Vietnam: What is an FDI enterprise? What conditions must be met to become an FDI enterprise?
What is an FDI enterprise according to Vietnamese regulations?
FDI is an acronym for Foreign Direct Investment, which means direct investment from abroad. Currently, this activity is commonly used in international economic activities, but Vietnam still does not have a specific regulation for this type of activity.
According to the provisions of Clause 22, Article 3 of the Investment Law 2020, foreign-invested economic organizations are economic organizations with foreign investors as members or shareholders. Therefore, based on the provisions of the Investment Law 2020, FDI enterprises are considered as foreign-invested economic organizations.
Vietnam: What is an FDI enterprise? What conditions must be met to become an FDI enterprise?
What are the requirements to become an FDI enterprise in Vietnam?
Clause 19, Article 3 of the Law on Investment 2020 stipulates that foreign investors are individuals with foreign nationality or organizations established under foreign laws that conduct investment and business activities in Vietnam. Based on the provisions of Clause 22, Article 3 of the Investment Law 2020 and Clause 19, Article 3 of the Investment Law 2020, to become an FDI enterprise, it is necessary to satisfy the conditions that at least one of the subjects is a foreign investor. to establish or contribute capital.
FDI enterprises in Vietnam are not allowed to organize any business lines?
In Article 6 of the Investment Law 2020 of Vietnam, it is stipulated that FDI enterprises are not allowed to conduct business in the following industries:
“Article 6. Banned business lines
1. The business investment activities below are banned:
a) Business in narcotic substances specified in Appendix I hereof;
b) Business in chemicals and minerals specified in Appendix II hereof;
c) Business in specimens of wild flora and fauna specified in Appendix 1 of Convention on International Trade in Endangered Species of Wild Fauna and Flora; specimens of rare and/or endangered species of wild fauna and flora in Group I of Appendix III hereof;
d) Prostitution business;
dd) Human trafficking; trade in human tissues, corpses, human organs and human fetuses;
e) Business activities pertaining to asexual human reproduction;
g) Trade in firecrackers.
h) Provision of debt collection services.
2. The Government’s regulations shall apply to production and use of the products mentioned in Points a, b, and c Clause 1 of this Article during analysis, testing, scientific research, medical research, pharmaceutical production, criminal investigation, national defense and security protection.”
Accordingly, prohibited business lines include:
- Trading in narcotics specified in Appendix I of this Law
- Trading in chemicals and minerals specified in Appendix II of this Law
- Trading in specimens of wild plant and animal species extracted from nature specified in Appendix I to the Convention on International Trade in Endangered Species of Wild Fauna and Flora; specimens of endangered, precious and rare species of forest plants, animals and aquatic animals of Group I, derived from natural exploitation as specified in Appendix III of this Law.
- Prostitution business
- Buying and selling people, tissues, corpses, human body parts, human fetuses
- Business activities related to human cloning
- Fireworks business
- Business debt collection services.
What is the procedure for granting a Lawful Investment Registration Certificate in Vietnam?
According to the provisions of Article 22 of the Investment Law 2020 of Vietnam, the following provisions are made:
“Article 22. Investment in the establishment of a business organization
1. Every investor shall establish a business organization in accordance with the following regulations:
a) A domestic investor shall establish a business organization in accordance with regulations of law on enterprises and law corresponding to each type of business organization;
b) A foreign investor that establishes a business organization shall satisfy market access conditions applied to foreign investors specified in Article 9 of this Law;
c) Before establishing a business organization, the foreign investor must have an investment project and follow the procedures for issuance or adjustment of an investment registration certificate, except for establishment of a small and medium-sized start-up enterprise and a startup investment fund in accordance with regulations of the Law on Small and Medium-sized Enterprises.
2. From the date on which the enterprise registration certificate or an equivalent document is issued, the business organization established by a foreign investor shall be the investor that executes the investment project set out in the investment registration certificate.”
The authority to issue an Investment Registration Certificate is specified in Clauses 1 and 2, Article 39 of the Law on Investment 2020, specifically:
“Article 39. The power to issue, adjust and revoke investment registration certificates
1. Management boards of industrial parks, export-processing zones, hi-tech zones and economic zone shall issue, adjust and revoke investment registration certificates with regard to the investment projects located therein, except for the case specified in Clause 3 of this Article.
2. Departments of Planning and Investment shall issue, adjust and revoke investment registration certificates with respect to the investment projects outside industrial parks, export-processing zones, hi-tech zones and economic zones, except for the case in Clause 3 of this Article.”
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