Where Foreign Investors Obtain Investment License in Vietnam?

 To set up a business in Vietnam through foreign direct investment, foreign investors need to register the investment license from Vietnam Ministry of Planning and Investment (MPI).

Depending on investment business lines, investment conditions, scale of the projects, where investment project is located, other Vietnam State authorities would be involved. MPI in Vietnam takes charge of developing legislation, guiding, consulting and coordinating with other State authority in regard to all investment in Vietnam. Foreign investors apply for investment license at MPI which is acting as the contact point. People’s Committee will be the government body that administer investment activities within its city or province and issue the investment license to the foreign investor.

In case the foreign investor setting-up a business within an industrial zone, the management board of an industrial zone will have authority over the investment licensing process. For investment project which is larger than VND 300 billion (around USD 14.2 million) or in conditional investment area, MPI and other ministries will be involved in the evaluation process to recommend to the Prime Minister for approval. Other ministries involved in investment project licensing would be Ministry of Trade and Commerce and Minsitry of Finance for setting up a trading company in Vietnam; Ministry of Science and Technology for investment in high-tech projects in Vietnam; Ministry of Education and Training for setting up education institute; Ministry of Health for investment in hospital in Vietnam, etc to ensure they are complying with the specific industry’s regulations.

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Renewal of License for the Establishment of Branches Office in Vietnam

 How to extend branch license in Vietnam?

The extension of the license for the establishment of a foreign trader’s branch in Vietnam shall be following the regulation of the commercial law and the relevant guiding decrees and circulars under Vietnam laws.

Preparation of dossiers for extension of license for the establishment of branches includes:

Application for extension of license for the establishment of branches, made according to the form set by the Ministry of Industry and Trade, signed by a competent representative of the foreign trader;

A copy of the business registration certificate or equivalent paper of the foreign trader that is translated into Vietnamese and certified by a Vietnamese diplomatic mission or consulate abroad consular legalization in accordance with the law of Vietnam;

Copies of audited financial statements or documents certifying the fulfillment of tax or financial obligations in the latest fiscal year or papers of equivalent value issued by competent agencies or organizations (where the foreign trader established) to prove the existence and operation of the foreign trader in the latest financial year, it must be translated into Vietnamese and authenticated in accordance with the provisions of Vietnamese law;

A copy of the license for the establishment of the branch.

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.

The order and procedures for extension of the license for the establishment of the branch at a competent agency shall be as follows:

A dossier for extension of the license for the establishment of the branch must be submitted within 30 days at the latest before the license expires;

Foreign traders submit applications directly or via post or online (if applicable) to the Ministry of Industry and Trade;

Within 03 working days from the date of receipt of the dossier, the Ministry of Industry and Trade shall check and request the supplement if the dossier is incomplete and invalid. Requests for supplementary records are made at most once during the process of processing applications;

Within 05 working days from the date of receipt of the complete and valid dossier, the Ministry of Industry and Trade shall renew the branch establishment permit. In case of non-renewal, the reasons therefor must be clearly stated in writing;

In case the extension of the license for the establishment of the branch is not governed in specialized legal documents, the Ministry of Industry and Trade shall send a written request for comment to the specialized management ministry within 03 working days from the date of receipt of a complete and valid file. Within 5 working days from the date of receiving the Ministry of Industry and Trade’s written request, the specialized managing ministries shall clearly state whether they agree or disagree with the license extension. Within 5 working days after receiving the opinions of the specialized management ministry, the Ministry of Industry and Trade shall extend or not extend the branch establishment permit to the foreign trader. In case of non-renewal, the reasons therefor must be clearly stated in writing;

Within 15 days from the date of extension of the license for the establishment of the branch, the Ministry of Industry and Trade shall publish on the website of the Ministry.

Our lawyers in Vietnam constantly follow up with changes of law to provide the client with update for better decision making process.

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Vietnam is Increasingly Attracting Capital from the US

 Vietnam is taking every opportunity to grow its economy and improve the living standard. This is not a vain dream since Vietnam has young and plentiful work force. That is why multinational companies wish to come and

 set up company in Vietnam.

The year 2015 marked the 40 years since the war end and the 20 years of normalized the relationship between Vietnam and the US. Vietnam began the process of innovation since 1986 but not until 1995, foreign investment in Vietnam began to flow in when the Government established formal diplomatic relations with the United States and joined the National Association of the South East Asia (ASEAN).

In recent years, foreign investment in Vietnam has accelerated. The Korean company is particularly excited with this market. Samsung Electronics is operating and building three plants at three locations – Ho Chi Minh City, Thai Nguyen and Bac Ninh. In total, this giant electronic corporation has poured more than USD 10 billion in Vietnam.

Vietnam is also expected soon to welcome a “wave” of investment from the US. The Procter & Gamble (P&G) – a consumer goods manufacturer is building a factory in Binh Duong with the cost of 100 million USD. The plant will produce Gillette razors.

