3:26:18 PM | 7/8/2005
The 4th draft of the amended Trade Law: Is this the one?
The 4th draft of the amended Trade Law will be submitted to the National Assembly on July 20. Consumers hope that the new draft will correct promotional activities that have deceived them in recent times. The round table on "Legal issues regarding promotion activities," organised by the Trade Promotion Department under the Ministry of Trade on July 26, 2004, has received several constructive views from lawyers, economists and businesses, which contribute to the 4th draft.
Fears of unfavourable promotional activities
In 2003 and the first half of 2004, there were over 600 local and 220 national promotion programmes, including an impressive programme introduced by Ha Tay Beer offering prizes of six BMW automobiles each valued at US$56,000. How can these programmes be supervised and inspected?
Almost all consumers have experienced these promotional activities. The prizes are certainly very attractive ranging from automobiles, motorbikes, television sets, air conditioners to tourist programmes to the West and the East. However, no one can certify how many prizes consumers have won.
The producers can confuse consumers and related authorities with unclear regulations, definitions and formalities. Mr. Le Tri Dung, Director of VCCI Expo company asked: "How can the Trade Ministry be sure that there were 200,000 prizes awarded as part of a beer promotion campaign and not only 100,000 with the special prizes remaining in the briefcase of the company director?"
In reply, Mr. Do Thang Hai, Deputy Head of the Department of Trade Promotion, said: "We can at least supervise the major prizes, such as houses worth VND500-700 million at prize giving ceremonies."
Public utilities and charities could benefit
Mr. Do Gia Phan, Vice-Chairman of the Association on Standards and Consumers' Interests said: "The expense for promotional activities is included in the production cost and thus exempted from enterprise profit tax. Therefore, such activities must be supervised to avoid losses in taxes. If the value of promotional activities is smaller than the registered prizes, the balance must be contributed to the development of public utilities."
Mr Truong Quang Nam, Head of the Legal Department under the Ministry of Trade said: "In many cases, the enterprises have made use of promotional activities for dumping or creating unhealthy competition. If no one wins the prizes, 50 per cent of the value of the prizes must be contributed to charity."
However, enterprises have different views. Ms. Bach Kim Chung, Public Relations Officer at Ha Tay Brewery Co., Ltd said: "It should serve as a warning and not a provision in the Law because it is not the fault of the producers when the consumers fail to win the prizes. We make sure the prizes are included in the production line."
The draft is expected to include a penalty clause against violations in promotional activities. According to Mr. Do Thang Hai, the maximum penalty will be the permanent suspension of promotional campaigns.
Novelty of amendment
The new element of the draft is the permission for foreign representative offices to conduct promotional activities on behalf of an overseas parent company. It is also a controversial issue, as the Trade Law does not allow business activities to be conducted by foreign representative offices, particularly when promotional activities are closely related to profit making activities of enterprises. The endorsement of the amendment still depends on the scrutiny of relevant bodies before the final decision. The most important thing that should come out of the amended Law is the eradication of overlapping.
Forum:
Correct law but limited enforcement
Both officials and lawyers feel the need to amend the Trade Law but see several shortfalls in the present draft concerning promotional programmes, advertisement and trade fairs and exhibitions.
Promotional programmes are increasingly attractive to consumers, highlighting trademarks and increasing turnover and profit. However, many promotional activities have misguided consumers, causing them to spend excessively often on things they do not really need.
Mr. Do Thang Hai, Deputy Head of the Department of Trade Promotion:
Several promotional campaigns have engaged in unhealthy competition or have harmed consumers' interests. Some programmes even fail to comply with the registration formalities or are not implemented as registered. Unclear regulations have caused misunderstanding on commodities, services and prizes that run counter to the legitimate interests of consumers. They have also discriminated between customers from different regions or the prizes have not been of the same value as officially announced.
Dr. Nguyen Minh Chi, Chairman of the Vietnam International Arbitration Centre:
Promotional activities in other countries are often encouraged, or even protected to develop the economy. In Vietnam the weakness lies in the management and feasibility of the law. Such activities are often not fully oriented and consumers are bewildered at how the programmes might affect them. This has seriously hampered the competition environment.
The draft allows foreign representative offices to conduct promotional activities. This should be reconsidered as the programmes always include the selling of commodities or services. For instance, a consumer buying a television set will be granted a tea set.
Under the present conditions, the expansion of promotional activities would cause more problems. The law is correct but the enforcement is limited.
Concerning advertising, unlike Vietnam, other countries do not limit expenses on such activities. In the United States, enterprises in their early stages may spend 60-70 per cent of their turnover on advertising.
Too many companies are engaging in trade fairs and exhibitions with low managerial skills and poor quality. Only well-known enterprises can ensure effective performances at these events.
Vietnamese
