Vietnam has become one of the most attractive investment destinations is Asia. Reasons for this are its politico-economic stability, stable foreign exchange, inflation and interest rates, modern infrastructure as well as its growing GDP, which has averaged at approximately 6.6% over the past two decades (source PCW 2019). In 2007 Vietnam joined the World Trade Organisation (WTO), which supported a dramatic rise in Foreign Direct Investment (FDI). The Vietnam Government shows commitment to expanding market access and opportunities in trade and investment to foreign investors. The country continues to be increasingly integrated into the global economy through bilateral and collaborative Free Trade Agreements (FTA’s). In June 2019 the European Union signed an FTA with Vietnam, the first of its kind with a developing country in Asia. Vietnam is determined to continue to develop itself as a popular South East Asian investment destination with an excellent potential for return on investment. With no indication of GDP growth slowing down Vietnam is on track to be the20th largest economy in the world by 2050.
Manufacturing and processing are currently favourite sectors for foreign investors as well as power production/distribution and real estate. But other sectors are on the rise as the Ministry of Planning and Investment (MPI) has developed a draft strategy with support from the World Bank on attracting FDI in 2018-2023. This new draft strategy targets quality rather than quantity, with a focus on high-tech, environmentally friendly, low-energy consuming and renewable energy projects, in addition to enhancing connectivity between FDI businesses and domestic companies.
Overall the major growth factors that drive opportunities for foreign investors in Vietnam are the young and ambitious workforce, the competitive economy with an increasingly educated and skilled labour force and the stable government that is committed to growth. GDP growth has been increasing at an average of 6.6% every year for the past decade. This momentum is expected to continue supported by competitive labour costs, a diversified trade structure and the recently signed FTA’s.
Vietnam is incredibly open and optimistic about foreign investment and the opportunities brought by increasing integration in international markets. Although licensing procedures to set up a business have become less cumbersome during recent years, the country was still only ranked nr 69 globally in the World Bank’s 2019 ‘Ease of doing business index ‘. This means it remains essential to seek local help when expanding into the country.
In this process Clockwork can be of fundamental value to you. We have a comprehensive understanding of the international business environment in Vietnam and its constantly changing regulatory and compliance requirements. This means we can support foreign investors in selecting the right company formation and efficiently manage its registration process.
Vietnamese corporate formations available to foreign investors:
- Limited Liability Company (LLC)
A limited-liabilty company formed by foreign investors in Vietnam may be under the forms of:
- A 100% foreign-owned business
- A foreign-invested joint-venture company between foreign investors and at least one domestic one
- Joint-stock Company (JSC)
A joint –stock company is formed by shareholders (at least three) and may either be:
- 100% foreign owned
- A joint venture between both foreign investors and domestic ones
This rare form of foreign investment in Vietnam may be established between two individual general partners. The general partner has unlimited liability for the operations of the partnership.
Foreign Investors may do business in Vietnam by:
- Opening a branch
- Opening a representative office
- Forming a Business Cooperation Contract (BCC)
- Public and Private Partnership Contract (PPP)
- Investing in the establishment of economic organizations – 100% foreign-owned business
- Investing in the form of capital contribution to or purchase of shares in economic organizations
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