Benefits of Setting Up Business in Danang

Da Nang – one of the strategic economic centers of Vietnam’s central region

The Vietnam prime minister has established central region’s strategic economic center, including 05 provinces and cities: Thua Thien Hue, Da Nang, Quang Nam, Quang Ngai and Binh Dinh to promote potential, geographical location and competitive advantages and step by step develop this economic region to become one of the most dynamic economic region in the country. In particular, Da Nang is defined as the role of nuclear motivation for promoting the development of the central region and the highlands.

Da Nang – eastern gateway of east – west economic corridor (EWEC)

EWEC is one of five economic corridor developed by the initiative of the Asia development bank in the greater Mekong sub – region.

Currently, the road system in Laos, Thailand and the road line from Da Nang to Savannakhet are completed. The second international bridge spanning the Mekong river was completed in the end of 2006 to facilitate the circulation of goods and passengers by road line from Da Nang to the northeastern provinces of Thailand and vice versa. East-west economic corridor not only provide an opportunity for the country on the path of promoting regional cooperation and improve living standards for the people but also enable businesses better access to the raw materials market services, capital, labor and technology with the purpose of creating favorable conditions for investment and trade across the border and diversifying economic activity and exports and promoting tourism development

Da Nang – entrance of the cultural heritage and natural wonders of the world

Da Nang is located in the heart of the “world heritage road”, stretching from the central coast of Vinh city to Da Lat city. From Da Nang, along the national highway 1A, visitors can access quickly and conveniently four of five world heritages in Vietnam, including Phong Nha – Ke Bang national park (about 300 km from the north of Da Nang), the ancient capital of Hue (about 100km from the north), Hoi An (about 30km from the southeast) and My Son (about 70 km from the southwest).

With the advantage of geographical location and potential economic development in tourism, Da Nang is an ideal destination for tourists as well as investors.

Infrastructure is step by step improved

Da Nang is an important traffic hub of the central – highlands and country with system of international airports, deep sea ports, roads, north-south railways developed conveniently.

Da Nang port is the third largest commercial ports in Vietnam after Saigon port and the port of Hai Phong. With a depth of 11m wharf, warehouse systems and equipment upgraded by capital funds of the government of Japan, Da Nang port can receive ships with a capacity of 45,000 dwt and others such as container ships, passenger ships, cargo ships. Da Nang is the international shipping route enabling to go to Hong Kong, Singapore, Japan, Taiwan and Korea.

Da Nang international airport is one of the three best airports in Vietnam. In addition to domestic flights, there are weekly international flights directly from Da Nang to Singapore, Bangkok, Taipei. In the near future, the airport will open more routes to Hong Kong, Japan and Korea. Da Nang international airport is currently being upgraded and expanded to meet the needs of increasing passengers and cargo.

The system of roads in and out of the city are constantly being expanded and newly constructed

Telecommunication systems: Da Nang is one of three major telecomunication centers of the country, international transmission speed with good quality of Southeast Asia. Da Nang post provides various and modern telecommunication services and be capable meeting the needs of customers.

The other services supporting investment (financial, banking, insurance …): most banks and finance companies of Vietnam have large branches in Da Nang. Some branches of foreign banks and international insurance companies are operating effectively in the city. These services have increasingly been improved better to meet the needs of investors.

Trained and abundant human resources

Da Nang has abundant human resources (over 50% of the population of the city), mostly young labor. Number of employees with technical expertise trained account nearly a quarter of the labor force. Labor costs in Da Nang are lower than some other cities in the country.

Da Nang is one of the provinces in the country with the high educational development index which create a favorable platform for the development of human resources of the city to perform the goal of improving the quality of human resources, quality of life. The city has about 14 universities, 15 colleges and professional schools with nearly 140,000 students. This system performs training in most areas of science, engineering, information technology, economics, business administration, language and pedagogy… Danang university also cooperates with universities of countries with an advanced education such as France, US, Japan, Australia, Canada, New Zealand …

Software technology center in Da Nang is one of the leading software producers in Vietnam and is the leading training center of the central region. Over the years, the software technology center has cooperated closely with companies of India (aptech) and Japan (aots) to train programmers, technicians and engineers reaching the international standard. Many IT company has chosen Da Nang to set up company in da nang to hold their talents for international projects.

In addition, the city also has about 55 vocational training centers which often provide short-term training courses in computer science, sewing, mechanics, electricity – electronics, construction techniques, etc …

Quality of life

Along with the process of urbanization, economic growth in recent years has helped to material life and spirit of the people of Da Nang continuously improved.

Unlike other large cities in Vietnam, next to the bustle of urban development, living in Da Nang always bring a sense of peace, comfort and closeness to nature. Da Nang is one of the very few cities in Vietnam having a harmonious combination between high mountains, deep forests, long beach, deep river. After work, you can easily find space to relax beside the river or on beautiful beaches.

Da Nang today is a city with a healthy cultural environment, with urban civilized lifestyle, literacy levels elevated, beautiful natural scenery. It can be said that Da Nang is an exciting place to live, work, travel and invest in Vietnam.

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Danang To Cooperate With the US Enterprises to Build an IT Center

On Oct 10th, 2019 representatives of Danang city met the US business delegation including Hayward Quartz Technology Inc., Westcoast Precision, Inc., Majestic Beauty Supplies, Inc., Lee’s Sandwiches International, Inc., Hung Phat USA. These are businesses in the field of manufacturing, processing diamonds and gold, silver and gems; production and distribution of beauty accessories, cosmetics; manufacturing and producing metal and hardware, supplying customized high-quality spare parts and semiconductor devices for the medical and biotechnology equipment industry; Manufacturing and distributing semiconductor equipment in the United States, whom shown interest to set up business and expand operation to Vietnam.

epresentatives of US enterprises affirmed that Danang City is a potential destination for businesses in the High Technology and Information Technology. With the coordination, as well as the city’s incentives in the field of high technology and investment in Danang High-Tech Park, enterprises from the United States consider opportunities to invest in the high technology sector in Danang.

