Invest in Vietnam: E-commerce Guide for FDI

With technology evolving fast, buying and selling online has become much easier. In Vietnam, the online shopping market is growing and the distance between buyers and sellers has diminished, as a result of which a seamless connections is established.

Moreover, given the impact of the previous pandemic-related lockdowns and the growth of the middle class, Vietnam’s E-Commerce sector has demonstrated promising potential. It is seen that there is a lot of enthusiasm in foreign enterprises to explore this booming market due to its promising potential.

This article aims to provide an in-depth understanding of how to legally do E-Commerce business in Vietnam. It will delve into the essential aspects such as the definition and forms of E-Commerce activities, prerequisites and procedures for establishing an E-Commerce business in Vietnam. It is important for a foreign enterprise to familiarize themselves with these fundamental principles, by which they shall gain a comprehensive overview of the Vietnamese policies governing E-Commerce.

Definition and Forms of E-Commerce Activities

According to Article 3.1 of Decree 52/2013/ND-CP (hereinafter referred to as “Decree 52”) partially amended by Decree 08/2018/ND-CP hereinafter referred to as “Decree 08”) and Decree 85/2021/ND-CP (hereinafter referred to as “Decree 85”), E-Commerce activity is defined as the act of conducting part or the whole of the process of commercial activity by electronic means connected to the Internet, mobile telecommunications network or other open networks.

A foreign enterprise has the flexibility to select E-Commerce activities from the following list, as outlined in Article 24 and 25 of Decree 52 amended by Article 1.6 and 1.7 of Decree 85:

(i) Self-Developed Sale E-Commerce Website (or App): Foreign enterprises can create its own Sale E-Commerce Website (or App), giving them complete control. They can display and sell products or services. From showcasing items to closing deals, processing payments, and offering customer support, it covers the entire buying and selling process.

(ii) Website (or App) providing E-Commerce Services: If the foreign enterprise prefers not to create their own Sale E-Commerce Website (or App), they can choose services from other companies. These companies offer a platform for your E-Commerce activities, allowing them to conduct their business without having to develop these Sale E-Commerce Website (or Apps) themselves. The E-Commerce services provided by these companies can include: E-Commerce trading floor service (Amazon, Lazada, Shopee); online auction service; online promotion service; and other types of services as stipulated by the Ministry of Industry and Trade (MOIT).

(iii) Provide Sale E-Commerce Website (or App): Or if a foreign enterprise prefers, they can create Sale E-Commerce Website (or App) that serve as platforms for other businesses or individuals. These platforms, known as Relay Platforms, enable others to promote, sell products, or offer services. By doing so, they essentially become the type of company mentioned in the second point (ii) above.

It is essential that the foreign enterprises are aware of these three types to decide how their products shall be sold in accordance with your purposes, either by selling products on their own Website (or app) or selling them on others’ platforms or develop a Website (or app) to provide an E-Commerce platform for others.

Requirements

Corresponding to the three types mentioned above, the requirements for each type are as follows:

(i) Self-Developed Sale E-Commerce Website (or App): According to Article 52 of Decree 52 amended by Article 10.1 and 11 of Decree 08, if the foreign enterprise wants to sell their products on their own Website, they must be traders, organizations or individuals who have been granted personal tax identification numbers; have Websites with valid domain names and complying with regulations on management of information on the Internet; and having notified the MOIT of the set-up of sales E-Commerce Websites.

(ii) Website (or App) providing E-Commerce Services: To sell on existing platforms (Website or App), the foreign enterprise needs to register a merchant account with their selected marketplace. Some platforms may require additional steps to get approval. Once the platform approves or verifies the accounts, they will be able to post and sell products.

(iii) Provide Sale E-Commerce Website (or App): If the foreign enterprise want to use your Website (or App) as a platform providing E-Commerce service for others, according to Article 54 of Decree 52 amended by Article 10.2 and 11 of Decree 08, they must be traders or organizations that are duly established in accordance with regulations of law; have a service provision plan; and having registered for setting up E-Commerce service provision Websites and having their registrations certified by the MOIT.

Moreover, it is worth mentioning that in Vietnam, registration is necessary for Specific Products, i.e. medicine, medical devices, cosmetics, processed foods and beverages, publications, ect. In this case, they shall have to execute procedures to apply for registration of such products before attempt to sell it online.

Procedures for establishing an Sale E-Commerce Website (or App/Platform)

For establishment of a Sale E-Commerce Website, the foreign enterprise company shall need to execute an procedure to notify the MOIT via their E-Commerce Management Portal in accordance with Article 53 of Decree 52 amended by Article 18.1 of Decree 85. Once duly executed the notification process, after 06 days, th their company will get a blue label stating “NOTIFIED TO MOIT” which shall be attached on Sales E-Commerce Website.

For establishment of a Relay Platform, the enterprise shall need to make registrations with the MOIT via their E-Commerce Management Portal in accordance with Article 55 of Decree 52 amended by Article 1.20 of Decree 85. Once duly executed the registration process, after 15 days, their enterprise will get a red label stating “REGISTERED TO MOIT” which shall be attached on their Relay Platform.

Conclusion

To sum up, establishing an E-Commerce business in Vietnam is a great way for foreign investors to effectively sell their products in Vietnam due to the country’s increasing demand for goods and their consumers’ change of habit in buying methods. However, in order to successfully establish an E-Commerce Website (or App/Platform), many legal issues and procedures are also involved which require thorough investigations and high expertise in the field for success. For these reasons, it is crucial to consult with a legal advisor to navigate the legal framework effectively and ensure compliance with Vietnamese regulations regarding E-Commerce.

D’Andrea & Partners Legal Counsel have authored innovative publications exploring a complete roadmap for doing investment and business in Vietnam, entitled the Invest in Vietnam Series, including a wide range of noteworthy topics for foreign investors and businesses ranging from essential legal matters and procedures for doing business in Vietnam to promising economic locations for FDI.

Invest in Vietnam Series are available at our offices, and in both printed and e-book formats on the online store of Amazon.

The above content is provided for informational purposes only. The provision of this article does not create an attorney-client relationship between D’Andrea & Partners and the reader and does not constitute legal advice. Legal advice must be tailored to the specific circumstances of each case, and the contents of this article are not a substitute for legal counsel.