E-Commerce business in Vietnam: Conditions for foreign investors

E-Commerce business in Vietnam: Conditions for foreign investors

As reported by Google, in terms of scale, Vietnam is the third-largest e-commerce market in Southeast Asia with 7 billion USD in 2020, following the biggest scale of 32 billion of Indonesia and Thai Lan with 9 billion USD. It is expected that by 2025, Vietnam will peak the highest growth rate of 34% in the region. The huge potential thus found in Vietnam’s E-commerce market will attract many foreign investment capitals. However, in order to access the market, foreign investors have to surpass several legal barriers.

As defined in Decree 52/2013/ND-CP, the e-commerce activity means conducting a part or the whole process of commercial activity by electronic means connected to the Internet, mobile telecommunications networks, or other open networks. The e-commerce activities are classified into 02 categories, including:

  • An E-commerce website for sales is an e-commerce website developed by traders, organizations or individuals by themselves for commercial promotion, sales or service provision.
  • An E-commerce service provision website is an e-commerce website developed by traders or organizations to provide an environment for other traders, organizations, or individuals to conduct their commercial activities, including: (i) E-commerce trading floor;(ii) Online auction website;(iii)Online promotion website;(iv) Other types of website as stipulated by the Ministry of Industry and Trade.

With the typical purpose of introducing goods and services of its owner, there are no additional sub-licenses for an e-commerce website, however, its owner must inform the Ministry of Industry and Trade on the establishment of the website. For foreign-invested enterprises carry out retailing activities through an e-commerce website for sales, other than the mentioned notification obligation, it is mandatory to apply for a business license in retail sales since it is a conditional business sector for foreign-invested enterprises under the Decree 09/2018 / ND-CP.

The activity on an E-commerce website for e-commerce service provider is essentially the activity in which traders provide a platform for other traders, organizations, or individuals to carry out commercial activities, is also a conditional business sector for foreign-invested enterprises. Since providing an e-commerce service is directly related to the purchase and sale of goods acitvity under the regulations of Decree 09/2018/ND-CP, the foreign-invested enterprises are  also required to apply for a business license to perform activities related to the purchase of goods. 

Under the Decree 09/2018/ND-CP, in order to be granted a business license, the following conditions must be satisfied 

  • Meet market access conditions prescribed in international treaties to which Vietnam is a signatory;
  • Acquire a financial plan deemed qualified to apply for a business license;
  •  Incur no overdue tax if it has been established in Vietnam for at least one year.

However, the provision of e-commerce services is a business service that has not yet been committed to open markets in international treaties to which Vietnam is a signatory. Therefore, the issuance of a business license will depend on the capacity of the investor as well as the appraisal by the competent authority of the Ministry of Industry and Trade. In addition to meeting the forementioned conditions, the following sub-criteria will be applied to consider licensing for providing e-commerce services, including:

  • In compliance with provisions of specialized law;
  • In conformity with the extent of competitiveness of domestic enterprises within the same sector;
  • Employment creation for domestic workers;
  • Potential and actual contribution to state budget.

After being granted a business license to provide e-commerce services, a foreign-invested enterprise must register an e-commerce service website at the Ministry of Industry and Trade under the Decree 52/2013 / ND-CP. This condition is generally applied for all enterprises with foreign investment and enterprises with 100% of the capital of Vietnam. In case of failure to register, enterprises may be fined from VND 40,000,000 to VND 60,000,000.

The above are the fundamental conditions for foreign-invested enterprises to provide e-commerce services in Vietnam. In addition to the existing market access conditions, during operation, businesses will need to comply with the regulations on information storage under Decree 52/2013 / ND-CP as well as regulations on assurance information security under the Law on Cyber Information Security.

If you have any questions or require any additional information, please contact Apolat Legal – An International Law Firm in Viet Nam.

This article is for general information only and is not a substitute for legal advice.