Which form of investment can foreign investors choose in Vietnam?
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Currently, Vietnam is becoming one of the countries attracting foreign investment. The amount of investor investing in Vietnam is increasing day by day. So what form of investment can foreign investors choose in Vietnam?
The legal basis for regulating the form of foreign investment in Vietnam is the following legal documents:
- Investment Law 2020
- Vietnam’s commitment to WTO
- Bilateral and multilateral free trade agreements in which Vietnam participates (FTAs);
- ASEAN Framework Agreement on Services (AFAS)
- Comprehensive Investment Agreement in ASEAN (ACIA),
- Agreement between Vietnam and Japan on investment freedom, promotion, and protection;
- Agreement establishing the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA).
Investment forms that foreign investors can choose:
- Investment in the establishment of economic organizations.
- Capital contribution investment, share purchase, purchase of contributed capital.
- Implementation of investment projects.
- Investment in the form of BCC.
- New investment forms and economic organizations according to the Government’s regulations.
When establishing a new economic organization, making a capital contribution, buying shares, or purchasing capital contributions from other economic organizations, investment in the form of BCC must meet the conditions and carry out investment procedures as prescribed for foreign investors in Vietnam.
The establishment of an economic organization by foreign investors in Vietnam is the establishment of enterprises, cooperatives, unions of cooperatives, and other organizations to conduct business investment activities. Unlike domestic investors, when establishing economic organizations, foreign investors must meet the following two conditions:
- Meeting market access conditions for foreign investors. Accordingly, foreign investors are not allowed to establish enterprises, cooperatives, unions of cooperatives, and other organizations to conduct investment and business activities in the following two groups of industries: Sectors and professions that have not been able to access the market yet; Sectors and professions with conditional market access.
- Before establishing an economic organization, the foreign investor must have an investment project and carry out the procedures for granting and adjusting the Registration Certificate, except for the case of setting up an innovative start-up small and medium-sized enterprise and innovative start-up investment fund in accordance with the law on supporting small and medium enterprises.
Foreign investors in Vietnam have the right to invest in the form of capital contribution, share purchase, or purchase of contributed capital, in order to implement this form, foreign investors need to meet the following conditions:
- Meeting market access conditions,
- Ensuring national defense and security according to the provisions of the Investment Law 2020,
- Land satisfaction in terms of conditions for receiving land use rights, and conditions for land use in islands, communes, wards, border towns, communes, wards, and coastal townships.
- Investment capital contribution: Foreign investors contribute capital to economic organizations in the form of buying shares issued for the first time or additionally issued shares of a joint-stock company; Contribute capital to limited liability companies, and partnerships; Contribute capital to other economic organizations.
- Purchase of shares, purchase of contributed capital: Purchase of shares of a joint-stock company from the company or shareholder; Buy the capital contribution of a member of a limited liability company to become a member of a limited liability company; Purchase of capital contributions of capital-contributing members in a partnership to become a capital-contributing member of a partnership; Purchase of capital contributions of members of other economic organizations.
BCC (business cooperation contract) is a form signed between a domestic investor and a foreign investor, a foreign investor and a foreign investor in Vietnam established on the basis of a contract signed between the parties and not established a new legal entity.
- To make investments in the form of BCC, foreign investors must carry out procedures for registration for the issuance of investment certificates.
Contract form and content:
- BCC must be made in writing, the content of BCC are business cooperation agreements including agreements to contribute business capital, share profits, and bear risks.
- The parties to the BCC contract establish themselves a Coordination Committee to perform the contract. The functions, tasks, and powers of the Coordination Committee shall be mutually agreed upon by the parties.
Vietnamese law has strict regulations on investment activities in general and foreign investment activities in Vietnam in particular. Without understanding the law in Vietnam, foreign investors easily violate the law and suffer unfortunate consequences. In order to prevent legal risks, receive adequate advice, save time and money, foreign investors should choose reputable and experienced partners.
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