MOIT regulation on foreign retailers contains loopholes: lawyers
VietNamNet Bridge – National Assembly deputies have expressed their concern about the dominance of foreign retailers in the domestic retail market, but the Ministry of Industry and Trade (MOIT) disagrees with their sentiments.
Nguyen Ngoc Hoa, a National Assembly’s deputy, chair of the Saigon Co-op, one of the largest Vietnamese retailers, said on November 18 that he fears the domestic retail market will be controlled by foreign groups, and that domestic production will be seriously affected because the distribution network would not be in the hands of Vietnamese.
Minister of Industry and Trade Vu Huy Hoang tried to reassure the public that there was no need to worry about the dominance of foreign retailers in the domestic market, saying that the watchdog agency is “using necessary tools to control the foreign retailers’ network development”.
Hoang said there are only 70 foreign-owned retail points out of the total 900 points throughout the country. Meanwhile, foreign retailers are estimated to make up only 3.4 percent of the total retail revenue of VND3,000 trillion in 2014. The proportion is even lower than the 3.8 percent recorded five years ago.
Also, foreign retailers do not have the right to distribute nine essential products.
However, Hoa said that the figures released by Hoang do not truly reflect the current retail market.
Hoa said though foreign retailers only have 70 retail points, the scale and revenue of the retail points are four to five times higher than that of domestically owned ones.
Meanwhile, retailers, thanks to their powerful financial capability, can locate their retail points in advantageous positions.
He said that foreigners’ small market share of 3.4 percent is true, taking into account the revenue from petroleum, gold and jewelry – products that only Vietnamese can distribute. Excluding these products, the foreign retailers’ market share would be much bigger.
Hoa also denied that foreign retailers are not allowed to distribute nine essential goods. “Anyone can buy rice, one of the nine items, at Big C or Metro retail points,” he said.
The Ministry of Industry and Trade often mentions the ENT (economic needs test) as a tool to bar foreign retailers from entering Vietnam.
With ENT, foreign retailers must get the nod from the watchdog agencies’ to open second and subsequent retail points. Vietnam has the right to refuse the foreign retailers’ proposal to open more retail points, if it finds it unreasonable to set up too many retail points in the same locality.
However, it is unclear what criteria the watchdog agencies refer to when considering “economic needs”.
A lawyer noted that the ENT is just a “vague” principle, with no clear criteria to determine whether foreign retailers can set up more retail points.
He noted that this is a barrier with holes, because it is questionable why Big C can set up two retail points, including one on Tran Duy Hung Street and the other at The Garden building in Hanoi, just one kilometer from each other.