Draft Decree on Criteria for Determining Vietnamese Origin: Proposed Framework for Identifying the Origin of Goods Circulating Domestically
The Ministry of Industry and Trade is currently finalizing a draft decree on criteria for determining Vietnamese origin for goods circulating within the domestic market (the “Draft”), with the objective of establishing a clear and transparent legal basis for origin labeling and advertising. The Draft introduces several notable points as follows:
Criteria for Determining Goods of Vietnamese Origin
Accordingly, goods shall be considered of Vietnamese origin if they fall into one of the following three categories:
- Goods wholly obtained in Vietnam, including plants grown and harvested in Vietnam; animals born and raised in Vietnam; products derived from such animals; minerals extracted in Vietnam; and products obtained from fishing, hunting, or gathering activities conducted in Vietnam;
- Goods produced in Vietnam entirely from materials originating in Vietnam;
- Goods that are not wholly obtained in Vietnam but undergo their final substantial transformation in Vietnam, resulting in a fundamental change in their nature and achieving a value content exceeding the prescribed minimum threshold.
Determination of Vietnamese Value Content for Non-Wholly Obtained Goods
For goods that are not wholly obtained in Vietnam, the Draft proposes that the value added through production, processing, or manufacturing activities conducted in Vietnam must account for at least 30% of the ex-works price of the goods.
The calculation method for Vietnamese value content is specifically outlined, taking into account the value of originating and non-originating materials, ex-works price, direct labor costs, allocated production costs, and the manufacturer’s anticipated profit.
For goods in the information technology and digital technology sectors, the Draft also recognizes that activities such as research and development, design, assembly, manufacturing, testing, digitalization, automated programming, and product development may be included in the Vietnamese value content if carried out in Vietnam.
Simple Processing Operations Not Qualifying for Vietnamese Origin
A key feature of the Draft is the proposal that simple processing operations shall not be considered in determining Vietnamese origin. Such operations include preservation, simple packaging changes, basic cleaning, ironing or pressing, labeling, simple polishing, husking, coloring, simple cutting, sorting, simple packaging, simple assembly, basic inspection, or individual slaughtering of animals.
This provision is significant in preventing situations where imported goods undergo only minimal processing in Vietnam but are nevertheless labeled or marketed as having Vietnamese origin.
Obligations of Traders
The Draft imposes clear obligations on traders when presenting information regarding Vietnamese origin on product labels or related materials. Specifically, traders are required to:
- Take full legal responsibility for the declared origin of goods;
- Retain documentation substantiating the origin of goods; and
- Provide supporting documents upon request by competent authorities.
Practical Implications for Businesses
Overall, the Draft represents an important step toward standardizing the determination of Vietnamese origin for domestically circulated goods. The introduction of a dedicated regulatory framework for the domestic market is expected to curb arbitrary origin claims, while providing a clearer legal basis for market surveillance and consumer protection.
In light of the above, should the Draft is adopted, enterprises should consider the following actions to mitigate the risk of misrepresenting origin:
- Review product portfolios and current origin claims to determine which products satisfy the Draft criteria for Vietnamese origin;
- Reassess supply chains and production processes, particularly for goods with imported inputs or only minimal processing conducted in Vietnam;
- Standardize documentation evidencing origin, including materials records, bills of materials, production processes, cost structures, invoices, technical documents, and related records for inspection purposes;
- Review product labeling, commercial materials, and advertising content to ensure that origin claims are legally compliant and not misleading; and
- Establish internal control mechanisms among legal, production, procurement, and marketing functions to ensure that origin-related claims are consistently verified prior to market disclosure.
