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PROJECT MANAGEMENT FIRM MOVES INTO VIETNAM REAL ESTATE
Background
Our client Thomas is the managing director of a successful real estate project consulting firm headquartered in Chicago, US. The firm provides project management services to major real estate projects in cities around the world, such as planning for large commercial and residential development projects. This includes preparing feasibility studies, contact negotiation and transactions management. Despite its global client portfolio, the company has limited experience in emerging markets in Asia. Thus, our client approached us with a view to expanding into Vietnam, where property markets and opportunities are growing rapidly.
Engagement planning
Vietnam is a complicated jurisdiction in which to set up a company. Incorporation procedures, particularly for foreign investors, are complex and require substantial amounts of paperwork. Successful entry into Vietnam depends on an in-depth understanding of the local market and procedures. Because our client wanted to operate autonomously in Vietnam with 100% foreign ownership, it became clear that a wholly-owned foreign entity (WOFE) was the optimum corporate structure in this case. Thus, Healy Consultants explained in detail the potential challenges of setting up a foreign-owned business in Vietnam, as well as the costs of doing so. With this clarified, Thomas gave us the verbal go-ahead to proceed with the engagement by setting up a company in Ho Chi Minh city, Vietnam’s commercial capital. Thomas duly signed Healy Consultants’ Client Engagement Letter, in which the client’s preferred corporate structure was outlined (including the US parent company as sole shareholder). Furthermore, the client supplied director due diligence required by both our Firm, as well as the Vietnamese authorities, including passport copies the US-based directors, the Certificate of Incorporation of the US parent company (certified by the Vietnam Embassy) and a copy of audited financial statements of the US parent company.
Company incorporation
To legally incorporate a company in Vietnam, it is necessary to have an office premises, without which it is not possible to obtain an Investment Certificate for the company. As Thomas had not planned to travel to Ho Chi Minh City until the company had been incorporated, he engaged Healy Consultants to find suitable office space for the Firm. Our Vietnam real estate expert worked according to the specifications and budget outlined by our client, and e-mailed digital photographs to Thomas in the US for his review. Within two weeks a suitable office space was located. An office lease was drawn up and signed by Thomas and couriered back to Healy Consultants. Next, Healy Consultants applied for the company name with the Ministry of Planning and Investment, with written approval received within five days.
To apply for the Investment Certificate, Healy Consultants visited the Ministry of Planning and Investment to obtain a foreign investment application form. Furthermore, documents including the Company Charter, Minutes of Meeting and the Directors Resolution were drafted by Healy Consultants and then couriered to Thomas for his signature and return to us. A challenge at this stage of the engagement was that all official documents were in Vietnamese. However, Thomas expressed his trust that the documents were in order and signed them immediately, returning them to us without delay. However, it remained a recurrent theme throughout the engagement that any due diligence documents supplied by Thomas for submission to the Vietnamese authorities had to be translated into Vietnamese and certified as a true copy by the Vietnamese embassy in Washington DC, adding time to the engagement. Upon receipt of the signed documents, Healy Consultants visited the Business Registration Office (BRO) at the Ministry of Planning and Investment, and paid the official company registration fee of 200,000 Vietnamese dong (US$12). After three weeks, Healy Consultants received the Investment Certificate from the BRO, a copy of which was e-mailed to Thomas.
Seal making license
With this step complete, Healy Consultants applied for a seal-making license at the Administrative Department for Social Order (ADSO) at the Municipal Police Department in Ho Chi Minh. Although having an Investment Certificate allows a company to conduct business as a legal entity in theory, in practice it is almost worthless without a company seal, without which Thomas’ company would be unable to register with the tax authorities, open a bank account or apply for utilities. Healy Consultants completed an application form for a seal provided by the ADSO, as well as a notarised copy of the Investment Certificate (notarisation had been arranged by through Healy Consultants’ solicitor). Obtaining a license to make a seal proved time consuming. Despite following up by phone with the ADSO to check the status of the license, we were required to visit the offices twice in one week to move the process forward. Ten days after receiving the Investment Certificate, Healy Consultants received a license enabling us to arrange for a seal to be made by an ADSO-recommended seal maker. The following day, the original ADSO application was submitted to the seal-maker, in addition to the seal-making license, along with a fee of US$15. The seal was delivered to the ADSO for collection within six days.
