TABLE OF CONTENTSI.ORGANIZATION AND ESTABLISHMENT OF FDI PROJECT...11.Investment preparation stage...11.1 Researching the investment environment:...11.1.1 Research purpose For investors.
Trang 1MINISTRY OF EDUCATION AND TRAINING
HO CHI MINH CITY
HO CHI MINH CITY OPEN UNIVERSITY
School of Advanced Study -
Trang 2TABLE OF CONTENTS
I ORGANIZATION AND ESTABLISHMENT OF FDI PROJECT 1
1.Investment preparation stage 1
1.1 Researching the investment environment: 1
1.1.1 Research purpose (For investors) 1
1.1.2 A good investment environment 1
1.1.3 Basic contents of the investment environment 1
1.2 Identify investment opportunities 2
2 The stage of finding partners to invest in 3
2.1 Find an investment partner 3
2.2 Standards of investment affiliate partners 3
2.3 Negotiating to implement investment linkage 4
3 The stage of applying for an investment license or applying for an investment license 4
3.1 Information on investment procedures 4
3.2 Procedures for applying for a certificate of foreign investment activities in Vietnam 4
4 The stage of appraisal is to approve the investment permission of the State management agency in the country receiving the investment capital 5
4.1 Project execution time 5
4.2 Issues of verification of FDI projects: 7
5 The issue of adjusting FDI projects 7
5.1 The stage of implementing FDI projects in Vietnam 7
6.Other issues related to the implementation of FDI projects in Vietnam: 8
6.1 Transfer projects: 8
6.2 Hire a manager 9
6.3 Problems opening an account: 9
II FEASIBILITY STUDY OF THE FDI PROJECT 10
The role of the Feasibility study of the FDI project: 11
1.1 The concept of market research 11
1.2 Purpose of market research 11
1.3 Role of market research 11
Trang 31.4 Market research content 11
2 Market and consumer research 12
2.1 Meaning 12
2.2 Market research and product consumers: 12
3 Research the market's demand for the project's products: 13
4.Research the level of competition of products in the market: 13
4.1 Research competitors: 13
5.Example of market content research in the international hotel construction project in Ho Chi Minh City: 14
REFERENCE I.
Trang 4I. ORGANIZATION AND ESTABLISHMENT OF FDI PROJECT.
An FDI project in general (investment abroad or foreign investment in Vietnam) must
go through 5 stages following principles:
- Investment preparation stage
- The stage of finding partners to invest in (If it is in the form of a businesscooperation contract or a joint venture)
- The stage of applying for an investment license or applying for an investmentlicense
- Appraisal stage to approve the investment permission of the regulatory agency.State in the receiving country
- The stage of implementing FDI investment projects
1 Investment preparation stage
At this stage, the investor must perform the following tasks:
1.1 Researching the investment environment:
1.1.1 Research purpose (For investors).
• Identify the ideal investment environment to invest capital
• Proactively propose solutions to limit unfavorable impacts of the investmentenvironment on businesses
Thus, carefully studying the investment environment allows to minimize risks ininvestment activities to improve capital efficiency
1.1.2 A good investment environment.
In order to choose a good investment environment, investors often survey andconsider many environments, thereby choosing the best investment environment
A good investment environment is one that is capable of bringing high returns andminimizing risks for investors
1.1.3 Basic contents of the investment environment
To assess the investment environment, traders need to have a basic understanding of
Trang 5the content (structure) of the investment environment Having problems reflects8
different aspects of the investment environment
The first aspect: Socio-political environment
The second aspect: Cultural environment
The third aspect: Legal and administrative environment
The fourth aspect: Resource economic environment
Fifth aspect: Financial environment
Sixth aspect: Infrastructure environment
The seventh aspect: Working environment
Eighth aspect: International environment
1.2 Identify investment opportunities
Identification of investment opportunities can take place in parallel with thedetermination of the investment environment, or after the investment environment hasbeen identified
The basis for determining investment opportunities:
• Business interests or investment purposes
• Financial capacity
• Market demand
There can be multiple investment opportunities for an investment purpose To choosethe best investment opportunity often go through the following steps:
Step 1: Research and evaluate investment opportunities.
