In September 2021, the Government issued Decree 85/2021 amending and supplementing some articles of Decree 52/2013 on e-commerce (the E-Commerce Decree). Decree 85/2021 will take effect from 1 January 2022 with substantial changes on the conditions applicable to foreign investors in e-commerce sector. We discuss below some notable new provisions under Decree 85/2021.

A pdf version is here.

Adjustment in the scope of application

Several business sectors are excluded from the scope of application of E-Commerce Decree if the specialised laws of such sectors have regulations on e-commerce. Such sectors (the Excluded Sectors) include financial, banking, credit, insurance, and lottery services; trading and exchange of money, gold, foreign exchange, and other payment means; betting services or games of chance; services of distribution, issuance of digital content products, radio and television broadcasting services. The entities and individual having e-commerce activities must be careful when determining whether the relevant specialized laws of its business have regulations on e-commerce.

Clearer definition of providers of e-commerce service

Decree 85/2021 adds a new definition of e-commerce service and clarifies that the providers of e-commerce services exclude traders, entities only providing website design service and not directly participating in business, operation or coordination of activities in such website.

Broader scope of entities participating in e-commerce activities

Under Decree 85/2021, traders or entities providing technical infrastructure, logistics and other support services for e-commerce activities must comply with e-commerce regulations. Previously, Decree 52/2013 only covers infrastructure providers as participants in e-commerce activities. However, it is not clear what other support services are.

Broader scope of foreign entities subject to E-Commerce Decree

Under Decree 52/2013, foreign entities subject to e-commerce regulations include those having presence in Vietnam via investment, establishment of branch or representative office or having website in Vietnamese domain names. Decree 85/2021 has expanded the scope of application to foreign entities. Foreign entities having e-commerce activities in Vietnam and being subject to Decree 85/2021 includes:

· foreign entities having e-commerce website (1) in Vietnamese domain names (similar to provision under Decree 52/2013); or (2) displayed in Vietnamese language; or (3) having more than 100,000 transactions originated from Vietnam within a year. Regarding the third factor, quantity of transactions can be determined according to report of relevant foreign entities; or official data of state authorities in customs, tax, internet management, banking; or public and available reports and information verified by the state authority; or

· foreign entities selling goods on Vietnamese e-commerce trading platforms.

Control of activities of foreign entities in Vietnam

· Regarding foreign entities having e-commerce website, foreign entities must register its e-commerce activities and establish its representative office in Vietnam or appoint its authorized representative in Vietnam. This regulation is different from the old requirement under Decree 52/2013 which does not require foreign entities to have its office or representative in Vietnam and would limit cross-border e-commerce services provided by an offshore supplier to customers in Vietnam. Foreign entities having e-commerce website in Vietnam must complete above requirement before the end of 2022.

· Regarding foreign sellers on Vietnamese e-commerce trading platforms, the foreign sellers may be required to appoint its commercial agent in Vietnam. The owner of e-commerce trading platforms must verify identities of foreign sellers trading on its platform.

Market access conditions applicable to foreign investors in e-commerce services (such as e-commerce trading platform, online auction website, online promotion website, etc.)

Decree 85/2021 reconfirms e-commerce service being a conditional business to foreign investors. The foreign investors are subject to two market access conditions including:

· foreign investors can invest in e-commerce services in Vietnam through establishing a new company in Vietnam or investing in an existing company in Vietnam. That means, other forms of investment like business cooperation contract or project implementation without commercial presence in Vietnam is not acceptable; and

· appraisal on national security by Ministry of Public Security if the foreign investor controls one or more enterprise(s) which belongs to group of five leading enterprises in e-commerce services in Vietnam as published by Ministry of Industrial and Trading. Such condition is exempt in case the acquired enterprise is a startup small and medium-sized enterprise.

Regarding the second condition, a foreign investor is deemed to control an enterprise if the investor

· owns more than 50% charter capital or voting shares of such enterprise; and

· directly or indirectly decides to appoint, remove or dismiss majority or all members and chairperson of the board of directors, (general) director of such enterprise; or can decide important matters in business activities of such enterprise such as selection of technology platform; form of business operation; selection of business lines, sector, location, form of business; adjustment to business scale and business lines, sectors; selection of form and method of mobilizing, allocating, and utilizing the business capital of such enterprise.

· Concept of control under Decree 85/2021 is similar to control concept under competition law, and it is not clear whether negative control would constitute a control under the third circumstance (please see further discussion here).

· Appraisal on national security by Ministry of Public Security is a step in the process of obtaining trading license for the relevant enterprise in case a foreign investor acquires majority shares of a big e-commerce enterprise in Vietnam. Thus, in such case, it would take more time for parties to complete legal requirements for the M&A transaction.

Change on notification of sale e-commerce website

Sale e-commerce website is only required to be notified to MOIT if such website has online ordering and check-out function. Thus, from 1 January 2022, enterprises no longer need to notify its sale e-commerce website which introduces and promotes products and services only (without order and check-out function).

Additional responsibility of owners of sale e-commerce website

In addition to responsibilities provided under Decree 52/2013, the owner of sale e-commerce website need to conduct the following, among others,

· publish on homepage of its website all links to information on general terms and conditions, delivery and shipping, payment methods;

· publish on its website information of goods as displayed in such goods’ labels;

· publish information of certificate or license proving its satisfaction of conditions applicable to its business lines; and

· regarding terms on delivery and shipping, allocate liability of logistics providers in relation to provision of goods documentation during delivery.

New form of the e-commerce trading platform

According to the new regulations, a social network can be considered as an e-commerce trading platform if such social network satisfies all following conditions:

· such social network has one of the following activities: (1) allowing participants to open shop to display, introduce goods or services; (2) allowing participants to open accounts to enter into contract with customers; or (3) having shopping section where participants post information on sale of goods and service; and

· participants of such social network directly or indirectly pay fees for the performance of above activities.

Additional responsibilities of providers of e-commerce trading platform having online ordering function

In addition to the common responsibilities, providers of e-commerce trading platform which have online ordering function have the following obligations:

· to designate a contact point to receive requests and provide information online to regulatory authorities about the entities violating laws. This contact point must provide information within 24 hours from the receipt of the request;

· to represent foreign sellers on the e-commerce trading platform in settlement of consumers’ complaints about goods/services provided by such foreign sellers and notify tax obligations to be fulfilled by such foreign sellers;

· to act as the contact point to receive and settle complaints from consumers if a transaction conducted on the e-commerce trading floor involves more than two parties;

· to store information about orders conducted on the e-commerce trading platform in accordance with regulations of the Law on accounting; and

· to jointly compensate for damages arising from its violation of obligations to handle law violations occurred on e-commerce trading platforms.

Brand-new procedures for registration of e-contract authentication services

Previously, providers of e-contract authentication services need obtain license from the MOIT. The Government now changes license to registration of e-contract authentication services. The result of a successful registration includes (1) a confirmation on registration of e-contract authentication services issued by MOIT, and (2) name of the providers to be updated on the list of registered e-contract certification service providers which is published on the E-commerce Management Portal.

This post is written by Le Minh Thuy and Le Vo Thuy Tien and edited by Nguyen Quang Vu.

Vietnam Business Law