The Ministry of Industry and Trade is currently in the process of soliciting public comments on the draft Decree No. 09/2018/NĐ-CP elaborating the Law on Commerce and the Law on Foreign Trade Management regarding the trading of goods and activities directly related to the trading of goods by foreign investors and foreign-invested economic organizations in Vietnam (“Decree 09”). The Draft contains several notable proposed amendments, as follows:

1. Competence in managing the trading of goods and activities directly related to the trading of goods

The People’s Committees of provinces and centrally-affiliated cities shall continue to be the competent authorities for issuing the Business License (“BL”), the License for Establishment of a Retail Outlet (“LERO”), and for managing, inspecting, and supervising the trading of goods and activities directly related to the trading of goods conducted by foreign-invested economic organizations within their respective localities. The Ministry of Industry and Trade shall coordinate in carrying out the inspection and supervision of the operations of foreign-invested economic organizations.

The requirement to obtain opinions from the Ministry of Industry and Trade and the line ministries in the process of reviewing and issuing the BL and the LERO, as stipulated in Clause 3, Article 8 of Decree No. 09, shall be abolished.

2. Provisions on the issuance of the Business License and the License for Establishment of a Retail Outlet

Draft inherits the provisions of Decree No. 09 whereby a domestic economic organization, upon receiving capital contribution and thereby becoming a foreign-invested economic organization, or an economic organization falling under the circumstances prescribed in Clause 1, Article 23 of the Law on Investment, shall be required to satisfy the conditions and carry out the procedures applicable to foreign-invested economic organizations.

Draft supplements a provision stipulating a time limit of 12 months from the date of receiving the capital contribution for an organization, which has become a foreign-invested economic organization as a result of such contribution, to complete the procedures for obtaining the LERO. During this 12-month period, the retail outlet may continue its operations.

2.1. Provisions on the Business License

a. Conditions for issuance of the Business License

Vietnam applies different regulatory regimes to investors from, and investors not from, countries or territories that are parties to international treaties to which Vietnam is a member.

In this regard, the Draft supplements the provision at Point a, Clause 1, Article 9, stating that: “Foreign investors must satisfy the conditions throughout the course of their business operations in Vietnam in accordance with this Decree.”. In practice, under the implementation of Decree No. 09, situations have arisen where a foreign investor, at the time of applying for the Business License (“BL”) or the License for Establishment of a Retail Outlet (“LERO”), was from a country or territory that is a party to an international treaty to which Vietnam is a member. However, thereafter, the foreign investor withdrew its capital, and the economic organization receiving such capital contribution from the foreign investor was no longer from a country or territory that is a party to such international treaty, yet continued to enjoy the preferential treatment reserved for investors from countries or territories that are parties to international treaties to which Vietnam is a signatory. Accordingly, the Draft tightens the regulations to ensure that preferential treatment is applied only to the proper beneficiaries.

The Draft introduces stricter regulatory provisions applicable to investors from countries or territories that are not parties to international treaties to which Vietnam is a signatory, with respect to services for which Vietnam has not committed to market opening under such treaties.

Draft further clarifies the definition of “lubricating oils and greases” in Clause 4, Article 9 of Decree No. 09 by specifying it as “lubricating oil and lubricating grease” to avoid divergent interpretations of the term “oil.” At the same time, the Draft adds a requirement that a foreign-invested economic organization must “have been granted an investment registration certificate for the production of lubricating oil and lubricating grease” instead of the previous, more general requirement of “engaging in the production of lubricating oils and greases.”

Regarding the contents of the BL, the Draft supplements the requirement to include information on the “place of incorporation/nationality” of the owner, capital-contributing members, and founding shareholders. This is to determine whether, in the event of a change in the owner, capital-contributing members, or founding shareholders of a foreign-invested economic organization, such persons remain from or are no longer from a country or territory that is a party to an international treaty to which Vietnam is a signatory

b. Application Dossier for Issuance of the BL

The Draft supplements a specific time frame requirement when preparing the business plan and financial plan, namely “within 5 years from the year of submission of the application,” so that foreign-invested economic organizations are subject to a defined period when formulating such plans.

The Draft also adds a requirement that the tax authority’s certification of no outstanding overdue tax liabilities must be issued no more than 06 months prior to the date of application submission.

2.2. Provisions on the LERO

a. Conditions for Establishment of a Retail Outlet

The condition requiring “having a financial plan for the establishment of a retail outlet” is abolished, as there is no basis for review and appraisal.

The provision on the retail outlet’s location being “in conformity with relevant planning in the geographical market area” is clarified to state that “the location of the retail outlet must satisfy the conditions prescribed under regulations on land management, planning, investment, construction, fire prevention and fighting, traffic safety, and environmental sanitation.”

With respect to the contents of the LERO, the Draft supplements three additional items to be specified therein.

b. Economic Needs Test (ENT)

The Draft supplements a provision clarifying the category of investors subject to the ENT requirement, namely: “Foreign investors from countries or territories that are not parties to an international treaty under which Vietnam has committed to the abolition of the ENT requirement.”

The Draft also supplements and clarifies the criteria for conducting the ENT, as compared to Decree No. 09, to ensure that retail outlets established by investors not exempt from the ENT requirement operate effectively.

c. Application Dossier for the LERO

The Draft supplements a requirement that the tax authority’s certification of no outstanding overdue tax liabilities must be issued no more than 06 months prior to the date of application submission.

It also adds a requirement to provide a Certificate of Branch Registration or a Certificate of Business Location Registration for the location where the retail outlet is to be established.

d. Amendment of the LERO

The Draft supplements a provision on cases requiring amendment of the license in the event of a change in the retail outlet’s location within the same shopping center. This provision is intended to address the situation where multiple retail outlets share the same address of the shopping center, while the specific position or detailed address of each retail outlet differs