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FOREIGN INVESTMENT IN VIETNAM 2021 

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With the enforcement of the Government's Resolution 02 regarding “The continuation of performing the main tasks and solutions to improve the business environment and improve national competitiveness by 2021”, foreign investment in Vietnam has experienced positive change, creating a positive sentiment in the early months of 2021. According to the report of the Ministry of Planning and Investment, as of November 20, 2020, the total newly registered capital, adjusted capital, contributed capital, and purchased shares of foreign investors reached 26.43 billion USD, equal to 83.1% over the same period in 2019. The realized capital of direct foreign investment projects was estimated at 17.2 billion USD, equaling 97.6% over the same period in 2019. These figures show that 2021 will be a promising year for Vietnam economy as well as foreign investors. Vietnam always has and will become an ideal destination, a prospering and favourable environment for foreign businesses and investors, a bright spot for the regional economy. Implementing the initial dual task of “carry out epidemic prevention, economic development”. Before carrying out any investment action, investors must take into consideration the following things:  What procedures need to be carried out in order to make an investment and what type of legal entity they would like to set up and be suitable to make an investment in Vietnam? Luat Doanh Tri would like to provide you with some information regarding these matters.  The legal procedures of making an investment in Vietnam 

Mục lục

With the enforcement of the Government's Resolution 02 regarding “The continuation of performing the main tasks and solutions to improve the business environment and improve national competitiveness by 2021”, foreign investment in Vietnam has experienced positive change, creating a positive sentiment in the early months of 2021. According to the report of the Ministry of Planning and Investment, as of November 20, 2020, the total newly registered capital, adjusted capital, contributed capital, and purchased shares of foreign investors reached 26.43 billion USD, equal to 83.1% over the same period in 2019. The realized capital of direct foreign investment projects was estimated at 17.2 billion USD, equaling 97.6% over the same period in 2019. These figures show that 2021 will be a promising year for Vietnam economy as well as foreign investors. Vietnam always has and will become an ideal destination, a prospering and favorable environment for foreign businesses and investors, a bright spot for the regional economy. Implementing the initial dual task of “carry out epidemic prevention, economic development”.

Before carrying out any investment action, investors must take into consideration the following things: 

What procedures need to be carried out in order to make an investment and what type of legal entity they would like to set up and be suitable to make an investment in Vietnam? Luat Doanh Tri would like to provide you with some information regarding these matters. 

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The legal procedures of making an investment in Vietnam 

I. Procedures for approval of investment policy: 

According to Vietnam Law on Investment, for investment projects that require an investment policy approval from the National Assembly, the Prime Minister, or the Provincial People's Committee, investors are obliged to carry out procedures to apply for an investment policy approval in accordance with the authority of these competent agencies in accordance with the regulated procedural order. 

As for investment projects which are not regulated as “require an approval of investment policy”, then the legal procedures which investors have to carry out are not obligatory. 

In short, If foreign investors wish to make an investment in Vietnam, they should consider whether their investment projects need to require approval of investment policy from governing authorities or not. 

  1. Procedures for registration of investment 

Article 36.1 of Vietnam Law on Investment stated that “ Foreign investment projects must acquire a Certificate of investment registration”. 

Procedures for granting Investment Registration Certificates are regulated within Article 37 of Vietnam Law on Investment. 

  1. Procedures for granting Investment Registration Certificates

The procedures for granting a Certificate of Investment Registration are regulated within Article 37 of Vietnam Law on Investment. Regarding projects that require approval of investment policy from authorized governing agencies (the National Assembly, the Prime Minister, or the Provincial People's Committee), the authorized investment registration agencies (Management boards of industrial estate, export-processing sectors, high-tech zones, economic sectors, or the Department of Planning and Investment) shall grant an investment registration certificate to the investor within 05 business days from the date of receipt of the approval in writing on investment policy.

II. Forms of Investment in Vietnam 

  1. Investment in establishing economic organizations

Investors may establish economic organizations in accordance with the law. Before establishing an economic organization, the foreign investor must have an investment project, carry out the procedures for issuance of an investment registration certificate in accordance with Article 37 Vietnam Law on Investment, and must satisfy the following conditions:

  • The ratio of charter capital ownership is specified in Clause 3 of Article 22 Vietnam Law on Investment (Foreign investors may own an unlimited charter capital in a business organization, except for the following cases: a) Ownership ratio of foreign investors in listed companies, public companies, securities trading organizations, and securities investment funds in accordance with the law on securities; b) The ownership ratio of foreign investors in state-owned enterprises that are equitized or converted to other forms shall comply with the provisions of the law on equitization and transformation of state-owned enterprises; c) Ownership ratio of foreign investors not specified at Points a and b of this Clause shall comply with other provisions of relevant laws and treaties to which the Socialist Republic of Vietnam is a member. tablets). 

  • The form of investment, the scope of operation, the Vietnamese partner's participation in the investment activities, and other conditions in accordance with the international treaties to which the Socialist Republic of Vietnam is a signatory.

  • Foreign investors implement investment projects through economic organizations established under the provisions of Clause 1 of Article 22, except for investment in the form of capital contribution, share purchase, capital contribution or investment. According to the Contract.

