WHY DA NANG IS A PLACE FOR SETTING UP BUSINESS

Da Nang has been creating flexible policies, good environments attracting foreign investors setting up company, building factory, and developing service business.

Da Nang is a social and economic center of central area of Vietnam with the role as the center of industry, trade and tourism and service.  It is a seaport city, an important transport hub for the transit of domestic and international transportation. Presently, Da Nang has been rising as a comprehensive and sustainability developing city.

With the advantages of geographical location, people and nature, the leader of Da Nang is planning to build the city becoming a major tourist center of the country, developing tourism industry with entertainment centers and luxury resorts in Vietnam.

In practice, Da Nang has been reducing administrative procedures, creating favorable conditions for investors in obtaining certificate for investment.  In the meantime, the city also supports investors understanding the information and maintaining direct dialogue mode with businesses leaders and managers in order to promptly assist any difficulties encountered by investors in the process of project implementation. Da Nang’s leaders are famous in being proactive in providing the latest information about the law in investment, especially information on the process of changing investment certificate… to facilitate the investment plan of the investors whom are investing in Da Nang.  For investment projects in infrastructure construction using ODA capital, the city has been quickly implemented the clearance and compensation in time to hand over the project site to the investors as planned.

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To ensure the tourism environment and sustainable development, the city focuses on attracting projects in high technology industry, supporting industry and services with high added value i.e. information technology, education, healthcare and logistics…, especially favouring clean and quality projects rather than large projects but are likely to cause environmental issues.

Along with economic development, Da Nang also has activities and measures for environmental protection by investing in building projects to protect and improve the environment such as: modernization the sewer and wastewater treatment system (JICA), building east-west economic corridor (ADB)… to ensure sustainable and long term development of the economy.

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An important element for economic development is the local security. Da Nang has done a great job in maintaining public security in order to guarantee investors a stable and safe political, social environment for investors.

It can be seen that Da Nang converges suitable elements and really is a promising land for investors both domestic and international, to invest in entertainment, real estate, tourism, IT, healthcare, education services.

ANT Lawyers, a law firm in Vietnam offers clients legal service in Da Nang through our affiliate office located in Hoi An (covering Da Nang, Hoi An, Hue City), managed by an experienced corporate lawyers whom bring along extensive experience from leading law firms in Vietnam including Mayer Brown, handling a wide range of corporate and commercial matters with a particular emphasis on foreign investment, mergers and acquisitions and real estate; from planning, consultation to execution.

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WHY INVESTORS SHOULD SET-UP BUSINESS IN PHU QUOC

The improvement in infrastructure system along with the preferential policies have stimulated investors to come to Phu Quoc to set-up company and do business.

Phu Quoc, an island in Kien Giang of Vietnam is in the top of three islands having tourism potential in Southeast Asia comparable to Phuket in Thailand and Bali in Indonesia.  Phu Quoc has become a magnet for attracting huge investment flows from foreign investors in the area of real estate, entertainment, casinos, restaurant or food and beverage service business.

Phu Quoc has temperate weather throughout the year. There are also fresh and friendly forest – sea ecology and the modern transport system on the island with international airport and international hospital. Moreover, many infrastructure projects and international schools are under construction, which are necessary and favorable conditions to invite and attract investors to the Pearl Island for doing business.

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Capital inflows to Phu Quoc have really exploded after the “knots” in investment were removed. The new airport went into operation that can welcome larger aircraft and serve more flights, in which there are more international direct flights from China, Singapore, Russia and Cambodia. The 51km long radial route on the island has been basically completed; the road around the island and the branch roads are also being deployed. The power grid was pulled from the mainland to the island, replacing the very high cost gasoline power in the past.

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The real estate and tourism consultants all agree that Phu Quoc fully convergent elements of an attractive beach for tourist with year-round sunshine, many beautiful beaches such as Long Beach, Truong Beach, Khem Beach and immense virgin forest. Moreover, Phu Quoc has a strategic location with just 1-2 hours flight to the key tourism markets in Southeast Asia.

Both investment and tourism in Phu Quoc have entered the acceleration phase. By the end of July 2015, Phu Quoc has attracted nearly 200 investment projects, including 136 projects that are being implemented in the area of over 5,100 ha with total registered capitals of 6.5 billion USD. Just one part of those projects become reality then it will make Phu Quoc to become a leading tourist destination in Vietnam, ahead of Da Nang and Nha Trang, competing with the top destinations in the area as Phuket and Bali.

