Brief on foreign direct investment of January 2018

Accumulated to January 20th, 2018, the country has 24,941 valid projects with a total registered capital of 320.3 billion USD. The accumulated realized capital of foreign direct investment projects was estimated at 173.9 billion USD, equivalent to 54.2% of total valid registered capital.

In January 2018 separately, total value of newly and additionally registered capital, capital contributed and shares purchased by foreign investors was 1.255 billion USD, equaling 75.9% of the same period in 2017. Realized capital of foreign direct investment projects was estimated at 1.05 billion USD, up 10.5% over the same period in 2017

I. Foreign investment in Vietnam 

1. FDI accumulation until January 2018 

Up to January 20th, 2018, the foreign investors have invested in 19 out of 21 branches in the national economic classification system, in which, processing, manufacturing industrial field accounted for the highest proportion with 187.1 billion USD, making up 58.4% of total investment, followed by real estate business with 53.2 billion USD (accounting for 16.6% of total investment capital), production and distribution of electricity, water and gas with 20.8 billion USD (making up 6.5% of total registered investment capital).

There were 125 countries and territories having valid investment projects in Vietnam. Korea ranked first with a total registered capital of 58.1 billion USD (accounting for 18.1% of total investment capital). Japan ranked second with 49.46 billion USD (capturing 15.4% of total investment), followed by Singapore and Taiwan, British Virgin Islands, Hong Kong.

FDI has been present in 63 provinces and cities in the whole country, in which Ho Chi Minh City continued to rank first in FDI attraction with 44 billion USD (making up 13.7% of the total investment capital), followed by Binh Duong with 30.4 billion USD (accounting for 9.5% of total investment), Hanoi with 27.67 billion USD (capturing 8.6% of total investment), Hanoi with 27.37 billion USD (accounting for 8.5% of total investment).

2. FDI attraction in January 2018

2.1 Performance

Realized capital

As of January 20th, 2018, foreign direct investment projects were estimated to disburse 1.05 billion USD, up 10.5% as compared to the same period in 2017.

Export and import

Export: Export of foreign investment sector (including crude oil) was 13.59 billion USD, up 33.7% as compared to the same period in 2017 and accounting for 71.5% of total export turnover. Export excluding crude oil was 13.4 billion USD, up 34.7% as compared to the same period in 2017 and accounting for 70.5% of total export turnover.

Import: Import of FDI sector was 7.8 billion USD, up 2% as compared to the same period in 2017 and capturing nearly 58.4% of total import turnover. Generally, the trade surplus of FDI sector was 5.79 billion USD including crude oil and 5.6 billion USD excluding crude oil.

2.2 Granting of investment certificate

As of January 20th, 2018, the whole country had 166 new projects granted investment certificate with total registered capital of 442.59 million USD, equaling 35.6% compared to the same period last year and 61 times of projects adjusted capital with total additionally registered capital of 456.78 million USD, up 155% over the same period in 2017. Newly registered investment capital in January 2018 decreased significantly as compared to same period in 2017 because in January 2017, there are many licensed projects with capital from 100 USD to nearly 300 million USD (accounting for over 71% of the total newly registered capital in January 2017), meanwhile in January 2018 no new projects over 100 million was licenced.

Also in January 2018, the whole country had 415 times of capital contribution and share purchase by foreign investors with a total value of the capital contribution of 356.04 million USD, up 54.7% as compared to same period of 2017. This includes 212 times of capital contribution and share purchase that increased enterprise chartered capital with the value of the capital contribution of 199.15 million USD and 203 times of capital contribution and share purchase in which foreign investors bought secondhand shares from domestic holders without increasing charter capital with the total value of capital contribution of 156.89 million USD.

Generally in January 2018, total newly and additionally registered capital and capital contributed and shares purchase by foreign investors was 1.255 billion USD, equaling 75.9% of the same period of 2017.

By investment field

In January 2018, 19 fields were invested by foreign investors, in which, processing and manufacturing industry attracted much attention from foreign investors with the total capital approximately 909 million USD, accounting for 72.4% of the total registered capital in January 2018. Wholesale and retail field ranked second with total investment capital of 90 million USD, accounting for 7.2% of total registered investment capital. Real estate business ranked third with total registered investment capital of 77.6 million UDS, capturing 6.2% of total registered investment capital.

