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Set up a factory in Vietnam

Set up a factory in Vietnam. Foreign investor (Client) intends to setup a factory for producing concrete products and offering construction services in Vietnam. You therefore would like us to assist in legal advice for setting up and operating the Factory.
We are grateful to present you hereinafter our Legal Services Proposal for your review and consideration.

1. Background of the case
It is our understanding that Client plans to setup a Foreign Owned Company for
manufacturing concrete products and offering construction services in Vietnam.
Establishment of the Foreign Owned Company (hereinafter referred to as “FIC”) shall require an Investment Certificate from the licensing authority.
Depending upon the location of the FIC, the licensing authority may be the Provincial People’s Committee (for FIC located outside industrial or export processing zones) or the provincial Industrial and Export Processing Zones Management Authority (for FIC located in industrial or export processing zones).
In this case, we note that the FIC shall offer construction services and manufacture concrete products.
For manufacturing concrete products, Clients shall be required to setup a factory.

For said purpose, following items are key work streams for setting up any Factories in Vietnam:

(i) Locating the suitable land lot: It is noted that all land in Vietnam is owned and
administered by the State. As such, there is no private ownership of land and all land is thus rented from the state. Before being granted the right to use land for business purposes, all land users must obtain a Land Use Right Certificate. Despite of that Vietnam Authority shall grant the Land Use Right Certificate only after completion of obtaining the Investment Certificate for FIC, Client shall need to carefully work with the provincial Industrial and Export Processing Zones Management Authority (for locating factory in Industrial Park) or Provincial People Committee (for locating Factory outside of Industrial Park) to consult the availability of suitable land lot before starting the Licensing Process. In-principal approval of the provincial Industrial and Export Processing Zones Management Authority or Provincial People Committee on the land lot to be leased is considered as one of essential documents for obtaining Investment Certificate of the FIC. According to our practical experience in previous case, Client should consider locating the Factory in Industrial Park. Then, Client may save much time and cost for obtaining the in-principle approval for location of the factory. Meanwhile, if Client intends to setup factory outside of Industrial Park, Client shall have to spend a considerable amount of money and time for prepare master planning, site clearance etc.

(ii) Environmental impact assessment to evaluate the possible impacts that the Factory may have on the environment, consisting of the environmental, social and economic aspects.
Depending on specific position of the case, the provincial Industrial and Export Processing Zones Management Authority shall require Client to conduct the Environmental Impact Assessment before the Licensing Process or not. However, we highly recommend Client to proceed with Environmental impact assessment before commencing the Licensing Process in order to avoid potential risk.

(iii) Obtaining Investment Certificates: Under Vietnam Law, obtaining Investment
Certificate for the project with investment capital from at least 300 billion Vietnam
Dong (about 15,000,000USD) shall be subjected to Investment Evaluation Process.
Accordingly, Client shall need to prepare the Feasibility Study for the Project of
setting up the Factory. Time limit for obtaining Investment Certificate under the
Investment Evaluation Process is 45 working days from submission of application
dossier for the Investment Certificate. However, in practice, the process can be much longer as it requires the Licensing Authority to consult relevant Ministries before granting Investment Certificate. Thanks to our strong relationship with the Ministries, we can help you to accelerate the process of getting their opinions.

(iv) Obtaining Certificate of Land Use Right: Vietnam Law requires all Entities to obtain Certificate of Land Use Right before being granted right to use land for business purpose. Time limit for obtaining Certificate of Land Use Right is about 10 working dates from the submission of application dossier to competent authority.
(v) Obtaining Construction Permit: Client shall be required to obtain Construction
Permit before commencing its construction work. Time limit for obtaining Construction Permit under Vietnam Law is 20 working days from submission of application dossier for construction permit.

(vi) Submission of documents proving satisfaction of conditions for fire fighting and prevention

2. Other considerable factors
The relevant licensing authorities shall evaluate the legitimacy and the feasibility of your Investment Proposal t to determine on granting of the Investment Certificate on the following basis:

a. the legal framework including Vietnam’s WTO Commitments, Vietnam Investment Law, Vietnam Enterprise Law, Regulations applicable to specific industries as well as the master economic development plan of the city or province that the FIC shall register its head-office. For manufacturing concrete products and construction services, Vietnam Government does not impose any restriction. Then, your investment proposal shall be supported.

b. Your financial ability, investment capital to put in the Investment Project, facilities and human resources serving the implementation of such investment project in Vietnam. In this field, Vietnam Law does not impose any minimum rate of required capital. However, according to our practical experience, for setting up a factory, you must consider investment of an amount of 700,000USD upward.

c. Technology applied for manufacturing concrete product shall be also a notable thing.
High Technology shall be much encouraged. Client shall be required to prepare
explanation on technology, machine etc used for manufacturing concrete products in Vietnam. Old technology which may cause environment pollution shall be rejected.

3.The roadmap for the incorporation of the FIC in this case can be described in following steps as follows:

Pre-licensing work:
Client shall be required to liaise with competent authority for
obtaining in-principle approval for location of the Factory. Processing shall be very much depended on the desired location. In Industrial Park, the process can be completed within
01 – 02 weeks. Meanwhile, if you locate the factory outside of Industrial Park, it shalltake you about 4-6 months to complete the Pre-Licensing work.

Preparing the application dossier:
We shall collect necessary information and
documents from you. Upon receipt of necessary information and documents from you, we shall translate documents from English into Vietnamese and prepare the application dossier under the standard forms. The initial drafted application dossier shall be sent to you for your comments. Then, after updating the application dossier based on your comments, we shall obtain the preliminary comments from the competent authority and send the finalized application dossiers for you to sign and seal. We anticipate that this phase shall be completed within 07 -15 working days.

Submission of application dossier:
Within 02 working days from receipt of duly signed and sealed application dossier, we shall submit the application dossier to the competent authority. It shall take about 01 month from submission of application dossier to the competent authority for the provincial licensing authority to grant the Investment Certificate. In some case the process can be longer as it takes time to consult relevant Ministries such as Ministry of Industry and Trade, Ministry of Planning and Investment, and the Ministry of Finance.

Post licensing:
Within 13 working days we shall complete the post licensing procedures such as publishing the FIC in News Paper, obtaining seal and tax code registration.

» Starting a business in Vietnam
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