The inconsistencies between the new Investment Law 2014 and Decree 23/2007 have caused many lawyers confused about the process of foreign invested enterprises (FIEs) to obtain a Trading Licence to operate in the sector of sale and purchase of goods (i.e. conducting export/import rights) and the related activities (e.g. distribution) (Trading Activities). Some temporary guidelines of licensing authorities recently could help clarify the situation.

According to an official correspondence in June 2016 of Ho Chi Minh City's Department of Planning and Investment (HCMC DPI) to a foreign investor applying for an investment project relating to Trading Activities, the foreign investor should conduct the licensing procedures in the following steps:

Step 1: applying for Investment Certificate at HCMC DPI in accordance with the Investment Law 2014 and its guiding Decree 118/2015 for approval of the relevant investment project;
Step 2: applying for Enterprise Certificate at HCMC DPI in accordance with the Enterprise Law 2014 to set up the enterprise implementing the relevant investment project (the Project Enterprise); and
Step 3: applying for Trading License at HCMC DPI for the Project Enterprise to conduct Trading Activities. The issuance of Trading License could be subject to consent of the Ministry of Industry and Trade (MOIT Consent).

The above procedure seems to be applied in a similar manner at Hanoi's Department of Planning and Investment (Hanoi DPI) according to an official correspondence of Hanoi DPI in September 2016. Under this guideline, a Foreign Investor or a Deemed Foreign Investor wishing to (i) invest in Trading Activities; or (ii) supplement Trading Activities to its current operation should take the following procedures:

firstly, the Foreign Investor or the Deemed Foreign Investor to apply for new Investment Certificate (in case of new investment project) or amendment to the current Investment Certificate (in case of adding Trading Activities to current operation) at Hanoi DPI; and
secondly, the relevant FIE (either the new FIE established via the relevant investment project; or the FIE being the Deemed Foreign Investor) to apply for Trading License in accordance with the current laws at Hanoi DPI. The issuance of Trading License is subject to MOIT Consent.

Under the current laws, the procedure for Foreign Investors and Deemed Foreign Investors are not clear because:

Decree 23/2007 and Circular 08/2013 follow the investment procedures under the Investment Law 2005 applicable to businesses subject to FIE conditions. Accordingly, MOIT Consent is conditional for an investment permission (i.e. a new Investment Certificate which concurrently serves as a Trading License; or an amendment to current Investment Certificate together with a new Trading License); and
The Investment Law 2014 introduces completely different investment procedures for Foreign Investors and Deemed Foreign Investor from those under the Investment Law 2005, whereby it seems that Investment Certificate and Trading License would be separate, rather than can be consolidated or issued at the same time.

As such, in light of the above temporary guidelines, the possible new licensing procedure for FIEs to obtain Trading License could be in the order below:

to obtain investment permission (i.e. new/amended Investment Certificate; or Acquisition Approval); and
to obtain Trading License (which is conditional upon MOIT Consent).

This post is contributed by Nguyen Bich Ngoc, an Associate of VNLaw.

Vietnam Business Law