Procedures for establishing foreign-invested enterprises in Vietnam. According to data published by the Ministry of Planning and Investment, from the beginning of the year to January 20, 2023, the total FDI capital registered in Vietnam (including newly registered capital, adjusted registered capital and price value of capital contribution and share purchase by foreign investors) reached 1.69 billion USD, down 19.8% over the same period last year. Although the total FDI capital registered in Vietnam in January 2023 decreased by nearly 20% compared to the same period in 2022, there is a positive point that in January 2023, there were 153 newly granted projects, with a total capital Registered capital reached 1.2 billion USD, an increase of 48.5% in the number of projects and 3.1 times more in registered capital compared to the same period last year. From the numbers, it shows that Vietnam is still an ideal investment environment for foreign investors and FDI capital flows. In order to support foreign investors in carrying out procedures for establishing foreign-invested companies in Vietnam, Quoc Bao Law Company guides on what are the procedures for establishing foreign-invested companies? Are you a foreign investor or a partner looking to learn the procedures for establishing a foreign-invested company? Are you wanting to invest in Vietnam but don’t know where to start? Are you wondering how to establish a foreign-invested company? Let’s find the answer with Law Quoc Bao in this article.
If you need advice or support on what you are looking for, contact Quoc Bao Law in Vietnam for assistance with business establishment, investing, applying for temporary residence cards and visas, immigration and legal documents. work permit in Vietnam.
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Mục lục
- 1 1. What is a foreign invested company?
- 2 2. Legal basis for establishing a foreign-invested company in Vietnam
- 3 3. Conditions for establishing a foreign-invested company
- 4 4. Who has the right to establish a foreign invested company?
- 5 5. Forms of establishing foreign-invested enterprises/companies
- 6 6. Types of businesses
- 7 7. Documents for establishing a foreign invested company
- 8 8 . Procedures for establishing foreign invested companies/enterprises
- 9 8.2. Procedures for establishing a company with foreign investment capital in the form of capital contribution and share purchase
- 10 9. Some notes before establishing a foreign-invested company in Vietnam
- 11 10. Why do foreigners want to invest in Vietnam?
- 12 11. Advantages and disadvantages of procedures for foreigners investing in Vietnam
- 13 12. Competent authority to issue investment certificates to establish foreign invested companies
- 14 13. Compare the forms of foreigners wanting to invest in Vietnam
- 15 14. Consulting services for establishing foreign invested companies of Law Quoc Bao
1. What is a foreign invested company?
The Investment Law 2020 does not clearly state the definition of a foreign invested company; however, a foreign invested company can be understood through the following definitions.
According to Clause 21, Article 3 of the Investment Law, “Economic organizations are organizations established and operating in accordance with Vietnamese law, including enterprises, cooperatives, cooperative unions and other organizations carrying out currently operating investment and business activities.”
Meanwhile, according to Clause 22, Article 3 of the Investment Law: “An economic organization with foreign investment capital is an economic organization with foreign investors as members or shareholders.”
Clause 23, Article 3 of the Investment Law: “Investment capital is money and other assets according to the provisions of civil law and international treaties to which the Socialist Republic of Vietnam is a member to carry out activities. business investment”.
Clause 19, Article 3 of the Investment Law: “Foreign investor is an individual with foreign nationality or an organization established under foreign law that carries out business investment activities in Vietnam.”
From the above definitions, it can be understood that a foreign-invested company is an enterprise established under the provisions of Vietnamese law, established or held shares by foreign individuals or investors from organizations. part, investing in operating activities in Vietnam.
2. Legal basis for establishing a foreign-invested company in Vietnam
WTO Commitment Schedule
Multilateral trade agreements have investment commitments.
Investment Law 2020, amended and supplemented in 2022 and implementation guidance documents.
Enterprise Law 2020, amended and supplemented in 2022 and implementation guidance document.
Trade agreements with foreign investors’ nationalities.
3. Conditions for establishing a foreign-invested company
Before establishing a foreign-invested company in Vietnam, foreign investors must have an investment project, carry out procedures for granting an Investment Registration Certificate according to regulations and must meet the conditions about:
To participate in establishing an economic organization, foreign investors need to meet the following conditions:
Market access conditions for foreign investors specified in the List of industries and occupations restricted to market access for foreign investors include charter capital ownership ratio of foreign investors in economic organization; Investment form; Scope of investment activities; Investor capacity; partners participating in investment activities.
