Vietnam labor law

Government issues decree on Commercial Law

The Government issued Decree 187/2013/ND-CP (20 November 2013) providing details of implementation of Commercial Law on activities of international purchase and sale of goods, agencies for purchase or sale, processing and transit of goods involving foreign parties.

Export – import of goods

Vietnamese traders not having foreign direct invested capital are entitled to export – import goods not subject to their registered business scope, except goods banned or temporarily suspended from export – import.

Goods banned from import may be considered and permitted to import in cases of importing for scientific research or humanitarian aid, without environmental pollution, spreading of epidemic diseases, affecting human health, traffic safety, security, defense, social order, and adversely affecting ethics, habits and customs of Viet Nam. 

  Nguyen Trung Hai, general director of Halong Canfoco Company, which specializes in making canned food products, said he has met no problem in making re-registration with the FDA, adding that this is just an administrative formality.

In registering, the production units located in the US have to give the email addresses of the representatives of the units, while the producers not in the US have to provide the email addresses of their US agents.   Le Thi Hoang Yen, Business and Production Director of Vilfood, said her company has hired a US firm to follow the registration formalities with the FDA and to act as the representative for Vilfood in the US.

The company which specializes in exporting processed seafood has been mostly exporting products to Europe, while the exports to the US just account for five percent of the company’s total exports.

However, Yen said the company still decides to make the re-registration because it attempts to penetrate more deeply into the US market.

The US has been importing food materials from Vietnam in big quantities, but it has not imported much in processed food.

Meanwhile, Hai of Canfoco said Canfoco does not hire any US firm to act as its representative in the US. It has decided to open a representative office there.

“We are considering opening a representative office in the US, which would help satisfy the requirements set by the US competent agencies and seek more US clients as well,” he said.

Regarding the expenses to run a representative office, Hai said it would cost about two billion dong a year, the sum of money, which Hai believes is nearly equal to the fee to spent to hire an US firm. Meanwhile, US firms cannot help expand the market.

Still targeting the US market

Under the new regulations, FDA would strengthen its inspection to the companies which export food products to the US.

According to David Lennarz, who was once the technique expert of FDA, now Deputy President of Registar Corp, FDA planned to conduct 1200 inspection tours to overseas production units in 2012, while the number of inspection tours is believed to double year after year.

In 2011, about 600 inspection tours were taken by FDA officials.

According to Yen, after the re-registration, food companies would be granted the registration numbers and PIN codes. In the past, the registration numbers and PIN codes were enough for Vietnamese enterprises to export food to the US.

However, with the new regulations, after granting the code numbers, if FDA finds it necessary, it would send officials to the production workshops of the manufacturers to find out if the production process can create the products that fit the US standards on food hygiene.

New regulations to combat pyramid schemes

Vietnam’s government is outlining new regulations to manage direct selling as pyramid schemes are on the rise.

Vietnam, multi-level marketing, direct selling, pyramid schemes

Direct selling is legal in Vietnam and as a relatively new business it lacks the regulations to deter those who use it for scamming and manipulating consumers.

At a roundtable meeting on November 22 in Danang on journalism and communications in the multi-level marketing (MLM) industry, chairwoman of the Vietnam Direct Selling Association Truong Thi Nhi said that after 11 years and 96 registered companies, 26 businesses have folded and five have seen their licences revoked.

The companies were both local, joint ventures, and foreign-owned. A majority of the firms were producers and traders of food, cosmetics, and housewear.

The meeting focused on the legal boundaries of direct selling and the pyramid schemes that lie outside those borders.

Joseph N. Mariano, president of the US Direct Selling Association and chairman of the ethics council under the World Federation of Direct Selling Associations, said the fundamental difference between the two was that legal businesses were committed to transparency and ethical standards. He also said that direct selling firms are committed to giving refunds to dissatisfied customers, are conscientious in their operations, and have transparent commission policies.

Mariano added that pyramid schemes focused only on expanding their sales network and putting their teams to work while at the same time greatly exaggerating the quality and application of their products in advertising.

According to director of the Vietnam Competition Authority under the Ministry of Industry and Trade Bach Van Mung, the agency just finished a draft which has been transferred to the Ministry of Justice and would later be submitted to the government for approval.

If passed into law, the new decree would overturn a previous one in 2005 and is expected to strictly crack down on pyramid schemes.

According to statistics from the Vietnam Direct Selling Association, Hanoi is home to 47 MLM companies, Ho Chi Minh City 42, Dong Nai Province 2, Binh Duong, Hai Duong, Haiphong, Quang Ninh and Bac Giang have one company each.

By the end of 2012 there were more than a million people involved in direct selling with total sales of more than VND4 trillion ($190 million). The industry contributes nearly VND600 billion ($28.5 million) in tax and contributed nearly VND25 billion ($1.2 million) to charities between 2005 and 2012.

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