The internet economy of Southeast Asia projects to expand three times in value during the next few years mainly through e-commerce. The Vietnamese e-commerce market maintained a value of 12 billion US dollars in 2020 thus becoming one of the fastest-growing internet economies next to Indonesia and Thailand and Singapore.
E-commerce businesses in Vietnam can experience positive development because the country has an expanding digital population and increasing internet penetration rates. E-commerce retail sales continue to rise rapidly in Vietnam so online channels now exceed modern retail channels in FMCG market growth rates. The digital economy of Vietnam will expand by US$52 billion by 2025 according to the findings of Google, in their study which projects a 29 percent yearly increase from 2020. Financial transparency drives the government toward eliminating cash transactions while enhancing the digital payment system regulations for public sector transactions. Potential investors wanting to launch e-commerce businesses in Vietnam need to understand the laws and specific regulations that govern the industry. A draft decree on e-commerce has been presented to Vietnam which will modify Decree 52/2013/ND-CP (Decree 52) a law that controls the e-commerce activities within the country.
E-commerce defined
E-commerce activity under Decree 52 includes performing any section or complete stage of commercial dealings through electronic means that link up to internet or mobile telecom networks or other open systems. Online presence requires website owners to perform registration activities through the Ministry of Industry and Trade (Moit) portal.
Business registration through e-commerce demands an investment registration certificate (IRC) followed by an enterprise registration certificate (ERC) and a trading license for direct sales operations then website notification or registration. The complete registration process spans from three to four months although certain business lines and particular circumstances may lengthen the time. The establishment of a new company requires no limit on capital yet investors need to demonstrate through their capital input that they can fund their business operations because inadequate funding may lead to approval denial or additional documentation requests. The ministry requirements for e-commerce investments demand appropriate approvals from both the Ministry of Planning and Investment (MPI) and the Moit. The business line could require supplementary requirements from the government’s conditional sector list based on its particular nature. The market potential is clear since a growing number of Vietnamese individuals choose to start online or e-commerce businesses during the present time. The following information provides essential clarification for individuals pursuing e-commerce business who want to establish a successful venture in the future. Establishing an e-commerce platform functions as one of the primary business ventures in Vietnam
Obtaining licence
To establish an e-commerce platform like Amazon, you should begin by obtaining an E-commerce Platform license for your business entity. The E-commerce platform functions as an IT product like websites or mobile applications, thus allowing companies to register as IT entities with E-commerce and product distribution operations. The registration procedure for IT companies follows the same path as trading companies. The main difficulty you will face when seeking an E-Commerce platform license.
The ministry system needs to approve the e-commerce platform license through multiple ministerial channels. The approval process for such applications might last anywhere from 6 months to one full year. The Vietnamese E-commerce market remains substantially unexploited by the current five platform operators. The above-mentioned regulatory requirements serve as the primary obstacles preventing market entry. Limited investors who lack financial strength, along with technical expertise, find this route unattainable.
Operating a website-based business for product sales represents an e-commerce initiative.
A website that features products from its owner becomes an E-commerce website, which stands apart from the previously discussed E-commerce platform.
An additional Website Notification procedure transforms the basic Trading company business model into a new setup. The work requires only 3-5 working days to finalise.
Foreign individuals have the opportunity to establish e-commerce businesses within Vietnam
Foreign investors can establish e-commerce businesses in Vietnam since they can acquire up to 100% ownership of the company. The trading company and IT company fall under the category of unconditional businesses. The incorporation period will extend from 4 to 8 weeks. The new entity requires further licensing after its establishment.
Establishing an e-commerce business in Vietnam requires shareholders to consider multiple expense factors:
- The establishment of an e-commerce business in Vietnam requires you to consider multiple associated expenses.
- The foundation of the company through entity formation starts the process.
- A business requires two supplementary licenses, namely the retailing license and the e-commerce platform license.
The operating expenses consist of leasing premises and personnel costs, together with tax and accounting requirements.
Cost of products (importation, delivery, logistics), etc
The price ranges differently based on the product acquisition methods and sale procedures.
You may also find these articles helpful
Start an IT business in Indonesia
Business opportunities in Benin
Market entry to Guatemala
