Investment atmosphere Vietnam is one of the leading investment destinations in Southeast Asia. With the advantages of geography, natural resources, and an affordable labor force, Vietnam attracts a large amount of capital every year. Vietnam has a number of unexplored sectors and a growing consumer market. In 2007, Vietnam’s FDI increased to more than US$21 billion from US$12 billion in 2006. The country’s FDI hit a record high in 2008, trebling 2007’s figure, reaching almost US$72 billion in registered capital. Due to the global financial crisis, the FDI registered in the 2009 – 2012 period decreased, yet the disbursement - both in terms of value and percentage - improved compared to 2007, indicating the continued confidence of foreign investors in Vietnam. Vietnam experienced a decline in FDI in 2012. Following the decline in 2012, FDI in Vietnam increased again from 2013 and reached US$22.8 billion in 2015. The FDI sector in 2015 contributed US$ 115.1 billion to Vietnam’s total export turnover of US$162.4 billion. While there was a FDI sector export surplus of US$17.1 billion, the domestic enterprises sector import also reached a surplus of US$20.3 billion. In 2015, FDI sector contributed 20% of GDP of Vietnam. The Vietnamese Government has made considerable efforts to improve the business and investment climate in Vietnam, for example by issuing favorable laws and regulations. Combined with the accession to the WTO in January 2007 these efforts have significantly paved the way for FDI in the country. Vietnam’s success in attracting FDI should be measured not only by the amount of registered capital or disbursements but also by the efforts to improve the investment climate. At the end of August 2013, the Prime Minister issued Resolution 103/ NQ-CP in order to realize the commitment to improve the investment climate and business community for investors. A revised Law on Corporate Income Tax has been included in the terms of the expansion project that are also investment incentives. Investment incentives on industrial parks have been restored. The adjusted tax rate of Corporate Income Tax has been reduced to 20%, effective 1st January 2016. The role of the private sector and foreign investors in the Vietnamese economy has increasingly been emphasized. “Business forum” meetings and dialogues between the Government and the private sector and foreign investors are frequently held, and provide great opportunities for businesses - especially in the foreign sector - to make themselves heard on important legislative issues.

Forms of investment Foreign investors may carry out the following forms of investment in Vietnam: Direct investment Indirect investment – Establishment of a new legal entity; – Investment by way of contractual arrangement: – Business Cooperation Contracts (BCC) signed with other local or foreign investors; – Public Private Partnership (PPP) contracts with Vietnamese state bodies (e.g. Build Operate Transfer (BOT), Build Transfer Operate (BTO) and Build Transfer (BT) Agreements); and – Invest by way of share/capital acquisition of an existing entity – Purchase of shares, share certificates, bonds and other valuable papers traded on the stock exchanges; – By way of securities investment funds; and – Investment through other intermediary financial institutions. Feature Limited liability company (LLC) Joint stock company (JSC) Partnership Required number of members/ shareholders One (for single member LLC); Two or more members, but not exceeding fifty members (for multi-member LLC) At least three shareholders; no restriction on maximum number of shareholders – Unlimited liability partners: At least 02 general partners (individuals) – Limited liability partners (optional): (organizations or individuals) Liability of members/ shareholders Limited to the extent of the registered capital contributions into the company Limited to the extent of the registered capital contributions into the company – Unlimited liability partners: Unlimited – Limited liability partners: Limited to the extent of the registered capital contributions into the company Issuing bonds Allowed Allowed Not allowed Issuing shares Not allowed Not allowed Listing on stock exchange Not allowed Allowed Not allowed 4.3 Forms of commercial presence The forms of commercial presence that foreign investors are allowed to take in Vietnam are the following: Representative Office (RO) A RO is a common form of early or initial establishment for foreign organizations looking to invest or to do business in Vietnam. From a legal perspective, the RO is a dependent unit of a foreign business entity, and allowed to survey the market and undertake a number of commercial promotion activities permitted by the laws of Vietnam. The key limitation of the scope of activities of the RO is that it’s not allowed to engage in any “direct profit-making” activities. Branch A branch of a foreign business entity in Vietnam is a dependent unit of the foreign business entity, established and conducting commercial activities in Vietnam in accordance with the law of Vietnam or an international treaty to which Vietnam is a member. The establishment and operation of the ROs and branches of foreign business entities need to be in line with Vietnam’s commitments in the international treaties of which Vietnam is a member. In case the foreign business entities come from countries/territories that are not members of the international treaties of which Vietnam is a member, or the scope of operation of the ROs/ branches are not in line with Vietnam’s commitments in such international treaties, the licensing authorities must seek evaluation opinions from the specialized ministries before a License for establishment of the RO/branch of such foreign business entities is granted. Legal entity Depending on the business industry, the number of investors, and whether there is any intention to list the entity, a foreign entity may establish its presence in Vietnam as a limited-liability company, a joint-stock company, or a partnership.

(Source: KPMG)