7 basic steps to set up a business and comply with
Vietnam laws
Vietnam’s economy is increasingly
diversified in terms of business activities and business regulations are also
constantly being improved and enhanced. Accordingly, foreign investors can
freely choose the right type of business. Therefore, the set up company in Vietnam is
always a matter of great interest to foreign investors whom find business
opportunities in Vietnam.
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The first step is to
set up a business in Vietnam
To take this step, the investor first
needs to determine the type of business to choose to establish and provide the
business name and expected information. Accordingly, the composition of the
enterprise establishment dossier will be prepared according to regulations and
submitted at the Business Registration Office, the Department of Planning and
Investment of the place where it is expected to be headquartered. After submitting
a valid application, the enterprise will be granted an enterprise registration
certificate and announced the registration contents on the National Business
Registration Portal.
The second step is to
publish the contents of business registration
After being granted an enterprise
registration certificate, an enterprise must make a public announcement on the
National Business Registration Portal.
In the third step, the
enterprise conducts stamp engraving
Enterprises can request to make a seal
from the seal making agent. Accordingly, the enterprise actively decides on the
type, quantity, form and content of the seal and is solely responsible for the
use of its legal entity seal.
Fourth step is that to
open a bank account in Vietnam
Currently, businesses can choose a bank
to open an account for their business, to open an account, the bank requires an
application form issued by the bank, a seal sample, the company’s charter, and
a certificate. Business registration and related documents are required by different
bank.
The fifth step is to
register the tax declaration form in Vietnam.
Accordingly, enterprises register for
the use of e-invoices and notify the use of e-invoices to their tax
authorities. Enterprises need to contact the invoice supplier to order the
printing of value-added invoice books and must register self-printed invoices
with tax authorities.
In the sixth step, the
enterprise needs to conduct labor registration in Vietnam. Enterprises register
with the Department of Labor, War Invalids and Social Affairs to declare the
use of labor. Within 30 days from the date of commencement of operation, the
employer must register the employer to the Labor Department (according to the
prescribed form). In addition, enterprises should note that the relationship
between the employer and the employee is regulated by the Labor Code and
specified in the labor contract.
Seventh step is to
register for social insurance in Vietnam.
Enterprises register with the Social
Insurance Agency to pay health insurance and social insurance for employees.
Employers must fill in all information according to the form provided by social
insurance, including: full name, date of birth, salary (recorded in labor
contract), number of social insurance book (for employees who have been issued
with a book), a certified copy of the company’s business registration certificate and
a copy of each labor contract.
It can be seen that setting up a
business requires businesses to carry out a lot of procedures and comply with
many different regulations of tax, banking, labor, insurance… Therefore,
besides learning about legal regulations and businesses can seek the support of
professional consulting firm in Vietnam with expertise and experience in the
field of business establishment to implement the process quickly and
effectively.
Finding the right business partner in
Vietnam is also important. We recommend doing research on the reputation of the
company and individual shareholders, corporate or individual, gathering
publicly available company information, and performing background checks on key
personnel to find potential risks in cooperation. Working with a reliable
partner can help achieve economic benefits, saving time and money in business.
ANT Lawyers, a law
firm in Vietnam could offer service to establish company in Vietnam.
We assist clients needing legal service in obtaining investment certificate,
business registration certificate, or other licensing procedures.
7 basic steps to set up a business and comply with Vietnam laws
By thuy dung
Where is least expensive cities for
working and living in Vietnam?
The price indexes has always been on top
of information list which investors look for when making investment into a new
country. Beside various information i.e. GDP, Stock market, unemployment,
producer price, interest rate, balance of trade, the investors also check the
consumer price index and income to determine the attractiveness of market
entry. There are many attractiveness factors including the low cost of living
and low level of income in comparable with other neighboring countries, for
making investment in setting up company in Vietnam for
manufacturing purpose.
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Where in Vietnam is
cheapest city to live and work?
According to statistics of 2021,
taking Hanoi as the base indicator, the top 10 localities with the most
expensive cost of living include: Hanoi (100%), Quang Ninh (99.5%), Ho Chi Minh
City (98.98%), Da Nang (96.4%), Hai Phong (95.58%), Lao Cai (94.75%), Son La
(94.58%), Lang Son (94.55%) %), Khanh Hoa (94.55%) and Dien Bien (94.41%).
How it has changed
since 2015?
The top 10 provinces and cities with the
most expensive cost of living in the country in 2015 include: Lai Chau
(100.3%), Hanoi (100%), Son La (99.27%), Lao Cai (99.02%), Dien Bien (98.85%),
Ho Chi Minh City City (97.39%), Ha Tinh (97.14%), Ha Giang (96.5%), Da Nang
(96.44%) and Binh Phuoc (96.12%).
In 2021, Hanoi’s per capita income
reaches more than 6 million VND/month. Since 2016, Hanoi has always
been in the top 3 localities with the highest income in the country.
