How Foreign Investors Comply with Reports Submissions in Vietnam

Foreign investors setting up business in Vietnam have to comply with statistics report submissions according to Vietnam laws. To ensure compliance, corporate lawyers should be consulted to ensure compliance with reports applicable to foreign owned enterprises in Vietnam.

As the current regulation, foreign owned enterprises are obliged to submit monthly, quarterly, six month and annual reports to the Vietnam Department of Statistics or State agency for foreign direct investment of respective province or city.

Monthly reports are applicable to businesses and projects operating in the industry: mining, processing industry, electricity, gas, water supply, waste disposal, water treatment, information and communications, real estate, transport, warehousing, trade and services.

Quarterly reports are applicable to businesses and projects operating in agriculture, forestry and fisheries, construction;

All foreign owned enterprises have to report every 6 months on employment and income of the employee;

On annual basis, all foreign owned enterprises have to submit reports on the identification information of the business; financial indicators reflecting business results including revenue by business lines, taxes, fees, expenses, and profit; and capital investments made during the year by investment sources and investment category.

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How Foreigners Could Obtain Residence in Vietnam Through Investment Scheme?

Foreigners could reside in Viet Nam under permanent residence or temporary residence status. In particular, foreign investors establishing or contributing capital to companies operating in Vietnam are subject to have temporary residence cards.

A Temporary Residence Card is the required document for the foreigners to legally stay temporarily in Viet Nam and the maximum term of a card is 05 years. The following will explain how Temporary Residence Cards can be obtained in Vietnam through investment.

What are the conditions for foreign investors to be granted temporary residence cards?

Foreigners who are granted a visa with a DT sign will be considered for a temporary residence card. The foreigners will need to apply for work permit exemption from authorities in Vietnam. The passport of foreigners has a minimum term of 13 months. Documents proving that foreigners contribute capital to, or invest in, enterprises in Vietnam for instance business registration certificates, investment registration certificates will be required. The foreigners will also need to provide a clean criminal record card.

What required documents to be prepared for application for temporary residence card?

1. 01 Document requesting temporary residence card of guarantor ( form NA6 for agencies, organizations; form NA7 for individuals)

2. 01 Information form for a temporary resident card (form NA8)

3. 02 photos (image size 2×3 cm);

4. 01 Copy of passport and a valid visa (bring an original for comparison);

5. 01 Notice of use of the seal of the enterprise.

6. 01 Document introducing seal, signature of the authorized person of the organization (form NA16)

7. 01 Copy of legal ducuments of organizations to prove purpose to be granted temporary residence card, such as: investment registration certificate, business registration certificate.

How long does it take to apply for a temporary residence card?

After 5 working days since receiving sufficient documents, state agencies will consider and issue temporary residence cards.

What are the procedures to apply for a temporary residence card?

Step 1: Prepare documents as prescribed by law.

Step 2: Submit application file

The officer receiving the application will check the legality and the content of the file. If the application is complete and valid, the officer receives the application and prints a receipt for the submitter.

Step 3: Return results

What state authorities can apply for a temporary residence card?

Immigration Management Department of provinces or cities where the investment is registered.

Some difficulties when carrying out the procedure

Everyone can apply for a temporary residence card by themselves, but not all cases are eligible for a temporary residence card. When applying for a temporary residence card, have some difficulties like: the visa is not for right purposes; foreigners don’t understand the required documents, procedures for applying for temporary residence card so that you don’t know how to write the declaration of temporary residence card; have confusion about the declaration form used for individuals and agencies, organizations…. As a result, the application file is invalid and will be returned. You will have to go to implementing agencies many times to complete an application file, which is costly, laborious, time-consuming but not yet available. Therefore, foreigners need the assistance of a reputable law firm to carry out the procedure effectively to be granted a temporary residence card.

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Vietnam Attracts Japanese Investors

During the volatility of the Covid-19 pandemic, the decision to invest in Vietnam became more and more interesting to Japanese investors.

Since 10 years ago, many Japanese enterprises have considered Vietnam as a promising foreign investment market after China. However, the outbreak of Covid-19 has left serious consequences for the Chinese economy, when a series of the world’s no.1 supply chains in this country were broken. Many foreign investors have chosen ASEAN, including Vietnam to invest, where there is a safe political system and a stable health system, and a favorable legal corridor.

According to the report of the Ministry of Planning and Investment, as of mid-June this year, the total foreign investment in Vietnam reached 15.67 billion USD. Japan ranks 4th among countries with total registered capital to invest in the Vietnam market. In the investment scenarios in Vietnam, finding local businesses becomes a short but effective step. Foreign investors choose potential businesses to invest in or buy back businesses. In which, Saizo is a typical example.

Saizo Japan is a prestigious brand in Japan, famous for its comprehensive range of health care products. During the scientific cooperation at the Center for Scientific Research of Vietnam, realizing the potential for development from products of natural origin, Saizo Japan planned to invest in chain technology, as well as the application of the Japanese biological science and technology background.

Saizo Japan is a prestigious brand in the country of the sun, famous for its comprehensive range of health care products. During the scientific cooperation at the Center for Scientific Research of Vietnam with Master of Science Nguyen Xuan Phu, realizing the potential for development from products of natural origin, Saizo Japan planned to invest in chain technology, as well as the application of the Japanese biological science and technology.

