Nearly 127,000 enterprises set up this year

HCMC – As many as 153,307 enterprises have been established and restarted this year, including 126,859 startups and 26,448 enterprises becoming active again, according to the Business Registration Agency.

As shown in a report of the agency, registered capital of 127,000 newly established enterprises is VND1,295.9 trillion, up 15.2% in number and 45.4% in capital, with the real estate sector making up nearly one-third of fresh funds. On average, each new enterprise has VND10.2 billion in registered capital, a rise of 26.2% year-on-year.

Meanwhile, 35,276 enterprises have registered to adjust capital with VND1,869.3 trillion in total, bringing total registered capital of this year to VND3,165.2 trillion.

According to the agency, new enterprises of this year are mainly active in the areas of wholesale, retail, repair of autos and bikes with more than 45,410 enterprises (35.8%). The processing-manufacturing sector welcomes over 16,190 new enterprises (12.8%), whereas the respective figures in the construction and real estate sectors are 16,035 and nearly 5,070 units.

Though the highest number of newly established enterprises is seen in the wholesale, retail, auto and bike repair sectors, real estate reports the biggest growth rate of 62%. In addition, regarding registered capital, the real estate sector continues to record the largest amount with VND388.37 trillion, accounting for 30%, followed by wholesale, retail, repair of autos and bikes with VND198.04 trillion (15.3%), construction with VND190.82 trillion (14.7%) and processing-manufacturing with VND144.73 trillion (11.2%).

While a new real estate enterprise boasts average registered capital of VND76.7 billion, an enterprise producing and distributing power, water and gas has VND65.7 billion.

In addition, the total number of laborers registered by newly established enterprises falls 8.4% to some 1.16 million. Of these, the processing-manufacturing sector is expected to employ some 430,620 workers (37.1%).

As for nearly 26,450 enterprises resuming operation this year, the number drops by 0.9%. They mostly operate in fields of wholesale, retail and repair of autos and bikes with 10,127 units (38.3%); construction with over 4,000 units (15.1%) and processing-manufacturing with 3,394 units (12.8%).

This year also sees temporary business suspensions at 21,684 enterprises, up 8.9% against last year. Of these, there are more than 8,600 enterprises (39.7%) in wholesale, retail and repair of autos and bikes; 3,165 construction enterprises (14.6%) and nearly 2,790 processing-manufacturing enterprises (12.8%).

Besides, nearly 38,870 enterprises stop operation without registering or are performing procedures for dissolution, down 4.6%. There is also a decline of 2.9% in the number of dissolving enterprises with 12,113 units

Source: The Saigon Times

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Tax Obligations of Representative Offices in Vietnam

Foreign entities have found Vietnam as an increasing attractive destination for investment.  They could consider entering Vietnam in various forms, including setting up representative offices.

“A representative office is a dependent unit of the enterprise, having the task of representing under authorization the interests of the enterprise and protecting such interests” (Clause 2 of article 45, Law on Enterprises 2014). “Representative office shall perform the functions of liaison offices, market surveys, promotion of business opportunities for traders they represent, excluding those in which the establishment of representative offices in that field, it is stipulated in specialized legal documents” (Article 30 – Decree No.07/2016/ND-CP decree detailed regulations on establishment of representative offices or branches of foreign traders in Vietnam under Laws on Commerce).

A representative office is a dependent unit of a foreign enterprise in Vietnam, and it acts under the authorization of foreign enterprises. Representative office shall not conduct business activities therefore, the tax obligations of the representative office are limited, such as:

Firstly, as representative office does not involve profit making activity, hence there are no Value Added Tax, Corporate Income Tax, Annual Due incurred.

Secondly, representative office has to register its tax code, to deduct and pay Personal Income Tax on behalf of its employees working in the representative office or deduct and pay contractor taxes for foreign sub-contractors (if any).

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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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Danang calls for investment in hi-tech agriculture

The central coast city of Danang called for investors to get involved in hi-tech agriculture projects worth VND1.5 trillion (around US$66 million) at a seminar last Friday, Lao Dong newspaper reports.

Experts said at the “Luring Investment into Hi-tech Agriculture in Danang City”seminar that given adverse weather conditions and falling agricultural land, the use of advanced technology in agriculture is a right thing to do to ensure higher productivity and economic efficiency.

The city is grappling with a slew of difficulties as agricultural land is sparsely located and small-scale farming is still popular.

Besides, the application of information technology, automation, bio-technology, and advanced farming practices is not common there.

The study for hi-tech agriculture solutions has the same fate and application models lack sustainability and expertise. Therefore, their agricultural products fail to meet consumer requirements.

There has been loose connectivity among scientists, the State, companies, and farmers. Notably, scant attention is paid to branding and product promotion.

The demand for farmed products which meet quality and safety requirements is increasing in the city. Thus, hi-tech agriculture has much room for growth there.

The municipal government proposed investors develop five hi-tech agriculture projects worth an estimated VND1.5 trillion (about US$66 million) at the seminar.

The city pledged to offer investors a host of policy incentives such as covering half of site clearance cost but no more than VND3 billion a project, half of infrastructure costs for manufacturing facilities but less than VND2 billion each, and all of interest for maximum loans of VND10 billion each within a period of three years.

Source: The Saigon Time

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Dong Thap lures investments into infrastructure, farm produce processing

HCMC – The Mekong Delta province of Dong Thap is calling for investors at home and abroad to develop industrial infrastructure, and agricultural goods processing projects, heard a press conference in HCMC last Saturday.

