Forms of Foreign Investment in Vietnam | ANT Lawyers

 From 01/01/2021, the Law on Investment 2020 in Vietnam came into force. According to the Vietnam Law on Investment 2020, there are five types of foreign investment in Vietnam.

• Investment in the establishment the economic organizations:

This type comprises two methods: Establishment of a company with 100% capital from foreign investors or establishment of a company between the domestic investors or the domestic government and foreign investors.  Before establishing the economic organizations, the investors must have the investment project, perform the procedures for issuance of the Investment Registration Certificate, satisfy the conditions on the percentage of charter capital ownership according to the Law on Securities, on equitization and transformation of state-owned enterprises, and the other conditions according to the international treaties that Vietnam signed (if any).

• Investment in the capital contribution, purchase shares, purchase contributed capital:

Capital contribution, purchase shares, purchase contributed capital are the types of indirect investment for foreign investors through the purchase of stocks, bonds, and other valuable documents. Investors must conform to the legal provisions on capital contribution, purchase share, and purchase contributed capital.

• Implementation investment project:

Foreign investors can sign the PPP contract. This is an investment method based on limited-term cooperation between the State and private investors through the signing of PPP contracts to attract private investors to participate in the implementation of investment PPP projects.

• Investment under the BCC contract:

BCC contract is signed between the domestic investors according to the Civil Law. BCC contract with at least one party being a domestic investor that performs the procedures for granting the Investment Registration Certificate.

• New forms of investment and economic organizations according to the Government’s rules.

We could assist the client to set up company in Ha Noi, Ho Chi Minh City, Da Nang or in other provinces in Vietnam.

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The Middle Class of Vietnam Increased Sharply| ANT Consulting

The top concern of foreign investors seeking to expand their business in Vietnam is the growing middle class, an important part of the Vietnam consumer market.

The middle class is not only an important part of the market, they are becoming the loyal customers of many foreign businesses, operating in all kinds of sectors in Vietnam. According to UPS Vietnam Managing Director, Vietnam’s middle class is buying more and more cross-border goods. This company invests in vehicles to deliver the items that these middle-class customers ordered from US, UK to their houses.

Accordingly, cross-border e-commerce is growing fast. More and more e-commerce companies are sourcing in Vietnam. In contrast, the middle class of Vietnam also shopping online at foreign websites.

According to experts, Vietnamese middle class people have monthly income of 15 million VND (equivalent to about 700 USD) or more. By 2020, the country is expected to have 44 million middle class people. According to the Center for Consumer Studies and Customers of Boston Consulting Group (US), the “middle class and wealthy” of Vietnam are people who earn an average of 714 USD a month or more.

The Brookings Institute studies showed that the growth rate of the Vietnamese middle class in the period from 2005 to 2015 is more than 14% per year. It is estimated that in the period from 2016 to 2020, this number will continue to increase by 4 percentage points, equivalent to over 18% per annum.

Compared with other Southeast Asian countries, the growth rate of the Vietnamese middle class is among the highest. For example, in the period from 2016 to 2020, the middle class in Malaysia and Thailand increased by more than 4%, Indonesia increased by nearly 12%, and Singapore only increased by 3% per year.

By 2015, the total consumption of the global middle class is 34.8 billion USD. Brookings Institute estimates that by 2030, this number will almost double. By 2030, the global middle-class consumption may increase by 29,000 billion USD compared to 2015. The today’s low-income countries such as India, Indonesia and Vietnam will create a market with total consumption increased by 15 trillion USD compared with the current rate.

Not only increasing in number, the change in the money and spending perspectives of the middle class is also an attractive point. This creates a change in many industries, from food to banking.

Vietnamese consumers are changing their lifestyle very fast and they are increasingly willing to spend on large items aimed at improving their lives. According to a Nielsen report, the percentage of people saving money in quarter II/2017 decreased more than 13% from the previous quarter and just behind Thailand, Singapore and Indonesia.

