Specific questions/points to be addressed:

•    Does the country have a stable legal system and rule of law? •    Is there a tradition of government secession and stable transition in the country? If so, when will the next significant elections take place? If not, are revolutions and coups common?•    What is the political and economic relationship like between the United States for each country?•    Who are each country’s primary trading partners?•    Is there material regional differences found in the country, such as tribal and religious influences?•    What is the general business structure found in each country and are there families or other types of entities that control large components of business?•    Is corruption common? Is it possible to conduct business in the country without violating the U.S. Foreign Corrupt Practices Act or other regulations? How does “corruption” manifest itself in business?•    In regards to the regulatory environment, are the same regulations in place and enforced for foreign businesses as they are for domestic enterprises? •    Are environmental regulations in place and are such regulations properly enforced?•    Is there a tradition of capitalism and respect for private property or are nationalizations and seizures of natural resources or foreign companies operating in any sector common?•    How difficult is it for a U.S. company to get money in and out of each country after investing in a country's bank or mining operations? For example, are there repatriation limits of moving earnings? Are there onerous taxes and regulations on earnings?            o    Is STRATFOR aware of any possible changes to taxation, removing money from the country, or any other types of capital constraints in general?•    What are the major security threats for foreign business travelers and country-based nationals working in each country, to include threats posed by terrorism, crime, political stability and war and insurgency?            o    Is there a presence of revolutionary or secessionist groups? If so, how much of a risk do they pose to the government and foreign businesses and their employees operating in the country?•    In regards to the abovementioned questions, are any major shifts in the present conditions expected within the next ten years?

need more research on: stock market status; big exports (crude oil, textiles, footwear, seafood (aquaculture), timber, rice, rubber, coffee, cashews, pepper and coal; FDI; state banks;; legal

VIETNAM ECONOMY

CURRENT CONCERNS ---Inflation; Trade Deficit/Foreign Currency Reserves

LEGAL AND CORPORATE REFORM

FINANCIAL SECTOR

STATE OWNED ENTERPRISES (SOEs)

BUSINESS ENVIRONMENT

VIETNAM IN WTO

INVESTMENT OPPORTUNITIES

VIETNAM ECONOMY

Vietnam has been in transition from a centrally planned to a 'socialist oriented market economy' since the introduction of the Đ i m i reformsổ ớ in 1986. In the early-to-mid 1990s, liberalization measures resulted in rapidly expanding exports and high economic growth, with real GDP growth averaging 9 per cent per year.

Growth slowed in the late 1990s, but the momentum picked up, with GDP growth averaging about 7.5 per cent per year since 2001, reaching a high of 8.5 per cent in 2007. Poverty rates are now less than 20 per cent, down from almost 60 per cent in the early 1990s.

Between 1995 and 2004, Vietnam grew at a rate of 7.5% per year- second only to the growth of China in the same period.Vietnam’s foreign trade is about $20 billion per year. In 2003, Vietnam took in foreign investment equal to 8% of its GDP.

Near-term forecasts for growth were scaled down significantly in light of the global financial crisis. Real GDP grew by 6.8 % in 2010. An export-oriented economy, Vietnam saw demand from key export markets decline during the economic slowdown. At the same time, FDI inflows were slowing with tightening global credit conditions.

In response to the economic slowdown, the Government introduced a range of measures to loosen monetary policy and stimulate the economy. This included a 4 per cent subsidy on commercial loans. The capacity of the Government to deliver a large fiscal stimulus ($8 billion breakdown: $5.2 billion for infrastructure and development projects; $1.6 billion in tax breaks for enterprises and individuals; $400 million for "welfare" purposes; $1 billion

to subsidize bank loans (local comps borrowed $15 billion) )to the economy, however, was limited by a large trade deficit and low foreign exchange reserves.

The government has succeeded in restoring significant level of macroeconomic stability in the past few months. Following the successful completion of the XIth Party Congress in January and the celebration of the Lunar New Year in early-February, the authorities moved swiftly to address the macroeconomic problems facing the country.

The dong was devalued by 9.3 percent against the US dollar on February 11, 2011, and Resolution 11 was approved on February 24, 2011. Resolution 11 contains a wide range of bold, mutually reinforcing and consistent monetary and fiscal policy targets and commits the government to undertake several structural measures including reform of the state-owned enterprises (SOEs), improving communication with the market and protecting the poor from future episodes of macroeconomic instability.

Goods and services exports now constitute around 70 per cent of Vietnam's GDP up from a 30 per cent share recorded in the mid 1990s. Vietnam's major exports are crude oil, textiles, footwear, seafood (aquaculture), timber products, rice, rubber, coffee, cashews, pepper and coal. Its major merchandise export destinations in 2009 were the United States, Japan, China and Switzerland.

