FORMS OF FOREIGN INVESTMENT IN LOGISTICS

FORMS OF FOREIGN INVESTMENT IN LOGISTICS

Logistics is a business sector that has recently attracted significant attention from foreign investors. Vietnam has great potential for the development of this industry, due to its advantages of densely populated industrial zones and the demand for transporting goods to consumers. According to Vietnamese law, this is a conditional market access industry; therefore, when investing in this sector, investors must meet certain conditions and adopt suitable investment forms.

Market Access Conditions for the Logistics Industry

• Conditions regarding entities: For individuals: must have full civil legal capacity; For legal entities: must have a business registration certificate that is consularly legalized.
• Conditions regarding capital contribution ratio: The law does not stipulate a minimum capital requirement for this industry. However, depending on the specific industry code chosen by the investor, they must form a joint venture with a domestic investor at a certain ratio or establish a company with 1-100% foreign capital; alternatively, they can invest by contributing capital, purchasing shares, or buying back capital contributions in the enterprise. To prove the source of investment capital, investors wishing to invest in the logistics sector must provide documents confirming their financial capability to invest.

• Conditions regarding industries: Some logistics sectors that foreign investors can engage in include: Warehousing services (CPC 742) – allowed to establish a company with 100% foreign capital; Freight forwarding services (CPC 748) – allowed to establish a company with 100% foreign capital; Express delivery services (CPC 7512) – allowed to establish a company with 100% foreign capital; Road freight transport services (CPC 7123) – allowed to establish a joint venture or contribute capital to purchase shares with the foreign investor’s contribution ratio being 51%, etc.

In addition, there are some logistics activities that foreign-invested enterprises are prohibited from engaging in, such as: Pipeline transportation; Inspection activities and issuance of certificates for transportation vehicles.

Forms of Investment in Logistics by Foreign Investors

Establishment of 100% Foreign-Owned Logistics Enterprises

Applicable to logistics industries permitted to establish 100% foreign-owned enterprises.

• Step 1: Complete the Procedure for Obtaining an Investment Registration Certificate:

Investors establish logistics enterprises at the Department of Foreign Economic Relations – Department of Planning and Investment of provinces/cities or the Management Board of Industrial Zones. The application includes: (Clause 1, Article 33 of the Investment Law 2020)

• A document requesting to implement the logistics investment project (in the prescribed format);
• Documents verifying the legal status of the investor establishing the logistics enterprise (passport for individual investors; establishment decision/business registration for organizational investors);
• Documents proving the financial capacity of the investor establishing the logistics enterprise (One of the following documents: financial statements for the last two years; financial support commitment from the parent company; financial support commitment from a financial institution; guarantee of financial capacity from the investor; other documents proving financial capacity);
• Investment project proposal for logistics (Must include the main contents: investor/selected investor form, objectives, scale, investment capital and funding method, location, duration, implementation schedule,… impacts, socio-economic efficiency of the project, preliminary environmental impact assessment,…);
• A copy of land use rights documents or other documents confirming the right to use the location for implementing the investment project (if the project does not request the State to allocate land, lease land, or allow land use change);
• Content explaining the technology (in the investment project for projects subject to appraisal, seeking opinions on technology as regulated by the law on technology transfer);
• BCC contract (for investment projects in the form of BCC contracts);
• Other documents related to the investment project (if any).

Within 15 working days from the date of receiving a complete application, the Department of Planning and Investment or the Management Board of Industrial Zones will review and issue the Investment Registration Certificate to the investor. In case of refusal, a written document must be provided, stating the reasons for the refusal.

• Step 2: Apply for a Business Registration Certificate
  • After obtaining the Investment Registration Certificate, the investor needs to complete this step to finalize the logistics company establishment process.
  • The investor submits a complete application to the competent authority (the Business Registration Office under the Department of Planning and Investment of provinces/cities). The application includes:
  • An application for enterprise registration (in the prescribed format) including the registration of real estate business sectors;
  • Company charter;
  • List of founding shareholders and foreign investor shareholders (if it is a joint-stock company); List of members (if it is a limited liability company with two members);
  • Documents verifying the legal status of the representative (If an individual: a copy of the passport/citizen ID/national ID; for organizations: establishment decision/business registration certificate/equivalent documents and the passport/ID/national ID along with a power of attorney for the fund manager in Vietnam);
  • A certified copy of the Investment Registration Certificate that has been issued;
  • Within 3-7 working days from the date of receiving a complete application, the Business Registration Office – Department of Planning and Investment will review and issue the Business Registration Certificate for the enterprise. In case of refusal, it must be documented and state the reasons.

Investing in Logistics through Capital Contribution, Share Purchase, and Capital Buyback

• Step 1: Complete the procedure for approving capital contribution, share purchase, and capital buyback (for investors wishing to invest in this form or in logistics sectors with limited foreign capital contribution ratios).
• Step 2: Complete the procedure for adjusting members/shareholders after obtaining approval for capital contribution and share purchase.
• Competent authority: Department of Planning and Investment of provinces/cities.
• Implementation time: approximately 25-30 working days.

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