This content is from: Local Insights

Vietnam: New logistics regulations

On February 20 2018, new logistics regulations under Decree 163/2017/ND-CP took effect and rescinded Decree 140/2007/ND-CP. Although Decree 163 introduces a few changes, including the digitalisation of logistics processes, it fails to open up market access and provide further clarification as expected, and may even create grey areas in practice.

Redefinition of 'logistics'

Unlike its predecessor, Decree 163 redefines logistics more broadly, in harmony with descriptions in Vietnam's WTO service sector commitments. For example, article 3.7 of Decree 163 provides the content of other logistics services which is similar to section II.11.H.d of the WTO commitments. In addition, article 3 of Decree 163 excludes pipeline transport and specifies all types of freight transportation services while keeping silent on 'passenger transport'.

No changes to foreign ownership limitations

Decree 163 does not give any extra room for foreign investment and merely restates the foreign ownership limitations of various logistics services as stipulated in the WTO commitments and its preceding Decree. Given the silence on passenger transport, the Decree is equally silent on relevant foreign ownership in such services. As such, foreign investors should check the foreign ownership limitations on passenger transport in the WTO and other relevant domestic regulations before making an investment decision.

New conditions added but could increase uncertainty

The regulation applies a few new conditions for foreign investors, such as allowing maritime freight transport companies with up to 49% foreign ownership to employ up to one-third non-Vietnamese crew members serving in ships registered in Vietnam or flying the Vietnamese flag. The captain and the first officer must be Vietnamese citizens. Although this new condition was not stated in the old regulations, it is not entirely new as it was already stipulated in the WTO commitments.

Another new condition in Decree 163 is that it requires a logistics business conducting part of or its entire business electronically over the internet, mobile or other open networks to comply with e-commerce regulations (ie notifying/registering with the authority of e-commerce services and protecting personal information and consumer interests).

Given that there is no further guidance on such e-logistics business, this requirement seems very general and could apply to any means of electronic communication (eg via email or a social network page). Consequently, this new regulation may create a grey area in practice which could lead to confusion among enterprises and even for the authorities.

Shiro MutoNguyen Tuan Anh

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