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July 13, 2018

Vietnam Considers Revising Key Aviation Industry Decree

The Vietnamese government has recently published draft amendments to Decree No. 92/2016/ND-CP which governs the conditions for investment and business in the aviation industry (Decree 92). The new amendments will open up expanded opportunities for foreign investors in the burgeoning aviation industry, but will make it more difficult for new domestic entrants, due to increased capitalization requirements. It is expected that the government will continue reviewing and refining the draft for issuance in the coming time.

According to the draft, the investment ceiling for foreign investment in an air carriage business enterprise will be raised to 49% from the previous limitation in which foreign investors were limited to 30% of the share capital. The largest shareholder will be required to be a Vietnamese company or individual.

It is also proposed that there will be no longer be a distinction between international and domestic-only carriers in determining minimum capital requirements. In comparison with Decree 92, the changes to minimum capital requirements can be summarized as follows:

In addition, under the draft, an airport enterprise, whether establishing and maintaining a domestic or international airport, is only required to have minimum capital of VND 200 billion (about USD 8.7 million).

The draft amendments to Decree 92 are indicative of Vietnam’s overall revamping of its aviation regulatory framework. In addition to Decree 92, the Vietnamese Government has been considering amendments to Decree 68/2015/ND-CP governing aircraft registration and rights over aircraft. Decree 68 provides domestic enforcement of the Convention on International Interests in Mobile Equipment (known as the Cape Town Convention), providing aircraft lessors and financiers greater security rights over their assets. The new draft amendments to Vietnam’s aviation regulations show the government is seeking to encourage more foreign investment to meet the country’s rapidly growing air transportation demands.

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