Ownership structures, sponsors or developers of project companies differ depending on the project model, in particular:

• public projects are commonly developed by State-owned enterprises – a well‑known example is Long Thanh International Airport, developed by Airports Corporation of Vietnam (ACV);
• public–private partnership (PPP) projects are commonly undertaken by (i) private sponsor(s) (whether domestic or foreign entities) or (ii) combination of private sponsor(s) and State-owned enterprise(s), with the Government participating as a contractual counterparty under a PPP project agreement – Please refer to Question 12 regarding all types of PPP models;
• private investment projects are initiated and developed by private sponsors (whether domestic or foreign investors) for their own commercial objectives.

With respect to PPP projects and private investment projects, it is common for the sponsor(s) to establish a special purpose vehicle (“SPV”) as the project company, typically structured as either a limited liability company (LLC) or a joint‑stock company (JSC). Foreign ownership in the SPV varies across industry sectors, shaped by market‑access conditions as well as applicable foreign ownership limitations under the investment legal framework as mentioned in Question 10.

The corporate governance of an SPV established for PPP projects or private investment projects is primarily governed by the Law on Enterprises, while the corporate governance of State-owned enterprises implementing public projects is also subject to specific State-capital management regulations, such as the Law on Management and Investment of State Capital in Enterprises No. 68/2025/QH15 issued by the National Assembly dated 14 June 2025, and its guiding regulations.

Independent audits are mandatory for certain groups of companies, including those with foreign ownership, State ownership or those operating in projects of national importance or large scale. Vietnam has recently adopted significant upgrades to the existing Vietnam Accounting Standards (VAS) to align them more closely towards the International Financial Reporting Standards (IFRS). It is important to note that this transition, which began taking effect from 1 January 2026, follows a phased implementation roadmap. The application of IFRS is structured into voluntary and mandatory tiers, depending on the specific enterprise group (such as state-owned enterprises, listed public companies, and certain foreign direct investment enterprises).

The involvement of sponsors and, where applicable, the host government is crucial to securing project financing from the lender(s).

Sponsors typically provide credit support to the project company (as borrower) through equity‑injection commitments, security packages over their equity interests, cash accounts, or other assets, as well as guarantees, all of which enhance the project company’s bankability.

Historically, the Vietnamese Government has also facilitated project financing by issuing Government Guarantees and Undertakings (GGUs) covering risks such as payment defaults, currency convertibility, and change‑in‑law exposures. In addition, guarantees from State‑owned offtakers – such as Electricity of Vietnam (EVN) in the energy sector – have not been uncommon in securing lender comfort. However, the government’s current approach reflects a shift away from extensive reliance on sovereign guarantees (GGU) – a departure from earlier decades – toward requiring the project company, sponsors and lenders to manage a greater portion of project risk.

Vietnamese law recognises nine forms of security, including mortgage, pledge, deposit, security deposit, escrow deposit, reserve of ownership rights, guarantee, fidelity guarantee, and retention of title. Among these, mortgage, pledge, and guarantee are the most commonly used security instruments in Vietnam’s project financing practice. Security is typically created over assets of the project company itself, which may include immovable assets such as land use rights, plants, buildings, fixtures and other assets attached to land (with restrictions for foreign lenders – See Question 7 below), and movable assets such as equity interests in the project company, bank accounts, receivables, contractual rights arising from project contracts, equipment and machinery. In certain cases, intermediaries or sponsors may also provide additional support through corporate guarantees or granting security over their own assets to secure the obligations of the project company.

Direct agreements – understood as a tripartite contract among the lender, the project company and the procuring authority in a PPP project that grant the lenders step-in rights to remedy defaults, assume control of the project, or replace the project company in the event of a default (“Lender’s Project-Granted Rights”) – are not commonly used in Vietnamese project finance market. Instead, the Lender’s Project-Granted Rights are typically documented as bilateral undertakings between the project company and the lender. Historically, the highest level of support the procuring authority provided to lenders was a Government Guarantees and Undertakings (GGUs) or a guarantee from a State‑owned offtaker (such as EVN). However, as mentioned in Question 3, these forms of support have been politically phased out in recent years.

