Set-up Representative Office in Vietnam

Setting up company 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.

ANT Consulting assists clients with Market Entry, Legal Advice, Tax Advice and Outsourcing Services in Vietnam.

We are located in Hanoi, Da Nang and Ho Chi Minh City.

Talk to our consultants at +84 28 3520 2779 or email us ant@antconsult.vn

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Coastal Shipping in Vietnam

Shipping regulatory in Vietnam

1.Coastal shipping competition

According Maritime Bureau, in 2015, although business activities of coastal shipping enterprise still had some difficulty, the total output reached 118.7 million tons, increasing 9.5% compared to 2014.

A Deputy Director of Vietnam Maritime Bureau, Mr Bui Thien Thu said that domestic shipping had taken charge of 100% of the domestic demand of coastal shipping. The domestic container ships has increased to 39 ships, a total increase of freight load is 200% from 2013 to 2015. The coastal shipping routes has transported 6.1 million tons of cargo including coal, slag, stone, rock, metal, fertilizers, cement, ore, fuel oil …

In 2015, output of goods in Vietnam’s seaport system continues an impressive growth, estimated at 427.3 million tons, rising 14.6%, in which the container reached 12 million TEUs, rising 15.5% compared to 2014.

According to Deputy Director of Bureau Bui Thien Thu, cargo volumes through Vietnam’s seaport system in 2015 in accordance with the approved plan in Decision No. 1037 of the Prime Minister in 2014 was 410 million tons. Thus, the volume outperformed 4.1% in 2015 compared with the initial plan.

However, the goods have been misallocated between different domestic seaports. To resolve this situation, there is a need to improve connectivity transport infrastructure and supporting services to relocate goods in different seaports, while speeding up the relocation of the port on the Saigon River and Ba Son shipyard.

During the year, Vietnam Maritime Bureau has completed the review and adjustment of detailed planning of port group 1, 2, 3, 4 and 6, thus managing the system more effectively. The Ministry of Transportation approved this plan.

By 2016, the total output of goods through the port system is estimated to reach 470 million tons (increasing 10% compared to 2015), in which each container is expected to reach 13.3 million, increasing 11% TEUs.

2.Vietnam Government published policy on Coastal Shipping, particular container services

In late May 3/2013, the Ministry of Transport has issued Document No. 128 / TB – BGTVT decision to terminate the operation of foreign fleets in terms of container shipping service in domestic routes, consisting of 20 units with a total tonnage of 500,000 DWT.

The foreign ship owners are not able to disapprove this decision since prioritising domestic fleets is compatible with the Law of the customs, as well as commitments to the world Trade Organization (WTO) on the protection of the members.

From 2013 to 2015, the fleets of Vietnam were given good opportunity to win back market share in terms of the domestic container shipping, which used to belong to the foreign shipping companies (with an estimated value of 1,000 billion / year). There are various container shipping companies gaining loyal leads which ground stable roots for domestic fleets.

Also Vietnam Maritime Bureau in collaboration with Ministry of Transport, Vinalines, Vietnam Ship Owners Association and Vietnamese ship owners operating on domestic routes ensure the limitation of congestion at seaport.

Average freight rates of Vietnamese fleet are offering customer around 5.2 million / 20-foot container for the north – south journey. This price is equivalent to the unit price of the foreign shipping company in 2012.

There have been more Vietnamese fleet being able to operate on domestic routes such as Hai Phong and Cai Lan to HCMC, Ba Ria – Vung Tau and vice again.

3.Vietnam regulations establishing who can and who cannot provide coastal shipping services, particular containers.

To ensure sufficient capacity to meet the demand for domestic container market, in addition to 30 domestic container shipping companies, Vietnam Maritime Bureau has also allowed 8 foreign fleets owned by Vietnamese enterprises to operate on domestic routes.

The biggest difficulty for domestic container shipping companies is that market has not completely recovered. Currently the container shipping companies from the South to the North reach approximately 80% of capacity, while the reverse route only reaches 50% capacity.

In long term, this policy has enabled the Vietnamese fleet to gradually recover from difficult period when all the domestic container shipping belonged to foreign companies.

ANT Consulting assists clients with Market Entry, Legal Advice, Tax Advice and Outsourcing Services in Vietnam.

We are located in Hanoi, Da Nang and Ho Chi Minh City.

Talk to our consultants at +84 28 3520 2779 or email us ant@antconsult.vn

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Korean Companies Choose Vietnam for Doing Business

set-up business in Vietnam

Results of the survey of Korea International Trade Association (KITA) announced in early January 2015 showed that the majority of the Korean companies which planned to expand their business in the emerging foreign markets this year had chosen Vietnam.

According to KITA, out of about 537 Korean businesses surveyed, 49% said that they planned to develop their businesses or set-up business venture in Vietnam in the year 2015

The surveyed companies can choose from the list of 32 countries with an annual growth rate higher than 3% in the past three years.

Indonesia and Thailand are the No.2 and No.3 preferred markets with 37.4% and 30% of the companies selected to survey respectively, followed by Malaysia with 28.5% and Turkey with 20.7%.

The survey results showed that among the 15 most popular leading business locations this year, there are 7 countries in East Asia.

More than 53% of Korean companies surveyed said that they are targeting the local consumer market in countries above, 24.8% said they would use the country as a production facility, and 22, 2% said the expansion was to take advantage of the value of the existing free trade agreements.

ANT Consulting assists clients with Market Entry, Legal Advice, Tax Advice and Outsourcing Services in Vietnam.

