Granting Investment Registration Certificate in Vietnam

 As Vietnam integrates further into the global supply chain, foreigners are more and more encouraged to invest in Vietnam in many areas for pursuing profit. The foreign direct investment of the foreigners is required to be registered at Vietnam state authority to protect the rights of the investor. The investors could then establish company in Vietnam and apply investment certificate in Vietnam

According to the Law on Investment, investment projects of foreign investors; projects of setting up a economic organization in which foreign investors holding 51% of charter capital or more or the majority of the general partners are foreigners in a partnership; projects of BCC contract between domestic investors and foreign investors or between domestic investors and economic organization which foreign investors holding 51% of charter capital or more or the majority of the general partners are foreigners shall need to conduct the procedure of applying investment registration certificate as regulations of law.

Preparation of dossier to apply investment certificate in Vietnam

-A written request for permission for execution of the investment project;

-A copy of the ID card or passport (if the investor is an individual); a copy of the Certificate of establishment or an equivalent paper that certifies the legal status of the investor (if the investor is an organization).

-An investment proposal that specifies: investor(s) in the project, investment objectives, investment scale, investment capital, method of capital rising, location and duration of investment, labor demand, requests for investment incentives, assessment of socio-economic effects of the project;

-Copies of any of the following documents: financial statements of the last two years of the investor; commitment of the parent company to provide financial support; commitment of a financial institutions to provide financial support; guarantee for investor’s financial capacity; description of investor’s financial capacity;

-Demand for land use; if the project does not use land allocated, leased out by the State, or is not permitted by the State to change land purposes, then a copy of the lease agreement or other documents certifying that the investor has the right to use the premises to execute the project shall be submitted;

-Explanation for application of technologies to the project which specifies: names of technologies, origins, technology process diagram, primary specifications, conditions of machinery, equipment and primary technological line;

-The business cooperation contract (BCC) (if the project is executed under a BCC).

Order and procedure to apply investment certificate in Vietnam

-Investors submit the dossier at Department of Planning and Investment (or management of economic zones, high-tech zones);

-Within 15 working days from the date of receipt of a complete and valid dossier, the competent authority shall grant the investment registration certificate in Vietnam for investors. In practice, the time duration would be lengthened due to the time for preparation of documents from investor, getting them notarized, legalized, authenticated and translated into Vietnamese before being accepted in Vietnam.

The actual time for processing paper at the State authority would also last longer in practice when the State authority evaluate the project plan of the investor to ensure that its investment purpose is achievable economically and in accordance to the regulations of Vietnam.  It is advised that the client engage professional law firms in Vietnam to assist with advisory and to apply investment certificate in Vietnam for doing business in Vietnam.

Read More

Why Investors Would Find Phu Quoc a Place for Investment?

 The improvement in infrastructure system along with the preferential policies have stimulated investors to come to  set up company in Phu Quoc.

Phu Quoc, an island in Kien Giang of Vietnam is in the top of three islands having tourism potential in Southeast Asia comparable to Phuket in Thailand and Bali in Indonesia.  Phu Quoc has become a magnet for attracting huge investment flows from foreign investors in the area of real estate, entertainment, casinos, restaurant or food and beverage service business.

Phu Quoc has temperate weather throughout the year. There are also fresh and friendly forest – sea ecology and the modern transport system on the island with international airport and international hospital. Moreover, many infrastructure projects and international schools are under construction, which are necessary and favorable conditions to invite and attract investors to the Pearl Island for doing business.

Why set up company in Phu Quoc?

Capital inflows to Phu Quoc have really exploded after the “knots” in investment were removed. The new airport went into operation that can welcome larger aircraft and serve more flights, in which there are more international direct flights from China, Singapore, Russia and Cambodia. The 51km long radial route on the island has been basically completed; the road around the island and the branch roads are also being deployed. The power grid was pulled from the mainland to the island, replacing the very high cost gasoline power in the past.

The real estate and tourism consultants all agree that Phu Quoc fully convergent elements of an attractive beach for tourist with year-round sunshine, many beautiful beaches such as Long Beach, Truong Beach, Khem Beach and immense virgin forest. Moreover, Phu Quoc has a strategic location with just 1-2 hours flight to the key tourism markets in Southeast Asia.

