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STANA ILIEV STANA ILIEV MAIK KUBELTMAIK KUBELT
THE PHARMACEUTICAL THE PHARMACEUTICAL MARKET VIETNAM MARKET VIETNAM
SURVEY 2008SURVEY 2008 TREND TREND GUGUIIDDEELLIINNEESS AND AND MARKETMARKET ENTRYENTRY STRATEGIESSTRATEGIES
WINFRIED HUETTLWINFRIED HUETTL ISBN 978ISBN 978--33--925266925266--6363--8 8
GERMAN CHAMBER OF INDUSTRY AND COMMERCE VIETNAM
PUBLISHERS: PUBLISHERS:
Stana Iliev and Maik Kubelt:
The Pharmaceutical Market Vietnam
Survey 2008 Trend
Guidelines and market
entry strategies
Publishers:
Winfried Huettl with
German Chamber of Industry and Commerce Vietnam
© hüttl public relations gmbh ISBN 978-3-925266-63-8
Lauterstein, Hanoi 2008
1st edition
198,00 Euro
STANA ILIEV STANA ILIEV MAIK KUBELTMAIK KUBELT
THE PHARMACEUTICAL THE PHARMACEUTICAL MARKET VIETNAM MARKET VIETNAM
SURVEY 2008SURVEY 2008TREND TREND
GUIDELINES GUIDELINES AND AND MARKETMARKET
ENTRYENTRY STRATEGIESSTRATEGIES
Special thanks
My special thanks goes to the authors
Stana Iliev and Mike Kubelt, who has
worked out this case study on the spot in
Vietnam. They were supported by the
pharmaceutical distributor Deka Ltd. –
many thanks to their executive managers
Mr. Dat and Mr. Kien. Not to be over-
looked is my Vietnamese friend and repre-
sentative Mr. Dang Quoc Hung with his
fantastic network in all parts of this amaz-
ing country. It is great that the German
Chamber of Commerce and Industry will
promote as co-publisher the case study on
their channels - thanks to Jan Noether,
Chief Representative DIHK!
Thanks to Dr. Martin Godau and Stephen
Smith for editing and proofreading and
last but not least I'm indebted to my wife
Monika for the graphical design.
Professor Winfried Hüttl, Publisher
AFTA ASEAN Free Trade Area
ASEAN Association of Southeast Asian Nation
ARF ASEAN Regional Forum
ASEM Asian Europe Meeting
APEC Asian-Pacific Economic Coop-eration
BTA Bilateral Trade Agreement
CPP Certificate of Pharmaceutical Product
CIL Common Investment Law
Doi Moi Name of Vietnamese Reno-vation in 1986
EU European Union
FSC Free Sale Certificate
GDP Gross Domestic Product
GMP Good Manufacturing Prac-tices
GNP Gross National Product
HCMC Ho Chi Minh City
IMS Health pharmaceutical mar-ket intelligence
IP Intellectual Property
KPV Communist Party Vietnam
MOF Ministry of Finance
MOH Ministry of Health
MPI Ministry of Planning and In-vestment
OTC Over the counter
SME Small and medium sized enterprise
SOCB State Owned Commercial Bank
TRIPS Agreement on Trade-Related Aspects of Intellectual Prop-erty Rights
UEL Unified Enterprise Law
VAT Value Added Tax
VHI Viet Nam Health Insurance
VND Vietnamese Dong
VSI Vietnam Social Insurance
WTO World Trade Organization
GLOSSARY
• Contents
Glossary
1. Geographic and demographic facts 1
1.1 Political situation & economy 7
2. History of Vietnam; social structures and facts about society 12
2.1. General Health Care System 16
3. Development after the entry to the WTO 28
3.1. Basic conditions for foreign investors; market entry barriers 30
3.2. Basic conditions for research and development 39
3.3. Legislation and basic conditions for license applicants 42
4. Alternative Medicine and the significance of naturopathic treatments 45
5. Marketing structure & distribution channels 48
6. Business competition; previous and present competitors; future competitors 54
7. WTO Guidelines 57
8. Opportunities and forecasts on future legislation, competition,
sales potentials, product development and growth prospects 63
9. Recommendations for market entry strategy 69
Appendix:
List of importing companies
Laws on Investment Decree Nr. 23Circular on Decree 23
Drug licensing regulations, Decision No. 3121Circular on Decree No. 17
Literature
Introduction Publisher Professor Winfried Hüttl: Vietnam - a challenge and opportunity Vietnam, the fourth most populous country in the Far East Asia, entered the World Trade Organization (WTO) in early 2007. Its entry is now helping the development of the domestic pharmaceutical industry that has traditionally been regarded as not well organised due to poor standards both in financial budgets as well as in research. However, this is now changing as the industry now needs to improve its production standards and with the entry of foreign movers and shakers competition in this mar-ket will be intensified. Now it is the time for foreign companies and the doors will be wide open to plan and to do the first steps. Very helpfull for the planning and the market entry could be – hot off the presses - our case study which is now released and published to-gether with the German Chamber of Commerce Vietnam. According to industry reports, Vietnam imports medicines such as anti-bacterial agents, and many firms are registered to import these medicines. The imported medicines play an important role in preventing and treating diseases as well as providing raw materials for the local industry, in the country. The specific drugs are still rare and come mainly from France, Germany and Switzerland. However, it is not just the number of foreign companies that is rising in the country, local companies are also on the growth path. Vietnam has 180 pharmaceutical factories, 75 of which meet Good Manufacturing Practices standards, 25 of which are foreign-invested. I have to bring forward more positive arguments for an engagement of foreign investors and companies: - The government is keen to attract foreign investment in the pharmaceutical indus-try to produce much-needed medicines, such as antibiotics. The foreign investment has been on the rise in the sector. - The Vietnamese pharmaceutical market has significant growth potential, due to a sizeable population and a low per capita medicines spending of less than $10 per year. - To develop the pharmaceutical industry, the government has to modernize the industry and to implement Good Practices in pharmaceutical sector, build up the industry of pharmaco-chemicals, antibiotics and active substances from medicinal plants, supply sufficiently essential drugs for healthcare and promote rational and safe drug use. Considering this growth the pharmaceutical market is expected to top $1.15 billion, by 2011*) up from an estimated $882 million in 2006. The increase in the foreign investment in the pharmaceutical industry and Vietnam’s entry into WTO, and not to forget the government initiatives to support the industry,this all will boost the growth of the Vietnam pharmaceutical industry in the coming years. Professor Winfried Hüttl, Publisher *)with courtesy by Bio Spectrum Bureau
Foreword Jan Noether
In January 2007 Vietnam became the 150th member of the Word Trade Organization and
since, the economic growth gained a momentum this country did not experience before.
This development is by no means a surprise to the Asian neighbours of Vietnam but reflects
a consequence of the sustainable policy of economic renovation called “Doi Moi”, which
commenced some 20 years ago. The economic growth rate of 2007 surpassed 8,5%,
industrial production improved by 17% (US$ 35,9 bio.), exports were US$ 48,4 bio. (+21,7%)
and the Foreign Direct Investment almost doubled to reach an all time high of US$ 20,2 bio.
It goes without saying that Vietnam needs to overcome various challenges to maintain the
currently strong momentum, such as infrastructure needs, additional vocational training
efforts or the timely implementation of WTO agreements, to just name a few.
The strong focus of Vietnam to further develop its economy found its peak in the WTO
accession and is likely to be followed by various new opportunities for foreign investors and
for organizations to look into trading activities with their respective Vietnamese counter-
parts. According to the WTO agreements, we expect a substantial relaxation of formerly
limited distribution rights from 2009 onwards, which certainly offers potential, among
others to the foreign invested pharmaceutical industry in Vietnam. The business study
“Pharmacy Market Vietnam – Prospects and potentials after the WTO entry” sheds a
comprehensive light on the current scenario of the Vietnamese Pharmacy Market and
moreover, it outlines possible strategies, which shall be of interest to your organization.
With best wishes
Jan Nöther
German Industry and Commerce Vietnam
Abstract
The Pharmaceutical Market Vietnam in the year 2008: • Altogether the biggest market entry barriers of Vietnam are as in all ASEAN countries the risk
of competition by generic products meaning especially price battles. Secondly the still very unclear and complex bureaucracy and favoritism could become a mayor obstacle for a new company.
• The licensing of drugs is yet compared to other Asian standards rather easy and fast. The growth expectations of Vietnam’s pharmaceutical enterprises are very good. The domestic companies are more than willing to expand and to cooperate with global competitors.
• On the other hand non communicable diseases are mounting; diseases of civilization like cardiovascular diseases, cancers and diabetes. Furthermore an increasing rate of and life-style related diseases can be detected.
• The government will allow 100% foreign private owned companies by the year of 2009. Befo-re the WTO entry Vietnam had set up trade relations with 165 countries and signed bilateral trade agreements with 72 countries. After the 1st of January 2007 the primary task of the country is now to transform the centrally-planned economy into a free market economy to meet the requirements of global economy. That will bring out challenges and opportunities in economic development and lead to a profound modernization in Vietnam.
• Foreign wholesalers are basically not allowed to do marketing for their products. Still they are allowed to ’promote’ their goods to hospitals and medical staff. It is common to have agents to advertise certain offers in hospitals.
• One of the possible outcomes might be a shifting in the accessibility of foreign pharmaceuti-cal products since patent rights become stricter and distribution channels are changing. In January 2009 foreign businesses will be allowed to carry out direct import and export and to distribute directly to the Vietnamese market.
• By now the pharmacy market increases approximately 15% per year. The consumption of pharmaceutical products rose from US$ 0.3 in 1990 to US$ 7.6 in 2003. The health and phar-maceutical sector holds a lot of opportunities to foreign investors in the future. The demand for high quality drugs can not be fulfilled by domestic industries at present. In the next years the demand will even enhance.
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1. Geographic and demographic facts
Formal name of the country: Socialist Republic of Vietnam
(Cong Hoa Xa Hoi Chu Nghia Viet Nam)
Short form: Vietnam Term for citizens: Vietnamese Capital of Vietnam: Hanoi Flag: Red with a large yellow five-pointed star in the center
Time zone: Seven hours ahead of Greenwich Mean Time Area: 331, 56 sq km
Population: App. 83,690,000
Public holidays: New Year (January 1); Lunar New Year (movable date in January or February); Liberation Day to commemorate the fall of Saigon (April 30); Labor Day (May 1); Independence Day to commemorate Japan’s withdrawal following its defeat in World War II (September 2)
Neighboring countries: Cambodia, China, Laos Size: 330,363 square kilometres Natural hazards: Occasional typhoons with extensive flooding Administrative divisions: 60 provinces, 4 municipalities Currency: Vietnam Dong (abbreviated as “VND”).
1$ = 16000 VN Dong 1€ = circa 21.000 VN Dong (1/2008)
Economy: Agriculture, forestry and fishery: 20 %; industry and
construction: 42%; service: 38% Export partners: Japan, USA, China, Australia, Singapore, Philippines,
Taiwan, Germany, UK, South Korea, France, Malaysia Import partners: Taiwan, Singapore, Japan, South Korea, China,
Malaysia, Germany, Russia, USA, France, Australia, UK, Switzerland
Natural resources: Coal, copper, crude oil, gold, iron, manganese, silver,
zinc
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Export-commodities: Crude oil, coal, marine products, rice, garments and textiles, footwear, handicraft, coffee, rubber, tea, cashew nuts, pepper, vegetables, furniture
Import- commodities: Machinery and equipment, petroleum products,
fertilizer, steel products, raw cotton, grain, plastic materials
Demography: Age structure: 0-14 years: 29.4% (male 12,524,098; female
11,807,763); 15-64 years: 65% (male 26,475,156; female 27,239,543); 65 years and over: 5.6% (male 1,928,568; female 2,714,390)
Population growth rate: 1.3%
Birth rate: 19.58 births/1,000 population
Death rate: 6.14 deaths/1,000 population
Ethnic groups: Kinh (Viet) 86.2%; Tay 1.9%; Thai 1.7%; Muong 1.5%; Khmer 1.4%; Hoa 1.1%; Nun 1.1%; Hmong 1%; others 4.1% (1999 census)
Languages: Official language: Vietnamese Other languages used: Chinese and Khmer
Literacy: Total population: 94%
Male: 96.9% Female: 91.9%
Religion: Buddhism est. 7.6 million; Roman Catholicism 6 million; Cao Dai 2 million; Hoa Hao 1 million; Protestantism 500,000; Islam 50,000
Climate facts: Tropical monsoon zone. Humidity averages 84 %
Climate zone in North Vietnam: temperate zone. Different temperatures from May to October (hot temperature), November to April (cold temperature)
Climate zone in South Vietnam: tropical climate (very hot). Rainfall every year ranges from 1,200 to 3000 millimetres. Temperature varies between 5°C and 37°C
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Topographic facts, natural resources and climate facts The country of Vietnam is
predominantly tropical lowland and
forested highland. Hills cover three
quarters of the total land area. Vietnam
is divided into the north, with highlands
and the Red River Delta, and the
south, with coastal lowlands and the
Mekong River Delta. Vietnam is
located in a tropical monsoon zone.
Humidity averages 84 % throughout
the year. The country has two different
climate zones. The North Zone is a
temperate zone with different
temperatures. From May to October
temperatures are very hot, while
between November and April the
weather is rather cold. The South of
Vietnam has a really hot tropical
climate throughout the whole year.
Rainfall every year ranges from 1,200
to 3000 millimeters, and temperature
varies between 5°C and 37°C.
Vietnam’s main natural resources are
coal, copper, crude oil, gold, iron,
manganese, silver, and zinc.
Infrastructure Public transport systems similar to
those found in western countries are
not yet installed. Buses are the only
alternative to the very popular
motorcycle.
The transportation system of Vietnam
needs modernization and expansion.
Generally, the roads are in poor
condition and the underdeveloped
railroad system is not very useful for
the transportation of goods. The
railroad system in general is not very
efficient. There are 6 single-track
railroads with a total length of 3,260
kilometers in Vietnam. For a low-
income country, that is one-third of the
average of the network density. The
longest railroad line runs between
Hanoi and Ho Chi Minh City. It
measures 1,730 kilometers. It takes 32
hours to travel from Hanoi to Ho Chi
Minh City on the Reunification
Express. Vietnam needs to invest more
than US$ 400 million between 2004
and 2009 to modernize its railroads.
The government plans to build two
subway lines in Ho Chi Minh City by
2007. The cost of the subways is
estimated at US$ 800 million.
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A better alternative for transportation is
the inland waterways. The most
important inland waterways are the
Mekong River and the Red River
systems. The waterways carry more
freight than the railroads, and the
volume of freight being carried in
recent years has been steadily rising.
However, there is still great potential
as Vietnam only uses 40 % of its
waterways.
Additionally, Vietnam has seven
international ports and five additional
ports that specialize in transporting oil
and coal. The volume of freight is
about 14 million tons annually, which is
only one-third of the capacity.
Moreover, Vietnam has 17 major civil
Airports, including three international
gateways: Danang serving Danang,
Noi Bai serving Hanoi, and Tan Son
Nhat serving Ho Chi Minh City. The
largest is Tan Son Nhat, handling an
estimated 75 % of international
passenger traffic. The national airline is
Vietnam Airlines, which links Vietnam
to 19 cities worldwide.
Ha Noi
The capital of Vietnam, Hanoi, was
founded in 1010 and is therefore the
oldest city in South East Asia. A
harbour town in the north of Vietnam, it
has a population of 4 million
inhabitants, of which three quarters are
between the ages of 20 and 30.
The image of Ha Noi is more quiet and
elegant than that of Hồ Chí Minh City.
It has nine inner districts and
numerous sights such as temples,
pagodas and museums.
Ho Chi Minh City (formerly Saigon)
Hồ Chí Minh City, in the South of
Vietnam, is the biggest city of Vietnam.
It has a population of almost 7 million
inhabitants. Similar to Hanoi, three
quarters of the inhabitants are aged
between 20 and 30. Hồ Chí Minh City
is also a harbour town and has the
fastest growing economy in Vietnam.
The city consists of 19 districts and 5
inner circles. It was named after Ho
Chi Minh, who proclaimed the
Democratic Republic of Vietnam in
September 1945 and later took over
leadership of the country as the state
and prime minister.
Media
The Ministry of Culture in Vietnam
supervises all mass media and
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communicates only officially approved
information. The government also
shuts down newspapers that do not
conform to its own values. Some
English newspaper can still be bought,
however.
There are rules governing Vietnamese
peoples’ use of the internet as well.
Vietnamese people do not have the
right to publish critical commentaries
on the internet. If they do, they can
face punishment including
imprisonment.
Telecommunication Vietnam has invested huge sums for
the modernization of its telephone
network. Today the telecommunication
in Vietnam is at a good standard level.
However, the cost of a call to another
country is really high because they
have not yet invested in
communication networks to other
countries.
Most Vietnamese people frequently
use the country’s numerous internet
cafes to connect to the World Wide
Web. The government of Vietnam is
anxious about the internet as an
information platform because they fear
they may loose their status as the only
information portal in Vietnam. For this
reason, Vietnam’s authorities block
some foreign internet sites and close
internet cafes in an attempt to
safeguard there status and monopoly
over information in Vietnam.
Education system
For every child between the age of 6
and 14 school attendance is obligatory.
Education at kinder garden is also
important in Vietnam. School
attendance is split into two periods: the
first period is elementary school
(classes one to five) and the second
period is secondary school (classes six
to nine). After school attendance the
Vietnamese have the choice to go to
high school for three more years in
order to take the acceptance test to go
to University. University courses last
for four years in an economic university
or five years in a technical university.
Environmental facts
The National Environmental Agency,
which includes the Ministry of Science,
Technology and Environment, is
responsible for the protection of the
environment in Vietnam. The Institute
of Ecological Economics is a non-
government organization that plays an
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important role in the protection of the
environment.
Urbanization, industrialization, and
intensive farming have a negative
impact on Vietnam’s environment as
they result in:
• Air pollution
• Water pollution
• Noise pollution
Particularly in industrial and urban
centers like Hanoi and Ho Chi Minh
City, waste treatment is the most
serious problem, along with
dangerously high air pollution. Vietnam
also has to deal with other problems,
such as declining fish yields, severe
deforestation, flooding in the deltas,
soil erosion and sedimentation of
rivers, and pollution of the coastal and
marine environment.
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1.1 Political situation and economy
Vietnam’s government consists of a
one party system. This party, The
Communist Party of Vietnam (or KPV
for short) enjoys full authority on all
political decisions in the country.
Officially, political decisions are made
by the National Party Congress.
Unofficially, verdicts are decided by a
board of 14 members of the politburo.
This politburo consists of a 3 headed
leadership which is made up of the
General Secretary of the KPV (Nong
Duc Manh), the President (Nguyen
Minh Triet) and the Prime Minister
(Nguyen Tan Dung).
The government is responsible for the
implementation of political decisions,
but still owes justification to the
National Assembly, who have become
more and more authoritarian over the
past 10 years. Since debates
concerning a large catalog of important
matters are held publicly, the
government is being forced more than
ever to give account for their actions.
Reform politics have been changing
everyday life radically. However, while
the DoiMoi reforms, implemented since
1986, have greatly improved the
economy and foreign affairs, the
government has remained rather rigid
and old fashioned. However, the strong
leadership of the KPV has ensured a
very stable political system that is free
of religious extremism.
Since freedom of opinion, the media,
religion and assembly are still
restricted, the major concerns at
present are the development of an
open society and a free media. Other
problems the country faces include
political criminals, the death penalty
and the situation of human rights.
Furthermore, Vietnam has big
problems regarding human trafficking.
In particular, young woman who are
often under age are sent to China
every year.
Foreign relations
After its incursion into Cambodia
(1978-89), Vietnam was isolated
internationally. The conflict was
resolved by the Paris agreement on
Cambodia in October 1991. During the
1990s, Vietnam started to orientate its
foreign relations towards western
countries and western standards. This
philosophy, and the wish for a stable
and peaceful situation, led to the end
of isolation from the rest of the world
and the beginning of reforms aimed at
renewing the country.
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Soon after, Vietnam joined ASEAN,
ARF, ASEM, APEC, and consequently
the WTO.
The United States of America lifted
there economic embargo against
Vietnam in 1994. The USA and
Vietnam normalized relations in June
1995. In 2001, a new bilateral trade
agreement was signed with the USA.
In June 2005, a high level Vietnamese
delegation, led by the Prime Minister
Phan Van Khai, visited the USA, which
was the first such visit for 30 years.
Vietnam and Japan enjoy a good
economic and political relationship.
Economic development
Economic reform implemented in 1986
led to reorientation and recognizable
progress in Vietnam’s economy. Since
2000, Vietnam has seen a constant
annual GDP growth of 7 %. By 2005,
Vietnam’s GDP growth had reached a
peak of 8.4 %. This is the second
largest growth amongst all Asian
countries at present, trailing only
China. Vietnam’s economy currently
has a purchasing power parity of US$
280 billion, with an inflation rate of only
4 %. Its exports amount to US$ 19.88
billion annually and it imports reach
approximately US$ 22,5 billion a year.
Normal business hours in Vietnam are
from 8.00 am to 5.00 pm, with working
days being Monday to Friday.
The most important factors which have
influenced the country’s economic
development are the increase in
international commerce and foreign
direct investments. By 2005, those
investments had increased up to US$
5.8 billion.
Agriculture is still vital for Vietnam’s
economy, and about 75 % of its
population is dependent on the sector.
This is very sensible, since in rural
areas around 90 % of the poor
population is engaged in agriculture.
Although Vietnam has made much
progress in converting its economy into
a free market economy, many state
owned companies play a major role in
economic growth. Many of the large
state owned companies are to be
transformed into Stock Corporations.
This process has required more time
than was first expected, and therefore
has blocked liberalization reforms.
