How to Set up Trading Company in Vietnam

How to Set up Trading Company in Vietnam

Investment in set up trading company in Vietnam is considered as investment in conditional investment areas

 

Once an underdeveloped country, in the last two decades Vietnam has shown an incredible growth in the world economic scene, especially in the criteria of investment attraction. For a foreign company that is interested in expanding the business in a new country or region, Vietnam is a promising destination. In order to start a company or specifically a trading company in Vietnam, foreign investor should comprehensively understand the formality and function of the legal entity to be formed according to Vietnam Law. The consultancy and guidance of skilled and qualified lawyers in Vietnam law firms throughout the process shall mostly be needed.

The legal basis for a foreign company to set up a company in Vietnam is stated in the Enterprise Law of Vietnam: foreign organizations and individuals will be entitled to establish and manage enterprises in Vietnam in accordance with this law, with some exceptions.  Foreign investors may invest in the form of 100% foreign- owned capital to establish joint-stock companies, limited liability companies, partnerships or private enterprises under the provisions of the Enterprise Law and relevant laws.

The foreign investor shall mostly needs to fulfill the investment registration procedures at provincial-level state agencies in charge of investment in order to be granted the investment certificates, in accordance with Vietnam law in investment. The dossier required for the investment registration shall comprise of an examination dossier, papers showing the capability to satisfy the conditions which the project is required by law to satisfy, for investment projects in conditional investment domains i.e. specific goods to be traded at HS code level, experience in trading area, how the trading procedures would be carried out, potential business in Vietnam.

In particular, for investment capital, it should be noted that, trading company needs to commit larger investment in terms of capital, since its function is to identify competitive suppliers, negotiate and purchase their products and sell them through a distribution network in Vietnam. In the meantime, the investor needs to have experience in trading to run the business smoothly and efficiently. The investor should explain why the company would contribute to the development in Vietnam when applying for investment license at Department of Planning and Investment, and Ministry of Trade and Commerce.

ANT Lawyers, a law firm in Vietnam could offer service to establish company in Vietnam. We assist clients needing legal service in obtaining investment certificate, business registration certificate, or other  licensing procedures.

 

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7 basic steps to set up a business and comply with Vietnam laws

7 basic steps to set up a business and comply with Vietnam laws

Vietnam’s economy is increasingly diversified in terms of business activities and business regulations are also constantly being improved and enhanced. Accordingly, foreign investors can freely choose the right type of business. Therefore, the set up company in Vietnam is always a matter of great interest to foreign investors whom find business opportunities in Vietnam.

 

The first step is to set up a business in Vietnam

To take this step, the investor first needs to determine the type of business to choose to establish and provide the business name and expected information. Accordingly, the composition of the enterprise establishment dossier will be prepared according to regulations and submitted at the Business Registration Office, the Department of Planning and Investment of the place where it is expected to be headquartered. After submitting a valid application, the enterprise will be granted an enterprise registration certificate and announced the registration contents on the National Business Registration Portal.

The second step is to publish the contents of business registration

After being granted an enterprise registration certificate, an enterprise must make a public announcement on the National Business Registration Portal.

In the third step, the enterprise conducts stamp engraving

Enterprises can request to make a seal from the seal making agent. Accordingly, the enterprise actively decides on the type, quantity, form and content of the seal and is solely responsible for the use of its legal entity seal.

Fourth step is that to open a bank account in Vietnam

Currently, businesses can choose a bank to open an account for their business, to open an account, the bank requires an application form issued by the bank, a seal sample, the company’s charter, and a certificate. Business registration and related documents are required by different bank.

The fifth step is to register the tax declaration form in Vietnam.

Accordingly, enterprises register for the use of e-invoices and notify the use of e-invoices to their tax authorities. Enterprises need to contact the invoice supplier to order the printing of value-added invoice books and must register self-printed invoices with tax authorities.

In the sixth step, the enterprise needs to conduct labor registration in Vietnam. Enterprises register with the Department of Labor, War Invalids and Social Affairs to declare the use of labor. Within 30 days from the date of commencement of operation, the employer must register the employer to the Labor Department (according to the prescribed form). In addition, enterprises should note that the relationship between the employer and the employee is regulated by the Labor Code and specified in the labor contract.

Seventh step is to register for social insurance in Vietnam.

Enterprises register with the Social Insurance Agency to pay health insurance and social insurance for employees. Employers must fill in all information according to the form provided by social insurance, including: full name, date of birth, salary (recorded in labor contract), number of social insurance book (for employees who have been issued with a book), a certified copy of the company’s business registration certificate and a copy of each labor contract.

