Multi-level marketing (“MLM”) has reached sustainable growth in Vietnam. Strict government management has brought down the overall number of MLM enterprises and distributors. This has allowed strong MLM enterprises with solid finances to increase market share. Industry revenues show good growth, especially enterprises selling health and consumer products. According to data recently published by the National Competition Commission (Ministry of Industry and Trade), at the end of April 2026, there were 15 registered MLM enterprises nationwide (a decrease of four compared to 2024). The total current number of distributors was 652,184 (a decrease of about 6% compared to 2024).
A New MLM Decree
On April 7, 2026, the Government promulgated Decree 137/2026/ND-CP (“Decree 137”) providing a changed regulatory framework. It came into effect on July 1, 2026. The Decree replaces Decree 40/2018/ND-CP (“Decree 40”) and tightens the management of MLM businesses. The intent is to avoid distortions, increase transparency and reduce administrative intervention. Decree 137 has abolished the minimum charter capital of VND 10 billion, but the Government has increased the amount that an MLM enterprise must place in escrow. Specifically, the escrow must be equivalent to 5% of the charter capital, but no less than VND 20 billion–a doubling of the prior escrow account requirement of VND 10 billion. This is a significant increase in the amount of required liquidity.
Thus, instead of requiring a specified minimum charter capital, the new Decree has focused on the financial liquidity of MLM enterprises. The intention of the higher escrow account is to assure that MLM enterprises can compensate distributors and consumers for damage caused by MLM operations and to pay benefits earned by distributors. Decree 137 has clearly created a higher level of safety. This creates a higher financial barrier to market entry. These changes obviously give an advantage to enterprises with a higher financial capacity, and we believe this was a clear intention.
Reduction of administrative burden and Delegation of Power
- Decree 137 simplifies reporting obligations and the registration, amendment and reissue of the MLM license. It also delegates more power to provincial authorities. An example is the modification of an MLM product registration. Previously, if an MLM enterprise wished to amend information of MLM product, it had to notify the Ministry of Industry and Trade in writing. Now, however, an MLM enterprise need only announce such changes on its website.
- The rules involving the people who train distributors have also changed. Previously, a qualified trainer had to obtain a training certificate which certified a trainer’s knowledge. The training certificate has been abolished. Now, provincial People’s Committees (“PCs”), not the Ministry of Industry and Trade, examine candidates. The examination remains uniform. Results are valid throughout Vietnam. Trainers licensed in one province can train distributors anywhere. PCs also regularly inspect and supervise training in their provinces.
- Additionally, there are improvements in the management of contracts between MLM enterprises and distributors. Hard copy contracts have been replaced by electronic contracts. This change will improve management and save costs. Faster and more accurate digitization techniques are also now possible.
- Reporting obligations have been reduced. For example, annual and semi-annual reports to the Ministry of Industry and Trade and Department of Industry and Trade have been reduced to one annual report to Ministry of Industry and Trade. This change will significantly reduce unnecessary reporting.
More people are prohibited from participating in MLM sales
Decree 137 expands the list of individuals prohibited from participating as MLM distributors. In addition to civil servants (who are already prohibited), now, officers, professional soldiers, defense workers, and civil servants in agencies and units of the People’s Army and officers, non-commissioned officers, soldiers, police workers in agencies and units of the People’s Public Security are also prohibited. This is a significant step to remove the influence of officers on this commercial activity.
Development of digitalization and sustainability in the MLM industry
Administrative processes have changed. Previously, steps such as issuance, amendment and re-issuance of certificates for MLM enterprises could only be conducted in person or by post. The National Public Service Portal (“NPSP”) has become more secure. Now, submission through the NPSP is possible. Enterprises must now use electronic signatures to verify administrative application documents. Responses by licensing authorities will be made on the NPSP.
Licensing authorities must utilize information already available on Government databases to process application documents. If such information is not available, is incomplete or is inaccurate, licensing authorities must request additional information or corrections within a specific timeframe. This process is available to enterprises: (i) via its registered contact person’s NPSP account; (ii) via text messaging, by telephone or email to the contact person or enterprise; and (iii) the contact person or enterprise may contact the licensing authority to update or correct the data.
To sum up, Decree 137 puts a higher emphasis on MLM enterprises’ financial health, and it delegates more management power to provincial authorities. MLM enterprises will find it less burdensome to work with the Government. Finally, MLM enterprises’ finances have been strengthened, reducing risks to distributors.
