Opening retail stores/outlets in Vietnam for foreign investors.

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Opening retail stores/outlets in Vietnam for foreign investors

The Vietnamese domestic economy continues to grow and is considered by many as one of the leading growth markets in Southeast Asia and globally. Accordingly, Vietnam has continued to attract foreign investors invest and expand their trading and retail activities, and tap into the growing market. In this article, we seek to bring some clarity to the process of establishing retail outlets for foreign investors.

Restrictions on retail activities in Vietnam

In general, the trading of goods (exports, imports, wholesale and retail) is not restricted for foreign investors within the Vietnam legal framework, unless the traded goods are specified on the list of prohibited or restricted for trading, or are subject to specific licenses for trade. These can include the trading of lubricants, rice, sugar, recorded items, books, newspapers and magazines (except for rice, sugar, recorded items, books, newspapers and magazines which are distributed by a company in its retail outlets in forms of supermarkets, mini supermarkets, and convenience stores).

General procedures for foreign investors

  1. Firstly, before seeking to open a retail outlet, a Vietnamese company must have retail business lines registered as permitted business activities.
    • If the Vietnamese company has not been established yet, please ensure to register the retail business lines when registering the company. Please see our publication covering a general overview of the company establishment process.
    • If a Vietnamese company has already been established but has not registered the retail business lines, the addition of retail business lines corresponding to its specific retail activities is a must before it can applying for a Trading License as well as Retail Outlet Certificate to operate according to this model.

    In summary, the first step for retail outlet establishment is either establishing a company in Vietnam having registered appropriate retail business lines, or adding appropriate retail business lines into an existing company’s business lines.

  2. Secondly, obtaining a Trading License. Under the law, a Trading License is a must-have license prior to retail operation commencement, regardless whether the company wishes to open a physical retail outlet or only sell online.
  3. Finally, applying for the Retail Outlet Establishment License.

A typical timeline for establishing foreign-owned retail stores

M1M2M3M4M5M6M7M8
Step 1.Company establishment or adding trading business lines1 month
Step 2.Obtaining Trading LicenseFrom 2 to 3 months
Step 3.Obtaining Retail Outlet LicenseFrom 3 to 4 months

Please note that:

  • Each outlet will need to have its own separate Retail Outlet Establishment License
  • The first Retail Outlet Establishment, along with successive outlets, which are (i) less than 500m2in size, or (ii) located in a shopping mall, and (iii) not classified as a convenience store/mini supermarket can be completed without an Economic Needs Test (“ENT”) process, but other successive outlets will need to complete the ENT process aside from Retail Outlet Establishment process; and
  • A domestically owned company having retail outlet(s) in Vietnam upon becoming a foreign invested business entity or considered as foreign investor under Law on Investment, needs to apply for both a Trading License and Retail Outlet Establishment License.

The focus of this article is on the retail outlet registration process which is conducted at the Department of Industry and Trade (DOIT). The assumption is that the company has appropriate retail business lines registered already, and looking at the process of obtaining a Trading License and Retail Outlet Establishment License.

How to obtain a trading license

Criteria Description
AuthorityDepartment of Industry and Trade

In special cases, DOIT will seek the Ministry of Industry and Trade’s (MOIT) approval before license issuance, for example, retail of rice, sugar, recorded items, books, newspapers and magazines which are distributed by the company in its retail outlets in forms of supermarkets, mini supermarkets or convenience stores.

Requirements [1]

 

  1. Meet market access conditions prescribed in international treaties to which Vietnam is a signatory
  2. Present a financial plan deemed qualified to apply for a business license; and
  3. Have no overdue taxes, where the company has been established in Vietnam for at least 1 year.
Required documents [2]
  1. Documents relating to satisfaction of Corporate Income Tax liabilities of the company
  2. The notarised Investment Registration Certificate, if any
  3. The notarised Enterprise Registration Certificate
  4. A presentation detailing:
    1. Satisfaction of the requirements for Trading License issuance under the law (row 2 above in this table)
    2. Business plan: business activities and methods of doing business; presentation of business plan and market development; labour needs; evaluation of the implications and socio-economic effectiveness of the business plan
    3. Financial plan: An income statement made on the basis of the last audited financial statement if the enterprise has been established in Vietnam for at least 1 year; presentation of capital, sources of funds and fund-raising plans
    4. The sale of goods and other related activities and financial situation of the foreign-invested company, and where a local company having retail outlet(s) in Vietnam becomes a foreign-invested company or considered as foreign investor under Law on Investment
    5. Documents proving the financial capability in implementation of business activities: a bank letter, or bank statement (a plan of mobilising capital in the future may be attached to the bank documents)
Validity period [3]Normal case: No specific duration of the trading license by law