It can be seen that setting up a business requires businesses to carry out a lot of procedures and comply with many different regulations of tax, banking, labor, insurance… Therefore, besides learning about legal regulations and businesses can seek the support of professional consulting firm in Vietnam with expertise and experience in the field of business establishment to implement the process quickly and effectively.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

ANT Lawyers, a law firm in Vietnam could offer service to establish company in Vietnam. We assist clients needing legal service in obtaining investment certificate, business registration certificate, or other  licensing procedures.

 

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The Development of Renewable Energy in Vietnam

The Development of Renewable Energy in Vietnam

On June 15th, 2020, at the National Assembly’s socio-economic discussion session, the Ministry of Industry and Trade clarified a number of issues related to the implementation of power projects and energy security in Vietnam amid the the situation of energy supply, especially electricity supply is facing many difficulties when hydroelectric and thermal power reserves are almost fully exploited and the risk of energy import is increasing.

 

Vietnam has the advantage of being an equatorial country, with high annual sunshine hours (average from 1800-2600 hours/year) which is an advantage to develop solar energy. Vietnam has a long coastline (3260 km) and favorable terrain, the construction of wind power stations is a solution that can help improve Vietnam’s electricity output in the next years.

As reported by the Ministry of Industry and Trade, for solar power, the total planned capacity of about 10,300 MW has been operated on 90 solar power projects with a total capacity of about 5,000 MW. For wind power, as proposed by the Ministry of Industry and Trade, the Prime Minister has agreed to supplement the planning of an additional 7,000 MW of wind power, raising the total scale of wind power capacity planned to 11,630 MW.

In addition, according to Vietnam’s commitment at COP21, Vietnam will reduce the greenhouse gas emissions by 8% by 2030. And with effective support from the international community, Vietnam can cut its emissions by 25% greenhouse gas emissions by 2030. And the Clean energy technology is one of the best solutions to fulfill this commitment.

In addition, the installation, operation and maintenance of wind and solar power systems are relatively simple, at low cost therefore will save time and cost for investors. Besides, clean energy does not cause impacts on large-scale migration environment, such as deforestation, emissions of dust, water and ash, etc. In contrast, it also creates beautiful and majestic landscapes, and attractive to visitors, this is in line with Vietnam’s sustainable development goals in the future.

With economic and environmental advantages, the scientists forecast that, in the world to 2040 and 2050, the percentage of solar power capacity in total generating capacity will be 45% and 50 %; The structure of electricity production by 2050 is as follows: Number 1 is solar power: 35.8%; followed by onshore wind power: 24.3%; Offshore wind power: 12.1%; Hydroelectricity: 12.4% and the rest are other sources of renewable energy and fossils and nuclear: 15.4%.

In order to ensure the implementation of the overall plan for the coming time, the Ministry of Industry and Trade is focusing on speeding up the construction of the electricity Planning No. VIII to submit to the Government in the fourth quarter of 2020. In particular, following the contents of the Resolution No. 55-NQ/TW of the Politburo on “Vietnam’s national energy development strategy orientation to 2030, vision to 2045” on February 11th, 2020, according to which ratio of sources of renewable energy in the total primary energy supply will reach about 15-20% by 2030; 25-30% by 2045.

According to Resolution No. 55-NQ/TW, Vietnam will develop breakthrough mechanisms and policies to encourage and promote the renewable energy sources in order to replace fossil energy sources at maximum. Prioritizing the use of wind and solar energy for electricity generation; encourage investment in building power plants using urban waste, biomass and solid waste in parallel with environmental protection and economic development of the circulation. To establish and develop a number of renewable energy centers in advantageous regions and localities. Then researching and assessing the overall potential and developing development orientations for geothermal energy, ocean waves, tides and ocean currents; deploy a number of application models, conduct pilot tests to evaluate the effectiveness. To undertake technological research, formulate a number of production pilot projects and encourage the use of hydrogen energy in line with the general trend of the world. In addition, the Resolution prioritizes the development of renewable energy in line with the ability to ensure system safety with reasonable electricity costs and encourage the development of rooftop and surface solar power. To develop groundbreaking support policies and mechanisms for offshore wind power development in association with the implementation of the Vietnam’s Sea Strategy.

With advantages and priority policies for renewable energy development as above, Vietnam hopes that more international investors will invest and set up company in Viet Nam in renewable energy.

