An In-Depth Handbook for Setting Up a Foreign-Invested Company in Vietnam
Van Pham LLC - Vietnam & SEA Market Entry
Your Trusted Partner for Vietnam & SEA Market Entry Business Set Up & Compliance | Gia nhập thị trường & Tuân thủ
Emerging as a dynamic participant among the swiftly advancing economies in Asia, Vietnam has assumed the role of a promising market, drawing the attention of investors seeking avenues for business expansion.
This article serves as a guiding framework to furnish a comprehensive roadmap, empowering investors with the requisite knowledge to navigate the intricacies of the Vietnamese business landscape.
2. Registration for investment project
Various approaches exist for investors to engage in business activities in Vietnam, with the establishment of a company emerging as the predominant approach. Prior to initiating the company formation process, foreign investors are mandated to register their investment projects with either the Department of Planning and Investment or the Management of Industrial Zones. Noteworthy exceptions pertain to the creation of small and medium-sized start-up enterprises and startup investment funds, as stipulated by the regulations outlined in the Law on Small and Medium-sized Enterprises.
The culmination of this preliminary phase is the acquisition of an Investment Registration Certificate (IRC). It is imperative to note that, in certain instances characterized by exceptional scale or distinctive business sectors, the investment project necessitates submission to higher authorities for approval. This can include regulatory bodies such as the National Assembly, the Prime Minister, or provincial People’s Committees, although such occurrences are rare and contingent upon the specific attributes of the project in question.
Upon receipt of the investment project application, competent authorities engage in a comprehensive assessment, encompassing various dimensions such as project subjects, market entry conditions, project implementation locale, financial capacity, and the schedule for capital injection. Particularly, projects affiliated with the manufacturing sector may undergo scrutiny via an environmental impact evaluation. Additionally, in instances where the project specializes in a distinct business sector, the issuance authorities will seek consultancy and approval from relevant ministries.
Hence, meticulous drafting of the investment project proposal becomes imperative during this phase, incorporating detailed information. Investors are mandated to demonstrate to the authorities a clear investment roadmap, backed by a robust financial plan. This presentation should elucidate how the project contributes to the Vietnamese economy and human resources, along with delineating the key milestones for project development. Such precision aids in mitigating protracted deliberations and queries from regulatory authorities.
While the statutory timeline for standard cases is approximately 15 days (excluding scenarios requiring approval from pertinent government agencies), the actual processing time may extend to one or two months. Notably, cases necessitating approval entail a lengthier timeframe, spanning from four months to a year for the issuance of the Investment Registration Certificate (IRC).
3. Registration for enterprise
Following the successful acquisition of the IRC, the subsequent imperative step in the investment process involves the registration of a company to actualize the approved project. Investors are presented with the option of selecting from various company structures such as a single-member company, multi-member company, or joint-stock company, each requiring the attainment of an Enterprise Registration Certificate (ERC).
The application for the ERC is facilitated through the National Portal, offering an online platform for submission. While the statutory timeline for authorities to respond to applications stands at a brisk 3 working days, the practical timeframe for completion may extend to approximately 2 weeks.
In essence, the submission of supporting documents for the ERC closely mirrors the requirements of the IRC process. The Department of Planning and Investment (DPI), responsible for issuing the ERC, relies on the previously obtained IRC to assess and approve the ERC application. Consequently, having a pre-existing IRC significantly streamlines the ERC process, emphasizing the importance of adhering to the approved content of the issued IRC during the ERC application. Therefore, meticulous attention to detail, especially regarding contribution capital and business scope, ensures a smooth transition from IRC approval to ERC issuance.
During this stage, investors gain crucial insights into their tax obligations. The process of obtaining the ERC provides investors with their tax code and designates the relevant tax authority to facilitate seamless reporting and fulfillment of taxation obligations.
4. Document requirement and timeline for company setting up
With the Enterprise Registration Certificate (ERC) firmly in hand, signifying the successful establishment of a legal entity, the commencement of company operations becomes imminent. However, a vigilant approach to post-establishment steps is essential for investors keen on managing unforeseen risks efficiently.
Key post-establishment actions include:
Register for sub-license if if mandated by prevailing laws and regulations
5. Conclusion
As the Vietnamese market continues to flourish, savvy investors who adopt informed and strategic approaches can unlock the door to Southeast Asia's most dynamic and promising business landscape. This comprehensive roadmap aims to serve investors the power and confidence to reap the rewards that this thriving economy has to offer.
#VietnamInvestment #ForeignInvestment #CompanySetup
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Feel free to contact me via my WhatsApp at +84 (0) 76 548 9586 (Khoa Pham) if you would need any additional information regarding market entry in Vietnam with reference to legal requirements, permits, or market research.