A wholly-owned foreign company in logistics business is allowed in Vietnam

A wholly-owned foreign company in logistics business is allowed in Vietnam

Vietnam’s WTO Commitments allow for a wholly-owned foreign company in logistics business with respect to  (i) container stations and depot services, (ii) storage and warehouse services (CPC 742), (ii) freight transport agency services (CPC 748, and (iii) “other supporting and auxiliary transport services (CPC 749)” ) since January 2014.

"Container station and depot services" means storing containers, whether in port areas or inland, stuffing/stripping, repairing and making them available for shipments.
"Freight transport agency services" includes freight forwarding services. These services include activities such as organising and monitoring shipment operations on behalf of shippers, through the acquisition of transport and related services, preparation of documentation and provision of business information.

Roadmap for the integration of logistics services in ASEAN countries will create an ASEAN singe market by 2015 by strenthening ASEAN economic integration through liberization and facilitation measures in the areas of logistics services.   

Meanwhile Vietnam Government’s Decree No.140/2007/ND-CP dated 5 September 2007 stipulated that the foreign entity shall be permitted to establish a joint venture company in which the capital contribution ratio of the foreign investor does not exceed 51%.

Therefore, there is a discrepancy between the WTO Commitments and Decree 140 with respect of the logistics business.  As a result of this inconsistency in law, on 18 August 2014 the People”s Committee of Ho Chi Minh City issued official dispatch No 6613/VP-DT suspending the issuance or amendment of investment certificates or investment licenses to100 percent foreign-owned companies operating in the logistics business. As such, the licensing authorities in Ho Chi Minh City will wait for further detailed directives and instructions from the Prime Minister with respect of the logistics business before issuing or amending investment certificates or licenses in logistics.

On 25 February 2016, the People’s Committee of Ho Chi Minh City issued Official Dispatch No.735/UBND-DT to remove restrictions on foreign ownership in the field of logistics. Accordingly, the licensing authorities of Ho Chi Minh City can now issue investment registration certificates to foreign wholly-owned enterprises operating in freight transport agency services (CPC 748), in order to be consistent with Vietnam’s WTO Commitments. Other auxiliary services (CPC749) shall be subject to the Prime Minister’s pending instructions.

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