Establishing a company with Korean capital in Vietnam

1. The trend of Korean investment capital in Vietnam

For many years, Korea has always been an important economic partner of Vietnam, with impressive numbers. Specifically, Korea has always been the leader in foreign direct investment in Vietnam, with the participation of most large corporations.

Accumulated by the end of the first quarter of 2021, Korea held the number one position among countries investing in Vietnam with a total of more than 9,000 valid projects and a total registered capital of over 71, 5 billion USD, accounting for 18.1% of total foreign investment capital (FDI) in Vietnam.

Statistics of the Foreign Investment Agency show that the frequency of Korean investors interested in the Vietnamese market is increasing, especially in the fields of processing industry, manufacturing, real estate and recently the field of high technology and green development. Korean enterprises also want to participate in large-scale infrastructure projects of Ho Chi Minh City as smart urban development planning.

Regarding trade, in 2020, Korea is Vietnam's third largest trading partner with two-way trade turnover reaching 66 billion USD. Particularly for Ho Chi Minh City, Korea is the 5th largest export market, export turnover is approximately 1.8 billion USD in 2020.

With the trend, the demand for establishing Korean-invested companies in Vietnam has also continuously increased in recent years.

2. Procedures for establishing a company with Korean capital in Vietnam

The procedure for establishing a company with Korean capital in Vietnam is similar to that of other foreign-invested companies, basically including 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 projects.

Step 2. Apply for Investment Certificate

Korean 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).

The investor submits the application at the Investment Registration Certificate Authority, which is the Department of Planning and Investment where the company will be located.

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

Step 3. Establish an enterprise

Korean 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 Business 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 Enterprise Registration Portal but can use it immediately.

Step 5. Open a direct investment account

According to the provisions of the Enterprise Law, Korean investors need to contribute capital within 90 days from the date of issuance of the Enterprise Registration Certificate. Therefore, right after establishing a company, Korean investors need to open an account to transfer direct investment capital.

Step 6. Complete the following procedures for enterprise establishment

After establishing the company, Korean investors carry out the procedures of registering to buy digits, pay license tax, declare license tax, issue invoices, declare 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.