Some of the largest Vietnam corporations such as Vingroup, Sun Group, CEO Group, BIM Group are implementing the huge projects that could alter the appearance of the island. In which the giant in real estate sector – Vingroup has invested projects as: Vinpearl Resort on an area of 300 ha in Long Beach, the combining of golf course and safari zoo on an area of more than 2,000 ha, and the 80 ha commercial complex.

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The improvement in infrastructure system along with the preferential business and legal environments i.e. favourable land rental rates, corporate income tax, exemption of visa for foreign tourists make Phu Quoc island of Kien Giang, Vietnam a new attractive place for investment.

ANT Lawyers, a law firm in Vietnam could offer service to set-up company in Phu Quoc through its affiliate office.  We assist clients needing legal service in obtaining investment certificate, business registration, or other  licensing procedures in Phu Quoc, Kien Giang Province, Vietnam.

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HOW TO ESTABLISH A COMPANY IN VIETNAM

Foreign investors may invest in the form of 100% capital to establish a limited liability company, joint stock company, partnership company or other forms in investment in Vietnam.

Foreign investors that invest in Vietnam for the first time must have investment projects and fill in investment registration or examination procedures at state agencies in charge of investment in order to be granted investment registration certificates. Investment certificates shall concurrently be business registration certificates.  Company with 100% foreign capital has founded and operated from the date of issuance of the investment certificate.

A project dossier for establishing a company in Vietnam shall comprise:

• Registration/Request for issuance of Investment Certificate;
• A report on financial capability of the investor;
• Draft of the company’s charter;
• List of members of company: a) copy of the people’s identity card, passport or other lawful personal certification, for individual members; b) copy of the establishment decision, business registration certificate or other equivalent document, for member organizations; copies of the authorization document, the people’s identity card, passport or other lawful personal certification, for authorized representatives. Copies of the business registration certificates of the foreign member organizations must be authenticated within three months before the date of submission of the business registration dossier by agencies where such organizations are registered;
• Written authorization of the investor in case investor is organization and valid copy of the lawful personal certification of the authorized representative. Documents in foreign languages must be translated into Vietnamese, notarized and legalized;
• The joint-venture contract or Business Cooperation Contract (BCC);
• Other documents required by Vietnam law.

The establishment of a company in Vietnam would take from 30 days.  The extra time might be needed in case the investment area is conditional or the State government needs to examine the investment project.  Minimum capital, special licenses or other conditions might be required in certain investment projects.

At ANT Lawyers, a law firm in Vietnam with law offices in Hanoi and Ho Chi Minh City, we are available to assist clients in establishing foreign owned company in Vietnam.  We could be reached at email: ant@antlawyers.vn or office tel: +84 912 817 823.

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LIST OF INVESTMENT SECTORS BANNED IN VIETNAM

Although investment is encouraged in Vietnam, there are sectors banned to invest in Vietnam which foreign investors need to be advised and considered when setting up business in Vietnam.

The list of investment sectors banned in Vietnam has been issued with Decree 108/2006/ND-CP dated September 22nd 2006 of the Government on guiding the implementation of some Articles in the Law on Investment.

I. The projects which are detrimental to national defense, national security and public interest

1. Production and processing of drugs

2. Investment in services that secretly investigating infringe upon the interests of the State, the legitimate rights and interests of organizations and individuals.

3. Investment in the fields of private detective and investigation.

II. The projects which are detrimental to the historical places, cultural, ethical, habits and customs of Vietnam

4. The projects built on the campus of the national historical and cultural places, projects that negatively affect the architecture and landscapes of national historical and cultural places.

5. Production of depraved and superstition cultural products.

6. Production of dangerous toys, educational harmful toys that affect to the character and health of children or to the security, social order and safety.

7. Prostitution business, trafficking in women and children.

8. Experimental reproductive cloning in humans.

III. The projects harmful to people’s health, destroying natural resources and destruction of the environment

9. Manufacturing of prohibited chemicals (contact ANT Lawyers for details) (according to the Convention).

10. Production of veterinary drugs, plant protection drugs that are banned or not permitted to use in Vietnam.

11. Production of medicines for human use, vaccines, biologicals, cosmetics, chemicals and pesticides, bacteria which are not permitted to use in Vietnam.

