Forms of Setting up company in Vietnam

 Forms of Setting up company in Vietnam

According the Vietnam Law on Enterprises, there are four common types of companies:

-Private enterprise

-Partnership

-Joint stock company

-Limited liability company

-Private enterprise is a business run by a single person who is responsible for all of its operations and owns all of its assets;

-Partnership is an organization in which (i) at least two partners co-own the business and operate jointly under a single name; There may be limited partners in addition to general partners; ii) A partnership's general partners must be individuals who are fully responsible for the partnership's obligations with their entire property: iii) Limited partners are only responsible for the partnership's debts up to the amount of their capital contribution;

-Joint stock company is an enterprise where i) Its contract capital is partitioned into equivalent bits known as shares; ( ii) Shareholders may be individuals or organizations; the base number of investors will be three and will not be confined to a specific most extreme number; ( iii) Its shareholders are only responsible for the debts and other property obligations of the company up to the value of their capital contribution; ( iv) Shareholders will be free to transfer their shares in accordance with the law;

-Limited liability company (also known as a single-member or multi-member limited liability company). A one-member limited liability company is an enterprise which is owned by one organization or individual (hereinafter referred to as the company owner); Within the company's charter capital, the owner is responsible for the company's debts and other property obligations. A business is a limited liability company if: i) Members may be individuals or organizations; The number of members in total cannot be more than fifty; ( ii) Individuals are answerable for obligations and other property liabilities of the undertaking inside how much capital that they have resolved to add to the endeavor; ( iii) The members' capital shares can only be transferred in accordance with the law.

ANT Lawyers is a law firm in Vietnam with international standards, recognized by IFLR1000 on Financial and Corporate practice. The firm provides a wide range of legal services, including M&A, corporate establishment, business advisory, tax advisory, dispute resolution for multinational and domestic clients.

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Areas prohibited to set up company in Vietnam

 Vietnam encourages investors to set up company in Vietnam

With the public authority's endeavors in working on the venture and business climate, which is good for homegrown financial backers as well as unfamiliar financial backers, Vietnam's monetary, political and social circumstance has consistently stayed stable and accomplished extraordinary advancement, over the course of the time including the post-Coronavirus period, while laying out reciprocal exchange relations with numerous nations the world. In an effort to open up the economy, the government keeps changing its policies to support business development and improve the business environment. Specifically, the public authority resolves to energize unfamiliar financial backers carrying on with work in Vietnam: to start a business, build a factory, or buy shares in a Vietnamese company, or to invest in Vietnam in various sectors that will benefit the economy.

In general, foreign investors are permitted to establish a business and invest in Vietnam. Up until the end of 2022, the capital for Foreign Direct Investment (FDI) registered is USD 439 billion, and the FDI attracted in 2022 alone is USD 27,7 billion. In practice, a significant number of them have established businesses in Vietnam and have made substantial investments in manufacturing and production, real estate, energy, technical fields, wholesale and retail product trading, and other related industries.

Areas prohibited to set up company in Vietnam

It should be noted that the following are prohibited areas of business in Vietnam: i) dealing in illegal drugs; ii) minerals and chemicals are traded; iii) exchanging examples of plants and wild creatures; iv) the prostitution industry; v) buying and selling people, tissues, organs, human hatchlings; vi) human cloning-related business practices; vii) exchanging fireworks; viii) Businesses that provide debt collection services, including debt collection services, which were recently added to the prohibited list in the beginning of 2021 due to the negative social impact that debt collection companies in Vietnam have had.

The general requirement for both domestic and international investors is that they are permitted to engage in business investment activities in trades and industries that are not prohibited by law. The remaining trades and industries are divided into conditional and ordinary business lines, with the exception of the trades that are prohibited from business investment. In normal business lines, financial backers can openly enter without boundaries. Interestingly, contingent business lines set conditions that should be met assuming the financial backers wish to join. Understanding the lawful condition to work in a particular industry and business line is the initial step for financial backers to enter the market to set up organization in Vietnam.

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10 Questions to Ask Before Setting up Company in Vietnam

 Foreigners are encouraged to make investment in Vietnam through direct investment by setting up company in Vietnam.

