Establish a foreign-invested manufacturing factory in Vietnam

Similar to establish an enterprise, the establishment of a foreign-invested manufacturing factory in Vietnam still requires applying for two main types of licenses: Investment Registration Certificate and Enterprise Registration Certificate. However, with complex characteristics and the need for a larger land bank, the establishment of the factory must carry out some other procedures.

Selection of the factory establishment location

• Renting pre-built facilities – factories/plants from permitting infrastructure leasing companies in Vietnam. This option is suitable for investors that need to rent land to build factories on a small scale;
• Renting land in industrial parks, export processing zones or high-tech zones. This option is suitable for investors requiring to rent land with a long-term and land leasing area to build from or more than medium-sized factory. When building factories located in industrial parks or export processing zones, investors will enjoy specific regulations to enterprises in industrial parks and export processing zones;
• Lease land directly from the State. This option is suitable for investors who plan to lease land for a long time and a large land lease area. However, this option has a drawback that it may take a lot of time and cost to achieve approval of investment policies of competent agencies on land use planning as well as site clearance plans (in case leased land has not been cleared);
• In case the investor has land and needs to convert from residential land to factory construction land, the investor needs to fully meet the conditions on construction density in accordance with the regulations of that province to be granted a construction permit for their factory project. Along with that, the factory construction must always ensure compliance with the detailed planning on construction approved by the competent state agency; ensure suitable for purposes of using land in accordance with the approved state planning, conformity with the approved construction design of the work and ensure the safety conditions for construction permits for such works.

Apply for approval of an environmental  impact assessment report

When a foreign investor invests in a service industry in Vietnam, the investor will encounter limitations from Vietnam’s GATS commitments signed when joining the WTO such as regulations on the ratio of contributed capital, restrictions on the type of legal entity established for each specific industry in Vietnam. However, when building a factory in Vietnam, foreign investors meet very few restrictions on market access such as investing in service industries, except for some industries with specific conditions such as automobile manufacturing, cosmetics, medical equipment,… In addition, the production process may have negative impacts that adversely affect the environment. Therefore, some objects and projects specified in Appendix II in the Government’s Decree No. 18/2015/ND-CP must carry out environmental impact assessment procedures. This procedure must be carried out during the project preparation phase.

Environmental impact assessment dossiers

• Dossier of request for appraisal:
  • One (01) application form environmental impact assessment report appraisal in accordance with the prescribed form;
  • Seven (07) copies of the project’s environmental impact assessment report. In case the number of appraisal panel members exceeds seven (07) people, the project owner must provide an additional number of environmental impact assessment reports. The form of cover pages, cover subpages and requirements on the structure and content of environmental impact assessment reports shall comply with prescribed forms;
  • One (01) copy of feasibility study  report of investment project report or other equivalent document.
• Dossier submitted for approval after being appraised with the approved result
  • One (01) written request for approval of the environmental impact assessment report, clearly explaining the contents that have been amended and supplemented according to the appraisal council’s conclusion, except for cases where no amendments or supplements are required;
  • The environmental impact assessment report is bound in a hard binder, and the project owner signs the bottom of each page of the report, including an annex as prescribed.

The investor shall submit a dossier of request for approval of the environmental impact report to the People’s Committee of the province. The time limit for appraisal is at least 30 days from the date of receipt of a valid dossier.

Note: In case of building a factory without having to apply for approval of an environmental impact assessment report, investors must carry out procedures for certification of environmental protection plans at the Department of Natural Resources and Environment where the factory is located.

A dossier of certification of an environmental protection plan includes:

• Three (03) copies of environmental protection plans with cover pages and content requirements in accordance with the prescribed form;
• One (01) investment report or production, business or service plan.

Apply for an Investment Registration Certificate

For the project required to be approved policy

Depending on the type of project scale, investors must apply for approval of investment policies from different competent agencies such as the National Assembly, the Prime Minister or Provincial People’s Committees.

A dossier of application for approval of the policy includes:

• A written request for permission to execute investment project;
• Copy of citizen identity card, identification card or passport for individual investors; a copy of the Certificate of Establish or other equivalent document confirming the legal status of an institutional investor;
• 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 to 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, permit change 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;
• An explanation on the use of technology applied to the project specified at Point b, Clause 1, Article 32 of this Law includes: technology name, technology origin, technological process diagram; main technical parameters, usage status of machinery, equipment and main technological lines;
• BCC contract for investment projects in the form of BCC contract;
• Preliminary assessment of environmental impacts, environmental protection solutions.

The investor will send the dossier to the investment registration agency to apply for approval of the investment policy of the competent authority. After receiving the approval of the investment policy, the investor is not required to carry out procedures for applying for an investment certificate. The investment registration agency will issue an Investment Registration Certificate to the investor within 05 working days from the date of receipt of the written decision on investment policy.

