Project management firm moves into Vietnam real estate
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.
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.
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.
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.
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.
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
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.
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).
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:
- Obtaining foreign investment approval and a business license from the State Bank of Vietnam in Hanoi for the foreign exchange business. The application to the State Bank included submitting a Business Plan for the company’s proposed foreign exchange activities, information about the shareholders and directors, and an analysis of the market conditions. Healy Consultants prepared all supporting documentation required to obtain State Bank approval;
- Locating a 500 sq ft office premises in Ho Chi Minh and arranging for the Client to sign a lease agreement;
- Obtaining a Business Registration Certificate from the Department of Planning and Investment;
- Obtaining a company seal from the Municipal Police Department in Ho Chi Minh;
- Publishing notification of the company’s formation in the local English-language Vietnamese newspaper;
- Obtaining a company tax code from the Municipal Taxation Department in Ho Chi Minh;
- Registering the company with the Ho Chi Minh Trade Union.
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.
Australian market research company setup a Vietnam representative office in Hanoi
Our Client, Mike is the CEO of Eastern Group. Eastern Group is an Australian-owned independent company that does business in Vietnam, Asia and Australia. With comprehensive market research, Eastern Group maximizes the efficiency of Clients’ investment opportunities. The focal areas of expertise provided by the firm include knowledge management, business intelligence, competitive intelligence, and business investigations.
Eastern Group would like to conduct market research for their Australian-based private equity Clients to invest in Vietnam. Vietnam was chosen because Vietnam boasts a major trade and commercial hub with quality shipping ports for Eastern Group’s Client base of private equity, shipping and investment firms, including their major Client, Cargo Office International. Being close to Vietnam’s freight management business, this offers the company excellent market opportunities.
Mike contacted Healy Consultants to discuss his goal of expanding his company in Vietnam. After understanding the corporate objective that Mike outlined to Healy Consultants, we then recommended the group to set up a representative office in Vietnam. Healy Consultants then sent Mike a detailed cost proposal to set up the Vietnam representative office. Healy Consultants started the registration process once he signed Healy Consultants’ Client Engagement Letter, provided necessary due diligence, and remitted the engagement fees to our bank account to enable our team to start the engagement. At this point, our Vietnam team, in consultation with our Singapore office, prepared a detailed Engagement Project Plan, outlining the project steps and deliverables from Healy Consultants, as well as the likely timeframe to finish the whole engagement.
Representative office registration
Vietnam representative office set up is a time consuming, and complex process. However, Healy Consultants’ transparent, logical engagement procedures ensure that the procedures are as smooth as possible. Healy Consultants started the incorporation after Mike signed our Client Engagement Letter, returned the original document to our Singapore office, submitted his due diligence and had Mike confirm his corporate structure.
Before Healy Consultants commenced the representative office set up process, the Vietnam government must review and approve a lease agreement for office premises. As requested by Mike, Healy Consultants assisted him in locating permanent office premises in Hanoi. This includes i) sourcing for the permanent office premise, ii) arranging an office viewing iii) negotiating the terms and conditions of the lease agreement iv) preparing the lease agreement in the format stipulated by the Vietnam Government.
Healy Consultants first performed a company name search at the Business Registration Office of the Vietnam Department of Planning and Investment. After their approval, Healy Consultants submitted the registration application to the Department of Industry and Trade of Province in Hanoi (“DOIT”). The application includes i) application dossier for Registration of Investment, ii) audited financial reports of parent company and other information requested by Vietnamese authorities.
After one month from the date we submitted the RO application package, Healy Consultants received the RO license certificate. To support the set-up, Mike travelled to Hanoi personally to apply for the RO seal from the police department in Hanoi. Thereafter, Healy Consultants accompanied Mike to visit Vietncombank Hanoi branch to proceed with RO bank account opening. Healy Consultants submitted a full set of corporate documents and a business plan highlighting the company’s activities. The business plan contained details such as the company’s activities (and its products and services), information on the shareholders and directors, a brief market analysis and some financial projections. Healy Consultants submitted the complete account application pack, and accompanied our Clients to the bank for a brief interview, where they explained why they required an account in Vietcombank. On the same day, Healy Consultants received approval for the corporate bank account and Mike made the initial deposit to the bank account.
To support the set-up, Healy Consultants applied for a tax code at the Municipal Taxation Department in Hanoi and pays the business license tax of 3 million Dong. Healy Consultants received approval from the tax authority in two weeks. Immediately after the approval, Healy Consultants publishes an announcement in the public newspaper in Vietnam including details of i) name of representative office, ii) address of headquarters and representative office, iii) line of business, and iv) full name, resident address, nationality, number of identification card, passport or other relevant personal certification of owner, members and legal representative.
To comply with the Vietnam Companies Act, Healy Consultants submitted the registration of activity of the representative office to the “DOIT”.
Corporate bank account
After confirming that Mike’s representative office is successfully being set up, Healy Consultants applied the internet banking and ATM card facilities for the representative office. Over the course of the following two weeks we received (in sealed, separate envelopes) internet banking and ATM card PIN numbers, which we kept safely for our Clients’ collection.
