Doing business in

Viet Nam

By Mr. Minh Hong LE

Head of Office
Viet Nam Trade Office in Indonesia
Content

• Overview of Viet Nam Economic

Development
Part I

• Business and Investment Environment in Viet

Nam and Setting up a Business in Viet Nam
Part II
 Part I
Overview of Viet Nam
Economic Development

3
 Viet Nam at a Glance
• Location: Southeastern Asia, bordering the Gulf of Thailand, Gulf of Tonkin, and Eastern Sea, alongside
China, Laos, and Cambodia.
• Total area: 331,210 sq km
• Climate: Tropical and hot
• Population: 94.7 million (Jan 2017)
• Currency: Vietnam Dong (VND)
• GDP real growth rate: 6.21% (2016).
• GDP by sector: Agriculture (18%), Industry (39%), and Services (43%)
• GDP per capita: US$ 2.111 (2016 est.)
• Inflation ratio: 1.83 % (2016)
• CPI: 4.74% (2016)
• Labor force: 56 million (2016 est.)
• International visitors: 1.07 million (April 2017)
• Cumulative FDI: US$ 300.7 billion; 23.071 FDI projects
• Exchange rate: 1 USD = 22.300 VND
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 GDP growth
8.0
7.0 6.7 6.0
6.68
5.9
6.0 5.2 5.4 6.2
5.0
4.0
3.0 %GDP
2.0
1.0
0.0
2010 2011 2012 2013 2014 2015 2016

Viet Nam’s Export - Import

2014 2015 2016
Export
150.2 162.4 176.6
(USD billion)
Import
147.8 165.6 174.1
(USD billion)

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 Viet Nam’s Top 5 Exports (2016) Viet Nam’s Top 5 Imports (2016)
Items Export value Items Import value
(USD billion)   (USD billion)
   
 Total value 176.3   Total value  174.1
1 Mobile phone and components 34.3 1 Machineries, equipments, tools and parts 28.4
2 Textile and garment 23.8 2 Computers, electronics, components 27.8
3 Computer, electronics and components 18.9 3 Telephones, mobile phones, parts 10.4
4 Footwear 13.0 4 Material (fabric, leather, footwear…) 18.8
5 Machineries, equipments, tools and parts 10.4 5 Iron and steel 7.5

Source: Viet Nam Customs

6
 Major export destinations of Viet Nam in 2016

7 Source: Viet Nam Customs

 Major import destinations of Viet Nam in 2016

8 Source: Viet Nam Customs

Viet Nam’s Economic Integration
FDI inflows to Viet Nam
2013 2014 2015 2016 Q.1 2017
Registered USD 22.3 USD 21.9 USD 22.7 USD 24.4 USD 7.71
Capital billion billion billion billion billion
Implemented USD 11.5 USD 12.5 USD 14.5 USD 15.8 USD 3.62
Capital billion billion billion billion billion

10 Footer text here

 Major FDI Investors in Viet Nam (up to Q1/2017)

29%

51% S. Korea
Japan
Singapore
Others
11%
9%

11 Footer text here

 Cumulative FDI – By sectors

Other
4%
Agriculture, forestry & fishery
1%
Warehouse and logistics
1%
Information and Communication Manufacturing & processing
2% 58%
Mining
2%
Wholesale, retail, maintenance services
2%
Construction
4%
Hotel & restaurant
4%
Manufacturing & distribution of water, gas, electricity
5% Real estate business
18%

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 Major Cities

• Capital city • 3rd largest city • 2nd largest city

HA NOI

DA NANG

HCM City
• Population: 7.6 • Population: 1.04 • Population:8.2
Million Million Million
• GDP (2015): • GDP (2015): • GDP (2015):
9.24% 6.68% 9.85%
• Political center • Potential • Important
of Viet Nam destination economic and
• Seaport commercial hub

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 Viet Nam – Indonesia Trade and Investment Relations
Year 2016 Quarter I 2017

Total USD 5.5 Billion USD 1.61 Billion

Vietnam’s export
USD 2.6 Billion USD 782 Million
to Indonesia
Vietnam’s import
USD 2.9 Billion USD 885 Million
from Indonesia

Indonesia is one of important investors of Vietnam

• Indonesia ranks 30th/105 countries and territories invest in Vietnam
• Total capital (Q1/2017): USD 436 Million
• Total projects (Q1/2017): 59 projects
• Major Indonesian investors in Vietnam: Ciputra, PT. Semen Gresik, etc.

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 Viet Nam’s main exports to Indonesia (Q1/2017)

24%
Phone and part

Iron and steel

Machines
45%
Material (textile, leather, etc.)

Computer and parts

12%
Others

8%

5% 6%

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 Viet Nam’s main imports from Indonesia (Q1/2017)
9%

9%

Coal Car

8%
Metal Chemical

Paper Others
7%
62%

6%

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 Part II:
Business and Investment Environment
and
Setting up a Business in Viet Nam

17
 Main Legal Documents

Law
• Commercial Law 2005
• Law on Import and Export Duties 2005
• Corporate Income Tax Law 2008 and later revised versions
• Enterprise Law 2014 (revised)
• Investment Law 2014 (revised)
• …
Decree
• Decree 187/2013/ND-CP dated 20 Nov 2013 on detailing the implementation of the
Commercial Law regarding international goods sale and purchase and goods purchase,
processing and transit agency activities with foreign countries
• Decree 78/2015/NĐ-CP dated 14 Nov 2015 on Enterprise Registration
• Decree 118/2015/NĐ-CP dated 12 Nov 2015 on providing guidance on a number of articles in
the Law on Investment 2014
•…