Danang city has many benefits that investors are interested in such as the safe and stable living environment, the young and highly qualified labours from more than 25 universities and colleges in the city, in addition the city is also a destination for many domestic and foreign investors in many different fields, which is an opportunity for investors to compete, distribute the productions.

Currently, in Danang, there are more than 60 investment projects of the US investors with the registered capital of nearly 6 million USD, including large projects such as the Sunshine Aerospace Components Plant Project in Danang high-tech park of Universal Alloy Corporation (USA) with total registered capital of USD 170 million; the factory of electronics and electronic equipment manufacturing and assembling project, total capital of USD 50 million, in Hoa Khanh Industry Zone Expansion invested by Key Tronic EMS Group. Besides there are many other projects being implemented and effective in the process of operation.

Danang City and investors from the United States hoped to achieve more business achievements in the future to help investors and the city achieve development goals in the future to welcome company to set up company, factory, and invest in Vietnam.

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FDI into Vietnam Increased Sharply in January 2019

According to the report of the Foreign Investment Agency, the Ministry of Planning and Investment, in January 2019, the total newly registered, increased and contributed capital to buy shares of foreign investors reached 1.9 billion USD, increase by 51.9% over the same period in 2018. It shows that foreign investors are very interested to invest in Vietnam

In particular, foreign direct investment (FDI) from the beginning of the year until January 20th 2019 had 226 new licensing projects with a registered capital of 805 million USD, increase by 36.1% in the number of projects and increase by 81.9% in registered capital compared to the same period in 2018.

Besides, there are 72 licensed projects from previous years registered to adjust investment capital with an additional capital of 340.3 million USD, decrease by 25.5% compared to the same period last year. Thus, the total newly registered and additional registered capital reached more than 1.145 billion USD, increase by 27.3% over the same period in 2018.

In the month, there were 489 turns of capital contribution and shares purchase of foreign investors with a total capital contribution of 761.9 million USD, increase by 114% compared to the same period in 2018; In which, there are 72 turns of capital contribution and share purchase to increase the charter capital of the enterprise with the value of 384.91 million USD and 417 turns of foreign investors buying domestic shares without increasing the capital, valued at 376.97 million USD.

Also in January, the realized FDI capital was estimated at over 1.55 billion USD, increase by 9.2% over the same period in 2018.

Export of foreign investment sector (including crude oil) reached 13.58 billion USD, equaling 94.9% compared to the same period in 2018 and accounting for 67.9% of export turnover. Export excluding crude oil reached 13.4 billion USD, equaling 95% over the same period in 2018 and accounted for 67% of export turnover.

According to the Foreign Investment Agency, FDI capital of new projects in the month focused mainly on processing and manufacturing industries with a registered capital of 591 million USD, accounting for 73.4% of the total new registered capital; Transportation and warehousing industry reached 65.3 million USD, accounting for 8.1%.

Water supply, waste management and handling activities reached 59.2 million USD, accounting for 7.4%; the remaining sectors reached 89.5 million USD, accounting for 11.1%.

From the beginning of 2019, Japan has poured investment capital of nearly 364 million USD, accounting for 19% of the total investment, leading 51 countries and territories with investment projects in Vietnam. The proof is that the Kyoshin Limited Liability Company (Vietnam) granted an amended investment registration certificate dated January 17th 2019 to increase its investment capital by 134.7 million USD.

This is a project invested by Japanese investors in Ho Chi Minh City since 1995 with the goal of manufacturing, processing and exporting electrical components, molds.

Or as Katolec Global Logistics Vietnam project, which was invested by Katolec Corporation (Japan) with a total investment of 65 million USD with the goal of warehousing and storing goods in Ha Nam; Sews-Components Vietnam Factory II project, with a total registered investment capital of 64.89 million USD, invested by Japanese investors in Hung Yen…

Ranked no.2 is Korea with a total registered investment capital of 349.1 million USD, accounting for 18.3% of the total investment capital in Vietnam. China ranked third with total registered investment capital of 307.8 million USD, accounting for 16.1% of total investment capital.

Regarding investment location, foreign investors have invested in 39 provinces and cities, of which, Ho Chi Minh City attracts the most foreign investment with a total registered capital of 745.7 million USD, accounting for 39.1% of total investment capital.

Binh Duong ranked second with total registered capital of 240 million USD, accounting for 12.5% of total investment capital. Hai Duong ranked third with total registered capital of 125.7 million USD, accounting for 6.5% of total investment capital.

In January 2019, there were 4 projects granted certificates of investment registration abroad with total investment capital of Vietnam of 1.05 million USD; in which, there are 2 projects in the field of retail and wholesale with total investment capital of Vietnam is 600 thousand USD, accounting for 47.9% of total investment capital.

The remaining two projects are in the field of professional science, technology, information and communication activities. Countries receiving investment from Vietnam in January 2019 are Singapore, Finland, Japan and the United States.

Also in January 2019, there was 01 project to adjust investment capital with an additional investment of 200,000 USD in Vietnam. In general, in January 2019, the total investment capital of Vietnam to abroad and newly granted increased by 1.25 million USD.

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Japanese Investment Flows into Vietnam Packaging Production

Vietnam Artpresto factory, 100% Japanese capital, specializing in packaging production with a total investment of 5 million USD was started in Chau Son Industrial Zone, Ha Nam province right in the first week after the Lunar New Year holiday.