According to PwC Vietnam, the fast-growing middle class in the country will accelerate the demand for more sophisticated banking services, such as insurance through banking and asset management. Along with that, cashless payments will have the opportunity to grow.

Moving from cash payment to cashless is an indispensable trend. We see many banks in Vietnam are shifting their focus to retail banking thanks to the increased spending of young people. The developing technological infrastructure facilitates the transition from a cash economy to a cashless economy.

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How Foreign Investors Comply with Reports Submissions in Vietnam

Foreign investors setting up business in Vietnam have to comply with statistics report submissions according to Vietnam laws. To ensure compliance, corporate lawyers should be consulted to ensure compliance with reports applicable to foreign owned enterprises in Vietnam.

As the current regulation, foreign owned enterprises are obliged to submit monthly, quarterly, six month and annual reports to the Vietnam Department of Statistics or State agency for foreign direct investment of respective province or city.

Monthly reports are applicable to businesses and projects operating in the industry: mining, processing industry, electricity, gas, water supply, waste disposal, water treatment, information and communications, real estate, transport, warehousing, trade and services.

Quarterly reports are applicable to businesses and projects operating in agriculture, forestry and fisheries, construction;

All foreign owned enterprises have to report every 6 months on employment and income of the employee;

On annual basis, all foreign owned enterprises have to submit reports on the identification information of the business; financial indicators reflecting business results including revenue by business lines, taxes, fees, expenses, and profit; and capital investments made during the year by investment sources and investment category.

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How Foreigners Could Obtain Residence in Vietnam Through Investment Scheme?

Foreigners could reside in Viet Nam under permanent residence or temporary residence status. In particular, foreign investors establishing or contributing capital to companies operating in Vietnam are subject to have temporary residence cards.

A Temporary Residence Card is the required document for the foreigners to legally stay temporarily in Viet Nam and the maximum term of a card is 05 years. The following will explain how Temporary Residence Cards can be obtained in Vietnam through investment.

What are the conditions for foreign investors to be granted temporary residence cards?

Foreigners who are granted a visa with a DT sign will be considered for a temporary residence card. The foreigners will need to apply for work permit exemption from authorities in Vietnam. The passport of foreigners has a minimum term of 13 months. Documents proving that foreigners contribute capital to, or invest in, enterprises in Vietnam for instance business registration certificates, investment registration certificates will be required. The foreigners will also need to provide a clean criminal record card.

What required documents to be prepared for application for temporary residence card?

1. 01 Document requesting temporary residence card of guarantor ( form NA6 for agencies, organizations; form NA7 for individuals)

2. 01 Information form for a temporary resident card (form NA8)

3. 02 photos (image size 2×3 cm);

4. 01 Copy of passport and a valid visa (bring an original for comparison);

5. 01 Notice of use of the seal of the enterprise.

6. 01 Document introducing seal, signature of the authorized person of the organization (form NA16)

7. 01 Copy of legal ducuments of organizations to prove purpose to be granted temporary residence card, such as: investment registration certificate, business registration certificate.

How long does it take to apply for a temporary residence card?

After 5 working days since receiving sufficient documents, state agencies will consider and issue temporary residence cards.

What are the procedures to apply for a temporary residence card?

Step 1: Prepare documents as prescribed by law.

Step 2: Submit application file

The officer receiving the application will check the legality and the content of the file. If the application is complete and valid, the officer receives the application and prints a receipt for the submitter.

Step 3: Return results

What state authorities can apply for a temporary residence card?

Immigration Management Department of provinces or cities where the investment is registered.

Some difficulties when carrying out the procedure

Everyone can apply for a temporary residence card by themselves, but not all cases are eligible for a temporary residence card. When applying for a temporary residence card, have some difficulties like: the visa is not for right purposes; foreigners don’t understand the required documents, procedures for applying for temporary residence card so that you don’t know how to write the declaration of temporary residence card; have confusion about the declaration form used for individuals and agencies, organizations…. As a result, the application file is invalid and will be returned. You will have to go to implementing agencies many times to complete an application file, which is costly, laborious, time-consuming but not yet available. Therefore, foreigners need the assistance of a reputable law firm to carry out the procedure effectively to be granted a temporary residence card.

