Foreign investors choosing a direct presence in Vietnam can set up an enterprise as a wholly-owned subsidiary or a joint venture with foreign or Vietnamese partners
1. Ways of Investing in Vietnam
Foreign investors may consider investing in Vietnam through following ways:
1.1. Establishment of A New Legal Entity
Foreign investors choosing a direct presence in Vietnam can set up an enterprise as a wholly owned subsidiary or a joint venture with foreign or Vietnamese partners. Before establishing a business organization, foreign investors must have an investment project, carry out the administrative procedures for issuance of an Investment Registration Certificate (“IRC”). Foreign investors consider the below criteria in order to plan an investment project:
- Form of a new legal entity includes types of companies, branches, and representative offices;
- The ratio of ownership of capital;
- Scope of operation; and
- Other conditions in certain cases.
All the necessary conditions are not only stipulated in regulations of investment law and enterprise law, regulations of law on securities, regulations of law on equitization and conversion of state-owned companies of Vietnam, but also the international agreements to which the Socialist Republic of Vietnam is a signatory.
1.2. Making Investment by way of Purchasing Equity, Purchasing Shares, or Capital Contribution
The capital contribution, share purchase, capital contribution of foreign investors must be notified to competent authorities of:
- The form of business organizations which investors want to pour investment into;
- The method of contributing capital to business organizations includes purchase of shares or entity; contributing capital to different business organizations;
- The expected ratio ownership of the investors in such business; and
- Explanation of the conditions applicable to foreign investment (if any).
1.3. Investment under Public Private Partnership Contracts (“PPP”)
Investment through PPP is a form of investment signed on the basis of contracts among competent state agencies, investors and project enterprises to implement, manage and operate infrastructure projects, provide public services. Thus, the PPP contract is a cooperation agreement between the State and the private sector in infrastructure development investment and provision of public services, whereby part or all the works will be transferred to private sector implemented with the support of the State. The PPP regime was legislated in Decree No. 63/2018/ND-CP on Investment In The Form Of Public – Private Partnership.
1.4. Investment under Business Cooperation Contracts (“BCC”)
BCC is a contract signed among investors in order to cooperate in business of profit sharing and product division without establishing a company. Investment activities are established on basis of a signed contract among investors, the rights and obligations of the parties are only bound by the contract without organizational constraints as in the form of setting up a legal entity.
After signing the BCC, parties will set up a steering board following BCC provisions and may open an operating office to execute the contract and implement the project in Vietnam.
2. Incentives and Assistance of the GovernmentInvestment Incentives
Depending on the type of the investment, the nationality of investors, investment locations, business sectors and other factors, investment incentives may be granted in the form of:
- Lower, exemption or reduction of corporate income tax;
- Exemption from import duty on goods imported to form fixed assets, raw materials, supplies and components for implementation of the investment project; and/or
- Exemption from, or reduction of, land rent, land use fees and land use tax.
The Government encourages and supports investors by assisting in various fields of investment, including
- Technical infrastructure, social infrastructure;
- Training and development of human resources;
- Credit support;
- Access to business premises;
- Relocation of manufacturing facilities from urban areas;
- Scientific & technological research, technology transfers;
- Market development, information provision;
- Research and development
In 2019, the Government continues to issue many regulations and policies in a positive and transparent direction, in order to create the most favorable conditions for foreign investors to enter Vietnam, strengthen national competitiveness in the area.
3. Procedures for An Investment Project Application Foreign investors investing in Vietnam for the first time must plan investment projects. The implementing process may vary, depending on each investment form.
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