This event once again shows that packaging is still the field that attracting capital, especially when the major manufacturing industries, from manufacturing and agriculture, are on the rise, leading to the need to use bags.

The Artpresto Vietnam packaging factory, invested by Artpresto Vietnam Company (belonging to Bandai Namco Group), with the goal of producing high quality packaging products.

Once completed, Artpresto Vietnam factory will operate with a capacity of nearly 40 million products/year.

Artpresto Company was established in 1983, in charge of packaging design, product design, and trading printing products of Bandai Namco Group. Artpresto’s total revenue in 2018 is about 8 billion yen.

According to general director of Artpresto Vietnam Company, when operating, the factory in Vietnam will contribute to improving the supply chain of high-quality packaging products for the Japanese and Vietnamese markets.

Not to mention customers, the demand of Bandai Namco Holdings – the parent company of Artpresto is very large, so the factory in Vietnam will be a significant packaging supply channel for the Group. And yet, in the calculation of this group, Artpresto Vietnam will be the first development of Bandai Namco to the Vietnamese market in particular, and the foundation of development in the Southeast Asian market in general.

This can be understood, when doing good business in Vietnam, capital will be poured to expand, increase production and catch up business opportunities.

Earlier, in mid-2018, United Packaging Co., Ltd. was also belong to a Japanese investor – Oji Holdings Corporation, had poured capital to build a factory located in Tan Phu Trung Industrial Park (Cu Chi district, HCMC), on an area of 5 hectares, with a total investment of more than 15 million USD.

United’s factory specializes in manufacturing paper products such as high-end packaging used in the food industry and goods labels.

It is known that Tan Phu Trung Packaging Factory is the 6th project of Oji Holdings Corporation in Vietnam, after projects in Hai Phong and Ha Nam and is the 31st factory of this group in the Southeast Asia region.

With the current growth rate of 10-15% per year, the Vietnamese packaging and processing industry is considered to be quite attractive to suppliers of machinery and equipment operating in the industry, as well as the trend of foreign enterprises expanding investment and acquiring businesses operating in this field.

Packaging is a product rich in types and designs, so packaging materials are also rich and diverse. Packaging materials in Vietnam are mainly plastic, paper, carton, metal and glass. It is estimated that the whole industry will grow by 25% in 2019.

According to the forecast, economic sectors mainly from food, pharmaceuticals and cosmetics will grow 2-digit in the period from now to 2025, so packaging has a good opportunity to develop, including packaging industrial and agricultural packaging. The problem is that business owners need to develop clear strategies, identify core values, strengthen effective management solutions, find appropriate technology equipment…

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Benefits of Setting Up Company in Ho Chi Minh City

Ho Chi Minh City is considered as Vietnam’s economic hub. During the long history of foundation and development, the city’s economy is growing constantly and motivating the development of the country.

The city is therefore considered as a potential investment environment for domestic investors as well as foreign investors. The investment through establishing companies and conducting business activities in Ho Chi Minh city certainly promises to achieve multiple benefits. These benefits come from the following reasons.

First, Ho Chi Minh City has strategic location advantage in Vietnam. Southeast Asia Region, Ho Chi Minh City is 1,700 km south of Hanoi, 297 km east of Phnom Penh, Cambodia, 881 km east of Bangkok, Thailand.

Food, glass, textiles, paper products, plastics, chemicals, building materials and machinery are produced here. Ho Chi Minh City accounts for 20% of total gross domestic product (GDP), 30% of industrial production and 40% of export products of Vietnam. The city also accounts for 33% of the national budget and 60% of foreign investment flows into the region. In the past few years, the economy have been grown at a rate greater than 10% (6% to 8% nationally).

Second, Ho Chi Minh City is home of well – qualified, abundant and young human resources.

With a population of more than 8 million, accounting for more than 10% of the total Vietnamese population, Ho Chi Minh City itself has potential employment market to make any business investment. The work force in Ho Chi Minh City was estimated to reach 4.7 million people in 2012, making up more than 50% of the total population of the city. The percentage of trained labor increased from 40% in 2005 to 55% in 2010 and was forecast to reach 70% in 2015. The percentage of labor source holding postgraduate degree is also increasing year by year and most of them tend to stay in the city after holding degrees. Ho Chi Minh City is also home to more than 80 universities and colleges, vocational schools with over 400,000 students providing an abundant trained work force.

With the above – mentioned abundant labor force, any set up company in Ho Chi Minh City can easily recruit suitable employees in a short time..

Third, the city has modern and high infrastructure system. Namely, when setting up company in Ho Chi Minh City, the owners will benefit from the modern and comprehensive infrastructure system.

Tan Son Nhat Airport is the largest airport in the country with the capacity to accommodate 20 million people a year. From Tan Son Nhat Airport, there are 50 routes to other countries all over the world such as China, Japan, Korea, Singapore, European countries, etc.

Saigon Port serves as a gateway to the Mekong River Delta, the South China Sea (83 km away from the sea) and the Asia continent. The port has a total area of 500,000 m2 with 5 terminals meeting the international standards, and it handles about 8.3 million tons of cargo annually. Throughout the history of foundation and development of Saigon, Saigon Port plays an important role in making Ho Chi Minh City a flourishing trading center. It accounts for a fifth of the nation’s Gross Domestic Product and almost a third of its industrial production.

Ho Chi Minh City is also home to industrial zones. According to the statistics of Cushman & Wakefield, the city has 18 industrial parks that are operating with a total area of 3635 ha. When investing in such industrial zones in Vietnam, enterprises can benefit from various incentive policies such as low rate tax or other incentive policies.