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Solar Energy Power Future in Vietnam

Although the initial investment cost for solar energy in Vietnam is high but it brings in opportunities for cheaper option than thermal power technology being used in Vietnam.

In other country, solar power plants are competing fiercely with the thermal power plants running on coal.

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In Vietnam, Thien Tan solar energy plant has been started to construct on 24 ha land in Quang Ngai with capacity of 19.2 MW at investment of VND 800 bil. The Ministry of Industry and Trade has also approved the investment project of Tuy Phong solar energy plant on 50 ha land in Binh Thuan with capacity of 30 MW at investment of VND 1,454 bil. This will open opportunities for renewable energy to contribute to the effort of protecting the environment and curbing climate change.

The solar energy is new in Vietnam therefore the investment in this area is at very early stage. However, the foreign investors have been increasingly interested in seeking opportunities in investment in solar energy projects.

Similar to investment in wind power energy in Vietnam, one of the concerns for investors is the expected increase in purchasing price from Electricity Vietnam Corporation, the party whom purchase the electricity on Power Purchase Agreement (PPA). Further, legal frameworks for promoting solar energy investment are not yet finalized. Accordingly, the contribution ratio of renewable energy in Vietnam is minimal. The Vietnam government has been trying to put some effort to increase the renewable energy contribution to 5,6% (in 2020) and 9,4% (2030).

To achieve this, Vietnam government shall need to be consulted on plan to support the solar energy investment project in Vietnam in tax, land, capital, power purchase agreement. Investors would need to be consulted by local consulting firm on process, procedures on investment policy, appraisal process, power purchase agreement, and other steps to develop and execute an energy project in Vietnam to improve the effectiveness of the investment in renewable energy.

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Hanoi Calls for Direct Investment in 11 Large-Scale Agricultural and Rural Projects

Hanoi’s agriculture sector is calling for direct investment in Hanoi, in 11 large-scale agricultural and rural projects in the period of 2019 – 2025.

In the process of reviewing and synthesizing projects on development of agricultural production, projects on processing agricultural products being implemented, preparing for implementation, newly proposed investment projects, Department of Agriculture and Rural Development of Hanoi announced a list of projects calling for direct investment in the period 2019 – 2025.

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The largest contributor is high-tech agricultural projects. Currently in the city, there are 105 models of high-tech agriculture application, 71 associate models in agricultural production in the direction of high technology. Thanks to the application of high technology, many models have brought the economic efficiency of billions of dong/ha of cultivation. The application of modern techniques and technologies to agricultural production has brought about great effects on the productivity and quality of agricultural products.

With the effectiveness of this model, Hanoi calls for investment in hi-tech agricultural production projects in An Thuong and Song Phuong communes, Hoai Duc district, on an area of ​​668 hectares, with an expected investment capital of 1,000 billions VND. The project of hi-tech agriculture in Hien Ninh commune, Soc Son district with the scale of 120 hectares and expected investment capital of 350 billion VND. The project of high-tech agriculture in Thanh Xuan and Tan Dan communes, Soc Son district, on an area of ​​70 hectares, with an investment of 150 billion VND.

High-tech agricultural production projects in the banks of Day river in Dong Thap commune, Dan Phuong district, with scale of 23.3 ha, estimated investment of 1,000 billion VND. High-tech agricultural production projects in Kim Son commune, Son Tay town, on an area of ​​80 ha and an investment of 1,300 billion VND. High-tech agricultural production projects in Ba Vi district, with the scale of 300 ha, expected investment of 100 billion VND.

Project on agriculture in combination with ecotourism in Hiep Thuan commune, Phuc Tho district, with a scale of 200 ha, expected investment of 1,300 billion VND.

In addition, the Department of Agriculture and Rural Development of Hanoi also proposed a series of projects of concentrated cattle slaughtering areas in Quang Lang and Tri Thuy communes specializing in cattle slaughtering in Phu Xuyen district, with an area of ​​2.74 hectares and expected investment capital of 350 billions VND. Project on cattle slaughter area in Tri Lai village, Dong Thai commune, Ba Vi district with a scale of 4 ha and expected investment capital of 350 billion VND. Project of cattle and poultry slaughtering area in Trach My Loc commune, Phuc Tho district on an area of 10 hectares, estimated investment of 400 billion VND. Project of ​​cattle and poultry slaughtering in Minh Phu commune, Soc Son district, on an area of 10 hectares, estimated investment of 400 billion VND.

With a series of these new projects, Hanoi strives to reduce by 50% the number of small slaughterhouses in residential areas by 2020, proceed to end small scattered slaughtering activities in districts and towns.

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“Golden Opportunity” To Welcome FDI Movement

There are “golden opportunities” for the world to know Vietnam and invest in Vietnam, with a special advantage of “strategic trust”, a safe investment destination and ready to welcome shifting capital flows. But taking advantage of opportunities or not depends on the actions of Vietnam.

There is no doubt that there is a wave of foreign investment moving away from China into Southeast Asia, including Vietnam.

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In fact, the trend of shifting investment from China into Vietnam has started to become stronger since last year, after the US – China trade war became more and more complicated. The Covid-19 pandemic has accelerated this trend. Not only the administration of President Donald Trump, but also many European countries, including Japan have also called and announced their willingness to support their companies to move production out of China to reduce dependence on this economy.

