Are you considering starting your own business in Vietnam? With its growing economy and favorable business environment, Vietnam presents a promising opportunity for entrepreneurs. However, navigating the process of setting up a business in a foreign country can be daunting. In this guide, we’ll walk you through the essential steps to start your own business in Vietnam, backed by detailed insights and reliable statistics.
Why Choose Vietnam for Business
Vietnam’s rapid economic growth and political stability make it an attractive destination for business ventures. Here are some compelling reasons why you should consider starting your business in Vietnam:
Strong Economic Growth: Vietnam has been one of the fastest-growing economies in the world, with an average GDP growth rate of around 6-7% annually over the past decade. According to the World Bank, Vietnam’s GDP reached $340.6 billion in 2020, making it one of the largest economies in Southeast Asia.
Favorable Business Environment: The Vietnamese government has implemented various reforms to improve the ease of doing business in the country. As a result, Vietnam ranked 70th out of 190 countries in the World Bank’s Ease of Doing Business Index in 2021, indicating a relatively favorable regulatory environment for businesses.
Strategic Location: Situated in the heart of Southeast Asia, Vietnam offers excellent connectivity to regional markets such as China, Thailand, and Singapore. With expanding trade agreements and infrastructure development, Vietnam serves as an ideal gateway for businesses looking to tap into the ASEAN market.
Young and Dynamic Population: Vietnam boasts a young and dynamic population, with a median age of around 30 years. This demographic dividend presents immense opportunities for businesses targeting the consumer market, especially in sectors like technology, e-commerce, and retail.
Abundant Labor Force: Vietnam is known for its skilled and relatively low-cost labor force, making it an attractive manufacturing hub for multinational companies. Additionally, the government has been investing in vocational training programs to enhance the skill sets of the workforce.
By choosing Vietnam as your business destination, you’ll gain access to a vibrant market, supportive government policies, and a skilled workforce, setting the stage for entrepreneurial success.
Now that we’ve covered why Vietnam is an excellent choice for business ventures, let’s delve into the essential steps to start your own business in this dynamic market.
Step 1: Choosing the field to do business
Choosing the field to do business in is a very important first step, as it will determine the subsequent steps. There are some business sectors in Vietnam that prohibit foreign investors from engaging, meaning you are not allowed to operate in those fields. Some sectors in Vietnam allow foreign investors to fully own companies with 100% capital. And there are some fields that restrict foreign investors by not allowing them to establish businesses or requiring them to form joint ventures with individuals or local companies. That’s why it’s necessary for you to identify which industry you will conduct business in Vietnam.
There are six sectors you may consider for doing business in Vietnam. That would be:
- Tourism and Hospitality
- Information Technology and Software Development
- Manufacturing and Export
- Agriculture and Agribusiness
- Renewable Energy and Environment
- Import-Export, Wholesale, and Retail
Before diving into any business venture, thorough market research is crucial. Understand the demand for your product or service in Vietnam, identify your target audience, and analyze your competitors. According to a report by Statista, Vietnam’s GDP growth rate has been consistently high, averaging around 6-7% annually over the past decade, indicating a robust market for businesses.
Step 2: Choose Your Business Structure
In Vietnam, you can choose from various business structures, including Limited Liability Company (LLC), Joint Stock Company (JSC), Partnership, or Sole Proprietorship. Each structure has its own set of requirements and implications. According to the World Bank’s Ease of Doing Business Index, Vietnam ranked 70th out of 190 countries in 2021, indicating a relatively favorable regulatory environment for businesses.
If you plan to establish a small-scale, individual model, the limited liability company (LLC) structure is suitable for you. The sole proprietorship business form may not be suitable for foreign investors. As for the joint-stock company (JSC) structure, it requires a minimum of three shareholders. You can find the advantages and disadvantages of each business structure in the Free Ebook.
Step 3: Choose a location to conduct business
When foreign investors start doing business in Vietnam, there are typically two locations that are often considered: Ho Chi Minh City and Hanoi. These are the two largest centrally governed cities in Vietnam.
Currently, there are many solutions regarding the main office address for you to choose from. You can rent an office with full amenities available, such as workstations. Alternatively, you can opt for virtual office solutions or shared offices to save costs while still ensuring you have an address for business registration purposes.
Step 4: Choose the appropriate investment form
For foreigners, there are three investment forms you can consider:
Firstly, establishing a company with 100% ownership, which means a business with 100% capital owned by the foreign investor.
Secondly, acquiring capital or shares of an existing company.
Thirdly, business cooperation through a business cooperation contract.
The third option is not common in Vietnam because it is not associated with establishing a business entity. The first and second options are common investment forms that you can choose based on your practical needs.
Step 5: Business registration procedures
For the form of establishing a company with 100% ownership, it requires you to go through 2 procedures as follows:
Firstly, you need to proceed with the application for an Investment Registration Certificate (IRC).
Next, after obtaining the IRC, you will proceed with the establishment of the business to implement the project.
In the case where you choose to acquire capital or shares of an existing company, you need to carry out procedures for capital contribution registration, share purchase. After approval by the Department of Planning and Investment, the company will proceed to include your name in the business license.
Typically, it will take from 20 to 30 days for you to complete all these procedures. Except for some industries with special conditions such as manufacturing, processing, and manufacturing, the time may be longer.
Depending on each investment form, the procedures to be carried out will be different. It is essential for you to choose a local consulting firm to advise and carry out the procedures for you.
Step 6: Fulfill Legal and Tax Obligations
Compliance with legal and tax obligations is essential for operating a business in Vietnam. This includes obtaining necessary licenses and permits, adhering to labor laws, and fulfilling tax requirements.
So, we have just gone through 6 important steps to know how to start your own business in Vietnam. We hope it is useful for you in researching investment and business opportunities in Vietnam.
Click here to download a free Ebook guide on establishing businesses in Vietnam for foreign investors.
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