Benefits of setting up company in Hanoi | ANT Consulting

 Along with the trend of integration in the world, Vietnam is considered a country with rapid and strong growth, in which, industrialization and modernization are focused on developing a uniform set and achieve high performance. Hanoi and Ho Chi Minh City are considered the two cities and dynamic development in Vietnam.

In particular, Hanoi, the potential capital for developing and attracting foreign and domestic investment. Therefore, the investment from businesses to the city is seen as an advantage and the best. To evaluate how such advantages are, the following article will analyze in detail as follows:

First, the labor force

Hanoi is considered a capital with a longstanding historical developed tradition. The population is heavily crowded, reaching about 7 million after 4 times of adjusting the administrative boundaries in 2014. Ha Noi has become one of the 17 largest cities in the world. In addition, with favorable conditions, Hanoi is considered an attractive city for labor, especially qualified and highly skilled workforce. This is a particular advantage for businesses to invest in Hanoi, because the amount of labor leads to a consequence that cost for labor is cheap and a large workforce will provide for industries requiring a large amount of labor force.

Second, the pace of economic development

In 2014, the economy of Hanoi has continued to grow and controlled inflation. In addtion, GDP in the province is estimated at 8.8% and revenue is estimated at 130.000 billion, with 103% of the mathematics. Besides, administrative reform, improvement on the investment environment, business environment, policies to remove difficulties for enterprises often deploy, which made PAR index of cities rise 2 levels compared with 2012 and No. 5 of the 63 provinces and cities nationwide. Thus, with the stable and strong economic development, Hanoi is a city that brings stability for businesses to invest and develop business in this city.

Thirdly, facility

With the aim of developing Hanoi based on critirea of synchronous and modern infrastructure, leadership of Hanoi has attempted to offer policies to promote infrastructure construction of the city in order that Hanoi will become more modern, in which, the traffic system in Hanoi must be built and upgrades more modern. This is considered particularly advantage, because the synchronous development of infrastructure will bring to the development of economy of the city.

Fourthly, administrative and tax policies

With attractive policies for investment, Hanoi has implemented policies solving administrative procedures with only a door. This policy is seen as a new step forward the people of Hanoi in general and businesses having demand to invest in Hanoi in particular. With this open policy, the procedures for establishing businesses, dissolution, business transformation become quickly and easily than ever before, creat favorable conditions for the development of business and resolve administrative procedures. In addition, in order to facilitate business development for businesses, Hanoi has many policies to reduce taxes in order to create favorable conditions for development of new business with low capital.

Fifthly, geographic location

Judged to be a convenient location, with synchronous traffic system, a northern – southern railway, highway 1A, along with the expanded domestic and international routes, Hanoi is considered a city with the most convenient trade location in Southeast Asia and the gateway to the East Sea of Laos and other countries. Thus, Hanoi is the right choice of businesses that need an exchange between domestic and international provinces.

Sixthly, broad market

With the population of 7 million, belonging to one of the 17 cities with the largest population in the world, Hanoi is considered a city which has the largest consumer goods market in the country. Abundant work force, along with the large number of people from suburbs, strong demand for consumer products, services lead to favorable conditions for businesses in production and consumption of consumer products and services. These come from a reason that if the demand rises, the number of products will also lead to increase and as a consequence, economic growth of enterprises will also increase. It can be said that this is a particular strength of the city that businesses investing here are looking forward. From the analysis given above, it can be said that Hanoi is considered to be an attractive destination for small and medium enterprises, especially for enterprises with foreign investment into the Vietnam market. To better understand how to establish enterprises and choose the best type of enterprise, ANT Consulting is honored to be served our customers and provide the best services for customers. We hope cooperation from you.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

We support customers to limit risks in setting up business in Hanoi, quick and time-saving procedures.

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Benefits of Setting Up Company in Ho Chi Minh City | ANT Consulting

 Ho Chi Minh City is considered as Vietnam’s economic hub. During the long history of foundation and development, the city’s economy is growing constantly and motivating the development of the country.

The city is therefore considered as a potential investment environment for domestic investors as well as foreign investors. The investment through establishing companies and conducting business activities in Ho Chi Minh city certainly promises to achieve multiple benefits. These benefits come from the following reasons.

First, Ho Chi Minh City has strategic location advantage in Vietnam. Southeast Asia Region, Ho Chi Minh City is 1,700 km south of Hanoi, 297 km east of Phnom Penh, Cambodia, 881 km east of Bangkok, Thailand.

Food, glass, textiles, paper products, plastics, chemicals, building materials and machinery are produced here. Ho Chi Minh City accounts for 20% of total gross domestic product (GDP), 30% of industrial production and 40% of export products of Vietnam. The city also accounts for 33% of the national budget and 60% of foreign investment flows into the region. In the past few years, the economy have been grown at a rate greater than 10% (6% to 8% nationally).

Second, Ho Chi Minh City is home of well – qualified, abundant and young human resources.

