By Jennifer Chang    Photo：CANVA

This might be the most common question on the minds of many foreign investors who have recently set up factories in Vietnam: "Even though all materials are sourced locally, why are origin certificates still being rejected?" Starting from the end of 2024, Vietnam’s Certificate of Origin  policy is undergoing significant adjustments. This is not merely a change in administrative procedures, but a profound restructuring of the "Vietnam Manufacturing Value Recognition System."

Over the past decade, the Vietnam Chamber of Commerce and Industry (VCCI), as the core institution for issuing Certificates of Origin, maintained a relatively flexible workflow with ample operational leeway, allowing foreign-invested enterprises to quickly adapt to the local environment. However, starting from May 5, 2025, the situation began to change. The authority to issue certificates is gradually being transferred from VCCI to the local branches of the Ministry of Industry and Trade of Vietnam. The policy focus is shifting from “serving enterprises” to “safeguarding the nation’s tariff benefits.” This shift means that enforcement will become stricter, review standards clearer, and the previous flexibility in operations will almost disappear.

Many companies, especially some Chinese enterprises, transport components or semi-finished products to Vietnam and only perform simple assembly, labeling, or packaging, then claim the products as "Made in Vietnam" to evade tariff restrictions imposed on Chinese goods, such as the punitive tariffs the United States has imposed on Chinese products. However, according to international trade rules (such as those under the WTO, RCEP, and various bilateral free trade agreements), only products that have undergone substantial transformation in a particular country can be recognized as originating from that country. Substantial transformation is one of the key criteria in international trade for determining the country of origin. When a product undergoes processing or manufacturing in a country that is sufficient to change its name, use, or character, it is considered to have undergone substantial transformation there. In other words, its country of origin can be labeled as that country.

Two examples of substantial transformation:

Example 1: Steel rods transformed into screws

Steel rods originally imported from abroad are cut, heated, shaped, and threaded in Vietnam, ultimately becoming practical screws. This is not just a change in appearance; the use is completely different, transforming raw material into a component. Therefore, these screws can be said to have undergone substantial transformation in Vietnam, and their origin can be recognized as “Vietnam.”

Example 2: Raw cotton transformed into garments

Although the raw cotton comes from other countries, the company in Vietnam processes it into yarn, weaves it into fabric, and then cuts and sews it into a finished garment. This is a complete set of processing steps, turning raw material into wearable clothing with entirely different use and appearance. Thus, such products are also considered to have undergone substantial transformation in Vietnam and can be labeled as “Made in Vietnam.”

These examples illustrate that as long as a product undergoes genuinely meaningful processing in Vietnam, transforming it into something with a different use or form, it can be recognized as “originating from Vietnam.” Simply labeling or performing basic assembly is not enough.

In the past, many companies believed: “As long as I purchase enough raw materials in Vietnam and increase processing time, I can obtain the Certificate of Origin.” But now, this way of thinking no longer works. The Ministry of Industry and Trade of Vietnam has adopted a stricter approach, emphasizing: “You must carry out substantial processing and transformation in Vietnam to prove that the products are not simply assembled from imported Chinese parts.” This represents a significant shift: previously, the focus was on data ratios—how much Vietnamese material was used or how many days of processing occurred. Now, the focus is on whether the product has genuinely been transformed into something different in Vietnam. Mere packaging, assembly, or minor modifications no longer qualify as “Made in Vietnam.”

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