Mandatory registration. The creation of security over immovable assets (land and assets attached to land), ships and aircraft must be registered at appropriate registries, although only land and assets attached to land are typically relevant in project financing. Prior to registration, mortgages over land and assets attached to land must be notarised at the notary office to be effective and enforceable.

Voluntary registration. Though not mandatory, it is recommended to register certain security assets in order to secure the priority rights over competing claims and provides public notice of the foreclosing security interests in an event of enforcement. These include listed shares registered with the Vietnam Securities Depository and Clearing Corporation (VSDC) and other types of movable assets registered with the National Registration Agency for Secured Transactions (NRAST). Where multiple secured lenders have registered their interests, priority is determined by the chronological order of registration.

Pre-insolvency enforcement

Enforcement may be triggered upon an event of default, without the need to first submit the matter to any competent dispute resolution forum. The secured party may enforce the security using any or all of the methods agreed in the security documents, commonly including all those permitted under Vietnamese law—such as public auction, private sale, takeover of the secured assets, or any other contractually agreed methods.

The enforcement process involves the secured party providing advance notice with no less than 10 days for moveable assets or 15 days for immovable assets, unless otherwise agreed by the parties. However, lenders have a right to enforce without notice if the secured assets are at immediate risk of damage or significant devaluation.

It is worth noting that the enforcement of security depends largely on the cooperation and goodwill of the securing party. If the securing party remains uncooperative, the enforcement of security by the secured party becomes challenging in Vietnam. In particular, the secured party will need to resort to the agreed dispute resolution forum to obtain a valid and enforceable judgment, and subsequently proceed to the Judgment Enforcement Agency to exercise its enforcement powers – which takes significant time and expense.

Post-insolvency enforcement

Under the new Law on Rehabilitation and Bankruptcy 2025 (effective 1 March 2026), there are two separate processes for rehabilitation and bankruptcy. A company facing imminent insolvency – a new concept introduced under the new law – defined as being unable to pay debts due in the next six months or having outstanding debts for no more than six months – may initiate a rehabilitation process.

The rehabilitation process will trigger an “automatic stay”, suspending enforcement actions against all assets of a company initiating this process, including realisation of security. During this process, secured creditors must file proof of debt and actively participate in creditors’ meetings to safeguard their interests, particularly where secured assets are proposed to support the rehabilitation plan. Crucially, under the new framework, a rehabilitation plan can be passed by a 65% majority of the debt held by those attending and voting at the meeting. Because this resolution becomes binding on all creditors, secured lenders who fail to participate may face the risk of an unfavorable restructuring plan that alters payment schedules or restricts collateral enforcement being imposed by the majority of attending (often unsecured) creditors.

On the other hand, bankruptcy proceedings may be initiated upon the debtor’s insolvency, either by petition from eligible requestors (including among others, unsecured and partially secured creditors) or by mandatory petition from the debtor’s management bodies where rehabilitation has not been sought. Similarly, an “automatic stay” will be triggered following commencement of the bankruptcy proceedings. In worst-case scenarios where the court declares the insolvent entity bankrupt, assets of the bankrupt entity are dealt with according to the following order of priority:

a. Registered secured assets are enforced to fulfil the secured obligations under the security documents in favour of the secured party. Any surplus assets are classified as unsecured assets and distributed in the descending order of priority mentioned in paragraph (b) below. If the secured assets are insufficient to pay the obligations owed to the secured party, the secured party will be treated as an unsecured creditor in respect of the deficient amount.

b, Unsecured creditors will have access to the remaining assets in order of priority.

Notably, creditors must file debt claims within 15 days of commencement of bankruptcy proceedings (as compared to 30 days under the previous regime), otherwise they will lose the right to participate in the bankruptcy proceedings.

The new law also introduces cross‑border bankruptcy provisions to facilitate cooperation between Vietnamese courts and foreign courts, enhancing Vietnam’s creditor‑friendly stance in international insolvency matters. However, it remains to be seen how this will be implemented in practice.