Other conditions as prescribed in laws, resolutions of the National Assembly, ordinances, resolutions of the National Assembly Standing Committee, decrees of the Government and international treaties to which the Socialist Republic of Vietnam is a member pellets.
Conditions for ensuring national defense and security.
Land law regulations on conditions for receiving land use rights, land use conditions in islands, communes, wards, border towns, coastal communes, wards and towns.
Regulations in Clause 22, Article 3 of the Investment Law 2020, Economic organizations with foreign investment capital are economic organizations with foreign investors as members or shareholders.
Definition in Clause 19, Article 3 of the Investment Law 2020, Foreign investor is an individual with foreign nationality, an organization established under foreign law conducting business investment activities in Vietnam.
Thus, the person capable of establishing a company with foreign investment capital is an individual with foreign nationality or an organization established under foreign law that carries out investment and business activities in Vietnam.
4. Who has the right to establish a foreign invested company?
Persons with the right to establish foreign-invested companies are listed and clearly defined in the law below:
The current Enterprise Law stipulates: Right to establish, contribute capital, buy shares, purchase capital contributions and manage enterprises.
1. Organizations and individuals have the right to establish and manage enterprises in Vietnam according to the provisions of this Law, except for the cases specified in Clause 2 of this Article.
2. The following organizations and individuals do not have the right to establish and manage businesses in Vietnam:
a) State agencies and people’s armed forces units use state assets to establish business enterprises to make private profits for their agencies and units.
b) Cadres, civil servants and public employees according to the provisions of law on cadres, civil servants and public employees
c) Officers, non-commissioned officers, professional soldiers, workers, and defense officials in agencies and units of the People’s Army; Professional officers and non-commissioned officers in agencies and units of the Vietnam People’s Police, except those appointed as authorized representatives to manage the State’s capital contribution in enterprises
d) Leaders and professional managers in state-owned enterprises, except those appointed as authorized representatives to manage the State’s capital contribution in other enterprises
d) Minors; people with limited civil act capacity or lost civil act capacity; organizations without legal status
e) People who are being prosecuted for criminal liability, serving prison sentences, administrative handling decisions at compulsory detoxification facilities, compulsory education establishments or are banned from practicing business or holding positions. perform certain tasks or jobs related to business according to the Court’s decision; Other cases as prescribed by law on bankruptcy and anti-corruption.
If requested by the Business Registration Authority, the person registering to establish a business must submit a criminal record card to the Business Registration Authority.
3. Organizations and individuals have the right to contribute capital, purchase shares, and purchase capital contributions to joint stock companies, limited liability companies, and partnerships according to the provisions of this Law, except for the following cases:
a) State agencies and people’s armed forces units use state assets to contribute capital to enterprises to gain private profits for their agencies and units.
b) Subjects who are not allowed to contribute capital to the enterprise according to the provisions of law on officials and civil servants.
4. Gaining private profits for your agency or unit according to Point a, Clause 2 and Point a, Clause 3 of this Article is the use of income in any form obtained from business activities, capital contributions, share purchases, Purchase capital contributions for one of the following purposes:
a) Divided in any form to some or all of the people specified in Points b and c, Clause 2 of this Article
b) Adding to the operating budget of agencies and unit’s contrary to the provisions of law on state budget
c) Establish a fund or add to it to serve the private interests of agencies and units.
5. Forms of establishing foreign-invested enterprises/companies
Establish a foreign-invested company in the form of investors contributing capital from the beginning.
Accordingly, foreign investors will contribute capital right from the beginning of establishing a company in Vietnam. Accordingly, foreign investors’ capital contribution, depending on the field of activity, can range from 1% to 100% of the company’s charter capital.
Establishing a company with foreign investment capital in the form of capital contribution and share purchase.
With this form, foreign investors will contribute capital to a Vietnamese company that already has a Business Registration Certificate. Foreign investors, depending on the field of activity, can contribute capital from 1% to 100% of capital into Vietnamese companies. Foreign investors will carry out procedures for purchasing capital contributions and shares of Vietnamese companies. After that, the Vietnamese company became a foreign-invested company.