Almost one third of all credit is
provided to state owned companies,
who are favored in location gratings.
This leads to a weakening of the
banking sector. Additionally, they are
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often inefficiently and have rigid
leadership.
The banking sector is controlled by the
four state banks (SOCB). They provide
about three-thirds of all credit. Reforms
have not been able to improve the
credit portfolio and consequently have
not been able to grant equal
opportunities for state owned and
private companies until now.
The USA and EU are the most
important business partners for
Vietnamese exports. Thanks to the
bilateral agreements between Vietnam
and the USA, the USA has been able
to increase its exports six times since
negotiations took place. Integration
into the global market in general has
improved profoundly. Exports presently
represent 64 % of the GNP.
By 2006, around 41,000 private
enterprises were being established
each year. In 2000, 200,000 private
small and medium sized enterprises
had created 1.65 million jobs in
Vietnam.1 Forecasts for next year’s
economic development in Vietnam are
more than positive.
1 Source: 29 pg. 40
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Embassy of the Federal Republic of Germany Ambassador: Christian-Ludwig Weber-Lortsch Add.: 29 Tran Phu St., Ba Dinh District, Hanoi Tel. (+84) 4-8453836/37 Fax. (+84)4-8453838 E-Mail: germanemb.hanoi@fpt.vn http://www.hanoi.diplo.de
German Industry and Commerce Vietnam Add.: 257 Hoang Van Thu, Tan Binh Dist. HoChi Minh City Tel: (+84)8-8455528 Fax: (+84)8-8455527 E-Mail: info@vietnam.ahk.de http://www.vietnam.ahk.de
Consulate General Ho Chi Minh City Dr. Heinz Peter Seidel Add: 126 Nguyen Dinh Chieu St. Dist. 3, Ho Chi Minh City Tel. (+84)8-8291967/8224385 Fax: (+84)8-8231919 E-Mail: info@hoch.diplo.de http://www.hcm.diplo.de
The Office of Government Minister-Director Doan Manh Giao Add: 1 Bach Thao St., Hanoi-Vietnam Tel: (+84)4-8042519 Fax: (+84)4-8044940
Department for European Market of Ministry of Trade Mr.Nguyen Canh Cuong Tel.: (+84)4-8262538-ext.1030 Fax: (+84)4-8254719 Email: europa@mot.gov.vn
The Ministry of Planning and Investment Minister Vo Hong Phuc Add: 2 Hoang Van Thu St., Hanoi- Vietnam Tel: (+84)4-8043782/8042560 8043255 Fax: (+84)4-84234453 http://www.mpi.gov.vn
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The State Bank of Vietnam Governor Le Duc Thuy Add: 49 Ly Thai To St., Hanoi-Vietnam Tel: (+84)4-8255587 Fax: (+84)4-8258385 http://www.sbv.gov.vn
The General Department of Customs General Director: Le Manh Hung Add: 162 Nguyen Van Cu St., Bo De –Long Bien, Hanoi-Vietnam Tel: (+84)4-8720707 Fax: (+84)4-8263905 http://www.customs.gov.vn
German Industry and Commerce Vietnam Hanoi Office: Add: R.1303, Vietcombank Tower 198 Tran Quang Khai ST., Hanoi- Vietnam Tel: (+84)4-8251420 Fax: (+84)4-8251422 E-Mail: info@vietnam.ahk.de http://www.vietnam.ahk.de CEO/ Chief representative: Mr. Jan Noether Representative: Mr. Le Trang The Ministry of Trade Add: 21 Ngo Quyen St., Hanoi- Vietnam Tel: (+84)4-9360733/8253905 Fax: (+84)4-8264696 http://www.mot.gov.vn Minister Truong Dinh Tuyen
Other Useful Websites: http://www.vneconomy.com.vn Website about the Vietnamese economy http://www.exim-pro.com Website about export/import promotion in Vietnam http://www.vietrade.gov.vn Website about trade promotion in Vietnam http://www.gso.gov.vn Website of the General Statistical Office of Vietnam http://www.vietnameconomy.com.vn http://www.vietnampanorama.com http://www.intellasia.com
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2. History of Vietnam: Social structures and facts about the society
History of Vietnam
Vietnam has a history of occupation,
colonialization, war and civil war. It
also has a history of delightful
culture, remarkable dynasties and a
profound philosophic background.
In 968 C.E. the empire of An Nam
was founded and accepted by the
Chinese four years later. In the 10th
century, An Nam had to defend itself
over and over again against
Mongolian and Chinese occupation.
During the Le Dynasty, An Nam
culture and Buddhism grew stronger
and blossomed. In the 18th century
the country expanded to the south
into the Mekong Delta. By then, An
Nam was united and not divided into
two noble houses, the north and the
south.
With the help of France, the house of
Nguyen was able to win the throne
and, becoming emperor in 1802.
Shortly afterwards, the country was
officially named Viet Nam. In the
second half of the 19th century,
Vietnam had to end its persecution
of Christians and hand over several
provinces of the Mekong Delta to
France. Not until the next century, in
1926, was Vietnam allowed to form a
parliament with advocatory functions.
Consequently, the Communist Party
of Indochina was founded by Ho Chi
Minh in 1930.
As a result of the Second World War
and the occupation of France by the
Germans, the Japanese were able to
take Indochina from the French. In
answer to this action, Ho Chi Minh
and the Communist Party initiated a
movement called Vietminh, with the
aim of independence for Vietnam. In
1945, the Japanese permitted the
formation of an independent country
involving Tongking, An Nam and
Cochin China, ruled by the emperor
Bao Dai. Shortly afterwards,
Japanese occupation was ended
and the Vietminh removed the
emperor who had been installed,
founding the Democratic Republic of
Vietnam. As there was still an
ongoing conflict with the French, who
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were not willing to accept the
Vietminh as a government, the
Indochina War occurred in 1946. By
1954 the French had to withdraw
from the country and Vietnam was
separated into a northern communist
part and a southern non-communist
part. Ho Chi Minh became president
of the northern part and Ngo Dinh
Diem was prime minister of the
south.
The separation and the refusal of the
south to allow elections for the whole
of Vietnam led to a civil war. The
south collaborated with the USA to
overthrow the northern Vietcong
rebels. Consequently, the north sent
troops over the Ho Chi Minh path
and the Civil War, the Vietnam War,
began.
The war became an international
conflict and had active participation
from the USA. Eight years later the
armistice between the Democratic
Republic of Vietnam and the USA
was agreed upon. This led to the
departure of the American troops.
Two years later, in 1975, the
communist north Vietnamese made
an attack against the south, which
led to the surrender of the non-
communist part of the country. Under
the new government both parts were
reunited again and the new Socialist
Republic of Vietnam was founded on
July 2nd 1976.
Following this, Vietnam led a war
against Cambodia, which ran from
1978 to 1989 and installed a
communist government in the
country. China responded with
attacks on the northern borders of
Vietnam. In the same year, Vietnam
had to surrender to international
pressure and withdrew from
Cambodia.
By 1992 the new constitution allowed
foreign investments and private
companies to operate in restricted
areas of the country. Little by little
Vietnam was able to open up to the
world. In 1997, Phan Van Khai was
elected as prime minister by national
representatives, and President Tran
Duc Luong was appointed by the
parliament.
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Social structure About 62 million Vietnamese live in
rural areas. That is about 74 % of the
population. However, more and more
people are moving to urban areas.
These areas have seen an increase
in western ways of life. The future
will witness an ongoing trend
towards western customs.
Nevertheless, traditions and
traditional customs are widely
practiced and are still part of the
culture, even in urban areas.
Unlike western culture, the
Vietnamese value family and clan
over individualism. Kinship is a very
essential part of Vietnamese culture.
Hierarchies and family bonds are
taken very seriously. They are
complex and can not be ignored.
As kinship has an important role in
society, a complex hierarchy of
relationships exists. In Vietnamese
society there are 9 distinct
generations. Virtually all
commemorations and celebrations
within a clan follow the principles of
these 9 generations. Younger people
might have a higher position in the
family hierarchy than an older
person, but must still respect their
elders.
The number of inhabitants of
Vietnam is estimated at around 84.5
million people. The population is
growing at a rate of about 1.2 % per
year. The average population density
is about 246 people per square
kilometer, one of the highest levels in
the world. The highest concentration
of people is along the Red River.
The average age, however, is very
low. Only 5 % of people are over the
age of 65 years, and 30 % of the
inhabitants are under 14 years old.
The growth rate of the country is
falling, as well as the death rate due
to improved medical care.
Demographic changes are already
happening.
Around 88 % of the inhabitants are
ethnic Vietnamese. In addition, over
50 other minority groups are
represented, in particular the
Chinese, Thai, and Central Highland
peoples. These minorities, in
general, live in very poor conditions
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and are mostly cut off from general
social life and economic
development. Over 6 % of the
inhabitants are illiterate. There are
not enough schools to serve the
country’s population. Also, because
of the high cost of tuition, books and
uniforms, and the need to
supplement their family’s income,
about one-third of students drop out
of school after the fifth grade.
Vietnamese is the official language
of Vietnam. Due to the history of the
country, other popular languages
include English, French, Russian
and German.
The government officially allows
freedom of religion and recognizes
the Buddhist, Roman Catholic,
Protestant, Hoa Hao, Cao Dai, and
Muslim denominations. However,
non-sanctioned groups, including
branches of even the recognized
denominations, face harassment.
Religion also has a big impact on
Vietnamese society. A complicated
mixture of Mahayana Buddhism,
Confucianism and Daoism is a
characteristic of the very traditional
society. Ancestor worship, as well as
animism also plays an essential role
in the country’s culture. Regardless
of religious belief, many Vietnamese
practice this ancestor worship in their
day to day lives. It is a big part of the
culture of the country and reflects the
profound influence of religion,
philosophy and the worshiping of
clans and families.
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2.1 General health care system
Vietnam’s health care system has
recently been undergoing a great
deal of conversion. Due to the fast
development of the country in
general, and the ongoing major
program of poverty reduction and
economic growth, there are high
expectations for the continuing
improvement of the health care
sector.
Development Twenty years ago the health care
sector was completely subsidized by,
and under the control of the central
government. By 1989 it became
clear that additional ways of
financing the system were needed
for the future. Therefore, the
common system consisting of three
options was implemented:
1. Government budget allocation
2. Out-of-pocket payments
3. Prepayment schemes or
health insurance
During the recent period of change
even more tools have been
developed in the sector, such as
user fees, health insurance, and
health care funds for the poor.
However, none of these options are
able to finance the health care
system completely. Due to these
discrepancies in particular, health
facilities have been built without
being properly supplied and staffed
by the government.
Even though a policy to waive fees
for the poor has been implemented,
most hospital revenues come from
informal or private payments.
Furthermore, the private sector has
become increasingly more
significant. Unlike other Asian
countries, Vietnam spends quite a lot
on health care. In fact, its expenses
make up 5 to 6 % of GDP2 each year
and out-of-pocket payments add up
to US$ 233 per capita per year.
Therefore, it is interesting to see the
difference between public and
private expenditure. While almost
three quarters of spending is carried
2 Source 1 pg. 4 3 Source 1 pg. 4
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out by the private sector, the public
sector only provides one quarter of
all spending.
Medical situation
During the mid-1960s, Vietnam
declared smallpox, cholera,
poliomyelitis and typhoid eradicated.
Even though the country proclaimed
many other contagious and
infectious diseases eliminated,
diseases like malaria, trachoma,
tuberculosis (and unfortunately even
cholera, poliomyelitis and typhoid)
still cause a high mortality rate and
have not yet been fully brought
under control. One reason for this is
unsanitary environments, which are
the cause of the outspread of
diseases.
The government of Vietnam has
campaigned for habitual
immunizations against diphtheria,
tetanus, whooping cough, polio-
myelitis, tuberculosis, and measles.
Also, programs have been initiated
to improve sanitary awareness.
Communal health centers have been
set up in every district to encourage
environmental decontamination, the
consumption of clean water and
food, and clean living conditions in
general. The government has also
initiated a program for the
extermination of rats, mosquitoes
and flies.
The population’s life expectancy is
relatively high. According to the
findings of the Evaluation of the
Tuberculosis Component of the
National Health Sector Project of the
World Bank in Vietnam, infant
mortality in the last few years has
been only 3.4 %. Still, Vietnam is
facing a high prevalence of chronic
malnutrition, as well as high maternal
and neonatal mortality rates. This is
especially true for minorities in
isolated areas such as the highlands,
who suffer from communicable
diseases and undernourishment.
Of course, HIV and AIDS are
widespread and a big problem in
Vietnam. According to the Atlantic
Philanthropies, an estimated
215,000 people have HIV/AIDS in
Vietnam, with more becoming
infected every day. Also, an
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estimated 8,500 children between
the age of 0 and 15 are living with
HIV, and there are an estimated
22,000 orphans who have lost
parents to AIDS.4 The extension of
the disease has been observed as
expected. It was first spread
amongst intravenous drug users and
via sex workers. Since it has been
scattered into the general population
and the disease is also linked to an
increase in tuberculosis, HIV and
AIDS have now reached pandemic
levels. As in other countries, the
virus has been seen as shameful
and therefore those infected have
been discriminated against. Slowly
the government, as well as the
Communist Party and National
Assembly, have responded with
education and projects supporting
prevention and control. Also,
Vietnam is one of the 15 nations to
receive funding as part of a US$ 15
billion global AIDS plan.
Vietnam still faces challenges from
communicable diseases such as
4 Source 15
Hepatitis B, parasitic diseases in
children, acute respiratory infections,
tuberculosis, dengue fever,
Japanese encephalitis, and food-
borne related problems, which cause
almost 30 % of mortalities. However,
this cause of mortality will soon not
be the most common anymore.
On the other hand, non-
communicable diseases are
increasing, such as cardiovascular
diseases, cancers and diabetes.
Furthermore, an increasing rate of
lifestyle related diseases are being
detected. The abuse of tobacco,
alcohol and drugs is more common
than before. Likewise, suicide,
violence and mental diseases are on
the increase. Also, accidents are
occurring more frequently and may
well become the largest source of
premature mortality.
Certainly, there are considerable
disparities between the different
regions and population groups,
resulting in social inequalities. These
differences are not only due to
inconsistent health services, but also
to very dissimilar living conditions.
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Especially in the Mekong River
Delta, the Central Highlands and the
Northern Uplands, living conditions
are more inferior to in other parts of
Vietnam.
Many people are still suffering from
the effects of dioxin use. The poison
made its way into the food chain and
consequently into peoples genes. A
result of this has been higher rates of
cancer, miscarriage and stillbirth.
Furthermore, rural areas still contain
a large amount of unexploded
ordnance devices and landmines.
Every year a number of farmers and
scrap collectors are wounded or
killed by exploding munitions.
Recent situation / health care programs
Almost all hospitals in Vietnam are
state owned and the insurance
system is too expensive for the
majority of the population. Social and
health insurance contributions are
only required for Vietnamese
employees. The health insurance
fund is financed both from the
employer as well as the employee.
The employer is obligated to pay 15
% of its employees' salaries and
certain allowances into a social
insurance fund. Vietnamese
employees must contribute 5 % of
their salary and certain allowances.
The employer is also required to pay
2 % of the total amount of the
principal salary and certain
allowances paid to employees as a
monthly contribution to a health
insurance fund. Vietnamese
employees are required to contribute
1 % of their salary and certain
allowances as stated in their
employment contract.
As mentioned previously, there are
three main options for financing
health care:
1. Government budget allocation
2. Out-of-pocket payments
3. Prepayment schemes or
health insurance
The concept of health insurance is
relatively new in Vietnam. Obligatory
and voluntary health insurance
schemes were installed by the
government 1992. These schemes
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were administered by Vietnam
Health Insurance under the guidance
of the MOH.
At present Vietnam operates three
insurance schemes:
A. Obligatory coverage: This covers all active and retired
workers in the public sector, and all
salaried workers in private sector
enterprises with 10 or more workers.
The contribution rate is 3 % of a
salary (2 % paid by the employer
and 1 % paid by the employee).
B. Voluntary schemes: These include health insurance for
school children (with a per capita
contribution collected by educational
institutions) and the Farmer
Voluntary Insurance Scheme, in
which farmers contribute 30 % of
their premier and the provincial
government contributes 70 %.
C. Schemes fully subsidized by the government: These include reward schemes for
merit, free health cards for the poor,
etc. However, these schemes
disadvantage the most vulnerable in
society, who face informal user
charges.5
The newly installed health insurance
system has been well accepted,
especially with respect to hospital
costs. Though the cost of health care
is much lower with cards, people
tend to make fewer payments with
cash than they do with insurance. So
there is still the potential for great
efficiency with health insurance. Of
course, the professionalism of health
insurance programs has not yet
reached western standards.
Particular problems such as long
delays and a failure to respond to
claims, especially in the northern
provinces, curtail the benefits of
health insurance. Also, the public
health care system is still operating
rather unfairly. Poorer households
get a lesser share of support and do
not have the same access to good
facilities as richer families. On the
other hand, communal health care,
which is wide spread throughout the
country and well staffed, benefits 5 Source 1 pg. 13;14
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21
poorer families disproportionately.
For this reason the government
produced a ’Strategy for People’s
Health Care’ in 2001, with the
following two objects:
- Renovating the health
insurance system to regulate the
financial relationships between the
users and providers
- Seeking new approaches to
strengthen the quality and efficiency
of the commune curative care
services
In the past few years the budget for
health care has increased
considerably, and by 2004 more
autonomy had been given to the
various provinces. Therefore, the
regions can operate with two big
blocks: wages and salaries; and all
other operations and maintenance.
The budgets depend on the size,
disease patterns and differential
resource needs of a particular
region.
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6 6 Source 22 pg. 97
Ministry of Health
Curative Care National Programs
Local Governme
Provincial Hospitals
District Hospitals
National Hospitals N
TP
EPI
Lep
rosy
Mal
aria
IMC
I
Rep
rese
ntat
ive
Hea
lth
Vietnam’s Health Care System
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Market share Public health care expenses, in spite
of the ongoing improvements, only
make up 1 % of the GDP and 20 %
of the income in the health care
sector, at highest. Most health
treatments are undertaken by public
hospitals, which prefer fees for their
services. In addition, unofficial
spending in the sector is very
common, which is the cause of most
of the inequality. The largest amount
of health care spending is made up
of out-of-pocket payments. This
expenditure equals about 80 % of
the sector’s turnover.
Hospitals and health facilities
Hospitals and medical centers can
be found in most provinces and in
the larger cities. In the main, inner
city institutions, especially
international hospitals, are better
staffed and maintained than the
others.
There are 18 main hospitals in Hanoi: Bach Mai Hospital Add: Giai Phong St., Dong Da Dist. Hanoi Tel: (84-4) 869 3731 / 869 3732
Dong Da Hospital Add:168Nguyen Luong Bang,DongDaDist,Han.Tel: (84-4) 511 5271
E Hospital Add: Nghia Tan, Cau Giay Dist., Hanoi Tel: (84-4) 754 3832
Friendship Hospital Add: 1 Tran Khanh Du, Hoan Kiem Dist., HanoiTel: (84-4) 972 2231
Hanoi Obstetrics Hospital Add: De La Thanh St., Ba Dinh Dist., Hanoi Tel: (84-4) 834 3181
Hospital 198 Add: Mai Dich, Cau Giay Dist., Hanoi Tel: (84-4) 837 3747
Hospital of Army 108 Add: 1 Tran Hung DaoSt.,Hoan Kiem Dist.Han.Tel: (84-4) 825 4627
Hospital of Army 354 Add: 120 Doc Ngu St., Ba Dinh Dist., Hanoi Tel: (84-4) 834 5595
Institute of Ophthalmology Add: 85 Ba Trieu St., Hoan Kiem Dist., Hanoi Tel: (84-4) 943 8004
National Cancer Institute Add: 43 Quan Su St., Hoan Kiem Dist., HanoiTel: (84-4) 825 2143
National Hospital of Pediatrics Add: 18/879 La Thanh, Dong Da Dist., Hanoi Tel: (84-4) 835 9638
National Hospital of Traditional Medicine Add:29 Nguyen Binh Khiem, Hai Ba Trung Dist.Tel: (84-4) 826 3616
National Hospital of Tuberculosis and Pulmonary Add:463 Hoang Hoa Tham,Ba Dinh Dist., Han.Tel: (84-4) 832 6249/ 832 5865
Saint Paul Hospital Add: 12 Chu Van An St., Ba Dinh Dist., Hanoi Tel: (84-4) 823 3071/ 823 3075
Thanh Nhan Hospital Add: 42 Thanh Nhan, Hai Ba Trung Dist., Han. Tel: (84-4) 971 4360/ 971 4373
Viet Duc University Hospital Add: 40 Trang Thi St., Hoan Kiem Dist., HanoiTel: (84-4) 8.253.531
Vietnam - Cuba Hospital Vietnam - France Hospital
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Add: 37 Hai Ba Trung, Hoan Kiem Dist., Hanoi Tel: (84-4) 825 3718
Add: 1 Phuong Mai St., Dong Da Dist., Hanoi Tel: (84-4) 577 1100
There are 16 main hospitals in Ho Chi Minh City: 30/4 Hospital Add: 9 Su Van Hanh St., Ward 9, Dist. 5, Ho Chi Minh City Tel: (84-8) 835 6583
An Nhon Tay Hospital Add: Cho Cu Hamlet, An Nhon Tay Commune, Cu Chi Dist., Ho Chi Minh City Tel: (84-8) 794 6443
Cho Ray Hospital Add: 201B Nguyen Chi Thanh St., Ward 12, Dist. 5, Ho Chi Minh City Tel: (84-8) 855 4138 Fax: (84-8) 855 7267
Vietnam - France Hospital in HCM City Add: 6 Nguyen Luong Bang St., Tan Phu Ward, Dist. 7, Ho Chi Minh City Tel: (84-8) 411 3333
Ho Chi Minh City Medical Hospital Add: 179 Nam Ky Khoi Nghia St., Dist. 3, Ho Chi Minh City Tel: (84-8) 932 6579 Fax: (84-8) 932 6004
Hospital of Dermatology and Venerology Add: 69B Ngo Thoi Nhiem St., Ward 6, Dist. 3, Ho Chi Minh City Tel: (84-8) 930 5995
Hospital of Pediatrics No.1 Add: 2 Su Van Hanh St., Ward 10, Dist. 10, Ho Chi Minh City Tel: (84-8) 835 3255
Hung Vuong Hospital Add: 128 Hung Vuong, St., Ward 12, Dist. 5, Ho Chi Minh City Tel: (84-8) 855 8532
Nguyen Tri Phuong Hospital Add: 468 Nguyen Trai St., Ward 4, Dist. 5, Ho Chi Minh City Tel: (84-8) 923 4349
Pasteur Institude Add: 167 Pasteur St., Ward 8, Dist. 3, Ho Chi Minh City Tel: (84-8) 823 0352
Sai Gon General Hospital Add: 125 Le Loi Str., Dis.1, Ho Chi Minh City Tel: (84-8) 829 7709 Fax: (84-8) 822 5988
Thong Nhat Hospital Add: 1 Ly Thuong Kiet St., Ward 7, Tan Binh Dist., Ho Chi Minh City Tel: (84-8) 864 2143
Thu Duc General Hospital Add: Tan Phu Hamlet, Linh Chung Communce, Thu Duc Dist., Ho Chi Minh City Tel: (84-8) 896 4992
Tropical Diseases Hospital Add: 190 Ben Ham Tu St., Ward 1, Dist. 5, Ho Chi Minh City Tel: (84-8) 923 8704
Trung Vuong Hospital Add: 266 Ly Thuong Kiet St., Ward 14, Dist. 10, Ho Chi Minh City Tel: (84-8) 865 6744
Tu Du Obstetric Hospital Add: 284 Cong Quynh Str., Dist.1, Ho Chi Minh City Tel: (84-8) 839 1229 Fax: (84-8) 839 6832
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List of health facilities and populations covered 7
Area
Districts Hospitals
Commune Health Stations
Population per District Hospital
Population per CHS
Red River Delta Region 96 2 239 179 618 7701 North East Region 100 2 024 90 367 4 465 North West Region 25 571 92 504 4 050 North Central Coast Region 77 1 798 132 317 5 667 South Central Coast Region 51 800 131 249 8 367 Central Highlands Region 46 592 94 130 7 314 North East South Region 48 524 257 535 23 591 Mekong River Delta Region 79 1 355 209 106 12 191 Vietnam 522 9 903 150 703 7 945
7 Source 22 pg. 30
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Pharmacies
Private and public pharmacies are
very common throughout the country
and are usually very small. A
pharmacy will be found in most cities
and towns in Vietnam. They sell both
local and international products.
