Circular No. 09/2007/TT-BTM guiding the implementation of Decree No. 23/2007/NĐ-CP dated February 12, 2007 detailing the Law on Trade regarding trading activities and other activities directly related to trading of goods of foreign-invested enterprises in Vietnam.

CIRCULAR

Guidelines for implementing Decree No. 23/2007/NĐ-CP dated February 12, 2007

detailing the Law on Trade regarding trading activities and directly related activities

concerning the purchase and sale of goods by foreign-invested enterprises in Vietnam

___________________________

Pursuant to Decree No. 29/2004/NĐ-CP dated January 16, 2004 of the Government on the functions, tasks, powers, and organizational structure of the Ministry of Trade;

Pursuant to Decree No. 23/2007/NĐ-CP dated February 12, 2007 of the Government detailing the Law on Trade regarding trading activities and directly related activities concerning the purchase and sale of goods by foreign-invested enterprises in Vietnam;

Pursuant to Decree No. 35/2006/NĐ-CP dated March 31, 2006 of the Government detailing the implementation of the Law on Trade regarding franchising activities;

Pursuant to Decree No. 12/2006/NĐ-CP dated January 23, 2006 of the Government detailing the implementation of the Law on Trade regarding international trade activities and agency buying, selling, processing, and transiting goods with foreign countries;

Pursuant to Decree No. 108/2006/NĐ-CP dated September 22, 2006 of the Government detailing and guiding the implementation of certain provisions of the Investment Law;

The Ministry of Trade guides some contents stipulated in Decree No. 23/2007/NĐ-CP dated February 12, 2007 as follows:

I. GENERAL GUIDELINES

1. Investment to carry out trading activities and directly related activities

Foreign investors or foreign-invested enterprises in Vietnam meeting the conditions specified in point a, Clause 1, Article 4 of Decree No. 23/2007/NĐ-CP have the right to invest to carry out trading activities and directly related activities according to the investment form and implementation schedule prescribed in Appendix 01 of Decision No. 10/2007/QĐ-BTM dated May 21, 2007 of the Minister of Trade announcing the implementation schedule for trading activities and directly related activities (hereinafter referred to as Decision No. 10/2007/QĐ-BTM).

2. Exercise of export rights

2.1. Foreign-invested enterprises in Vietnam that have been granted permission to exercise export rights shall exercise such rights as follows:

a) Exporting goods not included in the list of prohibited export items (Item I of Appendix 01 of Decree No. 12/2006/NĐ-CP), not included in the list of temporarily suspended export items (if any), and goods not included in the list of goods not permitted to be exported (Clause A, Item II of Appendix 02 of Decision No. 10/2007/QĐ-BTM);

b) For goods listed in the schedule for export (Clause B, Item II of Appendix 02 of Decision No. 10/2007/QĐ-BTM), foreign-invested enterprises may implement exports according to the prescribed schedule;

c) Directly purchasing goods from traders registered to engage in trading or having the right to distribute such goods for export;

d) Directly handling export procedures at customs authorities in accordance with Vietnamese laws.

2.2. Foreign-invested enterprises that have been granted permission to exercise export rights shall not establish bases for purchasing goods for export.

3. Exercise of import rights

3.1. Foreign-invested enterprises that have been granted permission to exercise import rights shall exercise such rights as follows:

a) Importing goods not included in the list of prohibited import items (Item II of Appendix 01 of Decree No. 12/2006/NĐ-CP), not included in the list of temporarily suspended import items (if any), and goods not included in the list of goods not permitted to be imported (Clause A, Item II of Appendix 03 of Decision No. 10/2007/QĐ-BTM);

b) For goods listed in the schedule for imports (Clause B, Item II of Appendix 03 of Decision No. 10/2007/QĐ-BTM), foreign-invested enterprises may implement imports according to the prescribed schedule;

c) Directly handling import procedures at customs authorities in accordance with Vietnamese laws;

d) Selling each group of imported goods to one trader registered to engage in trading or having the right to distribute such group of goods. Such trader shall be selected and registered by the foreign-invested enterprise with the competent authority granting permission. Each group of goods includes items under one Chapter of the Import Tariff.

3.2. Foreign-invested enterprises that have been granted permission to exercise import rights shall not establish bases for distributing imported goods.

