Foreign Investors Contributing Capital to Vietnam: Distinguishing Direct and Indirect Investment and DICA/IICA Accounts
When foreign investors bring capital into Vietnam, one of the first Legal/Compliance issues to determine is whether the investment is in the form of direct or indirect investment. Correctly identifying the investment type will affect investment procedures, ownership ratios, the bank accounts used, and the methods for t
Foreign Investors Contributing Capital to Vietnam: Distinguishing Direct and Indirect Investment and DICA/IICA Accounts
When foreign investors bring capital into Vietnam, one of the first Legal/Compliance issues to determine is whether the investment is in the form of direct or indirect investment. Correctly identifying the investment type will affect investment procedures, ownership ratios, the bank accounts used, and the methods for transferring money into and out of Vietnam.
1. How do direct and indirect investments differ?
Simply put:
Direct Investment (FDI): foreign investors directly inject capital into enterprises/projects in Vietnam and participate in the formation, ownership, or operation of the enterprise.
Indirect Investment (FII): foreign investors invest through financial instruments or other forms of investment not classified as direct investment.
| Criterion | Direct Investment (FDI) | Indirect Investment (FII) |
|---|---|---|
| Nature | Direct investment in enterprises/projects | Investment through securities, capital contributions, or indirect investment forms |
| Typical example | Establishing a company in Vietnam | Purchasing shares of a Vietnamese company |
| Enterprise establishment | Yes | No |
| Direct capital contribution to enterprise | Possible | Possible in some cases but must check if it falls under DICA |
| Purchasing listed shares | Not a typical FDI case | Yes |
| Foreign currency account | DICA | Indirect investment account in VND |
| Account holder | Directly invested enterprise | Foreign investor |
2. Singaporean Investors Establishing Companies in Vietnam
This is the most easily identifiable case.
For example:
ABC Pte. Ltd. – Singapore wishes to establish ABC Vietnam Co., Ltd.
If ABC Singapore contributes capital to establish ABC Vietnam, this is:
Foreign Direct Investment (FDI).
The ownership ratio does not necessarily have to be 100%.
Case 1: Singaporean Investor owns 100%
| Investor | Ratio |
|---|---|
| ABC Singapore | 100% |
| Vietnamese Investor | 0% |
→ FDI – direct investment.
Case 2: Singaporean Investor owns 90%
| Investor | Ratio |
|---|---|
| ABC Singapore | 90% |
| Vietnamese Investor | 10% |
→ Still FDI – direct investment.
Case 3: Singaporean Investor owns 49%
| Investor | Ratio |
|---|---|
| ABC Singapore | 49% |
| Vietnamese Investor | 51% |
→ Still potentially direct investment, as the Singaporean investor directly contributes capital to establish an economic organization in Vietnam.
Therefore, it should not be understood that “below 50% = indirect investment”.
Ratios of 49%, 51%, 90%, or 100% are not the sole criteria for determining the direct or indirect nature.
4. What is a DICA account?
DICA (Direct Investment Capital Account) is a direct investment capital account used for transactions related to foreign direct investment activities.
It can be visualized as:
ABC Singapore
↓ capital contribution
DICA of the enterprise in Vietnam
↓
Vietnamese Enterprise
This account is very important for enterprises with foreign direct investment.
5. How is money transferred from Singapore to Vietnam?
Assume:
ABC Singapore establishes ABC Vietnam
Investment capital: USD 1,000,000
ABC Singapore ownership: 100%
After completing all necessary procedures and the enterprise opening the appropriate account:
ABC Singapore
↓ USD 1,000,000
DICA of ABC Vietnam
↓
ABC Vietnam uses capital for investment/business activities
Investors should not simply transfer contributed capital to a personal account or an inappropriate account and then record it as capital contribution.
Legal/Compliance needs to check:
- Is the investor consistent with the investment profile;
- Is the transferred amount consistent with the registered capital;
- Is the receiving account the correct type of account;
- Content of the transfer;
- Capital contribution deadline;
- Bank documents proving capital contribution.
6. Can money in a DICA be used to pay office rent?
Investment funds can be used for legal investment/business activities, but it is necessary to distinguish DICA from a company's regular payment account.
For example, a company has a DICA in USD but office rent must be paid in VND.
The appropriate cash flow can be understood as:
DICA
↓ foreign currency conversion
Company's VND payment account
↓
Office lessor
Therefore, it should not be understood that:
"If there is money in a DICA, all daily expenses must be paid directly from the DICA."
The use of a DICA must comply with foreign exchange management regulations and the guidelines of the bank where the account is opened.
7. What is an indirect investment account?
If a DICA is associated with direct investment, then indirect investment uses a VND indirect investment account according to current mechanisms.
For example:
A Singaporean fund wants to buy shares of a Vietnamese company listed on HOSE.
