HM&P lawyer shared about the advantages and challenges of FDI enterprises after changing administrative boundaries

The merger of provincial administrative units, reduced from 63 to 34 provinces/cities, is one of Vietnam's historic administrative reforms, towards a lean, efficient and synchronous government apparatus. Besides the expectations of opening up new development space and attracting high-quality foreign investment inflows, many foreign direct investment (FDI) are currently facing new legal and administrative challenges arising from the merger process. In a direct interview with Ho Chi Minh City Radio and Television (HTV) on December 12, 2025, representatives of HM&P Law Firm ("HM&P") - Senior Associate Nguyen Nhat Duong shared in-depth about the current situation, difficulties and recommendations for FDI enterprises in the important transition period this.

National Highway 13 on the Binh Duong side has seen multiple sections expanded and upgraded to a modern, well-developed standard. On the HCMC side, plans for expansion have also been formulated, and local residents are expecting the project to be completed soon to ensure seamless and uninterrupted connectivity. Source: Tuoi tre News

Administrative merger affects the operation of FDI enterprises

According to Lawyer Duong, the merger of provinces/cities according to the guidelines of the Party and the Government is an important milestone in the process of institutional reform in Vietnam. The goal of rearranging administrative units is not only to streamline the state apparatus, but also aims to improve management efficiency, improve the quality of public services, develop synchronous infrastructure and create a more favorable foundation for attracting investment.  especially FDI inflows.

From the perspective of foreign investors, the restructuring of administrative boundaries is expected to contribute to reducing intermediary procedures, simplifying administration and expanding the room to attract large-scale projects. However, in the process of transformation, the new government model also poses many challenges for businesses, especially in the context that FDI investors always value a stable legal environment, consistent policies and predictable administrative procedures.

Difficulties come from differences in local policies and institutions

Before the merger, each locality in Vietnam had a separate system of investment incentives. For example:

• Ho Chi Minh City prioritizes high technology, innovation and semiconductor industry according to Resolution 98/2023/QH15;
• Binh Duong stands out with land rent exemption incentives for production and business projects;
• Ba Ria – Vung Tau focuses on attracting investment in seaports – logistics and "green" industry.

Differences in development orientations, databases and management structures between localities after the merger have caused many problems in the process of "regional linkage". Investors may face inconsistent administrative procedures, interrupted or changed preferential policies, affecting the stability of the investment environment.

Practical challenges that FDI enterprises are facing

According to Lawyer Nguyen Nhat Duong, although the process of merging administrative units brings many expectations to improve the investment environment, in the short term, many notable legal and operational problems arise for FDI enterprises. Specific challenges can be divided into two main groups:

Firstly, the challenges of institutions and preferential policies

• Lack of synchronization of policies between localities after the merger: Some investment incentive policies have been changed or terminated, making it difficult for FDI enterprises to determine the types of incentives to be enjoyed and affecting the predictability of the legal environment;
• Overlapping data systems and administrative procedures: Differences in the process of processing documents and decentralization of management between the old localities have not been consolidated synchronously, making it difficult to identify the competent agency to receive and handle procedures;
• Obligation to adjust information on many types of legal documents: Although the temporary business registration certificate does not need to update the new address, other types of licenses such as investment certificates, specialized business licenses, land use rights, etc. may still need to adjust to the new administrative boundaries.

Second, problems in actual operation

• The accounting system and electronic invoices are not synchronized: Updating the new address on the invoice makes the accounting software unrecognizable, forcing businesses to operate manually and take a long time to issue invoices;
• Interrupted tax payment transactions: The name of the new tax authority after the merger has not been updated in the banking system, making it impossible for enterprises to complete tax payment documents;
• Increase in logistics and space rental costs: Real estate prices, warehousing and transportation costs increased according to the expectations of new infrastructure, affecting the operational problems of enterprises, especially in the field of production and distribution;
• Overload or lack of a focal point for receiving documents: Some localities have not properly allocated agencies to receive administrative procedures, causing businesses to take time to determine where to submit dossiers, or encounter overload at the receiving point.

The aforementioned challenges not only affect investment costs and progress, but also impact the confidence of FDI investors in the stability and transparency of the legal environment in Vietnam during the current administrative restructuring period.

Source: Government News

Some recommendations from HM&P

In the face of major changes in administrative boundaries, FDI enterprises need to actively review all investment activities to promptly adjust to the new regulations. According to Lawyer Nguyen Nhat Duong, there are two groups of things that businesses need to pay special attention to:

• Review and update preferential policies: New investors need to accurately determine the investment incentives being applied in the area of operation and carry out procedures at the competent authority. Meanwhile, existing investors should check the preferential contents in the Investment Registration Certificate, Investment Policy Decision or similar documents to update in accordance with the new administrative unit.
• Adjusting legal documents according to new boundaries: Enterprises need to update their addresses and related information on investment licenses, sub-licenses, and land use right papers, unless there is a notice of exemption from adjustment from the authorities. At the same time,  the declaration and submission of dossiers must ensure accuracy and the right point of competence to avoid being sanctioned or prolonging the settlement time.

From an institutional perspective, Lawyer Duong said that FDI enterprises not only need to actively review legal documents and update preferential policies, but also need a stable and clear institutional framework to ensure consistency in the investment process:

• Completing and synchronizing the legal framework on investment incentives: It is necessary to unify regulations related to determining preferential areas after the merger, protecting the interests of existing investors, and at the same time allowing investors to choose the most beneficial preferential option if there are many different legal bases.

• Standardization of administrative procedures on a digital platform: The construction of a shared data system and the establishment of a nationwide interconnected electronic one-stop mechanism will help reduce intermediary procedures, shorten the time for processing documents and increase transparency in serving businesses.

The change of administrative boundaries is a major reform step, opening up long-term development opportunities for Vietnam. However, in order for those benefits to be realized, it is necessary to ensure that the transition process does not interrupt the activities of foreign investors. FDI enterprises need to proactively grasp legal changes, update information and adjust dossiers accordingly, and at the same time request the companionship of legal experts to respond promptly to new risks arising. With experience in advising FDI enterprises in Vietnam, HM&P is always ready to support businesses in reviewing policies, adjusting legal documents and developing comprehensive compliance solutions in the context of administrative boundary restructuring.

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