4. Exercise of distribution rights

4.1. Foreign-invested enterprises that have been granted permission to exercise distribution rights shall exercise such rights as follows:

a) Engaging in wholesale, retail, franchising, and agency trading of domestically produced goods and imported goods, except for goods listed in the schedule of goods not permitted to be distributed (Clause A, Item II of Appendix 04 of Decision No. 10/2007/QĐ-BTM);

b) For goods listed in the schedule for distribution (Clause B, Item II of Appendix 04 of Decision No. 10/2007/QĐ-BTM), foreign-invested enterprises may engage in wholesale, retail, franchising, and agency trading according to the prescribed schedule.

4.2. Foreign-invested enterprises that have been granted permission to operate wholesale and retail shall comply with the provisions of Clause 7 and Clause 8, Article 1 of Decree No. 23/2007/NĐ-CP when engaging in wholesale and retail. Foreign-invested enterprises that have been granted permission to establish retail outlets (including the first retail outlet) shall not engage in retail outside the permitted retail outlets.

4.3. Establishing retail outlets outside the first retail outlet

a) Establishing retail outlets outside the first retail outlet shall be considered on a case-by-case basis based on the number of retail outlets, market stability, population density in the province or city where the retail outlet is located, and the suitability of the investment project with the planning of that province or city.

b) A foreign-invested enterprise that has been granted an Investment License or Certificate of Investment with the content of establishing a retail outlet outside the first retail outlet but has not yet been granted a Retail Outlet Establishment Permit in accordance with Decree No. 23/2007/NĐ-CP must go through the procedures for issuing a Retail Outlet Establishment Permit in accordance with the guidance provided at point d, Clause 4, Section II of this Circular.

II. ISSUANCE OF PERMITS TO CONDUCT ACTIVITIES IN THE PURCHASE AND SALE OF GOODS AND RELATED ACTIVITIES DIRECTLY RELATED TO THE PURCHASE AND SALE OF GOODS

1. In the case of investment solely to exercise export rights, import rights without engaging in distribution activities or other activities directly related to the purchase and sale of goods

a) For a foreign investor making their first investment in Vietnam solely to exercise export rights and import rights, they must go through the procedures for issuing an Investment Certificate. A foreign-invested enterprise currently operating in Vietnam that wishes to supplement the exercise of export rights and import rights must go through the procedures for supplementing the Investment Certificate.

In cases of refusal, the State Bank will issue a document refusing approval to use foreign currency within the territory and clearly state the reasons.

- Application documents for issuance or supplementation of the Investment Certificate in accordance with the laws on investment;

- An explanation of compliance with business conditions regarding legal entity nationality, form of investment, business services, scope of operation;

- Registration of the content of exercising export rights and import rights.

b) The competent authority issuing the permit shall base on the provisions of Decision No. 10/2007/QĐ-BTM to issue or supplement the Investment Certificate without the need for approval from the Ministry of Trade.

2. In the case of first investment to conduct activities in the purchase and sale of goods and related activities directly related to the purchase and sale of goods

a) A foreign investor making their first investment in Vietnam involving investment in activities of purchasing and selling goods and related activities directly related to the purchase and sale of goods must go through the procedures for issuing an Investment Certificate.

In cases of refusal, the State Bank will issue a document refusing approval to use foreign currency within the territory and clearly state the reasons.

- Application documents for issuance of the Investment Certificate in accordance with the laws on investment;

- An explanation of compliance with business conditions regarding legal entity nationality, form of investment, business services, scope of operation;

- Registration of the content of conducting activities in the purchase and sale of goods and related activities directly related to the purchase and sale of goods.

b) The competent authority issuing the permit shall issue the Investment Certificate after obtaining the approval of the Ministry of Trade.

3. In the case of supplementing activities in the purchase and sale of goods and related activities directly related to the purchase and sale of goods

A foreign-invested enterprise that has been granted an Investment Certificate or Investment License and requests to supplement activities in the purchase and sale of goods and related activities directly related to the purchase and sale of goods must go through the procedures for issuing a Business License.

a) Issuance of a Business License

- Documents include:

+ An application for issuance of a Business License carried out according to Model MD1 issued together with this Circular;

+ An explanation of compliance with business conditions regarding legal entity nationality, form of investment, business services, scope of operation;

+ Registration of the content of conducting activities in the purchase and sale of goods and related activities directly related to the purchase and sale of goods.

- The competent authority issuing the permit shall issue a Business License according to Model GP1 issued together with this Circular after obtaining the approval of the Ministry of Trade.

b) Amendment and supplementation of a Business License

- Documents include:

+ An application for amendment and supplementation of a Business License carried out according to Model MD2 issued together with this Circular;

+ A copy of the Business License already issued.

