business formation

You are 2 foreigners. This is technically not difficult, but time consuming. ~ 12 weeks is the expected time frame, if you have Vietnamese partner, they open within 7 calendar days, somehow 10 weeks a company needs to age, before a foreign partner can be registered and finally take total (99%) over.

If you just want a dry start with 99% foreign capital, you gonna spend likely years and/or run the proper investment ladder, some million USD to prove in bank account.

I only consider the second option as challenge, the first option is quite reasonable, giving you the to prepare your business, as the Vietnamese (later 1% partner) can start within days.

Thanks for your input l3ully.

Let me confirm what you said...

1. It's not difficult for foreigners to start a retail store, wholly foreign own entity (100%), it just take about 12 weeks.
2. A partnership with a Viet citizen, partnership (51-49%), is much faster. After 10 weeks, I can obtain 99% ownership.

After that, you kind of lost me.

You mentioned, start dry as 99% foreign ownership could take up to years and require million? How is it different from point #1?

You lost me again, saying option 1 is more reasonable than option 2?

We definitely prefer 100% wfoe over any partnership unless it is a major burden dealing with the run around and the cost to start things.

"Wholly foreign" is maximal 99%. The 1% is Vietnamese unless you want to run the investor track, which in NT seems to start somewhere above 1 Million USD or you have already a company and just open representative in Vietnam.

"You mentioned, start dry as 99% foreign ownership could take up to years and require million? How is it different from point #1?" - NO, the years and big moneys give you a 100%.

The  99% is for whatever reason the maximum, a foreigner can own on Vietnamese founded company. And than can only happen, after the company is "aged".

I can weigh in on this. I made my company with Alien and they were very good and have been looking after me for about 3 years from the initial set-up, and now with many other things, such as translation, contracts and accounting services.

Basically, what Lully is saying relates to the 2 possibilities for foreigners opening a company

Option 1 - 99% ownership
Option 2- 100% foreign owned company

Option 1 - This is really what you need if you are planning on opening an SME selling clothes and such. The stages work as follows:
Step 1- Create a Business License. The opening stage must be a 100% Vietnamese owned company with at least one director (previously it was 2 but it has changed to 1 person). This can be a friend or colleague, maybe someone who will be working with you. They open the company with the company name (in English and Vietnamese) along with the areas of business the company intends to operate in (both now and possibly in the future). For you, you would add import of clothing and retail sales, but if you have any other types of business you plan on doing in the future (e.g. bar or restaurant, hotel, tourism etc etc), then you should add those areas to the business license upon set up of the company. Then you will need to have a registered address of your company (house, office, shop etc). This process takes about 7 working days to complete
Step 2- The next stage involves adding one or more foreign investors to the business license (you and/or your wife). What occurs is a contract document whereby the Vietnamese director/name on the business license transfers their shares to the 2 foreign investors. This split of shares can be anything up to 99% of the company. So if you were to add you and your wife, you could split it 49.5% each with the Vietnamese name owning 1% (however, they have no control, profit share agreements or influence on the company - they are simply a name on the license as required by Vietnamese law). This process takes between 10 working days to complete.
Step 3- (normally done at the same time as Step 1). Foreigners who wish to own/operate a business here are required to have a criminal record certificate that states they have a clean record. This can be done by requesting it from your local police in your home town, or it can be done here with the Khanh Hoa Department of Justice. If you do it here, it can take from 45-60 days to receive, if you can get it done at home and Fed-Exed here, then it is quicker and the whole process of making your business license is quicker to complete.
You should also note that the company can commence trading as soon as the 1st step is completed i.e. after 7 working days, and the other stages are completed while the company is in operation. So you can make the Vietnamese license, start trading and looking for a shop to rent/sign contracts etc while the other stages are in process.
Step 4 - If the Vietnamese partner/name is someone you trust and will be working with you in the business, then you can leave them as the Director of the company (each company can only have 1 director). They would then be responsible for stamping and signing contracts, tax reports and any official documentation. If this isn't the case, then you would need to add either yourself or your wife as the Director (with the other spouse remaining as an investor).
Step 5 (Optional) - as owners/investors of a company, you can then apply for a residency card for a period of 3 years. This takes about 10 working days to complete.
Step 6 - Once the company is created, there are some tax requirements. Every SME upon opening must pay its yearly excise tax to the government. It costs 50USD per year. The second is for a USB Software program (USB Talken i think its called). Basically, its just a government provided software program for submitting your monthly, quarterly and yearly accounts online (previously it was all paper but now they have upgraded to the electronic system). You can but the USB Software for 50USD for 1 year, or 100USD for 3 years.

Option 2 - 100% Foreign Owned Company

This option is more geared towards large companies making a significant investment in Vietnam. The minimum investment is normally 250,000 USD upwards and there has to be a certain amount of capital available along with requirements on the number of staff you will employ. It is more suited to large multinationals (tech companies, construction companies, manufacturers etc).

So in a nutshell, option 1 is what you would need to do. It can seem complicated but i have a bit of experience in this area and know the system quite well. All in all, it should take about 2-3 months for full set up, but as I explained you can begin trading as soon as the Vietnamese business license is created (Step 1)...

To go back to a question you asked Lully. Under Option 1, you can never own 100% of the company (only 99%). In reality though, it's just semantics, the Vietnamese partner is simply a name on the license.... You will have complete control over every aspect of your business including decision making, purchases, sales, bank accounts etc....

If you need any more info, you can PM me and I will do my best to help you.....

Source: I have my own company in Nha Trang and so have been through this process.

P.S. There is a 3rd option I've just remembered. if you have a company in the States already, you can open a branch of that company here in Vietnam. This would not require you to have a Vietnamese partner, although it is a more expensive way than Option 1........

atomiccolm, thank you very much. the information you provided is very very helpful.

things are moving along, we'll be in Nha Trang early in May to look at property, meet with people, and get things started.

we'll look into the information you provided further and will pm you if there are further questions.

thank you.

No problem,

Best of luck

Colm