Both investment and tourism in Phu Quoc have entered the acceleration phase. By the end of July 2015, Phu Quoc has attracted nearly 200 investment projects, including 136 projects that are being implemented in the area of over 5,100 ha with total registered capitals of 6.5 billion USD. Just one part of those projects become reality then it will make Phu Quoc to become a leading tourist destination in Vietnam, ahead of Da Nang and Nha Trang, competing with the top destinations in the area as Phuket and Bali.

Some of the largest Vietnam corporations such as Vingroup, Sun Group, CEO Group, BIM Group are implementing the huge projects that could alter the appearance of the island. In which the giant in real estate sector – Vingroup has invested projects as: Vinpearl Resort on an area of 300 ha in Long Beach, the combining of golf course and safari zoo on an area of more than 2,000 ha, and the 80 ha commercial complex.

The improvement in infrastructure system along with the preferential business and legal environments i.e. favourable land rental rates, corporate income tax, exemption of visa for foreign tourists make Phu Quoc island of Kien Giang, Vietnam a new attractive place for investment.

The actual time for processing paper at the State authority would also last longer in practice when the State authority evaluate the project plan of the investor to ensure that its investment purpose is achievable economically and in accordance to the regulations of Vietnam.  It is advised that the client engage professional law firms in Vietnam to assist with advisory and to apply investment certificate in Vietnam for doing business in Vietnam.

Read More

What Foreign Investors Should Consider to Open a Business in Vietnam

 In the context of integration and globalization, the number of foreign investors whom wish to make investment and open a business in Vietnam has increased due to the attractiveness of the business environment.

Business considerations to open a business in Vietnam

Foreign investors often consider Vietnam an attractive destination to register businesses for several compelling reasons:

1. Robust Economic Growth: Vietnam has experienced consistent and robust economic growth over the past few decades. It is one of the fastest-growing economies in Southeast Asia and offers ample opportunities for foreign investors to tap into a growing consumer market.

2. Favorable Demographics: Vietnam boasts a young and increasingly affluent population, making it a promising market for various industries, including consumer goods, technology, and services for investors to open a business in Vietnam.

3. Strategic Location: Vietnam’s strategic location in Southeast Asia provides easy access to other fast-growing markets in the region, including China, Thailand, and Singapore. Its proximity to major shipping routes is also advantageous for trade.

4. Investment-Friendly Policies: The Vietnamese government has implemented a range of investment-friendly policies, including tax incentives and preferential treatment for foreign investors in specific sectors. These policies aim to attract foreign capital and technology.

5. Bilateral and Multilateral Trade Agreements: Vietnam has signed numerous trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), which offer preferential trade terms and access to a broader market.

6. Skilled and Cost-Effective Labor: Vietnam’s workforce is known for its relative affordability compared to some neighboring countries. It also boasts a pool of skilled and diligent labour, making it an attractive location for manufacturing and outsourcing operations.

7. Infrastructure Development: The Vietnamese government has invested significantly in infrastructure development, including transportation, logistics, and energy. These improvements enhance the ease of doing business and connectivity within the country.

8. Political Stability: Vietnam has maintained political stability for many years, providing a secure environment for foreign investment. The government’s commitment to economic reform and openness to foreign participation adds to this stability.

9. Supportive Investment Agencies: Local investment promotion agencies provide assistance and support to foreign investors in navigating the investment process.

10. Diverse Investment Sectors: Vietnam offers investment opportunities across various sectors, including manufacturing, technology, agriculture, tourism, and renewable energy. This diversity allows investors to choose sectors that align with their expertise and interests.

11. Growth of the Middle Class: The rising middle class in Vietnam is driving increased consumer spending, creating a demand for a wide range of products and services.

12. Improving Business Environment: Vietnam has made efforts to improve its business environment, streamline administrative procedures, and reduce bureaucracy to make it easier for foreign investors to open a business in Vietnam

13. Access to Global Value Chains: Vietnam’s participation in global value chains, particularly in electronics, textiles, and manufacturing, makes it an attractive destination for companies seeking to integrate into these supply chains.

