In the dynamic realm of international trade, making wise decisions is crucial for investors. Whether you are an experienced entrepreneur or a new business owner, selecting the ideal location to do business holds significant importance. This article embarks on a comparative analysis of doing business in Vietnam and Thailand, examining their distinct regulatory environments, company registration processes, and the unique aspects that shape these two Southeast Asian nations. Whether you are considering setting up a company or exploring new markets, gaining insights into the intricacies of these countries will empower you to make well-informed decisions, regardless of the stage of your entrepreneurial journey.

Ease of Doing Business in Vietnam: Regulatory Environment and Company Setup

Unpacking the Company Registration Process in Vietnam

When delving into the process of company registration in Vietnam, investors often face various options for foreign-invested corporate vehicles. However, three of the most common structures are the Representative Office, Branch Office, and 100% Foreign-Owned Limited Liability Company (LLC). Understanding the distinctions between these vehicles is essential, as they each come with unique benefits and regulations.

• A Representative Office serves as an extension of the foreign parent company, focusing on market research and liaison activities. It is limited in its ability to engage in commercial activities.
• A Branch Office, on the other hand, can partake in some revenue-generating activities but operates under certain restrictions defined by the parent company's business scope.
• LLC is a separate legal entity that can conduct various commercial activities. This structure offers more control and flexibility to foreign investors in running their operations in Vietnam.

Navigating these options is a crucial first step when considering doing business in Vietnam, as it lays the foundation for the regulatory processes that follow.

Timing Matters: How Long Does It Take to Set Up a Company in Vietnam?

The timeline for setting up a company in Vietnam varies depending on the type of business structure. For instance, an LLC typically requires 3 to 4 months to establish. Representative Offices can often be set up in half the time, around 2 months. Meanwhile, Branch Offices generally require 3 months for setup.

It's important to note that some businesses might need to secure pre-investment approval from Vietnamese authorities. Furthermore, acquiring the essential Investment Registration Certificate (IRC), a prerequisite for establishing new companies, typically takes 15 working days, unless the business sector falls outside the scope of the World Trade Organization (WTO). In such cases, the process might take longer.

Once the IRC is obtained, companies can progress to subsequent steps, including securing a physical business address and obtaining an Enterprise Registration Certificate (ERC). The latter usually takes 3 working days. While many sectors and business lines have no specific minimum capital requirements in Vietnam, some, such as finance, banking, insurance, fin-tech, language centers, vocational schools, and real estate companies, do have particular mandates.

Post-licensing procedures, which typically require 30 working days, encompass the public announcement of company establishment, seal registration, bank account registration, tax token acquisition, online declaration, business license tax payment, and labor registration. These timelines reflect Vietnam's commitment to offering a streamlined and efficient process for investors looking to do business in the country.

Ease of Doing Business in Thailand: Regulatory Framework and Company Formation Procedures

The Steps to Starting a Business in Thailand: From Concept to Company

Commencing a business venture in Thailand begins with thoughtful planning. Before delving into the business setup process, it's essential to determine the type of business you want to establish. It's noteworthy that, unless your company falls under a Board of Investment (BOI) program, the majority of shareholders must be Thai citizens, while foreigners can own a maximum of 49% of the company. This stipulation may be exempted if your business secures a Foreign Business License (FBL), typically granted to foreign-owned businesses that don't compete with Thai enterprises. Acquiring the FBL may take a few months, and the application can be submitted to the Foreign Licensing Department of the Ministry of Commerce.

When it comes to business structures, the private limited company is a popular choice among entrepreneurs. In this structure, shareholders enjoy limited liability, while directors assume unlimited liability. Understanding these initial steps is crucial for a smooth setup process.

Time Is Money: How Efficient Is the Business Setup Process in Thailand?

Efficiency is the hallmark of business setup in Thailand. The process typically commences with reserving a company name, a task that can be efficiently completed by registering an account with the Department of Business Development online. The subsequent step involves preparing the necessary documents, a process that varies depending on your business type. Required documents may include the Memorandum of Association, application forms, shareholder lists, director forms signed by each director, the Declaration of Business Operation form, and details regarding your business's offices and branches. Additionally, obtaining a company stamp is crucial as it will serve as your company's signature in various business transactions.