Telecommunication and information technology in the city is modern. The system of post and telecommunication in Ho Chi Minh meets international standard, providing fast, reliable and high quality services such as ADSL, rapid data transfer, wide broadband MAN. The Internet service in Ho Chi Minh city is also among the cheapest in the world.

Besides, the city is also considered the best working conditions. Enterprise will not be fear that it is not enough place for working. The city with the system of offices provide ideal working environment for all investors.

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Assistance in Setting-up Business Venture

Foreign investors could make direct investment in Vietnam through setting up one hundred per cent (100%) capital of foreign investors, or establishing joint venture between domestic and foreign investors, or investing in the contractual forms of: BCC, BO, BTO, and BT

Types of enterprise for foreign investors to invest in Vietnam are as following:

Limited Liability Company 

A limited-liability company may not issue securities to mobilize capital.

Joint Stock Company

The main difference between Joint Stock Company and Limited Liability Company is the Joint Stock Company can raise funds by offering shares or securities. In addition, an enterprise tends to join the Stock exchanges or public company must be a Joint Stock Company. Management system of Joint Stock Company is more complicated than Liability Company.

Partnership

Unlimited liability partners must be individuals who shall be liable for the obligations of the company to the extent of all of their assets. Limited liability partners shall only be liable for the debts of the company to the extent of the amount of capital they have contributed to the company.

Representative Office of Foreign Trader

Representative Office is not allowed to directly conduct profit making activities in Vietnam (i.e: the execution of contracts, direct payment or receipt of funds, sale or purchase of goods, or provision of services)

Branch of Foreign Trader

The Branch is permitted to conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

Investing by Signing Contracts

Business co-operation contract (BCC) means the investment form signed between investors in order to co-operate in business and to share profits or products without creating a legal entity.

Build-operate-transfer contract (BOT) means the investment form signed by a competent State body and an investor in order to construct and operate commercially an infrastructure facility for a fixed duration; and, upon expiry of the duration, the investor shall, without compensation, transfer such facility to the State of Vietnam.

Build-transfer-operate contract (BTO) means the investment form signed by a competent State body and an investor in order to construct an infrastructure facility; and, upon completion of construction, the investor shall transfer the facility to the State of Vietnam and the Government shall grant the investor the right to operate commercially such facility for a fixed duration in order to recover the invested capital and gain profits.

Build-transfer contract (BT) means the investment form signed by a competent State body and an investor in order to construct an infrastructure facility; and, upon completion of construction, the investor shall transfer the facility to the State of Vietnam and the Government shall create conditions for the investor to implement another project in order to recover the invested capital and gain profits or to make a payment to the investor in accordance with an agreement in the BT contract.

Foreign investors may sign BOT, BT and BTO contracts with a competent State body to implement infrastructure construction projects in Vietnam. Typically, the contracts are for projects in the fields of transportation, electricity production, water supply, drainage and waste treatment.

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Which area of business foreign investors could invest in Vietnam?

Recently, Vietnam has been an attractive investment destination to foreign investors thanks to the social-economic innovation policy from the early 80s of the twentieth century to the present. The economic, political and social situation always keeps stability and achieves remarkable developments, establishing trade relations with most countries in the world. Especially, Vietnam Government has been focusing efforts to improve the investment and business environment, which is favorable for not only domestic investors but also foreign investors. The Government has been issuing policies to improve the business environment, support business development and take decisive actions through resolutions and legal documents.

In addition to continuing to implement incentive policies to attract foreign investment such as corporate income tax exemption and reduction, import tax exemption for a number of industries, exemption from rent and land use,…the Government is also committed to reform administrative procedures to simplify procedures, create the best conditions for investors, and opening the economy for foreign investors.

Foreign investors, when investing in another country, must identify their business lines and areas of business, and consult with experts or Vietnam lawyers whether that business line is subject to any special conditions. There are areas with out conditions of investment and but there are also industries that are restricted from doing business under strict conditions, and even prohibiting business in specific professions on purpose.

In Vietnam, the investors of Vietnamese are free to do business in area which which is not in the list of prohibited. For foreign investors, the business lines allowed to invest are considered based on Vietnam’s WTO Commitments on Trade in Services and the Agreements signed between Vietnam and other countries. After that, business conditions in each specific industry to foreign investors will be applied.

General conditions applied to domestic and foreign investors are that investors are entitled to carry out business investment activities in industries and trades which are not prohibited by laws. The industries and trades banned from business investment include: trading in narcotic substances; trading in some toxic chemicals, precursors, minerals; trading in specimens of wild plants and animals according to the provisions of Appendix 1 to the Convention on International Trade in Endangered Species of Wild Fauna and Flora; specimens of endangered, precious and rare wild animals and plants of Group I originated from nature according to the provisions of the Investment Law; trading in prostitution; buying and selling people, tissues, body parts; business activities related to asexual reproduction on people; and trading in firecrackers.

Apart from the above-said prohibited business and investment lines, the remaining industries and trades are divided into conditional business lines and common business lines. For common business lines, investors can freely invest without barriers. By contrast, conditional business lines impose conditions that must be met if organizations wish to invest. 

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What are common investment methods in Vietnam?

In Vietnam laws, there are a number of investment methods such as establishing economic organizations; investment in the form of capital contribution, purchase of shares or capital contributions in business organizations; Business Cooperation Contract or Public Private Partnership. Investment in establishing economic organizations, capital contribution, purchase of share or capital contributions are most common in our opinion.

Investment in establishing economic organizations

For investment in the establishment of economic organization, an investor invests capital to carry out the establishment of an enterprise, cooperative, cooperative union or other organization to carry out business investment activities. This is a way of direct investment in which investors directly invest capital and directly participate in management activities.