Other support services
Because Mike is the chief representative officer of the RO, a work permit is required for him to stay and work legally in Vietnam. Healy Consultants submitted the application dossier for Mike’s work permit to the Department of Labor of Hanoi (“DOLISA”). Following this, Mike supplied legalized personal information requested by the Department of Labor of Hanoi. Four weeks from the date of submission, Mike received his work permit application approval.
To further support Mike’s business engagement in Hanoi, Healy Consultants aids Mike in many other related tasks. For example, Healy Consultants provided: i) full recruitment support, including hiring of local staff, advertising, interviews, shortlists, etc. ii) sourcing for contractors to furnish Mike’s office iii) contacts in Hanoi, e.g. suppliers, potential Clients in Hanoi iv) an introduction to existing Clients who operate in the same industry.
Vietnam incorporation is complex and time-consuming. The whole company incorporation, bank account opening, and visa application process takes approximately six months to complete from start to finish. Mike’s timely response and co-operation was highly appreciated during the engagement.
In August 2013, Healy Consultants provides Mike with a complete company kit including i) original RO license certificate ii) original Tax Registration Certificates and iii) bank kits (incl internet banking token and cheque book). For our continuous improvement, Healy Consultants also emailed Mike an Engagement Feedback Survey for his completion.
UK research firm enters Vietnam
Mr. Gagnerie owns a marketing-research firm based in the UK and wished to expand his business to the emerging markets in Asia. The firm provides fieldwork surveys, market analysis and consumer insights for companies who want to invest in foreign countries or launch new products. Ho Chi Minh City – Vietnam – was chosen for its dynamic consumer trends. Our Client required assistance in opening a branch in Ho Chi Minh City, with guidance on incorporation procedures, banking and tax issues, and a good location for their office.
Prior to engagement, we ensured that our Client understood the difficulties of setting up a company in Vietnam due to the complex and inconsistent legal procedures. Since the Client preferred 100% ownership of the company, we recommended a wholly foreign-owned entity. After agreement on the fees, terms and condition of our service, the Client kindly signed the engagement letter, settled our fees and was keen provide us with all the due diligence required for the company incorporation.
At this stage, our Client was informed that all the documents were required to be translated into Vietnamese and notarized.
Healy Consultants started the incorporation procedure by sending all the due diligence documents to the Notary Public Agency in Ho Chi Minh for translation and notarization stamp. Our team then checked the availability of Mr. Gagnerie’s preferred company name and obtained a certificate of name availability within 2 working days.
Thereafter, Healy Consultants assisted Mr. Gagnerie to obtain a Business Registration Certificate and a Tax Registration Certificate from the Business Registry Office in Ho Chi Minh City, both of which were approved in the next 6 days. Healy Consultants then applied for a seal-making license at the Administrative Department for Social Order (ADSO). The license was granted and Healy Consultants successfully obtained a company seal for Mr. Gagnerie within 5 working days. After the company seal was registered by the Police Division in Ho Chi Minh City, Mr. Gagnerie’s company was legally incorporated.
Follow the successful company incorporation, Healy Consultants assisted our Client to register of self-printed invoices and order VAT Invoice Books for his company. This step was done in alignment with the requirements of the Municipal Taxation Department.
After the successful incorporation of the company, our Client was a legal entity. However, in order to start its business, the company needed a corporate bank account for international funds transfer. Therefore, Healy Consultants suggested a multicurrency bank account at HSBC Vietnam. We completed the bank account application, which was then couriered to our Client for his signature. After receiving the signed application, on behalf of the Client, Healy Consultants attended an interview at a HSBC branch in Ho Chi Minh. Our staff provided the bank officer all the relevant documents as proof of the company’s eligibility to do business in Vietnam including the resolution of the management board, the signed application form, the Business Registration Certificate, the Tax Registration Certificate, and the company seal. One week after the interview day, the application was approved and all the account information was e-mailed to our Client.
Other support services
After the company’s incorporation, Healy Consultants assisted our Client to obtain Employment visas for 8 foreign staff (3 British and 4 Indians) from the Vietnam Labour Department of the Immigration Office.
To further support Mr. Gagnerie’s business engagement in Ho Chi Minh, Healy Consultants aids him in many other related tasks. For example, Healy Consultants provided: i) full recruitment support, including hiring of local staff, advertising, interviews, shortlists, etc. ii) Sourcing for contractors to furnish Gagnerie’s office iii) contacts in Ho Chi Minh, e.g. suppliers, potential clients in Ho Chi Minh iv) an introduction to existing clients who operate in the same industry.
The whole company incorporation, bank account opening and visa application process took approximately two months to complete from start to finish.
Healy Consultants provided Mr. Gagnerie with a complete company kit including i) original business registration certificates ii) original tax registration certificates and iii) bank kits (incl internet banking token and cheque book). For our continuous improvement, Healy Consultants also emailed Gagnerie an engagement feedback survey for his completion.