The cash flow can be visualized as:
Singaporean Investor
↓
VND indirect investment account
↓
Purchase Vietnamese shares
↓
Dividends/profits
↓
Indirect investment account
↓
Legal transfer of money abroad
According to Circular 03/2025/TT-NHNN, an indirect investment account is a Vietnamese Dong payment account of a foreign investor opened at an authorized bank to carry out revenue and expenditure transactions related to indirect investment activities.
8. Comparison of DICA and indirect investment account
| Criterion | DICA | Indirect Investment Account |
|---|---|---|
| Subject | Direct investment | Indirect investment |
| Account holder | Directly invested enterprise | Foreign investor |
| Example | Singapore establishes a Vietnamese company | Singapore buys Vietnamese shares |
| Company establishment | ✅ | ❌ |
| Direct capital contribution | ✅ | ❌ if required to use DICA |
| Purchase listed shares | ❌ | ✅ |
| Currency | Can be VND/foreign currency depending on the case | VND |
| Purpose | Transactions related to direct investment | Transactions related to indirect investment |
9. What about buying 49% of a Vietnamese company?
This is the most easily mistaken case.
For example:
ABC Singapore buys 49% of the shares of Vietnamese Company X.
One cannot simply look at the figure 49% and immediately conclude:
"49% → indirect investment."
It is necessary to determine the nature and structure of the transaction, and also check if the target company falls under the cases requiring a DICA.
Meanwhile:
ABC Singapore newly establishes Company X in Vietnam and contributes 49% of the capital.
→ This is still direct investment, as the investor directly participates in establishing an economic organization in Vietnam.
10. General Diagram
Direct Investment
Singapore
↓
Foreign Investor
↓
Establish/contribute capital to Vietnamese enterprise
↓
DICA
↓
Vietnamese Enterprise
↓
Business activities
Indirect Investment
Singapore
↓
Foreign Investor
↓
VND indirect investment account
↓
Shares / bonds / indirect investment
↓
Dividends / profits / transfer proceeds
11. Quick formula for Legal/Compliance
Establish a business → think FDI → check DICA.
Buy securities → think FII → check indirect investment account.
Buy 49% of a business → do not immediately conclude FII → must check transaction structure and DICA regulations.
And most importantly:
Do not use the 50% threshold to distinguish between direct and indirect.
Related articles
- Resolution 10-NQ/TW: Vietnam Changes FDI Attraction Strategy – What Should Investors Prepare For?
- LEGAL UPDATES | Decree 96/2026/ND-CP: Important Changes to Investment Procedures and Incentives in Vietnam
- Decree 103/2026/ND-CP: New Regulations on Outward Investment and Key Considerations
Frequently Asked Questions
What should readers know about Foreign Investors Contributing Capital to Vietnam: Distinguishing Direct and Indirect Investment and DICA/IICA Accounts?
When foreign investors bring capital into Vietnam, one of the first Legal/Compliance issues to determine is whether the investment is in the form of direct or indirect investment. Correctly identifying the investment type will affect investment procedures, ownership ratios, the bank accounts used, and the methods for t
What should readers know about Foreign Investors Contributing Capital to Vietnam: Distinguishing Direct and Indirect Investment and DICA/IICA Accounts?
When foreign investors bring capital into Vietnam, one of the first Legal/Compliance issues to determine is whether the investment is in the form of direct or indirect investment. Correctly identifying the investment type will affect investment procedures, ownership ratios, the bank accounts used, and the methods for t
What should readers know about Foreign Investors Contributing Capital to Vietnam: Distinguishing Direct and Indirect Investment and DICA/IICA Accounts?
When foreign investors bring capital into Vietnam, one of the first Legal/Compliance issues to determine is whether the investment is in the form of direct or indirect investment. Correctly identifying the investment type will affect investment procedures, ownership ratios, the bank accounts used, and the methods for t
What should readers know about Foreign Investors Contributing Capital to Vietnam: Distinguishing Direct and Indirect Investment and DICA/IICA Accounts?
When foreign investors bring capital into Vietnam, one of the first Legal/Compliance issues to determine is whether the investment is in the form of direct or indirect investment. Correctly identifying the investment type will affect investment procedures, ownership ratios, the bank accounts used, and the methods for t
What should readers know about Foreign Investors Contributing Capital to Vietnam: Distinguishing Direct and Indirect Investment and DICA/IICA Accounts?
When foreign investors bring capital into Vietnam, one of the first Legal/Compliance issues to determine is whether the investment is in the form of direct or indirect investment. Correctly identifying the investment type will affect investment procedures, ownership ratios, the bank accounts used, and the methods for t
What should readers know about Foreign Investors Contributing Capital to Vietnam: Distinguishing Direct and Indirect Investment and DICA/IICA Accounts?
When foreign investors bring capital into Vietnam, one of the first Legal/Compliance issues to determine is whether the investment is in the form of direct or indirect investment. Correctly identifying the investment type will affect investment procedures, ownership ratios, the bank accounts used, and the methods for t
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