Vietnam is among the fastest-growing economies in the world. However, despite becoming a more open economy, import to Vietnam is still highly regulated by the government. In this article, we shed light on some of the key elements you need to know when planning to import to Vietnam.
Why import to Vietnam?
Quickly developing infrastructure
According to the Asian Development Bank, Vietnam invests nearly 6% of its GDP on infrastructure development which is nearly double compared to other emerging markets in Southeast Asia.
This makes Vietnam an attractive destination for FDI. Quickly developing infrastructure is alluring foreign investors to set up manufacturing companies. This, in turn, encourages the import/export sector.
Trade agreements and openness to foreign direct investment
Over the past 30 years, Vietnam has been reforming and transforming itself into a globally minded economy. Vietnam has become a member of the WTO and a part of numerous international partnerships for economic integration, including free trade agreements with partners both within and outside the region.
In addition, Vietnam attracts foreign investors by offering them several incentives. For example, investors who contribute to certain geographical areas or sectors of special interest, such as high-tech or health care, can enjoy some tax benefits.
Since 2015, foreign investors can also invest in more areas than previously.
Growing middle class
Together with the increasing population, Vietnam’s middle class is growing at a rapid speed. Moreover, a market research firm Nielsen has even estimated that Vietnam’s middle class will rise to 44 million consumers by 2020, compared to 8 million in 2012, making Vietnam a nation with one of the fastest-growing middle classes in the world.
Vietnam’s middle class is already thought to be responsible for more than 50% of the country’s total consumption. We see companies like Chanel, Versace and Armani opening stores in Saigon. These companies execute a very thorough market research before entering the market, indicating that Vietnam has enough of potential purchasing power to attract foreign brands.
And rightfully so, since Vietnam ranks 6th in the latest Global Retail Development Index, jumping five positions compared to last year.
Find out more: Top 11 Reasons Why to Invest in Vietnam.
Understanding Vietnamese import regulations
Firstly, the founders must obtain the Investment License from the Department of Planning and Investment. However, note that it is not necessary to acquire a separate import license in order to set up an import company in Vietnam. An import license is obtained together with the investment license which already allows operating as an import/export company.
However, for trading, you will need a separate trading license for wholesale/retail sale from the Ministry of Industry and Trade. This license will be acquired after the incorporation.
In order to import certain products to Vietnam, government level of approval is necessary. In other words, these products cannot be imported unless they are registered. For example, cosmetics products must first be registered with the Drug Administration of Vietnam before any trading can take place.
Examples of other products that are subject to registration:
- drugs and food supplements
- processed products from vegetables, fruit, grain
- wine and cigarettes
- essential oils, perfumes, cosmetics
- milk and dairy products, eggs, honey and other animal-derived products
Importing those products is possible but it requires additional steps. Emerhub handles both the incorporation and product registration process.
Most goods imported to Vietnam are subject to duty. Imported products are subject to import tax and value-added tax (0-10%). Depending on the type of product, tax rates vary in different ranges. For example, consumer goods, especially luxury goods are usually subject to higher tax rates than machinery, raw materials or equipment used in production.
However, Vietnam is a member of ASEAN Free Trade Area and intraregional import taxes for certain products range from 0-5%. This includes products such as:
- meat and fish
- fruit and vegetables
- medicaments and pharmaceutical goods
- agricultural machinery
To demonstrate the import tax calculation, we have provided some simple formulas and illustrative examples in our previous article on how to calculate import tax and duty in Vietnam. Import duty calculator included.
Circular No. 34/2013/TT-BCT of the Ministry of Industry and Trade brings out a list of products that foreign capital companies cannot export from, or import into, Vietnam.
For example, some of the products that you cannot import to Vietnam include:
- petroleum oils
- newspapers and journals
- second-hand items (including electronics and automotive).
Popular products to import into Vietnam
Many sectors rely heavily on imported goods. For example, Vietnam imports over 90% of its medical equipment.
At the same time we see a shift in Vietnamese market structure, taking a lead as a manufacturing country thanks to skilled and cheaper labor force compared to China (read more: Should You Move Manufacturing from China to Vietnam?). Additionally, this again increases the demand for raw material, technical and electrical machinery.
Products with the highest dollar value
Since Vietnam is emerging as one of the next manufacturing giants in Asia, it is no surprise that the highest dollar value in 2016 comes from the following product groups:
Value in US$
(percentage of overall imports)
|1. Electrical machinery, equipment||45.6 billion (23%)|
|2. Machinery, including computers||21 billion (10.6%)|
|3. Plastics, plastic articles||9.6 billion (4,9%)|
|4. Iron, steel||8.8 billion (4.4%)|
|5. Mineral fuels including oil||7.6 billion (3.9%)|
|6. Vehicles||6.4 billion (3.3%)|
|7. Aluminium||5.9 billion (3%)|
|8. Optical, technical, medical apparatus||5.5 billion (2.8%)|
|9. Fish||5.2 billion (2.6%)|
|10. Knit or crochet fabric||5.2 billion (2.6%)|
Source: World’s top exports
Products with the easiest regulations
The health supplements sector in Vietnam is booming. According to Tran Dang, President of the Vietnam Functional Food Association, functional food sector has grown 9-10% every year.
Moreover, the importation and registration processes are relatively easy for functional food products. If the products meet the standards of hygiene and food safety required by the Vietnamese law, no further testing is needed.
Previously, only some of the medical devices imported to Vietnam were required to have licenses, as opposed to domestically produced devices. But starting from 2017, all medical devices imported to Vietnam are required to have marketing authorization (MA) licenses.
