Setting Up Company in Vietnam
from Singapore

Why you should set up a company in Vietnam?
 

Setting up a company in Vietnam can be an enticing prospect for many entrepreneurs and businesses, thanks to a myriad of factors ranging from its growing economy to its strategic geographical location. In this comprehensive exploration, we'll delve into the reasons why Vietnam presents a compelling case for setting up a company, encompassing economic opportunities, business-friendly policies, a skilled workforce, favorable demographics, and more.
 

1. Robust Economic Growth

Vietnam's economy has been experiencing robust growth over the past few decades, making it one of the fastest-growing economies in the world. With an average GDP growth rate of around 6-7% annually, Vietnam offers a dynamic and flourishing market for businesses across various sectors. This sustained economic expansion provides a fertile ground for startups and established companies alike to thrive and expand their operations.
 

2. Strategic Geographical Location

Situated in Southeast Asia, Vietnam boasts a strategic geographical location that serves as a gateway to the larger ASEAN (Association of Southeast Asian Nations) market comprising over 600 million people. Its proximity to key markets such as China, India, and other ASEAN countries, along with access to international shipping routes, makes it an ideal hub for trade and investment activities.
 

3. Favorable Investment Environment

Vietnam has been actively pursuing economic reforms and liberalization policies to attract foreign investment. The government has implemented various measures to streamline administrative procedures, reduce bureaucratic hurdles, and improve the ease of doing business. Additionally, Vietnam offers attractive incentives such as tax breaks, preferential treatment for certain industries, and land lease incentives to encourage foreign investment.
 

4. Young and Dynamic Workforce

Vietnam possesses a young and rapidly growing workforce, with a median age of around 30 years. The country's large pool of labor is known for its diligence, adaptability, and eagerness to learn, making it highly attractive for businesses seeking skilled and affordable manpower. Furthermore, Vietnam's increasing focus on education and vocational training ensures a continuous supply of qualified talent across various industries.
 

5. Rising Middle Class and Consumer Market

The burgeoning middle class in Vietnam is driving significant changes in consumer behavior and spending patterns. As disposable incomes rise, there is a growing demand for a wide range of goods and services, including consumer electronics, automobiles, healthcare, education, and leisure activities. This presents lucrative opportunities for businesses looking to tap into Vietnam's expanding consumer market.
 

6. Infrastructure Development

Vietnam has been making substantial investments in infrastructure development to support its growing economy. Major projects encompassing transportation networks, energy facilities, industrial parks, and urban infrastructure are underway, enhancing connectivity and facilitating business operations across the country. The modernization of infrastructure not only improves logistics and distribution capabilities but also attracts investment in key sectors.
 

7. Advantageous Trade Agreements

Vietnam's active participation in regional and international trade agreements has further bolstered its appeal as a business destination. The country is a member of numerous trade pacts, including the ASEAN Free Trade Area (AFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the EU-Vietnam Free Trade Agreement (EVFTA). These agreements provide preferential access to vast markets and reduce trade barriers, offering significant advantages for companies operating in Vietnam.
 

8. Thriving Startup Ecosystem

Vietnam has witnessed the emergence of a vibrant startup ecosystem, particularly in tech-related industries such as e-commerce, fintech, and software development. Supported by a growing number of incubators, accelerators, and venture capital funds, the startup scene in Vietnam is teeming with innovation and entrepreneurial spirit. With a young and tech-savvy population, Vietnam offers fertile ground for startups to flourish and scale their businesses.
 

9. Cultural Richness and Quality of Life

Beyond its economic opportunities, Vietnam boasts a rich cultural heritage, stunning natural landscapes, and a diverse culinary scene, making it an attractive destination for expatriates and foreign professionals. Cities like Hanoi and Ho Chi Minh City offer a vibrant lifestyle with modern amenities, affordable living costs, and a welcoming atmosphere, enhancing the overall quality of life for residents and expats alike.

Vietnam presents a compelling case for setting up a company, offering a combination of robust economic growth, favorable investment environment, strategic location, skilled workforce, and burgeoning consumer market. With its proactive government policies, supportive business ecosystem, and abundant opportunities across various sectors, Vietnam continues to attract businesses and investors from around the globe. Whether you're a startup looking to tap into a dynamic market or an established company seeking to expand your presence in Southeast Asia, Vietnam holds immense potential for growth and success.

 

What to Take Note of When You Set Up a Vietnamese Company
 

Vietnam is an increasingly popular destination for foreign investors looking to tap into a fast-growing, dynamic economy in Southeast Asia. With its strategic location, competitive labor costs, and youthful population, Vietnam offers vast opportunities across manufacturing, services, technology, and more. However, setting up a company in Vietnam involves a number of legal, administrative, and cultural considerations. Here’s what you need to take note of when establishing a Vietnamese company.
 