Immovable mortgage issues: Vietnamese law does not permit foreign lenders to take security over immovable assets, including land use rights, fixtures and certain assets attached to the land. This is often a key concern, as immovable assets typically represent the most valuable assets of the project company. To provide lenders with an acceptable level of comfort and to ensure that project financing structures in Vietnam remain bankable, the market has developed the following approaches:

• Local bank guarantee: This structure involves a local bank issuing a guarantee for the benefit of the foreign lenders. In return, such guarantee is secured by immovable assets that the project company mortgages to the local bank.
• Separate local and foreign loan: A local bank provides a VND‑denominated loan (often a smaller loan in comparison to the overall loan package), while foreign lenders extend a USD‑denominated loan to the project company, each supported by different security packages – the immovable assets are mortgaged in favour of the local bank, and any excess enforcement proceeds are mortgaged to the foreign lenders. It is important to note that this option must be structured as two separate loans – and not treated as a syndicated facility involving both foreign and local lenders – in order to avoid the stricter application of Vietnamese regulations on local-foreign syndicated loans (e.g., a foreign lender is not permitted to act as the payment agent in those syndicated loans).

Enforcement challenges. As mentioned in Question 6, enforcement challenges arising from a lack of cooperation by the securing party should also be taken into consideration. However, in cases where such cooperation is available, the remitting bank has historically required the borrower to obtain an amendment to the loan registration with the State Bank of Vietnam (SBV) in order to permit early repayment, which delays the repayment process. However, under the new regulatory amendments introduced by Circular No. 80/2025/TT-NHNN, taking effect from 25 January 2026 (“Circular 80”), this issue has been resolved, as the regulation now expressly provides that no SBV registration is required for enforcement‑based repayments. In particular, repayments of principal arising from (i) a lender’s write‑off, (ii) performance of a guarantee, or (iii) enforcement and realisation of secured assets are no longer subject to SBV registration. The repayment arising from a conversion of the loan into shares of the company is also common in practice but this scenario is not included in the above exemptions.

Because debt recovery in project financing depends heavily on the project’s implementation progress, any risks associated with project implementation – such as force majeure risks, political and regulatory risks, permitting risks, as well as construction and completion risks –  should be identified and carefully evaluated. Especially in the energy sector, typical risks that the parties can reasonably anticipate include  (i) changes in energy policy, licensing regimes, grid connection rules, or tariff frameworks (such as the removal of Feed-in-Tariff mechanism, application of ceiling price), (ii) offtake-associated risks such as curtailment risks, non-bankable PPA, (iii) Insufficient grid and transmission capacity risk. To mitigate such risks, it is advisable to structure loan disbursements in multiple tranches tied to the project’s implementation progress.

Foreign loans are typically disbursed and repaid in foreign currencies (most commonly USD), which places the currency‑convertibility risk on the borrower and, subsequently, on the lender if the borrower’s cash position is insufficient. For large offshore loans, it is common for lenders to require the borrower to obtain hedging instruments from local banks to mitigate foreign‑exchange exposure.

The SBV consent is required for (i) medium or long-term foreign loans; (ii) short-term loans being extended to last longer than 12 months from the first disbursement date; or (iii) non-extended short-term loans with an outstanding balance that lasts more than 12 months (plus 30-working-day grace period) from the first disbursement date. The SBV consent covers, among others, foreign loan information (e.g., principal, interest, lenders, borrowers, other fees), guarantor and mortgagor’s information. In addition to this registration, as mentioned in Question 5, the security interest registration may be mandatorily registered for being effective or voluntarily registered for securing the priority rights.

No governmental or regulatory consents in respect of the creation of security over PPP project documents in favor of the lender(s) are required for such security to be valid, enforceable, or admissible as evidence in a court of law.

The foreign investment, foreign exchange, and royalties may be relevant for project financing, in particular:

Foreign investment: There is a FDI screening mechanism in Vietnam. Foreign ownership limits apply depending on the investment sector. Generally Vietnam will apply any foreign ownership restrictions based on various international treaties that Vietnam is a party (eg the WTO). There are also sector specific laws that regulate foreign ownership, which vary depending on the specific sub-sector. By way of example, offshore wind power projects may permit foreign investors to hold up to 95% of the charter capital of the project company, whereas other energy and natural resource sectors are generally not subject to foreign ownership limits. These restrictions may materially affect the ability of the secured party to enforce its security over equity interests.

