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Methods of Hong Kong investment into Vietnam
The total trade turnover between Hong Kong and Vietnam reached approximately USD 33 billion in 2022, a 16% increase. Therefore, Vietnam offers numerous new investment and business opportunities for Hong Kong investors. So, how many forms of investment are available for Hong Kong capital in Vietnam? Let’s explore this through the article below with Siglaw Firm!
How Many Forms of Investment Are Available for Hong Kong Capital in Vietnam?
In the post-Covid-19 era, bilateral trade between Vietnam and Hong Kong continues to grow steadily. Hong Kong (China) remains one of Vietnam’s major trading partners. For years, Hong Kong has ranked as the 5th largest foreign investor and the 8th largest trading partner of Vietnam.
In terms of trade, Vietnam is currently Hong Kong’s 8th largest trading partner. In 2021, the bilateral trade volume reached USD 13.5 billion, with key products including computers, electronics, and components. As of November 2022, Vietnam exported USD 10 billion to
In Terms of Investment, Hong Kong Currently Ranks 5th Among Foreign Investors in Vietnam. As of now, Hong Kong has 2,164 projects in Vietnam, with a total registered capital of nearly USD 29.5 billion. The investments are primarily concentrated in processing and manufacturing industries, real estate business, and the production and distribution of electricity, gas, and water. Several large-scale projects from Hong Kong have played a vital role in the development of Vietnam’s key economic sectors over the past years. The investment cooperation between the two parties is characterized by strong interconnection and mutual support, promoting sustainable growth and development for both sides.
According to the 2020 Investment Law, Companies with Hong Kong Capital Can Invest in Vietnam through Five Forms of Investment:
Investment in the Establishment of an Economic Organization with Hong Kong Capital in Vietnam
The formation of an economic organization with Hong Kong capital can be done through two methods:
- Establishing a company with 100% Hong Kong capital.
- Establishing a company with joint capital between Hong Kong investors and domestic investors or the Vietnamese government.
Before establishing an economic organization with Hong Kong investment capital, investors must have an investment project, complete the investment registration procedures by obtaining an Investment Registration Certificate for the company with Hong Kong capital, and comply with ownership ratio requirements as stipulated by securities law, laws on the equitization and transformation of state-owned enterprises, and other conditions outlined in international treaties to which the Socialist Republic of Vietnam is a member.
Investment in Capital Contribution, Share Purchase, and Acquisition of Equity in Companies with Hong Kong Capital in Vietnam
Capital contribution, share purchase, or acquisition of equity in economic organizations of companies with Hong Kong capital in Vietnam represents a form of indirect investment by Hong Kong investors wishing to invest in Vietnam. This indirect investment takes the form of purchasing stocks, bonds, or other securities in Vietnamese companies, where investors do not directly participate in the management of investment activities. When engaging in this type of investment, investors must comply with the legal forms and procedures for capital contributions, share purchases, and equity acquisitions as regulated by Vietnamese law governing these activities.
Implementation of Investment Projects by Companies with Hong Kong Capital in Vietnam
Hong Kong investors may enter into investment contracts under the Public-Private Partnership (PPP) model. This investment method is based on a time-limited partnership between the state and private investors, facilitated by the signing of PPP contracts to attract private investors to participate in the implementation of PPP investment projects.
Investment through BCC Contracts
The BCC (Business Cooperation Contract) is an investment form signed between investors to collaborate in business, share profits, and distribute products without establishing a new legal entity. This form of investment allows Hong Kong investors to quickly engage in investment activities without the time and costs associated with establishing and managing a newly formed legal entity. The BCC contract is executed between domestic investors in accordance with civil law regulations. For BCC contracts involving at least one Hong Kong investor, it is required to complete the procedure for obtaining an Investment Registration Certificate.
Investment Forms and New Economic Organization Types as Regulated by the Government
In addition to the aforementioned investment forms, certain projects with Hong Kong investment capital must receive approval from the Prime Minister for investment policies. These projects include:
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Projects Significantly Affecting the Environment, include:
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Projects that require the conversion of rice cultivation land from two crops or more, with a scale of 500 hectares or more.
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Projects that necessitate the resettlement of 20,000 or more people in mountainous areas or 50,000 or more people in other regions.
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Projects that require the application of special mechanisms or policies that must be decided by the National Assembly.
Above are the forms of investment in Vietnam using Hong Kong capital. If you have any questions related to these investment forms, you can directly contact Siglaw Firm for assistance!
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