Japan, known as the Land of the Rising Sun, is gradually becoming a popular investment destination for Vietnamese individuals and organizations, particularly for IT projects. The most notable success is that of FPT. As of the end of 2022, after 17 years of operating in Japan, FPT has not only become the first Vietnamese IT company to successfully enter the Japanese market but also the largest Vietnamese company in Japan, with 13 offices and 2,000 employees.(1)
1. Advantages of Investing in Japan
Vietnam and Japan signed the Vietnam-Japan Economic Partnership Agreement (VJEPA) on December 25, 2008, which took effect on October 1, 2009. This is Vietnam’s first bilateral Free Trade Agreement, in which both Vietnam and Japan provide greater incentives to each other compared to the ASEAN-Japan Comprehensive Economic Partnership Agreement (AJCEP) and commitments under the WTO (particularly in professional services such as legal, tax consulting, computing, engineering, advertising, testing and analysis services; and services in information, construction, distribution, education, environment, finance, healthcare, and tourism).(2)
Consequently, Vietnamese investors have more favorable conditions when investing in Japan compared to other ASEAN countries.
2. Legal Regulations for Investment in Japan
(i) Vietnamese investors can choose from various forms of investment in Japan, including:(3)
- Establishing an economic entity under the laws of the host country.
- Investing through contractual agreements abroad.
- Contributing capital, purchasing shares, or buying stakes in an overseas economic organization to participate in its management.
- Buying or selling securities and other valuable papers or investing through investment funds or other financial intermediaries abroad.
- Other forms of investment as permitted by the laws of the host country.
(ii) Eligible Investors: Individuals and organizations.
(iii) Permitted Sectors for Investment: All business sectors, except:(10)
- Sectors prohibited business investment under Article 6 of the 2020 Investment Law and related international treaties.
- Sectors with technology or products restricted from export as per foreign trade regulations.
- Sectors prohibited business investment under the laws of the host country.
(iv) Source of Funds for Investment in Japan
Current regulations allow investors flexibility in using the following sources of funds for overseas investment:
- Foreign currency is held in accounts at authorized credit institutions or purchased from authorized credit institutions as prescribed by law.
- Vietnamese Dong in accordance with foreign exchange management regulations of Vietnam.
- Machinery, equipment, materials, raw materials, fuel, finished goods, and semi-finished goods.
- Value of intellectual property rights, technology, trademarks, and asset rights.
- Shares, contributed capital, or projects exchanged between a domestic economic organization and an overseas economic organization: This is a relatively new and less common form of overseas investment. Vietnamese laws permitting such capital exchange help foster collaboration between countries, facilitating a flexible investment structure and allowing overseas shares/capital contributions/projects to be used as repayment for Vietnamese investors, enabling them to become shareholders/partners/project owners abroad.
However, it is essential to verify the laws of the host country to ensure that capital exchange for shares/contributions/projects can be practically carried out, ensuring a smooth transaction process.
- Other legal assets as per civil law.
(v) Procedures Required in Vietnam to Invest in Japan
- Approval of Overseas Investment Policy
The following projects require approval for overseas investment policy:
-
- Investment projects requiring special mechanisms or policies decided by the National Assembly.
-
- Investment projects in banking, insurance, securities, press, broadcasting, television, telecommunications sectors with foreign investment capital of 400 billion VND or more.
-
- Investment projects of 800 billion VND or more.
Projects not falling under the above categories do not require approval for overseas investment policy.
- Application for an Overseas Investment Registration Certificate
- Opening an overseas investment capital account.
- Registering foreign exchange transactions with the State Bank.
- Transferring investment capital abroad.
The above provides an overview of the basic legal issues necessary for investing in Japan. It is hoped that Vietnamese individuals and organizations can gain a comprehensive view to develop effective and sustainable investment strategies in the international market.
(2) Các cam kết chính (moit.gov.vn)
(3) Article 52.1 Investment Law 2020
(4) Article 53 Investment Law 2020
See more:
1/ Chinese investors production activities of beds, cabinets, tables and chairs in Vietnam
2/ Foreign investors operating restaurants outside shopping centers
Disclaimers:
This article is for general information purposes only and is not intended to provide any legal advice for any particular case. The legal provisions referenced in the content are in effect at the time of publication but may have expired at the time you read the content. We therefore advise that you always consult a professional consultant before applying any content.
For issues related to the content or intellectual property rights of the article, please email cs@apolatlegal.vn.
Apolat Legal is a law firm in Vietnam with experience and capacity to provide consulting services related to Business and Investment and contact our team of lawyers in Vietnam via email info@apolatlegal.com.
