In the context of economic integration, the demand for cross-border goods transportation is increasing, leading to the participation of many foreign transport companies in the Vietnamese market. However, to operate legally, these companies must strictly comply with legal regulations on investment, transportation services, and postal services. So, what exactly is a foreign transport company? What are the conditions and procedures for establishment? This article will provide detailed information on these issues.
I. Understanding Foreign Transport Companies
1. What is a foreign transport company?
A foreign transport company is a foreign-invested enterprise operating in the logistics sector in Vietnam. According to Article 233 of the Commercial Law 2005, logistics services include various activities such as receiving goods, transportation, warehousing, storage, customs clearance, customer consultancy, packaging, and other related services.
Accordingly, foreign transport companies may provide part or all of the logistics service chain, depending on the scope of business permitted. To operate legally in Vietnam, these companies must comply with regulations on foreign investment, conditions for conducting transportation service business, and other relevant legal requirements.
2. Types of Foreign Transport Companies
Foreign transport companies may operate in various forms depending on the mode of transportation they provide. Below are some of the main types:
(i) Sea Freight: This is the most common method for international cargo transport, especially for goods with large volumes and non-urgent delivery times. Foreign transport companies offer services such as container shipping, bulk cargo, oversized and overweight cargo, and related logistics services.
(ii) Air Freight: Suitable for high-value goods that require fast delivery, such as electronics, pharmaceuticals, and manufacturing components. Foreign transport companies may provide specialized air freight services, including transportation of perishable, hazardous, and oversized goods.
(iii) Road Transport: Foreign transport companies may operate through partnerships with local enterprises to provide cross-border trucking or container transport services. This form is particularly common in the ASEAN region and with China.
(iv) Rail Transport: This mode is rapidly developing thanks to international railway routes connecting Vietnam with China and Europe. Foreign transport companies may collaborate with Vietnamese railway enterprises to operate in this sector.
Depending on the mode of transport, foreign transport companies must comply with relevant legal regulations on logistics, freight forwarding, taxation, and customs management when operating in Vietnam.
II. Legal Regulations on Foreign Transport Companies
1. Regulations on Transport Service Business for Foreign-Invested Companies
General regulations on the transport service business for foreign-invested companies are provided in Clauses 1 and 2, Article 4 of Decree No. 163/2017/ND-CP:
(i) Traders engaging in specific logistics services as defined in Article 3 of Decree No. 163/2017/ND-CP must satisfy the investment and business conditions prescribed by law for those respective services.
(ii) Traders conducting part or all of their logistics business activities via electronic means connected to the Internet, mobile telecommunications networks, or other open networks must not only comply with the legal provisions applicable to the specific services listed in Article 3 of Decree No. 163/2017/ND-CP but also adhere to regulations on e-commerce.
2. Conditions for Foreign Investors Engaging in Transport Services
In addition to meeting the general conditions outlined in Section II(1) above, foreign investors from countries or territories that are members of the World Trade Organization (WTO) providing logistics or transport services must satisfy the conditions under Clause 3, Article 4 of Decree No. 163/2017/ND-CP as follows:
(1) For freight transport services under maritime transport (excluding domestic shipping):
- They may establish companies operating vessels flying the Vietnamese flag or contribute capital, purchase shares, or equity in enterprises, provided that the foreign investor's capital contribution does not exceed 49%. The total number of foreign crew members working on vessels flying the Vietnamese flag (or registered in Vietnam) owned by such companies must not exceed one-third of the crew. The captain or chief officer must be a Vietnamese citizen.
- Foreign maritime transport companies may establish enterprises or contribute capital, purchase shares, or equity in Vietnamese enterprises.
(2) For container handling services under maritime auxiliary services (some areas may be designated for such services or subject to specific licensing procedures): enterprises may be established or foreign investors may contribute capital, purchase shares, or equity in enterprises, provided that the foreign investor’s capital share does not exceed 50%. Foreign investors may also establish a commercial presence in Vietnam in the form of business cooperation contracts.
(3) For container handling services under auxiliary services for all modes of transport, excluding services provided at airports: enterprises may be established or foreign investors may contribute capital, purchase shares, or equity in enterprises, provided that the foreign investor’s capital share does not exceed 50%.
