Q: Do I need to rent a factory first, hire employees and to put the whole factory, or is this all done on the paper, for the authorities to evaluate?
A: You do not need to rent a factory and hire employees for the authorities’ evaluation. This is all done on the paper. It does mean that the Investment Project is really feasible so that competent authority shall be quite persuaded to grant the Investment Certificate. No worries for this stage, SBLaw experiences and shall support you in drafting paperwork and making explanation to authority. If possible, You may contact with the lessor to sign an MOU on hiring a factory. This MOU is to make sure with competent authority for the actual feasibility of project.
Q: If there’s any minimum capital require to invest in order to be consider for licensing?
A: Actually, Vietnam Law on Investment does not imply a minimum amount of investment capital to setup a wholly foreign invested company. Capital is also not a legal requirement required by government.
However, in actual practice and our experiences applying with manufacturing company in HCM. Capital needs to be sufficient to run the project, and it also depends on how big the project is, how many employees working in this company are. For instance, a medium or small manufacturing company with less than 20 employees, the charter capital may be require at least 500.000 USD.
Q: Is there any minimum required for workers to hire? I’m planning to start with a small factory of 100-120 workers (obviously to expend in the future to much more than that), but I wonder if there’s any minimum for workers and if it’s okay to start with?
A: Yes, it is ok to start with that number of employees. Vietnam law does not provide officially a minimum for worker to hire. It depends on the policy of each location where the factory located. However, when hiring a worker, employer may have to follow some regulations under Vietnam labor law and other related documents. For ex : Regarding minimum salary of employee, According to Decree 103/2012 dated 4th, December 2012 issued by Government taken full effect on 20th, January 2013, The minimum salary range applying for workers working in Zone 1 (Zone 1 includes Ho Chi Minh City) is 2,035.000VND ( ~100 US$)/month. To hire a worker depends on negotiation between employer and employee but should not less than this minimum salary range.
Q:Renting a factory in industrial zone Vs renting in the periphery of HCM (up to an hour from HCM); I’m thinking to rent a factory outside the industrial zone because of the cost differences, and the accessibility for workers. Do you see any problem with that? Can you help me locate a factory site around 2000m2 area with around 1000m2 of building area?
A: As stated in the Proposal, the manufacturing factory is highly recommended to locate in industrial zone since it is related to urban management. Government wants to keep factories/ manufacturer away from residence area. Factories/manufacturer therefore need to be gathered in industrial zone. Frankly speaking, to set up company/ factory in Industrial Zone will be more convenient and faster,
Relating to the research on suitable location for your project, S&B Law can support you with the service fee of 300 USD (Three hundred US Dollars). By this research, we will provide you the list of locations which satisfy all requirements for your investment project.
Q: I’m going to this venture with investors, what type of entity do you recommend for us to establish?
A: It is fine for us to draft paper work under a JVC. We think that the structure of legal entity in Vietnam should be limited liability company.
A limited liability company is an enterprise in which a member may be an organization or an individual. The number of members shall not exceed fifty and shall be liable for the debts and other property obligations of the enterprise within the amount of capital that it has undertaken to contribute to the enterprise.
This legal entity will be easier for the investor in management and controlling the company.
Q:And if we want you to write a shareholder / partnership agreement, how much would you charge for this service?
A: Yes, sure. We can handle that. To draft a shareholder/ partnership agreement, we shall charge you 400 USD. Please email me for further information then we can proceed the work.