 

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Procedures for Applying the Enterprise Registration Certificate in Vietnam

What Are the Procedures for Applying the Enterprise Registration Certificate for Foreign Investor in Vietnam?

According to Viet Nam’s commitments under the framework of the WTO and EVFTA agreement, foreign investors are allowed to establish foreign-invested enterprises to conduct business activities in Vietnam. However, the order and procedures for establishing enterprises for foreign investors must comply with the provisions of Vietnamese law.

 

Accordingly, this process consists of two main steps: (1) carry out the procedures for applying for the Investment Registration Certificate and (2) carry out the proceduresfor applying for the Enterprise Registration Certificate. In other words, to be granted the Enterprise Registration Certificate to officially and legally conduct business activities, a foreign investor must first obtain an Investment Registration Certificate.

For investment registration, foreign investors must have an investment project, except in the case of establishing a creative start-up small and medium-sized enterprise and an innovative start-up investment fund under the law on business support small and medium. The industries and trades in the investment project must not be in the industries and trades that prevent the access the market for foreign investors or the industries and trades being banned from doing business under the Law on Investment 2020. After that, investors need to prepare a dossier for issuance of the Investment Registration Certificate to be submitted to the Department of Planning and Investment where the investor implements the investment project.

Dossier for applying for the investment registration certificate includes: an application for issuance of the investment certificate; the Investor’s financial capacity report is prepared and responsible by the Investor; an explanation of the ability to meet the conditions that the investment project must satisfy according to the provisions of law for the project in the field of conditional investment; the economic – technical explanation includes the following main contents: objectives, scale, investment location, investment capital, project implementation progress, land use demand, technological solutions and solutions environmental legislation; draft of the company’s charter with full signatures of the legal representative, members or authorized representatives; members list; documents for verifying the investor’s legal status; documents for verifying financial ability. The investment registration authority repond to the application for the Investment Registration Certificate to the investor within 15 days from the date of receipt of a valid dossier.

After being granted the Investment Registration Certificate, the foreign investor shall carry out the procedures to be granted the Enterprise Registration Certificate. In this step, the legal conditions are not as strict and complicated as the first step, but it also requires investors to prepare a number of papers and documents. Depending on the type of enterprise and the content of registration, the business registration subject needs to submit different types of documents under the requirements of the law. Investors can submit the dossier in person at the Business Registration Office or submit it online via the electronic network. The Business Registration Office shall issue the Enterprise Registration Certificate within 03 working days from the date of receipt of a valid dossier. In case the dossier is invalid or the name of the enterprise requested for registration is not in accordance with regulations, the Business Registration Office must notify in writing the contents that need to be amended, supplemented to the enterprise founder or the enterprise within 03 working days from the date of receipt of the dossier.

It can be remarked that the two-step process creates obstacles for many foreign investors when establishing an enterprise in Vietnam. It has been suggested the legislator to consider shortening the order and reducing the number of documents that need to be submitted, and at the same time, promote the online procedures to save time and human resources. For efficiency in preparing documents, the client could engage a law firm in Vietnam to assist carrying out procedures of setting up company and applying for investment and business registration certificate in Vietnam.

 Source ANTLawyers: https://antlawyers.vn/business/what-are-the-procedures-for-applying-the-enterprise-registration-certificate-for-foreign-investor-in-vietnam.html

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How Vietnam Support Start-up Company in Vietnam?

How Vietnam Support Start-up Company in Vietnam?

Start-up company is a topic that is receiving much attention in Vietnam, especially in the context of the country’s strong integration with the world economy. Starting a business is expected to create economic growth, make a positive contribution to socio-economic development. From start-up ideas gradually appears startup businesses in Vietnam. Every year, Vietnam has hundreds of new businesses established, in which the number of small and medium enterprises account for the majority. Because they are small and medium-sized enterprises, it is inevitable to face great competitive pressure from large traditional enterprises as well as competitors.

 

The identification of small and medium enterprises is the basis for the State to have supportive policies to help enterprises face competitive pressure in the market. Criteria to determine small and medium enterprises include: field of operation, average number of employees participating in social insurance per year, total revenue or total capital of the enterprise.

Firstly, micro-enterprise in the field of agriculture, forestry, aquaculture; industry and construction that has an average annual number of employees who participate in social insurance not exceeding 10 people and the total revenue in the year not exceeding 3 billion VND or the total capital of the year is not more than 3 billion VND. Micro enterprises in the field of commerce and services employing no more than 10 employees per year on average with social insurance contributions and total annual revenue is not more than 10 billion VND or the year’s total capital is not more than 3 billion VND.

