After the authorities revoked working licences of five multi-level marketing (MLM) firms last year, there are 23 firms of this type allowed to operate in the country.

Amway Vietnam is among 23 multi-level marketing (MLM) firms in Vietnam.
(Photo thoibaokinhte)

According to the Department of Competition and Consumer Protection (a unit under the Ministry of Industry and Trade), MLM firms work as pyramid schemes, in which the sales force is compensated not only for the sales they generate, but also for the sales of the other salespeople they recruit. 

In addition to more than 20 firms with working licences, the department said there are a number of unlicensed firms trading to raise money from innocent participants, aiming at making illicit profits and affecting the market and consumers.

Since last year, the department has coordinated with localities to tighten management over those firms.

After checking 28 MLM firms in 2018, the department reissued working licences for 23 firms that met the regulations on business conditions under the Government's Decree No. 40/2018 / NĐ-CP of March 12, 2018 on managing business activities in a multi-level manner. At the same time, it withdrew five that failed to meet the conditions.

As of early this year, 23 enterprises have been granted licences to work as MLM firms across Vietnam.

Last year, the department fined three MLM firms more than 1.4 billion VND for their violations.

Thien Su Vietnam Co., Ltd. received a fine of 585 million VND, New Image Vietnam Co., Ltd. received a fine of 250 million VND, while Morinda Vietnam Co., Ltd. was fined 605 million VND and had its licence revoked.

Together with the tightened management, the department warned people about the risk of illegal MLM firms through different activities, like talk shows on mass media to inform them about the law on MLM activities and how to recognise and avoid illegal ones.

A representative of the department said it will closely coordinate with relevant agencies, especially local authorities, to inspect, examine and deal with violations, find and stop illegal firms to better protect consumers.

As of the end of June 2019, there were 817,034 people participating in MLM firms, down 35 percent compared to the end of December 2018. Of those mentioned, only 36 percent take part in sales activities and receive commission, while the rest participate in the firms to buy goods at preferential prices and do not make sales.

The total multi-level sales in the first six months of 2019 reached more than 5.8 trillion VND (250 million USD), an increase of 25 percent over the total revenue of the same period of 2018.

Also in the period, MLM firms contributed 886 trillion VND to the state budget including 40.39 percent from value added tax, 33.9 percent from import and export tax, 11.22 percent from personal income tax, 12.22 percent from corporate income tax and 2.15 percent from other taxes.