Investor: Our company come from Hongkong and is mainly engaged in the sale of textile auxiliaries and dyes. Now we intend to expand our business in Saigon.
And we’d like to know the fee for setting up a company and the lawyer’s fee (including setting up everything). Could you please provide us more detailed advice on this? Looking forward to your early reply.
Lawyer: This is reference to your email from which we understand that your company, (hereinafter referred to as “Client”) is now seeking legal advices for establishment of wholly foreign invested company (hereinafter referred to as “FIC”) for import and distribution of textile auxiliaries and dyes in Saigon, Vietnam.
We therefore are grateful to present you our Legal Services Proposal for your review and consideration.
1.General Introduction
The establishment of a FIC in Vietnam requires an Investment Certificate from the licensing authority. Depending upon the location of the company, the licensing authority may be the Provincial People’s Committee (for companies located outside industrial or export processing zones) or the provincial Industrial and Export Processing Zones Management Authority (for companies located in industrial or export processing zones).
We would like to clarify that the procedure for establishment of a FIC in Vietnam generally takes a rather long time in comparison with other countries in the region.
Our practical experiences show that although the total time for establishment of a foreign invested company as stipulated under Vietnam Investment Law 2014 is only 15 days, the actual process may take a longer time due to that the competent authority must consult other relevant offices to evaluate the investment project.
With respect to several cases that involves with relocation of 10,000 people or more in highlands; 20,000 people or more in other areas or requirement for changes of land purposes or project in several special field such as Construction and operation of airports; air transport; Construction and operation of national seaports; Petroleum exploration, extraction, and refinery etc, it shall require for approval from the National Assembly, Prime Minister or Provincial People Committee before starting the licensing process.
In this case, we assume that your case is not subject to such requirement for approval. However, we reserve our right to re-quote our professional fee and amend the work schedule if your case is subject to approval of the National Assembly, Prime Minister or the Provincial People Committee.
In order to setup a FIC, it shall require you to undergo two following steps:
Step 1: Obtainment of Investment Certificate. The Law requires that within 15 working days from submission of the application dossier the competent authority shall have to issue the Investment Certificate for Foreign Investor. However, having preliminarily discussed with the Licensing Authority, we do not much expect that the licensing authority can comply with this requirement in practice, especially, those relating to conditional investment sectors. For granting the Investment Certificate, the relevant licensing authorities shall evaluate the legitimacy and the feasibility of such Investment Project to determine on granting of the Investment Certificate on the following basis:
·Legal framework including Vietnam’s WTO Commitments, Vietnam Investment Law, Vietnam Enterprise Law, Regulations applicable to specific industries as well asthe master economic development plan of the city or province that the FIC shall register its head-office.
·Your financial ability, investment capital to put in the Investment Project, facilities and human resources serving the implementation of such investment project in Vietnam.
Step 2: After obtainment of Investment Certificate, Client shall be required to obtain the Certificate of Business Registration. The Law requires that within 05 working days from submission of application dossier, the competent authority shall have to issue the Certificate of Business Registration for forming the Foreign Invested Company.
2. Setting up FIC for import and distribution of textile auxiliaries and dyes.
According to the Item 1, Article No. 4 of Decree No.23/2007/ND-CP dated 12 February 2007 of the Government providing regulation for implementation of commercial law regarding purchase and sale of goods and activities directly related to the purchase and sale of goods by enterprises with foreign owned capital in Vietnam (Hereinafter referred to as “Decree No.23/2007/ND-CP”), foreign investors who satisfy following conditions shall be entitled to license for activities of trading in Vietnam:
- It is an investor belonging to a country or territory participating in an international treaty of which the Socialist Republic of Vietnam is a member and in such treaty Vietnam has undertaken to open the market on activities of purchase and sale of goods and activities directly related to purchase and sale of goods;
- The form of investment is consistent with the schedule/s undertaken in international treaties of which the Socialist Republic of Vietnam is a member and is consistent with the law of Vietnam;
- The goods and services in which business is conducted are consistent with Vietnam’s undertaking to open the market and are consistent with the law of Vietnam;
- The scope of operation is consistent with Vietnam’s undertaking to open the market and is consistent with the law of Vietnam;
- It has approval from the State body authorized in Vietnam. In addition, under Vietnam WTO’s Commitments, from the year of 2009, foreign investor is entitled to join goods trading activities in Vietnam. Hongkong has been a member of WTO. Thus, Client is entitled to setup a FIC for import and distribution of textile auxiliaries and dyes in Vietnam.
We also would like to note that, trading goods is considered as conditional investment sector in Vietnam and therefore following key factors shall be taken in account:
- Capital: Vietnam Law does not stipulate minimum capital amount for this industry. However, according to our practical experience in previous case, an amount of 200,000USD upward should be reasonable. The Vietnam Government can also recommend you to increase the Capital Amount if the number of goods to be registered is large;
- Parent Company must have positive business operation result in at least 02 recent years. This must be evidenced by audited Financial Statements for 02 recent years.
- Parent Company must be experienced in the field at least 03 years. - Head office address of the FIC in Vietnam must be compliant with master plan of Vietnam.
If you would like further information on Setting up a company in the sale of textile auxiliaries and dyes., please either email to our Partners at: info@sblaw.vn or call to our Office:
Ha Noi Office: +84 (4) 62 62 0246
HCM Office: +84 (8) 35 208 101.
