Establishing a company with Japanese capital in Vietnam

Establishing a company with Japanese capital in Vietnam

1. The trend of Japanese investment in Vietnam

The trend of Japanese investment in Vietnam is constantly increasing in both the number of enterprises and investment capital. Specifically, in 2018, Japan led the countries investing in Vietnam with $8.59 billion, accounting for 24.2% of the total investment capital among 112 countries and territories having investment projects in Vietnam. At the end of 2019, more than 2,000 Japanese enterprises invested in Vietnam and FDI inflows from Japan continued to increase strongly.

Accumulating the situation of FDI by the end of 2019, Japan ranked second with a total registered capital of 59.3 billion USD, accounting for 16.7%. This claimed that Japan had always been an important investment partner of Vietnam after 47 years of establishing diplomatic relations.

JETRO's survey of the current situation of Japanese enterprises investing in Asia and Oceania in February 2020 showed that 63.9% of Japanese enterprises doing business in Vietnam will continue to expand their business. This is the highest rate in ASEAN and third in Asia and Oceania.

According to many experts, the Vietnamese market has great potential in attracting Japanese enterprises to invest in expanding production business. Not only large enterprises and corporations, but now Japanese small and medium enterprises are also promoting investment promotion in Vietnam. Notably, Japanese enterprises are tending to invest in other localities instead of just concentrating on Hanoi and Ho Chi Minh City as before.

Currently, the trend of Japanese investors investing in Vietnam is still increasing, even though business is facing many difficulties due to the impact of the Covid pandemic. Therefore, the need to establish a company with Japanese capital in Vietnam has also increased.

2. Procedures for establishing a company with Japanese investment capital

Procedures for establishing a company with Japanese investment in Vietnam include the following steps:

Step 1. Online declaration of investment project information on the National Foreign Investment Information System

Before carrying out the procedures for issuance of the Investment Registration Certificate, the investor shall declare online information about the investment project on the National Foreign Investment Information System. After the enterprise submits the hard copy application, it will be granted an account to access the National Information System on Foreign Investment to monitor the processing of the application. At the same time, the Investment Registration Authority also uses the National Foreign Investment Information System to receive, process and return investment registration results, update the status of application processing and issue code for investment project.

Step 2. Apply for Investment Certificate

Japanese investors prepare a set of documents including:

• A written request for the implementation of an investment project.

• Documentation of investor's legal status.

• Documents proving the financial capacity of the investor include at least one of the following documents: financial statements of the last 2 years of the investor; commitment to financial support of the parent company; financial institution's commitment to financial support; guarantee on the financial capacity of the investor; other documents proving the financial capacity of the investor.

• Investment project proposal includes the following main contents: investor or investor selection form, investment objective, investment scale, investment capital and capital mobilization plan, location, time period, implementation progress, information on the current status of land use at the project site and proposed land use demand (if any), labor demand, proposal for investment incentives, impact activities, socio-economic efficiency of the project, preliminary assessment of environmental impacts (if any) in accordance with the law on environmental protection. If the construction law stipulates the preparation of a pre-feasibility study report, the investor may submit a pre-feasibility study report instead of the investment project proposal.

• In case the investment project does not request the State to allocate or lease land or permit the change of land use purpose, a copy of the paper on land use rights or other documents determining the right to use the site shall be submitted for implementation of the investment project.

• The explanation of the technology used in the investment project, for the project subject to appraisal and consultation on technology, in accordance with the law on technology transfer.

• BCC contract for investment projects in the form of BCC contract.

• Other documents related to the investment project, requirements on conditions and capacity of the investor as prescribed by law (if any).

Investors submit dossiers at the Investment Registration Certificate Authority, which is the Department of Planning and Investment, where the company's head office will be located.

Estimated implementation time: 15 working days from the date of receipt of complete documents.

Step 3. Establish an enterprise

Japanese investors need to prepare 1 set of documents as follows:

• Enterprise registration application form.

• Regulations.

• List of members (For limited liability companies with two or more members), List of shareholders (For joint stock companies).

• Copies of legal papers of individuals or organizations contributing capital to establish the company.

• Copy of Investment Certificate.

• Copy of legal documents of the legal representative.

After that, the investor submits the application at the Enterprise Registration Office, Department of Planning and Investment. Working time is 03 days from the date of submission of valid application.

Step 4. Engrave legal entity seal

After the establishment of the enterprise, the enterprise shall engrave its seal. According to the provisions of the Enterprise Law 2020, enterprises do not need to notify the seal sample on the National Business Registration Portal but can use it immediately.

Step 5. Open a direct investment account

According to the provisions of the Enterprise Law, Japanese investors need to contribute capital within 90 days from the date of issuance of the Enterprise Registration Certificate. Therefore, right after the establishment of the company, investors need to open an account to transfer capital directly.

Step 6. Complete the following procedures for enterprise establishment

After establishing a company, Japanese investors carry out the procedures for registering to buy digits, paying license tax, declaring license tax, issuing invoices, declaring tax, etc.

3. Legal basis

• Enterprise Law No. 59/2020/QH14 dated June 17, 2020.

• Investment Law No. 61/2020/QH14 dated June 17, 2020.

• Decree 31/2021 guiding the Investment Law 2020.

• Decree 01/2021/ND-CP on business registration.