Legal News
Vietnam to increase foreign ownership limit to 49 per cent at domestic airlines

17 - 07 - 2018
Vietnam Investment Review

The Ministry of Transport (MoT) has proposed to raise the foreign ownership limit for airlines to 49 per cent, as well as removing the difference in charter capital between international and domestic airlines.

According to MoT's new draft decree, in a change from the previous limit of 30 per cent of charter capital, foreign investors in the aviation sector could own up to 49 per cent of charter capital in a Vietnamese airline.

The draft decree amending Decree 92 also proposed to remove differences in the required minimum amount of capital for airlines providing international and domestic air transport services, which stipulates conditional business sectors or activities in the civil aviation industry.

The draft decree stipulated the minimum amount of capital required for the establishment and maintenance of an airline operating up to 10 aircraft to be VND700 billion ($30.84 million).

This regulation is subject to airlines providing international air transport services, while an airline operating domestic routes needs only a minimum of VND300 billion ($13.2 million).

Under existing legislation, an airline operating between 11 to 30 airplanes is required to have minimum capital of VND1 trillion ($44 million) if providing international services and VND600 billion ($26.4 million) if operating domestically.

However, the new decree recommends all airlines operating from 11 to 30 airlines must have at least VND1 trillion ($44 million), while airlines with over 30 airplanes are required to have VND1.3 trillion ($57.3 million). Currently, an airline operating up to 30 airplanes and providing international routes must have at least VND1.3 trillion ($57.3 million), while VND700 billion ($30.84 million) is required for an airline providing domestic routes.

In addition, the new draft decree required that at least one Vietnamese national or legal entity owns the highest share of charter capital in the foreign-invested airline. In case a Vietnamese legal entity has foreign investment capital, the foreign holding must not exceed 49 per cent of that entity.

The draft decree also removed the requirement for an airline’s legal representative to be a Vietnamese national.

Adding to the country’s existing popular airlines national carrier Vietnam Airlines, budget operator Jetstar Pacific Airlines and Vietjet Air, on July 9, Prime Minister Nguyen Xuan Phuc gave his approval to the FLC-backed Bamboo Airways investment project at Phu Cat Airport, Binh Dinh province, set to become Vietnam's next airline.

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