Foreign investors from countries and territories participating in international treaties to which Vietnam is a member wishing to set up enterprises in the field distribution in Vietnam must base on the committed roadmap in accordance with 2005 Investment Law, Decree 108/2006/ND-CP, documents referred to in Q12 above and relevant document.
The establishment by foreign investors of distribution enterprises should pay special attention to some content that Vietnam has committed to market opening (11/12 sectors including 110 sub-sectors of services, including distribution), as follows:
1. some strict restrictions in market opening commitments:
Firstly: no distribution market opening for 7 categories: (1) cigarettes, cigars, (2) books, newspapers, magazines, video tapes, (3) metals and precious gemstones, (4) pharmaceutical products and addition causing substances, (5) explosives, (6) rice, (7) sugar.
Secondly: sensitive products such as steel, fertilizer, cement,…the market will only be opened after 3 years;
Thirdly: restriction on the opening of retail sale points by foreign invested enterprise (for the second retail sale point and after that, permission from Vietnam must be obtained for each specific case).
2. for whole sale, retail sale and agency services:
a. Establishment of enterprises in the distribution sector:
At the time of WTO admission: a foreign service supplier is permitted to set up a joint venture and contribute no more than 49% of the legal capital of the joint venture.
As from 1/1/2008: percentage stipulated
As from 1/1/2009: no percentage stipulated
b. whole sale, retail sale and agency services:
since accession to the WTO: FDI Enterprise doing business in distribution services are permitted to conduct whole sale, retail sale and agency activities for all categories imported legally or produced locally, except for the following 11 categories: (1) cements, (2) outer types (expert for aircraft types), (3) tractors, (4) motorcycle engines, (5) cars, (6) motorcycles, (7) steel, (8) audio and video aid, (9) alcohol, (10) alcoholic drinks, (11) fertilizers;
As from 1/1/2009: are allowed to carry out distribution in the following 4 categories: (1) tractors, (2) motorcycle engines, (3) automobiles, (4) motorcycles
3 years after WTO accession: FDI enterprises mentioned above are allowed to distribute all categories,
The establishment of retail sale points other than the fist one must be considered on a case basic depending on the demand and the development of the market.
At the time of accession to the WTO – a foreign service supplier is permitted to sep up a joint venture with capital contribution of no more than 49%
As of 1/1/2008- no more than 51%
As of 1/1/2009- no cap percentage stipulated
3 years after WTO accession – permitted to set up branches to conduct business in franchising services.