    

Moreover, other big names come from the US that are expanding operations in Vietnam are Starbucks and McDonald’s. They opened their first store here in December 2013 and February 2014.

There are a number of factors that make foreign investment in Vietnam explode. One of the most important reasons is the low labor cost. Labor cost hikes in China are the reason why many multinational manufacturers turned their attention to Vietnam where the cost is 50% cheaper. Besides, the purchasing power of Vietnam consumer is increasing, inflation has been curbed and many easing regulations to boost growth are also the reason why continuous investments are poured tin..

However, the biggest attraction for most foreign investors is the Trans-Pacific Partnership agreement (TPP) about free trade in which Vietnam is one of 12 countries that participate in negotiations. In mid of this year, General Secretary of Vietnam, Mr. Nguyen Phu Trong will visit the United States. TPP agreement will be the main topic of the conversation with the US officials. If the two countries can reach an agreement, the US will become even more important partner of Vietnam’s economy in the future.

In a press conference in HCM city in January 2015, US Ambassador in Vietnam – Mr. Ted Osius was upbeat about the impact of the TPP to Vietnam economy and the US investment here. TPP agreement “will allow the US to become the number one investor and trading partner of Vietnam” he said.

In about 4.5 million Vietnamese living overseas, about 2 million are living in the US. In particular, many people have made a name in the business world. They are Mr. Henry Nguyen – who brought McDonald’s to Vietnam and Mr. David Thai – founder of Highlands coffee chain.

According to the Ministry of Foreign Affairs of Vietnam, approximately 180,000 companies in the United States are owned by Vietnamese, achieved a total revenue of 20 billion USD. Strengthening ties between the two countries could stimulate greater cash flow stream across the Pacific.

The Ministry of Planning and Investment of Vietnam is estimated to spend 500 billion USD in over 10 years to develop the infrastructure necessary for sustainable growth. However, Vietnam can only able to meet 40% of the above figure, through the Government budget, ODA and private capitals.

That is why the Government wants to attract FDI. The Vietnam Government has set a target to create an industrial economy by 2020. Six priority areas are agriculture, forestry and fisheries processing, agricultural machinery, electronics, shipbuilding, environmental and energy saving, automobile production.

The transition from growth based on FDI into industrial-based growth can be rather difficult. However, Vietnam has shown it is serious and is still on track.

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.

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RCEP Helps Vietnam Accelerate Investment Attraction

 Together with ASEAN countries, Vietnam absolutely have the opportunity to become a hub to attract foreign investment in Vietnam, especially from countries participating in the Regional Comprehensive Economic Partnership (RCEP).

Finally, the RCEP was signed after 8 years of negotiations. Although it still has to wait a while for the 15 member countries, including 10 ASEAN member countries and 5 partners (including China, Japan, Korea, Australia and New Zealand) to approve, the assessment of the impact of the RCEP on the Vietnamese economy has been repeatedly confirmed.

The rules of origin procedures in RCEP bring significant advantages to Vietnam, whose economy is heavily dependent on imported materials. Vietnam is having a large trade deficit from Korea, China on raw materials for export production and it is always difficult for the origin of goods when exporting to many major markets around the world.

With RCEP, it is reported that Vietnamese enterprises can more easily access raw materials from member countries to produce export goods. For example, it is possible to import electronic chips from Japan and Korea; imported raw materials for textile and leather from China, then produced domestically and exported to other countries, at the same time satisfying the rules of origin within the bloc to take advantage of tariff preferences.

Not only with Vietnam, experts also agreed that RCEP is a favorable opportunity for all countries to participate in restructuring, repositioning supply chains and participating in global value chains. With RCEP, ASEAN is hoping to become the center of the global production chain. If we can do that, the chances for Vietnam are not small.

Vietnam has the opportunity to reshape and better exploit new positions, thereby building up a position in the global supply chain map. Of course, there will be an opportunity to attract investment. RCEP can help Vietnamese companies expand their markets, join regional supply chains and attract foreign investment.

Among the remaining 14 RCEP member countries, most are major investment partners of Vietnam. Even in the list of 10 countries and territories with large investment in Vietnam, there are 6 partners from RCEP. In which, the largest is Korea (70.38 billion USD), followed by Japan (59.89 billion USD), Singapore (55.7 billion USD), China (18 billion USD), Malaysia (12.8 billion USD), Thailand (12.5 billion USD).

Even without RCEP, foreign investment capital from these countries is still pouring into Vietnam, especially when Vietnam is the focus of attention of international investors, when investment flows are changing during Covid-19 period.

Currently, China, Japan, Korea and even Singapore, Thailand, Malaysia are speeding up investment abroad to expand production and supply chains. Vietnam is a safe and attractive destination. The opportunity to speed up investment attraction from RCEP member countries will be greater for Vietnam, especially when Vietnam is building many outstanding mechanisms and policies to catch the shifting investment inflows.