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Challenges in Preparing Documents for Representative Office Application

The representative office (RO) is a popular foreign investment vehicle which investors utilize when wishing to enter the Vietnamese market without committing too much investment. The representative office could help the foreign entity to hire local employees to carry out market research, business promotion.

A foreign company wishes to establish a representative office in Vietnam must submit an application dossier for a license to the Provincial Department of Industry and Trade (DIT).

However, there are cases where the government agencies receiving the application would be different from the department of industry and trade depending on the business lines carried out by the foreign entity.

Firstly, the trade service is bound in Vietnam’s Commitment in trade service in WTO but there are no existing specialized legislative documents:

When the trade service which the foreign entity provides does not fall under areas prescribed by specialized legislative documents in Vietnam, the licensing agency shall submit a written request for directions to the relevant ministries for opinions. The foreign entity shall wait for at least 15 working days for receiving a written notice of whether the license for establishment of the representative office is granted or rejected. This process not only extends the duration of establishment of a representative office but also raises risk of rejection.

Secondly, the trade service is not yet bound in Vietnam’s Commitment:

Where the scope of operation of the representative office is inconsistent with Vietnam’s commitments or the foreign trader is not located in the country or territory being party to treaties to which Vietnam is a signatory, there is an extra process in registration of representative office. The representative office shall be approved by relevant ministers, heads of ministerial agencies for establishment of the representative office.

Thirdly, trade services are supplied in foreign countries, but such does not exist in Vietnam

The foreign entity has to apply codes as follows to Vietnam standard industrial classification system or CPC. If the foreign entity can not define a code, it is merely impossible to register the representative office.

In most of the cases, the foreign entity should consult with a law firms in Vietnam whom lawyers have expertise in WTO laws, law on investment and experience in working with Vietnam state authorities, to prepare application right at the start and be ready to challenge the authorities when required to protect the best interests of the clients.

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Attraction from Industrial Parks in Phu Yen

Phu Yen is gradually moving its economic structure from a purely agricultural province to industry, tourism and services. In order to achieve this goal, thousands of hectares of industrial parks have been prepared, along with infrastructure investment with full facilities to attract projects and foreign investors to invest in Vietnam and in Phu Yen province.

In May 1974, at the An Phu Industrial Zone in Tuy Hoa, Phu Yen province, the electronic component factory was kicked off, marking the presence of the high-tech industry in Phu Yen. This is the first electronic component factory to be built in Phu Yen, with a capacity of 500 million pieces per year, with such main products as RF coils and electromagnets. Total investment for the factory is over 5.7 million USD, 100% of products will be exported. The establishment of a factory in Phu Yen province is part of Coilcraft Corporation’s production development in Asia.

The Vice Chairman of Phu Yen People’s Committee welcomed the Coilcraft Corporation for investing in Phu Yen, contributing significantly to the socio-economic development and the industrialization and modernization process of the province. At the same time, it is suggested that the Management Board of Phu Yen Economic Zone and investors continue to have connections and promote the industrial potential of Phu Yen to other investors.

The appearance of electronic component factory invested in An Phu Industrial Park, besides the glass production factories of Hoang Hai Trading Co., Tan Phat Canned Food Joint Stock Company and the project of CCIPY Vietnam limited liability company., as well as bottled water , soft water plants, and seafood processing plants (in Hoa Hiep 1 Industrial Park) of Xin Bang Co., Ltd have made the investment situation in Phu Yen’s industrial zones more diverse and exciting.

Besides implementing the policy of economic restructuring towards industrialization, the Party and Phu Yen authorities have made many appropriate policies in order to mobilize internal resources in the province and attract foreign investment. At the same time, completing investment in infrastructure of approved industrial zones and clusters; promote the efficiency of investment and the role of industrial zones and clusters in economic restructuring of the industry, contributing to the economic restructuring of the province.