IV. The hazardous waste treatment projects brought from overseas into Vietnam, production of toxic chemicals or the use of toxic agents that are prohibited by the provisions of international treaties

12. The hazardous waste treatment projects brought from overseas into Vietnam, production of toxic chemicals or the use of toxic agents that are prohibited by the provisions of international treaties to which Vietnam is a member.

V. Other investment projects that are prohibited under the provisions of law.

At ANT Lawyers, a law firm in Vietnam with offices in law office Hanoi and Ho Chi Minh City, we are available to assist clients in licensing and post-licensing matters to help clients with all questions and services in setting up and maintaining the company or other form of business entities in Vietnam. We could be reached at email:ant@antlawyers.vn or office tel: +848 35202779.

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HOW TO SET-UP TRAVEL SERVICES BUSINESS IN VIETNAM

Foreign investor could only set-up joint venture with Vietnam travel agency to set-up travel services business in Vietnam because transport of passenger belongs to investment areas with conditions applied to foreign investor inVietnam.

No one could deny that information technology has tremendously changed the way travel services business operates.  The use of booking reservation system application on smartphone and internet are widespread that make travel has never been easier.   Foreign investor would be interested to explore the travel services market. However, 100% foreign owned company is not allowed to set-up in travel services business in Vietnam. As this investment area is conditional, it is advised that a law firm in Vietnam should be consulted to ensure compliance with local regulations.

The application process and documents requirements are briefly as following:

I. Required documents:

1. Application for the International Travel Business License (form);
2. Certificate of business registration (copy – certified)
3. Business plan for the international travel agency;
4. Tour schedule
5. Proof of at least 4 years of experience in international travel business operations
6. Certified copies of the tourist guides’ cards whereby at least 3 international tourist guides are required
7. Confirmation of bank deposit (as per regulations);
8. Proof of office premises or legally registered place of business

II. Business License Application Procedure

1. Submission of the required documents to the correct authority (Department of Culture, Sports and Tourism of the province/city where the business is headquartered).
2. The Department of Tourism of the province/city completes the records of appraisal and submits a written request with the agency’s records to the Minstry of Culture, Sports and Tourism in Vietnam within ten working days from the date of receipt of a valid application. When cases are not eligible for the proposed permit to the state agencies, the provincial tourism department shall cite the specific reasons for refusal.
3. The state management agency of tourism (VNAT – Ministry of Culture, Sports and Tourism) is responsible for reviewing and licensing the international travel business within ten working days from the date of both receipt of the file and written request of the state agency of tourism in the province. In case of refusal, the ministry shall state the specific reasons to the state and provincial tourism authorities

III. Number of records

– Submission to the Department of Culture, Sports and Tourism: 01

– Tourism Authority Filed in: 01

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TOP 10 CHALLENGES OF DOING BUSINESS IN VIETNAM

Expanding gross domestic product (GDP), modern infrastructure and a dramatic increase in foreign direct investment (FDI) are signs that Vietnam has transformed into an attractive investment destination, but there are still barriers to doing business which are best navigated with local help on board.

Since 1988, there have been 13,544 foreign investment projects with a total registered capital of US$213 billion in Vietnam, building a large overseas investment sector which occupies about 17% of GDP and 43.4% of industrial product value. Overseas firms are attracted by Vietnam’s 87 million-strong population which supports a large and young workforce and that has also seen an increase in disposable income in recent years.

Strong economic growth rates have been a common feature of the Vietnamese economy since the 1990s, and even though the high levels slumped slightly during the global financial crisis, the country has rapidly returned to pre-crisis growth trends and is expected to continue on this path. Infrastructure, tourism development, and related real estate and retail sector development in urban areas are all attracting large amounts of FDI, and overseas firms are increasingly attracted by the country’s move from a centralized to a market-orientated economy.

However, The World Bank and International Finance Corporation (IFC) rank Vietnam in 99th place in the world for ease of doing business, which means it is essential to seek local help of law firms and lawyers in Vietnam when expanding into the country.

