Conditions for establishing a foreign-invested logistics company in Vietnam

Legal grounds

• Law on Investment 2020
• Decree No. 163/2017/ND-CP
• Schedule of commitments on services of Vietnam in WTO

Logistics is a conditional business, therefore, when establishing a foreign-invested logistics company in Vietnam, an enterprise must meet the following conditions:

Conditions on investors

Foreign investors: Individuals shall have full legal capacity. If it is an organization, it must have a Business Registration Certificate certified by a Consulate. Investors with nationalities belonging to WTO countries.

Vietnamese business owner: A person with legal status, eligible to establish a company.

Conditions on capital

Currently, the law does not stipulate the minimum capital to establish a foreign-invested logistics company in Vietnam, but this capital will be contributed to suit the project. Depending on the type of service, investors can invest 100% or enter into joint ventures with domestic investors according to a certain ratio. For foreign investors of a country or territory that is a member of the World Trade Organization, when doing business in logistics services, foreign investors will be allowed to purchase shares/stakes to the enterprise proportionally when dealing in logistics services related to transportation.

Conditions of business lines

Some business lines in which foreign-invested logistics companies are allowed to do business

• Container handlingservices, except for services provided at airports.
• Container warehousing services classified as auxiliary services for sea
• Warehousing services classified as all auxiliary services for multimodal transport.
• Delivery
• Freight transport agency service
• Customs brokerage services(including customs clearance services).
• Other servicesincluding bill of lading inspection, cargo brokerage services, cargo inspection, sampling and weighing services; goods receipt and acceptance services; and preparation of transport documents.
• Wholesaling auxiliaryservices and retailing auxiliary services including management of goods in storage, and collection, collation and classification of goods and their delivery.
• Cargo transport services classified as seatransport services.
• Cargo transport services classified as inland waterway transport services.
• Cargo transport services classified as rail transport services.
• Cargo transport services classified as roadtransport services.
• Air carriage services.
• Multimodal transport services.
• Technical inspection and analysis services.
• Other auxiliaryservices for transport.
• Other services under the agreement signed between the logistics service provider and customer according to basic rules of the Law on Commerce.

The ratio of capital that foreign investors who are WTO members can own when purchasing shares/stakes to transport logistics service enterprises is as follows:

For cargo transport services classified as sea transport services (except for inland transport) (CPC 7211,7212)

The foreign investor may establish companies operating ships flying the Vietnamese flag or contribute capital, or purchase shares or stakes in another enterprise, provided the holding of the foreign investor in such company does not exceed 49%. The total number of foreign seafarers working on the ship flying the Vietnamese flag (or registered in Vietnam) under the ownership of these companies in Vietnam shall not exceed 1/3 of the ship’s personnel. The captain or first mate must be a Vietnamese citizen.

For container handling services classified as auxiliary services for sea transport (some areas may be used exclusively for the provision of services or procedures for issuance of licenses may be completed in these areas) (CPC 7411)

The foreign investor may establish an enterprise or contribute capital, purchase shares or stakes in another enterprise, provided the holding of the foreign investor in the such company does not exceed 50%. The foreign investor may establish a commercial presence in Vietnam under a business cooperation agreement.

For container handling services classified as auxiliary services for multimodal transport, except for services provided at airports:

The foreign investor may establish an enterprise or contribute capital or purchase shares or stakes in another enterprise, provided the holding of the foreign investor in the such company does not exceed 50%.

For customs clearance services classified as auxiliary services for sea transport:

The foreign investor may establish an enterprise or contribute capital or purchase shares or stakes in another enterprise which is invested in by a domestic investor, in which the capital contribution rate of foreign investors in a company does not exceed 51%. The foreign investor may establish a commercial presence in Vietnam under a business cooperation agreement.

For other services including bill of lading inspection, cargo brokerage, cargo inspection, sampling and weighing services; goods receipt and acceptance services; and preparation of transport documents

The foreign investor may establish an enterprise or contribute capital or purchase shares or stakes in another enterprise which is invested in by a domestic investor.

For cargo transport services classified as inland waterway transport services or cargo transport services classified as rail transport services

The foreign investor may establish an enterprise or contribute capital or purchase shares or stakes in another enterprise, provided the holding of the foreign investor in the such company does not exceed 49%.

For cargo transport services classified as road transport services

The foreign investor may provide such services under a business cooperation agreement or establish an enterprise or contribute capital or purchase shares or stakes in another enterprise, provided the holding of the foreign investor in such company does not exceed 51% and all drivers of the enterprise must be Vietnamese citizens.

For air carriage services

Comply with the provisions of the law on aviation.

For technical inspection and analysis services

– Regarding the services provided to exercise the authority of the Government, they may be provided by an enterprise which is invested in by a domestic investor after three years or by an enterprise in which foreign investment is not limited after five years from the date on which the private service provider is allowed to provide such services.

– It is not allowed to provide vehicle inspection services and issue certificates to such vehicles.

– The provision of technical analysis and inspection is limited in the areas determined by the competent authority for national defense and security reasons.

For the following industries, investors can establish 100% foreign-owned enterprises or  enter into joint ventures or contribute capital, and purchase shares/stakes in Vietnamese enterprises

• Warehousing services (CPC 742)
• Cargo transport services (CPC 748)
• Delivery services (CPC 7512)

In case foreign investors are subject to the application of international treaties with other provisions on conditions for providing logistics services. Investors can choose to apply the investment conditions specified in one of those international treaties.

Customers wishing to establish a foreign-invested logistics company in Vietnam, please contact Viet An Law Firm for detailed support!