Points to Note for Economic Demand Examination When Establishing Retail Stores (From the Second Store Onwards) in Vietnam
2025/07/23
- Nguyen Minh Tuan
Introduction
Economic Demand Review (hereinafter referred to as “ENT”) is one of the important procedures that foreign-invested economic organizations (hereinafter referred to as “FDI enterprises”) must undergo when applying for permission to establish their second or subsequent retail stores. This article explains the regulations and necessary procedures of the ENT process to help FDI enterprises smoothly expand their retail business in Vietnam.
1. What is ENT? Cases where ENT procedures are necessary
In the retail sector, ENT (short for Economic Needs Test) is a market economic demand assessment conducted by competent Vietnamese authorities to determine the necessity of permission when FDI enterprises establish their second and subsequent retail stores.
The regulation of ENT applies to FDI enterprises that set up the second and subsequent retail stores in Vietnam. FDI enterprises refer to companies that fall under any of the following categories.
(i) Companies where foreign investors hold more than 50% of the capital contribution, or where foreigners contribute as the majority of unlimited liability partners in a general partnership.
(ii) Companies in which economic organizations corresponding to (i) hold 51% or more of the shareholding ratio.
(iii) Companies in which foreign investors and economic organizations corresponding to (i) together hold 51% or more of the shareholding ratio.
However, retail stores from item 2 onward with an area of less than 500m2, established within a shopping mall and not classified as convenience stores or mini supermarkets, are excluded from the ENT procedure. Therefore, FDI companies need to assess basic information such as the number, area, location, and form of the retail stores they plan to establish in advance to determine whether it is necessary to carry out ENT procedures.
2. Standards to be met in ENT procedures
| No. | Standard |
| 1 | The size of the geographic market area affected by the operation of the retail stores |
| 2 | The number of retail stores operating in that area |
| 3 | The impact on market stability and the business activities of other retail stores and traditional markets within the area |
| 4 | Impact on traffic density, environmental sanitation, and fire prevention/extinguishing |
| 5 | Contribution to economic and social development in the following aspects – Job creation for domestic workers – Contribution to the development and modernization of retail business in the area – Improvement of living environment and living conditions for local residents – Ability and extent of contribution to the national budget |
The competent authority reviews the suitability of the planned site for retail store establishment based on these standards and decides whether to approve the establishment. Therefore, when FDI companies consider expanding their retail business, it is essential to conduct market research in advance and formulate a store establishment plan that complies with each standard in order to smoothly proceed with the ENT procedure.
3. Review Authority and Approval Procedures for Retail Store Establishment Permits Requiring ENT
| Step | Content | Competent Authority | Process (For details, refer to Article 29 of Decree 09/2018/ND-CP (hereinafter referred to as Decree 09)) |
| Step 1 | Initial confirmation of compliance with standards | Department of Commerce and Industry of the province/city where the retail store is located | FDI enterprises, when applying for the establishment of retail stores, submit application documents for the establishment of the second and subsequent retail stores, including a conformity declaration to ENT standards as prescribed in Article 27 of Decree 09. The provincial and municipal Departments of Commerce and Industry, based on Article 22 of Government Ordinance 09, will examine the conformity to the retail store establishment standards and propose the establishment of an ENT Review Committee to proceed to the next step. |
| Step 2 | Examination | The ENT Review Committee established by the Provincial People’s Committee where the retail store is located | The ENT Review Committee evaluates the ENT standards, and the committee chairman prepares a conclusion proposal. The ENT Review Committee is chaired by a representative of the provincial People’s Committee or an authorized agency, and is composed of representatives from related agencies such as the Department of Industry and Trade, Department of Finance (formerly Planning and Investment Department), Department of Construction, Department of Natural Resources and Environment, and Department of Transport. |
| Step 3 | Approval | Provincial and municipal Departments of Industry and Trade where retail stores are located | When the ENT Council Chairman proposes the establishment approval, the Department of Industry and Trade reports the content to the Ministry of Industry and Trade and seeks their opinion. The Ministry of Industry and Trade conducts the review and decides whether to approve the establishment permit or not. |
| Step 4 | Announcement of results | Department of Commerce of the province/city where the retail store is located | When the Ministry of Commerce approves the permit, the Commercial Bureau issues the license for establishing retail stores |
If ENT procedures are required, the review period from application to approval usually takes 3 to 4 months. Therefore, to avoid prolonging the review process, it is important to make thorough preparations and develop an appropriate business plan. Additionally, based on relevant laws and regulations, it is required to prepare to be able to explain the ENT standards in detail.
4. Application status of ENT procedures for the establishment permit application of the second and subsequent retail stores in Vietnam
Currently, Vietnam has committed to gradually abolish ENT procedures for FDI enterprises in accordance with Free Trade Agreements (FTAs) as follows.
– EU-Vietnam Free Trade Agreement (EVFTA): To be abolished from August 1, 2025
– Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP): To be abolished from January 14, 2024
– UK-Vietnam Free Trade Agreement (UKVFTA): To be abolished from August 1, 2025
However, at present, no specific laws or regulations have been enacted regarding the abolition of ENT procedures, and FDI companies still need to confirm with the relevant authorities and carefully consider the necessity of ENT procedures.
In conclusion
ENT procedures play an important role in the establishment of the second and subsequent stores, greatly impacting the business expansion of companies.
FDI enterprises are required to thoroughly understand ENT standards, evaluate the market, and properly prepare the necessary documents for application. It is also important to closely monitor legal amendments and trends in regulatory easing due to FTAs and to be prepared to meet the latest requirements.
References
Decree No. 09/2018/ND-CP detailing the Commercial Law and Foreign Trade Management Law
This article was translated by Yarakuzen.