But with RCEP, the story is not just the investments between RCEP members. The prosperity, large market size of the RCEP bloc will also make it become the focus of global investors.

When proposing to negotiate RCEP, ASEAN countries also want to create a favorable environment to connect economies, creating opportunities for enhancing production capacity towards the goal of building ASEAN into a dynamic and unique economic region in terms of production and market.

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How to establish company in Vietnam?

 Foreign investors may invest in the form of 100% capital to establish company in Vietnam, being limited liability company, joint stock company, partnership company.

Foreign investors that invest in Vietnam for the first time must have investment projects and fill in investment registration or examination procedures at state agencies in charge of investment in order to be granted investment registration certificates. Investment certificates shall concurrently be business registration certificates. Company with 100% foreign capital has founded and operated from the date of issuance of the investment certificate.

A project dossier for establishing company in Vietnam shall comprise:

Registration/Request for issuance of Investment Certificate;

A report on financial capability of the investor;

Draft of the company’s charter;

List of members of company;

Copy of the people’s identity card, passport or other lawful personal certification, for individual members;

Copy of the establishment decision, business registration certificate or other equivalent document, for member organizations;

Copies of the authorization document, the people’s identity card, passport or other lawful personal certification, for authorized representatives.

Copies of the business registration certificates of the foreign member organizations must be authenticated within three months before the date of submission of the business registration dossier by agencies where such organizations are registered;

Written authorization of the investor in case investor is organization and valid copy of the lawful personal certification of the authorized representative. Documents in foreign languages must be translated into Vietnamese, notarized and legalized;

The joint-venture contract or Business Cooperation Contract (BCC);

Other documents required by Vietnam law.

The establishment of a company in Vietnam would take from 30 days. The extra time might be needed in case the investment area is conditional or the State government needs to examine the investment project. Minimum capital, special licenses or other conditions might be required in certain investment projects.

The law on investment constantly changes which ANT Lawyers will monitor and provide relevant update.

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How to establish company in Vietnam?

Foreign investors may invest in the form of 100% capital to establish company in Vietnam, being limited liability company, joint stock company, partnership company.

Foreign investors that invest in Vietnam for the first time must have investment projects and fill in investment registration or examination procedures at state agencies in charge of investment in order to be granted investment registration certificates. Investment certificates shall concurrently be business registration certificates. Company with 100% foreign capital has founded and operated from the date of issuance of the investment certificate.

A project dossier for establishing company in Vietnam shall comprise:

-Registration/Request for issuance of Investment Certificate;

-A report on financial capability of the investor;

-Draft of the company’s charter;

-List of members of company;

-Copy of the people’s identity card, passport or other lawful personal certification, for individual members;

-Copy of the establishment decision, business registration certificate or other equivalent document, for member organizations;

-Copies of the authorization document, the people’s identity card, passport or other lawful personal certification, for authorized representatives.

-Copies of the business registration certificates of the foreign member organizations must be authenticated within three months before the date of submission of the business registration dossier by agencies where such organizations are registered;

-Written authorization of the investor in case investor is organization and valid copy of the lawful personal certification of the authorized representative. Documents in foreign languages must be translated into Vietnamese, notarized and legalized;

-The joint-venture contract or Business Cooperation Contract (BCC);

-Other documents required by Vietnam law.

The establishment of a company in Vietnam would take from 30 days. The extra time might be needed in case the investment area is conditional or the State government needs to examine the investment project. Minimum capital, special licenses or other conditions might be required in certain investment projects.

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Which Authority Approves Business Setting up in Vietnam?

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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Whats New in the Draft of the Decree on Amending the Decree 52 on E-Commerce?

The Decree No.52/2013/ND-CP (Decree 52) on e-commerce will be effective from July 1st, 2013. However, this Decree does not have specific regulations on e-commerce activities for foreign investors conducting e-commerce activities in Vietnam. Therefore, the draft of the Decree amending Decree 52 shall fill the missing gap for foreign investors with particulars in conducting e-commerce activities in Vietnam.

The draft decree has supplemented regulations on management of e-commerce activities for foreign investors setting up business in Vietnam. Specifically, the draft decree (i) adds specific regulations on foreign traders and organizations conducting e-commerce activities in Vietnam; (ii) supplements market access conditions for foreign investors in accordance with the Law on Investment; and (iii) provides the exclusion of foreign investors investing in economic organizations that are innovative and creative enterprises in order to promote innovation activities in accordance with the law on support small and medium enterprises.

In particular, the draft decree also provides plans for e-commerce activities of foreign investors in Vietnam. According to the draft decree, foreign investors can set up an e-commerce website under the Vietnamese domain name or an e-commerce website with the display language in Vietnamese. The option of setting up an e-commerce exchange floor with a specified number of transactions from Vietnam in a year is also considered for selection.

