THINGS TO CONSIDER BEFORE OPENING A BUSINESS IN VIETNAM

THINGS TO CONSIDER BEFORE OPENING A BUSINESS IN VIETNAM

(For FDI Investors – minimum cost for 1 member company FDIs)

Many people start a business driven by passion or personal dreams. However, the business reality in Vietnam is highly competitive and extremely cost-sensitive. That is why before you start a business in Vietnam, let think carefully about below question.

1.  Is Your Business Truly Profitable?

     - As average income levels in Vietnam remain relatively low, which means customers may not be willing—or able—to pay premium prices for most products or services, while the fixed costs are very high as following explanation, your business should generate at least 2 time ~ 3 times your operating costs in order to be sustainable. If it cannot reach this level, you should seriously reconsider your plan, as below reasons?

 

2. How Much Does It Take to Open a FDI Business in Vietnam?

2.1. Initial Investment and Fixed Costs

     - Opening a business in Vietnam requires both significant upfront investment and ongoing fixed costs.

2.1.1 One-Time Costs

     - You should budget for the following expenses at minimum:

1. Basic FDI-related licenses such as:

• ERC (Enterprise Registration Certificate)
• IRC (Investment Registration Certificate)

             Estimated minimum cost: USD 1,000+ (In practice, often USD 5,000+ even for simple cases). Processing time: approximately 3 months

2. Industry-Specific Licenses (If Applicable)
   Required for sectors such as restaurants, pharmacies, manufacturing, etc.
   (e.g. signboard permits, fire safety approval, health and hygiene permits)

            Estimated cost: USD 1,000+. (Often USD 5,000+ even for simple cases)
            Processing time: approximately 3 months, paralel with the basic licences. 

        3. Labor-Related Documents

• Work permits
• Visas
• Temporary residence cards for foreign employees

        4. Company Setup Items

• Company seal
• Digital signature
• Stamps
• Administrative registrations

        5. Miscellaneous Fees

• Translation and notarization
• Legal consulting
• Compliance and advisory costs

         ➡ Estimated total setup cost: at least USD 5,000+

2.1.2 Fixed Monthly Costs

        a. Accounting and Staffing

          Vietnam’s tax system is complex, especially for foreign-invested companies. Self-declaration is not recommended.

          Hiring employees involves far more than simply paying base salary.

          For example, if you hire one staff member at USD 500/month, the real cost may include:

• Monthly salary: USD 500
• 13th-month salary: USD 500/year as a must-bonus at the end of the year. 
• Mandatory insurance (~30%): USD 150/month
• Bonuses, benefits, and other costs: USD 100/month

         ➡ Actual monthly cost: approximately USD 1,000/staff/month

        b. Tax Reality

        Taxes may be declared quarterly (if annual revenue is below VND 50 billion dongs/year).
        Businesses are required to pay:

• VAT 8% or 10%
• Corporate income tax 15%
• Personal Tax 10% in case of paying instead of the labor.

        Some companies declare insurance at the lowest possible level, which can result in tax payable being much higher than actual profit. In addition, many expenses cannot be legally declared (cash payments, entertainment, drinks, informal costs, etc.). As a result, tax can sometimes become a very large financial burden, exceeding what the company actually earns in real profit.

        c. Office Rental

• Typical monthly rent: USD 500 – 10,000/month, depending on location
• Initial setup costs (furniture, cabinets, equipment): USD 1,000+

        d. Sudden and Unexpected Costs

        Unexpected expenses can arise without warning and must be included in your contingency plan, such as:

• Government fines, for something that you do no understand. 
• Year-end parties
• Company trips
• Administrative or compliance-related costs (like paper, ...) 

 

3.  Summary on minimum Fixed Cost Reality Check

3.1 Total Initial Setup Cost (One-Time Investment)

Item	Estimated Cost (USD)
FDI licensing (ERC, IRC)	1,000 – 2,000
Industry-specific licenses	500 – 3,000
Legal consulting & compliance	500 – 2,000
Translation, notarization, legalization	300 – 1,000
Company seal & digital signature	200 – 500
Work permit & visa (per foreigner)	800 – 1,500
Office setup (furniture, equipment)	1,000 – 3,000
Total Initial Cost	~5,000 – 15,000 USD

➡ This cost must be paid before any revenue is generated.

3.2 Monthly Fixed Operating Cost (Minimum Level)

Item	Estimated Monthly Cost (USD)
Outsourced accounting	100 – 300
One staff (real cost)	~1,000
Office rental (shared/small office)	300 – 1,500
Utilities, internet, phone	100 – 200
Transportation & admin expenses	100 – 300
Minimum Monthly Fixed Cost (at least)	~1,500 – 3,000 USD

 

3.3 Survival Cost for the First 6–12 Months for 1 staff-FDI not including your own salary. 

• 12 months of operation: USD 18,000 – 36,000

➡ This amount is cash reserve, not investment capital.

 

4. Recommendations to Minimize Costs

4.2. Hire only 1 assistant staff who can handle insurance, translation, administration, and daily operations, and who can speak English or your foreign language

• Staff only rent 1 person: ~USD 500/month --> Real cost: ~USD 1,000/month (including insurance,...)
• Outside Accounting : Use an outsourced accounting service → USD 200/month
• Virtual office or co-working space : ~USD 200/month/seat
  → Includes printing, photocopying, and meeting rooms (hourly rental), or only an address to register for the business at around 25 dollars/month (but no desk or equipment supplied).

        ➡ Total fixed cost: at least USD 1,500/month, excluding your own salary and product-related expenses.

5. OTHER THINGS TO THINK:

5.1. Operational and Cultural Pressures

       Foreign investors often underestimate:

• Government procedures and administrative handling
• Language barriers
• Managing local staff and workplace culture. They easily to quit jobs, and self-centered characters...

       These factors require time, patience, and strong local knowledge.

5.2. Life in Vietnam

       Living in Vietnam is comfortable only when you have stable income:

       Advantages

• Daily living costs are manageable
• Food is excellent and affordable
• People are friendly and welcoming
• Travel is convenient and generally safe

       Although salaries are low, Vietnamese people usually maintain:

• A positive attitude
• Strong resilience
• Warm hospitality

6. SUMMARY:

- Only Invest When the Following Conditions Are Met

1. Your business model can generate 2–3 times your fixed costs. (Example: USD 5,000/month fixed cost → USD 10,000–15,000/month revenue)
2. Your competitive advantage is long-term, not temporary. 
3. You have a clear and realistic business plan, including marketing strategy, positioning, and long-term expansion. Your plan must generate at least 2–3 times total costs. Lower-margin plans are  risky without deep local understanding or strong financial backup.
4. Never engage in illegal or unethical activities. Penalties are severe and may result in imprisonment.
5. Prepare a minimum one-year survival budget with no revenue.
6. Always maintain a risk management or stop-loss plan. Set a clear financial stop-loss point and prepare for worst-case scenarios—not best-case ones

______________________

* English – Japanese – Vietnamese Interpretation / Translation and Notarization Services

* Legal Services
(Marriage, Divorce, Company Establishment, Various Licenses, Legal Consulting)

* Life / Business Coaching

* 0382 155 900

Please leave a message on Zalo, then we will return to you