In 2015, Da Nang ranked 9/63 with a
price equal to 96.44% compared to Hanoi. By 2017, the city “jumped” to third
place, up 6 places compared to 2015. In 2021, Da Nang’s cost of living is 96.4%
of that of Hanoi and ranked 4th in the country in terms of expensiveness. In
2021, Da Nang has per capita income of more than 5.2 million VND/month, ranking
5th out of 63 provinces and cities. Previously, 2019 was the year the city had
the highest income in the past 10 years with more than 6 million
VND/person/month.
In 2021, Ho Chi Minh City reached 98.98%
and ranked 3rd out of 63 provinces and cities in cost of
living. From 2002 to 2016, the city has always been the place
with the highest income in the country. From 2018 to present, Ho Chi Minh City
maintains the “runner-up” position (behind Binh Duong), in which, 2019 is the
year with the highest income with 6.7 million VND/person/month.
Besides the three central cities that
are constantly in the top of the most expensive localities in the country, Lao
Cai is the only mountainous province.
In 2020, Lao Cai ranked 5th in terms of
the expensive level in consumption, equal to 96.52% compared to Hanoi. Lao Cai
is the most expensive province among 14 Northern Midlands and Mountainous
Provinces (the cheapest is Phu Tho, equal to 91.07% compared to Hanoi, ranked
56th nationwide). By 2021, Lao Cai’s index drop to 94.75%, the lowest level of
the place since 2015 until now. With this index, Lao Cai ranks 6th in the
country in terms of the expensiveness of the cost of living.
In particular, although the cost of
living is quite high, the income of people in Lao Cai is not high. The average
income of people in this locality was only 1.8 million VND/person/month in 2016
and ranked 53rd in the country. In 2021, people in Lao Cai earn an average of
2.51 million VND, ranking 55th in the country.
The low level of income and least living
cost make Vietnam a favourable destination for investment. Many
labour intensive manufacturers in garment, shoes, furniture… have long chosen
Vietnam as a place for establishing company in
manufacturing. There are growing number of companies in electronics also
manufacture in Vietnam to take advantage of the comparable low wage workforce.
With highly
professional staff and great experience in foreign investment, ANT Lawyers
- law firm in Vietnam would
like to support you to establish company in Vietnam.
Where is least expensive cities for working and living in Vietnam?
By thuy dung
Investors are always interested in areas which the government incentivize for investment in Vietnam, to enjoy benefits i.e. tax reduction, tax exemption, land usage…which give them some help to grow the business in areas which are not economically potential without the help from the government when setting up a company in Vietnam.
According to the regulations on business investment in Vietnam in Decree No.118/2015/ND-CP, investment projects eligible for investment incentives are entitled to tax and land policies in their performance. Accordingly, for businesses that invest in industries or areas enjoying investment incentives, there will be many advantages related to tax and using land when performing business.
According to the provisions of Appendix I, Decree No.118/2015/ND-CP, the fields are preferentially invested in many fields such as science and technology, electronics, mechanics, material production, and information technology, agriculture, environmental protection, infrastructure construction, education, culture, sports, health activities of People’s Credit Funds and microfinance institutions are specified in Appendix I Decree no. 118/2015/ND-CP.
However, with the continuous development of the economy, along with the development projects of many small and medium-sized enterprises, besides start-up projects, it is more suitable to the market economy and start-up situation of many investors, on March 30th 2020, the Government has issued Decree No.37/2020/ND-CP supplementing the list of preferential investment industries which will take effect from May 15th, 2020.
According to the provisions of Decree No. 37/2020/ND-CP, for business investment activities in accordance with the Law on Support for Small and Medium Enterprises with the following business lines which will be added to the list of industries to enjoy incentives for investment in Vietnam, including business investment in the product distribution chain of small and medium-sized enterprises, business investment in incubation facilities for small and medium-sized enterprises, business investment in technical facilities supporting small and medium-sized businesses, investing in a common working area for small and medium-sized start-ups.
The investors who invest in Vietnam in the business lines above in supporting industries for small and medium-sized enterprises from May 15, 2020, will be entitled to specific tax and land incentives specifically as required by law. Domestic and foreign investors could utilize the opportunity to make investment to enjoy the incentives in Vietnam when conducting businesses.
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Which Areas Are Incentivized For Investment in Vietnam Under Decree No. 37/2020
By thuy dung
With the attention of many investors, Lien Chieu port project promises to attract large capital to build and form a large-scale logistics port in the Central of Vietnam and also attractive foreign investors to invest in Vietnam.
The Lien Chieu port project is being implemented by the Government and Da Nang City urged to speed up the implementation process. According to expert, the construction of Lien Chieu port could not be delayed any longer. Because Tien Sa port has been over 118 years, the life cycle is old and does not meet the demand for a large logistics port in the region.
