Set up a business in Vietnam for goods processing

Processing goods is an increasingly popular business activity, especially in the export sector. However, to establish a goods processing company, it is necessary to fully meet the conditions prescribed by law. In this article, Viet An Law Firm will work with customers to research the necessary conditions to set up a business in Vietnam for goods processing.

Legal basis

• Vietnam’s WTO commitment schedule;
• Enterprise Law 2020;
• Commercial Law 2005;
• Law on Foreign Trade Management 2017;
• Decree 01/2021/ND-CP on business registration;
• Decree 69/2018/ND-CP detailing some articles of the Law on Foreign Trade Management;

What is commercial processing?

According to Article 178, Commercial Law in 2005, commercial processing means a commercial activity whereby a processor uses part or whole of raw materials and materials supplied by the processor to perform one or several stages of the production process at the latter’s request to receive remuneration.

Conditions for setting up a business in Vietnam for goods processing

Market access conditions for foreign investors

The WTO commitment schedule also stipulates that for services related to production, the commercial presence of foreign investors in Vietnam is not limited,  foreign investors are allowed to set up a 100% foreign-owned enterprise.

Conditions on the entity setting up a goods processing business

To set up a goods processing business, a Vietnamese trader or a foreign-invested trader in Vietnam must be at least 18 years old and have full civil act capacity or an organization with full legal capacity qualified as a legal entity.

This ensures that individuals or organizations set up a goods processing business have enough capacity to carry out business transactions such as signing contracts, buying and selling, and acknowledging rights and obligations when performing business transactions of goods processing contracts.

Conditions on goods processing objects

• Goods not on the List of goods banned from export or temporarily suspended from export, goods on the List of goods banned from import or temporarily suspended from import; based on Article 10 of the Law on Foreign Trade Management 2017, the Government will have regulations on goods banned from export and import into Vietnam. However, the Prime Minister will have the right to allow the export and import of prohibited goods for special purposes, warranty, analysis, testing, scientific research, medical, pharmaceutical production, national defense, and security protection.
• For goods exported and imported under license, specified in Appendix III issued with Decree 69/2018/ND-CP stipulates goods exported and imported under license under the management of the Ministry of Industry and Trade, traders can only sign contracts with foreign traders after being licensed by the Ministry of Industry and Trade.

Conditions for goods processing license

According to Article 38 of Decree 69/2018/ND-CP, in the case of goods exported or imported under a license as prescribed above, the processing trader also needs to carry out additional procedures to apply for a goods processing license to carry out processing contracts in Vietnam. Domestic processing traders must send a set of application documents for a Goods Processing License directly or through postal services or online (if applicable) to the Ministry of Industry and Trade.  Application includes:

• Written request for a Goods Processing License;
• Investment certificate or business registration certificate, enterprise registration certificate;
• Certificate of Eligibility for production and business (if any).
• Power of Attorney for Viet An Law to carry out the procedure.

Procedures for applying for a goods processing license

• Step 1: Prepare complete documents to apply for a Goods Processing License;
• Step 2: Apply for a Goods Processing License to the Ministry of Industry and Trade;
• Step 3: Receive notice of amendments and supplements from the Ministry of Industry and Trade (If any);
• Step 4: Receive the results of the Goods Processing License;

Procedures for setting up a goods processing business

For domestic traders

Procedures for setting up a business

• Step 1: Prepare complete documents to set up a business;
• Step 2: Submit company establishment documents to the Business Registration Office – Ministry of Planning and Investment where the business is headquartered;
• Step 3: Receive the results of the Business Registration Certificate from the Ministry of Planning and Investment;
• Step 4: Carve the company seal, including the legal entity seal (round seal) and title seal (square seal);
• Step 5: Carry out some procedures after the set up such as declaring license tax and registering digital signature.

Business establishment profile

• Application for enterprise registration;
• Company charter;
• List of members for multiple-member limited liability companies and list of shareholders for joint stock companies, accompanied by the following documents:
  • If an individual contributes capital: a valid copy of an ID card or citizen identification card or valid passport;
  • If the organization participates in capital contribution: the decision to contribute capital and appoint a capital contribution manager, copy of Enterprise Registration Certificate, copy of ID card/ citizen identification/passport of the capital management representative contribute.

For foreign traders

Establishment procedures

• Step 1: Prepare complete documents to set up a foreign-invested goods processing business;
• Step 2: Apply for Investment Certificate;
• Step 3: Receive Investment Certificate results;
• Step 4: Submit business establishment documents to the Business Registration Office – Ministry of Planning and Investment where the business is headquartered;
• Step 5: Receive the results of the Business Registration Certificate from the Ministry of Planning and Investment;
• Step 6: Carve the company seal, including Legal entity seal (round seal) and title seal (square mark);
• Step 7: Carry out some procedures after establishment.

The dossier to apply for an Investment Certificate includes:

• Written request for investment project implementation;
• Copy of foreign investor’s passport;
• Proposing investment projects;
• Copy of Bank confirmation of balance corresponding to the investment amount;
• In case the investment project does not request the State to allocate land, lease land, or allow a change of land use purpose, submit a copy of land use rights documents: Real estate lease contract, land use rights certificate; Construction decisions, or other documents proving the project location;
• Content explaining the technology used in the investment project for projects subject to examination and consultation on technology according to the provisions of the law on technology transfer;
• Other documents related to the investment project, conditions, and capacity requirements of the investor according to the provisions of law (if any).

Dossier for issuance of Certificate of Registration of foreign-invested enterprises

• Application for enterprise registration;
• Company charter;
• List of founding shareholders and shareholders who are foreign investors (if a joint stock company); List of members for limited liability companies with 2 or more members;
• Certified copy of ID card, or passport (if an individual); Establishment decision, business registration certificate or equivalent document and citizen identification card or passport with authorization document for the capital manager in Vietnam (if an organization) ;
• Certified copy of Investment Registration Certificate;
• Power of Attorney for Viet An Law Firm to carry out procedures;

Above is advice on the conditions for setting up a goods processing business. If you need to set up a business in Vietnam for goods processing or need further information, please contact Viet An Law Firm for the earliest support.