Their number amounts to 41,500,
which is considerably small
considering the size of the
population. However, this number is
steadily increasing. There are about
789 private pharmacies registered in
the area of Hanoi. Many are situated
around hospitals and clinics.
Although there are only a small
number of pharmacies in Vietnam,
they sell about 55 to 60 % of the
current market share of
pharmaceutical products. All
pharmacy points are licensed
according to the area they are in.
There are three degrees of
education in pharmacy lasting 1
year, 3 years and 5 years,
respectively. All degrees allow the
holder to own a pharmacy.
Unfortunately, there are no
consistent standards for pharmacies,
and therefore drugs are not always
dispensed with the correct dosage,
information or warnings. Medicines
are often sold with incorrect advice
about dosage or intake. Even though
the practice is illegal, antibiotics and
other prescription medicines often
are sold over the counter. As a
consequence, some such medicines
have no effect.
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3. Development of the after the entry into the WTO Social effects
Previous experience shows that
certain social effects of the country’s
economic changes can be expected.
There will definitely be changes in
the demographic structure of the
country. Large migration towards the
bigger cities will greatly speed up the
growth of those areas. Also, through
migration the countryside will go
through demographic changes as
well. The average age will drop and
traditional family structures will
dissolve. Younger people in
particular tend to move to the bigger
cities to work and take part in the
economic growth. Additionally, the
abolition of subsidies, for example on
gas, will hit the population as well.
As a result of the changes described,
the gap between the rich and poor
will almost certainly increase. The
country’s development will only be
supported by the weak social
system. Education and medical
services will become more
expensive and harder to access for
the poorer population. As a
consequence, the government will
have to initiate social reforms and
programs to tackle these problems.
Another consequence will be further
expansion of the infrastructure of
Vietnam. There are already plans for
the introduction of a subway and a
new airport in Ho Chi Minh City.
Foreign investors may take part in
the process as well.
Economy
Since the Socialist Republic of
Vietnam committed to support the
transformation of the economy from
a centrally planned command
economy to a socialist-based market
economy, more and more industrial
branches have fallen into the hands
of private investors. Supporting
programs and tax advantages have
had to be cut back as well. Although
many parts of the market are still
closed to foreign investors,
regulations will become more
relaxed over time.
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Vietnam’s economy is going to profit
from entry to the WTO and the
resulting liberalization of the market.
International business relations,
investments and industrialization are
going to benefit the economy
immensely. On one hand, it will be
easier for Vietnamese businesses to
have access to foreign markets. On
the other hand, it will be harder for
them to keep up with their
competitors, for there will be fewer
barriers for foreign companies to
enter the Vietnamese market.
Enforcement of the new resolutions
is already proving to be difficult for
Vietnam’s bureaucracy. Rules and
regulations are not yet fully
complete. There are still guidelines
for implementation missing, and the
communication and information
systems to assist international
relationships are inadequate.
Reforms / investors
Especially for foreign investors, the
results of WTO entry will be primarily
of a positive nature. Reforms, made
possible by WTO entry, will be
accelerated and will allow external
businesses a better position in the
market. In 2007, a new investment
law was passed to ensure equal
conditions for national and
international businesses in the
country. Furthermore, the WTO is
introducing more diverse conditions
for membership. Step by step these
regulations will be obeyed. Another
law for the protection of intellectual
property has been introduced as
well. This is especially important
because the greatest risk foreign
businesses often face is major
violations of their patents. However,
most of the new regulations lack
detail and are intangible. In the
future, basic conditions will be
stricter and representatives will have
to be licensed every five years. In
the past, foreign businesses were
only permitted to import goods for
their own products. According to the
law, foreign businesses are now
allowed to open up branches in
Vietnam. They also have the right to
import and trade, which allows them
to offer services for their own
products in the country. Overall, after
WTO entry Vietnam can count on an
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increase in direct investments. In
2005, for instance, there was an
expansion of investments by about
38 %. Inside the EU, Germany is the
most important partner for Vietnam,
and Vietnamese export activity is
increasing steadily.
Entry to the WTO does not only
create an air of respectability that will
attract foreign businesses, there are
also numerous advantages for
Vietnam itself. As a member,
Vietnam has access (free of
discrimination) to very important key
markets, including the USA, Japan
and China. It also has more power to
resist restrictions like the recent anti-
dumping-duty of the EU put on shoe
produced in Vietnam. However, the
country will also have to face much
more competition than it has been
used to. On one hand, this will result
in more effectiveness in national
businesses, but on the other hand it
will be the cause of several
dismissals and structural changes in
large, public sector companies.
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3.1. Basic conditions for foreign investors / market entry barriers
With WTO entry, Vietnam committed
itself to providing access to foreign
investors. Since then, the country
has tried to implement various
different incentives to welcome
foreign investors into the country.
The very complicated taxation
system was reformed and made
easier in 1999. By 2000, investment
law had been improved so as to be
more flexible and allow taxation
advantages. Furthermore, a lot was
done for the protection of foreign
investments. Since 2006, equal
treatment has been ensured for both
national and foreign investments
through the harmonization of
investment and business law.
Further reforms are going to lead to
a more predictable and stable
market in general.
Besides the very favorable
geographic position Vietnam has to
offer, a very good location in the
center of Southeast Asia with
plentiful raw materials, it also boasts
a stable political situation as well as
a constantly improving economic
situation and very low labor costs. All
these circumstances make up very
positive conditions for foreign
investors. Nowadays these ventures
amount to about 40 % of the whole
investment volume of the country.
However, not only has the volume of
investment changed, there has also
been a recognizable shift in the
nature of investments. Most foreign
ventures used to be small and
medium sized businesses, whereas
now many current investors are
large, global companies. In
particular, Asian countries such as
Singapore, Japan, Hong Kong and
South Korea are increasingly
operating in the Vietnamese market.
German ventures at present are still
very rare.
Notwithstanding the above, Vietnam
still faces many obstacles, such as
the existing, rigidly structured
socialistic government. Vietnam is
yet to catch up with other Asian
countries. Initiated reforms have to
be implemented and economic
growth has to stay at a high level.
Vietnam has already signed over 30
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multi and bilateral agreements to
protect foreign investors.
Vietnam and the WTO
Vietnam’s entry into the WTO has
already shaped the country’s
development for the future with
regards to its position in the global
economy. This move will make it
possible for Vietnam to keep up
economically with other Asian
countries. After its application as a
developing country in 1995, Vietnam
started various bilateral negotiations
with members of the WTO. In 2006
the last round of negotiations with
the USA was complete. Due to this,
Vietnam had to begin to liberalize its
economic system, which was
accelerated, and on January 11th
2007 it was accepted as a member
of the WTO.
Vietnam and Asia
The ASEAN Free Trade Area
(AFTA) was formed in 1992 with the
aim of members creating free trade
zones within the association, as well
as with China and Japan. Since
1995 Vietnam has been a member of
the ASEAN and in 1996 it became a
member of AFTA. The alliance
makes Vietnam even more attractive
because it provides access to all
ASEAN countries without major tax
impacts.
Vietnam and the USA
The trading agreement BTA
coordinates nearly all economic
transactions between the USA and
Vietnam. It includes the handling of
traded goods, the trading of services,
intellectual property rights, business
protection legislation, trading
simplifications, and transport
conditions. Both countries are
committed to providing each other
with the most favored nation
treatment and the native equal
treatment.8
Vietnam and the EU
Another vital trading agreement is
the one between the European
Union and Vietnam, called KA. It
deals mainly with the handling of 8 Source: 6 pg. 23
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trading goods. Compared to the
benefits of the BTA though, it is
rather insubstantial, for it lacks direct
agreements in the service sector:
“Therefore there is a need to adapt
to BTA to provide the same
conditions for European and
American businesses.”9
Furthermore, since 2003 there has
been an agreement between those
who deal in textiles and an obligation
on Vietnam to reduce its tariffs on
goods of that nature. As mentioned
previously, Vietnam’s legislation is
beginning to liberalize economic
conditions, so it is now much easier
to import European goods such as
pharmaceuticals.
Vietnam and Germany
A bilateral agreement was signed in
1998 between Vietnam and
Germany for the protection of long
term investments. The agreement
covers political risks and is
additionally supported with a federal
guarantee for direct investments.10
Germany is on the top of Vietnam’s
9 Source: 6 pg. 24 10 Source: 6 pg. 25
exporting list of EU member states.
The German delegate of commerce
has offices in Ho Chi Minh City, as
well as in Hanoi. In addition, the
DIHK/AHK and the German
merchant’s community have set up
an office in Hanoi. A total of 9.9
billion US$ of direct investments
were put into Vietnam in 2006.
CIL and UEL
In order to protect foreign
investments from administrative
disposal the investment and
business laws CIL and UEL were
harmonized in 1992. The regulations
include an interdiction of the
socialization of companies and the
protection of intellectual property.
With these tools, CIL, UEL and the
reform of the constitution, Vietnam is
clearly willing to open up to the
global market and welcomes foreign
investment into the country. The
opening of the stock market in 2000
in Ho Chi Minh City and 2005 in
Hanoi was an important step in this
regard. However, the socialist
government and its heavy and rigid
bureaucracy still form an obstacle to
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foreign companies. The system can
only adapt slowly to the new found
volume of economic investments and
the liberalized trading system.
CIL
The new law of investments has
harmonized all investment forms.
Now there is no more differentiation
between the origins of an investment
project. Companies are allowed to
interact in various different business
sectors. Investments in the country’s
infrastructure are especially
supported by the government. The
CIL lists all the sectors and their
obligations for investments.
Furthermore, there is no minimum or
maximum amount stated for
investments. Even 100 % foreign
holdings are permitted.
Foreign investors may invest in
Vietnam in any of the following
forms:
- Business cooperation on the
basis of a business
cooperation contract;
- Joint Venture Enterprises;
- Enterprises with 100 %
foreign owned capital;
- Different property holdings
can be transferred abroad,
including business benefits,
personal income of personnel
in foreign countries,
investment capital, earnings
out of technology transfer and
service, benefits and interests
of business loans, and other
property holdings
characterized as the
investor’s fortune.
There are three options for initiating
a commercial presence in Vietnam:
- Representative office license
- Branch license
- Foreign investment project
license
Sectors that have belonged to state
owned companies until now are
being reduced and foreign investors
are granted them following
guarantees11:
11 Source 6 pg. 12
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34
1. The capital and assets
invested in Vietnam by foreign
organizations and individuals shall
not be requisitioned or expropriated
through administrative measures.
2. An enterprise with foreign
owned capital shall not be
nationalized.
3. The law related to foreign
investment in Vietnam affirms that in
cases where foreign investors are
affected by a change in the policies
and laws of the country, the
Vietnamese government will have a
reasonable solution to ensure their
legitimate interest. Where ownership
of foreign investors is violated the,
provisions of the law related to
foreign investments in Vietnam will
be applied as a basis for the
protection of their ownership.
4. The maximum duration of a
foreign investor’s investment
activities in Vietnam is 50 years.
However, in some cases it can be
extended, but to no more then 70
years.
A license for foreign investment is
granted by the people’s committee
under the following circumstances
and with the following information
included:
1. Legal status of investor
(Name, Address)
2. Object, costs and location of
the implementation of the investment
project
3. Investment capital, project
implementation plan, land use
demand
4. Financial report of the investor
Benefits to investors that are
available include12:
- Exemption of import tariffs on
equipment, raw material and
components
- Exemption or reduction of
income tax
12 Source 6 pg. 13
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- The possibility to confer
business losses for up to 5 years
Investment incentives are provided
for the following industrial sectors13:
- Development of new energy
sources, production of high tech
products, biotechnology and
information technologies
- Agricultural products, salt
products, and the breeding of plant
species
- Traditional handicrafts
- Projects that will increase
employment
- Investments in research and
development
- Development of infrastructure
and important industrial production
facilities
UEL
13 Source 6 pg. 33
In the past, the UEL used to
constrain the contingent which a
foreign investor was allowed to hold
in a company. The representative
can be the chairman of the board or
the director of the company. He has
to remain in Vietnam.
As corporate forms, CIL and UEL
envisage:
- Limited Liability Companies
- Shareholding Companies
- Partnerships
- Private Enterprises
- Branch Offices
- Representative Offices
Requirements of the company
management according to UEL are:
- Legal capacity
- They have to hold 10 % of the
corporate share or have special
knowledge or experience
There are three different business
development zones: industrial zones
(IZ), export converting zones (EPZ),
high-tech zones (HTZ), and
economic zones (WZ).
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Taxation
Over the last couple of years the
taxation system has had to adapt to
the economic changes. Several new
and modified tax laws have been
introduced, as well as the Corporate
Income Tax Law, the Value Added
Tax Law, and the Special Sales Tax
Law.
The main categories of tax imposed
in Vietnam are as follows:
• Corporate Income Tax
• Value Added Tax
• Personal Income Tax
• Foreign Contractor Tax
• Special Sales Tax
• Import and Export Duties14
The following tax benefits were
established:
- Companies in high-tech zones
only pay 10 % on the turnover tax
based on their earnings.
Furthermore, they are exempt from
turnover tax for their first four years 14 Source 7 pg. 9
in business, beginning with their first
earnings.
- Producing businesses in
export converting zones only pay 10
% on the turnover tax based on their
earnings. Furthermore, they are
exempt from turnover tax for their
first four years in business,
beginning with their first earnings.
Service companies in these zones
pay 15 % on turnover tax and get
exemption from it for their first two
years in business.
- Companies in industrial zones
are taxed after an export share is set
in their investment license. The rate
of taxation varies between 10 % and
15 %. A two year exemption is
granted as well. Additionally, a
further two year reduction of 50 % on
the turnover taxation is permitted.
Rules of competition
Since July 2005 new competition law
has been effective. Besides dealing
with anticompetitive practices and
unfair competition, sanctions can be
introduced for violations of the law.
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This law also assists greatly with the
liberalization attempts of Vietnam.
Anticompetitive agreements are
defined as follows15:
- Direct or indirect agreements
on prices
- Agreements on the splitting of
markets or suppliers
- Agreements on the restriction
of production, purchasing or
sales amounts
- Agreements on restrictions of
technological development
investments
- Agreements at the conclusion
of a contract which force off
topic allegiances or conditions
- Agreements which prevent
the market entry of others
- Agreements which exclude
from the market those that are
not part of the agreement
- Secret agreements related to
auction procedures
The first three agreements are only
restricted if all the parties together
hold a minimum of 30 % of market 15 Source 6 pg. 72
shares. Exceptions are made if, for
example, there will be a cost
reduction for consumers.
The following behavior is restricted
for companies with market
dominating or monopolistic
positions16:
- The sale of goods or services
at prices under the total cost,
with the aim to exclude other
competitors from the market
- To force unreasonable
purchase or sale prices on
goods or services, as well as
the setting of minimum sale
prices which inflict damage on
the consumer
- The use of different business
conditions for identical
transactions to build up
unequal conditions
- To force off topic obligations
or conditions at the conclusion
of contracts
- Refusing the market entry of
new competitors
16 Source 6 pg. 72
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Sanctions for violation of the law
include admonishment,
administrative fines up to 10 % of
yearly earnings, and the possibility of
canceling a company’s license.
The following counteractions can
also be carried out17:
- Restructuring of the company
which misapplied their
position
- Splitting of a merged or
consolidated company, or
forcing the reversal of the
transaction
- Public disclaimer
- Exclusion from an
anticompetitive agreement, or
the concerning contract or
transaction
- Other necessary action to
correct the anticompetitive
action
The biggest market entry barriers in
Vietnam are the same as in all
ASEAN countries, namely the risk of
competition from generic products
and price battles. Also, the very 17 Source 6 pg. 74
unclear and complex bureaucracy
and favoritism that occurs in the
country could become major
obstacles for a new company. Mr.
Thomas Steffen from Bayer Schering
Pharma Representative Office
HCMC identifies another obstruction
as being crossing competences of
the MOH and the MPI that leads to,
for example, the exposure of transfer
prices to the MOH, which is not
common at all.
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3.2 Basic conditions for research and development Intellectual property rights
Many foreign investors are afraid of
investing in Asian countries. Their
main concern is corruption and the
lack of adequate intellectual property
(IP) protection. Many cases of
industrial espionage in the past have
taught investors to be very careful in
countries where there is no proper
protection. Intellectual property rights
have become more and more
important during Vietnam’s process
of liberalization and its opening up to
the global economy. Vietnam has
done a lot to improve and strengthen
its laws to protect foreign
investments. The government is still
taking action to ensure the safety of
the intellectual property of
enterprises. The main issues are
patents, science and technology,
trademarks, industrial design, and
copyrights. Besides modernization of
the law, competent institutions and
administrations are being built up
and improved.
The private sector has been able to
enrich and strengthen the
relationships between the economy
and the government. The
government has also begun to work
with civil services groups to cope
with evolving social and public
problems. Additionally, much effort
has been made to integrate science
and technology in long term
investments to ensure future
development, which consequently
requires good IP protection.
Consequently, penalties for IP
violations are going to be made
tougher during the country’s process
of economic growth and the rise of
foreign investments.
In the process of implementing such
laws, one of the major issues is the
educating of universities and
research and development
institutions about IP laws and
regulations. A crucial understanding
has to be internalized by the public
to create an awareness of
intellectual property, and the
acquaintance with IP regulations still
has to be improved and developed.
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Educational conditions and workforce
Opening up an enterprise or branch
requires a good local workforce.
Vietnam has more than 150 public
and private universities and colleges.
The biggest are in the large cities
like Hanoi and Ho Chi Minh City. A
number of universities teach
pharmacy, public health, chemistry
and biochemistry. Even more
academies have excellent study
programs in economics and
business administration.
Education in Vietnam generally has
a very high ranking. Approximately
700,000 students are reported to be
enrolled in universities and colleges
throughout Vietnam. The second
language used in secondary schools
is English. Third languages are
Chinese, Mandarin, French and
Russian. German is also becoming a
common third language. Degrees
awarded are at the level of either
Bachelor, Master or Doctor.
The quality of education has recently
improved very much. International
standards have been put into
practice after the opening of the
economy. Foreign professors and
academics are being brought into the
country and much cooperation is
made with foreign universities to
upgrade the educational structure
and its potential.
Overall, it might be too early to
outsource research and
development activities, for there are
not yet enough highly qualified
people in Vietnam. However, there is
a well qualified workforce for
business administration and
management in the country. A good
labor force is also available for
manufacturing and production.
Before its opening up to other
markets, Vietnam’s research was
only predestined for public research
facilities. As the country found the
arrangement very inefficient, the
government began to connect
research facilities to establishments
of higher education and economy.
During the period of liberalization in
Vietnam, the traditional division
between science and education
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41
began to close. Still, the majority of
research is carried out by these
research facilities.
Another goal is to support and
initialize international cooperation
with regards to scientific and
technological research.
Furthermore, a better networking of
research and education is another
very important aim.