14. Tourism Potential: Vietnam’s natural beauty, rich cultural heritage, and historic sites contribute to its growing tourism industry, attracting foreign investment in hotels, resorts, and related services.

15. Green Energy Initiatives: Vietnam is increasingly focusing on renewable energy projects, presenting opportunities for foreign investors in wind, solar, and hydroelectric power to open a business in Vietnam.

Vietnam’s strong economic growth, favorable investment policies, strategic location, and diverse opportunities across various sectors make it an appealing choice for foreign investors looking to open a business in Vietnam and expand their businesses in Southeast Asia. However, it’s essential for investors to conduct thorough market research, understand local regulations, and seek professional legal advice in Vietnam to navigate the complexities of the Vietnamese business landscape successfully.

Legal considerations to open a business in Vietnam

To open a business in Vietnam, however, foreign investors must meet the requirements of Vietnam and international treaties to which Vietnam is a party.

Firstly, the field in which foreign investors wish to conduct business must not be on the list of industries that have been denied entry to the market for foreign investors or are prohibited from doing so under the Law on Investment.

Secondly, foreign investors may be restricted to the percentage of charter capital ownership in some economic organizations.  For example, foreign investors ownership could only be up to 30% of charter capital of a commercial bank in Vietnam.  Limiting the amount of charter capital is indirectly restricting the management and control rights of investors. Instead of freely making policies or decisions, foreign investors have to depend on other members of the company, namely domestic investors. The investors are suggested to consult with corporate lawyers in Vietnam or banking and finance lawyers in Vietnam for specific details in the specialized area like banking or finance.

Thirdly, foreign investors must consider the type of business they want to register. A foreign insurance enterprise, for example, may operate in Vietnam as an insurance limited liability company or as a branch of a foreign non-life insurance enterprise.

If the investor registers the establishment of an enterprise that is not under Vietnam law and the international treaties that Vietnam has signed, the application for registration is considered invalid.

In addition, each type will also have certain limitations. For example, setting up a joint stock company might not be suitable for all investors. In the governance of a joint stock company, the decision-making process is complicated and time-consuming with different sequences and procedures.

Finally, the Vietnam law also have requirements on the legal status, financial status, and competence of investors in certain professions. To open a business in Vietnam, foreign investors must meet all the prescribed conditions.

In conclusion, the foreign investors would need to undertake the legal research into the business it wish to register in Vietnam, and make strategic decision considering the legal and business requirements to maximize the benefits Vietnam would bring to open a business in Vietnam.

Read More

How to Close a Business in Vietnam?

 All corporations, companies, partnerships, branch offices, representative offices and other business entities are legal entities in Vietnam which can only be dissolved through formal procedures. The following will be discussing about how to close a business in Vietnam.

What are the major challenges with closing a business in Vietnam?

The main thing to remember throughout the process is that the dissolving company, a branch office or a representative office, one  should pay close attention to the involvement of all key stakeholders, i.e. the employees, customers, creditors, business partners and relevant authorities.

The following are key information to gather for thorough analysis

- Company size in terms of capital and number of employees?

- Enterprise’s business sector?

- Tax invoice usage declaration?

- Annual profit?

- Compliance with tax procedures?

- Administrative violations in the field of taxation?

- Any outstanding tax?

- Tax document filing records?

- Other tax matters?

What does the dissolution process involve?

Once an analysis has been through, the next procedures mostly deal with reporting and submitting the relevant documents to the various regulators and tax authorities at each step of the process, terminating contracts, liquidating assets and settling liabilities, and general administrative work such as returning the corporate seal, registration certificates, and having the company’s name removed from the system of the license authorities.

How to prepare document to close a business in Vietnam?

1. Documents submitted to the licensing authority in Vietnam:

- Liquidation notice of enterprise;

- Minutes of the meeting of Management Board / Board of Directors decided on the dissolution of enterprises;

- The company’s decision on liquidation;

- Report on enterprise asset liquidation;

- The list of creditors and the paid debt;

- Documents evidencing that enterprise has fulfilled all of its tax;

- Confirmation on social insurance for employees after the dissolution decision;

- The seal and certificate of seal sample registration.