Forms of establishment of economic organizations include two types: Establishing company with 100% foreign capital; or establishing joint ventures between domestic investors or the Government of Vietnam with foreign investors.

Before establishing an economic organization, the foreign investor must have an investment project and carry out the procedures for the grant of an investment registration certificate. Besides, the conditions for the charter capital ownership and the conditions prescribed by international treaties to which Vietnam is a member need to be met. Regarding charter capital, foreign investors are allowed to hold unlimited ownership in economic organizations, except for cases where the investors operate in fields related to listed companies, public companies, securities trading organizations and securities investment funds in accordance with the law on securities; State owned enterprises equitized or transformed under other forms. In addition, investors must check international treaties to which Vietnam is a signatory.

It should be noted that depending on the amount of investment capital of a foreign investor, the legal status of an economic organization after its establishment will be determined differently. If the foreign investor holds 51% or more of charter capital, the economic organization after its establishment will have to carry out the procedures applicable to foreign investors. Conversely, if foreign investors hold less than 51% of the charter capital, the regulations applicable to economic organizations after their establishment are applied as domestic investors.

Investment in the form of capital contribution, purchase of shares or capital contributions in business organizations

Foreign investors who wish to access the Vietnamese market but do not want to establish an economic organization can contribute capital, buy shares or buy capital contributions to business organizations operating in Vietnam.

With this form, the investor will become a member or shareholder of that economic organization. It requires investors to meet a conditions similar to the form of establishment of economic organizations. Having said that, it must meet the conditions for the charter capital ownership and the conditions prescribed by international treaties to which Vietnam is a member. Depending on each specific case, the investor must follow the procedures for registration of capital contribution, purchase of shares or capital contribution in an economic organization and send to the competent agency for recognition of legal investment.

Understanding the regulations are important for investors to enter the Vietnam market and consulting with Vietnam lawyers would help investors make informed decision for their business plan in Vietnam.

Let us know if you need legal help. ANT Lawyers, your lawyers in Vietnam.

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Da Nang Hold Series of International Information Technology Activities

From 21st to 24th October, the Danang People’s Committee in collaboration with the Vietnam Software and IT Services Association (VINASA) will organize an important international chain of information technology activities, including: Smart City Summit 2019 – The 3rd Smart City Summit 2019 and Japan Information Technology Day 2019 – The 12th Japan ICT Day 2019 in Danang.

Smart City Summit is an annual international event being held to promote cooperation, experience sharing, and smart city building strategy for the cities in the area, based on new technology platforms such as: IoT, Big Data, AI, SMAC… they help to manage the city’s performance and bring practical utilities, social security to the citizen, accelerate the digital transformation process of governments and orgazations, enterprise.

The summit will have the participation of 600 delegates, including about 200 international delegates, including senior leaders of the Government, ministries and central branches of Vietnam; leaders of major cities in Vietnam and the region; leaders of leading enterprises, technology corporations of Vietnam and the world.

The summit will be an opportunity for Danang to acquire and build a smart city, based on the scientific and technological foundations of advanced countries in the world, to build a smart and modern city, application of Information Technology (IT) to management and operation to bring high efficiency in the process of development and investment attraction.

Japan ICT Day is a cooperative promotion activity for Vietnam and Japan IT enterprises organized annually by VINASA and Vietnam – Japan Cooperation Committee (VJC), starting from 2007. The program was the sponsorship of the Ministry of Information and Communications, the Ministry of Industry and Trade, the coordination and support of many Japanese organizations such as the Embassy of Japan, JETRO, JISA, JEITA, KEIS, OADC, CSAJ, JASA,…

Japan ICT Day 2019 with the theme “Vietnam-Japan cooperation to promote digital transformation” will have the participation of 350 delegates, including nearly 100 delegates from Japan, with 3 topics: Cooperation Vietnam-Japan IT in the new technology trend; Developing IT human resources for Vietnam – Japan IT cooperation; Improve the efficiency in software outsourcing. Japan ICT Day 2019 is also expected to create a highlight to further promote Vietnam-Japan IT cooperation in Danang in particular and cooperation between localities of Japan and Danang in all fields.

Danang holds the 3rd Smart City Summit 2019 and the 12th Japan ICT Day 2019 continue the target of “’The year continues to promote attract investment “of the city, and at the same time promote the process of building a smart city in Danang.

By the events, Danang wishes to complete the process of establishing a smart city in the near future, and attracting and learning the experiences of advanced countries in the world. This is also an opportunity for investors around the world to set up company in Danang in the future, to be able to give the best benefits not only for investors but also for the development of Danang city.

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Establishing Distribution Company In Danang

Da Nang is a city in the Central of Vietnam, with the advantage of being a trading place of many countries in the world. Danang has a large seaport in the top 10 large seaports of Vietnam, facilitating trading activities with many countries around the world.

At the present, Da Nang is promoting foreign investment into Da Nang, and many investors have chosen Da Nang to do business in the distribution business line. For this business line, Vietnam has committed to open up to attract 100% foreign investment. As committed, foreign-invested companies in the distribution sector will be allowed to provide commission agents, wholesalers and retailers of all products manufactured in Vietnam and legally imported products into Vietnam. Therefore, the investors can import or produce goods, then they distribute the goods in accordance with regulations.

In addition, with the increasing in the number of tourists coming to Da Nang in recent years, the demand for consumer products, fashion and other items for tourists has increased. This triggers demand that many companies to provide essential goods for tourists, and this is a great investment opportunity for investors both domestically and abroad. The investors could explore this opportunity to set up company in Da Nang and fill the market’s demand.

