Key Considerations on How to Set Up a Company in Vietnam

Setting up a company in Vietnam presents a promising opportunity for entrepreneurs and businesses seeking to tap into one of Southeast Asia’s booming economies. Boosted by a dynamic market, strategic location, and favorable government policies, Vietnam has quickly turned into an attractive destination for foreign investors. However, going through the process of establishing a business in Vietnam requires an in-depth understanding of the legal landscape, business practices, and regulatory requirements. This guide aims to focus on the key considerations and steps involved in setting up a company in Vietnam in the hopes of helping you embark on your business venture with confidence and clarity.  

How to Set Up a Company in Vietnam Through Foreign Investment 

 Direct Foreign Investment 

Foreign investment in Vietnam necessitates partnering with a local entity, whether through establishing a wholly foreign-owned enterprise or forming a joint venture. The acquisition of an enterprise license and adept navigation of the intricate legal processes stipulated by Vietnamese regulations are imperative for securing such investments.

 Indirect Foreign Investment 

Conversely, indirect foreign investment centers on acquiring shares in Vietnamese firms, providing an avenue to potentially secure a managerial role within the company. The nature of this position is contingent upon the mutually agreed terms between the foreign investor and the Vietnamese company. 

Key Benefits of a Business 

Strategically located with an extensive coastline, Vietnam accesses vital shipping routes for imports and exports and is an attractive investment location for international manufacturers due to its proximity to Asia-Pacific economic hubs such as China, Singapore, and more. The Vietnamese government supports foreign investments through attractive fiscal and non-fiscal benefits, including tax exemptions for corporations investing in high-tech or healthcare sectors. 

Vietnam boasts a young and educated working population, with over 100 million residents and more than 50% under 35 years old, resulting in the highest labor force participation rate in Asia. Despite the pandemic, Vietnam’s economy has maintained a high growth rate and was one of the few nations to experience significant growth during the peak of COVID-19. 

To attract foreign investment and strengthen the logistics supply chain, significant resources have been allocated by the Vietnamese government to improve infrastructure, especially in key financial and manufacturing regions, showcasing a dedicated effort towards economic modernization. 

Vietnam is also a signatory to 15 global trade agreements, actively participating in ASEAN and the ASEAN Free Trade Area to enable cheaper intra-regional tariffs. Furthermore, the US-Vietnam Bilateral Trade Agreement and EU-Vietnam Free Trade Agreement are set to enhance robust import and export activities.  

Meeting Requirements 

To set up a company in Vietnam, foreign investors are generally allowed 100% ownership in sectors like manufacturing, trade, and education. However, industries such as tourism and advertising require a Vietnamese joint venture partner. Establishing a limited liability company requires at least one shareholder, with a maximum of fifty. Foreign investors must first obtain an investment registration certificate. 

Most business categories in Vietnam do not have a minimum capital requirement. However, the Department of Planning and Investment will assess if the proposed share capital aligns with the business plan.  

A local director must be appointed, who does not need residency status at incorporation but must have a Vietnamese residential address. By law, foreign employees must maintain work permits or exemption certificates to legally work for the company, provided they meet the specific conditions set. 

A registered office address is mandatory for company registration, with service-based enterprises permitted to use a virtual office in certain provinces, excluding Hanoi. Certain sectors, such as manufacturing and retail, require a physical office. The incorporation process takes about four weeks, with 2-3 working days needed to open a corporate bank account. 

Legal Business Entities 

When establishing a company in Vietnam, foreign investors must choose a suitable business structure or entity based on the business’s approach, size, and any other relevant variables. Here are the primary alternatives to look forward to when setting up a company in Vietnam: 

Limited Liability Company 

A Limited Liability Company (LLC) in Vietnam is an ideal choice for foreign investors seeking 100% ownership, particularly for small and medium-sized businesses. This structure, requiring only one founder and accommodating up to 50 members, protects personal assets by limiting liability to the value of shares. Establishing an LLC necessitates a registered business address, a legal representative, legalized financial documents, notarized copies, and a capital requirement depending on the business field. 

Joint Stock Company 

In Vietnam, a Joint Stock Company (JSC) merges elements of a partnership and a corporation, where shareholders contribute capital in exchange for shares and receive profits based on ownership percentage. Suitable for larger businesses, JSCs can issue shares, list on the stock exchange, and allow 100% foreign ownership in certain industries. They facilitate joint ventures between international and local investors, requiring a minimum of three shareholders with no maximum limit. Shareholders’ liability is limited to their investment. Establishing a JSC involves meeting legal requirements, including minimum registered capital, regulatory procedures, annual reporting, auditing, and tax obligations. 

Branch Office 

A branch office serves as an overseas extension of the parent company, engaging in all permitted commercial activities and generating profit. It has the authority to enter contracts, issue VAT invoices independently, and maintain accounting records either jointly or separately from its parent company. Operating alongside its parent entity abroad, the branch office conducts economic activities and contributes to the overall profitability of the organization. 

Representative Office 

Representative Offices (ROs) offer an appealing avenue for companies aiming to enter the Vietnamese market with minimal initial investment. They serve as platforms for conducting market research, facilitating communication between the parent company and local entities, and promoting brand activities. Despite operational limitations, such as the inability to engage in commercial activities or generate revenue, ROs provide invaluable insights into the local business landscape and regulatory environment. Acting as a precursor to establishing a more substantial presence, ROs enable companies to build networks and understand market dynamics before expanding further in Vietnam. 

Premia TNC’s Industry-Leading Incorporation Services 

Looking to establish your company in Vietnam? At Premia TNC, we are here to make the process seamless and hassle-free for you. This is how we can assist: 

Expert Consultation 

Our dedicated team of professionals brings extensive experience across various fields to guide you through every step of the incorporation process. 

No Consultant Fees 

Enjoy our services without worrying about additional consultant fees. Our assistance is transparent and free of hidden fees. 

Competitive Pricing 

Benefit from our reasonable and competitive service costs, ensuring value for your investment. 

Efficiency 

We understand the importance of time in business. Our quick and hassle-free process ensures that you can establish your company swiftly and efficiently. 

Quality Assurance