In addition, foreign investors setting up e-commerce websites in Vietnam must notify and register e-commerce activities according to regulations. At the same time, they need to ensure the fulfillment of obligations on protection the interests of consumers. The quality of the goods need to be protected by their representative office, designation of a legal representative in Vietnam.

Foreign investors selling goods on Vietnamese e-commerce exchanges must comply with the operating regulations of e-commerce exchanges in Vietnam. When providing Vietnam e-commerce exchanges, foreign investors are responsible for verifying their identities. In addition, foreign investors conducting e-commerce activities are responsible for complying with the provisions of Vietnamese law on the right to export and import goods in accordance with the laws.

The draft decree also specifies that e-commerce service is a conditional market access industry for foreign investors. Market access conditions will also be considered accordingly. In addition, the control and domination of enterprises providing e-commerce services are also clearly regulated.

In the coming time, Vietnam will continue to receive comments to supplement and complete the draft of decree amending Decree 52 on e-commerce activities. It is important to create a clear and appropriate e-commerce operating environment to attract foreign investors with experience and capability to invest, set up company and operate in Vietnam in the area of e-commerce to facilitate goods transaction, protect intellectual property, reduce cost. However, it is also equally important to ensure the management of investment activities of foreign investors in the field of e-commerce in Vietnam.

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Billions of dollars investment flows into Vietnam in during the Covid-19 pandemic time

According to the data of the Ministry of Planning and Investment, until September 20th, 2021, 1,212 foreign investment projects had been registered (a decrease of 37.8% in 2020), however, the total of registered capital reached USD 12.5 billion (an increase by 20.6% over the same period). This information shows that the foreign investment projects in Vietnam had been increased in scale.

In addition, the total of newly registered capital, adjusted and contributed capital to buy shares, buy capital contribution of foreign investors through M&A reached USD 22.15 billion, increased 4.4% over the same period in 2020. There were 678 times of projects registered to adjust their investment capital (a decrease of 15% last year), however, the total registered capital increased to over 6.4 billion USD (an increase of 25.6% over the same period). There are proofs to show that investors already present in Vietnam are continuing to put their faith in the business plan in Vietnam.

In 2021, although Vietnam’s economy meets many challenges because of the Covid-19 pandemic, many foreign investors still believe in the future recovery and invest in Vietnam.

In Dong Nai province, in the first 9 months of 2021, investors establish company with the total amount of new investment increased by 25% over the same period and reached 88% of the plan of 2021. In which, there were 42 new projects with the registered capital increasing by 50.1% over the same period and reaching 62.7% of the plan of 2021.

Bac Ninh province is the province that attracted USD 20.4 billion from foreign investors. For many years, Bac Ninh province focuses on attracting FDI company to set up company to invest in high technology, with electronic technology as the main product. In the total foreign investment capital, the number of FDI investment capital in the technology sector accounted for 86%. Therefore, Bac Ninh is the province nation’s leading technology development, second in export turnover and 6th in attracting investment.

General Director of Samsung Vietnam shared: Not only for Samsung but also for all foreign investors, Vietnam is providing an attractive investment environment such as abundant labor source, stable socio-political situation, production and circulation infrastructure, and investment incentives. “Recently, there have been many negative effects arising from the COVID-19 pandemic, however, in the long term, Vietnam remains an attractive investment destination for foreign investors”.

Based on the opinion of the Ministry of Planning and Investment, the foreign-invested business community highly appreciates the Government’s efforts in responding to the epidemic, expressing optimism about Vietnam’s economic recovery and commits to continue investing and doing business in the long term, especially when the Prime Minister directs to build a safe adaptation roadmap and determine a new perspective on anti-epidemic.

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The Flow of Korean FDI into The Central Region and Highlands of Vietnam

According to the Foreign Investment Agency (Ministry of Planning and Investment), nearly 4.4 billion USD has been invested by Korean businesses in the Central Region and Highlands so far.

In mid-December 2020, LG Electronics (Korea) put LG VS Research Center into operation at DITP building – Trung Nam Land (Da Nang). This is the third center in Vietnam that LG has established, after the centers in Hanoi and Ho Chi Minh City.

According to Vice Chairman of Da Nang City People’s Committee, recently, the city has received the attention of Korean businesses and investors. The most recent is the ICT Vina II medical equipment factory project of ICT Vina Company in Da Nang Hi-Tech Park, with a total investment of 60 million USD. This is one of the typical foreign direct investment (FDI) projects of Korean investors in the Central Region – Highlands of Vietnam.

According to the director of the Korea Trade-Investment Promotion Agency (Kotra) in Da Nang, in previous years, Korean businesses were interested in investing in the tourism sector in Da Nang, but in recent years, they pay much attention to the field of processing, manufacturing and outsourcing technology.

In Da Nang, as of November 2020, Korea is the foreign investor with the most number of projects, with 232 projects, total registered capital of 376 million USD, focusing in the fields of services, real estate, industrial production and information technology.