Corporate banking
Having obtained the BRC and company seal, Thomas’ company was a legal entity. However, in order to support its operations, Thomas required a corporate bank account which allowed him to receive and make payments to Vietnamese clients and the US parent company. Healy Consultants prepared a US dollar and Vietnamese dong currency bank account opening application pack on our client’s behalf. Earlier in the engagement, Healy Consultants had Thomas sign a Power of Attorney to allow us to open the corporate bank account on his behalf. The application form was couriered to Thomas for his signature and return to us, which was done within one week. We visited the bank branch in Ho Chi Minh and submitted the complete application pack, including the application form, the Investment Certificate, a resolution of the management board on the authorised bank signatories and the company seal. We also attended a brief interview at the bank on Thomas’ behalf, explaining why the company required a corporate bank account in Vietnam. We received bank account opening approval within a few days, and e-mailed Thomas his new account number.
Notification of company incorporation
While waiting for bank account approval, the next task was to arrange to publish notification of the company’s formation in the Saigon Times Daily, an English language business newspaper, at a cost of US$65.
Tax registration
Healy Consultants visited the Municipal Taxation Department in Ho Chi Minh to apply for a tax code for the company, and pay the business license tax of 3 million dong (US$185). Our staff prepared a detailed application pack for the tax department, including a standard declaration of tax registration and the notarised company Investment Certificate. Within one week the tax code was received from the Ho Chi Minh Municipal Taxation Department, which also serves as confirmation that the company complies with the Ministry of Finance’s regulations on accounting standards. Healy Consultants then applied to purchase a set of pre-printed value added tax (VAT) invoices from the Municipal Tax Department, which were received within one week.
Conclusion
Thomas relocated to Ho Chi Minh City a few weeks after incorporation to oversee local logistics and negotiate contracts with locally-based real estate construction firms. The engagement was completed smoothly and efficiently by Healy Consultants’ staff in Ho Chi Minh and Singapore, who worked hard to overcome the time differences between Asia and Chicago to keep Thomas updated on the project status at all times, without him needing to visit Vietnam.
INTERNATIONAL MONEY EXCHANGE OPENS HO CHI MINH OFFICE
Background
Our client is a Singapore-based international money exchange business, with branches in London, Singapore, Hong Kong, Malaysia and Australia. The client wished to extend its reach in Asia by opening an exchange centre in Ho Chi Minh city, Vietnam's commercial capital. Our client indicated to us that the business would involve foreign currency exchange as well as remittances to foreign countries. Our client also indicated that the business would require a 500 sq ft shop in central Ho Chi Minh.
Engagement planning
From the outset we made it clear to our client of the challenges of setting up a money exchange business in Vietnam. Since it falls under a 'banking services' category, the business requires approval from the State Bank of Vietnam in Hanoi. That said, our client was keen to proceed, settling our engagement fees as well as signing our Client Engagement Letter and providing the due diligence as required by both Healy Consultants and the Vietnamese authorities (who required all documents to the translated into Vietnamese, adding both time and expense to the engagement).
Company incorporation
Despite the challenges, Healy Consultants completed the engagement for our client in a timely and efficient manner. Services provided by Healy Consultants to complete incorporation included:
Employment visas
Following incorporation, Healy Consultants obtained Temporary Resident Cards (Employment Visas) for 10 expatriate staff (Indian citizens) from the Vietnam Labour Department of the Immigration Office.
Contact Us
For more information on our Vietnam corporate services, email email@healyconsultants.com or telephone us in Singapore at (+65) 6735 0120.
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