Establish foreign-owned inland sea transportation companies in Vietnam

Vietnam has a more than 3000 kilometer coastline with many ports from the North to the South as well as a growing manufacturing industry which support the inland sea transportation business. Foreign investors with expert maritime experiences have huge advantages comparing to local companies. However, coastline and sea are relating to national defense. Hence, this business sector contains many limitations on foreign investors. Besides that, the Maritime Code 2015 of Vietnam and Decree No.160/2016/NĐ-CP regulates on conditions for sea transportation business, shipping agency services and towage services which were approved by the National Assembly and the Government are going to take effects on July 1^st 2017. In order to help foreign investors while researching the laws of Vietnam, Viet An Law Firm collects and provides some basic information as follows:

Legal documents:

• The Schedule of Specific Commitments in Services of Vietnam in WTO;
• The Law on Investment 2014;
• The Law on Enterprises 2014;
• The Maritime Code 2015 of Vietnam (takes effects on July 1^st 2017);
• Decree No. 160/2016/NĐ-CP regulates on conditions for sea transportation business, shipping agency services and towage services (takes effects on July 1^st 2017).

In accordance with clause 23 Article 4 of the Maritime Code of Vietnam, inland sea transportation means “carriage of cargoes, passengers and baggage by sea transportation between the point of departure and the point of arrival of cargoes, passengers and baggage located within the territorial waters of Vietnam”.

In accordance with the Schedule of Specific Commitments in Services of Vietnam in WTO, inland sea transportation services includes:

• Passenger transportation services (CPC 7221);
• Cargoes transportation services (CPC 7222).

It states that foreign investors shall provide inland sea transportation services in Vietnam under the form of:

• Joint-venture with Vietnam partners;
• Foreign capital contribution in the joint-venture does not exceed 49% of the total capital of the joint-venture.

Nationality of the ship: In accordance with clause 1 Article 8 of the Maritime Code 2015 of Vietnam, “cargoes, passengers and baggage carried within inland sea shall be transported by Vietnamese ships”.

Foreign investors can invest in inland sea transportation services in Vietnam in two ways:

• Establish a foreign-owned inland sea transportation in Vietnam with Vietnamese partners;
• Contribute capital, purchase shares, purchase capital contributions in Vietnamese inland sea transportation company.

Foreign investors are able to choose one of them but they must comply with the maximum 49% of foreign capital contribution in the company.

Option 1: Establish foreign-owned inland sea transportation in Vietnam with Vietnamese partners:

Step 1: Foreign investors apply for the Investment Registration Certificate

An application includes:

• A written request for permission for project execution;
• Individual investors: copies of ID or passport of each individual;
• Organization investors: copies of Establishment Certificate or equivalent paper confirming the legal status;
• Project proposal;
• Copies of financial statements in the current 02 years or financial support commitment of the parent company or financial institutions; guarantee for investors’ financial capacity, description of investors’ financial capacity;
• Land use demand. If the project does not use land allocated or leased by the State or does not require the State to change land use purpose, the copies of the lease agreement or equivalent papers proving that investors have rights to use the location shall be submitted;
• If the project use any technology in the List of technologies restricted from transfer, investors have to submit the explanation on technology transfer.

Submit the application at: The Department of Planning and Investment.

The process: Within 15 days from the receipt date of the valid application, the Department of Planning and Investment will grant the Investment Registration Certificate to foreign investors. If the Department of Planning and Investment refuse to grant, they will respond in notices and explain the reasons.

Step 2: Establish foreign-owned inland sea transportation in Vietnam

Apply for the Business Registration Certificate:

An application includes:

• A written request for business registration;
• The Articles of Associates;
• The list of members of the multi-member limited liability company or the list of partners of partnership;
• Notarized copies of ID or valid passport of each individual member; notarized copies of the Business Registration Certificate/Establishment Certificate of each organization member; notarized copies of ID or valid passport of each legal representative of each organization;
• Power of attorney (Clients grant to Viet An);
• Certificate of Investment Registration of foreign investors.

Submission place: The Department of Planning and Investment.

Duration: 03 – 06 working days.

Announce the business registration contents:

• Business registration information must be announced publicly on the National Portal of Business Registration within 30 days from the date of issuance of the Business Registration Certificate. The contents of the announcement are all the information stated in the Business Registration Certificate.
• Notice: In accordance with Clause 1 Article 26 of the Decree 50/2016/NĐ-CP, if the company does not announce or lately announce the business registration information on National Portal of Business Registration, they are fined an amount of money from 1.000.000 VND to 2.000.000 VND.

