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Posted in: Inward Investment
A foreign investor who wishes to set up a new company in Vietnam for a residential housing project in Vietnam may need to follow two different licensing routes depending on whether the project will require an in-principle approval under the investment regulations (Investment In-principle Approval)
If an Investment In-principle Approval is required then the key licensing steps for the foreign investor would be:
Under the Law on Entry, Exit, Transit, and Residence of Foreigners in Vietnam, which came into effect on 1 January 2015, a “foreign investor” (nhà đầu tư nước ngoài) may be granted a long-term visa (or temporary resident permit) of up to five years. The problem is, however, that many foreign investors in Vietnam are companies, not individuals. Technically, the individual representatives of such foreign companies are not considered as foreign investors and are therefore not qualified for long-term visas to stay in Vietnam. In the past, individual representatives of foreign companies which invest in Vietnam may obtain a long-term visa on the ground that they enter into Vietnam to implement investment projects. Such regulations are now no longer valid. Accordingly, foreign directors/managers in Vietnamese companies who have obtained a long-term visa on the ground that they are representatives of foreign investors in the Vietnamese companies may now need to obtain a shorter visa on the ground that they are employees or staffs of the Vietnamese companies.
In Official Letter 2719 in October 2016, the Generate Directorate of Energy (GDE) notifies the General Department of Customs that coal-fired power producers who want to directly import coal must obtain an approval by the Prime Minister. The GDE’s notification relies on two grounds:
If a foreign company only plans to collect information and research Vietnam’s market regarding the demand of certain goods and services and to have a contact point in Vietnam then in addition to incorporating a company under both Investment Law 2014 and Enterprise Law 2014, the foreign company may consider setting up a representative office under the Commercial Law 2005 and Decree 72/2016. The advantages of having a representative office in Vietnam are:
· The timing and procedures to set up a representative office would be shorter and simpler than setting up a foreign invested company;
· Technically, a representative office can be operated and managed by one staff (who will be the chief representative in this case); and
· Operating a representative office would be simplier and less expensive cost because a representative office is not subject to tax declaration, preparation of financial statements, preparation and submission of labor and investment reports. Usually, a representative office only needs to submit annual operating report by 31 January each year.
Operating through a representative office has the following disadvantages:
· A representative office has no status of independent legal entity;
· The operation term of a representative office is 5 year at maximum (but can be extended); and
· A representative office is not entitled to enter into sale and purchase contracts or other business activities.