Economic Need Test for Second Retail Outlet for Foreign-Invested Companies

According to Decree 23/2007/ND-CP, a foreign-invested company wishes to open more than two retail outlets will need to pass an Economic Need Test (ENT) except in limited circumstances.  However, there are not specific  definitions on ENT, in which the investor could check it against their capility that could make foreign investors be hesitated on entering Vietnam market.

Under Circular No. 08/2013/TT-BCT issued by the Ministry of Industry and Trade, ENT is further clarified underwhich,

1. The ENT for setting up additional retail outlets by foreign invested companies is based on a) Number of the retail outlets, b) the maturity of the market, c) The population density and d) the area of the district where the proposed retail outlet is to be located.

2. A retail outlet with an area of less than 500m2 located in the place which has been designed for retailing business and which has complete infrastructure is not subject to ENT. This provision should allow foreign-invested companies to open small shops inside any complete shopping center without going through an ENT;

3. An ENT will be performed by a ENT Committee set up by the provincial People’s Committee. The decision of the ENT must be approved by the provincial People’s Committee.

Our lawyers of foreign investment practice at ANT Lawyers, a law firm in Vietnam are available to advise and provide client with service and representation for setting up a trading company in Vietnam.

In order to seek further advice or request service, please contact us at ant@antlawyers.vn or call +84 28 730 86 529