Government issues new decree on multi-level marketing plans

The Government has issued a new decree which it says will help build a "clean and transparent multi-level marketing environment". - Photo theleader.vn

The multi-level marketing model is recognised as a legal business model in Viet Nam and is governed by the Law on Competition and Decree 110/2004/ND-CP, which were issued in late 2004.

The government then issued Decree 42/2014/ND-CP replacing Decree 110. However, Minister of Industry and Trade Tran Tuan Anh proposed the government tighten control of businesses applying the multi-level marketing model.

Therefore, on March 12, 2018, the government issued Decree 40/2018/ND-CP to promote the management of business activities, replacing Decree 42.

Trinh Anh Tuan, deputy head of the Competition and Customer Protection Authority, said the issuance of the new decree would continue to build a clean and transparent multi-level marketing environment. "This is the driving force for multi-level marketing businesses to continue consolidation and growth of their business, bringing their products closer to consumers," he said.

According to him, one of the highlights of the new decree is a ban on fake multi-level marketing activities for businesses under Article 5. This ban will protect the interests of consumers and genuine multi-level marketing enterprises, he said.

Business enterprises are not allowed to sell or transfer networks of participants joining multi-level marketing activities of goods to other enterprises, excluding cases of acquisition, consolidation or merger of corporates.

The new decree prohibits businesses from providing false or misleading information about the benefits of participating in multi-level marketing, features and uses of goods, as well as activities of multi-level marketing businesses.

On the other hand, the State also bans organisation of seminars, conferences and training courses on the multi-level marketing model without the authorisation of the multi-level marketing enterprises.

These enterprises are not allowed to entice corrupt participants of other multi-level marketing companies to join their networks.

The ministry also warns enterprises and organisations not to abuse their position, authority, social status or profession to encourage or request others to join their multi-level marketing network or buy goods under multi-level marketing activities.