Foreign investors in maritime freight transport service business

With the trend of international trade integration, the freight transport industry between countries is also increasingly developing. Businesses will often choose the form of freight transport by sea with advantages such as transporting large volumes of goods, time-saving. Therefore, foreign investors also pay great attention to investing in the freight transport service business by sea in Vietnam nowadays. In this article, Siglaw will guide you through the procedures for foreign investors to do business in freight transport services by sea.

Conditions for foreign investors to conduct business in freight transport services by sea

Vietnam is a country with a long coastline from North to South with many developed seaports. Henceforth, Vietnam has a great advantage to develop maritime transport business. Maritime transport is a transport activity related to the use of infrastructure and means of maritime transport.

Maritime transport or sea transport is a form of transporting goods through the use of maritime facilities and infrastructure to serve the transport activities. Depending on the route, type of goods, means of transport are ships and means of loading and unloading goods such as cranes. Therefore, the conditions for foreign investors to do business in maritime freight transport services include:

Legal basis for foreign investors doing business in maritime freight transport services

• Vietnam’s commitments to join the World Trade Organization (WTO);
• ASEAN Framework Agreement on Services (AFAS);
• Vietnam-Japan Economic Partnership Agreement (VJEPA);
• Vietnam-Korea Free Trade Agreement (VKFTA);
• European-Vietnam Free Trade Agreement (EVFTA);
• Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP);
• Decree No. 160/2016/ND-CP regulating the conditions for maritime transport business, shipping agency services and ship towing services;
• Decree No. 163/2017/ND-CP regulating logistics services business;
• Decree No. 147/2018/ND-CP amending and supplementing a number of articles of the Decrees regulating business conditions in the maritime sector.

Provisions in the Treaties on maritime freight transport services

1. Establishment of companies operating Vietnamese-flagged vessels

• Joint ventures are permitted in which the foreign capital contribution does not exceed 49% of the total legal capital. Foreign crew members are allowed to work on Vietnamese-flagged vessels (or registered in Vietnam) owned by joint venture enterprises in Vietnam, but the total number does not exceed 1/3 of the ship’s crew. The captain or first mate must be a Vietnamese citizen.
• For EVFTA: Foreign service providers are allowed to establish joint ventures in which the foreign capital contribution does not exceed 70% of the total legal capital of the joint venture.
• For AFAS: Freight transport, except domestic transport (CPC 7212), is allowed to establish joint ventures in which the foreign capital contribution does not exceed 70% of the total legal capital of the joint venture.

1. Other forms of commercial presence to provide international maritime freight transport services: Foreign maritime freight transport companies can establish 100% foreign-invested enterprises

Procedures for foreign investors to conduct business in maritime freight transport services

 

Step 1: Apply for a Investment Registration Certificate (IRC) for maritime freight transport services

Step 2: Apply for a Enterprise Registration Certificate (ERC) for maritime freight transport services

Step 3: Publish the ERC content on the National Business Registration Portal

Step 4: The enterprise engraves a seal and publishes the seal sample

Step 1: Apply for an IRC for maritime freight transport services

1. Document requesting to implement an investment project for maritime freight transport services;
2. Copy of ID card or passport for individual investors and documents confirming legal status for institutional investors;
3. Detailed document proposing a maritime freight transport services investment project;
4. Copy of documents on financial matters of foreign investors;
5. Documents on land use needs, location lease agreement or location use rights to implement the investment project.

Competent Authority: Department of Planning and Investment or Management Board of industrial parks, export processing zones, economic zones and high-tech zones if the investment project is in those zones.

Estimated Time: For investment projects not subject to investment policy decisions, the deadline for returning dossiers is 15 – 20 working days from the date of receipt of complete dossiers.

Step 2: Apply for a ERC for maritime freight transport  services

1. Application for registration of maritime freight transport service business;
2. Company charter with maritime freight transport service industry code;
3. List of company members/List of founding shareholders and shareholders who are foreign investors;
4. Copies of the following documents:

• ID card, passport of individual members;
• ID card, passport of authorized representative;
• Copy of ERC for foreign organization members.

1. IRC according to regulations;
2. Authorization letter if the enterprise does not directly submit the application.

Competent Authority: Business Registration Office under the Department of Planning and Investment.

Estimated Time: 03 – 06 working days from the date of receiving complete and valid documents.

Step 3: Publish the ERC content on the National Business Registration Portal

Information on the ERC must be made public on the National Business Registration Portal within 30 days from the date of issuance of the ERC. According to Clause 1, Article 26 of Decree 50/2016/ND-CP, in case an enterprise does not publish or fails to publish the business registration content on the National Business Registration Portal within the prescribed time limit, the enterprise will be fined from VND 1,000,000 to VND 2,000,000.

Step 4: The enterprise engraves a seal and publishes the seal sample

Enterprises can authorize or carve their own seals and notify the Department of Planning and Investment of their company’s seal samples. Enterprises can decide on the form, quantity and content of the seals, but they must show the name and enterprise code. After receiving the notification of the enterprise’s seal samples, the Business Registration Office will issue a Receipt to the enterprise, post the enterprise’s notification on the National Business Registration Portal and issue a notice of posting information on the enterprise’s seal samples to the enterprise.

Note on applying for a Certificate of Eligibility for Maritime Freight Transport Service Business

According to Decree No. 160/2016/ND-CP regulating the conditions for maritime transport business, maritime agency services and maritime towage services, before officially starting operations, foreign investors had to apply for a Certificate of Eligibility for Maritime Freight Transport Services Business. The issuance of the Certificate of Eligibility for Business will be submitted to the Vietnam Maritime Administration.

However, Clause 6, Article 3 from the Decree No. 147/2018/ND-CP about amending and supplementing a number of articles of the Decrees regulating business conditions in the maritime sector stipulates that “Enterprises engaged in maritime transport, shipping agency services, and ship towing services established before the effective date of this Decree shall continue to operate; from the effective date of this Decree, enterprises must fully satisfy the conditions for maritime transport business, shipping agency services, and ship towing services prescribed in this Decree”.

Thus, foreign investors in maritime freight transport service business only need to fully satisfy the conditions for maritime transport business, shipping agency services, and ship towing services as prescribed, and do not need to apply for a Certificate of eligibility for maritime freight transport services business.

Above is information on procedures for foreign investors to conduct business in sea freight transport services according to the latest legal regulations. If you have any questions, please contact Siglaw for the fastest support.

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