At one time or another, most of us have toyed with the idea of owning our own bar in Vietnam, here’s how
I’m a US citizen in the process of teaming up with a Korean corporation to open a bar/club concept. Can you give me an idea of the requirements involved? Another alternative would be to partner up with my soon-to-be Vietnamese wife, but she has a number of businesses in her own name already. I’m not 100 percent sure what our arrangement will be, perhaps you can advise on the pros and cons?
I’ll be happy to guide you through the process but be warned that opening a bar/club in Vietnam could be a long and difficult road for foreigners.
The first question a foreigner must ask before starting any kind of business in Vietnam is whether the economic sector in which you would like to invest is open to foreign investments. To answer this question, you have to dig into what is called Vietnam’s World Trade Organization commitments on services.
Vietnam became a member of the World Trade Organization in January 2007. Following its accession, and in accordance with the World Trade Organization rules, the Vietnamese government made specific commitments to gradually open some economic sectors to foreign investors.
Regarding the food and beverages supply sector (including bars and restaurants), the Vietnamese government committed to fully open it to foreign investors eight years after its accession to the World Trade Organization. It means that since January 2015, there are no restrictions on foreigners setting up bars and restaurants in Vietnam. Before that date, it was only allowed for foreign investors to supply food and drink services as part of an investment in the construction, renovation or acquisition of a hotel.
Therefore, in theory, you now have plenty of options as you should be able to 1) set up your fully-owned company in Vietnam, 2) set up a 100 percent foreign-owned company together with your Korean partner, or 3) team up with a local partner, such as your fiancé, through a joint venture company. This sounds good but in practice setting up your business as a foreign individual may be much more complicated.
As a first step, you will have to apply to the Vietnamese authorities for two essential documents: the Investment Registration Certificate, and the Enterprise Registration Certificate. The process to obtain these certificates may be burdensome but there is no other way for a foreigner to invest in Vietnam. You will have to provide substantial information on your technical, practical and financial capacity to develop your proposed project, together with sufficient supporting documents.
As a key requirement of your investment application, you must secure appropriate commercial premises for the bar evidenced by a letter of intent or memorandum of understanding entered into with the landlord. You will need to make sure that your proposed business is in accordance with the master plan of the district in which the bar is to be situated. Another key point is that you will be required to prove your “financial capacity” to implement your project—which means producing a bank certificate that shows sufficient available funds or credit. In practice, the local authorities have a quasi- discretionary power to determine whether your financial capacity is sufficient to properly implement your investment project.
Even when you have obtained these two certificates, you have not yet achieved your objective because you still have to obtain various specific licenses from the authorities before you can open your bar. In order to open a bar in Vietnam, it is required that you obtain, among other things, a fire safety certificate, a food safety license (if you plan to serve food or snacks to your customers) and a liquor trading license. Alcohol is a very sensitive issue in Vietnam and this might be the toughest part of the process.
The number of licenses is limited and the issuance is subject to many requirements. Having a local partner to help guide you through this process is, from our experience, essential.
The legislation over bars is still not clear on many points and we can only recommend that you keep a very good relationship with the local authorities in order to obtain the information you need and to make sure you comply with their requirements.
If your project turns out to be a nightclub, things become harder as you will have to add many conditions to the list of requirements. In theory, the club must be located far from schools, churches, public authorities, hospitals… It is also mandatory that the manager of the club graduated in Cultural or Art studies.
You probably see by now that your investment will require a lot of courage and determination! Alternatively, you may prefer the option of teaming up with your soon-to-be wife under a personal arrangement. These kinds of arrangement are quite common in Vietnam and rely more on personal trust than legal efficiency and protection. Remember that things can turn out badly even if you are going into business with a friend or partner that you have known for years and trust completely. Make sure that you at least set out in writing your respective responsibilities and commitments, and how any profits or liabilities will be shared between you, and always keep some resources in reserve just in case.
Whatever you decide, don’t give up and keep in mind that you will have plenty of time to rest with a cold beer in your own bar once you are done with all these formalities. I will buy you a few drinks to celebrate on the opening day!
BIO: A member of the Paris Bar, Antoine Logeay has been practicing law first in France, mainly in litigation and arbitration, then in Vietnam for three years as an associate of Audier & Partners based at its Hanoi office. Audier & Partners is an international law firm with presence in Vietnam, Myanmar and Mongolia, providing advice to foreign investors on a broad range of legal issues.