Hanoi (VNA) - Afterthe authorities revoked working licences of five multi-level marketing (MLM)firms last year, there are 23 firms of this type allowed to operate in thecountry.

According to the Department of Competition and Consumer Protection (a unitunder the Ministry of Industry and Trade), MLM firms work as pyramid schemes,in which the sales force is compensated not only for the sales they generate,but also for the sales of the other salespeople they recruit. 

In addition to more than 20 firms with working licences, the department saidthere are a number of unlicensed firms trading to raise moneyfrom innocent participants, aiming at making illicit profits andaffecting the market and consumers.

Since last year, the department has coordinated with localities to tightenmanagement over those firms.

After checking 28 MLM firms in 2018, the department reissued workinglicences for 23 firms that met the regulations on business conditions under theGovernment's Decree No. 40/2018 / NĐ-CP of March 12, 2018 on managing businessactivities in a multi-level manner. At the same time, it withdrew five thatfailed to meet the conditions.

As of early this year, 23 enterprises have been granted licences to work as MLMfirms across Vietnam.

Last year, the department fined three MLM firms more than 1.4 billion VND fortheir violations.

Thien Su Vietnam Co., Ltd. received a fine of 585 million VND, New ImageVietnam Co., Ltd. received a fine of 250 million VND, while Morinda VietnamCo., Ltd. was fined 605 million VND and had its licence revoked.

Together with the tightened management, the department warned people about therisk of illegal MLM firms through different activities, like talk shows on massmedia to inform them about the law on MLM activities and how to recognise andavoid illegal ones.

A representative of the department said it will closely coordinate withrelevant agencies, especially local authorities, to inspect, examine and dealwith violations, find and stop illegal firms to better protect consumers.

As of the end of June 2019, there were 817,034 people participating in MLMfirms, down 35 percent compared to the end of December 2018. Of thosementioned, only 36 percent take part in sales activities and receivecommission, while the rest participate in the firms to buy goods atpreferential prices and do not make sales.

The total multi-level sales in the first six months of 2019 reached more than 5.8trillion VND (250 million USD), an increase of 25 percent over the totalrevenue of the same period of 2018.

Also in the period, MLM firms contributed 886 trillion VND to the state budgetincluding 40.39 percent from value added tax, 33.9 percent from import andexport tax, 11.22 percent from personal income tax, 12.22 percent fromcorporate income tax and 2.15 percent from other taxes./.