However there are restrictions in some cases in regard to investment capital, investment area, special licenses required. The investor is suggested to consult with a law firm in Vietnam for advice and service offering.

10 Questions to Ask Before Setting up Company in Vietnam

Before setting up company in Vietnam, ask yourself the following questions:

1. Which business should I invest in Vietnam?

There are non-conditional investment areas and conditional investment areas. Establishing company in the non-conditional investment areas are more simple than in conditional investment areas. Investment in IT services, manufacturing, management consulting, business promotion are a few samples of non-conditional investment areas. Example of conditional investment areas are real estate, trading, travel agencies, freight forwarding… which are more complicated with investment conditions. Investment conditions might also be changed over the time depending on the WTO commitments which Vietnam enters.

2. What should I name the business in Vietnam?
The company in Vietnam has to have Vietnamese name, and English name. The company could also have abbreviated name. The name of the company in Vietnam indicates the structure of the company, the business lines, and the name that differentiate against other businesses. For instance, the company could be named Alpha consulting limited liability company.

3. Where should I register the address of the business in Vietnam?
Not every address could be used to register a company. The address has to be an address of a house with leasing agreement or office building which owner has license to operate as office building.

4. What is the legal structure of the company?
Depending on the number of investor contributing capital, company could be set-up as one member limited liability company or two ore more member limited liability company or joint stocks company.

5. How much capital is required to set-up a company in Vietnam?
The investment amount depends on the business plan and is subject to the approval of the provincial Department of Planning and Investment evaluating application dossier. In some business areas like real estate, banking and finance, minimum capital is required. In general for non-conditional investment area, the law does not specify the minimum capital to establish a company in Vietnam however the State agencies that evaluate investment plan could reject the investment project which are not feasible. Bank statement in foreign banks could be used to prove sufficient fund of investment capital.

6. Whom will be legal representative and work permit in Vietnam?
The investor will need to appoint the legal representative in Vietnam to oversee the business performance and take legal responsibility in Vietnam. If the legal representative is an expatriate, whom is a capital contributing member or owner of a limited liability company or a member of the Board of Management of a shareholding company which is registered to operate in Vietnam, he or she will be exempted from work permit in Vietnam. Otherwise, he or she will need to have a work permit to work in Vietnam legally. The work permit holder would then apply for temporary residence card to live in Vietnam as long as the work permit allows.

7. How long does it take to set-up a company in Vietnam?
It depends on what type, scale, and whether or not conditions are required. For a simple minimum capital without conditions to set-up, it would take 30 working days. For setting up company in conditional investment areas i.e.  trading company in Vietnam, time would be lengthen due to the involvement of a number of State agencies approving the investment project and it would take 60 working days. For setting up company in other investments in areas requiring conditions to meet, time might be taken depending on the type of conditions and the government agencies evaluating the conditions of investment.

8. Whom will be granting the investment license in Vietnam?
For most of the investment projects, the provincial state agencies with the approval of the Department of Planning and Investment (DPI) will be granting the Investment Certificate in Vietnam. However, depending on the type, scale, and whether or not conditions are required, other Vietnam State agencies might be involved. For the case of trading company, ministry of trade and commerce, ministry of finance, provincial people’s committee will be reviewing the investment application dossier as well.

9. What are the tax liability in Vietnam?

Major taxes in Vietnam are corporate income tax, import and export tax, value added tax, and personal income tax in Vietnam. In some special areas, there are other taxes. The corporate income tax is currently at 22% and will reduce to 20% beginning 2016. Export is mostly encouraged as such the export tax is 0 however there are special cases when export tax is larger than 0. Import tax varies according to tariff. Value added tax is mostly at 10% however in some cases, VAT could be 5% or 0%. Personal Income tax varies according to income level and is applicable from VND 9,000,000 above.

10. What are mandatory reports submissions requirement in Vietnam?
Companies are required to keep accounting books, prepare and submit tax reports on monthly, quarterly and annually. Foreign companies are also required to have financial audit taken before the financial year end. The financial year in Vietnam is from January to December and the deadline to submit financial report is March 30th for the previous year. Other reports are required to be submitted at other State agencies.

With highly professional staff and great experience in business in Vietnam, ANT Lawyers would like to support you in establishing company in Vietnam.

