Question: I am writing to request for your professional assistance in establishing a Company in Ho Chi Minh City.
We are a Singapore based camera and cell phone dealer, wishing to establish a Company and conducting businesses in Ho Chi Minh City. Our business model will be shipping cell phones and cameras from Singapore, and perform distribution and selling work in Ho Chi Minh City.
We are interested in establishing a wholly foreign-owned company, can you
please kindly advise us on the required procedures, and a quotation on your charges in helping us establishing the company?
Answer: We refer with thanks to your email from which we were requested to advice on possibilitiesof setting up a foreign invested company for conducting trading right against camera and cell phone in Ho Chi Minh City, Vietnam.
1. BRIEF SUMMARY OF BACKGROUND AND OUR COMMENTS
1.1. It is our understanding that you intend to set up a wholly foreign invested company in Ho Chi Minh City for import and export of photovoltaic products such as solar module, solar cell and related materials with the minimum capital.
According to the Item 1, Article No. 4 of Decree No.23/2007/ND-CP dated 12 February 2007 of the Government providing regulation for implementation of commercial law regarding purchase and sale of goods and activities directly related to the purchase and sale of goods by enterprises with foreign owned capital in Vietnam (Hereinafter referred to as “Decree No.23/2007/ND-CP”), foreign investors who satisfy following conditions shall be entitled to license for activities of exports in Vietnam:
– It is an investor belonging to a country or territory participating in an international treaty of which the Socialist Republic of Vietnam is a member and in such treaty Vietnam has undertaken to open the market on activities of purchase and sale of goods and activities directly related to purchase and sale of goods
– The form of investment is consistent with the schedule/s undertaken in Vietnam’s undertaking to open the market and are consistent with the law of Vietnam;
– The goods and services in which business is conducted are consistent with the law of Vietnam
– The scope of operation is consistent with Vietnam’s undertaking to open the market and is consistent with the law of Vietnam;
– It has approval from the State body authorized in Vietnam.
Under Vietnam WTO’s Commitments, from the year of 2009, foreign investor is entitled to join goods exports activities in Vietnam. China is a member of WTO. Thus, you are entitled to setup a wholly foreign invested company in Vietnam for import and trading cell phone and camera.
We also would like to note that cell phone and camera can be classified to consumable goods and the competent authority may require you to setup retail outlet for trading such products. The retail outlet must locate in the licensed trading centers in Ho Chi Minh City. In case the scale of retail outlet exceeds 500 meter squares, you must obtain approval from a special committee.
3.2. The establishment of the new company requires an Investment Certificate from the licensing authority. Depending upon the location of the company, the licensing authority may be the Provincial People’s Committee (for companies located outside industrial or export processing zones) or the provincial Industrial and Export Processing Zones Management Authority (for companies located in industrial or export processing zones).
We would like to clarify that the procedure for establishment of a foreign invested company in Vietnam generally takes a rather long time in comparison with other countries in the region. Our practical experiences show that although the total time for establishment of a foreign invested company as stipulated under Vietnam Investment Law 2005 is only 20 – 45 days, the actual process may take a longer time due to that the competent authority must consult other relevant offices to evaluate the investment project.
Under Vietnam Law on Investment, for incorporating a foreign invested company (Hereinafter referred to as “FIC”), you are required to propose an Investment Project initially to obtain Investment certificate. The relevant licensing authorities shall evaluate the legitimacy and the feasibility of such Investment Project to determine on granting of the Investment Certificate on the following basis:
a. the legal framework including Vietnam’s WTO Commitments, Vietnam Investment Law, Vietnam Enterprise Law, Regulations applicable to specific industries as well as the master economic development plan of the city or province that the FIC shall register its head-office.
b. Your financial ability, investment capital to put in the Investment Project, facilities and human resources serving the implementation of such investment project in Vietnam. Vietnam Law does not impose minimum capital for FIC conducting import right and trading right. However, according to our experience, in this case, you should consider an investment capital of 500,000USD upward.
c. Head office of the FIC and retail outlet should be in line with master plan of the City.
3.3. The roadmap for the incorporation of the FIC for trading activities can be described in following steps as follows:
a) Preparing the application dossier: We shall collect necessary information and documents from you. Upon receipt of necessary information and documents from you, we shall translate documents from English into Vietnamese and prepare the application dossier under the standard forms. The initial drafted application dossier shall be sent to you for your comments. Then, after updating the application dossier based on your comments, we shall obtain the preliminary comments from the competent authority and send the finalized application dossiers for you to sign and seal. We anticipate that this phase shall be completed within 05-07 working days.
b) Submission of application dossier: Within 02 working days from receipt of duly signed and sealed application dossier, we shall submit the application dossier to the competent authority.
c) Licensing process: It shall take about at least 3-4 months days from submission of application dossier to the competent authority for the provincial licensing authority to grant the Investment Certificate. For avoidance of any doubt, we would like to note that the competent authority may need to consult relevant Ministries before granting the Investment Certificate. In such case, the licensing process shall be longer.
d) Post licensing: Within 13 working days we shall complete the post licensing procedures such as publishing the New Company in News Paper, obtaining seal and tax code registration.