On January 15 2018, the Vietnamese government issued
Decree 09/2018/ND-CP which came into force on the same day.
Decree 09/2018/ND-CP replaced Decree 23/2007/ND-CP in governing
trading goods and other directly related activities by foreign
investors and foreign-invested companies in Vietnam. Decree
09/2018/ND-CP sheds light on some issues which were not clear
under Decree 23/2007/ND-CP, but on the other hand raises doubts
on others. There are five takeaways affecting the retail
First, as the applicable entities under Decree 09/2018/ND-CP
are clearer, foreign investors will find it easier to engage in
the retail business by making investments through a
Vietnam-domiciled corporate vehicle wherein they do not hold a
51% or more stake (though the foreign investors may still
control the business by adopting a flexible structure).
Second, if a domestic retail company is acquired by a
foreign investor, it will have to obtain a special retail
licence for its existing business and every single retail
outlet it has opened in order to continue its operations,
regardless of the foreign ownership in the company. This
requirement was not so clear under the former decree.
Third, foreign-invested companies may now retail rice,
sugar, video records, books, newspapers and magazines, which
were not permitted under the former decree, in their own
supermarkets, minimarts and convenience stores.
Fourth, the economic needs test (ENT) will now be applicable
to the opening of a convenience store or a minimart even if it
has an area of less than 500 square metres and is located in a
Fifth, the opening of the first retail outlet of a
foreign-invested company will have to pass the ENT if its
foreign shareholder already has a retail outlet in Vietnam or
it bears the same brand as an existing retail outlet operated
by another foreign-invested company in the country.
While some are positive changes, others will force foreign
investors to expend more of an effort to be able to set foot in
this lucrative market with a 93 million population.
||Truong Huu Ngu