Conditions and Procedures for Establishing a Singaporean Company in Vietnam

Singaporean enterprises wishing to do business in Vietnam must comply with Vietnam’s investment and enterprise laws. As a member of ASEAN and the WTO, Vietnam has established a relatively favorable legal framework for foreign investors, including those from Singapore—a nation with exceptionally close economic and trade ties to Vietnam. However, to establish a company in Vietnam, Singaporean investors must satisfy specific conditions and carry out certain procedures as prescribed by Vietnamese law.

Legal Basis

• Law on Investment 2020
• Law on Enterprises 2020
• Decree 31/2021/ND-CP detailing and guiding the implementation of the Law on Investment
• Decree 01/2021/ND-CP on enterprise registration

• WTO Commitments and Vietnam – Singapore Free Trade Agreements (VSFTA, CPTPP)

• Specialized legal instruments for conditional business lines

Conditions for Establishing a Company in Vietnam for Singaporean Enterprises

1. Investor Status
The investor must be a legal entity or an individual with Singaporean nationality. In the case of a legal entity, the parent company in Singapore must provide a complete dossier proving its legal status, such as the Certificate of Incorporation, Company Charter, and the decision appointing the authorized representative.

2. Business Lines
Investors are permitted to register business lines that are not banned or restricted according to Vietnam’s commitments to the WTO and various FTAs. Certain sectors require compliance with market access conditions or approval from specialized regulatory authorities.

3. Foreign Ownership Ratio
For most business lines, Singaporean investors can own up to 100% of the charter capital of a company established in Vietnam. However, certain sectors—such as distribution, logistics, education, and real estate—may impose foreign ownership limits or require a joint venture with a domestic enterprise.

4. Project Location
The project must have a clear head office address that complies with land-use planning and does not violate conditions regarding national security, defense, or environmental protection.

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Procedures for Establishing a Singaporean Company in Vietnam

Establishing a Singapore-invested company in Vietnam involves two main phases:

Phase 1: Applying for the Investment Registration Certificate (IRC)

The dossier includes:

• A written proposal for the implementation of the investment project.

• An investment project proposal.

• Copies of the investor’s legal documents.

• A report on financial capacity (financial statements, bank confirmation).

• Location lease agreement and related legal documents regarding the premises.

• An explanation of compliance with market access conditions (if any).

Processing Time: 15 working days from the date of receipt of a valid and complete dossier.

Phase 2: Enterprise Registration – Applying for the Enterprise Registration Certificate (ERC)

The dossier includes:

• An application for enterprise registration.

• The company’s charter.

• A list of members/shareholders.

• Personal identification or registration certificates of the investor.

• Power of Attorney for the entity carrying out the procedure (if applicable).

Processing Time: 3 working days from the date of receipt of a valid and complete dossier..

Legal Risks and Considerations When Establishing a Singaporean Company in Vietnam

• Proving Financial Capacity: Failure to demonstrate sufficient financial capacity can lead to the rejection of the IRC application. This is a critical factor that many foreign investors often underestimate.

• Conditional Business Lines: Investors must carefully review the list of conditional business lines, especially in sectors such as education, healthcare, logistics, and real estate.

• Market Access Conditions: According to the list of sectors with banned or restricted market access for foreign investors promulgated under Decree 31/2021/ND-CP, investors must conduct a thorough analysis prior to registering their business lines.

• Dossier Content Issues: Several documents originating from foreign investors must undergo consular legalization. Delays in preparing legalized documents can significantly affect the company establishment timeline.

Investment Incentives for Foreign Investors in Vietnam

• Regarding Taxation: Highly effective investment projects may be entitled to a Corporate Income Tax (CIT) exemption for up to 4 years from the commencement of business operations, and a 50% reduction in payable tax for a maximum of the next 9 years. Additionally, preferential tax rates of 10%, 15%, or 20% are applicable to projects within investment-encouraged sectors. For import and export taxes, FDI enterprises enjoy exemptions or reductions on imported machinery, equipment, materials, and spare parts used for production and business. Regarding Value Added Tax (VAT), Vietnam applies exemption and reduction policies for certain groups of exported goods and services. Furthermore, land use tax may be exempted or reduced for projects utilizing large land areas, having long land-use terms, or serving socio-economic development goals.

• Regarding Administrative Procedures: The investment process has been simplified to create maximum convenience for foreign-invested enterprises. From investment registration to enterprise establishment procedures, all steps are executed swiftly, transparently, and efficiently. Additionally, investors receive support from specialized consulting services that provide legal information, answer inquiries, and assist in completing necessary dossiers and administrative procedures.

• Regarding Land: FDI enterprises are considered for land leases at preferential rates and with long-term usage rights. The State also provides support in site clearance and technical infrastructure construction to ensure projects are implemented on schedule.

• Regarding Human Resources: Foreign enterprises have the right to recruit both domestic and foreign laborers suited to their production and business needs. Concurrently, State-supported vocational training programs help enhance the quality of the labor force available to FDI enterprises.

• Regarding Foreign Exchange: Foreign-invested enterprises are permitted to freely convert foreign currency on the market and have the right to repatriate profits abroad after fulfilling all financial obligations in Vietnam.

Overall, Vietnam’s investment incentive policies are designed to protect the legitimate rights of investors while simultaneously promoting sustainable development and international integration. This outstanding competitive advantage makes Vietnam an attractive destination for businesses from Singapore and many other countries worldwide.

Investment Consulting Services for Foreign Enterprises at BKC Law

BKC Law provides comprehensive, all-inclusive services:

• Consulting on the selection of business lines and investment forms that align with international commitments and Vietnamese law;

• Drafting investment dossiers, company charters, joint venture contracts, and shareholder agreements;

• Representing clients in executing procedures to obtain the IRC, ERC, and sub-licenses;

• Assisting with opening investment capital accounts, transferring funds, and executing lawful capital contributions.

For legal consultation at BKC Law, please contact our Lawyers via the following information:

• Phone: 0901 3333 41

• Email: info@bkclaw.vn

• District 1 Office: 9th Floor, Diamond Plaza Building, 34 Le Duan Street, Sai Gon Ward, District 1, Ho Chi Minh City

• Binh Tan Office: 41 Ten Lua Street, An Lac Ward, Binh Tan District, Ho Chi Minh City

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