On 15 January, the Government promulgated Decree 09/2018/ND-CP detailing Commerce Law and Law on Foreign Trade Management on goods purchase and sale activities and goods purchase & sale related activities of foreign-invested enterprise, foreign-invested business organizations in Vietnam (“Decree 09”) to replace Decree 23/2007/ND-CP (“Decree 23”).
To help enterprises be able to understand and apply the new provisions of Decree 09, we are very pleased to clarify some of new highlights as follows:
– The definitions:
Decree 09 clarifies the concepts of goods purchase & sale activities and goods purchase and sale activities related activities including the following activities: implementation the rights to export, rights to import, rights to distribute; supply logistic service; lease of goods not including financial leasing; supply service on commercial promotion not including advertisement service; supply commercial intermediary service; supply e-commerce services; supply service on organizing the bids on goods or service.
Furthermore, the new Decree supplemented many necessary concepts such as: retailing establishments, convenient stores, minimarts, commercial center; e-commerce services, financial documents, etc.
– For cases requiring a license:
One of the highlights of Decree 09 is the extension of business license to the foreign investors. Accordingly, foreign investors do not belong to countries or territories participating in treaties to which Vietnam is a contracting party as well as the foreign investors belong to countries or territories participating in treaties to which Vietnam is a contracting party but no commitment to open towards goods, services are the subjects to be granted a license
– The competent on granting license:
Decree 09 stipulates the body to grant Business License and License for setting up a retail establishment is Department of Industry and Trade instead of Provincial People’s Committee provided in Decree 23. Simultaneously, the new Decree reduces the cases that are required to ask for opinions of Ministry of Industry and Trade (“MOIT”) or other specialized ministries, leading to simplify of administrative procedures.
– The conditions to be granted a business license:
The new Decree has simplified and clarified the requirements for the foreign investors belonging to the countries, territories participating in the treaties to which Vietnam is a member. Accordingly, in cases of compulsory licensing, the foreign investors that belong to countries or territories participating in the treaties to which Vietnam is a member commit to open market for goods purchase and sale shall be granted a business license if : No overdue tax debt in case of having been established in Vietnam for at least 1 year or more; having a financial plan to proceed the activities proposed for granting a business license, etc. For the foreign investors not belong to countries or territories participating in the treaties to which Vietnam is a member, in addition to the above mentioned conditions, , the following criteria must also be satisfied: match with competitive level of domestic enterprise in the same fields; ability of making employments; contribution to State budget.
In case of the goods not belongs to the group of goods committed on opening by Vietnam such as rice, sugar, recorded items, books, newspaper, magazines will be considered to grant a license for implementation the rights on retailing distribution in the forms of super market, minimart or convenience stores.
– The conditions for setting up a retail establishments:
Decree 09 stipulates the conditions for setting up the retail establishment and the grounds to grant a license for setting up a retail establishment.
To set up the first retail establishment, the investors must have a financial plan, no overdue tax debt, and the location must be line with the relevant planning. From the second retail establishments onwards, the grating procedure will be based on economic needs test (“ENT”). The ENT as along with testing criteria and procedures have been clearly defined.
MOIT shall consider the suitability with the regional and national plans and strategies on development the fields and sectors to accept for granting permit for the foreign investors belong to countries or territories participating in the treaties to which Vietnam is a member. In other case, the basic to accept shall include some other factors: the process of negotiation, opening market of Vietnam; Vietnam’s strategies on cooperation with foreign partners; diplomatic relations, national security, social order and safety.– The procedure for granting license:
The procedures for granting license for setting up the retail establishments are stipulated separately for each case: setting up the first retail establishment, setting up the retail establishments other beyond the first one do not have to implement the ENT and setting up the retail establishments other beyond the first one have to implement the ENT. Generally, the procedure is shortened from 15 days stipulated in Decree 23 into 7 or 10 days up to the case from the date of receiving the sufficient dossier, the competent authority shall complete checking the validity of the dossier; within 7 or 10 days up to the case from the date of receiving the dossier, MOIT shall issue the written approval or written rejection with clear reasons. The dossier applying for business license is stipulated more detailed with simplified and shortened procedure. The duration on granting such license reduce from 15 days into 10 days in the case shall not ask for MOIT’s opinion, and from 30 days to 28 days in the remaining cases.
Moreover, Decree 09 also details some related issues including report regime; sending, storage licenses and public information; the forms of handling violation under provisions of this Decree and application.
In comparison with Decree 23, Decree 09 is more progressive and detailed, cleared on stipulating on goods purchase and sale activities and goods purchase and sale related activities of foreign-invested enterprise and foreign-invested business organizations in Vietnam. Hopefully, this is favorable premise for foreign investors to enhance their contribution into the development of Vietnam’s economy.