  1. Carrying out investment in establishing economic organizations

Economic organizations must satisfy the conditions and carry out investment procedures as prescribed for foreign investors when investing in establishing economic organizations; investment in capital contribution, purchase of shares or capital contributions of economic organizations; Investing under a BCC (Business Cooperation Contract) contract falls into one of the following cases:

  • Having 51% or more of the charter capital held by foreign investors or the majority of the general partners are foreign individuals if the business organization is a partnership;

  • Having an economic organization specified at Point an of this Clause holding 51% of the charter capital or more;

  • Having foreign investors and business organizations specified at Point an of this Clause holding 51% of the charter capital or more.

  1. Investment in the form of capital contribution, share purchase, capital contribution to economic organizations

Investors have the right to contribute capital, purchase shares, and purchase capital contributions to economic organizations.

  1. Forms and conditions for capital contribution, share purchase and capital contribution to economic organizations

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Foreign investors may contribute capital to economic organizations in the following forms

  • Purchase of shares in the initial issue or additional shares of a joint-stock company;

  • Capital contribution to limited liability companies and partnerships;

  • Contributing capital to other economic organizations other than joint-stock companies, limited liability companies, and partnerships. 

Foreign investors purchase shares or capital contributions of business organizations in the following forms:

  • Purchase of shares in a joint-stock company from the company itself or a shareholder;

  • Purchase of equity interests from members of a limited liability company to become a member of a limited liability company;

  • Purchase of equity interests from capital contributors in a partnership to become a capital contributor of a partnership;

  • Buying capital contributions from members of other economic organizations other than those specified above;

  1. Procedures for investment in the form of capital contribution, share purchase, capital contribution

An investor shall carry out the procedures for registration of capital contribution, share purchase, or capital contribution to an economic organization in the following cases:

  • Foreign investors contribute capital, purchase shares, or contribute capital to economic organizations operating in conditional business investment lines or trades applicable to foreign investors;

  • Contribution of capital, purchase of shares or capital contribution leads to foreign investors and economic organizations defined in Clause 1, Article 23 of Vietnam Law on Investment to hold 51% or more of the charter capital of economic organizations.

Application for registration of capital contribution, share purchase, capital contribution:

  • The document of registration of capital contribution, share purchase, capital contribution includes the following contents: information about the economic organization in which the foreign investor is expected to contribute capital, purchase shares or capital contribution; the ratio of foreign investors' ownership in charter capital after capital contribution, share purchase, or capital contribution to economic organizations;

  • Copy of personal documentation, ID card, or passport for the individual investor; a copy of the Certificate of Establishment or another equivalent document certifying the legal status of the institutional investor.

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Procedures for registration of capital contribution, share purchase, capital contribution. 

  • Investors shall submit dossiers or documents specified mentioned above to the Planning and Investment Service of the locality where the head office of the economic organization is located;

  • If the capital contribution, share purchase or capital contribution of a foreign investor meets the conditions specified at Points a and b, Clause 1, Article 22 of the Law on Investment, the Department of Planning and Investment shall notify in writing within 15 days from the date of receipt of sufficient documents for the investor to carry out the procedures for changing shareholders or members according to the provisions of law. If the conditions are not met, the Department of Planning and Investment shall notify the investor in writing, clearly stating the reason.

  • An investor other than those specified in Clause 1 of Article 26 shall carry out the procedures for changing shareholders or members in accordance with the law when making a capital contributions, buying shares or capital contributions of an economic organization. Where there is a need to register the capital contribution, share purchase or capital contribution of an economic organization, the investor shall comply with the provisions of Clause 3 of Article 26 of the Law on Investment.

  1. Investment in the form of PPP (Public Private Partnership) contract

  • Investors and project enterprises sign PPP contracts with competent state agencies to execute investment projects on new construction or to renovate, upgrade, expand, manage and operate structural works. infrastructure or public service provision.

  • The Government shall detail fields, conditions and procedures for implementing investment projects in the form of PPP contracts.

  1. Investment in the form of BCC contract

  • BCC contracts signed between domestic investors comply with civil law.

  • A BCC contract is signed between a domestic investor and a foreign investor or between foreign investors carrying out the procedures for issuance of an investment registration certificate in accordance with Article 37 of the Law on Investment 

  • The parties to a BCC contract establish a coordination board to perform the BCC contract. Functions, duties and powers of the coordination board are agreed by the parties.

  1. Contents of a BCC contract 

The main contents of a BCC contract usually consist of

  • Names, addresses and authorized representatives of the parties to the contract; the transaction address or the address where the project is implemented;

  • Objectives and scope of business investment activities;

  • Contribution of the parties to the contract and distribution of business investment results between the parties;

  • Contract performance schedule and deadline;

  • Rights and obligations of the parties to the contract;

  • Modification, assignment and termination of the contract;

  • Liability for breach of contract, method of dispute settlement.

During the performance of a BCC contract, the contracting parties may agree to use assets formed from business cooperation to establish an enterprise in accordance with the law on enterprises.

Parties to a BCC contract have the right to agree on other contents that are not contrary to law.

To gain in-depth knowledge about foreign investment in Vietnam 2021, please contact Doanh Tri Law Firm via:

Hotline: (+84) 911.233.955 - (024) 6293 8326

Email: luatdoanhtri@gmail.com

Our advisors are fully at your service in Hanoi and Ho Chi Minh City!

Bài viết ngày được thực hiện bởi: toanhthu

Chức vụ: Giám đốc công ty

Lĩnh vực tư vấn: Dân sự, Hình sự, Doanh nghiệp

Trình độ đào tạo: Thạc sỹ Luật, MBA

Số năm kinh nghiệm thực tế: 10 năm

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