Investment Opportunities in Vietnam’s Textile Industry

Posted 11.02. 2021 by Cekindo

Vietnam’s textile and garment industry recorded an export turnover of US$16.18 billion between January and July of 2020 – a slight decrease due to the COVID-19 pandemic. However, in the crisis, the Vietnam textile industry still saw positive development as the country surpassed Bangladesh in 2020 and became the world’s second-largest textile and garment exporter.

The textile and garment industry will continue to thrive post-pandemic as many local and foreign enterprises are preparing to expand through the EU-Vietnam Free Trade Agreement (EVFTA).

Support from the Government in Textile Industry in Vietnam

Vietnam’s government’s fast response in curbing COVID-19 and its support in the Vietnam textile industry are the key factors that the market will continue to grow significantly post-pandemic.

Prior to the pandemic, the government had already provided assistance for the textile market via industrial park expansion for textile and local supporting industries. The government’s strategy is to enhance the contribution of supporting needs to 18% in domestic manufacturing and processing sectors. The federal government also encouraged the local authorities to help companies in technology transfer, innovation, and research and development.

Besides, the Ministry of Finance of Vietnam proposed to expand the import tax exemptions list for components, raw materials, and supplies for manufacturing and processing export goods.

Start a Textile Business with Company Registration

Foreigners can find four major types of legal entities suitable for their ventures in the Vietnam textile industry.

  • Limited Liability Company (LLC)
  • Joint-stock Company (JSC)
  • Representative Office (RO)
  • Branch Office (BO)

Comparison Between LLC and JSC

Among the four entities, LLCs and JSCs are the most common legal entities that foreigners prefer to establish for their textile business.

LLC

  • Easier to start a business
  • Suitable for small businesses
  • Personal assets are under the protection
  • Shares are the only shareholder’s liability
  • No set minimum capital, but generally US$20,000, or the amount that is reasonable for the establishment
  • Can be a single-member LLC (one shareholder) or multi-member LLC (2 to 50 members)

JSC

  • Suitable for medium and large businesses
  • Owners of JSC can issue shares
  • Listing on the public stock exchange is permitted
  • Charter capital is assigned equally in share portions
  • Minimum three shareholders but no maximum number of shareholders
  • No fixed initial capital, but generally VND10 billion

Steps and Requirements for Registering a Textile Company in Vietnam

The incorporation procedure duration differs depending on the legal entity type. The process varies from one to three months.

In general, foreign investors shall follow the following steps to register a textile company in Vietnam:

  1. Acquire an Investment Registration Certificate (IRC) from the Department of Planning and Investment (DPI) in Vietnam.
  2. The second most important document to obtain during the company registration is the Enterprise Registration Certificate (ERC).
  3. After foreign investors have obtained IRC and ERC, they must register their taxes, make payment to their business license tax and contribute to the initial investment capital.

How Cekindo can Assist

Investors and entrepreneurs who want to expand their service and have regional involvement globally may decide to set up a Vietnam company. Vietnam’s labor market is concentrated and driven, and the legal entity options are also of higher flexibility. This allows you to establish and run a legal company in Vietnam quickly.

Cekindo’s Vietnam team of professionals works effectively and with local governments to help you manage the complicated and constantly-evolving procedure. This saves you a lot of precious money and time. Besides, our highly-skilled experts can take care of another aspect of your business needs. This includes your company’s accounting and bookkeeping, foreign workers’ permit application, as well as HR outsourcing.

Tell us your business requirements via the contact form below.