Foreign exchange: SBV maintains tight oversight over the use of foreign exchange in Vietnam, including the management of the foreign loans. Lenders should be mindful of the SBV’s requirements on foreign loan registration, as noted in Question 9, as well as the obligation to route all drawdowns and repayments through either a Direct Investment Capital Account (DICA), a specialised foreign loan account, or a permitted offshore debt service account as discussed in Question 15.  In addition, all foreign loans (including short-term and long-term loans) are required to be reported to the SBV on a monthly basis. Missing this annual report may result in the borrower being challenged by the SBV when applying for the registration of any amendment to its existing SBV approval.

Royalties: Royalties apply to certain projects, such as licensed mining projects. Project companies are generally subject to an annual payment of royalties, which are calculated on the basis of reserves and volume, the applied resource tax base, and the specific rate for mineral exploitation rights fees, to receive a concession to exploit minerals, among other financial obligations. The current rate for mineral exploitation rights fee ranges from 1% to 5% for various types of metallic minerals, non-metallic minerals, rare earths, thermal water minerals, carbon dioxide gas. There is a price adjustment mechanism for royalties to bridge the gap between surveyed reserves and actual output. These factors should be taken into account when assessing the financial outcome of the mining projects for financing purposes.

Vietnam is active in fulfilling its international commitments regarding green transformation, reducing greenhouse gas emissions, and mitigating the impacts of climate change, with a focus on sustainable development. Official data from the SBV shows that green credit has continued to grow steadily, with outstanding loans reaching VND 730 trillion (US$31 billion) as of the end of June 2025, up 7.35% from the end of 2024 and accounting for 4.3% of total outstanding loans in the economy. However, Vietnam does not have a standalone  ESG legislation. In general, ESG obligations are embedded across key regulatory pillars:

• Environmental: The Law on Environmental Protection serves as a key legislation governing environmental obligations, which supports Vietnam’s COP26 pledge to achieve net-zero emissions by 2050.
• Social: The Labour Code prohibits child and forced labour, mandates occupational safety, and protects employee benefits. In addition, consumer protection and data protection obligations are becoming increasingly significant.
• Governance: The legal framework focuses on internal corporate governance, reporting and disclosure of information, anti‑corruption and anti‑money laundering.

Only public companies are subject to statutory disclosure of their annual reports which includes ESG elements. In recent years, green credit and green bond are increasingly directed towards projects in renewable energy, sustainable agriculture and other projects with measurable environmental benefits. These projects benefit from lower interest rates and other incentives, and in return the lenders typically require borrowers to comply not only with domestic ESG laws but also with international standards (e.g., IFC Performance Standards). This variety of ESG standards leads to confusion and inconsistency. It is also worth noting that no ESG standard/template are one-size-fits-all, as requirements differ for each company depending on its specific industry.

Vietnamese law provides the following PPP models: Build – Operate – Transfer (BOT), Build – Transfer – Operate, Build – Own – Operate (BOO), Operate – Manage (O&M), Build – Transfer – Lease (BTL), Build – Lease – Transfer (BLT), Build – Transfer (BT) contract or hybrid models combining any of these.

These PPP models are governed by the following key regulations:

• The Law on Public-Private Partnership Investment No. 64/2020/QH14, as amended from time to time (“PPP Law”);
• Decree No. 243/2025/ND-CP providing detailed regulations on several articles of the PPP Law;
• Decree No. 312/2025/ND-CP regulating the financial management mechanism for PPP projects and the payment/settlement mechanism for Build-Transfer (BT) contracts;
• Decree No. 257/2025/ND-CP detailing the implementation of projects applying the BT contract model.

Previously, PPP investments were restricted to only six public investment sectors, namely transportation, power, irrigation and water, health, education, and information technology infrastructure. With the effectiveness of the amendment to the PPP Law on 1 July 2025, the PPP investments have expanded and adopted a “catch‑all” approach, covering all public investment sectors and industries for the purposes of developing and constructing infrastructure works or systems and providing public services.

Vietnamese court’s recognition

In order to be enforceable in Vietnam, foreign court judgments and arbitral awards must be submitted to a Vietnamese court for recognition and enforcement. However, there are limits on how foreign court judgements and foreign arbitral awards are recognised, as described below.

