In addition to having a localization rate of 30%, made-in-Vietnam products are required to be partly produced in Vietnam, not just basic processing.

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The Vietnamese Ministry of Industry and Trade (MoIT) has recently released the draft circular providing criteria for products eligible to be classified as “made in Vietnam”.

The draft circular regulates that made-in-Vietnam products should be originated or wholly produced in Vietnam, including agricultural products or natural resources. Otherwise, products should undergo final processing or manufacturing in Vietnam to fundamentally change the essential qualities of the products to be labelled as such. 

 In addition, products would be required to qualify for HS code transformation, an internationally standardized system of names and numbers to classify traded products, and certain amount of added-value to be considered Vietnamese products, such as having 30% of localization rate and being processed in Vietnam. 

 Regarding the HS code transformation, enterprises are allowed to use 100% imported materials during the production process to make made-in-Vietnam products, as long as such process is more than just basic processing, such as packaging, classifying, cleaning, storing, assembling, among others. 

 Notably, imported goods using Vietnam as transshipment for later export are not considered made-in-Vietnam products. 

 The MoIT expects the criteria set in new circular to be vital in tackling growing trend of foreign goods forging Vietnam’s origin, while there would be no additional administrative procedure and costs for enterprises in the new regulation. 

 Under Vietnam’s regulation, it is up to the manufacturers to label their product as “Made in Vietnam” as they wish, provided that they are honest.

 Many enterprises have taken advantages of this loophole to self-proclaim its products as “Made in Vietnam” such as the Khaisilk, a premier Vietnamese silk brand, found mislabeling its scarves imported from China as “Made in Vietnam” or the questionable case of Asanzo, which assembles in Vietnam its TV sets from components imported from China and declared them Vietnamese products.