In addition, with many policies to support enterprises in administrative procedures, as well as management, investors can easily carry out procedures as well as manage and control their business better. Enterprises investing in Da Nang are now very satisfied with the way public services are handled in the city’s administrative procedures, therefore more and more investors are choosing Da Nang as a destination for investment when targeting in Vietnam.

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Hanoi Leads the Whole Country in Attracting FDI in the First 2 Months

According to the Foreign Investment Agency (Ministry of Planning and Investment), in the first 2 months of 2019, many foreign investors have set up business in Hanoi. In fact, Hanoi is the locality that attracts the most FDI in 44 provinces with 4 billion USD, accounting for 47.3%, followed by Ho Chi Minh City with 1 billion USD, accounting for 12%, the third is Bac Ninh with 54 million USD, accounting for 6.3%.

Specifically, among the investment projects in Hanoi in the first 2 months of the year, the largest project is the Indochina Energy Development Project of Thai investors with a total registered capital of 10 million USD.

This is a project operating in the fields of expertise, science and technology, using 100% foreign investment with the aim of providing management consultancy activities (except business tax); Investment consultancy (except financial, legal, tax, securities, insurance consultancy); Construction and installation of electrical systems; Technical consultancy activities.

The second largest registered investment project is the project of Super Gold Moon Co., Ltd. (Korea) on accommodation and catering services with a total registered capital of 3.448 million USD, of which contributed capital is 0.86 million USD, loan is 2.586 million USD. The project uses 100% foreign investment.

The third is EB Nguyen Xien Supermarket Project of Big C Thang Long International Trade and Service Co., Ltd (Thailand) with a total registered investment capital of 2.5 million USD in the form of joint venture.

Also according to the Foreign Investment Agency, as of February 20th 2019, the total newly registered capital, increased and contributed capital to buy shares of foreign investors reached 8.47 billion USD, increase by 2.5 times compared to the same period in 2018.

There are 66 countries and territories with investment projects in Vietnam, led by Hong Kong with a total investment of 4.3 billion USD, accounting for 51% of total investment. Right after that at the 2nd and 3rd positions are Singapore and Korea respectively.

In addition, there are a number of large projects in the first 2 months of 2019 such as: Capital contribution, share purchase of Beerco Limited (Hong Kong) into Vietnam Beverage Company Limited, the value of contributed capital is 3.85 billion USD with the main goal of brewing beer and malt brewing beer in Hanoi; Project of factory manufacturing electronic equipment, network equipment and multimedia products, total registered investment capital of 260 million USD invested by Goertek (Hongkong) Co., Ltd in Bac Ninh…

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M&A Due Diligence and Execution in Vietnam

Merger and Acquisition (M&A) activities in Vietnam have been rapidly increasing over the the years in value and number of transactions when Vietnam’s opening policies to attract foreign investments loosen up. The M&A due diligence and execution are therefore important steps to ensure a successful transaction.

For foreign investors wishing to take advantage with a certain level of risks in Vietnam where the cost of labour are cheap, mid-income populations are growing, and the need of capital are high, it is imporatant to find the right target companies to invest. Challenges might arise when approaching the right local companies, locating the right decision makers within the local companies, encountering differences in languages and cultures.

It is imporant that the local consultants with the understanding of the business and legal environment in Vietnam where the local companies are incorporated could be involved at an initial stage to monitor and minimize the risks, improve the effectiveness of the M&A process in Vietnam.

The Vietnam consulting company could also provide corporate intelligence and insights of the Vietnam targeted companies to have an overall evaluation of the compliance of the Vietnam companies, possible risks involved and growth potential. Financial forensic services might also be needed before other further steps. Then, the following will need to be considered when undertaking the M&A in Vietnam.

+Due diligence

M&A due diligence in Vietnam is a vital step because it determines whether the M&A will succeed or not. There are some aspects that must be carefully considered:

-Financial reports

Review all the financial reports of the Vietnam targeted companies within 3 to 5 years to assess the current and future financial situation. These data needs to be audited by a reputable independent auditing company. Evaluating financial situation targets on many aspects such as the reasonable connection between the financial statements, operating and sales margin of the business in relation to the average in that industry. These data allow valuation real value of the target business.

-The cash flow

Checking the dates on invoices showing that whether targeted businesses have paid promptly or not. Term of payment may vary from industry to industry, but generally 30 to 60 days. If the money order is paid after the billing date period of 90 days or more, it means that the business owner may be struggling with cash flow. Finding out that if the clients’ inability to pay bills or not is very important.

-The staff

Determining the importance of staff for the success of the business considering work habits of employees, working time of key employees; ability to remain working after a change of the owner occurs; the incentives necessary to keep key employees; ability to easily replace key employees; the relationship of key employees with the company’s customers.

-The customers

This is the most important assets of the Vietnam targeted company. Make sure that clients are as the other tangible assets of the business. Evaluating customers on some primary aspects: the relationship with the current owner of the business, customer history with business relations and the contribution of each customer to the profits of the company; assessing that customer will leave or stay when the business having new owners; customer services and dispute of the company, the relationship of the former owner of the business with the community or the industry.

-Business location

This is especially important if the targeted company is a retail company. Does the importance of business location play a crucial role for the success of the company? How is the location of the company you plan to acquire? Is there sufficient parking lot for customers? How does the company depend on sales in the region? How is the prospects of the business in this area? Does this place have been in the process of rapid change from new residential district office building or not? Has business location become more or less desirable because of contemplated changes in surrounding area or not?

-Competitors

Considering this aspect in order to define the capacity of the targeted business in the industry, the following questions would help: who are its competitor and what are their strategies? Does the price war happen frequently? How has the competitive environment changed?

