Starting a business in Vietnam as a foreigner: advice from a Vietnamese lawyer
Procedures for investing or starting a business in Vietnam as a foreigner have been greatly simplified in recent years. Starting a business in Vietnam is now fast and simple for investors and creators of foreign companies.
What form to set up a business in Vietnam?
Several choices are presented to you to set up your business in Vietnam. Foreign entrepreneurs can start a business in Vietnam:
- forming a company with 100% foreign capital
- constituting a joint venture
- entering into a business cooperation contract
- establishing a representative office or branch
Representative offices or branch divisions are useful for a foreign company. These entities are not, however, corporate bodies and cannot sign contracts. The representative office can be useful prior to commercial implementation. It has the purpose of linking and exploration of the Vietnamese market. The establishment of the representative office is subject to obtaining a license from the Department of Industry and Commerce of the place of establishment. A representative office must not directly conduct profit-making activities. A branch may be established by a foreign company only in certain sectors, including banking, insurance, securities law and some trading.
A foreign investor will have more interest in starting a business in Vietnam in the form of a company with 100% foreign capital in the form of a joint venture. Indeed, a 100% foreign capital company is much freer in the pursuit of its business goals because it does not undergo the control of the Vietnamese government.
How to start a business in Vietnam as a foreigner?
Any business must be registered as a company to benefit from a legal existence in Vietnam. Registration provides a document certifying the existence of the company, called an ERC “Enterprise registration certificate.”
Foreign-owned companies, with the majority of whose capital is owned by a foreigner, further requires obtaining an investment certificate, called an IRC for “investment registration certificate.” The IRC is obtained by filing out an application with the government departments concerned (i.e. Department of Planning and Investment of Provinces/Cities)
Why start a business in Vietnam?
Vietnam has many advantages for foreign investment. First of all, it has a large market of 90 million inhabitants and domestic consumption appears strong. The economy of this country is young and constantly open to internationalisation, welcoming more and more foreign investors. Growth continues at a high rate. One will also notice a Chinese investment shift towards Vietnam. In addition, the workforce is young, dynamic and inexpensive and the cost of living is low.
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