Under the draft decree on logistics management, foreign investors would have to face the limitations on market opening when making investment in Vietnam.

The Ministry of Trade is nearly completing the draft decree on logistics management, which stipulates the business conditions and responsibilities of the businessmen providing logistics services.

Under the draft decree, the participation of foreign investors in the domestic logistics market would be limited in accordance with the commitments Vietnam has made under the framework of international treaties.

For example, in terms of providing goods loading and unloading services, foreign investors would only be allowed to set up joint ventures, in which the foreign ownership must not be higher than 50% of total capital.

Foreign investors would have the right to set up joint ventures to provide warehouse services, in which foreign investors can make the capital contribution of up to 51% of total capital. The provision will only be removed in 2014.

As for transport services, only the businessmen of the countries or territories with which Vietnam has made commitments on logistics market opening within international treaties will be allowed to do so. Besides, foreign businessmen will have to meet the technical requirements to be eligible to provide these services.

In terms of maritime transport services, for example, foreign investors will only be allowed to set up joint ventures to operate fleets from 2009. The investors would be able to contribute up to 49% of the total capital.

Foreign investors will be allowed to establish joint ventures to provide international maritime transport services, in which their capital proportion must not exceed 51%. The limitation will be removed in 2012.

If foreign investors want to provide domestic river transport, they can set up 49-51% foreign-domestic owned joint ventures.

The draft decree has also set strict requirements on domestic owned logistics companies. The businessmen providing logistics services must be enterprises or cooperatives, which make legal registration in accordance with the current laws. Besides, they must have vehicles, equipments and tools and fleets which can meet the technical and safety requirements.

Prior to that, logistics companies and experts have called on the state management authorities to build up a perfect legal framework to develop logistics industry.

Duong Chi Dung, Chairman, Chief Executive Officer of the Vietnam Shipping Lines Corporation (Vinalines) said that the Commercial Law was born two years ago, while the decree, guiding the implementation of the law in logistics services, has not been enacted yet. Other laws including the Navigation Law, Investment Law and Competition Law all still lack guiding documents to bring them into life.

Mr Dung said that there are a lot of problems which have been hindering the development of logistics services.

The Vietnam’s seaport system proves to be very poor with very few deep water ports and international transit ports, which can receive big vessels. The service of goods transportation by air has not been developed.

Especially, Vietnam does not have the air fleet which can meet specific requirements of clients, e.g carrying fresh food and vegetables. Meanwhile, the current railway system cannot link with seaports, economic zones and industrial zones. The current level of information technology still cannot meet the requirements for operating and managing logistics services.

Source: Thuong mai