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In recent years, Nha Trang has become an increasingly attractive destination for foreign investors thanks to its strong potential for tourism, trade, and service development. Establishing a business in Nha Trang not only creates valuable business opportunities but also provides foreign investors with a structured and compliant way to enter the Vietnamese market. However, to ensure a smooth establishment process, investors should have a clear understanding of the applicable legal regulations, investment conditions, and procedures required under current Vietnamese law.
Common Investment Options for Foreign Investors in Nha Trang
Foreign investors in Nha Trang may choose from several investment structures depending on their business objectives, desired level of control, and the applicable regulations under Vietnamese law. The most common options are outlined below.
1. Establishing a Foreign-Invested Company (FDI Company)
This is a form of direct investment in which a foreign investor establishes a new company in Vietnam and owns all or part of its charter capital. Depending on the intended business lines and applicable market access regulations, the investor may establish either a wholly foreign-owned enterprise or a joint venture with a Vietnamese partner.
The primary advantage of this structure is the high degree of control it offers over the company’s management, operations, and long-term business strategy. However, the legal procedures are relatively complex, and the licensing process may take several months.
In Nha Trang, this investment structure is generally appropriate for foreign-invested enterprises established to implement an investment project, particularly projects involving land use. For foreign investors who simply wish to establish a small-scale business without an investment project, this option is generally not practical in Nha Trang or elsewhere in Khanh Hoa Province.
In addition, certain conditional business sectors require investors to satisfy specific market access conditions, such as minimum capital requirements, foreign ownership limitations, and restrictions relating to land use in coastal or island areas.
2. Capital Contribution or Acquisition of Shares/Equity in a Vietnamese Company
Instead of establishing a new company, foreign investors may invest indirectly by contributing capital to, or acquiring shares or equity interests in, an existing Vietnamese company. This approach can significantly reduce both the time and costs associated with the initial investment procedures.
Before completing the transaction, the foreign investor must obtain approval for the capital contribution or share acquisition from the Department of Finance of Khanh Hoa Province, where required under Vietnamese law.
For foreign investors seeking to own a small business in Nha Trang without implementing an investment project, this is generally the most practical and efficient investment option.
Please note that in certain conditional or restricted business sectors, foreign ownership ratios are subject to limitations under Vietnamese law and Vietnam’s international commitments.
3. Business Cooperation Contract (BCC)
A Business Cooperation Contract (BCC) is an investment structure that does not require the establishment of a separate legal entity. Under this arrangement, a foreign investor and a Vietnamese partner enter into a contractual agreement to conduct business activities and share profits in accordance with the agreed terms.
The main advantage of a BCC is its relatively simple legal procedure compared with establishing a new company. It also provides considerable flexibility in allocating rights, obligations, and profit-sharing arrangements between the parties, making it particularly suitable for short-term or project-based business cooperation.
However, because a BCC does not create an independent legal entity, financial management, liability allocation, and dispute resolution may become more complex if these matters are not clearly addressed in the agreement.
Conditions for Foreign Investors to Establish a Business in Nha Trang
Business Line Requirements
The proposed business line is one of the most important factors for foreign investors seeking to establish a business in Vietnam. Under the Law on Investment, foreign investors generally enjoy the same market access rights as domestic investors, except for business sectors included in the list of sectors with no market access or sectors subject to conditional market access for foreign investors.
Business sectors with no market access: Foreign investors are prohibited from conducting business activities in these sectors in Vietnam under any form of investment.
Business sectors subject to conditional market access: Foreign investors may only invest in these sectors if they fully satisfy the applicable market access conditions. The specific requirements vary depending on the business sector and are prescribed by the relevant specialized laws and regulations.
Capital Requirements
Vietnamese law does not impose a general minimum capital requirement for all foreign-invested enterprises. However, for certain conditional business sectors, specialized legislation may prescribe a minimum statutory capital requirement or other financial conditions. In such cases, foreign investors must provide evidence demonstrating sufficient financial capacity to satisfy the applicable requirements.
In addition, certain conditional business sectors impose restrictions on the maximum ownership percentage that foreign investors may hold in a Vietnamese company. Outside these restricted sectors, foreign investors are generally permitted to own up to 100% of the charter capital of the enterprise.
Business Location Requirements
When applying for an investment registration certificate, the investor must identify the proposed business location.
The business premises may be located on land allocated or leased by the State, or on premises leased from individuals or organizations that have lawful land use rights.
The business location must have a clear and identifiable address and be lawfully available for use by the investor. In addition, the location must comply with local planning regulations and be suitable for the registered business activities.
Costs and Timeline for Establishing a Business for Foreign Investors in Nha Trang
The costs and processing time for establishing a business in Nha Trang depend primarily on the size of the investment project and the investment structure chosen by the foreign investor.
For investors establishing a new foreign-invested enterprise (FIE), the Department of Finance of Khanh Hoa Province will circulate the investment application to the relevant government departments and authorities for consultation before issuing the investment approval. This inter-agency consultation process may significantly increase both the processing time and the overall cost of the investment registration procedure.
For investors choosing to invest through capital contribution, share acquisition, or the purchase of equity interests in an existing Vietnamese company, the procedures are generally simpler and more streamlined. As a result, both the processing time and the associated costs are typically lower than those for establishing a new foreign-invested enterprise.
For a detailed quotation tailored to your specific investment project, please contact DCNH Law directly. Our team will provide a comprehensive assessment of the applicable procedures, estimated timeline, and professional service fees.
Frequently Asked Questions (FAQs)
Can a foreign investor own 100% of a Vietnamese company?
Yes. A foreign investor may own 100% of the charter capital of a Vietnamese company, provided that its business activities are not subject to foreign ownership restrictions under Vietnamese law or Vietnam’s international commitments.
Is residence in Vietnam required to establish a company?
No. Foreign investors are not required to hold a permanent residence card or temporary residence card in Vietnam in order to establish a company.
However, at certain stages of the investment process, the investor may be required to be physically present in Vietnam to work with the competent authorities or complete procedures relating to the establishment and operation of the business.
Can I acquire an existing Vietnamese company instead of establishing a new one?
Yes. Foreign investors may acquire an existing Vietnamese company by making a capital contribution or purchasing shares or equity interests from the current owners. In many cases, this is a faster and more practical alternative to establishing a new foreign-invested enterprise.
What are the accounting and tax compliance requirements?
Foreign-invested enterprises are generally subject to the same accounting and tax obligations as Vietnamese companies.
The company must maintain proper accounting records and supporting documentation, comply with Vietnam’s invoicing requirements, submit periodic tax declarations (generally on a quarterly basis), and prepare annual financial statements in accordance with Vietnamese accounting regulations.
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DCNH LAW
Address: 5th Floor, Building 42 Le Thanh Phuong, Tay Nha Trang Ward, Khanh Hoa Province, Vietnam
Phone: (+84) 974 278 893 | (+84) 343 320 223
Email: dcnh.law@gmail.com