Second, small enterprise in the field of agriculture, forestry, aquaculture; industry and construction that has an average annual number of employees who participate in social insurance not exceeding 100 people, total revenue in the year not exceeding 50 billion VND or total capital of the year not exceeding 20 billion VND, except micro-enterprises. Small enterprises in the field of commerce and service that have an average annual number of employees who participate in social insurance no more than 50 employees total revenue in the year is not more than 100 billion VND or total capital of the year is not more than 30 billion VND, except micro enterprises.

Third, medium enterprise in the field of agriculture, forestry, aquaculture; industry and construction that has an average annual number of employees who participate in social insurance not exceeding 200 people, total revenue in the year not exceeding 200 billion VND or total capital of the year not exceeding 100 billion VND but not micro-enterprises and small enterprises. Medium enterprises in the field of commerce and service that have an average annual number of employees who participate in social insurance no more than 100 employees, total revenue in the year is not more than 300 billion VND or total capital of the year is not more than 100 billion VND but not micro enterprises and small enterprises.

Because there are a large number of enterprises in the Vietnamese market, the State has introduced policies to support small and medium enterprises such as technology support, information support, consulting support, supporting human resource development, supporting small and medium enterprises to transform from household businesses, small and medium enterprises to innovative start-ups, small and medium enterprises joining industry clusters, value chains. Small and medium enterprises play an increasingly important role in the economic development of countries around the world. With the ability to create business opportunities and effective jobs, this business model is increasingly encouraged to develop and receive support from state agencies to expand and develop this business model in Vietnam.

With highly professional staff and great experience in foreign investment, ANT Lawyers would like to support you to prepare before setting up company in Vietnam.

 

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Differences Between Limited Liability Company and Joint Stock Company

How to distinguish a Limited Liability Company and Joint Stock Company?

Vietnam Law allows the establishment company in Vietnam in various forms. It is an important step in investment process.

 

10 questions to ask before setting up company in Vietnam?

Investors could choose different forms depending on the needs and capacity on the ability to raise capital and sharing the risk in business as well as the management and operating costs. Each form will have its own organizational structure, operating mechanism, rights and obligations specified under Law on Enterprise 2014.

Currently, Limited Liability Company (“LTD”) and Joint Stock Company (“JSC”) are two popular enterprise forms operating in Vietnam.

What is the difference between these two forms of companies?

I. Organizational Structure

Number of members/shareholders:

LTD

-Single member LTD: Having only one member (member can be an organization or an individual);

-Multi members LTD: Having at least 2 members and not exceed 50 members (member can be an organization or an individual).

JSC

Joint Stock Company has at least 3 shareholders and not limit the maximum number.

Management structure

LTD

-Single member LTD

Single member LTD owner by an organization shall be organized under two models: Company president, Director/General director and Supervisor; (OR) Members Council, Director/General director and Supervisor.

Single member LTD owner by an individual shall be organized as follows:  Company president, Director/General director.

-Multi members LTD

Multi members shall be organized by: LTD Council members, Chairman of the Members Council and Director/General director;

Multi members LTD having 11 members or more shall establish the Board of Supervisors.

JSC

JSC can be organized under two models: General Meeting of Shareholders, Board of Directors, Board of Supervisors and Director/General director; (OR) General Meeting of Shareholders, Board of Directors (Board of Internal Supervisors under Board of Directors) and Director/General director.

II. Capital Contribution

Raising capital

LTD

-Single member LTD: Owner increases charter capital

-Multi members LTD: Members increase their charter capital, or increasing the number of capital contributors

JSC

Different from LTD, JSC can raise its capital by various methods as follows: Selling shares to existing shareholders; Selling shares individually to non-shareholders; Issuing shares on the stock market.

Transfer of contributed capital

LTD

-Single member LTD: Owner transfers a part of contributed capital to other persons and this could lead to changes of the type of business or other procedures if all capital is transferred (for instance in a M&A deal).

-Multi members LTD: Offer the stakes to other members in proportion to their stakes in the company under the same conditions;  The stakes could only be transferred to other persons if the members do not buy or do not buy completely within 30 days from the offering date.

JSC

The shareholders of JSC are free for transfer their contributed capital after 03 years from the establishment.