6. Types of businesses
** Limited liability company with two or more members
A limited liability company with two or more members is an enterprise with from 02 to 50 members who are organizations and individuals. Members are responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise, except in the following cases:
In case there are members who have not contributed capital or have not contributed the full amount of capital as committed, the company must register to change charter capital, with the proportion of members’ capital contribution equal to the amount of capital contributed within 30 days from the date of registration. The last day to contribute the full capital contribution according to regulations (Capital contribution period is 90 days from the date of issuance of the Business Registration Certificate). Members who have not contributed capital or have not contributed the full amount of capital as committed must be responsible in proportion to the committed capital contribution ratio for the company’s financial obligations arising in the period before the date of company registration. Sign changes to charter capital and capital contribution ratio of members.
Members’ capital contributions can only be transferred according to the following regulations:
Buyback of capital contribution: A company member has the right to request the company to buy back his or her capital contribution if that member has voted against the resolution or decision of the Board of Members on the following issues:
Amending and supplementing contents in the Company’s Charter related to the rights and obligations of members and the Board of Members.
Reorganize the company.
Other cases as prescribed in the Company’s Charter.
Transfer of capital contribution: Company members have the right to transfer capital contribution according to the following regulations:
Offer to sell that capital contribution to the remaining members in proportion to their capital contribution in the company with the same offering conditions.
Transfer with the same offering conditions for the remaining members specified in Point a of this Clause to non-members if the remaining members of the company do not buy or do not buy all within 30 days from the date of purchase. from the date of offering.
In addition, a member’s capital contribution can be handled in some special cases such as inheritance, donation, debt repayment, member being detained or temporarily detained…
A limited liability company with two or more members has legal status from the date of issuance of the Business Registration Certificate.
A limited liability company with two or more members is not allowed to issue shares, except to convert into a joint stock company.
Limited liability companies with two or more members may issue bonds according to the provisions of this Law and other relevant laws; The issuance of individual bonds must comply with the provisions of law.
** One-member limited liability company
A single-member limited liability company is an enterprise owned by an organization or individual (hereinafter referred to as the company owner). The company owner is responsible for the company’s debts and other property obligations within the company’s charter capital.
A one-member limited liability company has legal status from the date of issuance of the Business Registration Certificate.
A single-member limited liability company is not allowed to issue shares, except to convert into a joint stock company.
A one-member limited liability company may issue bonds according to the provisions of this Law and other relevant laws, issuance of individual bonds according to the provisions of law.
The charter capital of a one-member limited liability company when registering to establish a business is the total value of assets committed to contribute by the company owner and recorded in the company charter.
The company owner must contribute capital to the company with sufficient and correct types of assets as committed when registering to establish a business within 90 days from the date of issuance of the Business Registration Certificate, excluding operation time. Transfer and import capital contribution assets, carry out administrative procedures to transfer asset ownership. During this period, the company owner has rights and obligations corresponding to the committed capital contribution.
** Joint stock company
A joint stock company is an enterprise in which:
Charter capital is divided into equal parts called shares.
Shareholders can be organizations or individuals; The minimum number of shareholders is 03 and there is no limit to the maximum number.
Shareholders are only responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise.
Shareholders have the right to freely transfer their shares to others, except in the following cases:
Within 03 years from the date the company is granted the Business Registration Certificate, common shares of founding shareholders are freely transferable to other founding shareholders and can only be transferred to persons who are not founding shareholders if approved by the General Meeting of Shareholders. In this case, the founding shareholders intending to transfer common shares do not have the right to vote on the transfer of those shares. (Clause 3, Article 120 of the Enterprise Law 2020)
Shares are freely transferable, except for the cases specified in Clause 3, Article 120 of the 2020 Enterprise Law and the Company Charter has regulations restricting the transfer of shares. In case the company charter has restrictions on the transfer of shares, these regulations are only effective when clearly stated in the shares of the corresponding shares. (Clause 1, Article 127 of the Enterprise Law 2020)
A joint stock company has legal status from the date of issuance of the Business Registration Certificate.
A joint stock company has the right to issue shares, bonds and other securities of the company.
** Partnerships
A partnership is an enterprise in which:
There must be at least 02 members who are joint owners of the company, doing business together under a common name (hereinafter referred to as partnership members). In addition to general partners, the company may have additional capital contributing members.
