Vietnam is increasingly becoming a new emerging market for foreign enterprises seeking overseas investments. With the rise of the global green economy trend, the Vietnamese government actively promotes green manufacturing policies, offering foreign enterprises vast development opportunities. However, investing in green manufacturing in Vietnam requires not only seizing market opportunities but also a deep understanding of and compliance with Vietnam’s environmental policies and regulations, as well as effectively addressing the accompanying challenges. This article provides practical guidelines for enterprises planning to invest in Vietnam, helping them achieve sustainable development.

Encouragement Policies for Foreign Investment in Vietnam

Investment Law and Policy Incentives

The Vietnamese government, through the Law on Investment (No. 61/2020/QH14) and the 2021 Decree on the Implementation of the Investment Law (Decree No. 31/2021/ND-CP), has outlined specific encouragement policies for foreign investment, particularly in high technology, green energy, infrastructure development, and other fields. Investments in these sectors may enjoy several preferential policies, such as corporate income tax reduction, import tax reduction, and land use fee exemptions.

• Legal Basis: Law on Investment (No. 61/2020/QH14), effective from January 1, 2021.
• Specific Provisions: Article 15 stipulates preferential treatments for eligible investment projects.
• Issuing Authority: Ministry of Planning and Investment (MPI)
  • Contact: Website: www.mpi.gov.vn; Phone: +84 24 08043485

Preferential Policies in Special Economic Zones and Industrial Parks

Vietnam’s special economic zones and industrial parks offer more favorable policies for foreign enterprises, such as lower corporate income tax rates and land use fee exemptions. These areas provide more attractive investment conditions, especially suitable for investors in green manufacturing.

• Legal Basis: 2021 Decree on the Implementation of the Investment Law (Decree No. 31/2021/ND-CP)
• Specific Provisions: Article 26 details the tax incentives for enterprises within special economic zones and industrial parks.
• Issuing Authority: Vietnam Industrial Zones Authority (VIZA)
  • Contact: Website: www.hepza.hochiminhcity.gov.vn; Phone: +84 28 38290033

Restricted Areas for Foreign Investment in Vietnam

Negative List

Foreign investment in certain sectors in Vietnam is strictly restricted or completely prohibited. According to the 2021 Decree on the Implementation of the Investment Law (Decree No. 31/2021/ND-CP), the Vietnamese government has clearly defined restricted sectors for foreign investment, such as those involving national security, defense, media, publishing, and maritime transport.

• Legal Basis: 2021 Decree on the Implementation of the Investment Law (Decree No. 31/2021/ND-CP)
• Specific Provisions:
  • Article 6: Specifies the prohibited sectors for foreign investment.
  • Article 7: Outlines the conditions for market access in conditional sectors.
• Issuing Authority: Ministry of Planning and Investment (MPI)
  • Contact: Website: www.mpi.gov.vn; Phone: +84 24 08043485

Foreign Shareholding Restrictions

In some key sectors, such as finance, securities, insurance, media, and telecommunications, Vietnam imposes explicit restrictions on foreign shareholding. Typically, the foreign shareholding ratio must not exceed 49%.

• Legal Basis: Securities Law (No. 54/2019/QH14) and Decree on Foreign Investors’ Participation in Vietnam’s Capital Market (Decree No. 155/2020/ND-CP)
• Specific Provisions: Article 77 specifies the upper limits of foreign shareholding in specific sectors.
• Issuing Authority: State Securities Commission (SSC)
  • Contact: Website: www.ssc.gov.vn; Phone: +84 24 39344283

Market Opportunities and Challenges in Green Manufacturing in Vietnam

Market Opportunities Brought by Environmental Policies

The Vietnamese government promotes green economic development through policies such as the Law on Environmental Protection (No. 72/2020/QH14) and the 2021-2030 National Strategy on Green Growth. These policies provide foreign enterprises investing in green manufacturing projects in Vietnam with a vast market space and a range of policy supports and incentives. For instance, the Vietnamese government encourages investments in renewable energy, energy-saving equipment manufacturing, and offers tax reductions and technological R&D support.

Technological Innovation and Environmental Challenges

Investing in green manufacturing in Vietnam requires enterprises to innovate and upgrade in technology and environmental aspects. Although the initial investment is relatively high, these investments can reduce operating costs and enhance product market competitiveness in the long term. For example, investing in solar energy projects can reduce an enterprise’s carbon emissions and save on energy costs.

• Case Study: A Chinese electronics manufacturing enterprise invested USD 5 million in a solar energy project in Vietnam, expecting to recoup the investment within five years.
• Policy Support: Enterprises can apply for green technology R&D support and tax incentives through the Ministry of Industry and Trade (MOIT).
  • Contact: Website: www.moit.gov.vn; Phone: +84 24 22202222

Green Supply Chain Transformation

Vietnam’s supply chain is transitioning towards green transformation, and enterprises must consider the environmental qualifications of their suppliers. This approach not only helps enterprises meet international market environmental requirements but also enhances brand competitiveness.

• Case Study: A Chinese enterprise successfully secured an order from the EU market by collaborating with a local supplier of environmentally friendly dyes.
• Policy Support: It is recommended that enterprises settle in green industrial parks, such as the Saigon Hi-Tech Park in Ho Chi Minh City, to enjoy tax incentives and policy support from the government.

Compliance and Risk Management

Enterprise Registration and Licensing

When investing in green manufacturing in Vietnam, enterprises must strictly follow local registration and licensing requirements. The Law on Enterprises (No. 59/2020/QH14) outlines the registration procedures and licensing requirements for foreign enterprises. Enterprises can only operate after obtaining an Investment Registration Certificate (IRC) and an Enterprise Registration Certificate (ERC).

• Legal Basis: Law on Enterprises (No. 59/2020/QH14)
• Specific Provisions: Article 30 outlines the registration procedures for foreign enterprises.
• Issuing Authority: Ministry of Planning and Investment (MPI)
  • Contact: Website: www.mpi.gov.vn; Phone: +84 24 08043485

Environmental Compliance and Tax Management

Enterprises must comply with regulations such as the Law on Environmental Protection and the Law on Tax Administration (No. 38/2019/QH14) during their operations in Vietnam. Especially in the field of green manufacturing, enterprises need to conduct environmental compliance checks to ensure that production processes meet environmental requirements. Additionally, utilizing tax incentives such as corporate income tax reductions and VAT deductions can effectively lower operating costs.

• Legal Basis: Law on Environmental Protection (No. 72/2020/QH14)
• Issuing Authority: Ministry of Natural Resources and Environment (MONRE)
  • Contact: Website: www.monre.gov.vn; Phone: +84 24 37956868

Conclusion

Investing in green manufacturing in Vietnam is a crucial way for Chinese enterprises to seize market opportunities and enhance competitiveness amid the global sustainable development trend. Through the detailed interpretation of Vietnam’s foreign investment policies and green manufacturing opportunities provided in this article, enterprises can better understand the investment environment in Vietnam and make more scientific investment decisions. During the investment process, enterprises should closely monitor policy changes, fully utilize policy support, and establish good cooperative relationships with local governments and environmental agencies to ensure the smooth progress and long-term development of their projects.