Key Legal Issues for Singaporean Companies Investing in the Information Technology (IT) Sector in Vietnam

In recent years, Vietnam has emerged as a strategic investment destination for many Singaporean enterprises in the information technology (IT) sector, thanks to its strong human resources, competitive operating costs, and an increasingly improved investment environment. Accordingly, identifying and addressing legal issues at the pre-investment stage is a key factor in helping Singaporean investors mitigate risks and ensure the long-term sustainability of their projects.

1. Market Access Conditions for the Information Technology Sector

One of the key legal issues is determining whether the intended IT activities fall within sectors subject to market access conditions for foreign investors. Under Vietnam’s current legal framework and international commitments, most “pure” IT activities – such as software development, software outsourcing, IT consulting services, and technology research and development – are generally open to foreign investors with up to 100% foreign ownership.

However, legal risks often arise when Singaporean enterprises expand into “borderline” or regulated areas, including digital platforms with cross-border service elements, fintech, large-scale processing and storage of personal data, telecommunications services, or intermediary information services. In such cases, investors may be required to satisfy additional conditions relating to sub-licenses, minimum legal capital, technical infrastructure, or may even face restrictions on foreign ownership ratios. Therefore, investors should focus on accurately identifying their business model.

2. Investment Procedures from a Legal Risk Management Perspective

From a legal standpoint, the establishment of an IT company with Singaporean capital in Vietnam typically involves two main stages: investment registration and enterprise registration. The application for an Investment Registration Certificate (IRC) is not merely a formal legal requirement but also functions as a substantive appraisal of the project. Key aspects such as investment objectives, staffing scale, project location, project duration, and capital structure may be closely reviewed by the competent authorities.

Following the issuance of the IRC, the Enterprise Registration Certificate (ERC) establishes the company’s legal entity status. At this stage, legal risks commonly arise from registering business lines inconsistent with the approved investment scope or determining a charter capital that does not align with the actual scale and needs of the project.

Post-Establishment Compliance Obligations: the most significant challenges for Singaporean enterprises is in ongoing operations and long-term legal compliance.

👉 First, in relation to tax and accounting, enterprises must comply with Vietnamese accounting standards and pay close attention to related-party transactions and transfer pricing issues, particularly when providing services to the Singapore parent company or other group entities.

👉 Second, with respect to labor matters, IT companies typically employ highly skilled personnel and foreign experts. Failure to comply with regulations on labor contracts, social insurance, and work permits for foreign employees may result in strict sanctions and reputational risks.

👉 Third, data protection and cybersecurity have become increasingly regulated areas. IT enterprises that process user data in Vietnam must pay special attention to obligations regarding data security, data storage, and information provision upon lawful requests from competent authorities.

3. Protection of Legal Rights and Intellectual Property of Singaporean Enterprises

An essential advisory issue is the protection of intellectual property rights. In practice, many Singaporean enterprises make significant investments in software, algorithms, and branding but delay registering intellectual property protection in Vietnam. This may expose them to risks of disputes, unauthorized use, or loss of commercial exploitation rights.

From a legal perspective, timely registration of trademarks, software copyrights, and the establishment of internal intellectual property control mechanisms are necessary measures to safeguard the long-term interests of investors.

4. Investment Incentives

Under the Investment Law 2020 and Decree No. 31/2021/ND-CP, investment incentives in the IT sector apply primarily to activities classified as “manufacturing of information technology products, software, and digital content.” In particular, the “production of digital technology products,” in the context of digital transformation, is a promoted investment sector that may benefit from tax and land-related incentives in accordance with applicable regulations.

However, not all IT-related activities qualify for investment incentives. In practice, the IT sector encompasses a wide range of business models, and eligibility for incentives depends on the substantive nature of the activities rather than their nominal classification. Service-oriented activities—such as software outsourcing, developing software for a Singapore parent company without ownership of the product, IT services and consulting, system maintenance and operation, and cloud services—are not considered manufacturing of technology products and therefore do not automatically qualify for investment incentives. In such cases, investors may consider incentives based on investment location, for example by locating the project in a high-tech zone or a concentrated IT park.

✅ Conclusion

Vietnam’s legal framework governing investment, enterprises, technology, and data has its own specific characteristics, requiring investors to fully understand and comply with applicable regulations from the outset. Accordingly, the role of legal advisors extends beyond supporting establishment procedures to accompanying enterprises in designing appropriate legal structures, managing legal risks, and ensuring long-term compliance. This forms the foundation for Singaporean enterprises to achieve stable and sustainable growth in the Vietnamese market.