BUSINESS ARTICLES

Foreign investors establish tourism companies in Vietnam (Travel Agents)

Foreign investors establish tourism companies in Vietnam (Travel Agents)
Foreign investors establish tourism companies in Vietnam (Travel Agents)

In an effort to overcome the Covid-19 pandemic, Vietnam is one of the Asian countries that is fully open to international tourists. According to the Global Tourism Development Capability Index 2021 report of the World Economic Forum (WEF), Vietnam’s tourism ranked 52nd out of 117 economies, up 8 places compared to 2019. This shows that Vietnam is gradually becoming an attractive destination for international tourists, leading to the interest of foreign investors in this field. This article will provide general conditions for foreign investors to do business in travel services in Vietnam.

Market access conditions

According to WTO commitments, Vietnam does not limit the capital contribution of foreign service providers in joint ventures for travel agency and tour operator services (CPC 7471), this is also committed similar to the Free Trade Agreement between the European Union and Vietnam (EVFTA).

With this commitment of Vietnam, investors are required to:

  • Joint venture with a Vietnamese legal entity with unlimited capital contribution; and
  • The foreign investor must be a legal entity (not an individual).

Scope of operation

Business travel service in Vietnam is divided into the following activities:

  • Domestic travel services for domestic tourists.
  • International travel service serving international tourists to Vietnam and tourists going abroad.

Enterprises providing international travel services are entitled to provide international travel services and domestic travel services. However, foreign-invested enterprises are only allowed to provide international travel services to serve international tourists to Vietnam.

Accordingly, with each different type of travel service business, investors will have to meet the corresponding business conditions.

Regulations of Vietnamese Law

Travel services are regulated as a conditional business (196), according to which:

Domestic travel service requires the following conditions:

  • Being an enterprise established in accordance with the Law on Enterprises.
  • Deposit 20,000,000 (twenty million) VND at the bank.
  • The person in charge of a business in travel services must have an intermediate or higher degree in travel; In case the personnel graduated from an intermediate level or higher in another major, they must have a certificate of domestic tourism operations.

International travel service requires to meet the following conditions:

  • Being an enterprise established in accordance with the Law on Enterprises.
  • Deposit 50,000,000 (twenty million) VND at the bank.
  • The person in charge of the travel service business must have a college degree or higher in tourism; In case the personnel graduated from college or higher in another major, they must have an international tourism management certificate.

In addition, a tour operator providing travel services for international tourists to Vietnam and tourists going abroad must pay a deposit of VND 100,000,000 (one hundred million).

Steps to set up a company

The establishment of a travel service company is usually done through the following steps

Step 1: Apply for an investment registration certificate

Step 2: Apply for an enterprise registration certificate

Step 3: Apply for a license for the provision of tourism

Points to note

  • Enterprises need to publicize their business name, and travel service business license number on signboards at headquarters, branches, transaction offices, travel contracts, advertising publications, and electronic transactions.
  • Buy insurance for tourists during the duration of the travel program, unless the tourist already has insurance for the entire travel program.
  • Assist tourists with procedures for entry, exit, transit and customs.
  • Implement periodical reporting and statistics: 20th of the following month (for monthly reports) and February 20th of the following year (for annual reports).
  • Foreign individuals are not allowed to practice as tour guides in Vietnam.

The article is based on applicable law at the time noted as above and may no longer be appropriate at the time the reader approaches this article as the applicable law has changed and the specific case that the reader wishes to apply. Therefore, the article is only for reference.