The final stage involves registering the company at the Business Registration office located in your company's area. During this step, you'll also receive a taxpayer identification number for your business. Typically, the registration of a private company takes approximately one week, while public companies may require up to one month. Thailand's efficient setup process highlights the country's commitment to attracting foreign investment and fostering a conducive business environment for investors.

Comparative Analysis: Vietnam vs. Thailand for Business Setup - Pros and Cons

Weighing the Pros and Cons of Doing Business in Vietnam and Thailand

When choosing a location to set up a business, it's essential to weigh the pros and cons. Both Vietnam and Thailand offer compelling advantages and exhibit distinct challenges. Vietnam boasts a burgeoning market with over half of its population under the age of 35, promising a youthful and productive workforce.  The country's geographical location, as part of Southeast Asia, provides strategic access to regional markets. However, navigating Vietnam's complex regulatory landscape can be daunting. The limited transparency and occasional bureaucratic inefficiencies may pose challenges for newcomers.

On the other hand, Thailand offers remarkable strengths, including robust digital connectivity and a highly skilled workforce. These factors, combined with the Thai government's comprehensive policies and investment incentives, position Thailand as the preferred investment destination in the region. Nonetheless, Thailand may present more competition in some sectors, and the business environment can be somewhat more costly due to stringent regulations.

Comparing Business Opportunities: Vietnam vs. Thailand

In terms of business opportunities, Vietnam's rapid economic growth and evolving middle class offer promising markets for a wide range of industries. While its regulatory environment can be challenging, it's worth noting that Vietnam has been actively making improvements to facilitate business setup. This commitment is showcased through its various Free Trade Agreements (FTAs), such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA).

Thailand, on the other hand, beckons with a well-structured framework of investment policies that actively endorse liberalization and open trade. The government actively encourages foreign investments that contribute to skills, technology, and innovation, fostering a welcoming environment for innovative enterprises.

The choice between Vietnam and Thailand ultimately hinges on an investor's unique business objectives. For those seeking high-growth markets and willing to navigate a learning curve, Vietnam may be an ideal choice. On the other hand, Thailand offers stability, a strong legal framework, and established business networks.

Final Thoughts

In this comprehensive analysis of the business setup landscape in Vietnam and Thailand, we've explored the unique opportunities and challenges each country presents to investors. The decision to establish your business hinges on a careful evaluation of the pros and cons, and aligning these with your specific objectives. Whether you're drawn to Vietnam's dynamic growth or Thailand's well-established market, Viettonkin is your trusted partner in navigating the complexities of both regions. Our expertise and guidance are your keys to a successful business setup. Unlock new horizons, explore more with Viettonkin, and embark on a seamless journey to establish and thrive in either Vietnam or Thailand.

Vietnam has become an emerging economy in Southeast Asia since a lot of improvements and achievements in diplomatic relations and integration policies. Despite the adverse impact of COVID-19 on the economy, the Vietnamese government was praised for the very cautious actions to constrain the pandemic from spreading in the community. Thanks to such efforts, it can be said that economic activities are gradually soon boosted to recover the loss caused by the epidemic. Vietnam has a lot of potential for investors today to invest in. This article provides you regarding the business opportunities in Vietnam for foreigners to consider and grasp the chance of investment.

Online gaming industry

According to a research conducted by Niko Partners and Google, Vietnam’s e-sport market will hit the highest rate of compound annual growth rate (CAGR) in Southeast Asia and is predicted to reach $10.1 million in 2020. 

There are three main sub-sectors in the gaming industry consisting of mobile games, online gambling, and e-sports. Most online games used by Vietnamese youngsters are produced by foreign companies. Chinese companies account for the largest proportion of 69% of products released in the Vietnam market. Other big players come from South Korean and US companies who create PlayerUnknown’s Battlegrounds (PUBG), League of Legends, and FIFA Online. 