Starting a Business

There are 10 procedures to undertake when starting a business in Vietnam, making it among the most complex start-up environments in the world. What’s more, many tasks facing new corporate entities may be unfamiliar to overseas companies, making the task far more rigorous. Registration of the seal-sample at the State Agency, for example, or publicly announcing the formation in a local newspaper are procedures most companies generally don’t have to complete.

Dealing with Construction Permits

It takes 110 days and 11 procedures to get permits for construction in Vietnam, once again requiring interaction with several official departments. Inspections must be carried out by the Department of Construction and the municipality, and certificates should be obtained from the Firefighters Prevention Department, the Department of Construction and the Department of Natural Resources and Environment.

Getting Electricity

Getting electrical connection is among the most rigorous tasks facing startups in Vietnam, taking 115 days to complete and costing a significant percentage of income per capita. Inspections by the local power corporation are required before completing processes with the Traffic and Transport Department and the Firefighters Prevention Department.

Registering Property

Registering property in Vietnam takes 57 days to complete, which is far higher than the OECD norm but around average for East Asia and Pacific. Contracts between the transferor and the transferee are signed before taxation is paid and registration for the right to use land is complete.

Getting Credit

Vietnam is home to quite a stable credit environment, and obtaining capital is a relatively smooth process for businesses. However, the lack of a private credit bureau can make the process a little trickier for overseas firms.

Protecting Investors

Investor protection is an area in which Vietnam needs to improve. It is ranked in 169th place by the World Bank and IFC, with a weak director liability index and shareholder suits index.

Paying Taxes

There are massive 32 corporate tax payments to be made each year which takes an average of 872 company hours to complete. Compared to the OECD norm of 176 and the East Asia and Pacific average of 209, taxation is one of the most burdensome processes of doing business in Vietnam.

Trading Across Borders

Given its strong manufacturing base and reliance on interconnectivity, trading across borders is a cheap endeavour. However, that isn’t to say the process is not complicated, and the stream of documentation required for both importing and exporting highlights that cross-border trade can be difficult at the best of times.

Enforcing Contracts and Resolving Insolvency

Enforcing contracts takes 400 days to complete and 34 procedures. Resolving insolvency is a far more laborious process, taking five years on average to complete and with a low recovery rate.

Culture

The Vietnamese believe in the teachings of the early Chinese philosopher Confucius which emphasize the importance of relationships, responsibility and obligation. Vietnam is also a collectivist country and community concerns will almost always come before business or individual needs.

ANT Lawyers

We have the local knowledge to help you navigate these minefields. Whether you want to set up in Vietnam or just want to streamline your Vietnamese operations, we could assist.

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WHAT HAS CHANGED IN VIETNAM INVESTMENT LAW

The new Investment Law 2014 announced by Vietnam Government on December 26th, 2014 has come into effect on July 1st, 2015. The new law introduces changes which include more opening policies for foreign investors to establish and set-up businesses in Vietnam.

What makes foreign investors hesitate to invest and set-up business in Vietnam? The administrative problems and lack of transparency; the inconsistencies in implementing the principle of freedom to do business.

Theoretically, the new Investment Law 2014 will resolve the above mentioned issues by offering a faster amendment mechanism on registering changes or issuing the new Business Registration Certificate or Investment Certificate. Generally, the process and procedures are expected to become more straightforward and convenient for foreign owned companies compared with 2005 Investment Law and the 2005 Enterprise Law by reducing the volume of paper and the administrative works.

In conclusion, the 2014 Investment Law will help clear up some of the confusions that accompanied the 2005 Investment Law and the 2005 Enterprise Law and their application, as well as ease and simplify the foreign investment process which, it is hoped, will promote business activities and investment into Vietnam. The investment of foreign investor into a Vietnamese company in certain situations would be treated in the same manner as a domestic investor that provides an opportunity to offer clients creative structuring solutions to facilitate investment in Vietnam.

ANT Lawyers is a Vietnam law firm with international standards, recognized byIFLR1000 on Financial and Corporate practice.  We are an exclusive Vietnam member of Prae Legal, the global law firm network covering more than 150 jurisdictions.  The firm provides a range of legal services as following to multinational and domestic clients.

Commercial

Dispute Resolution

Debt Recovery

Employment

Foreign Investment

Intellectual Property

International Trade and Taxes

Infrastructure and Project

Civil Matter

This publication is designed to provide updated information of legal matters, and does not constitute professional advice.

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