What do foreign investors prepare before investing in Vietnam?

With a population of over 90 million people and a fast growing economy in Southeast Asia. Vietnam is considered as a potential destination to attract foreign investors. Foreign investors need to know the law provisions in order to have the best preparation before investing in Vietnam.

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1. Foreign investors choose the form of investment

Foreign direct investment into Vietnam is made through two forms of investment:

– Investing in the establishment of economic organizations in Vietnam;

– Contributing capital, buying shares, or buying capital contributions of business organizations operating in Vietnam.

Each form of investment corresponds to a separate legal procedure. Determining the form of investment is important work need to be done from the beginning.

2. Foreign investors determine their investment capital

Investment capital means money and properties used by foreign investors to conduct investment activities in Vietnam. Investors need to identify the following issues for investment capital:

– Amount of capital planned to invest in Vietnam;

– Type of capital: cash, assets, intellectual property rights, etc.

Vietnamese law does not specify the minimum and maximum capital amount for investment activities. However, to ensure convenience during the investment process, foreign investors should have a minimum investment capital of 100 million VND or more. Note that some industries such as real estate business require an investment capital of over 20 billion VND.

At present, most foreign investor investing in Vietnam may own 100% of capital of economic organizations due to the limitation of the rate of capital contribution has expired. However, there are a number of industries that limit the rate of foreign investors’ capital contribution or require investment in the form of joint venture.

3. Investment fields and trades

Foreign investors based on investment needs, target customers, business objectives to select appropriate investment industries. Investors refer to the CPC code in Vietnam’s Schedule of Commitments to select investment industries. The CPC provides information on investment conditions, forms of investment, and limits on the capital contribution ratio applicable to investors when investing in Vietnam.

A number of industries are related to the fields of security, social safety and public health which are regulated by Vietnamese law and are subject to conditional business lines. Foreign investors planning to invest in these sectors should pay attention to regulations on charter capital, human resources, etc.

4. Investment location

Foreign investors will determine in advance where the investment project is to be executed if they are established in the form of an economic organization. The agreement/lease agreement is a necessary document to carry out the procedures for granting an investment registration certificate (IRC).

Investment locations are within Vietnam’s territory and must not be located in condominiums or dormitories. The majority of foreign investors now rent real estate for investment locations.

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