Under the decree issued on February 12, 2007 and circular No 9 issued on July 17, 2007, after Vietnam’s entry to the World Trade Organisation (WTO), FDI businesses are entitled to export and import products in the same way as Vietnamese businesses with no exception. However, FDI individuals and businesses are not allowed to organise or take part in the domestic distribution system.

Complaints from FDI businesses

Deputy Head of the Domestic Market Department under the Ministry of Industry and Trade (MoIT), Vo Van Quyen said feedback has been given by both domestic and foreign businesses after circular No 9 became effective. They said that some regulations in the circular are not yet consistent with Vietnam’s commitments to the WTO. FDI businesses have blamed Vietnam for its deliberate delay in opening up the market.

FDI businesses which have the right to distribute products, are allowed to run wholesales and retail outlets, concessions of commercial activities, made-in Vietnam products agents and products imported to Vietnam under regulations.

However, it impossible for them to run retail activities beyond their permitted retail units while permission is required if they want to set up new retail establishments.

State management agencies will consider each specific cases based on the number of retail units, market stability, population density in provinces and cities where retail units are located and the conformity of investment projects with zoning plans of each locality before they decide on whether to grant permits or not.

The circular also regulates that FDI businesses, which are granted business permits, can only sell imported product categories to a sole trader having a business registration or having the right to distribute those kinds of products. This trader is selected by FDI businesses and registered with an authourised permit granting agency. Each product category includes products subject to import tariffs.

Some Vietnamese distributors said that this regulation has prevented businesses and individuals from importing goods, as well as organising and participating in the distribution network.

According to the American Chamber of Commerce in Vietnam (AmCham), the Resolution 9 is not suitable with Vietnam’s commitments in terms of commercial rights. In addition, the new limitation to a sole distributor stated in the Resolution also violates the national treatment principle as the similar limitation is not applied to Vietnamese importers.

Vo Van Quyen analysed that when Vietnam joined the World Trade Organisation (WTO), its member economies have opened door to Vietnamese businesses, and of course, the country has also opened up its market for foreign businesses.

Registered importers are allowed to import and sell imported products to individuals and businesses who are authorised to distribute these products in the Vietnamese market. “The right to import does not mean the right to distribute,” he noted.

Ensuring healthy competition and transparency

According to AmCham, a number of products can be delivered to consumers through a variety of ways. To ensure the effectiveness and raise competitiveness, Vietnam should give the green light to different types of distribution. While some importers are satisfied with using a sole registered distributor of all goods categories for consumers nationwide, many others want a more flexible distribution mechanism.

Mr Quyen said that the adjustment in the Resolution is considered a significant step compared with the regulation which came into effect from the third quarter of 2007 that only allowed FDI businesses to have a sole distributor. Therefore, this adjustment will provide foreign businesses with more opportunities to sell imported products to different businesses in accordance with Vietnam’s WTO commitments, he added.

A new point in the revised Resolution is that the Ministry of Industry and Trade will have specific regulations on criteria to engage in distribution and the organization of a distribution network. These criteria will allow importers to sell products to many businesses but will limit the organisation and participation in domestic distribution network.