Sensitive/restricted cases: 5 years, inclusive of:

  1. The foreign investor is not from a country or territory which has acceded to a treaty to which Vietnam is a signatory, and/or
  2. For restricted goods: lubricants, rice, sugar, recorded items, books, newspapers and magazines
Procedure [4]Step 1: Client’s Role

The Client prepares the application files and submits them directly or online or via post to DOIT

Step 2: Statutory Role

DOIT reviews the company’s ability to meet the conditions and issues the trading license. In several special cases, DOIT will seek MOIT’s approval before license issuance

Estimated timelinesFor normal cases: around 2-3 months

For special cases that need Ministerial approval: 3-4 months

How to obtain a Retail Outlet Establishment License

Criteria Descriptions
AuthorityDOIT (and MOIT involved for giving opinion and potentially an ENT Council appointed by the provincial People’s Committee)
Requirements [5]For the first retail outlet and the successive outlets which are (i) less than 500m2in size, (ii) located in a shopping mall and (iii) not classified as a convenience store or mini supermarket, the company is to satisfy the following requirements:

  1. Provide a financial plan for establishing the retail outlet
  2. Have no overdue taxes where it has been established in Vietnam for at least 1 year
  3. The location where the retail outlet is set up is conformable with the relevant planning in the relevant geographic market
For other retail outlets (besides the first outlet and the aforesaid successive retail outlets in section 1), the company is to satisfy additional conditions as follows:

  1. The scale of relevant geographic market being affected by the intended retail outlet
  2. The number of existing retail outlets in the relevant geographic market
  3. Impact of the retail outlet on the market stability and operating activities of other retail outlets and traditional markets in the relevant geographic market
  4. Impact of retail outlet on traffic density, environment hygiene, fire safety in the relevant geographic market
  5. Potential contribution of the retail outlet to the socio-economic development of the relevant geographic market
Required documents [6]
  1. An application form for the license for establishing a retail outlet
  2. A presentation specifying:
    • The location: Intended address of the retail outlet; description of general area, relevant area and area for establishing the retail outlet; representation of fulfilment of conditions; and enclosed retail outlet documentation
    • Business plan for the retail outlet: Presentation of business plan and market development; labour needs; evaluation of the implications and socio-economic effectiveness of the business plan
    • Financial plan for establishing the retail outlet: An income statement made on the basis of the last audited financial statements if the enterprise has been established in Vietnam for at least 1 year; representation of capital, sources of funds and fund raising plans; enclosed with other financial documents
    • A document justifying that the enterprise has no overdue taxes issued by the tax authority
  3. The notarised copy of Enterprise Registration Certificate, Certificate Of Registration for project establishing the retail outlet (if any), and trading license
  4. A presentation of ENT criteria in cases requiring compliance with ENT
Validity period [7]The validity period of a license for establishment of retail outlet is as long as the remaining duration of the certificate of registration for project establishing the retail outlet. Where there is no certificate of registration for investment, the validity period of the license for establishment of the retail outlet is as long as the duration as specified in the retail outlet documentation.
Procedure [8]Step 1: Client’s role

The Client prepares the application files and submits them directly or online or via post to DOIT

Step 2: Statutory role

DOIT checks the company’s ability to meet the conditions and issues the license.

Please note that in certain cases, before issuance of the Retail Outlet Establishment License:

  • If the product belongs to the list of goods with restricted to distribution, DOIT will seek MOIT’s opinion.
  • For the second and further retail outlets, DOIT will seek the assessment by the ENT Council and MOIT’s opinion.
Estimated timelineFrom 3-4 months

Please note:

  • If the first retail outlet is in the same province with the headquarters, the Company is entitled to apply for both the trading license and retail outlet license; and
  • The company is to report to the authority annually on the sale of goods and other related activities before 31 January.[9]
  • [1] Article 9.1 and 2, Decree No. 09
  • [2] Article 12, Decree No.09
  • [3] Article 11.3, Decree No.09
  • [4] Article 13, Decree No. 09
  • [5] Article 22 Decree No. 09
  • [6] Article 27, Decree No.09
  • [7] Article 26.2, Decree No.09
  • [8] Article 28, Decree No. 09
  • [9] Article 40 Decree No. 09
Last updated on January 13, 2021

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