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Establish foreign-owned logistics company in Vietnam

Vietnam is a nation which has growing maritime business as its 3000-kilometer long coastline and the key location of South East Asia. Moreover, Vietnam also has a lot of industrial and export-processing zones leading import and export business become one of the mains investment filed here. Hence, logistics services is considered as a potential business for foreign investors. However, “logistics services business” is listed in the Law No.03/2016/QH14 as a conditional business sector. Therefore, foreign investors shall satisfy these conditions stipulated in the laws of Vietnam and international commitments in order to invest in Vietnam. Viet An Law Firm collects and provides some basic information related to foreign investment in logistics services 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;
  • Decree No.140/2007/NĐ-CP providing detailed regulations on the Law on Commerce regarding conditions for logistics services and limitations on liability of logistics traders.

Logistics services, as stipulated in Article 233 the Law on Commerce 2005, are commercial activities whereby traders perform one or some jobs including reception, transportation, warehousing, yard storage of cargoes, 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 receive service charges.

In accordance with Article 4 Decree No.140/2007/NĐ-CP, logistics services are classified as follows:

Principle logistics servicesLogistics services related to transportationOther related logistics services
Services of arranging pickup and loading of goods, including loading goods into containers;Goods warehousing and storage services, including the business of warehousing in containers and storage for processing raw materials and equipment;

Transportation agency services, including agency activities of conducting customs procedures and preparing plans for unloading goods;

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 outof-date goods and redistribution of such goods; and activities being leasing out and hire purchase of containers.

Sea carriage services;Internal waterways carriage services;

Aviation carriage services;

Rail carriage services;

Road carriage services;

Pipeline conduit services.

Services being technical checks and analysis;Post services;

Wholesale commercial services;

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;

Other subsidiary transportation services.

 

Conditions applied to foreign investors:

Investment forms: Foreign investors must corporate with Vietnamese partners. 100% foreign-owned logistics company is not allowed under the laws of Vietnam.

Proportion of foreign capital in the company: As the laws do not allowed 100% foreign-owned logistics companies, foreign investors shall corporate with Vietnamese partners to run their business. However, in the Schedule of Specific Commitments in Services of Vietnam in WTO, the maximum proportion of foreign capital in a logistics company depends on each activity. Please refer to the table below:

SectorsCodesMaximum foreign capital
Container handling servicesCPC 741150%
Freight transportation (internal waterways)CPC 722249%
Freight transportation (Railways)CPC 711249%
Freight transportation (Roadways)CPC 712351%
Storage and warehouse servicesCPC 742None
Freight transport agency servicesCPC 748None

If foreign investors intend to provide several logistics services, the maximum proportion of foreign capital in the company shall be the lowest level among those services. For example, if the company intends container handling services, storage and warehouse services and freight transportation (roadways), foreign capital of the company shall not exceed 50% of the charter capital. As logistics services are wide and complicated, in case Clients need, Viet An Law Firm shall research and give detailed information and advice once Clients provide us the list of intended services.

Logistics activities: There are some logistics activities that foreign-owned logistics companies cannot perform:

  • Pipeline conduit services;
  • Regarding technical check and analysis: excluding testing and issuing certificates for transportation facilities.

In order to invest in logistics services in Vietnam, foreign investors can choose one of two following options:

  • Establish foreign-owned logistics company in Vietnam;
  • Contribute capital, purchase shares, purchase capital contributions to Vietnamese logistics company.

Option 1: Establish foreign-owned logistics company in Vietnam

Notice: Foreign investors are not allowed to own up to 100% of the charter capital. Hence, they need to corporate with Vietnamese partners.

Step 1: Apply for the Investment Registration Certificate

An application for the Investment Registration Certificate 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 specifying: the investors, project’s objectives and scale; capital and capital rising method; location, duration and schedule of the project; labor demand;
  • 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; request for investment incentives; assessment of socio-economic effects of the project;
  • 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 logistics company in Vietnam

Apply for the Business Registration Certificate:

An application for the Business Registration Certificate 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;
  • After receiving the announcement on the seal sample, the Business Registry Office shall grant the receipt to the company, post the announcement on the National Portal of Business Registration and issue the Announcement on Publication of the seal sample to the company.

Option 2: Contribute capital, purchase shares, purchase capital contributions to Vietnamese logistics company

This option shall save time and money for foreign investors as they do not have to apply for the Investment Registration Certificate. However, they shall comply with the regulations on the foreign capital stating that foreign investors cannot own up to 100% of the charter capital of the company. In case investors choose this option, they just need to register to contribute capital, purchase shares, purchase capital contributions at the Department of Planning and Investment. Regarding to logistics activities foreign investors cannot perform, they should consider to adjust the business sectors of the Vietnamese company if needed.

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 and procedures related to foreign investment in Vietnam;
  • Consult about business sectors, business conditions of each sector under the laws of Vietnam;
  • Consult and draft the applications for Investment Registration Certificate, Business Registration Certificate and sublicenses;
  • Represent for Clients to perform procedures at state-authorized agencies when being authorized;
  • Consult about after-establishing issues: contracts, labor, tax, social insurance…

Foreign investors looking for advice on legal issues and procedures to establish foreign-owned logistics company in Vietnam as well as other issues related to foreign investment and enterprises in Vietnam, please feel free to contact Viet An Law Firm for more information!

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