JAPAN INCREASES INVESTMENT IN VIETNAM IN FINANCE AND SERVICES

Japanese investors have switched from setting up business in Vietnam in manufacturing into financial investment, retail.

Why Japanese Investors Invest in Vietnam?

Three Reasons Japan Invests in Vietnam

Why Japan Will Increase Investment in Vietnam

Til end of Jan 2015, Japan is the second largest foreign investors in Vietnam in direct investment form with 2,494 projects, and total registered capital of nearly 36.9 billion USD however there have been changes in the structure of the investment capital in Vietnam.  In particular, the manufacturing sector once accounted for the largest proportion of investment in Vietnam drops 30% from nearly $ 1.2 billion in 2013 to nearly 830 million 2014.  In fact, the projects in the manufacturing sector often require huge capital during a long-term investment.  In the context that Japan’s economy faces difficulties as well as the global economy is not bright, the reduction of investment in the manufacturing sector is also understandable.

In indirect foreign investment in Vietnam, Japan ranks sixth in the list of countries conducting M&A in Vietnam with more focus on small or medium but long-term and potential large area.  The field of production only accounts for 10% of the total value.

However, the recent survey has shown there is a new wave of Japanese investment in other sectors such as construction, real estate, transportation or financial investment.  The report of The Japan External Trade Organization, or JETRO, a Japanese government-related organization that promotes trade and investment reflects the proportion of new investment projects in the construction, real estate increased from 3% in 2013 to 6% in 2014, while the capital had risen to 13%, compared with 2 % of a year ago.

In real estate sector, Tokyu Corporation has joined invested with Becamex IDC to develop Tokyu Binh Duong Garden City in an area of ​​over 110 hectares with a total investment of about USD 1.2 billion. Daibiru Corporation also acquired the office building Corner Stone in Hanoi with value of the deal at USD 60.1 mil.  These are example that Japanese investors recognizing the potential development of Vietnam’s changes in real estate market as the land ownership have been approved and effective from Jul 2015. As reported, M&A deals in real estate in 2014 accounted for 61% of M&A deals.

In financial investment, in 2014, Daiwa PI Partners and Vietnam Opportunity Fund of Vina Capital invested USD 45 million in the International Dairy Joint Stock Company, making foreign ownership increase to 70%.

In retail sector, Vietnam is also considered as an attractive market with growing mid-income consumer group. The largest retailer Aeon Japan after years of market research has poured more than USD 500 million for two commercial centers were opened in Ho Chi Minh City, Binh Duong and a new center in Long Bien (Hanoi).  The group also plans to expand through acquiring shares of two local supermarket being Fivimart and Citimart.

It appears that Japan is holding strong among the leading investors in Vietnam, together with Korea and Singapore.

ANT Consulting is here to assist you from the outset; providing intelligence, information, management or support and administrative services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Market Entry
• Tax Advice
• Legal Advice
• Outsourcing Services

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or call +848 3520 2779 (HCMC Office), +844 39388751 (Hanoi Office).  To learn more about us, please visit www.antconsult.vn

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SETTING UP LIMITED COMPANY

Why set up a private limited company? After all, setting up a limited company is likely to involve more administration and higher costs than if you were a humble sole trader.

Essentially, the answer as to whether you set up a private limited company concerns personal financial liability. If you’re a sole trader and your business fails, you’re personally liable for its debts. Potentially, you risk personal bankruptcy if the debt is considerable and you can’t pay it. Setting up a limited company offers protection against this.

Why set up a limited company?

A limited company is a separate legal entity and as such, legally, it’s responsible for its own actions. The finances of private limited companies are entirely separate from those of its owner(s). Private limited companies can have one or more shareholders, but shares cannot be sold publicly (ie on the stock market). Public limited companies, of course, can do this.

Providing you don’t trade recklessly or fraudulently, as a director of a limited company your risk of loss is restricted to money you’ve invested in the company. However, you’re liable for bank loans if you provide personal guarantees for that limited company.

To an extent, being a private limited company might make you more credible to potential customers, partners or investors.

