Which Form of Investment - Branch or Company?

Which Form of Investment - Branch or Company?

Foreign entities can set-up branch offices or set-up company in Vietnam to carry out business activities.

 

There are several main different aspects between opening a branch office or establishing a foreign owned company in Vietnam.

Conditions

Permits for establishment of Vietnam-based branches of foreign enterprise shall each have a valid term of five years.

Foreign enterprise must choose between establishing a 100% foreign capital enterprise or forming a joint-venture with domestic investor or company.

Certificate

The Branch office needs to apply and obtain the operation license of a Branch;

A foreign owned company will need to apply and obtain the investment certificate (“IC”) to operate in Vietnam.

Capital

Optional, foreign entity will decide how much money to invest in branch. The allocation capital for branch is capital for the subordinate units.

Mandatory, foreign entity will need to provide minimum capital as required by Vietnam Law in conditional investment area.

Obligation of owner

For branch office in Vietnam, owner takes full responsibility;

For company, owner takes responsibility within the capital contributed into the company in Vietnam;

Other matters

For branch office setting up in Vietnam, the procedure is less complicated compared to those for the establishment of a 100% foreign owned company;  the branch office is able to carry out trading and some other activities as stipulated by Vietnam laws and the WTO commitments which Vietnam enters. The business lines of a branch have to be aligned with the business lines of the headquarter of the foreign entity.

Setting up foreign owned company would be more complicated than the setting up of the branch office, however this form of investment has more flexibility and freedom as it is an independence Vietnam entity recognized under Vietnam laws

We are a law firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or services request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529.

 

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Da Nang strengthens external relations, promotes investment attraction and international cooperation

On October 30th, 2020, representatives of Da Nang city received the delegation of the Ministry of Foreign Affairs to work, exchange and provide information on the coordination between the Ministry of Foreign Affairs and the city in the implementation of international cooperation program.

 

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Despite being affected by the COVID-19 epidemic, Da Nang still strives to implement important investment promotion activities such as: Economic promotion seminar, tourism, human resources within the framework of the visiting Vietnam and Danang of the Secretary General of the Liberal Democratic Party of Japan (January 11th to 14th, 2020), organized an online investment promotion conference “Danang – Silicon Valley of Southeast Asia”, contribute ideas and develop local implementation plans for free trade agreements that Vietnam has signed such as: Free Trade Agreement between Vietnam and the European Union, on the draft “White Book 2020” at the request of the European Business Association in Vietnam (EuroCham).

Up to now, Da Nang has established friendly and cooperative relations with 45 localities of 20 countries and territories, with 94 Cooperation Agreements were signed. Specific cooperation programs are effectively maintained and implemented, coupled with the promotion of new cooperation programs.

With its convenient location, abundant, high-quality human resources, and many development policies to attract the international investment, in the first 9 months of 2020, the city has attracted USD 140,88 million, of which, there are 66 newly licensed FDI projects with a total registered investment capital of USD 121.78 million, with 9 projects increasing capital with total additional capital is USD 15,038 million. Accumulated to date, Da Nang has 869 FDI projects with a total investment of USD 3.518 billion.

By creating opportunities for international investors in the fields of high technology, environmental protection, tourism services, etc. Danang has all the strengths from nature to people to be the first choice of international investors. Many large investors in the region and the world have chosen Danang as their investment development place when expanding their investment activities in Vietnam, especially when many investors have gradually moved their factory out of China. Danang promises to be a good destination for major investors in the world, to set up company and factory, and help them achieve the favourable benefits when investing in Vietnam.

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Da Nang cooperates with the Netherlands in the field of high-tech agriculture

On November 18, 2020, representatives of Da Nang city and experts, Dutch farming enterprises organize an online seminar “Promotion and cooperation of high-tech agriculture in Da Nang- Netherlands” to develop hi-tech agricultural cooperation relations between the two countries.

 

The Netherlands is a country with developed agriculture and high technology application in Europe and is also a country that is known to apply technologies to cope with the impacts of climate change on agriculture. Similarly, Vietnam is also an agricultural country affected by climate change, but Vietnam’s agriculture has not had the conditions to apply high technology to improve the quality of agriculture.