• Foreign court judgments: Vietnamese courts rarely recognize foreign court judgements. This is because Vietnam has only entered into a few bilateral treaties to recognize and enforce foreign court judgements. The reciprocity principle is rarely applied. According to database of the Ministry of Justice, during the period from 2012 to 2019, Vietnamese courts handled 26 applications for recognition and enforcement of foreign courts’ judgments and decisions, of which 12 were recognized, 5 were refused, and 9 were suspended.
• Foreign arbitral awards: In contrast to foreign court judgments, the recognition and enforcement of foreign arbitral awards in Vietnam is relatively common, as Vietnam is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the 1958 New York Convention), which currently has 172 member States. Under the Convention, any foreign arbitral award issued in a member State of the 1958 New York Convention may be submitted to the Vietnamese courts for recognition and enforcement. In principle, Vietnam courts are prohibited from re-examining the merits of the underlying dispute. However, there remains a risk that the recognition may be refused if the award is found to contradict the fundamental principles of Vietnamese law and we have encountered such cases in practice. Due to these recognition and enforcement risks, there has been a trend in Vietnam towards domestic arbitration for disputes involving a Vietnamese party or assets to be enforced in Vietnam.

Contractual agreements to arbitrate

Vietnamese law allows parties to agree on either domestic or foreign arbitration. Vietnamese courts must refuse to accept jurisdiction over any dispute that is subject to an arbitration agreement, unless the arbitration agreement is deemed invalid or unenforceable, or the dispute falls under the exclusive jurisdiction of Vietnamese courts (e.g., dispute over the ownership of Vietnamese real estate). Given that there is a clear legal basis (the 1958 New York Convention) for Vietnamese Courts to recognize foreign arbitral awards, it is always recommended that the disputes arising from foreign loans be settled by arbitration rather than to foreign courts, except for cases that fall within the exclusive jurisdiction of Vietnamese courts.

Submission to a foreign jurisdiction

In Vietnam, submission to a foreign jurisdiction is generally effective for legal relations involving foreign elements, provided the application of foreign law does not violate the fundamental principles of Vietnam law. However, Vietnam law reserves exclusive jurisdiction over certain matters, regardless of either of foreign elements or the parties’ choice of governing law, including, among others:

• transactions and contracts relating to ownership, lease, or creation of security interests over real estate located in Vietnam territory;
• labour and consumer contracts that affect the minimum entitlements of employees or consumers;
• PPP contracts to which a Vietnamese authority is a party;
• power purchase agreement for electricity projects that must follow mandatory templates.

With respect to the project financing, it is common that the principal finance documents (i.e., facility agreements) are governed by foreign law such as New York law or English law, while security documents are governed by Vietnam law.

Waiver of immunity

The waiver of immunity is recognized under the Civil Code of Vietnam. The Vietnamese State, its central and local government agencies, are liable for civil obligations to foreign individuals or entities in the following circumstances where a waiver of immunity is clearly established:

• an international treaty to which Vietnam is a party stipulates a waiver of immunity;
• mutual agreement on a waiver of immunity by the parties to the transaction; or
• the Vietnamese State, its central or local government agencies waive its immunity rights.

a. Key current issues for project financing in Vietnam

Apart from the key considerations regarding the security scheme discussed in Question 7, the project‑financing stakeholders should also be aware of the following key issues:

Borrowing cap: The project company that has been issued an Investment Registration Certificate (IRC) (e.g., a foreign‑invested enterprise) or an in‑principle investment approval may only borrow an amount up to the difference between the borrower’s contributed charter capital  and the total investment capital specified in the IRC or the in‑principle approval. This borrowing cap applies to all existing onshore and offshore long‑term loans (with a tenor of more than one year) and excludes all onshore and offshore short‑term loans.

Use of proceeds: The permitted use of foreign loan proceeds depends on the loan tenor. As most project finance loans are for a term of more than 12 months, there are no restrictions on the use of proceeds other than the use of proceeds must be consistent with the licensed investment projects and business plan of the borrower. For completeness, short term loans of 12 months or less can only be used for working capital purposes.

Borrower insolvency: The post‑insolvency enforcement considerations noted in Question 6 are another important issue – particularly because project companies are commonly structured as SPVs, separate from the sponsors themselves. Once the court accepts a bankruptcy petition initiated by the borrower, an “automatic stay” takes effect, which may suspend all enforcement actions against the debtor’s secured assets.

