Decision No. 2332/QD-BCT dated April 12, 3013 of the Ministry of Industry and Trade approving the “Planning for nationwide tobacco wholesale network to 2020 and with the vision to 2025”

THE MINISTRY OF INDUSTRY AND TRADE

Decision No. 2332/QD-BCT dated April 12, 3013 of the Ministry of Industry and Trade approving the “Planning for nationwide tobacco wholesale network to 2020 and with the vision to 2025”

Pursuant to the Decree No. 95/2012/ND-CP dated November 12, 2012 of the Government defining the functions, tasks, powers and organizational structure of the Ministry of Industry and Trade;

Pursuant to the Decree No. 92/2006/ND-CP dated September 07,  2006 of the Government and the Decree No. 04/2008/ND-CP dated January 11, 2008 on the amendments to the Decree No. 92/2006/ND-CP of the Government on the establishment, approval, and management of the socio-economic development planning;

Pursuant to the Circular No. 17/2010/TT-BCT dated May 05, 2010 of the Minister of Industry and Trade on the contents, order and procedure for formulating and approving trade development planning;

The Decision No. 6318/QD-BCT dated December 01, 2010 of the Minister of Industry and Trade, approving the outlines and estimates for the “Tobacco wholesale network planning nationwide during 2010 – 2020, and the orientation towards 2025”;

At the proposal of the Director of Domestic Market Department,

DECIDES

Article 1. To approve the “Planning for nationwide tobacco wholesale network to 2020 and with the vision to 2025”, in particular:

I. PLANNING VIEWPOINTS

1. The planning for tobacco wholesale network is carried out on the principle that tobacco is restricted from trade and its use is not encouraged. The State strictly control the development and spread of tobacco wholesale network

2. The planning for tobacco wholesale network is to ensure the systematic and synchronous tobacco wholesaling from the production to the wholesaling and service provision.

3. Develop capable tobacco wholesalers that always satisfy conditions and regulations of the State on the trade in tobaccos.

II. PLANNING TARGET

1. General targets

Step by step build up and rearrange the tobacco wholesale network towards a reasonable structure participated by all economic sectors in order to establish a system of professional tobacco sellers capable of satisfying demands (including domestic and imported tobaccos) in each locality nationwide, raise the competitiveness in the market economy under the management of the State and international economic integration; limit spontaneous businesses and unlicensed businesses; control the product quality, prices, control and restrict cigarette smuggling; contribute to the prevention and suppression of tobacco harm and protection of consumers’ interests.

2. Specific targets

Rearrange the wholesalers in central-affiliated cities and provinces (hereinafter called provinces) based on the existing tobacco wholesale network as follows:

a) By 2015

Maintain the existing network, including tobacco wholesalers in at least 02 provinces licensed by the Ministry of Industry and Trade, tobacco wholesalers within 01 province licensed by Industry and Trade Departments, and tobacco retailers in districts, towns, and cities affiliated to provinces (hereinafter referred to as districts) licensed by Industry and Trade or Departments of Economics and Infrastructure (hereinafter called Industry and Trade Department); prioritize the tobacco wholesalers in localities with high demands; focus on improving the capability and facilities of tobacco wholesalers in order to facilitate the establishment of the tobacco wholesale network of succeeding stages.

It is estimated that there are approximately 1,000 tobacco wholesalers nationwide by 2015 (including 200 tobacco wholesalers in at least 02 province, 800 tobacco wholesalers in 01 province), 50% of which Is in the North, 24% of which is in the Middle and Tay Nguyen, and 26% of which is in the South.

b.  From 2016 - 2020

Establish the tobacco sale network including tobacco distributors (tobacco sellers in at least 02 provinces, licensed by the Ministry of Industry and Trade), tobacco wholesalers (tobacco seller in 01 province, licensed by Industry and Trade Departments), and tobacco retailers (tobacco sellers within a district, licensed by Departments of Industry and Trade) by determining the number of tobacco distributors, wholesalers, and retailers according to the population, financial capability, transportation capability, according to the storage system and the ability to break into the market of each seller to supply tobaccos to their customers.

It is estimated that there are approximately 350 tobacco distributors, 1,760 tobacco wholesalers nationwide by 2020 (45% of which is in the North, 27% of which is in the Middle and Tay Nguyen, and 28% of which is in the South).

An area of at least 123,000 m2, 2,460 trucks capable of at least 500 kg, and 2,460 billion VND are needed during this period.

c. 2021 - 2025

Keep rearranging the tobacco distributors, wholesalers, and retailers in the previous period to match the socio-economic development and management requirements in this period.

It is estimated that there are approximately 300 tobacco product distributors, 1,500 tobacco wholesalers in this period (40% of which is in the North, 30% of which is in the Middle and Tay Nguyen, and 30% of which is in the South).

