Vietnam has been an excellent destination for foreign investments for individuals and organizations around the world. By the end of 2022, Vietnam’s economic growth is predicted to record an impressive 7.5%, according to the World Bank. Combine with the fact that Vietnam shares borders with global economic leader China, there aremany other reasons that foreign investors find appealing to set up a company in this vibrant economy.
Summary of the benefits of setting up a company in Vietnam:
- Vietnam has investor-friendly policies and had a score of 69.8 for ease of doing business in 2020.
- Vietnam has trade agreements with many countries such as South Korea, Japan, China, India, New Zealand, Russia, Australia, and European countries – making investments more effortless and more lucrative.
- The country has an increasing population, creating a much younger workforce with competitive labor costs.
- Vietnam’s government has come up with several investment incentives in specific sectors for foreign investments.
- The upgraded infrastructure in Vietnam, such as international airports and expressways, has made transportation, shipping, and logistics much more straightforward, supporting businesses across almost all industries.
Minimum Capital Requirements to Set up a Company in Vietnam
Currently, there is no fixed amount of minimum capital required for most industries and sectors in Vietnam. For some conditional businesses in Vietnam, however, minimum capital requirements apply, and the amount of minimum capital depends on the type of industry a company is in.
For businesses that don’t require a set minimum requirement, it is highly recommended that they have a planned capital that is reasonable and practical to their projects and business activities. Investors and business owners must consider their business’s potential profits and expenses when planning their minimum capital.
An acceptable and standard minimum capital of US$20,000 for non-conditional service providers such as management consulting, technology consulting, or such businesses that can start with low expense. Examples of conditional business lines with a minimum capital requirement for foreign investors include education businesses, mutual insurance organizations, and financial institutions.
Foreign language schools in Vietnam require foreign business owners to have a minimum capital of at least VND 20 million or US$850 per student (exclusive of the expense incurred from land tenancy). The total minimum capital shall be calculated when the estimated education scale is greatest.. If the investor rents an existing facility instead, the required minimum capital shall be 70% of the set amount. And, a foreign mutual insurance company must have at least VND10 billion or US$434,000 legal capital.
Vietnam’s Ministry of Planning and Investment shall collaborate with the relevant business sector’s ministries to decide the amount of minimum capital requirement for different industries based on their operational scale and capital intensiveness For instance, huge factories and construction projects that operate at large scale will have a much higher capital amount.
Once an investor’s company is registered, it is compulsory to pay the full amount of capital in 90 days, starting from company registration. Failure to meet the deadline will result in an administrative penalty and be subjected to amend the investment & business license accordingly.
2022 Update: Suggested Minimum Capital Requirements
Due to recent updates that started in 2021 by the Vietnamese Government, the amount of minimum capital for most industries and businesses has recently increased. However, its important to note that these are not official requirements, but suggestions from Incorp Vietnam, based on our experience serving foreign investors in Vietnam.
Therefore It is possible to set up a company in Vietnam with a minimum of US$20,000 capital if your proposed capital is realistic.
InCorp Vietnam (formerly Cekindo) is a leading provider of global market entry services. We are part of InCorp group, a regional leader in corporate solutions, that encompasses 8 countries in Asia-Pacific, headquartered in Singapore. With over 1,100 legal experts serving over 15,000 Corporate Clients across the region, our expertise speaks for itself. We provide transparent legal consulting, setup, and advice based on local requirements to make your business perfectly fit into the market with healthy growth.
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