1 Objectives and necessity of investment
2 Total amount of capital required
3 Expected funding sources
4 Estimation of economic efficiency indicators
Step 2: Build a technical and economic justification
Goals in this step: To create a solid basis for making a decision to invest capital or
not, so they capitalize on the identified investment opportunity
Step 3: Study the feasibility of the technical and economic argument
*Notes at the investment preparation stage:
Trang 6In complex projects with large investment capital to accurately assess the feasibility of
an investment project, one or several additional surveys (depending on the necessity
of the project) are conducted such as:
- Market survey
- Survey of raw materials supplied
- Survey on equipment technology
- Site survey, construction geology
- Survey on the capacity of contractors, etc
Prof Dr Vo Thanh Thu and PhD Ngo Thi Ngoc Huyen (2011) Ky Thuat Dau Tu Truc
Tiep Nuoc Ngoai (4th edition) Ho Chi Minh City General Publishing House,
379-385, 389- 392
2 The stage of finding partners to invest in
This stage only takes place when the investor has a continuous intention in investmentactivities in the form of business cooperation contracts or investment joint ventures
2.1 Find an investment partner
● To find investment partners abroad, investors often use the followinginformation: Association of investors in the host country
● Embassy and consulates
● Chamber of Commerce and Industry
● Overseas trade and investment development center
● List of projects calling for investment of State agencies at central and localmanagement levels
● Through business partners
● Through websites of businesses sounding call investment link
2.2 Standards of investment affiliate partners
In order to choose a good partner, investment projects are introduced to manypartners A good partner usually has to satisfy the following basic conditions:
● Have Business premises in line with the project's objectives
Trang 7● Have financial capacity: Intangible and tangible capital to meet project
implementation requirements
● Have a need for investment cooperation?
2.3 Negotiating to implement investment linkage
During the negotiation process, lawyers or professional consulting agencies The stage
of finding a partner and carrying out the negotiation plays an important role, itdetermines the success of the project later, experience shows that it is necessary tocarefully study the partner and the situation of the project to actively negotiate andfind an appropriate solution
Prof Dr Vo Thanh Thu and PhD Ngo Thi Ngoc Huyen (2011) Ky Thuat Dau Tu Truc
Tiep Nuoc Ngoai (4th edition) Ho Chi Minh City General Publishing House,
394-395,397
3 The stage of applying for an investment license or applying for an investment license.
3.1 Information on investment procedures
Each country in different stages of development has different regulations onprocedures for foreign investment activities in its territory Investors should exploitinformation sources to know about the procedure for applying for an investmentlicense
3.2 Procedures for applying for a certificate of foreign investment activities in Vietnam
Investment certificate-issuing agencies:
Depending on the scale, importance, and influence of FDI projects, the followingagencies participate in granting investment certificates:
● Prime Minister
● Ministry of Investment Planning (Foreign Investment Department)
● People's Committees of provinces and cities (Department of Planning andInvestment)
Trang 8● Management boards of Industrial Zones, Export Processing Zones, and tech Zones (when investing in IZs, EPZs, and HZs )
High-Format of the certificate:
● The project investment registration is the investment registration certificate,
which is also the business registration certificate
● With the project, investment verification is an investment certificate as well
as a business registration certificate
Prof Dr Vo Thanh Thu and PhD Ngo Thi Ngoc Huyen (2011) Ky Thuat Dau Tu Truc
Tiep Nuoc Ngoai (4th edition) Ho Chi Minh City General Publishing House,
399-400
4 The stage of appraisal is to approve the investment permission of the State management agency in the country receiving the investment capital 4.1 Project execution time
* For investment projects under the authority of the Prime Minister:
● Within 3 working days from the date of receipt of the investment projectdossier, the dossier-receiving agency shall check the validity of the dossier andsend the dossier to the concerned ministries and branches for verificationopinions
● In case the dossier is invalid, the investment-receiving agency shall notify theinvestor in writing, making it easy to amend and supplement the dossier
● Within 15 working days from the date of receipt of the investment projectdossier, the consulted agency shall verify in writing and take responsibility forthe project's issues under its management function
● Within 25 working days from the date of receipt of complete and validdossiers, the investment certificate-issuing agency shall make an inspectionreport for each and submit it to the Prime Minister for the decision oninvestment policies
● Within 7 working days from the date of receipt of the verification reportsubmitted to the Prime Minister by the People's Committee of the province or
Trang 9the Management Board of the Government Office notify in writing the PrimeMinister's opinion on the investment project.
