Establish Singaporean companies in Vietnam

In accordance with Foreign Investment Agency, within 5 months of 2017, investment capital from Singapore to Vietnam ranked third with the total registered capital is 1.23 billion USD, making up 10.21%, following Korea and Japan. Vietnam and Singapore officially established bilateral relation on August 1^st 1973. Since then, many major milestones were created by both countries; especially, the Vietnam Singapore Industrial Park which is considered as a successful story in industrial infrastructure sector and also plays an important role in foreign investment attraction of Vietnam. According to International Enterprise Singapore (IES), four key sectors in Vietnam to which Singaporean investors pay attention are: infrastructure, consumerism, manufacturing, food and agribusiness. Statistics from the Ministry of Industry and Trade states that bilateral commerce of Vietnam and Singapore in 2016 reached 19.828 billion USD. Although it went down by 8.2% in comparison with 2015, Vietnam is still the 12^th largest commercial partner of Singapore.

In the context of Singapore’s economy is falling while Vietnam’s economy is growing rapidly, many Singaporean investors are looking for opportunities here. If many large Singaporean corporations and companies have been investing in Vietnam for a long-term period, other small and medium enterprises from Singapore have just started their business in Vietnam. An issue those SMEs have to face is investment procedures. In order to give our Clients a hand, Viet An Law Firm collects and provides some basic information as follows:

In accordance with the Law on Investment 2014, investment methods includes:

• Establish foreign-owned business organization;
• Contribute capital, purchase shares, purchase capital contributions to business organization;
• Public Private Partnership Contract;
• Business Cooperation Contract.

Among those methods, establish foreign-owned business organization and contribute capital, purchase shares, purchase capital contributions to business organization. Although there are different processes, the final goal of Singaporean investors is to own capital in the company. However, foreign investors should pay attention to limitations on foreign investment stipulated in national agreements in which Vietnam is a party as well as local jurisdiction.

Because both Vietnam and Singapore are signing parties of ASEAN Framework Agreement on Services (AFAS) with 9 packages of commitments in which some sectors have wider market access in comparison with WTO Commitments. For example, Road Freight Transport (CPC 7123), WTO Commitments states that foreign investors shall establish a joint-venture with Vietnamese partners; in which, foreign capital shall not exceed 49% of the total capital of the company but AFAS stipulated that the maximum proportion of foreign capital in the joint-venture is 70%. Besides that, the Law No.03/2016/QH14 on the list of conditional business sectors stipulating that investors shall satisfy conditions in specialized laws of each sector. For example, a Singaporean-owned company plans to export, import and distribute goods in Vietnam, they have to get the Business License (a sublicense) issued by the Department of Industry and Trade. Based on that, they have legal rights to be named on the custom declaration papers to export, import their goods and distribute to end consumers in Vietnam. When Clients provide Viet An Law Firm information on their business sectors, we can research the regulations and give detailed advice suitable for each Client.

Option 1: Establish Singaporean company in Vietnam

Step 1: Apply for the Investment Registration Certificate

An application for the Investment Registration Certificate includes:

• A written request for permission for project execution;
• Individual investors: copies of ID or passport of each individual;
• Organization investors: copies of Establishment Certificate or equivalent paper confirming the legal status;
• Project proposal specifying: the investors, project’s objectives and scale; capital and capital rising method; location, duration and schedule of the project; labor demand;
• Copies of financial statements in the current 02 years or financial support commitment of the parent company or financial institutions; guarantee for investors’ financial capacity, description of investors’ financial capacity; request for investment incentives; assessment of socio-economic effects of the project;
• Land use demand. If the project does not use land allocated or leased by the State or does not require the State to change land use purpose, the copies of the lease agreement or equivalent papers proving that investors have rights to use the location shall be submitted;
• If the project use any technology in the List of technologies restricted from transfer, investors have to submit the explanation on technology transfer.

Submit the application at: The Department of Planning and Investment.

The process: Within 15 days from the receipt date of the valid application, the Department of Planning and Investment will grant the Investment Registration Certificate to foreign investors. If the Department of Planning and Investment refuse to grant, they will respond in notices and explain the reasons.

Step 2: Apply for the Business Registration Certificate

An application for the Business Registration Certificate includes:

• A written request for business registration;
• The Articles of Associates;
• The list of members of the multi-member limited liability company or the list of partners of partnership;
• Notarized copies of ID or valid passport of each individual member; notarized copies of the Business Registration Certificate/Establishment Certificate of each organization member; notarized copies of ID or valid passport of each legal representative of each organization;
• Power of attorney (Clients grant to Viet An);
• Certificate of Investment Registration of foreign investors.

Submission place: The Department of Planning and Investment.

Duration: 03 – 06 working days.

Announce the business registration contents:

• Business registration information must be announced publicly on the National Portal of Business Registration within 30 days from the date of issuance of the Business Registration Certificate. The contents of the announcement are all the information stated in the Business Registration Certificate.
• Notice: In accordance with Clause 1 Article 26 of the Decree 50/2016/NĐ-CP, if the company does not announce or lately announce the business registration information on National Portal of Business Registration, they are fined an amount of money from 1.000.000 VND to 2.000.000 VND.

Engrave the seal and publish the seal sample:

• The company can authorized Viet An Law Firm or can engrave the seal by itself then announce the seal sample to the Department of Planning and Investment. The company is allowed to decide about the appearance, quantity and the contents of the deal but it must contain the name and the code of the company;
• After receiving the announcement on the seal sample, the Business Registry Office shall grant the receipt to the company, post the announcement on the National Portal of Business Registration and issue the Announcement on Publication of the seal sample to the company.

Option 2: Contribute capital, purchase shares, purchase capital contributions to Vietnamese company

This option helps investors save their time and budget as they do not have to apply for Investment Registration Certificate. However, foreign investors shall comply with the maximum proportion of foreign capital in the company in specific cases. If they choose this one, they just need to register to contribute capital, purchase shares, purchase capital contributions at Department of Planning and Investment. Besides that, if there is any sector banning foreign investors, please consider to adjust and eliminate them.

Step 1: Foreign investors register to contribute capital, purchase shares/capital contributions to the company

Application includes:

• Application for capital contribution, shares/capital contributions purchase indicating: the information of the target company, the foreign capital contribution after completing the procedures;
• Copies of the ID or passport of each individual investor; copies of Establishment Certificate or equivalent papers confirming the legal status of each investor who is an organization.

Submission place: The Department of Planning and Investment.

The process: If the capital contribution, shares purchase, capital contribution purchase of foreign investors comply with the regulations on investment forms and foreign capital contribution, within 15 days from the date of receipt of the valid application, the Department of Planning and Investment will grant a written announcement. If the application does not satisfies conditions, the Department of Planning and Investment will grant a written announcement providing reasons and explanation.

Step 2: Transfer the shares, capital contributions and change the shareholders or members of the company

Foreign investment consulting services in Viet An Law Firm:

• Consult about regulations and procedures related to foreign investment in Vietnam;
• Consult about business sectors, business conditions of each sector under the laws of Vietnam;
• Consult and draft the applications for Investment Registration Certificate, Business Registration Certificate and sublicenses;
• Represent for Clients to perform procedures at state-authorized agencies when being authorized;
• Consult about after-establishing issues: contracts, Singaporean employees working in Vietnam, commercial franchise, tax, social insurance…

If you are looking for advice about regulations and procedures for Singapore investment in Vietnam as well as other legal issues related to companies and investment, please feel free to contact Viet An Law Firm for more information!