Viet Nam issues regulatory update affecting foreign retail enterprises

by Dezan Shira & Associates

Selling goods and related activities by foreign invested enterprises (FIEs) in Viet Nam are subject to Circular 08. Photo diendandautu.vn

(Biz Hub) On April 22, 2013, the Vietnamese Ministry of Industry and Trade issuedCircular No. 08/2013/TT-BCT (hereinafter referred to as "Circular 08″) regarding the activities of selling goods and related activities by foreign invested enterprises (FIEs) in Viet Nam.

Circular 08 will replace Circular 09/2007/TT-BTM and Circular 05/2008/TT-BCT, which are dated July 17, 2007 and April 14, 2008 respectively.

Circular 08 promulgates the following changes:

- Foreign retailers are now required to complete an Economic Needs Test (ENT) based on a district's population density if it wishes to open up additional outlets past its first. The ENT previously only covered the population density of a city or province.
- Foreign retailers that wish to establish a new outlet that is smaller than 500 square meters do not have to complete an ENT if the outlet is set up in an area that has been designated by the local government for trading activities.
- Each centrally-governed city and province will need to form an ENT council. The council is to consist of the local people's committee, the Department of Planning and Investment, the Department of Industry and Trade and any other relevant agencies, and it will be tasked with evaluating ENT and ENT exemption applications.
- Existing FIEs must submit a detailed dossier when applying to amend its Investment Certificate, and the dossier must include documents evidencing its financial capacity and a certificate issued by the tax authority confirming that the entity had completed its corporate income tax liabilities over the past two fiscal years.
- FIEs with export rights are now allowed to purchase goods imported by other enterprises for export.
- FIEs with import rights are now allowed to sell their imported goods to FIEs with export rights.Export processing enterprises may now apply for import rights, export rights and/or distribution rights.

Viet Nam established the ENT system to restrict foreign investors from penetrating its local retail market. According to the General Statistics Office, Viet Nam currently has 638 supermarkets nationwide, including 152 in HCM City, 88 in Ha Noi and 29 in Da Nang.

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This article was first published on Vietnam Briefing.

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