New Decree on Maritime Services in Vietnam

Various new requirements on maritime transportation services, shipping agency services and towage services in Vietnam are introduced in Decree 30/2014. In particular, from 1 July 2014, under Decree 30/2014:

  • Any new company providing maritime transportation services will need to have a Maritime Transportation Service Licence from the Vietnam Marine Bureau. A Maritime Transportation Service Licence is valid for 5 years. Companies established before 1 July 2014 providing maritime transportation services will have 5 years to obtain the Maritime Transportation Service Licence.
  • Companies providing maritime transportation services must have a minimum capital of VND 5 billion (US$ 250,000) for domestic routes or VND 20 billion (US$ 1 million) for outbound routes.
  • A shipping agency company must now use Vietnamese “shipping agent” employees. It is not clear who would be considered as “shipping agent” employees within a shipping agency company.
  • A towage service company must have at least two towing vessels and must purchase professional insurances.
  • Interestingly, Decree 30/2014 requires all companies involving in maritime transportation services, shipping agency services and towage services to have, among other things, experienced in-house counsels.
  • A foreign investor is allowed to set up joint venture shipping agency or joint venture towing service company with no more than 49% foreign ownership. It is not clear whether a foreign investor could acquire an existing Vietnamese shipping agency company or an existing towing service company.
  • It is not clear if a company providing transshipment services is regarded as a maritime transportation company or a company providing loading and unloading services. In the former case, a foreign investor may hold 100% charter capital of a maritime transportation company in Vietnam. On the other hand, in the latter case, a foreign investor can only hold up to 50% charter capital. 
Vietnam Business Law Blog

Decree 163 of the Government on logistics services was issued on 30 December 2017 (Decree 163/2017). It is going to take effect on 20 February 2018 and replace Decree 140 of the Government on logistics services dated 5 September 2007 (Decree 140/2007). Below are salient changes in Decree 163/2017.

Decree 163/2017 no longer requires the logistics services providers to meet the condition of adequate equipment and personnel. That condition was applied to some logistics services, but under Decree 163/2017, the logistics services providers have only to meet conditions specific to the logistics service that they provide.

Decree 163/2017 allows foreign investors to apply, at their discretion, investment conditions regarding logistics services under an international treaty where multiple treaties are applicable.

Decree 163/2017 classifies logistics services in accordance with Vietnam’s commitments to the WTO. By contrast, Decree 140/2007 has its own classification of logistics services which is not consistent with the description of logistics services under the WTO Commitments. And the investment conditions and foreign ownership limit provided in Decree 163/2017 are generally consistent with the WTO Commitments. Therefore, it is easier to compare the Decree 163/2017 with the WTO Commitments.

The table below sets out the applicable foreign ownership limit under Decree 163/2017, to the extent possible, in comparison with Decree 140/2007:

From 15 January 2018, Decree 8/2018 has simplified the conditions for obtaining a licence to import petrol for domestic distribution under Decree 83/2014 as below:

On 15 January 2018, the Government issued Decree 9/2018 on sale and purchase of goods and other directly-related activities by FIEs. Decree 9/2018 took effect immediately and replaces the outdated Decree 23/2007. Several issues arise from this Decree 9/2018. Unfortunately, most of these issues will likely make the operation and investment by FIEs in the sectors covered by Decree 9/2018 more (sometimes much more) challenging. In particular,

In November 2017, the National Assembly passed various amendments to the Law on Credit Institutions 2010 (LCI Amendments). About two-thirds of the LCI Amendments focus on restructuring, rescue, and liquidation of a credit institution. This probably explains the relatively short period between the issuance of the LCI Amendment and its effective date. The LCI Amendments will take effect from 15 January 2018, less than two months after issuance. The National Assembly usually give a new law six months to one year to take effect. This seems to indicate a sense of urgency by the State Bank of Vietnam (SBV) in dealing with various banks which have been rescued by the SBV for the last couple of years.

In addition to the provisions on restructuring, rescue, and liquidation of a credit institution, the LCI Amendments contain a host of other amendments which aim to improve the governance and operation of a credit institution. These amendments include:

Decree 126/2017 replacing Decree 59/2011 on equitisation of State-owned enterprises  introduces various new requirements for a strategic investor who invests during the equitisation of a State-owned enterprise (equitised SOE). These new requirements (especially the pricing requirement) are more difficult for a strategic investor to satisfy. In particular,

  • The equitized SOE must decide to select the strategic investor and the strategic investor must commit to invest before publication of the public offering document for the public auction. Under Decree 59/2011, the strategic investor may decide to invest either before or after the public auction;
  • Despite being required to commit to invest before the public auction, in most cases, the strategic investor must pay a price not lower than the average bidding price at the public auction. Under Decree 59/2011, there is no such requirement and the minimum price is the lowest successful bidding price. This requirement under Decree 126/201 seems to repeat the mistake under Decree 109/2007. There is unlikely any sensible investor who will commit to invest without knowing the price that it has to pay first;

The Sabeco – ThaiBev transaction announced on Monday is no doubt the biggest equity deal in Vietnam so far. The deal structure (see below) as reported by newspaper involves Vietnam Beverage acquiring 53.59% shares in Sabeco. Vietnam Beverage is wholly owned by Vietnam F&B Alliance Investment. Thai Bev, in turn, owns 49% of Vietnam F&B Alliance Investment. From the look of it, it appears that ThaiBev is investing in Sabeco by setting up a “non-foreign” investor through various corporate layering.

Under the Labour Code 2012,  a labour contract means an agreement between an employee and an employer on a paid job, working conditions, and rights and obligations of each party to the labour relationship. A labour contract between an employer and its employee can fall into one of the following types:

  • Seasonal Contract: a seasonal contract (or contract for a specific job) is a labour contract with the duration of less than 12 months;
  • Definite Term Contract: a definite term contract means a labour contract with the duration of between 12 months and 36 months. The term of a definite term contract can be extended one time only. Thereafter, the employer must enter into an Indefinite Term Contract (see below); and
  • Indefinite Term Contract: an indefinite term contract means a labour contract in which the two parties do not fix the term nor the time of termination of the contract.

In Vietnam, private ownership over land is not recognised under the Constitution and Land Law 2013.  Instead, one may acquire certain rights which are close to the ownership rights over the land (land use rights) in accordance with the land regulations. A foreign investor does not fall under the scope of subjects that are entitled to obtain land use rights in Vietnam, but a local company (Local Co) wholly or partly owned by such foreign investor may acquire land use rights to conduct its investment projects.