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3.3 Legislation and basic conditions for license applicants Opening up a representative office
usually takes not more than 50 days.
Applications are handed in to the
provincial municipal authority. Fees
for registration are mostly very low
and bureaucracy not to
cumbersome. Pharmacy licenses, on
the other hand, often take longer
than 6 months.
Registration of drugs and
pharmaceutical products can only
requested by local manufacturers
and domestic importing companies,
and must be requested separately
for every product. The fees are
rather low at only US$ 2000 per
product. For registration two
certificates must be approved, the
Free Sale Certificate (FSC) and the
Good Manufacturing Practices
(GMP). The GMP can be replaced
by the Certificate of Pharmaceutical
Product (CPP). Additionally, the
product must be approved by the
Institute of Quality Control and
undergo sample testing by five
different Drug Approval Committees.
Applications have to be made in
English or French in addition to
Vietnamese.
Within the Ministry of Health there is
a special department that manages
drug, pharmaceutical, and cosmetic
licenses. The Pharmaceutical
Management Department, or Drug
Administration of Vietnam (in
cooperation with the Ministry of
Commerce) is authorized to grant or
cancel licenses, and is also in
charge of national drug policies.
The licensing of drugs, compared to
other Asian standards, is still rather
easy and fast. Registration is
required for 12 months for both
foreign and domestic products. After
2012 the duration will expand and
fees will adapt to typical Asian levels,
meaning they will rise. However, one
has to be careful during the
registration process. The legal
paperwork should be approved
within the first 3 months. The very
complex and conservative
bureaucracy must be taken into
consideration. If a minor mistake
appears at the end of the process,
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for example a wrong translation, then
the whole registration process must
start again at the beginning. The
maximum validity of a product is 5
years. In order to re-register the
application has to be made 6 months
before expiration. The validity of a
product license depends on its
demand, meaning a 5 year license is
generally given to a product that is
not locally produced but has a high
demand. A 3 year license will be
granted to foreign products with a
high demand and which can not be
produced locally in adequate
amounts. Year long licenses are
commonly granted to OTC products
that are produced under a
Vietnamese joint venture.
Altogether, the licensing of a new
medicinal product demands 4 steps:
• Legal report
• Toxicology study report
• Experimental pharmacology
study report
• Clinical pharmacology study
report
The licensing of a new western drug
also demands 4 steps:
• Legal report
• Experimental pharmacology
study report
• Pharmaco-kinetics and bio-
availability study report
• Clinical pharmacology study
report
Numerous foreign companies
complain that there is no adequate
infrastructure for these procedures.
Hospitals and other medical facilities
can not meet the requirements of
upcoming licensing procedures.
Through their license, many state
owned companies import
unregistered generic products to sell
outside their usual range. To take
action against this practice is very
difficult. Today about 10,000
products are registered on the
Vietnamese market. About 6000 of
them are domestically produced and
4000 are manufactured abroad.
The most important licensing body
for foreign investors wanting to start
a project in Vietnam is the Ministry of
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Planning and Investment (MPI). The
MPI is in charge of the allocation of
investment licenses for significant
foreign investments. Of course,
certain types of investments require
additional approval from other
government bodies. The agency
decides as to the applicability of
investments and passes them on to
the relevant governmental agencies.
The granting of incentives and
preferences is decided in
cooperation with the MPI and the
particular government agencies
responsible. By 2012, foreign
companies will be able to open up
100 % private businesses. Their re-
registrations will be conducted by the
MPI in corporation with local
authorities.
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4. Alternative medicine and the significance of naturopathic treatments Vietnam has a long history of
traditional medicine. Alternative
medicines are divided into three
types: The Northern Medicine
(Thuoc Bac), the Southern Medicine
(Thuoc Nam) and the Western
Medicine (Thuoc Tay).
Vietnamese physicians rely upon a
four step diagnostic: visual
inspection, auditory perception,
questioning the patient, and taking
the pulse. Vietnamese patients react
rather suspiciously to questions
about their medical history or
symptoms. It is presumed that a
physician should be able to identify
the sickness by its outer signs.
Northern Medicine is deeply
influenced by traditional Chinese
medicine. Only Chinese speaking
people practice this form of
treatment. The philosophy is based
upon the Yin-Yang force and the
eight trigrams. Both those elements
represent the entire universe,
material and moral. Ying is the
female, passive element, while Yang
stands for the male, active element.
The human body is seen as a micro
cosmos, which is shaped by the
universe, and therefore has to adapt
its inner functions to external forces
and nature. The basic idea is the
harmony of the human being with
nature. Founded on this principle,
treatments are based on the
harmonization of internal and
external forces, and through
balancing physical and moral energy
diseases and infections are
overcome. Many of the northern
practices have been found to be very
useful and are used in everyday life.
The second traditional medicine is
called the Thuoc Nam or the
Southern Medicine. Treatments rely
on cure through tropical plants and
domestic animals. The cultivation of
medicinal plants and the
manufacture of drugs derived from
domestic plants have reportedly
helped to overcome a shortage of
western medicines. Some of these
traditional drugs have been found to
be most effective in curing
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46
dysentery, arthritis, gastritis,
stomach ulcers, heart diseases,
influenza, blood clotting, and high
blood pressure. Due to its minimal
expense, time and effort it is often
referred to as the poor people’s
medicine. The knowledge of this type
of medicine is passed from
generation to generation.
The third alternative is the Western
Medicine, called Thuoc Tay. Healing
is based on the handling of
hazardous ghosts. The treatment
tries to prevent evil ghosts from
entering the body, or withdrawing
them from the sick body. This
Western Medicine is the most
superstitious of all. Charms are
supposed to protect pregnant
woman, ugly names for new born
babies and magical phrases are
supposed to shield people from evil
spirits, and sacrifices of food and
alcohol are made to becalm demons.
While the Northern and Southern
Medicines are mainly of natural and
earthly nature, the Western Medicine
has a rather spiritual and religious
character.
Today this traditional medicine is a
vital part of modern treatments and
strongly integrated into the common
health care system. Traditional
Vietnamese medicine has given rise
to new therapeutic methods that
have called for the wider application
of herbal medicine and acupuncture.
The idea of the disruption of the
inner harmony of all natural systems
is seen as the reason for all
sicknesses. Consequently,
Vietnamese people will not stop
trusting alternative medicine
altogether. Vietnamese physicians
implement traditional cures in the
modern health care system with
public supervision over the efficiency
of such treatments together with
drugs. Since the development and
improvement of modern diagnostics,
traditional treatments have become
even more common. Illnesses that
are not acutely life threatening can
be treated well by naturopathic
medicine. Traditional medicine is
applied in regular hospitals, special
traditional hospitals and medical
stations, and is even covered by the
insurance system. Physicians are
generally also licensed in the
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47
practice of these alternative
treatments.
Traditional medicine has a big
market share. Almost 17 % of
pharmaceutical and health care
turnover originates from traditional
medicine. There are 450 private
companies practicing traditional
medicine and around 250
manufacturers of alternative
medicine, who have even started to
export their products successfully.
It is crucial for foreign investors in
the pharmacy market to consider the
value and impact of alternative
medicine so as to develop an
understanding of the mindset of the
people, and therefore knowledge
about suitable distribution strategies.
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5. Marketing structure and distribution channels
Vietnam’s distribution structure is
characterized by governmental
restrictions and bureaucracy. Only
domestically operating businesses
are allowed to distribute their
products on their own. All imported
medicine has to be transferred to a
local state owned company or an
approved import company. The
import company on the other hand,
is only allowed to buy foreign
products from state owned
companies. After that they can either
sell the imported products to
pharmacies or they have a very
slight chance of selling to hospitals
directly (although the possibility of
this is rather small). Hospitals in
Vietnam have a certain budget,
about 50 % of which is provided by
the government. Since 2006, there
have been regulations stating that
only 15 % of that budget can be
spent freely and not on buying from
state owned pharmaceutical
manufacturers. Due to complex
distributing channels, prices do not
vary between wholesalers.
Therefore, hospitals often prefer
state companies when it comes to
making decisions about distributors.
State owned enterprises have a
monopoly on hospital supplies. Only
a few intermediaries have a chance
to interfere and participate in the
market. Due to the financing system,
state owned companies mostly sell
OTCs instead of prescription drugs.
These are sold mainly by private
importing companies.
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Advertisements for pharmaceuticals
are regulated by the government. A
TV spot for OTCs requires a special
permit and prescription drugs can
only be promoted in specific
publications addressing medical staff
and pharmacists. Other permitted
ways of advertising are seminars
and training, oversea trips for
doctors to attend foreign
conferences, educational material,
and samples.
Foreign wholesalers are not allowed
to market their products. Still, they
are allowed to ‘promote’ their goods
to hospitals and medical staff. It is
common to have agents advertising
products in hospitals.
Today there are about 800
companies responsible for
wholesaling drugs. These
businesses are usually very small
and operate only in very limited
areas. To employ these companies
3
1
324
3
2
1 1
Foreign Companies
Local Companies
State Owned Pharmaceutical
Companies
Importing Companies
Hospitals Pharmacies
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50
is still rather expensive. The average
cost ranges from about 4 to 14 % of
general turnover.
Newly licensed drugs are registered
with the maximum market price. In
reality, products are mostly sold at
much lower levels. Since two-thirds
of the products sold are OTC
products, out-of-pocket payments
are the most common. They amount
to nearly US$ 23 per capita each
year.
The ongoing economic boom in
Vietnam and the liberalization of the
market after WTO entry can provide
new sales potential to western
enterprises. The country can also
offer attractive opportunities for
distribution, as well as profitable
manufacturing. Still, there are not
many competitors in the market
except local industry. The growth
expectations for Vietnam’s
pharmaceutical enterprises are very
good. The domestic companies are
more than willing to expand and
cooperate with global competitors.
As mentioned previously, the
government will allow 100 % foreign
private owned companies by the
year 2009. All of the named
regulations will be obsolete.
Pharmacy manufacturers and
wholesalers from abroad will be able
to sell their products freely to
hospitals, pharmacies and grocery
stores without the need of a
middleman. Therefore, any company
wanting to enter the market should
arrange a representative office so
that they become accustomed to
legislation, licensing processes and
the market itself.
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Another crucial development is the
increasing number of outsourcing
projects. About 70 % of the
multinational companies in Asia have
already started to outsource a part of
their value chain, and the tendency
is rising. Usually this covers
production or research.
On the other hand, western
enterprises have started to
concentrate more on the distribution
and marketing of their products,
while research and development are
being outsourced. This strategy, of
course, requires long lasting and
trustful relationships and
cooperation.
1
1Foreign Companies
Local Companies
State Owned Pharmaceutical
Companies
Importing Companies
Hospitals Pharmacies
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Profile of an importing company of pharmaceutical products: DEKA CO. Ltd.
One very large and successful
import company for pharmaceuticals
is DEKA CO. Ltd. Established in
2001, DEKA has a young team of
university graduates in pharmacy, as
well as economics. Since its
foundation, sales have increased
steadily, reaching US$ 3.5 million in
2006. Their product range contains
pharmaceutical products as well as
diagnostic products. They are the
exclusive distributor for Fresenius,
the worldwide leader in infusion
products such as anesthetic agents
and parental nutrition. Furthermore,
DEKA is also the selected distributor
of BioMerieux, a worldwide producer
of diagnostic reagents and
equipment.
Their distribution system is planed
individually for each product group
and tries to combine modern sales
knowledge with the flexibility of the
Vietnamese market. Their network
system is set up throughout the
whole country to provide direct
access to their products, which
shows in their continuing good
turnover.
1000
17002200
30003500
0500
100015002000250030003500
2002 2003 2004 2005 2006
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DEKA operates from two
headquarters: one in Hanoi which
employs 22 people and the other in Ho
Chi Minh City with a total of 25 staff.
The northern provinces are covered by
12 salesmen. In the south, DEKA
employs 15 sub-distributors in the
major provinces.
List of Importers & Manufacturers
Hanoi Address: No.8 Lot 1A Trung Yen
Cau Giay Hanoi; Tel.: 84 4 78 30 363 Fax: 84 4 78 30 364 Email: deka@hn.vnn.vn
Ho Chi Minh City Address: 110 Ba Hat – Ward 9
Dist. 10 HCMC Tel.: 84 8 83 49 730 Fax: 84 8 92 71 604 Email: dekahcm@hcm.nn.vn
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6. Business competition; Previous and present competitors; Future competitors
Foreign companies currently active
in the market number about 300,
most of which are representative
offices. India and South Korea in
particular have large market shares
in Vietnam and they are increasing in
influence. Considering the latest
developments and future predictions
based on WTO regulations, the
number of future competitors will
increase by about 5 to 10 % a year.
Only the present lack of a proper
chemical industry might slow down
the expected development.
Locally manufactured products are
still supported by the government
and can therefore be sold at very low
competitive prices. That advantage
is, however, diminished by the fact
that raw materials have to be
imported. Consequently, the
resulting exposure to global market
prices and currencies is balancing
the competition in prices.
Corporations with domestic
companies are supportive and a
distinct advantage, and local
enterprises at present are very eager
to cooperate.
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55
List of registered pharmacy services: http://www.hotfrog.vn/Products/Pharmacy List of German competitors in the country: German companies manufacturing pharmaceuticals:
• B. Braun Vietnam Representative office
• Hexal AG Representative
Office Hanoi
• German companies wholesaling pharmaceuticals:
• Detlef von Appen GmbH &
Co. Representative Office
• Helm AG Representative Office
• VI PHAT Ltd. Betw. 201 and
300 employees
• Rudolf Lietz Inc. Representative Office
• Bayer
List of international competitors in the country:
• Pfizer
Website: http://www.pfizer.com/home/
Address:Saigon Trade Center 37 Ton Duc Thang Street, District 1 Ho Chi Minh City Phone: +84 8 910 5120 Fax: +84 8 910 5118
• GlaxoSmithKline
Representative offices Address:Ho Chi Minh City Rep. office: The Metropolitan - Unit 701 235 Dong Khoi Str. District1. Ho Chi Minh City, Vietnam Phone: 84-8-824 8744 Fax: 84-8-824 8742 Hanoi Rep. Office: Hanoi Tower Center-Unit 405 49 Hai Ba Trung Street. Hoan Kiem District Hanoi, Vietnam Phone: 84-4-936 2607 Fax: 84-4-936 2608
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• Sanofi-Aventis
Website: http://www.sanofi-aventis.com.vn
Address:10 Ham Nghi, D1 Ho Chi Minh City, Vietnam Tel.: +84 8 82 98 526 Fax: +84 8 91 44 801
• Novartis
Address: Lot 32 Bien Hoa City Dong Nai Tel.: 61 836718 Fax: 61 836724
List of the biggest state owned Competitors:
• Vietnam Pharmaceutical Corporation (Vinapharm or. VIMEDIMEX)
Vinapharm is Vietnam's largest state-owned company, which owns all of the state-owned pharmaceutical-producing units
Website: www.vimedimex2-hcm.com , www.vietpharm.com.vn
Address:246 Cống Quỳnh P. Phạm Ngũ Lão, Q.1 Ho Chi Minh City
Tel.: 08- 8398441; 8396012; 8398449 Fax: 08- 8325953 Email: vimedimexII@hcm.fpt.vn , info@vietpharm.com.vn 260 Nghi Tàm Tây Hồ
Hà Nội Tel.: (84-4) 8 293 907 Fax: (84-4) 8 293 912 Email: vietpharm@hn.vnn.vn
• Vietnam OPV Pharmaceutical
Co
Website: http://www.vnemart.com/opvpharmaceutial
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57
Address: Suite 803 Saigon Tower 29 Le Duan St, Dist.1 HoChiMinh,
Tel.: [84] (8) 8238999 Fax: [84] (8) 8275689
Annual Revenues: USD 5,000,000 Number of Employees: under 300 Vietnam Company Certifications: Asean GMP, GSP, GLP
7. WTO guidelines
Before WTO entry, Vietnam had set
up trade relations with 165 countries
and signed bilateral trade
agreements with 72 countries. After
the 1st of January 2007, the primary
task of the country was to transform
the centrally planned economy into a
free market economy in order to
meet the requirements of the global
economy. This will bring out many
challenges and opportunities in
economic development and lead to a
profound modernization within
Vietnam.
Of particular interest to foreign
industry are the evolving changes in
commercial law. Vietnam’s WTO
accession has meant the country is
now integrated into an international
rule based commercial system,
leading to more transparency and
openness which hopefully will result
in better economic governance and
therefore encourage foreign
investments.
Furthermore, Vietnam is obliged to
implement ceilings on duties ranging
between 0 and 35% for most non-
agricultural goods within the period
leading up to 2014. Vietnam has also
applied the Trade-Related Aspects
of Intellectual Property Rights
(TRIPS) Agreement immediately
without any transition period. Price
controls have to be notified to the
WTO and the Technical Barriers to
Trader and Sanitary and
Phytosanitary Measures agreements
have also been implemented without
any transition period. Moreover, a
new law has harmonized the
country’s import and export
regimentations to simplify trading
procedures.
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58
Enforcement and acquaintance of recent laws / Trading and distribution in Vietnam
In order to display and implement its
adaptation to WTO regimentations,
Vietnam has passed guidelines
crucial for foreign investments. As
Oliver Massmann explains in an
article about the Implementation
Directive No. 09/2007, the new
directive of July 2007 is supposed to
implement the trading and
distribution rights of foreign
companies, and was decided on in a
decree of the 12th of November
2006. Decree 23 applies to
companies with foreign capital that
are executing export, import and
distribution activities according to
national commercial law. This results
in a broadly termed decree.
The background to this wide ranging
regimentation is the existence of two
parallel concepts for trading and
distribution in Vietnam which
underlie different terms. Trade has
the right to import and export goods,
while distribution is only allowed to
sell goods within Vietnam.
Decree 23 does not provide an
independent schedule for the course
of rights granted to foreign investors
concerning trading and distribution,
but refers to the international
contracts made by Vietnam.
Therefore, the possibility of foreign
investors taking action in those fields
depends on the position of Vietnam
in the particular agreement.
According to Decree 23, a license for
commercial transactions can be
applied for. Despite numerous
agreements, the decree is still very
restrictive and all concessions are
fully within the control of the
responsible authorities.
The obligations met by Vietnam for
WTO access are vital for all foreign
investments. Accordingly, all
member states of the WTO enjoy full
trading rights, including the right to
import goods and to pass them to
licensed distributors. This, on the
other hand, excludes the possibility
of selling directly to other
organizations or to individuals as
end-consumers. The following
schedule is compiled for the granting
of trading rights:
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59
• WTO access: Joint Venture
Companies with Vietnamese
partners and foreign capital
share of not more than 49 %
• January 2008: Annulment of
limitation on foreign capital
share
• January 2009: 100 % foreign
owned companies
Outside these regimentations there
will be no trading licenses granted by
Decree 23.
Decree 23 now allows foreign
enterprises to import and distribute
goods in the country within the
boundaries of governmental
obligations. These obligations
include trading permission for
commercial interactions, as well as
the duty of the importer to inform the
authorities about all national
business partners. Moreover, the
guidelines contain further obligations
for companies intending to open up
retail outlets.
The points that are taken into
consideration are as follows:
• The number of service
providers in a certain area
• The market stabilty
• The size of the particular area
Within the guidelines there are
three more obligations
positioned:
• An appropriate number of
present retail outlets
• Population density
• Compliance with the
investment plans of the
particular city or province
The decree regulates the procedure
of applications for trading and
distribution rights. An application for
a license containing distribution
rights also needs the approval of the
Ministry of Trade, which in most
cases leads to a double licensing
procedure. Responsible authorities
have the right to demand information
about reports, data and justification
from the licensed company at any
time. Further authorization of
commercial operations according to
the WTO schedule is supposed to be
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60
carried out on behalf of Economic
Needs Tests. It is a case of ‘wait and
see’ whether that appliance should
come into action in practice. In
conclusion, Decree 23 does
implement the WTO obligations, but
does not go beyond. It will not be
before 2009 when 100 % distribution
rights for foreign investors are
allowed, and licensing procedures
turn out to be rather complicated due
to a large number of contact points
and long standby times.18
Overall, legislation and enforcement
are very state-company friendly.
Nevertheless, competition law and
intellectual property law are
becoming more widely practiced in
day to day business. Vietnamese
people are embracing these new
laws and have come to use them
more frequently in commercial
procedures. Of course, this recent
use is still in a test phase and
judgments in most cases are mainly
meant to make an example. Most
penalties are not that great, but are
meant to set a standard for the
18 Oliver Massmann, Partner, DUANE MORRIS Hanoi
future, which will spare much
aggravation. Furthermore,
punishments, other than in some
Asian countries, are regarded as a
severe loss of face for the convict.
Main punishments consist of
monetary fines and temporary
business closures. However, these
fines are not very high and business
closures are not long term, since
judgments is still being fathomed and
evaluated. Competition and
intellectual property laws are
experiencing major alterations and
are becoming more and more
adequate as requirements rise. The
new protection and regimentation
systems in Vietnam are working in
the main because all actors involved
are interested in their proper
operation. Trade Mark Agents exist,
as well as institutions for
administrative enforcement.
Compared to China, for example,
Vietnam’s judiciary is capable of
administering IP rights and
consequently the resultant
implementation.
A majority holding for foreign
investors has been possible since
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61
January 1st 2008. This allows full
rights on active imports and
distribution within the country, if
appropriate licenses are granted.
The approval of commercial licenses
only takes about three months, so if
applications are handed in, the new
found company with a majority
holding can start operating and enjoy
full trading and distributing rights.
Short and midterm developments
One of the most noticeable effects of
the WTO commitments is tariff cuts
on foreign goods. Lower tariffs have
led to more imports of larger
quantities of foreign goods, thereby
lowering prices of certain products
for consumers. In general, the
market is becoming wider and more
diverse, and competition between
local and foreign goods is increasing.
