Doing Business in Vietnam
ComplianceMay 11, 2020

Doing business in Vietnam

Following decades of minor economic growth, today Vietnam is one of the world’s fastest developing nations and the third-largest market in southeast Asia.

Since its independence from France after World War II and unification of the north and south in 1975, Vietnam has moved away from a purely agrarian economy, and its government is committed to global economic integration. Factors in Vietnam’s growth include its young population, stable political system, relatively low inflation, strong manufacturing sector, and increasing FDI inflows.

To succeed in doing business in Vietnam, U.S. companies must understand the country’s laws, rules, and regulations. In this article, we review what makes Vietnam an attractive option for business, some risks and considerations, and common FAQs.


Prepare for expansion in this region with all the key information about tax rates, incorporation details, entity types, business environment, and more. Download this country guide for a practical breakdown.



Advantages of doing business in Vietnam

Growing economy

The enactment of the “doi moi” or “renovation” policy in 1986 kickstarted an era of modernization and competitiveness in Vietnam. The policy enabled Vietnam to transition from an agrarian to a more industrial market-based economy. This growth continues even despite the impacts of the current Covid-19 pandemic with Vietnam’s economy unexpectedly expanding in the second quarter of 2020.

Developing infrastructure

Driven by the demands of its own people and growing trade, Vietnam is experiencing a significant construction boom aimed at building up its infrastructure. An important factor in the country’s competitiveness, the construction sector receives major support from the Vietnamese government.

Manufacturing

Vietnam has made considerable investments in manufacturing, notably in electronics. The sector is one of the largest contributors to the country’s GDP (16.5% in 2019). In this highly competitive sector, Vietnam is matching established players in the region.

Ease of doing business

To attract foreign investment and encourage entrepreneurial development, the government has made significant changes to the country’s regulatory business environment. These improvements have made it much easier for businesses to operate in Vietnam. Today, The World Bank scores Vietnam as one of the most improved countries in the following areas:

  • Lowering the cost of starting a business
  • Expanding the accessibility of information and notifications online
  • Lowering employers’ contribution to the labor fund tax
  • Removing requirements to submit hard copies of VAT returns which can now be done electronically

Risks and considerations

Despite the growing advantages of doing business in Vietnam, starting and running operations can present some challenges which U.S. investors and businesses should be aware of.

Foreign ownership regulations

Vietnam’s government has strict rules on what types of businesses can be 100% foreign-owned. Those businesses with activities that do not fall under the approved types for foreign ownership will require a Vietnamese joint venture partnership. Furthermore, in the case there are no World Trade Organization (WTO) agreements or local laws regulating foreign ownership for a specific or unique line of business, ministry-level approval will be required to start that business in Vietnam.

Lengthy registration process

Registering a company in Vietnam involves many steps. The process can take anywhere between one to four months, depending on the type of business being conducted. The first step is to apply for an Investment Registration certificate which can take up to a month to receive. Next, the business will require a Business Registration certificate which adds another week to the process. Finally, the business may be required to apply for additional licenses based on the type of operation being started.

Remains a developing country

Despite the many incentives and positive outlook for foreign businesses, Vietnam is still a developing country with restrictions on infrastructure and telecommunications networks compared to neighboring countries like Thailand.
Vietnam, however, is a very promising nation and its government is making the right strategic moves to ensure the country’s competitiveness.


Prepare for expansion in this region with all the key information about tax rates, incorporation details, entity types, business environment, and more. Download this country guide for a practical breakdown.



Frequently asked questions for doing business in Vietnam

Why should I consider doing business in Vietnam?

Some of the key elements that make Vietnam an attractive location for business development include the low cost to start a business, regulations that encourage foreign investment and it’s government’s openness to the global economy, its strategic location with direct access to some of the world’s main shipping routes, stable GDP growth, and competitive labor costs.

What challenges should I consider when expanding to Vietnam?

Important to consider the foreign ownership rules depending on the type of business you are looking to conduct in the country, the timing of getting operations up and running, and the infrastructure and transportation limitations.

What is the corporate tax rate?

The corporate tax rate is 20%

What are the business entity types available?

The most common business entity types in Vietnam are:

  • Single-Limited Liability Company (1M-LLC)
  • Multi-Member Liability Company (2M-LLC)
  • Joint Stock Company (JSC)

How long does it take to incorporate in Vietnam?

If your company does not have any special conditions due to the type of operation it conducts, the registration process will take approximately one month. If your company needs additional licenses, such as for trading or tourism activities, the timeline of the process can stretch to three or four months.

Conclusion

If you are considering entering the Vietnamese market, it is critical to have an experienced global partner with the local know-how. With a worldwide network of in-country experts, CT will make sure your local needs are met, accurately, and on time.

CT can help you get set up, through a single point of contact and provide you with customized solutions for all your entity compliance needs. We’ll help to ensure you have the right support tailored to your global goals. CT has helped businesses and law firms expertly manage compliance issues for 125 years. To learn more about how we can help you better manage your global compliance needs, contact a CT representative at (855) 444-5358 (toll-free U.S.).