Latest Regulation On Establish a Foreign Direct Investment Company
Pursuant to Law on Investment No. 61/2020/QH14 dated June 17, 2021, foreign investors are allowed to invest in Vietnam under various forms: investment in the establishment of a business organization; making an investment by contributing capital, buying shares, or buying capital contributions of business organizations; investment under business cooperation contracts,…In case if foreign investors including individuals and organizations wants to establish a foreign direct investment company in Vietnam, they should consider the following regulation.
1. Business lines limited from market access applicable to foreign investors
Foreign investor that establishes a business organization shall satisfy market access conditions applied to foreign investors specified Law on Investment. Decree No. 31/2021/ND-CP guiding some articles of the Law on Investment (herein referred to as Decree 31) provides the List of business lines limited from market access applicable to foreign investors in Appendix I (“Limited Market Access List”).The Limited Market Access List comprises two sub-Lists:(A) List of business lines not allowed for market access: this covers 25 business lines such as trading goods and services on the list of goods and services on which monopoly is held by the State in the commercial sector, press activities and information gathering in any form, fishing, overseas contracted employment agency services, temporary import for re-export business;
(B) List of business lines subject to conditions for market access: this covers 58 specific business lines such as production and distribution of cultural products, including visual recordings, insurance, banking, securities brokerage, telecommunication services, printing services, e-commence business; and business lines licensed under pilot scheme. In addition, Decree 31 clarifies the principles of market access applicable to foreign investors as follows:
- For List of business lines not allowed for market access: Foreign investors are not allowed to invest;
- For List of business lines subject to conditions for market access: Foreign investors can invest provided that they satisfy the applicable conditions;
- For business lines that have no commitment by the Vietnamese government on market access to foreign investors:
- If there is no regulation restricting foreign investors’ market access under Vietnam’s domestic laws: foreign investors are allowed to access market same as the domestic investors;
- If there are regulations restricting the foreign investors’ market access under Vietnam’s domestic laws: foreign investors must comply with such regulations.
2. Procedures for establish a foreign direct invested company
- Step 1: Establish an investment project in Vietnam at provincial investment registration office;
- Step 2: Establish a company at provincial registration office after getting Investment Registration Certificate;
- Step 3: Engrave the seal;
- Step 4: Perform initial tax registration procedure at Tax authority.
3. The dossier that needs to be prepared includes:
- An application form for execution of the investment project, including a commitment to incur all costs and risks if the project is not approved;
- A document about the investor’s legal status;
- Document(s) proving the financial capacity of the investor including at least one of the following documents: the investor’s financial statements for the last two years; commitment of a parent company to provide financial support; commitment of a financial institution to provide financial support; guarantee for the investor’s financial capacity; other document proving the investor’s financial capacity;
- Proposal for the investment project including the following main contents: investor or method of investor selection, investment objectives, investment scale, investment capital and plan for raising capital, location, duration and schedule of the investment project, information about the current use of land in the location of the project and proposed demand for land use (if any), demand for labor, proposal for investment incentives, impact and socio-economic efficiency of the project and preliminary assessment of environmental impact (if any) in accordance with regulations of law on environmental protection. If the law on construction requires formulation of a pre-feasibility study report, the investor is entitled to submit the pre-feasibility study report instead of a proposal for the investment project;
- If the project does not require the State to allocate or lease out land or to permit land repurposing, a copy of the document regarding the land use rights or other document identifying the right to use the location for execution of the investment project is required to be submitted;
- Contents of the explanation for the technology to be used in the investment project if the project requires appraisal and collection of opinions on the technology in accordance with the Law on Technology Transfer;
- The business cooperation contract if the investment project is executed under a business cooperation contract;
- Other documents relating to the investment project, and requirements on the eligibility and capacity of the investor in accordance with regulations of law (if any).
4. Consultancy service for investment project establishment of Pham Consult
With many years of experience in consulting foreign investors on the establishment of foreign direct investment company, Pham Consult provides consulting services with the competitive price, assisting you in:
- Consulting in conditions, procedures and issues arising when establishing a foreign direct investment company in Vietnam;
- Preparing all the required dossiers in bilingual languages (Vietnamese and English) to ensure that foreign investors can easily follow up and evaluate the progress of work (if customers have requests)
- Assisting client with notarization, consular legalization and notarized translation;
- Being on behalf of clients for submitting and receiving the results at state agencies;
- Consulting, explaining to the state agencies in case of arisen problems.
If you are interested in establishment a foreign direct investment company in Viet Nam and you still have many problems about this procedures, please kindly contact us via the following information for free consulting. Pham Consult always desires and undertakes to provide clients with the best services and support to help you optimize operating costs for your business goals.