1. Concept

Investment means an investor’s use of capital and assets in the forms and ways prescribed by law to carry out activities for the purpose of profit or other economic or social benefits.

Industries prohibited from investment: trading in narcotics, chemicals, minerals, plant specimens, wild animals, prostitution, human trafficking, human cloning.

Current forms of investment: investment in the establishment of economic organizations, Investment in the form of capital contribution, purchase of shares, capital contribution to economic organizations, Investment in the form of PPP contracts, Investment in the form of BCC contracts.

Foreign investor means an individual with foreign nationality, an organization established under foreign law that conducts business investment activities in Vietnam

2. Conditions for foreign investors

a)Investment conditions for foreign investors

• The percentage of ownership of charter capital of foreign investors in economic organizations;
• Forms of investment;
• Scope of investment activities;
• Vietnamese partners participating in investment activities
• Other conditions as prescribed under international treaties and Vietnamese law.

b)Investment conditions for foreign investors apply in the following cases

• Invest in the establishment of economic organizations;
• Investment in the form of capital contribution, share purchase, capital contribution in economic organizations;
• Investment in the form of business cooperation contracts;
• Receiving transfer of investment projects or other cases of receiving investment projects;
• Amending and supplementing business investment lines of foreign-invested economic organizations.

c)General conditions on hungry trades with foreign investors

• For industries and sub-sectors that Vietnam has committed to which foreign investors meet the investment conditions of such industries, the Investment Registration Agency shall consider and decide to grant and adjust the Investment Registration Certificate or capital contribution registration, purchase shares and contributed capital of foreign investors in accordance with the Law on Investment;
• For service sectors and sub-sectors that have not been committed or are not specified in Vietnam’s Schedule of commitments in international treaties on investment but Vietnamese law has provisions on investment conditions for foreign investors, the provisions of Vietnamese law shall apply;

3. Procedures for direct investment through the establishment of economic organizations

The order follows the procedures in Article 38 of the Law on Investment 2020

Step 1. Application for an investment registration certificate

For investment projects subject to approval of investment policies specified in Articles 30, 31 and 32 of this Law within the following time limits:

• 05 working days from the date of receipt of the written approval of the investment policy concurrently with the investor’s approval for an investment project subject to the issuance of an Investment Registration Certificate;
• 15 days from the date of receipt of the investor’s request for an Investment Registration Certificate for an investment project other than the case specified at Point a of this Clause.

For investment projects not subject to the competence to approve investment policies of the National Assembly, the Prime Minister of CP and the Provincial People’s Committee as prescribed in Articles 30, 31 and 32 of this Law, investors shall be granted investment registration certificates if they satisfy the following conditions:

• Investment projects not in industries or trades prohibited from business investment;
• Having a location for implementation of investment projects;
• The investment project conforms to the planning specified at Point a, Clause 3, Article 33 of this Law;
• Satisfy the conditions on investment rate per land area, number of employees used (if any);
• Meet market access conditions for foreign investors.
• The components of an application for an investment certificate include: (K1, Article 33 of the Law on Investment 2020 and Official Letter 8909/BKHDT-PC in 2020 on the implementation of the investment law)
• A written request for implementation of an investment project;
• Copy of identity card, identity card or passport for individual investors; a copy of the Certificate of Incorporation or other equivalent document confirming the legal status of an institutional investor;

• Documents proving financial capacity: A copy of one of the following documents: financial statements of the last 02 years of the investor; commitment to financial support of the parent company; commitment to financial support of the financial institution; guarantee on the financial capacity of the investor; documents explaining the financial capacity of the investor;
• An investment project proposal includes the following contents: investor or investor selection form, investment objectives, investment scale, investment capital and capital mobilization plan, location, duration, implementation schedule, information on the current status of land use at the project site and land use demand proposal (if any), demand for labor, proposal for investment incentives, impacts, socio-economic efficiency of the project, preliminary environmental impact assessment (if any) in accordance with the law on environmental protection. Where the law on construction provides for the preparation of a pre-feasibility study report, the investor may submit the pre-feasibility study report instead of the investment project proposal;
• Proposing land use needs; in case the project does not request the State to allocate land, lease land, permit change of land use purpose, submit a copy of the site lease agreement or other document certifying that the investor has the right to use the location for the implementation of the investment project;
• Contents of explanation of technologies used in investment projects, for projects subject to appraisal and collection of opinions on technologies in accordance with the law on technology transfer;

Step 2. Establishment of economic organizations

After being granted the Investment Registration Certificate, the investor shall carry out procedures for establishing an economic organization. The establishment of an economic organization must satisfy the following conditions (Clause 2, Article 38, Law on Investment):

• Investment projects not in industries or trades prohibited from business investment;
• Having a location for implementation of investment projects;
• Investment projects in conformity with national regulations, regional planning, provincial planning, urban planning and planning of special administrative-economic units (if any);
• Satisfy the conditions on investment rate per land area, number of employees used (if any);
• Meet market access conditions for foreign investors.

Above is the content of KALF’s advice on the process of foreign investors’ investment in Vietnam. All of our above advice opinions are based on applicable legal provisions. If you have any questions or requests about legal issues, please contact us for timely answers.

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