Establish a company providing machinery rental services in Vietnam

For small and medium enterprises, it is very difficult to spend some capital to invest in the purchase of diversified machinery specially in high investment costs business areas such as construction, infrastructure, warehousing. In addition to the capital cost of purchasing machinery, the cost of docking and storage is also a significant cost along with costs incurred related to maintenance for machinery and equipment. Therefore, the demand for renting construction machinery and equipment in Vietnam is huge, which results in large-scale investment on providing machinery and equipment rental services in Vietnam.

Conditions for establishing a foreign-invested company providing machinery and equipment rental services

Conditions of market access for machinery and equipment rental services

Regulations in WTO, VJEPA, CPTPP

Other machinery and equipment rental service (CPC 83109): Unbound.

Regulations in EVFTA and VKFTA:

Allow foreign capital contribution in the joint venture not to exceed 51%.

Provisions of the ASEAN Framework Agreement on AFAS Services

Particularly, AFAS allows foreign capital contribution in the joint venture not to exceed 70%. 

Additional commitments: Equipment brought into Vietnam must comply with relevant regulations of Vietnam on import and export management, standards, technical requirements, national security, national telecommunications infrastructure and comply with relevant legal provisions on telecommunications licenses as well as licenses for the use of radio and frequency equipment. In addition, AFAS is also open to the following services:

• Unmanned aircraft rental (CPC 83104): non restricted.
• Rentals related to furniture and other household appliances (CPC 83203): non restricted.
• Unmanned boat rental service (CPC 83103): non restricted, except allowing foreign capital contribution in the joint venture not exceeding 70%.
• Private car rental service without driver (CPC 83101): non restricted.

Free Trade Agreement between Vietnam and EU – EVFTA (Appendix 8-B-1)

Vietnam in EVFTA commit open for 2 sub-sector of Rental/leasing without operator services :

• Relating to ships (CPC 83103): Non restricted, except that joint ventures with foreign capital contribution not exceeding 70 % can be established 
• Relating to other machinery and equipment (CPC 83109): Foreign service suppliers may only provide services through joint ventures with Vietnamese partners, with foreign equity not exceeding 51 %.

Conditions on capital contribution ratio of foreign investors

In all trade agreements joined by Vietnam, there are restrictions related to the capital contribution ratio of foreign investors when establishing machinery and equipment rental service companies subjected to each business sub-sectors and each nationality of foreign investors following above-mentioned commitments

Procedures for establishing a foreign-invested company providing machinery and equipment rental services

Step 01: Apply for an Investment Registration Certificate for a foreign-invested company

If the projects do not use land (do not lease land directly from the State), do not use technologies on the list of restricted transfer), they are not required to carry out procedures for Approval of Investment Policies. Foreign investors shall always carry out procedures for applying for an Investment Registration Certificate.

Dossiers of issuance of Investment Registration Certificate for foreign-invested companies:

• A written request for implementation of an investment project;
• Documents on the legal status of investors
• For individual investors: Copy of identity card, identity card or passport
• For institutional investors: a copy of the Certificate of Establishment or other equivalent document confirming legal status;
• An investment project proposal includes the following contents: investors implementing the project, investment objectives, investment scale, investment capital and capital mobilization plan, location, duration, investment progress, labor demand, proposal for investment incentives, impact assessment, etc socio-economic efficiency of the project;
• A copy of one of the following documents:
  • Financial statements of the last 02 years of the investor;
  • Commitment of financial support of the parent company;
  • Commitment to financial support of the financial institution;
  • Guarantee on the financial capacity of the investor;
  • Documents explaining the financial capacity of the investor;
• Proposing land use needs; in case the project does not request the State to allocate land, lease land or allow transfer of land use purpose, submit a copy of the site lease agreement or other document certifying that the investor has the right to use the location for the implementation of the investment project;
• Explanation on technology use includes: technology name, technology origin, technological process diagram; main specifications and usage status of machinery, equipment and main technological lines for projects using technologies on the List of technologies restricted from transferring
• BCC contract for investment projects in the form of BCC contract.

The agency submits an application for issuance of an Investment Registration Certificate to a company with 100% foreign capital at the investment registration agency

• If the company is located in the industrial park, it is the Management Board of the industrial parks.
• If the company is located outside the industrial park, it is the Department of Foreign Economic Affairs – Department of Planning and Investment of the province.

Step 02: Establish an enterprise to issue an Enterprise Registration Certificate

After obtaining the Investment Registration Certificate, investors need to prepare documents to establish an enterprise.

Dossier of establishment of a foreign-invested company:

• Application for enterpriseregistration;
• The company’s charter;
• List of members/shareholders;
• Copies of the following documents: Citizen identity card, National identity card, Passport or other lawful personal identification of individual members;
• Establishment decision, EnterpriseRegistration Certificate or other equivalent document of the organization and authorization document; Citizen identity card, identity card, passport or other lawful personal identification of the authorized representative of the member being an organization;
• For members being foreign organizations, a copy of the Enterprise Registration Certificate or equivalent document must be consular legalized;
• Investment Registration Certificate for foreign investors in accordance with the Law on Investment.

The agency submitting the dossier for issuance of an Enterprise Registration Certificate to a company with 100% foreign capital isDepartment of Planning and Investment of the province.

Time for issuance of business registration certificate for a company with 100% foreign capital:05 working days from the date of receipt of complete and valid documents

Step 03: Post the statement of establishment of a foreign-invested company

After being granted the Enterprise Registration Certificate, an enterprise must publicly announce on the National Business Registration Portal according to the order and procedures and pay fees as prescribed.

The contents of the announcement include the contents of the Certificate of Business Registration and the following information:

• Business lines;
• List of founding shareholders and shareholders being foreign investors, for joint-stock companies.

Implementing agency: Reporting department of the Business Registration Agency – Department of Planning and Investment of the province.

Step 04: Engrave the seal of the foreign-invested company

After obtaining the Enterprise Registration Certificate and having proceeded to post the enterprise establishment statement. The enterprise conducts seal engraving at one of the licensed seal engraving units. Enterprises themselves decide on the number and form of seals within the scope permitted by law.

Step 05: Apply for licenses for the production and distribution of cultural products, including video recordings

Clientswishing to establish a foreign-invested company providing machinery rental services or other business sectors, provide legal advice during the implementation of investment projects in Vietnam, please contact Viet An Law Firm for the best support!