6 Steps to Prepare for Overseas Investment

Overseas investment has become an important strategy in the context of increasing globalization. Many businesses, from small to large, realize that expanding the market beyond national borders not only brings opportunities to increase revenue but also helps access advanced technology and improve competitiveness. International investment allows businesses to diversify resources, minimize risks and take advantage of cost advantages in new markets. However, to successfully implement overseas investment activities, businesses need to prepare carefully and master important steps. This article will guide customers through 6 essential steps to ensure an effective and sustainable investment process.

What is overseas investment?

Foreign direct investment is understood as Vietnamese investors establishing or contributing capital to economic organizations abroad, directly operating and managing economic organizations abroad, using money, machinery, and equipment to contribute capital.

Foreign investment can be implemented in two main forms:

Direct investment: This is when an organization or individual purchases or establishes companies, branches, or joint ventures directly in the target country. This may include owning or managing businesses or assets directly.

Indirect investment: This is when an organization or individual invests in financial instruments, such as stocks, bonds, or investment funds, related to a business or project in a target country that they do not directly control or manage

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Step 1: Businesses plan and invest

Detailed investment planning is the first and most important step. Businesses need to:

– Set clear investment goals: Identify the reason for the investment, such as expanding the market, finding raw materials, or optimizing the production process. This goal should have specific and quantitative indicators.

– Market research: Carefully analyze the target market, including:

– Consumer needs and trends: Learn about the consumption habits of local customers.

– Competitiveness: Evaluate competitors in the industry, determine your business’s competitive advantage.

– Business conditions: Understand legal regulations, business environment and local culture.

– Budget and resource allocation: Prepare a table of investment cost estimates, including start-up costs, operating costs, marketing costs, and contingency for risks. This helps businesses have an overview of their financial capacity.

Step 2: Determine the form of foreign investment

There are many forms of investment that businesses can choose from, including:

– Joint venture: Create a cooperative relationship with a local partner to share risks and profits. Joint ventures can help businesses easily access the market and better understand the local culture.

– 100% foreign investment: Businesses operate on their own without local partners. This is a highly controlled form of investment, but at the same time requires large capital and good risk management capabilities.

– Contributing capital, buying shares, buying capital contributions of economic organizations abroad to participate in the management of that economic organization. This form helps businesses quickly penetrate the market with available infrastructure and customers.

Enterprises need to carefully analyze each form to choose the optimal option for their investment goals and available resources.

Step 3: Carry out procedures for granting certificates of registration for overseas investment

To carry out overseas investment, businesses need to apply for a Certificate of Investment Registration from a competent state agency. This process includes:

Preparing documents for procedures for granting certificates of overseas investment.

The information that needs to be prepared includes:

– Name of investment project/Name of company abroad

– Information on the location of the project abroad

– Business lines abroad

– Information on partners abroad

– Information on investment capital abroad

Apply for a Foreign Investment Certificate

Documents to apply for a Foreign Investment Certificate include:

– Foreign Investment Registration Document

– Legal documents:

– For individual investors: Copy of ID card/ CCCD/ passport.

– For organization investors: Copy of Business Registration Certificate; Investment Certificate (if any)

– Document from a credit institution authorized to commit to arranging foreign currency for the investor or committing to self-balancing foreign currency sources

– Documents proving the investor’s financial capacity: Verifying the balance of the bank account, financial statements of the last 2 years.

– Document confirming the investor’s tax payment obligations from the tax authority.

– Decision to invest abroad.

– Certificate of Business Registration abroad (if any).

– To make overseas investments in fields such as banking, science and technology, securities, insurance, etc.

Investors must submit a written approval from a competent state agency.

– Authorization document

Agency receiving and processing the application: Ministry of Planning and Investment.

– Receive the Certificate: When the application is approved, the enterprise will receive the Investment Registration Certificate, allowing it to proceed with the next steps.

Step 4: Carry out investment registration in the investment receiving country

After receiving the Certificate, the enterprise must carry out investment registration in the host country. This process includes:

– Apply for an operating license: The enterprise needs to work with the competent authorities of the host country to receive an operating license. This process may vary depending on the regulations of each country.

– Tax registration: Ensure compliance with tax regulations and other financial obligations in that country. This includes registering for a tax code and paying taxes as prescribed.

– Establish infrastructure: Enterprises need to prepare the necessary conditions for business operations such as renting offices, building factories, and recruiting staff. At the same time, enterprises should also research and select local suppliers.

Step 5: Open a capital account and transfer investment capital abroad

Opening a capital account and transferring investment capital is one of the important steps. The steps to take include:

– Choosing a bank: Enterprises need to choose a reputable bank with experience in international money transfers and business support services.

– Opening a capital account: Enterprises need to provide the necessary documents to open a capital account. The bank will require documents such as the Investment Registration Certificate, legal documents of the enterprise, and other related documents.

– Making money transfers: Enterprises need to clearly understand the money transfer process and regulations on money transfer abroad to ensure that the capital transfer takes place smoothly. At the same time, businesses should also monitor exchange rates and related fees to optimize costs.

Step 6: Implement investment activity reporting regime

Finally, businesses need to comply with the periodic reporting regime on their investment activities. This includes:

– Financial reports: Businesses need to prepare and submit periodic financial reports to the management agency in the host country. This report should reflect the financial situation and business performance of the project.

– Investment efficiency report: Evaluate investment results compared to the original target, analyze strengths and weaknesses during the operation process to adjust strategies if necessary.

– Compliance with local regulations: Ensure reports are submitted to competent authorities on time and in accordance with local laws. This not only helps businesses maintain their reputation but also avoid unnecessary legal risks.

Investing abroad not only brings development opportunities but also comes with many challenges. By fully implementing the above steps, businesses will have a solid foundation to go further on the path of internationalization and sustainable growth.

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Investment consulting support services at BKC Law

Investment consulting support services at BKC Law provide clients with comprehensive and professional solutions to optimize the investment process. We specialize in consulting on legal issues related to domestic and foreign investment, helping clients understand regulations, carry out necessary procedures and minimize risks. Our team of experienced lawyers is committed to accompanying you at every stage, from building an investment strategy to implementing and supervising the project, ensuring that every decision is based on a solid legal foundation.

For free legal advice at BKC Law, you can contact our Lawyers with the following information:

Phone: 0901 3333 41

Email:info@bkclaw.vn

District 1 Office: 9th Floor, Diamond Plaza Building, 34 Le Duan, District 1, Ho Chi Minh City

Binh Tan Office: 41 Ten Lua, Binh Tan District, Ho Chi Minh City

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