Everything You Need To Know about Company Incorporation in Vietnam

Can a Foreigner Own a Business in Vietnam?

Indeed, foreign citizens have the right to expand into Vietnam and do a company incorporation within the country. However, specific restrictions apply: A 100% Foreign Invested Enterprise in Vietnam can only take the form of a Limited Liability Company (LLC) or a Joint Stock Company (JSC). As a foreign investor interested in expanding your business within this dynamic and rapidly evolving young economy, you must initially acquaint yourself with the process of business formation.

Understanding the Legal Requirements

To start doing business in Vietnam, you need to create a compliant legal entity. This should take anywhere from one to three months, depending on the entity type. Vietnam makes its market highly approachable for foreign investors by providing several business entity alternatives to incorporate during initial investments. Each entity is suited to a particular size of the investment, the number of investors involved, and the motive of market entry.

Navigating the Incorporation Process

The process of company incorporation in Vietnam can be complex, especially for foreign investors who are unfamiliar with the local regulations and requirements. It's crucial to understand the legal framework, obtain the necessary licenses and permits, and comply with ongoing regulatory changes. Seeking the guidance of a local legal or incorporation expert can be immensely helpful in navigating the bureaucratic landscape and ensuring a smooth incorporation process.

What are the Options Available for Company Incorporation in Ho Chi Minh ?

Vietnam offers several business entity alternatives for foreign investors looking to incorporate in the country. Depending on the size of your investment, the number of investors involved, and your market entry strategy, you can choose the most suitable option.

Limited Liability Company (LLC)

Considering Limited Liability Company (LLCs) are the most common legal entity due to the reduced risk of liability attached to this type of entity as well as the lower capital requirements. They are particularly fit for small and medium-sized businesses (SMBs) looking to set up or expand to Vietnam. Depending on the structure, an LLC can have a single member or multiple members. The number of members in a multi-member LLC might range from two to fifty.

• Reduced Liability: LLCs offer limited liability protection, meaning that the personal assets of the owners are generally protected from the company's debts and liabilities.
• Flexible Management Structure: LLCs provide flexibility in management structure, allowing for a more streamlined decision-making process compared to other entity types.
• Lower Capital Requirements: The minimum capital requirement for an LLC in Vietnam is relatively lower than other entity types, making it more accessible for small and medium-sized businesses.
• Tax Advantages: LLCs in Vietnam can potentially benefit from various tax incentives, such as income tax deductions, depending on the nature of their business activities.

Representative Office in Vietnam

A Representative Office is preferable for foreigners interested in investigating the business environment and doing market research in Vietnam. Because of its structure, which does not allow for invoicing processing, this type of company proves ideal for staff recruitment and market observation before committing to full-scale expansion. It also enables them to establish a sales network for the parent firm before fully expanding into Vietnam.

• Market Exploration: A Representative Office is an excellent option for foreign companies looking to explore the Vietnamese market without immediately engaging in commercial activities.
• Limited Scope: Representative Offices are not allowed to generate revenue or engage in profit-making activities. Their primary function is to conduct market research, liaise with clients, and promote the parent company's products or services.
• Easier Setup: Compared to other entity types, the incorporation process for a Representative Office is generally faster and less complex, making it a suitable choice for initial market entry.
• Temporary Presence: A Representative Office is a temporary business presence in Vietnam and is not intended for long-term operations. It can serve as a stepping stone towards a more permanent business entity in the future.

Branch Office in Vietnam

An affiliate of the parent company is a Branch Office. You can perform all of your parent company's business activities and generate profits from your branch office in Vietnam. It is essentially a copy of your parent company with local stipulations applied. You can perform full commercial activities, hire staff and list on the stock market.

