[Part 1] What Are the Pitfalls in Establishing a Representative Office in Vietnam?

When establishing a representative office in Vietnam, there are many potential pitfalls, from legal procedures to office selection. Delays in approval applications or deficiencies in lease agreements can pose major risks to office operations. This article explains the common pitfalls in setting up a representative office, as well as practical precautions for office selection and lease agreements to help you avoid costly mistakes. If you are a corporate officer preparing for your company’s first entry into Vietnam, this article is a must-read.

---

1. Legal Procedures Often Overlooked When Establishing a Representative Office in Vietnam

When setting up a representative office in Vietnam, there are numerous details in the legal process that must not be overlooked. Failure to properly handle the timing of applications, required documents, and contract reviews can result in significant delays—or, in the worst case, outright rejection of the application. Because the establishment process involves unique local rules and business practices tied to office selection and on-site procedures, insufficient preparation can lead to unexpected trouble. Below are the main legal pitfalls and key points of caution.

1.1. Beware of Delays in Approval Applications

The period required for approval depends on the content and timing of the application. During peak seasons or when documents are incomplete, approvals may be significantly delayed. It is also common for local authorities to request additional information or supplementary documents, which further increases the time required. It is therefore essential to plan a schedule that allows sufficient leeway and to anticipate potential delays.

• The timing of submission can increase the risk of delays
• A system to respond quickly to additional document requests is necessary
• Consider local government holidays and busy seasons

1.2. Application Rejections Due to Documentation Errors

Applications are often rejected by Vietnamese authorities due to incomplete or inaccurate documents. Even minor mistakes, such as missing signatures, omitted certificates, or inconsistent formatting, can lead to rejection. For documents related to office establishment, such as lease agreements or proof of office location, strict requirements must be met. Double-checking against the latest requirements is crucial for a smooth process.

• Missing signatures, seals, or supporting documents
• Mistakes in forms or content can also result in rejection
• Always obtain and confirm the latest application formats

1.3. Parent Company’s Business Track Record Is Required

Approval may require proof that the parent company has been actively operating for a certain period. Applications may be rejected if the parent company is newly established or has been dormant. Documentation of registration details and business performance is a key evaluation point, so these should be well-organized before applying.

Point of Caution	Details
Years in operation	At least 1 year of activity often required
Proof of business activity	Financial statements, business reports
Dormant periods	Recent inactivity increases risk of rejection

1.4. Insufficient Review of Lease Agreements

If the lease agreement for a representative office is not carefully reviewed, it can lead to serious problems later. Beyond rent and contract period, it is essential to confirm whether the office can legally be used for business registration and whether necessary permits can be obtained. Issues such as “Is the office address registrable?” or “Is the building authorized for commercial use?” are critical. Always verify unclear points with the landlord or a local expert before signing.

• Confirm in advance that the property can be registered
• Review all details of the lease (renewal, termination clauses)
• Understand local real estate practices and legal restrictions

1.5. Appointment Procedures for the Chief Representative

After establishment, appointing a chief representative is mandatory. Delays in this process can prevent the office from starting operations and may hinder other activities such as filing notifications or opening bank accounts. The appointment should be completed promptly after approval, with all required documents prepared in advance.

• Delays in appointment lead to operational delays
• Prepare a list of required documents beforehand
• Confirm eligibility and visa requirements of the appointee

---

2. Key Office Selection Criteria to Avoid Failure

Choosing the wrong office location in Vietnam can significantly disrupt operations. Selecting the right property requires a comprehensive approach beyond cost and appearance—considering location, infrastructure, legal compliance, and future expansion. Below are five critical criteria.

2.1. Check the Convenience of Location

Office location directly affects efficiency and employee satisfaction. Consider access to transportation and proximity to clients or government offices. Surrounding amenities such as restaurants, banks, post offices, and hospitals also impact daily operations. Because traffic conditions vary greatly between cities, visit in person to assess the commute.

• Always check transportation access
• Confirm nearby infrastructure and amenities
• Experience the commute firsthand

2.2. Compare Rent and Contract Terms

Each property differs in rent, deposits, contract duration, and termination clauses. Do not base decisions solely on rent. Penalties for early termination and rent adjustment clauses at renewal must be carefully reviewed. In Vietnam, large deposits may be required, and foreign companies may face special terms. Estimate costs comprehensively.

• Understand all initial and additional costs
• Confirm termination and renewal conditions
• Compare contract versions in both local language and Japanese

2.3. Evaluate Infrastructure Quality

Reliable infrastructure—electricity, internet, and water supply—is essential. Conditions vary by area, so conduct on-site inspections and interviews. Some office buildings lack backup power systems or have unstable internet, which can disrupt operations.

Infrastructure	Checkpoints
Electricity	Stability, backup power availability
Internet	Speed, provider options
Water supply	Condition of restrooms and facilities

2.4. Confirm Legal Compliance

Verify that the building’s registered use allows representative office operations and that there are no ownership or registration issues. If the property does not comply with requirements, your office establishment approval may be denied. Foreign companies may need additional permits, so professional consultation is recommended.

• Ensure property use aligns with office requirements
• Check for registration or ownership issues
• Conduct expert review before contracting

2.5. Consider Future Expansion

Anticipate business growth and staff increases. If the office lacks flexibility for layout changes or expansion, relocation may become necessary, leading to costs and disruptions. Check vacancy status and floor division flexibility before signing.

• Confirm possibility of expansion or floor relocation
• Review layout change restrictions and costs
• Balance long-term staffing plans with space availability.

When setting up a representative office in Vietnam, carefully reviewing these criteria will help you avoid pitfalls and select the right office for successful operations.