If you want to establish an overseas business in Vietnam, the first thing you should do is read the following six must-know facts.
Is it easy to do business in Vietnam?
Launching a business in Vietnam has gained significant attention in recent years, primarily due to the expanding business prospects within the country. Vietnam, a member of the WTO since 2007, has undergone nearly 15 years of international economic integration. As a result, it has substantially lowered entry barriers in numerous industries. The legal frameworks governing business operations have been enhanced and adapted to accommodate the needs of business owners and align with global trends.
New Investment Law
The introduction of the new Investment Law in 2021 represents a pivotal moment for investors in Vietnam, bringing about substantial changes to key regulations that will impact both domestic and foreign-owned businesses, largely in a positive manner. This updated law has streamlined the registration process for both domestic and business incorporation in Vietnam, removed certain restrictions in various industries, and eliminated several cumbersome steps and reporting requirements for business operations. Many business sectors that were previously restricted or posed challenges for foreign investors, such as Real Estate, are now accessible and more straightforward to engage with.
Higher efficient Government
The government has enhanced its administrative system for greater efficiency. In major cities like Ho Chi Minh and Hanoi, a majority of paperwork processes can now be conducted online. The implementation of the e-government policy has eliminated numerous bureaucratic obstacles, fostering a business-friendly environment. The Vietnamese government is actively championing anti-corruption and transparency initiatives. Over recent years, it has taken action against corrupt enterprises, fostering a fairer landscape for the country’s businesses.
Remaining barrier
Despite significant improvements in English teaching in schools over the last few decades, language barriers remain a challenge for foreigners in Vietnam. The majority of Vietnamese people do not speak English as a second language, although young individuals in major cities like Ho Chi Minh City, Hanoi, and Danang often possess adequate English skills for work purposes. Consequently, many international companies choose to establish their businesses in these cities due to the availability of a qualified workforce.
Can a foreigner own a business in Vietnam?
The establishment of a 100% foreign-owned company in Vietnam is a common practice. To answer the question ‘Can I start a business in Vietnam?’ depends on the industry you intend to enter.
As part of its commitment to joining the WTO, Vietnam has opened its doors to foreign investment. While some industries have additional market entry requirements, others do not. Business services such as consulting, IT outsourcing, IT services, and trading are fully open to foreigners. However, certain sectors like logistics (49-51% foreign ownership) and advertising (up to 99% foreign ownership) have not fully allowed 100% foreign investment. Meanwhile, industries such as pharmaceutical sales and distribution are entirely closed to foreigners.
To determine whether you can establish a company in a specific sector in Vietnam, it’s essential to review Vietnam’s WTO commitments or consult with an experienced business consultant who can assess the feasibility and conditions for your desired business.
The foreign direct investment (FDI) company registration process in Vietnam can be relatively straightforward for non-conditional businesses like consulting, IT, and trading. The typical timeline is 4-6 weeks, and the required documents usually include the investor’s passport and bank statements if it’s an individual ownership structure.
However, obtaining a business registration certificate in Vietnam for conditional businesses, such as education, financial services, logistics, and e-commerce platforms, can be more complex. It often involves higher-level approvals, such as ministry approval, which can take months. The specific conditions also vary by industry, and a thorough understanding of these requirements is essential before submitting applications. Some businesses like recruitment services, training/coaching, restaurants/cafes, or e-commerce platforms may also require additional operational licenses in addition to the primary business license.
What types of companies in Vietnam a foreigner can choose from?
The types of businesses available in Vietnam are similar to those found in many other countries and include limited liability companies, joint-stock companies, public companies, and representative offices or branches.
Foreigners who want to open a business in Vietnam can choose from any of the aforementioned legal entities to establish their businesses. The most commonly chosen type of company by foreign investors is the Limited Liability Company (LLC), particularly for small and medium-sized enterprises (SMEs), including Vietnamese-owned businesses.
Read more about: Business types mostly registered by foreign investors in Vietnam
How to set up a foreign company in Vietnam?
The procedure to business setup in Vietnam can be described as below.