General partners must be individuals, responsible with all their assets for the company’s obligations.
Capital contributing members are organizations and individuals and are only responsible for the company’s debts within the amount of capital committed to contributing to the company.
A partnership company has legal status from the date of issuance of the Business Registration Certificate.
Partnership companies are not allowed to issue any type of securities.
Partnership members and capital contributing members must contribute the committed capital amount in full and on time.
A general partner who fails to contribute the committed capital in full and on time, causing damage to the company, must be responsible for compensating the company for damages.
In case a capital contributing member fails to contribute the committed capital amount in full and on time, the not yet fully contributed capital is considered that member’s debt to the company; In this case, the relevant capital contributing member may be expelled from the company according to the decision of the Board of Members.
** Private enterprise
A private enterprise is a business owned by an individual who is solely responsible for all activities of the business with his or her entire assets.
Private enterprises are not allowed to issue any type of securities.
Each individual is only entitled to establish one private enterprise. The owner of a private enterprise cannot simultaneously be the owner of a business household or a general partner of a partnership.
Private enterprises are not entitled to contribute capital to establish or purchase shares or capital contributions in partnerships, limited liability companies or joint stock companies.
The investment capital of a private business owner is registered by the business owner himself. Private enterprise owners are obliged to accurately register the total investment capital, clearly stating the capital amount in Vietnam Dong, freely convertible foreign currencies, gold and other assets; For capital in other assets, the type of asset, quantity and remaining value of each type of asset must also be clearly stated.
All capital and assets, including loans and leased assets, used in the enterprise’s business activities must be fully recorded in the enterprise’s accounting books and financial reports according to the provisions of law.
7. Documents for establishing a foreign invested company
For foreign investors to establish economic organizations
** Application for Investment Certificate
For projects subject to investment policy decision: The investor submits the Investment Policy Approval Document.
The Department of Planning and Investment issues the Investment Registration Certificate to the investor within 05 working days from the date of receiving the written decision on investment policy.
For projects not subject to investment policy decision: Investors need to prepare the following documents:
Written request for investment project implementation (According to form).
Copy of identity card, ID card or passport for individual investors; Copy of Certificate of Establishment or other equivalent document certifying legal status for institutional investors.
Investment project proposal includes the following contents: Investor implementing the project, investment objectives, investment scale, investment capital and capital mobilization plan, location, term, investment progress , labor needs, proposals for investment incentives, assessment of impact and socio-economic efficiency of the project; For investment projects that have been put into operation, the investor submits a report on the implementation of the investment project from the time of implementation to the time of requesting an Investment Registration Certificate instead of the project proposal. Investment project (According to form).
Copy of one of the following documents: Financial statements of the investor for the last 2 years; commitment to financial support from the parent company; commitment to financial support from financial institutions; guarantee of the investor’s financial capacity; Documents explaining the investor’s financial capacity.
Propose land use needs for projects requesting the state to allocate land, lease land, or allow land use purpose change; In case the project does not request the State to allocate land, lease land, or allow change of land use purpose, submit a copy of the location lease agreement or other documents certifying that the investor has the right to use the location for implementation. current investment project.
Explanation on technology use for projects using technology on the List of technologies restricted from transfer according to the provisions of law on technology transfer (Point b, Clause 1, Article 32 of the Investment Law 2014) includes Contents: Technology name, technology origin, technology process diagram; Main technical parameters, usage status of main machinery, equipment and technological lines.
BCC contract for investment projects in the form of BCC contract.
** Application for Business Registration Certificate
Based on the regulations in Decree 01/2021 on business registration, depending on the type of business, company documents that need to be prepared include:
Application for establishment of a business.
Draft company charter depending on the type of business (Single member LLC; LLC with two or more members; Joint stock company) according to the Enterprise Law 2020
List of members (For LLCs with two or more members and List of founding shareholders for Joint Stock Companies);
Certified copy of personal identification documents (ID card/CCCD/Passport) of the company’s legal representative, the owner of the one-member limited liability company, and the members of the second limited liability company members or more, founding shareholders of a Joint Stock Company, authorized representatives.
Investment registration certificate if capital contributing members/founding shareholders are foreigners or foreign companies.