Source ANTLawyers: https://antlawyers.vn/library/10-questions-to-ask-before-setting-up-company-in-vietnam.html

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Many “American eagles” expressed their desire to invest and expand into Vietnam

Many “American eagles” expressed their desire to invest and expand into Vietnam

After the Covid-19 pandemic with unremitting efforts, Vietnam has affirmed its capacity in all aspects with other countries, especially the capability to fight against Covid and quick return focus to business. Therefore, Vietnam is becoming an attractive investment destination for global investors including American companies. With the stable political situation, young and abundant human resources and commitment to investment facilitation from the Vietnam Government, it has become a great motivation for American investors to choose Vietnam as a safe and effective investment destination to expand business and set up company in Vietnam.

On the occasion of Vietnam Prime Minister Pham Minh Chinh’s business trip to attend the Special Summit to celebrate the 45th anniversary of ASEAN- America relations, many big American enterprises such as Intel, Apple and Google have shared their desire to expand the supply chain, cooperate in technology and move production to Vietnam by coordinating with Vietnamese enterprises that have suitable capability to participate. This is also considered a great opportunity for Vietnam to interact with the world’s leading advanced economy to improve its labor capacity and is a potential market for workers to learn and demonstrate their abilities.

Specifically, Apple wants the Vietnamese Government to continue to have preferential policies to encourage high-tech American enterprises to develop business and invest in Vietnam. On the other hand, Apple also affirmed that it will actively consider the Prime Minister’s proposal on increasing the number of domestic suppliers and raising the rate of using domestic services and goods higher in Apple products in the near future.

In addition, Intel also showed its interest in the Vietnamese market by emphasizing the very important role of Vietnam and Vietnamese factories in Intel’s production chain. Moreover, Intel also highly appreciates Vietnam’s infrastructure and human resources as potential conditions for technology enterprises to continue to expand their operations. Especially in today’s volatile world, Intel’s expansion of investment in Vietnam is a strategic solution.

Currently, Microsoft is working with Vietnam’s Ministry of Information and Communications to deploy digital skills programs both private and public sector, and data science development in Vietnam. Accordingly, technology will help enhance transparency and trust, prevent and fight corruption. Vietnam has a young population, a dynamic country, ready to receive new technologies Microsoft wishes to strengthen cooperation with Vietnam in the fields of digital transformation, ensuring network security, helping Vietnam achieve the goal of reducing emissions to zero by 2050 and contribute to helping Vietnam build a green economy, digital economy, and sustainable development.

In addition, in order to attract foreign investment, the Prime Minister emphasized that the “sincerity, trust and responsibility” stance, “harmonious benefits, shared risks” between big American and Vietnamese enterprises will help the relationship between the parties is stable and good. In addition, to implement the commitments it has joined, Vietnam is continuing to build and perfect institutions suitable to Vietnam’s conditions and circumstances. Moreover, the development of strategic infrastructure such as digital transformation infrastructure, transport infrastructure, energy infrastructure, healthcare infrastructure… will also be the focus of completion to attract foreign investors to establish company inVietnam.

Besides, Vietnam continues to improve the open and stable business environment, and effectively handle administrative procedures. In particular, digital transformation will help reduce direct transactions, fight negativity, trouble, corruption, save time and costs for people and businesses. Therefore, Vietnamese businesses need to innovate in both capacity and organization to capture this opportunity well.

With highly professional staff and great experience in business in Vietnam, ANT Lawyers – Law firm in Vietnam would like to support you to establish company in Vietnam.

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How to Set-up Travel Services Business in Vietnam?

How to Set-up Travel Services Business in Vietnam?

Foreign investor could only set-up joint venture with Vietnam travel agency to set-up travel services business in Vietnam because transport of passenger belongs to investment areas with conditions applied to foreign investor in Vietnam.

 

10 Questions to Ask Before Setting up Company in Vietnam?

No one could deny that information technology has tremendously changed the way travel services business operates. The use of booking reservation system application on smartphone and internet are widespread that make travel has never been easier.  Foreign investor would be interested to explore the travel services market. However, 100% foreign owned company is not allowed to set-up travel services business in Vietnam. As this investment area is conditional, it is advised that a law firm in Vietnam should be consulted to ensure compliance with local regulations.

