Foreign investors authorised to establish wholly-owned logistics companies in Vietnam

VIR

Foreign investors will be permitted to establish their wholly foreign-owned companies providing logistics services, following Decree No.163/ND-CP, which will come into effect on February 20.

Accordingly, the logistics services will be divided into 16 main types, including container loading and unloading (excluding airports), warehouses for supporting transport, transport and customs agencies, and shipping.

The special thing is that foreign investors can establish wholly foreign-owned companies trading in the above services. However, it stipulates some strict conditions. For example, for international sea transport services, foreign investors will have to operate shipping fleets under the Vietnamese flag. Besides, the captain and the first deputy captain must be Vietnamese citizens, while foreign crew members must be less than one-third of the total crew.

Regarding road transport services, foreign investors can establish 100 percent foreign-owned companies with the condition that all drivers need to be Vietnamese citizens.

Along with newly-established firms, foreign investors can also join M&A activities with the maximum ownership limit of 49-51 percent, depending on the sector.

The Vietnamese logistics market is considered attractive by foreign investors. Last year, Taekwang Industry Company pursued the acquisition of subsidiaries of Gemadept, the largest logistics firm in Vietnam.

In June 2017, it signed a memorandum of understanding to acquire convertible bonds from Vietnamese Investment Group (VIG), which was seeking to sell its stakes in Gemadept. Taekwang proposed $442 million for the deal.

CJ Logistics, formerly CJ Korea Express, proposed a higher price than Taekwang for Gemadept’s stakes, aiming to realise its ambition of becoming one of the five largest logistics firms in the world.

As a result, in early October 2017, Gemadept completed the hand over of 50.9 percent stake in Gemadept Shipping Holding Co., Ltd. and 50.9 percent in Gemadept Logistics Holding Co., Ltd. to CJ Logistics.

Meanwhile, Thailand’s JWD Infologistics Pcl. is looking to enter Vietnam by acquiring a majority stake in a local freight forwarding company early this year. The move is part of its plans to expand in the region, to capitalise on growing demand, and to stimulate growth.

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