Logistics activities in Vietnam are interested by foreign investors because this is one of the most potential activities.
In accordance with the Vietnam Commercial Law 2005, logistics services are commercial activities, according to which traders organize one or more jobs including receiving, transporting, storing, warehousing, customs clearance, other paperwork, customer consultation, packaging packing, code signing, delivery or other services related to the goods as agreed with the customer to enjoy remuneration.
According to Decree No. 163/2017/ND-CP, the logistics service is provided including 16 main categories. In addition to having to meet the same conditions as domestic investors, foreign investors in the country or territories being members of the World Trade Organization are provided with logistics services with fairly strict conditions.
A few notes on the ratio of capital and commercial presence of foreign investors when establishing a Logistics project in Vietnam:
| No | Service Content | Vietnam Law | WTO Commitments |
| 01 | International Sea Freight
(a) Passenger transportation less cabotage (CPC 7211) (b) Freight transportation less cabotage (CPC 7212) |
-The foreign sea transport company is allowed to establish a business or contribute capital, buy shares, capital contribution in the enterprise.
– Foreign capital contribution not exceeding 49% of total legal capital. |
Foreign service providers are allowed to establish joint ventures in which the capital contribution of foreign parties does not exceed 49% of the legal capital of the joint venture. |
| ⇨ Foreign service providers are permitted to establish joint venture, contribute capital, buy shares of capital contribution, capital ratio of foreign investors not exceeding 49%. | |||
| 02 | Inland waterway transport
(a) Transportation services Passenger load (CPC 7221) (b) Transportation services Download Cargo (CPC 7222) |
Foreign service providers are permitted to establish business or contribute capital, buy shares, capital contribution in the enterprise, where foreign investor’s contribution ratio is not more than 49%. | Foreign service suppliers are permitted to provide services only through the establishment of joint ventures with Vietnamese partners in which the capital contribution of foreign side not exceeding 49% of total legal capital.
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| ⇨ Foreign service providers are permitted to establish joint venture, contribute capital, buy shares of capital contribution, capital ratio of foreign investors not exceeding 49% | |||
| 03 | Rail Transport Services
(a) Passenger transportation (CPC 7111) (b) Freight transportation (CPC 7112) |
Foreign service providers are permitted to establish business or contribute capital, buy shares, capital contribution in the enterprise, where foreign investor’s contribution ratio is not more than 49%. | Foreign service suppliers are permitted to provide services only through the establishment of joint ventures with Vietnamese partners in which the capital contribution of foreign side not exceeding 49% of total legal capital. |
| ⇨ Foreign service providers are permitted to establish joint venture, capital contribution, buy shares of capital contribution, capital ratio of foreign investors not exceeding 49%. | |||
| 04 | Road transport services | ||
| Passenger transportation (CPC 7121+7122) |
Foreign service suppliers are permitted to provide passenger and freight transport services through business cooperation contracts or joint- ventures with the capital contribution of foreign side not exceeding 49%. | ||
| Freight transportation (CPC 7123) |
In case of business transport services under road transport services, which is carried out through the form of business Cooperation Agreement or established enterprise or capital contribution, buy shares, capital contribution in the enterprise, where foreign investor’s contribution ratio is not more than 51%. | Foreign service suppliers are authorized to establish a joint venture to provide freight services, in which the proportion of foreign capital contribution should not exceed 51%. | |
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05 |
Maritime Auxiliary Services | ||
| Container handling services (CPC 7411)⇨ permit to establish joint venture, capital contribution, purchase of shares, capital contribution, finance of which foreign investor’s contribution is not more than 50% |
Foreign service suppliers are permitted to establish business or capital contribution, buy shares, capital contribution in the enterprise, where foreign investor’s contribution ratio is not more than 50%. Foreign investors are allowed to establish trade presence in Vietnam in the form of a business cooperation agreement. | Foreign service suppliers are permitted to provide services only through the establishment of joint ventures with Vietnamese partners in which the capital contribution of foreign side not exceeding 50%. | |
| Customs Clearance Services
⇨ Foreign service suppliers are permitted to establish joint ventures, capital contribution, purchase of shares, capital contribution, business cooperation and no restriction on foreign investor’s ownership ratio |
In case business customs services under the support services of marine transport, Foreign service suppliers are permitted to establish enterprises or contribute capital, buy shares of capital contribution in the enterprise, including capital contribution of domestic investors. Foreign investors are allowed to establish trade presence in Vietnam in the form of a business cooperation agreement. | Foreign service suppliers are permitted to establish joint venture, which does not restrict the proportion of foreign investors ‘ equity. | |
| Container Station Services
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According to the above commitment, restrictions on the establishment of joint ventures and the restriction on foreign capital ratios will be removed after 07 years since the Vietnam entered the WTO and to date, foreign investors have established businesses with 100% foreign capital to carry out this service (the Ministry of Industry and Trade to guide the opening of the logistic market) | ||
| 06 | Checkups, cargo brokerage services, cargo inspections, sampling services and weight determination; Cargo acceptance and acceptance services; Transport Documents Preparation Service | According to the above commitment, restrictions on foreign capital ratios in joint ventures will be deleted after 07 years since joining, however, conditions for establishing joint ventures continue to be applied. | |
| 07 | Container handling services | Foreign service suppliers are permitted to establish business or capital contribution, buy shares, capital contribution in the enterprise, where foreign investor’s contribution ratio is not more than 50%. Foreign investors are allowed to establish trade presence in Vietnam in the form of a business cooperation agreement. | Foreign service suppliers are permitted to provide services only through the establishment of joint ventures with Vietnamese partners in which the capital contribution of foreign side not exceeding 50%. |
| 08 | Container warehousing services, warehousing services; Cargo Handling Services | According to the above commitment, restrictions on the establishment of joint ventures and restrictions on foreign capital ratios will be deleted after 07 years since Vietnam joined the WTO and to date, foreign investors have established 100% foreign invested enterprises to perform this service. | |
| 09 | Shipping Services | Establishment of 100% foreign invested enterprises | |
We have provided you with the information on the proportion of equity and commercial presence of foreign investors when establishing a Logistics company in Vietnam.
Please contact us directly for free consultation on the relevant legal matters when doing this activity.
NACI LAW,
Hanoi Office: 6th Floor, office area 169 Nguyen Ngoc Vu, Cau Giay, Hanoi.
Ho Chi Minh Office: 4th Floor, Lot A No. 974, Truong Sa Street, Ward 12, District 3, Ho Chi Minh City, Vietnam.
South Korean lawyer: + 84. 904 537 525.
Vietnamese lawyer: + 84. 9789 38 505
Commitments of Naci Law when performing legal services for customers:
1. Always comply with Vietnamese law and International law.
2. Update, notify the progress of the stage to customers.
3. Always look for ways to minimize risks and fully resolve them if they arise.
4. Make a refund in case the job cannot be completed despite all our efforts.
