Vietnam’s middle-class population is the fastest growing in Southeast Asia, estimated to grow to 56 million by 2030, while the number of individuals with a net worth of more than US$30 million will increase by 26% by 2026.
With more disposable income, Vietnamese consumers are showing more interest in imported food and beverage and health and well-being products. In recent years, Vietnam has witnessed a notable shift in consumer preferences, with an increasing appetite for international cuisines and products. This growing demand has paved the way for foreign companies to capitalize on a diverse range of opportunities within the Vietnamese food market.
In this article, we embark on a comprehensive exploration of the conditions and procedures that foreign enterprises must navigate to establish and distribute imported foods within Vietnam.
Scope of permitted food trading activities
According to the commitment of Vietnam in international treaties such as WTO, AFAS, VJEPA, TKFTA, EVFTA, CPTPP, Vietnam allows foreign investors coming from country members of these treaties 100% to do import, export and distribution of goods that are not on the list of goods banned from export or import, or distribution according to the provisions of Vietnamese law or be not restricted according to ommitments in international treaties to which Vietnam is a signatory.
Notes:
- Wholesaling involves selling goods to wholesalers, retailers, other organizations and traders.
- Retailing involves selling goods to individuals, households, and other organizations for consumption purposes.
- Retail outlet means the place where retailing is conducted.
- Foreign-invested companies are not allowed to purchase goods from entities other than traders for export nor establish, or participate in, a good distribution system in Vietnam, unless otherwise provided for by Vietnamese law or treaties to which the Socialist Republic of Vietnam is a contracting party.
Foreign Company Incorporation Procedure
In order to set up a foreign-owned company (i.e. 100% foreign-owned company or joint-venture company) (“VN Co”), the investors need to conduct the following steps:
- Step 1: Apply for an Investment Registration Certificate (IRC)
- Step 2: Apply for an Enterprise Registration Certificate (ERC)
The term of an IRC can be up to 50 years.
There is no term for the ERC.
The company is legally established on the date of the ERC.
Sub-licenses to import and trade foods in Vietnam
Following the IRC and ERC, the VN Co must apply for the following licenses to import and trade foods in Vietnam.
Business License
This license is to allow VN Co to do the retail activity.
Business License term:
- Normal case: No specific duration of the trading license by law.
- Sensitive/restricted cases: 5 years, inclusive of:
- The foreign investor is not from a country or territory which has acceded to a treaty to which Vietnam is a signatory, and/or
- For restricted goods: lubricants, rice, sugar, recorded items, books, newspapers and magazines.
Retail Outlet License
If the VN Co has retail outlets, following the IRC and ERC and the Business License, Retail Outlet Licenses must be obtained.
- Each outlet will need to have its own separate Retail Outlet License.
- The first Retail Outlet Establishment, along with successive outlets, which are (i) less than 500m2 in size, or (ii) located in a shopping mall, and (iii) not classified as a convenience store/mini supermarket can be completed without an Economic Needs Test (“ENT”) process, but other successive outlets will need to complete the ENT process aside from Retail Outlet Establishment process. However, as per EVFTA and CPTPP, 5 years after these Treaties come into effect, the ENT will be abolished.
- The validity period of a license for establishment of retail outlet is as long as the remaining duration of the certificate of registration for project establishing the retail outlet.
Certificate of Food Hygiene and Safety
To do wholesale and retail of foods, the VN Co needs this certificate, aiming at regulating the food's hygiene and the safety standards of the related traders' premises, as well as the behavior of their staff.
The term of the certificate is 3 years and renewable.
Additional certificates and procedures
In order to import food products into Vietnam and circulate such imported food products in the Vietnamese market, the VN Co must obtain the following procedures:
- The Certificate of Conformity Announcement or Announcement on Conformity with Regulation on Food Safety; and
- Obtain a Certificate of Compliance with the Foods Import Requirements.
- Conduct the inspection for food safety. In order to avoid costs and delays associated with inspection and testing under the State inspection, the exporting countries may consider the Vietnam Treaty on Mutual Recognition of Food Safety Certification.
Export permits/clearances
Export requirements differ depending on the product and destination country. The competent Vietnamese authority may grant Certificates of Free Sale, Health Certificates, Certificates of Origin or other certificates for exported food, if so, requested by the country of importation.
Other important notes for food import and distribution companies
Legal Representation Requirements of the VN Co
The VN Co shall have at least one and may have more Legal Representative(s). One of them must be a resident of Vietnam.
In case the VN Co has only one legal representative, during the time the only Legal Representative does not stay in Vietnam, they are required to grant an Authorization Letter to a person in Vietnam to take over their duties under their instruction and strictly comply with the law.
In short: if the only legal representative is not a Vietnam resident, a legally authorized representative in Vietnam is required.
Capital Requirements
The Capital Structure of the VN Co which needs to be registered in the application and eventually mentioned in the IRC, includes the Charter Capital and the Long-term Loan Capital.
Charter Capital is the capital that the Investors shall pay fully to the Capital Account opened at a licensed bank in Vietnam within 90 days as of the date of issuance of the ERC.
The Long-term Loan are those having a duration of more than 1 year and optional. If the Investors have plans to grant a Long-term Loan to the VN Co, it is required to include the Long Term Loan in the company incorporation application. Otherwise, no Long-term Loan is included.
Start your food import and distribution company in Vietnam
Setting up a foreign company for importing and distributing foods in Vietnam presents unique challenges and opportunities.
At Fidinam, our expertise lies in providing tailored solutions that adhere to local and international regulations, ensuring your business not only complies but also thrives in Vietnam’s vibrant market.
Our team is equipped with the knowledge and experience to address your specific needs. For expert assistance and to discover how we can support the growth of your food import and distribution business in Vietnam, reach out to Fidinam today via the form below or email info@fidinam.com.vn.
All information provided is of a general nature and is not intended to be a full analysis of the points discussed. This article is also not intended to constitute, and should not be taken as, legal, tax or financial advice by us. If you are interested in investing in Vietnam or have any further questions, please reach out to us.
