Procedures for setting up a factory in Vietnam

4/2/2021

Like establishing a business, the establishment of a foreign-invested factory in Vietnam still requires two main types of licenses: an Investment Certificate and a Business Registration Certificate. However, with the complicated characteristics and the need for a larger land resource, the establishment of the factory requires a number of other procedures. Here are some key procedures for setting up a foreign-invested factory in Vietnam. 

Select a location for a factory 

  • Rent facility - pre-built factory buildings from licensed infrastructure leasing companies in Vietnam. This plan is suitable for investors wishing to rent land for small-scale factory construction; 
  • Rent land in industrial zones, export processing zones or high-tech zones. This plan is suitable for investors wishing to lease land with a long lease term and leased land area to build medium-sized factories or more. When building factories located in industrial zones or export processing zones, investors will enjoy specific regulations specific to enterprises in industrial parks and export processing zones; 
  • Rent land directly from the State. This option is suitable for investors who have a long-term land lease plan and a large land lease area. However, this option has a drawback that it can take quite a lot of time and cost to get the investment policy approval of the authority in terms of land use planning and zoning as well as the ground clearance (in case the leased land has not been cleared ground); 
  • In case the investor has land and needs to convert from residential land to factory land, the investors need to meet all the conditions for work construction density in accordance with the regulations of that province before being granted a construction permit for their factory project. Along with that, factory construction works must always be consistent with the detailed construction planning approved by the competent state agency; ensuring suitability for the purpose of land use in accordance with the approved state planning, in accordance with the approved work construction design and ensuring safety conditions for construction permits built for that project. 

Approvals of the environmental impact assessment report 

When a foreign investor invests in a service industry in Vietnam, the investor will encounter the limitations of the GATS schedule of commitments that Vietnam has signed upon joining the WTO, such as regulations on the percentage of capital contribution, restrict the type of legal entity established for each specific industry in Vietnam. However, when building a manufacturing factory in Vietnam, foreign investors face very few restrictions on market access, such as investing in service industries, except for some industries with specific regulations such as automobile production and assembly, cosmetics, medical equipment... Besides, the production process can have negative impacts, adversely affecting the environment, so some objects and projects are specified in Appendix II in Decree No. 18/2015/ND-CP of the Government must conduct an environmental impact assessment procedure. This procedure must be carried out during project preparation. 

Application of environmental impact assessment 

  • Application for evaluation: 
  • One (01) written request for environmental impact assessment report appraisal in the prescribed form; 
  • Seven (07) reports on environmental impact assessment of the project. In case the number of appraisal council members is more than seven (07) people, the project owner must provide an additional number of environmental impact assessment reports. The form of the cover page, the sub-cover page and the structure and content requirements of the environmental impact assessment report shall be made according to the prescribed form; 
  • One (01) feasibility study report or investment project report or equivalent document. 
  • Application submitted for approval after being verified with approval results
  • One (01) written request for approval of the environmental impact assessment report, which clearly explains the amended and supplemented contents according to the conclusion of the appraisal council, except for cases where no modifications or additions are required;
  • The environmental impact assessment report is bound with a hard-bound book, the project owner signs at the bottom of each report page, including the appendix as prescribed.

The investor submits the application for approval of the environmental impact report to the People's Committee of the province. The deadline for appraisal is 30 days at the latest from the date of receiving valid dossiers.

Note: In case of building a manufacturing factory without having to apply for approval of an environmental impact assessment report, the investor must complete the procedures for confirming the environmental protection plan at the Department of Natural Resources and Environment where the factory is located.

Documentation of the environmental protection plan includes:

  • Three (03) copies of the environmental protection plan with the cover page and content requirements in the prescribed form;
  • One (01) investment report or plan for production, business or service.

Apply for an Investment Registration Certificate

For projects that required to apply for policy approval

Depending on the size of the project, the investor must apply for the approval of the investment policy from different competent agencies such as the National Assembly, the Prime Minister or the People's Committee of the province.

An application for policy approval includes:

  • Proposal for investment project implementation;
  • Copy of ID card or passport for individual investors; a copy of the Certificate of Establishment or another equivalent document certifying the legal status of the institutional investor;
  • Proposal for an investment project includes the following contents: investor implementing the project, investment objectives, investment scale, investment capital and capital raising plan, location, duration, investment schedule, labor demand, proposal for investment incentives, assessment of the project's socio-economic impact and efficiency;
  • Copy of one of the following documents: investor's financial statements for the last 02 years; commitment to financial support of the parent company; commitment to financial support of a financial institution; guarantees on investors' financial capacity; documents explaining the financial capacity of the investor;
  • Proposed land use demand; In case the project does not request the State to allocate land, lease land, or permit the change of land use purpose, submit a copy of the lease agreement or other documents certifying that the investor has the right to use the location to carry out an investment project;
  • Explanation for the use of technology for the project, including the following contents: name of technology, origin of technology, technology process diagram; main specifications, usage status of main machinery, equipment and technological line;
  • BCC contract for an investment project in the form of a BCC contract;
  • Preliminary environmental impact assessment, environmental protection solutions.

The investor will send a dossier to the investment registration agency to apply for the approval of the investment policy of the competent agency. After receiving investment policy approval, the investor is not required to apply for an investment certificate. The investment registration agency will issue the Investment Registration Certificate to the investor within 05 working days from the date of receipt of the decision on investment policy.