How do I set up a limited company?

To become a limited company, you register (‘incorporate’) online at Companies House. Alternatively, for a small fee, an accountant, solicitor or agent will do this for you. All you need do to set up a limited company is provide some basic information and a few signatures. 

Ready-made limited company names are available to buy, should you wish. Alternatively, if you want to form a brand new limited company, you must send a memorandum of association, articles of association and a completed IN01 form to Companies House.

A memorandum of association details the limited company’s name, registered office and nature of business. It must be signed by the director(s) in front of a witness. A registered office is the official limited company address, which is where Companies House will send notices, letters and reminders. The articles of association set out the rules for the running and regulation of the company.

Companies House cannot supply memorandum and articles, but these can be bought from a legal stationer or company-formation agent.

What responsibilities do company directors have?  

Private limited companies must appoint at least one director, who can also be a shareholder in the limited company. Someone cannot assume this role if they’ve been disqualified from acting as a limited company director; if they’re an undischarged bankrupt; or are younger than 16-years-old.

Private limited companies no longer have to appoint a company secretary. Directors of private limited companies are responsible for notifying Companies House of changes in the structure and management of the company.

Accounts must be filed with Companies House each year ahead of the requested date, otherwise a fine is payable. Unless the company is exempt, accounts must also be audited annually. The company (or its accountants) must inform HM Revenue & Customs, by means of an annual return, of any taxable income or profits. Corporation Tax is then payable.

Company directors are employees of the company and must therefore pay income tax andClass 1 National Insurance contributions. Profit from limited companies is usually distributed to shareholders as dividends.

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BENEFITS OF SETTING UP BUSINESS IN DANANG

DANANG IS CONSIDERED AN IDEAL DESTINATION FOR INVESTMENT. THE RESULT SHALL BE INCREDIBLE WHERE WE EVALUATE ON THE FOLLOWING ASPECTS:

Danang – one of the strategic economic center of Vietnam’s central region

In March 13th, 2004, the prime minister signed a decision to establish central region’s strategic economic center, including 05 provinces and cities: Thua Thien Hue, Danang, Quang Nam, Quang Ngai and Binh Dinh to promote potential, geographical location and competitive advantages and step by step develop this economic region to become one of the most dynamic economic region in the country. In particular, Danang is defined as the role of nuclear motivation for promoting the development of the central region and the highlands.

Benifits of setting up business in Danang Vietnam

Danang – eastern gateway of east – west economic corridor (EWEC)

EWEC is one of five economic corridor developed by the initiative of the Asia development bank in the greater Mekong sub – region.

Currently, the road system in laos, thailand and the road line from danang to savannakhet are completed. The second international bridge spanning the mekong river was completed in the end of  2006 to facilitate the circulation of goods and passengers by road line from danang to the northeastern provinces of thailand and vice versa. East-west economic corridor not only provide an opportunity for the country on the path of promoting regional cooperation and improve living standards for the people but also enable businesses better access to the raw materials market services, capital, labor and technology … With the purpose of creating favorable conditions for investment and trade across the border and diversifying economic activity and exports and promoting tourism development

Danang – entrance of the cultural heritage and natural wonders of the world

Danang is located in the heart of the “world heritage road”, stretching from the central coast of vinh city to da lat city. From danang, along the national highway 1a, visitors can access quickly and conveniently four of five world heritage in vietnam, including phong nha – ke bang national park (about 300 km from the north of danang), the ancient capital of hue (about 100km from the north), hoi an (about 30km from the southeast) and my son (about 70 km from the southwest).

With the advantage of geographical location and potential economic development in tourism, danang is an ideal destination for tourists as well as investors.

Infrastructure is step by step improved

Danang is an important traffic hub of the central  – highlands and country with system of international airports, deep sea ports, roads, north-south railways  developed conveniently.

Danang portis the third largest commercial port in vietnam after saigon port and the port of haiphong. With a depth of 11m wharf, warehouse systems and equipment upgraded by capital funds of the government of japan, danang port can receive ships with a capacity of 45,000 dwt and others such as container ships, passenger ships, cargo ships. Danang is the international shipping route anabling to go to hong kong, singapore, japan, taiwan and korea.

