vietnam

What business sectors or industries are highly profitable in Vietnam 2022

What business sectors or industries are highly profitable in Vietnam 2022

What business sectors or industries are highly profitable in Vietnam

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What business sectors or industries are highly profitable in Vietnam

LHD is a professional consultant company. LHD law firm professionally provides the professional consultant services in specific areas such as: Intellectual Property Consultant, Investment and Management Consultant....

LHD Main Services

LHD law firm offers cost-effective Vietnam Business Services and Vietnam market entry solutions and expertise to companies and entrepreneurs wishing to take advantage of the attractive quality-to-cost ratio of Vietnamese manufacturing operations or seeking to access Vietnam's growing market for imported goods and services.

The transformation of Vietnam's centrally planned economy into a market-oriented economy has created a business and market environment in Vietnam where business regulations are subject to change, business goal posts are constantly being moved and bureaucracy is overbearing. Thus, doing business in Vietnam and Vietnam market entry are often challenging experiences and coming to terms with Vietnamese legislation, regulation, taxation and, most importantly, the Vietnamese way of doing business can be both expensive and time-consuming. 

LHD law firm Worldwide's strength lies in its understanding of and ability to deal with these Vietnam business and market entry challenges. Our knowledge of relationships in Vietnam ensures that our clients receive full support in their business activities, be they in corporate support or business development services.

Our international outlook makes us sensitive to cultural and business differences and enable us to bridge the cultural and business gaps that can so easily hinder business success in Vietnam and facilitate our ability to deliver both Vietnam business services and Vietnam market entry solutions

LHD Law Firm Services

We offer a portfolio of Vietnam business services and Vietnam market entry solutions covering every aspect of these processes. Our expertise encompasses a wide-portfolio of services and advice relating to Vietnam market entry, typically leading to the establishment of:

  • A Representative Office in Vietnam
  • A Vietnamese investment company with total or part foreign ownership
  • A Joint Venture in Vietnam
  • A Special Purchase Vehicle using a Hong Kong or a low or zero tax company (“offshore”)

Additionally, LHD law Firm Worldwide offers:

  • Bespoke Vietnam Business Services relating to the identification of suitable tax advisers, lawyers, local partners, premises, factories, management, staff and expatriate housing.
  • Professional corporate administration services. We have the capacity to deliver a turn-key back office function for an operation in Vietnam.

Whilst our Vietnam Business Services and Vietnam market entry solutions are broad, many of our clients utilize our services selectively, and this approach is welcomed.

Our clients are diverse. They include major US corporations, international companies and both owner managed business and entrepreneurs.

Best 15 Most Profitable Business Opportunities in Vietnam

Vietnam is a very suitable and profitable place for your business to grow. The open economy of Vietnam has many advantages like the strong growth rate of the economy, Government support, infrastructural development, cheap labor, skilled workforce, and low cost of developing a business, etc.

Agriculture & Food Processing

Vietnam is rich in agriculture and exports several items like rice, coffee, cotton, peanuts, rubber, sugarcane, etc. Besides these items, there are many other items like fruits, vegetables that you can process and sell to the customers and earn profits. You can even export them.

You can do the business of agricultural processing by having your farm, and growing produce. Alternatively, you can buy them from farmers and processes. Just one thing; you have to do good research on the local demand as well as export potentials of processed food.

Cosmetics & Detergent

The demand for beauty products is rising in Vietnam, as the economy is rising and the population has a large percentage of youth. This is your excellent opportunity to earn good profits from this popular business idea in Vietnam.

Detergent making is among the most popular business ideas in Vietnam. There is a steady demand and people always look for new and unique products. Therefore, you can do good business by manufacturing detergent.

Restaurant/Bar

Vietnamese love to go to different kinds of restaurants to eat out. You can start a restaurant with good décor serving quality food. It can be local Vietnamese food, or you can serve foreign food too. A restaurant of any size or type is a popular business idea in Vietnam. In cities like Ho Chi Minh City, Hanoi, Da Nang, the restaurant business can bring in big profits.

The bar also has a good demand and thereby a good business opportunity for you. However, remember that there are certain government rules and regulations regarding the opening bar. Be very particular in following the regulations to avoid any legal complications.

Real Estate

Real Estate business is now a very popular business idea in Vietnam as the country is developing and several immigrants and expatriates are coming to this country. You can start your real estate business in Vietnam and expect a good profit.

You can build properties and put up for sale, or you can buy properties and resell them. Real estate has very good demand. You can also be a property manager or a real estate agent. Since real estate is a huge field, you have to be careful in choosing the slot of your operation.