We are located in Hanoi, Da Nang and Ho Chi Minh City.

Talk to our consultants at +84 28 3520 2779 or email us ant@antconsult.vn

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Vietnam Personal Income Tax Laws Foreigners Should Know

Set-up representative office in Vietnam

As the deadline for declaring Personal Income Tax (PIT) is approaching, we are reviewing some tax laws in Vietnam that foreigners working and earning in Vietnam should know and comply.

Law No. 71/2014/QH13 dated 26 November 2014 issued by Vietnam National Assembly amending five tax laws including Law on Personal Income Tax (“PIT”) and Law on Tax Administration provides with regulations on PIT finalization.

Vietnamese Government further issued a number of regulations on tax declaration, payment and finalization, as follows:

1. Decree No. 91/2014/ND-CP dated 1 October 2014, of Government, amending Decree No. 65/2013/ND-CP and Decree No. 83/2013/ND-CP of guidance on the Law on Tax Administration (“Decree 91”). Decree 91 has complemented several exemptions from PIT finalization and comes into effect from 15 November 2014.

2. Circular No. 119/2014/TT-BTC dated 25 August 2014, of the Ministry of Finance, amending and supplementing a number of tax circulars in order to simplify tax formalities (“Circular 119”). Circular 119 has supplemented regulations on PIT obligations of any individual who is a citizen of the country and/or territory entered into an agreement on preventing double taxation with Vietnam.

3. Circular No. 128/2014/TT-BTC dated 5 September 2014, of the Ministry of Finance, guiding the reduction of personal income tax for individuals working in economic zones and border-gate (“Circular 128”). Circular 128 broadens the subject of tax deduction and comes into effect from 20 October 2014.

4. Circular No. 151/2014/TT-BTC dated 1 October 2014, of the Ministry of Finance, guiding Decree 91/2014/ND-CP on various aspects of PIT finalization, providing detail subjects which are not required to finalize PIT.

Tax resident in Vietnam should note that 2014 Personal Income Tax finalization shall be made no later than 31 March 2015.

ANT Consulting assists clients with Market Entry, Legal Advice, Tax Advice and Outsourcing Services in Vietnam.

We are located in Hanoi, Da Nang and Ho Chi Minh City.

Talk to our consultants at +84 28 3520 2779 or email us ant@antconsult.vn

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Japan Increases Investment in Vietnam in Finance and Services

Vietnam company formation

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 assists clients with Market Entry, Legal Advice, Tax Advice and Outsourcing Services in Vietnam.

We are located in Hanoi, Da Nang and Ho Chi Minh City.

Talk to our consultants at +84 28 3520 2779 or email us ant@antconsult.vn

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Strong Flows of FDI Into Vietnam in Jul 2015

Vietnam company formation

It has been reported foreign direct investment is strong in the month of Jul 2015 for which foreign investors have been putting more money into manufacturing through setting up business in Vietnam especially high tech area.

There were a series of FDI projects that are newly granted with the investment certificate in July 2015, such as the 274 million USD project of Far Eastern in Binh Duong; or the project of Regina Miracle Company will invest 88 million USD to build a shoes manufacturing plant in an area of ​​13.6 hectares in the VSIP Hai Duong. Moreover, VSIP has just received the investment certificate of the industrial park – urban area – services VSIP Nghe An project with the first phase investment capital of over 15 million USD, the entire project could be 76 million USD.

This trend will probably continue in the future, and not just relying on those large-scale projects mentioned above. In the mid-July, during the visit to the United States, leaders of Ho Chi Minh City (HCMC) have signed a written approval for the Jabil Group (US) to invest additional amount of 500 million USD to expand their factory in HCMC hi-tech park.

Jabil has invested in Vietnam since 2007 and recently they are continuously expanding their investment. According to the statistics of HCMC, Jabil’s revenue in HCMC have steadily increased by 50% / year over the last 5 years and accumulated until the end of June 2015, Jabil has exported 1.3 billion USD of the high-tech products, making great contributions to the socio – economic development of the city.

If this project soon to be granted the investment certificate, it will contribute not only to newly registered FDI capital, but more importantly, emphasis the intention to encourage investment in high-tech sectors was a right choice.

Not only in the field of high technology, in order to meet the opportunities brought up by the Trans-Pacific Partnership (TPP), many large FDI projects will flow into Vietnam in the coming time. The negotiations in an effort to resolve outstanding issues when joining TPP will be conducted this coming months. If completed, the TPP will bring many opportunities (and of course the challenges) for Vietnam.

Meanwhile, there are more and more foreign business delegations coming to seek investment opportunities through setting up factories in Vietnam. Last week, a South Korean business delegation came to Vietnam to survey the market and seek investment opportunities in the field of electronics industry in Vietnam.

South Korea is currently the largest investor in Vietnam, with total registered capital of over 39 billion USD and this figure will continue to rise sharply in the future. According to Mr. Kim Young Sun, general secretary of the ASEAN – Korea Center, Vietnam is an attractive investment destination for many Korean businesses, especially businesses in the electronics field.

In particular, with the Vietnam – Korea free trade agreement has just been signed, the expected two-way trade turnover will reach 70 billion USD by 2020. This will open up further extensive cooperation opportunities between Vietnam and Korea in various fields, including investment in Vietnam.

ANT Consulting assists clients with Market Entry, Legal Advice, Tax Advice and Outsourcing Services in Vietnam.

We are located in Hanoi, Da Nang and Ho Chi Minh City.

Talk to our consultants at +84 28 3520 2779 or email us ant@antconsult.vn

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