Vietnam's major imports are machinery and spare parts, refined petroleum products, urea, steel ingots, pharmaceuticals, textile and garment inputs, plastics and chemicals. (Source: GSO). The top three sources of imports in 2009 were China, Japan and the Republic of Korea.

According to official statistics, total committed foreign direct investment (FDI) in 2009 topped US$21.4 billion. (Source: Foreign Investment Agency, MPI). The State Bank of Vietnam estimates remittances from overseas Vietnamese in 2008 exceeded US$7.8 billion. Remittances remain an important financial inflow but are estimated to have fallen in 2009 with the global economic slowdown.

First 4 months of 2011, exports increased 35.7 percent against the same period last year. Despite tightened credit, industries, agriculture, services and tourism saw positive growth, especially services (22.7 percent).

CURRENT CONCERNS

Inflation-----February 10th 2011, the Viet Dong was devalued by about 7%, the most since 1993. It was Vietnam’s fourth devaluation in 15 months to curb the trade deficit and narrow the gap between official and black-market exchange rates. This helped in spurring inflation to highs.

Previously devalued on November 2009, Feb. 2010, Aug 2010 amid fears that Vietnam would run short on foreign capital needed to fund the trade deficit ($1billion Jan 2011)

Indication that Vietnamese government had preferred to support exports and growth rather than fight inflation. The IMF has frequently called on Hanoi to tighten its monetary policy.

Jan 2011, Resolution No. 11 -- three main targets of curbing inflation, stabilizing the macro economy and ensuring social welfare in the rest of the year. Key points are to tackle inflation by restraining lending growth and curbing the budget deficit

Viet GOV had originally projected that the country’s GDP would rise between 7.0 to 7.5 percent in 2011 (up from 6.78% in 2010). Though signs that the Viet GOV is moving against inflation indicate that the economy could expand at a pace between 6.0% and 6.5% in 2011. (Q3 GDP growth at 6.11%)

--8 March Deputy Planning and Investment Minister Cao Viet Sinh says, the government had identified, and is determined not to push too much on the growth target but to focus intensively in containing high inflation,"

-- Fitch retained Vietnam’s long-term debt rating issued in foreign currency and local currency at B+ with stable outlook assess and said that if the Vietnamese government continues its tightening monetary measures, this rate would be maintained. Fitch Ratings cut Vietnam’s long-term foreign and local-currency ratings by one level to B+ on July 29 2010.

Fears that large percent differentials between official and black market rates on currency will damage the credibility of the currency regime.

--6 Oct Vietnam’s government bonds advanced, pushing their yield to the lowest level since May, amid speculation banks are pouring more funds into the securities as inflation eases. The dong strengthened--First decline in inflation rate since August 2010.

Vietnam is aiming to contain 2011 year-end inflation to about 18 percent, according to a statement posted on the government website Sept. 1. Analysts say 19%-20% realistic.

---5 Oct Though the IMF calls on Vietnam not to ease its monetary policy on fighting the fastest inflation in Asia. Must continue macro-stabilization initiative to regain investor confidence hurt by inflation that has exceeded 20%; must attack the widening trade deficit; and near bankruptcy of the nation’s largest shipbuilder (risks in the banking industry).There are also continuing concerns that slower growth may spur calls from various players to relax monetary and fiscal policies and to go slow on structural reforms. GOV must remain vigilant on maintaining macro stability and avoid prematurely dropping the initiatives.

Trade Deficit/Foreign Currency Reserves------Vietnam’s currency reserves fell to about $13.6 billion at the end of 2010, down from $14.1 billion in September 2010 and $23.9 billion in 2008.

State Bank of Vietnam’s credibility requires improvement given repeated one-off devaluations. SBV should enact higher interest rates to maintain price stability and prevent further dong sell-offs.

Moody’s Investors Service cut Vietnam’s sovereign credit rating in December, citing the risk of a balance-of-payments crisis and a drop in foreign reserves as inflation accelerates and the currency weakens

---5 Oct Vietnam's trade deficit in 2011will narrow to around US$10 billion with exports expected to continue along a strong growth path to reach $95 billion by year's end, a staterun newspaper reported.

--6 Oct The monetary authority reiterated its determination to stabilize the exchange rate through year-end

Imports could rise 23.8 percent to $105 billion, leaving an annual trade gap of 10.5 percent of exports, below a government target of 16 percent for 2011

Trade deficit: 2009=$12.87 billion; 2010=$12.6 billion; 2011=$10 billion? Due to Q1-Q3 growth of export revenue due to higher prices of agricultural products, raw materials, and minerals.

State Bank of Vietnam (SBV) has started to purchase dollars in the inter-bank market, thereby building up much needed international reserves. Vietnam’s sovereign bond spreads have steadily declined in the past few months. But there are plenty of macroeconomic risks in the system that can easily reverse the hard-earned gains of the past three months.

