Overview on Cosmetics Regulations in Vietnam

Cosmetics are areas of highly regulated in Vietnam as they apply on human and could create health concern. Hence, cosmetics imported into Vietnam have to be applied special procedures to ensure safety. Cosmetics regulations in Vietnam would lay out provisions that importers and manufacturers to follow.

To carry out the Combination Convention in the cosmetic management which has been signed by countries are member of the Association of Southeast Asian Nations on September 2nd, 2003 (commonly called ASEAN Cosmetic Convention), the Ministry of Health of Vietnam issued Circular 06/2011/TT-BYT on Cosmetic Management.

The Circular dated January 25th, 2011 regulating the management of cosmetic products manufactured in the country, as well as cosmetics imported for circular in Vietnam. Besides, the cosmetic regulations is also provided in related provisions.

According to the Vietnam cosmetic regulations, cosmetic product must be construed as a substance or a preparation which is used for touch with outside parts of human body (skin, hair system, finger nails, toenails, lip, and outside reproduction organ) or teeth and mouth mucous membrane with main purpose in order to cleanse, aromatize, change the outward characteristics, form, adjust body’s smell, safeguard body, or maintain the human body in good condition. In addition to the products being grouped as cosmetic products such as: creams, emulsion, lotions, gels and oils for skin (group 1); tinted bases (group 2); toilet soaps, deodorant soaps (group 3); … some products are not classified as cosmetic.

Under Vietnam law, a cosmetic product made in Vietnam or imported into Vietnam must go through procedure of proclamation before being is sold on the market. In particular, organizations or individuals circulating the cosmetic products on the market have to be responsible for obtaining permissions through cosmetic product proclamation from authority agencies as well as responsible for safety, effectiveness, and quality of product.

For exporting cosmetic, the exporter needs to obtain the Certificate of Free Sale (CFS) as regulated. CFS is issued when such domestic cosmetic is issued the cosmetic product proclamation receipt number by competent state management agency. For importing cosmetic, enterprises are only allowed to import the cosmetic into Vietnam when presenting to the Customs agency the valid receipt number of cosmetic product proclamation report which has been issued by the Medicine Management Department – the Health Ministry. However, Vietnam law also provide import of cosmetic in some special situations which are not obligated to implement the cosmetic product proclamation as the following:

– Organization or individual who imports cosmetic in order to study and experiment;

– The organizations, individuals who receive cosmetic as gifts;

– The organizations, individuals who import cosmetic for displaying at fair, gallery and other temporary import for re-export situations.

For manufacturing cosmetic, the cosmetic regulations require the organizations which manufacture the cosmetic must deploy to apply and satisfy principles, the “cosmetic good manufacturing practice” standard of the Asian Southeast Association Nations (CGMP-ASEAN).

Besides, compliance with the other requirements such as labeling, safety of ingredients, cosmetic advertising is also required.

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China usurps US as Vietnam’s top export market: report

Vietnam’s exports to China surged about 15 times to $50.6 billion over the past decade.

China has overtaken the U.S. to become Vietnam's biggest export market, according to reports.

The shift happened last year after the U.S. started adopting several trade protectionist policies, and China started boosting trade and investment in Southeast Asia, Bloomberg reported on Wednesday.

The U.S. had been Vietnam’s top export market since 2002 before being taken down by China last year, Bloomberg said.

Vietnam’s exports to China surged about 15 times to $50.6 billion compared with a fourfold increase to the U.S. to $46.5 billion in the decade through 2017, according to statistics from the International Monetary Fund, as cited by Bloomberg. The trend has persisted this year with Vietnam’s shipments to China increasing by 33.5 percent in Q1 compared to the same period last year, as opposed to a 20 percent jump to the U.S., according to data from the General Statistics Office of Vietnam.

“The center of trade for Asia has clearly shifted to China from the U.S.,” said Eugenia Victorino, an economist from Australia & New Zealand Banking Group in Singapore, Bloomberg reported.

Victorino also said that Asian countries would soon realize that China is superior to the U.S. in terms of trade, especially with the U.S. taking a protectionist stance.

Le Dang Doanh, a Vietnamese economist and a member of the Committee for Development Policy of the United Nations, said Vietnam needs to stop being too dependent on China by diversifying to more markets, Bloomberg reported.

In fact, Vietnam is already on the move, having signed several international trade deals such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership last month, which will reduce trade tariffs between the 11 member countries. 

In 2015, the E.U.-Vietnam Free Trade Agreement was also signed, reducing tariffs between Vietnam and the 28 member countries of the E.U.

According to the General Statistics Office of Vietnam, the U.S. still reigns supreme as Vietnam's top export market, but exports to China are growing at a much faster rate compared to the U.S in recent years.

