Hanoi Reduces Application Time for Business Registration Certificates
HANOI – Vietnam’s capital, Hanoi, has implemented a plan to reduce the time needed to obtain a Business Registration Certificate to within three days of receiving the application, instead of the previous 10 days. Although this change will only initially apply to Vietnamese enterprises, the definition of Vietnamese enterprises was changed recently to allow them to have foreign ownership. Hanoi is the first city in the country to implement this program.
The change in registration time is part of the new regulations laid out in the new Law on Enterprises 2014, which will go into full effect on July 1. Hanoi has taken the bold choice of implementing the changes earlier in hopes of boosting its attractiveness to investors. In July, the rest of the country will have to follow suit and shorten their registration times.
This isn’t the first time Hanoi has taken the initiative to be more business-friendly. Starting this January, Land Use Right (LUR) certificates will have to be issued within 20-30 days of an application being lodged, instead of the previous 52 days. The number of documents has also been reduced to just four, rather than the nine previously required. The documents required include the Land Use Right Transfer Contract, the Contract liquidation, and the Hand-Over Minutes.
These positive regulatory changes in Hanoi should help increase the number of enterprises established in the city. In 2014, more than 13,400 enterprises were established, down 3.5 percent from 2013. Total chartered capital was also down 11.4 percent to VND98.43 trillion (US$4.7 billion). However, Hanoi did manage to attract 418 new foreign invested projects in 2014 with a total investment capital of almost US$1.4 billion, up 26 percent on 2013. Further clarifying procedures and business incentives should help this increase in investment to continue.
Business Registration in Vietnam
In order to conduct business in Vietnam, companies must be granted permission from the government by obtaining an Investment Certificate (IC). This occurs at the Department of Planning and Investment (DPI) of the relevant province/city. In Hanoi, it can occur at the department’s one-stop shop.
The following are the two main stages involved in registering a business in Vietnam:
1.) Submit the registration application (made up of the Business Certificate and the Investment Certificate) to the Business Registration Department and make an appointment to collect the IC.
2.) Go to the Business Registration Department to collect the IC. If the application is lacking some documents, and/or one or more documents contain mistakes, the DPI will request for amendments and supplements when resubmitting the application.
In addition, there is a VND100,000 (US$5) cost for each application for a Vietnamese enterprise. Documents required in the first stage include a paper for registering the enterprise, ID of the company owner, and usually the certificate of legal capital or the certificate of profession.
Reforms and Easing of Business Environment in Vietnam
Other Vietnamese institutional reforms in 2014 included the abolition of procedures and costs required to change most lines of business, as the line of business is no longer written on a Business Registration Certificate. However, there are certain business lines that still have stipulations that need to be fulfilled by the enterprise.
Finally, the National Assembly passed 18 new laws in November 2014 that should come into effect on July 1, 2015. They make it significantly easier for foreign enterprises to conduct more successful business practices in Vietnam. These changes include abolishing Investment Certificates for M&As, making it easier for foreigners to acquire property, and allowing enterprises with less than 51 percent foreign ownership to be treated as a domestic company as long as it was established in Vietnam. These changes show that the government is keen on making it easier to do business in the country.
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