Set up an FDI company for food business in Vietnam

Due to the increasing demand for food consumption, domestic and foreign businesses are developing the food business to meet both domestic and export markets. Currently, the food business situation in Vietnam is very developed and has potential. With the diversity of natural resources and human resources, Vietnam has attracted many foreign investors in this field. However, to be successful in the food business, FDI companies need to master regulations on food safety, and product quality, and comply with inspection and management procedures to meet the conditions. establishment and operation of businesses. In the following article, Viet An Law will provide conditions to set up an FDI company for food business in Vietnam according to current legal regulations.

Legal basis

• Vietnam’s schedule of commitments on trade and services in the WTO;
• Law on Investment 2020;
• Law on Enterprise 2020;
• Law on Food Safety 2010;
• Decree 31/2021/ND-CP guiding the Investment Law;
• Decree 01/2021/ND-CP on business registration;
• Decree 122/2021/ND-CP regulates sanctions for administrative violations in the field of planning and investment.

What is an FDI enterprise?

FDI enterprises (Foreign Direct Investment) are enterprises with foreign investment capital and fully use this capital source in most of their business activities. Currently, the law does not have a definition of FDI. The closest definition of FDI is specified in Clause 22, Article 3 of the Investment Law 2020 on economic organizations with foreign investment capital.

Currently, there are two main types of FDI enterprises:

• 100% foreign-invested enterprise.
• Joint venture enterprise between domestic and foreign partners.

Condition to set up an FDI company for food business in Vietnam

For investors to be granted an Investment Registration Certificate for the food business in Vietnam, they first need to meet the regulations for entering the business investment market in this field. The food business may include the following activities:

• Food production;
• Wholesale and retail of food;
• Import and export of food.

According to Vietnam’s commitment schedule in the WTO, Vietnam currently does not restrict investors from accessing the food business in Vietnam. However, some conditions should be noted:

• For retail activities: the establishment of retail establishments (other than the first establishment) will be considered based on economic needs test (ENT);
• For food production activities in some large cities such as Hanoi and Ho Chi Minh: locations must be rented in industrial parks.

In addition to market access conditions, foreign investors also need to comply with Vietnamese law on food management. For example, regulations on food safety certification, food declaration, and obtaining a Certificate of Free Sale of food.

For import and export activities, according to the provisions of Decree 09/2018/ND-CP, foreign-invested enterprises have the right to export food purchased or produced in Vietnam or legally imported into Vietnam. Vietnam to foreign countries and separate customs areas, under the following conditions:

• Exported food is not on the list of goods banned from export; list of goods temporarily suspended from export; List of goods that are not allowed to be exported in international treaties to which Vietnam is a member;
• For exported food on the list of goods exported under license and conditions, economic organizations with foreign investment capital must have a license or meet all conditions prescribed by law. For example, quarantine certificate, certificate of origin, food safety license, and food declaration number.

Procedures for setting up an FDI company for food business in Vietnam

Step 1: Apply for an Investment Registration Certificate to establish a food business company for foreign investors

• Document requesting implementation of the investment project on food processing;
• Copy of ID card or passport for individual investors and documents certifying legal status for institutional investors;
• Investment project proposal documents include detailed project content;
• Copies of documents on the investor’s financial affairs;
• Documents on land use needs, location rental agreements, or right to use location to carry out investment projects.
• Power of Attorney for Viet An Law.

Step 2: Apply for an Enterprsie Registration Certificate

Procedures for establishing a business are carried out according to the provisions of the Enterprise Law 2020 and Decree 01/2021/ND-CP, specifically as follows:

Registration documents to establish a food business company include:

• Application for business registration.
• Company charters.
• List of members for limited liability companies with two or more members; List of founding shareholders and list of shareholders who are foreign investors for joint stock companies.
• Copies of legal documents of organizations and individuals who are members/shareholders of the company; Legal documents of the individual for the authorized representative and document appointing the authorized representative.
• Investment registration certificate in case the enterprise is established or participates in the establishment by foreign investors or economic organizations with foreign investment capital according to the provisions of the Investment Law.
• Power of Attorney for Viet An Law to carry out the procedure.

After preparing the documents, the company founder or authorized person submits the documents to the business registration agency where the enterprise is headquartered. Enterprises are granted an Enterprise Registration Certificate when they meet all the conditions prescribed in Clause 1, Article 27 of the Law on Enterprises.

Step 3: Publication of the business registration content

After being granted an Enterprise Registration Certificate, an enterprise must make a public announcement on the National Business Registration Portal within 30 days from the date of publication. Enterprises pay the fee and send a request for publication of enterprise registration contents to the Business Registration Office where the enterprise is registered.

Step 4: The business engraves the company seal

Businesses can authorize or engrave their company seal themselves. Enterprises can decide for themselves the form, quantity, and content of the seal but must show the name and enterprise code. Currently, businesses do not have to notify seal samples but manage and preserve their company seals themselves.

Step 5: Carry out post-establishment procedures

• Making company signs;
• Open a bank account;
• Declare and pay license tax, VAT, register for electronic tax payment;
• Purchase digital signature.
• Notice of invoice issuance and electronic invoice registration;
• Apply for wholesale and retail licenses for foreign enterprises;
• Apply for a food safety license for food business companies;
• Carry out food declaration and apply for Certificate of Free Sale of food (CFS) numbers for products exported abroad if required.

Some related questions

Besides establishing an FDI company, in what form can foreign investors conduct food business in Vietnam?

According to Article 21 of the Investment Law 2020, in addition to establishing economic organizations, investors can make investments in Vietnam in the form of:

• Purchase shares or stakes in economic organizations in Vietnam;
• Implement investment projects;
• Invest under BCC contract;
• New forms of investment and types of economic organizations according to Government regulations.

Is there a penalty in case of not disclosing business information?

According to Clause 1, Article 45 of Decree 122/2020/ND-CP, in case an enterprise does not publish or publish inconsistent with time limit the prescribed content of enterprise registration on the National Business Registration Portal, the enterprise shall be fined from 10,000,000 VND to 15,000,000 VND.

Consulting services for establishing FDI companies of Viet An Law

• Consulting businesses to meet the conditions for establishing FDI companies providing food;
• Drafting documents to fulfill registration and reporting obligations to investment management agencies when establishing a company;
• Authorized representative of the client to carry out related procedures;
• Providing tax accounting services for businesses and other post-establishment services;
• Regularly advise clients after the company goes into operation;

Clients who need advice or learn more about the conditions for establishing an FDI food business company, please contact Viet An Law Firm for the best support.