What is a Domestic Investor and a Foreign Investor?

This English version is translated from the Vietnamese original. In case of any discrepancy, the Vietnamese version prevails.

What are Domestic Investors and Foreign Investors under the 2025 Investment Law?

The 2025 Investment Law (No. 143/2025/QH15) is the current legal document that clearly defines the concepts of domestic investor and foreign investor in Clauses 19 and 20 of Article 3. These are two foundational definitions that directly affect investment registration obligations, market access conditions, and many other legal procedures.

How is a Foreign Investor Defined?

Clause 19 of Article 3 of the 2025 Investment Law provides:

A foreign investor is an individual holding foreign nationality or an organization established under foreign law that conducts investment and business activities in Vietnam.

Thus, the criteria for determining a foreign investor include two main groups:

• Individuals: holding foreign nationality and conducting investment and business activities in Vietnam (regardless of place of residence).

• Organizations: established under foreign law and conducting investment and business activities in Vietnam.

According to What Criteria is a Domestic Investor Determined?

Clause 20 of Article 3 of the 2025 Investment Law provides:

A domestic investor is an individual holding Vietnamese nationality or an economic organization with no foreign investor as a member or shareholder.

Two groups fall under the category of domestic investor:

• Individuals: holding Vietnamese nationality.

• Economic organizations: with no foreign investor participating as a member or shareholder — meaning 100% domestic capital.

What is the Key Difference Between These Two Concepts?

The distinguishing criterion is not based solely on the individual's nationality but also on the capital structure of the organization. An enterprise established in Vietnam but with a shareholder or member that is a foreign investor will not be regarded as a domestic investor under the 2025 Investment Law, even though the enterprise is registered and operates in full compliance with Vietnamese law.

Criterion	Domestic Investor	Foreign Investor
Individual	Vietnamese nationality	Foreign nationality
Organization	No foreign members/shareholders	Established under foreign law
Legal Basis	Clause 20 of Article 3 of the 2025 Investment Law	Clause 19 of Article 3 of the 2025 Investment Law

What Legal Significance Does This Distinction Have?

Correctly determining investor status has significant practical importance in many legal procedures, including:

• Obligation to Issue an Investment Registration Certificate (IRC): A foreign investor conducting a project in Vietnam must establish an economic organization before applying for an IRC, whereas a domestic investor in most cases only needs to register for business operations.

• Market Access Conditions: According to Clause 10 of Article 3 of the 2025 Investment Law, foreign investors must meet market access conditions for sectors on the Restricted List — this does not apply to domestic investors.

• Capital Ownership Ratio: Many sectors limit the capital contribution ratio of foreign investors, which affects the capital structure within the enterprise.

• Share Purchase in Certain Specific Sectors: For example, in the credit institution sector, the conditions and ownership ratio of foreign investors are regulated by separate provisions.

Who is Included in the Definition of "Investor" under the 2025 Investment Law?

Clause 18 of Article 3 of the 2025 Investment Law defines a broader scope:

An investor is an organization or individual conducting investment and business activities, including domestic investors, foreign investors, and economic organizations with foreign invested capital.

Thus, in addition to the two groups of domestic and foreign investors, the law recognizes economic organizations with foreign invested capital as a separate sub-category — typically enterprises established in Vietnam but with capital contributions from foreign investors. This type of organization may be subject to additional regulations when conducting subsequent investment activities in Vietnam.

Do You Need Further Advice on Investor Status and Investment Procedures in Vietnam?

Accurately determining investor status from the outset helps enterprises avoid legal risks throughout the project lifecycle. A&D Law Firm — a business legal consultant in Vietnam — can assist with capital structure review, determination of investment registration obligations, and advice on market access conditions appropriate to each sector and specific form of investment.

This article is for general legal reference purposes only and does not substitute for legal advice on specific matters. Legal provisions may change over time; please contact a lawyer for accurate and appropriate advice tailored to your actual circumstances.