Foreign investment in vietnam’s transport service company

Transport services are rapidly increasing due to the process of globalization today. Therefore, the demand for investment in transportation companies of both domestic and foreign investors continously rises. The following article will clarify the procedures for foreign investors to contribute capital to a transportation company in Vietnam through the regulations of the Law on Investment 2014, Law on Enterprise 2014, law related to transportation (waterway, railway, road, aviation) and the WTO Protocol of Accession.

The conditions that foreign investors have to fulfill:

• 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: Investor can choose to contribute capital; buy shares, or buy capital contributions of transport services company, depending on the type of that company;
• The investor’s charter capital:
  • Railway transport services: joint ventures with Vietnamese partners in which the capital contribution of foreign side not exceeding 49% of the total legal capital;
  • Road transport services: must joint ventures with Vietnamese partners in which the capital contribution of foreign side not exceeding 51% of the total legal capital;
  • Maritime transport services: For cargo and passenger transport services: joint ventures with Vietnamese partners capital contribution of foreign side not exceeding 49%; For services related to international transport: can establish a foreign-invested enterprise from January 11, 2012;
  • Internal waterways transport services: joint ventures with Vietnamese partners in which the capital contribution of foreign side not exceeding 49% of the total legal capital;
  • Air transport services: Carriage of passengers or goods shall comply with the Vietnamese Law on aviation, in which the proportion of foreign capital contribution shall not exceed 30%; For aircraft repair and maintenance services: the capital contribution of foreign side is no limit.
  • Other transport auxiliary services: For container handling services (except for services provided at airports): joint ventures with Vietnamese partners in which capital contribute of foreign side not exceeding 50%; For Storage and warehouse service and Freight transport agency services, capital contributed by foreign investors are currently not limited…

Procedures for making investment by contributing capital, buying shares, or buying capital contributions

Due to the fact that transport services are conditional business lines, foreign investors have to register the capital contribution or purchase of shares/capital contribution:

An application for registration of capital contribution or purchase of shares/capital contribution:

• 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);
• A procuration or service contract in case the investor does not directly file and receive the result of this procedure.

Procedures for registration of capital contribution or purchase of shares/capital contributions:

• 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 the conditions in the Law on Enterprise, 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.

After receiving permit from the Service of Planning and Investment, foreign investor can contribute capital in transport services company. That company will do the formalities to change members/shareholders described by law.

Investing in the form of capital contribution to an operating transport services company will be easier for the investor than the form of investment to establish a company in Vietnam. As a matter of fact, when establishing a company, foreign investors must seek Vietnamese partners to establish joint ventures, carry out procedures to aplly for Business Registration Certificate and other types of sub-license. To get a better understanding of the conditions and formalities, investors should contact an liable law firm.