However, if the medical device you wish to import already has a valid MA license granted in another country, you don’t need any import licenses and can import the given product freely.
Products with the most complicated import regulations
Whereas some products can be imported to Vietnam quite easily, others can be listed as complicated products. For example, cosmetics and telecommunication items. These are goods which either require additional licenses or for which the Ministry of Trade only gives out a limited amount of import licenses.
Obtaining necessary licenses for these products is not impossible, but, in some cases getting your hands on the license or outstanding local distributor may turn out to be more expensive, time-consuming and complicated than originally anticipated.
However, stricter regulations may also make the competition weaker.
Vietnam regulates the import of cosmetics strictly. In order to import cosmetics products to Vietnam, you must first acquire a cosmetic product proclamation report from the Medicine Management Department of the Ministry of Health and present the valid receipt number to the customs agency.
The importer also has to conduct quality control before circulating cosmetics products in Vietnam. For the quality declaration you need the following documents:
- Notification of the cosmetics products (details of the product, manufacturer, assembler, local company responsible, person representing the local company, importer, and list of ingredients)
- Certificate of Investment or Business Registration stating that the importer can deal with cosmetics products
- Certificate of Free Sale from the country of origin
- Power of Attorney issued by the manufacturer
Regulations for importing telecommunications products are very strict. Besides being time-consuming, importing telecommunication items often requires an import license from the Ministry of Information and Communication as well.
What documents you need:
- Packing list
- Photos of the product
- Technical information
- Gross and net weight
Another sector that has become attractive in Vietnam is animal feed. Despite being an agricultural country, Vietnam imports a great amount of its animal feed from other countries.
In order to sell animal feed in Vietnam, however, you must get the approval granted by the Ministry of Agriculture and Rural Development. The Directorate of Fisheries or the Department of Livestock Productions must also certify that your product meets the conditions for being sold in Vietnam.
If the product has not been examined yet, it has to be inspected at a verification facility in Vietnam. However, if the product is allowed to be sold in Vietnam, you still need to make an announcement at the Department of Agriculture.
For that you need to provide:
- Certificate of Free Sale
- Product information
- Certificate of ISO, GMP, HACCP or other equivalents
- Standards applied
- Original label and products label in Vietnamese
- Certificate of the analysis
Emerhub can handle the process of product registration on your behalf.
Trading trends in Vietnam
Vietnam – EU
Vietnam and EU have signed EU-Vietnam Free Trade Agreement, which is expected to come into effect in 2018 and simplify the regulations and reduce the tax on most of EU imported goods. 65% of EU export will be liberalized at entry into force of the FTA, the remaining EU export will be liberalized gradually within the next 10 years.
In other words, EU originated products (ranging from wine and spirits to automotive and motorcycles) will be more affordable compared to the current market prices.
Vietnam – US
Since the Bilateral Agreement (BTA) in 2001, trade between the United States and Vietnam has been gradually increasing every year together with Vietnam’s GDP per capita.
According to the preliminary statistics of the Ministry of Finance of Vietnam, imports from the US to Vietnam have already reached to almost 5.5 billion USD in 2017. Some of the main import goods from the US in 2017 have been:
- soya beans
- animal feed and animal feed materials
- chemical products
- wood and wooden products
- machine, equipment, tools, and instruments
However, products with the highest dollar value are computers, electrical products, spare parts, and components.
The Trans-Pacific Partnership would have meant an even stronger trade relationship between Vietnam and the US. However, the United States’ withdrawal from the TPP has had no considerable effect on the trade between these two countries.
Trade between Vietnam and the US has grown by nearly 20% since 2001 and experts believe that this rise will continue despite the US’s withdrawal from the TPP.
How to import to Vietnam?
In order to import to Vietnam, you must have a legal entity that is established and registered in Vietnam.
Setting up a trading company
Together with the acquisition of all the necessary documents, setting up a company in Vietnam can take up to 3 months.
- Investment license
- Business registration certificate
- Import license (together with the investment license)
In general, there is no minimum capital requirement for setting up a trading company in Vietnam. However, it must be in compliance with revenues and expenses.
Emerhub can assist you with establishing a company in Vietnam. We will take care of all the paperwork and communicate with the authorities on your behalf. Read more on how to set up an import company in Vietnam.
Using importer of record in Vietnam
If you don’t want to set up a legal entity in Vietnam or wait for several months before you can start importing, there is another way to import to Vietnam. You can use importer of record (also known as the under name import service) instead.
Undername import means that you don’t have to acquire any import licenses or set up a company in Vietnam. In addition, you are also exempt from tax liabilities since the consignee will cover the taxes.
Besides enabling fast and seamless import to Vietnam, there are also other benefits that accompany undername import. Find out more about these advantages here.
- All payments related to taxes are non-reclaimable when using importer of record service. These taxes can be treated as total expenses against the importation services.
- It is important that Emerhub receives tax payments when your products arrive in the destination country as the customs clearance process has to be executed in no more than 3 working days. Late payment will risk the success of on-time customs clearance and may bring further costs (such as D/O, demurrage, warehousing).
Using a nominee registrar
As already mentioned previously in the article, some imported products require registration. Emerhub can also act as your nominee registrar. In that case, Emerhub will make the announcement/registration of the product and share with the importer for the customs clearance.
Contact us via [email protected] or leave your details in the form below to get a quote from Emerhub. With our experience in the market, we are happy to help you through Vietnamese import regulations.