By investors

In January 2018, there were 45 countries and territories having investment projects in Vietnam. South Korea ranks first with total investment capital of 355.6 million USD, making up 28.3% of total investment capital; Singapore ranked second with total registered capital of 199 million USD, accounting for 15.8% of total investment capital into Vietnam; Hong Kong ranked third with a total registered capital of 147.4 million USD, capturing 11.7% of total investment capital.

By investment area

In January 2018, 59 provinces and cities were invested by foreign investors, in which Ho Chi Minh City attracted the most of FDI with a total registered capital of 306.2 million USD, capturing 24.4 % of total investment capital. Hai Duong ranked second with a total registered capital of 181.3 million USD, accounting for 14.4% of total investment capital. Binh Duong ranked third with a total registered capital of 168.1 million USD, accounting for 13.4% of total investment capital.

Some large projects granted invest certificate in January 2018 are:

- Kefico Vietnam Co., Ltd., licensed in 2009 with the aim of producing spare and auxiliary parts for motor vehicles in Hai Duong, adjusted to increase investment capital by 120 million USD.

- Vina Cell Technology Co., Ltd projects, licensed in 2016 with the goal of producing the solar battery in Bac Giang province increased investment capital by 100 million USD.

- Nam Dinh Ramatex Textile and Garment Factory project with total investment capital of 80 million USD invested by Singaporean investors in Nam Dinh.

- Jotun Paint Vietnam Co., Ltd. project, licensed on January 19, 2018, with total investment capital of 70 million USD invested by Norway investors in Ho Chi Minh city.

II. Vietnam's investment abroad

In January 2018, the whole country had 6 projects granted certificates of investment registration abroad with a total investment of 6.46 million USD from Vietnam. In which, there are 3 projects in the wholesale and retail field with a total investment capital of 5.17 million USD, accounting for 80% of total investment capital. The other three projects are in the processing, manufacturing, accommodation industry and professional science and technology activities. The countries received investments from Vietnam in January 2018 are Canada, Cambodia, New Zealand, Germany, Belize, Myanmar./.

- Ministry of Planning and Investment -

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Foreign investors register to invest 1.25 billion USD in January

Foreign investors registered to invest nearly 1.25 billion USD in Vietnam in January, which will include funding for new projects, in addition to existing projects and buying stakes in projects, which will equal 75.9 percent, compared to the same period last year.

In January, the disbursement of foreign direct investment (FDI) saw a positive increase of 10.5 percent to 1.05 billion USD year on year, according to statistics from the Ministry of Planning and Investment’s Foreign Investment Agency.

A number of large projects were granted licences during the month, including Kefico Vietnam Company Ltd, which was allowed to add 120 million USD in investment capital; Vina Cell Technology Company Ltd, which added 100 million USD; the Nam Dinh Ramatex Textile and Garment Factory project with total capital of 80 million USD in Nam Dinh province, funded by a Singapore investor; and Jotun Paint Company Ltd in HCM City, invested by a Norwegian investor with funds of 70 million USD.

Out of 125 countries and territories with FDI projects in Vietnam, the Republic of Korea was the most significant investor with 58.1 billion USD, accounting for 18.1 percent of total capital. Japan was in second place with 49.46 billion USD at 15.4 percent, followed by Singapore, Taiwan, Britishvirgin Island and Hong Kong.

In terms of investment in foreign countries, Vietnam granted licences for investments in foreign countries for six projects in January, with a total investment capital of 6.46 million USD.

Three of these projects were in retail and wholesale areas, while the remainders were in the fields of processing and manufacturing, residential services and science and technology.

The projects are being conducted in Canada, Campuchia, New Zealand, Germany, Belize and Myanmar.

- dtinews -

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Penalties on Working Without Work Permit in Vietnam

Vietnam has become an attractive destination for foreigner investors due to the impressive development of socio – economic in recent years. This is such a good opportunity for Vietnamese enterprises to get cooperation in business with foreign partners.

To take advantage of the opportunities to be the pioneer and market share, many of them have demand in employees with good skills and qualifications. To meet these requirements, more and more companies hire foreign workers for specific positions which might lack of human resources within Vietnam territory.