Lien Chieu Port will have an area of about 220 hectares, of which 70% is for warehousing, the capacity of 3 phases is up to 2 million TEUs, general cargo is about 5 million tons. Lien Chieu Port serves not only cargo for Da Nang or neighboring provinces, but also the East-West economic corridor.
The total estimated investment is 3,426 billion VND for the shared infrastructure for Lien Chieu port project, in which the central budget accounts for 87.4% from the contingency of the Medium-term Plan for the period 2016 – 2020 and Medium-term Plan source for the period 2021 – 2025; the budget of Da Nang City is expected to contribute 12.6%; Da Nang has also arranged 30 billion VND capital plan for 2020.
Meanwhile, the call for investment in harbors, container yards, general warehouses, logistics areas, logistics facilities behind the port… is also receiving the attention of many investors. Recently, the Japan International Cooperation Agency (JICA) has proposed a grant of 50 million Yen (equivalent to 11 billion VND) to survey and collect Lien Chieu port development research data.
The research results are the basis for JICA to continue reviewing and supporting the Pre-Feasibility Study Report of Lien Chieu port project. Currently, many domestic and international investors are also interested in participating in the construction of Lien Chieu port such as T&T Group, Tan Cang Saigon, Boskalis Inter A.V Company (Netherlands) and Japanese investors.
Component 2 of Lien Chieu port project will be invested in the form of mobilizing and calling businesses to invest with appropriate sizes in planning and in each development stage. After completing the procedure, Da Nang city will organize bidding, open auction…
Lien Chieu Port Project Attractive to Investors
By thuy dung
On May 15, 2020, the Minister of Planning and Investment met Ambassador Mr. Yamada Takio (Japan) on the occasion of starting his working term in Vietnam. The parties spent time welcoming and sharing a number of problems that need to be resolved to promote investment activities between the two countries in the context of the Covid-19 epidemic, including promoting public investment, promoting investment in the private sector, attracting investors to set up company, factory and implement investment into export processing zones in Vietnam.
The Ambassador said there are currently more than a thousand Japanese experts who wish to have work permit, investment visa, temporary residence card to go to Vietnam to restore business production. In addition, Japanese small and medium enterprises are very interested in the Vietnam market. Japan Government has provided 23.5 billion yen (USD 220 million) to encourage domestic enterprises to transfer production activities to Southeast Asian countries, including Vietnam, which is an opportunity for Vietnam to attract FDI to register investment project in setting up factory in Vietnam.
Following the the investment shift after the US-China Trade war (2019) and the Covid-19 epidemic, many Japanese investors intend to withdraw from China to invest in Vietnam to set up factory, and company and form a new supply chain. Accordingly, Vietnam will have a plan to create a working group to attract Japanese enterprises to invest in the fields and provinces that Vietnam wishes to contribute more to the socio-economic development of Vietnam. In 2019, Japan is the fourth-largest FDI country in Vietnam, the second largest investment partner in Vietnam implementing the project, with a total investment of USD 59.3 billion.
With its advantages and experience, Japanese investors are investing in Vietnam in the fields of professional science, technology, information technology, wholesale, retail, engineering and real estate. These industries are the advantages of Japanese investors when investing in Vietnam, which it not only brings benefits to investors but also helps Vietnam to learn management experience and operation from Japan, helping Vietnam to apply to develop the domestic economy.
The Vietnamese representative emphasized the importance to attract Japanese enterprises to invest smoothly and successfully in Vietnam, including large and small and medium-sized enterprises to contribute more to the socio-economic development of Vietnam. At the same time, the Ministry of Planning and Investment continued to work closely with the Embassy as well as with the Ambassador’s individual to bring closer cooperation between the two countries.
Cooperation between Vietnam and Japan After the Covid Epidemic
By thuy dung
On April 14, 2020, the Prime Minister issued Directive 18/2020/CT-TTg on Vietnam’s socio-economic development plan for the period of 2021-2025. The Directive summarizes the results achieved during period of 2016-2020 and sets development goals for the period of 2021-2025.
The Directive identifies the results achieved in the period of 2016-2020, along with focusing on analyzing the quality of economic growth, implementing restructuring of each industry, each field and development competitiveness of each region.
In addition, the goal in the period of 2021-2025 is to improve labor productivity, competitiveness, improve business environment, support and develop businesses, create new business environment applying information technology, increase production capacity. Accordingly, set a common goal of achieving the country’s average economic growth rate from 5 years from 2021 to 2025 by about 7%, but agencies and localities depending on the actual situation to make their appropriate growth. In addition, the Directive also clearly stipulates the target of average GDP in this period is 3,200-3,500 USD/person, in which the proportion of industry and services in GDP by the end of the period reaches 85%, the rate of trained labour reaches 65-70%.