Engrave the seal and publish the seal sample:

• The company can authorized Viet An Law Firm or can engrave the seal by itself then announce the seal sample to the Department of Planning and Investment. The company is allowed to decide about the appearance, quantity and the contents of the deal but it must contain the name and the code of the company.

Step 3: Apply for the Sea transportation business certificate

Conditions to be satisfied:

• Organization’s structure: Having a department of sea transportation business management;
• Financial capacity: Having a guarantee granted by a credit institution or a branch of a foreign bank to guarantee the obligations of the ship owners to seafarers with a minimum of 500 million VND;
• Ships: Having at least 01 ship flying Vietnam’s national flag and complying with the National Technical Regulations issued by the Ministry of Transport;
• Personnel: The manager of the department of sea transportation business management must obtain at least a college degree in one of the following majors: maritime, foreign trade, commerce or economics. Seafarers working on the ship must satisfy all requirements on specialization, be granted professional certificates by the Minister of Transportation and satisfy health requirements by the Minister of Health.

Notices about foreign seafarers working on Vietnamese ships:

• The total number of foreign seafarers does not exceed one third of manning levels of the ship (manning level is understood as the required seafarers working on the ship depending on each ship’s type, equipment, arrangement, automatic level and trade area);
• The ship master or first mate of the ship must be Vietnamese citizens.

Currently, regulations on minimum manning levels of Vietnamese ship are prescribed in the Circular No. 11/2012/TT-BGTVT. However, this Circular is going to expire on June 30^th 2017 and soon be replaced by a new one.

An application for Sea transport business certificate includes:

• A written request for Sea transport business certificate (using the Form 01 attached in Decree No. 160/2016/NĐ-CP): 01 original;
• The list of positions and degrees, certificates of members of the department of sea transportation business management: 01 copy granted from master register or 01 notarized copy from the original or 01 copy enclosed with the original for collation;
• A guarantee granted by a credit institution or a branch of a foreign bank: 01 original;
• Ship registration certificate: 01 copy enclosed with the original.

Submission place: Vietnam Maritime Administration.

Process:

• If the application is valid, within 05 days, the Vietnam Maritime Administration will assess and issue the Sea transport business certificate. If case of refusal, the Vietnam Maritime Administration shall grant a written notice providing explanation;
• If the application is invalid, within 02 days, the Vietnam Maritime Administration will grant a written notice providing guidelines for completion.

Option 2: Foreign investors contribute capital, purchase shares, purchase capital contributions in Vietnamese inland sea transportation company

If foreign investors decide choose this option, they do not have to apply for the Investment Registration Certificate. Besides that, a Vietnamese inland sea transportation company has already been granted the Sea transport business certificate. Therefore, foreign investors shall comply with the conditions mentioned above and the limitation on foreign capital to get the approval by the Department of Planning and Investment.

Step 1: Foreign investors register to contribute capital, purchase shares/capital contributions to the company

Application includes:

• Application for capital contribution, shares/capital contributions purchase indicating: the information of the target company, the foreign capital contribution after completing the procedures;
• Copies of the ID or passport of each individual investor; copies of Establishment Certificate or equivalent papers confirming the legal status of each investor who is an organization.

Submission place: The Department of Planning and Investment.

The process: If the capital contribution, shares purchase, capital contribution purchase of foreign investors comply with the regulations on investment forms and foreign capital contribution, within 15 days from the date of receipt of the valid application, the Department of Planning and Investment will grant a written announcement. If the application does not satisfies conditions, the Department of Planning and Investment will grant a written announcement providing reasons and explanation.

Step 2: Transfer the shares, capital contributions and change the shareholders or members of the company

Foreign investment services in Viet An Law Firm:

• Consult about regulations on foreign investment in Vietnam;
• Consult about process and procedures relating to foreign investment in Vietnam;
• Consult about conditions of each conditional business sector according to the laws;
• Consult and draft the application for Investment Registration Certificate; Business Registration Certificate and sublicenses for foreign investors;
• Consult about after-establishing issues: contracts, tax, labor, social insurance…

If you need legal advice on regulations and procedures relating to foreign investment in Vietnam, please feel free to contact Viet An Law Firm for more details!