LEGAL AND CORPORATE REFORM

Investment Law (2005) -----(changed Foreign and domestic investments governed by two separate laws) which came into effect in 2006, are gradually contributing to an improved business environment and a more 'level playing field' in most economic sectors.

“Direct” investments and “indirect” investments regulated by Investment Law that provides investment guarantees and roadmap for conditions and procedures:

Indirect investment=purchasing shares, bonds, and other valuable papers; investing through securities investment funds and investing through other intermediary financial institutions.

Joint Stock Company (JSC), a company with at least three shareholders but no

maximum number of shareholders, can mobilize capital by the sale of shares and securities.

Investment certificates (ICs) necessary for most investments can be obtained from appropriate People’s Committees (PCs).

Enterprise Law -----Assembly has also passed a new Law on Enterprises (Enterprise Law), also effective from 1 July 2006, which is intended to apply equally to domestic and foreign-invested enterprises. Outlines the types of corporate vehicles investors can establish to carry out investments.

However, a truly common legal framework has not yet been achieved in all areas. The challenge for the Government will be to maintain the pace of economic and corporate reform in the face of pressures arising from the global financial crisis.

FOREIGN PURCHASE OF EQUITY IN DOMESTIC ENTERPRISE---for publicly listed companies, the cap on foreign ownership is 49%.

Exceptions to foreign ownership:

----allowed ownership ratio is restricted in sensitive fields of: banking, petroleum, civil aviation, publishing, press, education, securities, legal services, and insurance

---allowed ownership ratio restricted for SOEs undergoing equitization or in process of conversion of form.

----ownership ratios for sectors set out in Vietnam’s WTO commitments follow the restrictions and guidelines set out in the agreements.

Foreign ownership in practice----although there are not specific restrictions within the law, there have been frequent issues with licensing authorities refusing to register or implement foreign acquisitions of domestic companies involved in some sensitive sectors (distribution and trading, real estate).

TAXATION

----uniform Corporate Income Tax (CIT) rate is 25%. Though exceptions exist in particular sectors and favorable tax incentives developed to promote FDI in particular areas/sectors.

----higher 30%-50% CIT for mining/prospecting in gas, petroleum, natural resources, and minerals

----incentive CIT rate of 10% for period of 15 years for business commencing operations in “specially difficult socio-economic conditions,” economic zones, and high tech zones, and 20% for those businesses operating in “difficult socio-economic conditions.”

-----Resident individuals are subject to Personal Income Tax PIT rates for income accrued within and outside of Vietnam… “global taxation.” Non-residents also subject to PIT if income is derived within Vietnam.

----VAT ranges from 0%-10% depending on the type of transaction made.

Corporate Bankruptcy Law 2004----Vietnam enacted a new corporate bankruptcy law in 2004, it does include an involuntary bankruptcy provision. Seems that the law also applies to SOEs, though yet to see this much in practice.

REMITTING PROFITS OVERSEAS----The Investment Law specifically allows foreign investors, after financial obligations to the Vietnamese State have been met, to remit profits out of Vietnam. with proper documentation provided to bank, overseas remittances outside of Vietnam are not a problem and here is no profits remittance tax.

Allowed Remittances:

---Profits received from exchange of technology, services, derived from IP.

---Profits derived from business operations within Vietnam (quarterly, semi-annual, or annual)

----invested capital and proceeds from the liquidation of investments

---assets legally owned by the investor.

FINANCIAL SECTOR

In 2006 the Vietnamese Government approved a banking development plan up to 2020

Banking-----The plan includes moving the State Bank of Vietnam (SBV) towards a modern central bank, with more independence in its monetary and exchange rate policy, and improved supervision capacity over the banking system. This importantly complements the plans to equitize all five state-owned commercial banks, which the SBV currently both regulates and 'owns'.

Challenges in this reform process include: addressing tensions arising from the SBV's dual regulatory and ownership role; resolving the legacy of directed lending to SOEs subsequent bad loans; strengthening the banking system in such key areas as assessment of credit risk; and developing a greater understanding of international banking practices and products.

Post WTO ----Foreign firms allowed to purchase up to 30% of shares in banks. Vietnam allows foreign banks to establish WFOE subsidiary banks. Foreign banks are allowed to set up branches in Vietnam but those branches will not be allowed to establish sub-branches and are subject to limits in raising deposits from Vietnamese entities within five years of Vietnam’s accession.

Stock market----- The Vietnam Stock Index (VN Index) ---capitalization-weighted index of all the companies listed on the Ho Chi Minh City Stock Exchange (HOSE).

The stock market witnessed spectacular development during 2006 and most of 2007, with capitalisation of shares reaching the equivalent of over 40 per cent of GDP by December 2007.