Currently, the high-tech agriculture is a priority for Da Nang to thrive in order to meet the needs of use and export to many countries around the world. The creation of quality and safety products is the city’s top goal. At present, Da Nang is concentrating on solutions, promulgating supportive and encouraging policies to attract investment to set up company in the field of hi-tech agriculture, completing the detailed planning of 3 agricultural regions which applying high technology. Although the land reserve for agricultural production is limited, the city always gives priority to the development of hi-tech agriculture.

Not only investing in production, planning and application of high-tech science, Da Nang hopes to receive Dutch help in choosing applied technology, export standards as well as how to use the agricultural land effectively, avoid wasting resources. In addition, attracting Dutch investors with financial ability and business experience in the field of high-tech agriculture will help Da Nang learn how to manage effectively and meet demand of the city and providing food for millions of visitors to Da Nang each year. Besides, in the future, Da Nang hopes to combine high-tech agriculture and tourism to create the highest economic efficiency for the city.

With its efforts, Da Nang hopes that in the future there will be more Dutch investors investing in the city through setting up company in Da Nang, Vietnam or cooperate with local company in the field of high-tech agriculture, thereby bringing the highest economic efficiency to the investors and the city.

We are a law firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or services request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529

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Apply the Safeguard Measures on DAP and MAP fertilizer

Apply the Safeguard Measures on DAP and MAP fertilizer

DAP and MAP is complex inorganic fertilizers, with main component of nitrogen and phosphorus,  whose function of lining, dressing crops and production of NPK fertilizer.

On March 31st, 2017, Ministry of Industry and Trade (MOIT) received Dossier requesting to apply the safeguard measures on DAP and MAP fertilizer. Requesting Party is DAP Vinachem Joint Stock Company and DAP No 2 -Vinachem Joint Stock Company. 

Anti-dumping-Lawyers-in-VietnamOn April 13th, 2017, Trade Remedies Authority of Vietnam (Investigating Body) received Dossier requesting to apply globally the safeguard measures on DAP and MAP fertilizer.

On May 12th, 2017, based on Dossier requesting to apply the safeguard measures of domestic industry, regulations of World Trade Organization (WTO) and Vietnamese Law, the Ministry of Industry and Trade (MOIT) promulgated Decision No. 1682A/QD-BCT on initiation of investigation to apply globally the safeguard measures on DAP and MAP fertilizer imported into Vietnam.

Based on conclusion from preliminary investigation showing that imported goods caused significant damage to domestic industry, MOIT promulgated Decision No. issued Decision No. 3044/QD-BCT on August 04th, 2017 on applying temporary safeguard measures on goods with HS codes as follows: 3105.10.20; 3105.10.90; 3105.20.00; 3105.30.00; 3105.40.00; 3105.51.00; 3105.59.00; 3105.90.00 with temporary tax of VNĐ1,855,790 per/ton. Temporary safeguard measures shall from August 19, 2017 to March 6, 2018.

In the final investigation phase, Investigating Body held consultations with the relevant parties, assessed socio-economic impacts of temporary safeguard measures, updated data and consulted Ministries, agencies.

The final investigation conclusion showed that the amount of imported DAP and MAP fertilizers had increased both absolutely and relatively during the investigation phase. The conclusion also showed that the imported DAP and MAP fertilizers caused price pressures and price hikes on domestic goods during 2013-16 period. Phenomenon of price pressures, price hikes continues to take place in 2017 so the selling price of domestically produced fertilizer is still lower than the production cost. Domestic fertilizer production industry suffer on all aspects such as significant reduction of quantity and sales.

Accordingly, there was increase of imported goods having impact on prices. One of the three conditions is met to apply the safeguard measures according to regulations of WTO and Vietnammese law (Three conditions are: having impact on quantity and prices of imported goods; domestic industry was significantly damaged; There is causality between the increase of imported goods and the damage of domestic industry).