Tourism

Vietnam is a beautiful country with a distinct culture and attracts tourists from different parts of the world around the year. That is why tourism is a popular business idea in Vietnam.

You can open your travel agency and organize different types of tour packages for the tourists. Vietnam is full of places with natural beauty and there is no dearth of tourists here. Therefore, you are bound to make profits.Do good research on the places and the culture of the country so that you can attract tourists and arrange a pleasant trip for them. The local cuisine is also very famous and does not forget to add them to the tour packages.

In case you want to go to hotels or guesthouses, you have to go through the real estate rules and regulations.

Logistics

The growth of export-centric manufacturing has given rise to good demand for logistic business. You can start your logistics business in Vietnam with the help of a few rented delivery trucks to start with.

In this business, you have to grow your contact network very well and maintain the schedule. Many companies in Vietnam do not have their logistic unit, but they need such a service. Therefore, this is your opportunity to grow the logistic business.

Exports

Export is among the most lucrative popular business ideas in Vietnam. The country export important items like rice, coffee, crude oil, rubber, seafood, etc. You can sell these items to international buyers through different e-commerce websites.

You can also start your business as a freight forwarding agent, forwarding manufactured goods to the buyers. As a freight forwarding agent, you can do business on a local level as well as at the international level.

Property Supervisor

The business of Property Supervisor is popular in Vietnam. Many people in Vietnam own properties but do not have the time or intention to supervise them. This is a scope for you to grow your business as a Property Supervisor.

This business can be run from home too. You need to visit the property regularly, collect rents, pay bills or taxes of that property.

Marketing Services

The growing economy of Vietnam is characterized by the growth of different kinds of enterprises. Most of them need an efficient marketing service to keep pace with the economy and earn profits.

In this scenario, marketing services is a popular business idea in Vietnam. As an independent Marketing Consultant, you can provide an effective service to the organizations by providing analysis of marketing trends, factors for the generation of demand, consumer patterns, changing preferences, etc....

And if you want to invest and set up a business in Vietnam 

Following below, we discuss

  • Set-up Process
  • Charter Capital
  • Key Positions in Foreign-invested Entities

Set-up Process

The first step in setting up a business in Vietnam is acquiring an Investment Certificate (IC), also known as a Business Registration Certificate. The time period required to acquire an IC varies by industry and entity type, since these determine the registrations and evaluations required:

  • For projects that require registration, IC issuance takes about 15 working days.
  • For projects subject to evaluation, IC issuance time is likely to vary. Projects not requiring the Prime Minister’s approval take 20 to 25 working days, while projects that do need such approval take approximately 37 working days.

It is important to note that during the IC application process, under Vietnamese law, all documents issued by foreign governments and organizations must be notarized, consular legalized, and translated into Vietnamese. Once the IC has been issued, additional steps have to be taken to complete the procedure and start business operations, including:

  • Seal carving
  • Tax code registration (within ten working days of the issuance of the IC)
  • Bank account opening
  • Labor registration
  • Business license tax payment
  • Charter capital contribution
  • Public announcement of company establishment

Charter Capital

As defined by Vietnamese law, charter capital is “the amount of capital contributed or undertaken to be contributed by shareholders in a certain period and stated in the charter of the company.” In an additional clarification of the definition, the Vietnamese government stated that “the charter capital of a shareholding company is the aggregate par value of the number of issued shares.”

Therefore, charter capital can be used as working capital to operate the company. It can be combined with loan capital or constitute 100 percent of the total investment capital of the company. Both charter capital and the total investment capital (which also includes shareholders’ loans or third-party finance), along with the company charter, must be registered with the license-issuing authority of Vietnam. Investors cannot increase or decrease the charter capital amount without prior approval from the local licensing authority.

In addition to the FIE’s investment certificate, capital contribution schedules are set out in FIE charters (articles of association), joint venture contracts and/or business cooperation contracts. Members and owners of Limited Liability Corporations (LLCs) must contribute charter capital within the capital contribution schedules of their chosen method of business establishment.

In order to be able to transfer capital into Vietnam, after setting up the FIE, foreign investors must open a capital bank account in a legally licensed bank. A capital bank account is a special purpose foreign currency account designed to enable tracking of the movement of capital flows in and out of the country. This type of account allows money to be transferred to current accounts in order to make in-country payments and other current transactions.

Key Positions in Foreign-invested Entities

The key positions in foreign-invested entities vary by entity type. Here, we’ll discuss the management structure of an LLC.

The management structure of a multiple-shareholder LLC consists of:

  • The Member’s Council and its Chairman
  • The General Director
  • The Board of Supervision (when the LLC has more than ten members)

The Member’s Council is the highest decision-making body of the company and serves a management role under its Chairman. In an LLC with multiple owners, each member participates in the Member’s Council.  If the owner of the LLC is a business entity, that entity can appoint representatives to serve on the Member’s Council.

