How to Set up a Manufacturing Company in Vietnam

Vietnam has become one of the world’s most sought-after locations for export manufacturing. Rising costs in China, a young and competitive workforce, a dense network of industrial parks and free trade agreements covering the EU, the UK, Japan, Korea, ASEAN and the CPTPP have drawn electronics, textile, furniture, automotive component and machinery manufacturers from every major economy. Setting up a manufacturing company in Vietnam is a well-trodden path, but it involves more approvals, more authorities and a longer critical path than a trading or services company. This guide explains the entity options, the licensing sequence, the incentives available in 2026, realistic timelines and costs, and the mistakes that most often delay production start.

Why Manufacture in Vietnam?

Under the Law on Investment and the Law on Enterprises (both amended in 2025), foreign investors can own 100% of a manufacturing company in almost every sector, lease industrial land for up to 50 years and repatriate profits freely. Manufacturing wages remain roughly a third of coastal China’s, the country runs a large trade surplus with the United States and Europe, and most industrial parks sit within a few hours of a deep-water port. Just as importantly, manufacturing is one of the few sectors where Vietnam still offers meaningful corporate income tax incentives, particularly for high-tech, supporting-industry and large-scale projects located in industrial and economic zones.

The trade-off is complexity. A factory project must pass through investment registration, enterprise registration, land sub-lease, environmental approval, fire-safety design approval, construction permitting and, for many sectors, product-specific licences before the first unit ships. Each is issued by a different authority on its own timeline, so sequencing matters more than in any other type of Vietnamese company setup.

Comparing Ways to Manufacture in Vietnam

Option	Core features	Typical use case
100% foreign-owned LLC in an industrial park	Wholly owned Vietnamese company; IRC + ERC; sub-leases serviced land or a ready-built factory from the park developer; full control of operations and IP	Most foreign manufacturers building or leasing a dedicated plant for export or domestic supply
Export Processing Enterprise (EPE)	An LLC licensed to export all (or virtually all) output; treated as a non-tariff zone, so imported materials, machinery and utilities are exempt from import duty and VAT; strict customs fencing and reporting	Contract manufacturers and component suppliers selling exclusively to overseas customers or other EPEs
Joint venture with a Vietnamese partner	LLC or JSC with shared capital; partner may contribute land, licences or distribution; governance set by charter and shareholders’ agreement	Projects needing local land-use rights, a conditional business line, or domestic market access through an existing partner
Contract manufacturing / tolling	No Vietnamese entity; production outsourced to a local factory under a processing contract; the foreign company supplies materials and specifications	Testing the market or moving volume quickly before committing capital to a plant
Acquisition of an existing factory	Buy shares in, or the assets of, an operating Vietnamese manufacturer; M&A approval required for foreign buyers in conditional sectors	Investors who need licensed capacity, a trained workforce and customers on day one

Choosing the Right Legal Structure

Almost every foreign-invested factory in Vietnam is a limited liability company (LLC), either single-member (one corporate parent) or multi-member (up to 50 owners). The LLC is quick to set up, has a simple governance structure and no minimum capital requirement, although the investment registration authority will expect charter capital that is realistic for the plant being proposed. A joint stock company is only worth considering where the project will bring in multiple investors or eventually list.

Within the LLC, the key decision is whether to register as an Export Processing Enterprise (EPE). An EPE is exempt from import duty and import VAT on raw materials, machinery and construction materials, and its exports are zero-rated, which materially improves cash flow for pure exporters. The price is a fenced site with customs supervision, detailed import-export reconciliation reports, and restrictions on selling into the domestic market (domestic sales are treated as imports into Vietnam and taxed accordingly). Manufacturers that expect meaningful Vietnamese sales usually stay as an ordinary LLC and use bonded warehouses or duty-drawback instead.

Watch: How to set up a manufacturing company in Vietnam

Prefer to watch rather than read? This short video from MSA Asia walks through the key steps, approvals and decisions involved in setting up a factory in Vietnam as a foreign investor.

Where to Locate: Industrial Parks and Economic Zones

Foreign manufacturers overwhelmingly locate inside industrial parks (IPs), and for good reason. Park developers hold the master land-use rights and sub-lease serviced plots or ready-built factories to tenants, so the investor never has to negotiate land clearance or conversion. The park’s management board acts as a one-stop authority for the IRC, construction permit and many operational filings. Power, water, wastewater treatment and road access are already in place. Vietnam has more than 400 industrial parks; the main clusters are:

North: Bac Ninh, Bac Giang, Hai Phong, Hung Yen, Vinh Phuc and Thai Nguyen, anchored by electronics supply chains (Samsung, Foxconn, LG) and served by Hai Phong port and the border with China.
South: Binh Duong, Dong Nai, Long An and Ba Ria-Vung Tau around Ho Chi Minh City, the traditional base for furniture, garments, footwear, food processing and machinery, served by Cat Lai and Cai Mep deep-water ports.
Central: Da Nang, Quang Nam, Quang Ngai and Nghe An, with lower land and labour costs and generous economic zone incentives.

