Foreign investment in Vietnam is encouraged by the Government, investment in Vietnam will be facilitated by the Government and enjoy many incentives. However, the Government also sets out mandatory conditions that foreign investors must meet to be allowed to invest in Vietnam. Finch Law will help you find out through the article below.
Who are foreign investors?
According to Vietnamese law, foreign investors are individuals with foreign nationality, organizations established under foreign law carrying out business investment activities in Vietnam.
Thus, it can be understood that foreign individuals or organizations can invest in Vietnam if they meet all the conditions of the Government.
What are the conditions for foreign investment in Vietnam?
When investing in Vietnam, foreign investors need to meet the following conditions:
Condition 1: Investment belongs to one of the following investment forms or choose one of the following forms to invest in Vietnam
- Investment in establishing economic organizations;
- Investment in contributing capital, buying shares, buying capital contributions;
- Implementation of investment projects;
- Investment in the form of BCC contracts;
More information about BBC contracts can be found here.
- New forms of investment and types of economic organizations.
Condition 2: Ensuring the ratio of charter capital ownership of foreign investors in economic organizations
The charter capital ownership ratio must comply with the provisions of international treaties on investment and specific regulations of Vietnam. In particular, it should be noted that:
- In case many foreign investors contribute capital, purchase shares, or purchase capital contributions in an economic organization and are subject to one or more international treaties on investment, the total ownership ratio of all foreign investors in that economic organization must not exceed the highest ratio prescribed by an international treaty with provisions on the ownership ratio of foreign investors for a specific industry or profession.
- In case many foreign investors from the same country or territory contribute capital, purchase shares, or purchase capital contributions in an economic organization, the total ownership ratio of all such investors must not exceed the ownership ratio prescribed in the international treaty on investment applicable to those investors.
- In case an economic organization has many business lines and international treaties on investment have different provisions on the ownership ratio of foreign investors, the ownership ratio of foreign investors in that economic organization shall not exceed the foreign ownership ratio restriction for the industry with the lowest foreign ownership ratio restriction.
For public companies, securities companies, securities investment fund management companies or securities investment funds, securities investment companies:
- For public companies, the capital ownership ratio for foreign investors is 50%.
- For securities companies, securities investment companies, securities investment funds, the capital ownership ratio for foreign investors is up to 100%.
Condition 3: Scope of permitted foreign investment in Vietnam
The Vietnamese Government clearly stipulates the scope of permitted investment in Vietnam. Therefore, investors need to pay attention to this scope and avoid prohibited or restricted industries.
You can find the document regulating the scope of permitted foreign investment industries in Vietnam on the Vietnamese Government’s Electronic Information Portal or the official website of the Ministry of Planning and Investment.
Condition 4: Proof of investor capacity; partners participating in investment activities
Investors need to prove their financial capacity when investing in Vietnam to show their ability to meet the investment conditions of the law. Investors can prove this in many ways such as:
- Proving the investor’s equity, verifying account balance
- Proving the ability to mobilize capital, credit commitment
Thus, for individual investors, it can be proven through savings books, bank account balances, for corporate investors, it can be proven through audited financial statements, account balance confirmations, credit commitments.
Condition 5: Other conditions
Market access conditions for foreign investors are considered according to the provisions of current legal documents (including laws, resolutions of the National Assembly, ordinances, resolutions of the National Assembly Standing Committee, decrees of the Government) and international treaties to which the Socialist Republic of Vietnam is a member for each specific investment field.
In addition, investors must also satisfy the following provisions (if any):
- Use of land, labor; natural resources, minerals;
- Production, supply of public goods, services or state-monopolized goods, services;
- Owning and trading in housing, real estate;
- Applying forms of support, subsidies of the State for a number of industries, fields or developing regions, territories;
- Participating in programs, plans for equitization of state-owned enterprises;
- Other conditions as prescribed in laws, resolutions of the National Assembly, ordinances, resolutions of the National Assembly Standing Committee, decrees of the Government and international treaties on investment that stipulate not allowing or restricting market access for economic organizations with foreign investment capital.
Foreign investment in Vietnam has many regulations and requirements that not everyone can easily understand. Therefore, if you are in need of investing in Vietnam, please contact Finch Law for support.
We have a team of lawyers with more than 15 years of experience in the fields of investment, business, and trade. Finch Law has worked with many clients who are large corporations from China, Japan, Singapore, Taiwan, etc.
