Foreign investment in vietnam’s transport service company

Tourism is a service sector that is strongly developing in Vietnam. As a result, tourism companies attract a lot of attention from investors, both domestic and international. However, since tourism is a conditional business, it is important for foreign investors who wish to invest by contributing capital to a tourism company to notice the requirements in legal documents. These requirements are regulated by the Law on Investment 2014, the Enterprise Law 2014, the Law on Tourism (newest version is about to take effect on January 1, 2018) and the WTO Protocol of Accession.

Under the Law on Investment 2014, foreign investors wishing to invest in Vietnam should meet the following conditions:

• The investor’s charter capital:
  • Foreign investors are licensed to operate travel agency services, provided they have joint ventures with Vietnamese partners (no limit to foreign capital contribution). Therefore, foreign investors can not establish a 100% foreign- invested tourism company;
• The form of investment, operating scope, Vietnamese partners, and other aspects are conformable with the international agreements to which the Socialist Republic of Vietnam is a signatory:
  • On the form of investment to tourism companies: capital contribution or shares/ capital contributions purchase;
  • Foreign-invested tourism companies are only allowed to do inbound service and domestic travel for inbound tourists as an integral part of inbound services. Foreign-invested tourism companies are not permitted to do outbound service;
  • Tourist guides in foreign-invested enterprises must be Vietnamese citizens.

Registration of capital contribution or purchase of shares/capital contributions:

Application documents need prepared:

• A written for registration of capital contribution or purchase of shares/capital contributions, which specify information about the business organization to which investment is made; the holding of the foreign investor after making investment;
• A copy of the ID card or passport (if the investor is an individual); a copy of the Certificate of establishment or an equivalent paper that certifies the legal status of the investor (if the investor is an organization);
• In case the investors authorize someone else to do this procedure on behalf of him/her, there must be a procuration or a service contract indicating person who will carry out this fomality.

Procedure:

• The investor shall submit the application prescribed above at the Service of Planning and Investment of the province where the headquarter of the business organization is situated;
• If the contribution of capital, purchase of shares/capital contributions satisfies all the conditions, the Service of Planning and Investment shall send a written notification to the investor within 15 days from the day on which the satisfactory application is received. If conditions are not satisfied, the Service of Planning and Investment shall notify the investor in writing and provide explanation.

 Contribute capital and other formalities:

• After receive the permit from the Service of Planning and Investment, foreign investors shall contribute capital in form of which they declare.
• The tourism company receiving capital from forgein investors shall carry out procedure to change members/ shareholders or convert the type of company follow legal regulations.

* Note: If foreign investor want to contribute capital to establish a tourism company, it is difficult for he/she to do the formation to register for business certificate and apply for tour operation license. Therefore, it is more convinient to set up a domestic tourism company first  apply for Tour Operation License  foreign investor contribute capital or buy shares/capital contributions of that tourism company.