• Expansion of Parent Company: A Branch Office is an extension of the parent company, allowing for the direct execution of the parent company's business activities in Vietnam.
• Commercial Activities: Branch Offices can engage in a wide range of commercial activities, including invoicing, generating revenue, and hiring local staff, similar to the operations of the parent company.
• Regulatory Compliance: Branch Offices must comply with Vietnamese laws and regulations, including obtaining the necessary licenses and permits to operate in the country.
• Parent Company Liability: The parent company is ultimately responsible for the liabilities and obligations of the Branch Office in Vietnam.

Joint-stock Company (JSC) in Vietnam

Vietnam Joint-stock companies are typically larger and consist of three or more shareholders as founding shareholders. A company's charter capital is formed by the equal division of its shareholders' shares into equal units, which are owned by individuals or organizations. Furthermore, shareholders bear responsibility for the firm's obligations and liabilities according to their capital contributions. Additionally, a JSC, like a limited liability company, can register as either a wholly foreign-invested or a joint venture company.

• Multiple Shareholders: Joint-stock companies in Vietnam must have a minimum of three founding shareholders, which can be individuals or organizations.
• Shareholding Structure: The company's charter capital is divided into equal shares, which are owned by the shareholders. Shareholders' liability is limited to their capital contributions.
• Flexibility in Ownership: JSCs can be structured as either wholly foreign-owned or joint ventures, depending on the investment and ownership structure.
• Potential for Public Listing: Vietnam's Joint-stock companies have the option to list their shares on the stock exchange, providing access to public capital markets.

Challenges for Foreigners in Company Incorporation in Vietnam

While Vietnam has made significant progress in improving its business environment, there are still some challenges that foreign entrepreneurs may face when incorporating a company in the country.

Legal Framework and Bureaucracy

Vietnam has made significant progress in improving its business environment, but navigating the legal framework, obtaining licenses, and dealing with bureaucracy can still be challenging and time-consuming for foreign entrepreneurs. Foreign entrepreneurs should continuously monitor, adapt to, and adhere to new regulations, which may be introduced with little notice.

• Navigating the Legal Landscape: The Vietnamese legal system can be complex, and staying up-to-date with the latest regulations and requirements is crucial for foreign investors.
• Obtaining Necessary Licenses: The process of obtaining the necessary permits and licenses to operate a business in Vietnam can be time-consuming and require extensive documentation.
• Bureaucratic Hurdles: Dealing with government agencies and bureaucratic procedures can be a frustrating experience for foreign entrepreneurs, requiring patience and persistence.

Intellectual Property Protection

Enforcing intellectual property (IP) rights in Vietnam can be tricky. While the country has IP laws, their enforcement may not always be consistent or effective, making it essential to take extra precautions to protect valuable IP assets.

• Weak IP Enforcement: The enforcement of intellectual property rights in Vietnam can be inconsistent, leaving foreign companies vulnerable to IP infringement.
• Importance of IP Protection: Proactive measures, such as trademark registration and patent filings, are crucial to safeguard your company's intellectual property in the Vietnamese market.
• Seeking Legal Expertise: Partnering with a local legal expert can help foreign companies navigate the complexities of IP protection and enforcement in Vietnam.

Cultural and Linguistic Differences

It's crucial to understand Vietnamese business culture and create personal relationships while building trust with partners, employees, and customers. Meanwhile, the challenging Vietnamese language still used in most documents & procedures. A fully bilingual native legal consultant or secretary can be especially helpful.

• Understanding Vietnamese Business Culture: Successful business operations in Vietnam require a deep understanding of the local business culture, including the importance of personal relationships and trust-building.
• Language Barriers: The Vietnamese language is a significant challenge for foreign entrepreneurs, as it is used in most business documents and processes.
• Bridging the Cultural Gap: Hiring a local, bilingual professional, such as a legal consultant or secretary, can greatly facilitate communication and cultural integration.

Finding a Local Partner

Partnering with a local business or individual can help you navigate the legal, cultural, and language challenges. However, finding a reliable and trustworthy local partner can be a daunting task in itself.