Another major change is the
constraint of price regulations within
the WTO integration rules. Overall,
the obstacles caused by
administrative procedures will
decrease. Another issue is the future
requirement for transparency of state
policies and administration, which
will create a more competitive
market and help reduce inflation.
These are only examples of intended
market oriented reforms meant to
help Vietnam open up to the global
economy and adjust to its
requirements. Other crucial aspects
will be improvement of the
investment climate and the
implementation of new investment
laws. The average increase in GDP
of 8 % is expected to remain
constant until 2010. This will
strengthen the banking sector as
well as the structure of state
enterprises. Further expectations of
economic development include the
improvement of infrastructure and
human resources, the reduction of
administrative fees, a more efficient
public service system, and
macroeconomic stability.
Impact on the pharmacy market
One possible outcome might be a
shift in the accessibility of foreign
pharmaceutical products, as patent
rights will become stricter and
distribution channels will change. In
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62
January 2009, foreign businesses
will be allowed to carry out direct
importing and exporting, and will be
able to distribute directly to the
Vietnamese market.
Another positive development will be
a reduction in the tax rate to 2.5 %
on pharmaceutical products,
scheduled for 5 years after WTO
entry. The tax rate on cosmetic
products is expected to decrease
from 44 % to 17.9 % by the time
Vietnam has fully enforced all
commitments made for its entry to
the WTO.
The Swedish International
Development Agency measured the
Vietnamese pharmaceutical industry
at 2.5-3 on the World Health
Organization 4-grade scale. Already
86 % of the domestically produced
pharmaceutical products meet Good
Manufacturing Practice guidelines.
Vietnam’s pharmaceutical industry is
on the way to meeting international
standards and the country has
started to provide favorable
conditions for foreign industry.
The government even supports and
evokes domestic businesses to
cooperate with international
companies to establish
pharmaceutical groups and to keep
up with international standards and
market information.
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63
8. Opportunities and forecasts for future legislation, competition, sales potentials, product development and growth prospects
Future legislation and conditions
Future legislation is going to adapt to
international standards and
regulations, as well meet WTO
requirements and the requirements
of bilateral trading agreements. One
example is the implementation of
GMP criteria due to ASEAN
standards. By 2003, 41
pharmaceutical enterprises in
Vietnam had joined the standard,
and the government of Vietnam
promised to invest US$ 1.5 billion in
the pharmaceutical manufacturing
sector over the next 10 years.
It might take about 5 more years to
fully establish ASEAN and WTO
requirements in Vietnamese law.
Although the Vietnamese
government and society in general
have experienced a profound shift in
principles, actual implementation
might take longer than expected.
Liberalizing international trade and
foreign investment has been
welcomed by the communist party, in
spite of its former ideology. A
paradigm shift has led to an
endorsement of free market
capitalism and is noticeable in the
economic strategy of the country.
Although domestic firms are still
favored by the government and
problems like corruption and
favoritism are still critical, this will
most certainly change in the future.
Dramatic economic growth and the
overwhelming speed of globalization
in Vietnam have, along with creating
many opportunities, also created
very serious problems. The disparity
between the rich and the poor is
already very alarming and will no
doubt increase at fast rate. While
economic prospects look good,
social issues and intellectual
curiosity might suffer due to the fast
developments and influence of
global players.
Another concern is the transfer of
large state owned companies to the
private sector. The government still
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64
struggles with the idea of such
companies being domestic capitalist
enterprises, although many
arguments favor the idea. The
resulting impact of market forces will
inescapably increase competition
and therefore generate more
economic efficiency and increase
consumer choice. Large private
companies are now able to compete
for finance in the private capital
market, both at home and abroad;
but most of all, privatization will
reduce the duty of the government to
financially support nationalized
industry.
Competition development
In 1995 the local pharmacy sector
produced only 80 substances. By
2002 it had reached 384. Today, in
additional to local companies, there
are 8 joint ventures and 16 wholly
foreign owned investments with a
total capital of US$ 172 million. The
market share of state owned
companies in 2003 was 40 % of the
whole turnover. After 2009
competition will be much stronger.
State owned companies will no
longer have a monopoly in the
market. Due to the resulting
competition, prices will be lower.
Growth prospects
Growth prospects in the health
sector are very optimistic. Today the
pharmacy market is increasing by
approximately 15 % per year. The
consumption of pharmaceutical
products rose from US$ 0.3 in 1990
to US$ 7.6 in 2003. In the year 2000
the production value of the sector
was US$ 418 million, which amounts
for 10 % of the Vietnamese market
share. In 2002, 64 % of all medicine
consumed was imported. The
turnover in 2003 amounted to US$
606.7 million; the domestic turnover
of which was only US$ 241.88
million. By 2006 the market share
was US$ 11.23 per capita. The main
reason for the increase was cheap
OTC products. According to IMS
Health pharmaceutical market
intelligence, the market growth in
2006 was 22 %, and made a
turnover of US$ 773 million. Though
the market grew, imports increased
up to 69 % (approximately US$ 533
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65
million). Domestically produced
products only made up US$ 240
million. Besides the big share of
OTC products, cheap generic
products make up a large quantity of
the market as well.19 With regards to
the fast developments of society,
civil illnesses in particular will
increase, demanding special
attention.
19 Source 29 pg. 54
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66
Market growth in the health sector Indicators 2005 2006 Change (%)
Total consumption of drugs 817.4 956.4 17-of which domestically produced 395.2 475.4 20.3Imports, including raw material 650.2 710.0 9.2Exports 17.7 19.7 12.0Consumption per capita 9.85 11.23 14.0Market players in trade and distribution
No. of importers 79 89 12.7
No. of distributors 680 800 17.7No. of retailers 37,500 41,500 10.7Market players in production
No. of manufacturers 174 178 2.3
No. of foreign comp. in market 270 320 18.5
Source: Ministry of Health Product development:
Leading product classes: their market share and growth rete in 2006
22 21
9 9 8
1521
15
23 21
05
10152025
syst
emic
antie
ffect
ives
alim
enta
ry a
ndm
etab
olis
m
cent
ral
nerv
ous
syst
em
card
iova
scul
arsy
stem
resp
irato
rysy
stem
market share (%)growth rate (%)
20
20 Source IMS report
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67
The fastest growth rate in products is
75 % for the antineoplast and
immunomodule products. Next,
blood and blood forming organ
products with a growth of 45 %;
followed by hospital solutions
growing at a rate of 40 %.
Future shift in sales figures
Nowadays, sales figures in hospitals
mainly depend on the financing
system which is still implemented.
Hospital budgets consist of 50 %
government support, 30 % insurance
payments and 20 % free patient’s
payments. Also, the segmentation
and prescription of pharmaceutical
products (brands, generics, OTC)
depends on the budget and type of
hospital.
Most brands are prescribed to
government patients or wealthy free
patients. Hospitals that treat such
patients mostly prescribe brand
products.
Most OTC products are prescribed to
insurance patients and poorer free
patients. Many rural medical centers
and hospitals which treat the poorer
population sell OTCs and generics.
Generics are mostly sold to
insurance patients and free patients.
Pharmacies mostly sell OTC and a
few generic and brand products.
In the future hospital budgets will
longer rely mostly on the
government. Only 10 % of financial
resources will be provided by the
government. About 40 % of the
income will be generated from
insurance patients and 50 % will be
taken via free patient payments.
Therefore, the segmentation of
brands, OTCs and generics will
change fundamentally.
A bigger demand for brand products
will arise because hospitals will be
able to prescribe them to free
patients and insurance patients as
well. More generics will be
prescribed to government patients as
well as free patients.
OTCs will still sell the most,
especially through public
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68
pharmacies. OTC prescriptions will
also be made to poor free patients.
Price of workforce: Hanoi US$ Ho Chi Minh
City US$ Worker’s salary including bonuses and allowances
80-140 90-170
Engineer’s salary including bonuses and allowances
210-400 250-500
Manager’s salary including bonuses and allowances
400-600 450-650
Office rent/m2/month 15-20 15-25 Apartment rent/for 100m2/month 1850 1800 Power charge/ Kw 0.08-0.10 0.8-0.10 40-foot container transport cost to European port
2,700 2,200
Petrol price / liter 0.5 0.5
Highest personal income tax 40% 40% Source: GSO Vietnam Prospects
The health and pharmaceutical
sector holds a lot of opportunities for
foreign investors in the future. The
demand for high quality drugs can
not be fulfilled by domestic industries
at present, and in the next few years
the demand will increase even more.
While high levels of restrictions and
bureaucracy are still a problem for
foreign investors, which allows local
companies to benefit, entry to the
WTO will result in a complete
change of circumstances. Also, the
toughest competitors will be
weakened greatly by the
opportunities given to foreign
companies by WTO regulations with
regards to the free market. As IP
rights and competition laws are
being tested and implemented
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69
adequately, GDP increases
constantly, the market grows and the
government continues to reduce
commercial barriers for foreign
industry.
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9. Recommendations for market entry strategy SWOT Analysis
Strengths:
By cooperating with local businesses,
foreign enterprises, with their
experiences and capital, have a very
high chance of saturating a new
opening market. However, to ensure
success, the expertise of businesses
should be utilized.
A profound understanding of the local
business environment will certainly be
vital for all strategies. Without such
knowledge, an undertaking will risk to
loose invested capital and eventually
fail. The Vietnamese culture and
economy holds many conventions to
consider, beginning with working
morals and ending with the proper
approach for dealing with authorities.
Such an issue leads to contemplation.
Before entering a new market the
investors should be aware of the
country’s culture to ensure a good start
and prevent any mistakes or
complications occurring. In reality,
business is carried out not with a
company, but with its people.
Another supporting factor for entry to
Vietnam’s market is the updating of
legislation and its controlling organs.
Considering these new regulations, it is
advisable to cooperate with domestic
companies and to consult established
legal advisors. The assistance of local
experts will further provide flexible
management methods in an unknown
environment, simplifying business
processes inside and outside company
structures.
Nowadays, Vietnamese companies are
very western oriented and wish to work
hand in hand with foreign companies.
The liberalization and opening up of
the market are being welcomed by the
economy. Local enterprises want to
take part in international business and
are trying to adapt to the requirements.
Weaknesses:
Notwithstanding the above, there are
many obstacles a foreign investor must
face before enjoying equal rights with
domestic companies. Before January
2008, extraneous companies were only
allowed to operate representative
offices with very limited powers in the
country. After this time, foreigners were
allowed to hold the majority share of an
enterprise. Due to the WTO regulations
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71
it will be possible to operate as a
foreign company with full rights in
Vietnam after January 2009.
Nevertheless, even the current status
can be used wisely before entering the
market completely. The time can be
used to cooperate with domestic
partners and to register pharmaceutical
products in advance before the
licensing procedures become more
complicated and expensive. That will
give companies a head start for when
the WTO commitments take effect.
Apart from the legal fundamentals, it
can be expected that difficulties will be
faced with regards to the moral
conflicts of the majority caused by the
fast changes and developments in the
country. Even after 2009, distribution
could be hampered by preferential
treatment of domestic businesses.
Rethinking and a change of
paradigms, especially in state
authorities, will take more time than
simply a change of legislation. Again,
joint ventures and their common
interests can help protect from
discrimination and provide better
access to local authorities.
Opportunities:
Two thirds of the Vietnamese
pharmacy market consists of over the
counter products. Still, the spectrum of
drugs is limited. Specializing in OTCs
can therefore be a very profitable field.
Another interesting aspect is the
increasing focus on brand products.
By 2009, 100 % foreign investment
subsidiaries with direct import rights
will be allowed by Vietnamese
legislation. Investment licenses will be
given and supported by the Ministry of
Planning and Investment. The
possibility of direct imports and
distribution will provide the opportunity
to not only reduce costs compared to
the present, but will also enable
businesses to be much more flexible
and make quicker transactions.
There is a definite need for a wider
range of available products. In
particular, hospitals are claiming a
need for a greater variety of
pharmaceutical products. Availability of
foreign medicine and treatments, as
well as a bigger portfolio, is an urgent
desire of staff in health care facilities all
over the country.
Today, smaller hospitals and health
stations are not yet relying on foreign
products. Availability is the most
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72
important factor. Therefore, domestic
manufacturers are being preferred in
rural areas. As a consequence of the
change in legislation, direct distribution
will change that preference to a large
degree, and open up a so far
inaccessible market.
Since western medicine enjoys wide
acceptance due to its quality
guarantees and reliability, and no
financial obligations are negated,
health care facilities tend to use many
more foreign products when the
opportunity arises.
An important consideration is the quite
different attitudes of the northern and
southern consumers. While in the
south customers are more eager to
buy the latest products and brands,
and are willing to spend more money in
doing so, in the more traditional
northern part of the country people are
more likely to compare prices and
ingredients, and tend to choose
generics over brand products.
Threats:
The biggest possible threats are still
the violation of IP rights and
competition laws. Vietnam’s process of
adaptation to international standards is
still in progress and will take more time
and experience. Therefore, foreign
investors should prepare carefully to
ensure successful and safe market
entry. According to
PricewaterhouseCoopers, the following
actions can help to protect businesses:
• Careful selection of an IP
holding location, as well as
examination of the tax
implementations of IP migration
and revenue from future
exploitations
• Structuring for R&D, cost
sharing and royalty
arrangements
• Incentive planning, strong
documentation and IP studies
• Engaging with the related
central government agencies to
improve their knowledge and
law enforcement capability
• Aligning interests with those of
the local government party,
because much infringement is
local in nature
• Engaging in local standard
debates and elevating
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protection initiatives in
international standard groups
• Organizing government
education efforts that stress and
quantify the benefits of IP
protection, especially for future
R&D patents and health care
delivery
• Encouraging local IP holders to
support the cause of IP
protection
• Nurturing alliances with
researchers, academics and
policy advisers, and helping
them expand their knowledge
and influence
Another possible threat is the cost of
development, which is hard to estimate
in a booming Tiger state like Vietnam.
Mr. Steffen from Bayer Shering
identifies how yesterday’s calculations
might be obsolete tomorrow.
Therefore, planning should always stay
up to date and flexible in relation to
new developments and changes in the
market.
Investor insights
Without a proper point of view and
good analyses of the market, the way
into Vietnam’s business culture can be
very bumpy. A business will not be
successful without the appropriate
preparation and support. Expert
knowledge and insight analyses are a
vital point for new businesses in a
foreign country. Conducting business
in Vietnam is littered with obstacles,
but is also very worthwhile.
Until 2009, foreign companies still
need to cooperate with local
enterprises, but this does not have to
be disadvantageous. To find a good
business partner is not hard at all in
these times of transformation.
Sometimes less turnover can mean
more. To begin, a company’s
management should invest mainly in
intensive planning and the
development of a strategy so as to
ensure long term survival in the
Vietnamese market. To consider all
relevant factors, new companies
should consult local experts for advice.
Especially for a pharmacy enterprise,
tight distribution contracts are
important; for example, to ensure
proper cold chains, transportation and
infrastructure guarantees. Therefore,
trustworthy and able partners can
provide a great deal of support.
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In order to achieve company goals,
strategies should be carefully adapted
to the market. Also, bureaucracy
should be paid attention to very
carefully because of the complex
structures and constant changes in
legislation. Local partners should be
consulted for such operations as well.
A partnership made out of commercial
regulations can open up many
advantages and benefits, and even
open doors to future business affairs
and additional markets. For example,
taxation in Vietnam is very complex at
present. Benefits and assessments
vary dramatically between legal
persons and foreign contractors. Also,
the agreement on double taxation with
Germany is not airtight21, which is
another reason for finding qualified
support in the local market, as well as
good juristic advice. Rather important
in this matter is implementation by the
partner company during development
of the Vietnamese market. This will
ensure a healthy and strong status for
investments.
21 Quote: Oliver Massmann
AAPPPPEENNDDIIXX
Literature: 1. Vietnam’s Health Care System: A Macroeconomic Perspective, Paper Prepared for the
International Symposium on Health Care Systems in Asia Hitotsubashi University, Tokyo; 01/21-22/ 2005 © Susan J. Adams, Ph.D. Senior Resident Representative International Monetary Fund; Hanoi.
2. Gearing up for a global gravity shift: PricewaterhouseCoopers; 2007
PricewaterhouseCoopers. 3. Health Care Financing for Vietnam: Discussion Paper No. 2; 06/2003; United Nations
Country Team Viet Nam; Hanoi. 4. Vietnam und die WTO: ESSAY zur Ringvorlesung „Konflikte in Gegenwart und Zukunft“ im
Studiengang Friedens- und Konfliktforschung (M.A.); Sommersemester 2006; vorgelegt bei: PD Dr. Johannes M. Becker von: Adrian Boos (Rastatt).
5. Rahmenbedingungen für deutsche Hochschulaktivitäten: Länderanalyse Vietnam; 11/2003;
Dr. Karola Hahn; Kassel. 6. Vietnam Investitionsführer und Leitfaden für ausländische Lieferfirmen 1. Buch:
Grundlagen; . überarbeitete Auflage 01/2007; Oliver Massmann Rechtsanwalt; Hanoi; omassmann@duanemorris.com.
7. Investment in Vietnam: 2004; KPMG Limited; Vietnam.
8. Laenderanalyse Vietnam: ore/AP/dpa-AFX; amb/AP; 11/01/ 2007; Spiegel Online; www.spiegel.de.
9. Beitritt zur Welthandelsorganisation: Vietnam oeffnet seine Maerkte; ore/AP/dpa-AFX; 11/20/2006; Spiegel Online; www.spiegel.de.
10. Vietnam auf dem Sprung: (tso/dpa); 03/30/2007; Tagesspiegel Online;www.Tagesspiegel.de. 11. Vietnam tritt WTO bei: (tso/AFP); 01/11/2007; Tagesspiegel Online; www.Tagesspiegel.de. 12. Handel mit Vietnam soll normalisiert werden: (tso/AFP); 12/10/2006; Tagesspiegel Online;
www.Tagesspiegel.de. 13. USA bescheinigt Vietnam Fortschritte: (tso/AFP); 11/14/2006; Tagesspiegel Online;
www.Tagesspiegel.de. 14. Country Profile Vietnam: 12/2005; Library of Congress Federal Research Division; U.S. 15. VietNam: 10/25/2007; The Atlantic Philanthropies;
www.atlanticphilanthropies.org/health/viet_nam.
16. Vietnam Goes Global: The government embraces capitalism, but so far only for small
businesses; 12/15/2005; Jordan Ryan Yale Global; Hanoi. 17. Principles of Health Economics for Developing Countries: William Jack; World Bank
Institute; 1999; 04/26/2004; book review by Danny Yee; http://dannyreviews.com/. 18. Die Sozialistische Republik Vietnam: 07/18/2007; www.wikipedia.de/die sozialistische
republik vietnam/. 19. Kultur Vietnam: 07/18/2007; www.wikipedia.de/kultur vietnam/. 20. Welthandelsorganisation: 08/15/2007; www.wikipedia.de/welthandelsorganisation/. 21. Private pharmacies in Hanoi, Vietnam: a randomized trial of a 2-year multi-component
intervention on knowledge and stated practice regarding ARI, STD and antibiotic/steroid Requests; 09/2002; J. Chalker; chalkerj@compuserve.com; USA.
22. Report on the Joint Programme Review of the NTP: End term Evaluation of the Tuberculosis
Component of the National Health Sector Project of the World Bank in Vietnam; 08/11-22/2003 Centers for Disease Control and Prevention, Medical Committee Netherlands Vietnam, KNCV Tuberculosis Foundation, Royal Netherlands Embassy, World Bank, World Health Organization Regional Office for the Western Pacific, WHO Vietnam Country Office.
23. Pharmamarkt: Asien holt deutlich auf; 08/20/2007; www.absatzwirtschaft.de. 24. Vets rip health care at Vietnam reunion: 03/26/2007; Lowell; The Sun; Mass. Distributed by
McClatchy-Tribune Business News; USA. 25. From research evidence to policy: Mental health care in Viet Nam; 2006; Harpham, T.; Tuan,
T.; Bulletin of the World Health Organization, 84(8), 664-668. 26. WTO-Beitrittsprozess sorgt für Modernisierungsschub: Deutschland wichtigster
Handelspartner innerhalb der EU; 10/24/2006; Mathias Haase; Nachrichten für Außenhandel; Land im Fokus: Vietnam; Nr. 205 pg. 2 NfA; haase@oav.de.
27. Zur Lage der Menschenrechte in der Sozialistischen Republik Vietnam- Religionsfreiheit:
2002; Georg Evers; Internationales Katholisches Missionswerk e.V.Fachstelle; ISSN 1618-6222 missio-Bestell-Nr. 600 230; Aachen.
28. German Vietnam Business Handbook and directory: 2005; Wolfgang Ehmann; German
Industry and Commerce Vietnam; www.vietnam.ahk.de; Hanoi. 29. Report on Vietnam: 05/2007; European Union Economic and Commercial Counselors;
www.delvnm.ec.europa.eu; Hanoi. 30. Bilaterale Wirtschaftsbeziehungen: German Embassy Hanoi; 31.10.2007;
http://www.hanoi.diplo.de/Vertretung/hanoi/de/Startseite.html.
