“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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Which Areas Are Incentivized For Investment in Vietnam Under Decree No. 37/2020

Investors are always interested in areas which government incentivize for investment in Vietnam, to enjoy benefits i.e. tax reduction, tax exemption, land usage…which give them some help to grow the business in areas which are not economically potential without the help from the government when setting up company in Vietnam.

According to the regulations on business investment in Vietnam in Decree No.118/2015/ND-CP, investment projects eligible for investment incentives are entitled to tax and land policies in their performance. Accordingly, for businesses that invest in industries or areas enjoying investment incentives, there will be many advantages related to tax and using land when performance business.

According to the provisions of Appendix I, Decree No.118/2015/ND-CP, the fields are preferentially invested in many fields such as science and technology, electronics, mechanics, material production, and information technology, agriculture, environmental protection, infrastructure construction, education, culture, sports, health activities of People’s Credit Funds and microfinance institutions are specified in Appendix I Decree no. 118/2015/ND-CP.

However, with the continuous development of the economy, along with the development projects of many small and medium-sized enterprises, besides start-up projects, it is more suitable to the market economy and start-up situation of many investors, on March 30th 2020, the Government has issued Decree No.37/2020/ND-CP supplementing the list of preferential investment industries which will take effect from May 15th, 2020.

According to the provisions of Decree No. 37/2020/ND-CP, for business investment activities in accordance with the Law on Support for Small and Medium Enterprises with the following business lines which will be added to the list of industries to enjoy incentives for investment in Vietnam, including business investment in the product distribution chain of small and medium-sized enterprises, business investment in incubation facilities for small and medium-sized enterprises, business investment in technical facilities supporting small and medium-sized businesses, investing in a common working area for small and medium-sized start-ups.

The investors who invest in Vietnam in the business lines above in supporting industries for small and medium-sized enterprises from May 15, 2020, will be entitled to specific tax and land incentives specifically as required by law. Domestic and foreign investors could utilize the opportunity to make investment to enjoy the incentives in Vietnam when conducting businesses.

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“The King of Emerging Markets” Mark Mobius: Few reliance on China will become a target, Vietnam emerged as a new address for the supply chain.

Companies will move their supply chains out of China after the Covid-19 crisis to minimize the impact from similar shocks that may occur in the future, and they might choose to invest in Vietnam.

According to Mark Mobius, a wave of displacement from China will erupt after the epidemic is under control. At the same time, the supply chain will be less dependent on the world’s second economy. The founder of Mobius Capital Partners also said the pandemic has caused businesses to rethink the way they should do to minimize future supply shocks.

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According to Mobius, lot of people are dependent on supply chains in China. However, they are becoming diversified into the supply chain as much as possible. Finding nearby supply chains becomes a new target. There will be some priorities for companies based in the US or regional markets like Mexico and Canada.

However, the diversification of these supply chains will move to places like Vietnam, Bangladesh, Turkey or even Brazil.

Not only Mobius, according to independent analyst Fraser Howie, Governments will seek to reduce their dependence on China, although no country can completely ignore Beijing’s role in supply chains.

Richard Martin of IMA Asia commented that although manufacturers in some industries began moving their operations out of China before Covid-19 broke out, the pandemic would trigger a second wave in which the Nationalism is used to consider supply chain restructuring.

Many industries, such as agri-pharmaceuticals and energy, have been under great pressure amid the global health crisis because of their reliance on economies such as China and logistics constraints. International pressure on the supply chain.

Booming from Wuhan, China in late 2019, Covid-19 has spread across the globe and crippled many economies, including the United States. The social distancing solution to prevent the virus from spreading is applied by a number of countries. The time of re-opening of the economies is still a big question mark when the epidemic has not been controlled yet.

Meanwhile, the price of oil in the US dropped sharply because the crisis led to a situation of supply exceeding demand, causing WTI oil futures delivered in May fell to negative level for the first time. However, low oil prices are a good sign for emerging markets like India and China, the energy importers.

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Fraud Management in Vietnam

Vietnam is working on improving on the level of transparency. It is advisable that foreign investors take effort to learn about their partners before cooperating with them. In other words, it is important to understand an individual or enterprise before joining venture with them  in Vietnam so that  the investors may reduce the minimum risks that may occur as well as evaluating the possibility of cooperation in the future.

Despite the high risks of fraud, there are good opportunities in Vietnam. Namely, at the present, Vietnam has been strongly attracting direct investment capital from foreign investors. This leads to the demands of investigation as above – mentioned.

If the investors ignore this step of investigation, they may take heavy consequences because of their subjective. It may be a loss of money, time, effort and reputation.

Normally, most of the investors investing in Vietnam for the first time are using survey results from third parties, that is, the companies specializing in the investigation of market information.

Because, first, when investing in a whole new market, the investors do not understand clearly about the investment environment as well as the operating subjects in this new market. If the investors conduct the investigations themselves, the result may be inaccurate and not objective.

Second, the investors can save time as well as money to focus on other professional activities. With a team of experienced professionals, the companies specializing in this investigation field have full of capacity to meet all requests from the investors. Besides, time for the investigation is quick, and the price shall be much cheaper than the cost that the investors use to do their own investigation.

Therefore, if you are going to invest in Vietnam, we recommend you to conduct a thorough Vietnam background check, which includes the followings:

• Research for records of enterprises or record of individuals in Vietnam;
• Research for the reputation of the company or individual who shall be your business partners in Vietnam;
• Research for the history of public information about the company or individual.

Readmore : https://www.antconsult.vn/tag/fraud-management-in-vietnam

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Set-up Limited Liability Company in Vietnam

Limited Liability Company is a form of enterprise which is established by contributing of members.  A member shall be liable for the debts and other property obligations of the enterprise within the amount of capital that he/she has undertaken to contribute to the company.

Limited liability companies are regulated by two types:

One member Limited Liability Company is an enterprise owned by one organization or individual;

Limited Liability Company with two or more members is an enterprise owned by organizations or individuals, in which the number of members shall not less than two members and not exceed fifty.

Organizational and management structure of Limited Liability Company normally comprise of a Member’s Council, General Director or Director.

A limited-liability company established by foreign investors may take the form of either:

100% foreign-owned enterprise (where all members are foreign investors); or;

Foreign-invested joint-venture enterprise between foreign investors and at least one domestic investor.

Readmore : https://www.antconsult.vn/services/set-up-limited-liability-company-in-vietnam.html

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