Distribution service sees significant changes, poor management

After three year of accession to the World Trade Organization, Vietnam has seen significant changes in distribution service sector, and particularly, retail services, but it has also revealed several shortcomings in State management of the sector. 

Shoppers at a supermarket in Ho Chi Minh City (Photo: SGGP)

The statement was agreed to by participants at a workshop entitled “International experience on State management of distribution services and recommendations for policy making in Vietnam”, which was held by the Domestic Market Deparment under the Ministry of Industry and Trade and Multilateral Trade Assistance Project, Phase III (EU – Viet Nam MUTRAP III) in Ho Chi Minh City on September 7.
 
Achievements
 
Retail sales and services in the country increased constantly throughout periods, with the period 1996-2000 seeing a rise of 10.75 percent per year, 2001-2005 18.3 percent, and 2006-2008 25 percent.
 
In 2009, total retail sales and service revenue reached US$65 billion, accounting for over 60 percent of the country’s gross domestic product (GDP).
 
The total revenue was VND747.4 billion in the first six months of 2010, a year-on-year increase of 26.7 percent.
 
Vietnam has also continuously ranked in top positions in Global Retail Development Index (GRDI).
 
According to rankings by the US consultancy group, A.T.Kearney, in 2007, Vietnam ranked 4/7 in the list of the most attractive retail markets in the world, in 2008, it was ranked in the first position, in 2009 the six, and 2010 14th.
 
Infrastructure for the distribution service has developed at a very high rate.
 
According to the ministry, there were 8,500 markets nationwide in 2009. The number of markets rose by 100 in the first six month of the year.
 
In 2009, the number of supermarkets was 451, 26 of which were owned by foreign investors.
 
The country has also witnessed the entrance of world-class retailers such as Metro Cash&Carry (Germany), Big C (Bourbon – France), Parkson (Lion Corp. – Malaysia), Diamond Plaza (South Korea) and Lotte (South Korea)
 
Former trade minister Truong Dinh Tuyen said, the distribution service, especially retail service in Vietnam are being so dynamic and developing well like never before.
 
It opens new opportunities for both domestic and foreign enterprises, and gives local customers more choices, he added.
 
Shortcomings
 
Along with the strong development, management of the distribution service sector has revealed many shortcomings, with many counterfeit, low-quality, smuggled and unsafe goods flooding the market.
 
The country’s current legal system on distribution service is imperfect as there yet to be a consistent regulation on the sector, clear concepts of retail and wholesale, and guidelines on the Economic Needs Test (ENT).
 
Development planning for trade has not been as expected as it failed to show development of business models.
 
Participants at the workshop said it is high time for Vietnam to have a specific code of retail to monitor the sector better and create a legal framework for enterprises to develop.
 
The workshop was the second in the series of three workshops organised in this year to compile recommendations of international and local experts in order to assist the ministry to draft a practical Decree on distribution service.

By Thuy Hai – Translated by Yen Thi

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