Land is typically sub-leased for the remaining term of the park’s own lease (often 30 to 45 years) with a one-off land rental payment plus annual infrastructure and management fees. Ready-built factories rent from roughly USD 4 to 6 per square metre per month in prime northern and southern parks and are the fastest route to production, often within three to five months of IRC issuance.

Step-by-Step: Setting Up a Manufacturing Company in Vietnam

1. Feasibility, sector check and site selection

Confirm that the intended products are open to 100% foreign ownership (most manufacturing is, but chemicals, pharmaceuticals, food, defence-related goods and some recycling activities carry conditions). Shortlist parks based on logistics, labour pool, utility capacity and incentive status, and obtain a land commitment letter from the chosen developer. Decide at this stage whether the company will be an EPE.

2. Investment Registration Certificate (IRC)

The IRC is the government’s approval of the investment project itself: investor, objectives, location, capital, technology and schedule. For in-park projects it is issued by the provincial industrial zone management board; outside parks, by the provincial investment authority. The dossier includes a 20 to 40 page project proposal, the parent company’s legalised registration documents and audited financial statements, proof of funds, the land commitment letter and a preliminary environmental assessment. The statutory processing time is 15 working days for standard projects; three to six weeks is realistic for a complete first submission, longer for conditional sectors. Since March 2026 the amended Investment Law also allows the enterprise to be registered ahead of the IRC in certain cases, which can shorten the critical path.

3. Enterprise Registration Certificate (ERC)

With the IRC in hand, the Vietnamese company is incorporated by obtaining the ERC, usually within three to five working days. The ERC creates the legal entity and tax code; only then can the company sign the land sub-lease, open bank accounts, import machinery in its own name or hire staff.

4. Post-licensing registrations

Immediately after the ERC: company seal, digital signature, tax registration and e-invoice set-up, a direct investment capital account (DICA) at a licensed bank for receiving charter capital and loans, customs registration, labour and social insurance registration, and appointment of a Chief Accountant. Charter capital must be contributed within 90 days of the ERC.

5. Environmental approval

Depending on scale and sector, the project needs either an Environmental Impact Assessment (EIA) approved by the provincial environment authority (or the ministry for large or sensitive projects) or, for smaller plants, an environmental licence or registration. The EIA must be approved, not merely filed, before construction starts, and a full EIA realistically takes five to eight months including baseline surveys and public consultation. Start this in parallel with the IRC.

6. Fire-safety design approval and construction permit

Factory designs must be certified by a licensed Vietnamese design verifier and approved by the provincial fire police before the construction permit is issued (20 working days statutory for in-park projects). After construction, a fire-safety acceptance inspection and environmental licence are required before operations begin. Leasing a ready-built factory removes most of this stage, though fit-out and fire acceptance still apply.

7. Machinery import and installation

Machinery, equipment and specialised vehicles forming fixed assets of an incentivised project can be imported free of import duty; EPEs also avoid import VAT. Imports can only be cleared once the company holds its ERC, tax code and customs registration, so machinery contracts should be timed accordingly or routed through a bonded warehouse.

8. Sector-specific licences and production start

Food, pharmaceutical, chemical, medical-device, automotive and electronics manufacturers need product or facility certifications from the relevant ministry before selling. Once all approvals are in place, document the production commencement date; it starts the clock on CIT incentives and customs commitments.

Tax Incentives for Manufacturing in Vietnam (2026)

Vietnam’s standard corporate income tax rate is 20%. Under the Law on CIT No. 67/2025/QH15, effective from 1 October 2025 and applying from the 2026 tax year, incentives are targeted at project quality rather than granted automatically by location. The main packages relevant to manufacturers are:

Preferential rate of 10% for 15 years, plus 4 years’ exemption and 9 years at 50% for high-technology projects, supporting-industry products on the government’s priority list, projects in economic zones and hi-tech parks, and large-scale projects meeting capital, revenue or headcount thresholds.
Preferential rate of 17% for 10 years, plus 2 years’ exemption and 4 years at 50% for projects in industrial parks located in districts with difficult socio-economic conditions and for certain encouraged sectors such as high-grade steel, energy-saving products and agricultural machinery.
Import duty exemption on machinery, equipment and construction materials not produced domestically that form fixed assets of an incentivised project, and on raw materials for the first five years for projects in especially encouraged sectors or locations.
Land rental exemptions of 3 to 15 years, or for the whole lease term, for projects in encouraged sectors or locations, granted by the province.

