CORPORATE ARTICLES

Vietnam Opens More Logistics Service Sectors To Foreign Investors

In recent years, Vietnam Government has been facilitating foreign investment in almost all types of logistics services excluding inspection services, certificate granting for conveyances, transport auxiliary services, and other restrictions on transport related services.

As of January 22nd, 2014, the Prime Minister of Vietnam issued Decision No. 169/QĐ-TTg approving the development scheme for logistics services in Vietnam’s transport sector by 2020. This scheme aims to enhance economic efficiency by increasing exploitation and use of seaports. Furthermore, with a long-term developmental orientation also stated in such scheme, logistics services are hoped to have developed into an important service industry, conceivably contributing 5-10% to Vietnam’s Gross National Product (GNP) by the year of 2030. In addition, Decision No. 169/QĐ-TTg proposed development solutions for transport infrastructure and international cooperation, as well as construction solutions for mechanisms and support policies.

Logistics services are deemed commercial activities and are stipulated as such in Vietnamese Commercial Law (2005). Concurrently, in Decree No. 140/2007/NĐ-CP issued by Vietnam Government in 2007, they are classified into three general categories as follows:   

1. Primary logistics services:

a) Loading and unloading services;

b) Warehouse and storage services;

c) Transport agency services;

d) Other supplementary services such as freight services, container hire purchase, etc.

2. Transport related logistics services:

a) Ocean transport services;

b) Air transport services;

c) Rail transport services;

d) Road transport services;

e) Pipeline transport services;

f) Inland waterway transport services.

3. Other logistics services:

a) Technical examination and analysis services;

b) Postal services;

c) Wholesale and retail services;

d) Other transport auxiliary services. 

Also stated in Decree No. 140/2007/NĐ-CP are certain conditions and liability limitations for logistics service providers (including foreign ones). Additionally, for each type of logistics services, this Decree stipulates corresponding rates for foreign capital contribution in joint ventures.

To satisfy current demand and attract investment, former restrictive regulations on foreign capital contribution (not exceeding 51%) in joint ventures providing international ocean transport services were lifted in 2012. Likewise, at present, foreign investors no longer encounter restrictions on capital contribution when providing warehouse and storage services, freight transport agency services and other supplementary services; for such restrictions are lifted in 2014 as stipulated in Decree No. 140/2007/NĐ-CP.

Although a number of logistics sectors are now open to foreign investors, there are still important aspects of logistics in which no restrictions on foreign capital contribution have yet been lifted; for instance: (i) loading and unloading services require foreign capital contribution not exceeding 50%, (ii) inland waterway and rail transport services require foreign capital contribution not exceeding 49%. Since 2010, foreign capital contribution in joint ventures providing road transport services has been increased from 49%; however, it must not exceed 51%.

In respect of logistics services concerning technical examination and analysis, which are supplied in the exercise of governmental authority, foreign investors are only permitted to form a joint venture with a Vietnamese private enterprise after 3 years (or 5 years for other forms of foreign investment) from when it is granted the permission to provide the aforementioned logistics services.  

Notably, wholesale, retail, and postal services will be conducted in compliance with discrete regulations of Vietnam Government.

Meanwhile, on the other hand, foreign investors are prohibited not only from providing inspection services and other transport auxiliary services, but also from granting certificates to conveyances, unless otherwise regulated by law.

PLF Law Firm

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