Work permit in Vietnam

According to Labor Code 2012, the employer wishing to recruit the foreign workers has to explain their labor demand to the People’s Committee of provinces and obtain written approval from this agency. Pursuant to this written approval, the employer shall submit the application for the work permit to the Department of Labor, War Invalids and Social Affairs of the province where the planned working place of such foreign workers is located.

A foreign citizen wishing to work in Vietnam must fully meet the following conditions:

Possessing full civil act capacity;

Possessing technical and professional qualifications and skills and health appropriate to the work requirement;

Not being a criminal or subject to penal liability examination according to Vietnamese and foreign laws;

Possessing a work permit granted by a competent Vietnamese state agency, except the cases specified in Labor Code.

Therefore, based on regulations of the Labor Code of Vietnam, except for the foreign citizens exempted from work permit i.e. investor of company established in Vietnam, all of cases the foreign citizens wishing to work in Vietnam shall be subject to work permit application. A foreign employee shall produce his/her work permit when carrying out immigration procedures or upon request of a competent state agency.

In case foreign citizens who do not belong to work permit exemption being found working in Vietnam without work permit, that person shall be considered violation of the law of Vietnam. In addition, the employer that uses the violated employee without work permit shall be punished accordingly.

According to Decree No. 95/2013/ND-CP amendments to the government’s Decree No. 95/2013/ND-CP dated August 22, 2013 on Penalties for administrative violations against regulations on employment, social insurance, social insurance, and Vietnamese guest workers:

i) Foreign citizen that working without work permits, except for the cases in which the work permit is exempt shall be expelled.

ii) Employers who employ foreign workers in Vietnam without work permits or certificates of exemption from work permits, or employ foreign workers using expired work permits shall be implied:

a. A fine from VND 30,000,000 to VND 45,000,000 if the violation involves 01 – 10 workers;

b. A fine From VND 45,000,000 to VND 60,000,000 if the violation involves 11 – 20 workers;

c. A fine From VND 60,000,000 to VND 75,000,000 if the violation involves more than 20 workers;

Additional penalty: The employer who commits the violation mentioned herein shall have its operation suspended for 1 – 3 months.

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Ordinary customs tariff in force from January 1, 2018

The Prime Minister has adopted the Decision No. 45/2017/QD-TTg amending and supplementing the Decision No. 36/2016/QD-TTg that prescribes application of ordinary customs duty rates with the following noticeable provisions:
From January 1, 2018 the ordinary import tariff given in the Annex to the Decision No. 45/2017/QD-TTg in place of the Annex given in the Decision No. 36/2016/QD-TTg dated September 1, 2016 will be applied.

Customs Law firm in Vietnam

The HS schedule of goods which are taxed at the rates subject to the new ordinary customs tariff is established on the basis of the Decree No. 125/2017/ND-CP amending and supplementing the Decree No. 122/2016/ND-CP.
Where imported goods are not specified in this new Tariff Schedule and do not qualify for incentive duty rates or other special treatments referred to in a, b of paragraph 3 Article 5 of the Law on Import and Export Duties, they will be subject to the ordinary duty rate which equals as much as 150% of the incentive customs duty rate stated in the Appendix II of the Decree No. 125/2017/ND-CP .

The Decision No. 45/2017/QD-TTg will enter into force from January 1, 2018.

Source Thuvienphapluat .vn

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04 important things that enterprises must take into consideration in 2018

The policies and guidelines in effect from 2018 which may have significant influence on enterprises, including:

1. Simplification of documentation required for application for enterprise registration:

This is a guideline set out in the Resolution No. 136/NQ-CP dated December 27, 2017 on the plan to simplify administrative procedures and citizen's papers related to management of residents under the jurisdiction of the Ministry of Planning and Investment.

Accordingly, documentation requirements and contents of application and declaration forms necessary to apply for registration of establishment of enterprises will be subject to changes in the coming time, specifically including:

- Repealing the documentation requirement such as “Citizen Identification card, ID card, passport or other legally-required documents" for application of registration of enterprises.

- Replacing certain personal identification information by “personal identity numbers" existing in sample forms and declarations required by enterprise registration formalities.

Additionally, the Resolution provides a guideline to cancellation of the requirement for submission of personal identification documents in several formalities for outward and inward investment in Vietnam.

