A question that often comes up when discussing starting a business in Vietnam is “What is the minimum capital requirement for my business and how much of that is paid-up capital?” This article will explain the minimum capital requirements for different industries in Vietnam and some key steps for setting up a foreign-owned company.
Setting up a company in Vietnam
Foreign investors in Vietnam commonly choose between Limited Liability Company (LLC) or Joint-Stock Company (JSC) business entity types. Either business type can be a 100% foreign-owned entity or a joint venture with a local partner.
Limited Liability Company (LLC)
You should consider setting up an LLC if you plan to open a small to medium-sized (SME) business in Vietnam. The corporate structure for LLCs is simple:
- LLCs do not have shareholders, rather it has partners.
- While partners cannot hold shares in the company, they can own different percentages of the company.
There are two kinds of LLCs, single-member LLCs and multi-member LLCs. As the names suggest, single-member LLCs have 1 owner which can be a person or organization. On the other hand, multi-member LLCs can have anywhere from 2 to 50 partners who can also be persons or organizations.
Joint-Stock Company (JSC)
For medium to large-sized businesses, it would make more sense to open a JSC or a shareholding company. Its complex corporate structure is better suited for managing businesses that are on a larger scale. JSCs have 3 or more original shareholders as owners.
Paid-up capital and minimum capital requirement in Vietnam
There is currently no set minimum capital requirement for most businesses in Vietnam. However, your planned capital must be realistic and reasonable to support your planned business activities.
You must pay the registered capital in full within 90 days from the date of company registration. If the company’s founders fail to meet the deadline, they will have to dissolve the company.
Minimum capital requirement differences by industry
Some business lines and industries have minimum capital requirements. The capital requirements for these can vary depending on operational factors or industry standards:
- Language schools: The minimum capital for businesses in the education sector must be VND 20 million (approx. USD 850) per student, not including the rental fee for the business space. To get a figure for the capital, you must estimate how many students the business will have.
- Medical service providers: The required capital varies depending on the specific services being provided and are evaluated on a case-by-case basis.
- Fintechs: VND 50 billion (approx. USD 2 million)
- Insurance providers: Varies based on the type of insurance business you undertake:
- Life Insurance ranges from VND 750 billion (approx. USD 30 million) to VND 1,300 billion (approx. USD 52 million).
- Non-Life Insurance ranges from VND 400 billion (approx. USD 16 million) to VND 500 billion (approx. USD 20 million).
- Health Insurance requires a fixed amount of VND 400 billion (approx. USD 16 million).
- Life Insurance ranges from VND 750 billion (approx. USD 30 million) to VND 1,300 billion (approx. USD 52 million).
- Non-Life Insurance ranges from VND 400 billion (approx. USD 16 million) to VND 500 billion (approx. USD 20 million).
- Health Insurance requires a fixed amount of VND 400 billion (approx. USD 16 million).
- For real estate businesses, the real estate enterprise approving the real estate project must ensure that:
- Its owner's equity shall not be lower than 20% of total investment of that project
- The area of land used is less than 20 ha or 15% of the total investment of that project
- If it is capable of raising capital for implementing that project
- If a real estate enterprise implements several real estate projects at the same time, its owner's equity must be sufficient to fund all of such projects at the aforementioned percentage.
- Its owner's equity shall not be lower than 20% of total investment of that project
- The area of land used is less than 20 ha or 15% of the total investment of that project
- If it is capable of raising capital for implementing that project
- If a real estate enterprise implements several real estate projects at the same time, its owner's equity must be sufficient to fund all of such projects at the aforementioned percentage.
Industries with no minimum capital requirement should still plan a capital that is within reason. When planning your capital, you should take into consideration your expected expenses and potential income. Emerhub's local experts can help you plan the right amount of capital based on your specific operations.
How much is the paid-up capital in Vietnam?
In the Vietnamese market, while there are no minimum capital requirements for foreign-owned companies, we recommend having a paid-up capital of USD 10,000. From our experience in assisting with business registration, USD 10,000 is usually accepted as sufficient for covering business expenses.
Ultimately, the Department of Finance will determine whether your planned capital investment is appropriate for your business. Emerhub's local experts can help you evaluate current market trends and determine the best amount of capital to prepare for your specific business registration.
Stay Permit for Foreign Investors in Vietnam
Based on current regulations, if you have investments in a single business amounting to VND 3 billion (approx. USD 130,000) you cannot obtain a resident card for yourself or your respective dependents. However, depending on the amount and type of investment, you can qualify for a Vietnam investor visa, which allows stays of up to 5 years.
If you intend on staying in Vietnam passed the period allowed by your visa, you may be eligible for a Temporary Residence Card (TRC), or you can also consider transitioning to a long-term business visa. To learn more about the process of relocating to Vietnam, be sure to check out our guide to visas in Vietnam.
Starting a small business in Vietnam
Due to the straightforward company registration process and low capital requirements, Vietnam is an appealing location for setting up a small business. While most businesses can be 100% foreign-owned, you must nominate one director who is a resident of Vietnam.
Here are some of the most common businesses that can be 100% foreign-owned:
- Wholesale and retail trading (e-commerce and physical stores)
- Restaurants and cafes
- Consulting businesses
Setting up a company with less than USD 10,000 capital
It’s possible to get approval even if your investment is USD 10,000 or lower. It all depends on whether your business is capital-intensive or not. There are several kinds of businesses you can start with a capital of USD 10,000 or lower.
One way to keep costs down and get approval with a low capital investment is to start a business that does need a permanent physical location. Bypassing the need for physical office space will allow you to open your business for as little as USD 3,000.
Some examples of businesses you can start for less than USD 10,000:
- IT Services (i.e web design or development);
- Management Consulting
- Market Research
You can also consider operating an e-commerce trading business, but the starting capital for this can be higher than the businesses listed above. We recommend a capital investment of at least USD 10,000 for this kind of business. Are you ready to open a business in Vietnam? Fill out the form below and one of our consultants will be happy to assist you.