Forms of investment in foreign capital construction

Forms of investment in foreign capital construction

 

Currently, Vietnamese law as well as the Commitment Schedule no longer impose any restrictions on the form of investment or capital contribution for foreign investors. Foreign investors can establish a foreign-invested construction company in Vietnam to operate in the construction sector with a capital ownership ratio of up to 100% of the charter capital. This is truly an opportunity to welcome many investors to the real estate market in Vietnam. So what are the forms of investment in the foreign-invested construction sector in Vietnam? Let’s find out with Siglaw Law Firm through the article below!

 

What is foreign capital investment in construction in Vietnam?

Investment in the field of foreign capital construction is the act of individuals and organizations of a country investing capital to conduct business activities in the field of construction through investment forms according to the provisions of investment law in Vietnam to invest in Vietnam for the purpose of business and profit-making.

 

4 forms of foreign capital investment in construction in Vietnam

In recent years, Vietnam’s investment and business environment has been constantly improving in the direction of openness, transparency, and conformity with international standards. In the context of Vietnam’s increasingly deep integration into the world economy, this will increase Vietnam’s attractiveness and competitiveness in attracting foreign investment, including in the construction sector.

The construction industry in Vietnam is increasingly dynamic thanks to the increase in the number of infrastructure projects in areas such as ports, railways, highways, or urban public transport systems, housing projects, and commercial centers.

Construction has become a “hot” industry created by many subjective and objective factors. First of all, it is necessary to mention the trend of market globalization, the economic expansion between countries in the region and the world. Then there is the increasing demand and competition of many companies and large markets.

According to the Investment Law 2020, there are four forms of investment in the construction sector with foreign capital in Vietnam:

 

Investment in establishing economic organizations

Forms of establishing economic organizations include two methods:

 

+ Establishing a company with 100% foreign investment capital;

 

+ Establishing a company between domestic investors or the domestic Government and foreign investors.

 

Before establishing an economic organization, foreign investors must have an investment project, carry out procedures for granting an investment registration certificate and must satisfy the conditions on the charter capital ownership ratio according to the provisions of the law on securities, on equitization and conversion of state-owned enterprises and the conditions according to the provisions of law and international treaties to which Vietnam is a member.

 

Investing in capital contribution, buying shares, buying capital contributions

Contributing capital, buying shares, buying capital contributions in economic organizations is a form of indirect investment by foreign investors. This form of indirect investment is through the purchase of stocks, bonds, and other valuable papers in which the investor does not directly participate in managing investment activities. When implementing this form of investment, investors must comply with the forms and procedures for contributing capital, buying shares, and buying capital contributions.

 

Implementing PPP investment projects

Foreign investors can sign investment contracts under the public-private partnership method (PPP contract), which is an investment method implemented on the basis of limited-term cooperation between the State and private investors through the signing of PPP contracts to attract private investors to participate in implementing PPP investment projects.

 

Investment in the form of BCC contracts

BCC is a form of investment signed between investors to cooperate in business, share profits, and share products without establishing a new legal entity. This form of investment helps investors carry out investment activities quickly without spending time and money to establish and manage a newly established legal entity. BCC contracts signed between domestic investors are implemented in accordance with the provisions of civil law. For BCC contracts with at least one party being a foreign investor, the procedure for granting an investment registration certificate must be carried out.

 

However, depending on the form of foreign investment, investors must meet different conditions for each form.

 

Advantages of investing in foreign capital construction in Vietnam

– Legal system: Vietnam’s legal system is gradually building and perfecting the legal system, contributing significantly to the formation and development of a socialist-oriented market economy, gradually perfecting the political system, creating a legal environment for international integration. Administrative procedure reform is simple, shortening the time to process documents.

– Political situation in Vietnam: Vietnam is considered a country with a relatively stable political situation. There are almost no cultural divisions, ethnic conflicts, etc. This helps ensure a business environment for foreign enterprises investing here.

– Development policies and strategies: Continue to review, supplement and perfect institutions, continue to substantially reduce business conditions that are barriers to foreign investment; Promote administrative reform, effectively implement one-stop procedures to create a favorable business environment for enterprises to establish and develop; Review and amend preferential policies and mechanisms, attract foreign investment in the context of applying global minimum tax.

– Infrastructure and technical infrastructure design: competent authorities are increasingly interested in improving the business environment for foreign enterprises investing in Vietnam, accelerating the construction progress of infrastructure such as highways connecting border gates, international airport projects, infrastructure related to the power system, building more high-tech industrial parks, new economic zones, etc.

– Human resources with solid expertise: Vietnam is a country with a young population structure. The quality of Vietnam’s labor force is constantly improving. Therefore, Vietnam is considered one of the countries with abundant labor resources. This is a plus point that creates favorable conditions for foreign investors to invest in the foreign capital construction sector in Vietnam;

– Market demand and development trends: Economic development leads to increasing demand in the construction sector, creating favorable conditions for foreign investors to invest in the construction sector in Vietnam.

If you have any questions about the forms of investment in the foreign capital construction sector, you can contact Siglaw Law Firm directly for support!

Siglaw Law Firm

Phone: (+84) 961 366 238

Email:

• vphn@siglaw.com.vn
• vphcm@siglaw.com.vn

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