Conditions of Setting up Import and Export Company in Vietnam

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

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

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

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

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

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

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

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

e. It has approval from the competent State body.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In order to seek further advice or request service, please contact us at ant@antlawyers.vn or call + 84 912 817 823.

Read More

What Admiralty and Maritime Legal Matters in Vietnam Involve?

Admiralty and maritime lawyers in Vietnam may represent and defend the interests of commercial ship owners and charters involving the total spectrum of maritime casualties, accidents and disputes which may arise in reference to commercial ocean shipping.

Additionally admiralty and maritime lawyers in Vietnam are frequently appointed by a broad vary of domestic and international marine insurance corporations directly or through our international partner law firms in UK, US and Australia to represent and defend the interests of their insureds in reference to casualties involving each commercial and recreational vessels.

When legal proceeding arises from a maritime casualty or dispute admiralty and maritime lawyers in Vietnam commit the total range of the firm’s resources and therefore the intensive litigation expertise of our attorneys to attain the most effective potential outcome for the client. The attorneys additionally counsel ship owners, charters, marine insurers and clients on risk avoidance, regulative necessities and strategic legal solutions.

An overview of the a number of the kinds of maritime claims, casualties and transactions that admiralty and maritime lawyers regularly handle is as following:

• Casualty Defense, Investigation and Litigation
• Collisions
• Cargo damage
• Personal injury and death (seamen, longshoremen and passengers)
• Property damage
• Product liability
• Shipowner’s limitation of liability
• Marine Liability Insurance
• Commercial Disputes
• Bills of Lading
• Charter party disputes
• Vessel mortgage foreclosure
• General Average and Salvage Claims
• Vessel Regulatory Matters
• Regulatory compliance
• Civil fines and penalties
• Security issues
• Maritime Contracts
• Contracts of affreightment, bills of lading and charter parties
• Drafting and advice
• Recreational Boating
• Injuries and Property Damage
• Product Liability
• Sales and documentation
• Subrogation

ANT Lawyers has law been partnering with a number of UK, US, and Australian law firms in advising clients in admiralty and maritime in Vietnam.

Read More

Process Setting-up Foreign Onwed Import Export Business in Vietnam

If a foreign-invested company wishes to apply for export/import or distribution rights, it has to submit the below listed documentation to the competent authorities:

1. Export/Import rights:

The foreign investors who invest to exercise right to export, right to import must follow procedures for grant of investment certificates; the foreign-invested enterprises in Vietnam which supplement the operational business activities for exercise of right to export, right to import must follow procedures for adjustment of investment certificates:

a. Dossier of verification for grant or adjustment of investment certificate as prescribed by law on investment;

b. A written explanation about the satisfaction of conditions in exercise of goods trading and directly related activities;

c. Documents proving the financial capability and experiences of investor in exercise of right to export and right to import;

d. Vouchers of tax agencies on performing the enterprise income tax liability within two consecutive years in the case the foreign-invested enterprises wish to supplement the exercise of right to export, right to import.

2. Trading activities/Distribution

The foreign investors with investment projects on exercise of goods trading and directly related activities in association with the setting up of enterprises must follow procedures for grant of investment certificates.

a. A dossier comprises:

i) Dossier of verification for grant of investment certificate as prescribed by law on investment;

ii) A written explanation about the satisfaction of conditions in exercise of goods trading and directly related activities according to the form MD-6 promulgated together with this Circular;

iii) Documents proving the financial capability and experiences of investor in exercise of busienss operation of goods trading and directly related activities.

b. After having acceptance opinion of the Ministry of Industry and Trade, the competent state agencies shall grant investment certificate. The investment certificate shall concurrently be business license.  Although not stipulated in the law, before granting an investment certificate with these business lines, the authorities usually consider application on case by case basis, taking into account market stability, population density in the area where the company is located and the consistency of the investment project with the master plan of the said area.

For these business lines the competent authorities must obtain the approval of the Ministry of Industry and Trade before issuing the investment certificate.

3. License for setting up retail establishments

If a foreign-invested enterprise wishes to set up a retail establishment in addition to the first retail establishment, it must follow procedures for license for setting up retail establishment, a dossier comprises:

a. Dossier of verification for grant or adjustment of investment certificate as prescribed by law on investment;

b. Dossier of license for setting up retail establishments, comprising:

i) Application for license to set up retail establishment;

ii) A written explanation about the satisfaction of conditions of setting retail establishments as per the law;

iii) Document of provincial People’s Committee that approves the working result of the Council of checking the

economic demand to consider the conformity of setting up of a retail establishment in addition to the first retail establishment.

iv) Report on exercise of goods trading and directly related activities of licensed projects;

v)Vouchers, which are issued by tax agencies, about exercise of enterprise income tax liability in two adjacent years.