-Business registration, permits and zoning

It’s necessary to make sure that business registration certificate and other legal documents can be easily given to the buyer. It would be better to acknowledge the procedures to transfer these documents and its fee with the help of local management set up company in Vietnam. If the targeted company is a joint-stocks company, what is the procedure for the business registration? Can foreigners own the company 100% according to Vietnam laws? Conditional investments in Vietnam need to be considered carefully by lawyers in Vietnam to avoid mishaps.

-The company image

Company image can be a significant asset and that cannot be assessed in the financial report. There are many intangible factors to consider when evaluating a company: how to serve customers, how employees answer the phone and the level of support the community or the industry.

+Negotiate the price

It is important to understand the purpose and motivation of both parties. The sellers’ motivation are formed and affected by value drivers. There are two main value drivers which are approach value and avoidance value. Approach value is our purpose such as prosperity and avoidance value is the negative effect that we need to eliminate. Normally, the buyers try to find out what are the reasons why the owner wish to sell the companies. This will help the buyers plan a reasonable strategy beforehand.

A research analyzes the general aspects that the buyers seeking for via conducting surveys companies’ owner who have sold or transformed their enterprises. The research results are focus on profit maximization (79%), minimization of tax payable (73%), protection of viability of the company (71%)…(Source: Acquisition Marketplace Review, 2007).

The motivation of the buyer in most cases is similar to the motivation of the seller, which is to maximize profits, expand markets, increase revenue, operating areas, areas of activity, minimize taxes…

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Benefits of Setting Up Company in Hanoi

Along with the trend of integration in the world, Vietnam is considered a country with rapid and strong growth, in which, industrialization and modernization are focused on developing a uniform set and achieve high performance. Hanoi and Ho Chi Minh City are considered the two cities and dynamic development in Vietnam.

In particular, Hanoi, the potential capital for developing and attracting foreign and domestic investment. Therefore, the investment from businesses to the city is seen as an advantage and the best. To evaluate how such advantages are, the following article will analyze in detail as follows:

First, the labor force

Hanoi is considered a capital with a longstanding historical developed tradition. The population is heavily crowded, reaching about 7 million after 4 times of adjusting the administrative boundaries in 2014. Ha Noi has become one of the 17 largest cities in the world. In addition, with favorable conditions, Hanoi is considered an attractive city for labor, especially qualified and highly skilled workforce. This is a particular advantage for businesses to invest in Hanoi, because the amount of labor leads to a consequence that cost for labor is cheap and a large workforce will provide for industries requiring a large amount of labor force.

Second, the pace of economic development

In 2014, the economy of Hanoi has continued to grow and controlled inflation. In addtion, GDP in the province is estimated at 8.8% and revenue is estimated at 130.000 billion, with 103% of the mathematics. Besides, administrative reform, improvement on the investment environment, business environment, policies to remove difficulties for enterprises often deploy, which made PAR index of cities rise 2 levels compared with 2012 and No. 5 of the 63 provinces and cities nationwide. Thus, with the stable and strong economic development, Hanoi is a city that brings stability for businesses to invest and develop business in this city.

Thirdly, facility

With the aim of developing Hanoi based on critirea of synchronous and modern infrastructure, leadership of Hanoi has attempted to offer policies to promote infrastructure construction of the city in order that Hanoi will become more modern, in which, the traffic system in Hanoi must be built and upgrades more modern. This is considered particularly advantage, because the synchronous development of infrastructure will bring to the development of economy of the city.

Fourthly, administrative and tax policies

With attractive policies for investment, Hanoi has implemented policies solving administrative procedures with only a door. This policy is seen as a new step forward the people of Hanoi in general and businesses having demand to invest in Hanoi in particular. With this open policy, the procedures for establishing businesses, dissolution, business transformation become quickly and easily than ever before, creat favorable conditions for the development of business and resolve administrative procedures. In addition, in order to facilitate business development for businesses, Hanoi has many policies to reduce taxes in order to create favorable conditions for development of new business with low capital.

Fifthly, geographic location

Judged to be a convenient location, with synchronous traffic system, a northern – southern railway, highway 1A, along with the expanded domestic and international routes, Hanoi is considered a city with the most convenient trade location in Southeast Asia and the gateway to the East Sea of Laos and other countries. Thus, Hanoi is the right choice of businesses that need an exchange between domestic and international provinces.

Sixthly, broad market

With the population of 7 million, belonging to one of the 17 cities with the largest population in the world, Hanoi is considered a city which has the largest consumer goods market in the country. Abundant work force, along with the large number of people from suburbs, strong demand for consumer products, services lead to favorable conditions for businesses in production and consumption of consumer products and services. These come from a reason that if the demand rises, the number of products will also lead to increase and as a consequence, economic growth of enterprises will also increase. It can be said that this is a particular strength of the city that businesses investing here are looking forward. From the analysis given above, it can be said that Hanoi is considered to be an attractive destination for small and medium enterprises, especially for enterprises with foreign investment into the Vietnam market. To better understand how to establish enterprises and choose the best type of enterprise,

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Billion USD Projects Are Coming to Vietnam

After setting a record of 14.59 billion USD in the first 4 months, foreign investment in Vietnam is forecasted to continue to accelerate in the coming time. Most likely, the first billion-dollar project will land in Vietnam this year.

Although mentioned a lot, but the 4.6 billion USD project of Exxon Mobil Corporation (USA) probably will not be the first billion-dollar project granted investment certificate in Vietnam this year. Instead, it will be the Weijia Textiles Vina Project of Wai Chi Kai investor (Hong Kong). Under the plan, Wai Chi Kai will invest 1 billion USD to build a factory specializing in the production of knitted collar products, wrist bands, ribbed fabric, textile fabrics, textile accessories, fashion accessories… The project was implemented in Dong An 2 Industrial Zone (Hoa Phu Ward, Thu Dau Mot City, Binh Duong Province).

