OneIP OneIP INDUSTRIAL
PROPERTIES

Investing in Vietnam - Key market Entry Options

green and rustic Vietnam
Fueled by continuous growth, Vietnam has become one of the most favored investment destinations in Southeast Asia. The Vietnamese Government is generally open, welcoming to foreign investment. Foreign investors, however, should have a good understanding of the various available market entry options as they wish to take advantage of this vibrant, rapidly growing economy. According to the Law on Investment No 61/2020/QH14, dated 17 June 2020, issued by the National Assembly of Vietnam, foreign investors may carry out their investment in the four key following forms:
  • Establishment of a business entity;
  • Capital contribution/ Purchase of shares/stakes;
  • Business Cooperation Contracts; and
  • Execution of a public-private partnership project.
Establishment of a business entity Setting up a business entity is one of the most favored investment vehicles for foreign investors interested in doing business in Vietnam in the long term. Although there are some restrictions or conditions for foreign investment when it comes to several protected sectors, investors can establish a foreign-owned enterprise (FOE) in many industries. A wholly FOEs can be established by one or more foreign investors, under the form of either a limited liability company (LLC) or a joint-stock company (JSC). Other options for establishing a commercial presence in Vietnam include representative offices and branch offices, but these are not legal entities. Capital contribution/ Purchase of shares/stakes Purchasing shares or charter capital is a quick and easy way for foreign investors to get access to sectors with restricted foreign ownership. In general, foreign investors are entitled to contribute capital to economic organizations in the following forms:
  • Contributing new capital to LLCs;
  • Purchasing capital contribution portions from existing members of LLCs;
  • Subscribing for new shares in JSCs; and
  • Purchasing existing shares of shareholders of JSCs.
Foreign investors, however, are required to register their acquisition of shares or charter capital and obtain an Acquisition Approval with the State Investment Registration Authority (SIRA) or the Industrial Zone Authority, depending on the jurisdiction of the entity being acquired, in two cases:
  • Purchasing shares/ charter capital from a company operating in business sectors where foreign investors are subject to conditions; and
  • Purchasing shares/charter capital from a company, resulting in foreign investors owning over 50% charter capital of the company.
Business Cooperation Contracts (BCC) BCC is a type of contract signed between multiple parties, typically between a foreign investor and a local company or the government for the purpose of conducting business operations in Vietnam. As entering a BCC does not require foreign investors to set up a new and separate entity in Vietnam to engage in business activities, it has become a relatively popular entry option for foreign contractors in recent years. Traditionally, BCCs were most commonly used in the oil industry, telecommunications, and advertising projects. However, this is changing as these fields have become more open to LLC and JSC. Execution of a Public-Private Partnership (PPP) project Investment under the form of PPP is conducted on the basis of a contract between an authorized governmental agency and foreign investors in order to implement an infrastructure project or to provide public services. Business scopes can range from traffic, electricity, production, and business or a number of restricted sectors as stipulated by the Prime Minister. Build-operate-transfer (BOT) contracts, build-transfer-operate (BTO) contracts, and build-transfer (BT) contracts, among others, are well-known examples of a specific authorized project. This form of foreign investment is a means to entice international capital into the infrastructure sector.

Leading the Trend with the Latest Industrial Real Estate Information