This growth was driven by more liberal foreign ownership caps, a strong increase in the number and size of listed entities and strong interest from domestic and foreign investors (Source: State Securities Commission).

But the share market began to fall dramatically in October 2007 and in early 2009 hit its lowest point since January 2006. While it has risen since then, it has not returned to previous growth rates. (high in 2007 around 1141 points…low in 2009 235….Q1-Q3 2011 avgs around 432 at close)

Thai index (Bangkok SET Index), began to climb after Sep 2009 and reached a high to beyond pre-global financial crisis figures at 1139 points in Aug 2011, has sharply declined from that point (mostly due to EU crisis, wage increases, Yingluck victory)

SECURITIES MARKET REGULATION

Law on Securities 2006-- provides the broad framework for securities regulation in Viet Nam, specifically legislating in the areas of: public offers of securities (not listings); public companies; securities trading markets (stock exchanges and unlisted market); securities operations including securities companies, fund management companies, securities investment companies and custodian banks; public funds and member funds; disclosure of info.

--State Securities Commission (SSC) body that licenses securities businesses, approves public offers of securities and takeovers, oversees management of the markets and market players and investigates breaches of, and enforces, the securities laws.

--HCMC Stock Exchange (HOSE) Hanoi Stock Exchange (HNX)

-- As discussed in Section 2, a common method for foreign investors to indirectly invest in Viet Nam is via the securities market, particularly the stock exchanges. Foreign investors wishing to invest in listed or unlisted securities must first:

---obtain a securities trading code from the VSD;

----and open an indirect investment capital account at an appropriately authorised bank in Viet Nam.

An investor may trade through a securities company, authorised transaction representative or local fund manager depending on the investor's desired level of supervision of their investments.

Foreign ownership caps and restrictions, discussed generally in Section 2.4 above, include a blanket 49% cap on foreign investment in listed shares and public companies. Orders from foreign investors will not be put through the trading system if there is no room for foreign investors in relation to the particular listed company. Additionally, lower caps, such as those applying to banks, will apply even where an entity is listed.

STATE OWNED ENTERPRISES (SOEs)

Equitization=privatization

Before economic reform process began, Vietnam started a program to equitize (semi-privatization) its SOEs as part of an effort to improve the competitiveness of the state corporate sector and maintain the momentum of FDI.

In late 2007 the Government announced an ambitious plan to extend the equitization process to major SOE conglomerates in sectors such as banking, insurance, aviation, cement, steel and textiles, with a target to reduce the number of SOEs to around 550 by 2010. The remaining SOEs would operate in sensitive sectors of public services, national defense and security and some economic sectors deemed to be of national importance.

SOE equitization problems---- To date, however, the equitization agenda has not reached its target and there are no reliable statistics on the actual number of SOEs equitized. In addition, a number of new SOEs created during the past few years, especially under the umbrella of state-owned conglomerates have not been supervised or reflected in official statistics.

--- In the last two years, the government delayed plans to sell stakes in Bank for Investment & Development, Vietnam Airlines and other SOEs as the global plunge in stock markets raised concerns during the worldwide recession.

The vast majority of SOEs that have been equitized were small and medium-sized enterprises and the state continues to maintain a controlling share in a large number of enterprises following equitization.

Vietnam focused equitizations in 2010 on smaller companies or units of larger groups. it raised 129.2 billion dong selling shares in BIDV Insurance Co., an arm of BIDV, the nation’s second-biggest lender by assets.

Equitization and IPOS

--- July 20 2011, Vietnam Mekong Housing Bank IPO raises $9.57 mln-exchange, (one of Vietnam's five remaining wholly state-owned lenders) sold 17.85 million shares at an average price of 11,025 dong per share, well below the nearly 64.6 million shares on offer

---April 4 2011, Vietnam Airlines Corp., the state- owned carrier, intends to hire an overseas bank to work on its planned domestic initial public offering as the government seeks to accelerate a privatization push. (IPO should be around end of 2012)

-----VINASHIN CASE In May 2011, Vietnam indicated it would accelerate plans to privatize and break up SOEs after the nation’s largest shipbuilder Vinashin (Vietnam Shipbuilding Industry Group) almost collapsed under 86 trillion dong ($4.5 billion) of debts.

--- The ex- chairman of Vietnam Shipbuilding Industry Group, known as Vinashin, was arrested amid a probe into losses. Indicating willingness to crackdown on SOE/state execs that were closely linked to the party---(Binh, 57, had run Vinashin since the company’s formation in 1996, holding posts including general director, chairman and secretary of the group’s party unit)

--- Jun 2 2011, Vinashin asks bondholders to write off 90% of debt (over $4 billion) from default. The shipbuilder’s financial difficulties have raised questions about the extent Vietnam’s government will support state-owned enterprises, threatening to undermine investor confidence in the nation as it aims to accelerate privatization.