For projects that are not required to apply for approval of investment policies

To be able to establish a factory in Vietnam, foreign investors must be granted an Investment Registration Certificate. A dossier of application includes:

• A written request for permission to execute investment project (according to the form);
• Copy of citizen identity card, identification card or passport for individual investors; a copy of the Certificate of Establishment or other equivalent document confirming the legal status of an institutional investor;
• 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 to 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;
• Head office lease contract, Documents proving the lessor’s lease right (Certificate of land use right, Construction permit, Enterprise Registration Certificate with real estate businessfunction of the lessor or equivalent documents);
• Proposing land use needs; in case the project does not request the State to allocate land, lease land, permit change 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 use of technology applied to investment projects, for projects using technologies on the list of technologies restricted from transferring in accordance with the law on technology transfer, including: technology name, technology origin, technological process diagram; main technical parameters, usage status of machinery, equipment and main technological lines;
• BCC contract for investment projects in the form of BCC contract.

You must declare information about investment projects online on the National Foreign Investment Information System. Within 15 days from the date of online declaration, investors must submit dossiers for issuance of Investment Registration Certificates to the provincial Management Board of Industrial, export processing and hi-tech parks. After receiving, the Investment Registration Agency will consider the validity and issue a code for the investment project. In the event of a rejection, the Agency must notify the investor in writing stating the reasons.

Apply for an Enterprise Registration Certificate

After being granted the Investment Registration Certificate, you can start carrying out some procedures to establish a company.

Dossier of application for an Enterprise Registration Certificate:

• Application for Enterprise Registration;
• Draft business charter;
• List of members for mutiple-member limited liability companies, founding shareholders for joint-stock companies;
• A valid copy of one of the notarized documents:
  • For individuals: A valid citizen identity card/ identification card or passport;
  • For organizations: Enterprise Registration Certificate for organizations and enclosed with identification card of the authorized representative of the organization;
• Decision on capital contribution, Documents appointing authorized representatives for members/ shareholders being organizations;
• Other documents in special cases (Viet An Law will advise customers to prepare in accordance with the law).

After preparing all dossier, you submit the application at the Enterprise Registration Agency through the National Enterprise Registration Portal. Within 03 – 05 days, the Enterprise Registration Agency will issue an Enterprise Registration Certificate if your application is valid. After that, investors must publish information on the National Enterprise Registration Portal.

In case you have demand for establishing a company in Vietnam to ensure to have more steady legal entity for your business operation compliance with Vietnamese law, you may refer to the article Establish a company in Vietnam to further information.

Apply for a factory construction permit

In case of new construction of a factory, the investor must apply for a new construction permit.

Component of a construction permit dossier

• Application for a construction permit (according to the form);
• A copy or file containing an original copy of one of the documents proving land use rights in accordance with the land law;
• Copies or files containing primary copies of two sets of technical design drawings or construction drawing designs of construction works approved and appraised by specialized agencies in accordance with the law on construction, each set includes:
  • A drawing of the total ground of the project or the total ground of each phase of the project at the scale of 1/100 – 1/500;
  • Site plan drawing of each project on the land plot at the scale of 1/100 – 1/500, enclosed with a map of the construction location;
  • Drawings of vertical sides and main sections of each project at the scale of 1/50 – 1/200;
  • Foundation plan drawing scale 1/100 – 1/200 and foundation section scale 1/50 of each project together with connection diagram to rainwater drainage, wastewater treatment, water supply, electricity supply, communication scale 1/50 – 1/200.
  • A copy or file containing the main copy of the decision approving the construction investment project;
  • A copy or file containing the main copy of the report on design appraisal results of specialized construction agencies for works subject to design appraisal;
• A copy or file containing an original copy of the investor’s written commitment to ensure the safety of the building and adjacent works for construction works with basements;
• A copy or file containing the original copy of the declaration of capacity and experience of the design organization or individual according to the form, enclosed with a copy of the certificate of practicing construction activities, for works that have not been appraised for design by specialized construction agencies.

Management boards of industrial parks, export processing zones, economic zones and hi-tech zones will receive dossiers and grant construction permits to investors if the dossiers are valid or issue written refusals to grant construction permits in case the dossiers are invalid.

Apply for a fire prevention and fighting license

A dossier of application for a fire prevention and fighting license includes:

• Application for a Fire prevention and fighting license (according to the form);
• Notarized copy of the certificate of competence for fire prevention and fighting; written examination of fire prevention and fighting for newly renovated or newly built establishments, motor vehicles that need to ensure fire safety and fighting when converted or newly built; Notarized copies of fire safety inspection records for establishments and other motor vehicles;
• An inventory of all fire prevention and fighting equipment and life-saving means equipped (according to the form);
• Fire extinguishing options;
• Decision on the establishment of fire prevention and fighting teams at the Facility;
• List of individuals who have passed training in fire prevention and fighting.

The investor submits the application at the Vietnam Fire and Rescue Police Department. In case of authorization for another individual or unit to perform, a written authorization must be attached.

In addition to the main procedures mentioned above, foreign investors still have to carry out some basic procedures after establishing a factory like establishing an enterprise such as paying taxes, applying for seals, hanging signs, printing invoices ,…

In case there are still many problems, don’t hesitate to contact Viet An Law via phone number or email to receive the most dedicated support and assistance. Viet An Law is always ready to accompany and be a reliable friend for your success!