Before Vietnam joined
World Trading Organization (WTO), distribution and import, export activities
conducted by foreign owned entities are strictly regulated by Vietnam
government. As such, foreigners could only conduct the import of goods
through the Vietnam agents.
Since 2007, Vietnam
has become an official member of WTO and it had to commit a route to open local
market to foreign companies and traders, including foreign distributors.
Within 02 years from the date of accession to WTO, regulations with services
and trading activities have been eased up gradually to be more open.
Since 2009, foreigner investors have been entitled to set up 100%
foreign-owned companies to conduct activities related to the sale and
purchase of goods including import and export, and distribution including
acting as agents for purchase and sale, wholesale, retail and franchising.
This opens up opportunities for foreign investors to expand their
trading activities in Vietnam.
1. Conditions for
foreign-owned company in import and export or distribution field:
According to Article 4, Decree No. 23/2007/ND-CP on 12 February 2007 by the
Government providing regulation for implementation of Commercial Law regarding
purchase and sale of goods and activities directly related to the purchase and
sale of goods by enterprises with foreign owned capital in Vietnam (“Decree No.
23”), the conditions for an enterprise with foreign owned capital to be granted
a business license for activities of purchase and sale of goods and activities
related to purchase and sale of goods in Vietnam shall comprise:
a. It is an investor belonging to a country or territory participating in an
international treaty of which the Socialist Republic of Vietnam is a member and
in such treaty Vietnam has undertaken to open the market on activities of
purchase and sale of goods and activities directly related to purchase and sale
of goods;
b. The form of investment is consistent with the schedules undertaken in
international treaties of which the Socialist Republic of Vietnam is a member
and is consistent with the law of Vietnam;
c. The goods and services in which business is conducted are consistent with
Vietnam’s undertaking to open the market and are consistent with the law of
Vietnam;
d. The scope of operation is consistent with Vietnam’s undertaking to open the
market and is consistent with the law of Vietnam;
e. It has approval from the competent State body.
With respect to foreign investors not in the category stipulated in clause (a)
above, the Minister of Industry and Trade shall consider each application on a
case by case basis and must approve activities of purchase and sale of goods
and activities directly related to purchase and sale of goods before the
authorized State body grants a business license.
2. Conditions of
foreign-invested enterprises on implementation export rights
According to Circular No. 08/2013/TT-BTC dated on April 22, 2013 issued by the
Ministry of Industry and Trade detailing the goods trading and directly related
activities of foreign-invested enterprises in Vietnam (“Circular No.08”),
foreign-owned enterprises which have been licensed to conduct export activities
are permitted to export, purchase goods in Vietnam for export, including goods
imported in Vietnam by them or other enterprises already finished tax liability
and other financial obligations, under the following:
conditions:
a. Export goods which are not in the list of those banned from export, list of
those temporarily suspended from export, list of those of which the right to
export is not granted according to international commitments;
b. For export goods in the list of conditional export goods, enterprises must
meet conditions as prescribed by law;
c. For export goods in the list of goods to be exported under roadmaps
specified in international commitments, enterprises must comply with the
committed roadmap;
d. The export commodities must be suitable with content of the right to export
which enterprises have been licensed for implementation.
The foreign-invested enterprises already licensed for right to export are
entitled to directly do procedures for export of goods at customs agencies as
prescribed by law.
The foreign-invested enterprises already licensed for right to export are
entitled to directly purchase only goods of Vietnamese traders who have
business registration or right to import, right to distribute such goods for
export; not entitled to organize the network of goods purchase in Vietnam for
export, unless otherwise provided by law of Vietnam or International treaties to
which the Socialist Republic of Vietnam is a contracting party.
3. Conditions of
foreign-invested enterprises on implementation import rights:
Under Circular No. 08, foreign-owned enterprises which are licensed to import
goods are permitted:
a. Import goods which are not in the list of those banned from import, list of
those temporarily suspended from import, list of those of which the right to
import is not granted according to international commitments;
b. Import goods belong in the list of conditional import goods, enterprises
must meet conditions as prescribed by law;
c. Import goods belong in the list of goods to be imported under roadmaps
specified in international commitments, enterprises must comply with the
committed roadmap;
d. The import commodities must be suitable with content of the right to import
which enterprises have been licensed for implementation.
The foreign-invested enterprises already licensed for right to import are
entitle to directly do procedures for import of goods at customs agencies as
prescribed by law.
The foreign-invested enterprises already licensed for right to import but not
yet licensed for right to distribute are entitled to directly sell import goods
for Vietnamese traders who have business registration or right to export, right
to distribute such goods; not entitled to organize or participate in the
network of goods distribution in Vietnam, unless otherwise provided by law of
Vietnam or International treaties to which the Socialist Republic of Vietnam is
a contracting party.
4. Conditions of
foreign-owned enterprises on implementation distribution rights:
Distribution is defined as Decree 23 as “activities of wholesaling, retailing,
agency for purchase and sale of goods and franchising in accordance with
the law of Vietnam”. The right to distribution is defined as “the right to
undertake directly activities of distribution”.
Under Circular No. 08, foreign-owned enterprises which have been licensed to
conduct distribution activities shall be permitted:
a) To conduct wholesaling, retailing, franchising and agency for trading goods
manufactured in Vietnam and goods imported into Vietnam, except:
i) For goods on the list of those banned from business and list of those of
which the right to distribution is not granted under international commitments;
ii) For goods restrained for business or goods of conditional business,
enterprises must meet conditions as prescribed by law;
iii) For distribution goods in the list of goods to be distributed under
roadmaps specified in international commitments, enterprises must comply with
the committed roadmap.
b) The distribution commodities must be suitable with content of the right to
distribution which enterprises have been licensed for implementation.
Depending on the method
of business, investor could choose one of activities belonging to distributions
rights. With each method, the investor needs to apply a suitable business
registration issued by competent authorities.
Further, foreign
invested enterprises whose investment registered retail business line in their
investment certificate could open a single retail outlet in order to sell their
goods to the end of user or customers. The setting up of retail
establishments including the first retail establishments must abide by law regulations
on state management for retail activities and be conformable with the related
master plans of central-affiliated cities and provinces, where are expected for
setting up of retail establishments. The setting up of retail
establishments in addition to the first retail establishments are considered
for each specific case based on the examination on economic demand of each
locality where place retail establishment under the criteria: Quantity of
retail establishments, stability of market, residential density and scale of
district-level localities where are expected for the setting up of retail
establishments.