Perhaps, because of that, for the first time, Apple is stepping up the production of AirPods wireless headphones in Vietnam, the number can be up to millions of products. And not only headphones, but many other important components are also expected to be manufactured in Vietnam, helping Apple no longer have to rely heavily on suppliers from the Chinese market. Recently, Apple Vietnam has announced the recruitment of many important technical personnel, and the move is thought to be made to better monitor the production of these components in Vietnam.

Both Microsoft, Samsung, LG and many other large and small corporations are also investing in Vietnam market.

Speaking at the Prime Minister’s meeting with businesses, representatives of European, Japanese, Korean and US businesses… in Vietnam have confirmed their interest in Vietnam’s investment destination.

In the first four months of 2020, foreign investment in Vietnam tended to decline, but according to the Deputy Minister of Planning and Investment, Vietnam was still a lucky market, as one of the few countries in the world still recorded positive investment flows. If Vietnam early controls the epidemic and the positive macroeconomic prospects return from the third quarter, it may benefit from the shift of foreign investment flows.

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FDI Is Expected to Flow into Vietnam After the Covid-19 Epidemic

The Covid-19 epidemic is also considered an opportunity for Vietnam to receive faster flows of foreign investment, especially capital flows away from China.

According to the Director of Foreign Investment Department (Ministry of Planning and Investment), a large US corporation is planning to invest a multi-billion-dollar project in Asia. The two locations they considered were China and Vietnam. Given the situation of the Covid-19 epidemic in China, it is likely that they will choose Vietnam. In March, they will make a final decision…

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A group of Korean and US investors interested in LNG power projects in Vietnam is probably one of the rare foreign business delegations coming to Vietnam at the time of the outbreak of Covid-19. On February 11th, they went to the Government Office and the Ministry of Planning and Investment to work on this content.

Without hiding ambition, according to representative of Korean investors consortium including Korea Gas Corporation, Southern Korea Electric Company, Hanwha Group… – they want to invest into LNG port and gas power plant projects in Vietnam. Even in addition to the electricity sector, these investors also want to invest in other areas in Vietnam.

The fact that foreign investors still coming to Vietnam at this time proves the attraction of Vietnam. The postponement and cancellation of investment promotion trips of foreign investors is only momentary.

In addition, according to the National Center for Socio-Economic Information and Forecast, the Covid-19 epidemic showed that the world was too dependent on China.

Having similar views, the New York Times also forecast that the flow of foreign investment from China to Vietnam to avoid US taxes could be accelerated by the Covid-19 epidemic.

According to the representative of JETRO Hanoi Office, in order to disperse risks, 122 Japanese enterprises asked by JETRO said that they decided to relocate their production in China and the place to be moved to the top is Vietnam.

Vietnam is at the top of the list, with 42.3% of the 122 businesses mentioned above have chosen. Following Vietnam is Thailand (20.6%), Philippines (18.6%) and Indonesia (16.5%). Japanese enterprises moving away from China not only because of trade war, but also to evade the increasing input costs in this market.

In the international market, it is forecasted that the flow of international investment into China and investment from China to foreign countries will face difficulties in 2020, even possibly sharply decline in the first quarter of 2020. The Covid-19 epidemic, if combined with geopolitical risks, trade war risks… also makes the global political, economic and social environment even more uncertain, promoting defensive psychology, shrinking, thus weakening investment motivation.

This is an opportunity for Vietnam to have policies to attract investors who are intending to narrow production in neighboring countries and invest in Vietnam. Investment promotion units should proactively work with foreign investors who have plans to invest in Vietnam to discuss, orient and unify the preliminary investment procedures.

Besides, in the long term, it is necessary to continue improving the investment and business environment, amending policies and strategies to attract foreign investment.

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Renew the validity of protection titles to subject matter of industrial property

According to the Law on Intellectual Property in Vietnam, the subject matter of industrial property rights shall comprise inventions, industrial designs, designs of semi-conducting closed circuits, trade secrets, marks, trade names and geographical indications.

Rights to an invention, industrial design, layout design, mark shall be established on the basis of a decision of Intellectual Property Office of Vietnam to grant a protection title in Vietnam or the recognition of international registration pursuant to an international treaty of which Vietnam is a member. The remaining being: (i) rights to trade name shall be established on the basis of lawful use thereof; (ii) rights to a trade secret shall be established on the basis of lawful acquirement of the trade secret and maintaining confidentiality thereof.

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How are term and scope of protection of the right to an arising object on the basis of granting of a protection title?

Firstly, protection titles shall be valid throughout the entire territory of Vietnam. This provision means the validity of title is only territorial. It means titiles granted by any country will only take effect within its territory and are not accepted in other countries or other titles granted by Intellectual Property Office of Vietnam will take effect throughout the entire territory of Vietnam.

Secondly, regarding each industrial property object, validity of protection titles are different. Such as validity of the invention patent is 20 years from the grant date but the timeline to calculate until the end of 20 protection years is filing date. Regarding utility solution patent, the validity shall be 10 years and the calculation until the end of 10 years is same as calculation of invention patent. It should be noted that validity of invention patent and utility solution patent may not be extended. However, industrial design patent, certificate of registered mark may be extended. In particular: (i) industrial design patent shall be shall be valid from the grant date until the end of five years after the filing date and may be extended consecutively with each time of 5 years. Therefore, industrial design patent may be extended up to 15 years; (ii) certificate of registered mark shall be valid from the grant date until the end of ten years after the filing date. However, this object has a special feature that it is able to extend repeatedly and consecutively the validity with each time of 10 years. Therefore, this object may be extended validity forever.