Regarding the direction of social development, the Directive plans to complete a number of projects such as the project “Strengthening the capacity of arbitration in resolving trade and investment disputes in service of international integration”, Project “Promoting cashless payment for the period 2016-2020”, Project on “Developing Vietnam’s environmental industry to 2025”, “Project on domestic coordination mechanisms to solve problems environment in Free Trade Agreements (FTA)”.
In addition, the Directive also sets out the goal of promoting the construction of synchronous infrastructure such as transportation, seaports, energy, information and communication technology, urban areas, agriculture, etc. develop urban areas in line with the trend of smart, green, environmentally friendly urban centers, adapting to climate change, focusing on improving urban quality.
With the goals achieved in the period of 2016-2020 and the goals were set in the period of 2021-2025, Vietnam hopes to achieve the socio-economic benefits set out in order to further develop the country, bringing development life to all aspects and bringing Vietnam to compete with other countries in the world.
Socio-economic development goals of Vietnam in the period of 2021-2025
By thuy dung
Within the framework of CPTPP, Vietnam and Canada organized a “Business in Vietnam” Workshop organized by the City of Toronto and the Canada-Vietnam Trade Council in Toronto, Canada to promote investors to invest in Vietnam and set up company and factory.
Through the workshop, the participants discussed the topics “Looking back on a year of implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and opportunities in Vietnam” and “sharing business experience in Vietnam”. The parties assessed the investment opportunities in the field of aviation, information technology, telecommunications, agricultural products and services in Vietnam by Canadian investors.
The Export Development Canada Agency (EDC) representative affirmed that with the favorable demographics and the growing in middle class, the Vietnam economy brings many opportunities for Canadian businesses. Besides, before entering the market in Vietnam, enterprises should prepare to invest time and resources to build sustainable relationships in the local and recommend that Canadian exporters should choose a local representative to import/distribute their products.
The agencies like EDC and TCS (trade support agencies, under the Department of Global Affairs, which has than 1,000 Canadian trade experts) could play an important role in assisting businesses with go to the new market during the term of business. In 2019, Vietnam continues to be Canada’s largest trading partner in Southeast Asia, with two-way trade turnover estimated at CAD 7.8 billion (USD 5.98 billion).
Participants mentioned the potential of cooperation between Vietnam and Canada in the field of finance, in the context of the value of financial services import into Vietnam reaching 523 million USD in 2018. Vietnam’s investment in transport infrastructure – an area where Canada has many strengths – is expected to increase to USD 11 billion by 2020 and USD 17 billion by 2025. This is considered to be “expected land” that businesses of the two countries should promote exploitation.
Representative of Canada-Vietnam Trade Council opined that this seminar attracted the attention from the Canadian Government, the provincial Government of Ontario and especially Canadian businesses because they received many opportunities in Vietnam, a country with a stable economy and strong growth. As part of a cooperation agreement between Toronto and Ho Chi Minh City, the Canada-Vietnam Trade Council in collaboration with the Toronto city is planning a business trip to explore the market of Ho Chi Minh City to facilitate connecting Toronto businesses to access Vietnam market, set up company in Vietnam.
The participants expressed their desire to further promote investment opportunities from both countries. Thereby, it is hoped that in 2020, there will be more Canadian investors investing in Vietnam, which will help the parties improve the effectiveness of long-term cooperation in the future.
Promote Vietnam-Canada investment under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
By thuy dung
In Vietnam laws, there are a number of investment methods such as establishing economic organizations; investment in the form of capital contribution, purchase of shares or capital contributions in business organizations; Business Cooperation Contract or Public Private Partnership. Investment in establishing economic organizations, capital contribution, purchase of share or capital contributions are most common in our opinion.
Investment in establishing economic organizations
For investment in the establishment of economic organization, an investor invests capital to carry out the establishment of an enterprise, cooperative, cooperative union or other organization to carry out business investment activities. This is a way of direct investment in which investors directly invest capital and directly participate in management activities.
Forms of establishment of economic organizations include two types: Establishing company with 100% foreign capital; or establishing joint ventures between domestic investors or the Government of Vietnam with foreign investors.
Before establishing an economic organization, the foreign investor must have an investment project and carry out the procedures for the grant of an investment registration certificate. Besides, the conditions for the charter capital ownership and the conditions prescribed by international treaties to which Vietnam is a member need to be met. Regarding charter capital, foreign investors are allowed to hold unlimited ownership in economic organizations, except for cases where the investors operate in fields related to listed companies, public companies, securities trading organizations and securities investment funds in accordance with the law on securities; State owned enterprises equitized or transformed under other forms. In addition, investors must check international treaties to which Vietnam is a signatory.
It should be noted that depending on the amount of investment capital of a foreign investor, the legal status of an economic organization after its establishment will be determined differently. If the foreign investor holds 51% or more of charter capital, the economic organization after its establishment will have to carry out the procedures applicable to foreign investors. Conversely, if foreign investors hold less than 51% of the charter capital, the regulations applicable to economic organizations after their establishment are applied as domestic investors.
