Set up a foreign company in Vietnam

In terms of economic integration, Vietnam is one of the most active countries in participating in and negotiating multilateral and bilateral free trade agreements. The benefits of signing and joining these free trade agreements are that the economy is increasingly open, removing barriers for businesses and traders, and especially the opportunity to attract capital of foreign investors entering Vietnam. Set up a company in Vietnam did not become difficult for foreign companies intending to invest in Vietnam. Therefore, the law governing set up a company in Vietnam will include free trade agreements that Vietnam has signed and the national laws of Vietnam. Viet An Law Firm’s application for making a preliminary guide to foreign businesses can establish company in Vietnam.

Legal basis for the set-up of foreign companies in Vietnam

• WTO commitments, bilateral free trade agreements between Vietnam and other countries;
• The Law on Investment 2020 and implementation guidelines;
• The Law on Enterprise 2020 and implementation guidelines;
• Specialized legal documents related to the investment sector.

Determine the nationality of the foreign investor who wants to set up a company in Vietnam

The identification of an investor’s nationality allows investors to see whether the country of which the investor is a member of the World Trade Organization (WTO) or between Vietnam and a country. Does the national investor have free trade agreements? Determining the investor’s nationality will help investors determine what incentives they will enjoy and what barriers there will be when investing in Vietnam.

For different industries, there will be different conditions for investors to invest in Vietnam, and different free trade agreements will also have different degrees of openness.

Determining the investment industries and sectors of the foreign company that set up a company in Vietnam

According to the United Nations PCPC Interim Center Product Classification System, the service industries that foreign investors can invest in Vietnam are divided into 12 sectors, including Business Services, Services information, Construction, and related engineering services, Distribution Services; Educational Services; Environmental Services; Financial services; Medical and social services; Travel services and related services; Recreational, cultural and sports services; Service of transportation; Other services.

Up to now, barriers have been removed gradually and many sectors have been fully opened, meaning that when foreign investors invest in Vietnam, there is no need to meet industry conditions. That is because the barriers have been removed according to the roadmap committed by Vietnam. However, there are still some sectors that still maintain some limitations, based on Vietnam’s commitments in trade agreements, the Law on Investment 2020, and its implementing guidelines, some sectors need to have the following conditions :

• Real estate
• Other business services
• Professional service
• Travel services and related services
• Recreational, cultural, and sporting services
• Computer and audio-visual services
• Research and development services
• Information services
• Rental or rental service with or without an operator
• Service of transportation
• Building services
• Medical and social services
• Education and training – vocational training and related services
• Environment
• Agriculture, Forestry, and fishery
• Production and trading of goods
• Retail goods, e-commerce,…

Example: Construction service (CPC 511-8)

Legal basis: WTO, AFAS, FTAs, VKFTA

1. WTO, AFAS, FTAs, VKFTA

a Foreign investor: must be a legal entity of a WTO Member or a member of ASEAN (If a Korean investor is a Korean investor, according to VKFTA: does not require the investor to establish a legal entity of Korea)

(b) The scope of activities of foreign-invested economic organizations includes:

– Construction of high-rise buildings (CPC 512)

– Construction of civil engineering works (CPC 513)

– Completion and installation work (CPC 514, 516)

– Completion of high-rise buildings (CPC 511, 515, 518)

2. The Law of Vietnam: No regulation on investment conditions applicable to foreign investors

To know more about the conditions of other industries, the most complete and accurate way, investors can visit the Website of the Ministry of Planning and Investment-Foreign Investment Department: 

Investment procedures for foreign projects in Vietnam

• Investment projects of foreign investors.
• The investment project of economic entities specified in Clause 1 of Article 23 of the Law on Investment 2020 for foreign investors to invest in establishing other economic organizations; capital contribution investment, share purchase, capital contribution purchase from other economic organizations; Investing in the form of a BCC if the economic organization falls into one of the following cases:

• • Having foreign investors holding more than 50% of the charter capital or having the majority of the general partners being foreign individuals if the business organization is a partnership;        
  • Economic organizations with foreign investors holding more than 50% of the charter capital or the majority of the company’s members are foreign individuals, organizations holding more than 50% of the charter capital;        
  • Having foreign investors and economic organizations whose foreign investors hold more than 50% of the charter capital.        

