How do you create an enterprise in Vietnam, let alone a social enterprise, when you are a foreigner. Well you’d better brace yourself for the ride! Setting up a social enterprise takes time, money, a willingness to gather and complete a whole lot of paperwork, access to legal advice and, most of all, patience. I have outlined the steps that I followed in setting up Urban Care in Vietnam and have included some tips that will save you time and effort. You would need some cash in advance, patience, some more cash, and a whole great deal of some more patience. Because it really took some time. Quite a bit more than expected in the first place actually. The plan was to sort out all the paper work within a month… well, how about 8?
At the outset prepare yourself for the process of doing paperwork, and gathering extensive documentation to prove that you are a qualified investor, with the necessary skills and funding to sustain a business in Vietnam. This is particularly so for foreigners setting up enterprises (not considered “regular business” like IT or other domains) and/or projects in the health sector, which is strictly controlled by the government.
You will quickly become aware of the amount of red tape and administration that is required to be considered a qualified investor. So, do yourself a favour and find a good lawyer. First of all, you have to find a lawyer. A seasoned and bilingual legal mind on your side is essential to doing any kind of business in Vietnam. A lawyer can assist you with the myriad red tape that you will encounter to get official permission to invest in the country – something you will need before you can move forward. This might sounds odd when setting up a company, but you would find it is way easier to have a seasoned sherpa with you to undertake all the red tape work you have to submit to the various administrations which have a say in whether or not you would be allowed to invest in the country.
I recommend highly, Miss Nguyen Ha, a well-educated lawyer, who is fluent in English, has previous international experience and understands how to bridge Vietnamese and Western business culture (let me know if you wish to contact her).
Steps to setting up a social enterprise
The following is a summary of the process that I had to follow to establish Urban Care in Vietnam. Note that I have included dates to give you a sense of the timeframes involved.
- Find yourself a good lawyer (September 2009)
- Present your lawyer with a complete and detailed business plan (October 2009)
- The lawyer will respond with initial feedback from the central administration, including the minimum capital you will have to commit to the business (I planned for 10,000 USD, and the administration asked for 50,000 USD. You can’t argue or negotiate these terms, so best to try to raise more than less)
- Prepare your investment certificate application with all necessary details (including ALL your business lines, because the certificate is issued for a company, with a named investor for specific business lines)
- Find an office space BEFORE receiving your investment certificate. This means finding a landlord who is willing to rent to a foreigner (NB! Tax declaration can be a sticky issue with private landlords in Vietnam) and signing a lease for an office before you’re even able to start doing business. You are not allowed to work from home, meaning that you must have a real office physically distinct from your home (not your garage by the way).
- Sign a lease (November 2009)
- Get an official letter from your bank stating that you have sufficient personal funds to capitalise the company.
- Make certified copies of all your diplomas and certificates and have them officially translated (such services are available in Hanoi)
- Choose a Vietnamese name for your company (October 2009)
- And submit this to the Investment and Planning Department, which has a say in this matter. You can expect to wait some time for feedback from them (December 2009) so in the meantime:
◦ Prepare your company charter
- Submit your application (in our case this took 3 months – November, December and January, 2010), during which time you will likely:
◦ Wait for feedback and comments
◦ Clarify your business lines (November and December)
◦ Re-clarify your business lines (our cost-effectiveness analysis, for example, was not clear enough)
◦ Re-submit your dossier per the first round of comments and change the Vietnamese name of your company (December and January 2010)
- Expect further delays due to Tet holidays (February 2010)
- Expect delays immediately following Tet holidays
- Receive your official certificate (April 2010)
You now are now certified to do business in Vietnam, but wait, there’s a lot more to do before you can actually start the work you really want to do!
- You must apply for:
◦ Your company VAT code
◦ A business visa for your passport
◦ Your personal PIT code
◦ Your company’s PIT code
◦ Your company’s official seal
Then you must:
- Announce the official opening date of your business and publish this in the local newspaper
- Open your company’s bank account
◦ Continue work on the capitalisation of your company and declare to the authorities the completion of this process.
This will likely take another couple of months. But once you have completed all of the above, you will have learned a lot about starting a business as a foreigner in Vietnam, developed more patience than you imagined you had, and be bona fide to get the more important work of your social enterprise up and running.