Electricity of Vietnam Group (EVN) – restructuring slowdown because of difficulty with capitalization (domestic or foreign). The government hopes to equitize EVN but has faced problems with enticing investors to sign onto the project.

----Aug 2011, head of energy division at Ministry of Industry and Trade says Viet GOV plans to speed up its fundraising through bond sales domestically and internationally for the electricity investment projects. Vietnam will also privatize electricity companies to attract investors, he added.

--- Vietnam estimates it will spend VND929.7 trillion (US$45 billion) to boost its electricity generation capacity by 2020 to meet domestic demand

The equitization has not touched parent companies of major state-owned conglomerates. There are technical challenges associated with equitizing major SOEs, particularly in assessing assets to prepare for sale. Many observers have noted that the momentum for equitization may be weakening.

Though the Vinashin case is an example of strong will for continuing the push towards privatization and divorcing definitive state support from SOEs

BUSINESS ENVIRONMENT

Foreign Ownership-----The Vietnamese Government is gradually loosening foreign investment limits, for example, by lifting the foreign ownership limit in listed companies to 49 per cent, and in unlisted companies to 40 per cent.

Legal System-----The legal system is also undergoing major change to better align commercial statutes with international norms. The implementation of WTO commitments is gradually contributing to a better operating environment over the medium and longer-term as tariffs are cut, investment restrictions loosened still further, and a more transparent and predictable commercial legal and administrative system comes into place. This process will take some years to begin to show real benefits.

Well defined process for judge appointment on various levels of courts (Supreme, Provincial, District) Law on Execution of Civil Judgments enacted in 2009 established civil-judgment executing bodies to enforce the judgements.

Most members of the judiciary system are members of the Communist Party and will seek its advice on sensitive matters. Sentiment that judicial system is not transparent or accountable. Extended and various processes make reaching a final judgment long and frustration.

Lawsuit filings can receive judgments in 90 days or more, though executors allow 120 days before force judgment execution, though could take a lot longer.

2003 Ordinance on Commercial Arbitration allowed for operations of arbitration firms. Awards can be cancelled by Vietnamese courts. Offshore arbitration also allowed, though enforceability of awards is often an issue because they must conform to priciples of Vietnamese Law.

Corporate Bankruptcy Law 2004----Vietnam enacted a new corporate bankruptcy law in 2004, it does include an involuntary bankruptcy provision. Seems that the law also applies to SOEs, though yet to see this much in practice.

VIETNAM IN WTO

WTO------ joined in 2007 making progress in implementing its WTO accession commitments, including: adopting implementing legislation; improving transparency of trade regulations; and clarifying consistency of treatment for private companies and SOE. WTO membership is expected to be accompanied by significant expansion in trading opportunities

----Jan 2009 In accordance to Vietnam’s commitment on wholesale trade and retailing liberalization WTO agreements, Wholly Foreign Owned Enterprises (WFOEs) have been allowed to engage in trading and distribution, which was the last restriction on foreign investment in the sector. Though restrictions remain, primarily due to import restrictions on certain products.

----WTO entry allowed for Vietnam opening previously closed sectors: architectural and engineering services, construction, banking and education, distribution and retail services.

---most sectors are open except a limited few that are not covered by WTO regulations. Though Vietnam’s leaders seem to understand and appreciate the benefits of WTO membership.

---A number of products are listed as subject to state trading enterprises because of consumption restrictions, for cultural and moral reasons, or because they are ‘natural monopolies’: tobacco products, petroleum, cultural products such as newspapers, journals and audio-visual materials, and aircraft

CONDITIONAL SECTORS---broadcasting and tv, production, publishing and distribution of cultural products; mining; post and telecommunications; aquaculture; tobacco; transport and ports/airports; real estate business-import, export and distribution; education and training; hospitals and clinics. Prime Minister approval may be required to be involved in these sectors…..

--- Vietnam maintains export controls on some products such as rice, and some wood products and minerals (to prevent illegal exploitation). It is pledging to apply controls on these products in a way that conforms to WTO agreements.

FTAs-----Vietnam is a member of a growing network of free trade agreements, both individually and as part of ASEAN. Vietnam is participating in Trans-Pacific Partnership Agreement (TPP) negotiations with Australia and seven other APEC economies (Brunei, Chile, Malaysia, New Zealand, Singapore, Peru and the US).

ASEAN FTA (AFTA) 1995; Greater Mekong Subregion (GMS) Economic Cooperation Program. APEC

INVESTMENT OPPORTUNITIES

Vietnam is an attractive market: the economy is growing briskly and sustainably, and the population is adding a million people a year. Even more important, the country's middle class is growing fast. Vietnam’s literacy rate is 92.5 percent, and from 2003 to 2008 the number of college and university students nearly doubled. The cities, though mostly small, are expanding rapidly. Six of them—Can Tho, Da Nang, Haiphong, Hanoi, Ho Chi Minh City, and Nha Trang—account for 40 percent of the country’s sales, according to AC Nielsen estimates from 2007.