For projects that do not require investment policy approval

In order to establish a factory in Vietnam, a foreign investor must be granted an investment registration certificate. An application for an Investment Certificate includes:

  • Proposal for investment project implementation (form);
  • Copy of ID card or passport for individual investor; a copy of the Certificate of Establishment or other equivalent document confirming the legal status of the institutional investor;
  • Proposal for an investment project includes the following contents: investor implementing the project, investment objectives, investment scale, investment capital and capital raising plan, location, duration, investment schedule, labor demand, proposal for investment incentives, assessment of the project's socio-economic impact and efficiency;
  • Copy of one of the following documents: investor's financial statements for the last 02 years; commitment to financial support of the parent company; commitment to financial support of a financial institution; guarantees on investors' financial capacity; documents explaining the financial capacity of the investor;
  • Office lease contract, Document proving the lessor's right to lease (Land use right certificate, Construction permit, Business registration certificate with real estate business function of the lessor or equivalent documents);
  • Proposed land use demand; In case the project does not request the State to allocate land, lease land, or permit the change of land use purpose, submit a copy of the lease agreement or other documents certifying that the investor has the right to use the location to carry out an investment project;
  • Explanation of technology use for investment projects using technologies on the List of technologies restricted from transfer under the Law on Technology Transfer, including the following contents: name of technology, origin of technology, technology process diagram; main specifications, usage status of main machinery, equipment and technological line;
  • BCC contract for an investment project in the form of a BCC contract.

Information about an investment project must be declared online on the National Foreign Investment Information System. Within 15 days from the date of online declaration, the investor must submit an application for the Investment Registration Certificate to the Management Board of the province's industrial, export processing and hi-tech zones. After the application is received, the Investment Registration Office will consider the validity and issue a code for the investment project. In case the application is rejected, this agency must notify the investor in writing, clearly stating the reason.

Apply for a business registration certificate

After being granted the Investment Registration Certificate, you can begin to carry out a number of procedures to establish a company.

Application for an Enterprise Registration Certificate:

  • Application form for Enterprise Registration (form);
  • Draft charter of the business;
  • List of members, for two-member limited liability companies, founding shareholders, for joint-stock companies;
  • A valid copy of one of the authenticating documents:
  • For individuals: valid ID card or passport or citizen identification card; 
  • For organizations: Enterprise registration certificate for organizations and accompanied by personal identification papers of the authorized representative of the organization; 
  • Capital contribution decision, document on appointment of authorized representative for company members, institutional shareholders; 
  • Other documents in special cases (Viet An Law will advise customers to prepare in accordance with the law). 

After preparing all your documents, the Company should submit your application to the Business Registration Authority through the National Portal of Business Registration. Within 03 - 05 days, the Business Registration Office will issue the Business Registration Certificate if your application is valid. Then, the investor must publish information on the National Business Registration Portal. 

Apply for a factory building permit 

In the case of building a new factory, the investor must apply for a new construction permit. 

Construction permit dossiers include: 

  • An application form for a construction permit (form); 
  • A copy or a file containing a photocopy of the original of one of the documents proving the right to use the land in accordance with the land law; 
  • A copy or file containing the original copy of two sets of technical design drawings or construction drawings that have been approved and verified by specialized agencies in accordance with the law on construction, each set includes: Drawings of the total project site or the total ground plan for each phase of the project, scale 1/100 - 1/500; The ground plan of each work on the land lot, scale 1/100 - 1/500, attached with the work location diagram; Drawings of the main verticals and sections of each project, scale 1/50 - 1/200; A drawing of the foundation plan, scale 1/100 - 1/200 and the foundation cross section, scale 1/50 of each project, together with the connection diagram of the storm water drainage, wastewater treatment, water supply, and supply system. electricity, communication rate 1/50 - 1/200. 
  • The copy or file containing the photocopy of the original approval decision on investment in construction of works; 
  • A copy or a file containing a copy of the original design appraisal report of the construction-specialized agency for the project that must be appraised for design; 
  • A copy or a file containing a copy of the investor's original written commitment to ensure the safety of the work and neighboring works for crowded and basement construction works; 
  • A copy or a file containing a copy of the original declaration of capacity and experience of the organization or individual designed in the form, together with a copy of the certificate of construction practice, for the work that has not been approved by the agency. construction design expertise. 

Management boards of industrial parks, export processing zones, economic zones, high-tech zones will receive dossiers and grant a construction permit to investors if the dossiers are valid or issue a written refusal to grant a construction permit in case the application is not valid. 

Apply for a fire protection license 

A dossier of application for a fire prevention and fighting license includes: 

  • An application form for a Certificate of fire prevention and fighting (form); 
  • Authenticated copy of certificate of authority on fire prevention and fighting; test documents on fire prevention and fighting for newly renovated or newly built establishments, motorized means of transport that need to ensure fire prevention and fighting safety when converted or newly built; authenticated copies of the record on the inspection of fire prevention and fighting safety for establishments and other motor vehicles; 
  • The inventory of all equipped fire prevention and fighting means and life-saving means (form); 
  • Fire fighting options; 
  • Decision on the establishment of the grassroots fire prevention and fighting team; 
  • List of individuals who have passed the training on fire prevention and fighting. 

The investor submits the application to the Department of Fire and Rescue Police. In case of authorizing another individual or unit to perform the implementation, a power of attorney must be attached. 

In addition to the main procedures mentioned above, foreign investors still have to follow some basic procedures after setting up a factory similar to establishing an enterprise such as paying taxes, applying for seals, hanging signs ... 

In case you need further assistance, please contact us here.