Regarding certificate of registered geographical indication, it shall have indefinite validity starting from the grant date because of its characteristic of sign used to identify a product as originating from a specific region, locality, territory or country. Reputation of products bearing a geographical indication shall be determined by graphical conditions, including natural factors (climatic, hydrological, geological, topographical and ecological factors and other natural conditions); Human factors (skills and expertise of producers, and traditional production processes of localities…).

In addition, one of objects having specific validity is certificate of registered design of semi-conducting closed circuits. Certificate shall be valid from the grant date until the earliest date among the following: (i) the end of ten years after the filing date; (ii) the end of ten years after the date the layout design was first commercially exploited anywhere in the world by a persons with the registration right or his or her licensee; (iii) the end of fifteen years after the date of creation of the layout design.

Having said that, when the owner of industrial property object is granted protection title, it should be noted at time of expiration of title to apply for the extension in order to guarantee interests as well as benefits that industrial property objects brings. The owner could contact IP department of ANT Lawyers and patent, trademark and other IP attorney will be assisting the client to review the matters and provide relevant advice.

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Vietnam and Japan Signed 12 Cooperation Agreements

The Secretary General of Liberal Democratic Party of Japan, the President of Japan – Vietnam Friendship Parliamentary Union- Nikai Toshihiro, on January 12th, 2020 met with the Vietnam’s Prime Minister- Mr. Nguyen Xuan Phuc in Hoi An to discuss economic, cultural and tourist exchange topics.

At the meeting, the representative of Vietnam welcomed the Japanese delegation to come and exchange of economic, cultural and tourism exchanges of the two countries. The representative of Vietnam affirmed that Vietnam appreciate the cooperation with Japan, especially in economic matters. At the moment, Japan is the top country with FDI in Danang in particular and Vietnam in general. The Japanese investors set up company, obtain investment registation certificate and invest in various business lines including IT, trading, real estate, design consultancy, engineering. Based on the cooperation between the countries, Vietnam and Japan have achieved many positive effects on the economy, education, culture, social security.

The representative of Vietnam confirmed that the relationship between the countries developed into many fields as “extensive strategic partnership for peace and prosperity in Asia” established in 2014, in which, Japan always is the trustful, important partner of Vietnam.

The representative of Japan expressed his pleasure to visit Vietnam in the beginning of 2020. He said that the organization of the delegation has the largest scale ever with more than 1,000 delegates, and diverse members from National Assembly deputies, representatives of ministries, branches, local leaders, businesses and people of Japan showed high interest and consensus within Japan from the National Assembly, the Government, localities, business community and people towards strengthening and deepening friendly and cooperative relations with Vietnam in the coming time.

By this meeting, the representatives of the two countries witnessed the signing and exchange of 12 cooperation documents, memorandums of understanding between ministries, branches, localities and businesses of the two countries. By these cooperation documents, the two countries hope that in the future, they will cooperate more together in all aspects of culture, education, economy and society to realize their construction goals and develop the countries.

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Hanoi Topped the Country in Attracting FDI after 7 Months

The Foreign Investment Agency (Ministry of Planning and Investment) has recently released the data on foreign direct investment (FDI) activities in Vietnam in the first 7 months of 2018, in which Hanoi is the province that attract the most FDI with the total registered capital of 6.17 billion USD, accounting for 26.9% of total investment. It shows that Hanoi is an attractive destination for foreign investors

With a total registered capital of 6.17 billion USD, accounting for 26.9% of total investment capital in 7 months, Hanoi surpassed the second place with 4.12 billion USD registered capital of Ho Chi Minh City (accounting for 17.9% of the total investment capital), Ba Ria – Vung Tau with the total registered capital of 2.15 billion USD, accounting for 9.4% of the total investment capital.

To achieve these results, in the past 7 months there have been many large-scale projects registered to invest in Hanoi. Among them is the “smart city” project in Hai Boi commune, Vinh Ngoc district, Dong Anh district, Hanoi with a total investment of 4,138 billion USD invested by Sumitomo Corporation (Japan); The Lotte Mall Hanoi project, with a registered capital of 600 million USD, which is invested by a Korean investor in Hanoi with the goal of building a high-end international standard complex comprising of shopping centers, hotels, offices, apartments for short-term business travelers.

At the conference “Hanoi 2018 – Investment and Development Cooperation”, Hanoi also handed over the decision approving the investment policy and investment registration certificates for 71 projects, with total investment capital of more than 400,000 billion VND (nearly 20 billion USD). Of which, there are 11 FDI projects with a total capital of more than 130 trillion VND (5.428 billion USD). This is a very impressive achievement, the result of the best foreign investment attraction so far and the hallmark of Hanoi in the work of attracting FDI.

According to the Hanoi Statistics Office, in the first 7 months of 2018, the production and business situation of foreign-invested enterprises still maintained a growth rate of 14,791 billion VND, equivalent to 48.3% of the plan, increase by 3.6% over the same period in 2017. This also shows that the prospect of attracting investment in Hanoi in the coming time will continue to flourish.