Investment in the form of capital contribution, purchase of shares or capital contributions in business organizations
Foreign investors who wish to access the Vietnamese market but do not want to establish an economic organization can contribute capital, buy shares or buy capital contributions to business organizations operating in Vietnam.
With this form, the investor will become a member or shareholder of that economic organization. It requires investors to meet a conditions similar to the form of establishment of economic organizations. Having said that, it must meet the conditions for the charter capital ownership and the conditions prescribed by international treaties to which Vietnam is a member. Depending on each specific case, the investor must follow the procedures for registration of capital contribution, purchase of shares or capital contribution in an economic organization and send to the competent agency for recognition of legal investment.
Understanding the regulations are important for investors to enter the Vietnam market and consulting with Vietnam lawyers would help investors make informed decision for their business plan in Vietnam.
What are common investment methods in Vietnam?
By thuy dung
Foreigners are encouraged to make investment in Vietnam through direct investment by Setting up company in Vietnam.
However there are restrictions in some cases in regard to investment capital, investment area, special licenses required. The investor is suggested to consult with a law firm in Vietnam for advice and service offering.
Before setting up business in Vietnam, ask yourself the following questions:
1. Which business should I invest in Vietnam?
There are non-conditional investment areas and conditional investment areas. Establishing company in the non-conditional investment areas are more simple than in conditional investment areas. Investment in IT services, manufacturing, management consulting, business promotion are a few samples of non-conditional investment areas. Example of conditional investment areas are real estate, trading, travel agencies, freight forwarding…which are more complicated with investment conditions. Investment conditions might also be changed over the time depending on the WTO commitments which Vietnam enters.
2. What should I name the business in Vietnam?
The company in Vietnam has to have Vietnamese name, and English name. The company could also have abbreviated name. The name of the company in Vietnam indicates the structure of the company, the business lines, and the name that differentiate against other businesses. For instance, the company could be named Alpha consulting limited liability company.
3. Where should I register the address of the business in Vietnam?
Not every address could be used to register a company. The address has to be an address of a house with leasing agreement or office building which owner has license to operate as office building.
4. What is the legal structure of the company?
Depending on the number of investor contributing capital, company could be set-up as one member limited liability company or two ore more member limited liability company or joint stocks company.
5. How much capital is required to set-up a company in Vietnam?
The investment amount depends on the business plan and is subject to the approval of the provincial Department of Planning and Investment evaluating application dossier. In some business areas like real estate, banking and finance, minimum capital is required. In general for non-conditional investment area, the law does not specify the minimum capital to establish a company in Vietnam however the State agencies that evaluate investment plan could reject the investment project which are not feasible. Bank statement in foreign banks could be used to prove sufficient fund of investment capital.
6. Whom will be legal representative and work permit in Vietnam?
The investor will need to appoint the legal representative in Vietnam to oversee the business performance and take legal responsibility in Vietnam. If the legal representative is an expatriate, whom is a capital contributing member or owner of a limited liability company or a member of the Board of Management of a shareholding company which is registered to operate in Vietnam, he or she will be exempted from work permit in Vietnam. Otherwise, he or she will need to have a work permit to work in Vietnam legally. The work permit holder would then apply for temporary residence card to live in Vietnam as long as the work permit allows.
7. How long does it take to set-up a company in Vietnam?
It depends on what type, scale, and whether or not conditions are required. For a simple minimum capital without conditions to set-up, it would take 30 working days. For setting up company in conditional investment areas i.e. trading company in Vietnam, time would be lengthen due to the involvement of a number of State agencies approving the investment project and it would take 60 working days. For setting up company in other investments in areas requiring conditions to meet, time might be taken depending on the type of conditions and the government agencies evaluating the conditions of investment.
8. Whom will be granting the investment license in Vietnam?
For most of the investment projects, the provincial state agencies with the approval of the Department of Planning and Investment (DPI) will be granting the Investment Certificate in Vietnam. However, depending on the type, scale, and whether or not conditions are required, other Vietnam State agencies might be involved. For the case of trading company, ministry of trade and commerce, ministry of finance, provincial people’s committee will be reviewing the investment application dossier as well.
9. What are the tax liability in Vietnam?
Major taxes in Vietnam are corporate income tax, import and export tax, value added tax, and personal income tax in Vietnam. In some special areas, there are other taxes. The corporate income tax is currently at 22% and will reduce to 20% beginning 2016. Export is mostly encouraged as such the export tax is 0 however there are special cases when export tax is larger than 0. Import tax varies according to tariff. Value added tax is mostly at 10% however in some cases, VAT could be 5% or 0%. Personal Income tax varies according to income level and is applicable from VND 9,000,000 above.
