Forms of Foreign Investment in Vietnam

  From 01/01/2021, the Law on Investment 2020 in Vietnam came into force. According to the Vietnam Law on Investment 2020, there are five types of foreign investment in Vietnam.

Investment in the establishment the economic organizations:

This type comprises two methods: Establishment of a company with 100% capital from foreign investors or establishment of a company between the domestic investors or the domestic government and foreign investors. Before establishing the economic organizations, the investors must have the investment project, perform the procedures for issuance of the Investment Registration Certificate, satisfy the conditions on the percentage of charter capital ownership according to the Law on Securities, on equitization and transformation of state-owned enterprises, and the other conditions according to the international treaties that Vietnam signed (if any).

Investment in the capital contribution, purchase shares, purchase contributed capital:

Capital contribution, purchase shares, purchase contributed capital are the types of indirect investment for foreign investors through the purchase of stocks, bonds, and other valuable documents. Investors must conform to the legal provisions on capital contribution, purchase share, and purchase contributed capital.

Implementation investment project:

Foreign investors can sign the PPP contract. This is an investment method based on limited-term cooperation between the State and private investors through the signing of PPP contracts to attract private investors to participate in the implementation of investment PPP projects.

Investment under the BCC contract:

BCC contract is signed between the domestic investors according to the Civil Law. BCC contract with at least one party being a domestic investor that performs the procedures for granting the Investment Registration Certificate.

New forms of investment and economic organizations according to the Government’s rules.

We could assist the client to set up company in Ha Noi, Ho Chi Minh City, Da Nang or in other provinces in Vietnam.

The processing and manufacturing industry leads in attracting foreign investment in Vietnam

  In the first 05 months of 2021, the processing and manufacturing industry continues to be the leading industry in attracting foreign investment, with a total investment capital of 6.14 billion USD.

According to the General Statistics Office, in the first 05 months of 2021, the foreign investors have invested in 18 industries and fields, of which the processing and manufacturing industry leads the way with a total investment of 6.14 billion USD, accounting for 43.9% of total registered investment capital.

The field of electricity production and distribution ranked second with a total investment of 5.43 billion USD, accounting for 38.8% of the total registered investment capital. Followed by real estate, wholesale and retail business with a total registered capital of 1.05 billion USD and nearly 522 million USD.

According to statistics, until the end of May 2021, the total newly registered capital, adjusted and contributed capital, bought shares, purchased capital contribution of foreign investors reached nearly 14 billion USD, up by 0. 8% over the same period in 2020, realized capital of foreign direct investment projects were estimated at 7.15 billion USD, up 6.7% over the same period in 2020.

In the first 5 months of 2021, there were 613 new projects granted investment registration certificates, the total registered capital reached nearly 8.83 billion USD (up 18.6% over the same period), 342 projects registered to adjust investment capital, the total registered capital increased to 3.86 billion USD, and 1,422 times of capital contribution to buy shares from foreign investors, total value of capital contribution reached 1.31 billion USD.

According to investment partners, there are 70 countries and territories have invested in Vietnam, of which Singapore leads with a total investment capital of 5.26 billion USD, Japan ranks second with a total investment capital of 2.59 billion USD, Korea ranked third with a total registered investment capital of 1.83 billion USD, followed by China, Hong Kong, Taiwan…

In 2021, although still affected by the Covid-19 epidemic, with many policies to restore the economy and support foreign investors, Vietnam has made many outstanding achievements in attracting FDI. With this achievement, Vietnam hopes that many international investors choose Vietnam as an investment destination for setting up company not only in the field of processing and manufacturing but also in many other investment fields so that they can contribute to promoting the country’s economy and investors in the future.

Forms of Foreign Investment in Vietnam

 From 01/01/2021, the Law on Investment 2020 in Vietnam came into force. According to the Vietnam Law on Investment 2020, there are five types of foreign investment in Vietnam.

Investment in the establishment the economic organizations:

This type comprises two methods: Establishment of a company with 100% capital from foreign investors or establishment of a company between the domestic investors or the domestic government and foreign investors. Before establishing the economic organizations, the investors must have the investment project, perform the procedures for issuance of the Investment Registration Certificate, satisfy the conditions on the percentage of charter capital ownership according to the Law on Securities, on equitization and transformation of state-owned enterprises, and the other conditions according to the international treaties that Vietnam signed (if any).

Investment in the capital contribution, purchase shares, purchase contributed capital:

Capital contribution, purchase shares, purchase contributed capital are the types of indirect investment for foreign investors through the purchase of stocks, bonds, and other valuable documents. Investors must conform to the legal provisions on capital contribution, purchase share, and purchase contributed capital.

Implementation investment project:

Foreign investors can sign the PPP contract. This is an investment method based on limited-term cooperation between the State and private investors through the signing of PPP contracts to attract private investors to participate in the implementation of investment PPP projects.

Investment under the BCC contract:

BCC contract is signed between the domestic investors according to the Civil Law. BCC contract with at least one party being a domestic investor that performs the procedures for granting the Investment Registration Certificate.

New forms of investment and economic organizations according to the Government’s rules.

We could assist the client to set up company in Ha Noi, Ho Chi Minh City, Da Nang or in other provinces in Vietnam.

What is Bank Guarantee Letter?

According to Vietnam Law on Credit Institution, and Circular 07/2015/TT-NHNN on bank guarantee, bank guarantee refers to a type of credit whereby the guarantor undertakes to act on behalf of the obligor to fulfill their financial obligations to the obligee in the event the obligor fails to fulfill or insufficiently fulfill their agreed-upon obligations to the obligee; the obligor must take on their debt obligations and repay the guarantor.

Guarantee commitment is the written document issued by the guarantor or the counter-guarantee issuing party or the guarantee-confirmation issuing party.

Letter of guarantee refers to the written commitment between the guarantor and the obligee to the guarantor’s fulfilling the financial obligation on behalf of the obligor in the event the obligor fails to fulfill or insufficiently fulfill agreed-upon obligations to the obligee.

To avoid confusion of bank, it is common to issue non conditional and irrevocable bank guarantee. Having said that, the bank will release payment upon the first request from the obligee without the obligations to verify any contract non-performance.