Having said that, LTD is a type of enterprise that the capital contribution is not the only link between the members of the company but they are also linked together by relationship. They may be acquaintances and trust each other to jointly contribute capital to establish an enterprise. Therefore, the management of the LTD is as complicated as JSC. With the larger the number of shareholders, the level of capital mobilization, voting power to decide on issues of the company based on the ratio of capital contribution of each shareholder, the management and operation of the JSC is more complex.

The ability to raise capital of a JSC is higher than a LTD. Because, JSC can issue shares to the public in the form of securities. When the stocks are listed on stock exchange, the information of company’s business operations must be public and more transparent.

The procedure to set up a company in form of an LTD or a JSC has not much differences.

ANT Lawyers is a law firm in Vietnam with English speaking lawyers, located in the business centers of Hanoi, Danang and Ho Chi Minh City to provide convenient access to our clients. With highly professional staff and great experience in foreign investment, we would like to support you to set up joint stock company in Vietnam.

 

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Where is least expensive cities for working and living in Vietnam?

Where is least expensive cities for working and living in Vietnam?

The price indexes has always been on top of information list which investors look for when making investment into a new country. Beside various information i.e. GDP, Stock market, unemployment, producer price, interest rate, balance of trade, the investors also check the consumer price index and income to determine the attractiveness of market entry. There are many attractiveness factors including the low cost of living and low level of income in comparable with other neighboring countries, for making investment in setting up company in Vietnam for manufacturing purpose.

 

Where in Vietnam is cheapest city to live and work?

 According to statistics of 2021, taking Hanoi as the base indicator, the top 10 localities with the most expensive cost of living include: Hanoi (100%), Quang Ninh (99.5%), Ho Chi Minh City (98.98%), Da Nang (96.4%), Hai Phong (95.58%), Lao Cai (94.75%), Son La (94.58%), Lang Son (94.55%) %), Khanh Hoa (94.55%) and Dien Bien (94.41%).

How it has changed since 2015?

The top 10 provinces and cities with the most expensive cost of living in the country in 2015 include: Lai Chau (100.3%), Hanoi (100%), Son La (99.27%), Lao Cai (99.02%), Dien Bien (98.85%), Ho Chi Minh City City (97.39%), Ha Tinh (97.14%), Ha Giang (96.5%), Da Nang (96.44%) and Binh Phuoc (96.12%).

In 2021, Hanoi’s per capita income reaches more than 6 million VND/month.  Since 2016, Hanoi has always been in the top 3 localities with the highest income in the country.

In 2015, Da Nang ranked 9/63 with a price equal to 96.44% compared to Hanoi. By 2017, the city “jumped” to third place, up 6 places compared to 2015. In 2021, Da Nang’s cost of living is 96.4% of that of Hanoi and ranked 4th in the country in terms of expensiveness. In 2021, Da Nang has per capita income of more than 5.2 million VND/month, ranking 5th out of 63 provinces and cities. Previously, 2019 was the year the city had the highest income in the past 10 years with more than 6 million VND/person/month.

In 2021, Ho Chi Minh City reached 98.98% and ranked 3rd out of 63 provinces and cities in cost of living.   From 2002 to 2016, the city has always been the place with the highest income in the country. From 2018 to present, Ho Chi Minh City maintains the “runner-up” position (behind Binh Duong), in which, 2019 is the year with the highest income with 6.7 million VND/person/month.

Besides the three central cities that are constantly in the top of the most expensive localities in the country, Lao Cai is the only mountainous province.

In 2020, Lao Cai ranked 5th in terms of the expensive level in consumption, equal to 96.52% compared to Hanoi. Lao Cai is the most expensive province among 14 Northern Midlands and Mountainous Provinces (the cheapest is Phu Tho, equal to 91.07% compared to Hanoi, ranked 56th nationwide). By 2021, Lao Cai’s index drop to 94.75%, the lowest level of the place since 2015 until now. With this index, Lao Cai ranks 6th in the country in terms of the expensiveness of the cost of living.

In particular, although the cost of living is quite high, the income of people in Lao Cai is not high. The average income of people in this locality was only 1.8 million VND/person/month in 2016 and ranked 53rd in the country. In 2021, people in Lao Cai earn an average of 2.51 million VND, ranking 55th in the country.

The low level of income and least living cost make Vietnam a favourable destination for investment.  Many labour intensive manufacturers in garment, shoes, furniture… have long chosen Vietnam as a place for establishing company in manufacturing. There are growing number of companies in electronics also manufacture in Vietnam to take advantage of the comparable low wage workforce.

With highly professional staff and great experience in foreign investment, ANT Lawyers - law firm in Vietnam would like to support you to establish company in Vietnam.

 

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