In fact, in terms of FDI inflows from Korea in the Central Region, it must be mentioned the appearance of the Doosan Vina brand in Dung Quat Economic Zone (Quang Ngai). This is the first FDI enterprise, also the most successful enterprise today in the heavy industry sector in Quang Ngai.

With the estimated revenue of 200 million USD/year, Doosan Vina makes a great contribution to the budget revenue and enhances the export value of Quang Ngai. Doosan Vina is creating jobs for about 2,000 employees, of which over 85% are Quang Ngai citizen.

Binh Dinh is also a locality that has been interested by Korean businesses recently. According to the Center for Investment Promotion of Binh Dinh Province, the projects coming from Korean investors are the 70 million USD solar power projects invested by QN Korea Energy Company; Project of high-tech pork farm of New Hop Livestock Company Limited, invested nearly 5 million USD; Wesbrook Vietnam wood processing factory project, invested USD 2.5 million…

In the Central Region – Highlands of Vietnam, in the first 9 months of 2020, Korea is the leading partner in terms of total registered capital in the region, reaching 79.41 million USD with 23 new projects, focusing on processing sectors, manufacturing, technological expertise, accommodation and catering services.

Accumulated to date, Korea is second only to Singapore in this area. Korean enterprises are present in most of the strong sectors and fields of localities such as heavy industry, real estate, tourism, textiles, manufacturing, processing and investment in industrial zone infrastructure.

With the potentials of strategic location, natural resources, abundant human resources, an increasingly complete infrastructure system, the advantage of developing tourism real estate with a series of cultural heritages, long and beautiful coastlines… Combined with new strengths such as trade and investment agreements, breakthrough investment incentive mechanisms and policies, many provinces in the Central Region – Highlands are becoming trust and safety investment destinations of foreign investors, especially Korean businesses.

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Why the Investors to Choose a Reputation Enterprise for Cooperation?

Profitable investment is the legitimate aim of every investor. However, to be able to make an overall assessment of an enterprise that investors can trust is really a difficult choice. Especially for foreign investors who do not have much experience in the Vietnam market whom wish to enter Vietnam market for making investment through M&A. It is very important for the foreign investors to undertake the research for the reputation of the company and each shareholders being corporate or individual, obtain public information of the company, and key personnel under take brief due diligence to access potential risks for cooperation.

According to the data reported as of March 20, 2021 by the Foreign Investment Department (Ministry of Planning and Investment), the total foreign investment capital registered for new, adjusted and contributed capital, purchased shares of investors foreign investment amounted to 10.13 billion USD, an increase of 18.5% over the same period in 2020. This data shows that the demand of foreign investors to invest in Vietnam is still gradually increasing. So, how can foreign investors choose businesses to invest with peace of mind?

In addition to choosing an enterprise with an appropriate industry and intended investment capital, the fact that that enterprise has reputable name, capability, and experience in the market in the business field is a criterion that investors should consider and can be trusted. Moreover, investors should take the time to learn information from official sources by looking up the company’s name, grasping basic information such as: owner’s name, representative, capital status, influential individual being shareholders,… and compare such to the company’s website to know if the company provides full information, images, updates on the company’s operations regularly, accurately or are not.

Many cases of “virtual” businesses taking advantage of investment needs and the lack of information about the Vietnam market have taken advantage of and defrauded foreign investors. On the other hand, the enterprise will be the one to make decisions that directly affect the investment results of the investor; therefore, the foreign investors should understand, consider and choose a reputable and safe enterprise entirely to invest capital.

In addition, what is the name and influence of that enterprise in the investment field? What is experience and enterprise performance in recent years? It is also the actual evidence that proves the capability of that enterprise. An important note for investors is that in addition to information about enterprise achievements, negative information about the company such as violations in business practice, errors in service provision, etc. causing disputes, compensation with customers is less public information and difficult to find.

In many cases, investors do not have a thorough understanding of their partners, but only decide based on virtual commitments, the display of capability beyond the capabilities of the business. From there, putting your investment capital on a risky way lead to potential unnecessary disputes with the target enterprise.

Furthermore, understanding the Vietnamese legal regulations on rights and obligations for foreign investors, although not related to the selection of enterprises to invest in, is also necessary information for investors to have projection of the problems that may arise during the process of participating in investing in the business.

After all, what investors are looking for are “clean” enterprises that have the capability to grow quickly but at the same time must be able to maintain stability and develop sustainably. However, every business environment has certain potential risks and it is the job of foreign investors to always be alert and learn exactly the information of enterprises to minimize risks potential.

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Business Conditions for Condominium Management Training Service

On July 1st 2016, the Government issued Decree No. 79/2016/ND-CP guiding the business of training service, improving the professional knowledge, management profession and operation of condominium.

