How to invest in Vietnam – Forms of Investment

The National Assembly of Vietnam approved the Joint Investment Law in November 2005. The purpose of the Joint Investment Law is to create a unified legal regime for investment activities and promote investment by allowing all Both participants in the Vietnamese economy invest and do business on the basis of equality, fair competition, transparency and stability.

The General Investment Law clarifies the general principle regarding investors’ freedom to choose investment. Investors can invest in any sector of Vietnam’s economy except for a number of prohibited sectors. In areas where investment is subject to specific entry conditions, such conditions must also be followed.

1.1. Investment industry is prohibited

Foreign investors are prohibited from investing in the following four main types:

· Projects that are detrimental to national defense and security and public interest;

· Projects detrimental to historical, cultural and ethical sites;

· Projects that are harmful to public health, natural resources and the environment; and

· Projects for treating hazardous waste brought into Vietnam; projects that produce any kind of toxic chemicals or use chemical agents prohibited by international treaties

1.2. Conditional investment industry

If foreign investors invest in conditional investment areas according to the provisions of Vietnamese law, they must comply with specific investment conditions provided that such investment conditions are in accordance with provisions of international treaties to which Vietnam is a signatory (ie WTO commitments). The following conditional investment areas are applicable to all foreign investors investing in Vietnam:

· Radio and TV.

· Production, publishing, and distribution.

· Exploration and exploitation of minerals.

· Establishment of infrastructure for telecommunication networks, transmission, and provision of internet and telecommunications services.

· Establishing a public postal network and providing postal and courier services.

· Construction and operation of river ports, seaports, railway stations, and airports.

· Transporting goods and passengers by rail, air, road, and sea and inland waterways.

· Fishing.

· Tobacco production.

· Real estate business.

· Import, export, and distribution business.

· Education and training.

· Hospitals and clinics.

· Other areas of investment in international treaties to which Vietnam is a party and restricting market access to foreign investors (that is, all of Vietnam’s commitments to the WTO on trade).

Vietnam’s membership of the WTO took effect on January 11, 2007. According to Vietnam’s WTO commitments, Vietnam makes commitments on goods, especially tariffs and agricultural subsidies. As a result of this policy, identify service commitments, which can be provided by foreign service providers and the conditions that apply. for such activities include restrictions on foreign ownership. Finally, Vietnam makes commitments regarding changes in institutional and legal settings for trade. The investment options open to foreign investors in Vietnam are likely to change even more after Vietnam’s accession to WTO, when WTO commitments are included in the list of conditional sectors according to provisions of law.

2. Forms of investment

The General Investment Law distinguishes between direct and indirect investment. Direct investment involves the capital investment of an investor involved in investment management. In indirect investment, the investor may (A) purchase stocks, stock certificates, bonds or other valuable papers, (B) invest in investment funds or (C) invest through an intermediary financial institution; but in any case, the investor is not directly involved in the management of the invested enterprise.

For your transparent views, detailed guidelines for direct investment and indirect investment are presented here, respectively, in Sections 2.1 and 2.2 of Part A.

2.1. Direct investment

Foreign investors have considerable flexibility in choosing one of the following suitable economic structures for their investment strategy in accordance with applicable industry restrictions.

· A private enterprise is an enterprise owned by an individual who is responsible for all activities of the business within all its assets. Private businesses may not release any type of security. Each individual can only establish a private enterprise.

· Partnership means business with at least two co-owners doing business under a common name. Those co-owners must be the individuals responsible for the liability of the partnership within all of their assets. Partnerships may not release any kind of security. In addition to the co-owners of the partnership, there are also capital contributors in the partnership. These capital contributors are only liable for the debts of the partnership within the amount of capital they have contributed to the partnership.

· A limited liability company with one member is an enterprise owned by an organization or an individual. The organization or individual is responsible for all debts and other property obligations of the company within the company’s charter capital. A limited liability company with a member may not issue shares.

· A limited liability company with 2 or more members means a business where the member can be an organization or an individual. The number of members does not exceed 50. Members of the company must be responsible for the debts and other property obligations of the business within the amount of capital they have committed to contribute to the company. Each member’s capital contribution can be transferred. A limited liability company with 2 or more members may not issue stocks.

· A joint-stock company/shareholding is an enterprise in which: charter capital is divided into equal parts called shares; shareholders may be organizations or individuals; minimum number of shareholders is three and will not limit the maximum number; shareholders are only responsible for the debts and other financial obligations of the enterprise only within the amount of capital contributed to the enterprise; Shareholders may transfer their shares to others. A joint-stock company can issue all types of securities to raise funds.

Foreign investors may establish a business establishment wholly owned by that investor in Vietnam (except for certain sectors whether foreign shareholding is required by law or No. Please see Section 2.3). In addition, foreign investors may choose to enter into joint ventures with local Vietnamese partners or foreign partners to establish multi-member limited liability companies, joint-stock companies, or partnerships.
Foreign investors may choose to sign a business cooperation contract (BC BCC) with local partners to cooperate in production and profit-sharing or to share products and other forms of business cooperation. No need to establish a new legal entity in Vietnam.

A foreign investor may sign a Build – Operate – Transfer (SILVER BOT) contract, Build – Transfer – Operate (Tu BTO,) and a Contract of Transfer (BT Transfer) with the agency. The State has the authority to carry out new construction projects, expand, modernize and operate infrastructure projects in the fields of transport, electricity production and trading, water supply, and drainage, and treatment. waste and other sectors as prescribed by the Prime Minister.

2.2. Indirect investment

Foreign investors are allowed to make the following indirect investment forms in Vietnam:

· Buying stocks, stocks, bonds, and other valuable papers;

· By securities investment funds; and

· By way of other intermediary financial institutions.

Any investment by buying or selling shares, stock certificates, bonds and other valuable papers of individuals and organizations and the procedures to make indirect investment activities

Source: GOV

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