Business registration certificate, power of attorney for the representative to be named on the capital contribution/shares of the capital contributing organization (if any)
For the form of investors contributing capital and buying shares in Vietnamese companies
** Application for registration of capital contribution and share purchase
Economic organizations with foreign investors contributing capital, purchasing shares, purchasing capital contributions submit 01 set of registration documents to the investment registration agency where the economic organization is headquartered. Profile includes:
Document to register capital contribution, share purchase, purchase of capital contribution.
Copies of legal documents of individuals and organizations contributing capital, purchasing shares, purchasing capital contributions (investors) and economic organizations with foreign investors contributing capital, purchasing shares, purchasing capital contributions.
Document of principle agreement on capital contribution, share purchase, purchase of capital contribution between foreign investors and economic organizations with foreign investors contributing capital, purchasing shares, purchasing capital contributions or between investors. foreign investment with shareholders or members of that economic organization.
Copy of the Certificate of land use rights of the economic organization with foreign investors contributing capital, purchasing shares, purchasing capital contributions (in case there is a Certificate of land use rights in an island, commune, ward, border towns and coastal communes, wards and towns; other areas affecting national defense and security).
** Records of changes to members and shareholders of the company
Notice of change in business registration content
List of new members/list of new shareholders
Transfer contract or documents proving completion of transfer.
Copies of the individual’s invalid documents in case the new member is an individual or copies of the organization’s legal documents, copies of the individual’s legal documents for the authorized representative and copies of legal documents of the individual. Appoint an authorized representative in case the new member is an organization.
For members that are foreign organizations, copies of the organization’s legal documents must be consular legalized.
Document from the Investment Registration Authority approving capital contribution, share purchase, purchase of capital contribution of foreign investors, economic organizations with foreign investment capital (document results in step 1)
Document to change legal representative.
Notice of change of legal representative
Copies of personal legal documents for the new legal representative
Resolutions, decisions and copies of minutes of meetings of the Board of Members/minutes of meetings of the General Meeting of Shareholders on changing the legal representative.
8 . Procedures for establishing foreign invested companies/enterprises
8.1. Procedures for establishing a foreign invested company when investors contribute capital from the beginning.
Step 1: Prepare documents to apply for Investment Registration Certificate
Foreign investors prepare documents for issuance of Investment Registration Certificate
Step 2: Submit application for Investment Registration Certificate
After completing the dossier, the investor submits an application for an Investment Registration Certificate to the competent state agency.
Application submission location:
If the enterprise has its headquarters in an industrial park: submit to the Industrial Park Management Board
If the enterprise has its headquarters outside the industrial park: submit to the Department of Foreign Economic Relations under the Department of Planning and Investment where the enterprise is headquartered.
Step 3: Issue Investment Registration Certificate
From the date of receiving accurate and complete documents, the investment registration agency will issue an Investment Registration Certificate within 15 days.
Step 4: Prepare and submit application for Business Registration Certificate
Next, the foreign investor begins the procedure for granting a Business Registration Certificate. Detailed documents will include:
Place of application: Department of Planning and Investment of the province where the company is headquartered.
Step 5: Announce business registration information.
After being granted a Business Registration Certificate, investors need to publicly announce on the National Business Registration Portal and pay fees according to regulations.
Step 6: Carve the company seal.
Enterprises can completely decide on the quantity, form, type and content of their corporate seal.
Step 7: Issue a business license or operating license.
Some professions need to apply for a license related to operating conditions. For example: Education business: apply for a training license, food business: apply for a food hygiene and safety license, etc.
In addition, applying for a Business License only applies to businesses operating in the field of retailing goods or setting up retail establishments.
Step 8: Open a foreign direct investment capital account.
After completing the above steps, foreign investors need to open a foreign direct investment capital account and transfer capital to this account in accordance with the capital contribution deadline recorded in the Investment Certificate.
In addition, foreign-invested companies also need to open a transaction account to receive money from the foreign direct investment capital account for future revenue and expenditure procedures in Vietnam.
Step 9: Carry out the following procedures to establish a company.
The procedures after establishment of a foreign-invested company are similar to those of a Vietnamese company including:
Hang nameplates at headquarters.
Register for digital signature.
Proposal to issue electronic invoices.
Report on project implementation status according to regulations in the Investment Registration Certificate
Tax declaration
Step 1: Establish a company with Vietnamese capital.
