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Regulatory changes for Representative Offices of Foreign Trade Promotion Organisations in Vietnam.

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Regulatory changes for representative offices of foreign trade promotion organisations in vietnam

The Vietnamese authorities issued on 7 February 2024 Decree 14/2024/ND-CP amending and supplementing articles of Decree 28/2018/ND-CP, detailing the Foreign Trade Management Law on certain measures for foreign trade development. The new Decree effective from 25 March 2024 brings significant changes in the licensing procedures for Representative Office (RO) of Foreign Trade Promotion Organisation (FTPO) in Vietnam, with key adjustments in management authorities, documentation requirements, processes, timelines, and compliance.

In this article, we delineate some of the key changes, which include more stringent measures, and their impact on the operations and statutory structures relevant for foreign investors in Vietnam.

Changes in management authority

Under the previous regulatory framework, the Vietnam Trade Promotion Agency (Vietrade), a division of the Ministry of Industry and Trade of Vietnam, was the principal entity overseeing the administrative procedures of ROs during the pre-inspection phase.

The subsequent operational phase of these offices, the post-inspection phase, which encompasses responsibilities such as tax declaration, account opening, and labour/human resources management, is directly associated with specific localities. The local authorities play a pivotal role in the efficiency of post-inspection activities and should be directly engaged in pre-inspection activities to ensure proactive measures and unity, rather than mere coordination.

Furthermore, the efficacy of state management is perceived to be constrained by the resources of the central state management agency, including human, physical, financial resources, and mechanisms. In reality, it largely relies on the resources, precision, proactivity, and actual coordination of the local levels, with the Department of Industry and Trade playing a crucial role.

This centralised approach to licensing procedures presented certain challenges, particularly for ROs not situated in Hanoi, as it complicated direct communication with the competent authority.

The new regulation decentralizes the authority to Provincial Departments of Industry and Trade (DOIT) where the RO is located, facilitating the licensing process, query resolution, and addressing unexpected issues.

Such changes do not only facilitate and better support the state management, but the RO statutory efficiency is improved as well. This setup can also eliminate certain existing limitations and difficulties in coordination between the pre-inspection and post-inspection phases of management.

On an annual basis, before the last working day of January of the following year, ROs are required to submit a written report on their activities for the year to the licensing authority. Starting from 2025, these reports will have to be submitted to the local DOIT instead of Vietrade as previously required.

Streamlined submission methods online

The licensing procedures have been refined to enhance the efficiency of submission methods. Previously, submissions were made directly or via postal deliveries to the authority, such as Vietrade in Hanoi, and now to the DOIT as per the new Decree 14/2024/ND-CP. The updated regulation incorporates online submissions through the National Public Service Portal or the Provincial Administrative Procedure Processing System, depending on the province of operation. This advancement facilitates adherence to the pragmatic licensing procedures for ROs.

Multiple processing timeline changes and potential issues

The updated regulations bring about significant changes to the processing timelines for various applications, encompassing new registrations, amendments, renewals, and re-issuances. The shift from “working days” (typically Monday to Friday) to “calendar days” (inclusive of all seven days of the week) does not necessarily imply a shortening or extension of processing times compared to the previous regulations. For example, the standard registration deadline set by the Vietnamese authority has been revised from 15 working days to 20 calendar days from the date of receipt of complete applications (or 40 days for cases necessitating opinions from other Ministries), and from 10 working days to 14 calendar days for the consideration and evaluation of applications for modification, renewals, or re-issuance of the license of RO.

It is important to note that ROs are now required to update their license information (such as changes in the head of the RO or the head’s information, name changes, or changes in the address of the RO) within a shortened adjustment period. The previous “30 working days from the date of change” has been revised to “30 calendar days from the date of change”, which now includes weekends and public holidays in the processing times. This could potentially reduce the deadline by approximately 15 days, posing compliance challenges in cases that require necessary documents such as legalisation, notarisation, and translation, or the delivery of documents to Vietnam that may take a considerable amount of time.

New regulations for license amendments for address changes

The new regulation introduces a more nuanced approach to the modification procedure for RO licenses, particularly in relation to address changes. It distinguishes between two scenarios: (i) if the new address is within the same province or city as indicated in the previous license, only a license modification procedure is necessitated; (ii) if the new address is in a different province or city, a re-issuance of the license becomes mandatory. Furthermore, a minimum of 90 days prior to the planned relocation to a new province or centralised city, the RO is required to notify their creditors, employees, and other relevant parties. This notification, which includes the intended relocation date, must be publicly displayed at the old office and published in three consecutive issues of a print or electronic newspaper authorised in Vietnam.

Regulatory adjustments for new issuance and revocation of RO license

Under the previous regulation, authorities had the discretion to deny the issuance of a new license for the establishment of a RO if there was “evidence” that the establishment would be detrimental to Vietnam’s national defence, security, order, safety, traditions, culture, ethics, customs, public health, resources, or cause environmental pollution. The new regulation extends this provision, allowing authorities to refuse not only based on “evidence” but also on “indications” of such harm.

Regarding license revocation, the previous regulation confined revocation to instances arising from the RO’s conduct, such as inactivity, operating beyond its defined functions, or criminal violations related to Vietnam’s labour laws. The new regulation broadens this scope to encompass violations originating from both the RO and the FTPO. For example, if there is any evidence that activities are harmful to Vietnam’s national security, or if the licensing authority is notified by another authority that the FTPO has committed labour law violations subject to criminal prosecution, or if the FTPO is on the sanctions list of a United Nations Security Council resolution, the RO license will be revoked.

In conclusion, the impending modifications pertaining to the licensing procedures and compliance for RO of FTPO in Vietnam are of considerable importance. It is noteworthy that the new decree continues to maintain certain regulations governing RO, such as the authority sanctioning administrative violations, registration of seal specimens, and the application for Work Permits or Work Permit Exemptions for foreign employees for the RO, which will be directed in specific future instances.

 

If you need any assistance with these or any other matters in respect to RO in Vietnam, to ensure you are compliant and protected in the market, our experts are ready to support.

Hoang Vu, Senior Associate | Licensing, Market Entry and Corporate Services – hoang.vu@acclime.com

Duong Tran, Assistant Manager | Licensing, Market Entry and Corporate Services – duong.tran@acclime.com

Phuong Vo, Manager | Licensing, Market Entry and Corporate Services – phuong.vo@acclime.com

Rizwan Khan, Managing Partner – r.khan@acclime.com

Updated on March 1, 2024

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