4 note for Foreign Investors When Establishing a Company in Viet Nam
Company in Viet Nam: In recent years, business and investment enviroment in Viet Nam has been increasingly strong and vibrant. Therefore, to implement investment incentives and attraction policies, Vietnam’s legal frameworks governing investment regulation for foreign investors has also been loosened, resulting in creating favorable conditions for foreign investors to invest and do business in Vietnam market. However, when carrying out investment projects, forgein investors should pay attention the following:
1. General statue of foreign investors
- Investment method:
Vietnamese laws allow foreign investors to implement investment projects in the following forms:
- Investment in establishment of a business organization;
- Investment in the form of capital contribution, purchase of shares/stakes in a business organization;
- Investment in the form of a business cooperation contract.
In addition, foreign investors can make indirect investment through buying securities or through finacial intermediaries.
- Conditions for investment:
Although Vietnam’s investment incentive policies have been advanced, meeting certain investment conditions for foreign investors is still difficult beginning. Depending on the field of investment, foreign investors need to accommodate the following conditions:
- Ratio of the foreign investor’s charter capital in a business organization;
- Investment method;
- Scope of investment;
- Vietnamese partners participating in the investment.
2. Investment project’s location
In some cases, the land and space which foreign investors leases is not in line with the purpose of using land and houses in accordance with the laws on land and housing, resulting in the change of land use purpose or find a suitable location, but this problem is quite complex, time-consuming and costly.
A typical provision that foreign investors should note is that Vietnamese law does not permit enterprises to locate head offices, representative offices, branches or business locations in apartments used for residential purposes.
Therefore, foreign investors need to pay special attention when establishing a business in Vietnam about choosing the investment project’s location to avoid the hassle and to shorten the time.
3. Business lines
Foreign investors must fullfill the following requirements of business lines:
- Business lines must not be on the list of business lines banned from investment in Vietnam prescribed in Article 6 of the 2014 Law on Investment.
- Foreign investors must abide by the investment conditions issued in Vietnam’s Schedule of Commitments in the WTO (if foreign investors in the territories which are WTO members) or international agreements Vietnam joins with the country which the investor holds nationality.
- Foreign investors must meet the conditions for business lines in the list of conditional business lines in accordance with Appendix 4 of the 2014 Law on Investment.
4. Procedures for investment registration
In order to conduct investment in Vietnam, foreign investors need to perform the following 3 steps:
Step 1: Carry out the procedure for issuance investment registration certificate.
Step 2: Carry out the procedure for issuance enterprise registration certificate / the procedure for capital contribution, purchase of shares/stakes to business organizations.
Step 3: Implement procedures to grant child licenses (for the list of conditional business lines)
Foreign investors should note that the procedure of enterprise establishment registration for domestic enterprises only takes about 04 working days but it may take foreign investors up to 30 working days to complete the procedure and start to conduct investment activities.
- Investment Law 2014
- Decree 118/2015/NĐ-CP on guidelines for some articles of the law on investment
- Interprise Law 2014
- Housing Law 2014