Setting up a business in Vietnam Foreign direct investment (FDI) requires investors to follow a strict legal process and meet regulatory requirements. This article details Procedures and requirements for establishing a company in Vietnam For foreign investors, applicable to all types: 100% foreign-owned companies, joint ventures, branches, representative offices. 

Additionally, this article provides additional associated costs, legal requirements, business culture, as well as opportunities and challenges. Thereby, to support investors in making the right decisions and taking advantage of consulting services to optimize the investment process.

1. Procedures for establishing FDI enterprises in Vietnam

The process of establishing FDI enterprises in Vietnam is regulated by Investment Law 2020 , and Enterprise Law 2020, including the following specific steps:

1.1. Apply for Investment Registration Certificate (IRC)

All FDI projects must apply for Investment Registration Certificate (IRC), is a legal document confirming the right to invest in Vietnam. IRC application includes:

• Application for investment project implementation.
• Investment project proposal, including site lease agreement.
• Financial statements of the last two years of the investor.
• Legal documents of the investor (notarized copy of business license, passport, etc.).
• Other documents proving investment capacity and conditions.

Applications are submitted at Department of Planning and investment or the Management Board of industrial parks, export processing zones, high-tech zones, depending on the project location. Processing time is usually 15 working days, but may be longer for projects not covered by World Trade Organization (WTO) commitments.

1.2. Apply for Enterprise Registration Certificate (ERC)

After receiving the IRC, the investor proceeds to apply for Enterprise Registration Certificate (ERC), also known as a Business License, to officially establish a business. The documents include:

• Business registration application.
• Company charter.
• List of members or shareholders.
• Power of attorney and appointment of legal representative.
• IRC clone.

Applications are submitted at Department of Planning and investment, and the processing time is approx. 3 working days. ERC also serves as the tax identification number of the enterprise.

1.3. Post-licensing procedures

After receiving ERC, the enterprise needs to complete the following procedures to start operating:

• Seal engraving: Enterprises must engrave the company seal and notify the seal sample to the business registration authority.
• Open a bank account: Open a direct investment capital account to carry out capital transfer transactions.
• Labor registration: Register to use labor with the local labor management agency.
• Pay business tax: Annual payment of business tax.
• Announcement of establishment information: Publish business registration contents on the National Business Registration Information Portal.

These procedures are usually completed within 1-2 weeks after receiving ERC, depending on the complexity of the project.

*Register investment policy (if required)

For large-scale FDI projects or those in specific sectors such as housing, airports, oil and gas, or casinos, investors must register their investment policies with the Provincial People's Committee or other competent authorities, such as the Prime Minister or the National Assembly. The dossier to be prepared includes information about the project, the investor's financial capacity, and relevant legal documents. This step is to ensure that the project is consistent with Vietnam's socio-economic development strategy.

2. Cost of establishing FDI enterprise

The cost of establishing an FDI enterprise in Vietnam includes government fees and other mandatory costs, as prescribed by Circular 47 / 2019 / TT-BTC and related legal documents. Below is a detailed table of expenses:

⚠️ Note about IRC fees: The cost of obtaining an Investment Registration Certificate (IRC) is not fixed and may vary depending on the type of project and the locality. For example, manufacturing projects usually cost more than import-export projects. Investors should consult the Department of Planning and Investment or consulting firms for accurate information.

Additionally, if consulting services are used, the overall cost can range from $3.500 or more, including service fees, translation fees and other administrative costs.

3. Legal requirements and business culture

3.1. Legal requirements

FDI enterprises must comply with the regulations of Investment Law 2020 , and Enterprise Law 2020, as well as regulations related to the business sector. Some of the key legal requirements include:

• Business: Do not invest in prohibited industries such as drug trafficking, toxic chemicals, or endangered species of flora and fauna (UNCTAD Investment Policy Hub).
• Authorized capital: There is no minimum capital requirement for most industries, but capital must be sufficient to carry out the project. Some industries such as finance, banking, or education have specific capital requirements.
• Registered address: The business must have a legal address in Vietnam, as evidenced by a lease contract or prior lease agreement.

Legal representative: There must be at least one legal representative residing in Vietnam, who can be a foreigner with a work permit.

3.2. Business culture

Understanding and respecting Vietnamese business culture is an important factor in building relationships and achieving success. Some cultural characteristics to note:

• Building relationships: Vietnamese people value long-term relationships. Investors should take time to get to know their partners and avoid rushing into negotiations.
• The concept of "face": Avoid embarrassing your partner by not criticizing him publicly; issues should be resolved privately.
• Meeting schedule: Schedule meetings in advance with printed invitations, avoid direct phone calls. Use local interpreters and prepare bilingual materials.
• Business attire: In Hanoi, dress is usually professional (suits for men, dresses and shirts for women); in Ho Chi Minh City, style can be more relaxed (business casual).

Gift giving culture: Give small gifts such as pens, stationery with company logo after the meeting. On big holidays such as Lunar New Year, give high-end gifts such as wine or imported fruit.

4. Opportunities and challenges when investing in Vietnam

4.1. Opportunity

Vietnam offers many attractive opportunities for foreign investors:

• Critical position: Located in the heart of Southeast Asia, Vietnam is the gateway to major markets such as China, Japan and ASEAN.
• Young workforceWith a population of over 100 million people and an average age of around 32, Vietnam has an abundant and dynamic labor force.
• Growing consumer market:The growing middle class creates a huge demand for goods and services.
• Incentives: The Vietnamese government provides tax incentives and exemptions for strategic industries such as high technology, renewable energy and infrastructure.

“Vietnam attracts investors with its large workforce, growing market and growing middle class, making it an important destination as global supply chains diversify,” said Jimmy Koh, head of network partnerships and strategic marketing at UOB.VIR).

4.2. Challenges

Despite the many opportunities, investors also face some challenges:

• Complicated administrative procedures: The licensing and compliance process can be time consuming and require professional assistance.
• Language and cultural barriers: Differences in language and working styles can make communication and negotiation difficult.
• Compete: Investors have to compete with local companies and other foreign investors, especially in fast-growing industries such as manufacturing and technology.
• Regulatory environment: According to a report by the US State Department, US investors often face difficulties with inconsistent regulatory interpretation and an incomplete legal system (US Department of State).

Vietnam ranked 70th in the index Ease of Doing Business World Bank's 2019 Business Environment Report shows that the business environment has improved but there are still areas that need to be addressed..

5. Conclusion

Establishing an FDI enterprise in Vietnam is a great opportunity but also comes with challenges that require careful preparation. By understanding the process, costs, legal requirements and business culture, investors can optimize their chances of success. Using professional consulting services not only helps simplify the process but also ensures that the business operates efficiently and complies with the law. With its strategic location, young workforce and growing consumer market, Vietnam continues to be an ideal destination for foreign investors looking to expand their operations in the Southeast Asian region.

The role of consulting services

To overcome the challenges and ensure compliance with legal requirements, investors should use consulting services from experienced law firms or consulting companies in Vietnam. These services provide:

• Legal support: Prepare and submit IRC and ERC applications, ensuring compliance with the provisions of the Investment Law and Enterprise Law.
• Cultural Consulting: Guide investors on business style and how to build relationships with local partners.
• Risk management: Identify and prevent legal, financial and operational risks.
• Save time and money: Optimize processes, minimize errors and unnecessary costs.