How to Expand Your Business in Vietnam
Over the last six years, Vietnam has become one of the top places for business expansion and investment among US investors and exporters alike for all the right reasons. Ranked among the fastest emerging markets, Vietnam has one of the highest economic growth rates worldwide, increasing rapidly at an average rate of 7.2% annually. The country is also experiencing amazing industrial production growth. In fact, in the last decade, the average industrial production was approximately 12% per year. All this has contributed to the country’s high GDP growth of about 6.7%.
Other factors that have made many choose Vietnam as a top location for setting up business operations are:
- The US FDI flow in Vietnam. In 2009, the US FDI in Vietnam was about $524 million, soaring up by 10.8% from last year.
- The good infrastructure is another factor that has made Vietnam appealing for US firms to setup their operations here.
How to Expand and Setup Business in Vietnam? Steps to Get Started
Unlike setting up business in Singapore, starting operations in Vietnam is quite complex for foreign business owners. Vietnamese business set up laws and processes are complicated, making it difficult for international companies to set up operations here. Therefore, it is highly recommended for a local company incorporation firm that is experienced and understands the Vietnamese company setup laws to assist you with the incorporation process.
If you’re an international entrepreneur thinking of setting up business in Vietnam, then here’s a quick overview of the business setup process:
In Vietnam, international business owners are allowed to both, own and operate their firms, either through direct or indirect foreign investment. Indirect investment refers to buying shares in the Vietnamese firms while firms that are either wholly foreign-owned or joint business ventures with local business owners are categorised as direct foreign investments.
Determining Your Business Structure
To set up a business in Vietnam, determine your business structure first. In Vietnam, there are 3 business structures available,
- 100% foreign owned sole proprietorship
- Joint-venture enterprise
- Business cooperative owned and controlled by those who use the services
Please note that the Vietnamese government only encourages foreign investments in specific sectors like:
- Items that are produced and manufactured for export purposes
- Where technology and modern manufacturing methods & techniques are applied
- Raw material processing
- Efficient use of natural resources
- Construction of establishments for industrial production and infrastructure facilities
Business owners are not allowed to set up operations that may in any way have adverse effects on the Vietnamese:
- National security and defence
- Historical and cultural preservation
- Traditions and customs
- Its natural environment
Foreign business owners must provide the following legal documents to establish operations in Vietnam:
- Valid ID card or passport
- Papers that prove financial solvency
- Firm incorporation certificate
- Firm charter/articles of association
- Audited business financial statements for the past year
Follow Currency Restrictions
To move money into Vietnam, it should either be deposited in a Vietnamese based bank account for foreign currency or converted into Dong. Foreign business owners operating in Vietnam must abide by and understand the significant restrictions that govern to the money movement in the country.
Also, money can only be transferred from the country if it falls under one of the following categories:
- Payments for imports
- Payments for investment capital earnings
- Payment of the interest or principal on off shore credits or loans.