Vietnam's rapid economic growth over recent years has increased demand for imported goods, creating significant opportunities for exporters of metals, wheat, dairy produce, machinery, petroleum-based products and live animals. While the global economic slowdown presented challenges, the long term outlook for Australia-Vietnam trade and business relationships remains positive.

The continuing shift towards a more market-based economy and strong economic growth in Vietnam have increased demand for education and training services. Education sector reforms are also under way with support from the Government of Vietnam and donors

including the World Bank and Asian Development Bank. The need for training in areas such as English language, business and management and information technology remains high, especially in the major urban centres of Hanoi and Ho Chi Minh City.

---Telecoms --Vietnam allows telecom joint ventures with foreign partners holding majority shares to provide telecom services related to network infrastructure. These services include telephone services, packet-switched data transmission services, circuit-switched data transmission services, telex services, telegraph services, facsimile services, and private leased circuit services.

For non facilities-based services, foreign capital contribution to these joint ventures shall not exceed 51% of legal capital. Joint venture will be allowed without limitation on the choice of partner. Foreign capital contribution can exceed 65% of legal capital. For facilities-bases services, joint ventures with telecommunications service suppliers duly license in Vietnam will be allowed.

Foreign capital contribution will exceed 49% of legal capital. 51% gives management control of the joint venture. In the telecoms sector, foreign investment in business cooperation contracts will have the possibility to new current arrangements or to convert them into another foreign establishment with conditions no less favorable than those that currently enjoy.

Vietnam has large deposits of oil and gas, and a wide range of exploitable mineral deposits. Many companies have expressed interest in minerals development in Vietnam, but remain concerned by uncertainty in the regulatory environment and the fiscal regime.

Long-term trade and investment opportunities should increase in line with Vietnam's progress in implementing its legislative and administrative reform program.

Population, 2009: 88 millionMajor cities: Ho Chi Minh (5.2 million); Hanoi (2.6 million); Haiphong (753,000) Danang (710,000), Dong Nai (696,000)Average GDP growth, 1998-2009: 7.1%Per capita GDP (in PPP), 2009: $2,900GDP (in PPP), 2009: $258.9 billionInward FDI: 2000: $1.3 billion; 2008: $7.6 billionTop 3 countries for FDI: Korea (15%); Singapore (13%), Taiwan (12%)Share of global trade, 2008: 0.73%Leading export: Garments, $9.1 billionLeading import: Machinery and equipment, $12.7 billionPercent of population under 19 years old: 37%Median age: 27.4Percent population urban: 28%Rate of urbanization: 3.1%Number of households, with $5,000+ in annual income, 2008: 3.7 millionProjected number of households with $5,000+ income, 2013: 11.9 millionNumber of mobile telephones, 2003: 3.5 million; 2008: 70 millionCompound annual growth rate of exports, 1995-2007: 20%Top 3 destinations for exports: U.S. (16%), Japan (14%), China (9%)

Compound annual growth rate for imports, 1995-2007: 19%Top 3 sources for imports: China (14%), Singapore (13%), Taiwan (12%)

Vietnam's main exports include:

crude oil textiles and garment rice coffee rubber coal aquaculture processed forest products (timber)

Although agricultural produce crowds the export item list, this will soon transform as Vietnam increases its industrial base. The 2009 report states 11% earnings on crude oil, 7% on aquatic products, 7% footwear, 5% electronic equipment, 5% jewelry, 5% rice, 4% wooden products, 4% machinery, 3% coffee, 2% anthracite and 2% rubber.

2009 saw Vietnam import rubber worth USD 90 million, US$400 million plastics, US$440 million machineries, USD 390 million electronic goods and USD 350 million steel, among others. 

Procedure Time to complete Cost to complete

1Check the proposed company name; obtain a business registration certificate from the local business registration office under the Department of Planning and Investment

14 days VND 200,000 (official fees)

2 Obtain a seal-making license from the Public Security 6 days VND 20,000

3 Make a company seal 6 daysVND 165,000 – VND 370,000 for bronze seal

4 Pick up company seal 1 day no charge5 Open a bank account 1 day no charge6 Publish announcement in a daily newspaper 5 days VND 700,000

*7 Apply for a tax code at the Municipal Taxation Department; pay business license tax

7 days (simultaneous with previous procedure)

VND 1,000,000 (business license tax)

8 Buy pre-printed VAT invoices from the Municipal Taxation Department or obtain and print self-printed VAT invoices 14 days

If buying the pre-printed VAT Invoices: VND 20,000 per book (50 copies)

*9Register with the local labor office to declare use of labor (Municipal Department for Labor, Invalids and Social Affairs).

