03 notes on licenses issued to establish a foreign-invested enterprise’s first retail outlet in Vietnam

Amid increasingly deep economic integration, Vietnam is becoming an attractive destination for foreign investors. Particularly, the retail sector, with its strong growth potential, is opening up significant opportunities for those who want to expand their business activities in the Vietnamese market.

In this article, BLawyers Vietnam describes the current regulations of Vietnamese law regarding the requirements and procedures necessary for foreign investors to be granted a license to establish their first retail outlet in Vietnam.

1. Subjects to be granted a license for establishment of a retail outlet

According to the provisions of Vietnamese law, a license for establishment of a retail outlet (“Retail Outlet License”) is issued to a foreign-invested business entity to set up a retail outlet. Accordingly, a foreign-invested business entity is entitled to apply for a Retail Outlet License after obtaining a business license and retail outlet documentation.

Additionally, the business entity in the following cases must meet and carry out procedures for issuance of a Retail Outlet License when setting up a retail outlet:

1. Over 50% of charter capital is held by the business entity in which foreign investors hold more than 50% of charter capital or in which the majority of partners are foreign in the case of a partnership company;
2. Over 50% of charter capital is held by foreign investors, the business entity which has foreign investors holds more than 50% of charter capital, or the majority of partners are foreign in the case of a partnership company; and
3. A business entity with a retail outlet in Vietnam, after receiving capital contributions to become a foreign-invested business entity mentioned in Item 1.(i) and Item 1.(ii) above, must go through the process of issuing a Retail Outlet License.

2. Conditions for setting up the first retail outlet

According to Vietnamese law, to establish the first retail outlet, the business entity must meet the following conditions:

1. Acquire a financial plan for setting up a retail outlet;
2. Have no overdue tax if it has been established in Vietnam for at least 1 year; and
3. The location where the retail outlet is set up conforms with the relevant planning in the relevant geographic market.

3. Bases for approving the issuance of a Retail Outlet License

By law, the Department of Industry and Trade of the province where a retail outlet is located shall issuance its Retail Outlet License. In addition, the Department of Industry and Trade of the province shall consult with the Ministry of Industry and Trade before issuing the Retail Outlet License.

Accordingly, Vietnamese law has specifically stipulated the contents for the Ministry of Industry and Trade to consider and approve the issuance of a Retail Outlet License to the business entity. Those contents include:

1. If the foreign investor is from a country or territory which has acceded to a treaty to which Vietnam is a signatory and under which Vietnam has committed to open its market for sale of goods and other related activities: The conformity with sector development planning and strategies of the region or country will be considered during the approval process;
2. If the foreign investor is not from a country or territory which has acceded to a treaty to which Vietnam is a signatory:
   1. Conformity with sector development planning and strategies of the region or country;
   2. Vietnam market opening negotiation process;
   3. Vietnamese market opening need;
   4. Vietnam and foreign-partner cooperation strategies; and
   5. Diplomatic relations, national security, social safety and order.

The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at info@blawyersvn.com. BLawyers Vietnam would love to hear from you.

Date: 02 August 2024

Writer: Thai Bui