Vietnamese Government prioritizes refining e-commerce regulations to drive growth

Vietnamese Government prioritizes refining e-commerce regulations to drive growth

With ongoing technological development, improved logistics and rising consumer demand, Vietnam's e-commerce market is poised for robust growth.

The Ministry of Industry and Trade will propose a draft law on e-commerce this year to institutionalize policies and harmonize the sector's legal framework with other laws to ensure consistency and coherence, said Deputy Minister of Industry and Trade Nguyen Sinh Nhat Tan.

Nearly 725,000 organizations and individuals are active on e-commerce platforms, with transactions exceeding US$3 million. Photo: Quynh Lien/The Hanoi Times

He noted that in order to better address the challenges of managing cross-border e-commerce activities, the ministry will decentralize authority in state management and supervision, especially of cross-border digital platforms.

Several online retail platforms, such as Temu and Shein, were able to break into the Vietnamese market without completing the necessary legal procedures. The lax supervision has allowed foreign goods to be sold domestically without being properly taxed, affecting local production, the state agency said.

Additionally, numerous sales activities on social media applications remain unregulated, resulting in consumption data that does not accurately reflect the purchasing power of the population. Currently, nearly 725,000 organizations and individuals are conducting business on e-commerce platforms, with a total transaction value exceeding VND75 trillion (US$3 million), according to data from 439 platforms provided to the taxation authority. In 2024, tax revenue from e-commerce is expected to increase by 20% year-on-year to reach VND116 trillion ($4.6 billion).

Dinh Trong Thinh of the Finance Academy noted that e-commerce has significant advantages, including the ability to reach customers regardless of geographic boundaries, enable shopping anytime and anywhere, and offer diverse business formats with multiple parties.

However, he added, controlling transactions and managing tax obligations in the e-commerce sector remains a challenging task. Sellers do not need brick and mortar stores, and transactions are conducted entirely online, often with servers located overseas. An individual may have multiple storefronts simultaneously on different e-commerce platforms or social media sites.

For efficient tax administration, it is therefore crucial to legalize responsibilities and establish effective coordination mechanisms among stakeholders. Legislative changes on e-commerce must both support its development and benefit consumers, while promoting a stable and competitive environment for domestic businesses, Thinh said.

Vietnam’s e-commerce market exceeds $25 billion in 2024

Local consumers in Vietnam are increasingly turning to e-commerce sites for their purchases. Photo: PVcomBank

The Ministry of Industry and Trade reported that Vietnam’s e-commerce market is projected to surpass $25 billion in 2024,   a growth of approximately 20% compared to 2023. This figure exceeds the previous forecast of $22 billion by Google, Temasek, and Bain & Company. In the region, the country’s e-commerce market ranks behind only Indonesia and Thailand.

Le Hoang Oanh, Director General of the Vietnam E-commerce and Digital Economy Agency, highlighted that changing consumer trends are significantly contributing to the growth of e-commerce. Young consumers are increasingly turning to online shopping with strategies such as social media marketing, livestream sales, and attractive promotions. In addition, the high penetration of smart mobile devices and high-speed Internet connections are facilitating the expansion of e-commerce.

Nguyen Ngoc Dung, President of the Vietnam E-commerce Association, suggested that while 2024 saw strong growth in the e-commerce sector, businesses need to adapt to new consumer trends, enhance technology application, and improve customer service to sustain this momentum. Furthermore, upgrading logistics infrastructure and ensuring security are essential for creating a safe and convenient shopping environment for consumers, he recommended.

Tran Tuan Anh, CEO of Shopee Vietnam, said that Vietnam's market is huge, with a large population rapidly accessing new products as household incomes rise. Consumers in remote areas and islands can also go online without facing any barriers. The pace of change in e-commerce and technology in Vietnam mirrors global trends.

"We hope that regulators will provide support mechanisms to help businesses and individuals access new e-commerce products and business models," he said.

Hanoi Times