Business in Vietnam can be classified into 3 categories viz. un-conditional businesses, conditional businesses and restricted businesses. This article on the Top 5 business in Vietnam lists the best 5 businesses to set up in Vietnam in the unconditional and conditional categories. Before setting up a business in Vietnam it is always advisable to check in which category your intended business falls, as it might not always be possible to get a business registration certificate. Setting up an LLC in Vietnam in the unconditional business category is the easiest as there are no pre-requisite conditions. On the other hand, setting up a foreign company in Vietnam in the conditional business category might be significantly difficult. Foreign investors doing business in any conditional business category may have to fulfill with a number of pre-conditions inordre to recieve a business registration certificate.
Businesses in Vietnam are set up for two main reasons
1. For entities (individuals/ businesses) who want to grow their enterprise invest in Vietnam’s economy and repatriate profits.
These are genuine investors who typically set up a company in Vietnam or find ways of buying a business in Vietnam and are mostly keen on having a foreign company in Vietnam.
2. For entities (individuals) who want to retire in Vietnam with the option to undertake some short-term work to generate an income.
Since there is no retirement visa program one of the ways for a person to remain in Vietnam indefinitely is by becoming an investor either by buying an existing business or starting a company in Vietnam.
Business in Vietnam – Top 5 unconditional businesses to invest in
Unconditional businesses are businesses in Vietnam in which 100% foreign direct investment is permitted i.e 100% foreign ownership is allowed without any pre-conditions or prerequisites.
- Wholesale (consumer goods) trading company in Vietnam (B2B).
- Management consultancy (including HR consultancy) in Vietnam.
- IT and software development company in Vietnam.
- Engineering company i.e EPC related and technical services in Vietnam.
- Graphic design and digital marketing company in Vietnam.
Types of companies in Vietnam operating these businesses – LLC (limited liability company) with 1 – 50 equity holders.
Preconditions – Nil
- Foreign equity – 100% ownership
- Local director – Not required
- Investment capital – No stipulated minimum investment capital
Cost of setting up a company in Vietnam in any of these sectors – USD 10,000 + investment capital.
Business in Vietnam – Top 5 conditional businesses to invest in
Conditional businesses, as the name suggests are businesses in which foreign investors are allowed to make investments only after fulfilling certain pre-conditions. These pre-conditions are typically related to minimum investment capital and equity sharing with a local Vietnamese person, majority equity held by a local Vietnamese person or a combination of all of the above.
- Setting up a 100% foreign-owned retail (consumer goods) trading business in Vietnam.
Preconditions – after the government issues the business registration certificate foreign investors must apply for a special retail trading license.
Drawbacks of establishing a retail business in Vietnam – In addition to the retail trading license which must list the specific products or group of products, one also requires a retail outlet license which has to be approved by multiple departments of government.
Approval time – 1 year.
Minimum costs – USD 25,000 onwards
- Setting up a 100% foreign-owned e-commerce business in Vietnam.
(e-commerce online market place eg. Llazada, e-commerce online classifieds eg. Shopee, e-commerce retailers, eg any company selling their own products online through their website)
Preconditions – Need a special retail trading license.
Drawbacks – In addition to the retail trading license one would also require a special e-commerce license for which a mock of the e-commerce website must be submitted to the Department of E-commerce and Digital Economy under the Ministry of Industry and Trade.
Approval time – 3 – 6 months.
Minimum costs – USD 45,000 onwards
- Setting up a 100% foreign-owned English language center or education-related business in Vietnam.
Preconditions – Need a special education license from the department of education.
Drawbacks – The license to operate any education center requires the investor to fulfill 4 conditions related to capital investment, infrastructure, syllabus and staff.
Approval time – Typically, 3 – 6 months.
Minimum costs – USD 32,122 onwards
- Setting up a 100% foreign-owned restaurant, coffee shop, microbrewery and F&B outlet.
Preconditions – Need prior approval from the local people’s committee to authorise the location of the F&B establishment prior to the approval of the business license.
Drawbacks – Firstly, require a license post-incorporation for food hygiene and safety. Lastly, require several other licenses such as a fire safety license, alcohol license and environment license.
Approval time – Typically, 3 – 6 months.
Minimum costs – USD 28,688 onwards
- Setting up a 99% foreign-owned restaurant tourism-related business in Vietnam.
Preconditions – Foreign investors must offer 1% equity to a Vietnamese national
Drawbacks – Foreigners can only invest in companies involved in inbound tourism-related activities. Need a special tourism license. All tour guides must be local Vietnamese.
Approval time – Typically, 3 – 6 months.
Minimum costs – USD 20,668 onwards
Mahan company Ltd offers a #1 Stop service for FDI consultancy and company registration. Additionally, we also offer marketing and operations management, HR consultancy, stragergy for business expansion, M&A and consultancy services for exit stratergies. Mahan is committed to giving foreign investors the local advantage along with the support needed to help them make informed decisions. We are an enabling resource, focused towards generating wealth for foreign investors. To find out more about our services from us please click here.
Disclaimer
This article provides information of a general nature based on current Vietnamese laws and regulations. Part of the information provided herein is also based on our practical experience, interpretations of the law as well as other credible sources, freely available in the public domain. For specific circumstances, readers should seek proper advice and/or contact the Mahan team at contact@mahan-vn.com-vn.com.