Setting up a Business in Vietnam presented by Alberto Vettoretti

Presenter(s):

  • Title: Setting up a Business in Vietnam presented by Alberto Vettoretti
  • Date: May 8th, 2013

There are several options available for foreign investors looking to enter Vietnam. Mr. Vettoretti discusses the types of foreign investment in Vietnam, including joint ventures and representative offices. He will also cover the requirements, tax details, and helpful tips for each investment option, and the major laws and regulations related to establishment in Vietnam.

Transcript:

  • Types of Foreign Investment (2012):

    • The number of Wholly Foreign Owned Enterprises (WFOE) represented over 70% of the total FDI
    • Joint Ventures continue to become a more popular choice for foreign investors, currently representing over 20% of the total FDI

    Major laws and regulations related to establishment in Vietnam:

    1. Law on Enterprise: Specifies the nature of the entity
    • Limited liability companies (LLC)
    • Joint Stock Companies (JSC)
    • Partnerships
    • Private Enterprises

    2. Law on investments: Specifies the type of entity
    • Joint Ventures
    • 100 % Foreign Owned Entities
    • Contractual Forms (i.e. BCC, BOT, BTO, BT)

    3. Commercial law
    • Representative Offices (RO) and Branch Offices (BO)

    A Closer Look at Foreign Investment Options:

    1. LLC limited liability:
    •Two types: One shareholder or multiple shareholders; either in the form of
    Foreign Owned Enterprises or Joint ventures
    • The number of shareholders cannot exceed 50
    • Not permitted to issue shares
    • No minimum capital investment requirement
    • No regulations apply on nationality and residency of members
    • Legal representative is generally required to reside in Vietnam

    2. Joint Stock Companies
    • Generally used for larger projects
    • Ability to go public
    • No minimum requirements for capital contributions
    • JSC required to have at least three shareholders

    3. Partnership Companies:
    • Generally used for specific sectors
    • At least two partners or co-owners of same enterprise
    • Fully LiableNo limited liability
    • Partnerships can also consist of a limited liability member who can only contribute a part of the capital, with limited rights and liability

    4. Representative Offices and Branch Offices
    a. Not legal entities
    b. Extension of business license of the investment companies

    Representative Offices:
    • Not subject to tax
    • Ability to directly hire staff
    • Cannot engage in generating business activity
    • Not subject to Vietnamese taxation

    Branch Offices:
    • Conduct business activities, must be within the parent company’s business scope
    • Parent company needs to have been operating in own country for a minimum of five years

    Other Investment Options
    • Business Corporation contracts (BCC)
    • Build–Operate –Transfer contracts (BOT)
    • Build-Transfer-Operate contracts (BTO)
    • Build-Transfer contracts (BT)

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