VIETNAM


Vietnam Bui Ngoc Hong, Do Huy and Nguyen Xuan Thuy, LNT & Partners


1. Overview of FDI in Vietnam


1.1 Which countries are the principal sources of FDI into your jurisdiction? The majority of FDI into Vietnam comes from Asian countries. The top three countries are Japan followed by Singapore then South Korea. There has been a 65.5% year on year increase, with the total amount of investment capital reaching $19,234 million for the first ten months of 2013.


The top 10 sources of FDI flowing into Vietnam, according to the Ministry of Finance of Vietnam, are listed below.


Number


1 2 3 4 5 6 7 8 9


10 Country


Japan Singapore South Korea Taiwan British Virgin Islands Hong Kong The USA Malaysia China Thailand


Investment capital (million $) 33,665.12 28,875.31 28,711.09 27,784.79 15,411.87 12,550.63 10,602.85 10,320.00 6,942.31 6,445.38


1.2 What are the key sectors in your jurisdiction which attract, or the government is seeking to attract, FDI? Manufacturing and processing captured nearly 60% of the total FDI attracted. Other notable sectors along with their corresponding FDI amounts, based on statistics from the Ministry of Finance of Vietnam, are identified below.


Number


1 2 3 4 5


6 7 8 9


10 Sector


Manufacture and processing Real-estate business Hotel and restaurant Construction Manufacture, distribution of electricity, gas, water, air conditioner Information and communication Art and entertainment Warehouse and transportation Agriculture, forestry and fishery Wholesale, retail and maintenance services


Investment capital (million $) 120,964.54 48,432.91 10,722.25 9,809.91 9,530.18


3,988.16 3,664.48 3,531.26 3,336.08 3,296.59


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1.3 Is the government generally supportive of FDI? Which government, and regional, bodies are responsible for driving FDI in your jurisdiction? The Vietnamese government is highly supportive of FDI. Indeed, a significant part of Vietnam’s economy is driven by FDI, which accounts for roughly 23% of the total investment capital of the economy.


Vietnam’s economy is centrally controlled, with the Ministry of Planning and Investment having overall management authority on FDI. However, local governments have been given more autonomy to compete for FDI, organising investment tours with the private sector to spur more interest in specific industries.


2. Investment vehicle


2.1 What are the most common legal entities and pass-through vehicles used for FDI in your jurisdiction, and how long do they take to become operational? Since Vietnam’s accession to the World Trade Organization (WTO) in 2007, wholly foreign-owned entities account for the most common legal structure for FDI, followed by joint ventures and then investments via arrangements in the form of build-operate-transfer contracts (BOTs), build-transfer contracts (BTs), build-transfer-operate contracts (BTOs), or business cooperation contracts (BCCs). This is according to a report of the Ministry of Finance of Vietnam.


Upon successful screening of an application file, an investment certificate (IC) is issued.


The time it takes to obtain an IC depends on the sector of investment. On average, it takes about three months to obtain an IC in the service sector, and about four months for the manufacture sector.


2.2 What are the key requirements for establishment and operation of these vehicles which are relevant to FDI? Foreign investors must generally satisfy the following requirements to invest in Vietnam: (i) financial capacity; (ii) experience in the industry engaged; and (iii) other conditions specific to a particular industry, such as environmental protection or qualified key personnel to run the foreign invested company.


Vietnamese law does not require a foreign invested company to have a local Vietnamese director. A foreigner may assume the role of director; but when the director is conccurently the legal representative of the company, the foreigner director must have permanent residence in Vietnam.


3. Investment approval


3.1 For foreign investment approval (including national security review) explain the following: a) The regulator/s’ name, factors it must consider when making its decisions, and how much discretion it has; The Prime Minister has the ultimate power to approve many large scale FDI projects. This power is shared with the Ministry of Planning and Investment, which has overall responsibility to approve and manage FDI. Other ministries are vested with either the right to approve, or to comment on certain aspects of, an FDI project, depending on the specific industry.


WWW.IFLR.COM IFLR REPORT | FOREIGN DIRECT INVESTMENT 2014 61


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