Foreign investors providing domestic retail collection services

Foreign investors providing domestic retail collection services

A retail collection location, also known as a CFS warehouse (Container Freight Station), is a warehouse used to carry out activities of collecting, dividing, and separating goods from many shippers transporting the same container. In a retail collection location, business owners can provide the following services such as:

• Packing, repackaging, arranging, and rearranging goods awaiting export.
• Transit and transshipment goods are brought to CFS locations in the port to be separated, packed into export containers or packed together with Vietnamese export goods.
• Splitting imported shipments to wait for import procedures or combining containers with other export shipments to export to third countries.
• Transfer of ownership of the goods during the retention period.

To learn more about investing in domestic retail collection services, let’s learn through this article with Siglaw!     

Legal basis for foreign investors to operate domestic retail collection services

1. Vietnam’s commitments in international treaties;
2. Law No. 61/2020/QH14, Investment Law;
3. Law No. 59/2020/QH14, Law on Enterprises;
4. Decree 31/2021/ND-CP detailing and guiding the implementation of some articles of the Investment Law;
5. Decree 01/2021/ND-CP on business registration;
6. Decree No. 09/2018/ND-CP detailing the commercial law and the Foreign Trade Management Law on goods purchase and sale activities and activities directly related to the purchase and sale of goods by foreign investors, economic organizations with foreign investment in Vietnam.
7. Decree 68/2016/ND-CP regulates conditions for duty-free goods business, warehouses, locations for customs procedures, consolidation, inspection and customs supervision.
8. Decree 67/2020/ND-CP amends and supplements some articles of Decree No. 68/2016/ND-CP regulating conditions for duty-free goods business, warehouses, locations for customs procedures, and final results. Customs training, inspection and supervision

Conditions for foreign investors to operate domestic retail goods collection services

According to the provisions of the Investment Law and Decree 31/2021/ND-CP, domestic LCL collection service business belongs to conditional market access industries and occupations for foreign investors and conditional business sectors and occupations. Therefore, foreign investors who want to do business in 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 ​​are not specified in the Schedule of Commitments
• Vietnamese Law

Clause 1, Article 7, Decree 09/2018/ND-CP Economic organizations with foreign investment capital that have the right to export: Goods purchased in Vietnam; goods ordered by that economic organization to be processed in Vietnam and goods legally imported into Vietnam to foreign countries and separate customs areas, under the following conditions:

•  Exported goods are not on the list of goods banned from export; list of goods temporarily suspended from export; List of goods that are not allowed to be exported in international treaties to which Vietnam is a member;
• For exported goods on the list of goods exported under license and conditions, economic organizations with foreign investment must have a license or meet all conditions prescribed by law.

Conditions for retail 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 cargo collection location, the following conditions must be met: 

• LCL collection locations are established in areas where the following areas are located:

+) Seaports, international civil airports, export and import ports established inland, road border gates, international intermodal railway stations;

+) Industrial parks, high-tech parks, non-tariff zones and other areas according to the provisions of law.

 

•  The LCL collection location has a minimum warehouse area of ​​1,000 m2 excluding yards and auxiliary works, and must have a fence separating it from the surrounding area.
• There is software that meets the requirements for managing and storing and exporting online data to customs authorities about the name of goods, quantity, condition of goods, and the time when goods are brought in, taken out, and stored in the locality. Detailed retail cargo collection point according to the bill of lading and/or customs declaration for management according to the automatic cargo management and supervision system.
• There is a camera system that meets an online connection with the customs management agency. Images can be observed at all locations of retail collection locations at all times of the day (24/24 hours), image data is kept for a minimum of 06 months.

Note: If the retail cargo collection location is located in a seaport or inland port area and the enterprise operating the retail cargo collection location is a port business enterprise, it is not required to carry out the recognition procedures. However, procedures for issuing retail collection location codes must be carried out to carry out procedures for goods to be brought into and out of the retail collection location before putting the retail collection location into operation.

