This is reference to your email from which, we understand that your Singapore company, (hereinafter referred to as “Client”) is now seeking legaladvices for establishment of Joint Venture Company with business principal activities of (i)
Operations of shipping agency and customs clearance agency (hereinafter referred to as “FIC”).
Location of the Company can be in Ho Chi Minh City or HaiPhong City.
We therefore aregrateful to present you our Legal Services Proposal for your review and consideration.
1. SETTING UP FOREIGN INVESTED COMPANY IN VIETNAM
The establishment of a FIC in Vietnam requires an Investment Certificate and a Certificate of Business Registration from the licensing authority.
Depending upon the location of thecompany, the licensing authority may be the Provincial People’s Committee (for companieslocated outside industrial or export processing zones) or the provincial Industrial and ExportProcessing Zones Management Authority (for companies located in industrial or exportprocessing zones).
We would like to clarify that the procedure for establishment of a FIC inVietnam generally takes a rather long time in comparison with other countries in the region.
Our practical experiences show that although the total time for establishment of a foreigninvested company as stipulated under Vietnam Investment Law 2014 is only 15 days, theactual process may take a longer time due to that the competent authority must consult otherrelevant offices to evaluate the investment project.
With respect to several cases that involveswith relocation of 10,000 people or more in highlands; 20,000 people or more in other areasor requirement for changes of land purposes or project in several special field such asConstruction and operation of airports; air transport; Construction and operation of national
seaports; Petroleum exploration, extraction, and refinery etc, it shall require for approvalfrom the National Assembly, Prime Minister or Provincial People Committee before startingthe licensing process. In this case, we assume that your case is not subject to suchrequirement for approval. However, we reserve our right to re-quote our professional fee andamend the work schedule if your case is subject to approval of the National Assembly, PrimeMinister or the Provincial People Committee. In order to setup a FIC, it shall require you toundergo two following steps:
Step 1: Obtainment of Investment Certificate. The Law requires that within 15 working daysfrom submission of the application dossier the competent authority shall have to issue theInvestment Certificate for Foreign Investor. However, having preliminarily discussed withthe Licensing Authority, we do not much expect that the licensing authority can comply withthis requirement in practice, especially, those relating to conditional investment sectors. Forgranting the Investment Certificate, the relevant licensing authorities shall evaluate thelegitimacy and the feasibility of such Investment Project to determine on granting of the Investment Certificate on the following basis:
Legal framework including Vietnam’s WTO Commitments, Vietnam InvestmentLaw, Vietnam Enterprise Law, Regulations applicable to specific industries as well as the master economic development plan of the city or province that the FIC shall register its head-office.
Your financial ability, investment capital to put in the Investment Project, facilitiesand human resources serving the implementation of such investment project inVietnam.
Step 2: After obtainment of Investment Certificate, Client shall be required to obtain theCertificate of Business Registration. The Law requires that within 05 working days fromsubmission of application dossier, the competent authority shall have to issue the Certificateof Business Registration for forming the Foreign Invested Company.
2. OUR SPECIFIC COMMENTS
2.1. Operations of shipping agency is classified to CPC 748 (freight transport agency):
According to roadmap of opening market under Vietnam’s WTO commitments, from the year of entering into WTO, Foreign Investors shall be required to setup joint venture with Vietnamese Partner in which foreign ownership must not exceed 51%. 7 years after entering into WTO, foreign ownership restriction shall be removed.
Thus, with respect to these services, Investor shall not face with difficulties in obtaining Investment Certificate for establishment of joint venture company;
2.2. Operations of customs clearance agency: According to roadmap of opening market under Vietnam’s WTO commitments, from the year of entering into WTO, Foreign Investors shall be required to setup joint venture with Vietnamese Partner in which foreign ownership must not exceed 51%. 5 years after entering into WTO, foreign ownership restriction in Joint Venture Company shall be removed. Thus, with respect to these services, Client is allowed to setup Joint Venture Company with a Local Investor in which the Ownership of the Client can be up to 99%. We also would like to further note that in this case, experience of the Local Investor in the field of logistic services shall be considered as one of important factors that determine success possibility of the case;
2.3. Other critical factors In this case, in order to secure the high success possibility, we highly recommend Client to carefully account following factors:
- Location of the Joint Venture: In Vietnam, location of a foreign invested company isvery important. Location of the Joint Venture Company must strictly comply withmaster plan of the City.
- Investment Capital of FIC: Under Vietnam Law, your proposed business does notrequire for minimum rate of investment capital.
However, upon applying for investmentcertificate, Client shall need to provide an estimate of capital required for operating the
Foreign Invested Company in a medium or long term. For a number of business activities as mentioned in your email, the competent authority may require Client toconsider an amount of investment capital from 200,000USD upward.
- Experience of Client: Experience of Client and Vietnam Partner in the field is also oneof important factor that determining the success possibility of the case. Foreign Investorand Vietnam Partner having no experience in the field is generally not favoured by theLicensing Authority.
If you would like further information on Etsablishment of Joint Venture Company with business principal activities of Operations of shipping agency and customs clearance agency., please either email to our Partners at: info@sblaw.vn or call to our Office:
Ha Noi Office: +84 (4) 62 62 0246
HCM Office: +84 (8) 35 208 101.
