Vietnam will see 'phenomenal growth' in its mass grocery retail sector between now and 2012 following its move on 1 January to allow foreign companies to set up wholly-owned businesses, according to industry analysts Business Monitor International (BMI).
Quoted in a report on just-food.com, BMI said economic growth and a rise in tourism to Vietnam will make the market 'one of the retail industry's brightest new prospects' over the coming years.
Traditional retail formats still account for 96 per cent of the market, BMI said, but in opening up completely to foreign retailers Vietnam has paved the way for further multinational retail investment in the country.
The move to allow foreign firms to set up wholly-owned businesses came into force on 1 January in line with Vietnam's commitments to the World Trade Organisation (WTO), which the country joined two years ago, just-food said.
Since Vietnam became a WTO member in 2007, foreign retailers have been allowed to own up to 49 per cent of joint ventures with local companies, but have been barred from owning businesses outright.
Now, retailers from overseas can set up wholly-owned operations, although there remain some restrictions on what they can distribute, just-food said.
From 1 January, foreign retailers will be able to distribute tractors, cars and motorcycles. From 1 January next year, non-Vietnamese retailers will be allowed to distribute all legal domestically-produced and imported goods with the exception of commodities including rice, sugar, cigarettes and pharmaceutical products, just-food said.
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