Foreign investors can only buy capital/shares/contribute capital to Vietnamese companies. Therefore, if there is no company, the Vietnamese partner must establish a company with 100% Vietnamese capital.
Step 2: Prepare documents to register to buy capital contribution/shares from foreign investors.
Step 3: Submit application.
After fully preparing the documents, the foreign investor submits the documents to the Investment Registration Office, Department of Planning and Investment of the province where the enterprise is headquartered.
If the documents are correct and complete, the Department of Planning and Investment will notify whether the investor meets the conditions to purchase capital contribution/shares/capital contribution in a Vietnamese enterprise within 15 days.
Step 4: Foreign investors purchase shares, contribute capital, and purchase capital contributions from Vietnamese enterprises.
If foreign investors contribute more than 51% of charter capital, the Vietnamese company will open a direct investment capital account. The investor will then transfer the capital contribution through the direct investment capital account.
Members/shareholders who have transferred capital need to declare and pay transfer tax as prescribed by law.
Step 5: Change the Business Registration Certificate
After completing the capital contribution, the Vietnamese company carries out procedures to change its business registration to a foreign-invested company.
Place to receive documents: Department of Planning and Investment where the company is headquartered.
Step 6: Issue Business License or Operating License
Do the same as step 7 of the above section.
9. Some notes before establishing a foreign-invested company in Vietnam
Foreign investors, including foreign individuals and foreign companies, can establish companies in Vietnam with capital ownership from 1 to 100% capital depending on the investment field.
Conditions for establishing a foreign-invested company depend on the field in which the investor is establishing: According to WTO commitments and Vietnamese law, some fields can be easily established in Vietnam such as: trade, import-export, investment consulting, management consulting, software, real estate, construction, restaurants, tourism, manufacturing (needs a factory in an industrial park), …
Except for industries requiring legal capital, the capital contributed by investors does not have a minimum level but must be consistent with the scale of operation of the registered company. However, the amount of capital contributed affects the application for a work permit and temporary residence card for the investor, accordingly the investor and the representative managing the capital contribution are only exempted from the work permit and issued a card. For temporary residence, if the capital contribution is 3 billion VND or more, and the investor contributes a high capital contribution, the temporary residence card period will also be granted longer.
If foreign investors contribute capital right after establishment, they need to prove their finances through savings book, deposit balance, etc. For individuals, deposit balances, tax reports, profitable financial reports, etc. for companies. But if a foreign investor contributes capital to buy shares, it is not necessary to provide these documents.
For procedures to establish a foreign-invested company, it is necessary to provide a house or office rental contract or loan contract and real estate documents of the rented house or office to submit with the establishment documents. Meanwhile, for Vietnamese companies or capital contribution purchase procedures, this condition is not required.
The director, legal representative, and capital contribution manager of a foreign-invested company can be a foreigner or Vietnamese.
Foreign-invested companies are also granted Enterprise Registration Certificates (ERC) by the Business Registration Office – Department of Planning and Investment where the company is headquartered as Vietnamese capital companies.
For companies with foreign investors contributing capital from the beginning from 1% and foreign-invested companies operating in the field of education, the procedure for issuance of an Investment Registration Certificate (IRC) must be carried out.
The biggest difference between a foreign-invested company and a Vietnamese-invested company is that the company needs to open an investment capital account to contribute capital and transfer profits back to the country later.
Unlike Vietnamese-invested companies, which are responsible for their own capital contributions, foreign-invested companies are required to make capital contributions to their capital account and are supervised on capital contributions through investment reports. capital contribution period.
The capital contribution period of a foreign-invested company is clearly recorded in the Investment Registration Certificate. Accordingly, if the investor has not yet contributed capital by the due date, the bank opening the investment capital account will not accept late capital contributions. To be able to carry out capital contribution procedures as committed, the company needs to make adjustments to the Investment Registration Certificate to extend the capital contribution deadline.
Tax declaration procedures, VAT rates, and Corporate Income Tax of foreign-invested companies are similar to those of Vietnamese-invested companies. However, foreign-invested companies must audit their year-end financial statements.
In addition, foreign-invested companies that are granted Investment Registration Certificates must annually carry out investment reporting procedures, investment monitoring and evaluation reports, and report on project implementation status to the public. investment registration agency.
