Under the Law on Investment 2020, there are 5 forms of foreign investment in Vietnam. Each form has different requirements and regulations. Therefore, when choosing forms of investment, foreign investors need to consider the most appropriate one.

The five forms of foreign investment specified in the Investment Law 2020

The forms of foreign investment are:

1. Investment in establishment of economic organizations
2. Investment in the form of contribution of capital to, or purchase of shares or capital contributions at, economic organizations
3. Implementation of investment projects
4. Investment in the form of BCC
5. Other forms and economic organizations are specified by the Government.

In comparison, Investment Law 2020 has some significant changes and supplement regarding forms of foreign investment.

Establishment of economic organizations

Foreign investors must comply with the following regulations on the establishment of economic organizations:

– The establishment of an economic organization must satisfy all conditions for market access as prescribed in Article 9, the Law on Investment 2020; and

– Before establishing an economic organization, a foreign investor must have: (i) an investment project; (ii) Investment registration certificate. In the case of establishment of innovative start-up small and medium-sized enterprises and innovative start-up investment funds, the provisions of the law on supporting small and medium enterprises shall be complied with.

Contribution of capital to, or purchase of shares or capital contributions at economic organizations

Foreign investors must complete the procedure of contribution of capital to, or purchase of shares or capital contributions at economic organizations in cases of:

– Invest in economic organizations operating in business lines with conditions applicable to foreign investors;

– Invest to hold from 51% of the charter capital of an economic organization, as prescribed in Clause 1, Article 23.

Investment projects

An investment project is when an investor’s long-term or medium-term capital investment to carry out a project in a specific place and time. An investment project has the following characteristics:

(i) investment objectives;

(ii) limited implementing time;

(iii) the project can be transferred one part or all.

Forms of foreign investment, BCC

BCC is an acronym for Business Cooperation Contract. The parties to this contract are foreign investors or domestic investors join a contract with foreign investors to carry out the procedures for granting investment registration certificates (according to Article 38). Functions, obligations and rights are agreed upon by the parties. And because the nature of the form of investment is a contract, the parties do not need to establish an economic organization.

In addition, the Law on Investment 2020 also stipulates the types of investments that may appear in the future. This shows that Vietnam is opening the door of integration more to welcome foreign investors with many different investment forms.

Read more about: Investment topic (Investment forms; getting IRC…) and topic on enterprises… on website inalaw.net.