E-commerce market booms, but hard to control

E-commerce in Viet Nam is growing, however many individuals and businesses are taking advantage of online platforms to sell poor quality and fake goods, harming customers and causing lost tax revenues.

 

The statement was made by Dam Thanh The, Chief of the Standing Office of National Steering Committee 389, at a conference held in Ha Noi on Thursday.

The said authorities had not been able to control fraud on such platforms as there was a lack of regulations over the e-commerce sector.

In addition, the legal framework lagged behind the development of technology and sanctions were not strong enough to deter violations.

E-commerce boom

According to data released by German market research firm Statista, in 2018, Vietnamese's e-commerce revenue reached nearly US$2.27 billion and was on the list of the six most developed e-commerce countries.

Statistics compiled by Nielsen Viet Nam and Miniwatts Marketing Group showed that 85 per cent of the Vietnamese population uses the internet, ranking 13th among the 20 countries with the highest proportion of internet users in the world.

Vietnamese consumers spend an average of 7 hours a day online. 90 per cent of the urban population and 50 per cent of the rural population use smartphones.

According to the Viet Nam E-Business Index 2019 Report 2018, the growth of e-commerce in the period 2017 - 2019 averaged between 25 per cent and 30 per cent per year. If Viet Nam maintains this growth, the market in 2025 will rank third in Southeast Asia, following Indonesia and Thailand.

A representative of the General Department of Market Management, under the Ministry of Industry and Trade (MoIT), said e-commerce business activities had seen strong development both in value and volume, attracting many businesses and individuals.

However, the growth of e-commerce also encouraged the trade of banned and counterfeit goods.

Controlling e-commerce activities

Regarding domestic e-commerce activities, Nguyen Thi Minh Huyen, MoIT’s Deputy Director General of Vietnam E-commerce and Digital Economy Agency, said in order to protect consumers, the MoIT had invited e-commerce exchanges such as Lazada, Tiki, Shopee, Sendo and Adayroi to commit to fighting counterfeit, fake and smuggled goods.

These branded e-commerce platforms have measures to protect consumers. However, the management of individuals and businesses that operate on social networks is extremely difficult.

For cross-border e-commerce activities, Viet Nam has different legal documents such as the Law on E-Commerce Transactions, Law on Cyber Security, Law on the State Bank of Viet Nam and Law on Tax Administration.

However, according to Nguyen Cong Binh, Deputy Director General of Vietnam Customs, The legal documents governing this activity are not sufficient, leading to lax regulations over the sector.

All import-export goods, including those of traditional commerce or e-commerce, are controlled by customs authorities. However, in traditional trade, the customs authority manages all goods as well as records and documents related to import and export.

As for e-commerce, transactions are conducted in cyberspace, so customs offices can only manage goods physically at border gates. Paperwork, invoices and documents related to goods are not manageable.

If it is imperative that all electronic transactions have complete records and invoices during import and export, it will hinder the development of the industry. However, if it is not strictly controlled, it will be very difficult to prevent fraud, especially tax fraud, that causes losses of state budget revenue and adverse impacts on domestic production and business activities.

Hien suggested that to manage this activity, it was important to control the origin of goods and clamp down on the manufacture of counterfeit products.

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