Jurisdiction - Vietnam
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Vietnam – Can A 100% Foreign-Owned Manufacturer Add “Import And Export” As A Business Line?

28 January, 2014

 

Legal News & Analysis – Asia Pacific – Vietnam – Corporate/M&A

 

A wholly foreign-owned business manufactures in Vietnam. Now, it would like to export production-line materials purchased in Vietnam to other countries. The question is whether a 100 percent foreign-invested enterprise can add “import and export” as a business line. 

 

Short answer: Yes, but subject to the “evaluation” process of the licensing authority.

 

  • Trading (import and export) is open to wholly foreign-owned companies in Vietnam, except for trading of very specific products, such as oil, cigarettes, and publications.1
  • However, “import and export” belong to the group of “conditional” business sectors for foreign investment. Foreign investors have to go through an “evaluation” licensing process to add a “conditional” business line to their investment certificates.
  • The Licensing Authority2 can decide whether to seek guidance from other State bodies with respect to the “investment conditions”. If so, the licensing process may become lengthy and complicated.
  • The Licensing Authority has broad discretion to demand various information to assess the company’s financial strength, experience or management skills.
  • In extreme cases, the company should ask the Licensing Authority to issue a written statement regarding the legal basis for requiring extensive documentation and delaying approval. Similarly, the company could also escalate to the Ministry of Planning and Investment for a resolution.

 

End Notes:

 

1 Implementing Vietnam’s WTO service sector commitments with regards trading and distribution the new Circular No. 34/2013/TT-BCT will take effect on 5 February 2014 and sets out the products prohibited and restricted from export, import, and distribution by foreign invested enterprises. Circular 34 replaces Decision No.10/2007/QD-BTM dated 21 May 2007.

 

 

2 The licensing authority can be either the provincial People’s Committee or the Board of Management of an industrial zone or economic zone where your investment project is located (collectively, the “Licensing Authority”).

 

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For further information, please contact:

 

Giles T. Cooper, Partner, Duane Morris

gtcooper@duanemorris.com

 

Hoang Minh Duc, Duane Morris

hmduc@duanemorris.com

 

Manfred Otto, Duane Morris

motto@duanemorris.com

 

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