1 day (simultaneous with previous procedure)

no charge

*10 Register employees with the Social Insurance Fund for the payment of health insurance and social insurance.

1 day (simultaneous with previous procedure)

no charge

*11 Register for trade union with Vietnam General Confederation of Labour

7 days (simultaneous with previous procedure)

no charge

*:Takes place simultaneously with another procedure.

Registration Requirements Details

Procedure 1. Check the proposed company name; obtain a business registration certificate from the local business registration office under the Department of Planning and InvestmentTime to complete: 14 days Cost to complete: VND 200,000 (official fees)Comment:

According to Article 15 of Decree 88/2006/ND–CP, to file for a business registration certificate, the founders of a limited liability company with two or more members must submit the following:- A request for business registration on the standard form issued by the Ministry of Planning and Investment.- A draft company charter signed in full by the legal representative and, in a company with two or more members, by the members or their authorized representatives.- A list of members of the company on the standard form issued by the Ministry of Planning and Investment, which includes- Valid copy of one personal identification document, if a founding member is an individual.- Copy of the decision of establishment, the business registration certificate or charter (or other equivalent document), a valid copy of one of the personal identity documents for an authorized representative, and the corresponding decision on authorization, if a founding member is a legal entity.- Confirmation of the legal capital from the authorized body or organization if the company engages in lines of business subject to legal capital requirements.- Valid copy of the practicing certificates for the partners, directors, and any other managerial individual if the company conducts business for which a certificate is required by law.Forms can now be downloaded, and the application can be submitted online. The Business Registry Office must verify the online application for completeness and correctness and reply via email within 5 days from the day of the received application. If the application must be revised, the Business Registry Office must reply once again within a day of application revision. The registrant must submit the original application and related documents within 10 days of submitting the correct online application and must receive the license on the same day.

Pursuant to Article 15.2 of the Law on Enterprises, No. 60/2005/QH11, issued by the National Assembly on November 29, 2005 (effective July 1, 2006) and Article 20.1 Decree No. 88/2006/ND-CP, on business registration, issued by the government on August 29, 2006, the legal time for obtaining a business registration certificate is 10 working days. According to Article 23 Decree 88/2006/ND-CP, business registration fees must be determined on the basis of the number of lines of business for which business registration is made.

Procedure  2. Obtain a seal-making license from the Public SecurityTime to complete: 6 daysCost to complete: VND 20,000Comment:

A seal-making license is obtained at the Administrative Department for Social Order (ADSO), which is under the Municipal Police Department. The required documents include an application form provided by the ADSO, a certified copy of the business registration certificate, and a notarized copy of the certificate of business registration. On average, two office visits are required for this process.Seal-making is governed by Decree 58/2001/ND–CP (dated August 24, 2001), which replaces Decree 62/CP of 1993. Most business transaction documents must be signed and stamped before they are considered valid and legal. Without a seal, an enterprise cannot register with the tax department, open a bank account, or apply for operating facilities and services (e.g., telephone, utilities, office leasing)

Pursuant to Circular No. 78/2002/TT–BTC of the Ministry of Finance (dated September 11, 2002), the fee for the seal’s certificate of registration is VND 20,000. The application file, including a certified copy of the business registration certificate, is submitted to an ADSO officer at the Business Registration Office.

Procedure  3. Make a company sealTime to complete: 6 daysCost to complete: VND 165,000 – VND 370,000 for bronze sealComment:Procedure  4. Pick up company sealTime to complete: 1 dayCost to complete: no chargeComment:

The seal must be made by the seal-making service recommended by the ADSO. The founder must submit the original seal-making application and license to the seal maker.

Procedure 5. Open a bank accountTime to complete: 1 dayCost to complete: no chargeComment:Each bank requires a different minimum deposit to open an account. For instance, whereas Vietcombank requires the fixed amount of VND 5 million for an account in VND and USD 500 for one in USD, Asian Commercial Bank requires VND 1 million for a VND account and US 100 for a USD account.To open the account, the bank requires a bank-issued application form, the company seal, the company’s business registration certificate, and the resolution of the management board on the authorized signatures. Procedure 6. Publish announcement in a daily newspaperTime to complete: 5 daysCost to complete: VND 700,000Comment:

Under the Law on Enterprises (passed by the National Assembly on November 29, 2005), the notice of company formation to be publicly announced must include:- Company name.- Address of headquarters, branches, or representative offices.- Line of business.- Charter capital for limited liability companies.- Full name, home address, nationality, identity card number, passport or other relevant personal certification, and the number of establishment or business registration of company owner or members.- Full name, resident address, nationality, number of identification card, and passport or other personal certification of the company legal representative.- Location of business registration.The fee depends on the newspaper, the page, and the number of pages of the notice. In addition to the daily newspaper, other mediums in which the notice may be published include the Business Registration Office’s company information network or e-newsletter.