Accordingly, organizations and individuals providing the above services must fully satisfy the 05 following conditions:

– First, the organization was established and operating in Vietnam; has the function of vocational training or college, university or postgraduate education as prescribed.

– Second, has a facility and classroom to ensure sufficient seat for students and location for students to practice on professional knowledge and practice.

– Third, has syllabus or teaching materials consistent with the training framework program that was promulgated by the Ministry of Construction.

– Fourth, has a minimum of 40% of the teachers on the payroll or a contract of indefinite term (has social insurance contribution) in accordance with the training framework program under the guidance of the Ministry of Construction.

– Fifth, being recognized by the Ministry of Construction or the agency authorized by the Ministry of Construction as qualifying for business of condominium management training service.

In addition, this Decree also provides for conditions for business of real estate brokerage practice training service as follows:

– First, the organization was established and operating in Vietnam; has the function of vocational training or college, university or postgraduate education as prescribed.

– Second, has a facility and classroom to ensure sufficient seats for students and location for students to practice on knowledge of real estate brokerage and administration of real estate trading floors.

– Third, has syllabus or teaching materials consistent with the training framework program that was promulgated by the Ministry of Construction.

– Fourth, has a minimum of 30% of the teachers on the payroll or a contract of indefinite term (has social insurance contribution) in accordance with the training framework program under the guidance of the Ministry of Construction.

Decree No. 79/2016/ND-CP officially takes effect upon signing.

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Legal Procedures Post Licensing in Vietnam

After establishing a company in Vietnam, the compay has to perform a number of legal procedures for compliance purposes.

First, they have to declare the license tax. The tax declaration should be submitted to tax authorities. If the taxpayer has a branch in the same province, the tax declarations of the branch should be submitted to the taxpayer’s tax authority. On the other hand, if the taxpayer has a branch in another province, the tax declarations of the branch should be submitted to the tax authority of the branch. In case when the taxpayer does not have a permanent business location, the tax declaration should be submitted to the sub-department of taxation where the business is located or where the taxpayer resides. License tax is submitted annually and if the taxpayer has declared and paid license tax, he is not required to submit license tax declaration in the next year if the amount of license tax payable is not changed. In case the taxpayer amount of license tax payable in the next year is changed, a tax declaration shall be submitted by December 31st of that year.

Second, the enterprise has to conduct the VAT (value added tax) declaration. The taxpayer that has just begun his business shall declare VAT quarterly. In the next calendar year after 12 months of business, VAT declarations shall be declared whether monthly or quarterly depending on the revenue from the sale of goods and/or services in the preceding calendar year (12 months). VAT shall be declared monthly or quarterly throughout the calendar year and the 3-year period. For example, the first stable period begins on October 1st, 2014 and ends on December 31st 2016.

Third is the CIT declaration (corporate income tax). The CIT declaration should be submitted to the supervisory tax authorities. According to business results, the taxpayer shall make the quarterly tax payment within 30 days of the quarter succeeding the quarter in which tax is incurred; they shall not submit the provisional CIT declaration quarterly.

The fourth is the invoice printing. Before placing the first order for invoices, the company must send a written request for permission to use ordered invoices to the supervisory tax authority. Before the business uses invoices for its sale of goods and services, except for invoices purchased from or provided by the tax authority, the business has to send a notice of invoice publication together with a sample invoice to the tax authority.

Every quarter, sellers of goods and services shall submit the invoice using a report to the tax authority, even when there are no invoices that have been used during the period. The report of the first quarter shall be submitted by April 30th, second quarter by July 30th, third quarter by October 30th, and fourth quarter by January 30th of the next year. If no invoices are used during the period, the quantity of used invoices in the report shall be zero (0).

The fifth is the bank account. The opening of a bank account to conduct transactions with customers is necessary because according to the ministry of Finance, the invoice value of 20 million VND or above should be transferred through the bank. Within 10 days from the day that enterprise opens a bank account, the company has to notify the bank account number to the competent tax agency.

The sixth also the last one is labour and social insurance. If the contract between enterprise and employee has a duration of over 3 months, it is subjected to compulsory social insurance.

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Why Investors Should Set-up Business in Phu Quoc?

The improvement in infrastructure system along with the preferential policies have stimulated investors to come to Phu Quoc to set-up company and do business.

Phu Quoc, an island in Kien Giang of Vietnam is in the top of three islands having tourism potential in Southeast Asia comparable to Phuket in Thailand and Bali in Indonesia. Phu Quoc has become a magnet for attracting huge investment flows from foreign investors in the area of real estate, entertainment, casinos, restaurant or food and beverage service business.

Phu Quoc has temperate weather throughout the year. There are also fresh and friendly forests – sea ecology and the modern transport system on the island with an international airport and international hospital. Moreover, many infrastructure projects and international schools are under construction, which are necessary and favorable conditions to invite and attract investors to Pearl Island for doing business.