Foreign-invested projects are not required to apply for an investment registration certificate. Accordingly, the investor is only established as a Vietnamese capital enterprise and the procedures for buying capital contribution

• Having foreign investors holding less than 50% of the charter capital or having a minority of general partners who are foreign individuals in case economic organizations are partnerships;     
• Economic organizations with foreign investors holding less than 50% of the charter capital or the majority of the company’s members are foreign individuals, organizations holding less than 50% of the charter capital;        
• Having foreign investors and economic organizations whose foreign investors hold less than 50% of the charter capital.        
• Foreign investors make investments in the form of capital contribution, share purchase, or purchase of capital contributions from other economic organizations; Investment in the form of a BCC contract.        
• Foreign investors invest in the form of capital contribution, share purchase, or purchase of capital contributions from economic organizations.        

The foreign investor must apply for investment policy approval at the People’s Committee of the province (Article 32 of the Law on Investment 2020)

• An investment project that requests land allocation or land lease by the State without auction, bidding, or transfer, an investment project that requests permission to change the land use purpose, except for land allocation. , lease of land, or permit the change of land use purpose of households or individuals that are not required to obtain written approval from the People’s Committee of the province under the law on land;        
• Housing investment projects (for sale, lease, or lease-purchase), urban areas in the following cases: an investment project with a land-use size of fewer than 50 hectares and a population of less than 15,000. people in urban areas; investment projects with a land-use scale of fewer than 100 hectares and a population of fewer than 10,000 people in non-urban areas; investment projects, irrespective of the size of the land area, the population of the restricted area or the historic inner city (determined in the urban planning scheme) of the special-grade urban area;     
• The investment project to build and trade golf courses (golf);        
• Investment projects of foreign investors, foreign-invested economic organizations implemented in islands, communes, wards, and townships; coastal communes, wards, and towns; other areas affecting national defense and security.        
• For the above investment projects implemented in industrial zones, export processing zones, hi-tech zones, or economic zones in conformity with the planning approved by competent authorities, the Management Board of industrial parks and zones export processing, hi-tech zones, economic zones approved investment policy.        

A project of the foreign investor must apply for an investment policy approval procedure of the National Assembly (Article 30 of the Law on Investment 2020)

• An investment project that greatly affects the environment or potentially seriously affects the environment, including:        

• • Nuclear power plant;     
  • Investment projects requiring a change of land use purpose special-use forest, watershed protection forests and protection forests border of 50 hectares or more; protective forests for wind and sand shielding, and protection forests for wave and sea encroachment of at least 500 hectares; production forests of 1,000 ha or more;     

• An investment project requiring a change of the use purpose of land under wet rice cultivation for 02 crops or more with an area of ​​500 ha or more;        
• An investment project requiring resettlement of 20,000 people or more in mountainous areas, 50,000 people or more in other regions;        
• An investment project that requires a special mechanism or policy to be decided by the National Assembly.        

A project of the foreign investor must apply for an investment policy approval from the Prime Minister (Article 31 of the 2020 Investment Law).