• Importance of Local Partnerships: Collaborating with a Vietnamese partner can provide valuable insights, connections, and support in navigating the local business landscape.
• Challenges in Finding the Right Partner: Identifying a trustworthy and competent local partner can be a time-consuming and complex process, requiring thorough due diligence.
• Partner Matching Services: Utilizing partner and distributor matching services can streamline the process of finding the right local partner for your business expansion in Vietnam.

Human Resources and Talent

Finding skilled and qualified employees in Vietnam can be challenging, particularly in specialized sectors. Offering competitive salaries and investing in employee training and development can attract and retain talented professionals.

• Talent Shortage in Specialized Sectors: Certain industries, such as technology and high-skilled manufacturing, may face a shortage of experienced and qualified local talent.
• Employee Retention Strategies: Offering competitive compensation packages, opportunities for career development, and a positive work culture can help attract and retain top talent in Vietnam.
• Investing in Training and Development: Providing comprehensive training and development programs can help build a skilled workforce and address the talent gap in the Vietnamese market.

Top Business Opportunities in Vietnam in 2025

Vietnam's dynamic and rapidly growing economy presents a wealth of opportunities for foreign investors. Here are some of the top business sectors to consider in 2023:

Manufacturing and Electronics

Vietnam has emerged as a manufacturing hub, particularly in the electronics and high-tech industries. The country's stable political environment, attractive investment incentives, and well-developed infrastructure make it an appealing destination for multinational companies looking to establish or expand their manufacturing operations.

• Electronics and Electrical Equipment: Vietnam is a major electronics manufacturing hub, with a strong presence of global tech giants like Samsung, LG, and Intel.
• Automotive and Machinery: The automotive and machinery sectors are also thriving, driven by Vietnam's growing middle class and increasing demand for consumer goods.
• Textiles and Apparel: Vietnam's textiles and apparel industry continues to grow, leveraging the country's low labour costs and favourable trade agreements.

Information Technology and E-commerce

Vietnam's tech-savvy population and rapidly expanding internet penetration have created a thriving information technology and e-commerce landscape. Opportunities abound in software development, IT services, and e-commerce platforms.

• Software and IT Services: There is a growing demand for software development, IT consulting, and other technology-related services in Vietnam.
• E-commerce and Digital Platforms: Vietnam's e-commerce market is experiencing rapid growth, driven by the increasing adoption of online shopping and mobile payments.
• Fintech and Digital Payments: The fintech industry is also expanding, with opportunities in digital banking, mobile wallets, and other financial technology solutions.

Textile and Apparel

Vietnam's textile and apparel industry is a major driver of the country's economic growth, accounting for a significant portion of its exports. The sector has benefited from various free trade agreements, low labor costs, and a well-established supply chain.

• Garment Manufacturing: Vietnam is a global leader in garment manufacturing, producing a wide range of apparel products for international brands.
• Textile Production: The country has a thriving textile production industry, supplying raw materials and intermediate goods to the garment sector.
• Sustainable Fashion: There is increasing demand for sustainable and eco-friendly textile and apparel products, creating opportunities for companies with a focus on sustainability.

Agriculture and Food Processing

Vietnam's agricultural sector has tremendous potential, with a diverse range of crops and a growing demand for processed food products both domestically and globally.

• Food Processing: The food processing industry is experiencing rapid growth, driven by the rising middle class and increasing consumer demand for convenience and quality food products.
• Speciality Crops: Vietnam is known for its production of speciality crops, such as coffee, cashews, and tropical fruits, which present export opportunities.
• Sustainable Farming: There is growing interest in sustainable and organic farming practices, creating opportunities for technology and solutions providers.

Tourism and Hospitality

Vietnam's natural beauty, rich cultural heritage, and growing middle class have made it an increasingly popular tourist destination. The tourism and hospitality sector presents numerous investment opportunities, from hotels and resorts to leisure and entertainment facilities.

