Issues Regarding Vietnam Business Registration

Issues regarding Vietnam business registration (Step by step)

To start a business in Vietnam, you must register your company with the licensing and operating authorities. This registration procedure is usually done at the business registration office of the Ministry of Planning and Investment of provinces and centrally run cities.

At the forum, analysis of new investment policies and regulations clearly demonstrated the reform spirit of legislators, but the actual application of these regulations by management bodies is still very inadequate and investor expectations. Vietnam's business registration procedures are still very complicated for foreign investors.

Entrepreneurial ecosystem in Vietnam– Strength and weakness

About strength

Qualified and competitive workforce

Vietnam has a population of 90.73 million and is expected to grow to 100 million by 2020 at an annual growth rate of 1.2%. More than 50% of the population is under 25 years old. Vietnamese have good work ethic, literacy rate over 90%, are well educated and are more cost competitive in industries requiring advanced skills such as information technology, pharmaceuticals and services finance.

The workforce is a key factor to help Vietnam's economy recover quickly after the impact of the government's distancing policy to reduce the risk of the covid pandemic.

Vietnam is a country with a dynamic Entrepreneurial ecosystem

Economic growth

Vietnam's development has been remarkable over the past 30 years. Economic and political reforms, which began in 1986, spurred rapid economic growth, transforming one of the poorest countries in the world into a low- and middle-income country. From 2002 to 2018, GDP per capita increased 2.7 times to over US$2,700 in 2019, with more than 45 million people escaping poverty. The rate of poor households dropped sharply from more than 70% to less than 6% (equivalent to US$3.2 per day). The majority of the remaining poor in Vietnam (86%) come from ethnic minorities.

Geographical location - economic

The geographical position of Vietnam, the birthplace of Southeast Asia, is the starting point and center of the planet's largest population (ASEAN and China, Japan, Korea and Chinese Taipei totaling more than 2 billion people) ...

Vietnam occupies the east coast of Peninsular Southeast Asia and is bordered by China to the north, Laos to the west, and Cambodia. This coastline has direct access to the Gulf of Thailand and the South China Sea.

Although the area is not very prominent, the territory of Vietnam stretches out in a variety of terrains and urban characteristics. Therefore, Vietnam forms vibrant markets with each area of its own strengths in the North - Central - South region.

Open Entrepreneurial environment

Vietnam was a low- and middle-income country until 1986 after a series of countries joined Doi Moi and international organizations such as ASEAN, WTO and achieved economic and social achievements. Investors can get new impressions over the years. This place is currently an attractive investment location and a promising place for foreigners to do business in Vietnam. In Vietnam, the operational efficiency of the development step is gradually improving.

Safe and stable destination

Vietnam, where several areas remain vulnerable to political and economic instability, benefit from a stable government and social structure, is an ideal location for capital investment. After 40 years of peace and development, Vietnam has become one of the reliable investment destinations of many countries with stability and political closeness. One of the most important factors for FDI companies to choose to invest in Vietnam is security.

Government support policy

Attracting foreign direct investment (FDI) has always been an important part of Vietnam's external economic activities. Vietnam already has many comparative advantages and a thriving investment environment, but the FDI sector is recognized as an important part of the economic structure thanks to the drastic reform of the business investment environment for foreign investors. foreign investors, making this area increasingly attractive.

About weakness

Public services are not transparent

Corruption remains a serious problem in Vietnam, and we can see and hear about all forms of corruption, including aid, bribery, giving and accepting expensive gifts in order to receive prompt public service.

Corruption remains a serious problem in the court system, as Vietnam has little judicial independence.

Public mechanism is a major weakness for attracting foreign investors to Vietnam

Procedures for starting a business

There are 10 steps one must follow to start a business in Vietnam, which has become one of the most complex startup environments in the world. In addition, many of the requirements for a new company are unfamiliar to foreign companies and can be much more difficult. For example, registering a stamp sample with the Public Security Bureau or publicly announcing its establishment in a local newspaper is a procedure that most businesses do not usually need to do.

How to register a business in Vietnam?

What are the steps to register business in Vietnam as a foreigner?

The first step, you apply for the investment license (investment registration certificate).  This is a relatively complicated procedure and in many cases, it is an independent procedure compared to the business registration that foreigners must be approved if they want to do business in Vietnam. Necessary dossier you need to prepare to get through this procedure:

• A written request for permission to execute an investment project.

• Copy of ID card or passport (if the investor is an individual). A copy of the Certificate of Establishment of a Legal Entity or an equivalent document certifying the investor's legal status (if the investor is an organization).

• The proposed investment project emphasizes the investor's socio-economic impact, investment purpose, investment scale, investment capital, financing method, investment location and time, and demand. 

• Copy of one of the following documents: Investor's financial statements for the last two years. Commitment to financial support of the parent company. Try to get financial support from financial institutions. Guarantee of investor's financial capacity. An explanation of the investor's financial capacity.

• The house lease contract, documents certifying the rights of the lessor (the certificate of land use rights, the construction permit, the business registration certificate of the lessor having the function of real estate business or other other equivalent documents);

• Demand for land use; The investor uses the site if the project does not use the allocated land, if the land is leased to the country, or if the country is not allowed to change the land use purpose. You must submit a lease or other copy of project documentation demonstrating that you have the right to do so.

• Description of technology application to projects on the list of technologies restricted from transfer under the Law on Technology Transfer. Technology name, origin, technological process diagram, primary specifications, machinery, equipment, primary technological line.

Business registration in Vietnam through many steps with complicated procedures

The next step, applying for a business registration certificate helps you do business legally in Vietnam like a foreign business. Dossier of establishment of a foreign-invested company:

• Business registration certificate according to the form from the Ministry of Planning and Investment;

• Company regulation;

• List of members (for limited liability companies) or related parties (for companies).

Certified copy:

• A copy of the member's personal identity card or other identity card.

• Decision of legal entity, certificate of company registration or equivalent document of organization and power of attorney. Identity card or other identification card of the official representative of the organization member. If the member is a foreign organization, a copy of the Business Registration Certificate or equivalent document must be consular legalized.

• Investment registration certificate for foreign investors according to the Law on Investment.

Finally, you need to apply for a license for some specialized professions such as medicine, legal, food processing,… Procedures are carried out according to the regulations of the Ministry corresponding to the field to be applied for a license.

Notes on business registration in Vietnam

Set a company name in Vietnam, You need to select, book and register various types of legal entities in Vietnam. You can't decide on your company name at all.

Choosing a name sounds easy, but you must follow these requirements when naming your company:

• For a foreign company, it must have a Vietnamese name, a foreign name and an abbreviated name.

• Company name can contain letters, symbols and numbers

• All names must be submitted to the commercial registry of Vietnam for reservations

• Submit initials to company registrar

• No Vietnamese company should use the name you submitted. This is related to Vietnamese law on intellectual property and trademark exclusivity

• Includes the structure of the legal entity in which the business is run.

Naming the company in Vietnam

Find legal support for your business plan in Vietnam, Changing the complex and complicated business registration in Vietnam can be a daunting task for entrepreneurs who are new to this nation. Therefore, if you want to expand your business, you need to carefully study the procedures for business registration in Vietnam and seek the legal support of a domestic legal consulting company.

Ignoring legal weaknesses, Vietnam promises to be an ideal business environment for multi-level investors.