On November 10th, 2017, Minister of Industry and Trade promulgated Decision No. 4236/QD-BCT on extending the deadline for investigating cases of applying safeguard measures on DAP and MAP fertilizers imported into Vietnam fertilizers for more two months before issuing the final Report. This extension is necessary to gather more information relating to the case, to consider thoroughly relevant parties’ opinion, to assess comprehensively socio-economic impact

On March 02nd, 2018, Minister of Industry and Trade promulgated Decision No. 686/QD-BCT on applying official safeguard measures on DAP and MAP fertilizer imported into Vietnam (case number SG06).

On March 21st, 2018, Investigating Body posted a notice of Implementation Guide of exemption from applying the safeguard measure.

On October 12th, 2018, Investigating Body posted a notice to receive the dossier requesting for exemption from application safeguard measure.

On May 31st, 2019, Investigating Body posted a public notice to receive the dossier requesting for final review.

On July 02nd, 2019, Investigating Body received Dossier requesting for final review from DAP Vinachem Company and DAP No 2 -Vinachem Company.

On July 10th, 2019, Investigating Body issued official dispatch on requiring the Requesting Party to supplement some relevant information.

On August 02nd, 2019, Investigating Body received dossier of supplementation information at request.

On August 13th, 2019, Investigating Body confirmed that the dossier is complete, valid in accordance with regulations of requirement of final review of safeguard measure on imported DAP and MAP fertilizer.

On September 03rd, 2019, MOIT promulgated Decision No. 2700/QD-BCT on final review of the safeguard measures on imported DAP and MAP fertilizer.

On September 18th, 2019, Investigating Body issued official dispatch no. 817/PVTM-P2 on sending final-review questionnaire of the safeguard measures on imported DAP and MAP fertilizer (ER01.SG06) to domestic production company, company importing DAP and MAP fertilizer. 

On January 13th, 2020, Investigating Body held consultations with the relevant parties to present opinion relating to the case.

On February 24th, 2020, Investigating Body completed the Conclusion of final review of safeguard measure on imported DAP and MAP fertilizer.

On March 03rd, 2020, MOIT promulgated Decision No. 715/QĐ-BCT on extending the application the safeguard measures on imported DAP and MAP fertilizers. Specifically, the applicable tax rates are as follows: from 7/3/2020-6/3/2021 safeguard rates is 1.050.662 dong/ton; from 7/3/2021-6/3/2022 is 1.029.219 dong/ton; from 7/3/2022-6/9/2022 is 1.007.778 dong/ton; from 7/9/2022 onwards is 0 dong/ton.

Based on results of review, MOIT determines the extension of appling the safeguard measures on imported DAP and MAP fertilizers is necessary to continue to prevent damage of domestic industry and to ensure the efficiency of measures, helping domestic industry to have more time to justify.

On March 13th, 2020, Investigating Body posted a noticae to receive the Dossier requesting for exemption from application safeguard measure on DAP/MAP fertilizers in 2020. Enterprise shall submit the Dossier requesting for exemption at public service Portal by website  https://dichvucong.moit.gov.vn or send directly to Trade Remedies Authority of Vietnam before 5pm on April 13th, 2020.

ANT Lawyers – A Law firm in Vietnam has law offices in Hanoi, Ho Chi Minh City and Da Nang.  The lawyers at each law offices in Vietnam have consistently made valuable and important contributions to our profession through the cases we handled on daily basis to facilitate business transaction or represented our clients to access justice.

 

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Why do we have to undertake background check before recruitment

 Why do we have to undertake background check before recruitment

Recruitment is the process of screening and recruiting qualified people to meet a job in an organization in general and in particular business. Recruitment plays a very important role in business development. Effective recruitment will provide businesses with a team of skilled, active, creative employees and provide human resources in accordance with the business performance of the business. Only when doing well the recruitment stage can we do well in the next stages. Therefore, businesses need to recruit the right people right the first time as well as arrange them in an important position.

 

Most of the information that enterprise has is provided by the employee and there is no verification of the information. And if the enterprise only relies on the information provided by the employee, it is likely that the employee is dishonest, or causes mistakes and avoid responsibility. To recruit “right employee, right job”, enterprise needs to check the applicant’s background.