The application process and documents requirements are briefly as following:

1. Required documents:

-Application for the International Travel Business License (form);

-Certificate of business registration (copy – certified)

-Business plan for the international travel agency;

-Tour schedule

-Proof of at least 4 years of experience in international travel business operations

-Certified copies of the tourist guides’ cards whereby at least 3 international tourist guides are required

-Confirmation of bank deposit (as per regulations);

-Proof of office premises or legally registered place of business

2. Business License Application Procedure

-Submission of the required documents to the correct authority (Department of Culture, Sports and Tourism of the province/city where the business is headquartered).

-The Department of Tourism of the province/city completes the records of appraisal and submits a written request with the agency’s records to the Ministry of Culture, Sports and Tourism in Vietnam within ten working days from the date of receipt of a valid application. When cases are not eligible for the proposed permit to the state agencies, the provincial tourism department shall cite the specific reasons for refusal. 

-The state management agency of tourism (VNAT – Ministry of Culture, Sports and Tourism) is responsible for reviewing and licensing the international travel business within ten working days from the date of both receipt of the file and written request of the state agency of tourism in the province. In case of refusal, the ministry shall state the specific reasons to the state and provincial tourism authorities

3. Number of records

-Submission to the Department of Culture, Sports and Tourism: 01

-Tourism Authority Filed in: 01

ANT Lawyers, a law firm in Vietnam could offer service to establish company in Vietnam. We assist clients needing legal service in obtaining investment certificate, business registration certificate, or other  licensing procedures.

 

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How to Set up Trading Company in Vietnam

How to Set up Trading Company in Vietnam

Investment in set up trading company in Vietnam is considered as investment in conditional investment areas

 

Once an underdeveloped country, in the last two decades Vietnam has shown an incredible growth in the world economic scene, especially in the criteria of investment attraction. For a foreign company that is interested in expanding the business in a new country or region, Vietnam is a promising destination. In order to start a company or specifically a trading company in Vietnam, foreign investor should comprehensively understand the formality and function of the legal entity to be formed according to Vietnam Law. The consultancy and guidance of skilled and qualified lawyers in Vietnam law firms throughout the process shall mostly be needed.

The legal basis for a foreign company to set up a company in Vietnam is stated in the Enterprise Law of Vietnam: foreign organizations and individuals will be entitled to establish and manage enterprises in Vietnam in accordance with this law, with some exceptions.  Foreign investors may invest in the form of 100% foreign- owned capital to establish joint-stock companies, limited liability companies, partnerships or private enterprises under the provisions of the Enterprise Law and relevant laws.

The foreign investor shall mostly needs to fulfill the investment registration procedures at provincial-level state agencies in charge of investment in order to be granted the investment certificates, in accordance with Vietnam law in investment. The dossier required for the investment registration shall comprise of an examination dossier, papers showing the capability to satisfy the conditions which the project is required by law to satisfy, for investment projects in conditional investment domains i.e. specific goods to be traded at HS code level, experience in trading area, how the trading procedures would be carried out, potential business in Vietnam.

In particular, for investment capital, it should be noted that, trading company needs to commit larger investment in terms of capital, since its function is to identify competitive suppliers, negotiate and purchase their products and sell them through a distribution network in Vietnam. In the meantime, the investor needs to have experience in trading to run the business smoothly and efficiently. The investor should explain why the company would contribute to the development in Vietnam when applying for investment license at Department of Planning and Investment, and Ministry of Trade and Commerce.

ANT Lawyers, a law firm in Vietnam could offer service to establish company in Vietnam. We assist clients needing legal service in obtaining investment certificate, business registration certificate, or other  licensing procedures.

 

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7 basic steps to set up a business and comply with Vietnam laws

7 basic steps to set up a business and comply with Vietnam laws

Vietnam’s economy is increasingly diversified in terms of business activities and business regulations are also constantly being improved and enhanced. Accordingly, foreign investors can freely choose the right type of business. Therefore, the set up company in Vietnam is always a matter of great interest to foreign investors whom find business opportunities in Vietnam.