- Check conditions for business
- Obtain a business address
- Appoint a resident legal representative
- Apply for an Investment Certificate
- Apply for a Business Certificate
- Make the company stamp/seal
- Open the bank account for the company
- Inject committed capital investment
- Tax registration
- Other operational tasks (recruitment, office setup, tax, accounting, and payroll)
What are the costs to register a business in Vietnam?
The cost of establishing a business in Vietnam can vary depending on the industry and the specific requirements of the business. In addition to the expenses associated with the establishment phase, there are also ongoing operational costs to consider. Here are some of the key cost centers to be aware of:
Establishment costs:
- State fees
- Business address/location arrangement
- Resident Representative (optional)
- Service fee for the agency (optional)
- Admin fee (translation + notarization)
- Capital investment (depending on the business)
Post-establishment costs:
- Business license tax
- Recruitment & Hiring
- Office setup
- Tax/Accounting compliance
- Annual audited financial statement
- Taxes: PIT, VAT, CIT, FCT, import tax
- Other corporate secretarial costs (additional licenses, legal consultancy, ect.)
Company registration fees in Vietnam are comparatively affordable when compared to those of other countries. However, preparing the necessary application documents for Investment Certificates and Business Certificates is a complex task that requires the expertise of experienced consultants to ensure a successful outcome. The preparation of these documents must be conducted exclusively in Vietnamese, which poses a substantial challenge for non-native Vietnamese speakers. This is where service providers like Iris International play a crucial role.
The fees charged by these service providers can vary widely, ranging from $1,000 to $10,000 or more, depending on the complexity of the case. Some service providers may offer more competitive pricing than international agencies. Nevertheless, it’s essential to exercise caution when encountering exceptionally low-cost service offers, as they may indicate poor communication, potential scams, or unprofessional service standards.
How to obtain Vietnam citizenship by investment?
While Vietnam does not offer citizenship based on investment, it does provide the option of obtaining temporary residency, which allows foreign individuals to stay in Vietnam for an extended duration. Temporary Resident Cards (TRCs) are commonly utilized by expatriates in Vietnam to facilitate their long-term stay in the country.
Temporary Resident Card
Obtaining a Temporary Resident Card (TRC) in Vietnam can be challenging, as it typically requires a substantial capital investment. The TRC allows for extended stays of 2, 3, or 5 years, depending on the size of the investor’s capital contribution. It is a valuable permit for expatriates as it enables them to stay in Vietnam for an extended period and can also facilitate the acquisition of TT Visas or Dependent Visas for their family members. However, the minimum investment required for an Investment TRC is relatively high at 3 billion VND (approximately USD 130,000.00), which may pose a challenge for small and medium-sized business owners.
Investor Visa
The Temporary Resident Card (TRC) is not the only option for foreigners in Vietnam. Another viable option is the Investor Visa, often referred to as the DT4 visa. While this visa has a maximum validity of one year, it can be renewed if the business operations are ongoing. It’s worth noting that the Investor Visa cannot be used to sponsor family members. However, there are methods to work around this restriction for small-investment business owners in Vietnam, albeit requiring additional steps and setup within the company. For more information, you can explore our other articles or reach out to us directly.
How to get a Vietnam investor visa?
To go through this procedure, your business certificate should clearly indicate your name as the owner or co-owner of a business entity in Vietnam. This documentation will be sufficient to apply for the Investor Visa.
For a newly established company, the immigration officer may initially grant the applicant a shorter visa duration, such as 3-6 months. However, this can be extended once you provide evidence of ongoing business operations, such as capital investment injections, contracts, invoices, tax reports, and more.
In recent years, investing in Vietnam has become a prominent trend due to the numerous business opportunities and the creation of more favorable conditions to encourage foreign businesses. These six essential facts about doing business in Vietnam should be thoroughly reviewed before you begin. Explore other articles on our website to gain a comprehensive understanding of the Vietnam investment landscape, setting the foundation for your successful business in the future.
If you require assistance with business incorporation or consulting in Vietnam, don’t hesitate to contact our consultants today for free consultation.
Contact us for more information.
EN 
VI