The article is made in collaboration between VCCI-HCM and HM&P Law Firm. In this article, HM&P will provide several contents that enterprises need to pay attention to in this Draft, related to their business activities. Below is the English version translated by HM&P of this article:
Advertising is the use of various means by companies to introduce to the public the products, goods and services that they provide. It is an effective method that acts as a link between producers, traders and consumers, promoting the supply and demand of the economy. The Advertising Law 2012, which was promulgated on June 21, 2012, has so far achieved certain successes in regulating advertising activities. Thanks to the effective adjustment mechanism, the quantity and quality of advertising content are now increasing, facilitating advertising service enterprises and promoting the circulation of goods and services.
However, after more than a decade of application, the regulations on advertising still do not seem to have responded timely to the development of the socio-economy, especially after Vietnam joined international treaties. Therefore, in order to strengthen the legal corridor for advertising activities, the Ministry of Culture, Sports and Tourism has proposed to draft a law on amending and supplementing some articles of the Law on Advertising ("Law on Amending the Law on Advertising"). At present, the Ministry of Culture, Sports and Tourism has developed a draft of the detailed outline of the Law on Amending the Advertising Law. In this article, we will provide some contents that enterprises need to pay attention to in this draft in relation to their business activities.
1. Ease regulations on foreign investors' participation in promotional activities in Vietnam
According to Vietnam's Schedule of Specific Commitments in Services upon accession to the WTO, Vietnam commits to the following in the area of advertising:
- No restrictions on cross-border provision services;
- Foreign service providers are allowed to establish joint ventures or enter into in business cooperation agreements with Vietnamese partners who are legally authorized to provide advertising services for commercial presence.
Thus, it is crystal clear that Vietnam's WTO accession commitment includes two contents related to two forms of service provision, in which there is no restriction on the form of cross-border service provision, but still sets certain requirements on the form of commercial presence of foreign operators in Vietnam.
Article 23 of the Law on Advertising 2012 does not specify the rights and obligations of foreign traders to engage in cross-border advertising. However, Clause 2 Article 13 of Decree 181/2013/ND-CP requires Vietnamese organizations and individuals who have goods and/or services and wish to advertise on the websites of foreign organizations and individuals providing cross-border advertising services to go through advertising service providers that are legally registered to operate in Vietnam. Consequently, it leads to additional authorization activities between foreign traders and advertising service providers in Vietnam. In addition, it also leads to information reporting procedures by advertising service providers in Vietnam.
However, this requirement seems to be inconsistent with Vietnam's commitment as a WTO member to cross-border service provision.
On July 20, 2021, the Government issued Decree No. 70/2021/ND-CP, effective from September 15, 2021, which cancelled the provision in Decree 181/2013/ND-CP on the requirement to license advertising service providers in Vietnam.
Following the spirit of Decree 70/2021/ND-CP, the Draft Law on Amending the Law on Advertising has mentioned to specify the rights and obligations of enterprises engaged in cross-border advertising activities based on the provisions of Decree 70/2021/ND-CP of the Government. On the contrary, the Draft Law has specifically "enforced" the rights and obligations of foreign traders engaged in cross-border advertising in Vietnam.
Regarding the form of providing services through the commercial presence of foreign traders in Vietnam, as mentioned above, in Vietnam's commitments as an accession to the WTO, there are still requirements that foreign investors operating in the field of advertising in Vietnam must establish joint ventures or enter into cooperation agreements with Vietnamese partners who have been allowed to provide advertising services. It is codified by the provisions of Clause 1 Article 40 of the Law on Advertising 2012.
However, with more than 10 years of application, the regulation is no longer suitable for practice. The purpose of Vietnam in making commitments and legislating this regulation is to protect Vietnam's fledgling advertising field against competitive pressure from advertising powers in the world. However, it no longer really protects the domestic advertising field, not to mention, also increases nominee agreement to avoid legal restrictions on foreign investors. Then, create unfair competition between enterprises in the advertising field.
Therefore, this draft has made a significant adjustment, which is to amend and supplement the provision that foreign advertising enterprises can directly provide advertising services in Vietnam, do not need to cooperate with Vietnamese advertising service providers.
Although there are no official regulations on this, however, in the spirit of not requiring foreign investors who want to operate in the field of advertising in Vietnam to establish joint ventures or business cooperation contracts with Vietnamese partners who are legally authorized to provide advertising services. In the coming period, advertising will be an investment field that promises to attract more attention from foreign investors. On their part, Vietnamese enterprises engaged in operate in the field of advertising also need to upgrade their enterprises to be able to cope with the competitive pressure from foreign investors in the same field.
2. Updating further advertising conditions for special products
For the general advertising activities, the applicable law makes a clear distinction between the advertising content of special products, goods and services ("special products") and ordinary products, goods and services[1]. Accordingly, these products must also meet separate advertising conditions and ensure advertising content in accordance with the special regulations. For example, the advertising content of pharmaceuticals is now strictly controlled by the State. In order to meet the advertising conditions for drugs, the advertising content must first comply with the provisions of Article 125 of the Decree 54/2017/ND-CP for each form of advertising, and then procedures must be carried out to request confirmation of the advertising content[2] before the products are introduced to the public.
Advertising regulations for special products in general and pharmaceuticals in particular are very strict, but this is appropriate because these are products that directly affect human health and the environment[3]. If the advertising content is inappropriate or dishonest, if it is not carefully evaluated, it may have a negative impact on social life, even difficult to overcome or have to be overcome at a very high cost.
Due to the influence of advertising in the circulation of the above-mentioned special products, the State now intends to add additional requirements for the advertising content of these products based on the provisions of the Decree No. 181/2013/ND-CP and update in accordance with the newly promulgated system of specialized legal documents[4], amendments will be proposed by the relevant ministries[5]. From the current situation, although the laws have strictly regulated the conditions and advertising content of special products, especially drugs, social networks are still rampant with advertisements of traditional herbal medicines, commitment to cure diseases.... Therefore, the upcoming revised regulations are expected to further tighten the existing regulations on the advertising content of the above special products.
However, this is only the draft of the amendment of the Advertising Law, and it still needs more time to complete the regulations on advertising still needs more time, so it is not possible to conclude whether or not these additional requirements will bring positive benefits to the economy and socio-economic management efficiency, especially for genuine business enterprises. However, the enterprises currently engaged in the above-mentioned special products and advertising activities should also focus on regularly updating the progress of the completion of the advertising regulations, which will help the enterprises to timely grasp the adjustments and additions related to the advertising conditions of their products.
To sum up, the Law on Amending the Advertising Law, which is still in the process of development and completion, promises to bring positive adjustments to advertising enterprises and create a healthy competitive environment between domestic and foreign investors. At the same time, the new regulations also help advertising activities in Vietnam to be more carefully examined before being transmitted to the public, and promote internal changes in advertising enterprises towards advertising products with higher quality and value.
Read the article at: Dự thảo sửa đổi Luật Quảng cáo – Nhiều điều chỉnh ảnh hưởng trực tiếp đến doanh nghiệp
[1] Clause 4 Article 20 of the Law on Advertising 2012.
[2] This procedure applies to all special products, goods and services as prescribed in Article 12 of the Decree 181/2013/ND-CP.
[3] Clause 12 Article 2 of the Law on Advertising 2012.
[4] Clause 5 Article 1 of the Draft of the Law on amending the Advertising Law.
[5] Clause 6 Article 1 of the Draft of the Law on amending the Advertising Law.
