State delivers the goods on business rules

Decision 10/2007/QD-BTM clarifies the forms of investment open to foreigners in the trade sector, provides commodity lists that comply with the harmonised system (HS) and gives a roadmap for the implementation of commodity trading activities, export rights, import rights and distribution rights.
“Although the commitments can be found in the WTO agreements and commitments, the decision provides summaries and details in an easily readable format. The decision will give foreign investors a clearer view of the roadmap for commodities and related activities that they can trade in and engage in,” said Nguyen Dang Viet, a partner at the Bizconsult law firm.
For instance, as regards distribution rights, the WTO agreements state that foreign investors have no right to distribute books, newspapers and magazines on the domestic market.
The new decision goes further, stating that foreign investors do not have the right to distribute publications with HS code 4901 (printed books, folded books, thin books and leaflets), HS code 4903 (children’s books and picture books) and HS code 4902 (newspapers, magazines and publications having advertisement content).
The WTO agreements also state that explosives are excluded from the commitments, but the new decision adds that explosive with harmonised system codes 3601, 3602 and 3603 are excluded.
“On the other hand, the detailed lists will help local companies to be more aware of the market opening roadmap and will help them prepare for competition with foreign companies once the limitations are totally abolished,” Viet said.
Tran Quoc Khanh, the general director of Ministry of Trade’s Multilateral Trade Policy Department, said the decision could be used as the basis for more provincial investment allocations. “This will create a more favourable investment environment,” Khanh said.
However, Viet said that the decision did not address some concerns. For instance, in the field of commodity distribution services, there are still no clear-cut criteria for establishment of second retail outlets after the first has been opened.
“The decision refers to the economic needs test, the number of the similar suppliers in the same geographical location, the stability of the market and geographical scale, but does not give enough detail, which may allow the authorities to make subjective assessments,” Viet said.
The decision also states that the roadmap will apply to existing foreign-invested enterprises who apply to expand their trading activities.
“A concern remains as to how the decision fits with article 29.4 of the 2005 Investment Law, which states that foreign investors shall be subject to the same investment conditions as local investors if more than 50 per cent of the company’s chartered capital belongs to the Vietnamese party,” Viet said.