VIETNAM
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Doing Business in Vietnam

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Vietnam: Brief Information

Vietnam occupies a land area of 330,000 sq. km and measures 1,650 km from its northern border with China to its southernmost tip. It has 3,260 km of spectacular coastline.

Vietnam has two climates: the southern and central regions have a tropical climate with dry and rainy seasons and are normally humid throughout the year. In the north, the four seasons, including a distinct winter, are more defined. Average annual rainfall is about 223cm.

Vietnam population stands at around 82 million this year. The average population density is 227 people/sq. km. The annual growth rate is 2.1%. The literacy rate is about 90%. Approximately 70% of the population is employed in agriculture and more than half is under the age of 25.

Political structure: Vietnam is a socialist country under the leadership of the Communist Party. The Party holds a national congress every five years to outline the country's overall direction and future course as well as to map out policies. The next Party's Congress is planned in the first quarter 2001.

The National Assembly which includes 450 members as maximum, representing all walks of life throughout the country, and is open to non-Party members, is the highest state authority and the only body with constitutional and legislative power. The President of the State and the Prime Minister are elected by the National Assembly.

The President has the right to nominate candidates for a number of key positions; nominees are then approved by the National Assembly. The Prime Minister, who is in charge of the day-to-day handling of the government, has the right to nominate and dismiss the members of his cabinet, though only with the approval of the National Assembly. He also has at his disposal the power to cancel or suspend decisions or directives issued by the ministries. The Government now consists of 17 ministries and 12 ministerial agencies.

Vietnam is divided into 61 provinces and cities under the direct control of the central authority. Local People's Councils are elected by the local population in each area. The Councils have the duty to maintain respect for the law, to carry out state policies and tasks. Local People's Committees are the executive bodies of local People's Councils. The Chairman, Vice Chairmen and members of the People's Committee are elected by the People's Council.

                      MAP OF VIETNAM

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Infrastructure: Decades of war and under-investment have left much of Vietnam's infrastructure in a run-down state. By international comparative standards, the transport system in Vietnam is relatively under-developed and it has difficulty keeping up with the rise in trade volumes and economic growth.

Vietnam's transport system consists of about 105,000 km of roads (the roads are generally narrow and of poor quality), 8 national seaports, 3 international airports and an additional number of smaller domestic airports.

The Government set a goal to reach the electricity output of 30-33 billion kWh this year. Large investments have been put in rehabilitating existing power plants, upgrading and expanding the transmission network as well as in constructing new power plants.

Vietnam now has three million telephones amongst the population, 8 earth satellite stations with direct communication channels with more than 40 countries and indirect connection with almost all the countries in the world. However, the telecommunication charge in Vietnam is relative expensive compared to other countries in the region despite the latest decision of the Government to reduce it by 15%.

Investing in Vietnam

Investment licensing procedures: Projects documents forming the investment license application must be prepared in Vietnamese and in a popular foreign language in accordance with the guidelines issued by the Ministry of Planning and Investment (MPI) and submitted to the competent investment licensing body. Application documents can be prepared by investors themselves or by an investment consulting company on their behalf.

Depending on the forms of investment, documentations should include:

  • An application for an investment license;
  • A business cooperation contract or a joint venture contract
  • A charter for the enterprise (in the case of a joint venture enterprise or a 100% foreign owned enterprise)
  • Evidence of the legal and financial status of the investing parties
  • An economic and technical feasibility study; and
  • Documents on the technology transfer (in the case of capital contribution in form of technology transfer), and environmental impact report (in the case of projects requiring an environmental impact report), land leasing application file (if the project requires land use), certificate of zone planning and preliminary design indicating the proposed architecture of the project (in the case of projects involving construction).

The Ministry of Trade is responsible for issuing licenses for representative offices of foreign companies except for representative offices of foreign banks and credit organisations whose licenses are issued by the State Bank. The license fee is US$5,000 for a representative office and US$4,000 for a branch of the representative offices.

The documents required for licensing should include an application letter (in the form designated by the Ministry of Trade or State Bank); a notarised copy of the certificate of incorporation or operation license; a brief introduction to the company or copies of its brochures; a copy of the company's charter; recent financial or annual reports with an auditor's signature; summary reports on past business conducted in Vietnam and copies of documents to this effect; and any other letters or documents explaining the necessity of an office in Vietnam. By law, the Ministry of Trade and the State Bank must notify the applicant of the result within 30 days of the receipt of proper documents, although in practice this deadline is not always observed.

(Source: "Doing Business in Vietnam" published by the Vietnam Chamber of Commerce and Industry)

Investors' Checklist: Where to go

LIST OF SPECIALLY ENCOURAGED INVESTMENT PROJECTS
  1. Making and processing of products with at least 80% of the bulk for export
  2. Processing of farm produce and forest products, excluding timber, seafood from domestically available raw materials and with half of the bulk for export
  3. Producing of highly qualified and economically efficient plant and animal strains
  4. Breeding of aquatic products and planting of agricultural and forest products
  5. Production of new and rare materials, application of new bio-technology; new technology in making information and telecommunications equipment
  6. Hi-tech industries
  7. Investment in research and development
  8. Production of waste treatment equipment
  9. Production of antibiotic materials
  10. Treatment of pollution and waste and environmental protection
  11. Investment in build-operate-transfer (BOT); build-transfer-operate (BTO) and build-transfer (BT)
LIST OF CONDITIONAL INVESTMENT AREAS

I. Projects subject to only two forms - joint ventures and business cooperation undertakings

  1. Building and operating of international and domestic telecommunications networks (reserved for business cooperation contracts)
  2. Exploiting and refining of crude oil, gas and rare natural ores
  3. Consultancy services (excluding technical consultancy)
  4. Air, rail ad sea transport, public passenger transport; construction of sea ports, airport terminals (excluding BOT, BTO and BT projects)
  5. Production of dynamite used in industry
  6. Forest planting
  7. Travelling agents
  8. Cultural activities

II. Products which guarantee scheduled proportion of exports

The Ministry of Planning and Investment (MPI) is authorised to make public obligatory proportion of exported products the domestic production of which has already satisfied domestic consumption in both quality and quantity.

III. Processing projects which need investment in creation of material sources

  1. Production and processing of milk
  2. Production of vegetable oil and sugar from sugarcane
  3. Timber processing
LIST OF AREAS OFF LIMIT TO INVESTMENT PROJECTS
  1. Projects posing danger to national security, defence and public interest
  2. Projects undermining historic, cultural relics and Vietnam's treasured customs and habits
  3. Projects damaging the environment, eco-systems and projects treating imported waste
  4. Projects manufacturing or using toxic chemicals already banned according to international conventions.


 

Map of Vietnam
Investment Licensing Procedures
Investors' Checklist

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