10. What are mandatory reports submissions requirement in Vietnam?
Companies are required to keep accounting books, prepare and submit tax reports on monthly, quarterly and annually. Foreign companies are also required to have financial audit taken before the financial year end. The financial year in Vietnam is from January to December and the deadline to submit financial report is March 30th for the previous year. Other reports are required to be submitted at other State agencies.
10 Questions to Ask Before Set-up Company in Vietnam
By thuy dung
Foreign entity is allowed to set up branch office in Vietnam to conduct business activities according to the law.
The branch of a foreign business entity in Vietnam (referred as “The Branch”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to enter into contracts in Vietnam and conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.
The Branch will need to apply and obtain the establishment license; and have a seal bearing the name of the Branch.
The Branch is permitted to conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.
It should be noted that the liability of the Branch is the liability of the foreign entity. The business activity of the Branch has to be consistent with the business activity of the foreign entity. The Branch has to has office address.
Therefore the investor should consider its investment strategy when setting up its Branch in Vietnam.
How ANT Lawyers Could Help Your Business?
Please click here to learn more about ANT Lawyers Foreign Investment Practice or contact our Law firms in Vietnam for advice via email ant@antlawyers.vn or call our office at +84 28 730 86 529
Set-up Branch Office in Vietnam
By thuy dung
According to Vietnam laws, any transaction relating to direct or indirect investment operation of foreigner must be implemented by an investment capital account opened in a licensed bank which is commercial bank or branch of foreign bank permitted to trade and supply foreign exchange service according to legal provisions. It is imperative that, the foreign exchange control in Vietnam is strictly regulated, it is suggested the investors whom invest in Vietnam to consult with banking lawyers in Vietnam to receive legal advice on transaction in the activities of investment through direct investment or M&A transactions.
In particular, the regulations on investment capital account of foreign investor are set forth in Circular No. 05/2014/TT-NHNN dated on March 12th, 2014 of the State Bank of Vietnam guiding the opening and use of indirectly- invested capital accounts for implementation of foreign indirect investment activities in Vietnam and Circular No. 19/2014/TT-NHNN dated on August 11th, 2014 of the State Bank of Vietnam guiding the foreign exchange management for the foreign direct investment in Vietnam.
What is Foreign Direct Investment?
Foreign direct investment in Vietnam means the transfer of capital for investment and participation in the management of investment activities in Vietnam by foreign investors.
The subject matters governed by Circular No. 19/2014/TT-NHNN include residents which are enterprises receiving the direct foreign investment; non-residents involved in the business cooperation agreement in Vietnam; non-residents who are foreign investors of FDI enterprises; organizations, individuals regarding the foreign direct investment in Vietnam.
The invested capital contribution of foreign and Vietnamese investors into an FDI enterprise must be performed in the form of money transfer into the direct investment accounts. In order to perform the foreign direct investment activities in Vietnam, FDI enterprise and foreigner participating in business cooperation contract are entitled to open their foreign currency and Vietnamese dong account of direct investment at a licensed bank.
What is Foreign Indirect Investment?
Foreign indirect investment in Vietnam means the investment into Vietnam by foreign investors through purchase and sale of securities, other valuable papers, contribution of capital and purchase of shares, and through securities investment funds, other intermediary financial institutions in accordance with the law of Vietnam but without direct participation in management of investment activities.
The subject matters governed by Circular 05/2014/TT-NHNN include foreign investors who are nonresidents conducting indirect investment activities in Vietnam; and organizations and individuals who are related to indirect investment activities in Vietnam. It means that this Circular does not govern foreign investors being residents who are foreign organizations and individuals. These subject mattes conduct indirect investment activities in Vietnam according to prevailing legal provisions on securities and other relevant normative legal documents.
All indirect investment activities of foreign investors in Vietnam must be conducted in Vietnam Dong. Transactions relating to foreign indirect investment activities must be conducted through an indirectly-invested capital account opened at a licensed bank.
How ANT Lawyers Could Help Your Business?
Please click here to learn more about ANT Lawyers Foreign Investment Practice or contact our Law firms in Vietnam for advice via email ant@antlawyers.vn or call our office at +84 28 730 86 529
Investment Capital Account of Foreign Investors in Vietnam
By thuy dung
When setting up a trading company in Vietnam, beside other conditions, the foreign investors have to prove experience in trading area. Areas such as banking, financial services, real estate, security services will require minimum investment. Foreign investment lawyers should be consulted for advice on investment licensing matters.
In general, foreign investors making investment in Vietnam are encouraged. However, there are areas although not prohibited, but are “conditional” areas including the project could affect national defense, security, social order and safety; finance and banking; field that affect public health; culture, information, press, publishing; entertainment services; the real estate business; prospecting, exploring and exploiting of natural resources, ecological projects and the environment; education and training, and professional services i.e. legal, accounting, tax…
The conditions required by Vietnam laws on investment toward the foreign investors are business requirements that the investor must meet after the incorporation of the company, not as a condition for receiving the investment license. However, in the case of a foreign investor applies for an investment license for a new project, the law requires that all business conditions must be satisfied before the grant of the investment license.