 

The first step is to set up a business in Vietnam

To take this step, the investor first needs to determine the type of business to choose to establish and provide the business name and expected information. Accordingly, the composition of the enterprise establishment dossier will be prepared according to regulations and submitted at the Business Registration Office, the Department of Planning and Investment of the place where it is expected to be headquartered. After submitting a valid application, the enterprise will be granted an enterprise registration certificate and announced the registration contents on the National Business Registration Portal.

The second step is to publish the contents of business registration

After being granted an enterprise registration certificate, an enterprise must make a public announcement on the National Business Registration Portal.

In the third step, the enterprise conducts stamp engraving

Enterprises can request to make a seal from the seal making agent. Accordingly, the enterprise actively decides on the type, quantity, form and content of the seal and is solely responsible for the use of its legal entity seal.

Fourth step is that to open a bank account in Vietnam

Currently, businesses can choose a bank to open an account for their business, to open an account, the bank requires an application form issued by the bank, a seal sample, the company’s charter, and a certificate. Business registration and related documents are required by different bank.

The fifth step is to register the tax declaration form in Vietnam.

Accordingly, enterprises register for the use of e-invoices and notify the use of e-invoices to their tax authorities. Enterprises need to contact the invoice supplier to order the printing of value-added invoice books and must register self-printed invoices with tax authorities.

In the sixth step, the enterprise needs to conduct labor registration in Vietnam. Enterprises register with the Department of Labor, War Invalids and Social Affairs to declare the use of labor. Within 30 days from the date of commencement of operation, the employer must register the employer to the Labor Department (according to the prescribed form). In addition, enterprises should note that the relationship between the employer and the employee is regulated by the Labor Code and specified in the labor contract.

Seventh step is to register for social insurance in Vietnam.

Enterprises register with the Social Insurance Agency to pay health insurance and social insurance for employees. Employers must fill in all information according to the form provided by social insurance, including: full name, date of birth, salary (recorded in labor contract), number of social insurance book (for employees who have been issued with a book), a certified copy of the company’s business registration certificate and a copy of each labor contract.

It can be seen that setting up a business requires businesses to carry out a lot of procedures and comply with many different regulations of tax, banking, labor, insurance… Therefore, besides learning about legal regulations and businesses can seek the support of professional consulting firm in Vietnam with expertise and experience in the field of business establishment to implement the process quickly and effectively.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

ANT Lawyers, a law firm in Vietnam could offer service to establish company in Vietnam. We assist clients needing legal service in obtaining investment certificate, business registration certificate, or other  licensing procedures.

 

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Where is least expensive cities for working and living in Vietnam?

Where is least expensive cities for working and living in Vietnam?

The price indexes has always been on top of information list which investors look for when making investment into a new country. Beside various information i.e. GDP, Stock market, unemployment, producer price, interest rate, balance of trade, the investors also check the consumer price index and income to determine the attractiveness of market entry. There are many attractiveness factors including the low cost of living and low level of income in comparable with other neighboring countries, for making investment in setting up company in Vietnam for manufacturing purpose.

 

Where in Vietnam is cheapest city to live and work?

 According to statistics of 2021, taking Hanoi as the base indicator, the top 10 localities with the most expensive cost of living include: Hanoi (100%), Quang Ninh (99.5%), Ho Chi Minh City (98.98%), Da Nang (96.4%), Hai Phong (95.58%), Lao Cai (94.75%), Son La (94.58%), Lang Son (94.55%) %), Khanh Hoa (94.55%) and Dien Bien (94.41%).

How it has changed since 2015?

The top 10 provinces and cities with the most expensive cost of living in the country in 2015 include: Lai Chau (100.3%), Hanoi (100%), Son La (99.27%), Lao Cai (99.02%), Dien Bien (98.85%), Ho Chi Minh City City (97.39%), Ha Tinh (97.14%), Ha Giang (96.5%), Da Nang (96.44%) and Binh Phuoc (96.12%).

In 2021, Hanoi’s per capita income reaches more than 6 million VND/month.  Since 2016, Hanoi has always been in the top 3 localities with the highest income in the country.

