Focus on multi-level marketing

Anh said that not all multi-level marketing firms violated regulations or collapsed. However, the 1.2 million participants in the network could have big impacts on both participants and consumers.

"Multi-level marketing is complicated and has risks if we do not tighten management policies," he added.

"It is the reason that the Government should review Decree No 42/2014/ND-CP as well as investigate shortcomings of regulations on the location and headquarters of multi-level marketing firms," he said.

Trinh Anh Tuan, deputy director of the ministry's Competitive Management Department told the conference held in Ha Noi on Monday to review multi-level marketing activities, and that by this month, the country had 50 licensed multi-level marketing companies.

In the first half of the year, multi-level marketing firms had total turnover of VND4 trillion (US$177.7 million), contributing VND452 billion to the State budget.

Of which, the foreign firms had turnover of VND1.8 trillion, accounting for 45 per cent while the domestic ones had VND2.2 trillion.

The number of people participating in the activities in the six month period was 500,000, a reduction of 57 per cent from the same period last year.

Tuan added that Decree No 42/2014/ND-CP which took effect on July 1 2014 had shortcomings as multi-level marketing had caused problems in reality.

There were nine multi-level marketing companies that had their licences withdrawn and were fined several thousand billion dong.

Check-ups from the departments of Industry and Trade nationwide in the first half of the year showed that 26 out of 48 investigated had signs of violations with total fines of around VND4.5 billion.

The most common violations included operations without licences, and organising large-scale conferences and training without permission from the departments.

Nguyen Thanh, director of Thua Thien Hue Province's Department of Industry and Trade said the regulation allowing multi-level marketing firms to operate without branches and representative offices had caused difficulties in management and check-ups.

The ministry on March 9 2016 promulgated Directive No 02 on enhancing the check-ups and supervision on the activities.

It found that fines in the Decree No 42/2014/ND-CP had not been strict enough to prevent the violations.

The ministry has been collecting opinions from relevant agencies for the revised Decree No 42/2014/ND-CP to submit to the Government for approval.