Capital inflows to Phu Quoc have really exploded after the “knots” in investment were removed. The new airport went into operation that can welcome larger aircraft and serve more flights, in which there are more international direct flights from China, Singapore, Russia and Cambodia. The 51km long radial route on the island has been basically completed; the road around the island and the branch roads are also being deployed. The power grid was pulled from the mainland to the island, replacing the very high cost gasoline power in the past.

The real estate and tourism consultants all agree that Phu Quoc fully convergent elements of an attractive beach for tourists with year-round sunshine, many beautiful beaches such as Long Beach, Truong Beach, Khem Beach and immense virgin forest. Moreover, Phu Quoc has a strategic location with just 1-2 hours flight to the key tourism markets in Southeast Asia.

Both investment and tourism in Phu Quoc have entered the acceleration phase. By the end of July 2015, Phu Quoc had attracted nearly 200 investment projects, including 136 projects that are being implemented in the area of over 5,100 ha with total registered capitals of 6.5 billion USD. Just one part of those projects become reality then it will make Phu Quoc to become a leading tourist destination in Vietnam, ahead of Da Nang and Nha Trang, competing with the top destinations in the area as Phuket and Bali.

Some of the largest Vietnam corporations such as Vingroup, Sun Group, CEO Group, BIM Group are implementing huge projects that could alter the appearance of the island. In which the giant in the real estate sector – Vingroup has invested projects as: Vinpearl Resort on an area of 300 ha in Long Beach, the combining of golf course and safari zoo on an area of more than 2,000 ha, and the 80 ha commercial complex.

The improvement in infrastructure system along with the preferential business and legal environments i.e. favourable land rental rates, corporate income tax, exemption of visa for foreign tourists make Phu Quoc island of Kien Giang, Vietnam a new attractive place for investment.

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In The First Half of 2020, Foreign Investment in Vietnam Reached 15.67 Billion USD

In the first half of 2020, foreign investment in Vietnam reached 15.67 billion USD

Influenced by the Covid-19 pandemic, foreign investment in Vietnam continued a downward trend, reaching 15.67 billion USD in the first 6 months of 2020. However, the situation is gradually improving.

According to data from the Foreign Investment Agency (Ministry of Planning and Investment), as of June 2020, the total newly registered capital, adjusted and contributed capital to purchase shares of foreign investors reached 15.67 billion USD, equal 84.9% over the same period in 2019.

As such, the Covid-19 pandemic has continued to affect the flow of foreign investment into Vietnam.

Of the total nearly 16 billion USD of registered foreign investment in Vietnam in the first half of the year, 8.44 billion USD came from 1,418 newly registered projects, increase by 13.8% over the same period.

Besides, there were 526 turns of project registered to adjust investment capital, with the total additional registered capital of over 3.7 billion USD, increase by 26.8% over the same period.

Specifically, in June 2020, the whole country attracted 1.79 billion USD of newly registered capital, adjusted and contributed capital, bought shares of foreign investors, increase by 3.1% over the same period in 2019, an increase of 14.9% compared to May 2020 and accounted for 11.4% of total investment capital attracted in the first 6 months.

Some notable projects that have been granted investment certificates in the past 6 months are Bac Lieu LNG Plant Project – 4 billion USD; Southern Vietnam Petrochemical Complex Project (Thailand), adjusted to increase capital by 1,386 billion USD; Radian Jinyu Tire Manufacturing Factory (Vietnam) – 300 million USD…

Particularly in June 2020, a number of large projects were granted investment certificates. Of which, there are: Knitting Factory Project at Texhong Hai Ha Industrial Park – 214 million USD; USI’s factory in Vietnam (China) – 200 million USD…

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Lien Chieu Port Project Attractive to Investors

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…

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Cooperation between Vietnam and Japan After the Covid Epidemic

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.

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“Golden Opportunity” To Welcome FDI Movement

There are “golden opportunities” for the world to know Vietnam and invest in Vietnam, with a special advantage of “strategic trust”, a safe investment destination and ready to welcome shifting capital flows. But taking advantage of opportunities or not depends on the actions of Vietnam.

There is no doubt that there is a wave of foreign investment moving away from China into Southeast Asia, including Vietnam.

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In fact, the trend of shifting investment from China into Vietnam has started to become stronger since last year, after the US – China trade war became more and more complicated. The Covid-19 pandemic has accelerated this trend. Not only the administration of President Donald Trump, but also many European countries, including Japan have also called and announced their willingness to support their companies to move production out of China to reduce dependence on this economy.

Perhaps, because of that, for the first time, Apple is stepping up the production of AirPods wireless headphones in Vietnam, the number can be up to millions of products. And not only headphones, but many other important components are also expected to be manufactured in Vietnam, helping Apple no longer have to rely heavily on suppliers from the Chinese market. Recently, Apple Vietnam has announced the recruitment of many important technical personnel, and the move is thought to be made to better monitor the production of these components in Vietnam.

