It is our understanding that you (foreign investor) now consider setting up a new company in Vietnam manufacturing foodstuff for exportation (hereinafter referred to as “NewCo”), S&B Law would like to provide some information as follows:

It is our understanding that you (foreign investor) now consider setting up a new company in Vietnam manufacturing foodstuff for exportation (hereinafter referred to as “NewCo”), S&B Law would like to provide some information as follows:

Having carefully studied the case and consulted the relevant competent authorities, we are of opinion that in general, the productions and services that the NewCo intends to carry out in Vietnam fall into the scope of Vietnam Commitments entering WTO.

Also, Vietnam Law System does not expressly impose any restriction or inhibition regarding to the productions and services that the NewCo proposed to carry out in Vietnam. Thus, it is possible for you to setup the NewCo in Vietnam.

Under Vietnam Law on Investment, in order to setup Company in Vietnam, foreign investor is required to obtain an Investment Certificate from appropriate competent authorities. Depending on the location of the project, the licensing authority may be the provincial People’s Committee (for projects located outside industrial or export processing zones) or the provincial Industrial and Export Processing Zones Management Authority (for projects located in industrial or export processing zones).

As to our experience, foreign invested company manufacturing products for exportation prefer locating their companies in industrial or export processing zones than other locations. The reason is that industrial or export processing zones are specially developed for calling foreign investment into Vietnam. Infrastructure therein is convenient for foreign investor to actually its manufacturing plans easily as it does not require to face with site clearance – the problem make almost foreign investment project in Vietnam slow down.

Another choices available for foreign investor to locate its Company is to lease Land Use Right (similar to Land Ownership in several countries) from competent authorities or lease office/manufacture/infrastructure from existing companies in Vietnam. Generally, foreign investor running investment project in the field of services sector or investment project with small scope prefer these option.

Upon determination of location for the NewCo, you shall then obtain an In principle Lease Contract – in case you lease Land Use Right/Office/Infrastructure from existing companies in Vietnam – or In principle Approval for Land Use Right – in case you lease Land Use Right from competent authorities.

Another important matter to be noted in running investment project in Vietnam is the Investment Capital. With respect to conditional investment sectors such as banking, finance, tourism, hospital etc… investment capital to be contributed by foreign investor must be satisfy minimum rate as stipulated by relevant regulation.

With respect to manufacture of foodstuff, it does not require for minimum investment capital. However, the investor must prepare an appropriate investment capital to ensure the feasibility of his proposed investment project in Vietnam.

In big cities such as Ho Chi Minh City or Hanoi, investment projects in the field of manufacture having small scope or low investment capital are not really preferred. Particularly, investment projects involving with manufacturing should have investment capital in equivalent to at least 400,000 – 500,000 US Dollar.

Also, in several Industrial and Export Processing Zones, investment projects demanding the land lot of at least 04ha shall be considered to lease the infrastructure or Land Use Right therein.

Scope of investment project may not be a big matter if you choose to locate your company in several province such as Bac Ninh, Bac Giang, Hung Yen, Hai Duong etc.

Then, the application dossier should be submitted to the appropriate licensing competent authority for obtaining Investment Certificate for the NewCo.

After that, you can actually setup the NewCo and run your business in Vietnam. For your ease of reference, hereinafter is an overview roadmap of licensing procedures for setting up a foreign invested company in Vietnam as follows:

 

Stage 1:       Pre-Licensing Stage

–          To obtain an in-principle lease contract or in-principle approval on Land Use Right.

–          To prepare other necessary documents for setting up the NewCo in Vietnam.

Stage 2:       Licensing Stage

–          Working with Competent Authorities for obtaining the Investment Certificate of the NewCo.

–          To be completed within 20-30 working days.

Stage 3:       Post-Licensing Procedure

–          Obtaining the seal, tax code and placing an announcement on the establishment of the NewCo in the newspaper;

–          To be completed within 5-10 working days.

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