In the context of deepening globalisation, overseas investment has become an inevitable trend that Vietnamese investors cannot ignore. As a developing country, since the implementation of the opening policy, Vietnamese enterprises have gradually shifted their investment capital overseas for production and business. This helps them avoid trade protectionists and take advantage of the incentives of host countries to produce and export goods. This is not only an opportunity to expanding business is also a way to affirm the position of businesses in the international arena. However, to implement overseas investment projects, it is extremely important to understand and comply with legal procedures. Thorough preparation and accurate information will help Vietnamese investors have an overview and confidence when entering the global arena, thereby optimising opportunities and achieving significant successes. This article will provide a comprehensive view of Steps to complete overseas investment procedures in 2024.
I) Overview of Overseas investment
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Concept of Overseas investment
According to the provisions of law, overseas investment activities are understood as the transfer of investment capital from Vietnam to abroad, using the profits earned from this investment capital source to carry out overseas business investment activities[1]. Investors who wish to carry out overseas investment activities must carry out procedures for granting overseas investment registration certificates and opening overseas investment capital accounts.
Vietnamese law stipulates that investment capital must be money and other assets in accordance with the provisions of civil law and treaties to which the Socialist Republic of Vietnam is a contracting party in order to carry out business investment activities[2]. Accordingly, capital for overseas investment must be money and other lawful assets of investors, including equity and loans in Vietnam transferred abroad, profits earned from overseas investment projects retained for overseas investment activities[3]. Money and other lawful assets[4] of investors may be foreign currencies on accounts at licensed credit institutions or purchased at authorised calculation institutions in accordance with law; Vietnamese dong in accordance with Vietnam’s law on foreign exchange management; Machinery, equipment, supplies, raw materials, finished goods, semi-finished goods; The value of intellectual property rights, technologies, brands, rights to assets; Shares, contributed capital and projects of investors exchanged at economic organisations in Vietnam and overseas economic organisations; Other lawful assets as prescribed by civil law.
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Forms of overseas investment
The current forms of overseas investment have been regulated by law, specifically, overseas investment can take the following forms[5]:
- To establish economic organisations in accordance with the laws of the host countries. This is a form of direct investment, whereby when an organisation or individual will establish a company, or a joint venture directly in the host country. Depending on the laws of the host country, Vietnamese investors must meet all necessary conditions to implement this form.
- Investment in the form of contracts abroad. This contract can be a business cooperation contract signed between investors for business cooperation, profit sharing, and product division in accordance with the provisions of law without establishing an economic organisation.
- To contribute capital, purchase shares, purchase capital contributions of overseas economic organisations to participate in the management of such economic organisations. This is a form of indirect investment through Vietnamese investors contributing capital, buying shares, capital contributions, or other valuable papers of overseas economic organisations.
- Buying and selling securities and valuable papers or investing through securities investment funds and other intermediary financial institutions abroad.
- Other forms of investment as prescribed by the law of the host country.
The international market is always a land full of potential that Vietnamese businesses are aiming for. However, despite such potential, the potential risks cannot be ignored. To succeed in the international market, businesses need to have a thorough strategy, a deep understanding of the market, and the ability to respond to challenges and risks that may arise. Only then will the potential of the international market be truly exploited and turned into sustainable development opportunities for Vietnamese businesses.
II) Procedure of overseas investment
Procedure overseas investment is one of the important processes for Vietnamese businesses and individuals who want to expand their business activities and look for opportunities in international markets. To ensure the success of the investment, Vietnamese investors need to understand the legal regulations, necessary steps and specific requirements set by each country. In addition, Vietnamese investors also need to meet the conditions in accordance with Vietnamese law on procedures overseas investment, Specifically, as follows:
Step 1: Prepare your application overseas investment. To prepare for the procedure overseas investment, Vietnamese investors need to prepare information including:
(+) The name of the project or the name of the company in the foreign country;
(+) Locations for overseas project implementation;
(+) Overseas investment objectives;
(+) Information about overseas partners;
(+) Information on the form of investment, investment capital, sources of investment capital, form of investment capital, progress of implementation of overseas investment activities.
