Business

Decree to tighten multi-level marketing rules

In the future, foreign investors who wish to register for multi-level marketing (MLM) activities in Vietnam may need three consecutive years of experience in multi-level marketing in another country.
Decree to tighten multi-level marketing rules ảnh 1The multi-level marketing model. (File Photo)
Hanoi (VNS/VNA) - In the future, foreign investors who wish toregister for multi-level marketing (MLM) activities in Vietnam may need threeconsecutive years of experience in multi-level marketing in another country.

The condition is part of a draft decree to amend some articles of Decree 40 onthe management of MLM business activities, which has been developed by theMinistry of Industry and Trade.

The Vietnam Competition and Consumer Protection Authority (VCCA) under theMinistry of Industry and Trade said the draft would reduce the required basictraining time and adjusted the training content to suit reality.

The draft also introduces regulations to improve transparency in the operationof MLM enterprises by adjusting the international patronage mechanism, preventingillegal activities or gaining illicit profits from the Vietnamese market.

Notably, the draft supplements regulations on the minimum commission rate onindividual sales of participants to encourage businesses to promoteparticipants' sales activities and limit the risk of disguised MLM businessmodels, which only recruits sellers and consumes goods within the system.

In addition, the draft amends regulations and issues on administrativeprocedures to ensure consistency and convenience in implementation.

The VCCA is expected to finalise the draft before the Ministry of Industry andTrade submits it to the Government in December this year.

A VCCA report revealed that the number of enterprises registering for MLMbusiness dropped in 2015-2020.

The country had 67 multi-level business enterprises in 2015, with 850,000people participating in multi-level sales networks.

Multi-level sales networks attracted more than 1.2 million people in 2018.However, the number of MLM enterprises was only 22 last year, with the numberof MLM sellers down to about 800,000.

However, revenue from multi-level sales increased sharply.

Total revenue from multi-level sales reached 8 trillion VND (348 million USD)in 2015, contributing 588 billion VND to the State budget, while the figurelast year was more than 15.3 trillion VND, contributing 1.8 trillion VND to theState budget.

Thanks to the drastic actions of authorities, the market has purged disguisedMLM enterprises in the past five years, said the VCCA.

With the participation of State management agencies from the central to locallevels, multi-level sales activities have been gradually stabilised, it added.

The sector’s revenue has increased steadily and businesses have madecontributions to the State budget, said a VCCA representative./.
VNA
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