10. Why do foreigners want to invest in Vietnam?
There are many reasons why foreigners want to invest in Vietnam, and these reasons can vary from person to person and industry to industry. Here are some common reasons:
Stable economic growth: Vietnam has had impressive economic growth in recent years and is predicted to be one of the prominent economies in Southeast Asia. This creates opportunities for foreign investors to participate in the country’s development.
Large population and cheap labor: Vietnam has a large population with cheap labor, which means investors can look for low-cost labor to produce goods or provide services. at lower costs than other developed countries.
Large consumer market: With more than 90 million people, Vietnam is a large and rapidly growing consumer market. This creates opportunities to reach potential customers and expand business.
Strategic geographical location: Vietnam is located in the center of Southeast Asia, close to major markets such as China, India, Japan and Korea. This makes Vietnam a strategic investment destination to expand business scale to neighboring markets.
Attractive tax structure: The Vietnamese government has applied many measures to encourage foreign investment, including tax exemption or preferential tax for a certain period of time for specific investment projects.
Developing infrastructure system: The infrastructure system in Vietnam is being upgraded and developed, including seaports, railways, roads, and airports. This facilitates the transportation of goods and services.
Improved business environment: The Vietnamese government has taken many measures to improve the business environment, including simplifying administrative procedures and creating favorable conditions for foreign investment.
The above reasons combined with Vietnam’s development potential have made the country an attractive investment destination for foreign investors.
To establish a foreign-invested enterprise, investors must have an Investment Registration Certificate issued by a competent authority. The procedure for applying for an investment registration certificate is specified in the Investment Law 2020 and specifically in Decree 31/2021/ND-CP.
Procedures for establishing a foreign company.
11. Advantages and disadvantages of procedures for foreigners investing in Vietnam
Below are some advantages and disadvantages related to foreign investment procedures in Vietnam:
** Advantage:
Rapid economic growth: Vietnam is experiencing significant economic growth and is one of the fastest growing economies in Southeast Asia.
Large consumer market: With more than 90 million people, Vietnam is a large and growing consumer market, creating opportunities to reach potential customers.
Cheap labor: Vietnam has cheap labor, making the country an attractive investment destination for industries with a lot of direct labor.
Strategic geographical location: Vietnam is located close to major markets such as China, India, Japan and Korea, making the country a strategic investment destination to expand business scale to other countries. neighboring market.
Developing infrastructure system: The infrastructure system in Vietnam is being upgraded and developed, including seaports, railways, roads, and airports.
Rights and protection of investors’ rights: Vietnamese law ensures the rights and freedom of legal operations of foreign investors in Vietnam and provides mechanisms to resolve disputes and conflicts invest.
** Defect:
Complicated procedures: Foreign investment procedures in Vietnam can be complicated and require a lot of paperwork and time to complete.
Language and culture: Language and cultural differences can make transactions and project management difficult for foreign investors.
Legal conflicts: Handling legal and contractual conflicts can take a lot of time and money.
Political fluctuations: Political fluctuations can affect the business and investment environment in Vietnam.
Complex tax laws: The tax law system in Vietnam can be complex and requires an in-depth understanding of tax regulations.
Market risks: Like any other market, Vietnam also has business risks, including market, financial, and political risks.
Despite its disadvantages, Vietnam is still considered an attractive investment destination for foreign investors due to its growth opportunities and economic development potential.
>> To learn about procedures for registering capital contribution of foreign investors, you can refer to this article Procedures for registering capital contribution of foreign investors
Pursuant to the provisions of Article 39 of the Investment Law 2020, there are provisions as follows:
“Article 39. Authority to issue, adjust and revoke Investment Registration Certificates
1. The Management Board of industrial parks, export processing zones, high-tech zones, and economic zones issues, adjusts, and revokes Investment Registration Certificates for investment projects in industrial parks, export processing zones, high-tech zones and economic zones, except for the cases specified in Clause 3 of this Article.
2. The Department of Planning and Investment issues, adjusts, and revokes Investment Registration Certificates for investment projects outside industrial parks, export processing zones, high-tech zones, and economic zones, except for cases prescribed specified in Clause 3 of this Article.
