Conditions of Setting up Import and Export Company in Vietnam

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.

Our lawyers of foreign investment practice at ANT Lawyers, a law firm in Vietnam are available to advise and provide client with service and representation for setting up a trading company in Vietnam.

In order to seek further advice or request service, please contact us at ant@antlawyers.vn or call + 84 912 817 823.

ANT Lawyers to Attend International Law Conference in Doha 2014

Prae Legal will be organizing the  2nd meeting in Doha, Qatar on 14th and 15th of September 2014.  This event will be supported by the State of Qatar.

Prae Legal is one of the largest law firm networks of more than 15o law firm members globally.  Last year, the 1st meeting of international law firms was organized in Istalbul, Turkey which ANT Lawyers, a Prae Legal member, the only law firm in Vietnam represented by Mr Tuan Nguyen attended in Sep, 2013.

The interaction of law firm members in Prae Legal has been active which help provide legal services to clients on cross-border matters or act as a reference when clients are in need of reliable law firm in another country.

Determination of Competence between Court and Arbitration

In order to clarify matters in regard to dispute resolution process in Vietnam, on Mar 20th, 2014, the Council of Judges of the Supreme People’s Court issued Resolution 01/2014/NQ-HDTP on guidelines for the Law on Commercial Arbitration in Vietnam.

Accordingly, the courts in Vietnam are permitted to deal with disputes which are agreed to be settled by arbitrators in the following cases:

i) There is a Decision of the court on cancelling Arbitration’s Judgement, Council of Arbtration’s Decision on recognition agreement of parties.

2) The parties have agreed to settle their disputes at a specific arbitration center but it has stopped operating;

3) The arbitrators selected by the parties can not participate in solving disputes due to force majeure events;

4) The appointed arbitrator refuses to settle the dispute without an agreement on a replacement;

5) The proceedings rules selected by the parties are different from different from those of the selected arbitration center, and this center does not adopt rules of the other centers.

6) Consumers object to the arbitrator selection according to Articles 17 of the Law on Commercial Arbitration

In the first four cases, the parties must not reach an alternative agreement on replacement.

This Resolution takes effect from July 2nd, 2014.