Vietnam is considered as a rising star among other Asian countries. Over the years, the number of foreign investors in Vietnam has been increasing dramatically. With many tax incentive policies and advantages of the country itself, a lot of individuals and business entities have been investing in Vietnam in many different ways.
Establishing a new business entity
To be able to establish a business entity in Vietnam, foreign investors must register for Investment Certificate and meet the following requirements:
(i) Types of companies
There are four most common types of companies that foreign investors usually choose. Those are:
- Joint stock company
- Single shareholder limited company
- Multi-member limited company
(ii) Shareholding Radio
In most industries, Vietnam allows 100% foreign ownership of a business. In the rest, foreign investors need Vietnamese joint venture partner.
Depends on the Vietnam’s commitments to the international Treaties, shareholding ratio of foreign investors will be different in each business lines.
Therefore, when establishing a company, foreign investors need to know what the ratio is.
Buying shares/contributing capital
This investment method is foreign investors buy shares/contribute capital to a business entity in Vietnam. The shareholding ratio must meet the requirements as mentioned above.
Under Law on Investment 2020, buying shares/contributing capital by foreign investors must meet the following conditions:
(i) Conditions on market access;
(ii) Provisions on assurance of national defense and security;
(iii) Land regulations on the conditions for receiving land use rights and conditions on land use on coastal, border islands, communes, wards and towns.
Common type of capital contribution:
- Buying shares from joint stock companies or its shareholders
- Buying capital contributions from members of limited liability companies
- Buying capital contributions from members of partnerships
Public-private partnership Contract
PPP (Public-private partnership) Contract is a contract between a country and investors to implement development projects. The projects are mostly infrastructure constructions, public service providing, …
Legitimate government office will sign contract with investor. Government capital contribution does not exceed 30% of total investment of the project. In case of changing the ratio, Prime Minister will decide. Before implementing, the parties have to establish a business entity for the project.
This is a method that optimizes investment efficiency and provides high-quality public services. It brings benefits to governments and people.
Business cooperation contract
BCC (Business cooperation contract) is an investment form that investors cooperate to share profits or/and products without establishing a new business entity. Therefore, rights and obligations of signing parties are specified in the contract.
The parties are usually domestic investors and foreign investors. The number of parties is not restricted.
In recent years, Vietnam has been ranking on top of the fastest-growing economies in the world. One of the reasons is the country opening up many opportunities for foreign investors. Put Vietnam on your list if you are considering the destination of your investment.