Foreign Investment in Vietnam

The Vietnamese Government offers comprehensive investment and tax incentives to attract foreign investment to Vietnam.

Foreign investment is governed by the Law on Foreign Investment in Vietnam (FIL) of 1996 and the amending regulations of July 2000 and March 2003.

Under FIL several forms of investment can be chosen:

• Business Cooperation Contract (BCC): BCC is a partnership signed by two or more Vietnamese and foreign parties with the objective of conducting joint business operations in Vietnam on the basis of sharing profit and loss as well as responsibilities. A BCC doesn’t create or form a legal entity.
  
  
• Joint Venture Company (JVC): A JVC is established pursuant to a joint venture contract signed between two or more parties to carry out business activities in Vietnam. A JVC is a legal entity and has limited liability. The legal capital of a JVC must be at least 30% of its total investment capital. Foreign parties must contribute at least 30% of the JVC legal capital.
  
  
• 100% Foreign Invested Enterprise (FIE): A FIE is wholly owned and managed by foreign investors. The legal capital of a FIE must be at least 30% of total investment capital. A FIE is a legal entity and has limited liability.
  
  
• Build-Operate-Transfer (BOT), Build-Transfer-Operate (BTO), Build-Transfer (BT) Projects: A written contract between foreign investors and authorized agencies forms the legal basis for implementing BOT, BTO and BT projects. The differences between BOT, BTO and BT projects are earmarked by different opportunities in generating the return of investment and profits.
  
  

A new regulation issued in 2003 allows foreign invested enterprises to establish joint stock companies together with other foreign invested enterprises, if all members operate profitable for more than 2 years.

The duration of foreign invested projects in Vietnam is limited to up to 50 years, only in some cases they might be extended to up to 70 years.

Investment projects are classified into Group A, B and C depending on the business field, export ratio of products, number of workforce, location and others.

Investment and tax incentives are granted according to the group in which the project is classified.

The amount of investment capital determines the state agency issuing the investment license, in some exceptions also the scope of business activities.

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Since 2003 foreign investors are allowed to buy shares (of up to 30%) of Vietnamese limited liability or joint stock companies. This kind of investment is not governed by the FIL. Such share contribution has to be registered at the authority, which is in charge for administration of the relevant enterprise.