List of importing companies:
1 DEKA CO. Ltd. No.8 Lot 1A Trung Yen Cau Giay Hanoi 2 TRAPHACO J.S.C 75 Yên Ninh Str., Ba Đình Dist. 3 Viet Phan Co., Ltd. 4 Toan Cau T&C Co., Ltd. 5 Central Pharmaceutical Co., No.3 6 Global Connections Inc. (GCC) 7 TL Forex Limited Company 8 TAYPHAR CO.,LTD. 439 Hoàng Hoa Thám Str., Ba Đình Dist. 9 CUU LONG PHARMACEUTICAL JOINT STOCK CORPORATION 150 Str. 14/9,
Ward 5, Vĩnh Long Town 10 GREAT WORLD CO., LTD Km 1954, Highway 1, Khánh Hậu Hamlet, Tân An Town 11 LIEN THANH CO.,LTD. 1/4 Lý Thường Kiệt Str., Mỹ Bình Ward, Long Xuyên City 12 HAGIANG PHARMACEUTICAL AND MEDICAL EQUIPMENT CO. Group 13, Nguyễn
Trãi Ward, Hà Giang Town 13 7BINH LUC PHARMACEUTICALS J.S.C Bình Mỹ Townlet, Bình Lục Dist. 14 LAOCAI PHARMACEUTICALS AND MEDICAL EQUIPMENT J.S.C. 66 Thanh Niên
Str., Duyên Hải Ward, Lào Cai City 15 BAC KAN PHARMACEUTICAL CO. Group 6, Phùng Chí Kiên Ward, Bắc Kạn Town 16 TUYENQUANG PHARMACEUTICAL AND MEDICAL EQUIPMENT CO. Quang
Trung Str., Tân Quang Ward, Tuyên Quang Town 17 THAINGUYEN PHARMACEUTICALS AND MEDICAL MATERIALS CO. 477 Lương
Ngọc Quyến Str., Phan Đình Phùng Ward, Thái Nguyên City 18 KIM BANG PHARMACEUTICAL CO. Group 10, Quế Townlet, Kim Bảng Dist. 19 THAIBINH PHARMACEUTICAL AND MEDICAL MATERIAL J.S.C 64 Hai Bà Trưng
Str, Thái Bình City 20 NINHBINH PHARMACEUTICAL CO. 12 Lê Đại Hành Str., Ninh Bình Town 21 HATAY PHARMACEUTICAL J.S.C. 80 Quang Trung Str., Quang Trung Ward, Hà
Đông Town 22 VIET DUNG PHARMACEUTICAL CO., LTD. 22 Trần Nguyên Hãn, Cát Đaì Ward, Lê
Chân Dist. 23 BAC NINH PHARMACEUTICAL J.S.C 21 Nguyễn Văn Cừ Str 24 HAIDUONG PHARMACEUTICAL AND MEDICAL MATERIALS J.S.C 102 Chi Lăng
Str., Nguyễn Trãi Ward 25 VINAPHACO 10 Tô Hiệu Str., Đống Đa Ward, Vĩnh Yên City 26 CHONG KUN DANG CORPORATION 122 Đội Cấn Str., Ba Đình Dist. 27 HANOI PHARMACEUTICAL - MEDICAL EQUIPMENT IMPORT EXPORT J.S.C 2
Hàng Bài Str., Hoàn Kiếm Dist. 28 SOUTH EAST ASIA PHARMACEUTICAL CO.,LTD. 7 Alley 6, Thái Hà Str., Đống Đa
Dist. Block 28, Alley 178, Thái Hà Str., Đống Đa Dist. 29 CENTRAL PHARMACEUTICAL ENTERPRISE NO.1 160 Tôn Đức Thắng Str., Đống
Đa Dist. 30 HA NOI TRADING AND MARKETING CO.,LTD. 185 Khâm Thiên Str., Khâm Thiên
Ward, Đống Đa Dist. 31 TUNG LOC PHARMACEUTICAL CO.,LTD. 168 Khâm Thiên Str., Đống Đa Dist. 32 SUNSTAR J.S.C 92 Vĩnh Hưng Str., Hoàng Mai Dist. 33 EDV CO.,LTD Fl.2, No.10 Lê Quý Đôn Str., Hai Bà Trưng Dist. 34 CO. FOR VACCINES AND BIOLOGICAL PRODUCTION NO.1 1 Yersin Str., Hai Bà
Trưng Dist. 35 BA DINH PHARMACEUTICAL CO.,LTD. 46 Alley 164, Vương Thừa Vũ Str., Khương
Trung Ward, Thanh Xuân Dist. 36 LONG CHAU PHARMACEUTICAL CO., LTD. 89/6 Phước Hanh A Group, Phước
Hậu Hamlet, Long Hồ Dist.
37 NGHEAN PHARMACEUTICAL MEDICAL MATERIALS J.S.C 16 Nguyễn Thị Minh Khai Str., Vinh City
38 CAOBANG PHARMACEUTICALS CO. 12 Nguyễn Du Str., Hợp Giang Ward, Cao Bằng Town
39 HOABINH PHARMACEUTICAL AND MEDICAL EQUIPMENT CO. 5A/12 Cù Chính Lan Str., Đồng Tiến Ward, Hoà Bình City
40 TRUNG VIET PHARMACEUTICAL CO., LTD. 366 Quang Trung Str., Trần Hưng Đạo Ward, Quảng Ngãi Town
41 MEDIPHARCO CENTRAL PHARMACEUTICAL J.S.C 8 Nguyễn Trường Tộ Str., Phước Vĩnh Ward, Huế City
42 THANHHOA MEDICAL MATERIALS PHARMACEUTICAL J.S.C 232 Trần Phú Str., Lam Sơn Ward, Thanh Hoá City
43 HATINH MEDICAL MATERIALS PHARMACEUTICALS CO. 143 Hà Huy Tập Str., Nam Hà Ward, Hà Tĩnh Town
44 BINHDINH PHARMACEUTICAL AND MEDICAL EQUIPMENT CO. 498 Nguyễn Thái Học Str., Qui Nhơn City
45 VAN THANH PHARMACEUTICAL CO., LTD. 205 Line 2/4 Nha Trang, Vạn Thạnh Ward, Nha Trang City
46 HUY LOC PHARMACEUTICAL ENTERPRISE PTE. 182 Lê Duẩn Str., Thạch Thăng Ward, Hải Châu Dist.
47 PIMEPHARCO LABS J.S.C 166-170 Nguyễn Huệ Str., Ward 7, Tuy Hoà City 48 THUAN THAO PTE.ENTERPRISE 140 Nguyễn Trái Str., Nha Trang City 49 BEN THANH PHARMACEUTICALS J.S.C 63 Nguyễn Thị Minh Khai Str., Bến Thành
Ward, Dist. 1 50 LAMDONG PHARMACEUTICAL AND MEDICAL EQUIPMENT JOINT STOCK
COMPANY 6A Ngô Quyền Str., Ward 6, Đà Lạt City 51 ALLERGAN INC. Rm.34, 6 Phùng Khắc Khoan Str., Dist. 1 52 ASTRAZENECA SINGAPORE 115 Nguyễn Huệ Str., Dist. 1 53 PHIL INTERNATIONAL CO., LTD 27 Nguyễn Trung Trực Str., Dist. 1 54 PHARMACEUTICAL AND MEDICAL PUBLIC CO 367 Nguyễn Trãi Str., Dist. 1 55 VIMEDIMEX MEDI-PHARMA J.S.C 246 Cống Quỳnh Str., Dist. 1 56 MEYER PHARMACEUTICALS 646T Nguyễn Trãi Str., Dist. 5 57 TRUONG THINH PLASTIC J.S.C 365A Nơ Trang Long Str., Bình Thạnh Dist. 58 MEKOPHAR PHARMACEUTICAL CHEMICAL J.S.C 297/5 Lý Thường Kiệt Str.,
Ward 15, Dist. 11 59 THANH THAO PHARMACEUTICAL CO.,LTD. 2/10B Trần Não, Bình An Ward, Dist. 2 60 VIDIPHA CENTRAL PHARMACEUTICAL J.S.C 19-21 Nguyễn Văn Trỗi Str., Ward 12,
Phú Nhuận Dist. 61 RHONE POULENC RORER CO. 10 Hàm Nghi Str., Dist. 4 62 HCM PHARMACEUTICAL CO. 18-20 Nguyễn Trường Tộ Str., Ward 12, Dist. 4 63 LAC MINH PHARMACEUTICAL CO.,LTD. 2/15D Cao Thắng Str., Ward 5, Dist. 3 64 HOCHIMINH MEDICAL EXPORT IMPORT CO. 181 Nguyễn Đình Chiểu Str., Dist. 3 65 PHONG PHU PHARMACEUTICAL J.S.C. 30-32 Phong Phú Str., Ward 12, Dist. 8 66 NATIONAL PHARMACEUTICAL CO.NO.2 136 Tô Hiến Thành Str., Ward 14, Dist. 10 67 ZUELLIG PHARMA-REP.OFFICE 8th Flr., 37 Tôn Đức Thắng Str., Dist. 1 68 PHARMACEUTICAL J.S.C OF FEBRUARY 3RD 10 International Site Str., Ward 6,
Dist. 3 69 PHUTHO PHARMACEUTICAL J.S.C 29 Line 52, Lữ Gia Living Quarter, Ward 15,
Dist. 11 70 OPC PHARMACEUTICALS JSC 343 Hùng Vương Str., Dist. 6 71 HUONG THAO PHARMACEUTICAL CO.,LTD. 73/3Bis Hùng Vương Str., Ward 6,
Dist. 6 72 MST CO.,LTD. K63/1 Village Str.70, Tân Xuân Hamlet, Hóc Môn Dist. (165-165A Sư
Vạn Hạnh (ext.), Ward 13, Dist.10) 73 LIMITED COMPANY MANUFACTURE TRADING SERVICE & PACKING TAN TOAN
PHAT Lot 14, Tân Tạo Str., Tân Tạo IZ, Bình Tân Dist. 74 ROUSSEL VIETNAM CO. 4-6 Nguyễn Huệ Str., Dist. 1 75 PHARMACEUTICAL FACTORY 150 112 Trần Hưng Đạo Str., Phạm Ngũ Lão Ward,
Dist. 1
76 DAM SAN CO.,LTD. 834/12 Sư Vạn Hạnh Str., Ward 13, Dist. 10 77 JANSSEN CILAG Rm.1203, 12 Flr., 35 Nguyễn Huệ Str., Dist. 1 78 SANOFI - SYNTHELABO VIETNAM J.V.C 440 Nguyễn Thị Minh Khai Str., Dist. 3 79 EGIS PHARMA CO. 1230U Villa No. 87, Thảo Điền Ward, Dist. 2 80 BRISTOL - MYERS SQUIBB VIETNAM 235 Đồng Khởi Str., Dist. 1 81 NEO UNICAP CO.,LTD. 224-226 Cách Mạng Tháng Tám Str., Dist. 3 82 CHOONG WAE PHARMA CORPORATION. REP.OFFICE Rm.205, 10 Line 3-2, Dist.
10 83 CHUNG HIEP LOI ORIENTAL MEDICAMENT CO. LTD 41 Nguyễn Phi Khanh Str.,
Tân Định Ward, Dist. 1 84 AMOLI ENTERPRISE - REP.OFFICE 133 Ngô Quyền Str., Ward 6, Dist. 10 85 WIND ASIA TRADE LTD. 1D Phổ Quang Str., Ward 2, Tân Bình Dist. 86 INTAS PHARMACEUTICAL CO.,LTD. 148 Nguyễn Đình Chính Str., Phú Nhuận Dist. 87 UCB SA 40 Bà Huyện Thanh Quan Str., Dist. 3 88 PANOFI AVENTIS REP.OFF. 10 Hàm Nghi Str., Bến Nghé Ward, Dist. 1 89 GROWENA IMPEX CO.REP. OFFICE 448/1B Lê Văn Sỹ Str., Ward 14, Dist. 3 90 30 ACTION CHIMIQUE THERAPEUTIQUE CO. 7 Trần Quang Diệu Str., Ward 14,
Dist. 3 91 HELM AG 5th Flr,Somerset Bldg.,21-23 Nguyễn Thị Minh Khai Str.,Dist. 1 92 BINH NGUYEN PHARMACEUTICS CO.,LTD. 19 Hồ Biểu Chánh, Ward 12, Phú
Nhuận Dist. 93 YOUNG IL PHARM CO. REP.OFF. Rm.108, 12 Mạc Đĩnh Chi Str., Dist. 1 94 NOVARTIS VIETNAM CO.,LTD. 8th Flr., Rm. 809, 37 Tôn Đức Thắng Str., Bến Nghé
Ward, Dist. 1 95 HOFFMANN LA ROCHE LTD. 19th Flr., 35 Nguyễn Huệ Str., Dist. 1 96 EBEWE PHARMA GEF.M.B.H NFG.KG Rm.205, City View Bldg., 12 Mạc Đĩnh Chi
Str., Dist. 1 97 JOHNSON AND JOHNSON MEDICAL S.A - REP.OFFICE 12th Flr., 35 Nguyễn Huệ
Str., Dist. 1 98 AMPHARCO USA 16th Flr., 37 Tôn Đức Thắng Str., Dist. 1 99 WYETH (SINGAPORE) PTE., LTD. Rm.11, 1st Flr., 6 Phùng Khắc Khoan Str., Dist. 1 100 GLAXO SMITHKLINE 235 Đồng Khởi Str., Dist. 1 101 U.S. SUMMIT CO. 5th Flr., Yoco Bldg., 41 Nguyễn Thị Minh Khai Str., Dist. 1 102 SUCHIANG CHEMICAL AND PHARMACEUTICAL CO.,LTD - REP.OFFICE 781/C9
Lê Hồng Phong Str., Dist. 1 103 TORRENT CO.,LTD. - REP.OFFICE 56A Nguyễn Thông Str., Tân Bình Dist. 104 RALABORATOIRES FOURNIER SCA Rm. 506, 37 Tôn Đức Thắng Str., Dist. 1 105 PIERRE FABRE S.A 106A Nguyễn Đình Chiểu Str., Đakao Ward, Dist. 1 106 CIECH - POLFA REP.OFFICE 2 Ngô Đức Kế Str., Lot 6, Dist. 1 107 ROHTO MENTHOLATUM VIETNAM CO. 18th Flr., 37 Tôn Đức Thắng Str., Dist. 1 108 THANH DAT PTE. 90A/B63 Lý Thường Kiệt Str., Ward 14, Dist. 10 109 KOREA GREEN CROSS CORP. REP.OFFICE Rm. 421, 243-243B Hoàng Văn Thụ
Str., Ward 1, Tân Bình Dist. 110 PHARMACIA & UPIJOHN CO. Rm.1202, 12th Flr., Mê Linh Point Tower, 2 Ngô Đức
Kế Str., Dist. 1 111 MERCK SHARP AND DOHME ASIA 115 Nguyễn Huệ Str., Dist. 1 112 GEDEON RICHTER LTD. 2A Nguyễn Văn Hường Str., Dist. 2 113 OPV VIETNAM LTD. Rm. 803, Sài Gòn Tower, 29 Lê Duẩn Str 114 IMEXPHARM CO. 63B-65B Lữ Gia Str., Dist. 11 115 PHARMAMATE INTL CO.,LTD. 12/4A Nguyễn Thị Minh Khai Str., Dist. 1 116 JIANGYIN JIANGLIAN INDUSTRY TRADE CO.,LTD. 6th Flr., 163 Hai Bà Trưng Str.,
Dist. 3 117 ISHAN-REP.OFFICE 243-243B Hoàng Văn Thụ Str., Tân Bình Dist. 118 DOMESCO MEDICAL IMPORT EXPORT J.S.C 190 B 3/2 Str., Ward 14, Dist. 10 119 BAXCO PHARMACEUTICAL INC. 22/42 Lữ Gia Living Quarter, Ward 15, Dist. 11 120 BV PHARMA JOINT VENTURE COMPANY Tân Thạnh Tây Hamlet, Củ Chi Dist. 121 ORGANON - REP.OFFICE 235 Đồng Khởi Str., Dist. 1 122 KIEN VIET COMPANY LTD 2/1 Hồng Hà Str., Ward 2, Tân Bình Dist.
123 HISAMITSU VIETNAM PHARMACEUTICAL CO.,LTD. 14+15 Str. 2A, Biên Hoà 2 IZ., Biên Hòa City
124 HOANG LONG CO.,LTD. 18-18 C1, Long Bình Tân Ward, Biên Hoà City 125 ROHTO MENTHOLATUM VIETNAM CO. 16 Str.5, Vietnam-Singapore IZ., Thuận An
Dist. 126 BINHTHUAN PHARMACEUTICAL AND MEDICAL EQUIPMENT CO. 114 Nguyễn
Hội Str., Phú Trinh Ward, Phan Thiết City 127 DOMESCO MEDICAL IMPORT EXPORT J.S.C 66 Highway 30, Mỹ Phú Ward, Cao
Lãnh Town 128 IMEXPHARM PHARMACEUTICAL J.S.C 4 Road 30-4, Ward 1, Cao Lanh Town 129 KIENGIANG PHARMACEUTICALS AND MEDICAL EQUIPMENT CO. 458 Ngô
Quyền Str., Vĩnh Lạc Ward, Rạch Giá City 130 LONGAN PHARMACEUTICAL AND MEDICAL EQUIPMENT CO. 59 Nguyễn Huệ
Str., Ward 1, Tân An Town 131 TRADE AND COSMETIC PHARMACEUTICALS J.S.C. 9 Nguyễn Kim Str., Ward 4,
Vũng Tàu City 132 HAIPHONG PHARMACEUTICAL CO. 71 Điện Biên Phủ Str., Minh Khai Ward, Hồng
Bàng Dist. 133 DIETHELM & CO.,LTD. 23 Láng Hạ Str., Đống Đa Dist. 134 ABBOTT LABORATORIES SA CO. 4th Flr., B19 Hà Nội Horison Hotel, 40 Cát Linh
Str., Đống Đa Dist. 135 SIA TENAMID CANADA INC 23 Kim Đồng Str., Giáp Bát Ward, Hai Bà Trưng Dist. 136 GEDEON RICHTER LTD. Rm.803, 8th Flr., 4 Dã Tượng Str., Hoàn Kiếm Dist. 137 TASLY PHARMACEUTICAL GROUP CO.,LTD. 4th Flr., Horison Hotel, Ba Đình Dist. 138 PHARMACEUTICAL ENTERPRISE NO.120 1A Trần Thánh Tông Str., Hai Bà Trưng
Dist. 139 HOFFMANN LA ROCHE LTD. 6A Trần Quốc Toản Str., Hoàn Kiếm Dist. 140 NEO UNICAP CO.,LTD. 2 Hàng Bài Str., Hoàn Kiếm Dist. 141 VIEN DONG PHARMACEUTICAL CO.,LTD. 27 Mai Hắc Đế Str., Hai Bà Trưng Dist. 142 N.V ORGANON Rm.702, Đồng Tâm Bldg., 29 Hàn Thuyên Str., Hoàn Kiếm Dist. 143 ASTRAZENECA SINGAPORE PTE .LTD. Rm.601, 4 Dã Tượng Str., Hoàn Kiếm Dist. 144 JOHNSON AND JOHNSON MEDICAL S.A - REP.OFFICE Rm. 8, 5th Flr., Int'l Center,
17 Ngô Quyền Str., Hoàn Kiếm Dist. 145 EAST ASIA PHARMACEUTICALS TRADING CO.,LTD. Rm.3, C6 Giảng Võ
Exhibition., Ba Đình Dist. (Lot 13D Trung Hoà, Nhân Chính Ward) 146 TRAVINH PHARMACEUTICAL J.S.C 27 Điện Biên Phủ Str., Ward 9, Trà Vinh Town 147 PHARMACEUTICALS AND MEDICAL EQUIPMENT CO. 99 Hoàng Văn Thụ, Ward 3,
Bạc Liêu Town 148 NAM HA PHARMACEUTICAL J.S.C 96 Thái Hà Str., Đống Đa Dist. 149 HAU GIANG PHARMACEUTICAL J.S.C 288B Nguyễn Văn Cừ Str., Ninh Kiều Dist. 150 MINH HAI PHARMACEUTICALS J.S.C 322 Lý Văn Lâm Str., Ward 1, Cà Mau City 151 SOUTH WEST PHARMACEUTICAL CO.,LTD. 529A Hà Hoàng Hổ Str., Mỹ Xuyên
Ward, Long Xuyên City 152 MEYER - BPC J.S.C 6A3 Highway 60, Bến Tre Town 153 SOUTHERN PHARMA CO.,LTD 366 Cách Mạng Tháng Tám Str., An Thới Ward,
Cần Thơ City
Regulation on Drug Registration
THE MINISTRY OF HEALTH
SOCIALIST REPUBLIC OF VIETNAM
Independence- Freedom- Happiness
----***----
Regulation on Drug Registration
(Issued in conjunction with Decision No3121/2001/QD-BYT dated 18 July 2001 of the Ministry of Health)
With the aim to unify the government's management over production and sale of drugs; to ensure the safety, efficacy and qualify of drugs, the MoH hereby promulgates the Regulation on Drug Registration. Chapter I General Provisions Article 1: Drug products produce and sold in Vietnam for proposes of prevention and treatment of diseases and for improvement of the human's health shall be registered with the Ministry of Health and be approved by the lattes to get a registration number. In special cases (drugs for epidemic and disasters relief and orphan drugs) the sale and consumption of un-registered drugs shall be specifically considered and approved by the Ministry of Health. Article 2: Scope of application and objects of the regulation: 2.1. Scope pf application - Drug products produce by legal domestic and foreign manufacturers, who have satisfied conditions in drug production, shall be registered before production and sale. - New drug products developed by scientific research institutions, while awaiting technological transference to any producers with satisfied conditions in drug production, the innovator institutions can apply for registration for their own production and sale, provided that the institutions meet required conditions for drug production - Drug products produced under-license can only produced by a drug producer with GMP standard production facilities located in Vietnam. -Drug products produced and prepared by health care institutions for the use of that institutions or their peripheral stations in therapy (that shall not be sold to the market): Heads of such institutions shall be responsible for drug formula, preparing process, specifications, safety and efficacy of the drugs produced by their institutions. 2.2. Scope of application: The following entities can register drug products for production and sale in Vietnam - Drug manufacturers located in the territory of Vietnam. - Domestic companies having functions in pharmaceutical trading, foreign companies registered to operate in pharmaceutical field in Vietnam. Article 3: In this Regulation, some terms can be interpreted as follows: 3.1 Drugs are products intended for use in human for the purpose of prevention, treatment, relief or diagnosis of diseases or for modification of physiological functions. 3.2 Finished drug products are those drug products that have passed all stages of production and are ready for marketing, distribution and use.