III. PLANNING FOR TOBACCO WHOLESALE NETWORK

1. Bases for defining the planning

The tobacco wholesale network is established on the following bases:

a) Bases for selecting and controlling sellers:

Tobacco sellers shall be selected in each province based on the population, area, distance, and type of city, financial capacity, transport conditions, storage system, and their experience.

b) Bases for selecting tobacco sellers:

- Bases for selecting tobacco distributors:

+ The number of tobacco distributors in at least 02 provinces depends on the country’s population: no more than 01 tobacco distributor for every 250,000 people

+ Distributors must have warehouses (or warehouse system) under their ownership or co-ownership, according to the joint venture or contribution agreements or warehouse lease contracts that match their scale (the area of at least 100 m2) and meet the demand for preserving the quality of tobaccos in storage.

+ Distributors must have vehicles under their ownership or co-ownership, according to the joint venture or contribution agreements or have vehicle lease contracts that match their scale (at least 02 vehicles capable of at least 500 kg) and meet the demand for preserving the quality of tobacco products in transit.

+ The financial capacity is able to ensure the normal operation of the distribution system (a written certification of at least 02 billion VND in their account).

+ There is a tobacco distribution system in at least 02 provinces (there are at least 02 sellers have sold tobaccos wholesale or are expected to become tobacco wholesalers in each province).

+ Distributors must have experience and ability to break into the tobacco market (usually the sellers that have sold tobaccos or other consumables)

- Bases for selecting tobacco wholesalers:

+ The number of tobacco product wholesalers within 01 province depends on the country’s population: no more than 01 tobacco product wholesaler for every 50,000 people

+ Wholesalers must have warehouses (or warehouse system) under their ownership or co-ownership according to the joint venture or contribution agreements, or have warehouse lease contracts that match their scale (the area of at least 50 m2) and meet the demand for preserving the quality of tobacco products in storage.

+ Wholesalers must have vehicles under their ownership or co-ownership, according to the joint venture or contribution agreements or have vehicle lease contracts that match their scale (at least 01 vehicle capable of at least 500 kg) and meet the demand for preserving the quality of tobacco products in transit.

+ The financial capacity is able to ensure the normal operation of the distribution system (a written certification of at least 01 billion VND in their account).

+ There is a tobacco wholesaling system in the province where there head office is situated (at least 02 tobacco retailers).

+ Wholesalers must have experience and ability to break into the tobacco market (usually the sellers that have sold tobacco products or other consumables)

2. Planning for tobacco wholesale network

a) By 2015

It is estimated that there are 1,000 nationwide tobacco wholesalers by 2015 (including 200 tobacco wholesalers in at least 02 province, 800 tobacco wholesalers within 01 province), 50% of which is in the North, 24% of which is in the Middle and Tay Nguyen, and 26% of which is in the South.

b) 2016 - 2020

It is estimated that there are approximately 350 tobacco product distributors, 1, 760 tobacco wholesalers by 2020 (45% of which is in the North, 27% of which is in the Middle and Tay Nguyen, and 28% of which is in the South).

Warehouses, vehicles, and finance needed in this period:

- An area of at least 123,000 m2 is needed in this period, including:

+ An area of at least 35,000 m2 is needed by tobacco distributors;

+ An area of at least 88,000 m2 is needed by tobacco product wholesalers;

- At least 2,460 vehicles capable of at least 500 kg are needed in this period, including:

+ At least 700 vehicles are needed by tobacco product distributors;

+ At least 1,760 vehicles are needed by tobacco product wholesalers;

- At least 2,460 billion VND is needed in this period, including:

+ 700 billion VND is needed by tobacco product distributors;

+ 1,760 billion VND is needed by tobacco product wholesalers;

c) 2021 - 2025

Rearrange the tobacco distributors and wholesalers so that there are approximately 300 tobacco distributors, 1,500 tobacco wholesalers in this period (40% of which is in the North, 30% of which is in the Middle and Tay Nguyen, and 30% of which is in the South). In particular:

- Rearrange tobacco distributors and tobacco wholesalers according to the requests of suppliers, the demands of the market, and the tendency of consumers, and comply with the principles established in this period.

- Manage the tobacco retailing system more strictly according to local planning.

