We refer with thanks to your email from which we were requested to advice on possibilities of setting up a wholly foreign owned company for trading in Vietnam. Therefore, we are grateful to set our legal services proposal for your review and consideration as follows:
1. BRIEF SUMMARY OF BACKGROUND AND OUR COMMENTS
1.1. Introduction to Vietnam Law on Trading Activities
It is our understanding that you are now considering possibilities of setting up a foreign invested company for trading goods in Vietnam.
With the respect to the importation and trading activities of FIC, 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 trading 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 international treaties of which the Socialist Republic of Vietnam is a member and is consistent with the law of Vietnam;
– The goods and services in which business is conducted are consistent with Vietnam’s undertaking to open the market and 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.
In addition, under Vietnam WTO’s Commitments, from the year of 2009, foreign investor is entitled to join goods import and trading activities in Vietnam. Thailand has been a member of WTO. Thus, Client is entitled to setup a FIC for importing and trading home based water purifier in Vietnam.
We also would like to note that, trading goods is considered as conditional investment sector in Vietnam and therefore following key factors shall be taken in account:
– Capital: Vietnam Law does not stipulate minimum capital amount for this industries. However, according to our practical experience in previous case, an amount of 500,000USD should be reasonable;
– Parent Company must have positive business operation result in at least 02 recent years. This must be evidenced by audited Financial Statements for 02 recent years.
– Parent Company must be experienced in the field at least 03 years.
– Head office address of the FIC in Vietnam must be compliant with master plan of Vietnam.
With the reference to road map for obtaining IC, it can be described 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 7 working days. The prepared documents shall then be sent to you for review, signing and seal.
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. It shall take about 3 months from submission of application dossier for the provincial licensing authority to grant the IC.
c. Post licensing: Within 13 working days we shall complete the post licensing procedures such as placing establishment of FIC on News Paper, Tax code registration and obtaining Seal Sample.
1.2. SETTING UP WHOLLY FOREIGN INVESTED COMPANY
The establishment of the FIC requires an Investment Certificate from the licensing authority. Depending upon the location of FIC, 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 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.
c. Head office of the FIC should be in line with master plan of the City.
The roadmap for the incorporation of the FIC for trading activities can be described in following steps as follows:
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 07 working days.
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. It shall take about 4 months from submission of application dossier to the competent authority for the provincial licensing authority to grant the Investment
2.SCOPE OF WORKS
With regards to the establishment of FIC in Vietnam, our scope of work shall be as follows:
Preparation of the application documents:
Notifying application documents required in accordance with Vietnamese law;
Drafting application documents required for submission purpose;
Liaising with SBLaw to discuss the draft application documents;
Amending the application documents based on your comments;
Obtaining preliminary comments from the licensing authority on the draft application documents;
Finalizing the application documents following comments from the licensing authority; and
Translating the final version of the application documents into Vietnamese for execution.
Licensing procedures:
Submitting the application dossier to the licensing authority on your behalf;
Monitoring and following up with the relevant authorities on the approval process;
Keeping you updated on the developments and additional requirements, if any; and
Assisting you in obtaining the investment certificate. Post-licensing procedures: Upon the issuance of the investment certificate, the FIC shall be required to carry out immediate administrative procedures.
Our services include:
Obtaining the seal of the FIC ;
Obtaining the FIC’s tax code; and
Placing an announcement on the establishment of the FIC in the newspaper.