According to the Foreign Investment Department, across the country, in the first 7 months of 2018, foreign investors have invested in 17 industries, of which the processing and manufacturing sector attracts the most attention of foreign investors with a total of 9.63 billion USD, accounting for 41.95% of the total registered capital. The real estate business ranks second with total investment capital of 5.6 billion USD, accounting for 24.4% of total registered capital. The third is wholesale and retail sector with a total registered capital of 1.69 billion USD, accounting for 7.4% of total registered capital.

In addition, in 7 months, 96 countries and territories have invested in Vietnam. Japan ranked first with total investment of 6.88 billion USD, accounting for nearly 30% of total investment; Korea ranked second with total registered capital of 5.46 billion USD, accounting for 23.8% of total investment in Vietnam; Singapore ranked third with total registered capital of USD 2.73 billion, accounting for 11.9% of total investment capital…

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Work permit for foreign investors?

Vietnam is a country that has been having many policies to attract foreign investors to work in Vietnam. In particular, foreign investors are individuals with foreign nationality, organizations established under foreign laws and carry out business investment activities in Vietnam. When conducting business investment activities in Vietnam, many people wonder if a work permit is required? In this article, we will help you answer the above questions.

Foreign investors carry out business activities in Vietnam in one of the forms such as contributing, purchasing shares or capital contributions of economic organizations. If the investor is a foreign individual who is a capital-contributing member or owner of a limited liability company, he / she will be exempted from work permit under the provisions of Clause 1, Article 7 of Decree 11/2016/ND-CP.

However, this provision does not mean that all of investors are automatically exempted from work permits. Foreign investors who are not required to have a work permit must be certified by the Department of Labor, War Invalids and Social Affairs before coming to work in Vietnam. Specifically, according to Article 8 of Decree 11/2016 / ND-CP, the employer requests the Department of Labor - Invalids and Social Affairs where the foreigner is expected to work to confirm the foreign worker is not required to issue a work permit at least 07 working days in advance from the date the foreign worker starts working.

Dossier of request for certification not subject to issuance of a work permit, including: Written request for certification of foreign workers not subject to work permit and documents proving that the foreign worker is not subject to a work permit. Within 03 working days from the date of receipt of a complete application for certification not subject to a work permit, the Department of Labor - Invalids and Social Affairs shall send a written confirmation to the employer. In case of non-certification, there must be a written reply clearly stating the reason.

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Procedures for changing information of shareholders?

In the period of industrialization and modernization, foreign investors are the objects that the government calls for investment. When deciding to invest in Vietnam, the main form is to contribute capital to buy shares and become a shareholder, this is considered the most common form. However, changes in business usually take place and they must be done under strict procedures to control.

In case of change of information that foreign shareholders in unlisted joint stock companies: According to Article 52 of Decree 78/2015/ND-CP, when this change is made, the company must notify the Business Registration Office where the enterprise has registered. The notice shall contain the following information: name, business identification number, tax code or number of business registration certificate (in case the enterprise have not a business identification number or tax code yet); information of a shareholder being a foreign investor transferring shares; information of foreign investors being transferred shares; full name, identity card number or passport or other lawful personal identification and signature of the company's legal representative.

Enclosed with the Notice, the company must send the Decision and a valid copy of the Meeting Minutes of the General Meeting of Shareholders on the change of shareholders being foreign investors; list of shareholders being foreign investors when changed; a share transfer contract or documents proving the completion of the transfer; A valid copy of the Establishment Decision or other equivalent document and a document of the Department of Planning and Investment approving the foreign investor's capital contribution, share purchase in accordance with the Law on Investment.

Upon receipt of the notice, the Business Registration Office shall give a receipt, check the validity of the file, change information about the shareholders being foreign investors in the National Enterprise Registration Database. In case of an enterprise's need, the Business Registration Office shall issue a Certification of changing the enterprise registration information to the enterprise.

In cases of changing basic information of foreign investors:

According to Article 54 of Decree 78/2015 / ND-CP, within 03 days from the change of name, enterprise ID number, head office address, number of shares and type of shares and last name , name, nationality, passport number, permanent address of authorized representatives of shareholders being foreign organizations, enterprises send notice of supplementation and update of business registration information to the Registration Office where the enterprise is headquartered.

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Incentives and investment support

In order to attract foreign investment into Vietnam, the Government of Vietnam offers many policies to encourage and support investors when investing in some special trades, industries or localities. By incentives and investment support, the state proactively restructures the economy in each field and region to sustainably develop economic sectors. Investment incentives and supports are the provisions of the Investment Law, and are further stipulated in specialized legal documents.

Vietnam has a roadmap to adjust the corporate income tax from 32% (1997) to 25% (2009) and most recently 22% (2014) and now 20% (from January 1, 2016). The State allows the application of enterprise income tax rates lower than ordinary tax rates with a definite term or the whole duration of investment project implementation; exemption or reduction of enterprise income tax for enterprises newly established from investment projects in geographical areas with exceptionally difficult socio-economic conditions, economic zones and hi-tech parks; Activities in the field of education - training, vocational training, health care, culture ... in order to attract and create conditions for investors to pay attention to these fields.

In addition, the Law on Investment, the Law on Export Tax and Import Tax also provide a policy of import duty exemption for imported goods to create fixed assets; materials, supplies and components for executing investment projects; investment projects with official development assistance (ODA). The agreements on import and export tax incentives within ASEAN countries, the WTO have helped investors reduce Input costs, high competitiveness in the domestic market as well as internationally.

