Laws of Vietnam

DECREE No. 57/1998/ND-CP OF JULY 31, 1998 DETAILING THE IMPLEMENTATION OF THE COMMERCIAL LAW REGARDING THE GOODS IMPORT, EXPORT, PROCESSING, AND SALE AND PURCHASE AGENCY ACTIVITIES WITH FOREIGN COUNTRIES

THE GOVERNMENT

Pursuant to the Law on Organization of the Government of September 30, 1992;

Pursuant to the Commercial Law of May 10, 1997;

At the proposal of the Minister of Trade,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1.- Scope of regulation

This Decree details the implementation of the Commercial Law regarding the goods import and export in commercial activities with foreign countries; goods processing and sale and purchase agency between Vietnamese and foreign traders.

The import and export activities of foreign-invested enterprises in Vietnam shall comply with the Law on Foreign Investment in Vietnam, the relevant legal documents and the provisions of this Decree.

Article 2.- Interpretation of terms

In this Decree the terms below shall be construed as follows:

1. Goods import and export activities are goods purchase and sale activities of Vietnamese traders with foreign traders under goods purchase and sale contracts, including the temporary import for re-export or temporary export for re-import and the transiting of goods.

2. Goods processing with foreign traders is an activity whereby Vietnamese traders or enterprises established under the Law on Foreign Investment in Vietnam undertake to process goods in Vietnam for foreign traders or order the processing of goods abroad.

3. Goods sale or purchase agency with foreign traders is an activity whereby Vietnamese traders act as agents to sell goods in Vietnam for foreign traders or agents to purchase goods in Vietnam for foreign traders for export or for manufacture in Vietnam for export.

Chapter II

IMPORT AND EXPORT OF GOODS

Section I. PROVISIONS ON IMPORT AND EXPORT GOODS

Article 3.- Import and export goods

Traders shall be entitled to import or export goods according to their business registration certificates. For goods which are banned from export or import and goods subject to conditional import or export, the provisions in Article 4 and Article 5 of this Decree shall apply.

Article 4.- Goods banned from import or export

1. A list of goods banned from import or export is issued together with this Decree (Appendix No. 1).

Any adjustment of the list of goods banned from import or export shall be approved by the Government at the proposal of the Minister of Trade after consulting the Ministry of Planning and Investment and the concerned ministries and branches.

2. The goods items on the list of goods banned from import or export can be imported or exported only in special cases permitted by the Prime Minister.

Article 5.- Goods subject to conditional import and export

1. Goods subject to conditional import or export are goods imported or exported according to quotas or goods imported or exported under the permits of the Ministry of Trade or specialized management ministries.

2. Issued together with this Decree is a list of conditional exports and imports (Appendix No. 2).

3. Any adjustment of the list of goods subject to conditional import and export shall be approved by the Government at the proposal of the Minister of Trade after he/she has consulted the Ministry of Planning and Investment and the concerned ministries and branches.

4. Early in the fourth quarter of each year, the Ministry of Trade shall assume the prime responsibility together with the Ministry of Planning and Investment and the concerned ministries and branches in submitting to the Prime Minister for approval the principles for the following year's import and export management over the goods subject to conditional import and export along the direction of gradually reducing the number of goods on this list and regulating them by taxes.

Article 6.- Goods temporarily imported for re-export, temporarily exported for re-import and transited goods

Goods which are dealt in by the mode of temporary import for re-export, temporary export for re-import or transiting shall be subject to a separate regulation issued by the Minister of Trade after he/she has consulted the concerned ministries and branches and in compliance with international practices.

Article 7.- Temporary cessation of the import or export of goods

In case of necessity the Government shall decide to temporarily cease the import or export activities with a particular market or the import or export of some particular goods items so as to exercise the national self-defense right according to international laws and practices.

The Ministry of Trade shall notify the concerned international and regional economic organizations as well as countries thereof according to the agreed procedures (if any) when the Government make concrete decisions on the temporary cessation of the import or export of goods.

Section 2. PROVISIONS ON IMPORT AND EXPORT BUSINESS

Article 8.- Import and export business

1. Traders that are enterprises of all economic sectors established under the provisions of law shall be permitted to import and/or export goods according to their registered business lines as stated in their business registration certificates.

2. Branches of corporations or companies shall be entitled to import and/or export goods under the authorization of the general directors of corporations or the directors of companies and in compliance with the contents of the business registration certificates of the corporations or companies.

3. Before conducting import and/or export business activities, enterprises shall have to register their import and export enterprise codes with the provincial/municipal Customs Departments.

The General Department of Customs shall set up a system of the above-mentioned codes and guide the registration of the import and export enterprise codes.

Article 9.- Entrusted import and export

1. Traders that have business registration certificates or have registered their import and export enterprise codes shall be entitled to entrust the import and/or export of goods in compliance with the contents of their business registration certificates.

2. Traders that have registered their import and export enterprise codes shall be entitled to take the entrusted import and/or export of goods in compliance with the contents of their business registration certificates.

3. The assignment of import and export and the taking of entrusted import and/or export of conditional import and/or export goods shall be guided in detail by the Ministry of Trade.

4. The obligations and responsibilities of the import and export trustors and trustees shall be specified in the contracts for the entrusted import and/or export agreed upon by the contracting parties.

Article 10.- Associations of import and export commodity lines

Traders, irrespective of their economic sectors, dealing in the same commodity lines, shall be permitted to establish associations of import and/or export commodity lines on a voluntary basis in order to coordinate their activities and raise the production and business efficiency and ensure their members' legitimate rights and interests as well as the national interests.

The Ministry of Trade shall issue a regulation on the establishment and operation of associations of import and/or export commodity lines after consulting the Government Commission for Organization and Personnel and the concerned ministries and branches.