• Except for projects falling under the jurisdiction of the National Assembly, investment projects regardless of capital sources fall in one of the following cases:        
  • Investment projects require immigrant resettlement of 10,000 people or more in the mountains, from 20,000 people or more in other areas;     
  •  New construction investment project: airport; runways of airports and airfields; the passenger terminal of the international airport; cargo terminals of airports and airfields with a capacity of 1 million tons/year or more each year;     
  •  New investment project in passenger transportation by air;     
  • New construction investment project: a harbor, a harbor area of ​​a special seaport; ports, port areas with investment capital of 2,300 billion VND or more, belonging to seaports of class I;     
  • Oil and gas processing investment project;     
  • Investment projects dealing in betting and drinking (casino), excluding prize-winning video games for foreigners;     
  • Investment Project construction of houses (for sale, for rent, for rent to buy), urban areas in the following cases: investment scale land use of 50 hectares or more or a size below 50 ha but with a population of 15,000 or more in urban areas; investment projects with a land-use scale of 100 ha or more or less than 100 ha with a population of 10,000 or more in non-urban areas; investment projects, irrespective of the size of the land area, population under the protected scope of relics recognized by competent authorities as national monuments or special national monuments;     
  • Project of investment in construction and infrastructure business of industrial parks and export processing zones;     
• Investment projects of foreign investors in the field of telecommunications services business with network infrastructure, afforestation, publishing, journalism;        
• Investment project at the same time falling under the authority to approve investment policies of at least 02 provincial-level People’s Committees;        
• Other investment projects under the competence of the Prime Minister to approve investment policies or to make investment decisions under the law.        

Documents of investor set up a company in Vietnam need to provide

Investors wishing to execute an investment project shall prepare components of the dossier and general documents irrespective of the competence to grant investment policy decisions. The general composition of the profile includes:

Competence to issue investment registration certificates

In Vietnam, there are two agencies competent to receive, grant, modify, and revoke an investment registration certificate, including:

Depending on the project implementation location, the investor will apply for an Investment Registration Certificate at one of the two agencies below.

Department investment plan will receive dossiers and registration certificate of investment for the following projects:

• Investment projects outside industrial zones, export processing zones, hi-tech zones, economic zones;
• Projects for the development of infrastructure, industrial parks, export processing zones, high-tech zones, and investment projects in industrial parks, export processing zones, and hi-tech zones in localities where management boards have not been established. industrial parks, export processing zones, and high-tech zones.

Board management of industrial areas, high-tech zones, export processing zones, and economic zones receipt and certificate of registration of the investment for the investment projects in industrial zones, high-tech zones, zones processing, and economic zones, including:

• Investment projects implemented in industrial zones, export processing zones, hi-tech zones, and economic zones.
• Investment projects for the development of infrastructure in industrial parks, export processing zones, and high-tech zones.

Department of Planning and investment where investors place or planned headquartered or operating office for the implementation of investment projects receiving the application and Certificated investment registration to:

• Investment projects implemented in many provinces and central cities;
• Investment projects are carried out at the same time inside and outside export processing zones, hi-tech zones, and economic zones.

Note the company headquarters and project implementation location of the company that is expected to be established

Depending on the project implementation site, investors will be entitled to different incentives related to land tax, as well as investment procedures of the agencies in that location.

• For companies operating in the field of production and processing that need factory premises: requirement to have a lease contract for a workshop or space to have a factory or a policy approval for use. land for production can proceed to set up foreign companies in Vietnam.
• For companies operating in commerce and services: an Office lease contract and related real estate documents on office lease are required. Do not use the apartment building for company headquarters.

Service of setting up a company in Vietnam by Viet An Law Firm

• Counseling and assisting investors in finding and renting offices, factories, and land with competent state agencies in Vietnam;
• Counseling and supporting customers on conditions related to the business lines that investors want to invest in.
• Drafting and preparing documents for investors;
• Working on behalf of investors with state agencies.
• Receive results from customers’ records.
• Vietnam Security Law conducts advisory support to clients the following activities as established companies in Vietnam as well as after the procedure for granting registration certificates of investment.
• Consulting and assisting investors in procedures for land, site clearance, factory construction, construction permits, environmental impact assessment, fire protection permits, qualified permits business.
• Comprehensive consultation on the provisions of labor law, tax, finance, foreign currency transfer, capital contribution …