Upon Vietnam’s accession to the WTO in 2007, the services market in Vietnam has been liberalised in certain areas, including the trading of goods. Under Vietnamese law, the trading of goods covers the following areas:
• Right to import’ refers to the rights to import goods into Vietnam for sale to business entities that themselves have the right to distribute the goods in Vietnam. The import right does not include the right to organise or participate in the distribution of goods in Vietnam.
• Right to export’ refers to the right to purchase goods in Vietnam for export. The export right does not include the right to organise a network of collecting and purchasing goods in Vietnam for export.
• Distribution right’ means the right to directly undertake activities of distribution, consisting of:
(i) being an agent for the purchase and sale of goods;
(ii) wholesale distribution;
(iii) retail distribution; or
(iv) franchising.
Vietnamese enterprises are free to carry out trading activities in Vietnam and are permitted to directly export and import all goods, except for certain restricted goods where a special business licence must be obtained from the relevant State authorities.
Foreign-invested enterprises in Vietnam may directly distribute or set up distribution networks to sell the products they manufacture in
Vietnam and may export their products directly.
The establishment of pure trading or distribution businesses not associated with manufacturing activities using foreign-invested capital was restricted before Vietnam joined the WTO. However, in accordance with Vietnam’s intention to open up its markets since joining the WTO, the restrictions on the set up of such pure trading businesses have been gradually removed.
The law currently permits 100% foreign-owned enterprises to undertake distribution activities by operating one retail outlet only.
In practice, as the Vietnamese government wishes to protect domestic enterprises, retail business by foreign investors in Vietnam is limited. An application for the establishment of multiple retail outlets will be carefully considered by the licensing authorities based on an Economic Need Test (’ENT’), which considers the following criteria:
(i) existing service suppliers in a particular geographic area;
(ii) stability of market; and
(iii) geographic scale.
It is at the discretion of the licensing authorities whether or not to allow the establishment of multiple retail outlets.
