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Yes, it is. Visa On Arrival is an authorised method for Vietnam visa applications.
We list herewith Ordinance No. 24/2000/PL-UBTVQH10 on Entry, exit and residence of foreigners in Vietnam to prove its legal basis.
"1. Vietnamese agencies and organizations, Vietnam - based foreign agencies and organizations as well as international organizations, Vietnamese citizens and foreigners lawfully residing in Vietnam may invite foreigners into Vietnam.
2. Agencies, organizations and individuals that invite foreigners into Vietnam shall have to ensure the compliance with foreigners’ entry purposes, ensure financial matters and their cooperation with the State bodies to settle arising problems for foreigners."