DECREE 09 REGULATES COMMERCIAL ACTIVITES OF FOREIGN ENTITIES

On January 15, 2018, the Vietnamese Government issued Decree 09/2018/ND-CP, that provides guidelines for the Law on Commerce and the Law on Foreign Trade Management regarding Sale of Goods and other activities directly related to the sale of goods of foreign investors and foreign-invested business entities in Vietnam (hereinafter “Decree 09”). Decree 09 came into effect on the same date and replaced Decree 23/2007/NĐ-CP regarding Sale of Goods and other activities of foreign-invested enterprises in Vietnam (“Decree 23”).

Below are the notable points of this new Decree:

  1. Extending regulation on the granting of business licenses to foreign investors:

To investors who belong to countries and territories participating in treaties to which Vietnam is a contracting party and commitment to open markets for trading activities, the may be licensed if they satisfy relevant conditions[1]:

  1. Foreign investors who do not belong to countries or territories participating in treaties, to which Vietnam is a contracting party;
  2. Foreign investors who belong to countries and territories participating in the treaties, to which Vietnam is a contracting party but Vietnam has no commitment to open with the goods or services they wish to trade.

Specific details of the conditions granting business licenses for each subject type are provided the Decree 09, Article 9.

  1. Specifying the terms “wholesale” and “retail”:

Regarding Wholesale Concepts: Decree 09 clarifies that traders and organizations who purchase goods in wholesale activities, which are wholesalers, retailers, and other organizations; excluding retail operation[2].

For Retail Concepts: Decree 09 explains that retailing is the activity of selling goods to individuals, households and other organizations for consumption purposes[3].

The content of these concepts is completely different from Decree 23.

  1. Competence to grant business licenses and permits for setting up retail outlets:

For business licenses, the competent licensing agencies changed from the provincial People’s Committees to the Department of Industry and Trade of provinces where the foreign-invested economic organizations are headquartered, these competent agencies shall issue or re-issue, modify, renew or revoke its business license for the establishment of retail outlet[4].

  1. Regarding consultation with the Ministry of Industry and Trade (“MoIT”), Decree 09 has narrowed the scope of cases which must be consulted with the MoIT: A licensing agency shall consult with the MoIT and supervising Ministry in the following cases:
  • Consulting with the MoIT and supervising Ministry before issuing or modifying a business license related to the business performing the retail distribution rights[5];
  • Consulting with the MoIT before issuing or modifying a business license related to the business activities that (i) Perform importation right, wholesale distribution rights; (ii) Offer logistics services; other than sub-sectors of logistics for which Vietnam has committed to open its market as specified in international treaties to which Vietnam is a signatory; (iii) Good rental, excluding finance lease; other than lease of construction equipment with operators; (iv) Provide commercial promotion services, excluding advertising services; (v) Provide commercial intermediary services; (vi) Provide electronic commerce services; (vii) Providing bid-holding services[6];
  • Consulting with the MoIT before issuing or modifying a license for the establishment of retail outlet.
  1. For export, import, and wholesale distribution, the business license is not required, unless the products are lubricants[7].
  2. For retail activities, a business license may be issued by the Department of Industry and Trade, and only consult the MoIT, supervising Ministry for products, namely: rice; sugar; recorded items; books, newspapers and magazines, and wait for their consideration for the retail distribution rights in the form of supermarkets, mini supermarkets and convenience stores.
  3. Shorten processing time, in case it is not necessary to consult the MoIT and the supervising Ministry, processing time is 10 days. In case of a consultation, it shall be 28 days (reduced by 17 days in comparison with Decree 23).

[1] Article 5.1, Article 6

[2] Article 3.6

[3] Article 3.7

[4] Article 8.1

[5] Point c, Article 5.1

[6] Points b, d, dd, e, g, h, and i Article 5.1

[7] Point b, Article 9.4.

 


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