In the three years from 2015 to 2017, Vietnam's export turnovers to the U.S. were $33.5 billion, $38.4 billion and $41.6 billion respectively, while export turnovers to China were $16.5 billion, $21.9 billion and $35.4 billion respectively, said the office. 

Vietnam's total import-export turnover reached an estimated $107.32 billion in the first quarter, up 17.7 percent against the same period in 2017, with export value in the first three months hitting $54.31 billion, while imports registered $53.01 billion, resulting in a trade surplus of $1.3 billion, according to data from the General Statistics Office.

Source: evnexpress

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Vietnam Customs Law 2014

On 23rd June 2014, the Vietnam National Assembly has issued the new Vietnam Customs Law. This new law comprises of 8 Chapters, 104 Articles and shall come into effect on 1st January 2015.

Accordingly, the new 2014 Vietnam Customs Law is focusing on customs procedure reform, modernization of customs administration, codify international laws on international commitment in order to meet the requirements and facilitate integration beneficial for import and export activities; improve the effectiveness and efficiency of customs operations management.

Article 23 of the law regulates the custom documents towards reducing the numbers of papers of customs documents required in the relevant documents to be submitted when doing customs procedures i.e. commercial invoices, import-export document. Custom documents can also be in writing or electronic invoices.

Besides, the new Vietnam Customs Law boosts the management practices from pre-check to post- check. Mechanism of post-clearance inspection for a period of 5 years is strictly specified in terms of objects, conditions and sanctions when a violation is detected. This provision not only facilitates but also tightly controls the flow of goods to ensure that it is in compliance with the customs declaration.

Clause 6 Article 88 of the 2014 Vietnam Customs Law regarding the jurisdiction of the customs authorities in the application of prevention of smuggling and illegally transporting goods across borders has been supplemented to detail the measures to control custom.

In addition, the provisions of Article 92 stipulates that Customs agency, customs officers shall be equipped with and using professional technical facilities, weapons, support tools, flags, signal flares, lights, screening, biochemical technology, mechanical equipment, electrical, electronic and other means as prescribed by law to perform the task of preventing and battling against smuggling, illegal transport of goods across the border. The equipment and the use of weapons and tools to support prescribed by law shall be governed in complied with regulations for management and use of weapons, explosives and support tools. These are important provisions to prevent and battling against smuggling, illegal transport of goods across the border.

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Dispute Resolution Through Arbitration

Dispute resolution methods are litigation, negotiation, mediation and arbitration. Handing disputes requires litigation law firm with dispute lawyers in Vietnam having experience and knowledge to provide resolutions to complex cross-border issues, commercial and civil disputes.

In the current business environment, most business agreements could contain a clause stipulating that disputes arisen must be resolved in arbitration. For a dispute to be referred to arbitration, there must be a valid arbitration agreement in writing, either as an arbitration clause within a contract or a separate agreement. If the agreement is included within the context of a contract, the arbitration clause is considered independent, and any modification, extension, or termination of the contract does not affect the validity of the arbitration clause. 

Vietnamese law allows for a written arbitration agreement to take the form in any written form, so long as the writing clearly indicates the parties’ intent to resolve any dispute via arbitration. If a dispute falls within the scope of a valid arbitration agreement, but a party attempts to initiate court proceedings, the residing court does not have jurisdiction over the matter, and must drop the case. Moreover, an arbitration agreement does not have to stipulate specific dispute matters and/or the arbitration organization authorized to resolve disputes without supplemental agreement. Even if there is a valid arbitration agreement, Vietnamese Arbitration Law stipulates that in order for a dispute to go to arbitration, it must also fit into one of three categories:

(1) disputes arising from “commercial activities”;

(2) disputes where at least one party is engaged in commercial activities;

(3) other disputes where the law stipulates that arbitration is a permissible means of resolution.

In category (1), the term “commercial activity” is defined in Commercial Law No. 36-2005-QH11 (31 December 2005) as “activity for profit-making purposes comprising the purchase and sale of goods, provision of services, investment, commercial enhancement, and other activities for profit-making purposes.” The types of disputes that often fall into the second category are noncommercial disputes, such as civil disputes, where at least one party to the dispute is engaged in commercial activities. However, this category does not apply in disputes between a good/service provider and a consumer. In this case, the law allows the party to choose between litigation and arbitration. Even the agreement includes a standard arbitration clause in the supply of goods or services contract, the dispute may not be arbitrated without the consumer’s consent. The final category of disputes permissible for arbitration gives legislators discretion to expand or maintain the types of disputes resolved through arbitration. An example of a category (3) dispute is a dispute arising from investment activities governed by the Law on Investment.

Arbitration has become an extremely popular method of dispute resolution, as many businesses prefer it over the high costs of litigation.

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