Foreign Investment is a big welcome into Vietnam in all legally permitted business lines except for those which are strictly prohibited by law and are detrimental to the national defense and policy of the State.

Nevertheless, there are certain conditional sectors (broadcasting, transport activities ports/airports, real estate business, mining, aquaculture, education and training, tobacco, hospitals and clinics and post and telecommunications) for foreign investment wherein detailed analysis of the investment project is required for approval. On the corollary, the logistics services are conditional services under Vietnamese law.

Logistic services are commercial activities whereby traders/enterprises organize the performance of one or many jobs including reception, transportation, warehousing, yard storage of cargos, completion of customs procedures and other formalities and paperwork, provision of consultancy to customers, services of packaging, marking, delivery of goods or other services related to goods according to agreements with customers in order to enjoy service charges. A logistic service enterprise must have lawful business registration and must have adequate facilities, equipment, working facilities and personnel.

 

A foreign investor cannot incorporate a wholly foreign invested company operating in the logistics sector. Only a joint venture company in collaboration with a local Vietnamese partner (either working or sleeping partner).  Generally, the foreign investor can own up to a maximum of 49% to 51% in the new company to be incorporated in Vietnam. The proportion of foreign investment shall vary according to the services provided by the logistic service provider.

Principal Logistic Services:

The foreign invested service providers in the business of principal logistic services can be incorporated as a legal entity under the form of a Joint Venture Company.

 

The capital contribution ratio of the foreign investor shall be as follows:

Type of Operations Allowed Foreign Investment
Services of arranging pickup and loading of goods, including loading goods into containers Upto 50%
Goods warehousing and storage services, including the business of warehousing in containers and storage for processing raw materials and equipment Upto 50%
Transportation agency services, including agency activities of conducting customs procedures and preparing plans for unloading goods Upto 51%

But this limitation shall be terminated  from 2014

Other subsidiary services including activities of receiving, archiving and managing information about transportation and storage of goods throughout the entire logistic process; activities being reprocessing of goods returned by clients, reprocessing of goods in storage and of out-of-date goods and redistribution of such goods; and activities being leasing out and hire purchase of containers Upto 51%

But this limitation shall be terminated  from 2014

Logistic services relating to transportation:

The foreign invested service providers in the business relating to transportation services can be incorporated as a legal entity under the form of a Joint Venture Company.

The capital contribution ratio of the foreign investor shall be as follows:

Type of Operations Allowed Foreign Investment
Sea carriage services

Maritime transportation services

Internal waterways carriage services

 

Upto 49%

Upto 51%

(but terminated from 2012

Aviation carriage services Law on Civil Aviation is applicable
Rail carriage services Upto 49%
Road carriage services Upto 51%
Pipeline Conduit services Not permitted unless provided in the treaty to which Vietnam is also a party.

Other related services

 

Type of Operations Special conditions
Services being technical checks and analysis, except for services of acceptance, testing of and issuance of certificates for transportation facilities:

In order for exercise authority by Government

 

 

In other forms

 

 

Can enter this sector as Joint Venture only after 3 years of its formation

Can enter this sector as Joint Venture only after 5 years of its formation.

Post services subject to discrete regulations of the Government
Wholesale commercial services subject to discrete regulations of the Government
Retail commercial services, including activities of managing goods in storage; collecting goods from various sources, assembling and classifying the goods, and redistributing and delivering them subject to discrete regulations of the Government
Other subsidiary transportation services Not permitted unless provided in the treaty to which Vietnam is also a party.

The different types of services and the corresponding foreign capital ration can be summarized as below:

Type of Services Foreign Ownership Remarks
Container handling services 50% There will no change in this restriction.

The services  cannot be provided in the airport.

Custom clearance services 99.9% maximum The service provider shall be a Joint-Venture with a local partner.

Prior to January 2012, it was restricted to 51%

Storage and warehouse services 51% From 2014, a 100% foreign  invested company can operate in this field.
Freight Transport Agency services 51% From 2014, a 100% foreign  invested company can operate in this field.
Bill auditing, freight brokerage services; freight inspection, weighing and sampling services; freight receiving and acceptance services; transportation document preparation services 51% The service provider shall be a Joint-Venture with a local partner.

After, 2014, the restriction shall  be lifted and the foreign investor can own upto a maximum of 99.9%

A.    Shareholders and Legal Representative:

The shareholder is a person owning at least one share in the joint-stock company. The study of Law on Enterprise indicates that there is no explicit restriction on a foreign individual or foreign organization from becoming the shareholder of a company in Vietnam. Therefore a foreign individual or corporate can become a shareholder of a Vietnamese company and enjoy the same benefits and rights as a local resident counterpart.

