As per Decision 1018/QD-TTg issued on September 21, 2024 and approved by the Prime Minister of Vietnam, there are plans for the development of Vietnam’s semiconductor industry by 2030, with a vision for 2050. This presents a significant opportunity for foreign investors engaged in semiconductor manufacturing and related industries like product design, logistics, packaging testing, equipment manufacturing, etc.
Get ready for exciting changes in policies and administrative procedures designed to boost foreign investment in Vietnam’s semiconductor sector. By simplifying the setup of semiconductor businesses and reducing administrative burdens, along with potential tax incentives, Vietnam is becoming an attractive investment market in this field.
This article will provide you with foundational knowledge about establishing a semiconductor manufacturing plant in Vietnam. It will help you prepare from the start to quickly lead investment in this key industry in the future.
What are the conditions for opening a semiconductor manufacturing business in Vietnam?
A manufacturing business is a company that transforms raw materials or components into finished products. According to Vietnamese law, foreign investors can open a semiconductor manufacturing in Vietnam with 100% ownership.
In reality, there are no extra demands for manufacturing semiconductor products. All you need to do is fulfill the standard requirements to establish your business in Vietnam, and begin operations post-incorporation.
Steps to set up the semiconductor manufacturing company in Vietnam
Step 1: Secure a locationÂ
This is where you can place your factory; you can set up the business either outside or within an Industrial Zone/Park.ill come with 3 options:
- Renting existing facilities: You can lease pre-built factories from licensed infrastructure leasing companies or industrial zones/zones. This option is best for quickly setting up a small to medium-sized factory (below 20,000 square meters). The rent per square meter is higher in this case, but it allows for short-term rent and a quicker time-to-market.
- Renting land in industrial zones and then building your own factory: This option involves leasing land in industrial zones for 40-50 years and a leased area of over 8 hectares. It suits companies looking for lower rent and willing to commit to a long-term lease (20-30 years).
- Renting land directly from the Government and then building your factory: This option is for leasing land for 40-50 years or more and having a large leased area. It requires working closely with the local government to acquire the land and permits to build and run the factory from scratch. It is recommended for companies aiming for a very large scale of manufacturing and needing special construction quality for the factory.
It is predicted that by the end of 2024, the semiconductor industry in Vietnam will reach a value of USD 6.16 billion. In preparation for this growth, many industrial zones in Vietnam are making plans to accommodate foreign investors who are interested in establishing manufacturing plants in the country. They are preparing facilities and land to welcome this wave of investment.
The industrial zones in Northern Vietnam are leading the way by preparing and upgrading infrastructure to provide facilities, warehouses, and logistics for semiconductor manufacturing companies coming into the country. The region is a key area for major semiconductor projects, with companies like Samsung, Foxconn, and Hana Micron Vina investing in Vietnam. As a result, the preparation of industrial zones in the North is crucial to handle the growing production from these companies.
Currently, there are no industrial zones in the South with the capacity to support semiconductor manufacturing plants. There have been proposals to establish high-tech industrial zones that meet the standards for production and related supporting industries. However, building the necessary infrastructure and making these zones operational will take 3-5 years. Therefore, if you are looking to set up a factory at the moment, the industrial zones in the North would be the best choice.
After you have secured the ideal location for setting up the factory, you can prepare to move to the next step of incorporation.
Step 2: Apply for the IRC and BRC
If you want to start a semiconductor factory or manufacturing business in Vietnam, you need two important documents: the Investment Registration Certificate (IRC) and the Business Registration Certificate (BRC). It typically takes three to four months for the Department of Planning and Investment (DPI) or the Industrial Zone Management Committee to issue these certificates.
However, if you plan to lease property or build facilities outside the industrial zone on a large scale, the process could take even years to complete. Approval involves multiple Government offices, departments, and levels of management.
The dossier to obtain them must meet the following criteria:
- A business address: It should be the address of the factory in a leasing contract.
- Legal representative: All businesses in Vietnam must have at least one legal representative, who can be a Vietnamese resident or foreigner with a permanent address in Vietnam.
- Paid-up capital: The law requires no specific amount, but it must be deemed “fair” based on what can be proven. It’s usually necessary to make a sizable investment before launching a manufacturing business, and insufficient capital needs to be explained to the authorities.
Step 3: Apply for the Construction License, the Fire Protection License
If you rent land and plan to build facilities yourself, then you need to obtain 2 additional licenses: the Construction License and the Fire Protection License. On the other hand, if you rent a ready-built facility inside an industrial zone and the administrators have already obtained these, you do not need to obtain those licenses anymore.
The Construction License permits the construction of one’s own facilities. At the same time, the Fire Protection License will be provided by the Police Department for Fire Prevention and Fighting and Rescue.
Moreover, the Fire Protection License must be obtained if you rent a ready-built facility and want to renovate it; your safety protocol at the factory or manufacturing facilities must be strictly adhered to.
Step 4: Ensure compliance with technical standards in semiconductor product manufacturing.
The government currently does not have regulations regarding the quality of semiconductor products manufactured in Vietnam. As the semiconductor industry becomes a key sector that the government is investing in, regulations and laws related to semiconductor products may be refined and clearly defined.
Therefore, at this moment, you need to ensure that your production processes and quality testing comply with the general technical standards of the industry and the world. This becomes even more critical, as semiconductor products are used in important devices such as computers, smartphones, and high-tech medical equipment, etc.
The future of the semiconductor industry in Vietnam
The semiconductor industry in Vietnam is a burgeoning sector, with substantial government support for large-scale manufacturing, research, and testing projects. Although there are currently no specific regulations or incentives in place for this high-tech industry, the recent decision 1018/QD-TTg designates the semiconductor industry as a key development sector with a vision towards 2050. This paves the way for more transparent and advantageous policies aimed at nurturing high-quality talent and attracting foreign investment to this promising market.
With the government’s backing, we can anticipate relaxed regulations and favorable conditions for establishing businesses in the semiconductor sector in the future. Tax incentives position Vietnam as an appealing destination for foreign investors seeking a market with abundant skilled labor, a stable political environment, and a strategic geographical position within the global supply chain.
How VNBG can assist you in operating semiconductor manufacturing in Vietnam
Running a manufacturing business overseas is hard and could require a lot of resources, especially in a high-tech industry like semiconductors. This is where VNBG can help you set up and operate your semiconductor manufacturing in Vietnam.
As the most trusted Business Process Outsourcing (BPO) company in Vietnam, we provide a comprehensive range of services to help you efficiently manage your business at minimal cost. Our offerings include market and location services, incorporation, recruitment, compliance services, tax advisory, customs clearance, warehousing, logistics support, and many more which can meet your range of demand.
We have special and dedicated teams for each required service to consult and optimize the most suitable solutions and strategies, as well as to ensure the smooth operation of your semiconductor manufacturing in Vietnam.
Contact VNBG for a free consultation and start your business venture in Vietnam today!