● Within 5 business days from the date of receipt of the approval of the PrimeMinister, the People's Committee of the province, or the Management Boardthat issues the Investment Certificate
● In case investment projects are not approved the investment project receiving agency shall send a written notice to the investor, clearly stating thereason
dossier-● Within 7 working days from the date of issuance of the Investment Certificate,the agency receiving the investment project dossier shall send a copy of theInvestment Certificate to the Ministry of Planning and Investment; Thefinancial; Department of Commerce; Ministry of Natural Resources andSchools; Banks in Vietnam; Ministry of industry management and relevantagencies
*For investment projects under the authority of the People's Committees of provinces and cities:
● Investors must pay 8 sets of records to the Department of Planning and
Investment Conscious, the city where the project will take place
● Within 3 working days from the date of receipt of the investment projectdossier, the dossier-receiving agency shall check the validity of the dossier andsend the dossier to the Department for verification opinions, unrelatedbranches; In case of necessity, the dossier shall be sent to the concernedministries and branches for opinions In case the dossier is invalid, theapplication-receiving agency shall notify the investor in writing to amend andsupplement the dossier
● Within 15 working days from the date of receipt of the investment projectdossier, the agency in question shall give written opinions for verification andtake responsibility for the issues of the project under its management function
● Within 20 working days from the date of receipt of complete and validdossiers The Department of Planning and Investment shall make an inspectionreport and submit it to the People's Committee of the province for decision
Trang 10within the time limit 5 of business days from the date of receipt of theinspection report Provincial People's Committees grant investment certificates.
● For projects granted investment certificates by the Management Board, within
a period of 20 working days from the date of receipt of complete and validdossiers The Management Board synthesizes opinions from the consultedagencies to decide on the issuance of the Investment Certificate
● In case the investment project is not approved, the agency receiving theinvestment project dossier shall send a written notice to the investor, clearlystating the reason
● Within7 working days from the date of issuance of the Investment Certificate,
the agency receiving the investment project dossier shall send a copy of theInvestment Certificate to the Ministry of Planning and Investment and theMinistry of Finance; Department of Commerce; Ministry of Natural Resourcesand Environment; The bank of Viet Nam; Ministry of industry managementand relevant agencies
4.2 Issues of verification of FDI projects:
For projects subject to inspection, the State management agency for foreign
investment activities will verify 5 core issues.
● Verification of the parachute cord and correctness of the records
● Appraisal of legal status and financial situation of investment parties
● Appraisal of the suitability of the investment project with the social fund of theinvestment project
● Appraisal of technical and technological level for application, rational use andprotection of natural resources, protection of the ecological environment
● Appraisal of the reasonableness of land use, valuation of assets contributed ascapital by the Vietnamese side
Prof Dr Vo Thanh Thu and PhD Ngo Thi Ngoc Huyen (2011) Ky Thuat Dau Tu Truc
Tiep Nuoc Ngoai (4th edition) Ho Chi Minh City General Publishing House,
405-409
5 The issue of adjusting FDI projects.
Trang 115.1 The stage of implementing FDI projects in Vietnam
● Establish an operating organization
* Form of business cooperation contract:
To conduct the operation in the form of a business cooperation contract, theParticipating Parties may choose to 2 forms:
- Establishing a Coordination Committee
- Setting up the Executive Office
a) Coordinating Committee:
The Coordinating Board is not the governing body of the joint ventures Functions,duties, and powers of the Articles of Association reflect the agreement of the businesscooperation party The Coordinating Board has no legal status and has no seal
b) Executive office:
The foreign business cooperation party may establish an Executive Office in Vietnam
to act as its representative in the performance of the business cooperation contract andtake responsibility for the operation of the Executive Office
The executive office of the foreign business cooperation party has a seal, can open anaccount, recruit contracted laborers and conduct business activities within the scope ofrights and obligations specified in the investment certificate and business cooperationcontract
How to set up an executive office:
The executive office of the foreign business cooperation party may be proposed to beestablished by either of the following two processes:
- Simultaneously with the application for an investment certificate if necessary: Theforeign business cooperation party proposes to establish an Executive Office with theinvestment certificate-issuing agency and if approved, the establishment of theoperating office will be specified in the investment adjustment certificate
Prof Dr Vo Thanh Thu and PhD Ngo Thi Ngoc Huyen (2011) Ky Thuat Dau Tu Truc
Tiep Nuoc Ngoai (4th edition) Ho Chi Minh City General Publishing House, 415,
417- 418