In an effort to have a more comprehensive legal framework of commercial activities on the digital platform, the government recently issued Decree No. 85/2021/ND-CP (“Decree 85”) amending and supplementing Decree No. Decree 52/2013/ND-CP on e-commerce (“Decree 52”). The new decree is meant to tighten control over the e-commerce sector in Vietnam, especially toward foreign entities.

Filling the “gap” in the management of cross-border e-commerce activities

Currently, foreign individuals and organizations subject to Vietnam’s e-commerce regulations include traders, organizations that have a presence in Vietnam, or have websites under the Vietnamese domain name. Meanwhile, an important subject has been overlooked and left out of Decree 52’s scope of regulation, which is foreign traders and organizations that are not present but have e-commerce activities in Vietnam.

To address this deficiency, Decree 85 stipulates the market access conditions applied to foreign investors regardless it has a presence in Vietnam or not, any business that has e-commerce activities in Vietnam are under the management of Vietnamese law on e-commerce, including:

Group 1: Foreign traders and organizations having websites providing e-commerce services in Vietnam, including (i) websites with a Vietnamese domain name (.vn), or (ii) websites with Vietnamese display language, or (iii) website have over 100,000 transactions from Vietnam per year.

Group 2: Foreign traders and organizations selling goods on Vietnamese e-commerce exchanges.

Group 3: Foreign investors invest directly in Vietnam in the field of e-commerce services.

Decree 85 also sets different conditions for each of the above groups.

Regarding Group 1: Foreign traders and organizations must register for e-commerce activities. At the same time, they must establish a representative office or appoint an authorized representative in Vietnam to coordinate with authorities in managing transactions, protecting consumers’ rights and benefits, and fulfilling the annual reporting obligation to the Ministry of Industry and Trade.

Regarding Group 2: The identity of foreign traders and organizations selling goods must be authenticated by the owner of the Vietnamese e-commerce site. Besides, at the discretion of the e-commerce platform’s owner, the foreign entity must carry out the import and export by itself or appoint a commercial agency in Vietnam; or the owner of the e-commerce site will be the party to import goods under the entrustment of the buyer.

Regarding Group 3: Decree 85 specifies market access conditions for the field of e-commerce services in Vietnam. Accordingly, foreign investors are allowed to invest in the form of establishing economic organizations or contribute capital to Vietnamese enterprises without limitation on the percentage of equity. In case the investment results in the domination of foreign investors in one or more enterprises in the list of 5 leading e-commerce service enterprises in Vietnam’s market published by the Ministry of Industry and Trade, an appraisal on national security conditions from the Ministry of Public Security will be required during the process of issuance or modification of the business license.

Foreign entities in Group 1 and Group 3 have 12 months from the effective date of Decree 85 (01 January 2022) to fulfill the additional requirements mentioned above.

In addition to the stringent control over foreign entities, Decree 85 also supplements several regulations generally applied to entities engaged in e-commerce activities in Vietnam, such as:

Transparency of information about goods and services

The provision of information on goods and services is not a new obligation of traders on the internet. However, Decree 85 has added stricter requirements according to which the sellers have to provide compulsory information on the good label, for example, manufacturing date, expiry date, batch number, etc. and information on license and/or certificates showing the satisfaction of business conditions in the case of conditional business.

Bring e-commerce on social networks under control

Social network is officially added to the forms of e-commerce platform if it has one of the following features: (i) allowing users to open booths for displaying/promoting their goods or services. service; (ii) allowing users to open accounts to carry out the conclusion of contracts with customers; (iii) having a trading section that allows users to post goods and services for sales. Accordingly, trading activities on social networks will no longer be out of the management of the state.

With this regulation, trading activities on social networks will no longer be outside the strict control of the state.