Step 2: Apply for an Overseas Investment Registration Certificate. Documents to apply for an Overseas Investment Registration Certificate for projects not subject to approval for overseas investment guidelines, they will be sent to the Ministry of Planning and Investment[6]comprise:
(+) Registration documents overseas investment;
(+) Documents on the legal status of the investor. In case the individual is an investor, a copy of ID card/passport is required. In case the organisation is an investor, a copy of the enterprise registration certificate or investment registration certificate, if any, is required;
(+) A written commitment to self-balance foreign currency sources or a written commitment to arrange foreign currency for investors of a licensed credit institution as prescribed by law[7]. In case the investor submits a written commitment to self-balance foreign currency sources, it shall be enclosed with a document of the credit institution certifying the balance of the investor’s foreign currency account;
(+) Written confirmation of the investor’s tax payment obligation from the tax authority[8].
(+) Decision on overseas investment[9];
(+) To make overseas investment in fields such as banking, science and technology, securities, insurance[10],… investors need to submit written approval from competent state agencies. This ensures that the project meets the investment conditions specified in the Laws on Credit Institutions, Securities, Science and Technology, and Insurance Business;
(+) Documents confirming the location of the project overseas investment for the cases specified in Article 73 of Decree 31/2021/ND-CP;
(+) Document determining the form of overseas investment as prescribed in Article 74 of Decree 31/2021/ND-CP.
(+) Documents that are relevant or required to be provided by a competent state agency.
Step 3: Registration of foreign exchange transactions related to overseas investment activities
After the investment activities have been approved or licensed by the competent authority of the host country, the investor needs to register for foreign exchange transactions at the State Bank. This registration includes information about the investor, the investment capital account at the authorised credit institution, the amount of investment capital to carry out overseas investment activities and the progress of remittance of investment capital overseas in currency.
A dossier for registration of foreign exchange transactions for overseas investment includes:
(+) Application for foreign exchange trading;
(+) A foreign language copy of the approval document or Business License or documents proving the right to conduct investment activities in the host country, along with a Vietnamese translation.;
(+) Copy of overseas investment registration certificate;
(+) The original document confirming permission to open the investor’s capital investment account from the credit institution, including information on the account number and the type of foreign currency;
(+) The original of the credit institution’s written confirmation of the amount of money the investor has transferred abroad before being granted the overseas investment registration certificate;
(+) In case of transferring overseas investment capital in Vietnamese Dong, a document explaining the need to transfer investment capital overseas in Vietnamese Dong is required.
Step 4: Capital transfer overseas investment
After completing the registration for foreign exchange trading, the investor will transfer overseas investment capital according to the previously registered project schedule. If there is any change in the progress of investment capital transfer, investors must register with the competent State Bank for review and update information.
Step 5: Implementation of the reporting regime overseas investment
Upon receiving the Certificate of overseas investment, investors will register an account to access the National Investment Portal, in order to comply with regulations on periodic reporting.
Above is an overview of Steps to complete overseas investment procedures in 2024 that Phuoc & Partners share with readers. If you encounter any difficulties related to the legal field, please contact us. Phuoc & Partners is a law firm established in Vietnam and currently has nearly 100 members working in three offices in Ho Chi Minh City, Hanoi and Da Nang. Phuoc & Partners is also considered one of the law firms with a leading team of staff in the legal field in Vietnam. practice fields are rated as the top in the legal market such as Labor and Employment, Tax, Mergers and Acquisitions, Litigation. We are confident to be one of the law firms providing the best legal services to our clients.
[1] Clause 13, Article 3 of the Law on Investment 2020
[2] Clause 23, Article 3 of the Law on Investment 2020
[3] Article 69 of Decree 31/2021/ND-CP
[4] Clause 2, Article 69 of Decree 31/2021/ND-CP
[5] Article 52 of the Law on Investment 2020
[6] Article 78 of Decree 31/2021/ND-CP
[7] Clause 3, Article 60 of the Law on Investment 2020
[8] Clause 5, Article 60 of the Law on Investment 2020
[9] Article 59 of the Law on Investment 2020
[10] Clause 1, Article 54 of the Law on Investment 2020