The Member’s Council must convene at least once a year, however, the Chairman or a shareholder holding at least 25 percent of the share capital can request a meeting at any time. The Chairman is responsible for preparing meeting agendas, convening meetings, and signing documents on behalf of the Member’s Council.

The General Director oversees the daily business of the company and implements resolutions of the Member’s Council.

In the case that an LLC has more than ten members, the creation of a Board of Supervision is mandatory. The formation, operation, powers, and functions of the Board of Supervision are not stipulated in law, but are instead prescribed in the company’s charter (articles of association).

Forms of Investment in Vietnam

Foreign investors when setting up business in Vietnam need to be advised by a law firm in Vietnam on forms of investment.

According to the Vietnam Law on Investment (2005), foreign investors can invest in Vietnam through direct investment and indirect investment.

The direct investment is when the investor invests its invested capital and participates in the management of the investment activities, includes:

–          To establish economic organizations in the form of one hundred per cent (100%) capital of domestic investors or one hundred per cent (100%) capital of foreign investors.

–          To establish joint venture economic organizations between domestic and foreign investors.

–          To invest in the contractual forms of: BCC, BO, BTO, and BT.

–          To invest in business development.

–          To purchase shares or to contribute capital in order to participate in management of investment activities.

–          To invest in the carrying out of a merger and acquisition of an enterprise.

–          To carry out other forms of direct investment.

Foreign investor will be considered for acceptance by the competent authorities and be granted Investment Certificate.

Indirect investment means a form of investment whereby the investor contribute the capital but do not participate directly in the management of the investment activity, includes:

–           Purchase of shareholding, shares, bonds and other valuable papers;

–           Through securities investment funds;

–           Through other intermediary financial institutions.

Types of enterprise for foreign investors to invest in Vietnam

a)     Limited Liability Company

Limited Liability Company is a form of enterprise which is established by contributing of members.  A member shall be liable for the debts and other property obligations of the enterprise within the amount of capital that it has undertaken to contribute to the enterprise.

Limited liability companies are regulated by two types:

–          One member Limited Liability Company is an enterprise owned by one organization or individual;

–          Limited Liability Company with two or more members is an enterprise owned by organizations or individuals, in which the number of members shall not less than two members and not exceed fifty.

Organizational and management structure of Limited Liability Company normally comprise of a Member’s Council, General Director or Director.

b)     Joint Stock Company

Joint Stock Company is an enterprise which has charter capital divided into equal portions called shares.   The minimum number of shareholders shall be three and there shall be no restriction on the maximum number.

Shareholders shall be liable for the debts and other property obligations of the enterprise only within the amount of capital contributed to the enterprise.

Joint Stock Companies may issue all types of securities to raise funds.  Founding shareholders must together register to subscribe at least twenty per cent (20%) of the number of ordinary shares which may be offered for sale.

The main difference between Joint Stock Company and Limited Liability Company is the Joint Stock Company can raise funds by offering shares or securities.  In addition, an enterprise tends to join the Stock exchanges or public company must be a Joint Stock Company.  Management system of Joint Stock Company is more complicated than Liability Company.

c)     Partnership

A partnership is an enterprise which must be at least two members being co-owners of the company jointly conducting business under one common name.  In addition to unlimited liability partners, there may be limited liability partners.

Unlimited liability partners must be individuals who shall be liable for the obligations of the company to the extent of all of their assets.  Limited liability partners shall only be liable for the debts of the company to the extent of the amount of capital they have contributed to the company.

d)     Representative Office of foreign trader

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.

e)     Branch of foreign trader

The Branch of a foreign business entity in Vietnam (referred as “The Branch”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to enter into contracts in Vietnam and conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

The Branch will need to apply and obtain the establishment license; and have a seal bearing the name of the Branch.

The Branch is permitted to conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

f)      The investing measures by signing Contracts

Business co-operation contract (BCC) means the investment form signed between investors in order to co-operate in business and to share profits or products without creating a legal entity.

Build-operate-transfer contract (BOT) means the investment form signed by a competent State body and an investor in order to construct and operate commercially an infrastructure facility for a fixed duration; and, upon expiry of the duration, the investor shall, without compensation, transfer such facility to the State of Vietnam.

Build-transfer-operate contract (BTO) means the investment form signed by a competent State body and an investor in order to construct an infrastructure facility; and, upon completion of construction, the investor shall transfer the facility to the State of Vietnam and the Government shall grant the investor the right to operate commercially such facility for a fixed duration in order to recover the invested capital and gain profits.

