Conditions for business in logistics services in Vietnam according to Decree 163

Conditions for business in logistics services in Vietnam according to Decree 163​ (Image from the Internet)

1. Conditions for business in logistics services in Vietnam according to Decree 163

According to Article 4 of Decree 163/2017/ND-CP, the conditions for conducting logistics services business are as follows:

- Merchants conducting specific services under logistics services as stipulated in Article 3 of Decree 163/2017/ND-CP must meet the investment and business conditions as required by law for those services.

- Merchants conducting part or entire logistics business activities via electronic means connected to the Internet, mobile telecommunications networks, or other open networks, in addition to complying with the legal provisions for specific services as defined in Article 3 of Decree 163/2017/ND-CP, must also adhere to the regulations on electronic commerce.

- Conditions for foreign investors conducting logistics services business:

In addition to meeting the conditions stipulated in Clause 1 and Clause 2, Article 4 of Decree 163/2017/ND-CP, foreign investors from WTO member countries or territories are allowed to provide logistics services under the following conditions:

+ In case of conducting freight transport services under maritime transport services (excluding domestic transport):

++  Allowed  to  establish  companies  operating  fleets  under  the  Vietnamese  flag  or  to  contribute  capital,  purchase  shares,  or  capital  contributions  in  enterprises,  where  the  foreign  investor's  capital  contribution  does  not  exceed  49%.  The  total  number  of  foreign  crew  members  working  on  ships  under  the  Vietnamese  national  flag  (or  registered  in  Vietnam)  owned  by  these  companies  in  Vietnam  does  not  exceed  one-third  of  the  crew  complement.  The  captain  or  first  mate  must  be  a  Vietnamese  citizen.

++  Foreign  maritime  transport  companies  are  allowed  to  establish  enterprises  or  contribute  capital,  purchase  shares,  or  capital  contributions  in  enterprises.

+ In case of conducting container handling services under marine transport support services (may designate specific areas to provide services or apply licensing procedures in these areas), allowed to establish enterprises or contribute capital, purchase shares, or capital contributions in enterprises, where the foreign investor's capital contribution does not exceed 50%. Foreign investors are allowed to establish a commercial presence in Vietnam in the form of business cooperation contracts.

+ In case of conducting container handling services under support services for all modes of transportation, except services provided at airports, allowed to establish enterprises or contribute capital, purchase shares, or capital contributions in enterprises, where the foreign investor's capital contribution does not exceed 50%.

+ In case of conducting customs clearance services under maritime transport support services, allowed to establish enterprises or contribute capital, purchase shares, or capital contributions in enterprises, where there is domestic investor capital contribution. Foreign investors are allowed to establish a commercial presence in Vietnam in the form of business cooperation contracts.

+ In case of conducting other services, including the following activities: Bill of lading inspection, freight forwarding brokerage services, goods inspection, sampling, and weight determination services; receiving and accepting goods services; transport document preparation services, allowed to establish enterprises or contribute capital, purchase shares, or capital contributions in enterprises, where there is domestic investor capital contribution.

+ In case of conducting freight transport services under inland waterway transport services, rail transport services, allowed to establish enterprises or contribute capital, purchase shares, or capital contributions in enterprises, where the foreign investor's capital contribution does not exceed 49%.

+ In case of conducting freight transport services under road transport services, it is implemented through the form of business cooperation contracts or allowed to establish enterprises or contribute capital, purchase shares, or capital contributions in enterprises, where the foreign investor's capital contribution does not exceed 51%. 100% of the company's drivers must be Vietnamese citizens.

+ In case of conducting air transport services in accordance with the provisions of aviation law.

+ In case of conducting technical analysis and inspection services

++ For  services  provided  to  exercise  the  authority  of  the  Government  of  Vietnam,  performed  in  the  form  of  enterprises  with  domestic  investor  capital  contribution  after  three  years,  or  in  the  form  of  enterprises  with  no  foreign  investor  capital  contribution  restrictions  after  five  years  since  the  private  service  provider  is  allowed  to  conduct  those  services.
​++  Not  allowed  to  conduct  inspection  services  and  issue  certificates  for  transportation  vehicles.
++  The  implementation  of  technical  analysis  and  inspection  services  is  restricted  in  geographic  areas  determined  by  the  competent  authority  due  to  national  defense  and  security  reasons.

- In case a foreign investor is subject to international treaties with different provisions on logistics services business conditions, the investor may choose to apply investment conditions stipulated in one of those international treaties.

2. Liability limits of merchants conducting logistics services business in Vietnam

According to Article 5 of Decree 163/2017/ND-CP, the liability limits of merchants conducting logistics services business are as follows:

- The liability limit is the maximum threshold for which merchants conducting logistics services are responsible to compensate customers for losses arising during the logistics services execution as stipulated in Decree 163/2017/ND-CP.

- In cases where related laws provide provisions on the liability limits of merchants conducting logistics services, they shall comply with the provisions of related laws.

- In cases where related laws do not provide liability limits, the liability limits of merchants conducting logistics services are subject to agreements between the parties. If there is no agreement between the parties, the following shall apply:

+ In cases where customers do not provide prior notice of the value of goods, the maximum liability limit is 500 million VND for each compensation claim.

+ In cases where customers have provided prior notice of the value of goods and have been confirmed by the merchant conducting logistics services, the liability limit shall not exceed the value of those goods.

- The liability limit for cases where merchants conducting logistics services organize multiple stages with different liability limits is the liability limit of the stage with the highest liability limit.

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