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 Improvements in new laws, regulations
• No need to apply for investment registration certificate, except for
investment projects of foreign investors; projects of which 51% of their
charter capitals is owned by foreign investor(s)
• Time to obtain investment registration certificate is shortened from 45 days
Investment to 15 days
Law 2014
• Investors may invest in business lines not prohibited under the Law
• 267 conditional investment lines
• Time to get Enterprise Registration Certificate is shorten from 5 – 10 days to
Enterprise 3 working days
Law 2014

• 09/9/2015, Viet Nam launched its National Single Window Portal, joined
ASEAN Single Window (customs clearance accelerated)
One-stop • National Business Registration Portal enabling online business registration
shop

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 Investment Incentives

Projects subject to investment incentives:

- Encouraged sectors;
- Local areas with difficulties;
- Industrial zones, high-tech parks, economic zones;
- Investment projects having capital of VND 6 trillion (US$ 266 million);
- Investment projects in rural areas;
- High tech enterprises, scientific and technological enterprises, scientific
and technological organizations.

Forms of Incentives
- Lower rate of corporate income tax
- Exemption or reduction of import tax on goods imported
- Exemption, reduction of land rents, land levy.

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 Taxation in Viet Nam
Value Added Tax - VAT

• Applicable to goods and services used for production, trading and consumption in Viet Nam
• 0%: exported goods/services sold to overseas
• 5%: essential goods and services (water, electricity, etc)
• 10%: standard VAT rate

Corporate Income Tax - CIT

• Current CIT rate: 22% and will be reduced to 20% on 1 January 2016
• Enterprise with total avenue does not exceed 20 billion/year: CIT rate of 20%
• Business in exploration and extraction of oil and rare resource: CIT rate of 32-50%
• Preferential rates of 10% an 20% apply to enterprises in certain sectors: education, training and health care, and to newly established
entities

Other Taxes: Personal income tax, Natural resources tax; Environment protection tax, etc.

Ministry of Finance / Viet Nam Customs / General Department of Taxation

www.mof.gov.vn
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 Setting up a Business in Viet Nam
•Contact and seek advice from a Vietnamese law firm (strongly
recommend)
•The Vietnam Trade Promotion Representative Office in Ho Chi Minh
city and Da Nang city
- HCMc office: hcmvietrade@vietrade.gov.vn
- Da Nang office: vietrade_danang@vietrade.gov.vn
•Research legal documents of Viet Nam (law, regulations, etc.)
•Search for information on the internet for reference
•Contact the Vietnam Trade Office in Indonesia (id@moit.gov.vn)
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•Prepare required document (if necessary) and contact the Viet Nam
 Setting up a Business in Viet Nam
No. Procedure Associated costs
Check the proposed company name; obtain a business registration certificate as
1 well as a tax registration certificate from the local business registration office under $9.52
the Department of Planning and Investment

2 Make a company seal $7.85 – $17.61 for bronze seal

3 Registration of the seal-sample at the Police Department $2.38
4 Open a bank account No charge
Publish the registration contents on the National Business Registration Portal
5 $33.33
(NBRP)
6 Pay Business license tax $47.61
Buy pre-printed VAT invoices from the Municipal Taxation Department or obtain
7 Approximately $9.52 per book
and print self-printed VAT invoices
Register with the local labor office to declare use of labor
8 No charge
(Municipal Department for Labor, Invalids and Social Affairs)
Register employees with the Social Insurance Fund for the payment of health
9 No charge
insurance and social insurance
10 Register for trade union with General Confederation of Labor No charge
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 Office and Factory lease cost
City Lease Cost Hanoi Ho Chi Minh city Da Nang

Grade A $39 - $43  $30 - $35 $18

Office space
Grade B $26 $17 - $20 $12
(per sqm /month)
Grade C $9-$15 $9 - $15 $8 - $12

Industrial Land Rentals

$0.13 - $0.19 $0.26 - $0.42 $0.09 - $0.11
(per sqm/month)

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 Water and Electrical rate in comparison
Source: JETRO’s 2013 Survey of Investment Related Costs in Asia and Oceania

USD/m3 USD/Kwh
Chart Title Chart Title
5 0.7
4.5 2.23 0.6 0.36
4
Water rate 0.5
3.5 Electrical rate
for business
3 use 0.4 for business
1.29 use
2.5 1.1 0.19
2.23 0.3
2 0.99 0.15
0.2 0.13 0.22
1.5 0.13
0.060.11 0.07
1 0.42 1.01 1.1 0.09 0.09 0.08
0.34 0.1
0.32
0.5 0.64
0.37
0
0

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 Wages and Office rent in comparison
Source: JETRO’s 2013 Survey of Investment Related Costs in Asia and Oceania

Legal minimum wage Office Rent (USD/m2/month)

3000 3000
2752 2752
2500 2500

2000 1918 2000 1918

1500 Legal minimum 1500 Office Rent
wage
1000 1000

500 500
226
113 197 223 40 21 23 119
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n ok r ta i ng nd ey no o r n ne
H
a
ngk
ka e i j
kl a
y dn
H
a
ngk ka e ij kl a yd
r c r B c S
Ba Ja
B
Au
S Ba Ja Au

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 Useful links and Contacts

• Ministry of Industry and Trade

• www.moit.gov.vn
• Ministry of Planning and Investment
• www.mpi.gov.vn
• Chamber of Commerce and Industry
• www.vcci.com.vn
• Viet Nam Customs General Dept.
• www.customs.gov.vn
• Viet Nam Trade Promotion Agency
• www.vietrade.gov.vn
• Viet Nam Foreign Investment Agency
• http://fia.mpi.gov.vn/
• Viet Nam Trade Office in Indonesia
• id@moit.gov.vn

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 Thank You !

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