Danang international airport is one of the three best airports in vietnam. In addition to domestic flights, there are weekly international flights directly from danang to singapore, bangkok, taipei. In the near future, the airport will open more routes to hong kong, japan and korea. Danang international airport is currently being upgraded and expanded to meet the needs of increasing passengers and cargos.

The system of roads in and out of the city are constantly being expanded and newly constructed

Telecommunication systems: danang is one of three major telecomunication centers of the country, international transmission speed with good quality of  southeast asia. Danang post providesvary and modern telecommunication services and be capable of meeting the needs of customers.

The other services supporting investment (financial, banking, insurance …): most banks and finance companies of vietnam have large branches in danang. Some branches of foreign banks and international insurance companies are operating effectively in the city. These services are increasingly better to meet the needs of investors.

Trained and abundant human resources

Danang has abundant human resources (over 50% of the population of the city), mostly young labor. Number of employees with technical expertise trained account nearly a quarter of the labor force. Labor costs in danang are lower than some other cities in the country.

Danang is one of the provinces in the country with the high educational development index which create a favorable platform for the development of human resources of the city to perform the goal of improving the quality of human resources, quality of life. The city has about 14 universities, 15 colleges and professional schools with nearly 140,000 students. This system performs train in most areas of science, engineering, information technology, economics, business administration, language and pedagogy… Danang university also cooperate with universities of countries with an advanced education such as france, us, japan, australia, canada, new zealand …

Software technology center in danang is one of the leading software producers in vietnam and is the leading training center of the central region. Over the years, the software technology center  has cooperated closely with companies of india (aptech) and japan (aots) to train programmers, technicians and engineers reaching the international expertise.

In addition, the city also has about 55 vocational training centers which often provide short-term training courses in computer science, sewing, mechanics, electricity – electronics, construction techniques, etc …

Quality of life

Along with the process of urbanization, economic growth in recent years has helped to material life and spirit of the people of danang continuously improved.

Unlike other large cities in vietnam, next to the bustle of urban development, lives in danang always bring a sense of peace, comfort and closeness to nature. Danang is one of the very few cities in vietnam having a harmonious combination between high mountains, deep forests, long beach, deep river. After work, you can easily find space to relax beside the river or on beautiful beaches.

Danang today is a city with a healthy cultural environment, with urban civilized lifestyle, literacy levels elevated, beautiful natural scenery. It can be said that danang is an exciting place to live, work, travel  and invest in vietnam.

If you wish to explore investment opportunities, or set-up company, business in Ho Chi Minh City in particular or in Hanoi or in Vietnam in general, please contact us via email ant@antconsult.vn or call our office number: +848 35202779 (HCMC) or +844 39388751 (Hanoi).

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ASSISTANCE TO SET-UP BUSINESS IN VIETNAM

TO HELP CLIENTS START BUSINESS IN VIETNAM, ANT CONSULTING INTRODUCE THE SERVICE TO ASSIST IN SETTING UP BUSINESS VENTURE IN VIETNAM.

FOREIGN INVESTORS COULD MAKE DIRECT INVESTMENT IN VIETNAM THROUGH SETTING UP ONE HUNDRED PER CENT (100%) CAPITAL OF FOREIGN INVESTORS, OR ESTABLISHING JOINT VENTURE BETWEEN DOMESTIC AND FOREIGN INVESTORS, OR  INVESTING IN THE CONTRACTUAL FORMS OF: BCC, BO, BTO, AND BT.

Types of enterprise for foreign investors to invest in Vietnam are as following:

a)     Set-up Limited Liability Company in Vietnam

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.

b)     Set-up Joint Stock Company in Vietnam

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.

c)     Set-up Partnership in Vietnam

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.

d)     Set-up Representative Office of foreign trader in Vietnam

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.

e)     Set-up Branch of Foreign Trader in Vietnam

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.

f)      Investment by Signing Contracts in Vietnam

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

Let us help your business in Vietnam.

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