Registering a foreign NGO in Vietnam: Challenges and strict requirements.

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Registering a foreign NGO in Vietnam: Challenges and strict requirements

Foreign NGOs (Non-Governmental Organisations) have a history of providing aid and support to Vietnam in many areas, particularly where socio-economic development has been needed the most. Focus areas have included healthcare, education, agricultural and rural development, community support, social problems, protection of natural resources and the environment, with total aid provided estimated at USD250 million.

From a statutory perspective however, the process of registering a foreign NGO in Vietnam is complex and sometimes extremely difficult, as the authorities assess each project on an individual basis before granting the NGO status and required operating licenses.

In the following article we cover the operational entity forms that foreign NGOs can adopt in Vietnam, and the practical processes to obtain the necessary registrations and government approvals required for the NGO to be legal and compliant.

Definition and status

NGOs cover a wide range of social entities, programs, institutions and associations that are entirely or largely independent of the government and have a primarily humanitarian or cooperative scope, rather than a commercial objective. In Vietnam, NGOs can be generally divided into two groups, including:

  • NGOs established under Vietnamese laws, and
  • Foreign NGOs who seek to operate/register to operate in Vietnam

This article focuses on the technical information and detailed procedures for registering a foreign NGO in Vietnam.

Decree 58/2022/ND-CP issued on 31 August 2022 covers the registration and management of activities of foreign NGOs in Vietnam takes effect from 1 November 2022, replacing Decree No. 12/2012/ND-CP of 1 March 2012 (Decree 12). Under the Decree 58, a foreign NGO is an organisation that:

  • Operates in the form of non-governmental organisations, non-profit organisations, social funds, private funds
  • Is established under foreign laws, has legally contributed by foreign capital
  • Has the operational scope of carrying out development assistance and humanitarian aid activities not for profit or other purposes in Vietnam.

There is a significant provision clarified in the Decree which states that foreign NGOs cannot make financial donations, operate sponsorships or raise funds from Vietnamese organisations and individuals.

Operational forms to be registered for Foreign NGOs in Vietnam

Foreign NGOs can register to operate under the Vietnamese laws in two forms:

  1. Operation Registration Certificate
  2. Representative Office Registration Certificate

Accordingly, the Project Office Registration Certificate mentioned in Decree 12 had been abolished, therefore under Decree 58, foreign NGOs seeking to register their presence in Vietnam can choose either ORC or RORC, depending on the conditions required by law for each type of establishment and their actual needs. In addition, the registration provisions for each of the above forms have been simplified.

Statutory process for registering the operation of a Foreign NGO in Vietnam

Foreign NGOs can register to operate under the Vietnamese laws under 2 forms: (i) Operation Registration Certificate (ORC), and (ii) Representative Office Registration Certificate (RORC). This section introduces the statutory processes for all two mentioned forms:

Form and statutory processPrimary conditionsLeadtimeOperational Term
ORC –

“Operation Registration Certificate”

  • Having a legal status under the law of the country or territory in which it is established
  • Having a clear operation charter, guidelines and purposes in conformity with Vietnam’s interests and needs
  • Having specific proposals on the expected programs, projects and non-projects to support development and humanitarian aid in Vietnam within 3 years
  • Have a proposal for a representative in Vietnam
6 working weeks*Up to 3 (three) years
RORC – “Representative Office Registration Certificate”
  • Having a legal status under the law of the country or territory in which it is established
  • Having a clear operation charter, guidelines and purposes in conformity with Vietnam’s interests and needs
  • Have commitment to long-term operation in Vietnam and detailed statistics on programs and projects that will be implemented in Vietnam within at least 5 years in one or more areas where the scale and nature of such programs or projects require regular, on-site operation and supervision
  • Have proposal for the Head of Representative Office in Vietnam

(*) The requirement of “2 years effectively operating in Vietnam” had been removed.

6 working weeks*Up to 5 (five) years

*Although there are official statutory timelines for registration, in practice these registrations may take significantly longer due to a variety of procedural and documentation reasons.

Under Decree 58, the registration timeline has been reduced to 30 working days (previously 45 working days) with detailed responsibilities of each authority.

Accordingly, the authority which is in charge of assessing the application dossier and issuing the registration certificate is now the Ministry of Foreign Affairs while Foreign NGOs Committee, as the coordinator, will receive applications, seek opinions from relevant authorities, and release the results. The authorities from which Foreign NGOs Committee will seek opinion include the Ministry of Public Security, Ministry of Planning and Investment, Ministry of Home Affairs, Ministry of Finance, State Bank of Vietnam, ministries and relevant ministerial-level management authorities in the sectors that the foreign NGO registers operation, the People’s Committees of provinces where the foreign NGO registers operation and the authority approving the receipt of aid from the foreign NGO.

