Vietnam is a great place for foreign investors to open a business. But as with any market, there are regulations that you need to follow to set up a company in the country.
A question that often comes up when discussing opening a business in Vietnam is “What is the minimum capital requirement for my business and how much of that is paid-up capital?” In this article, we will talk about the minimum capital requirements for different industries in Vietnam.
We will also touch on some important things to know when setting up a company in Vietnam. After reading this, you should have a good idea of what you need to prepare when starting a business in Vietnam.
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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 wholly foreign-owned entity or a joint venture with a local partner.
Limited Liability Company (LLC)
You should consider setting up an LLC if you are planning on opening a small to medium-sized business. The corporate structure for LLCs is simple. LLCs do not have shareholders, rather it has partners. While partners cannot hold shares for the company, they can own different percentages of the company.
There are two kinds of LLCs, single-member LLCs or multi-member LLCs. As the names suggest, single-member LLCs have 1 owner which can be a person or organization. Multi-member LLCs, on the other hand, 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
At the time of writing, there is no set minimum capital requirement for most businesses in Vietnam. But even if there is no minimum, your planned capital must be realistic and reasonable based on your planned business activities.
Investors must pay the 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
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.
But there are some business lines that have minimum capital requirements. The capital requirements for these differ depending on the specific industry of the business.
For example, language schools are a popular business for foreign investors. 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, the investor must estimate how many students the business will have and base it off that number.
Not all industries have a minimum capital amount that is dependent on other factors, though. For instance, real estate businesses need to have at least VND 20 billion (approx. USD 250,000) worth of capital.
But generally speaking, the required capital to start a business in Vietnam is quite low, especially when compared to countries like Indonesia.
How much is the paid-up capital in Vietnam?
In the Vietnamese market, the standard paid-up capital for foreign companies is USD 10,000. From our experience in assisting with business registration, USD 10,000 is usually accepted. However, depending on your business line, this amount could be lower or higher.
Ultimately, the Department of Planning and Investment will determine whether your planned capital investment is appropriate for your business. In any case, it would be a good idea to prepare at least USD 10,000 for your investment.
Stay Permit for Foreign Investors in Vietnam
Starting July 2020, those with investments in a single business amounting to VND 3 billion (approx. USD 130,000) cannot obtain resident cards for themselves or their respective dependents. However, they can get investor visas for themselves. This investor visa is valid for 1 year.
Until January 2021, investors can apply for a work permit exemption and get a resident card valid for up to 2 years. This is extendable to the investor’s dependents.
Starting a small business in Vietnam
Vietnam is an appealing location to open a small business because of low capital costs and the simple company registration process.
Most businesses can be 100% foreign-owned, however, there must be at least one director who is a resident of Vietnam. The resident director may be a foreigner of a citizen.
Some popular businesses that can be 100% foreign-owned:
- Wholesale and retail trading (e-commerce and physical stores)
- Restaurants and cafes
The capital for the above business lines can be quite low. These are good options if you’re looking to start a small business in Vietnam.
Starting 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. Not having to rent an office 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. You can also send an email to [email protected] or visit our page about company registration in Vietnam.