Facilitate foreign retails businesses

A newly significant change of the Vietnam Government for foreign invested businesses has been made, which is they are exempt from Economic Needs Test (ENT) when expanding retails stores with square less than 500m2.

On 28th March a Talk-show and Consult with businesses on principles of Economic Needs Test (ENT) to the establishment of retailing stores of FDI businesses in Vietnam was held in Ho Chi Minh City.

According to the representative of Eurocharm Vietnam, Korean Chamber of Commerce and attending businesses, there are a lot of businesses wish to expand their investment in retails system in Vietnam currently.

However, there are still difficulties in licensing for distributors and transferring in retails for FDI businesses in Vietnam. The implementation of ENT at provinces and cities is not consistent and synchronous, and there is no regulation on time limit for the conclusion of ENT committee to allow businesses to expand investment from the time receiving dossier.

Therefore, according to Mr. Hong Sun, Secretary-General of Korean Chamber of Commerce in Vietnam, a licensing process and clear guidelines on the establishment of a new ENT assessment committee will improve the transparency in licensing process in general. Mr. Hong Sun also said, for the planning areas which have been developed infrastructure for retails services, they should be exempt from ENT.

In order that ENT process is implemented quickly and conveniently for investors at locality, Prof. Pham Huu Thin, Manager of Materials Trading, Department of Domestic Market (Ministry of Industry and Trade - MOIT) said, ENT committee at each locality should be flexible in assessing ENT, choosing representatives of departments, sectors directly related to the assessed issues to involve in the committee.

Mr. Thin said, at the moment, there is lack of representative of Department of Industry and Trade in assessing ENT at some localities. Meanwhile, in order to assess ENT for the establishment of retails store at each locality, Department of Industry and Trade is the agent who have the most aware of retails system in that locality.

Representative of domestic distributors and retailers, Dr. Dinh Thi My Loan, Chairwoman of Association of Vietnam Retailers, said that Vietnam committed to open market of distribution and retailing at 4 types: agent, wholesales, retails (including multiple-level sale activities); and commerce transferring when it joined WTO.

In fact, Vietnam has opened earlier than its commitment. Right after Vietnam joined WTO, the ownership ratio of foreign side in retail distribution businesses is regulated not exceeding 49%, until 2008, this ratio is below 100% and from 2009, foreign businesses in retail distribution can be established with 100% foreign capital investment.

Mr. Vo Van Quyen, Director General of Department of Domestic Market (MOIT) said, in order to facilitate foreign retail distributors to expand their operation in Vietnam, in 2013, MOIT issued Circular no. 08/2013/TT-BCT allowing business with foreign investment to be exempt from ENT when expanding retails stores with square less than 500m2. This is a new significant change of the Vietnam Government for foreign investors.