VietNamNet Bridge - Vietnamese startups often become a foreign-invested enterprise (FIE) after successfully raising funds from foreign investors. Coc Coc, Vntrip, Huy Vietnam, The KAfe and Wrap & Roll are just a few of them.


The startup community was stirred up recently by the information that the founder and CEO of The KAfe Dao Chi Anh will resign from the post on October 25.

The announcement was made exactly one year after the startup stated it successfully called for $5.5 million worth of investment capital from foreign investors. 

The public has been informed that The KAfe has raised its charter capital from VND16 billion to VND224.8 billion and has become an FIE.

However, in fact, The KAfe became a 100 percent FIE one year ago. The latest business registration certificate dated on October 1, 2015 showed that The KAfe is wholly owned by Kafe (Hong Kong) Ltd.

Vietnamese startups often become a foreign-invested enterprise (FIE) after successfully raising funds from foreign investors. 
The same thing occurred with another food chain – Huy Viet Nam, the business which owns Mon Hue (Hue City dishes), Pho Ong Hung (Mr Hung’s pho) and, a startup in tourism.

Huy Viet Nam is now 100 percent owned by Huy Vietnam (Hong Kong) Ltd, while Vntrip is owned by One strip OTA Ltd.

Wrap & Roll, after receiving investment capital from Mekong Capital, has also become an FIE with the Singapore-based Inquisity Pte Ltd holding 78.3 percent of shares. Meanwhile, CEO Nguyen Thi Kim Oanh still holds 20.58 percent of the stake.

What’s behind these stories?

Analysts said that in these cases, Kafe (Hong Kong) Ltd and Huy Vietnam (Hong Kong) Ltd acted as an intermediary party which received capital from investors and then poured it into the legal entities which run the operation in Vietnam.

Hong Kong and Singapore are considered ‘tax havens’ through which capital from investors is brought to Vietnamese businesses. In South East Asia, Singapore is believed to be the most ideal country for people to start up their business thanks to the friendly business environment, transparent market and good policies to support businesses.

Setting up a business in Singapore is one of the requirements set by foreign investors when they consider startup projects to invest in. Registering legal entities in these countries to pour money into businesses in Vietnam is a growing trend among the startup community.

In cases like The KAfe, startups’ founding shareholders have two choices, either selling all the shares to foreign investors, or converting the shares to owning shares in the legal entities established overseas.

However, under current regulations, there are complicated procedures to follow make outward investments. Therefore, the second choice is not favored. 

Kim Chi