(4) For customs clearance services under maritime auxiliary services: enterprises may be established or foreign investors may contribute capital, purchase shares, or equity in enterprises with domestic investor participation. Foreign investors may also establish a commercial presence in Vietnam in the form of business cooperation contracts.
(5) For other auxiliary services, including activities such as bill of lading inspection, freight brokerage, cargo inspection, sampling and weighing services, cargo receipt and acceptance, and transport documentation preparation: enterprises may be established or foreign investors may contribute capital, purchase shares, or equity in enterprises with domestic investor participation.
(6) For freight transport services under inland waterway and railway transport services: enterprises may be established or foreign investors may contribute capital, purchase shares, or equity in enterprises, provided that the foreign investor’s capital contribution does not exceed 49%.
(7) For freight transport services under road transport services: this may be carried out through business cooperation contracts or by establishing enterprises or contributing capital, purchasing shares, or equity in enterprises, provided that the foreign investor’s capital contribution does not exceed 51%. All drivers employed by the enterprise must be Vietnamese citizens.
(8) For air freight transport services: these must comply with regulations under the aviation laws.
(9) For technical analysis and inspection services:
- Services performed under Government authority must be provided in the form of an enterprise with domestic capital for the first three years, or in the form of an enterprise without restrictions on foreign capital after five years from the time private service providers are permitted to operate such services.
-Foreign investors are not permitted to provide inspection and certification services for transport vehicles.
- The provision of technical analysis and inspection services may be restricted in certain geographical areas designated by competent authorities for reasons of national defense and security.
III. Clarifications on Certain Questions Regarding Foreign Transport Companies
1. What Should a Foreign Transport Company Prepare to Comply with Postal Regulations?
According to Article 6 of Decree No. 47/2011/ND-CP (as amended by Clause 4, Article 1 and Clause 2, Article 2 of Decree No. 25/2022/ND-CP), the following documents must be prepared by a foreign transport company to comply with postal regulations. The application dossier for a postal license must be submitted as one original set. The dossier includes:
(i) Application for Postal License (using the form provided in Appendix I):
APPENDIX I
APPLICATION FORM FOR POSTAL LICENSE
(Enclosed with Decree No. 47/2011/ND-CP dated June 17, 2011, of the Government)
[Name of Company]
SOCIALIST REPUBLIC OF VIETNAM
Independence – Freedom – Happiness
No: ……….
……….., date ….. month ….. year …..
APPLICATION FOR POSTAL LICENSE
To: …………………… (Name of licensing authority)
Pursuant to the Law on Post No. 49/2010/QH12 dated June 17, 2010;
Pursuant to Decree No. …../20…../ND-CP ......................................................... ;
[Name of Company] hereby requests [Licensing Authority] to grant a postal license with the following details:
Part 1. Company Information
1. Company name in Vietnamese (as stated on the Enterprise Registration Certificate or Investment Registration Certificate, written in uppercase): ..........................................................
Abbreviated name (as stated on the Enterprise Registration Certificate or Investment Registration Certificate): ..................................................
Company name in a foreign language (as stated on the Enterprise Registration Certificate or Investment Registration Certificate):...................................................................
2. Registered head office address (as stated on the Enterprise Registration Certificate or Investment Registration Certificate):............................................................................
3. Enterprise Registration Certificate or Investment Registration Certificate No.: ………….. issued by ………. on …………………………… at.....................................................................
4. Charter capital: ...................................................................................................................
5. Phone: ………………………………. Fax: .......................................................
6. Website (if any): …………………. E-mail: .....................................................
7. Legal representative:
Full name: ………………………………….. Gender: .........................................
Position: .........................................................................................................
Nationality: ……………………………. Date of birth: .......................................
ID/Passport No.: ……………………….. Issued on: …………. at: .......................
Permanent residence address: ..........................................................................
Phone: …………………………… E-mail: ................
8. Regular Contact Person:
Full name: ………………………… Gender: ....................................................................
Position: ......................................................................................................................
Phone: ………………………… E-mail: ..................................................................
