What is an FDI enterprise? Procedures for establishing an FDI enterprise

Do you know: the concept of FDI, characteristics & roles of FDI enterprises (companies with foreign investment capital)? Detailed instructions on procedures for establishing FDI enterprises.

What does FDI stand for? What is an FDI enterprise?

FDI stands for Foreign Direct Investment. Accordingly, an FDI enterprise is an enterprise with foreign direct investment capital without distinguishing the specific capital contribution ratio. The invested capital will be used for the business activities of the enterprise.

FDI enterprises include 2 types:

• 100% foreign-owned enterprise;
• Foreign-invested enterprises in joint ventures with Vietnamese organizations.

The role and characteristics of FDI – foreign-invested enterprises

1. The role of FDI enterprises

The existence of FDI enterprises plays a quite important role in the general economy of the whole country, for example, some benefits from FDI enterprises are:

• Supplement capital for investment and economic development;
• Boosting growth in goods exports and labor productivity;
• Contribute to GDP growth and state budget revenues;
• Contribute to increasing income and reducing poverty rate through labor structure transformation;
• Improve technology level and technological innovation for domestic enterprises;
• Create jobs and stable income for the labor force with general qualifications; 
• Bringing competitiveness to Vietnamese enterprises. Thereby, contributing to improving the operating system, improving technology and enhancing business capacity;
• The operating model of FDI enterprises is quite professional and effective, leading to synergy value for Vietnamese enterprises when doing business cooperation.

2. Characteristics of FDI

If joint stock companies and limited liability companies have their own characteristics, the foreign-invested enterprise investment model also has its own distinct features, specifically:

• The main purpose of FDI is to maximize profits for foreign investors;
• The investor retains the right to decide during the business and production process;
• FDI capital will normally be attracted to countries with a solid and clear legal foundation and corridor;
• Most FDI enterprises are newly established or acquire operating companies in the form of transferring shares, capital contributions, etc.

Procedures for establishing FDI enterprises and companies with foreign investment capital

Currently, to establish an FDI company in Vietnam, investors can refer to one of the following two methods:

• Method 1: Direct investment;
• Method 2: Indirect investment.

Depending on each specific case, FDI enterprises can choose the form of establishment or are forced to choose one form instead of another.

Below, Online Accounting will guide you through the steps to establish an FDI enterprise in each way.

1. Establishing a direct FDI enterprise from scratch (direct investment)

This is mandatory if the business falls into one of the following two cases:

• Case 1: Plan to use legal status in Vietnam to invest capital;
• Case 2: There is a plan to implement a state-related project or a large-scale project.

At that time, the process of establishing a foreign invested enterprise is as follows:

• Step 1: Procedures for granting investment registration certificate;
• Step 2: Procedures for granting business registration certificate.

(BSCC: Notarized copy – BCTC: Financial report)

Note :
Depending on whether the foreign investor is an individual or an organization, the details of the application will change.
Notarized copies of documents from abroad must be consularized and translated into Vietnamese.

2. Establish a Vietnamese company and then transfer it (indirect investment)

With this form, businesses need to carry out the following 3 steps:

• Step 1: Procedures for establishing a company with 100% Vietnamese capital;
• Step 2: Procedures for applying for a certificate of eligibility to contribute capital for foreign investors;
• Step 3: Procedures for transferring capital contributions to foreign countries (changing the business registration certificate).

(BSCC: Notarized copy – BCTC: Financial report)

Note :

Depending on whether the foreign investor is an individual or an organization, the details of the application will change.
Notarized copies of documents from abroad must be consularized and translated into Vietnamese.

  Reference: Instructions on how to establish an FDI enterprise.

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In fact, the procedure for establishing an FDI enterprise may take from 30 to 60 days, not to mention the arising documents, legal conditions… Therefore, to optimize time and cost, you can consider using the FDI enterprise establishment service of Online Accounting – full package from only 15,000,000 VND.

Reference:

>>  Full package of FDI enterprise establishment services;

>> Start a business in Vietnam  – Full service.

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Conditions for establishing FDI enterprises

Basically, the government has had many policies to attract foreign investment capital. However, to balance with domestic enterprises, FDI enterprises need to comply with the following conditions:

• Registering business in industries and fields not prohibited by law;
• Foreign investors, if they are individuals, must have foreign nationality; if they are organizations, they must be established under foreign law;
• There must be a specific investment project and completion of the procedures for granting an investment registration certificate before proceeding with the procedures for registering a business registration certificate – this is also one of the conditions for FDI enterprises to receive preferential policies from the state.

Frequently asked questions about FDI enterprises