Fresh regulations on logistics service business
14:06 | 28/02/2018

VGP - The Government on December 30, 2017 issued Decree No. 163/2017/ND-CP ("Decree 163") regulating the logistics service business in replacement of Decree No. 140/2007/ND- CP (“Decree 140”) detailing the Commercial Law on the conditions for trading in logistics services and the limitation of liability for traders providing logistic services.

Question: How many types of logistics service and what are qualifications for foreign investors to set up logistics enterprises?

Answer:

17 types of logistics service

Instead of classifying logistics services into 3 groups (logistics services, logistics services related to transportation and other related logistics services) including 15 services as stipulated in Decree 140, Decree 163 regulates 17 types of logistics service for the purpose of management of the functional agencies, including container handling services, except for services provided at airports; container warehousing services pertinent to sea transport support services; warehousing services pertinent to multimodal transport support services; delivery services; cargo agency service; customs declaration clearance (including customs clearance).

Foreign investors are eligible to set up logistics enterprises

In line with the WTO commitments on the roadmap of expanding the logistics market, Decree 163 adds new forms of investment to foreign investors doing business in logistics services. Accordingly, instead of restricting a capital contribution ratio of no more than 51% on FIs establishing joint ventures in logistics services, Decree 163 allows foreign investors to set up enterprises or contribute capital, purchase shares, and their capital contribution in the logistics enterprise depends on the type of logistics service to be traded.

Specifically, foreign investors belonging to the countries and territories that are members of the World Trade Organization are allowed to provide logistics services under the following conditions:

(i) For freight services pertinent to sea transport services (except for inland transport), foreign investors may establish companies operating their fleets under the Vietnamese flag or contribute capital, purchase shares and their capital contribution in the enterprise with a capital contribution ratio of no more than 49%. In particular, foreign shipping companies are eligible to set up enterprises or contribute capital, purchase shares, and their capital contributions in the enterprise are not subject to any restriction on their capital contribution ratio.

(ii) For container handling services pertinent to multimodal transport support services (except for services provided at airports), FIs are eligible to set up enterprises or contribute capital, purchase shares, and their capital contribution ratio does not exceed 50%. In addition to the sea transport support services, FIs are also allowed to establish commercial presence in Vietnam in the form of business cooperation contracts.

(iii) For customs clearance services pertinent to sea transport support services and other services, foreign investors may set up enterprises or contribute capital, purchase shares or capital contributions in the enterprises, including capital contributions by domestic investors.

(iv) In case of doing business in goods transport services pertinent to inland waterway transport services, goods transport services pertinent to rail transport services, foreign investors may set up enterprises or contribute capital, purchase shares or capital contributions in the enterprise, in which their capital contribution ratio does not exceed 49%.

For road transport services, foreign investors’ capital contribution ratio must not exceed 51%; at the same time, all enterprise drivers must be Vietnamese citizens.

Decree 163 takes effect from February 20, 2018./.

 

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