Do you wonder how to open a representative office in Vietnam? Do you want to know what a representative office in Vietnam is allowed to do, and what the estimated time frame and fees are? Then this guide is for you. It sets out everything you need to know in order to open a representative office in Vietnam.
Bizspective regularly receives inquiries from people who want to know how to open a representative office in Vietnam. A “rep. office”, as it is often called, appears to be an easy vehicle to enter the Vietnamese market. And the procedure to open a representative office in Vietnam does not seem overly complicated.
So is it really that simple? In this guide, we will deal with the ins and outs to open and run a representative office in Vietnam. We will look at the permitted activities, the requirements, procedures, time frames, and fees..
What many people do not know, or what they perhaps underestimate, is that the permitted activities of a representative office in Vietnam are quite limited. If we look at the Vietnamese Law on Enterprises, then a representative office in Vietnam is defined as a dependent unit of an enterprise, which acts as the enterprise’s authorized representative, and which represents and protects the enterprise’s interests.
Delving deeper into Vietnamese legislation, it becomes clear that a representative office in Vietnam is not allowed to do business. Indeed, the operation of a representative office in Vietnam shall be solely confined to conducting: (i) liaison activities, (ii) market research, and (iii) promotion of its head office’s businesses.
In other words: a representative office in Vietnam cannot actively engage in profit – making activities. It can explore the market, and promote the main company. It can oversee the implementation of the main company’s commercial activities. It can even hire its own staff, and lease its own office.
But it cannot make money by itself. It is even risky to do so. Because if the Vietnamese Authorities determine that a representative office does in fact engage in profit – making activities, then there may be administrative sanctions..
Now that we have determined the operating scope of the representative office in Vietnam, let’s have a look at what it takes to open one.
The first of the main requirements is that the “head company” is incorporated and registered for doing business in its own country for at least 1 year before establishing its representative office in Vietnam. It must be registered in a country with which Vietnam has signed a treaty, and its registration certificate must be valid for at least 1 more year.
Furthermore, the operations of the representative office must be in accordance with an international treaty that Vietnam has signed. If this last requirement is an issue, then a representative office can still be established, via a special Ministerial approval.
When it comes to the head of a representative office in Vietnam, they can be a Vietnamese person or a foreigner. But it is important to know that they cannot concurrently be: (i) the head of a branch office in Vietnam, or (ii) the legal representative of a company. He or she shall act within the scope of authorization, as granted by the main company via a power of attorney.
Now that we know the requirements to open a representative office in Vietnam, let us have a look at the registration procedures. The Authority in charge is the Ministry of Industry and Trade, in cooperation with the provincial People’s Committees.
In short, the application file exists of: (i) application form, (ii) copies of business registration certificate of the main company, (iii) appointment letter for the head of the representative office, (iv) copies of financial documents of the main company showing that it exists and operates, (v) copies of the ID documents of the head of the representative office, and documents regarding the proposed office of the representative office in Vietnam.
Most of these documents must be translated into Vietnamese and notarized as well. The business registration certificate of the main company must be certified or legalized by the Vietnamese Diplomatic mission in the country of issuance..
Officially within 3 working days upon the date of receipt of the application file, the Vietnamese Authorities may ask for additional documents and/or information. If not, then officially within 7 working days upon the application date, the Authorities shall inform the applicant whether or not the license for the representative office in Vietnam shall be granted or not.
We emphasize the word “officially”, because in practice administrative procedures in Vietnam often take longer than what is written in the Law. Having said that, the official time frames to open a representative office in Vietnam are considerably shorter than those for establishing a commercial legal entity.
Another comparison of the representative office in Vietnam is that there are no capital requirements. These are often a burden for foreigners with a relatively small project. With regard to the fees for establishing a representative office in Vietnam, the official State fees are (very) low.
However, most foreigners use the help of a service company in Vietnam for administrative procedures. Those service companies, whether they are a law firm, a business service company, or an accountant, they come in all sorts, and with all kinds of prices.
From our own experience, we think that a fee of around USD 500 – 1,000 is reasonable. As is often the case in Vietnam: you get what you pay for. So if you are looking for a customized approach, clear answers, professional support, and English-speaking service providers: expect to pay a little more.
Having looked at the requirements, procedures, time frames, and fees: what is the final verdict? It depends of course on what you are looking for.
If you are looking for a relatively easy way to establish a presence in Vietnam with the purpose of doing market research or overseeing a project: the representative office in Vietnam could do just that.
But if you want to do business in Vietnam, enter into contracts, make deals, etcetera: that is not what a representative office in Vietnam is meant for. In that case, you would better look into establishing a limited liability company (LLC).
We hope that you found this guide useful and that it has given you some insights into how to open a representative office in Vietnam.
If you are considering opening a representative office in Vietnam, then we would recommend you to speak with an expert in this field. For example, our legal expert Mr. Simon.
If you are not sure what is the most suitable way to start your business in Vietnam or if you are looking for business start-up advice more in general, then you may consider booking a consultation with our business start up experts Barney and Marijn.
If you have any questions about doing business in Vietnam, do not hesitate to contact our Bizspective team.