Currently, Phu Yen province plans to build industrial parks, attracting hundreds of investment projects. In particular, it is concentrated in Hoa Hiep 1 Industrial Park, Hoa Hiep 2, An Phu, North East Song Cau 1 and North East Song Cau 2.

One of the favorable conditions for the management board of Phu Yen economic zone to carry out the plans of promoting and attracting investment in line with the industries and sectors in the industrial parks. That is Phu Yen Provincial Industrial Development Plan up to 2020, with vision to 2030, which has been approved by the provincial People’s Committee.

The plan identifies groups of industries with priority given to development till 2020 with a vision to 2030, including: processing of agricultural, forest and aquatic products; medicine; textile; products from new technology; software industry and digital content; chemistry; energy; electronic equipment, telecommunications equipment and information technology; mechanical engineering; supporting industry.

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Licensing for Foreign Contractor

Under the provisions of the Vietnam law for operations of foreign contractors in Vietnam in the fields: investment and construction consulting, supply of materials and technology equipment together with technical services related to the construction works, construction of work, foreign contractors must apply for a contractor license.

Conditions for obtaining permits for foreign contractor in Vietnam:

Case for bidding packages that are subject to compulsory application in accordance with the bidding law of Vietnam: Win the bid or select the bid.

– Had won the bid or can select the bid.

– Had a forwarding bid contract.

Case for bidding packages that are not subject to compulsory application in accordance with the bidding law of Vietnam:

– Had won the bid or can select the bid.

– Had a forwarding bid contract.

Meeting all the conditions and capability that are consistent with contracted works prescribed by the law of Vietnam.

In all cases that foreign contractors are assigned the bid (due to win the bid through bidding or select the bid), foreign contractors have to codeshare with Vietnam contractors or have to use Vietnam sub-contractors (except the cases that are allowed by the Prime Minister or prescribed by the law of Vietnam).

Foreign contractors have to commit to fully implement the provisions of the law of Vietnam relating to contracting activities in Vietnam.

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Swedish firms look to spur investment in Vietnam

HCMC – Several leading Swedish businesses expressed their intentions to expand investment in Vietnam during a meeting with Prime Minister Nguyen Xuan Phuc in Stockholm on May 27.

Most of the participating companies, including Electrolux, Oriflame, Scania, ABB, Ericsson, Tetra Pak, and Volvo, have already been investing in Vietnam for many years, reported the Vietnam News Agency.

In his opening speech, the Vietnamese leader spoke highly of the Swedish firms’ prestige in the global market, including Vietnam.

Phuc said that the Swedish government and its people have offered considerable assistance to the Vietnamese people during the fight for national independence in the past, as well as its course of development.

He expressed his hope that Swedish businesses will further invest and apply new, cutting-edge technologies in Vietnam, as well as engage in the country’s social and economic development process.

Leaders of Swedish companies expected the European Union-Vietnam Free Trade Agreement (EVFTA) to be signed soon, thereby facilitating Swedish trade with Vietnam.

Jonas Samuelsson, president and chief executive officer of Swedish multinational home appliance manufacturer Electrolux, said that Vietnam is the most important market of the group in the Association of Southeast Asian Association, bringing in annual revenue of US$150 million.

He said Electrolux is seeking opportunities to boost its business in Vietnam since the country is showing its support for an open and free trade system, which is also a general trend in Asia.

Håkan Buskhe, president and CEO of Swedish aerospace and defense company Saab Group active all over the country, said that Saab spends a quarter of its revenue into the research and development sector on a yearly basis.

He added the group has partnered with Vietnamese firms in airspace and seaport management, so it stands ready to transfer its technologies to them.

Swedish multinational networking and telecommunications giant Ericsson has established its foothold in Vietnam since 1993, according to the company’s executive vice president Fredrik Jejdling.

Jejdling revealed that the company would coordinate with Vietnamese military-run telecom firm Viettel to develop the fifth-generation (5G) network service. This would help upgrade G5 infrastructure, enabling the country to adopt Internet of Things solutions.