With a population of more than 8 million, accounting for more than 10% of the total Vietnamese population, Ho Chi Minh City itself has potential employment market to make any business investment. The work force in Ho Chi Minh City was estimated to reach 4.7 million people in 2012, making up more than 50% of the total population of the city. The percentage of trained labor increased from 40% in 2005 to 55% in 2010 and was forecast to reach 70% in 2015. The percentage of labor source holding postgraduate degree is also increasing year by year and most of them tend to stay in the city after holding degrees. Ho Chi Minh City is also home to more than 80 universities and colleges, vocational schools with over 400,000 students providing an abundant trained work force.

With the above – mentioned abundant labor force, any companies set up in Ho Chi Minh City can easily recruit suitable employees in a short time..

Third, the city has modern and high infrastructure system. Namely, when setting up company in Ho Chi Minh City, the owners will benefit from the modern and comprehensive infrastructure system.

Tan Son Nhat Airport is the largest airport in the country with the capacity to accommodate 20 million people a year. From Tan Son Nhat Airport, there are 50 routes to other countries all over the world such as China, Japan, Korea, Singapore, European countries, etc.

Saigon Port serves as a gateway to the Mekong River Delta, the South China Sea (83 km away from the sea) and the Asia continent. The port has a total area of 500,000 m2 with 5 terminals meeting the international standards, and it handles about 8.3 million tons of cargo annually. Throughout the history of foundation and development of Saigon, Saigon Port plays an important role in making Ho Chi Minh City a flourishing trading center. It accounts for a fifth of the nation’s Gross Domestic Product and almost a third of its industrial production.

Ho Chi Minh City is also home to industrial zones. According to the statistics of Cushman & Wakefield, the city has 18 industrial parks that are operating with a total area of 3635 ha. When investing in such industrial zones in Vietnam, enterprises can benefit from various incentive policies such as low rate tax or other incentive policies.

Telecommunication and information technology in the city is modern. The system of post and telecommunication in Ho Chi Minh meets international standard, providing fast, reliable and high quality services such as ADSL, rapid data transfer, wide broadband MAN. The Internet service in Ho Chi Minh city is also among the cheapest in the world.

Besides, the city is also considered the best working conditions. Enterprise will not be fear that it is not enough place for working. The city with the system of offices provide ideal working environment for all investors.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

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Conditions of Setting up Import and Export Company in Vietnam | ANT Lawyers

 Before Vietnam joined World Trading Organization (WTO), distribution and import, export activities conducted by foreign owned entities are strictly regulated by Vietnam government. As such, foreigners could only conduct the import of goods through the Vietnam agents.

Since 2007, Vietnam has become an official member of WTO and it had to commit a route to open local market to foreign companies and traders, including foreign distributors. Within 02 years from the date of accession to WTO, regulations with services and trading activities have been eased up gradually to be more open. Since 2009, foreigner investors have been entitled to set up 100% foreign-owned companies to conduct activities related to the sale and purchase of goods including import and export, and distribution including acting as agents for purchase and sale, wholesale, retail and franchising. This opens up opportunities for foreign investors to expand their trading activities in Vietnam.

1. Conditions for foreign-owned company in import and export or distribution field:

According to Article 4, Decree No. 23/2007/ND-CP on 12 February 2007 by the Government providing regulation for implementation of Commercial Law regarding purchase and sale of goods and activities directly related to the purchase and sale of goods by enterprises with foreign owned capital in Vietnam (“Decree No. 23”), the conditions for an enterprise with foreign owned capital to be granted a business license for activities of purchase and sale of goods and activities related to purchase and sale of goods in Vietnam shall comprise:

a. It is an investor belonging to a country or territory participating in an international treaty of which the Socialist Republic of Vietnam is a member and in such treaty Vietnam has undertaken to open the market on activities of purchase and sale of goods and activities directly related to purchase and sale of goods;

b. The form of investment is consistent with the schedules undertaken in international treaties of which the Socialist Republic of Vietnam is a member and is consistent with the law of Vietnam;

c. The goods and services in which business is conducted are consistent with Vietnam’s undertaking to open the market and are consistent with the law of Vietnam;

d. The scope of operation is consistent with Vietnam’s undertaking to open the market and is consistent with the law of Vietnam;

e. It has approval from the competent State body.

With respect to foreign investors not in the category stipulated in clause (a) above, the Minister of Industry and Trade shall consider each application on a case by case basis and must approve activities of purchase and sale of goods and activities directly related to purchase and sale of goods before the authorized State body grants a business license.

2. Conditions of foreign-invested enterprises on implementation export rights

According to Circular No. 08/2013/TT-BTC dated on April 22, 2013 issued by the Ministry of Industry and Trade detailing the goods trading and directly related activities of foreign-invested enterprises in Vietnam (“Circular No.08”), foreign-owned enterprises which have been licensed to conduct export activities are permitted to export, purchase goods in Vietnam for export, including goods imported in Vietnam by them or other enterprises already finished tax liability and other financial obligations, under the following conditions:

a. Export goods which are not in the list of those banned from export, list of those temporarily suspended from export, list of those of which the right to export is not granted according to international commitments;

b. For export goods in the list of conditional export goods, enterprises must meet conditions as prescribed by law;

c. For export goods in the list of goods to be exported under roadmaps specified in international commitments, enterprises must comply with the committed roadmap;

d. The export commodities must be suitable with content of the right to export which enterprises have been licensed for implementation.

