VIETNAM – THE RISING DIGITAL ECONOMY – WHAT YOU MUST KNOW

While other South East Asian countries are suffering reversed economic growth in 2020 due to Covid-19, Vietnam has recorded the highest ever level of GDP growth – even higher than China and USA. One of the contributing factors to this success is the expansion of the digital economy – which is growing at double digits (USD 14 billion as of 2020 and predicted for USD 52 billion by 2025). In the span of 4 years between 2016 and 2020, online selling-related queries in Vietnam has increased six-fold. The country also sees seventy-three percent of YTD monthly active user growth for select mobile banking apps and 46% YoY growth in the e-Commerce sector.

With one of the fastest growing online population in the world, wide-ranging online supply and remarkably supportive ecosystem, Vietnam’s internet economy is stronger than ever and should be looked out for.

The Vietnam Government has implemented numerous laws and regulations in recent years with the goal of turning Vietnam into a full-fledged digital economy during the Fourth Industrial Revolution, such as Law on Cyber Security No. 86/2015/WH13 or Decision 749/QD-TTg dated 30 June 2020 on National Digital Transformation Program to 2025. The policies focus on the establishment of e-government to enhance transparency and speed up licensing works for enterprises, the legalization of e-Commerce activities such as AI development, online ride hailing or non-cash payment etc. At the same time, stricter measures in information management have been introduced, with the notable Decree 15/2020/ND-CP dated 3 February 2020 allowing police authorities to investigate and sanction individuals and entities distributing false or defaming information on social networks.

For investors interested in the e-Commerce sector of Vietnam, it is crucial to know that the government recognizes e-commerce transactions (except those conducted via social networks) as having the same degree of legal effectiveness and enforceability as written contracts. There are three categories of e-Commerce:

(a) Business to customer (“B2C”) website which is created for commerce activities of the website’s owner only;
(b) Business to business (“B2B”) website (like Tiki, Lazada, Shopee) which is created for commerce activities of other individuals or organizations; or
(c) Digital Application (“Apps”) which is installed on electronic devices and connected to a network for commerce transactions.

Circular 59/2015/TT-BCT on e-commerce via Apps and Circular 47/2014/TT-BCT on e-commerce via B2C and B2B websites provide that owners of websites or Apps must first satisfy all legal requirements on conditional business in relation to commerce activities to be provided via such platforms. In other words, investors must first assess whether the business lines they intend to engage in require them to obtain specific licenses/certificates or approval from government authority prior to commencement of business. For instance, to provide Food provision service, investors must acquire Certificate on Food Safety. In the next step, investors must also comply with specific conditions for e-Commerce business. One of the basic phases is registration.

Depending on Categories of E-Commerce, the service providers are required to make an official notification or registration on their E-Commerce to state authority as follows:

(a) B2C Websites, the service provider is responsible to lodge a notification of B2C website via the E-commerce portal of Ministry of Industry and Trade (“MOIT”) http://www.online.gov.vn/. Within 03 days from the date of receiving a complete set of required information, MOIT will send an acknowledgement on the notification of the service provider.
(b) B2B Websites, the service provider is responsible to lodge an application for registration of B2B website via the E-commerce portal of Ministry of Industry and Trade (“MOIT”) http://www.online.gov.vn/.
(c) Mobile Applications, Similar to B2C and B2B Websites, the service provider is responsible to lodge a notification of Mobile Applications used for their commerce activities or to lodge an application for registration of Mobile Applications used for commerce activities of other individuals or organizations.

The Vietnam Government’s continuous and visible effort in attracting foreign investment as well as transforming the country into a digital economy, if not to say, a developed one comparable to Singapore, should serve as a green flag to investors interested in developing digital services in Vietnam.

For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.