96/2026/ND-CP or is implemented in areas with difficult socio-economic conditions. Appendix II has been significantly expanded, focusing on high-tech fields, innovation, digital transformation, artificial intelligence, medicine and pharmacy, agriculture, and a number of other socialized fields.
IV. FREQUENTLY ASKED QUESTIONS ABOUT SMALL FDI UNDER 1 BILLION VND
Question 1: Does small FDI require investment policy approval?
According to Article 24 of the Law on Investment 2025, investment policy approval is only mandatory for 20 specifically listed project groups (such as projects involving large-scale land use, population relocation/resettlement, national defense and security, casinos…). Most small FDI projects under 1 billion VND in regular service sectors will not fall under the scope of requiring investment policy approval.
Question 2: Is it possible to increase charter capital and investment capital after establishing an FDI company?
Yes. Investors can adjust and increase charter capital by modifying the Enterprise Registration Certificate and adjusting the corresponding IRC. This is a common approach: starting with a small FDI to test the market, then increasing capital when business results are positive. The adjustment of the IRC must comply with the procedures specified in the Law on Investment 2025 and Decree No. 96/2026/ND-CP.
Question 3: Can a foreign investor contribute capital to an existing Vietnamese company to execute a small FDI?
Yes. Under the Law on Investment 2025, foreign investors can conduct FDI through capital contribution, share purchase, or purchasing capital contributions in an operating economic organization in Vietnam. However, notice should be paid to the regulation in Article 21 of the Law on Investment 2025: if the capital contribution results in the foreign investor holding over 50% of the charter capital, or falls under special cases such as contributing capital to an economic organization holding land in border or coastal areas…, they must carry out capital contribution registration procedures as prescribed.
CONCLUSION
Small FDI under 1 billion VND is entirely feasible from a legal perspective in Vietnam under the latest regulations of the Law on Investment 2025 and Decree No. 96/2026/ND-CP. The Law on Enterprises 2020 does not impose a minimum charter capital; at the same time, charter capital and project investment capital are two separate metrics – foreign investors can register a small charter capital and mobilize additional capital to execute the project. With the Law on Investment 2025 adding the method of establishing an enterprise before obtaining an IRC, the investment process has become significantly more flexible, paving the way for foreign investors who want to enter the Vietnamese market with a small capital scale.
However, before implementing a small FDI project, investors should carefully check: (i) whether the business line falls under sectors requiring legal capital or restricting market access; (ii) choose the enterprise establishment method (ERC first or IRC first) that suits the specific conditions of the project; and (iii) prepare a complete dossier according to regulations. To ensure proper compliance with the law and maximize benefits, investors should consult professional legal counsel before making investment decisions.