Refinancing restrictions: In certain circumstances, refinancing existing loans is necessary for the project company. However, an existing foreign loan may only be refinanced by a new local loan and new foreign loan,  provided that:

• With respect to the foreign loan, the new loan does not exceed the outstanding principal of the refinanced loan, which will be fully repaid within 5 business days from the disbursement of the new loan; and
• With respect to the local loan, if it is granted by a local credit institution, the term of the new loan does not exceed the remaining term of the refinanced loan, which has not been subject to any debt rescheduling. This requirement does not apply where the new local loan is granted by a non‑credit institution.

Notably, Vietnamese law does not allow the use of foreign loans to refinance domestic loans.

Ad-hoc cash sweep mechanism – a non-regular, as-needed process whereby excess cash from the borrower’s account is applied toward repayment of the loan – may not be practicable in Vietnam due to the statutory requirement to register specific loan repayment dates and amounts.

Loan account: The drawdown and repayment of foreign loans must be routed through either (i) a DICA – applicable where the project company is a direct foreign‑invested enterprise; (ii) a specialised foreign loan account, applicable where the project company does not maintain a DICA; or (iii) an offshore debt service account opened in the foreign country, which must be subject to SBV’s prior approval, though rarely used in practice due to approval challenges.

Cap on interests and fees: There is generally no statutory cap on interest rates for foreign loans in Vietnam, though the SBV retains discretion to impose limits. In practice, however, remitting banks may flag rates above 20% per annum – the maximum rate referenced under the Civil Code 2015 of Vietnam – or rates deemed unreasonably high under anti-money laundering considerations. The SBV may also refuse loan registration where interest significantly exceeds prevailing market levels.

Cost of funds. Vietnamese law requires that all costs associated with foreign loans be declared in the SBV loan registration. In theory, those costs include both offshore and onshore payments, such as hedging fees or security‑agent fees. However, based on our recent discussions with SBV officers, only offshore payments (e.g., principle, interest, agent fees) are typically declared in practice, creating a compliance gap that may expose both borrowers and lenders to risk should the SBV later change its interpretation – particularly in cases where the overall cost of funds (after including onshore payments) for the foreign loan is significantly higher than market levels.

b. Emerging trends and/or topics

Green loan: Under the Eighth National Power Development Plan as amended (Adjusted PDP VIII), Vietnam is accelerating its push toward green and sustainable growth by mobilising capital for clean energy and green infrastructure. Several projects – spanning hydropower, wind power, and emerging technologies such as green hydrogen – have already secured or are negotiating financing from international financial institutions. A notable example is the USD 20 billion package from the Japan International Cooperation Bank (JBIC) supporting 14 clean energy projects.

Infrastructure-financing loan: Beyond energy, Vietnam is channeling investment into critical infrastructure. The surge in manufacturing relocation and global supply chain integration is driving demand for new facilities and upgrades to existing systems, placing heavy pressure on current capacity. To meet this demand, the Government is actively attracting both domestic and foreign capital, including through PPP models. Landmark projects such as Long Thanh International Airport are underway, while major seaports like Lach Huyen and Cai Mep-Thi Vai are being expanded to strengthen Vietnam’s role in global trade and logistics.

Local bank capacity: Unlike in previous decades, when large‑scale projects were predominantly financed by foreign institutions, local credit institutions have now developed considerably, both in terms of experience and funding capacity. As a result of this growth, local banks are no longer limited to acting as agents for foreign lenders or as conversion banks. They have emerged as significant lenders in their own right to major projects. For example, the Long Thanh International Airport project was financed by 3 local banks – Vietcombank, VietinBank and BIDV – through a syndicated loan of USD 1.8 billion. The substantially enhanced capacity of local banks has made the project‑financing market more flexible and bankable, particularly because local loans are not subject to certain constraints that apply to foreign loans, as discussed in Question 7 and earlier in this section (such as issues relating to immovable mortgages, ad-hoc cash sweep mechanisms, loan accounts, SBV registration and cost of funds).