In 2015, Da Nang ranked 9/63 with a price equal to 96.44% compared to Hanoi. By 2017, the city “jumped” to third place, up 6 places compared to 2015. In 2021, Da Nang’s cost of living is 96.4% of that of Hanoi and ranked 4th in the country in terms of expensiveness. In 2021, Da Nang has per capita income of more than 5.2 million VND/month, ranking 5th out of 63 provinces and cities. Previously, 2019 was the year the city had the highest income in the past 10 years with more than 6 million VND/person/month.

In 2021, Ho Chi Minh City reached 98.98% and ranked 3rd out of 63 provinces and cities in cost of living.   From 2002 to 2016, the city has always been the place with the highest income in the country. From 2018 to present, Ho Chi Minh City maintains the “runner-up” position (behind Binh Duong), in which, 2019 is the year with the highest income with 6.7 million VND/person/month.

Besides the three central cities that are constantly in the top of the most expensive localities in the country, Lao Cai is the only mountainous province.

In 2020, Lao Cai ranked 5th in terms of the expensive level in consumption, equal to 96.52% compared to Hanoi. Lao Cai is the most expensive province among 14 Northern Midlands and Mountainous Provinces (the cheapest is Phu Tho, equal to 91.07% compared to Hanoi, ranked 56th nationwide). By 2021, Lao Cai’s index drop to 94.75%, the lowest level of the place since 2015 until now. With this index, Lao Cai ranks 6th in the country in terms of the expensiveness of the cost of living.

In particular, although the cost of living is quite high, the income of people in Lao Cai is not high. The average income of people in this locality was only 1.8 million VND/person/month in 2016 and ranked 53rd in the country. In 2021, people in Lao Cai earn an average of 2.51 million VND, ranking 55th in the country.

The low level of income and least living cost make Vietnam a favourable destination for investment.  Many labour intensive manufacturers in garment, shoes, furniture… have long chosen Vietnam as a place for establishing company in manufacturing. There are growing number of companies in electronics also manufacture in Vietnam to take advantage of the comparable low wage workforce.

With highly professional staff and great experience in foreign investment, ANT Lawyers - law firm in Vietnam would like to support you to establish company in Vietnam.

 

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Potential to attract investment when iPhone can be assembled in Vietnam

Potential to attract investment when iPhone can be assembled in Vietnam 

iPhone is the name of the smartphone line from Apple – a large American technology corporation. The iPhone is a high-end technology product and is used by many people around the world. Currently, Apple assembles the majority of iPhones in factories located in China, and components are manufactured in India, Thailand, the US and many other places. The setting up of iPhone manufacturing facilities in Vietnam will attract other investors to set up company in Vietnam.

 

Pegatron is one of three iPhone production partners for Apple that is under pressure to expand production outside of China. In addition, China’s application of Covid control measures has pushed the plan to expand production even more strongly. Accordingly, one of the expected locations to be selected is Vietnam.

Although in China the social distancing orders to control Covid-19 have been gradually removed, the labor shortage is still a serious problem. On the other hand, in the peak season, the demand for labor to increase production increases. Therefore, expanding production activities to other regions like Vietnam is a necessary solution to solve the labor shortage.

Besides, there are many different reasons for Pegatron to set up a factory in Vietnam. One of the reasons mentioned is that the stakeholders want to reduce the concentration of production in the current areas and limit the difficulty in recruiting personnel. Meanwhile, Vietnam has young and abundant human resources and production areas are planned and created more favorable conditions for foreign investors.

Moreover, Pegatron previously intended to expand the production line to Vietnam and Pegatron is building a factory in Hai Phong. In addition, many of Apple’s assembly partners also have factories in Vietnam, but no factories have yet assembled iPhones. Therefore, if iPhone is assembled in Vietnam, it will create a strong effect to attract foreign investors to invest in Vietnam and establish company in Vietnam. Accordingly, this will also be a great opportunity for the labor market in Vietnam and promote investment and development.

Currently, the Vietnamese market is gradually becoming an investment target of many large foreign investors. Therefore, besides the government’s open door policies, Vietnamese businesses and workers need to make more efforts to promote their capacity when participating in cooperation and working for large enterprises like Apple.

With highly professional staff and great experience in business, ANT Lawyers – Law firm in Vietnam would like to support you to establish company in Vietnam.

 

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