Thriving in Vietnam’s E-Commerce Market: A Legal Guide for Foreign Businesses

Vietnam’s e-commerce market is experiencing rapid growth, making it an increasingly attractive destination for foreign investors. In 2024, the market size is estimated to reach $22 billion, marking an 18% increase compared to 2023, and placing Vietnam among the top three e-commerce markets in Southeast Asia, following Indonesia and Thailand. By 2030, the market is projected to reach $63 billion, surpassing Thailand and securing the second spot in the region. With a young, tech-savvy population and rising internet penetration, Vietnam is well-positioned to emerge as a major player in the global digital economy.

Case Study

Despite strong growth, not all platforms entering the market adhere to local laws, highlighted by the recent exits of two Chinese giant cross-border platforms, Temu and Shein.

Shein had been operating in Vietnam for years, while Temu just entered the market in October 2024. However, both platforms failed to comply with local regulations by not registering with the Ministry of Industry and Trade (MOIT). After Temu’s illegal and ‘quiet’ entry, the authority urged both companies to complete their registration and other legal requirements by the end of November, including suspending all commercial, advertising, and marketing activities during the process. Despite this, they did not meet the deadline.

These events underscore Vietnam’s increasing oversight of the e-commerce sector. While the authorities have shown a willingness to cooperate, they have warned that failure to comply could result in blocking the platforms’ apps and domains. Additionally, the MOIT and other agencies are reviewing laws related to e-commerce and taxation to ensure proper regulation, protect the consumer, and expand revenue sources.

Key Legal Regulations to Engage in Vietnam’s E-commerce Sector

Foreign investors can enter Vietnam’s e-commerce sector through two types: (1) Direct Investment in Vietnam and (2) Cross-Border Service Provision. Each type requires compliance with specific key regulations, as outlined below:

I. DIRECT INVESTMENT IN VIETNAM

A. MARKET ACCESS CONDITIONS

E-commerce is a conditional market access business line for foreign investors. Therefore, to engage in this sector, foreign investors must adhere to the following key conditions:

• Investment Form:

Foreign investors wishing to invest in Vietnam’s e-commerce sector can choose to establish a company in Vietnam or contribute capital/ acquire share/ purchase equity in existing e-commerce companies in the country. In both cases, they must follow Vietnam’s investment regulations.

• National Security Appraisal by the Ministry of Public Security:

This condition only applies to foreign investors who control one or more enterprises among the top 5 leading e-commerce service providers in Vietnam, as listed by the MOIT. The MOIT will publish this list annually by March 15, covering the top 5 market leaders from the previous year.

In 2023, the MOIT announced the top 5 including:

No.	Website/App	Company name
1	Baemin	Woowa Brothers Vietnam Company Limited
2	Be	Be Group Joint Stock Company
3	GoJek	Go Viet Technology Trading Joint Stock Company
4	Grab	Grab Vietnam Company Limited
5	Lazada	Recess Company Limited

B. COMPANY ESTABLISHMENT

Regarding this form, foreign investors typically establish a company in the Limited Liability Company form – an independent entity with full control and limited liability within the scope of the contributed capital, to engage in e-commerce activity in the country (“Company”), by two key steps:

Step 1. Obtaining the Investment Registration Certificate (IRC)

Step 2.  Obtaining the Enterprise Registration Certificate (ERC)

Notes: The Company’s charter capital must be fully contributed within 90 days of the ERC’s issuance.

The Company shall register specific business lines to include all the activities that the Company will perform and the most important one is the VSIC code 6312 (Portal).

C. FULFILLING OTHER REQUIRED PROCEDURES

E-commerce is also a conditional business line, requiring foreign-invested capital companies to complete specific procedures and meet certain conditions to operate in this sector legally:

Procedure	Authority	Note
Business License Application	The Department of Industry and Trade (DOIT)	Conditions: (1) Meeting market access conditions; (2) Having a financial plan to carry out the e-commerce service activity; (3) No overdue tax debt (in case established in Vietnam for 1 year or more).
Notification of website establishment	The MOIT	Method: Online; Only for the type ‘e-commerce website for selling goods’ if it includes online ordering functionality before officially starting sales.
Registration of website establishment	The MOIT	Method: Online; Only for the type ‘e-commerce service provision website’ after it has been fully developed with the necessary features and information, registered under the domain name, and before officially offering services to users.

II. CROSS-BORDER SERVICE PROVISION

In addition to the form of direct investment in Vietnam, foreign traders can also choose to provide cross-border services by operating websites providing e-commerce services in the country. According to Vietnamese law, websites of foreign traders are considered to provide e-commerce services in Vietnam if they fall under one of the following circumstances:

– Using a Vietnamese domain name;

– Displaying language is Vietnamese; or

– Receiving more than 100,000 transactions from Vietnam within a year.

In such cases, these foreign investors are required to register their e-commerce activities with the MOIT and establish a representative office in Vietnam or appoint an authorized representative in Vietnam.

E-commerce service providers must comply with the tax regulations, especially on the value-added tax and corporate income tax. Additionally, by January 15^th each year, the providers must report to the MOIT the statistics on their activities from the previous year.

Opportunities for Foreign Investors

Vietnam’s e-commerce market offers significant opportunities for investors. Several foreign brands have successfully navigated the landscape and reaped substantial benefits, such as Shopee, TikTok Shop, and Lazada with the revenue in Q2/2024 being 53,740 billion VND, 18,360 billion VND, and 6,030 billion VND, respectively.

These platforms have thrived by localizing their services and complying with Vietnam’s regulatory framework. Their success highlights the importance of understanding and adhering to local laws, offering valuable insights for foreign investors seeking to enter the market.

With the increasing demand for online shopping and the government’s strong push for a digital economy, Vietnam is an ideal environment for new investments. Foreign investors can capitalize on the country’s strategic location in Southeast Asia and its expanding middle class to grow their e-commerce presence.

Conclusion

Vietnam’s e-commerce sector presents significant growth potential and will continue to grow in the coming period. While regulatory challenges exist, they can be navigated with proper planning and local legal understanding. With the right approach, Vietnam offers a lucrative opportunity for foreign investors to capitalize on its expanding digital economy.

In D’Andrea & Partners Legal Counsel we have authored innovative publications exploring Vietnam, produced in order to provide foreign investors and businesses with more practical guidance on how to do business in Vietnam, as it requires a specific context of the economic and legal framework of the country, including tailor-made consultancy for e-commerce activities in Vietnam.

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.