IFC member loans: The establishment of International Financial Centres (“IFCs”) under Resolution No. 222/2025/QH15 of the National Assembly signals Vietnam’s strong ambition to attract global capital, develop advanced financial services, and position itself as a future financial hub in Southeast Asia. Members of IFCs will benefit from, among others, streamlined administrative procedures, including the exemption from SBV registration requirements for their foreign loans. In addition, disputes arising within IFCs may be resolved before either domestic or international courts or through domestic or international arbitration. Arbitration decisions and awards issued by IFC arbitration centres will be final and enforceable if the parties agree to waive the right to challenge or annul such awards by Vietnamese courts, thereby strengthening legal certainty and enforceability. With this new framework, it is expected that an emerging trend will be the selection of IFC arbitration, together with an express waiver of the right to challenge or annul the arbitration award, as the dispute resolution mechanism in finance documents to which an IFC member is a party.

Key regulatory framework

The Power Development Plan (PDP) serves as a national planning instrument approved by the Prime Minister, guiding the development of electricity generation and transmission in the country over a certain period. The prevailing PDP is the Adjusted PDP VIII over the period 2021–2030, with a vision to 2050, issued by the Prime Minister under Decision No.768/QD-TTg dated 15 April 2025.

Currently, the Law on Electricity 2024 acts as the primary legislation governing the energy sector. Under the Law on Electricity 2024 and its implementing instruments, significant frameworks have been introduced to support Vietnam’s commitments to net‑zero emissions by 2050 and national energy security. Recent notable frameworks include direct power purchase agreement (DPPA) model regulated under Decree No. 57/2025/ND-CP issued by the Government on 3 March 2025, renewable self-consumption model regulated under Decree No. 58/2025/ND-CP issued by the Government on 3 March 2025, and battery energy storage systems (BESS) projects regulated under Circular 62/2025/TT-BCT issued by the Ministry of Industry and Trade on 10 December 2025.

In 2025, the National Assembly has also adopted Resolution No. 253/2025/QH15 which establishes a special, time-limited regime to accelerate investment and facilitate Vietnam’s energy transition. The new policy streamlines approval process, introduces more investor‑friendly pricing mechanisms, expands offshore wind and DPPA frameworks, recognises small modular reactor (SMR) nuclear power, and offers special regimes for urgent national oil and coal projects.

Incentives

Investors in renewable projects benefit from various incentive schemes, typically in the form of preferential tax, fee exemptions, land rent reductions, and guaranteed long‑term electricity contracts, among other incentives available at law.

Withholding tax on foreign lenders

Interest income and other facility-related income – all offshore fees payable by the borrower to the foreign lenders – derived from offshore loans is subject to withholding tax at the current rate of 5% on such income, which the Vietnamese borrower is required to withhold and pay on behalf of the foreign lenders. Withholding tax applicable to offshore lender may be exempted in accordance with the double taxation treaties between Vietnam government and relevant contracting State. To ensure that the foreign lenders receive the full amount they were originally entitled to after taxes and deducted, a gross-up provision is commonly provided in the facility agreement.

Thin capitalisation rules

There are no thin capitalization rules for tax purposes in Vietnam, but interest deductibility arising from intercompany loans is subject to a 30% EBITDA cap.

Separately, from an investment licensing perspective, the capital structure of a project company is governed by its Investment Registration Certificate, which specifies total investment capital and contributed capital. By law, for project‑finance or PPP projects, the contributed capital  must present at least 15% of the project’s total investment capital, with the balance funded through debt financing.

Registration fee

No registration fee applicable to the offshore loans which are subject to registration with the SBV.

Typical funding structures include (i) onshore loan by local credit institutions, (ii) offshore loan from credit institutions, non-credit institutions or project sponsors, (iii) the combination of sponsor equity and debt, and (iv) bond issuance, including onshore and offshore bonds. The use of private credit in project financing is common in the private sector, particularly in the real estate industry. This trend is driven in part by restrictions on funding sources available to real estate developers – specifically, the prohibition on obtaining offshore loans for real estate projects. As a result, developers are limited to domestic loans from Vietnamese credit institutions. To access offshore capital, many real estate developers (such as Novaland Group) have turned to issuing foreign bonds to international institutional investors as an alternative method of raising funds for project development. Another example is the Hoa Binh – Xuan Mai Clean Water Project, a privately developed infrastructure project. The project company issued 20‑year green bonds with a value of VND 875.1 billion (approximately USD 34.5 million). The bonds were subscribed by major private credit providers, including Chubb Life Vietnam, Hanwha Life, AIA, and Generali – representing a growing trend of insurance companies and similar institutions participating as long‑term project financiers in Vietnam.

