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10 April, 2018
Decree 09/2018/ND–CP (“Decree 09”) was issued on 15 January 2018 and came into effect on the same date, superseding Decree No. 23/2007/ND-CP on international goods sale and purchase and related activities of foreign invested enterprises.
Decree 09 expands the scope of business licences, clearly requiring the application of business operation license for the following business activities:
- Retail distribution;
- Import and wholesale distribution with respect to lubricants;
- Logistics services, except those as committed in applicable international treaties;
- Goods leasing (financial leasing not included), except leasing of construction equipment with operators;
- Trade promotion services, except advertising services;
- Trade intermediation services;
- E-commerce services (to be noted, e-commerce platforms were not required to obtain Business Operating Licence earlier); and
- Bidding organizing services for goods/services.
Regarding retail distribution, Decree 09 details the conditions applicable to foreign owned companies (1)(“FOC”) to set-up retail outlets in Vietnam and apply for Retail Outlet Establishment Licences (“ROEL”).
Decree 09 differentiates the set up of the first retail outlet from the second and subsequent retail outlets:
The first retail outlet must be granted a separate ROEL. To set up their first retail outlet in Vietnam, FOCs will notably have to comply with several conditions:
- Having a financial plan for setting up the retail outlet;
- Having a location for the outlet compliant with local planning; and
- Not incurring any overdue tax.
To set-up the second retail outlets onwards in Vietnam, FOCs will need to undergo an Economic Need Test (“ENT”), the ENT notably demands to the FOC to disclose the following information:
- Scale of the relevant geographic market impacted;
- Number of existing retail outlets in the relevant geographic market;
- Impact on the market stability and operating activities of other retail outlets and traditional markets in the relevant geographic market;
- Impact on local environment (traffic density, environment hygiene, fire safety); and
- Potential contribution to the socio-economic development.
However, the ENT is not necessary for FOCs setting up second and subsequent outlets with a surface of less than 500m², located in a shopping mall and not classified as mini supermarket or convenience store.
The timeline for application of ROEL is now 20 working days (against 40 working days previously).
For further information, please contact:
Ngoc Huong DANG, Partner, DS Avocats
dangngochuon@dsavocats.com
Victor Bonnecarrere, DS Avocats
bonnecarrere@dsavocats.com
