Dinh Thi My Loan, chairwoman of the Viet Nam Association of Retailers, said after 10 years of implementation, the law had become backward and could not catch up with new trade activities.

In the modern goods distribution channels, nine per cent of supermarkets and commercial centres which were owned by foreign direct invested (FDI) enterprises accounted for a high and increasing portion.

With the strategy of cheap pricing and transfer pricing, several FDI firms had been in unhealthy competition with domestic companies, Loan said.

Statistics from the Ministry of Industry and Trade showed that some FDI distributors reported low profits or even losses and were not contributing corporate income tax to the State budget. For example, Metro reported a profit of VND116 billion (US$5.1 million) in the only year of 2010 though it had begun operations in Viet Nam since 2002. It reported accumulated losses of VND1.78 trillion by the end of 2012.

Notably, State agencies have not paid attention to supervision and checks in time to prevent violations relating to FDI such as price transfer, prolonged losses despite expanding their network.

Loan said the favouring of certain localities by foreign investors had been a big barrier for local investors, especially in land lease and investment procedures.

Lawyer, Ngo Viet Hoa from the USAID Governance for Inclusive Growth (GIG) programme added that several regulations in Law on Commerce 2005 had not been applied in the last decade due to other regulations in special laws.

In addition, the management of import-export activities had seen certain shortcomings. The gaps in the law created favourable conditions for smuggling and trade fraud.

Hoa said most of the important regulations on trade and commercial policies had not been found in the law but in other guiding regulations.

Several regulations in the law had caused unnecessary overlapping of the legal system.

Phan Thi Thu Ha from the Supreme People's Court of Viet Nam said several regulations relating to licences and administrative procedures had lacked specific criteria for investors.

"This has resulted in policies becoming unpredictable for businesses while creating conditions for State agencies to cause trouble for firms," Nguyen Thi Dieu Hong, from the legal department at the Viet Nam Chamber of Commerce and Industry (VCCI) said.

Tran Huu Huynh, head of VCCI's Advisory Committee on International Trade Policies noted that the law should ensure integration, transparency and feasibility to international commitments as well as real context to facilitate trade activities. — VNS