VietNamNet Bridge – Foreign retailers will have to do Economic Needs Test (ENT) on the basis of the population density of a district rather than a city or province when they want to open the second outlet onwards.

This is one of the new regulations given in Circular 08/2013 on trading activities of foreign-invested enterprises released by the Ministry of Industry and Trade in late April. The circular replaces Circular 09/2007 of the Ministry of Trade, precursor of the Ministry of Industry and Trade, and will come into force on June 7.

If foreign retailers want to set up a new outlet covering less than 500 square meters in the areas with complete infrastructure planned for trading activities by local governments, they will not need to do ENT. This regulation will not apply when there are changes to the planning.

Each centrally-governed city and province will form an ENT council to evaluate the establishment of the second retail outlet onwards. The council will consist of the local people’s committee, the department of planning and investment (or the authority for the economic zone where the retail outlet in question will be located), the department of industry and trade and other relevant agencies.

Although the new regulations on establishment of the second retail outlet onwards are more specific, they still do not satisfy the recommendations previously given by local and foreign lawyers.

They previously suggested Vietnam should give more specific and transparent guidelines on ENT, including definition, scope of application, criteria for ENT and procedure and duration for each criterion. Specific criteria for ENT were said to prevent local authorities from making arbitrary decisions when considering the application for establishment of a new retail outlet.

Under Vietnam’s WTO commitments, ENT is introduced to restrict foreign investors from penetrating the local retail market.

As per the new circular, the establishment of retail outlets, including the first one, must comply with the planning of each city and province. Previously, foreign retailers only had to obey to such a regulation when opening the second outlet onwards.

There are now 638 supermarkets nationwide, including 152 in HCMC, 88 in Hanoi and 29 in Danang, according to the General Statistics Office.

Source: SGT