The foreign-invested enterprises already licensed for right to export are entitled to directly do procedures for export of goods at customs agencies as prescribed by law.

The foreign-invested enterprises already licensed for right to export are entitled to directly purchase only goods of Vietnamese traders who have business registration or right to import, right to distribute such goods for export; not entitled to organize the network of goods purchase in Vietnam for export, unless otherwise provided by law of Vietnam or International treaties to which the Socialist Republic of Vietnam is a contracting party.

3. Conditions of foreign-invested enterprises on implementation import rights:

Under Circular No. 08, foreign-owned enterprises which are licensed to import goods are permitted:

a. Import goods which are not in the list of those banned from import, list of those temporarily suspended from import, list of those of which the right to import is not granted according to international commitments;

b. Import goods belong in the list of conditional import goods, enterprises must meet conditions as prescribed by law;

c. Import goods belong in the list of goods to be imported under roadmaps specified in international commitments, enterprises must comply with the committed roadmap;

d. The import commodities must be suitable with content of the right to import which enterprises have been licensed for implementation.

The foreign-invested enterprises already licensed for right to import are entitle to directly do procedures for import of goods at customs agencies as prescribed by law.

The foreign-invested enterprises already licensed for right to import but not yet licensed for right to distribute are entitled to directly sell import goods for Vietnamese traders who have business registration or right to export, right to distribute such goods; not entitled to organize or participate in the network of goods distribution in Vietnam, unless otherwise provided by law of Vietnam or International treaties to which the Socialist Republic of Vietnam is a contracting party.

4. Conditions of foreign-owned enterprises on implementation distribution rights:

Distribution is defined as Decree 23 as “activities of wholesaling, retailing, agency for purchase and sale of goods and franchising in accordance with the law of Vietnam”. The right to distribution is defined as “the right to undertake directly activities of distribution”.

Under Circular No. 08, foreign-owned enterprises which have been licensed to conduct distribution activities shall be permitted:

a) To conduct wholesaling, retailing, franchising and agency for trading goods manufactured in Vietnam and goods imported into Vietnam, except:

i) For goods on the list of those banned from business and list of those of which the right to distribution is not granted under international commitments;

ii) For goods restrained for business or goods of conditional business, enterprises must meet conditions as prescribed by law;

iii) For distribution goods in the list of goods to be distributed under roadmaps specified in international commitments, enterprises must comply with the committed roadmap.

b) The distribution commodities must be suitable with content of the right to distribution which enterprises have been licensed for implementation.

Depending on the method of business, investor could choose one of activities belonging to distributions rights. With each method, the investor needs to apply a suitable business registration issued by competent authorities.

Further, foreign invested enterprises whose investment registered retail business line in their investment certificate could open a single retail outlet in order to sell their goods to the end of user or customers. The setting up of retail establishments including the first retail establishments must abide by law regulations on state management for retail activities and be conformable with the related master plans of central-affiliated cities and provinces, where are expected for setting up of retail establishments. The setting up of retail establishments in addition to the first retail establishments are considered for each specific case based on the examination on economic demand of each locality where place retail establishment under the criteria: Quantity of retail establishments, stability of market, residential density and scale of district-level localities where are expected for the setting up of retail establishments.

Our lawyers of foreign investment practice at ANT Lawyers, a law firm in Vietnam are available to advise and provide client with service and representation for setting up a trading company in Vietnam.

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Which Form of Investment – Branch or Company? | ANT Lawyers

  Foreign entities can set-up company or branch offices in Vietnam to carry out business activities.

There are several main different aspects between opening a branch office or establishing a foreign owned company in Vietnam.

1. Conditions

- Permits for establishment of Vietnam-based branches of foreign enterprise shall each have a valid term of five years.

- Foreign enterprise must choose between establishing a 100% foreign capital enterprise or forming a joint-venture with domestic investor or company.

2. Certificate

- The Branch office needs to apply and obtain the operation license of a Branch;

- A foreign owned company will need to apply and obtain the investment certificate (“IC”) to operate in Vietnam.

3. Capital

- Optional, foreign entity will decide how much money to invest in branch. The allocation capital for branch is capital for the subordinate units.

- Mandatory, foreign entity will need to provide minimum capital as required by Vietnam Law in conditional investment area.

4. Obligation of owner

- For branch office in Vietnam, owner takes full responsibility;

- For company, owner takes responsibility within the capital contributed into the company in Vietnam;

5. Other matters

For branch office setting up in Vietnam, the procedure is less complicated compared to those for the establishment of a 100% foreign owned company; the branch office is able to carry out trading and some other activities as stipulated by Vietnam laws and the WTO commitments which Vietnam enters. The business lines of a branch have to be aligned with the business lines of the headquarter of the foreign entity.

Setting up foreign owned company would be more complicated than the setting up of the branch office, however this form of investment has more flexibility and freedom as it is a stand alone Vietnam entity recognized under Vietnam laws.

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