- The competent authority issuing the permit shall issue a new Business License with the amended and supplemented content while recalling the previously issued Business License. In cases where the amendment and supplementation of a Business License relate to the content of business activities in the purchase and sale of goods and related activities directly related to the purchase and sale of goods, the competent authority issuing the permit shall carry out the amendment and supplementation of the Business License after obtaining the approval of the Ministry of Trade.

c) Reissuance of a Business License

- Documents include:

+ An application for reissuance of a Business License according to Model MD3 issued together with this Circular;

+ Documentation confirming by the police authority about the declaration of loss of the Business License or an explanation of the reasons for damage, destruction, or other forms of destruction of the Business License.

- The competent authority issuing the permit shall reissue a new Business License with the same content as the previously issued Business License.

4. In the case of establishing a retail outlet outside the first retail outlet

A foreign-invested enterprise establishing a retail outlet outside the first retail outlet must go through the procedures for issuing a Retail Outlet Establishment Permit.

a) Issuance of a Retail Outlet Establishment Permit

- Documents include:

+ An application for issuance of a Retail Outlet Establishment Permit carried out according to Model MD4 issued together with this Circular;

+ A copy of the Investment Certificate, Business License related to the establishment of the first retail outlet.

- The competent authority issuing the permit shall issue a Retail Outlet Establishment Permit according to Model GP2 issued together with this Circular after obtaining the approval of the Ministry of Trade.

b) Amendment and supplementation of a Retail Outlet Establishment Permit

- Documents include:

+ An application for amendment and supplementation of a Retail Outlet Establishment Permit carried out according to Model MD5 issued together with this Circular;

+ A copy of the Retail Outlet Establishment Permit proposed to be amended and supplemented.

- The competent authority issuing the permit shall issue a new Retail Outlet Establishment Permit with the amended and supplemented content while recalling the previously issued Retail Outlet Establishment Permit. In cases where the amendment and supplementation of a Retail Outlet Establishment Permit relate to the content of the retail outlet's operations, the competent authority issuing the permit shall carry out the amendment and supplementation of the Retail Outlet Establishment Permit after obtaining the approval of the Ministry of Trade.

c) Reissuance of a Retail Outlet Establishment Permit

The reissuance of a Retail Outlet Establishment Permit shall be carried out in accordance with the regulations for reissuing a Business License as stipulated at point c, Clause 3, Section II of this Circular.

d) Issuance of a Retail Outlet Establishment Permit for a retail outlet established outside the first retail outlet in accordance with the law but not yet issued a Retail Outlet Establishment Permit in accordance with Decree No. 23/2007/NĐ-CP

- Documents include:

+ An application for issuance of a Retail Outlet Establishment Permit carried out according to Model MD4 issued together with this Circular;

+ Report on the situation of investment and operation of the retail outlet requesting issuance of a Retail Outlet Establishment Permit;

+ A copy of the Investment License, Investment Certificate.

- The competent authority issuing the permit shall issue a Retail Outlet Establishment Permit according to Model GP2 issued together with this Circular.

III. REVOCATION OF BUSINESS LICENSES AND RETAIL OUTLET ESTABLISHMENT PERMITS

The competent licensing authority shall revoke the Business License and the Retail Establishment Permit in the following cases:

1. A foreign-invested enterprise operating in the field of goods trading and activities directly related to goods trading commits violations of the laws, thereby necessitating the revocation of the Business License and the Retail Establishment Permit.

2. An investment project in goods trading and activities directly related to goods trading ceases operations as prescribed by the laws on investment.

3. The competent licensing authority shall revoke the Investment License and the Investment Certificate.

IV. REPORTING REGIME

1. A foreign-invested enterprise operating in the field of goods trading and activities directly related to goods trading must comply with the financial reporting regime and statistical reporting regime as stipulated by Vietnamese laws.

2. Quarterly, before the 15th day of the first month of each subsequent quarter, the competent licensing authority shall compile and report to the Ministry of Commerce on the issuance, reissuance, amendment, supplementation, and revocation of licenses issued for investment projects in goods trading and activities directly related to goods trading, along with any recommendations and proposals according to the Reporting Form provided in this Circular.

V. IMPLEMENTATION

1. This Circular shall take effect fifteen days from the date of publication in the Official Gazette.

2. During the implementation of this Circular, if any difficulties arise, relevant organizations and individuals shall promptly reflect them to the Ministry of Commerce for timely resolution./.