After joining the World Trade Organization (WTO), Vietnam committed to open distribution services for all products made in Vietnam and products legally imported into Vietnam, except for some products listed in Appendix No. 03 of Circular No. 34/2013/TT-BCT as follows: Cigarettes and cigars; books, newspapers, magazines, and articles recorded; precious metals and gems; medicine; explosive; crude oil and processed oil; rice, cane sugar, and beet sugar. Accordingly, the distribution activities, especially the wholesale and retail of industrial machines and equipment serving to the manufacturing industry in factories and industrial parks, have attracted a lot of foreign investors.

When conducting the wholesale and retail activities of industrial machines and equipment in Vietnam, what procedures foreign investors need to implement and what things to note?

Pursuant to Article 5 of Decree No. 09/2018/ND-CP, foreign-invested enterprises are required to implement procedures for applying for a Business License when performing the following activities:

• Performing the right to retail all kinds of goods
• Manufacturing or distribution of industrial machines and equipment consuming some specific types of oil and grease in Vietnam

Therefore, based on the above provisions, having a Business License is a prerequisite for a foreign-invested enterprise to conduct distribution activities of industrial machines and equipment consuming some specific types of oil and grease in Vietnam. Regarding the implementation of procedures for applying for a Business License, foreign-invested enterprises should pay attention to some of the following content:

1. Conditions for granting a Business License

• According to Article 9 of Decree No. 09/2018/ND-CP, in case a foreign investor comes from a country or territory participating in international treaties to which Vietnam is a party and there is a commitment of Vietnam to open for goods trading and other activities relating to goods trading, the company (of such foreign investor) must satisfy the following conditions:

– Satisfying the conditions for market access in international treaties to which Vietnam is a party;

– Having a financial plan to carry out procedures for applying for a Business License;

– Not having overdue tax in case the foreign-invested enterprises have been established in Vietnam for one year or more

• In case a foreign investor comes from a country or territory participating in international treaties to which Vietnam is a party and there is a commitment of Vietnam to open for goods trading and other activities relating to goods trading, the company (of such foreign investor) must satisfy the following conditions:

– Having a financial plan to carry out procedures for applying for a Business License;

– Not having overdue tax in case the foreign-invested enterprises have been established in Vietnam for one year or more.

– Satisfying the following criteria:

+ Complying with the provisions of specialized laws

+ Complying with  the suitable level of competition against domestic enterprises in the same field

+ Having the ability to create jobs for domestic workers;

+ Having the ability to contribute to the state budget

You can also refer to other business lines that attract foreign companies when investing in Vietnam on our website.

Note: The Ministry of Industry and Trading and other line ministries shall, under the following requirements, consider and approve the granting of a Business License:

• Conformity with regional and national development plans and strategies for a business
• The negotiation process of opening Vietnam’s market
• Market-opening demand of Vietnam
• The strategy of cooperation with foreign partners of Vietnam;
• Diplomatic relations, national security, social order and safety in case foreign investors do not come from countries or territories participating in international treaties to which Vietnam is a party.

You may be interested in remittance of investment capital from Vietnam

2. The procedures for applying for a Business License

Step 1: Foreign-invested enterprises submit applications to the Department of Industry and Trading of the province/city where the foreign-invested enterprises are headquartered

Requisite applications:

• An application letter for a business license;
• An explanation statement on conditions for granting a business license, business plan, financial plan, and business situation of goods trading activities or other activities relating to such goods trading activities;
• Documents by any tax authority proving that there is no any overdue tax
• A copy of the Enterprise Registration Certificate and a copy of the Investment Registration Certificate regarding the projects on goods trading and other activities relating to goods trading

Required number of applications: 02 set

Step 2: Department of Industry and Trade receives and checks the applications

• • Within 15 days after receiving the applications, the Ministry of Industry and Trade shall issue a written approval on granting the Business License. In case of refusal, it must notify in writing and clearly state the reason.
  • Within 03 working days after receiving the applications, the Department of Industry and Trade checks and requests amendments and supplements if the applications are not sufficient and valid.
  • Within 10 working days after receiving complete and valid applications, the Department of Industry and Trade shall verify the fulfillment of conditions of foreign-invested enterprises/companies. In case of responding to the conditions, the Department of Industry and Trade shall send the applications to the Ministry of Industry and Trade for examination
  • Within 03 working days after receiving the written approval from the Ministry of Industry and Trade, the Department of Industry and Trade issues the Business License

Conclusion

The above are necessary problems relating to Procedure for applying for an investment project in trading industrial equipment and machine that should be noted. Our clients can contact us through the following address or can refer to other investment forms in Vietnam and the establishment of a representative office when investing in Vietnam.

Bizlawyer is providing legal services relating to this issue. Should Clients have any question or are interested in our legal services, please contact us via our Email: Info@bizlawyer.vn or Hotline Call: +8486.888.1900 for timely advice and support.