2. Documents submitted to the tax authority in Vietnam:

- Liquidation notice of enterprise;

- Minutes of the meeting of Management Board / Board of Directors decided on the dissolution of enterprises;

- The company’s decision on dissolution;

- Audit reports and tax settlements;

- The financial statements for the year to date the decision on dissolution;

- The company’s tax liabilities audited by tax authority;

- Verification of tax obligations of the enterprise.

Closing a business in Vietnam might be a lengthy process and more complicated than setting up a company in Vietnam.  Sometimes, it is important to make a decision to exit and start a new venture to continue doing business in Vietnam.

As a law firm in Vietnam, we do assist clients to close the business, exit the investment and deal with pending issues with licensing authorities including department of planning and investment, department of labour, tax bureau and others.

Read More

Vietnam Can Issue Residence Card to Foreign Investors to Set up business in Phu Quoc

 The Ministry of Planning and Investment proposed a series of preferential mechanisms for Phu Quoc special economic zone.

The Ministry of Planning and Investment has just submitted to the Government a draft Law on Special Administrative Units. In this draft, the Ministry proposes a series of mechanisms to attract investment capital and foreign experts set up business in Phu Quoc, to live and work in Phu Quoc special economic zone.

Specifically, according to the draft law, Phu Quoc is prioritized investment to become a center for trade, high-end services and international procurement. This will be the only special zone to be prioritized for the development of fisheries, aquaculture and processing and fishery logistics.

Why encourage to set up business in Phu Quoc?

According to the Ministry of Planning and Investment, the potential advantages of Phu Quoc can completely develop into a commercial center, even though Phu Quoc is located far from the land and there are only two main lines of transportation that are airway and sea. Phu Quoc also has favorable conditions for hydro-meteorology, natural environment, mountains, forests, marine and ecosystems; moderate weather, favorable for year-round tourism development. Especially, Phu Quoc has a large fishing ground and potential for aquaculture.

In addition, Phu Quoc has fertile farmland, large forest land, occupies 63.2% of the total natural land area, facilitates the development of agricultural economy and sustainable eco-tourism development.

Like other two special economic zones, which are Van Don (Quang Ninh), Van Phong (Khanh Hoa), the Ministry of Planning and Investment proposed a series of incentives for Phu Quoc such as income tax exemption for 5 years, but not exceed 2030 for individuals who have taxable income arising in the special economic zone. In subsequent years, the personal income tax payable will be reduced by 50%.

For managers, scientists and highly qualified experts with income subject to personal income tax in the 3 special economic zones mentioned above, they are also entitled to tax exemption until the end of 2030 and 50% reduction of tax amount in the remaining years.

In addition to the application of general incentives for special economic zones, Phu Quoc has also been proposed to enjoy a separate mechanism, such as raising the level of allowances from 30% to 50% of the basic salary for officials and employees working here.

In particular, in order to encourage investment, the Government of special economic zone will issue permanent residence cards to individual foreign investors with investment projects of 5 million USD or above, with the residence time of 5 years or more in Phu Quoc and not violating the law.

Regarding infrastructure, according to the Ministry of Planning and Investment, infrastructure of Phu Quoc has been invested quite synchronously to meet the needs of large-scale tourism development. Many high-class and large-scale resorts have come into operation. The Politburo has agreed to open casino project in Phu Quoc for the Vietnamese.

For Van Don special economic zone, according to the Ministry of Planning and Investment, priority will be given to develop island eco-tourism, innovative industries and high-tech agriculture.

Van Phong, in particular with its location, will be promoted to develop deep-water ports, logistics services, medical services, high-quality resort…

Read More

Transfer of Investment Projects in Vietnam: What 3 Matters to Consider?

 Under the current Law on Investment, investors are entitled to transfer of investment projects in Vietnam to other investor when satisfied with the specific conditions and conducting the procedure of project adjustment under the regulation of law.

What are transfer of investment projects in Vietnam?