Checking employee’s background is to create trust between enterprise and employee. The background check includes: Verify Identification; Verify at home; Verify qualifications and certificates; Verify employment history at old jobs; Verify criminal records in Vietnam.

Verification of the background helps to know personal information, origin, hometown, criminal status of the employee. Thereby, background check will minimize commercial risks; preventing fraud and internal theft better; increase security of data and documents in the enterprise. In particular, for important positions in the enterprise, the confidentiality of enterprise document information is extremely necessary.

Verifying employment history at past jobs is to understand working process and the reason for job termination; obtain an objective view of the necessary competencies, skills and work experience. From there, enterprise could save time in searching for suitable employees as well as saving labor training costs.

In addition, background check improves business efficiency, developes a team of integrity to meet the business requirements of the enterprise. Because recruiting well means finding out people to perform the job with the capabilities and qualities to complete the assigned work, then effective recruitment helps the enterprise perform well its business goal and improve profitability.

Currently, the situation of fraud, diploma trading, or dishonesty in recruitment, many enterprises cannot control and verify all the information that employees provide. Enterprises need to check applicant’s background when recruiting to prevent fraud, internal theft; increasing security of data and documents in enterprises; decrease recruitment time and training costs. Besides, creating trust between businesses and employees; increase employee productivity and product quality as well as increase business profits.  It is suggested to consult with professional background check company with proven track record in Vietnam to help with the local service.

ANT Lawyers – A Law firm in Vietnam has law offices in Hanoi, Ho Chi Minh City and Da Nang.  The lawyers at each law offices in Vietnam have consistently made valuable and important contributions to our profession through the cases we handled on daily basis to facilitate business transaction or represented our clients to access justice

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What are Conditions for Cancellation of Contract?

 What are Conditions for Cancellation of Contract?

When entering into a contract, the parties in a contractual relationship always aim for certain interests and purposes. However, in reality, the contract is not always implemented seriously and in good faith. According to Vietnam laws, parties are entitled to cancel the contract to protect rights and interests. Therefore, it is not rare for a party to request to cancel the contract in order not to be bound by the contract. However, it should be noted that the right of cancellation is only applied in some certain circumstances which stipulated by the law. This is to limit arbitrariness of cancelling the contract.

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The basic condition for cancelling the contract is the breach. However, it should be noted that not all breaches of contract will result in cancelling the ccontract. This is stipulated in both of general law and specialized law. According to Commercial law 2005 (“CL”), the sanction of cancelling the contract is applied in case of breaching act be a condition for the cancellation of the contract as agreed upon by the parties or in case of substantial breach of contractual obligations from a party. Specifically, contractual breach means the failure of a party to perform, to fully or properly perform its obligations according to the agreement between the parties or the provisions of CL. Substantial breach means a contractual breach by a party, which causes damage to the other party to an extent that the other party cannot achieve the purpose of the entry into the contract. Civil Code 2015 (“CC”) also stipulates correspondingly but it uses the term “serious breach”: “A party has the right to cancel the contract and shall not be liable to compensate for damage in the following cases: (i) A breaching act of one party is a condition for the cancellation of the contract as agreed upon by the parties; (ii) The other party seriously violates the obligations in the contract; (iii) Others circumstances as provided by law. Serious violation means the failure to fulfill obligations properly by a party which make the other party cannot achieve the purpose of the entry into the contract”. However, currently there is no specific guidance on identifying the substantial breach of contractual obligations and the serious breach of contractual obligations. Therefore, determining whether a party’s breach is considered as a substantial breach of contractual obligations or a serious breach of contractual obligations will be within the competence of the jurisdiction.

A lawfully concluded contract may be canceld when a party breaches its basic contractual obligations. After cancelling the contract, such contract shall be invalid from the time it is entered into, and the parties shall not have to continue performing their contractual obligations, except for their agreements on their post-cancellation rights and obligations and resolution of disputes. The parties shall have the right to claim benefits brought about their performance of their contractual obligations. If parties have indemnity obligations, their obligations must be performed concurrently. Where it is impossible to make the indemnity with benefits which one party has enjoyed, the obliged party must make the indemnity in cash. Breached parties are entitled to claim damages.