After having acceptance of the Ministry of Industry and Trade, the competent state agency shall grant the license for the setting up of retail establishments.

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

In order to seek further advice, please contact us at ant@antlawyers.vn or call + 84 912 817 823.

Read More

Vietnam Restructures Electricity Sector with Vision into 2025

Vietnam has been increasingly needing energy for industry development and consumption and therefore investment in building plants are encouraged by governments in all forms, especially with sources from Public Private Partnership.

The nuclear energy has not been approved by Vietnam National Assembly in 2016.  Vietnam has now more depending on up-coming thermal coal power plant construction projects when the sustainable energy projects i.e. wind, solar are slowly initiated.

For most of the significant projects, the developers requires the foreign EPC contractors to provide equipment, engineering and constructions whom requires construction licenses to operation in Vietnam.  They also keep an eye on on the changes in the law in electricity and Vietnam development of energy sector to follow opportunities.

In 2016, Vietnam has issued decision on national power development into 2020.

With aim to grow the energy sector to meeting growing demands and publicly announce the plan to the interested parties, Vietnam government has now restructuring the power sector aiming to achieve the conversion of the power sector under the market mechanism in order to enhance business efficiency, enhance the publicity, transparency, equal competition in terms of international integration, ensuring the development of sustainable electricity systems, market development-oriented retail electricity in Vietnam according to the market mechanisms under the regulation of Government.

Restructure Electricity Sector 2016 – 2020

The period from 2016 to 2018

Privatize the power generation corporation of Vietnam electricity Group (EVN), Vietnam National Oil and Gas Group (PVN), Vietnam national coal – mineral industries holding corporation limited (Vinacomin). Vietnam Power Generation Corporation to be remained in the groups managed by EVN and the group hold at least 51% of the shares.

To encourage the plant using the renewable energy to engage in the wholesale electricity market.

Orienting the National Load Dispatch Center to become one member limited liability company with independent profit and loss center to manage the system, the electricity market and metering activities.

The period from 2019 to 2020

Reduce the State capital in the power generation corporation, separate the Vietnam Power Generation Corporation from Vietnam Electricity Group, and guarantee the State capital ratio in the power generation companies.

Allow the BOT power plant, the large power plant having important meaning to involve in the wholesale electricity market. Ensure a fair, equality environment for investors.

Separate the cost of distribution and retailing of electricity to operate the retail electricity market.

Before the competitive wholesale electricity market officially implemented, complete the conversion of the National Load Dispatch Center into one member limited liability company.

Restructure Electricity Sector 2021 – 2025

Creating an environment for fair competition in the electricity retailing, separate the cost of distribution and retailing.

Privatize the power generation corporation, and retail activity ensuring the state’s capital ratio but not to private each company, or distribution activity.

Ensure the independence of the legal status, personnel, financial and interests between the power seller, and power buyer.

The Expected Changes of the Law on Electricity

The competent authority will revise the Vietnam Electricity Law and the related legal documents to propose the necessary amendments, to fit with the open market direction for the electricity industry in Vietnam, in order to avoid the legal entanglements for domestic as well as foreign investors.

Allows the plant using the renewable energy to have a options for preferential price mechanism or engage in the competitive wholesale electricity market.

Provide guidance on the cost separation on distribution and retailing of electricity, renew the mechanism of the retail price of electricity suitable for the market mechanisms under the state’s management.

Build a road map to transform the national load dispatch center to become one member limited liability company to complete the tasks independently and take responsibility.

The  laws on  electricity will be changed to attract investment of the private sector, boosting the industrial development of the country, which is always hunger for power to develop.  The changes of laws will be monitored by ANT Lawyers Energy and Project Department  in Hanoi, Da Nang and Ho Chi Minh City to provide clients with updates.

Read More

CPC Code – Foreign Investors Need to Know in Vietnam

Once a foreign investor wishes to invest in Vietnam, they not only need to be well-informed about investment environment, incentive, labor, State policies, but also need to know about CPC code. Each specific service is fixed with a provisional Central Product Classification (called CPC code) belonging to Central Product Classification of United Nations. In the Schedule of Service Commitment under WTO Commitment, all services which Vietnam commits to open market are listed with CPC code corresponding with international standard.

Investors could check business lines which they wish to invest against the Schedule of Service Commitment under WTO Commitment of Vietnam as well as specialty regulations under laws of Vietnam to define their business lines and consider its practicability.

If this business line was committed to open market with foreign investors, the investors could perform investment into Vietnam. For the business lines not yet committed, Vietnam has full rights on approval or refusal on permitting foreigner investors to carry out investment in Vietnam market. In special cases, Vietnam government could consider the issuance of investment license with the non-committed services based on scale, capital, and location of project, however, Vietnam has full rights to offer conditions that investors must meet before issuance of license, and still guarantee to comply basic principle of GATS (General Agreement on trade service).