Online gaming in Vietnam becomes more popular because of three main reasons. First, Vietnam remains a high level of smartphone penetration with more than 50% of the population using smartphones. Besides, the speed of internet coverage has been increased like 4G, 5G, which allows users to play on the go. Second, the young population is a key driver for the thrives of the online gaming industry in Vietnam. Two-thirds of 3.99 million gamers in Vietnam are between the age of 18 and 30. It is a large number of youngsters that drives a high growth of the gaming industry as well as brings huge potential for giant gaming companies to exploit the market. Last but not least, Vietnam has skilled and well-trained developers. Despite game products with simple user interface, quality and graphics created by Vietnamese teams, some games are introduced in overseas markets namely Caravan War and Tiles Hope: EDM Rush!. Hence, these are examples proving the possibility of online games in Vietnam. 

To enter the Vietnamese gaming industry, having local knowledge is of significance. Foreign developers usually collaborate with local publishing firms that help them build the user community, market products, and meet the local regulations. Obtaining a license from local authorities is the very first step for market entry. The licensing process usually takes from 20 days to a month and goes through the approval of the Ministry of Information and Communications, the Ministry of Culture, Sports and Tourism, and the Youth Union.

Foreign companies have two options if they would like to obtain a license for releasing games in Vietnam. They can partner with a Vietnamese representative that helps them conduct necessary procedures or establish a branch or representative office in Vietnam. In addition, these companies need to comply with requirements related to content and image so that those games are suitable for the ages of players. 

Healthcare industry

The healthcare industry has been a top priority for both Vietnamese people and the government during the fight against the pandemic. The Vietnamese healthcare system gains merits in the context of changing socio-economic and demography. Vietnam has implemented social health insurance as the main public financing method. Currently, 87% of the Vietnamese population has been covered with social health insurance and the government makes an attempt in achieving universal healthcare coverage. 

Over the past few years, the authority has focused on the construction of new hospitals to prevent overcrowding as well as reduce the pressure of central medical institutions. Meanwhile, the number of private hospitals and clinics have increased to cater to the middle-class segment. 

The public hospital system in Vietnam is facing some challenges because of facilities, equipment, and services. In spite of these challenges and the COVID-19, digital healthcare seems to be a promising sub-part that needs to be invested. 

On April 18, 2020, the MoH (Ministry of Health) coordinated with the MIC (Ministry of Information and Communication) to launch a telemedicine program. In the collaboration with Viettel Group, one of the biggest telecommunication companies in Vietnam, the government would like to bring telemedicine to rural areas where rural patients are able to be cured via a virtual platform. Telehealth will help people access quality healthcare without paying a high fee and commuting to a clinic. Besides, the private sectors also quickly take advantage of the shift towards technology-based healthcare, hence a lot of private hospitals in Vietnam have had access to modern technology in their operation. 

Nevertheless, the swelling health tech sector is still in its infancy and attracts less investment than other sectors namely e-commerce or payments. In fact, this healthcare technology-based sector relies on the development of 5G, Artificial Intelligence (AI) and the Internet of things (IoT). 

In order to boost the application of technology in the healthcare sector, companies need to draw investors’ attention as well as adhere to Vietnam’s national health frame. 

The MoH approved a five-year project on remote medical examination and treatment involving 24 hospitals nationwide. Additionally, technological apps and medical services will be developed to help doctors manage files and bring convenience to patients when they want to find medical information and make appointments with doctors. These methods will boost the digitalization in the healthcare system. 

Textile and garment

Obviously, the COVID-19 affected the supply and distribution process of textile and garment companies. Despite difficulties, Vietnam has positive prospects of recovering the textile and garment industry. This industry shifts production from conventional clothes to personal protection equipment to response with the current situation. Vietnam produced a large number of face masks to supply domestically and abroad. According to MoIT, in April, local manufacturers could produce 40 million face masks per day. Furthermore, the textile and garment industry has been supported wholeheartedly by the government, even prior to the pandemic. Vietnam encourages garment companies to improve the quality so that the national brand image becomes more and more trustworthy in the eyes of international customers. 

SEE MORE: Life in Vietnam: What can Americans look for?

In conclusion, grasping the business opportunities in Vietnam for foreigners helps expand their businesses and generate revenues. Vietnam, it can be said, is becoming a should-not-miss investment destination in Southeast Asia. Although the pandemic impacted adversely on the development of some industries, the situation is better now in Vietnam and a lot of industries namely online gaming, healthcare, and textile and garment have prospects to grow further. If you would like to invest in sectors in Vietnam, Viettonkin is always ready to provide you the best consultant service.