• Accommodation and Resorts: Vietnam's tourism industry is driving the development of hotels, resorts, and other hospitality infrastructure across the country.
• Leisure and Entertainment: Opportunities exist in the development of theme parks, museums, and other leisure and entertainment facilities to cater to the growing number of domestic and international tourists.
• Sustainable Tourism: Eco-tourism and sustainable tourism initiatives are gaining traction, offering opportunities for businesses with a focus on responsible and environmentally-friendly practices.

Step-by-step of Company Incorporation in Vietnam

Incorporating a company in Vietnam involves a series of steps that foreign investors need to navigate. Here's a general overview of the process:

Requirements For Vietnam Company Incorporation

Before starting the incorporation process, there are several key requirements that must be met:

• Allowed Foreign Direct Investment (FDI): Foreign investors must ensure that their proposed business activities are allowed under the current FDI regulations in Vietnam.
• Minimum Capital: The minimum capital requirement varies depending on the type of business entity, with LLCs and JSCs typically requiring higher capital compared to representative offices or branch offices.
• Registered Business Address: Foreign companies must establish a registered business address in Vietnam, which can be a leased office space or a virtual office.
• Resident Director: At least one resident director, who is either a Vietnamese national or a foreigner with a valid Vietnamese work permit, is required for the company.

Necessary Documents for Company Incorporation

The key documents required for company incorporation in Vietnam include:

• Application forms and business registration certificates
• Founder/shareholder identification documents
• Company charter and governance documents
• Land lease or office rental agreement
• Power of attorney (if applicable)
• Other supporting documents, such as feasibility studies or investment plans

Getting Started with Your Office Space – Things to Consider

When setting up a new business in Vietnam, the choice of office space is a crucial decision. Factors to consider include:

• Location: Selecting a strategic location that aligns with your business needs and target market is essential.
• Infrastructure and Amenities: Ensure that the office space has reliable utilities, internet connectivity, and other necessary amenities.
• Flexibility: Consider flexible office solutions, such as serviced offices or co-working spaces, which can accommodate your business's growth and changing needs.
• Regulatory Compliance: Ensure that the office space meets all the necessary legal and regulatory requirements for your business operations.

How quickly is the Company incorporated in Vietnam?

The timeline for company incorporation in Vietnam can vary depending on the type of business entity and the complexity of the registration process. Generally, the process can take:

• Setting up a new foreign-owned business entity: 1 to 3 months
• Buying a ready-made business: 2 to 4 weeks

It's important to note that the incorporation process may be affected by factors such as the responsiveness of government agencies, the completeness of the submitted documents, and any unexpected regulatory changes.

Why Choose LHD Law Firm

Everything we do at LHD Law Firm is focused on assisting your business through our investment law expertise and local business experience in Vietnam.

So that your enterprise can grow and expand quickly and avoid the costly traps that many start-up investors fall into at the hands of unscrupulous lawyers and agents.

? How we accomplish this?

We offer the best investment legal service in Vietnam, as well as a wide choice of INDIVIDUAL AND ECONOMIC EFFECTIVE SOLUTIONS for starting a business in Vietnam or managing an existing one.

• ?What we can do ...

→ Senior lawyer LAW FIRM

Lawyer: Thanh Thuy (email: all@lhdfirm.com) 

• Lawyer specializing in advising on setting up foreign capital companies in Ho Chi Minh City
• She graduated with a master’s degree in Commercial Law - City Law University of Ho Chi Minh City.
• Consultancy language: English and Vietnamese

She is one of the top 20 lawyers in Vietnam, highly rated by Legal500 and Hg.org → specializes in foreign investment, having realized more than 6800 projects in 15 years...

Lawyer: Phuong Khanh (email: hanoi@lhdfirm.com)

A lawyer specializing in advising on setting up foreign capital companies in Hanoi

She has a master's degree in Commercial Law from Hanoi Law University.

The language of consultation is English and Vietnamese

To seek further advice or request service to Set up a company in Vietnam, Contact us by: ☑: all@lhdfirm.com