1. Understand the Market and Business Environment
 

Before registering a company, conduct thorough market research. Understand the demand for your products or services, your competitors, and the regulatory landscape. Vietnam has been actively improving its business climate, but certain sectors may still be subject to restrictions, foreign ownership caps, or special approvals. Prior knowledge of these issues will help you avoid costly delays.

Industries such as real estate, telecommunications, education, logistics, and pharmaceuticals may require special licenses or come with restrictions on foreign ownership. Meanwhile, sectors like manufacturing, IT, and hospitality are generally more open to foreign investment.
 

2. Choose the Right Legal Structure
 

Vietnam offers several types of legal entities for foreign investors, and selecting the right one is crucial:

• Limited Liability Company (LLC): The most common structure, either as a single-member (wholly foreign-owned) or multi-member company. It offers flexibility and limited liability protection.

• Joint Stock Company (JSC): Suitable for larger ventures or when planning to raise capital via equity markets. Requires at least three shareholders.

• Representative Office (RO): Not allowed to conduct revenue-generating activities. Useful for market research, liaison, or promotion.

• Branch Office: A foreign company can establish a branch in Vietnam but only in sectors open to foreign investment and typically in service industries.

Choosing the right structure affects your tax obligations, liabilities, and ability to raise capital.
 

3. Company Registration and Licensing Requirements
 

To legally operate in Vietnam, you must go through a formal registration process:

• Investment Registration Certificate (IRC): This is required for foreign investors and confirms the right to invest in Vietnam.

• Enterprise Registration Certificate (ERC): After receiving the IRC, you need to obtain the ERC, which registers your business as a legal entity.

• Business License or Additional Licenses: Depending on your industry, further licenses may be required (e.g., for retail trading, education, or food and beverage).

Processing times for the IRC and ERC typically range from 15 to 45 working days, but delays can occur depending on the complexity of the business and local authorities.
 

4. Capital Requirements
 

Vietnam does not impose a strict minimum capital requirement for most sectors, but your declared capital must be realistic enough to cover your operational expenses. For certain industries, such as real estate development or financial services, higher capital thresholds apply.

You must also inject the registered capital within 90 days to 12 months after the company is established, depending on the capital schedule you submitted. Non-compliance may lead to penalties or revocation of your license.
 

5. Local Office and Staffing
 

Foreign companies are required to have a registered local address in Vietnam, which serves as the legal and operational base. This address must be valid and suitable for business use—home addresses typically don’t qualify.

When hiring staff, note that labor regulations in Vietnam are strict. Employment contracts, working hours, social insurance contributions, and personal income tax deductions must comply with local labor laws. Foreign workers also require work permits and visas, which take time to process and have eligibility criteria.

Many foreign companies hire a local HR agency to manage employment, payroll, and compliance.
 

6. Taxation and Accounting Compliance
 

Vietnam has a relatively straightforward tax system, but it requires diligence and timely reporting:

• Corporate Income Tax (CIT): Standard rate is 20%, with higher rates for special industries.

• Value Added Tax (VAT): Generally 10%, applied to most goods and services.

• Foreign Contractor Tax (FCT): Applicable when foreign entities provide services to Vietnamese companies.

• Personal Income Tax (PIT): Employers must withhold and remit PIT on behalf of employees.

You are also required to maintain proper accounting books in Vietnamese and submit periodic reports. Engaging a local accounting firm can help avoid penalties for non-compliance.
 

7. Intellectual Property Protection
 

Vietnam follows international standards for IP protection, and it’s important to register your trademarks, patents, and other IP rights early. Local enforcement is improving, but it still requires active monitoring. Counterfeit goods and brand imitation remain issues in certain industries.

Registering your IP with the National Office of Intellectual Property (NOIP) helps safeguard your business interests in Vietnam.
 

8. Cultural and Language Considerations
 

Vietnamese is the official language, and all documents must be submitted in Vietnamese. Working with reliable translation partners and local consultants is vital. Additionally, understanding Vietnamese business culture—such as the importance of relationships (guanxi), hierarchical decision-making, and negotiation etiquette—can greatly affect your success.

Building strong relationships with local stakeholders, employees, and government officials will facilitate smoother business operations and open more doors for growth.
 

9. Engage a Local Consultant or Law Firm
 

Navigating the Vietnamese regulatory system can be challenging, especially for first-time foreign investors. Partnering with a local business consultancy or law firm familiar with foreign direct investment (FDI) regulations will help streamline the incorporation process, reduce risk, and ensure compliance from day one. Or you could work with Koh Management to assist you with the registration process.

CALL +65 98638665 if you need a quote or Email Tommyksh@shkoh.com.sg

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Koh Management can assist you with setting up your Vietnam company, please speak to us to find out more.