A common question from our clients when they are visiting Vietnam; What are the Best Investment Opportunities in Vietnam in 2020? Here is our answer with the ways to access these opportunities.
The GDP growth of Vietnam over the past decades has averaged over 7%, so it’s safe to say they have experienced rapid progress. With its industrial sector being the most improved. Global companies who increasingly fancy building factories in Southeast Asia have increasingly lost interest in China. Therefore, many investors are turning to Vietnam, as the third densest country and one of the fastest-growing in Southeast Asia. And recently, investing options in Vietnam has increased.
Invest in Real Estate
Buying property is debatably the best way to profit from the rise in the economic situation of Vietnam. Due to its openness to foreign investment, the country remains one of Asia’s Moe promising markets.
Residence of Vietnam, local organizations and foreign-owned companies can buy the privilege to use and construct on land. The entity buying the property affects the length of a rent contract and conditions.
The maximum length is 50 years for an individual, with an option to renew the contract for another 50 years.
Foreign-owned companies can hold rent contact in Vietnam until they exhaust their investment license. The Department of Planning and Investment grants this to them for ten years. The investment license can also be renewed. However, to avoid having issues with the extension of the license, it’s necessary to keep the company in obedience and report taxes regularly in Vietnam.
How to buy
Set up a 100% foreign-owned company
To purchase a property in Vietnam, the first option is to set up a fully foreign-owned company. You can purchase apartments by establishing a foreign-invested company (“FIc”). The purpose of the apartment should be to provide housing to company founders, members, and employees.
You can either construct commercial buildings, factories and warehouses on rented land. You are not entitled to purchase or sell the property as a real estate business might. The right to construct residential and commercial property for sale and lease to the third party is only given to specifically registered real-estate trading companies.
How to register a foreign-owned company in Vietnam
The procedures to follow when registering a company in Vietnam are mostly the same for all foreign investment companies. Without additional licenses, it takes approximately 4-6 weeks.
To start doing business in Vietnam, the first thing to do is to obtain an Investment Registration License from the Department of Planning and Investment (DPI).
The second step in registering a business in Vietnam is to acquire a Business Registration Certificate. There is a 90-day deadline to make your first capital contribution after obtaining the business registration certificate from DPI.
Form a joint venture in Vietnam
Another option to purchase properties in Vietnam is to form a joint venture with a shareholder in Vietnam. The following can be purchased by locally-owned companies and Vietnamese residents:
- Buildings for sale, lease, or lease-purchase
- All or some parts of a real estate project to construct buildings for lease, sale, or lease-purchase
The condition of the agreement for Vietnamese residents is unrestricted, Ownership of property can be held by Local Vietnamese companies until the termination of the company. It’s necessary to choose a reliable and capable candidate when forming a joint venture, as serious problems may arise later if an undependable one is selected.
Buy as an individual
Residents’ houses can be purchased by Foreign citizens, without having to form a legal entity. The limit to agreement of ownership for a housing sale agreement is 50 years. This form of agreement is a usual practice in Vietnam. It’s the closest usable alternative to the idea of private ownership.
The renewal date for an individual purchase agreement can be 50 years and can be done by adding an extension clause to the agreement. It is advisable to negotiate terms in the agreement with the seller that covers the exact renewal terms, such as:
- Additional fees are not required to renew the contract
- Advance lease collection for the next rent period is not required to renew the contract
- Additional charges are not required when processing the extension
- The transfer of ownership to you will not necessitate the payment of additional fees if the law on Foreign ownership changes
After registration with the local tax authority, a house or an apartment can also be sub-leased as an individual.
Invest in the Vietnam Stock Market
Stock Market is definitely one of the safest and best business opportunities in Vietnam. Vietnam has 2 main stock exchanges Contrary to other Southeast Asia countries: the main Ho Chi Minh Stock Exchange (HOSE) and also the minor Hanoi Stick Exchange (HSX). About 700 separate stocks in Vietnam can be purchased between the two exchanges. That’s a huge amount of options for a frontier market.
Find a Stock Brokerage in Vietnam
One of the requirements to start investing in Vietnam stocks is getting a brokerage account. It’s usually preferable to register an account at one of Vietnam’s biggest brokerage firms, due to the problems arising from the language barrier.
Vietnam’s largest stock brokerages are generally more suitable in comparison to smaller ones. And such big firms are likely to have someone around who speaks English, who can act as a translator when visiting a main business district.
Open a Vietnam Brokerage Account
A number of papers will be filled out once you are done selecting a brokerage firm. The exact type of papers differs depending on the firm but generally include:
- Account Opening Application
- Power of Attorney
- Application for Securities Trading Code
- Copy of Your Passport
- For US Citizens, Documentation for FATCA Compliance
Open a Vietnam Bank Account
In order to hold funds and make global transactions, the stockbroker should be able to help with the opening of a bank account with one of their associates. You will be demanded to fill out other form(s), but the brokerage can reuse many of the information provided from the last step.
Apply for a Securities Trading Code
After concluding everything, securities trading code will be applied for with the help of the brokerage. This is basically an ID for investors and it’s also a requirement for trading stocks in Vietnam. It will obviously require a notarized passport copy, but that should have been submitted already for Steps 2 and 3.
The concluding part is getting a security trading code. Just transfer money to your new brokerage account, start trading, and start participating in Vietnam’s economic growth.