Two cautions. First, Vietnam has implemented the OECD global minimum tax, so multinational groups with consolidated revenue above EUR 750 million will see their Vietnamese incentives partly clawed back via the qualified domestic minimum top-up tax, although a new investment support fund offers cash grants to offset this for qualifying high-tech projects. Second, incentives are recorded on the IRC; if the project changes scope, capacity or location, the IRC must be amended before the change is implemented or the incentive can be lost.

Costs and Timeline at a Glance

IRC and ERC: 4 to 8 weeks in total for a standard in-park project; 8 to 12 weeks for conditional sectors.
Ready-built factory route: production start typically 4 to 6 months from project kick-off.
Build-to-suit route: 12 to 20 months including EIA, design certification, construction permit, construction and fire acceptance.
Land: one-off sub-lease payments of roughly USD 80 to 200 per square metre for the lease term in established parks, plus annual infrastructure fees; ready-built factories from around USD 4 to 6 per square metre per month.
Charter capital: no statutory minimum, but authorities expect capital proportionate to the project; USD 500,000 to several million is typical for a mid-sized plant, with the balance financed by registered offshore loans.
Professional fees: licensing, EIA consultancy, design verification and legal support usually run from USD 15,000 to 50,000 for a standard project before construction costs.

Ongoing Compliance for Manufacturing Companies

Once operational, a foreign-invested manufacturer must keep books under Vietnamese Accounting Standards, appoint a Chief Accountant, file monthly or quarterly VAT and PIT returns, quarterly CIT provisional payments and an annual CIT finalisation backed by an independent audit. Manufacturers also carry sector-specific obligations that trading companies do not: annual customs finalisation reports on imported materials (mandatory for EPEs and processing contracts), environmental monitoring reports, periodic fire-safety inspections, labour-safety training and equipment inspection certificates, foreign-loan registration with the State Bank, and quarterly investment implementation reports to the licensing authority. Transfer pricing documentation is required where the plant buys from or sells to related parties abroad, which describes most contract manufacturers. MSA’s Vietnam accounting and compliance team runs this calendar for foreign-invested factories across the country.

Common Mistakes When Setting Up a Factory in Vietnam

Signing machinery contracts before the ERC exists. Equipment then sits in port awaiting an importer of record.
Starting site works before EIA approval. This is treated as a violation even if the EIA is later approved.
Filing the IRC with the wrong authority. In-park projects go to the industrial zone management board, not the provincial investment department.
Drafting the IRC too narrowly. A fixed capacity figure or a short product list forces an IRC amendment for every expansion; use ranges and broad categories.
Choosing EPE status without checking domestic sales plans. Converting later is possible but costly.
Underestimating utility capacity. Power allocation in popular northern parks is constrained; confirm capacity in writing before committing.
Ignoring the global minimum tax. Large groups should model the top-up before relying on a 10% headline rate.

Frequently Asked Questions

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

Yes. Manufacturing is open to full foreign ownership in almost all sectors. Conditions apply to a limited list including certain chemicals, pharmaceuticals, food, recycling and security-related products.

How long does it take to set up a manufacturing company in Vietnam?

The company itself can be licensed in 4 to 8 weeks. Reaching production takes 4 to 6 months in a ready-built factory or 12 to 20 months for a purpose-built plant, driven mainly by environmental approval and construction permitting.

What is the minimum capital for a manufacturing company?

There is no statutory minimum, but the licensing authority assesses whether the proposed charter capital is sufficient for the project. Undercapitalised proposals are queried or rejected.

Should I set up an Export Processing Enterprise?

Only if substantially all output will be exported. EPEs enjoy duty and VAT exemptions on inputs but face customs fencing and restrictions on domestic sales.

What tax incentives can a manufacturer get in 2026?

Depending on sector, scale and location: a 10% or 17% CIT rate for 10 to 15 years with tax holidays, import duty exemption on fixed-asset machinery, and land rental exemptions. Incentives must be recorded on the IRC.

Set Up Your Vietnam Manufacturing Company with MSA

MSA has guided manufacturers from Europe, North America and across Asia through every stage of establishing production in Vietnam: structuring and EPE analysis, industrial park selection and lease negotiation, IRC and ERC licensing, environmental and construction approvals, capital account and customs registration, and the ongoing accounting, tax and payroll compliance that follows. Get in touch with MSA’s Vietnam market entry experts to plan your factory project and get a realistic licensing timeline for your sector and location.