2. Support policies for Small and Medium-sized Enterprises

From January 1, 2018 the 2017 Law on Support for Small and Medium-sized Enterprises enters into force and provides a number of support policies for these enterprises, specifically including:

- Credit access support: Establishing the Credit Guarantee Fund to grant guarantee for corporate credit;

- Tax and accounting support: Allowing enterprises to apply the CIT rate in the definite term which is less than the one normally applied to other enterprises.

- Production premise support: Allocating unoccupied land for development and construction of industrial clusters, agricultural, forestry and aquacultural product processing zones; granting subsidies for the price of land lease for industrial parks, hi-tech parks and industrial clusters operating in local jurisdictions.

- Technological support; support for incubation centers, technical centers and shared working places: Supporting technological innovation and development; granting exemption from and reduction in land rental, non-agricultural land use and corporate income tax.

- Market expansion support: Establishing product distribution chains.

- Information, consultancy and legal support: Permitting enterprises to have access to information through the national portal for corporate support; granting exemption from and reduction in consultancy costs charged for use of consultants’ services.

- Personnel development support: Granting relief from costs of participation in business and business management training courses.

Especially, the Law prescribes particular policies intended for enterprises transformed from business households and small or medium-sized startups.

3. Elimination of a great number of business requirements

The Decree No. 08/2018/ND-CP provides for removal and reduction of a lot of business requirements in such sectors as oil and gasoline, cigarettes, electricity, commercial franchising, electronic commerce, chemical, industrial explosive and food. Below are typical examples:

- Elimination of certain requirements concerning oil and gasoline manufacturing and business;

- Elimination of requirements concerning the franchisee party involved in commercial franchising activities;

- Repeal of the requirement saying, "it is mandatory that websites must have legitimate domain names and conform to regulations on management of information available on the Internet”, which is one of the requirements for establishment of e-commerce websites for sale of commodities and provision of services.

The Decree No. 08/2018/ND-CP will enter into force from January 15, 2018.

4. Requirements for granting business licenses to foreign investors

The Decree No. 09/2018/ND-CP entering into force from January 15, 2018 has laid down provisions on innovation of requirements for granting the license to purchase and sell goods to foreign investors, specifically including:

- Covering more persons eligible for being granted the business license, including foreign investors who do not belong to member countries or territories of international treaties of which Vietnam is a member (in contrast to the previous regulation under which only foreign investors belonging to member countries of international treaties of which Vietnam is a member are eligible for such business license).    

- Covering more goods and services which are eligible for the business license, including those which are not endorsed in international treaties of which Vietnam is a member (in contrast to the previous regulation under which only goods or services in which Vietnam is committed to open the market are eligible for such business license).

In each of the aforesaid cases, foreign investors are bound to meet certain requirements and criteria.

Source: Thuvienphapluat .vn

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Draft and Review Contracts - A Lawyer's View

In Vietnam, certain type of contract has to follow forms requested by laws as such client is recommended to seek help from professional contract lawyers in Vietnam to help draft or review.

Contract is an agreement enforced by law.  In Vietnam, contract is a civil transaction which parties enter into voluntarily, each of whom intends to create, change, or terminate one or more rights or obligations between them according to Vietnam Civil Code.  Contract plays an important roles in business transaction.  Written contract provide individuals and businesses a legal document reflecting agreement, expectation and mechanism to resolve potential disagreement or disputes.

Contract lawyers in Vietnam

The lawyers in Vietnam drafting or reviewing contracts under Vietnam laws will need to initially review the legal resources in relevant to the transactions, research related documents and the parties involved to provide legal opinions, make suggestions and propose an optimal solution to the client for negotiation and contract finalization.

Basic terms and conditions of the contracts being rights and obligations of parties to the contracts, and other terms in regard to duration, quality, payment, dispute handling procedures, applicable law and/or jurisdiction, confidentiality, force majeure, intellectual property clauses...among others have to be carefully taken into considerations.

Further, a contract should ensure the following points to be covered:

• Use right legal terms or terminology;
• Foresee the future scenarios;
• Describe the specific matters;
• Clearly mention obligations;
• Obtain a balance between parties involved.

