Consulting on professional and effective forms of overseas investment

Forms of overseas investment are methods of expanding international business activities of Vietnamese enterprises. This process requires Investors to comply with the legal regulations of Vietnam and the host country. Investment projects need to meet the conditions of capital, industry and registration procedures according to the Law on Investment 2020. The article will analyze in detail the principles, conditions and processes of making overseas investments.

Principles for implementing overseas investment activities

Overseas investment activities must comply with basic principles as prescribed by law, specifically:

Investors must take responsibility for the effectiveness of their investments abroad. Investment abroad must be consistent with the strategy, planning, and socio-economic development plan of the country and the industry.

Investment activities must not harm national security, social order and safety, social ethics, or community health. Investors must comply with Vietnamese law and the laws of the country and territory receiving investment.

The State protects the legitimate rights and interests of investors when conducting investment activities abroad. Investors are entitled to incentives according to tax laws and other incentives according to regulations.

Conditions for registering investment abroad

According to Article 60 of the Law on Investment 2020, investors must meet the following conditions to be granted a foreign investment license:

• Investment activities must be consistent with the principles of investing abroad. The project does not belong to industries or professions that are banned from business investment. The investor has a commitment to arrange foreign currency themselves or a credit institution commits to arrange foreign currency to implement the project.
• For projects with capital transferred abroad of 20 billion VND or more and not subject to investment policy decisions, the Ministry of Planning and Investment will consult with the State Bank of Vietnam.
• Investors must make a decision to invest abroad according to regulations. At the same time, there must be a written confirmation from the tax authority on the fulfillment of tax payment obligations by the time of submitting the project dossier.

Forms of investment abroad

Article 21 of the Law on Investment 2020 stipulates 5 main forms of overseas investment as follows:

• Establish an economic organization according to the laws of the investment receiving country. This is the most common form, Vietnamese investors establish a 100% owned subsidiary or joint venture abroad.
• Implement business cooperation contracts (BCC) with foreign partners. This form does not establish a new legal entity, the parties cooperate on a contractual basis.
• Buy shares and capital contributions of economic organizations abroad to participate in management. Investors can buy part or all of a foreign enterprise.
• Buy and sell securities and other valuable papers or invest through securities investment funds or other intermediary financial institutions abroad.
• Other forms of investment according to the laws of the receiving country.

Procedures for registering investment abroad

Profile components

Components of project documents subject to foreign investment policy

Project documents subject to foreign investment policy include the following main documents:

• Document requesting decision on investment policy abroad. Document for registration of investment abroad. Copy of investor’s legal documents.
• Investment project proposal includes main contents: project name, objectives, scale, form, location, investment term; labor needs; Assess the impact and socio-economic efficiency of the project; Proposed investment incentives (if any).
• Documents proving financial capacity: Investor’s most recent 2-year financial statements; commitment to financial support from the parent company; commitment to financial support from financial institutions; guarantee of the investor’s financial capacity; Other documents proving financial capacity.
• In case the investor submits a written commitment to self-balance foreign currency sources, it must be accompanied by a document from a credit institution confirming the investor’s foreign currency account balance.
• Document from the tax authority confirming the investor’s fulfillment of tax obligations.
• Documents determining the forms of overseas investment.
• Report on lending to economic organizations abroad includes the following contents: name of the borrower; total loan amount; Loan purposes and conditions; disbursement plan; debt recovery plan; Measures to secure assets and methods of handling secured assets (if any); Plan to balance foreign currency sources to make loans; evaluate the financial capacity of the borrower; Risk level and expected risk prevention measures for loans in the case of an overseas investment project with the investor lending to a foreign economic organization to implement the project invest..
• Document determining the performance of guaranteed obligations arising in the case of an overseas investment project with the content of the investor guaranteeing a loan to a foreign economic organization to carry out the investment project.
• Other relevant documents.

Reference content in Article 75 of Decree 31/2021/ND-CP.

The project dossier components are not subject to the policy of investing abroad

Project documents not subject to foreign investment policy include:

• Document for registration of investment abroad. Copy of investor’s legal documents. Decide to invest abroad according to the provisions of Article 57 of the Law on Investment.
• Written commitment to self-balance foreign currency sources or written commitment to arrange foreign currency for investors from an authorized credit institution.
• In case the investor submits a written commitment to self-balance foreign currency sources, it must be accompanied by a document from a credit institution confirming the investor’s foreign currency account balance;
• Documents proving financial capacity: The investor’s most recent 2-year financial statements or commitment to financial support from the parent company or financial institution; Guarantee of financial capacity. Document from the tax authority confirming the investor’s fulfillment of tax obligations.
• Commitment to self-balance foreign currency sources or a document from an authorized credit institution committing to arrange foreign currency for investors.
• Documents confirming the location of the investment project abroad.
• Documents determining forms of overseas investment.

Reference content: Clause 1, Article 78 of Decree 31/2021/ND-CP.

Execution order

Procedure for implementing projects subject to foreign investment policy

For projects under the authority of the National Assembly to decide on investment policies:

• Investors submit investment project documents to the Ministry of Planning and Investment. Within 5 working days, the Ministry of Planning and Investment sends the dossier to get appraisal opinions from relevant agencies.
• Within 15 days from the date of receiving the investment project dossier, the consulted agency shall have an appraisal opinion on the contents within the scope of its state management and send it to the Ministry of Planning and Investment.
• Within 30 days from the date of receiving the investment project dossier, the Ministry of Planning and Investment submits to the Prime Minister to establish the State Appraisal Council.
• Within 90 days from the date of establishment, the State Appraisal Council organizes the appraisal and prepares an appraisal report to submit to the Government.
• No later than 60 days before the opening day of the National Assembly session, the Government shall send the dossier deciding on investment policies to the inspection agency of the National Assembly.

Reference content: Article 76 of Decree 31/2021/ND-CP.

Procedure for implementing projects that are not subject to foreign investment policy

• The investor submits 01 set of offshore investment registration documents to the Ministry of Planning and Investment.
• Within 15 days from the date of receiving complete and valid documents, the Ministry of Planning and Investment shall consider issuing the Certificate of overseas investment registration.
• In case of refusal to issue an Outward Investment Registration Certificate, the Ministry of Planning and Investment shall notify the investor in writing and clearly state the reason.

Reference content: Clause 2, Article 78, Decree 31/2021/ND-CP.

Professional and effective overseas investment consulting and support services at Long Phan

Long Phan provides comprehensive overseas investment consulting services for businesses. Our team of experienced experts will support customers in the entire process from planning, preparing documents to implementing investment registration procedures.

Long Phan’s services include:

• Strategic consulting and choosing appropriate investment forms.
• Support in preparing project documents and investment proposals.
• Carry out procedures to apply for an Outward Investment Registration Certificate.
• Consulting on capital transfer procedures and foreign exchange transactions.
• Support for establishing businesses abroad.
• Consulting on legal compliance and reporting regime.

Investing abroad is an important strategy to help Vietnamese businesses expand their markets and improve their international competitiveness. To effectively implement investment projects, customers need to comply with the correct processes and procedures according to the law. Please contact Long Phan immediately via Hotline: 0906735386 for in-depth advice on investing abroad.