Vietnam Plans Police Screening for Foreign Investments, Raising Concerns Over Growth

 

Vietnam’s Ministry of Public Security has unveiled a draft decree that would require police clearance for foreign investment projects in strategic sectors, a proposal that is drawing praise from national security hawks and unease from international business groups.

A New Gatekeeper for Foreign Capital

Under the proposed regulation, investors in key industries such as telecommunications, energy, ports, and major infrastructure would need prior approval from the national police before receiving licenses from other government agencies. Officials say the goal is to protect critical infrastructure from cyberthreats, espionage, and potential sabotage.

“Global supply chains are becoming a geopolitical battlefield,” said Deputy Minister of Public Security Le Van Tuyen in a briefing to local media. “Vietnam must ensure that foreign capital does not compromise our sovereignty or expose vulnerabilities.”

The draft, released for public comment this week, would give the Ministry of Public Security wide discretion to assess whether an investment poses “national security risks,” including connections to entities already sanctioned abroad.

Business Community on Edge

Vietnam has long marketed itself as one of Asia’s most open and investor-friendly economies, attracting billions of dollars in manufacturing and high-tech projects from the United States, South Korea, Japan, and Europe. That openness has powered average GDP growth of more than 6% annually over the past decade.

Foreign chambers of commerce, however, worry that the proposed screening could slow approvals and inject uncertainty.

“The broad language and undefined timelines are red flags,” said Mary Tarnowka, executive director of the American Chamber of Commerce in Vietnam. “Investors need clear, predictable rules to plan multiyear projects. Any perception of arbitrary review could chill investment.”

The European Chamber of Commerce echoed those concerns in a written statement, urging “transparent criteria and reasonable review periods” if the policy moves forward.

National Security First

Supporters inside the government argue that Vietnam is simply catching up with global norms. Many advanced economies — including the United States, Japan, and members of the European Union — have strengthened foreign-investment screening in recent years, citing cyberespionage, critical technology theft, and infrastructure security.

“Vietnam cannot be the weakest link,” said Nguyen Khac Giang, a policy analyst at the ISEAS–Yusof Ishak Institute in Singapore. “Hanoi sees how 5G networks and energy grids have become arenas for great-power competition. It wants the legal tools to say no when something feels risky.”

The proposed law comes amid rising tensions in the South China Sea and intensifying strategic competition between Washington and Beijing. Vietnam has tried to maintain a careful diplomatic balance while deepening economic ties with both giants.

Possible Economic Ripples

Economists warn that an opaque or heavy-handed process could undermine Vietnam’s hard-won reputation as a reliable manufacturing hub, especially as companies diversify supply chains away from China.

“Vietnam is now central to the ‘China-plus-one’ strategy,” noted Deborah Elms, founder of the Asian Trade Centre in Singapore. “If approvals become unpredictable, investors may look to Indonesia, India, or Mexico instead.”

Manufacturing executives also fear delays in critical sectors such as semiconductors and renewable energy, where tight construction schedules are essential to meet global demand.

What Happens Next

The draft decree is open for public comment until the end of the year. After revisions, it will require approval by the prime minister and the National Assembly before becoming law. Officials have signaled they will consider feedback from industry groups.

“We welcome constructive input,” Deputy Minister Tuyen said, adding that the goal is to “strengthen national security while maintaining an open, competitive economy.”

For now, investors are watching closely. Vietnam’s remarkable growth story has been built on a simple promise: a stable, business-friendly environment in a strategically located nation of 100 million people.

Whether that promise holds will depend on how Hanoi balances the twin imperatives of protecting sovereignty and sustaining the flow of foreign capital.