Meanwhile, Bac Lieu Provincial People’s Committee is also urging the Ministry of Industry and Trade to speed up the appraisal process and supplement the project LNG Bac Lieu Gas Thermal Power Plant of investor Energy Capital (USA), investment capital 4.3 billion USD in Electricity Planning VII. Although the investment procedure for a power project is not simple, Bac Lieu hopes that the Project will soon be granted an investment certificate, with a scale of 3,200 MW. The reason is quite understandable, this project will add 3,000 billion VND/year to the local budget.

Besides the above billion USD projects, a series of other large-scale projects may soon be granted investment certificates this year. In which, there is a 500 million USD project of Hana Micron investor (Korea).

Information revealed that, in the middle of April 2019, Hana Micron has officially signed an investment cooperation agreement with Bac Giang Industrial Zone Management Board to implement a project specialized in manufacturing high-tech products and semiconductor equipment in this province.

Meanwhile, Apparel Far Eastern is looking to increase 610 million USD, while Meiko Electronics is about to increase an additional capital of 200 million USD in Vietnam. Once the procedure is completed, the list of large-scale FDI projects registered to invest in Vietnam this year will be extended.

The trend of shifting investment into Vietnam in anticipation of the opportunity by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), as well as to avoid the effects of US – China trade tension, which is becoming clearer.

After Compal, LG Group recently announced that it will stop producing smartphones in Korea to move to Vietnam, in order to cut costs, improve investment and business efficiency. LG’s factory in Pyeongtaek, south of Seoul, will officially stop operating later this year, to switch production to LG’s factories in Hai Phong.

In addition to LG, CP Foods – belonging to Charoen Pokphand Foods, Thailand’s leading group of billionaire Dhanin Chearavanont, will invest more than 200 million USD to build a pork and poultry export center in Vietnam to take advantage of free trade agreements that Vietnam has signed.

CP has invested in Vietnam about 1 billion USD since 1993 and is constantly expanding investment and business to dominate market share. According to CEO of CP Vietnam, Vietnam has an advantage over Thailand in export and labor costs.

That is also the reason why more and more foreign investors shift investment plans to Vietnam. After the US – China trade tension escalated and after the CPTPP took effect, this trend became stronger.

Even, not only secondary investment projects, but according to a recent study published by CBRE, the trend of companies shifting production from China to Southeast Asia, including Vietnam, will also positively impact Vietnam’s industrial real estate sector.

According to CBRE, this trend has been going on since 2018 and will continue to increase until 2020. Thus, at least within the next 2 years, foreign investment in Vietnam will continue to accelerate.

It is important to continue to improve the investment and business environment, create favorable conditions for foreign investors to be able to welcome opportunities and speed up attracting foreign investment, especially in the areas of production of Chinese goods subject to US sanctions.

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Ha Nam: Granting Investment Registration Certificate to Capella Real Estate JSC and Tejin Group (Japan)

On May 15th 2019, Ha Nam Provincial People’s Committee held a ceremony to grant Investment Registration Certificate for the Project of construction investment and infrastructure business of Thanh Liem industrial zone, phase II for Capella Real Estate Joint Stock Company, which has a total investment of nearly 950 billion VND and Tejin Carbon Vietnam Factory Project for Teijin Group with a total investment of 12 million USD.

Over the past years, with the viewpoint of always trying to improve the investment environment, Ha Nam’s leaders always support and create the most favorable conditions for investors, focusing on strong resources to build infrastructure, especially transport infrastructure, industrial zones and clusters. Drastically direct the implementation of solutions to improve the business investment environment, administrative reform…

Up to now, Ha Nam province has 8 industrial parks approved by the Prime Minister, of which 7 industrial parks have been put into operation, 1 Thai Ha Industrial Zone has completed the documents and procedures. 887 projects have been attracted, including 260 FDI projects and 627 domestic projects with registered capital of nearly 3,000 million USD and nearly 110,000 billion VND. In the first 4 months of 2019, the province granted 40 investment projects, including 16 FDI projects and 24 domestic projects with total registered and adjusted investment capital of 200 million USD and nearly 3,500 billion VND.

In the ceremony, Ha Nam province granted the Investment Certificate to the investment project of construction and business of Thanh Liem Industrial Park Phase II invested by Capella Real Estate Joint Stock Company. With a scale of 143 ha and total investment of nearly 950 billion VND. This is one of the most capable, reputable and experienced investors, has been very successful in the field of infrastructure development and attracting investment in industrial parks and industrial clusters in some localities all over the country.

Also at the conference, leaders of Ha Nam province granted the Investment Registration Certificate of Tejin Carbon Vietnam Factory Project to Teijin Group (Japan). This is an enterprise with more than 100 years of experience in the field of materials, health care and information technology. One of the leading enterprises developing core technologies including polymer chemistry, nanotechnology, biotechnology and synthetic technology.

Teijin Group (Japan) built Tejin Carbon Vietnam Factory with a total investment of 12 million USD, on an area of 15,300 m2, producing carbon fiber products used for the aerospace industry, automotive industry, plastic engineering, health, sports… to meet the demand of domestic and foreign markets.

At the conference, Chairman of Ha Nam Provincial People’s Committee welcomed the leaders of Teijin Group and Capella Company to trust and choose Ha Nam as the project investment location. At the same time, he also believed in the construction process, production and business activities, businesses will achieve high revenue and efficiency.

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