Conditions on investment form

• Direct investment: Establishment of economic organizations with foreign investment capital;
• Indirect investment: registering to contribute charter capital, purchase shares, capital contributions to companies providing domestic retail goods collection services with Vietnamese capital;

Order and procedures for foreign investors to operate domestic retail goods collection services

Step 1: Apply for Investment Registration Certificate (IRC)

Dossier to request issuance of Investment Registration Certificate: 

• Written request to implement an investment project to collect retail goods inland, including a commitment to bear all costs and risks if the project is not approved;
• Documents on the legal status of foreign investors: ID card, passport for individual investors; Copy of Certificate of Establishment or other equivalent document certifying legal status for investors who are organizations with consular confirmation
• Documents proving the financial capacity of the foreign investor include at least one of the following documents: the most recent 02 years of financial statements of the foreign investor; commitment to financial support from the holding company; commitment to financial support from financial institutions; guarantee of the investor’s financial capacity; other documents proving the financial capacity of the foreign investor;
• Proposed investment project for inland retail collection service business including the following main contents: investor or form of investor selection, investment objective, investment scale, investment capital and capital mobilization plan, location, deadline, implementation progress, information on current land use status at the project location and proposed land use needs (if any), labor needs, proposal for investment incentives, impact, socio-economic efficiency of the project, preliminary assessment of environmental impact (if any) according to the provisions of 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 inland retail collection services does not require the State to allocate land, lease land, or allow change of land use purpose, submit a copy of documents on land use rights or assets. Other documents determine the right to use the location to carry out the investment project;
• Explanation content on the technology used in investment projects for inland retail collection services for projects subject to appraisal and consultation on technology according to the provisions of the law on technology transfer turmeric;
• Other documents related to the investment project, conditions and capacity requirements of the investor according to the provisions of law (if any).

Number of documents: 01 set

Processing time: The investment registration agency issues the Investment Registration Certificate to the foreign investor within 15 days from the date of receipt of valid documents.

Issuing authority: Provincial Department of Planning and Investment where the company plans to establish headquarters

Step 2: Apply for Enterprise Registration Certificate (ERC)

After being granted an Investment Registration Certificate, the investor shall carry out the procedures to apply for a Certificate of enterprise registration for inland retail collection services by one of the following three methods:

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

The dossier includes the following documents:

• Application for establishment of FDI enterprise providing domestic retail goods collection services;
• Company rules;
• 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 respectively;
• Copies of legal documents of members, shareholders, representatives (For individual investors: Copy of citizen identification card, identity card, passport or other legal personal identification of founding members or shareholders; For investors who are economic organizations: Copy of the company establishment decision, business registration certificate or other equivalent documents of the organization; copy of the company’s establishment decision, business registration certificate or other equivalent documents of the organization; ID card or valid passport 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 application, the Business Registration Authority is responsible for reviewing the validity of the business registration application and issuing the business registration; In case the dossier is not valid, the Business Registration Authority must notify in writing the content that needs to be amended or supplemented to the business founder. In case of refusal to register a business, it must be notified in writing to the business founder and clearly state the reason.

Authority to issue:

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

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

• At district level: Finance and Planning Department under district People’s Committee

Step 3: Procedures for recognizing retail collection locations (According to Decree 67/2020/ND-CP)

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

• Written request for recognition according to Form No. 01 Appendix issued with this Decree: 01 original copy.
• Business registration certificate 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 photocopy.
• The design diagram of the LCL collection location clearly shows the boundary line separating the outside, the location of warehouses, the location of camera system installation, the internal transportation system, security, and offices. warehouse room and customs workplace: 01 photocopy.
• Certificate of eligibility for fire prevention and fighting issued by the police agency: 01 photocopy.

Sending method: send by post, send directly or via the electronic information receiving system of the customs authority to the General Department of Customs.

Authority: Provincial and city Customs Department

Duration:

+) Within 10 working days from the date of receiving complete documents from the enterprise, the General Department of Customs completes the inspection of documents and actual warehouses and yards. At the end of the inspection, the customs authority and the enterprise sign a record recording the inspection content.

+) Within 05 working days from the date of completing the inspection of documents and actual warehouses, yards, the Director General of the General Department of Customs shall issue a decision to recognize the bonded warehouse or issue a written response to the enterprise if have not met the prescribed conditions.

+)  In case of insufficient valid documents, within 05 working days from the date of receipt of the enterprise’s documents, the General Department of Customs will issue a written notice and request the enterprise to supplement the documents. After 30 working days from the date of sending the notice, if the enterprise does not respond in writing, the General Department of Customs has the right to cancel the dossier.

Note: Every 3 months, businesses operating retail cargo collection locations must notify in writing the Customs Department managing the retail cargo collection location about the current status of goods and the operation of the enterprises operating retail collection locations.

Siglaw is always ready to give advice and support customers with necessary information while carrying out procedures to change the investor’s address. Please contact Siglaw law firm for specific advice

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