He pledged to support Vietnam in developing the innovative network through software and technological solutions.

Johan Söderström, managing director for ABB in Sweden that has been operating in the Southeast Asian nation since 1993, expressed his desire to boost solutions about innovation and sustainable development, including robot technology.

He also showed a strong commitment to bolstering cooperation with Vietnam, especially in developing the electricity grid network.

PM Phuc affirmed that Vietnam’s competent agencies would provide the best possible support for Swedish businesses to expand investment. He also promised to canvass their opinions and remove obstacles so that these major companies can help bring advanced technologies to Vietnam.

As a gateway of ASEAN markets and with many new-generation free trade agreements already or about to be signed, Vietnam is an open market for Swedish enterprises, the PM added.

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Temporary residence card for foreigner in Vietnam

If the foreign investor, the employee needs to reside in Vietnam to be able to facilitate the implementation of investment, labor contract, the investor and the employee needs to have the company sponsored and proceed to apply Temporary residence card in accordance with the purpose of residence in Vietnam.

Temporary residence card is a document issued by an immigration authority or a competent authority of the Ministry of Foreign Affairs to a foreigner who is permitted to reside for a limited period of time in Vietnam and is valid for visa replacement. When a temporary residence card is available, the foreign investor or worker will present a temporary residence card instead of a visa when entering, leaving Vietnam and is legally residing in Vietnam.

To avoid administrative fines or deportation for violations of the law on residence in Vietnam, foreign investors and employees need to follow procedures for applying for a temporary residence card suitable for the purpose of entry (symbol visa). Investors, employees who have appropriate entry visas (DT or LD visa) will be considered by the Immigration Authority to grant a temporary residence card.

For the application for a temporary residence card that requires the investor, the employee needs to have all business documents, proving that it is eligible to sponsor a foreigner and enter the country for the right purpose. Request a Certification of exemption from a work permit, work permit, entry visa for the right purpose, legal residence address in Vietnam.

When all of the above conditions are met, investors and employees shall carry out the procedures for applying for temporary residence cards in Vietnam so that they can reside, leave and enter in accordance with law. The duration of the temporary residence card is issued pursuant to the purpose of entry and the proposal of agencies, organizations and individuals. The temporary residence card is from 1 to 5 years but shorter than the passport duration by at least 30 days, specifically:

– Temporary residence cards with symbols NG3, LV1, LV2, ĐT and DH are valid for no more than 05 years.

– Temporary residence cards with symbols NN1, NN2, TT are valid for not more than 03 years.

– Temporary residence cards with the symbol LD and PV1 are valid for no more than 02 years.

When the temporary residence card expires, the foreign individual will be considered to request the sponsored company to apply for a new temporary rresidence card.

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The Business Conditions for Sports Betting in Vietnam

Law on amendments to Physical Training and Sports No. 26/2018/QH14 is in valid as of February 1st, 2019. The highlight that must be noted is sports betting as provided in Article 67a. This activity is officially governed by laws. Sports betting is a form of entertainment with rewards in which bettors predict the results of sporting events used for betting purpose.

The sports betting has a long history, but it had not been recognized by the State for a long time. Therefore, the betting was considered a violation of laws and was liable to administrative and criminal remedies. Before sports betting is restricted and just allowed to bet on horse racing, greyhound racing and pilot international soccer as specified in the Decree 06/2017/ND-CP effective from March 31st, 2017 on business of betting on horse racing, greyhound racing and international soccer. After the amendment law takes effect, the sports are allowed to bet will be extended according to the List of sports activities allowed to trade in betting issued by the Government.

What Conditions Required for Sports Betting?

Relating to condition of sports betting business in Vietnam, the enterprises need to be granted a certificate of eligibility for betting business. This is one of the conditional business lines under the strict management.