In simple terms, the transfer of investment projects in Vietnam is quite similar to “selling” the projects. Just like when you sell something, you transfer the ownership and responsibility to someone else, transferring an investment project means handing over the rights and obligations of that project to another party.

When you carry out the transfer of investment projects in Vietnam, you are essentially selling the projects to other investors or companies. This means they will take over the projects and continue the development and operations. It’s like passing the baton to someone else in a relay race. They will be responsible for managing the project, making decisions, and ensuring its success.

Similar to a sales transaction, the transfer of investment projects in Vietnam involves a process that follow the law. You need to negotiate with potential buyers, agree on the terms and conditions, and sign contracts to legally transfer the project’s ownership.

 The conditions of transfer of investment projects in Vietnam

-The project is not terminated in the cases as prescribed in the Law on investment;

-Investment conditions applied to foreign investors are satisfied -in case the foreign investor receives a project of investment in conditional business lines;

-Regulations of law on law, real estate trading is complied with if the project transfer is associated with transfer of land;

-Conditions in the Certificate of investment registration or relevant regulations of law are complied with.

Preparation of dossier of transfer of investment projects in Vietnam

-A written request for permission for project adjustments;

-A report on the project’s progress up to the time of transfer;

-The project transfer contractor an other document with equivalent legal value;

-Copies of the ID card or passport (if the investor is an individual) or Certificate of Enterprise Registration or another document with equivalent legal value (if the investor is an organization);

-Copies of the Investment Registration Certificate or decision on investment guidelines (if any);

-Copies of the BCC contract (for BCC projects);

-Copies of one of the following documents of the transferee: financial statements of the last 02 years; commitment to provide financial support by the parent company, commitment to provide financial support by a financial institution, the guarantee of transferee’s financial capacity, documents describing the transferee’s financial capacity;

Order and procedure of transfer of investment projects in Vietnam

-Investors submit the dossier at Department of Planning and Investment (or Management of Economic Zone or High-tech Zone);

-Within a period of 10 working days from the date of receipt the complete and valid dossier for an investment project operating under an investment license and not subject to decision of investment policy (or 28 working days from the date of receipt the complete and valid dossier for an investment project which is subject to investment decision of the provincial People’s Committee; 47 working days from the date of receipt the complete and valid dossier for the investment project subject to the decision of the Prime Minister), the competent authorities consider and decide to adjust the investment registration certificate to the investor transferring the project.

Before the transfer of investment projects in Vietnam, investors need to evaluate the legal situation, apart from the financial, personnel, and other key issues of the project, which are subject of the transfer.

Therefore, to ensure effective transfer, investors often engage law firms with highly qualified lawyers in Vietnam to conduct M&A legal due diligence related to the legal documentation of the owner, capital contribution of the shareholder or member, tangible assets (land use rights, plant and machinery, equipment, etc.) and invisible assets (including industrial property rights), licenses, contracts or transactions of great value, taxes and other legal risks such as litigation or disputes which could significantly impact the project..

The transfer of investment projects in Vietnam is an administrative procedure with a state agencies that is only smooth when the parties reached agreements. In fact, the transfer of the investment project’s timeline depends on the appraisal and evaluation process of the parties involved in the project.

How a law firm in Vietnam could help with transfer of investment projects in Vietnam?

When it comes to the transfer of investment projects in Vietnam, engaging the legal services of a reliable law firm in Vietnam is essential for ensuring a smooth and successful process. The transfer of an investment project involves complex legal procedures, documentation, and compliance with regulatory requirements.

A law firm with experienced lawyers in Vietnam can provide invaluable support by conducting meticulous due diligence and assessing the legal aspects of the projects. They will thoroughly examine the project’s documentation, including ownership, financial records, contracts, licenses, and potential legal risks.

With their expertise, they can identify and mitigate any legal obstacles or disputes that could hinder the transfer process. By relying on the guidance of a trusted law firm, investors can navigate the intricacies of project transfer with confidence, ensuring a seamless transition of ownership and minimizing legal risks.

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest protection, risk mitigation and regulatory compliance while doing business in Vietnam. ANT lawyers, a law firm in Vietnam has attorneys in Hanoi, Ho Chi Minh and Danang.

Read More