3.3. Starting materials are substances, active (active ingredients) or in-active (reagents, excipients) that are put in composition of drug products in production process.
3.4. Western drug products include: - Pharmaco- chemicals and biological used as starting materials for drug production - Finished Pharmaco- chemicals and biological products.
3.5. Ancient medicines are those that are used following ancient (old) literatures regarding number of medicinal ingredients, quantity of each ingredient, processing methods, dosage, usage methods and indications.
3.6. New drugs are those with a new active ingredient in their composition; those that are new combination of known active ingredients; or those known drug products with new pharmaceutical dosage forms, new indications or new administration routes.
3.7 A brand name is a name given by drug manufacturer for a drug product that are different from the generic names or International Non-proprietary Names (INN) internationally or domestically recognized.
3.8. Drug stability is stability of quality of drug products (starting materials or finished products) that under specified storage conditions remain their physical, chemical and biological nature, and their characteristics of pharmacology, toxicity, etc, in specified limitations.
3.9 Drug shelf-life is the duration from the time point when a drug product still maintains its quality criteria as required in respective specifications in specified storage conditions.
3.10 Expiration date is a certain validity period from the date of production given to a certain drug product, within which and under specified storage conditions the product is no longer valid for use.
3.11 A drug product under-license is a drug product owned by a domestic or a foreign drug entities and has been granted a registration number (in Vietnam or in other countries), the production of which has been authorized by that manufacturer to another legal manufacturer in Vietnam. Article 4: An application dossier for registration of a drug product shall be prepared in three sets, including at least one of originals. In the application dossier, the following papers shall be provided with the original or notarized papers. - Free Sale Certificate (FSC) -Certificate of good manufacturing Practices (GMP Certificate) (The FSC and GMP can be placed with a Certificate of Pharmaceutical Product (CPP) In addition, two sets of drug labeling shall be attached application dossier. The application dossier literally presented on A4-sized paper sheets, in required order, with clear separation between difference parts. All the documentation in the dossier shall be certified by the manufacturer (with signature and stamp). In case where drug labelling is glued on A4-sized paper sheet, ad joint stamp is required. - Application dossiers of drug manufacturer located on the territory of Vietnam shall be presented in Vietnamese language. Application dossiers of imported drug products shall be presented in Vietnamese language or English. The Summary of Product Characteristics shall be written in Vietnamese language. Name of ingredients of the drug product shall be stated by generic names or international or domestic non-proprietary names. For the ingredients of herbal origin, the names shall be given along with scientific names in Latin. - For a domestic drug products applied with a brand name, the application dossier shall be include a copy of a reference note proving that no similar names have been registered with the Department of industrial Properties Protection (Ministry of Science, Technology and Environment)
or a certificate of industrial properties registration issued by the Department. For imported drug products with marketing authorization in the country of manufacture, reference to the trademark and design by the Department mentioned in the previous paragraph must be made upon request. - A local applicant applying for registration of a drug product, as a new drug manufacturer shall provide the following papers: + Certificate of operation registration with indication of business functions + Certificate of Good Manufacturing Practices or Certificate of satisfied conditions for manufacturer of medicinal plants or herbal medicines (applied to drug products originated from medicinal plants only) Article 5: Labeling requirements - Drug labeling shall comply with the Circular on Drug Labeling issued by the MoH and the regulation on Goods Labeling issued in conjunction with the Decision No 178/1999/QD-TTg dated 30 August 1999 of the Prime Minister - - Brant-names, principal trade mark (language, images or combination of them which is presented with one or more colors) shall not imitate or be confusingly similar to the names or principal trademarks of drug products of other manufacturers that have already been approved by MoH; not infringe to industrial properties right; not be confusing to the nature of drug product or being exaggerated in presentation and ambiguous to the potency of drug products. The use of generic names or international or national non-propriety names for drug products are encouraged - - Other information, such as bar code, digital code, medals, awards, marks of industrial properties rights to be appeared on the label, should be provided with proper duly proof - - Labels that are officially marketed shall be of the same color and presentation as those provided in the application dossier for drug registration. Article 6: In the period of registration validity, a registered drug product shall be applied for registration as a new application if any of the following changes is made: - - Change of formula and compositions - - Change of pharmaceutical dosage form - - Change of quality specifications and analytical methods - - Change of rout of administration - - Change of manufacturing process and methods - - Change of manufacturer Article 7: In the period of registration validity, the following changes to registered drug product shall be subject to prior approval of MoH: - - Product name - - Dosage - - Labeling - - Applicant - - Manufacturer (provided that the site of manufacturer remains unchanged) - - Shape or color of product, provided that the changes will not impose any impact to quality specifications and analytical methods of the product; - - Change or for more indications - - Change or for more contra-indication - - Site of manufacturer (provided that the site of manufacturer remains unchanged) - - Drug self-life - - Presentation of product label - - Change or for more packing sizes Application dossiers for the any of the changes or additions specified in this Article shall include the following: - - Forms 1-ĐKT and 9A-ĐKT (for domestic drug products) or 9B-ĐKT (for imported drug product), or 9C-ĐKT for change of applicant (01 original copy) - - documents related to the proposed changes or additions (01 original copy) For imported drug products, in applying for change of product name, the Free Sale Certificate in the country of manufacture for the product under new name must be submitted; applying for the change of the site factory, a GMP certificate for the factory at new location must be submitted; applying for change of name of manufacturer, a GMP certificate issue to the manufacturer under
the new name. The aforesaid certificates (FSC, GMP) must be issued by the national competent authority in the country of manufacture. Article 8: - - The registration is valid for 5 years from the date of issuance, The Ministry of Health shall have specific cases, and the registration name given shall be printed on the drug label. - - Six months prior to the expiry of the registration, for continuation of production and marketing of the drug product in Vietnam, the registration shall apply for the re-registration shall only be acceptable if being submitted not later than 6 months after the registration expiry. Submissions for re-registration, that are make later than 6 months after registration expiry shall follow requirements as new applications. - - Application dossiers for re-registration is specified in Article 15, Chapter 11, (for domestic drug products), Article 19, Chapter III (imported drug products) Article 22, Chapter IV (drug products under-license) of this Regulation. Article 9: Requirements on stability studies and registration of self-life; 9.1. Stability of drug product - - All drug products shall be stored in such storage conditions as required by the manufactures that are given based on stability studies - - Reports of stability studies shall specifically indicates: conditions for storage of product sample (temperature, humidity, etc) package, methods of study, results of studies in all indicator conducted on at least three different batches, a conclusion of stability of the studied drug product. - - Results of accelerated stability studies shall only be valid for prediction of drug shelf-life for new application for registration. For drug products under-license: if report of normal stability studies conducted on the batches produced in Vietnam is not available, reports of stability studies conducted by the foreign license holder can be used for registration purpose. During port-marketing period, the manufacturer shall monitor the stability of the drug product in normal stability studies shall be submitted as part of application dossier for re-registration. - - For imported drug products that have been marketed for a period equivalent to or longer than the predicted shelf-life, report of normal stability studies shall be submitted as part of application for registration in Vietnam. 9.2. Shelf-life of drug product: - - The product shelf-life shall be established basing on proper stability studies. The shelf-life of a drug product shall not longer than the shelf-life obtained in stability studies. - - Heads of applicant companies shall be responsible for the quality of drug products during the period of registered shelf-life. Article 10: Domestic registration applicants shall submit applications to its direct managing authorities (provincial departments of health, department of health of other ministries) for certification of legal status and manufacturing conditions with their opinions as request for registration approval of the Ministry of Health (with exception for the drug products included in Appendix1). The direct managing authorities shall have their certification and opinions on the application of the applicants not later than 7 days from the date of receipt of proper application. The applications shall then be submitted to the Ministry of Health for assessment and registration. Application dossiers of the members of VINAPHARM, of 100% foreign-invested manufacturers shall be signed and stamped by director of the manufactures and then submitted to the Ministry of Health (with exception for the drug products included in Appendix 1). The MoH shall, after receiving a complete application dossier, have feedback to the applicant in 3 three months for domestic drug product, and 12 months for foreign drug product at maximum. For the drug products included in the Appendix1, the application dossiers shall be submitted to the provincial department of health of the respective province where the production takes place for assessment. Those applications that have passed assessment of the provincial department of health shall be listed (with accurate product names and compositions) and sent as an attachment to an official request to the Ministry of Health for approval and registration grant. Registration applicants after having drug product registered shall be obliged to send the quality specifications of their registered products to the National Institute of Drug Quality control, the Sub-institute of Drug Quality Control and provincial drug quality control centers.
THE MINISTRY OF HEALTH
No.17/2001/TT-BYT
SOCIALIST REPUBLIC OF VIETNAM
Independence- Freedom- Happiness
----***----
Hanoi, August 01, 2001
CIRCULAR
GUIDING FOREIGN COMPANIES IN REGISTRATION FOR TRADING IN MEDICINES AND MEDICINE MATERIALS IN VIETNAM
THE MINISTER OF HEALTH
Pursuant to the Law on People’s Health Protection of July 11, 1989;
Pursuant to Decision No. 113/CT of May 9, 1989 of the Chairman of the Council of Ministers (now called the Prime Minister) on management of import and export of medicines and medicine materials for making curative medicines for human beings;
Pursuant to the Statute on preventive and curative medicines issued together with Decree No. 23/HDBT of January 24, 1991 of the Council of Ministers (now called the Government);
Pursuant to Decree No. 11/1999/ND-CP March 3, 1999 of the Government prescribing goods banned from circulation, services banned from commercial business and goods and services subject to business restriction and conditional business;
Pursuant to Decree No. 57/1998/ND-CP of July 31, 1998 of the Government detailing the implementation of the Commercial Law on import, export, processing and sale and purchase agency activities with foreign countries;
The Ministry of Health of the Socialist Republic of Vietnam guides in detail the foreign companies in registration for trading in medicines and medicine materials in Vietnam as follows:
Chapter I
GENERAL PROVISIONS
Article 1
1. As a special item of goods, medicine is the conditional business goods professionally controlled by the Ministry of Health of Vietnam. Foreign enterprises must register the activities concerning medicines and medicinal materials in Vietnam so as to ensure the imported medicines with good quality, safety and effect for the users.
2. The foreign enterprises who can satisfy the conditions stipulated in this Circular shall be issued the foreign companies’ operation license on medicines and medicinal materials ( hereinafter referred to as "License") by the Ministry of Health of Vietnam.
Article 2. Medicines and medicinal materials are stipulated in this Circular as follows:
- The medicinal materials include the materials, pharmaceutical material, excipients, capsules and immediate packing.
- The medicines includes pharmaceutical products and medicines made from medicinal herbs.
Article 3: Adjustment scope:
This Circular stipulates conditions, orders, procedures of registration dossiers, rights and obligations of the foreign enterprises who register the activities concerning medicines and medical materials in Vietnam
Article 4. Application objects:
Foreign enterprises not having juridical status in Vietnam (referred to as foreign enterprises) supplying Vietnam with the medicines under the import and export contracts with Vietnamese enterprises trading in medicines and medicinal materials
Chapter II
CONDITIONS, DOSSIERS, REGISTRATION PROCEDURES AND COMPENTENCE TO GRANT LICENSE
Article 5: Conditions:
1. Conditions for enterprises who have the first registration:
a) Enterprises who produce and trade in the medicines and medicinal materials are established in accordance with the local country’s law provisions.
b) Accepting to supply Vietnam with the medicines and medicinal materials under the import and export contracts through the medicine business enterprises of Vietnam.
c) The registration dossiers must be complete and valid.
d) In case of being production enterprises, they must satisfy GMP (Good Manufacturing Practice) standards. In case of being distribution enterprises, they must have licenses to trade in, import, export and preserve the medicines issued by the Competent bodies in the local country. In case, these certificates are unclear or doubtful in the authentication, the Ministry of Health of Vietnam shall appraise the enterprises’ real production and business premises in the local country (the foreign enterprises must pay every expense for the appraisal).
e) Experience in medicinal business and solvency
- The enterprises must have at least 3 years of experience in producing and trading in medicines and medicinal materials.
- The minimum turnover from medicines and medicinal materials in the most recent year (basing on the auditing report in the most recent fiscal year):
+ For the enterprises who are trading in the new medicine products: US $ 15 million per year. + For the enterprises who are producing the new medicine products: US $ 05 million per year. + For the enterprises who are producing and trading the medicines made from medicinal herbs, pharmaceutical materials, excipients and immediate packing: US $ 03 million per year.
g) For the enterprises who have had indirectly engage in activities concerning medicines and medicinal materials in Vietnam; within 2 years before the date of handing the registration dossier,
it is required to have no medicines of bad quality in the violation handling scope as stipulated in Article 15 of this Circular.
2. Conditions for enterprises who have the re-registration: when the license expired, the enterprises must make the re-registration dossiers and must satisfy the following conditions:
- Registration dossiers must be complete and valid - Turnover from the medicaments supplied into Vietnam must reach the average minimum of US $ 50,000 per year. - No law violation, no professional in the violation handling scope as stipulated in Article 15 of this Circular.
Article 6: depending on extent of violation:
Dossiers must be the originals or valid copies (with notary’s or issuing organ’s verification). The dossiers must be expressed in Vietnamese or English (in case of other languages, they must be translated into Vietnamese by a law-full translation establishment enclosed with the copy of original documents).
The dossiers shall include :
1. The registration application of the foreign enterprises trading in medicines and medicinal materials (Form 1 includes 1 Vietnamese and 1 English versions).
2. The brief profile on the enterprises’ activities (Form 2 includes 1 Vietnamese and 1 English versions).
3. Documents that prove the enterprises’ establishment in the local country in which has the trading and/or producing function (Enterprise establishment license or business registration).
4. For the enterprises who are manufacturers: There must be the certificates of the GMP (Good Manufacturing Practice) or certificates of pharmaceutical products (CPP) according to the certificate system by the World Health Organization (WHO).
For the enterprises who are trading in, importing and exporting medicines: There must be the licenses for trading in, importing, exporting and preserving medicines in the local country that are issued by the competent bodies in the local country.
Those above mentioned documents must remain effective at the time of applying for registration. In the duration of operating, companies must supplement if these documents expired .
5. Confirmation of current account number of enterprises at the bank in the local country (confirmed by the bank).
6. Brief auditing reports in the most recent fiscal year (confirmed by an independent auditing body).
Article 7: Procedures and licensing competence:
The Drugs Administration Department of Vietnam shall guide accepts and appraise the registration dossier of foreign enterprises who trading in medicines and medicinal materials in Vietnam. Annually, the Drugs Administration Department of Vietnam shall inform the schedules and accept dossiers periodically (2 twice per year).
Within 03 months from the date of receiving valid dossiers, the Ministry of Health shall issue licenses. In case, licenses are not issued, the Ministry of Health (The Drugs Administration Department of Vietnam) must clearly explain in writing reasons therefor.
Article 8: In case of changing name or address, the enterprises must give proposal and send the enclosed legal document to the Ministry of Health (The Drugs Administration Department of Vietnam ):
- The notices of changing enterprise’s name or legal address.
- The concerning legal documents must be the originals or legal copies. If they are not in English, there must be a translation into Vietnamese (translated by a law-full translation establishment).
Article 9: Re - registration dossiers:
Dossiers must be the originals or valid copies (with notary’s or issuing organ’s verification). The dossiers must be expressed in Vietnamese or English (in case of other languages, they must be translated into Vietnamese by a law-full translation establishment, enclosed with the copy of original documents).
The dossiers shall include :
1. The application for re-registration (Form 3 includes 1 Vietnamese and 1 English versions).
2. The brief report of the enterprise’s activities in the medical field with Vietnam enterprises (Form 4 includes 1 Vietnamese and 1 English versions)
3. For the enterprises who are manufacturers: There must be the certificates of the GMP (Good Manufacturing Practice) or certificates of (CPP) pharmaceutical products according to the certificate system by the World Health Organization (WHO).
For the enterprises who are only trading in importing and exporting medicines: The licenses of trading, importing exporting and preserving medicines in the local country shall be issued by the competent bodies of that country.
Those above mentioned documents must remain effective at the time of registration application. In the duration of operating, companies must supplement if these documents expired .
4. Confirmations of current account number of enterprise at the bank in the local country (confirmed by the bank)
Article 10: Provisions on charges and fees:
In case of registration or re- registration, the foreign enterprises must pay approval expenses and fees in accordance with the current provisions. The companies must complete all procedures on handing fees and receiving licenses within 6 months from the date of being informed to be issued licenses otherwise the licenses are obviously invalid.
Article 11: The licenses take effect within 02 years from the date of signing. If the enterprises want to continue working, they shall have to carry out the re-registration procedures 3 months before the licenses expired .
Chapter III
RIGHTS AND RESPONSIBILITIES OF FOREIGN ENTERPRISES REGISTERING THE ACTIVITIES CONCERNING MEDICINES AND MEDICINAL MATERIALS IN VIETNAM
Article 12: Foreign enterprises who register activities concerning medicines and medicinal materials in Vietnam shall have the following rights:
1. Being named as the foreign registration in case of registering medicines and medicinal materials produced by the manufacturers with the Ministry of Health of Vietnam.
2. Supplying Vietnam with the medicines and medicinal materials under the type of signing import and export contracts with medicine import-export enterprises of Vietnam
3. Organizing scientific workshops exchanging professional experience, medicinal information and advertisement according to the provisions stipulated by the Ministry of Health.
Article 13: Foreign enterprises who register medicine and medicinal materials in Vietnam shall have the following obligations:
1. Observing strictly Vietnam’s law provisions, provisions of the State management by the Ministry of Health, The Drugs Administration Department of Vietnam .
2. Not supplying Vietnam with medicines banned in Vietnam, artificial medicines and poor quality medicines.
3. Not distributing medicines directly into Vietnam in any forms.
4. Being completely responsible before the State’s management organs and the users for the quality of medicines supplied into Vietnam. Compensating for the users and Vietnamese partners in case of the damages caused by the medicine supplying enterprises in accordance with the law provisions.
5. Annually reporting to the Ministry of Health of Vietnam (The Drugs Administration Department of Vietnam ) about the medicinal activities with Vietnam (Form 4).
6. Reporting to Vietnam Ministry of Health (The Drugs Administration Department of Vietnam) in case of changes and sending the relevant legal documents in the following cases:
a) Changing the Director who is mainly responsible for the activities concerning medicines and medicinal materials. b) Terminating the medicine trade with Vietnam. c) Merging or separating enterprises.
7. Foreign enterprises shall be in charge of informing irregularly in the following cases:
a) Being required by the competent bodies b) Reporting to the Ministry of Health (The Drugs Administration Department of Vietnam ) in case of recognizing that the enterprises supply Vietnam with poor - quality medicines and violate other professional provisions. c) Reporting to the Ministry of Health (The Drugs Administration Department of Vietnam ) in case of serious events caused by the medicine that the enterprises have supplied into Vietnam. Reporting to ADR Centre about the harmful reaction of the medicine.
Chapter IV
EXAMINATION, INSPECTION AND HANDLING OF VIOLATIONS
Article 14: Examination and inspection:
Foreign enterprises who are issued the licenses for trading in medicines and medicinal materials shall be under the inspection by the Ministry of Health (The Drugs Administration Department of Vietnam ), Health Services of provinces, centrally-run cities and under the inspection by the Ministry of Health, and the Inspectorates of the provinces and centrally-run cities.
Article 15: Handling of Violations:
In the duration of working in Vietnam, the foreign enterprises that violate the laws and professional regulations shall be handed depending on the extent of violation according to the following provisions:
1. Licenses:
1.1 6 months of the probation operation (the enterprises violate professional rules at the possible operation they must make the report within 6 months, the Ministry of Health shall evaluate. If there is no violation, the enterprises will be issued the licenses);
- Quality violation at level 2 (as stipulated in Article 25 in Regulations on medicine quality management), twice within 12 months and the enterprises are sanctioned against the administrative violations by the Medical Inspectorates according to the provisions in Decree No.46/CP by the Government, those enterprises shall be warned and probated for 06 months.
- Quality violation at level 3 (as stipulated in Article 25 in Regulations on medicine quality management) three times within 12 months, those enterprises shall be warned and probated for 06 months.
1.2. Withdrawing of licenses:
- Quality violation at level 1 (as stipulated in Article 25 in Regulations on medicine quality management) and being fined by the Medical Inspectorates (according to the provisions at Points a, b in Clause 3; Points a, b in Clause 4.7 in Article 17 of Decree No. 46/CP dated August 6th, 1996 by the Government), the enterprises shall be withdrawn the licenses.
- During 6 months of probation (as stipulated in section 1.1 of this Article), if the enterprises continue supplying bad-quality medicines at level 2, they shall be withdrawn the licenses.
- Quality violation at level 2 more than 3 times within 12 months those enterprises shall be withdrawn the licenses.
- In case where the enterprises are withdrawn licenses or they are not granted licenses because of violation they can only re-hand in the registration dossiers after at least 2 years (the registration dossiers are stipulated the same as the first registration).
1.3. The enterprises who violates the pharmaceutical regulations and other provisions, depending on extent of violation, shall be considered and decided by the Ministry of Health (the Drugs Administration Department, Inspectorates of the Ministry of Health).
2. For other violations, the enterprises shall be handled in accordance with the current law provisions.
Article 16. The Drugs Administration Department and Inspectorates of the Ministry of Health regularly exchange information about the granting of licenses and violations, sanctions against administrative violations. The Inspectorates of the Health Services of provinces and centrall-run cities shall inform the result of handling and punishment for the violations in the controlled regions to the Inspectorates of the Ministry of Health for coordination, synthesization and announcement nationwide.