Conditions that the foreign investors have to meet when investing in conditional business could be related to the forms of the investment, the nationality of foreign investors, the professional expertise of the investor, the scale of investment projects, type of goods and services, time implementation of investment projects.
How ANT Lawyers Could Help Your Business?
Please click here to learn more about ANT Lawyers Foreign Investment Practice or contact our Law firms in Vietnam for advice via email ant@antlawyers.vn or call our office at +84 28 730 86 529
Conditional Investment Sectors and Investment Conditions in Vietnam
By thuy dung
Investment projects in Vietnam could be evaluated and approved for business setting-up at top level of the government, at ministerial levels or at the provincial levels.
The licensing authorities for business setting up in Vietnam has been divided to distribute workloads at different state agencies with aim to speed up the process and attract more quality investment projects in Vietnam.
In practice, the process for establishing companies or executing investment projects in Vietnam would take from one month for simple project, three to six month for areas categorized under conditional investment areas, requiring sub-licenses, or additional time for more complicated projects. At the provincial levels, there might be inconsistency between cities and provinces due to different interpretation of laws. For investment project with difficulty to manage, the provincial levels would need to consult with technical department of central government agencies, as such the time taken to process the investment certificate would be lengthen.
Understanding the mechanism and the work division of Vietnam authorities that evaluate and approve business licensing at different government agencies would help foreign investors to smoothen the process and improve their experience in Vietnam.
It is notable that, the government level will be focusing on significant projects, in special area at large investment capital with impact on social economic situations. Most of the investment licensing procedures will be carried out at the provincial levels where the investment projects exist.
The following will point out directions for foreigners to approach respective agencies based on the particular area of interests, scale, and nature of the investment. However, to avoid delay and increase effectiveness, it is advisable that the foreign clients would consult with Vietnam law firms to help advise and represent them in preparing and executing the investment in Vietnam.
I. Projects evaluated and granted investment licensing at government level
Depending on the business nature, industry sector, investment scale, and investment policy, the Vietnam Prime Minister, on behalf of the government will evaluate and approve investment licensing for setting up business.
1. The investment project in Vietnam the government will evaluate and approve regardless of funding, the scale of investment are in the following areas:
a) Development and commercialization of airports and air transport;
b) Development and commercialization of national port;
c) Exploration, mining and processing of oil and gas; exploration and exploitation of minerals;
d) Radio, television;
e) Casino;
f) Production of cigarettes;
g) Establishment of university level educational institute;
h) Establishment of industrial zones, export processing zones, high-tech zones and economic zones.
2. Although investment projects which do not fall under the cases listed above, but the government of Vietnam also evaluates and approves investment project with investment capital of VND 1,500 billion (around USD 75 mil) upwards regardless of funding and in the following areas:
a) Sales of electricity, mineral processing, metallurgical;
b) Construction of railway infrastructure, roads, inland waterways;
c) Production, sales of wine and beer.
3. Further, the government of Vietnam also evaluates and approve investment projects with foreign investment in the following areas:
a) Maritime transport;
b) Establishment of networks and provision of postal services, courier, telecommunication and internet; network setup and signal transmission;
c) Printing and distribution of newspapers; publication;
d) Establishment of independent scientific research.
4. Where the investment projects specified in the above cases are in the plan which the Prime Minister has approved or authorized other agencies to approve, and that the investment projects meet the conditions prescribed by law and treaties to which Vietnam Nam is a member, the agency granted investment certificates perform the procedure for issuance of investment certificates is not required to submit to the Prime Minister to decide on the investment policy.
5. Where the investment projects specified in the above case is not in the plan which has been approved by the Vietnam Prime Minister or authorized other agency to approve, and that the projects do not meet the conditions for market access provisions in international treaties which Vietnam is a member, the agency granted investment certificates shall consult with other of relevant industries and submit to the Prime Minister for investment policy decision.
II. Projects evaluated and granted investment licensing at ministerial level
1. The Vietnam Ministry of Planning and Investment shall evaluate and approve licensing for investment projects in the form of BOT, BTO, BT.
2. Other ministries will be evaluating and granting license for investment in some sectors.
a.Vietnam Ministry of Commerce and Industry shall evaluate and approve licensing for investment project in oil and gas sector;
b. Vietnam State Bank shall grant licensing for financial institutions;
c. Vietnam Ministry of Finance shall be responsible for issuing license for investment project of insurance business.
III. Projects evaluated and granted investment licensing at provincial levels
1. Department of Planning and Investment shall be the single point of contact that receive the application and evaluate the investment plan of the foreign investors wishing to establish business in Vietnam for projects
a. Outside of Industrial Zone, Industrial Processing Zone;
b. Infrastructure development project for Industrial Zone, Industrial Processing Zone which management board of industrial zone and industrial processing zone are not yet established.
