Foreign investment methods in Vietnam

Investment is the process in which investors spend money or use their property to run business, such as: establish business organizations, contribute capital, buy shares, buy capital contributions, sign contracts or execute investment projects. Establishing business organizations, the first method, is the one which investors care the most. To create a general look for investors, Viet An Law Firm introduce some investment method as prescribed in the Law on Investment as follows:

The Law on Investment 2014 does not divide investment methods in to direct and indirect investment. Instead, it provide four methods:

1.  Establishing business organizations:

Foreign investors have two choices:

• Establish a 100% foreign enterprise;
• Cooperate with local investors or the Government.

Before establishing a business organization, foreign investors must have the investment project, perform the procedures for issuance of the Certificate of Investment Registration and satisfy the conditions on capital ownership proportion as prescribed by the Law on Securities, the Law on Equitization and Transfer of state enterprises and other international agreements to which Vietnam is a member.

2.  Contribute capital, buy capital contributions, buy shares in business organization:

This is an indirect way for foreign investors to invest. With this method, foreign investors does not have to manage the business but please notice that there are procedures and formalities have to be followed.

3.  Sign PPP contracts:

PPP contracts are those signed by state-authorized agencies and investors or enterprises to execute investment projects. This is the method can optimize investment results and provide high-quality public services, which may bring more benefits to the state and citizens.

4.  Sign BCC contracts:

BCC contracts are those signed by investors in order to cooperate, divide revenues or products without creating any new legal entity. This one could help investors run their business immediately without wasting time and money for creating and managing a new legal entity.

If BCC contracts are signed by local investors, the Civil Code shall be applied. If BCC contracts are signed by at least one foreign investor, the Certificate of Investment Registration is required.

For more information about investment in Vietnam or to get legal advice, please feel free to contact Viet An Law Firm. We are willing to help!