“The procedure for business registration in Vietnam is improving recently, but challenges still remain as the legal system are unclear to foreign investors”, said Chip Hardy, President, Nova Hotel Renovation & Construction. “That’s why we seek for the business law consulting firm like GBS”, he added.
Foreign investors are attracted by Vietnam’s 90 million-strong population which supports a large and young workforce and that has also seen an increase in disposable income in recent years.
In the first nine months of this year, Vietnam has attracted US$25.37 billion worth of FDI capital, or 99.6% of last year’s figure, the Foreign Investment Agency (FIA) has announced.
Within 104 countries and territories supplying FDI to Vietnam, Japanese investors remained the largest source of foreign investment. Japanese investors registered to invest US$7 billion, making up 28% of the total FDI. The Korean investors came second, pumping in US$5.6 billion or 22.4% of the total FDI, followed by Singaporean with US$3.6.
Hanoi in the north and Ho Chi Minh City and Ba Ria – Vung Tau in the south attracted the largest amount of FDI capital during the period, with a total registered capital of US$5.8 billion, US$4.2 billion and US$2.1 billion, respectively.
Sophie Dao, Partner of GBS told Vietnam Insider that, according to the Vietnamese Law, every foreign investor can set-up a foreign invested company, which they own unlimitedly the chapter capital of the company, except some special cases, such as listed companies, public companies, securities trading organizations and securities investment funds or state-owned enterprises.
Depend on the legal form (representative office, branch office, private company, foreign partnership company, multi member limited liability company, single member limited liability company, foreign shareholding company) or type of the investor, required documents will be different and normally, it takes 15 days to 30 to get every done.
But don’t worry, Sophie and the lawyers at GBS will help you, even you don’t need to enter Vietnam.
… Challenges remain
The World Bank and International Finance Corporation (IFC) ranked Vietnam in 99th place in the world for ease of doing business, which means it is essential to seek local help when expanding in 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.
Dealing with Construction Permits: It takes up-to 110 days and 11 procedures to get permits for construction in Vietnam, requiring interaction with several official departments
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
Registering Property: It takes 57 days to complete, which is far higher than the OECD norm but around average for East Asia and Pacific
Getting Credit: Vietnam is home to quite a stable credit environment, and obtaining capital is a relatively smooth process for businesses.
Protecting Investors: Investor protection is an area in which Vietnam fails miserably. 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 a massive 32 corporate tax payments to be made each year which takes an average of 872 company hours to complete.
Trading Across Borders: Given its strong manufacturing base and reliance on interconnectivity, trading across borders is a cheap endeavor. However, that isn’t to say the process is not complicated.
Enforcing Contracts and Resolving Insolvency: It takes up-to 400 days to complete and 34 procedures.
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.
Contact Sophie Dao, Partner of GBS