Foreign investors in domestic retail collection services

Foreign investors in domestic retail collection services

 

Retail collection locations, also known as CFS (Container Freight Station), are warehouse and yard areas used to collect, divide, and separate goods of many shippers transporting the same container. At the retail collection locations, business owners can provide the following services:

• Packaging, repacking, arranging, and re-arranging goods awaiting export.
• Transit and transit goods are brought to LCL collection locations in the port to separate, combine with export containers or combine with Vietnamese export goods.
• Separating imported shipments to wait for import procedures or combining containers with other export shipments for export to a third country.
• Transferring ownership of goods during the storage period.

To learn more about the issue of investing in domestic retail collection services, Siglaw invites you to go through this article!

 

Legal basis for foreign investors to conduct domestic retail collection services

• Vietnam’s commitments in international treaties;
• Law No. 61/2020/QH14, Investment Law;
• Law No. 59/2020/QH14, Enterprise Law;
• Decree 31/2021/ND-CP detailing and guiding the implementation of a number of articles of the Investment Law;
• Decree 01/2021/ND-CP on business registration;
• Decree No. 09/2018/ND-CP detailing the Commercial Law and the Law on
• Foreign Trade Management on the purchase and sale of goods and activities directly related to the purchase and sale of goods by foreign investors and foreign-invested economic organizations in Vietnam.
• Decree 68/2016/ND-CP stipulates the conditions for trading in duty-free goods, warehouses, locations for customs procedures, collection, inspection and supervision.
•  Decree 67/2020/ND-CP amends and supplements a number of articles of Decree 68/2016/ND-CP regulating the conditions for trading in duty-free goods, warehouses, locations for customs procedures, collection, inspection and supervision

 

Conditions for foreign investors to conduct domestic retail collection services

According to the provisions of the Law on Investment  and Decree 31/2021/ND-CP, domestic retail collection services are subject to conditional market access for foreign investors and conditional business lines. Therefore, foreign investors wishing to conduct this service must satisfy certain conditions according to Vietnam’s international commitments in international treaties and according to the provisions of Vietnamese law.

 

Market access conditions for foreign investors

• WTO, FTAs ​​not specified in the Schedule of Commitments
• Vietnamese Law:

Clause 1, Article 7 of Decree 09/2018/ND-CP Foreign-invested economic organizations that have the right to export are allowed to export: Goods purchased in Vietnam; goods ordered by such economic organizations for processing in Vietnam and goods legally imported into Vietnam to foreign countries and separate customs areas, under the following conditions:

 

1. a) Exported goods are not on the list of goods prohibited from export; list of goods temporarily suspended from export; list of goods not allowed to be exported in international treaties to which Vietnam is a member;
2. b) For exported goods on the list of goods exported under license, under conditions, foreign-invested economic organizations must have a license or meet all conditions as prescribed by law.

 

Conditions for LCL collection locations

According to Article 62 of The Maritime Law, Article 19 of Decree 68/2016/ND-CP and Article 11 of Decree 67/2020/ND-CP, to be recognized as a retail collection location, the following conditions must be satisfied:

• Retail collection locations are established in areas where there are areas:

+) Seaports, international civil airports, inland ports for export and import of goods, road border gates, international railway stations;

+) Industrial parks, high-tech parks, duty-free zones and other areas as prescribed by law.

• Retail collection locations have a minimum warehouse area of ​​1,000 m2 excluding yards and auxiliary works, and must have a fence separating them from the surrounding area.
• There is software that meets the requirements for managing, storing, and exporting data online to customs authorities on the name of goods, quantity, status of goods, time of goods being brought in, taken out, and stored in the LCL collection location in detail according to the bill of lading and/or customs declaration for management according to the Automatic Goods Management and Monitoring System.
• There is a camera system that meets the requirements for online connection with the managing customs authority. Images can be observed at all locations of the LCL collection location at all times of the day (24/24 hours), image data is stored for at least 06 months.

Note: If the retail collection location is located in a seaport or dry port area where the retail collection location business enterprise is a port business enterprise, it is not necessary to carry out the recognition procedure according to the provisions of this Decree, but it is necessary to carry out the procedure for granting a retail collection location code to carry out the procedures for goods being brought in and taken out of the retail collection location before putting them into operation.

 

Procedures for foreign investors to conduct domestic retail collection business

Step 1: Apply for an Investment Registration Certificate (IRC)

Documents for requesting an Investment Registration Certificate:

• A written request to implement a domestic retail collection business investment project, including a commitment to bear all costs and risks if the project is not approved;
• Documents on the legal status of the foreign investor: ID card, passport, identity card for individual investors; copy of the Certificate of Establishment or other equivalent document confirming the legal status for institutional investors with consular confirmation
• Documents proving the financial capacity of the foreign investor, including at least one of the following documents: financial statements of the last 2 years of the foreign investor; commitment to financial support from the parent company; commitment to financial support from a financial institution; guarantee of the financial capacity of the investor; Other documents proving the financial capacity of the foreign investor;
• The proposal for an investment project to provide domestic retail collection services includes the following main contents: investor or form of investor selection, investment objectives, investment scale, investment capital and capital mobilization plan, location, duration, implementation progress, information on the current land use status at the project implementation location and proposed land use needs (if any), labor needs, proposed investment incentives, impacts, socio-economic efficiency of the project, preliminary assessment of environmental impacts (if any) in accordance with the provisions of the law on environmental protection.

