The Ministry of Industry and Trade proposed this adjustment in a draft decree amending Decree 40 on multi-level marketing management. The ministry stated the current 10 billion VND deposit is too small compared to the losses incurred by participants in prosecuted criminal cases related to multi-level marketing. Doubling the deposit to 20 billion VND is intended to better screen the capabilities of investors entering the market.
The proposed increase also reflects the 225% rise in average revenue of multi-level marketing companies last year compared to 2018, when Decree 40 was issued.
The security deposit is a mandatory sum multi-level marketing companies must deposit into a designated bank account to guarantee their commitments to participants. This fund covers compensation for participants if the company fails to fulfill its obligations, such as refusing to buy back goods, withholding payments when participants return goods, or in cases requiring refunds.
In addition to the deposit adjustment, the Ministry of Industry and Trade also proposes removing the 10 billion VND charter capital requirement for multi-level marketing companies to reduce investment and business barriers.
Similarly, the requirement for companies to demonstrate an information system for handling participant inquiries and complaints will likely be removed. The draft decree also no longer directly specifies prohibited acts. Instead, violations will be addressed under specific laws.
The Ministry of Industry and Trade introduced the term "senior distributor" for participants in the top three levels of a multi-level marketing network. This categorization aims to enhance management and oversight of key individuals within the system.
The draft decree also introduces the concept of "company managers." Managers, along with investors, shareholders, or legal representatives of multi-level marketing companies whose licenses have been revoked, will be barred from establishing or managing new multi-level marketing businesses.
According to the Ministry of Industry and Trade, this regulation aims to encompass key figures in multi-level marketing companies that have had their business registrations revoked, preventing their further involvement in management and promoting market integrity.
By the end of 2024, there were nearly 700,000 multi-level marketing participants, a decrease of about 400,000 compared to 2019. Despite this decline, total multi-level marketing revenue increased, reaching 16,206 billion VND last year, a nearly 29% increase compared to 2019 (12,575 billion VND). The average commission and bonus was about 951,000 VND per month, equivalent to 12% of the national average per capita income in 2024.
Currently, only 16 companies in the country hold multi-level marketing operating licenses (a decrease of 4 compared to the beginning of 2024).
Phuong Dung
