In today’s digital age, e-commerce has become an essential part of any business. With the rise of e-commerce, many businesses are interested in investing in this field, including foreign investors. For foreign investors who wish to start e-commerce exchange operations in Vietnam, registering the business is a crucial step.
Regulation in Vietnam about e-commerce
As technology continues to advance, online shopping has become increasingly popular as people seek to save time and money on travel expenses. This has led to the rise of e-commerce exchanges to meet consumer demand. Some websites, such as Shopee, Lazada, Tiki, and Sendo, have received substantial investment and have developed very effectively. This investment and development demonstrate the potential of the e-commerce sector to attract foreign investors and contribute to Vietnam’s economy.
Vietnamese law allows foreign investors to operate e-commerce exchanges in order to attract foreign investment. However, there are several conditions that foreign investors must follow in order to protect domestic e-commerce exchange developers. As such, foreign-invested companies that wish to register to run an e-commerce exchange must complete three main stages:
– The first stage involves adding the profession of “E-commerce exchange” to the Business Registration Certificate and Investment Registration Certificate if applicable.
– The second stage requires the company to apply for a business license to operate an E-commerce exchange.
– The third stage involves registering the E-commerce exchange with the Ministry of Industry and Trade.
Conditions for foreign investors to register activities in the sector of “E-commerce exchange”
Establishing an “E-commerce exchange” is an investment in creating a website that serves as a platform for traders, organizations, and individuals to engage in trade promotion activities and sell goods or services. To register as a foreign investor in this sector, it is necessary to examine Vietnam’s legal and regulatory framework, including commitments in the Schedule of Commitments on WTO Services and bilateral agreements.
Although Vietnam has not yet committed to opening up the market for the E-commerce exchange sector, under Vietnamese law, foreign investors are permitted to register and operate in this industry, subject to the provisions of Decree 52/2013/ND-CP and Decree 09/2018/ND-CP. In accordance with the Investment Law, the Department of Planning and Investment will evaluate each application on a case-by-case basis, taking into account the investor’s capacity and project feasibility, among other factors.
However, Vietnam has already granted approval for several foreign-invested companies to operate in the E-commerce exchange industry, such as Shopee and Tiki. Based on this experience, it is likely that registering and adding the E-commerce exchange activity to the business license will be approved.
Foreign-invested company’s e-commerce service business licenses and registration for running an exchange
E-commerce activities are subject to certain conditions under the Law on Investment. Therefore, foreign-invested organizations that receive approval from the Department of Planning and Investment to register and add e-commerce activities to their business license must also apply for an e-commerce business license from the Department of Industry and Trade. As explained in Section 1, e-commerce services are not currently open for market access by foreign investors in Vietnam. Therefore, foreign-invested companies must meet the following requirements in order to obtain an e-commerce business license:
Have a financial plan to support the activities specified in the business license application.
If the company has been operating in Vietnam for more than one year, it must not have any outstanding tax debt. Meet the conditions for compliance with specialized laws, competition levels within the domestic market, job creation for Vietnamese workers, and contribution to the state budget.
Upon satisfying these conditions, the Department of Industry and Trade will consult the Ministry of Industry and Trade to assess and approve the application based on the following criteria:
– Compliance with regional and national development plans and strategies is an important consideration.
– The negotiation process for opening Vietnam’s market is also relevant.
– One should take into account the necessity of opening Vietnam’s market.
– One should also consider Vietnam’s strategy for cooperating with foreign partners.
– Diplomatic relations, national security, social order, and safety may be affected if foreign investors come from countries that have not signed treaties with Vietnam.
The most difficult stage in registering a foreign-invested company’s E-commerce exchange operations is when the Ministry of Industry and Trade evaluates and approves the application. The evaluation criteria are also subjective and vary from case to case, as the authorities prioritize the development of domestic enterprises. When Vietnam presents foreign investors with numerous licensing difficulties, despite the fact that it is legal, it may disappoint them and lead them to question Vietnam’s open-market policy and investment environment. Once the company obtains the service business license, it can proceed with building a website or an app, preparing contracts, creating a service provision scheme, and registering the website or app with the Ministry of Industry and Trade to operate the exchange in an official capacity.
Foreign investors should also be aware of restrictions in certain industries in Vietnam, such as those related to national security or reserved for Vietnamese ownership. It’s important to seek legal guidance to ensure that the company is operating within the legal framework and complying with restrictions in Vietnam.
Conclusion
In conclusion, registering a foreign-invested company’s e-commerce exchange operation in Vietnam can be a lucrative investment opportunity for foreign investors. To ensure success, foreign investors must follow the necessary steps for registration, comply with relevant laws and regulations, establish proper data privacy and cybersecurity policies, work with local service providers, and seek legal advice. With careful planning and execution, foreign investors can take advantage of the growing e-commerce market in Vietnam and achieve success in their e-commerce exchange operations.
Moreover, operating an E-commerce exchange in Vietnam is still a new industry with a wide range of potential opportunities and drawbacks for domestic and foreign investors. However, to protect the development of the domestic market, it is necessary to introduce regulations to appraise and verify the capacity and conditions of foreign investors. That is the first step to review and ensure that the future e-commerce exchange operates effectively and protects domestic consumers.
HMLF is always available to offer assistance in understanding the procedures with authorities.
Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn
