Answer

 Question: We are a foreign company and wish to set up a real estate company in Vietnam. Can we set up a 100% foreign owned real estate company in Vietnam? What kind of real estate business can we do? What is the capital requirement applicable to a real estate project?

Answer:

Under the current laws of Vietnam, there has been no restriction on the ratio of shares that a foreign investor may hold in a real estate company. Therefore, you can set up a 100% foreign owned real estate company in Vietnam.

It is provided for in Article 50 of the Law on Investment that foreign investors investing in Vietnam for the first time must have an investment project and perform the procedures for application for an investment certificate; the investment certificate shall also be the business registration certificate. Thus, in order for you to set up a 100% foreign owned real estate company in Vietnam, you must have a specific real estate project.

Pursuant to Article 10 of the Law on Real Estate Business, a foreign investor shall be permitted to conduct real estate business within the following scope:

-          To invest in the creation of houses and buildings for sale, lease out or grant of hire purchase;

-          To invest in upgrading land and to invest in infrastructure works on the leased land in order to lease out land with completed infrastructure.

Under Article 8 of Law on Real Estate Business, any company conducting real estate business must have a legal capital - the minimum amount of capital that is required by laws for a company to be established. Article 3 of Decree 153/2007/ND-CP of the Government dated October 15, 2007 detailing and guiding the implementation of the Law on Real Estate Business sets this legal capital at VND 6(six) billion.

Additionally, subject to each specific real estate project, the investors must also satisfy the condition on their own capital for setting up the project. In particular:

-          For a project on new urban centers and project on technical infrastructure works of industrial parks, their own capital must not be lower than 20% of total investment capital of such project;

-          For a project on residential housing complexes, their own capital must not be lower than 15% of total investment capital of the project occupying less than 20 hectares of land, or must not be lower than 20% of total investment capital of the project occupying 20 hectares or more.