There are specific contracts in Vietnam for various transactions being:

• Joint venture contract;
• Share purchase contract;
• Sales contract;
• Business cooperation contract;
• Licensing contract;
• Investment contract;
• Labour contract;
• Lease contract;
• Distribution contract;
• Construction contract;
• Prenuptial agreement.

Each business transaction is different as such a contract is not a compilation of standard terms and conditions.  Professional contract lawyers in Vietnam would consider the purpose of the contract, transaction type, significance of the deal, industry, Vietnam legal requirements and expectation of the client to prepare a legally enforceable contract for the client, to avoid misunderstanding and protect the client against legal disputes.

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Customs Procedures Handling of Exported and Imported Goods Infringing Intellectual Property Rights.

On conducting customs procedures for exported or imported goods, the customs authority shall be responsible to inspect and compare the declared information of the goods owners on the written customs declarations on goods’ names, trademarks, origin, value,…; Inspect and compare the concluded contents of the State management agencies on the exported or imported goods; Results of customs dossiers inspection with the results of goods actual inspection; To compare the said inspection results with the laws and regulations on counterfeit goods.

Customs dispute law firm in Vietnam

In case the goods are found with intellectual property rights infringement signs, leaders of the Department of Customs where the infringing goods are located shall consider and decide to apply measures to prevent administrative violations and ensure the administrative violations punishment according to Current regulations for the cases:

Imported goods do not comply with goods labeling in accordance with regulations of laws; state inspection conclusion on goods quality or goods quality inspection results determine that the inspected goods do not fulfill requirements on importation and exportation quality; the goods listed in the list of state management agencies that fail to meet quality standards or are not allowed to circulate on the market; The contents stated on the goods labels are incompliant with other enclosed documents and so on.

Regarding the infringing goods and being temporarily suspended, during the time the goods are being temporarily suspended or subjected to prevention measures as prescribed by laws, the Departments Customs shall be responsible to take the following verification measures: Requesting the goods owner, owners of genuine goods which are counterfeited to provide documentation relating to the goods; cooperating with the goods owners and owners of genuine goods being counterfeited to collect samples and unify the appraisement traders to conduct appraisement; coordinating with the anti-smuggling control forces in verification and investigation according to prescribed profession.

Actions against counterfeit goods or goods with signs of counterfeit

In case the imported, exported goods are detected to be counterfeit, preventive and penalty measures in accordance with legislation on penalties for administrative violations shall be applied;

If exported and imported goods are detected with signs of counterfeit, the Director of the Department of Customs shall request the customs declarant to provide documents related to the goods:

A sale contract of goods or vouchers with equivalent value;

A technical document or a written component analysis (if any).

If the owner of the genuine goods which are counterfeited is determined, the owner of genuine goods which are counterfeited shall provide documents related to goods (such as catalogs, appraisement conclusions, and documents from abroad, results of handling of similar cases). If the owner of the genuine goods could not be determined, customs dossiers, genuine goods, analysis results of the risk information of goods and the law on counterfeit goods shall be utilized for identification; customs control forces shall be cooperated to investigate, verify (if necessary) or transfer information, case files to customs control forces to investigate, verify and handle in accordance with regulations of laws.

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From January 1, 2018, the license for import business is legally required for automobiles vehicle import

This is one of the provisions laid down in the Decree No. 116/2017/ND-CP prescribing statutory conditions for manufacture, assembly, import of automobiles vehicles and trade in automobiles vehicle maintenance and repair services.

Pursuant to this Decree, from January 1, 2018, enterprises will be allowed to import automobiles vehicles only if they satisfy statutory conditions and have already obtained the license for automobiles vehicle import business in accordance with applicable regulations.

Setting up business in Vietnam

In order to obtain this license, enterprises are required to:

- Legally own, contractually lease or authorize automobiles vehicle servicing premises that conform to prescribed requirements.

- Have a confirmation or document evidencing that they are entrusted to act on behalf of foreign automotive manufacturing and assembling enterprises to recall automobiles vehicles imported in Vietnam.

Application documentation for the license is discussed in detail in the Decree No. 116/2017/ND-CP set to commence on October 1, 2017.

Source: Thuvienphapluat .vn

See more: Process Setting-up Foreign Owned Import Export Business in Vietnam

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