A Bangladeshi multinational corporation in the mining manufacturing business wished to form a business operation in Vietnam to explore, extract, refine, and export limestone, coal, and calcium-concentrated minerals as well as source and repurchase mines in Northern Vietnam. In pursuit of such objective, in August 2017, the company cooperated with Viettonkin in a company incorporation project in which Viettonkin would serve as its strategic consultant throughout the entire process.
The company wished to establish a rightful business enterprise at the earliest opportunity to conduct necessary groundwork activities and asked Viettonkin to help in this regard. Unfortunately, due to the nature of the mineral exploration, extraction, refinery, and exportation as well as mine sourcing and mine purchase business, it is under very heavy regulations in Vietnam. Specifically, this is a very restricted and difficult sector for foreign-owned companies to make investments due to strict regulations and priorities are mainly granted to domestic or state-owned enterprises, except for especially designated projects which have approval from the government to be open to foreign investors. Since the regulations are very complex and required a lot of statutory procedures and licensing and registering initiatives, the entire incorporation and establishment process may take at least 6 months. Such delay would cause the Bangladeshi company to run risk of impairing the project development progress as a whole.
Viettonkin’s approach to helping the company was first and foremost pinpointing the client’s most urgent need. Pertaining to this case, the company’s top priority was to form a legal business entity that could act as a base for its staff to conduct groundwork activities such as staff recruitment, market research, mineral research, field research, etc., which were fundamental to the project’s overall scope and later phases.
Nonetheless, the main objective of the project was still ensuring that this company obtain the legitimate investment rights and necessary licenses to implement its business in Vietnam. Therefore, after pinpointing the first top priority, Viettonkin will approach the entire project by dividing it into feasible compartments that can be tackled more effectively and assisting the mining company in each and every one thoroughly.
After pinpointing the client’s top priority, Viettonkin recommended that the company should consider establishing an individually owned trading company in Vietnam under the name of a Bangladeshi managing director, instead of navigating the entire regulation system of the mineral extraction business line.
The key logic of this solution is that the establishment of a trading company in Vietnam is better facilitated compared to that of a mineral exploration, extraction, refinery, and exporting company; thus, the incorporation process will be accelerated considerably. Furthermore, after the trading company Vietnam is incorporated and implemented, the company’s independent entity in Vietnam can utilize its local personnel to conduct aforementioned important groundwork activities while Viettonkin can continue to conduct statutory activities to legitimize this company Vietnam’s rights to conduct mineral exploration, extraction, refinery, and exporting business.
In conjunction with such activities, Viettonkin also supported the company in other related matters such as human resource and recruitment assistance, drafting and reviewing labor contracts, sourcing mines and validating mines’ documents, etc. to ensure that all facets of the project were catered to and hedge the risks during any and all processes implemented in Vietnam.
Viettonkin successfully incorporated and established this company’s Vietnamese independent entity, a trading company, under the name of a Bangladeshi managing director. The company entity in Vietnam has recruited staff and commenced on performing groundwork activities such as field research, market research, and mines exploration.
In the meantime, Viettonkin was able to utilize the available time to continue with other statutory activities to register the extraction, refinery, and exporting business to the the Bangladeshi’s Vietnamese independent entity’s pipeline.
After the successful incorporation and formation, the company plans to venture into Indonesia and Viettonkin continues to serve as its strategic consultant in sourcing mergers and acquisitions projects in both Vietnam and Indonesia.