How to Set up a Manufacturing Entity in Vietnam: Top Relocation Questions Answered

The factory may be the destination, but it is not the first thing you build. A manufacturing move into Vietnam starts months earlier with decisions about ownership, land, licenses, capital and people. Get those moving in the right order and the path to production becomes much clearer.

Key takeaways

• Foreign investors can own 100% of businesses in most manufacturing sectors, although some conditional activities have restrictions.
• A wholly foreign-owned enterprise (WFOE) is a common structure for manufacturers seeking long-term control over Vietnamese operations.
• Foreign investors cannot own land in Vietnam, making the lease and facility strategy a central part of market entry.
• Ready-built factories can shorten the route to production, while build-to-suit projects offer greater control with a longer timeline.
• Manufacturing setup extends beyond the Investment Registration Certificate (IRC) and Enterprise Registration Certificate (ERC) to environmental, construction and operating approvals.
• Manufacturers should plan workforce needs early, as interim hiring arrangements are subject to local employment regulations.
• Qualifying manufacturing investments may benefit from tax incentives, import duty exemptions and other forms of government support.

Before you register anything, decide what you are actually building

Imagine the decision has already been made.

Vietnam is going to become part of your manufacturing footprint. The board supports the move. Operations has started looking at industrial parks. Someone has a spreadsheet comparing labor costs, ports and suppliers. There may even be a shortlist of factory sites.

It is tempting to ask the obvious question first: how do we register the company?

For a manufacturer looking to get started in Vietnam, that question usually comes too early.

The entity has to support a physical operation. What you manufacture can affect foreign ownership and licensing. The scale of production affects the facility you need. The facility affects your capital requirements and timeline. Your site feeds into the investment registration process. The people you need during setup may arrive months before production begins.

Change one decision and several others can move with it.

That is why manufacturing relocation to Vietnam works better when the company starts with the operation it wants to build, then works backward into the legal structure.

Before incorporation, get specific.

What will the Vietnamese operation manufacture? Will it serve export markets, domestic customers or both? Does production require specialized machinery or a custom factory layout? How much control does the parent company need? When do the first employees need to arrive?

Those answers begin to shape almost everything that follows.

Can a foreign company own 100% of a manufacturer in Vietnam?

Foreign investors can generally establish wholly foreign-owned manufacturing businesses in Vietnam. That model is common in export-oriented industries including electronics, machinery and furniture.

But “manufacturing” is not one legal category covering every possible activity.

Certain conditional sectors can carry market-access requirements, ownership restrictions or other licensing conditions. Vietnam’s 2025 Law on Investment took effect on March 1, 2026, with changes to conditional business lines taking effect on July 1, 2026. Even so, the exact products and processes involved should be classified before the ownership structure is finalized.

That distinction becomes important surprisingly early.

A company may describe its plan internally as “electronics manufacturing,” for example. Regulators need considerably more detail. Consider:

• What exactly will the factory make?
• What processes will happen there?
• Will the operation involve activities subject to additional conditions?

The ownership question therefore starts with the business activity itself.

For a manufacturer that qualifies for full foreign ownership, the next decision is how much of the Vietnamese operation it wants to control directly.

Which entity structure makes sense for manufacturing?

Three structures commonly enter the conversation: a WFOE, a joint venture (JV) and a business cooperation contract (BCC).

For many companies relocating a production line, the WFOE is the natural starting point.

It gives the foreign investor direct control over the entity, operations and profits. That can be especially attractive when Vietnam is intended to become a permanent production base rather than a temporary sourcing experiment.

A JV changes the equation. Sharing ownership may make sense when a local partner brings something the foreign manufacturer genuinely needs, including market access, licensing capability or local networks.

A BCC sits further back from full market entry. Because it does not create a separate legal entity, it can suit a pilot or cooperation project before the manufacturer commits to its own operation.

The structure should follow the operating plan rather than the other way around.

For manufacturers, one operating decision quickly becomes unavoidable: where exactly is this factory going to go?

You can build a factory in Vietnam, you cannot own the land it sits on

This catches some foreign investors off guard.

Foreign investors cannot own land in Vietnam. Manufacturing projects generally operate through leased land, often within an industrial park or zone and subject to the relevant provincial approvals.

So site selection is not simply a real-estate exercise.

You are looking at access to suppliers, ports, roads and workers, but also the legal and practical structure of the site itself. The biggest early choice is often between leasing industrial land for a purpose-built facility and moving into a ready-built factory (RBF).

Neither is inherently better.

Imagine a manufacturer moving a highly specialized production process with unusual power, machinery or floor-plan requirements. Saving several months by taking an existing building may mean compromising on the facility it will use for years.

Now imagine a company diversifying part of an existing Asian supply chain into Vietnam. It wants production running quickly and does not need a heavily customized plant. A ready-built factory may make far more sense.

The difference can be six months or more before production begins.

Once the site strategy becomes clearer, the relocation moves from where will we operate? to what has to be approved before we can?