In conclusion, from the regulation of law, it can be seen that nature of contract is to benefit for the parties and not to be canceld. The cancellation is very serious so the contract can only be canceld in some certain conditions. The contract cannot be canceld as a sanction if there is no contract breach. Simultaneously, the party requesting cancellation also needs to know that such request is only accepted if there is enough foundation to affirm that the other party has substantial breach of contractual obligations or the serious breach of contractual obligations.  Parties encountering potential dispute should consult with dispute lawyers in Vietnam for proper resolution.

ANT Lawyers – A Law firm in Vietnam has law offices in Hanoi, Ho Chi Minh City and Da Nang.  The lawyers at each law offices in Vietnam have consistently made valuable and important contributions to our profession through the cases we handled on daily basis to facilitate business transaction or represented our clients to access justice

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Benefits of Investors in Setting up a Business in Da Nang

 Benefits of Investors in Setting up a Business in Da Nang

Da Nang is one of the five major cities in Vietnam, having a geographical location that is particularly conducive to rapid and sustainable economic development. Da Nang has important transportation routes such as the China-ASEAN international railway crossings, seaports and international airports.

Da Nang is one of the tourist centers of the country, has rich tourism potential including natural tourism resources and humanities. Da Nang has many famous scenic spots such as Hai Van pass, Son Tra mountain, Ba Na hills, Ngu Hanh Son, Cham Museum or My Khe beach have been voted by Forbes magazine as one of the six most beautiful beaches in the world. These conditions are favorable for the development of diversified forms of tourism such as travel, research, cultural.

Da Nang have infrastructure development, four types of roads are popular: high way, rail way, International airport and International sea way. Da Nang have the sea lanes to most major ports in Vietnam and around the world. It helps investor more convenient to travel everywhere in Vietnam and other countries. Moreover, Da Nang’s water supply, electricity supply and communication system has developed rapidly and is increasingly modernized, ranking third in the whole country after Hanoi and Ho Chi Minh City. Da Nang have Da Nang Port, which help investor in import/export activities easily.

The first advantage of the policy mechanism is that Da Nang has also had great support the mechanism and policies for socio-economic development of Da Nang. Since Da Nang was recognized as a national grade I city in 2003, Da Nang has implemented guidelines, regulatory directions and the issuance of specific regulatory mechanisms. With the support from the Central Government, Da Nang authorities have also developed appropriate policies and mechanisms to facilitate the development of the economy, such as the one-stop-shopping mechanism, so Da Nang which is considered as a locality with attracting investment policies in Vietnam. Examples: Procedures related to investment, investment locations, clearance and handover plan, the granting of business registration certificates and investment preference certificates shall be carried out under the one-stop-shopping mechanism at the provincial municipal all of them are resolved at Da Nang Administration Center. Investors shall be exempt from all expenses related to the settlement of investment procedures apart from the payment of business registration fees according to the provisions of law. When investing in Da Nang, investors not only enjoy many preferential policy from city government but also have chance to find clients from many countries or compete with other companies in Vietnam and foreign countries.

Tradition of unity, consensus of people and the dynamism and creativity of the leadership, these advantages has aroused, mobilized the strength, the most important and decisive resource for the development of Da Nang. The determination of leaders, city authorities in building programs, projects with the support of the people, investors, enterprises, ect that help investors who will invest in Da Nang have highest benefits.

ANT Lawyers – A Law firm in Vietnam has law offices in Hanoi, Ho Chi Minh City and Da Nang.  The lawyers at each law offices in Vietnam have consistently made valuable and important contributions to our profession through the cases we handled on daily basis to facilitate business transaction or represented our clients to access justice

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Vision to develop logistics services in Da Nang

 Vision to develop logistics services in Da Nang

Da Nang, with its favorable geographical location, lies on the arterial North-South traffic axis in terms of road, rail, sea and air, is an important traffic gateway of the Central – Central Highlands and is the end point on the East-West Economic Corridor running through Vietnam – Laos – Myanmar – Thailand, converging types of transport from air, seaport, railway, expressway, especially with deep water ports. Therefore, Da Nang has a great potential to develop into a maritime transport center, an important logistics hub to countries in the region.