2. The management board of Industrial Zone, and Industrial Processing Zone:
a. For investment projects within the Industrial Zone, and Industrial Processing Zone which are not under the authority of the Prime Minister;
b. Infrastructure development project to for industrial zone and industrial processing zone.
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Which Authority Approves Business Setting up in Vietnam?
By thuy dung
On July 19th,2019, Da Nang City People’s Committee held a “Singapore-Danang Investment Connection Seminar”, which leaders of the city’s departments and sectors met many major companies from Singapore under the Singapore Business Federation and Singapore Business Development Agency’s arrangement with purpose of seeking investment opportunities in Da Nang taking advantage of the dynamic city which investors from Singapore could set up company and make direct investment.
Singaporean businesses appreciated the model of building and developing the smart city of Da Nang and the achievements in socio-economic development of Da Nang in recent years, including digitizing government and protecting the environment in Da Nang.
Singapore is well-known as a country that has developed strongly in socio-economic achievements, has plans for environmental protection, pollution treatment, high-tech development and tourism. These are the business lines that Danang needs to develop for the purpose of building the city in the future.
Currently, many Singaporean businesses have chosen Vietnam as an investment destination and are willing to cooperate with Danang in many business lines such as banking finance, education, information technology, etc. The leaders of Da Nang always appreciate Singapore’s experience of building smart country, innovation and start-up businesses; at the same time, they emphasized that Singapore is a potential market that Da Nang city focuses on investment promotion in the coming time.
Singapore is the 4th country in total of FDI investors in Vietnam, the total investment capital in the first 6 months of 2019 from Singapore is 2.119 million USD and is the 3rd largest country in terms of FDI in Vietnam, with a total investment capital is 49,161 million USD. Investors invested in many business lines such as manufacturing technology, wholesale, retail, information technology,
Da Nang wishes to attract many Singaporean investors who will choose the city as the place to invest in the future. The leader of the city always strives to create the best conditions for Singaporean investors to invest in the city, in order to achieve socio-economic development in the future.
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Da Nang to Cooperate with Singapore in Foreign Direct Investment
By thuy dung
Business owners being organizations and individuals responsible for launching cosmetic products on the market are only allowed to put into circulation when the competent state agencies approve and the business owners must bear full responsibility for the safety, efficiency and product quality. Competent state agencies will conduct post-trade test when the products are being sold to the market.
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Cosmetics are substances or preparations used in contact with the external parts of the human body (skin, hair, nails, lips and external genital organs) or the teeth and oral mucosa with the main purpose is to clean, perfume, change appearances, form, adjust body odor, or protect body or to keep the body in good condition. The following will provide conditions and list of cosmetic types subject to mandatory annoucement.
1. Conditions to apply:
– Organizations and individuals responsible for launching the product into circulation on the market must have function to doing cosmetics business in Vietnam
– The announcement of the features of cosmetic products (intended use of the product) must satisfy the ASEAN guidelines on disclosure features of cosmetic products
2. Kinds of cosmetic that have to announce the distribution of cosmetics:
Kinds of cosmetic products must disclose the circulation of cosmetic products:
– Cream, emulsion, lotion, gel and oil for skin (hand, face, feet)
– Face mask (with the exception of chemistry peeling products)
– Tinted (liquid, paste, powder)
– Makeup powder, after shower powder, toilet powder
– Bath soap, deodorant soap
– Perfume, toilet perfume
– Products for bath or shower (salt, foam, oil, gel)
– Hair removal products
– Deodorants and anti-perspirants
– Shaving products (cream, foam, lotion)
– The makeup and makeup remover products for face and eyes
– Products used for lips
– Products for take caring teeth and mouth
– Products for nail care and adorn
– The products used to clean the outside
– Sun cream products
– Products for tanning without sun
– Skin whitening products
– Anti-wrinkle products
– Other products
Some products which are not classified as cosmetics:
Anti-mosquito products, air freshener, fabric softener, bleach, toilet, oxygen liquid, antiseptic alcohol 700, alcohol 900, denture cleaning products that are not exposed to the oral cavity, fake eyelashes, liquids to take care of eyes/nose/ears, against nasal congestion product, anti-snoring products, vaginal lubrication gel, ultrasound gel, the product in contact with the genital, rectal enema, anesthesia , reduce/control the swelling/edema, dermatitis treatment, allergy relief, anti-fungal, anti-virus products, stimulate hair/eyelash growth, the product removed/reduced fat/ reduced body size, weight loss products, prevent/stop hair growth products, stop sweating process, permanent tattoo ink, remove keloid scars reduction products, wound cleaning products.
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Mandatory Announcement of Cosmetic Product
By thuy dung
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