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A customer at the checkout in a Lotte Mart oulet in Ho Chi Minh City’s District 11 |
Japanese investors eager to break into the Vietnamese market have called for a reform of the country’s procedures for licensing foreign retail outlets.
Any firm wishing to open more than two retail outlets in Vietnam must apply for a license and meet a WTO criterion known as the Economic Needs Test (ENT). The ENT is a criterion that each member state may establish to prevent market overkill in the retail sectors.
But it is not clear which agency administers the test and what calculations it uses to grant permission.
Last week, members of the Japanese Business Association of Ho Chi Minh City asked local officials to issue the ENT guidelines so they would know what conditions they had to meet to develop their businesses here.
Representatives from the Japanese firms said they were interested in the Vietnamese retail market, which was fully opened to foreign investors early last year, but they were hesitant to implement their projects because they were not sure what they needed to do to pass the ENT test.
The Japanese businesses also claimed that some foreign retailers, like Korean Lotte Mart, Malaysian Parkson and German Metro Cash & Carry were allowed to open more than two outlets in the country without passing the ENT test.
Local governments licensed the outlets with support from the Ministry of Industry and Trade, they noted.
Hirota Nakanishi, senior investment advisor at the Japan External Trade Organization’s office in HCMC, said that retail outlets and convenience stores would thrive in Vietnam, if prerequisite regulations were clear to foreign investors.
Nakanishi added that the government should not only issue the ENT guidelines soon, it should also simplify licensing procedures.
These procedures have been complicated by local governments who have begun granting licenses without following any uniform guidelines, he said.
Lu Thanh Phong, deputy director of HCMC’s Planning and Investment Department, responded to Nakanishi’s claims by saying that some foreign retailers like Lotte Mart were licensed before Vietnam joined the WTO in 2007.
About 216 licenses have been granted to foreign investors to import, export and trade in the country since then, he added.
Other concerns
Shimasaki Ryuhei, deputy chairman of the association, said Japanese investors are also concerned about issues like traffic and taxi services in Vietnam that could dampen investor interest.
Upon arriving at the international airport in HCMC he said, most prospective investors run immediately into rude and fraudulent taxi drivers who demand unreasonably high fares and refuse to serve them at night.
Ryuhei said Japanese investors are also worried about illegal strikes that might affect their investments in the country. He asked what measures the local government was taking to rectify the situation.
Le Thanh Tam, director of HCMC’s Labor, War Invalids and Social Affairs Department, said no court had yet issued a ruling on the legality of strikes in Vietnam.
He said the country has seen more strikes occur in foreign firms than their local counterparts.
Moreover, Tam said the number of strikes shrank from 200 in 2008 to 70 last year in HCMC.
None of these involved Japanese businesses, he added.