Chapter V
IMPLEMENTATION PROVISIONS
Article 17: This Circular takes effect 15 days after its date of signing and replaces Circular No. 07/BYT-TT of March 30, 1991 of the Ministry of Health guiding the registration of foreign companies being allowed to import and export of medicines and medicine materials with organizations and companies of the Socialist Republic of Vietnam.
All licenses granted before the effective date of this Circular remains effective till the time limit as stipulated in the licenses and 3 months before the expire date of these licenses, enterprises shall have to re-register and observe all regulations on re-registration stipulated in this Circular.
Any problems arising in the course of implementation shall be reported immediately by units and localities to the Ministry of Health (the Drugs Administration Department of Vietnam) for consideration on amendments and supplements.
FOR THE MINISTER OF HEALTH
VICE MINISTER
(Signed)
LE VAN TRUYEN
(This translation is for reference only)
Form No.1
REGISTRATION APPLICATION OF FOREIGN COMPANIES FOR TRADING IN MEDICINES AND MEDICINE MATERIALS IN VIETNAM
To: - The Ministry of Health of the Socialist Republic of Vietnam
- The Drugs Administration Department of Vietnam
Name of Business:
Address:
Tel:
Fax:
Address:
Tel:
We apply for business registration with the Ministry of Health of the Socialist Republic of Vietnam to trade in medicines and medicine materials in Vietnam. If being licensed, we shall commit ourselves to strictly observing the provisions of Vietnamese law, pharmaceutical statutes and regulations issued by the Ministry of Health and to being inspected by relevant competent management bodies of Vietnam.
Date...........................
Director
(Signature with the full name and sealed)
Form No.2a
BUSINESS RECORD
1. Name of Business:
2. Nationality of Business:
3. Address:
Tel: E-mail:
Fax:
4. Type of business:
- Trading business:
- Producing business:
�
�
5. Trading and producing sectors allowed to be engaged in the local country:
Pharmaceutical: Producing Trading
- Materials: � �
- Products: � �
- Finished medicine products made from medicinal herbs: � �
Chemicals: � �
Other trading and producing sectors (if any):
6. Date of establishment:
7. Place of establishment:
8. Charter capital:
9. Operating capital:
10. Number of account ........... at....... Bank, Tel: ................, Fax...............
11. Number of license:............... Expire date of the license:..............
12. Name and address of the competent licensing bodies in the local country:
13. Turnover from pharmaceutical trading in latest 3 years:
14. Total employees of the business:
15. Total pharmaceutical employees:
16. Director of the business:
- Name and surname:
- Professional qualification:
17. Lawfull person authorized who takes responsibility for activities of the business in Vietnam (if any):
Name, title:
Professional qualification:
The authorized term:
I ensure for the trustfulness of the above mentioned contents, if wrong, I shall take responsibility for them.
Date.....................
(General) Director of business
(Signature, full name, seal)
Form No.2b
REPORT ON ACTIVITIES RELATED TO MEDICINES AND MEDICINE MATERIALS WITH VIETNAMESE PARTNERS
(For enterprise making new registration)
1. Vietnamese businesses having trading relations (if any):
2. Total turnover from volume sold into Vietnam (including volume sold through other foreign companies):
Note: This total turnover calculated according to implemented contracts, excluding contracts never or haven’t been implemented.
3. List of medicines and medicine materials sold into Vietnam: (clearly stating name of medicine, kind of medicine, model of packing, content, concentration)
4. List of medicines and medicines having registered number for circulating in Vietnam.
5. Report on other activities in the pharmaceutical sector with Vietnam.
Date..............
(General) Director of business
(Signature )
Form No.3
REGISTRATION APPLICATION OF FOREIGN COMPANIES FOR TRADING IN MEDICINES AND MEDICINE MATERIALS IN VIETNAM
To: The Ministry of Health of the Socialist Republic of Vietnam
Business:
Address:
Tel:
Fax:
E-mail:
We have been granted license to trade in medicines and medicine materials in Vietnam by the Ministry of Health of the Socialist Republic of Vietnam.
Number of licenses granted for the first time: ..............Granting date:
Number of effective licenses:............Expire date:
We apply for registration with the Vietnam’s Ministry of Health to be re-granted licenses for trading in medicines and medicine materials in Vietnam. We commit ourselves to observing all professional statues and regulations of Vietnam’s Law.
Your faithfully,
Date...................
Director
(Signature with the full name)
Form No.4
OPERATION REPORT
(For 2 years)
To: The Ministry of Health of the Socialist Republic of Vietnam
Name of business:
Address:
Tel:.................................Fax:..........................E-mail:
Contents of report:
1. Representative office:
- License for opening rep. office No.: ............Date of granting:
- Address:
- Head of the rep. office:
2. Having business relations with the following Vietnamese businesses:
3. Report on turnover:
Year... Year...
Analysis:
a/ Materials:
Name of materials
Unit Volume Turnover
Year
Total
Year
Total
b/ Finished products:
Name of medicine
Registered number (if any)
Main active substances (if haven’t been registered)
Unit Volume Turnover
Year
Total
Year
Total
4. Report on violations of statutes, volume of quality-violated medicine lots that have been sold into Vietnam and settlement results.
We ensure for trustfulness of the above mentioned contents, if wrong we shall take responsibility for them.
Date.................
Director
(Signature with the full name)
Form No.5
OPERATION REPORT
Year....
To: The Ministry of Health of the Socialist Republic of Vietnam
Name of Business:
Address:
Tel:...............Fax:.........................E-mail:
Contents of report:
1. Representative office:
- License for opening Rep. office No.:.................... Date of granting:
- Address:
- Head of the rep. office:
2. Having business relations with the following Vietnamese businesses:
3. Report on turnover:
- Total turnover from medicines sold into Vietnam (according to contracts, converted into US$)
- Report on violations of statues, volume of quality-violated medicine lots that have been sold into Vietnam and results of handling.
We ensure for trustfulness of the above mentioned contents, if wrong, we shall take responsibility for them.
GOVERNMENT SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness No. 23-2007-ND-CP
Hanoi, 12 February 2007
DECREE PROVIDING REGULATIONS FOR
IMPLEMENTATION OF COMMERCIAL LAW REGARDING PURCHASE AND SALE OF GOODS AND ACTIVITIES DIRECTLY RELATED TO THE PURCHASE AND SALE OF GOODS BY ENTERPRISES WITH FOREIGN
OWNED CAPITAL IN VIETNAM
The Government
Pursuant to the Law on Organization of the Government dated 25 December 2001; Pursuant to the Commercial Law dated 14 June 2005;
On the proposal of the Minister of Trade,
Decrees: CHAPTER I
General Provisions Article 1 Governing scope This Decree provides detailed regulations for implementation of a number of articles of the Commercial Law regarding activities of purchase and sale of goods and activities directly related to the purchase and sale of goods by enterprises with foreign owned capital in Vietnam. Article 2 Applicable entities This Decree shall apply to enterprises with foreign owned capital, and to organizations and individuals involved in management of purchase and sale of goods and of activities directly related to the purchase and sale of goods by enterprises with foreign owned capital in Vietnam. Article 3 Interpretation of terms In this Decree, the following terms shall be construed as follows: 1. Activities of purchase and sale of goods and activities directly related to the purchase and sale of goods means import, export, distribution and other activities stipulated in Chapters 4, 5 and 6 of the Commercial Law. 2. Import and export of goods means the activities stipulated in article 28 of the Commercial Law. 3. Right to export means the right to purchase goods in Vietnam for export, and includes the right to provide one’s name on the goods export declaration in order to conduct and bear liability for the conduct of procedures relating to export. Right to export does not include the right to organize a network of purchasing in separate parcels throughout Vietnam for export, unless the law of Vietnam or an international treaty of which the Socialist Republic of Vietnam is a member stipulates otherwise. 4. Right to import means the right to import goods into Vietnam for sale to business entities which have the right to distribute such goods in Vietnam, and includes the right to provide one’s name on the goods import declaration in order to conduct and bear liability for the conduct of procedures relating to import. Right to import does not include the right to organize or participate in a goods distribution system in Vietnam, unless the law of Vietnam or an international treaty of which the Socialist Republic of Vietnam is a member stipulates otherwise. 5. Distribution means activities of wholesaling, retailing, agency for purchase and sale of goods and franchising in accordance with the law of Vietnam. 6. Right to distribute means the right to undertake directly activities of distribution. 7. Wholesaling means the activity of selling goods to other business entities and organizations; and does not include the activity of selling goods directly to the final consumer.
8. Retailing means the activity of selling goods directly to the final consumer. 9. Retail sales outlet means a unit owned by an enterprise for the purpose of conducting retailing. Article 4 Conditions for enterprises with foreign owned capital to be granted a business
license for activities of purchase and sale of goods and activities related to purchase and sale of goods in Vietnam
1. The conditions for an enterprise with foreign owned capital to be granted a business license for activities of purchase and sale of goods and activities related to purchase and sale of goods in Vietnam shall comprise:
(a) It is an investor belonging to a country or territory participating in an international treaty of which the Socialist Republic of Vietnam is a member and in such treaty Vietnam has undertaken to open the market on activities of purchase and sale of goods and activities directly related to purchase and sale of goods;
(b) The form of investment is consistent with the schedule/s undertaken in international treaties of which the Socialist Republic of Vietnam is a member and is consistent with the law of Vietnam;
(c) The goods and services in which business is conducted are consistent with Vietnam’s undertaking to open the market and are consistent with the law of Vietnam;
(d) The scope of operation is consistent with Vietnam’s undertaking to open the market and is consistent with the law of Vietnam;
(dd) It has approval from the State body authorized pursuant to article 5 of this Decree.
2. The Minister of Trade shall be responsible to announce the schedule/s undertaken in international treaties of which the Socialist Republic of Vietnam is a member and the specific conditions pursuant to clause 1 of this article. 3. With respect to foreign investors not in the category stipulated in clause 1(a) above, the Minister of Trade shall consider each application on a case by case basis and must approve activities of purchase and sale of goods and activities directly related to purchase and sale of goods before the authorized State body grants a business license. Article 5 Authority to issue business licenses for activities of purchase and sale of goods
and activities related to purchase and sale of goods, and to issue licenses to establish retail sales outlets
1. Provincial people’s committees shall be responsible to issue business licenses for activities of purchase and sale of goods and activities directly related to purchase and sale of goods (hereinafter referred to as business licenses) to enterprises with foreign owned capital which have already been issued with an investment certificate or investment license (hereinafter both referred to as an investment certificate) after receiving written approval from the Ministry of Trade. 2. A foreign investor investing in Vietnam for the first time which invests in activities of purchase and sale of goods and activities directly related to purchase and sale of goods shall submit an application file in order to conduct investment procedures with the State administrative body for investment. The State administrative body for investment shall obtain the opinion of the Ministry of Trade and shall only issue an investment certificate for activities of purchase and sale of goods and activities directly related to purchase and sale of goods if the Ministry of Trade has provided written approval. In this case the investment certificate shall act concurrently as the business license. Investment procedures shall be implemented in accordance with the Law on Investment.
3. If a foreign investor only invests in import/export business or if an enterprise with foreign owned capital only requests addition of import/export business without distribution business or activities directly related to purchase and sale of goods, then the State administrative body for investment shall rely on the schedule/s undertaken in international treaties of which the Socialist Republic of Vietnam is a member to issue or supplement the investment certificate without requiring approval from the Ministry of Trade. 4. An enterprise with foreign owned capital which already has the right to distribute shall be permitted to establish its first retail sales outlet and shall not be required to conduct procedures applying for issuance of a license to establish a retail sales outlet pursuant to this Decree. The establishment of any additional retail sales outlet after the first such establishment shall be subject to a decision of the provincial people’s committee in accordance with guidelines of the Ministry of Trade and in accordance with the order and procedures stipulated in this Decree. Article 6 Compliance with provisions of relevant laws 1. Enterprises with foreign owned capital must, in addition to exercise of rights and discharge of obligations stipulated in this Decree, also comply with the provisions of the Law on Enterprises, the Law on Investment and other relevant laws. 2. Where the activities stipulated in Chapters 4, 5 and 6 of the Commercial Law are regulated by another Decree, then the provisions of such other Decree shall apply. 3. Enterprises with foreign owned capital must pay fees in accordance with regulations of the Ministry of Finance when they conduct procedures for the issuance, re-issuance, amendment of or addition to business licenses and licenses to establish retail sales outlets. 4. In necessary cases, in accordance with the law of Vietnam, enterprises with foreign owned capital shall be obliged to report, supply data and explain issues relating to their activities at the request of an authorized State administrative body.
CHAPTER II Procedures for Issuance of Business Licenses
Article 7 Application files for issuance of business licenses: 1. Request for issuance of a business license on the standard form issued by the Ministry of Trade. 2. Explanatory statement on satisfaction of the conditions stipulated in sub-clauses (a), (b) and (c) of article 4.1 of this Decree. 3. Proposed business contents of purchase and sale of goods and of activities directly related to the purchase and sale of goods by the enterprise. 4. Copy investment certificate. Article 8 Rules for issuance of business licenses 1. An enterprise shall lodge three sets of its application file, one of which shall be an original, with the provincial people’s committee in the location where the enterprise has its head office. 2. Within a time-limit of three working days from the date of receipt of the application file, the body which received the file shall check its validity and forward it to the Ministry of Trade for its opinion. Where an application file is invalid, the body which received the file shall notify the investor in writing in order for the latter to amend or supplement the file. 3. Within a time-limit of fifteen (15) working days from the date of receipt of the application file, the
Ministry of Trade shall provide its written opinion on issues for which such Ministry has the administrative function. 4. Within a time-limit of fifteen (15) working days from the date of receipt of the opinion of the Ministry of Trade, the provincial people’s committee shall make a decision on issuance of a business license. In a case of non-issuance of a business license, the body which received the file shall notify the enterprise in writing, stating clearly the reasons therefore. 5. Within a time-limit of seven (7) working days from the date of issuance of a business license, the body which received the file shall provide copies of the business license to the Ministry of Trade and to the provincial people’s committee in the location where the enterprise has its head office. Article 9 Contents and effective term of business licenses 1. A business license shall contain the following items:
(a) Name and head office address of the enterprise; (b) Business contents of purchase and sale of goods and activities directly related to the purchase and sale of goods as stipulated in article 12 of this Decree; (c) Effective term of the business license.
2. In the cases stipulated in article 5 of this Decree, the effective term of the business license shall be equal to the duration of operation of the investment project as recorded in the investment certificate. Article 10 Amendment of and/or addition to business licenses 1. If an enterprise with foreign owned capital wishes to change one of the items stipulated in sub clauses (a) and (b) of article 9.1 of this Decree, it must conduct procedures to amend and/or add to the business license with the body which issued the license. 2. An application file for amendment and/or addition to a business license shall contain the following items:
(a) Request for amendment and/or addition to the business license on the standard form issued
by the Ministry of Trade; (b) Copy issued business license.
3. The business license-issuing body shall be responsible, within a time-limit of ten (10) working days from the date of receipt of a complete and valid file in accordance with clause 2 of this article, to amend and/or add to the business license if such amendment and/or addition is consistent with the law of Vietnam and an international treaty of which the Socialist Republic of Vietnam is a member. In a case of non-approval to the amendment and/or addition to the business license, the business license-issuing body must notify the enterprise in writing, stating clearly the reasons therefore. 4. On receipt of the amended business license, the enterprise must hand in the original of its old license to the business license-issuing body. Article 11 Re-issuance of business licenses for activities of purchase and sale of goods and
activities related to purchase and sale of goods
1. A business license which is lost, torn, corrupted, burnt or destroyed in any other form shall be reissued. 2. An enterprise whose business license is lost must declare such loss with the police office in the location where the business license is lost and with the business license-issuing body, and must publish an announcement on the mass media on three consecutive occasions. Thirty (30) days after the date of the first announcement, the enterprise shall lodge an Official Letter requesting that the business license-issuing body re-issue the license. 3. An application file for re-issuance of a business license shall comprise:
(a) Request for re-issuance of a business license on the standard form issued by the Ministry of
Trade; (b) Certification from the police office of declaration of loss of the business license; and explanatory statement of the reason for the loss or destruction in some other form of the
business license. 4. The business license-issuing body shall be responsible to re-issue a business license within a time limit of seven (7) working days from the date of receipt of a complete and valid application file. Article 12 Operational contents of purchase and sale of goods and activities related to
purchase and sale of goods 1. The operational contents of purchase and sale of goods and activities related to purchase and sale of goods of an enterprise with foreign owned capital must be specifically recorded in the business license, including:
(a) Activities of purchase and sale of goods and activities directly related to the purchase and sale
of goods which the enterprise has the right to conduct; (b) The types of goods in which business is prohibited, applicable to each activity
stipulated in clause 1(a) of this article; (c) The types of services permitted to be provided which directly relate to the purchase
and sale of goods.
2. An enterprise with foreign owned capital shall only be permitted to conduct activities consistent with the items recorded in its business license. 3. An enterprise shall only be permitted to conduct business in goods and services which the law stipulates are conditional when the enterprise has satisfied all the conditions stipulated by the law of Vietnam.
CHAPTER III Procedures for Issuance of Licenses to Establish Retail Sales Outlets
Article 13 Application files to establish retail sales outlets 1. An application file to establish a retail sales outlet in Vietnam shall contain the following items:
(a) Name and head office address of the enterprise;
(b) Names and addresses of retail sales outlets already established; (c) Name and address of the retail sales outlet it is proposed to establish; (d) Operational contents of the retail sales outlet; (dd) Full name, residential address, and number of identity card or passport or other legal
personal identification of the head of the retail sales outlet;
(e) Full name and signature of the legal representatives of the enterprise.
2. Copy business license. Article 14 Rules for issuance of licenses to establish retail sales outlets 1. An enterprise shall lodge three sets of its application file, one of which shall be an original set, with the provincial people’s committee in the location where the enterprise proposes to establish the retail sales outlet. 2. Within a time-limit of three working days from the date of receipt of the application file, the body which received the file shall check its validity and forward the file to the Ministry of Trade for its opinion. Where an application file is invalid, the body which received the file shall notify the investor in writing in order for the latter to amend or supplement the file. 3. Within a time-limit of fifteen (15) working days from the date of receipt of the application file, the Ministry of Trade shall provide its written opinion on issues for which such Ministry has the administrative function. 4. Within a time-limit of fifteen (15) working days from the date of receipt of the opinion of the Ministry of Trade, the provincial people’s committee shall make a decision on issuance of a license to establish the retail sales outlet. In a case of non-issuance of a license, the body which received the file shall notify the enterprise in writing, stating clearly the reasons therefore. 5. Within a time-limit of seven (7) working days from the date of issuance of a license to establish a retail sales outlet, the body which received the file shall provide copies of the license to the Ministry of Trade and to the provincial people’s committee in the location where the enterprise has its head office. Article 15 Contents and effective term of licenses to establish retail sales outlets 1. A license to establish a retail sales outlet shall contain the following items:
(a) Name and head office address of the enterprise;
(b) Name and address of the retail sales outlet;
(c) Operational contents of the retail sales outlet;
(d) Full name, residential address, and number of identity card or passport or other legal personal
identification of the head of the retail sales outlet;
(dd) Effective term of the license to establish the retail sales outlet. 2. In the case stipulated in article 5.4 of this Decree, the effective term of the license to establish the retail sales outlet shall be equal to the effective term of the business license. Article 16 Amendment of and/or addition to licenses to establish retail sales outlets 1. Within a time-limit of ten (10) working days from the date of a decision by an enterprise with foreign owned capital to change any one of the items stipulated in sub-clauses (a), (b), (c) or (d) of article 15.1, the enterprise must conduct procedures to amend and/or add to its license to establish the retail sales outlet. 2. An application file for amendment and/or addition to a license to establish a retail sales outlet shall contain the following items:
(a) Request for amendment and/or addition to the license on the standard form issued by the
Ministry of Trade, specifying the amended or supplemented contents;
(b) Copy issued license to establish the retail sales outlet. 3. The business license-issuing body shall be responsible, within a time-limit of ten (10) working days from the date of receipt of a complete and valid file, to amend and/or add to the license to establish the retail sales outlet. 4. On receipt of the amended license to establish the retail sales outlet, the enterprise must hand in the original of its old license to the business license-issuing body. Article 17 Re-issuance of licenses to establish retail sales outlets 1. An enterprise with foreign owned capital whose license to establish a retail sales outlet is lost, torn, corrupted, burnt or destroyed in any other form shall be re-issued with a license. 2. The application file and procedures for re-issuance of a license to establish a retail sales outlet shall be implemented the same as for a business license stipulated in article 11 of this Decree.
CHAPTER VIII Implementing Provisions
Article 18 Dealing with breaches 1. Any enterprise with foreign owned capital which commits a breach may, depending on the nature and seriousness of the breach, be subject to an administrative penalty. In the case of a serious breach, the business license or license to establish a retail sales outlet shall be withdrawn. 2. In a case where a breach shows sign of constituting a crime, the offender shall be prosecuted for criminal liability in accordance with law. Article 19 Effectiveness This Decree shall be of full force and effect after fifteen (15) days from the date of its proclamation in the Official Gazette. Article 20 Organization of implementation 1. The Ministry of Trade shall provide guidelines for the implementation of this Decree.
2. The Ministry of Finance shall provide regulations on the amount and management of fees for the issuance, re-issuance, amendment and addition to business licenses and licenses to establish retail sales outlets. 3. Ministers, heads of ministerial equivalent bodies and Government bodies, and chairmen of provinces and cities under central authority shall be responsible for the implementation of this Decree.
On behalf of the Government Prime Minister
NGUYEN TAN DUNG