Regarding horse racing and greyhound racing, the enterprises need to obtain the Certificate of investment registration for the project for construction of horse and/or greyhound racecourses and the Certificate of eligibility for betting business. For horseracing, the charter capital requirement is VND 1 trillion ($44.2 million), while for greyhound racing it is VND 300 billion ($13.2 million). Locations of horse and/or greyhound racecourses are conformable to the socio-economic development planning of the area where such racecourses are located. Therefore, if the project attracts more than one investor, the investor for the project for the construction of horse racecourses and/or greyhound racecourses which covers the business of betting on horse racing and/or greyhound racing shall be selected through bidding process according to law.

Regarding international soccer, the procedures is similar to horse racing and greyhound racing. However, The Government allows one enterprise to pilot the business of betting on international soccer. The duration of pilot international soccer betting business shall be 05 years since the date on which the Certificate of eligibility for international soccer betting business is issued. After such period, the Government shall consider whether or not to continue the pilot international soccer betting business upon the assessment of the collected results. The list of international football matches and tournaments which are selected to provide the basis for the business of betting on international football is stipulated in the Decision No. 1064/QĐ-BVHTTDL issued by the Ministry of Culture, Sports and Tourism.

Which Authorities Will Approve the Sports Betting Activities?

The Ministry of Finance will publicize the conditions, dossiers, procedures for organizing bidding to select enterprises to pilot international football betting business according to the provisions of law. To be able to participate in bidding, the enterprises need to meet the following conditions:

(1) The minimum charter capital shall be VND 1 trillion ($44.2 million)or an equivalent amount;

(2) Having a plan on investment in the technological system, technical equipment and business software to ensure their accurate, safe and stable operation;

(3) There shall be a feasible plan on the business of betting on international soccer and ticket selling methods and locations;

(4) Committing to community assistance.

There are 135 countries in the world officially legalizing sports betting activities. Betting is increasingly on the rise, along with the development of information technology and entertainment. In Vietnam, sports betting is put under the strict management.

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The Essential Information on Certificate of Origin from Vietnam

According to Decree No. 31/2018/ND-CP guiding Law on Foreign Trade Management in terms of origin of goods: “The Certificate of Origin means a written form or other form of equivalent legal validity granted by competent authority belonged to country, group of countries or territories exporting the goods based on regulations and requirements of origin, specifying origin of this goods”.

We comprehend that the Certificate of Origin (hereinafter referred to as “C/O”) is certificate of goods origin issued by a country (export country) to confirm goods produced and distributed by this country in the export market in accordance with the rules of origin to create the most favourable conditions for goods importing to other country (import country) on tariffs. C/O is an important instrument in importing and exporting goods.

Functions of C/O

Tariff preferences: Determining the origin of goods help us differentiate the import goods enjoyed tariff preferences to apply the preference regime according to trade agreements as signed by the countries.

Anti-dumping duty and anti-subsidy duty application: In the event that goods is dumped or subsidized in the market of other country, determining the origin of goods shall make anti-dumping duty and anti-subsidy duty application possible.

Statistics of trade and maintenance of quota system: Determining the origin of goods make compilation on statistics of trade of country or area easier. On this basis, competent authority of trade can maintain the quota system.

Category of C/O

Non-preferential C/O means a ordinary C/O confirming the origin of product from a specific country.

Preferential C/O means a C/O allowing the product eliminated or reduced from the country’s permission such as: Generalized Systems of Preferences (GSP), Commonwealth Preference Certificates (CPC), Common Effective Preferential Tariff (CEPT),…

The Agency granting C/O

Ministry of Industry and Trade of Vietnam is the agency granting Certificate of Origin directly or authorizing Vietnam Chamber of Commerce and Industry (VCCI) or other organization to issue Certificate of Origin.

According to the prevailing law, the treaty signed by Vietnam and the provision of import country on Certificate of Origin, the Ministry of Industry and Trade stipulates the regulation on selection of trader, procedure of self-certifying the origin, obligation and liability of self-certifying the origin, inspection of the self-certifying of origin of goods exported by traders and remedy.

