New amendment will broaden foreign distribution of goods

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Mar. 19 – Deputy Minister of Industry and Trade Le Danh Vinh has revealed a move to expand foreign business trade and distribution rights.

The expansion would be granted through an amendment to a circular regulating foreign business and investment in Vietnam. Currently, the circular permits foreign companies and importers only one national distributor for any merchandise in a given category of products. The restriction has drawn criticism from the European Commission.

With the amendment in place, foreign enterprises will be free to select their own distributors and points of sale, nationwide. For certain categories of merchandise, foreigners will be allowed to sell directly to customers, bypassing the distributor altogether. The reform stops just short of granting foreign importers the right to establish their own distribution networks.

While the majority of representatives at the Ho Chi Minh business conference, where Vinh reported the amendment, praised the move, several in attendance spoke out over issues its implementation would raise.

Antonio Berenguer, European Commission trade counselor, expressed his concern that government circulars in general take too long to implement, to which Vinh could only promise that the Ministry would make every effort to expedite the matter.

The amendment likely comes in response to not only the European Commission’s critique, but also charges from the American Chamber of Commerce in Vietnam, which argued in a recent position paper that the current circular does not fall in line with Vietnam’s commitments to the WTO.