Build-transfer contract (BT) means the investment form signed by a competent State body and an investor in order to construct an infrastructure facility; and, upon completion of construction, the investor shall transfer the facility to the State of Vietnam and the Government shall create conditions for the investor to implement another project in order to recover the invested capital and gain profits or to make a payment to the investor in accordance with an agreement in the BT contract.

Foreign investors may sign BOT, BT and BTO contracts with a competent State body to implement infrastructure construction projects in Vietnam. Typically, the contracts are for projects in the fields of transportation, electricity production, water supply, drainage and waste treatment.

The rights and obligations of the foreign investor will be regulated by the signed BOT, BT and BTO contract. The Government encourages both public- and private-sector investors to participate in BOT, BTO and BT in the following sectors:

(i)              Construction, operation and management of brand-new infrastructure facilities; and

(ii)             Renovation, expansion, modernization, operation and management of the existing infrastructure facilities such as:

•     Roads, bridges, tunnels, and ferry landings;

•     Railway bridges and railway tunnels;

•     Airports, seaports and river ports;

•     Clean water supply systems; sewage systems;

•     Wastewater, waste collecting and handling systems;

•     Power plants and power transmission lines;

•     Infrastructure works of health service, education, training, career training, culture, sport and offices of State agencies; and

•     Other projects as may be determined by the Prime Minister

What Foreign Investors Need to Know About Taxes in Vietnam

Foreign investors whom set-up company in Vietnam always face challenges to understand the tax system in Vietnam. The below briefly explains type of taxes in Vietnam for regular enterprises. In special cases, foreign enterprises are suggested to consult with tax lawyers in Vietnam before establishment and during the operation to ensure compliance

Major taxes which enterprises including both local and foreigners are subject to are corporate income tax, import and export taxes, and value added tax, and their employees are subject to personal income tax. Other taxes might be applicable depending on nature of business, such as natural resource tax, special consumption tax, and foreign contractor tax.

Corporate income tax (CIT) is governed under Vietnam Law on Corporate Income Tax. CIT is calculated by multiplying assessable income with the CIT rate. Assessable income is the difference between sales revenue and deductable expenses. In general, CIT tax rate in Vietnam is currently 22% and will be reduced to 20% starting Jan 1st, 2016.

Export and Import tax are governed under Vietnam Law on Export tax and Import tax. Export of finished goods is encouraged and export tax is 0%. Import tax will be as import tax tariff published by the government unless exempted for reasons of import to process for export, import to create fixed assets other other cases as the laws regulated.

Value added tax (VAT) is governed under Vietnam Law on Value added tax, applicable to goods and services sold in Vietnam. VAT is calculated by multiplying taxable price and VAT rate. The most common VAT rate is 10%. The rate level of 5% and 0% are applicable in certain cases.

Personal income tax (PIT) is governed under Vietnam Law on Personal income tax. Tax payers are resident, which taxable income includes income generated both inside and outside of Vietnam; and non non-resident, which taxable income includes income generated from Vietnam, regardless of the place where it is paid or received.

Income tax for foreigners working in Vietnam

A foreign individual is determined to have the tax resident in Vietnam if it meets one of the following conditions:

  • Have been in Vietnam for 183 days or more in one calendar year or within 12 consecutive months, counted from the first day in Vietnam. The number of days stayed in Vietnam is based on the individual passport;
  • It is considered a permanent residence in Vietnam in one of these two cases: (i)   Location of permanent residence registration is in Vietnam and this is stated in the registration card and permanent or temporary residence card; (ii) The residence in Vietnam is unregistered but the there was a lease of a total number of 90 days or more during the tax year.Objects of lease that are included in this case are hotels, workplaces and offices regardless if the individuals or a leasing company rent the objects.

Foreign individuals who do not fall under the conditions above are not determined to be tax resident in Vietnam. Foreigners working in Vietnam that are tax resident must pay income tax on their earned wages in Vietnam, including wages earned abroad. The amount of the tax to be paid will be determined by the tariff prescribed by the state.  In addition, foreigners residing in Vietnam are entitled to family allowances that include: (i) The deduction for taxpayers is 4 million/month (48 million/year); (ii) The deduction for each dependent is 1.6 million/month If foreigners working in Vietnam but do not fulfill one of the conditions to be tax resident in Vietnam, the personal income tax on wages for them will be determined by a fixed tax rate of 20% and is thereby no progressive tariff. Accordingly, they only have to pay tax on the salaries and wages incurred in the territory of Vietnam but the income from abroad are not taxed in Vietnam.

 

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