Establishing a Foreign Retail Enterprise in Vietnam

Vietnam currently boasts approximately 1,085 supermarkets, 240 shopping centers, and nearly 2,000 convenience stores, with Vietnamese enterprises accounting for about 70 to 80% of sales points nationwide. In recent years, the retail sector has seen strong growth, generating significant revenue for retail businesses. Consequently, retail is a potential sector that attracts both domestic and foreign investors.
This article will provide useful information on establishing a foreign retail enterprise in Vietnam.

1. Conditions for Establishing a Foreign Retail Enterprise in Vietnam

International Treaties Vietnam is a Member of (WTO, AFAS, FTAs, VKFTA):

Foreign-invested economic organizations are allowed to engage in the following activities:

• Commission agent services (CPC 621, 61111, 6113, 6121);
• Wholesale (CPC 622, 61111, 6113, 6212);
• Retail (CPC 631 + 632, 61112, 6113, 6212) (including multi-level marketing);
• Franchise services (CPC 8929).
• Foreign investors are prohibited from engaging in the distribution franchise of: tobacco and cigars, books, newspapers and magazines, recorded media, precious metals and stones, pharmaceuticals, explosives, crude oil and processed oil, rice, sugarcane, and beet sugar.
• Conditions for Establishing a Retail Facility: The establishment of retail facilities (beyond the first retail facility) of foreign-invested economic organizations will be considered based on Economic Needs Test (ENT).

Vietnamese Law:

Conditions for Establishing a Retail Facility:

• A financial plan for establishing a retail facility;
• No overdue tax debt if the company has been established in Vietnam for more than one year;
• The location for the retail facility must comply with relevant local planning.

Conditions for Establishing Additional Retail Facilities Beyond the First:

Without ENT Requirement:

• Apply the same conditions as for the first retail facility.
• With ENT Requirement
• Meet the conditions stipulated in paragraph 1
• Fulfill ENT criteria, including: the size of the geographic market area affected by the retail facility; the number of existing retail facilities in the area; the impact of the retail facility on market stability and the operations of existing retail facilities and traditional markets; the effect of the retail facility on traffic density, environmental hygiene, and fire safety in the area; the retail facility’s contribution to the socio-economic development of the geographic market area.

Franchise Activities:

Traders are permitted to grant commercial rights when the intended franchising business system has been in operation for at least one year.

2. Procedures for Establishing a Foreign-Invested Retail Enterprise in Vietnam

a) Investor Applies for an Investment Registration Certificate

Required Documents:

• Proposal for the investment project
• Legal documents of the investor: notarized copy of ID card or passport (for individuals); notarized copy of the establishment certificate or equivalent document and passport of the capital manager (for organizations)
• Investment project proposal including details on the investor, project objectives, scale and investment capital, capital mobilization plan, location, duration, investment schedule, labor needs, proposed investment incentives, assessment of impacts, and the socio-economic efficiency of the project
• Documents proving the financial capacity of the investor.

Submission Location: Department of Planning and Investment where the headquarters is intended to be located.
Processing Time: Within 15 days from receiving complete and valid documents, the Department of Planning and Investment will issue the Investment Registration Certificate to the foreign investor. If rejected, the Department will respond in writing, stating the reasons.

b) Procedures for Establishing a Foreign-Invested Company in Vietnam

Apply for an Enterprise Registration Certificate with the following documents:

• Enterprise registration application form
• Company charter
• List of founding shareholders and foreign investors (for joint-stock companies); List of members (for limited liability companies with two or more members)
• Notarized copy of ID card, passport (for individuals); establishment decision, business registration certificate or equivalent document, and ID card, passport, with a power of attorney for the capital manager in Vietnam (for organizations)
• Notarized copy of the issued Investment Registration Certificate.

Submission Location: Department of Planning and Investment where the company is headquartered.
Processing Time: 3 to 6 working days.

Application for Business License and Retail Store Establishment License

Required Documents:

• Application form for the establishment of a retail store
• Explanation including:
  • Location of the retail store
  • Business plan for the retail store
  • Financial plan for establishing the retail store
  • Tax document proving no overdue tax debt.
• Copies of: Enterprise Registration Certificate, Investment Registration Certificate for the retail store project (if any), Business License.
• Explanation of ENT criteria, if required:
  • Impact of the retail store on market stability and the operations of existing retail facilities and traditional markets in the geographic market area
  • Effect of the retail store on traffic density, environmental hygiene, and fire safety in the geographic market area
  • Contribution of the retail store to the socio-economic development of the geographic market area.

The above information is essential for foreign businesses considering establishing a retail enterprise in Vietnam. Businesses need to comply fully to receive legal protection and minimize related legal risks.