 

In cases where the law on construction stipulates the preparation of a pre-feasibility study report, the investor may submit a pre-feasibility study report instead of the investment project proposal;

• In case the investment project for the domestic collection of small-lot goods does not request the State to allocate land, lease land, or allow the change of land use purpose, a copy of the land use right papers or other documents determining the right to use the location to implement the investment project shall be submitted;
• Explanation of the technology used in the investment project for the domestic collection of small-lot goods for projects subject to appraisal and consultation on technology according to the provisions of law on technology transfer;
• Other documents related to the investment project, requirements on conditions and capacity of the investor according to the provisions of law (if any).
• Number of dossiers: 01 set
• Processing time: The investment registration agency shall issue the Investment Registration Certificate to the foreign investor within 15 days from the date of receipt of a valid dossier.
• Issuing authority: Department of Planning and Investment of the province where the company intends to establish its headquarters

 

Step 2: Apply for an Enterprise Registration Certificate (ERC)

After being granted an Investment Registration Certificate, the investor shall apply for a certificate of registration of an enterprise providing domestic LCL collection services by one of the following three methods:

 

• Register the enterprise directly at the Business Registration Office;
• Register the enterprise via postal service;
• Register the enterprise via the electronic information network.

The dossier includes the following documents:

• Application for establishment of an FDI enterprise providing domestic LCL collection services;
• Company charter;
• List of members or shareholders of the company (if it is a limited liability company with two or more members or a joint stock company);
• Copies of legal documents of members, shareholders, and representatives (For individual investors: Copies of citizen identification cards, identity cards, passports, or other legal personal identification of founding members or shareholders; For investors that are economic organizations: Copies of the decision to establish the company, business registration certificate, or other equivalent documents of the organization; copies of valid identity cards or passports of the legal representative of the organization);
• Investment registration certificate
• Other necessary documents (if any);

 

Within 03 working days from the date of receipt of the dossier, the Business Registration Authority shall be responsible for reviewing the validity of the business registration dossier and granting the business registration; in case the dossier is invalid, the Business Registration Authority shall notify in writing the contents that need to be amended or supplemented to the business founder. In case of refusal to register the business, it shall notify in writing the business founder and state the reasons.

 

Issuing authority:

• At provincial level: Business Registration Office under the Department of Planning and Investment

The Business Registration Office can organize points to receive dossiers and return results under the Business Registration Office at different locations in the province;

• At district level: Finance – Planning Office under the District People’s Committee

 

Step 3: Procedures for recognition of LCL collection locations (According to Decree 67/2020/ND-CP)

Documents for recognition of retail collection locations (amended by Decree 67/2020/ND-CP)

• Application for recognition according to Form No. 01 of the Appendix issued with this Decree: 01 original.
• Certificate of business registration or Investment certificate or other documents specified in Clause 4, Article 81 of Decree No. 78/2015/ND-CP dated September 14, 2015 of the Government on business registration: 01 copy.
• Design diagram of the LCL collection location area clearly showing the boundary separating it from the outside, location of warehouses, location of camera system installation, internal transportation system, security, warehouse office and customs office: 01 copy.
• Certificate of eligibility for fire prevention and fighting issued by the police agency: 01 copy.
• Method of sending: send by post, send directly or via the electronic information receiving system of the customs agency to the General Department of Customs.
• Authority: Provincial and municipal Customs Department
• Time limit:

+) Within 10 working days from the date of receiving the complete dossier of the enterprise, the General Department of Customs completes the inspection of the dossier, the actual warehouse, yard. After completing the inspection, the customs agency and the enterprise sign the minutes recording the inspection content.

+) Within 05 working days from the date of completing the inspection of the dossier, the actual warehouse, yard, the Director General of the General Department of Customs issues a decision to recognize the bonded warehouse or sends a written reply to the enterprise if it does not meet the prescribed conditions.

+) In case the dossier is not valid, within 05 working days from the date of receiving the dossier of the enterprise, the General Department of Customs shall issue a written notice and request the enterprise to supplement the dossier. After 30 working days from the date of sending the notice but the enterprise does not respond in writing, the General Department of Customs has the right to cancel the dossier.

 

Note: Every 03 months, the enterprise operating the LCL collection location must notify in writing the Customs Department managing the LCL collection location about the status of the goods and the operation of the enterprise operating the LCL collection location.

 

For comprehensive free CONSULTATION ON ESTABLISHING A DOMESTIC RETAIL GOODS COLLECTION SERVICES BUSINESS COMPANY FOR FOREIGN INVESTORS IN VIETNAM, please contact: 

• Head office in Ha Noi: No. 44/A32 – NV13, Gelexemco A, Le Trong Tan Street, An Khanh Ward, Hoai Duc District, Ha Noi.

• Hotline:  0967.818.020 – 0961-366-238

• Office in Ho Chi Minh: A9.05 Block A, Sky Centre Building, No. 5B Pho Quang Street, Ward 2, Tan Binh District, Ho Chi Minh.
• Representative office in Da Nang: 177 Trung Nu Vuong, Hai Chau District, Da Nang City.