In general, the key structuring issues for such financings are similar to those applicable to standard project financings, as discussed in Questions 7 and 15. However, when using a bond‑issuance structure, the procedural and regulatory requirements tend to be more stringent and complex. This often includes additional conditions (such as credit ratings or debt‑to‑capital ratio requirements), the involvement of additional stakeholders (for example, custodian agents, securities depositories, and bond issuance advisors), as well as increased administrative and compliance obligations. Furthermore, for offshore bond issuances, the issuer must comply with dual regulatory regimes – Vietnamese law and the laws of the jurisdiction where the bonds are issued – which increases both the complexity and cost of the transaction.

Development banks play an active role in extending both credit and non-credit support to projects in Vietnam. Active players include the Vietnam Development Bank (VDB), and international and regional banks such as the World Bank, the Asian Development Bank (ADB), the French Development Agency (AFD), the German Development Bank (KfW). These institutions provide long‑term loans, concessional funding, and technical assistance that supplement the limited capacity of domestic commercial banks. The Asian Development Bank (ADB) and the World Bank are particularly active, focusing on energy transition, infrastructure, and climate resilience projects, while VDB channels State‑backed funding into national development projects.

Export credit agencies (ECAs) also play an important role in project financing. They provide subsidised financing and guarantees that enhance bankability and attract commercial lenders into syndicated facilities. In Vietnam, most beneficiaries of ECA support are State‑owned enterprises developing large‑scale public projects (e.g., the first LNG‑to‑power project in Vietnam – the Nhon Trach 3 and 4 Project, in which PV Power (a subsidiary of PetroVietnam) obtained long‑term funding from a combination of ECA lenders and a local bank). However, we have also encountered an ECA‑supported financing for the private sector, namely the USD 950 million facility granted to VinFast Trading and Production Limited Liability Company (VinFast) for the development of its automotive and motorcycle manufacturing complex, which was guaranteed by Euler Hermes and the German Export Credit Agency.

With respect to the project development, insurance obligations are not merely contractual but are grounded in statutory requirements under the Law on Insurance Business and sector-specific regulations.

Mandatory insurance is conceived as an instrument to safeguard public interests, the environment, and social safety. Mandatory coverage typically includes construction all‑risk insurance covering owner’s loss or damage to works during the construction phase, and professional liability insurance for construction consultants.

Specific industries impose additional compulsory insurance obligations. For example, the oil and gas sector mandates liability insurance for risks associated with petroleum operations, environmental liability, third‑party liability, personal accident insurance, and other coverage consistent with international petroleum industry standards.

Other additional customary coverage (e.g., property damage, business interruption, political risk) is also obtained during project development and operation to satisfy lender requirements to ensure that lender’s security interests are protected against unforeseen events.

Foreign and local creditors may be named as beneficiaries under insurance policies if designated by the insured party. This is a key mechanism in project finance, as it allows lenders to step into the insured’s position and receive proceeds directly in the event of a claim. Assignment of insurance proceeds to lenders is a common condition precedent in financing agreements.

Foreign-invested companies can obtain insurance from qualified offshore insurers who satisfy the following key conditions:

• Meeting minimum financial capability and credit rating (e.g., at least “BBB” by S&P or Fitch, “B++” by A.M.Best, or “Baa1” by Moody’s);
• Maintaining minimum deposit of VND 100 billion (approx. USD 3.85 million) in Vietnam;
• Being domiciled in a jurisdiction with a treaty on cross‑border insurance business with Vietnam; and
• Providing services via a licensed insurance broker in Vietnam.

Onshore borrowers may only enter into hedging arrangements (including interest rate derivative products and FX transactions) with Vietnamese credit institutions, branches of foreign banks in Vietnam (the “Licensed Credit Institutions”).

For FX transactions, including FX spot, FX forward, currency swap, and FX option transaction, are fully transacted between a Licensed Credit Institution and its domestic customers. For offshore investors, hedging through Licensed Credit Institutions in the form of FX forwards is restricted to government-guaranteed VND bonds, but not private bonds.