Moving a company from Malaysia to Vietnam and how to replicate it
Dear Hadrien and Marijn, I’m an American who’s been living in Malaysia for 15 years now and I currently run a company where we design furniture and lighting. We also produce small consumer items which we sell online and ship from Malaysia to the US. My partner and I are considering a move to Vietnam to set up a similar company. Can you provide us with some advice on how to begin?
What a pleasure to read about your plans of moving to Vietnam. From our own experience we can assure you that it is a wonderful country with many interesting business opportunities. Since you already seem to have some plans in mind, let’s get you started right away. First things first, in Vietnam foreign investors can do business in all sectors that are not prohibited by law. In addition, there are so-called “conditional sectors,” such as television and radio broadcasting, telecommunications and transportation. These sectors are open to foreign investment, but stringent conditions may apply, making investment procedures more complicated. Rest assured, however, as your business plans do not fall within one of those categories.
According to the Law on Investment, foreign investors may directly invest in Vietnam through a wholly (100 percent) foreign-owned enterprise or through a joint venture with a Vietnamese partner. To implement your plans, you can start a business together with a local partner who speaks the language, who knows the market and who has experience doing business in Vietnam, but this is not a requirement. The next thing to consider is the type of company that you would like to establish. Under the Vietnamese Law on Enterprises, there are a number of options available to you, the most popular of which are the limited liability company and the shareholding company. In theory, the private enterprise is another option, but the risk of establishing such a company is that the owner shall be personally and fully liable for the company’s liabilities. The option of opening a branch is limited to certain service sectors only, and hence this option is not available to you. Once you have decided on the structure of your new company, it is time to obtain the approval of the Vietnamese authorities. Under the Law on Investment, firsttime investors need to have a so-called “investment project,” which is basically the business plan that you will need to submit to the Department of Planning and Investment of the city, province or industrial zone where you want to invest.
For your business plans, Vietnamese law does not prescribe a minimum amount of capital that you will need to contribute. In practice, however, the authorities will require you to commit a certain amount of capital in order to show your serious intentions. You will also need to provide the exact location of your future investment, which you can prove by submitting a copy of the lease contract, or a letter of intent that you have signed with your future landlord. As the owner of your new company, you will not be required to apply for a work permit. Instead, you and your partner can both apply for a visa with a duration of up to three years. As from January 1, 2015, the maximum duration will be extended to five years. If everything goes well, at the end of the line you will be granted an “investment certificate,” approving your investment project and the incorporation of your company at the same time. Once you have duly submitted all documents, it should take around 15 days to receive your investment certificate.
Unfortunately, in practice the procedure often takes considerably more time and it is not uncommon that you will be asked to submit additional documents about your plans. Even though we have only discussed the most important procedures, we hope you understand that establishing a company and implementing an investment project in Vietnam is not overly complicated. Having said that, obtaining practical advice beforehand, as you are already doing now, and carefully preparing your application file can save you a lot of time and frustration. In this regard, please keep in mind that all documents need to be prepared and translated in Vietnamese and that official foreign documents may need to be legalized in your home country on top of that. Furthermore, it is advisable to request the help of a professional to draft important documents, such as the charter of your future company, a joint venture contract and the lease agreement for your premises. We wish you and your partner a great new adventure in Vietnam!
Every month, Hadrien and Marijn answer legal questions from Oi readers. If you have any legal question you want answered, send them to legal@ oivietnam.com