Part 2. Summary Description of the Service
1. Type of service proposed for licensing: ................................................................................
2. Scope of service provision: ................................................................................................
3. Method of service provision: ..........................................................................................
Part 3. Requested License Term
Requested license term: …………… years
Part 4. Accompanying Documents
The accompanying documents include:
1. ...................................................................................................................................
2. ...................................................................................................................................
Part 5. Commitment
[Name of the Company] hereby commits:
1. To take full legal responsibility for the accuracy and legality of the information provided in this application for a postal license and in all accompanying documents.
2. If granted the postal license, [Name of the Company] commits to strictly comply with the relevant provisions of Vietnamese law and the conditions stated in the postal license.
Recipients:
- As above;
…………….
LEGAL REPRESENTATIVE OF THE COMPANY
(Sign, write full name, title, and affix company seal)
(ii) A copy of the Enterprise Registration Certificate;
(iii) The company's charter (if any);
(iv) Business plan;
(v) Standard form of service provision and usage contract compliant with postal regulations;
(vi) Samples of logos, trademarks, distinctive signs, or other elements of the company's brand identity system shown on postal items (if any);
(vii) Postal service pricing table in accordance with postal regulations;
(viii) Declared postal service quality standards in accordance with postal regulations;
(ix) Regulations on liability limits for damage compensation, customer complaint handling process, and time limit for complaint resolution, all in compliance with postal law;
(x) Cooperation agreements in Vietnamese with other companies or foreign partners for providing one, several, or all stages of the postal service proposed for licensing;
(xi) Documents proving the legal status of the foreign partner, duly legalized by consular authorities;
(xii) Franchise agreement with a company currently providing postal services (if any).
* Pursuant to Clause 3, Article 6 of Decree No. 47/2011/ND-CP (as amended by Clause 4, Article 1 and Clause 2, Article 2 of Decree No. 25/2022/ND-CP), the business plan must include the following main contents:
- Information about the enterprise, including its name, address, telephone number, fax number, email address of the transaction office, representative office, branches, business locations, website (if any), and other relevant information;
- The intended service areas of provision;
- The system and method of service management and operation;
- The service provision process, including acceptance, transportation, and delivery procedures;
- The method of service provision, whether self-organized by the enterprise or in cooperation with other enterprises (in the case of cooperation with other enterprises, the applicant must detail the scope of cooperation and coordination measures to ensure safety, security, complaint handling, and compensation for users);
- Safety measures to protect people, postal items, the postal network, and information security in postal activities.
2. Are foreign companies allowed to operate transportation businesses in Vietnam?
According to the conditions specified in Clause 3, Article 4 of Decree No. 163/2017/ND-CP, as outlined in Section II(2) above, foreign traders engaging in logistics services in Vietnam must meet the relevant conditions depending on the type of transportation service. For enterprises with 100% foreign ownership, Vietnamese law stipulates that they are not permitted to operate road transport services.
3. What are the penalties for foreign transportation companies operating without a license?
According to Point a, Clause 7, Article 28 of Decree No. 100/2019/ND-CP, which stipulates penalties for violations related to road transport and road transport support services in Vietnam:
A fine ranging from 7,000,000 VND to 10,000,000 VND shall be imposed on individuals, and from 14,000,000 VND to 20,000,000 VND shall be imposed on transport businesses or businesses providing transport support services that commit the following violations: Operating road transport services by automobile without a valid Transport Business License as required by law.
Accordingly, operating transport services without the required business license shall be subject to a fine of 7,000,000 VND to 10,000,000 VND for individuals, and 14,000,000 VND to 20,000,000 VND for organizations.
IV. Consulting Services and Legal Procedures for Foreign Transport Companies
Establishing and operating a foreign-owned transport company in Vietnam requires strict compliance with regulations on investment, commerce, logistics, and transportation. Therefore, consulting legal experts is essential to ensure lawful and effective business operations.
We provide legal consulting and assistance in the following areas:
- Establishing foreign-invested transportation companies in Vietnam
- Obtaining licenses for logistics and international transport services
- Ensuring compliance with customs, taxation, and international trade regulations
- Resolving disputes related to transportation and logistics activities
