Legal framework for multi-level marketing must be improved

July 30, 2021 - 08:24
The legal framework for multi-level marketing business must be improved to better protect rights of consumers while creating a healthier market and not increasing costs for enterprises, experts said.


The legal framework for multi-level marketing businesses is being reviewed for amendments to ensure a healthier market competition. — Photo

HÀ NỘI — The legal framework for multi-level marketing (MLM) business must be improved to better protect the rights of consumers while creating a healthier market for competition and without increasing costs for enterprises, Đậu Anh Tuấn, Head of the Việt Nam Chamber of Commerce and Industry’s Legal Department, said at an online conference on Wednesday.

The conference was held to canvas opinions on the draft decree to amend Decree No 40/2018/NĐ-CP regarding the management of multi-level marketing businesses.

Trịnh Anh Tuấn, Deputy Director of the Ministry of Industry and Trade’s Việt Nam Competition and Consumer Authority, said that although the COVID-19 pandemic heavily affected the Vietnamese economy, multi-level marketing businesses had seen significant growth.

He cited statistics that showed revenue for multi-level marketing enterprises increased by an average of 25 per cent per year since 2018 reaching revenue of more than VNĐ15 trillion in 2020, doubling that of 2017. In 2020, commissions and bonuses were worth around VNĐ5 trillion.

MLM business also contributed significantly to the State budget with tax revenues estimated at VNĐ1.8 trillion in 2020, 2.5 times higher than 2017 before Decree No 40 was issued.

The number of MLM enterprises also dropped from 67 in 2014 to 22 as the ministry cracked down on MLMs operating illegally.

However, in the two years since Decree No 40 took effect, some policies need to be amended to keep pace with market development and ensure management targets.

There are, however, still loopholes in the legal framework which MLM businesses could take advantage of to operate illegally. This was is threatening social security and negatively affects competition.

Đinh Trọng Thịnh from the Academy of Finance said that distortions in MLM business were not only affecting the assets of many people but also causing disturbances and threatening socio-economic security.

Thịnh said that it was necessary to have strict punishments to deter violators and to enhance transparency.

The amended decree should also focus on regulating the network development of foreign multi-level marketing businesses who were showing increasing interest in the Vietnamese market to ensure on-track development.

Việt Nam was one of five countries with the highest growth rate in multi-level marketing business revenue. Around 800,000 people participate in these businesses every year. — VNS