In addition, exemption, reduction of land rent, land use fee, land use tax is also one of the incentives for investors if they has an investment project in the special fields which are encouraged to invest in extremely difficult socio-economic areas; projects of using land to build apartment buildings for workers in industrial zones; projects using land to build student dormitories with money from the state budget, projects using land for construction of public works for business purposes (socialization) in the field of education, health, culture, gymnastics, sports, science - technology, ...

The geographical areas and sectors eligible for investment incentives show the Government's goal of economic development to focus on attracting foreign direct investment into the areas where Vietnam needs to develop. The corporate income tax rate and Vietnam's preferential policies are considered quite attractive compared to other countries in the region. Recognizing the importance of encouraging investment, Vietnam has been issuing regulatory documents to create a useful legal corridor and in line with international practice in creating highly competitive investment environment.

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What are common investment methods in Vietnam?

In Vietnam laws, there are a number of investment methods such as establishing economic organizations; investment in the form of capital contribution, purchase of shares or capital contributions in business organizations; Business Cooperation Contract or Public Private Partnership. Investment in establishing economic organizations, capital contribution, purchase of share or capital contributions are most common in our opinion.

Investment in establishing economic organizations

For investment in the establishment of economic organization, an investor invests capital to carry out the establishment of an enterprise, cooperative, cooperative union or other organization to carry out business investment activities. This is a way of direct investment in which investors directly invest capital and directly participate in management activities.

Forms of establishment of economic organizations include two types: Establishing company with 100% foreign capital; or establishing joint ventures between domestic investors or the Government of Vietnam with foreign investors.

Before establishing an economic organization, the foreign investor must have an investment project and carry out the procedures for the grant of an investment registration certificate. Besides, the conditions for the charter capital ownership and the conditions prescribed by international treaties to which Vietnam is a member need to be met. Regarding charter capital, foreign investors are allowed to hold unlimited ownership in economic organizations, except for cases where the investors operate in fields related to listed companies, public companies, securities trading organizations and securities investment funds in accordance with the law on securities; State owned enterprises equitized or transformed under other forms. In addition, investors must check international treaties to which Vietnam is a signatory.

It should be noted that depending on the amount of investment capital of a foreign investor, the legal status of an economic organization after its establishment will be determined differently. If the foreign investor holds 51% or more of charter capital, the economic organization after its establishment will have to carry out the procedures applicable to foreign investors. Conversely, if foreign investors hold less than 51% of the charter capital, the regulations applicable to economic organizations after their establishment are applied as domestic investors.

Investment in the form of capital contribution, purchase of shares or capital contributions in business organizations

Foreign investors who wish to access the Vietnamese market but do not want to establish an economic organization can contribute capital, buy shares or buy capital contributions to business organizations operating in Vietnam.

With this form, the investor will become a member or shareholder of that economic organization. It requires investors to meet a conditions similar to the form of establishment of economic organizations. Having said that, it must meet the conditions for the charter capital ownership and the conditions prescribed by international treaties to which Vietnam is a member. Depending on each specific case, the investor must follow the procedures for registration of capital contribution, purchase of shares or capital contribution in an economic organization and send to the competent agency for recognition of legal investment.

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Which area of business foreign investors could invest in Vietnam?

Recently, Vietnam has been an attractive investment destination to foreign investors thanks to the social-economic innovation policy from the early 80s of the twentieth century to the present. The economic, political and social situation always keeps stability and achieves remarkable developments, establishing trade relations with most countries in the world. Especially, Vietnam Government has been focusing efforts to improve the investment and business environment, which is favorable for not only domestic investors but also foreign investors. The Government has been issuing policies to improve the business environment, support business development and take decisive actions through resolutions and legal documents.

In addition to continuing to implement incentive policies to attract foreign investment such as corporate income tax exemption and reduction, import tax exemption for a number of industries, exemption from rent and land use,...the Government is also committed to reform administrative procedures to simplify procedures, create the best conditions for investors, and opening the economy for foreign investors.

Foreign investors, when investing in another country, must identify their business lines and areas of business, and consult with experts or Vietnam lawyers whether that business line is subject to any special conditions. There are areas with out conditions of investment and but there are also industries that are restricted from doing business under strict conditions, and even prohibiting business in specific professions on purpose.

In Vietnam, the investors of Vietnamese are free to do business in area which which is not in the list of prohibited. For foreign investors, the business lines allowed to invest are considered based on Vietnam's WTO Commitments on Trade in Services and the Agreements signed between Vietnam and other countries. After that, business conditions in each specific industry to foreign investors will be applied.

General conditions applied to domestic and foreign investors are that investors are entitled to carry out business investment activities in industries and trades which are not prohibited by laws. The industries and trades banned from business investment include: trading in narcotic substances; trading in some toxic chemicals, precursors, minerals; trading in specimens of wild plants and animals according to the provisions of Appendix 1 to the Convention on International Trade in Endangered Species of Wild Fauna and Flora; specimens of endangered, precious and rare wild animals and plants of Group I originated from nature according to the provisions of the Investment Law; trading in prostitution; buying and selling people, tissues, body parts; business activities related to asexual reproduction on people; and trading in firecrackers.

