FDI BUSINESS ESTABLISHMENT SERVICES

Hai Phong is rapidly emerging as a "golden destination" for Foreign Direct Investment (FDI), driven by modern infrastructure and progressive open-door policies. Consequently, the demand for FDI business establishment services in Hai Phong is surging, particularly among investors from Japan, South Korea, and Singapore.

However, for an FDI enterprise to be legally licensed, investors must navigate a series of complex procedures: applying for an Investment Registration Certificate (IRC), obtaining an Enterprise Registration Certificate (ERC), opening a Direct Investment Capital Account (DICA), and ensuring strict compliance with the Law on Investment 2020.

What is an FDI Enterprise?

An FDI (Foreign Direct Investment) enterprise is an entity established in Vietnam with capital contributions from foreign investors. This is a highly popular model ed by international investors to scale their business operations within our country.

According to the Law on Investment 2020, FDI enterprises can be established through various structures: 100% foreign-owned companies, joint ventures with Vietnamese partners, or through capital contribution and share acquisitions in existing domestic companies.

Investment Forms for FDI Enterprises

FDI is a primary method for foreign organizations or individuals to invest in a domestic enterprise by purchasing shares, participating in management, or contributing capital.

Pursuant to Article 21 of the Law on Investment 2020, there are four most common forms of investment applied by FDI enterprises:

1. Establishment of a New Economic Organization in Vietnam

This is the most prevalent form, where foreign investors directly establish a 100% foreign-owned company in Vietnam.

Example: A South Korean enterprise opening an electronic component manufacturing plant in Nam Cau Kien Industrial Park (Hai Phong).

• Advantages: Complete management autonomy and flexibility in operational modeling.
• Disadvantages: Stringent legal procedures and reporting obligations.

2. Capital Contribution, Purchase of Shares, or Stakes in Vietnamese Enterprises

This form is ideal for investors seeking rapid market entry without the need to incorporate a new entity.

Example: A Japanese investor acquiring a 40% stake in a local logistics firm in Hai Phong - the entity officially becomes an FDI enterprise.

• Advantages: Time-efficient leverages existing systems and infrastructure.
• Disadvantages: Requires rigorous due diligence of the Vietnamese partner and careful negotiation of capital transfer terms.

3. Business Cooperation Contract (BCC)

A BCC is an agreement between two or more parties to conduct business and share profits without establishing a new legal entity.

Example: A Singaporean company partnering with a Vietnamese firm to operate a logistics port in Dinh Vu.

• Advantages: High flexibility with fewer institutional constraints.
• Disadvantages: Potential for disputes if the agreement terms are not explicitly defined.

4. Execution of Independent Investment Projects or PPP Models

Certain FDI enterprises invest directly in large-scale projects such as industrial parks, port infrastructure, or energy plants. These forms often receive specific government incentives or specialized licensing.

Example: The LG Display Hai Phong project is a quintessential model of FDI investment in the high-tech sector.

Roles and Characteristics of FDI Enterprises

The impact of foreign-invested enterprises on the Hai Phong business landscape is significant.

• FDI firms introduce substantial capital, advanced technology, and professional management expertise, significantly enhancing production efficiency. They bring specialized knowledge and provide high-level training opportunities for the local workforce.
• With support from local authorities, FDI enterprises enjoy specialized tax and customs incentives. Furthermore, participation in global supply chains opens doors to new international markets and facilitates rapid scalability.