Beside business lines, investors also need to pay attention to form and rate of commercial presence in Vietnam. Accordingly, except other regulations at each sector and sub-sector of the Schedule of Service Commitment, foreign company only sets up commercial presence in Vietnam under Joint Venture Company, wholly foreigner-owned company, business cooperation contract, representative office, branch office.

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

In order to seek further advice or request service, please contact us at ant@antlawyers.vn or call + 84 912 817 823.

Read More

Benefits of Representative Offices in Vietnam

Following the trend of international economic integration, foreigners have been attracted by the benefits of doing business in Vietnam through setting up representative office, setting up company, acquiring shares in Vietnam enterprise through M&A activity.

At the initial stage, foreign entity would try to research market, undertake due diligence on its clients, buyers, clients, or other business partners therefore many will be interested in establishing a representative office in Vietnam.

The foundation of representative office of foreign entity in Vietnam is governed under Vietnam Commercial Law 2005 and Decree 07/2016 / ND-CP dated 25 May, 2016.

Advantages of establishment of a representative office:

Establishing a representative office is a tool to research the market. For the first time, foreign enterprises entering the Vietnam market, the primary purpose is understanding the market, undertaking research on clients, or due diligence on their business partners, distributors, monitoring the performance of buyers and being familiar with the Vietnam market. The establishment of representative office in Vietnam turns out to be the most effective option both of cost and time.

The representative office in Vietnam is an effective tool to promote commercial activity, seeking partners, and increasing opportunities to expand business market in Vietnam.

Representative office form in Vietnam has allowed foreign entity to receive benefits such as recruiting Vietnamese employees, foreign employees working in offices whom could apply for work permit in Vietnam, then temporary residence card in Vietnam, opening bank accounts in foreign currencies or Vietnam dong at commercial banks, and to be allowed to use those accounts solely for their operations.

According to the laws of Vietnam, the establishment of representative offices does not require the investor’s capital. Instead, setting up a company in Vietnam, an economic organization requires capital contribution as per business plan, ranging from USD 50 k to million USD. Sometime, if the investment fall under conditional areas, setting up company seems more challenging.  This relieves the foreign trader from advancing too much to achieve the purpose of expanding the market before the business plan has been proved to materialize.

Further, the establishment of representative office follows more simple procedures for licensing in Vietnamthan establishing entity in Vietnam. Accordingly, the process has been taken less time which is more favorable for foreign traders.

Challenges of the establishment of representative office in Vietnam?

Vietnam law provides that, in order to establish a representative office in Vietnam, foreign traders have to prove the fulfillment of the financial responsibility in their country. In practice, the foreign entity is expected to provide audited financial statements. In some countries, the financial audited report is not available according to laws. The Vietnam Department of Trade and Commerce, which state authority would grand representative office operation certificate would require documents showing the fulfillment of tax liabilities or financial obligations of the last fiscal year, or equivalent documents as proof of existence and operation of the foreign trader issued or certified by competent authorities where such foreign trader is established. This provision may initially be difficult. However, if the foreign trader has been established and operated legally in their country, the implementation of this provision is not a major obstacle.

As a large potential market such a Vietnam, as well as the current rapid reform in administrative procedures, Vietnam Government has been more flexible to encourage foreign traders doing business in Vietnam, hence the establishment of representative offices is an optimal method to consider for market research, trade promotion and a stepping stone to penetrate the Vietnam market successfully.

The commercial law and other business laws in Vietnam are frequently changing toward attracting more quality investment projects into Vietnam.  ANT Lawyers in Hanoi, Da Nang and Ho Chi Minh City continue to follow and provide update to its clients for their smooth operation in Vietnam.

Read More

How Could a Vietnamese Change the Name?

According to the civil laws in Vietnam, a citizen’s full name including first name, middle name and last name has been registered at birth in the birth certificate when properly issued. If a Vietnamese wishes to change the name, there must be a legitimate reasons and the process and procedure have to follow Vietnam Civil Code.

Individuals may request competent state agencies to recognize the change of name in the following cases:

a) At the request of person with name which the use such names causes confusion, emotional impact on family, honor, rights and lawful interests of that person;

b) At the request of the adoptive parents about changing names for adoption or adopted child ceases adoption with the adoptive parents or when the birth parents request to regain the name that originally used;

c) At the request of the father, the mother or the child when determining parents of children;

d) Changing the family name of a child from their father’s family name to their mother’s family name or vice versa;

e) Changing the names of persons found their origins;

f) Change the name of the persons which gender is redefined;

g) The other case law on civil registration regulations.

Due to the complexity of the process in some cases, a law firm in Vietnam could help with a service which clients could same time and cost rather than trying to carry out the process themselves.

Read More