Apart from the above-said prohibited business and investment lines, the remaining industries and trades are divided into conditional business lines and common business lines. For common business lines, investors can freely invest without barriers. By contrast, conditional business lines impose conditions that must be met if organizations wish to invest. Understanding the business lines is the first step for investors to enter the Vietnam market and consulting with Vietnam lawyers would help investors make informed decision for their business plan in Vietnam.

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Korean Investors Research to Invest in Solar Power Projects in Quang Tri Province

IL Yang Industrial Company (Korea) is planning to invest in Vietnam, conducting research, study, proceed to set up company building solar power plant in Quang Tri province, Vietnam.

On December 22nd, IL Yang Industrial Company (Korea) had a meeting with Quang Tri People’s Committee to discuss their investment in solar power project in Quang Tri province. Previously IL Yang Industrial Company had a field trip in Hai Lang and Vinh Linh district, Quang Tri province.

According to IL Yang Industrial Company, through surveys, the Company found that Quang Tri is a potential province to develop solar power. Therefore, in the coming time, the Company will continue to work with the province and other sectors to better understand the indicators to study, proceed to invest in building solar power plant in Hai Lang district with the capacity of 500MW and Vinh Linh district with the capacity of 200MW.

At the meeting, IL Yan Industrial Company expressed their wish to exchange relevant information as well as support and create favorable conditions from Quang Tri province’s leaders to study the project.

According to the People’s Committee of Quang Tri province, Quang Tri province is currently planning to attract investment projects in the field of industry, with priority in the areas of competitive advantage and environmentally friendly industries. In fact, there have been some solar power projects in the area.

The proposed investment in solar power plants in Hai Lang and Vinh Linh of IL Yang Company with advanced technology is suitable with the planning policy of locality. Since then, Quang Tri province is ready to cooperate, create conditions for the company to complete procedures and apply the maximum support policies of the province.

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Billion USD Projects Are Coming to Vietnam

After setting a record of 14.59 billion USD in the first 4 months, foreign investment in Vietnam is forecasted to continue to accelerate in the coming time. Most likely, the first billion-dollar project will land in Vietnam this year.

Although mentioned a lot, but the 4.6 billion USD project of Exxon Mobil Corporation (USA) probably will not be the first billion-dollar project granted investment certificate in Vietnam this year. Instead, it will be the Weijia Textiles Vina Project of Wai Chi Kai investor (Hong Kong). Under the plan, Wai Chi Kai will invest 1 billion USD to build a factory specializing in the production of knitted collar products, wrist bands, ribbed fabric, textile fabrics, textile accessories, fashion accessories… The project was implemented in Dong An 2 Industrial Zone (Hoa Phu Ward, Thu Dau Mot City, Binh Duong Province).

Meanwhile, Bac Lieu Provincial People’s Committee is also urging the Ministry of Industry and Trade to speed up the appraisal process and supplement the project LNG Bac Lieu Gas Thermal Power Plant of investor Energy Capital (USA), investment capital 4.3 billion USD in Electricity Planning VII. Although the investment procedure for a power project is not simple, Bac Lieu hopes that the Project will soon be granted an investment certificate, with a scale of 3,200 MW. The reason is quite understandable, this project will add 3,000 billion VND/year to the local budget.

Besides the above billion USD projects, a series of other large-scale projects may soon be granted investment certificates this year. In which, there is a 500 million USD project of Hana Micron investor (Korea).

Information revealed that, in the middle of April 2019, Hana Micron has officially signed an investment cooperation agreement with Bac Giang Industrial Zone Management Board to implement a project specialized in manufacturing high-tech products and semiconductor equipment in this province.

Meanwhile, Apparel Far Eastern is looking to increase 610 million USD, while Meiko Electronics is about to increase an additional capital of 200 million USD in Vietnam. Once the procedure is completed, the list of large-scale FDI projects registered to invest in Vietnam this year will be extended.

The trend of shifting investment into Vietnam in anticipation of the opportunity by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), as well as to avoid the effects of US – China trade tension, which is becoming clearer.

After Compal, LG Group recently announced that it will stop producing smartphones in Korea to move to Vietnam, in order to cut costs, improve investment and business efficiency. LG’s factory in Pyeongtaek, south of Seoul, will officially stop operating later this year, to switch production to LG’s factories in Hai Phong.

In addition to LG, CP Foods – belonging to Charoen Pokphand Foods, Thailand’s leading group of billionaire Dhanin Chearavanont, will invest more than 200 million USD to build a pork and poultry export center in Vietnam to take advantage of free trade agreements that Vietnam has signed.

CP has invested in Vietnam about 1 billion USD since 1993 and is constantly expanding investment and business to dominate market share. According to CEO of CP Vietnam, Vietnam has an advantage over Thailand in export and labor costs.

That is also the reason why more and more foreign investors shift investment plans to Vietnam. After the US – China trade tension escalated and after the CPTPP took effect, this trend became stronger.

Even, not only secondary investment projects, but according to a recent study published by CBRE, the trend of companies shifting production from China to Southeast Asia, including Vietnam, will also positively impact Vietnam’s industrial real estate sector.

According to CBRE, this trend has been going on since 2018 and will continue to increase until 2020. Thus, at least within the next 2 years, foreign investment in Vietnam will continue to accelerate.