IV. SOLUTIONS FOR PLANNING IMPLEMENTATION

1. For the State, the State shall:

a) Formulate and request the Government to promulgate a new Decree, providing guidance on the Law on Prevention and suppression of harmful effects of tobacco, to supersede the Government s Decree No. 119/2007/ND-CP dated July 18, 2007 on the production and sale of tobacco; draft a new Circular to supersede the Circular No. 02/2011/TT-BCT dated January 28, 2001 of the Ministry of Finance, providing guidance on the implementation of the Government s Decree No. 119/2007/ND-CP dated July 18, 2007 on the production and sale of tobacco.

b) Enhance the inspection of the compliance of tobacco sellers with business conditions and the laws on selling tobacco in order to create a stable sale system to prevent smuggling and substandard products from circulating in the market.

c) Provide knowledge about current laws on selling tobacco for tobacco sellers and relevant authorities.

d) Boost the establishment and development of modern modalities of tobacco selling. Improve the efficiency of tobacco sellers established over this period.

2. Tobacco manufacturers shall:

a) Formulate strategies for business and market development in conformity with the management requirements of the State. Survey the market and customers’ tendency to provide solutions for satisfying the demands of each market.

b) Develop and control the system of tobacco sellers to from a stable tobacco selling network.

3. Vietnam Tobacco Association (VTA) shall:

a) Cooperate with competent authorities in disseminating the laws on tobacco selling.

b) Provide instructions and experience of developing and controlling the stable tobacco product selling network for tobacco product manufacturers and sellers.

V. IMPLEMENTATION ORGANIZATION

1. The Ministry of Industry and Trade shall:

Announce the planning and cooperate with relevant Ministries in providing guidance for Industry and Trade Departments on the implementation of this Decision, in particular:

a) Monitor and inspect the implementation of the Planning.

b) Provide guidance for provincial governments on reviewing, amending, or making new planning for local tobacco retailing networks in conformity with this Planning and relevant laws.

c) Provide instruction and inspect the management of licensed tobacco wholesale networks of provincial governments.

d) Review the relevant mechanism, policies, and laws to make necessary amendments or request competent authorities to make amendments after reaching agreements with relevant Ministries.

e) Establish and request the Government to approve the National Project on Prevention of cigarette smuggling.

2. Responsibilities of other Ministries:

The Ministry of Finance, the Ministry of Planning and Investment, the Ministry of Health, and relevant Ministries, within their competence, shall cooperate with the Ministry of Industry and Trade in implementing the solutions and policies in this Planning.

3. Provincial People’s Committees shall:

Cooperate with Ministries in inspecting and supervising the implementation of the Planning; provide instructions for Industry and Trade Departments on cooperate with local units in performing the following tasks:

a) Review the tobacco wholesaling and retailing network planning of the provinces that already have them before this Decision takes effect, and make amendments if they are not conformable with the national tobacco wholesale network planning.

b) Elaborate local tobacco wholesaling and retailing planning for the products that have not had the tobacco wholesaling and retailing network planning.

The number of tobacco retailers in each province is determined based on the population and areas of the tobacco shops, the distance between two shops, demand of the market, tendency of consumers, the local socio-economic development, the financial capacity and experience of sellers.

c) Take appropriate measures for strictly controlling the sale of tobacco; avoid loss of the State budget as well as ensuring the health of consumers.

d) Send periodic reports on the implementation of this Planning to the Ministry of Industry and Trade.

a) Local governments shall issue licenses to tobacco sellers within their province based on the Decision to approve this Planning during the course of implementation of the tobacco wholesale network planning. Request the Ministry of Industry and Trade to make amendments to the planning that are necessary for suiting the demand, socio-economic development of each locality

4. Tobacco product manufacturers shall:

a) Cooperate with The Ministry of Industry and Trade and local governments in disseminating this Planning and providing guidance for enterprises within their systems on the implementation of this Planning and other laws.

b) Select capable tobacco distributors, wholesalers, and retailers; comply with the laws on selling tobacco.

5. VTA shall:

a) Cooperate with The Ministry of Industry and Trade and local governments in disseminating this Planning and providing guidance for enterprises in VTA on the implementation of this Planning and other laws.

b) Suggest and organize the cooperation between tobacco manufacturers and tobacco sellers in order to improve the connection in selling tobaccos.

c) Make suggestions on solutions, mechanisms, and policies serving the implementation of the approved planning.

Article 2.This Decision takes effect on the signing date.

Article 3.Ministers, Heads of ministerial agencies, the Chairmen of the provincial People’s Committees, involved organizations and individuals shall implement this Decision./.

For the Minister

Deputy Minister

Ho Thi Kim Thoa

APPENDIX

PLANNED NUMBER OF TOBACCO PRODUCT SELLERS BY 2020
(Attached with the Decision No. 2332 /QD-BCT dated April 12, 2013 of the Minister of Industry and Trade)

1. The maximum number of nationwide tobacco distributors by 2020 is 350.

2. The maximum number of nationwide tobacco wholesalers by 2020 is 1,760.

3. Maximum numbers of tobacco wholesalers in each province and city by 2020: