Establishment of FDI company for garment manufacturing

Establishment of FDI company for garment manufacturing

Vietnam’s garment manufacturing sector has been attracting the attention of international businesses thanks to its high quality product and abundant labor force. However, establishing and operating a foreign-invested company in this sector requires a deep understanding of the law, the production process, as well as the ability to interact with diverse business and cultural environments.

In this article, Siglaw will provide customers with the basic procedures and steps to invest in establishing a FDI garment manufacturing company in Vietnam.

Legal basis for establishing a foreign-invested company to produce garments in Vietnam

• Law on Investment 2020;
• Decree 31/2021/ND-CP elaboration of some articles of the Law on Investment;
• Law on Enterprises 2020;
• Decree 01/2021/ND-CP on business registration.

Conditions for establishing FDI enterprises manufacturing garments

According to current legal regulations, the garment manufacturing industry is not on the list of industries and occupations with restricted market access for foreign investors, so if foreign investors want to invest in establishing a company in this field, they can apply the same market access conditions as Vietnamese investors.

According to Point c, Clause 1, Article 22 of the 2020 Investment Law, before investors establish an FDI company manufacturing garments in Vietnam, they must have an investment project and follow the procedures for issuance or adjustment of an investment registration certificate.

Procedures for establishing a FDI garment manufacturing company

Step 1: Investment registration

Foreign investors who wish to establish a garment manufacturing company must submit an application for an Investment Registration Certificate to the Investment Registration Authority where the enterprise plans to locate its headquarters. The application includes the following documents:

• A written request to implement an investment project to establish a foreign-invested garment manufacturing company;
• Proposal for an investment project;
• In case the investment project does not request the Government to allocate land, lease land, or allow the change of land use purpose, a copy of the land use rights document or other document confirming the right to use the location to implement the investment project must be submitted;
• Explanation of the use of technology for projects using technology on the List of technologies restricted from transfer;
• Copy of ID card or passport for foreign investors who are individuals; copy of the Certificate of Establishment or other equivalent document confirming the legal status for foreign investors who are organizations;
• Documents proving the financial capacity of the investor;
• BCC contract for investment projects under BCC contracts;
• Authorization letter to carry out investment registration procedures.

Within 15 days from the date the investor submits a complete and valid dossier, the Department of Planning and Investment where the enterprise plans to locate its head office shall issue an Investment Registration Certificate to the enterprise. In case of refusal to issue, there must be a written explanation clearly stating the reason.

Step 2: Establishing a foreign-invested garment manufacturing enterprise

After being granted the Investment Registration Certificate, the foreign investor carries out the procedures for establishing a company. The dossier includes the following documents:

• Application for registration of a garment manufacturing enterprise;
• Company charter;
• Certified copy of the Investment Registration Certificate;
• List of members (for partnerships, LLCs with two or more members) or List of founding shareholders (for joint stock companies);
• Certified copy of personal legal documents of the legal representative, members or founding shareholders; legal documents of the organization for members/shareholders being organizations;
• Authorization document to carry out business registration procedures
• Other documents depending on each specific case.

Investors submit their application directly to the Business Registration Office – Department of Planning and Investment where the enterprise plans to locate its head office or submit it online on the National Business Registration Portal. Within 03 working days from the date of receipt of complete and valid application, the Business Registration Office shall issue an Enterprise Registration Certificate and publish information about the company on the National Business Registration Portal.

Note: When registering to establish a business, foreign investors need to pay attention to some industry and occupation codes related to garments:

Step 3: After registering to establish a FDI garment manufacturing company

After completing the procedures for establishing a foreign-invested garment manufacturing company, investors need to pay attention to performing the following tasks:

• Engrave a seal;
• Hang a sign at the head office;
• Notify the application of tax calculation methods;
• Open a bank account for the enterprise;
• Register for an electronic digital signature to pay taxes;
• Declare and pay business license tax;
• Issue electronic invoices;
• Fully contribute capital within 90 days from the date of being granted the Enterprise Registration Certificate.

Service of establishing FDI garment manufacturing companies by Siglaw Law Firm

Siglaw is proud to be the leading law firm in Vietnam providing consulting services & establishing foreign-invested enterprises in the garment manufacturing sector. When hiring the service of establishing FDI garment manufacturing companies, customers will receive:

• Instructions on preparing documents and necessary information to prepare dossiers for establishing foreign-invested companies in the garment manufacturing sector.
• Answering and consulting on legal regulations related to the garment manufacturing industry.
• Advice on choosing the optimal types of enterprises for customers.
• Advice on the most optimal legal and tax advantages and incentives suitable for each customer.
• Instructions on preparing related financial documents.
• Instructions on opening capital accounts and procedures for transferring foreign investment capital into Vietnam in accordance with the law.
• Instructions on initial tax procedures and tax reporting regimes in accordance with the law.
• Consulting on conditions and necessary sub-licenses for businesses to operate garment production in accordance with the law.

Siglaw Law Firm

Phone: (+84) 961 366 238

Email:

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

Headquarters: No.44/A32-NV13, Gleximco A, Le Trong Tan street, An Khanh, Hoai Duc, Ha Noi, Vietnam.

Southern branch: A9.05 BLOCK A, SkyCenter Building, 5B Pho Quang Street, Ward 2, Tan Binh District, Ho Chi Minh City, Vietnam.

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