Multimodal Transport Business Regulations in Vietnam

On October 16th, 2018, Vietnam Government issued Decree No. 144/2018/ND-CP amending, supplementing the decrees on multimodal transport. Under the law of Vietnam, multimodal transport (“MT”) is the transportation of goods performed with at least two different modes of transport under the multimodal transport contract from an original place to a place designated for delivery, the carrier is liable for the entire carriage. MT business includes: International multimodal transport (“IMT”) and Domestic multimodal transport (“DMT”).

The new decree eliminates and simplifies regulations on IMT business conditions and abolishes DMT business as a conditional business line. In fact, DMT including many transportations such as transport by sea, air,… is governed by specialized laws on each transport, hence it is not necessary to stipulate additional business conditions when conducting the combined transport.

Regarding the conditions of IMT business, the new Decree no longer differentiates between domestic and foreign enterprises as in the past, all enterprises therefore must meet the followings:

(1) Maintaining a minimum amount of assets equivalent to SDR 80,000 or provide an equivalent guarantee or an alternative of financial character as regulated by laws;

(2) Having a liability insurance policy for multimodal transport operator or an equivalent guarantee.

In addition, in order to facilitate member state of the ASEAN Framework Agreement on Multimodal Transport or another international treaty on multimodal transport to which Vietnam is a signatory, new regulations are stipulated as follows:

(1) Having a registration certificate of international multimodal transport or another document of equivalent validity issued by the competent national body of its country;

(2) Having a liability insurance policy for multimodal transport operator or an equivalent guarantee.

The licenses to provide international multimodal transport service issued by competent authorities of Vietnam before the date of entry into force of this Decree are still valid until their expiration dates.

With the role of supporting trading activities, modern transports need to meet the increasingly complex requirements of the domestic and international transport market, which not only deliver goods but also connect the transport process into an uninterrupted transport chain to ensure a faster and safer transport process.

Transport lawyers at ANT Lawyers, the law firms in Vietnam have always following up the legal development on transportation to provide our clients with regular update on the matters.

Read More

Can Foreign Invested Enterprises Distribute Pharmaceutical Products in Vietnam?

Currently, with the complicated developments of the Covid-19 epidemic in the world in general and in Vietnam in particular, the research, production and import of Covid-19 vaccines are the matter that everyone is concerned about. On February 24th, 2021, the first batch of vaccine approved for import was transported to Vietnam by the Vietnam Vaccine Joint Stock Company.

Facing this situation, a number of foreign enterprises have expressed their opinions on the limitations imposed on foreign-invested enterprises in the field of distribution of pharmaceutical products in Vietnam. Vietnam has reserved no commitment to open the distribution of pharmaceutical products service market and has not committed to opening the distribution of pharmaceutical products service market under any trade agreement or international treaty up to the moment, because the pharmaceutical sector is sensitive, directly related to access to drugs and people’s health.

According to the provisions of the law, “distribution of pharmaceutical products” means the division, movement and storage of pharmaceutical products from the warehouse of the manufacturer/importer of such products or from a distributor to the end user thereof or to a distribution point or between distribution points by means of various transport methods. For distribution services, in the WTO Commitments, it is clear that pharmaceutical distribution services are excluded from the scope of commitments for all modes of supply. In addition, Appendix 03 of Circular 24/2016/TT- publicizing roadmaps for goods trade and goods trading directly related activities of foreign-invested enterprises in Vietnam, it is also recognized that pharmaceutical products are on the list of goods not entitled to distribution.

Regarding this issue, the Drug Administration of Vietnam expressed the following viewpoint: “The suspension of allowing foreign-invested enterprises in Vietnam to provide drug storage and transportation services is to prevent the distribution of disguised drugs in Vietnam, contributing to health security and towards the professionalization of the medicine distribution system in Vietnam.”

Point c, Clause 10, Article 91 of Decree 54/2017/ND-CP, effective from May 8, 2017, provides for cases ineligible to distribute drugs as follows:

“10. The entities that are entitled to import but not entitled to distribute drugs and medicinal ingredients in Vietnam must do activities related to distribution of drugs and medicinal ingredients in Vietnam except for drugs and medicinal ingredients they manufacture in Vietnam, including:

c) Providing drug/medicinal ingredient transport or storage services.”

According to this content, foreign-invested enterprises in Vietnam are not allowed to transport and preserve drugs, except for drugs and medicinal ingredients manufactured by that enterprise in Vietnam. It can be seen that the restriction on the right to distribute drugs to foreign-invested enterprises is aimed at ensuring health security, being proactive in drug supply and distribution, towards to professionalize the domestic drug distribution system as a foundation to support the development of the domestic pharmaceutical industry and contributing to better control of drug prices in the market.

Read More

CAPITAL CONDITIONS IN AIR TRANSPORTATION BUSINESS

Air transportation is the conditional business line and conducted by air transportation enterprises. Air transportation business includes air transportation activity, advertising, marketing and sale of air transportation products on the market for the purpose of making profit.

Therefore, trading in this business line is subject to strict rules of law. The conditional business lines in the field of civil aviation are detailed in Decree 92/2016/ND-CP dated July 1st 2016.

Accordingly, in the field of air transportation, business must meet capital requirements as follows:

The minimum capital requirement to establish and maintain air transportation business:

• Operating up to 10 aircrafts: 700 billion VND for enterprises engaging in international air transportation; 300 billion VND for enterprises only engaging in domestic air transportation;
• Operating between 11 and 30 aircrafts: 1,000 billion VND for enterprises engaging in international air transportation; 600 billion VND for enterprises only engaging in domestic air transportation;
• Operating more than 30 aircrafts: 1,300 billion VND for enterprises engaging in international air transportation; 700 billion VND for enterprises only engaging in domestic air transportation;

The minimum capital requirements to establish and maintain general air transportation business: 100 billion VND.

Air transportation business that has foreign investment must meet the following conditions:

• The foreign parties take up less than 30% of charter capital;
• Must have at least one Vietnam individual or legal entity hold the largest part of the charter capital. In case Vietnam legal entity has foreign investment capital, the foreign capital share should not exceed 49% of the charter capital of the legal entity.

The transfer of share and capital contribution of air transportation business without foreign investment to foreign investor shall be made only after 02 years from the date of issuance of the air transportation business license.

Enterprises have to send the share and capital transfer proposal to foreign investor to Civil Aviation Administration of Vietnam, which includes: The transferee, transfer condition, the number of transferring shares and capital contribution; Development plans for aircraft teams, business plan, development strategies referred to in Paragraph 1, Article 9 of the Decree 92/2016/ND-CP (if any).

Within 05 working days from the date of receiving the proposal from business, Civil Aviation Administration of Vietnam will report to the Ministry of Transportation the appraisal results.

Within 05 working days from the date of receiving the appraisal result report of the Civil Aviation Administration of Vietnam, the Ministry of Transportation will consider approval or disapproval and clearly state the reasons.

ANT Lawyers is a Vietnamese law firm in Vietnam with English speaking lawyers whom understand the laws of Vietnam within the business and the local culture context.

The firm has been advising and representing foreign companies and individual clients interested in either doing business, or needing legal services or representation in Vietnam who are seeking reasonable and competitive solutions without compromising on service quality.

Read More