F&B Business in Vietnam

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Business-in-Vietnam

Under Vietnam-WTO Commitments, F&B is classified to CPC 642. Accordingly, from 1st January 2015, Vietnam undertakes to open its market for foreign investors to setup foreign invested company for running F&B Business in Vietnam without strict accompanying requirements[1].

According to our practical experience, in the year of 2015, licensing authorities in Ho Chi Minh City and Hanoi licensed several foreign investors to run F&B Business in Vietnam. Almost of such foreign investors registered their investment project under the nominee local partner before 2015.

Then, from 1st January 2015, when the accompanying requirements imposed on F&B are officially removed, they proceed the licensing procedure to acquire the F&B Business from their nominee local partner.

It seems that Vietnam Licensing Authority keep an opened mind to Foreign Investor running F&B Business in Vietnam. However, in the South of Vietnam, the Licensing Authority keeps a cautious view on allowing foreign invested company opening a large number of restaurants in Vietnam. Luckily, this opinion is not considered as official in Vietnam, even in Ho Chi Minh City[2] as there is no legal basis for restriction of opening national wide network of restaurant in Vietnam.

In this case, in order to secure the high success possibility, we highly recommend Client to carefully account following factors:

–         Location of the restaurant: In Vietnam, location of a foreign invested company is very important. Location of the restaurant in Vietnam must strictly comply with master plan of the City. Locations in Trade Complex Buildings are highly recommended. In case Client wishes to select locations out of Trade Complex Building, car parking place for customers, architecture and fire fighting system of the restaurant should be carefully accounted. The Licensing Authority may refuse to grant the License if Client fails to provide sufficient explanation on such matters.

–         Serving alcohol in Restaurant is considered as one of the most sensitive matters of the application for opening Restaurant in Vietnam, especially, those relating to foreign invested company. Generally, in order to serve Customer with Alcohol in restaurant, the Restaurant shall be required to obtain a Sub-License for retailed sale of Alcohol. The Sub-License shall be granted if the Restaurant satisfies strict conditions for storage of Alcohol, Food hygiene and safety, fire fighting and prevention, master plan of city on alcohol retailed sale network …etc[3]. However, we also further note that on 27th December 2014, the Ministry of Industry and Trade adopted the Circular No. 60/2014/TT-BCT further guiding on manufacturing and distribution of alcohol goods, serving alcohol for Customer in restaurant is removed from requirement for obtainment of Sub-License. This Circular shall be effective from 1st March 2015. However, the Circular does not clearly state that serving alcohol in restaurant is exempted from requirement of obtainment of Sub-License for retailed sale of Alcohol. This may cause confusion to the Licensing Authority. Thus, for avoidance of any difficulty during the licensing process, in the application dossier for setting up FIC in this case, we should not mention about proposal of serving alcohol for Customers in the restaurant. Then, we can add this business activity when the Government has new guidance on this matter.

–         Investment Capital of FIC: Under Vietnam Law, F&B business does not require for minimum rate of investment capital. However, upon applying for investment certificate, Client shall need to provide an estimate of capital required for operating the Foreign Invested Company in a medium or long term. We understand that in this case, Client plans to setup a small Restaurant. According to our practical experience in this field, we are of opinion that you should consider an investment amount of 500,000USD upward. By the way, we also would like to note that, in case we obtain the Investment Certificate by 1st July 2015, Client shall be required to contribute 100% charter capital of the FIC within 03 months after completion of obtainment of Certificate of Business Registration. However, if we can obtain the Investment Certificate before 1st July 2015, we can apply for an extended schedule of capital contribution, such as contribution of charter capital within 12 months from the date of setting up company.

–         Experience of Client: Experience of Client in the F&B is also one of important factor that determining the success possibility of the case. Foreign Investor having no experience in the field is generally not favoured by the Licensing Authority. In this case, we understand that Client having more than 15 years in F&B and having a large network of restaurant abroad. This shall much support for the case in Vietnam.

–         Other factors to be accounted: Under Vietnam Law, after completion of licensing process for opening the Company, in order to officially operate the Restaurant, Client shall need to obtain (i) Certificate of satisfaction on food safety and hygiene; (ii) Certificate of satisfaction on conditions for fire fighting and prevention and (iii) Commitment on environment protection.