VietNamNet Bridge - Decree 54 and the draft circular that guides its implementation compiled by the Ministry of Health (MOH) have both raised controversy: foreign investors say the regulations break Vietnam’s WTO (World Trade Organization) commitments.


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Vietnam still has not opened drug distribution services



AmCham’s managing director Adam Sitkoff said the presence of multi-national drug companies in Vietnam allows access to high-quality drugs. Some of the companies have been in Vietnam for 20 years and have invested millions of dollars in the market. 

But now they are facing difficulties as new regulations may hinder their operation.

Lawyer Chung Yee Seck from Baker & McKenzie law firm, said that Decree 54 and other tentative regulations do not allow FIEs (foreign invested enterprises) to provide drug preservation and transportation services, but these are not the prohibited or restricted services in the Pharmaceutical Law.

In general, Vietnamese laws don’t have retroactivity, except in special cases. The draft circular compiled by MOH says that 100 percent foreign invested enterprises must observe Decree 54 or stop providing drug preservation and transportation services when the document takes effect.

If the regulations take effect, healthcare centers and wholesalers will have to spend more on preservation and will have to transport products themselves to their storehouses, indirectly resulting in drug price increases.

Chung said the regulation is contrary to Vietnam’s international commitments and the Pharmaceutical Law’s spirit. It also is not in line with the principle of investment protection stipulated in the Investment Law and non-retroactivity. This violates Vietnam’s WTO commitments, he said. 

Lawyer Le Net from Le Net law firm also pointed out that there are conflicts between regulations in the draft circular and other legal documents. The draft circular doesn’t allow foreign invested enterprises to lease storehouses. 

Meanwhile, the Land Law and Real Estate Business Law allow businesses to lease properties associated with land.

The draft circular is feared to lead to an increase in drug importers’ and distributors’ operation costs. The delivery of goods to wholesale units must be carried out in importers’ major storehouses. This is contrary to the 2015 Civil Code and Commercial Law which allows parties to negotiate the delivery places.

If the regulations take effect, healthcare centers and wholesalers will have to spend more on preservation and will have to transport products themselves to their storehouses, indirectly resulting in drug price increases.

Nevertheless, the director of the WTO Center of the Vietnam Chamber of Commerce & Industry (VCCI), Nguyen Thu Trang, said the legal documents do not violate WTO commitments.

As Vietnam still has not opened distribution services, it has the right not to open transport and preservation services, which are parts of distribution services.


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Mai Thanh