Workers at an automobile and motorbike components production line run by the Japanese-invested Exedy Viet Nam Co Ltd in the northern province of Vinh Phuc. Foreign invested firms operating in the country have a number of options on forms of commercial presence. —  Photo Hoang Hung

HA NOI (Biz Hub) — Foreign investors can constitute their commercial presence in Viet Nam in the form of business co-operation contracts, foreign-invested enterprises and branches or representative offices following current regulations.

According to the 2014 Law on Investment, business co-operation contracts (BCC) are agreements between foreign investors and domestic enterprises, or among foreign investors in which the parties will carry out business activities, contribute capital, distribute profits and bear risks together without setting up a new legal entity.

The commercial presence under this form will save a lot of time and effort for investors.

Under this form of commercial presence, despite operating with independent legal status to solve any problem flexibly, the parties can also support each other in the processes of production and trading.

However, since no new legal entity will be established, the PLF law firm hereby makes a note for enterprises that the BCC signatories should have clear agreements on elements such as project management, selection of the company's stamp and rights of representation for signing contracts, to prevent any dispute from arising in the process of co-operation.

Depending on the fields of business, the government also permits foreign investors to establish enterprises with 100% foreign capital or joint ventures with domestic enterprises with a certain percentage of foreign capital investment.

In the case of joint ventures, the investors are entitled to contribute capital, buy shares or get capital contribution of a Vietnamese trader as per statutory proportions, and in accordance with international treaties that Viet Nam has signed.

Foreign investors can also set up their branches or representative offices in Viet Nam as the last form of the commercial presence.

According to provisions of Decree No. 72/2006/ND-CP, the foreign investors acknowledged as lawful enterprises by their countries of business registration shall be granted licences for the establishment of representative offices if they have been operating for no less than one year, or licences for the establishment of branches if they have been operating for no less than five years. — VNS/PLF Law Firm