1. Concept

Logistics services are commercial activities, whereby traders organize to perform one or more jobs including receiving, transporting, warehousing, warehousing, carrying out customs procedures, other paperwork, consulting customers, packaging, marking codes, delivering goods or other services related to goods as agreed with customers pay.

2. Logistics business conditions for foreign investors

General conditions

Traders providing specific services of logistics services specified in Article 3 of Decree 163/2017/ND-CP must meet the conditions for investment and business in accordance with the provisions of law for such services.

Traders conducting part or all of their logistics business activities by electronic means connected to the Internet, mobile telecommunications networks or other open networks, in addition to having to comply with the provisions of law for specific services specified in Article 3 of Decree 163/2017/ND-CP, must also comply with regulations on e-commerce.

Conditions for foreign investors

In addition to satisfying the general conditions, foreign investors belonging to countries and territories that are members of the World Trade Organization may be provided with logistics services under the following conditions:

Firstly, for the case of providing cargo transportation services belonging to sea transportation services (except for domestic transportation):

• To establish companies to operate fleets flying the Vietnamese flag or contribute capital, buy shares and contributed capital in enterprises, in which the proportion of contributed capital of foreign investors does not exceed 49%. The total number of foreign seafarers working on Vietnamese-flagged vessels (or registered in Vietnam) owned by these companies in Vietnam shall not exceed 1/3 of the ship’s margin. The captain or first mate must be a Vietnamese citizen.
• Foreign shipping companies may establish enterprises or contribute capital, purchase shares or contributed capital in enterprises.

Secondly, for the case of dealing in container handling services belonging to shipping support services (some areas may be reserved for providing services or applying licensing procedures in these areas), establishing an enterprise or contributing capital, purchase of shares and contributed capital in the enterprise, in which the proportion of contributed capital of foreign investors does not exceed 50%. Foreign investors are allowed to establish a commercial presence in Vietnam in the form of business cooperation contracts.

Thirdly, in case of providing container handling services belonging to services supporting all modes of transportation, except for services provided at airports, enterprises may be established or contribute capital, purchase shares or contributed capital in the enterprise, in which the proportion of capital contributed by foreign investors shall not exceed 50%.

Fourthly, in case of business in customs clearance services belonging to shipping support services, enterprises may be established or contributed capital, purchased shares or contributed capital in the enterprise, including capital contributed by domestic investors. Foreign investors are allowed to establish a commercial presence in Vietnam in the form of business cooperation contracts.

Fifthly, for the case of business of other services, including the following activities: Bill of lading inspection, freight brokerage services, cargo inspection, sampling and weight determination services; goods receipt and acceptance services; transport document preparation services, to establish enterprises or contribute capital, purchase shares and contributed capital in enterprises, including capital contributions of domestic investors.

Sixthly, for the case of providing freight transport services belonging to inland waterway transport services or freight transport services belonging to railway transport services, enterprises may be established or contribute capital, purchase shares or contributed capital in the enterprise, in which the proportion of capital contributed by foreign investors shall not exceed 49%.

Seventhly, in case of providing goods transport services belonging to road transport services, it shall be carried out through a business cooperation contract or the establishment of an enterprise or capital contribution, purchase of shares or contributed capital in the enterprise, in which the proportion of contributed capital of foreign investors shall not exceed 51%. 100% of the drivers of the enterprise must be Vietnamese citizens.

Eighthly, for air transport service business establishments, the provisions of the aviation law shall be complied with.

Ninthly, for the case of providing technical analysis and inspection services

• For services provided for the exercise of the Government’s competence in the form of enterprises with capital contribution from domestic investors after three years or in the form of enterprises with no restriction on capital contributed by foreign investors after five years, since the private service provider is allowed to trade in such services.
• It is not allowed to provide inspection and certificate services for means of transport.
• The implementation of technical analysis and inspection services is restricted from operating in geographical areas determined by competent agencies for reasons of national security and defense.

3. Procedures for registering the establishment of a logistics company for foreign investors

Step 1: Apply for an Investment Registration Certificate

According to Point a, Clause 1, Article 37 of the Law on Investment 2020, an investment project of a foreign investor (in this case, the establishment of a company in Vietnam to provide logistics services) is subject to an investment registration certificate.

Procedures for applying for an Investment Registration Certificate are carried out in accordance with the provisions of Article 38 of the Law on Investment 2020, Article 36 of Decree 31/2021/ND-CP.

Step 2: Carry out business registration procedures

For types of logistics services for which foreign investors are permitted by law to establish enterprises, foreign investors may carry out procedures for enterprise registration to provide business in such types of logistics services. However, in the process of establishing a business, foreign investors need to pay attention to the maximum proportion of their capital in the enterprise according to the regulations of each type of logistics service. Foreign investors can choose one of the following types of enterprises:

• Single-member limited liability company. For this type, foreign investors only choose when the type of logistics service does not limit the percentage of foreign investors’ ownership.
• Limited liability company with two or more members. For this type, foreign investors must enter into joint ventures with Vietnamese traders.
• Joint Stock Company. For this type, foreign investors must enter into joint ventures with Vietnamese traders.

Step 3: Apply for a business license under specialized laws

Depending on the type of logistics service that the investor decides to invest in, specialized laws in that field require enterprises to have a business license in that field to operate.

Above is the content of KALF’s consultancy on Logistics Business for foreign investors in Vietnam. All of our above advice is based on applicable legal regulations. If you have any questions or requests about legal issues, please contact us for timely answers.