It is important to continue to improve the investment and business environment, create favorable conditions for foreign investors to be able to welcome opportunities and speed up attracting foreign investment, especially in the areas of production of Chinese goods subject to US sanctions.

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Set-up Limited Liability Company in Vietnam

Limited Liability Company is a form of enterprise which is established by contributing of members. A member shall be liable for the debts and other property obligations of the enterprise within the amount of capital that he/she has undertaken to contribute to the company.

Limited liability companies are regulated by two types:

One member Limited Liability Company is an enterprise owned by one organization or individual;

Limited Liability Company with two or more members is an enterprise owned by organizations or individuals, in which the number of members shall not less than two members and not exceed fifty.

Organizational and management structure of Limited Liability Company normally comprise of a Member’s Council, General Director or Director.

A limited-liability company established by foreign investors may take the form of either:

100% foreign-owned enterprise (where all members are foreign investors); or;

Foreign-invested joint-venture enterprise between foreign investors and at least one domestic investor.

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British Investors Proposed to Invest in Wholesale Market in Gia Lai

Chairman of Gia Lai Provincial People’s Committee has just had a meeting and worked with Chairman of the Board of Directors of TKV Holdings International (United Kingdom), coming to survey and find out investment opportunities to set up business in Vietnam and in particular set up wholesale market project in Gia Lai province.

At the meeting, representatives of TKV Holding International Cooperation Joint Stock Company expressed their interest in building wholesale market; electronic portal of wholesale market without managers; strategic product identification; advising on the province’s strategic product identification in the global value chain (building national product images) and Gia Lai province’s product consumption plans.

The representative of the company also assessed that Gia Lai is a potential province and if implemented, the wholesale market model in Gia Lai will also have its own characteristics; At the same time, asking the province to provide additional issues related to regional planning and sector planning; local determination and orientation of Gia Lai province for the participation of enterprises in implementing this wholesale market model.

At the meeting, Chairman of Gia Lai Provincial People’s Committee Vo Ngoc Thanh also raised a number of issues for the unit to learn investment such as the project scale of the wholesale market, the need to connect between the wholesale market and the people. production if the model is deployed in Gia Lai.

Chairman Vo Ngoc Thanh expects TKV Holdings International Cooperation Joint Stock Company will soon agree with the province on how to do as well as speed up the implementation plans of this project. At the same time affirmed Gia Lai’s determination and will create favorable conditions for the unit through the Department of Planning and Investment to promote investment in implementing the wholesale market project in Gia Lai province in the early period. Best.

At the meeting, Chairman of Gia Lai Provincial People’s Committee also raised a number of issues for investors such as the project scale of the wholesale market, the need to connect between wholesale market and producers if the model is implemented in Gia Lai.

Chairman of the province expects TKV Holdings International Cooperation Joint Stock Company will soon agree with the province on how to do as well as speed up the implementation plans of this project. At the same time affirmed Gia Lai’s determination and will create favorable conditions for the unit through the Department of Planning and Investment to promote investment in implementing the wholesale market project in Gia Lai province in the shortest time.

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The Politburo First Issued Resolution on FDI Attraction

For the first time after 30 years of attracting foreign investment in Vietnam, the Politburo issued a thematic resolution to guide in the coming years.

On August 21st, General Secretary and State President Nguyen Phu Trong signed Resolution No. 50 on the orientation of perfecting institutions and policies, improving the quality and efficiency of foreign investment cooperation by 2030.

In the period from now until 2030, the guiding point emphasized by the Politburo is to attract FDI selectively, taking quality, efficiency, technology and environmental protection as the main evaluation criteria. At the same time, priority is given to projects with advanced technology, new technology, high technology, clean technology, modern management, high added value, spreading and connecting global production and supply chains.

In addition, the overall objective is to improve institutions and policies of foreign investment cooperation with high competitiveness and international integration. At the same time, basically overcome the limitations in building, completing and organizing the implementation of institutions and policies on foreign investment cooperation.

The Resolution of the Politburo also supplements the provision on the conditions for national defense and security in the process of considering and issuing investment registration certificates with new investment projects and investment activities through the form of capital contribution and purchase of shares.

The Politburo requires clearly defining the responsibilities of investors on environmental protection during the investment period, project implementation and operation of enterprises during the project implementation period. Along with these tasks, policies on investment management and supervision; innovation and efficiency improvement of investment promotion must be paid attention to.

The Politburo noted that the emphasis on inspection, supervision and inspection is associated with improving the responsibilities of local authorities and heads; definitely deal with projects that cause environmental pollution, inefficient land use and business losses for many years, the project does not comply with its commitments.

Statistics show that after nearly 30 years of receiving FDI capital, Vietnam has more than 23,000 FDI projects with a total registered capital of over 300 billion USD. In which, the total implemented capital is about 161 billion USD. Resolution 50 sets targets, registered capital in the period 2021 – 2025 is about 150 – 200 billion USD (30 – 40 billion USD a year); implemented capital of 100 – 150 billion USD. The period of 2026 – 2030, registered capital of 200 – 300 billion USD, implemented capital of 150 – 200 billion USD.

Percentage of enterprises using advanced technology, modern management, environmental protection, towards high technology increased by 50% in 2025 and doubled (100%) in 2030. Proportion of labor through training in the labor use structure from 56% in 2017 to 70% in 2025 and 80% in 2030.

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