According to the Ministry of Industry and Trade (MOIT), the lack of regulations about the products considered as made in Vietnam confuses institutions and individuals when labeling products and defining exact origin of products in accordance with Decree 43/2017.

MOIT is drafting a circular that will guide how to identify ‘made-in-Vietnam products’. Accordingly, made-in-Vietnam products must satisfy one of the following criteria: 1/goods with pure origin of Vietnam 2/goods made in Vietnam from materials with Vietnamese origin or 3/goods that undergo final processing and outsourcing process in Vietnam that lead to basic changes of the nature of goods.

The draft circular stipulates specific criteria if goods undergo final basic outsourcing and processing in Vietnam – conversion of goods’ codes, and defining of percentage of Vietnam-made value and specific processing stages. If goods only undergo simple processing in Vietnam, they won’t be considered as made-in-Vietnam goods.

MOIT says if enterprises have a production process meeting the criteria, they will see additional expenses because enterprises will continue to run the production process with existing material chains.

If goods are defined as made in Vietnam, this will help increase the value and prestige of enterprises, and create favorable conditions for trade activities in the Vietnamese market.

If enterprises have a production process that cannot satisfy the criteria, they may have to spend additional expenses in the first phase of the implementation process, because they need to adjust the production process (expenses on studying new regulations, on changing the supply chain of raw materials, investment in machinery and equipment).

All of these expenses will be one-time expenses. After their products can satisfy the requirements stipulated by the circular, they won’t have other expenses. 

The method to determine goods made in Vietnam and calculate Vietnam’s value content is as follows:

Vietnam Value Content (VVC) is calculated by one or the two formulas: 

Direct calculation formula: VVC = input value made in Vietnam / factory prices x 100%

Indirect calculation formula: VVC = (factory prices – value of input materials which are not made-in-Vietnam goods) / factory prices x 100%.

At first, the criteria on defining made-in-Vietnam products were planned to be set in a government decree. However, the government’s Resolution 73 dated May 27, 2022 assigned MOIT to set the criteria in a circular.

Luong Bang