Procedure 7. Apply for a tax code at the Municipal Taxation Department; pay business license tax Time to complete: 7 days (simultaneous with previous procedure)Cost to complete: VND 1,000,000 (business license tax)Procedure 8. Buy pre-printed VAT invoices from the Municipal Taxation Department or obtain and print self-printed VAT invoicesTime to complete: 14 daysCost to complete: If buying the pre-printed VAT Invoices: VND 20,000 per book (50 copies)Comment:

To obtain VAT invoices, company founders must submit the following documents to the Municipal Tax Department:- Managing director’s delegation of authority to the procurement agent (contact the Tax Department to buy invoices).- Application for buying preprinted invoices (standard form available).- Identify card of the procurement agent.- Business registration certificate and copy.- Tax registration certificate and copy.After receiving the company’s completed application, the Municipal Tax Department schedules an appointment for invoice purchase within 5 days. During this 5-day period, a tax officer visits the company’s office to certify its existence and issue the company a certification of the company office location. Note that the first purchase is restricted to not more than two books (100 copies).To register for self-printing of invoices, company founders must submit an application on a standard form, along with (a) a sample self-printed invoice, including all statutory details; (b) a map

showing the location of the company’s office or copy of the lease contract if the premises are leased, certified by the ward commune people’s committee; (c) the general director’s identification card; (d) a copy of the business registration certificate; and (e) and the tax registration certificate and copy.

It may take 7–10 days to register the self-printed invoices with the Municipal Taxation Department, and more time for the company to self-print the invoices.

It may take 7–15 days for printing the invoices at a printer authorized by the General Taxation Department of Vietnam. After having the invoices printed and before using them, the company must register the invoice serial numbers with the Municipal Taxation Department.

Procedure  9. Register with the local labor office to declare use of labor (Municipal Department for Labor, Invalids and Social Affairs).Time to complete: 1 day (simultaneous with previous procedure)Cost to complete: no chargeComment:

Within 30 days of starting operations, the employer must register all employees and their qualifications with the Labor Office (in conformity with set forms). The relationship between the employer and its employees are regulated by the Labor Code and set forth in labor contracts.

Procedure  10. Register employees with the Social Insurance Fund for the payment of health insurance and social insurance.Time to complete: 1 day (simultaneous with previous procedure)Cost to complete: no chargeComment:

The company must register with the Social Insurance Fund all employees who have contracts for 3 months or longer. The employer must complete a form provided by the Hanoi Social Insurance and include the following information: the employee name and date of birth, salary (as stated in the labor contract), the social insurance book serial number (for employees already issued with those books), a certified copy of the company’s business registration certificate, and a copy of each labor contract.The Social Insurance Office will issue an insurance registration book for each new employee that was not issued such book by the previous employer. The employer is responsible for paying social and health insurance contributions for each employee. Since the health insurance merged with the social insurance funds, payment is made (monthly or quarterly) directly to the Social Insurance Fund. Health insurance certificates are issued during the first month of the year.

Procedure 11. Register for trade union with Vietnam General Confederation of LabourTime to complete: 7 days (simultaneous with previous procedure)Cost to complete: no chargeComment:

The employer must register with the local trade union or industry trade union (as defined below) no later than 6 months from the date it starts operations. This procedure is mandated by Article 3 of Decree 96/2006/ND–CP (dated September 14, 2006), Providing Guidelines for Implementation of Article 153 of Labour Code on Provisional Executive Committees of Trade Unions in Enterprises.The term “trade union†includes (a) provincial or municipal-level confederations of labor under the Vietnam General Confederation of Labour; (b) central-level industry trade unions; (c) trade unions of corporations under the Vietnam General Confederation of Labor; (d) confederations of labor of districts, towns, and provincial cities; (e) local-level industry trade unions, (f) trade unions of processing zones, industrial zones, and high-tech zones; (f) trade unions of corporations; and (g) superior trade unions of other establishments. These trade unions are responsible for establishing a trade union for the company, according to the provisions of the Labour Code, the Law on Trade Unions, and the Charter of the Trade Union of Vietnam, to represent and protect the lawful and legitimate rights and interests of the employees and the labor collective.If a company trade union is not established within 6 months, the superior trade union shall appoint a provisional executive committee of the trade union to represent and protect the lawful and legitimate rights and interests of the employees and the labor collective. This mandate is provided for by the Labour Code, the Law on Trade Unions, and the Charter of the Trade Union of Vietnam. The term

of the provisional executive committee of the trade union and the extension of that term is subject to the regulations of the Vietnam General Confederation of Labor.