The provincial government and the Institute of Vietnam Organic Agricultural Economics unveiled the investment promotion conference under the theme of “Dong Thap – our potential, your opportunity,” which is slated to take place next Tuesday in Cao Lanh City, and is expected to have around 300 delegates.

Truong Hoai Chau, director of the provincial Department of Planning and Investment, said the local government is calling for investors for 33 projects which are aimed at developing infrastructure for industrial zones, hi-tech agricultural sub-zones, as well as processing industry, tourism, and trade.

The local government wants to prop up investments in the farm produce processing sector and others serving agriculture such as building material regions for agricultural production, centers for preserving and distributing vegetables and fruits, as well as plants for processing farm produce and agricultural by-products.

Dong Thap also need investors to distribute agricultural products at home and abroad.

He stressed investors will enjoy the highest incentives in line with the Government’s land and corporate income tax regulations. For example, they will be entitled to corporate income tax of 10%, 15%, and 17% depending on sectors and investment locations.

Le Thanh, head of the Institute of Vietnam Organic Agricultural Economics, said the province’s farm products such as mango, lotus, rice and cajuput have great potential, but their added value is low due to a lack of deep processing.

Therefore, the institute suggested the provincial government establishing a processing center for agricultural produce. As many as eight domestic and international companies have expressed interest in the project in a bid to ship the products to Japan, the United States and European countries.

The provincial government is also luring investors into developing infrastructure of nine industrial zones spanning 10 to 250 hectares each, producing clean and renewable energy, as well as constructing residential and affordable apartments, commercial centers, and resorts.

At the conference, the provincial government is expected to give in-principle approval to 21 projects, and sign 16 memorandum of understanding on investments worth around VND24 trillion (US$1.05 billion) in a wide range of sectors.

Nguyen Van Duong, chairman of the province, said Dong Thap has ranked in the top three in the provincial competitiveness index, and its agricultural growth rate has also topped the list in the Mekong Delta for the past several years.

However, he admitted, the economic and tourism growth of the province is hampered by insufficient transport infrastructure.

Source: The Saigon Times

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Infrastructure vital for foreign investment attraction

HCMC – Infrastructure plays a key role in whether foreign investors decide to make an investment in Vietnam or not, heard a conference on infrastructure development in HCMC on December 7.

Speaking at the conference, Kawaue Junichi, consul general of Japan in HCMC, said the first thing investors will look at is infrastructure when it comes to making an investment decision.

According to the consul general, to ensure sustainable infrastructure development, more attention should be paid to social and environmental impacts and economic purposes when implementing infrastructure projects.

Infrastructure projects like seaports, roads, railways and electricity systems should contribute to improving people’s lives and protecting the environment. They should be of high quality as well.

Among the infrastructure projects in Vietnam that have got positive reviews from Japan are Tan Son Nhat International Airport and East-West Highway in HCMC, and Noi Bai International Airport and Nhat Tan Bridge in Hanoi.

Kawaue Junichi said HCMC needs to develop more infrastructure projects of high quality, such as the under-construction Metro Line No.1, to promote foreign investment.

With an aim to assist Vietnam to develop its infrastructure, Japan has plans to fund other large-scale projects like Danang Port and Cai Mep-Thi Vai Port.

To ensure the feasibility and efficiency of an infrastructure project, investors should carefully calculate construction cost and time, assess environmental impact, and evaluate local conditions and demand.

Some experts said at the conference that foreign investors will successfully develop and operate their projects in Vietnam only if infrastructure facilities like power and water supply, and roads are complete and reliable.

Source: The Saigon Times

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IP Considerations in Technology Transfer to Vietnam and South-East Asia

On November 14th and 15th, 2017, European Chamber of Commerce in Vietnam held a seminar for representatives from businesses and law firms “IP considerations in Technology Transfer to Vietnam and South-East Asia”.

The seminar provides some sound advice relating to IP Considerations & Practical Tips for Successful Technology Transfer in Vietnam. Further, audience could learn some ways to minimize risk of IP issues associated with Technology Transfer in South-East Asia.

According to Law on Technology Transfer 2017, which shall take effect as of July 01st, 2018, Vietnam government ensures rights as well as legal interests and facilitates both organizations and individuals in carrying out technology transfer to Vietnam. However, to take advantage of such policy when contemplating transferring technology to Vietnam, you should Evaluate IP Value & Risk of IP infringements through the following tips:

• Check availability of use or protection status of IP objects
• Perform IP clearance search and market research
• Check and maintain validity of IPRs
• Use local IP agents as watchdogs of your IPRs (advice/strategy)
• Use NDA (Non-Disclosure Agreement)
• Check registration of IP objects with cautious consideration in the consistence of all material (contract and records by local authorities- NOIP)
• Sign Transferring technology contract or Assignment of IPRs/ License of IPRs separately toward each IP objects

Besides, there are some contractual issues to pay attention to such as:

• What are conditions of use?
• Structure of fees for License,
• How to terminate?
• What happens with the goods/ materials/ equipment after termination?
• How to avoid risk of technology usage after termination.

Multinational and global companies are always facing with challenges in devising creative solutions to minimize the risks to their IPRs associated with technology transfers. Careful evaluation and due diligence at the first stage of the transferring technology project help companies prevent unwilling suffer and unfair competition.

ANT Lawyers Co., Ltd is a law firm in Vietnam with IP agent certificate issued by National Office of Intellectual Property.  We are also member of legal committee of EuroCham which help contribute legal opinions to promote the development of investment environment in Vietnam.

Tuan Nguyen and Thao Hoang @ ANT Lawyers

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