9th Floor Diamond Plaza Building, 34 Le Duan, Ben Nghe Ward, District 1, Ho Chi Minh City
info@bkclaw.vn
0901 333 341
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Outward investment has become a crucial strategy in the context of deepening globalization. Many enterprises, from small to large, recognize that expanding beyond national borders not only increases revenue opportunities but also enables access to advanced technology and enhances competitive capabilities. International investment allows businesses to diversify resources, mitigate risks, and leverage cost advantages in new markets. However, successful outward investment requires thorough preparation and mastery of key steps. This article guides clients through the six essential steps to ensure an effective and sustainable investment process.
Outward direct investment refers to Vietnamese investors establishing or contributing capital to economic organizations abroad, directly managing and operating those organizations, and using money, machinery, equipment, or other assets for capital contribution.
Outward investment can be carried out in two main forms:
– **Direct investment**: This involves an organization or individual directly acquiring or establishing companies, branches, or joint ventures in the target country. This may include ownership or direct management of businesses or assets.
– **Indirect investment**: This form involves an organization or individual investing in financial instruments such as stocks, bonds, or investment funds related to businesses or projects in the target country without direct control or management.
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Developing a detailed investment plan is the first and most critical step. The enterprise should:
– Set clear investment objectives: Define the reasons for investment, such as market expansion, access to raw materials, or production process optimization. Objectives should be specific and quantifiable.
– Conduct market research: Thoroughly analyze the target market, including:
– Consumer demand and trends: Understand local customer behavior.
– Competitive landscape: Assess competitors in the industry and identify the enterprise’s competitive advantages.
– Business conditions: Understand local legal regulations, business environment, and culture.
– Prepare budget estimates and resource allocation: Develop a detailed cost projection covering initial investment, operating costs, marketing expenses, and contingency for risks. This provides a comprehensive view of financial feasibility.
Enterprises may choose from various investment forms, including:
– **Joint venture**: Form a partnership with local partners to share risks and profits. This approach facilitates market entry and deeper understanding of local culture.
– **100% foreign-owned investment**: The enterprise independently manages operations without local partners. This form offers high control but requires substantial capital and strong risk management capabilities.
– **Capital contribution, share purchase, or capital purchase in foreign economic organizations to participate in management**: This method enables rapid market entry using existing infrastructure and customer base.
Enterprises should carefully analyze each form to select the optimal approach based on investment objectives and available resources.
To conduct outward investment, enterprises must obtain an Investment Registration Certificate from the competent state authority. The procedure includes:
Required information includes:
– Name of the investment project / Name of the company abroad
– Location of project implementation abroad
– Business sector abroad
– Information on foreign partners
– Information on outward investment capital
The dossier for applying for an outward investment registration certificate includes:
– Application for outward investment registration
– Legal documents:
– For individual investors: Certified copy of citizen identity card / citizen identity card / passport.
– For organizational investors: Certified copy of business registration certificate; Investment Registration Certificate (if any)
– Written commitment from an authorized credit institution to arrange foreign currency or self-commitment to balance foreign currency sources
– Documents proving the investor’s financial capacity: Bank account balance confirmation, audited financial statements for the two most recent years
– Written confirmation of tax obligation fulfillment from the tax authority
– Decision on outward investment
– Business registration certificate abroad (if any)
– For investment in banking, securities, insurance, research, technology, etc., official approval from the competent state authority is required regarding fulfillment of outward investment conditions
– Power of attorney
Competent authority: Ministry of Planning and Investment.
– Receipt of Certificate: Upon approval of the dossier, the enterprise will receive the Investment Registration Certificate, allowing progression to subsequent steps.
After obtaining the Investment Registration Certificate, the enterprise must register the investment in the host country. This procedure includes:
– Obtaining operating licenses: Work with the relevant authorities in the host country to secure business operation permits. The process varies by country.
– Tax registration: Ensure compliance with local tax regulations and other financial obligations, including tax code registration and tax payment as required.
– Infrastructure setup: Prepare necessary conditions for business operations such as leasing office space, constructing factories, and recruiting personnel. At the same time, research and select local suppliers.
Opening a capital account and transferring investment capital is a critical step. The procedures include:
– Select a bank: Choose a reputable bank with experience in international money transfers and corporate support services.
– Open a capital account: Provide required documents to open the capital account. The bank will request documents such as the Investment Registration Certificate, enterprise legal documents, and other relevant materials.
– Execute capital transfer: Understand the money transfer process and regulations on outward capital transfer to ensure smooth execution. Monitor exchange rates and related fees to optimize costs.
Finally, enterprises must comply with periodic reporting requirements on investment activities, including:
– Financial reporting: Prepare and submit periodic financial reports to the competent authority in the host country. These reports must reflect the financial position and business performance of the project.
– Investment performance reporting: Evaluate investment results against initial objectives, analyze strengths and weaknesses during operations, and adjust strategies as necessary.
– Compliance with local regulations: Ensure reports are submitted to the competent authority within the prescribed deadlines and in accordance with local laws. This not only maintains the enterprise’s credibility but also avoids unnecessary legal risks.
Outward investment brings not only growth opportunities but also numerous challenges. By fully implementing the above steps, enterprises will have a solid foundation to advance further on the path of internationalization and sustainable growth.
The investment consultation service at BKC Law provides clients with comprehensive and professional solutions to optimize the investment process. We specialize in advising on legal matters related to domestic and international investment, helping clients understand regulations, complete necessary procedures, and minimize risks. Our experienced team of lawyers is committed to accompanying you at every stage—from building investment strategies to project implementation and monitoring—ensuring every decision is grounded in a solid legal foundation.
To receive free legal consultation at BKC Law, please contact our lawyers using the following information:
Telephone: 0901 3333 41
Email: info@bkclaw.vn
Branch in District 1: 9th Floor, Diamond Plaza Building, 34 Le Duan Street, District 1, Ho Chi Minh City
Branch in Binh Tan: 41 Ten Lua Street, Binh Tan District, Ho Chi Minh City
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41 Rockets, Binh Tri Dong B, Binh Tan District, Ho Chi Minh City.
info@bkclaw.vn
0901 3333 41
9th Floor, Diamond Plaza Building, 34 Le Duan, Ben Nghe Street, District 1, Ho Chi Minh City.
info@bkclaw.vn
0901 3333 41