OUTWARD INVESTMENT, WHAT SHOULD BE NOTED?

The laws of Vietnam encourages investors to develop business activities and expand markets from Vietnam to abroad. The conduct of outward investment activities is in line with the speed of economic integration and development, in order to improve the quality of trade activities, access to technology, improve capacity and increase profits for foreign investors, and at the same time contribute to the development of the country’s economy.

However, performing outward investments, investors need to pay attention to some issues as presented in this article.

1.         Who is allowed to conduct outward investment activities?

–        Enterprises established and operating under the Law on Enterprises and Law on Investment.

–         Cooperatives and cooperative unions established and operating under the Law on Cooperatives.

–         Credit institutions established and operating under the Law on Credit Institutions.

–        Household businesses registered under the laws of Vietnam.

–        Individuals holding Vietnamese nationality, except for the case specified by laws.

–        Other organizations making business investment as prescribed by the laws of Vietnam.

2.         What are the forms of foreign investment?

Investors may conduct outward investment activities in one of the following forms:

–        Establishment of a business organization in accordance with the law of the host country;

–        Making investment on the basis of an overseas contract;

–        Contribution of capital to, purchase of shares or stakes of an overseas business organization to participate in management of such business organization;

–        Trading in securities, other financial instruments, or making investment via securities investment funds and other intermediary financial institutions in a foreign country;

–        Other forms of investment prescribed by law of the host country.

3.         What assets can be contributed as capital for outward investment?

Outward investment capital must consist of money and other assets with lawful origin (Equity; loans in Vietnam transferred overseas; profits obtained from outward investment projects and retained to carry out investment activities in foreign countries). Including:

–        Foreign currencies on the accounts opened at licensed credit institutions or purchased from licensed credit institutions as regulated by law;

–        Vietnamese dong conforming to Vietnam’s law on foreign exchange management;

–        Machinery, equipment, supplies, raw materials, fuels, finished and semi-finished goods;

–        Value of intellectual property rights, technologies, brands and rights to assets;

–        Investors’ shares, stakes and projects permitted for or swap the purchase of shares, stakes or investment projects of foreign business organizations.

In this case, Vietnamese investors shall follow the procedures for issuance of the outward investment registration certificate and then foreign investors shall follow the investment procedures in Vietnam as prescribed by law.

–        Other legal assets prescribed by regulations of civil law.

4.         Does outward investment need to comply with the conditions on the investment business lines?

Investors carrying out outward investment activities need to comply with the conditions on investment industries and professions of the host country related to market access.

In addition, the  laws of Vietnam also sets out some regulations with requirements of compliance:

–        Business lines banned from outward investment:

+        Business in narcotic substances;

+        Business in chemicals and minerals;

+        Business in specimens of wild flora and fauna; specimens of rare and/or endangered species of wild fauna and flora as specified by laws;

+        Prostitution business;

+        Human trafficking; trade in human tissues, corpses, human organs and human fetuses;

+        Business activities pertaining to asexual human reproduction;

+        Trade in firecrackers;

+        Provision of debt collection services.

+        Business lines with technologies and products banned from export in accordance with the law on foreign trade management.

+        Business lines banned from business investment in accordance with regulations of laws of the host countries.

–        Business lines subject to conditional outward investment:

+        Banking;

+        Insurance;

+        Securities;

+        Press, radio and television;

+        Real estate business.