Compliance responsibilities and statutory provisions for Foreign NGOs

Foreign NGOs are responsible for the primary obligations listed below:

#ResponsibilitiesORCRORC
1.Foreign NGO’s representative in VietnamChief Representative of the foreign NGOsAuthorised Representative
2.NotificationWithin 45 (forty-five) days after obtaining a new, renewed, amended certificate, a foreign NGO is required to notify this together with its operational plan to the People’s Committee of the province or centrally run city in which it operates or will operate.
3.Location of foreign NGOs in Vietnam) (not its operating area)Shall have a transaction addressShall have an official office in Ha Noi, Ho Chi Minh City, Da Nang
4.Employees and Work PermitShall comply with Vietnamese laws
5.Accounts
  • Be required to open and use a payment account in Vietnam Dong or a foreign currency at a commercial bank or foreign bank branch licensed to operate in Vietnam for the purpose of implementing programs, projects, non-commercial activities. development assistance and humanitarian aid projects in accordance with Vietnamese law.
  • Be required to notify within 10 working days from the issuance/ amendment/ change date of the certificate.
  • Receive foreign currency or Vietnamese dong through the account in accordance with the provisions of Vietnamese law.
5.Goods import rightsTo comply with Vietnamese laws.
6.Person Income Tax for foreign employeesTo comply with Vietnamese laws.
7.Report schemeThe head of the foreign NGO or the authorized representative is required to:

(i)   Submit extraordinary and annual reports on activities in Vietnam to the authority and concurrently to the Ministry of Foreign Affairs, the Ministry of Planning and Investment, the ministries with the function of state management of the activities of foreign NGO by sectors and fields, and the Committee for foreign NGOs

(ii)  Update the information of foreign NGO in the database of foreign NGO within 10 days from the date of change

In general, the above primary obligations cover almost all operational aspects of a Foreign NGO in Vietnam. During the operation terms, the foreign NGO is also required to comply with all prevailing Vietnamese laws.

Online database for foreign NGOs

The Government offers guidelines about a newly established database of foreign NGOs in which all information of foreign NGOs in Vietnam will be stored and maintained up to date. The database will be connected to the National Public Service Portal and the Public Service Portal of the Ministry of Foreign Affairs, national database, the databases of ministries and ministerial-level agencies, Governmental agencies. The People’s Committees of provinces will assist in handling the administrative procedures regarding registration and management of operations of foreign non-governmental organisations.

Decree 58 also delineates how the database works in practice and the responsibilities of each entity in operating and managing the activities of foreign NGOs. The information updated in the database needs to be transparent, sufficient and be used efficiently with the right purposes.

Forbidden activities for foreign NGOs

Under the Vietnamese laws, the foreign NGOs are prohibited from:

  • Organising, carrying out, participating in, or sponsoring religious, and other activities against national interests, laws, national defence, security, social order and safety of Vietnam
  • Organising, carrying out, or participating in activities for profit, not for humanitarian or development purposes
  • Sponsoring coup in other countries, terrorism organisations and activities related to terrorism.
  • Organising, carrying out or participating in money laundering or activities related to money laundering
  • Organising, participating in or sponsoring activities against social ethics, national fine customs, practices, or national traditions, identity or national unity

In comparison with Decree 12, Decree 58 further stipulates that financing activities against the government is a prohibited act.

The Social Enterprise (SE)

To operate activities related to humanitarian projects, social responsibility, environmental support, etc. the Social Enterprise (SE) may be considered an effective, alternative vehicle which enable foreign organisations to undertake the above activities in Vietnam. The first, key benefit of the Social Enterprise is represented by the simplified registration requirements:

  • It can be registered as standard, Limited Liability Enterprise, under the provisions and governance of the Law on Enterprises
  • It operates for the purposes of resolving social and environmental issues in the public interest
  • It use at least 51% of the annual post-tax profit for re-investment to achieve the committed targets

Receiving donations

In addition, the Social Enterprise is NOT restricted to raise and receive local donations to cover its administrative and operating costs, as opposed to the foreign NGOs which are not allowed to do so. However, Social Enterprises are not permitted to use donations for purposes other than covering administrative expenses and operating costs and resolving the social and environmental issues registered in their business plan.

 

The above information is general and is meant to provide a practical framework to understand the prerequisites regarding foreign NGOs and SE, and their statutory registration processes in Vietnam.

We advise international humanitarian-purpose organization which seek to localise their operations in Vietnam to carefully peruse the local legislation on the matter, be prepared for a thorough screening process at the government level and keep in mind before commencing that not all applications are always successful.

Therefore, applicants should always seek expert advice about the local regulations and strict conditions in the sector, to ensure they understand the practical and legal aspects of their NGO or SE operation in Vietnam.

If you need any assistance with these or any other matters relevant for international investors in Vietnam, our experts are ready to work with your company to ensure you understand how the above will apply to your specific situation in Vietnam.


Contact our teams for expert support and further information on the NGO sector in Vietnam.

Tran Thi Thuy Duong – Supervisor, Incorporation, Licensing and Secretarial Services – duong.tran@acclime.com

Phuong Vo – Head of Incorporation, Licensing and Secretarial Services – phuong.vo@acclime.com

Matthew Lourey – Managing Partner – m.lourey@acclime.com

 

Last updated on October 3, 2022
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