Process of issuing C/O

When applying for C/O for the first time, the trader shall have to submit dossier to competent authority.

Dossier includes:

– Request for Certificate of Origin;

– Form of C/O filled in full into 01 (one) original copy and 03 (three) copies. The original copy and one of the copies shall be sent to the Importer by the Exporter and the Importer shall submit such instruments to competent authority in loading port or unloading port. The second copy and the third copy shall be saved by the agency issuing this C/O and the Exporter respectively. In case of import country’s requirement, the applicant can request the Agency issuing this C/O to grant more than 03 (three) copies of C/O;

– The declaration of completing the customs procedure at competent authority (certified copy with signature of competent persons), excepting the case it’s not necessary for export goods to declare according to the laws. The applicant of C/O shall have the right to submit this instrument no more than 30 (thirty) days from the date granting C/O in case of legitimate reasons.

If necessary, the agency issuing C/O may require the applicant to provide another instruments relating to export product such as: the declaration of importing material; the certificate of export; sales contract; VAT invoices; sample of material or product; bill of lading; air way bill and other instruments relating to origin of export goods..

Relating to enterprise participating eCOSys, all instruments shall be made by trader via electronic system and automatically transferred to agency issuing C/O. The agency issuing C/O bases on electronic dossier to check validity information and grant C/O to trader as soon as receiving full dossiers in hardcopy.

The agency issuing C/O informs the result of submitting dossier via eCOSys no later than 06 (six) working hours from receiving validity electronic dossier.

The agency grants Certificate of Origin to trader no more than 02 (two) working hours after receiving application in hardcopy.

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The Politburo First Issued Resolution on FDI Attraction

For the first time after 30 years of attracting foreign investment in Vietnam, the Politburo issued a thematic resolution to guide in the coming years.

On August 21st, General Secretary and State President Nguyen Phu Trong signed Resolution No. 50 on the orientation of perfecting institutions and policies, improving the quality and efficiency of foreign investment cooperation by 2030.

In the period from now until 2030, the guiding point emphasized by the Politburo is to attract FDI selectively, taking quality, efficiency, technology and environmental protection as the main evaluation criteria. At the same time, priority is given to projects with advanced technology, new technology, high technology, clean technology, modern management, high added value, spreading and connecting global production and supply chains.

In addition, the overall objective is to improve institutions and policies of foreign investment cooperation with high competitiveness and international integration. At the same time, basically overcome the limitations in building, completing and organizing the implementation of institutions and policies on foreign investment cooperation.

The Resolution of the Politburo also supplements the provision on the conditions for national defense and security in the process of considering and issuing investment registration certificates with new investment projects and investment activities through the form of capital contribution and purchase of shares.

The Politburo requires clearly defining the responsibilities of investors on environmental protection during the investment period, project implementation and operation of enterprises during the project implementation period. Along with these tasks, policies on investment management and supervision; innovation and efficiency improvement of investment promotion must be paid attention to.

The Politburo noted that the emphasis on inspection, supervision and inspection is associated with improving the responsibilities of local authorities and heads; definitely deal with projects that cause environmental pollution, inefficient land use and business losses for many years, the project does not comply with its commitments.

Statistics show that after nearly 30 years of receiving FDI capital, Vietnam has more than 23,000 FDI projects with a total registered capital of over 300 billion USD. In which, the total implemented capital is about 161 billion USD. Resolution 50 sets targets, registered capital in the period 2021 – 2025 is about 150 – 200 billion USD (30 – 40 billion USD a year); implemented capital of 100 – 150 billion USD. The period of 2026 – 2030, registered capital of 200 – 300 billion USD, implemented capital of 150 – 200 billion USD.

Percentage of enterprises using advanced technology, modern management, environmental protection, towards high technology increased by 50% in 2025 and doubled (100%) in 2030. Proportion of labor through training in the labor use structure from 56% in 2017 to 70% in 2025 and 80% in 2030.

