VietNamNet Bridge – It is expected that from 2014, foreign invested enterprises (FIEs) would be able to, step by step, distribute some kinds of important goods that they have been prohibited until now.

Under the commitments Vietnam made when joining the World Trade Organization (WTO), since January 1, 2009, Vietnam has to absolutely open its market doors to foreign investors, who come to set up distribution companies on the domestic market.

However, in fact, foreign distribution companies still cannot penetrate the domestic market deeply because of ENT (economic needs test) – the effective tool Vietnam has been using to control the development of the foreign distribution networks in Vietnam.

With ENT, the Ministry of Industry and Trade (MOIT) and local authorities have the right to refuse to allow foreign distributors to open the second and subsequent distribution points, if they believe that the new distribution points are not necessary for the localities.

The ENT barrier has been officially removed. And even if MOIT insists on the ENT, foreign distribution groups, through one or another way, still have been expanding their retail points.

In a similar case, under the WTO commitments, MOIT released the Decision No. 10/2007, stipulating that FIEs cannot directly distribute some important goods including rice, sugar, pharmacy, tobacco, crude oil, books and newspapers, and precious stones.

However, some problems have been found in the list of goods shown by MOIT. In fact, FIEs have the right to export rice since early 2011 and they also can distribute rice in accordance to a government’s document.

For such reasons, the MOIT’s decision needs amendment. A draft circular to replace the said circular is being compiled. It is expected that the new legal document, to be issued in early 2014, would extend the right of FIEs. This means that they would have the right to distribute the products they cannot do now.

In principle, the more widely-opened market would attract more foreign investors in the distribution sector to Vietnam. However, analysts believe that foreign groups would still have to think carefully to decide whether to enter the Vietnamese market, which is not an easy job.

The draft circular, while allowing FIEs to distribute medicine in general (not including non-drug nutritional products), restricts the products FIEs can distribute.

For example, the list of the medicine products FIEs can distribute does not include the items belonging to groups 3002, 3005, 3006 - the specific vaccines, the medical equipments which are the biggest advantages of foreign companies.

FIEs also cannot distribute veterinary drugs, biological products and raw materials for making animal and aquatic feed.

The opening of the petroleum product distribution market also does not worry Vietnamese biggest distributors. There are now 17 petroleum importers and distributors, including the six companies licensed in the first nine months of the year.

The 17 distributors are expecting the Decree 84 to be amended which would allow them to take initiative in their petroleum product import-export activities.

Vietnamese petroleum distributors keep unruffled amid the news that foreign investors would be allowed to jump on the bandwagon partially because no matter how the Decree No 84 is amended, the State will still control the market, which means that the State will still intervene the enterprises’ pricing policies.

Kim Chi