Estimating Realistic Startup Costs in Vietnam

Estimating Realistic Startup Costs in Vietnam

As many foreign investors are interested in setting up a small business in Vietnam, Nova Law will estimate realistic startup costs that you need to know.

Disclaimer: Any costs we state in this Article are just our estimation based on the current market prices. The actual costs can vary, depends on the size of each business, customized requirements, quality of service, market conditions, and subject to change from time to time

1. How much does it cost you to start a small business in Vietnam?

The minimum cost to start a small business in Vietnam starts from $30,000. In specific, the company registered charter capital is at least $30,000, and the actual cost payout for related services begins from $3,770.

2. Detailed estimation of business startup costs in Vietnam

Next, we will break down each item of cost need for starting a business in Vietnam.

Step by step a start a business in Vietnam

# Research market: from $200

Moving your business into the Vietnamese market often comes with new opportunities for growth, also comes with significant challenges and risks. Foreign investors should have a local market insight before deciding to launch a business in Vietnam. The common way is conducting market research in below several methods:

- Remotely DYI market research by using free tools, data, and information from the internet: cost might be FREE

- Business field trip, when the entrepreneur actually travels to see the grand reality of the Vietnamese market: cost for traveling, accommodations, translators…

- Hire market research companies: service fees could be different

At this stage, it’s important to seek advice from local lawyers to understand all the Vietnamese market entry conditions and barriers before planning to do any kind of business in Vietnam. The average fee for a market entry consulting service fee starts from $200.

# Leasing payment a physical location: from $300 for a 6-month contract

One of the first requirements for a foreign-owned company setting up in Vietnam is the availability of a local physical Vietnam address. The investor must choose and lease a location as the headquarter before registering a company in Vietnam. Below table is an updated leasing price of commercial properties in the 3rd quarter of 2020 in major cities of Vietnam:

Commercial Properties

In Hanoi

In Ho Chi Minh city

In Da Nang

Office space

(per sqm/month)

Grade A

From $24

From $35

From $22

Grade B

From $16

From $23

From $10

Grade C

From $9

From $9

From $8

Coworking space

(per person/month)

From 50$

From 50$

 

Industrial Land Rentals

(per sqm/month)

$66 - $160

$65 - $270

 

Source: https://www2.colliers.com/vi-vn/research/2020-q3-vietnam-quarterly-knowledge-report-vn

# Incorporation a company: from $2,000

Even though the company registration fee is very small (around 15$), but we must indicate that registering a foreign-owned company in Vietnam is not a cheap and simple task. From understanding the local regulations, figure out step by step to incorporate a company, preparing the required documents, working with the local authority, the process can be overwhelming. A small mistake could cost a lot of money and time-consuming. But this should not stop your resolve to expand to Vietnam. The best option is using a local advisor service. Agencies are run by professionals who have helped foreign investors with Vietnam company setting up. So, they know the best steps that you should follow, and the mistakes to avoid. The consulting and service fees are varied, depends on the quality and reputation of service firms, requirements and business scope of clients, etc.

Nova Law helps foreign investors incorporating the company with a service fee starting from $2,000. Clients could enjoy professional service and complete the registration faster. The deliverables are included an investment registration certificate, an enterprise registration certificate, company seal. The service fee is exclusive of 10% VAT, transportation, translation, and notarized fee.

Vietnam company incorporation service

# Post incorporation compliance: from $220 (compulsory)

- Each company needs at least a USB token key using for tax and customs online declaration, or other electronic transactions. The average price for a USB token key is $100 for 4 years of service

- Open bank account: from $100. After establishing, a foreign-owned company must open (i) a Direct Investment Capital Account using to transfer capital inbound and outbound of Vietnam, and (ii) a Payment Bank Account can be used for daily business activities and tax payments. Some banks don’t charge fees for account opening. But the company needs to maintain a minimum balance, for example, $50 in each account.

- Company sign: from $20

# Accounting compliance fee: from $650

- Issuing VAT electronic invoice: from $50 for 300 pages of e-invoice (one-time expense and using for many years)

- Outsource accounting and bookkeeping service fee: from $100 per month. Outsourcing may offer you the possibility to hire a professional with a high level of expertise at an affordable price.

- Annual audit service fee: from $500 per fiscal year. According to the current regulation, the annual financial statement of the foreignowned company shall be audited by an independent auditing firm operating in Vietnam.

# Visa and work permit: from $400

Foreign investors may apply for multiple entry investor visas (DT Visa) with terms from 3 months to 1 year. Those who want to stay for a longer duration may apply for temporary resident cards (TRC) with terms from 1 year to 5 years.

A work permit is granted for foreigners who come to Vietnam for working purposes. The duration of a work permit is 2 years and can be extended. After that, a working visa or a TRC will be granted correspondingly a maximum of 2 years duration.

In practice, the process and requirements to apply for visas and work permits are complicated and difficult to complete without the support of local service agencies. The average service fee starts from $400.

# Hire employees (optional)

Human resource is a valuable asset of every company. The cost for hire employees in Vietnam different based on the business fields and requirements of employers.

- Recruitment costs: pay for recruitment platforms or using recruitment agency services.

- The statutory labor minimum wage in urban areas is $200 per month. In fact, the market salary is often much higher than $200

- Total insurance premiums (social insurance, health insurance, unemployment insurance) covered by the employer: 22.5% of the gross salary

# Sub-licenses fee, register branch or representative office of the company (optional)

There are some conditional business fields that require the company to apply for approval or sublicense before conducting such business. For example, a trading company that wants to involve in the retail business shall apply for a Retail Business License. The cost of obtaining such a license is an average of $1000

When the company wants to expand its business to other locations, it requires to register the company’s dependent unit with the licensing authority. The cost for register a branch/RO unit is an average of $100 per registration time.

# Monthly utility bills

- The average price of electricity in Vietnam is 8.2 cents per kWh for businesses which is a monthly payment for actual usage.

- The minimum price for an internet package is from $10 per month

# Other costs for:

Purchase domain, host for the company’s website

- Purchase fixed assets (computer, printer, office furniture, stationery, etc.)

- Website, marketing materials design

- Delivery and postal

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