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Top 10 Challenges of Doing Business in Vietnam

Expanding gross domestic product (GDP), modern infrastructure and a dramatic increase in foreign direct investment (FDI) are signs that Vietnam has transformed into an attractive investment destination, but there are still barriers to doing business which are best navigated with local help on board.

Since 1988, there have been 13,544 foreign investment projects with a total registered capital of US$213 billion in Vietnam, building a large overseas investment sector which occupies about 17% of GDP and 43.4% of industrial product value. Overseas firms are attracted by Vietnam’s 87 million-strong population which supports a large and young workforce and that has also seen an increase in disposable income in recent years.

Strong economic growth rates have been a common feature of the Vietnamese economy since the 1990s, and even though the high levels slumped slightly during the global financial crisis, the country has rapidly returned to pre-crisis growth trends and is expected to continue on this path. Infrastructure, tourism development, and related real estate and retail sector development in urban areas are all attracting large amounts of FDI, and overseas firms are increasingly attracted by the country’s move from a centralized to a market-orientated economy.

However, The World Bank and International Finance Corporation (IFC) rank Vietnam in 99th place in the world for ease of doing business, which means it is essential to seek local help of law firms and lawyers in Vietnam when expanding into the country.

Starting a Business

There are 10 procedures to undertake when starting a business in Vietnam, making it among the most complex start-up environments in the world. What’s more, many tasks facing new corporate entities may be unfamiliar to overseas companies, making the task far more rigorous. Registration of the seal-sample at the State Agency, for example, or publicly announcing the formation in a local newspaper are procedures most companies generally don’t have to complete.

Dealing with Construction Permits

It takes 110 days and 11 procedures to get permits for construction in Vietnam, once again requiring interaction with several official departments. Inspections must be carried out by the Department of Construction and the municipality, and certificates should be obtained from the Firefighters Prevention Department, the Department of Construction and the Department of Natural Resources and Environment.

Getting Electricity

Getting electrical connection is among the most rigorous tasks facing startups in Vietnam, taking 115 days to complete and costing a significant percentage of income per capita. Inspections by the local power corporation are required before completing processes with the Traffic and Transport Department and the Firefighters Prevention Department.

Registering Property

Registering property in Vietnam takes 57 days to complete, which is far higher than the OECD norm but around average for East Asia and Pacific. Contracts between the transferor and the transferee are signed before taxation is paid and registration for the right to use land is complete.

Getting Credit

Vietnam is home to quite a stable credit environment, and obtaining capital is a relatively smooth process for businesses. However, the lack of a private credit bureau can make the process a little trickier for overseas firms.

Protecting Investors

Investor protection is an area in which Vietnam needs to improve. It is ranked in 169th place by the World Bank and IFC, with a weak director liability index and shareholder suits index.

Paying Taxes

There are massive 32 corporate tax payments to be made each year which takes an average of 872 company hours to complete. Compared to the OECD norm of 176 and the East Asia and Pacific average of 209, taxation is one of the most burdensome processes of doing business in Vietnam.

Trading Across Borders

Given its strong manufacturing base and reliance on interconnectivity, trading across borders is a cheap endeavour. However, that isn’t to say the process is not complicated, and the stream of documentation required for both importing and exporting highlights that cross-border trade can be difficult at the best of times.

Enforcing Contracts and Resolving Insolvency

Enforcing contracts takes 400 days to complete and 34 procedures. Resolving insolvency is a far more laborious process, taking five years on average to complete and with a low recovery rate.

Culture

The Vietnamese believe in the teachings of the early Chinese philosopher Confucius which emphasize the importance of relationships, responsibility and obligation. Vietnam is also a collectivist country and community concerns will almost always come before business or individual needs.

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Transfer of Investment Projects in Vietnam

Under the current Law on Investment, investors are entitled to transfer part or all of the project to another investor when satisfied the specific conditions and conducting to procedure of project adjustment under the regulation of law.

The conditions of project transfer

- The project is not terminated in the cases as prescribed in Clause 1 Article 48 of 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

- 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

- 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 transferring an investment project, 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 an investment project 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.

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