Opportunities and challenges
Vietnam has established itself as one of Southeast Asia’s most dynamic economic regions in recent years. With strong economic growth, a growing middle class, and increasingly investor-friendly policies, the country offers attractive opportunities for international companies. However, anyone wishing to do business or invest in Vietnam should familiarize themselves with the legal framework, tax aspects, and cultural peculiarities.
Investing in Vietnam: Requirements and Processes
Foreign investors are welcome in Vietnam, but are subject to certain regulations. Companies must generally apply for an Investment Registration Certificate (IRC) and a Company Registration Certificate (ERC). These can now be applied for digitally, making market entry much easier. Specific requirements apply depending on the type of investment—whether it’s company formation, implementation of an investment project, business cooperation agreements, or the acquisition of equity or shares.
Investors must submit, among other things, financial performance reports, detailed business plans and investment plans, and legal documents. While smaller investment projects can be approved within 15 business days, larger projects require political approval, which can take up to 35 business days.
Economic agreements and market advantages
Vietnam benefits from a variety of international trade agreements that facilitate market entry for foreign companies. The EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are particularly important. They reduce tariffs, facilitate trade, and create a legal framework for investors.
Another important factor is Investor-State Dispute Settlement (ISDS), which offers investors a high level of legal certainty. Under this provision, investors in investment-related disputes have the right to assert claims against the host country through international arbitration. Arbitration proceedings in dispute cases are made public for the sake of transparency. The final arbitration award is binding and enforceable without review by a Vietnamese court. The Vietnamese government must fully implement this commitment within five years of the EVIPA’s entry into force.
Taxes, legal framework and financing
Companies in Vietnam are subject to various types of taxes, including corporate income tax, value-added tax, and special levies for foreign entrepreneurs. Tax rates are competitive, and numerous tax incentives are available for foreign investors.
Small and medium-sized enterprises (SMEs) represent the majority of the Vietnamese economy. They contribute significantly to economic output but often have difficulty obtaining credit. To counteract this, the government has established special support programs such as the SME Development Fund. and the Credit Guarantee Fund launched.
Die vietnamesischen Banken bewerten die Kreditwürdigkeit indes anhand von Unternehmensgröße, Eigenkapitalrendite und Sicherheiten.
Furthermore, intellectual property rights (IPR) exist in Vietnam. This includes copyrights, patents, trademarks, and geographical indications.
Market entry and sales: challenges and opportunities
Anyone wishing to sell goods in Vietnam requires a business license and special permits for certain product categories, such as food, chemicals, or printed matter. There are also industry-specific regulations that must be observed before entering the market.
The Vietnamese market is characterized by increasing demand for international products, particularly in the technology, consumer goods, and luxury goods sectors. Nevertheless, distribution should be carefully planned, as local networks and personal contacts play a crucial role.
E-commerce in Vietnam: A growing market
The Vietnamese e-commerce sector is growing rapidly. Platforms like Tiki, Lazada, Shopee, and Sendo dominate online retail and offer companies a variety of options for selling their products directly to Vietnamese consumers. E-wallets, bank transfers, and cash on delivery are particularly popular payment methods.
However, a successful online business requires a well-thought-out strategy – Vietnamese people place great value on good customer service and flexible return policies.
Labor market and human resources management
The employment of foreign skilled workers in Vietnam is subject to strict regulations. Companies must apply for a work permit and a work visa, which are generally valid for up to two years. There are also clear legal regulations for Vietnamese workers regarding working hours, maternity protection, vacation entitlements, and social security.
Hierarchy and personal relationships play a significant role in Vietnam. Businesspeople value respect for those older or higher in rank; face-to-face meetings are often more important than written or digital communication and largely facilitate collaboration and the conclusion of business deals.
Conclusion: Vietnam as an attractive business location
Vietnam offers numerous opportunities for investors and companies, whether in traditional trade, e-commerce, or industry. The combination of a growing economy, international trade agreements, and a young, technology-savvy population makes the country an attractive destination for business activities.
Anyone wishing to invest in Vietnam should, however, thoroughly familiarize themselves with the legal and cultural peculiarities. Good preparation, in-depth market analysis, and the development of local networks are key to success in this dynamic market. Therefore, it is advisable to engage a Vietnam-based law firm to advise and support you.
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For questions and further details, please contact Dr. Oliver Massmann at [email protected]. Dr. Oliver Massmann is the General Manager of Duane Morris Vietnam LLC.
