Setting up a travel company in Vietnam

Conducting international travel businesses, which particularly involves activities of collaborating with foreign partners to bring international tourists into Vietnam, has become an amazing form of economic cooperation, which not only promotes domestic tourism but generates great amounts of revenue for investors as well. From those advantages, several investors desire to set up foreign-invested travel companies that enable them to design more and more attractive international tours. However, setting up a foreign-invested travel company in Vietnam is not simple at all, since the laws of our country lay down certain conditions and limitations to the procedure herein. Through this article, we would like to provide investors with detailed insight into the prevailing regulations of Vietnamese laws on the establishment of foreign-invested travel companies.

CONDITIONS FOR ESTABLISHING A FOREIGN-INVESTED TRAVEL COMPANY

It is necessary for foreign-invested travel companies to fully satisfy legal conditions as prescribed by the Law on Enterprise, the Law on Investment, and the Law on Tourism. Specifically, those companies shall satisfy certain regulations and conditions as analyzed below.

1. Legal basis for our analysis

The Law on Enterprise 2020, the Law on Investment 2020, and the Law on Tourism 2017, their implementation documents, and Vietnam’s Schedule of Commitments in WTO have set forth prevailing regulations and conditions for foreign-invested travel companies to comply with.

In particular:

• Foreign investors are required to provide services in the form of joint ventures with Vietnamese partners with no limitation on the capital holding ratio of foreign investors;

• Notably, regarding tour operator services, the Vietnamese partners with whom the foreign investors enter into joint ventures shall have obtained licenses for international travel business;

• Foreign-invested travel companies are merely allowed to provide the services of bringing international tourists into Vietnam. In addition, they are allowed to carry out domestic travel services as long as those services are enclosed with their services of bringing international tourists to Vietnam.

• Last but not least, tour guides working for foreign-invested travel companies shall be Vietnamese citizens.

So, what forms of investment can be worked out? In practice, foreign investors often conduct relevant procedures for establishing their travel companies in Vietnam first and apply for the issuance of international travel business licenses afterwards. Otherwise, foreign investors can seek to contribute capital or buy shares or stakes in Vietnamese local companies that have already registered business lines of tourism and obtained an international travel license.

2. Conditions for providing travel services for foreign investors

Regarding the forms of investment and the ratio of capital holding that apply to foreign investors:

Under its Schedule of Commitments in the WTO, Vietnam has not yet committed to allowing the establishment of a total foreign-invested company for travel services. Therefore, entering into joint ventures with Vietnamese partners is still the most probable way for foreign investors intending to provide those services in Vietnam.

Up to date, under Vietnam’s Schedule of Commitments in the WTO, the committed scope of tourism services includes travel agency services and tour operators. Accordingly, providing that the foreign capital holding ratio in the company is lower than 100%, there are no specific requirements for the correlation between the capital holding ratio of the foreign investors and that of Vietnamese partners. Moreover, to conduct tour operator activities, foreign investors shall participate in joint ventures with domestic travel companies that have obtained their own licenses for international travel businesses.

Regarding the scope of operations:

The scope of operations that foreign-invested travel companies may carry out by law is restricted to the two followings:

• Providing international tours of bringing foreign tourists into Vietnam, and
• Provide domestic tours only if these tours are parts of the international tours of bringing foreign tourists into Vietnam;

Regarding the conditions for the provision of international travel services:

• Investment form: establishing joint ventures, capital contribution, and other forms in compliance with the applicable laws of domestic laws and Vietnam’s accession process in international treaties to which Vietnam is a contracting party.
• Vietnamese partners engaged in the investment of foreign investors: having been granted licenses for providing international travel businesses, and having made the deposit required for international travel service business at the bank, with a specific amount of 250,000,000 VND;
• Scope of operations: only allowed to operate tours for bringing foreigners entering Vietnam and operate domestic tours in Vietnam, not allowed to operate tours bringing Vietnamese tourists abroad.
• Persons in charge of travel service businesses of the companies: having obtained degrees of college or higher education in the major of travel. if they have graduated from college or higher education in other majors rather than travel, they are required to obtain professional certificates in international tourism management.
• Tour guides working in foreign-invested travel companies: being Vietnamese citizens.

3. Relevant procedures for setting up a foreign-invested travel company

Step 1: Founding a travel company with Vietnamese capital (the “target company”)

• The dossier in this step consists of the followings:
• An application form for an Enterprise Registration Certificate;
• The Charter of the target company;
• A list of members or shareholders in the target company;

1. Valid copies of each of these identification documents (whichever is applicable):
2. ID card as for founders being individuals;
3. Enterprise Registration Certificates as for founders being organizations; and
4. Personal identification document(s) of the authorized representative(s) submitting the application dossier;

• Decision on capital contribution for company members, tourism company shareholders being organizations;
• A power of attorney to authorize representative(s) submitting the application dossier and receiving the results.

The target company shall apply for the business lines of “tour operator businesses, specifically including domestic travel business, international travel business” as prescribed by law.

The authority having the competence to receive the application dossier herein will be the business registration office where the target company’s head office is located.

Step 2: Applying for an international travel business license of the target company

The application dossier for an international travel business license includes the followings:

• An application for an international travel business license;
• A valid copy of the issued Enterprise Registration Certificate
• Programs to be designed for conducting international travel businesses,
• A plan for doing international travel businesses;
• An experience certificate of the person in charge of the international travel business;
• A decision on the appointment of the person in charge of operating the businesses;
• 03 valid copies of the professional cards of 03 tour guides, and their labor contract with the target company;
• A certificate of the deposit made for international travel businesses of the target company.

The authority having the competence to receive the application dossier herein will be the Department of Culture, Sports and Tourism where the target company’s head office is located.

Step 3: Foreign investors contribute capital, buy shares, or buy stakes in the target company.

To apply for the approval of the competent authority on the capital contribution, share purchase, or stake purchase in the target company of foreign investors, the dossier will consist of the followings:

• An application for capital contribution, share purchase, or stake purchase as prescribed by law;

• Valid copies of each of these identification documents (whichever is applicable):

1. Passports as for investors being individuals;
2. Enterprise Registration Certificates as for investors being organizations; and
3. Personal identification document(s) of the authorized representative(s) submitting the application dossier;

• Service supply contract signed between foreign investors and the organization conducting the service of providing capital contribution, share purchase, and capital contribution to a Vietnam travel company;
• A power of attorney to authorize representative(s) submitting the application dossier and receiving the results.
• The authority having the competence to receive the application dossier herein will be the Investment Registration Office where the target company’s head office is located.

The timeline for the assessment of the above-mentioned dossier is 15-25 working days from the date of receiving a valid application dossier for capital contribution, share purchase, or stake purchase in the Vietnam tourism company.

Looking for a provider of legal services for setting up your foreign-invested travel company in Vietnam?

Above is merely our general analysis of the prevailing laws of Vietnam in regard to the establishment of foreign-invested travel companies. In case of any further inquiries, please revert to us at info.@alb-partners for more assistance. With our team of qualified lawyers and legal experts majoring in the practice areas of corporation and investment, ALB & PARTNERS can facilitate investors with the following services:

• Consulting and drafting legal documents supporting the establishment of foreign-invested travel companies;
• Consulting on conditions for the issuance of international travel business licenses;
• Preparing documents and dossiers, and/or carrying out relevant legal procedures for setting up foreign-invested travel companies;
• Consulting other legal issues relating to the operation of foreign-invested travel companies in Vietnam, including but not limited to tax, labor, commercial transactions, corporate governance, and M&A…

Should Clients need legal assistance from ALB & Partners Law Firm, feel free to contact us via email: [email protected]