3. The investment registration agency where the investor implements the investment project, places or plans to locate an executive office to implement the investment project shall issue, adjust and revoke the Investment Registration Certificate for with the following investment projects:
a) Investment projects implemented in 02 or more provincial administrative units
b) Investment projects implemented inside and outside industrial parks, export processing zones, high-tech parks and economic zones.
c) Investment projects in industrial parks, export processing zones, high-tech zones, economic zones where the Management Board of industrial parks, export processing zones, high-tech zones, economic zones have not been established or is not within the scope of management of the Management Board of industrial parks, export processing zones, high-tech zones, and economic zones.
4. The agency receiving investment project documents is the agency competent to issue the Investment Registration Certificate, except for the cases specified in Article 34 and Article 35 of this Law.”
Thus, the competent authority to issue the Investment Registration Certificate in this case will be the Industrial Park Management Board and the investment registration agency where the investor implements the investment project, places or plans. Set up an executive office to carry out investment projects and grant you an Investment Registration Certificate.
13. Compare the forms of foreigners wanting to invest in Vietnam
In Vietnam, there are a number of popular forms that foreigners want to invest in Vietnam that foreign investors can choose from. Below are some commonly used forms of foreign investment in Vietnam and some important differences between them.
1. Direct investment:
Advantages: Direct investment allows foreign investors to directly control business operations and company management. Have the opportunity to participate in strategic decisions and long-term development of the company.
Disadvantages: Requires many legal and financial procedures, requires long-term commitment and knowledge of the local market.
2. Business cooperation (Joint Venture):
Advantages: Combine talent, experience and capital from both sides. Share risks and opportunities in the development process.
Disadvantages: Requires the ability to manage and work cooperatively with foreign partners. Potential for conflict in management and decisions.
3. Mergers and acquisitions (M&A):
Advantages: Can quickly expand business operations by acquiring or merging with existing local businesses.
Disadvantages: Requires a thorough assessment of the target company’s value, financial situation and management.
4. Franchising:
Advantages: Allows market expansion through the use of a successful brand and business model.
Disadvantages: Requires strict compliance with the licensor’s regulations. Manage and maintain brand quality on a large scale.
5. Invest in stocks and bonds:
Advantages: Does not require direct business operations management. It is possible to invest in local businesses that have grown.
Disadvantages: Often have no control and great influence on business decisions. Risks related to financial market fluctuations.
6. Invest in Real Estate:
Advantages: Real estate is often a stable field with long-term profit potential.
Cons: Requires knowledge of the local real estate market. Needs constant management and monitoring.
Depending on the business goals, resources and knowledge of investors, they can choose one or several of the above investment forms to make in Vietnam. The most important thing is to carefully learn about the legal regulations, market and business conditions in Vietnam before making an investment decision.
14. Consulting services for establishing foreign invested companies of Law Quoc Bao
Consulting services for establishing foreign-invested companies are known as one of the key services of Law Quoc Bao. With a nationwide system of professional law offices and a team of experienced and enthusiastic lawyers, Quoc Bao Law is proud to be the leading unit supporting all legal issues, legal advice, and procedures. documents for individual and business customers
Law Quoc Bao’s consulting service for establishing a foreign invested company includes the following contents:
– Advise customers on issues related to foreign investment in Vietnam including:
+ Consulting on State guidelines and policies related to foreign investment in Vietnam.
+ Consulting on choosing forms of foreign investment suitable to the needs of investors.
+ Consulting on conditions for establishing foreign-invested companies.
+ Consulting on procedures for establishing foreign-invested companies, including procedures for applying for an Investment Registration Certificate, Business Registration Certificate, and Business License.
In addition, Law Quoc Bao supports and advises clients on other related issues such as investment location selection, periodic monitoring reporting regime after project establishment, tax declaration regime, accounting regime. accounting, temporary residence registration procedures for foreign investors, etc.
– Support customers in preparing documents to establish companies with foreign capital, drafting legal documents according to foreign investment regulations in Vietnam of the Investment Law 2020, including contents such as:
+ Prepare necessary documents to apply for an Investment Certificate for the project, issue a Business Registration Certificate, legal seal, and Business License.
+ Research and review documents provided by customers.
+ Representing clients when carrying out legal procedures related to the establishment of foreign invested companies, Work on behalf of investors with competent authorities.
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