In a recent post, we have discussed the concept of “wholesale” and “retail” as two forms of activities under the regulations concerning trading activities by FIEs in Vietnam. From the commercial perspective, “distribution” (phân phối) activities should involve the purchase or import of goods from suppliers for selling to customers. Thus, if an FIE has registered distribution business (i.e., wholesale or retail), it should naturally be able to import goods to sell within its distribution rights without being subject to further licensing requirements. However, this may not be justified from the legal perspective as the purchase of goods to sell in Vietnam or abroad by an FIE is classified as other forms of trading and should be licensed before implemented. Under Vietnamese regulations,

(i) Export right (quyền xuất khẩu) means the right to purchase goods in Vietnam to export. And import right means the right to import goods to sell to traders having distribution rights in Vietnam. Generally, export rights and import rights do not include the right to organize or participate in a distribution system in Vietnam. In this regard, an FIE may perform export rights or import rights after registering these activities with the relevant regulations of the Investment Law 2014 and the Enterprise Law 2014;

(ii) an FIE enterprise having obtained the export right is entitled to export to foreign countries or separate customs zones (i) goods purchased in Vietnam, (ii) goods processed in Vietnam by a processor at the request of such FIE enterprise, and (iii) goods imported into Vietnam; and

(iii) an FIE enterprise having obtained the import right is entitled to import goods from foreign countries and separate customs zones to Vietnam.

Though not entirely clear, the above provisions suggest that an FIE not having registered the export right/ import rights may not implement the export/ import rights. In practice, in an Official Correspondence responding to a provincial-level Customs Department, the General Department of Customs opines that an FIE enterprise can only implement the export/import rights after such activities are registered under the relevant licenses according to the Investment Law and the Enterprise Law. Though this guideline does not directly address the issue being discussed, it could imply that only a clear record of the export/import rights can allow an FIE enterprise to perform the respective activities, notwithstanding any distribution rights it may have already obtained.

This post is contributed by Nguyen Bich Ngoc, an associate at Venture North Law.

[1] The Official Correspondence 1282 dated 4 May 2018.

Vietnam Business Law