What licenses and approvals do a Vietnam factory need?

This is where the relocation starts to look less like company formation and more like a project plan.

A manufacturing entity typically moves through two core registrations before the wider set of approvals needed to build and operate.

The Investment Registration Certificate (IRC) covers the investment project itself, including its scope, capital and location. The Enterprise Registration Certificate (ERC) establishes the legal entity and its corporate structure.

Under Article 19 of the 2025 Law on Investment and Decree 96/2026, foreign investors have greater flexibility in sequencing the IRC and ERC. However, the order of registration can affect capital contribution and banking requirements. These steps should be coordinated early to avoid delays.

Getting the company registered still does not mean the factory is ready to operate.

Depending on the project, that can include an Environmental Impact Assessment (EIA), construction permits, sector-specific licenses and fire-safety and factory-operation approvals.

Environmental requirements depend on the project’s classification and risk level. Projects requiring an EIA face statutory appraisal periods of up to 45 days for Group I and 30 days for Group II, excluding report preparation and public consultation. Lower-risk projects may instead require an environmental permit or registration. Where required, an environmental permit must also be secured before operations begin.

Construction permit requirements depend on the project and applicable exemptions. Changes effective July 1, 2026, expanded exemptions, making it important to confirm the applicable requirements and processing times before construction begins.

The sequence matters because these approvals are connected.

Picture a company that has chosen its site and wants to get construction moving immediately. Its project scope, capital, location and environmental requirements all feed into approvals that come before production.

The entity may exist on paper while the factory is still months away from being operational.

That is why the registration date is a poor way to measure progress on a manufacturing relocation. The better question is: what still stands between this project and its first production run?

How much capital do you need? When does it have to arrive?

The capital commitment made during setup eventually has to become real money or assets inside the Vietnamese business.

Under Vietnam’s Law on Enterprises, charter capital generally must be contributed within 90 days of ERC issuance. Total investment capital follows a separate contribution schedule recorded on the IRC.

The distinction matters under the newer registration framework. Where the ERC is issued before the IRC, uncertainty may arise around the capital contribution timeline. Companies should confirm the applicable requirements before finalizing their registration and funding schedules.

Permitted contributions can include cash as well as machinery, equipment, technology and certain other assets.

For a manufacturer, these parameters create an important connection between corporate setup and the physical move.

Machinery may be coming into the country. Construction or factory rental costs are beginning. Suppliers need paying. The local operation is moving from an investment plan toward a functioning business.

Your banking setup has to support that transition.

Foreign investment funds generally move through a direct investment capital account (DICA) opened with a licensed Vietnamese bank. Under current requirements, an IRC is needed to facilitate these transfers, even where the ERC has already been issued.

This makes registration sequencing particularly important. A company that receives its ERC before its IRC may face practical challenges coordinating its capital contribution deadline with its ability to transfer funds through the DICA.

So the DICA is not something to leave sitting on an administrative checklist until somebody remembers it.

A company can have its ERC, a signed factory lease and equipment on the way while still creating problems for itself if the capital contribution and banking pieces are not ready to move on schedule.

That 90-day clock deserves an owner before it starts ticking.

When should you start hiring the Vietnam team?

This is one of the awkward realities of a factory relocation.

The entity, site and permits may take six months, a year or longer to come together. But the company may need people in Vietnam much earlier.

Someone has to inspect sites. Someone needs to coordinate suppliers and machinery. The build needs oversight. Local recruitment needs to begin. Eventually, operators, supervisors, engineers and support staff have to be ready for production.

Waiting until the factory is fully operational to start building the team can simply move the delay somewhere else.

Once the entity is ready to employ directly, the company takes on the normal responsibilities of a Vietnamese employer. These include compliant labor contracts, minimum-wage and working-condition requirements and social insurance registration.

Foreign employees generally require work permits as well. Processing is typically around 10 working days after submission.

But what happens when a company needs people on the ground before its entity can employ them?

Early workforce planning becomes especially important. Vietnam does not formally recognize the Employer of Record (EOR) model as a standalone legal arrangement. The closest equivalent, labor outsourcing, is regulated and requires a licensed Vietnamese provider. It is also restricted to permitted job categories and assignments of up to 12 months.

That means an EOR arrangement is not automatically suitable for project managers, operations leads or other early hires. Companies must assess each role against local requirements. Foreign employees also generally need work permits through a Vietnamese employer.

Such arrangements do not automatically eliminate permanent establishment risks for the foreign parent company.

For manufacturers planning a permanent operation, the safest approach is to assess employment requirements early and coordinate hiring with entity establishment. This helps avoid delays without creating unnecessary compliance risks.

How long does manufacturing setup in Vietnam actually take?

The timeline depends heavily on the factory you choose.

Moving into an existing facility and building one from the ground up are two very different relocation projects.

A manufacturer leasing industrial land and developing a purpose-built facility is more likely to be looking at 12 to 18 months once registration, permitting and construction are considered together.