The founding shareholder shall be involved in formulating, approving and signing the original charter. Every founding shareholder is required to provide his/its basic and principal information details to be registered with the concerned authorities for business registration.

Legal Representative:

The legal representative is the officer of the Company who has the primary responsibility and power to act on behalf of the company in its dealing with the State. The only stipulation is for the representative-at-law, who would generally be either the Chairman of the Member’s Council or the director or general director of the Company, and is compulsorily required to be the permanent resident of Vietnam.

B.     Investment Capital:

There is no requirement for minimum investment capital for incorporating a company in Vietnam, except for the conditional investment sectors or business lines. But it is required for the new company to exhibit enough capital resources to successfully realize the business goals that would be set out in the Investment Certificate.

C.    Competent Authority:

The Ministry of Industry and Trade along with the Ministry of Transport and Ministry of Information and Technology are the state authorities responsible to check and supervise logistic service business activities including checking and supervising compliance. The Ministry of Planning and Investment is the authority regulating the business registration for logistic services.

D.    Investment Certificate and Licensing Procedure:

The establishment of the new company requires an Investment Certificate from the licensing authority. Depending upon the location of the company, the licensing authority may be the Provincial People’s Committee (for companies located outside industrial or export processing zones) or the provincial Industrial and Export Processing Zones Management Authority (for companies located in industrial or export processing zones).

The roadmap for the incorporation of the New Company can be described as follows:

 

a.       Application dossier for establishment of a foreign invested company

The foreign investor should make an application dossier for providing the following details of the parent Company:

i.       Complete information of the parent company along with the business registration details.

ii.       Complete information of the legal representative along with the identification documents

iii.       Complete information of the proposed entity along with details of address, investment capital, details of business lines

iv.      Financial Capability Statement

v.       Explanation clarifying the target of the project

b.      Licensing process

The approval authority for granting the Investment Certificate shall vary from the Prime Minister, Ministry of Planning and Investment, People Committee and the Management Board of industrial zones, depending upon the type and dimension of the project.

c.       Post-Investment Certificate process

After obtaining the Investment certificate, the new company, is required to follow the post-licensing procedure before its operations.

i. The new company, through its legal representative, should apply for the Seal of the Company and the Seal Registration Certificate should be obtained within 4 days from the date of the Investment Certificate.

ii. The New Company should apply with the Tax Office to obtain a Tax Code Certificate within 10 working days from the date issuance of Investment Certificate.

iii.   The New Company should publish the details of the Investment Certificate and related information of its operation in 3 newspapers immediately after obtaining the Investment Certificate.

Non-compliance of the post-licensing procedure shall lead to imposition of administrative penalties.

E.     Remittance of capital and assets abroad

The foreign investor, after fully discharging fully its financial obligations towards State of Vietnam, is allowed to remit abroad the following:

a.       Its profits from business activities

b.      Payments received from the provision of technology and services and from intellectual property;

c.       The principal of any interest on foreign loans;

d.       Invested capital and proceeds from the liquidation of investments;

e.       Other sums of money and assets lawfully owned by the investor.

If a newly promulgated law or policy contains higher benefits and incentives than those to which the investor was previously entitled, then the investor shall be entitled to the benefits and incentives in accordance with the new law as from the date the new law or policy takes effect.

If a newly promulgated law or policy adversely affects the lawful benefits enjoyed by an investor prior to the date of effectiveness of such law or policy, the investor shall be guaranteed to enjoy incentives the same as in the investment certificate. In case of any difficulty, then atleast the benefits and incentives shall be continued.

F.     The Rights and Liabilities of Logistic service provider:

The logistic service provider is entitled to enjoy service charges and other reasonable expenses. The service provider must comply with the provisions of law and transportation practices. The service provider shall follow the instructions of customers and notify the customers immediately whenever there is a deviation of such instructions.

The service providers shall be exempted from liability in certain cases where the loss is caused by faults and upon strictly adhering to instructions of customers or their authorized persons or the loss attributed to defect in goods, etc. The service providers shall not be liable for the loss of profits which the customers would have earned, but for any delayed services or provided at any wrong address, if the service provider is not at fault for the same.

As a general rule, the full liability of the service providers shall not exceed the limitation of liability for the full loss of the goods except if it is proved that the loss, damage or delayed delivery of goods is caused by the deliberate actions or inactions of the service provider.

Untitled-1

Get in touch with us

Your Name (required)

Your Email (required)

Subject

Your Message