No matter how the economy fluctuates, the need for food is still an inevitable daily human need. The Vietnamese market has the potential for culinary products to cater to consumers.
In Vietnam’s big cities, more and more restaurants with foreign owners offer dishes with tastes from many different regions and countries such as France, Italy, Japan, Korea, Singapore, Thailand, China, India…
Establishing a food business in Vietnam has thus become common and growing.
Possibility of setting up a 100% foreign-owned company in Vietnam
According to its commitment of Vietnam in international treaties such as WTO, EVFTA, CPTPP, etc., … Vietnam allows foreign investors coming from country members of these treaties 100% to conduct the Services of catering food (CPC 642) and beverages (CPC 643).
This means Vietnam allows foreign investors to incorporate 100% foreign-owned companies doing business in the fields of restaurants.
Incorporation procedure and key requirements
Incorporation
To set up a foreign-owned company (i.e. 100% foreign-owned company or joint-venture company) (“VN Co”), the investors need to conduct the following steps:
- Step 1: Apply for an Investment Registration Certificate (“IRC”)
- Step 2: Apply for an Enterprise Registration Certificate (“ERC”)
The term of an IRC can be up to 50 years.
There is no term for the ERC.
The company is legally established on the date of the ERC
Key requirements for incorporating a foreign-owned company in Vietnam
Legal Representation Requirements of the Vietnam Company
The company in Vietnam shall have at least one and may have more Legal Representative(s). One of them must be a resident of Vietnam.
If the Vietnam company has only one legal representative, and this sole Legal Representative does not stay in Vietnam, they must grant an Authorization Letter to a person in Vietnam to take over their duties under their instruction and strictly comply with the law.
In short: if the only legal representative is not a Vietnam resident, a legally authorized representative in Vietnam is required.
Capital Requirements
The VN Co's Capital Structure, which needs to be registered in the application and eventually mentioned in the IRC, includes the Charter Capital and the Long-term Loan Capital.
Charter Capital is the capital that the Investors shall pay fully to the Direct Investment Capital Account (“DICA”) opened at a licensed bank in Vietnam within 90 days as of the date of issuance of the ERC.
Long-term Loans are optional and have a duration of more than 1 year. If the Investors have plans to grant a Long-term Loan to the VN Co, it is required to include the Long-term Loan in the company incorporation application. Otherwise, no Long-term Loan is included.
Licenses and procedures to set up a restaurant in Vietnam
In addition to IRC and ERC, the company doing business in the fields of restaurants in Vietnam must obtain and perform the following licenses and procedures.
Certificate of Eligibility for Food Safety
Catering service establishments including restaurants must ensure food safety and shall bear responsibility for the safety of foods they produce and process and must obtain the Certificate of Eligibility for Food Safety before conducting the business activities.
The term of the certificate is 3 years and the re-issuance dossier must be submitted in case of expiration and continuing the production or trading activities.
Conditions for issuance of the Certificate of Eligibility for Food Safety are as follows:
- Having registered for the business line of food production and trading
- Having adequate conditions to ensure food safety applied for the Catering service establishments, including:
- Conditions for food processing places and commercial provision of catering services: such as kitchens are arranged in a way to ensure that unprocessed and processed food is not cross-contaminated, has sufficient technically qualified water, has food preservation equipment, hygienic devices for collecting and containing garbage and waste, etc.,
- Conditions for food processors and catering services providers: having safety and hygiene of cooking and processing utensils, tableware, utensils, and containers and complying with regulations on health, knowledge, and practices of persons directly engaged in food production and trading
- Conditions for food processing and preservation: using safe food and food materials of clear origin, food on sale must be placed in glass showcases or hygienic preservation containers on tables or shelves above the ground, which can prevent dust, rain, sunshine
- Specific conditions:
a) Carry out three-step food inspection including (i) inspection before processing food, (ii) inspection while processing food, and (iii) inspection before eating, and food sample storage at least 24 hours after the collection of food sample in accordance with the guidelines of the Ministry of Health.
b) Equipment and vehicles used for food transport and preservation must ensure hygiene and must not contaminate such food.
c) The persons directly processing food must be trained in food safety, and confirmed by the establishment owner, and not suffer from cholera, dysentery, typhoid, hepatitis A, E, infectious dermatitis, tuberculosis, or acute diarrhea while producing and trading food.
During operation, if the conditions mentioned above are not satisfied, the Certificate of Eligibility for Food Safety will be revoked.
Fire prevention and fighting
Depending on the business area, and volume, the restaurants need to comply with the regulations on fire prevention and fighting and ensure the safety conditions for fire prevention and fighting such as:
- making a fire-fighting plan;
- establishing a fire prevention and fighting force;
- having a traffic system, water supply, and communication for firefighting;
- having fire alarm systems, firefighting, fire prevention, escape, other fire prevention and fighting means;
- having a firefighting plan approved by the competent authority
- conducting the procedure for issuing a Certificate of design appraisal for fire prevention and fighting the fire, etc., …
Environmental production
During the production process, the restaurant project must comply with regulations on waste collection and treatment, wastewater treatment, and environmental protection measures.
Restaurants that generate waste need to carry out the Environmental Registration procedure before the competent authority issues the construction permit or before waste is discharged into the environment if a construction permit is not required in accordance with regulations of law on construction.
The content of environmental registration shall cover:
- General information about the investment project/business;
- Type of production, business, and service; technologies, capacity, products; raw materials, fuels, and chemicals used (if any);
- Type and quantity of waste generated;
- A scheme to collect, manage, and treat waste as prescribed;
- Commitments to environmental protection.
However, the restaurant with an area of less than 200 square meters shall be exempt from carrying out the procedure of the Environmental Registration.
Besides, restaurants that generate domestic wastewater must pay an environmental protection fee. The fee rate is 10% of the VAT-excluded selling price of 1m3 of clean water.
Register for selling alcohol for on-premises consumption
Restaurants that sell alcohol with at least 5.5% alcohol by volume (ABV) for customer consumption on-premises must register with the district-level Office of Economics or Office of Economics and Infrastructure.
Selling alcohol with at least 5.5% ABV for customer consumption on-premises is only permitted when the following conditions are satisfied:
- Being the enterprise duly established.
- Having the right to use a fixed business location with a clear address and registering to sell alcohol for on-premises consumption with the Office of Economics or Office of Economics and Infrastructure at the district level where the restaurant is located.
- Alcohol consumed on premises must be provided by the trader having the license for alcohol production/distribution/wholesaling/retailing.
- In case the restaurant producing alcohol to sell for on-premises consumption shall have the License for industrial alcohol production or License for manual alcohol production for business purposes prescribed.
Prices listing
Restaurants are entitled to decide their selling prices for goods and services sold, but must list the prices in VND at the restaurant, and are not allowed to buy or sell higher than the listed prices.
Fidinam can help
With Vietnam’s strategic trade agreements, robust infrastructure, and skilled workforce, the country provides an optimal environment for global brands seeking to enhance their production capabilities and expand their reach.
To explore how you can benefit from this opportunity and successfully set up your restaurant(s) in Vietnam, contact Fidinam Vietnam today for comprehensive support and guidance throughout the whole process.
Contact us via the form below or at info@fidinam.com.vn.