In the economic development orientation and in the Politburo’s Resolution No. 43-NQ/TW dated January 24, 2019 on Da Nang construction and development to 2030, a vision to 2045 defines: Danang will focus on exploiting advantages to soon become a marine economic center, forming logistics service supply chains for the Central and Central Highlands.

To comply with the Resolution, currently, in parallel with the expansion of the port, Da Nang is also actively calling for investment in logistics centers. Of which, 20 hectares in Hoa Vang district, 2 hectares in the north of Da Nang airport, 9.1 hectares in the High-Tech Park. At the same time, promote the early operation of highways Da Nang – Quang Ngai, La Son – Tuy Loan… to awaken potentials, promote trade links, connect industrial zones, economic zones in the region, thereby becoming the driving force to promote the city’s logistics services industry.

In addition, Da Nang will build a new Lien Chieu port as a transport port, Tien Sa port will be a tourist port in order to promote the central role of the international seaport city and urban seaport. According to the Department of Planning and Investment of the city, the Lien Chieu port project is currently completing the environmental impact assessment report, submitting for appraisal and approval of the subdivision planning project 1/2,000. City leaders suggested early appraisal of capital sources and capital balancing capabilities, and proposed to allocate central budget capital to support projects. In the next phases, Lien Chieu port will attract investors in logistics items. This is an important premise for Da Nang to promote the role of a key maritime route in the Central region and a logistics center in the region.

With the above orientation, it is expected that in the coming time, the market of transport services and logistics in the city will develop more vibrantly, raising the quality of services not only in the city but in the region. It is hoped that more companies will invest, set up company and apply for investment certificate in Da Nang in the area of logistics and logistics support.

ANT Lawyers – A Law firm in Vietnam has law offices in Hanoi, Ho Chi Minh City and Da Nang.  The lawyers at each law offices in Vietnam have consistently made valuable and important contributions to our profession through the cases we handled on daily basis to facilitate business transaction or represented our clients to access justice

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Forms of Investment in Vietnam

 Forms of Investment in Vietnam

Foreign investors when setting up business in Vietnam need to be advised by a law firm in Vietnam on forms of investment.

According to the Vietnam Law on Investment (2005), foreign investors in Vietnam through direct investment and indirect investment.

The direct investment is when the investor invests its invested capital and participates in the management of the investment activities, includes:

-To establish economic organizations in the form of one hundred per cent (100%) capital of domestic investors or one hundred per cent (100%) capital of foreign investors.

-To establish joint venture economic organizations between domestic and foreign investors.

-To invest in the contractual forms of: BCC, BO, BTO, and BT.

-To invest in business development.

-To purchase shares or to contribute capital in order to participate in management of investment activities.

-To invest in the carrying out of a merger and acquisition of an enterprise.

-To carry out other forms of direct investment.

Foreign investor will be considered for acceptance by the competent authorities and be granted Investment Certificate.

Indirect investment means a form of investment whereby the investor contribute the capital but do not participate directly in the management of the investment activity, includes:

-Purchase of shareholding, shares, bonds and other valuable papers;

-Through securities investment funds;

-Through other intermediary financial institutions.

Types of enterprise for foreign investors to invest in Vietnam

1. Limited Liability Company

Limited Liability Company is a form of enterprise which is established by contributing of members.  A member shall be liable for the debts and other property obligations of the enterprise within the amount of capital that it has undertaken to contribute to the enterprise.

Limited liability companies are regulated by two types:

-One member Limited Liability Company is an enterprise owned by one organization or individual;

-Limited Liability Company with two or more members is an enterprise owned by organizations or individuals, in which the number of members shall not less than two members and not exceed fifty.

Organizational and management structure of Limited Liability Company normally comprise of a Member’s Council, General Director or Director.

2.Joint Stock Company

Joint Stock Company is an enterprise which has charter capital divided into equal portions called shares.   The minimum number of shareholders shall be three and there shall be no restriction on the maximum number.

Shareholders shall be liable for the debts and other property obligations of the enterprise only within the amount of capital contributed to the enterprise.