Both Microsoft, Samsung, LG and many other large and small corporations are also investing in Vietnam market.

Speaking at the Prime Minister’s meeting with businesses, representatives of European, Japanese, Korean and US businesses… in Vietnam have confirmed their interest in Vietnam’s investment destination.

In the first four months of 2020, foreign investment in Vietnam tended to decline, but according to the Deputy Minister of Planning and Investment, Vietnam was still a lucky market, as one of the few countries in the world still recorded positive investment flows. If Vietnam early controls the epidemic and the positive macroeconomic prospects return from the third quarter, it may benefit from the shift of foreign investment flows.

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How to Obtain Business Registration Certificate in Vietnam?

Every organization and individual wishing to set up a foreign owned company in Vietnam shall need to meet some specifics conditions as promulgated under the Law on Investment and Law on Enterprise. In specific areas being considered as conditional investment, the investor shall also need to consult with the law governing the area of investment. Once the investment registration certificate is completed, the investor has the obligation to apply for enterprise registration.

The procedure to register for a certificate of enterprise registration of a joint stock company or limited liability with two or more members are herein mentioned:

Dossiers:

i) Application form for enterprise registration

ii) The company’s charter.

iii) A list of founding shareholders and shareholders being foreign investors/ a list of capital contribution members.

iv) Valid copies of:

Copies of the ID card or other ID papers of founding shareholders and foreign investors/members being individuals; list of authorized representatives of foreign shareholders being organizations.

Decision on establishment, certificate of business registration, or an equivalent document of the organization and the letter of authorization; the ID card or other ID papers of the authorized representatives of founding shareholders and foreign investors being organizations.

If shareholders are foreign organizations, the copy of the certificate of business registration or an equivalent document must be notarized, legalized and authenticated.

The Certificate of Investment registration of the foreign investors as prescribed by the Law on Investment.

State Authority: Business registration office of the province where the enterprise’s headquarters is situated.

Period: within 03 working days from the full receipt of the dossiers

Result: Business registration office shall issue the certificate of enterprise registration or if the application is not satisfactory, business registration office shall inform the applicant of necessary revisions and supplementation to company.

In general, Vietnam government encourages foreign direct investment. If the investor faces challenges at state authority, whom do not issue notification or request of supplementation to the application for enterprise registration, the investor cold lodge a complaint as prescribed by regulations of law on complaints and denunciation to the state authority to protect its right in doing business and investment in Vietnam. A law firm in Vietnam with expertise in both business registration and dispute resolution could assist the investor in the process.

The enterprise is entitled to do business from the issuance date of the certificate of enterprise registration. For conditional business lines, enterprises are entitled to engage in conditional business lines if they satisfy all conditions and are capable to maintain fulfillment of such conditions throughout their operation.

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Vietnam is ready to attract investment after the pandemic

The Covid-19 pandemic is spreading strongly around the world, affecting the world economy. A number of countries, with efforts to prevent, gradually control the spread of the disease and are entering the stage of economic recovery after the epidemic, including Vietnam.

With efforts in disease prevention, since mid-April 2020, Vietnam has basically prevented the pandemic which form the basis for attracting investment and developing production. Among Southeast Asian countries, it is forecasted that Vietnam will still be the country with the highest GDP growth rate in 2020, so investing in Vietnam is an opportunity for both domestic and foreign investors to apply for investment registration, set up company and factory.

On May 9th, 2020, the Government of Vietnam proposed economic development plans and plans to attract investment in Vietnam after the pandemic. The Government has launched many measures to support businesses such as reducing corporate income tax for small and micro enterprises; exemption from agricultural land use tax; adjusting export and import tax to support the operation of enterprises. In addition, the Ministry of Finance will also study and propose to delay the deadline for holding the General Meeting of Shareholders by 3 months (until before September 30), reducing the deadline for information disclosure of treasury stocks (from 7 days to 1-2 days left); increase the credit limit for securities industry; allowing enterprises with foreign direct investment (FDI) if eligible to be listed on the stock market.

Currently, Vietnam’s prestige and position are highly appreciated by the international community for its success in the prevention of pandemics, which shows that Vietnam is a desirable destination for international investors in the situation. Besides, the spread of pandemic in many countries around the world are complicated. In addition, the Covid-19 pandemic has created new awareness in changing consumer tastes, trading with remote principles, limiting exposure, developing new online businesses based on digital economy, pharmaceutical chemicals, e-logistics, etc. this case will give international investors many market opportunities when investing in Vietnam.

In order to seize the opportunity to welcome the wave of investment in Vietnam, the Government of Vietnam has devised many plans to attract and support investment, in order to help foreign investors can shift their investment to Vietnam in this time for applying for investment registration and business registration, to set up company and factory. In the coming time, with the prevention efforts and the plan to attract investment, Vietnam is expected to be a safe destination both for the health and economy of international investors.

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