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Figure 3.9: Penalties to some multi-level business companies in 2016

Figure 3.9: Penalties to some multi-level business companies in 2016

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3.3. Assessments on State administration for multi-level business

3.3.1. Achievements

3.3.1.1. System and functions of State administration for multi-level business

- The system of State administration for multi-level business is relevant and relatively fair.

- The system of State administration for multi-level business has fairly efficient operations.

3.3.1.2. Methods and instruments of State administration for multi-level business

Methods and instruments of State administration for multi-level business are effective.

3.3.1.3. Issues of State administration for multi-level business

The issues of State administration for multi-level business is stable.

3.3.2. Limitations and causes

3.3.2.1. Limitations

First: Limitations in the system and function assignment of multi-level business administration

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The administration system has not been specialized

The support and coordination of stakeholders are not clear, regular and proactive.

The assignment of functions and tasks of bodies is ineffective with limited coverage



Second: Limitations in personnel for multi-level business administration

Personnel in administration agencies for multi-level business is inadequate and unqualified.

The number of officers on multi-level business administration is small and unspecified.

Third: Limitations in communication and information in multi-level business administration

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The communication and monitoring of multi-level business in the area are still weak and

under-appreciated. The disclosure of information on websites of Departments of Industry



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and Trade is limited, especially multi-level business.

Local People’s Committees, Departments of Industry and Trade can only get the number of

registered multi-level businesses, but not the underground ones. They can not fully update

the situation of multi-level business on their websites or inform local residents.



Fourth: Limitations in issued documents on multi-level business administration

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Multi-level business is mainly managed under Decree 40/2018/ ND-CP on multi-level

business and Circular No. 10/2018/TT-BCT. Few localities have issued detailed local



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documents on regulating multi-level business.

Legal documents do not keep up with current development, even the violations.

Regulated deposits are low at no less than 10 billion VND on the chartered capital. There is



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no requirement to be calculated based on the annual sales.

The multi-level business objects are limited to physical goods.

The trading and transfer of multi-level business networks, excluding acquisition or merger,



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may lead to negative results and problems in handling violations.

There are few regulations on regular reports, notice of workshops, consultancy and product

launch.



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Despite being amending towards closer administration, regulations on multi-level business

have not covered every aspect of the business form, leading to some trade fraud.

Fifth: Limitations in implementation of documents on multi-level business administration

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The clarity in the payment of commission, bonuses and other financial benefits.

The rebuy of goods

The roles of code of conducts and code of ethics in multi-level business in Viet Nam have



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not been appreciated, so many enterprises and participants have violated the laws.

There is a lack of resources for implementation



Sixth: Limitations in inspection, supervision and settlement of violations in multi-level business

- The inspection of multi-level business has not been planned, and regular. It only takes place in

case of complaints. The system and personnel of inspection are limited in competence, which has not in

parallel with the development and sophistication of unlawful behaviors.

- Inspection and handling violations in multi-level business lacks the close coordination from

other stages.

- Inspection and handling violations have only focused on multi-level business registration

certificates, types of goods, commission payment, among others.

- The inspection and handling violations are separated among different agencies. The

regulations on inspection and handling are not strict enough.

- Regulations on punishments are inadequate and lenient, so violators are not afraid of

committing crimes.

- The non-transparent information on actual revenue from multi-level business allows

companies to promote and confuse people. In addition, the income from multi-level business is not

controlled, leading to tax loss.

3.3.2.2. Causes

First: External factors

- Socio-economic situation in Viet Nam

- Cultural-political situation in Viet Nam

- Science and technology in Viet Nam

Second: Internal factors

- The State

- Participants, consumers and the public

- Multi-level business companies in Viet Nam

CHAPTER 4:

SOLUTIONS ON PERFECTING STATE ADMINISTRATION FOR MULTI-LEVEL

BUSINESS IN VIET NAM

4.1. Directions of State administration for multi-level business in Viet Nam



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4.1.1. Socio-economic situation affecting State administration for multi-level business in Viet Nam

- Viet Nam has further integrated and joined trade agreements in the region and in the world.

The common principle of trade relations is equality and indiscrimination, so the State should facilitate

multi-level business and other trade business forms.

- The Government is guiding towards a tectonic government, the socio-economic development

is built on the individual development, in which multi-level businesses have made great contributions in

other countries. In Viet Nam, State administration agencies should also regulate, utilized and exploit this

form to bring the most economic benefits.

- The economic development in the world and Viet Nam has slowed down and multi-level

business still encounters limitations due to the close administration, lack of specialized documents,

weak personnel, inadequate coordination and cumbersome system, etc. There is a need for the major

changes in State administration for trade and multi-level business in particular.

- Industry 4.0 and the development of “sharing economy”, the expansion of the market and

financial instruments, the non-stop evolution of e-commerce, etc. are the favorable conditions for multilevel business and also the threats of illegal behaviors. They pose great challenges to State

administration for multi-level business in Viet Nam.

4.1.2. Forecast of multi-level business development in Viet Nam

- The number of multi-level enterprises will not increase sharply as before.

- The number of participants – distributors in the multi-level network will also tend to rise.

- Illicit forms of multi-level business have been eliminated with the closure of some major

violators.

4.1.3. Directions of State administration for multi-level business in Viet Nam in the upcoming period

- Communication and education

- Incentives and environment for the operation and development of multi-level business for

distributors – participants to earn legitimate income.

- Further studies on the business model and lessons from successful cases.

- Protection of the rightful interests of distributors – participants and customers – consumers.

4.2. Viewpoints, objectives and determinants on perfecting State administration for multi-level

business in the coming period

4.2.1. Viewpoints

- First: Maintaining the support to multi-level business registration and operations

- Second: Learning from international lessons, establishing specialized regulations on multilevel business

- Third: Promoting the administration for multi-level business of the State



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4.2.2. Objectives

4.2.2.1. Creating a favorable and fair business environment for multi-level enterprises and participants

4.2.2.2. Ensuring close supervision on illicit multi-level business forms

4.2.2.3. Keeping up with the development trend of multi-level business and State administration in the

world

4.2.3. Determinants

- The State

- Enterprises, participants and consumers

- The society

4.3. Solutions on perfecting State administration for multi-level business in the coming period

4.3.1. System and functions of State administration for multi-level business

- For Ministry of Industry and Trade, it is vital to organize a specialized unit for multi-level

business administration

- For Department of Industry and Trade, it is necessary to form work groups specializing in

managing multi-level business under Office of Trade Management in the area.

- Provincial/ Municipal Division of Market Surveillance under the Central Department have to

implement the documents in their areas, update the actual situation of multi-level business for relevant

management methods.

- People’s Committees of provinces, districts and communes need to keep track of multi-level

business in their areas. The author highlighted the roles of local authorities in managing multi-level

business.

- The State should raise the awareness of relevant agencies on their roles and responsibilities for

multi-level business administration, especially Ministry of Health, Science and Technology, Finance,

General Department of Customs in coordination with Ministry of Industry and Trade.

- It is essential to improve the accountability of agencies and officers of multi-level business

administration.

- It is important to clearly separate the responsibilities of authorized administration agencies

and individuals in the state agencies.

4.3.2. Human resources and personnel planning for State administration for multi-level business

- Supplementing personnel for multi-level business administration. Enhancing training for

officers to ensure the competence and professional qualifications to handle violations in multi-level

business.

- Exercising the linking role of Viet Nam Association of multi-level business, Association of

Consumer Protection in administration. Connecting to the world’s Association of Direct Sales.



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Figure 3.9: Penalties to some multi-level business companies in 2016

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