Foreign Direct Investment (FDI) businesses are common terms used in the finance and business sectors in Vietnam and internationally. However, not everyone fully understands this term and the necessary procedures for establishing FDI businesses in Vietnam.
FDI businesses play a crucial role in the operation of Vietnam’s economy. With international investment capital, FDI enterprises with headquarters or operations in Vietnam can engage in production and export activities based on international orders, thereby generating income to pay wages to workers.
Vietnamese workers, with income, are able to participate in the market for goods, cover daily living costs, and purchase essential products manufactured by their enterprise or other necessary products from other Vietnamese enterprises. This creates a continuous cycle, forming a stable goods market and becoming a fundamental pillar for Vietnam’s economy.
Definition of FDI Enterprises in Vietnam
FDI stands for “Foreign Direct Investment,” which is a commonly used term when discussing international economic activities. Essentially, FDI enterprises are defined as economic organizations that receive investment capital from foreign countries.
Types of Foreign Investment (FDI)
- Horizontal FDI: Investors focus on investing capital in a foreign company operating in the same industry or business sector as the FDI investor owns or manages.
- Vertical FDI: Vertical FDI involves investing in a supply chain, which may include various different industries or sectors.
- Concentrated FDI: Concentrated FDI involves investing in multiple different companies from the same parent company, spanning entirely different industries.
Conditions for Establishing FDI Enterprises
To set up a foreign-invested enterprise in Vietnam, the following conditions must be met:
- Establishment or ownership of a portion of capital by foreign investors.
- Engaging in business sectors that are not prohibited. The business sectors must not fall under the prohibited categories listed in Article 6 of the Investment Law 2020, including:
- Prohibited goods such as drugs listed in Appendix I of this Law.
- Chemicals listed in Appendix II of this Law.
- Specimens of endangered wild species of plants, wild animals from natural sources regulated in Appendix I of the International Convention on Trade in Endangered Species of Wild Fauna and Flora; specimens of forest plants, forest animals, endangered, rare aquatic products, Group I, regulated in Appendix III of this Law.
- Prostitution business.
- Buying, selling humans, body parts, corpses, fetal remains.
- Business activities related to human artificial reproduction.
- Fireworks business.
- Debt collection services.
Process and Procedures for Establishing FDI Enterprises in Vietnam
Step 1: Applying for Investment Certificate
- Establish a Vietnamese company.
- Apply for a conditional investment license for specific sectors.
- Transfer contributed capital to foreign investors.
- Obtain business licenses for retail activities or other required licenses for manufacturing facilities.
Step 2: Registering Business Establishment
After receiving the Investment Certificate, the enterprise needs to register its business establishment with the Business Registration Office of the Department of Planning and Investment.
Step 3: Publicizing Business Registration Information
Within 30 days from the date of issuance of the Investment Certificate, the enterprise must publicize its business registration information on the National Portal for Business Registration.
Step 4: Applying for Business Registration Certificate for Retail Activities
Submit necessary documents for obtaining the business registration certificate for retail activities. These documents include a proposal for a business license, an explanation of the conditions, financial capability confirmation, bank confirmation, a copy of the Investment Certificate, business registration certificate, land use rights certificate, authorization for the law firm to submit the dossier.
The process takes approximately 25-30 working days to complete.