Joint Stock Companies may issue all types of securities to raise funds.  Founding shareholders must together register to subscribe at least twenty per cent (20%) of the number of ordinary shares which may be offered for sale.

The main difference between Joint Stock Company and Limited Liability Company is the Joint Stock Company can raise funds by offering shares or securities.  In addition, an enterprise tends to join the Stock exchanges or public company must be a Joint Stock Company.  Management system of Joint Stock Company is more complicated than Liability Company.

3. Partnership

A partnership is an enterprise which must be at least two members being co-owners of the company jointly conducting business under one common name.  In addition to unlimited liability partners, there may be limited liability partners.

Unlimited liability partners must be individuals who shall be liable for the obligations of the company to the extent of all of their assets.  Limited liability partners shall only be liable for the debts of the company to the extent of the amount of capital they have contributed to the company.

4. Representative Office of foreign trader

A foreign business entity or a foreign trader is allowed to establish Representative Office in Vietnam.

Representative office of a foreign business entity in Vietnam (referred as “Representative Office”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to survey markets and to undertake a number of commercial enhancement activities permitted by the law of Vietnam.

Representative Office will need to apply and obtain the establishment license; and have a seal bearing the name of the representative office.

Representative Office is not allowed to directly conduct profit making activities in Vietnam (i.e: the execution of contracts, direct payment or receipt of funds, sale or purchase of goods, or provision of services), but the representative Office is permitted to:

-To operate strictly in accordance with the purposes, scope and duration stated in the license for establishment of such representative office;

-To rent offices and to lease or purchase the equipment and facilities necessary for the operation of the Representative Office;

-To recruit Vietnamese and foreign employees to work for the Representative Office in accordance with the law of Vietnam;

-To open accounts in foreign currency and in Vietnamese Dong sourced from foreign currency at banks which are licensed to operate in Vietnam, and to use such accounts solely for the operation of the Representative Office.

5. Branch of foreign trader

The Branch of a foreign business entity in Vietnam (referred as “The Branch”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to enter into contracts in Vietnam and conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

The Branch will need to apply and obtain the establishment license; and have a seal bearing the name of the Branch.

The Branch is permitted to conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

6. The investing measures by signing Contracts

Business co-operation contract (BCC) means the investment form signed between investors in order to co-operate in business and to share profits or products without creating a legal entity.

Build-operate-transfer contract (BOT) means the investment form signed by a competent State body and an investor in order to construct and operate commercially an infrastructure facility for a fixed duration; and, upon expiry of the duration, the investor shall, without compensation, transfer such facility to the State of Vietnam.

Build-transfer-operate contract (BTO) means the investment form signed by a competent State body and an investor in order to construct an infrastructure facility; and, upon completion of construction, the investor shall transfer the facility to the State of Vietnam and the Government shall grant the investor the right to operate commercially such facility for a fixed duration in order to recover the invested capital and gain profits.

Build-transfer contract (BT) means the investment form signed by a competent State body and an investor in order to construct an infrastructure facility; and, upon completion of construction, the investor shall transfer the facility to the State of Vietnam and the Government shall create conditions for the investor to implement another project in order to recover the invested capital and gain profits or to make a payment to the investor in accordance with an agreement in the BT contract.

Foreign investors may sign BOT, BT and BTO contracts with a competent State body to implement infrastructure construction projects in Vietnam. Typically, the contracts are for projects in the fields of transportation, electricity production, water supply, drainage and waste treatment.

The rights and obligations of the foreign investor will be regulated by the signed BOT, BT and BTO contract. The Government encourages both public- and private-sector investors to participate in BOT, BTO and BT in the following sectors:

(i) Construction, operation and management of brand-new infrastructure facilities; and

(ii) Renovation, expansion, modernization, operation and management of the existing infrastructure facilities such as:

-Roads, bridges, tunnels, and ferry landings;

-Railway bridges and railway tunnels;

-Airports, seaports and river ports;

-Clean water supply systems; sewage systems;

-Wastewater, waste collecting and handling systems;

-Power plants and power transmission lines;

-Infrastructure works of health service, education, training, career training, culture, sport and offices of State agencies; and

-Other projects as may be determined by the Prime Minister

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