Setup company for import, distribution, reparation and maintenance of goods in Vietnam

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Investor:  We are Japanese company and intend to setup a wholly foreign invested company for import, distribution, reparation and maintenance of robot, conveyor and cutters used for plastic molding machine in Vietnam, please advise?

Client: We understand that you intend to setup a wholly foreign invested company for import, distribution, reparation and maintenance of robot, conveyor and cutters used for plastic molding machine in Vietnam (hereinafter referred to as “FIC”).

We therefore are grateful to present you our Legal Services Proposal for your reviewand consideration.

1. BRIEF INTRODUCTION ON ESTABLISHMENT OF FIC

General Introduction The establishment of a FIC in Vietnam requires an Investment Certificate and a Certificate of Business Registration 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).

Then, you shall be required 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 as the 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 goods

With the respect to the import and distribution activities of FIC, according to the Item 1, Article No. 4 of Decree No.23/2007/ND-CP dated 12 February 2007 of the Governmentproviding regulation for implementation of commercial law regarding purchase and sale ofgoods and activities directly related to the purchase and sale of goods by enterprises withforeign 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 oftrading 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 treatyVietnam has undertaken to open the market on activities of purchase and sale ofgoods 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 andis 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 ofVietnam;

– 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 import and trading activities in Vietnam. Japan has been a member ofWTO. Thus, Client is entitled to setup a FIC for importing and trading robot, conveyor andcutters used for plastic molding machine in Vietnam.

 

We also would like to note that, trading goods is considered as conditional investment sectorin Vietnam and therefore following key factors shall be taken in account:

– Capital: Vietnam Law does not stipulate minimum capital amount for this industries.

 

However, according to our practical experience in previous case, an amount of400,000USD upward should be reasonable. The Vietnam Government can alsorecommend you to increase the Capital Amount if the number of goods to beregistered is large;

 

– Parent Company must have positive business operation result in at least 02 recentyears. 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 Setup company for import, distribution, reparation and maintenance of goods in Vietnam, 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.

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