Those ranges make more sense when you think about what is happening inside them.

The company is not spending a year waiting for one government registration.

Different workstreams are moving at the same time: entity establishment, site arrangements, environmental approvals, construction, banking, machinery, hiring and operational permits. They do not all move independently.

A delay in the site can affect registration. A permitting delay can hold up construction. A banking delay can complicate the capital contribution. Hiring too late can leave a finished factory without the team needed to run it.

This is why the fastest manufacturing relocation is not necessarily the one that rushes each individual step.

It is the one that gets the sequence right.

Where do Vietnam manufacturing relocations tend to go off track?

Most relocation problems are less dramatic than companies expect.

A manufacturer does not usually lose six months because one enormous unforeseen obstacle suddenly appears. Time disappears in smaller assumptions made early.

The build takes longer than expected. Provincial processing moves more slowly than the central timeline suggested. The company treats its DICA and 90-day capital deadline as post-registration housekeeping. Recruitment begins on the assumption that every skill set will be readily available locally.

Tax can become another blind spot. Foreign-invested manufacturers need to account for local tax and transfer pricing obligations as the Vietnamese operation begins transacting with the wider group.

Individually, each issue looks manageable. Stack three or four together and your production date starts moving.

That is why the planning conversation should happen before incorporation. The company needs one timeline showing the entity, site, approvals, capital, banking and workforce together.

The date that matters is not when the company receives its registration certificate. It is when the factory can actually switch on.

What incentives are available to foreign manufacturers in Vietnam?

Vietnam offers a range of investment incentives that can make manufacturing expansion more attractive. Eligibility depends on the project’s sector, location, investment scale and applicable regulations.

Qualifying projects in priority sectors or designated locations may benefit from reduced corporate income tax (CIT) rates, including a 10% rate for up to 15 years. Eligible investments may also qualify for tax holidays and subsequent tax reductions.

Other potential incentives include:

• Import duty exemptions: Qualifying machinery and equipment imported as fixed assets may be exempt from import duties.
• Export processing benefits: Eligible export processing enterprises may receive favorable customs and VAT treatment on qualifying imports and exports.
• Land rent relief: Certain projects may qualify for land rent exemptions or reductions, depending on their location and investment category.
• Investment support: Qualifying high-tech and semiconductor projects may access financial support under Vietnam’s Investment Support Fund.

Vietnam’s participation in trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the European Union–Vietnam Free Trade Agreement (EVFTA) and the Regional Comprehensive Economic Partnership (RCEP), can also provide preferential market access for qualifying goods.

These benefits should be evaluated during site selection and investment planning. Incentive eligibility can influence where a manufacturer establishes operations and how the project is structured.

Work backward from the first production run

A good relocation plan works backward from the date production needs to begin.

That sounds obvious. In practice, companies often start with incorporation because it feels like the first concrete task. Manufacturing has too many dependencies for that approach.

Before the first filing, put the major decisions on the same timeline.

First, define the operation. Confirm what the Vietnamese business will manufacture, the production processes involved, expected investment and whether any activities fall into a conditional sector.

Next, settle the structure and site strategy. Decide whether the operation needs a WFOE, JV or another arrangement. At the same time, determine whether a ready-built factory can support production or whether the project needs industrial land and a purpose-built facility.

Then map the approvals. The IRC and ERC establish the investment project and entity. Environmental, construction, sector-specific and operational approvals determine when the physical operation can move forward.

Build capital and banking into that same schedule. Charter capital deadlines, IRC requirements and DICA arrangements must be coordinated, particularly when the ERC is issued before the IRC.

Finally, work backward on people. Identify who needs to be in Vietnam during site selection, construction and pre-production. Determine which roles can wait for entity establishment and whether any compliant interim employment arrangements are available.

That gives leadership something much more useful than a company-registration timeline.

It gives them a route to production.

Build the Vietnam operation in the right order

Vietnam can make a compelling case for manufacturers diversifying their production footprint. But the decision to manufacture there is only the beginning.

A company still has to turn an expansion strategy into a working factory. That means deciding what the local operation will actually do, choosing the right structure, securing a site, moving through the approvals and getting capital, banking and people ready for production.

Those decisions are connected. A ready-built factory can shorten the route to market, but only if the building works for the production line. A WFOE can provide full control, but the proposed activities still need to support that ownership structure. An entity can be registered while the factory remains months from opening.

Waiting for every permit before thinking about people can leave the company recruiting against the clock.

The companies that handle the move well do not treat incorporation, real estate, permits and hiring as separate projects. They build one sequence around the operation they ultimately need to run.

By the time the machinery arrives, the legal entity, capital, banking and workforce should be moving toward the same date. That is when a manufacturing relocation stops being a collection of approvals and starts becoming a factory that can actually open.

Planning a manufacturing move into Vietnam? Talk to us about getting your entity, payroll and people in place while your factory plans move forward.