Chapter III

PROCESSING WITH FOREIGN TRADERS

Section I. PROCESSING FOR FOREIGN TRADERS

Article 11.- General provisions

Vietnamese traders of all economic sectors shall be permitted to undertake processing for foreign traders without any restriction on the quantity and types of processed goods. For processed goods which are on the list of goods banned from import or export and which are subject to temporary cessation of import or export, traders can sign contracts only after they obtain the written approval from the Ministry of Trade.

Article 12.- Processing contracts

A processing contract must be made in writing and include the following terms:

a/ The names and addresses of the contracting parties;

b/ The names and quantities of products to be processed;

c/ The processing price;

d/ The payment schedule and mode;

e/ The list, quantities and values of imported raw materials, auxiliary materials and materials and home-made raw materials, auxiliary materials and materials (if any) for processing; norms for the use of raw materials, auxiliary materials and materials; norms for material consumption and percentages of raw material waste in processing;

f/ The list and value of hired, borrowed or donated machinery and equipment (if any) used for processing;

g/ Measures to deal with waste materials and discarded products and principles for dealing with hired and/or borrowed machinery and equipment, surplus raw materials, auxiliary materials and materials after the termination of the processing contract;

h/ The place and time of goods delivery;

i/ The trademarks and the names of origin of goods;

j/ The effective term of the contract.

Article 13.- Norms on the use, consumption and waste of raw materials, auxiliary materials and materials

The norms on the use, consumption and waste of raw materials, auxiliary materials and materials shall be agreed upon by the parties in the processing contracts. The directors of processing enterprises shall take responsibility for using imported raw materials, auxiliary materials and materials for the right processing purpose, any breaches shall be handled according to law.

Article 14.- Hiring, borrowing and importation of machinery and equipment of the processing-ordering party for the performance of processing contracts

1. The processing-taking party shall be entitled to hire and/or borrow machinery and equipment of the processing-ordering party for the performance of processing contracts. The hiring, borrowing or donation of machinery and equipment must be agreed upon in the processing contracts;

2. The importation of machinery and equipment, including used machinery and equipment, for the performance of processing contracts shall comply with the provisions of Vietnamese laws on the import of technologies and import and export management.

Article 15.- Rights and obligations of the processing-taking party and processing-ordering party

1. For the processing-ordering party:

a/ Delivering all or part of raw materials and materials for the processing as agreed upon in the processing contracts;

b/ Receiving and bringing out of Vietnam all the processed products, hired and/or borrowed machinery and equipment; raw materials, auxiliary materials, materials and waste materials after the liquidation of the processing contract, except for cases where they are permitted to be sold, destroyed or donated as stipulated in this Decree;

c/ Being allowed to send specialists to Vietnam to provide technical guidance on the manufacture and inspect the quality of processed products as agreed upon in the processing contracts;

d/ Taking responsibility for the right to use the trademarks and the names of origin of goods. In cases where the trademarks or the names of origin of goods have already been registered in Vietnam, written certification of the Vietnam Industrial Property Department is required;

e/ Strictly complying with the provisions of Vietnamese laws on processing activities as well as the terms of the signed processing contracts.

2. For the processing-taking party:

a/ Enjoying import tax exemption for machinery, equipment, raw materials, auxiliary materials and materials temporarily imported according to the set norms for the performance of processing contracts;

b/ Being entitled to hire other traders to conduct the processing;

c/ Being entitled to supply part or the whole of raw materials, auxiliary materials and materials for processing as agreed upon in the processing contracts and having to pay export tax under the Law on Export Tax and Import Tax for the quantities of raw materials, auxiliary materials and materials domestically procured;

d/ Being entitled to receive remuneration from the processing-ordering party in the form of processed products, except for products on the list of goods banned from import or export. For products on the list of goods subject to conditional imports or export, the approval of the competent agency is required.

e/ Strictly abiding by the provisions of Vietnamese laws on processing activities, export, import and domestic manufacture of goods and the terms of the signed processing contracts.

Article 16.- Customs procedures

Basing themselves on the contents of the processing contracts already signed by the parties in accordance with the provisions in Article 12 of this Decree, the customs authorities shall proceed with the import and export procedures and oversee the importation and exportation relating to processing contracts.

Article 17.- Intermediary processing

1. Intermediary processing is a form of processing whereby the processed products of this processing contract are used as raw materials for another processing contract.

2. The processed products of the first-stage processing contract are delivered according to the processing-ordering party's mandate to the next-stage processing contract.

3. The procedures for delivery and receipt of intermediary processed products and the importation and exportation of processed products shall comply with the guidance of the General Department of Customs.

Article 18.- Liquidation and settlement of processing contracts

1. Upon the termination of a processing contract or when a processing contract is no longer effective, the parties thereto shall have to liquidate the processing contract and fill the procedures for settling the contract with the customs authorities.

For processing contracts with a term of over one year, annually the processing-taking party shall have to settle the contracts with the customs authorities.

2. The bases for the liquidation and settlement of a processing contract shall be the quantity of imported raw materials, auxiliary materials and materials and the quantity of exported products according to the norms for the use of raw materials, auxiliary materials and supplies, the material consumption norm and the waste percentage as agreed upon in the processing contract.

3. After the termination of a processing contract, machinery and equipment hired and/or borrowed under the contract, surplus raw materials, auxiliary materials and materials, faulty products and discarded materials shall be dealt with as agreed upon in the processing contract and the approval of the Ministry of Trade is required.

4. The destruction of discarded materials and/or faulty products (if any) must be effected under the supervision of the customs authorities. In cases where they are not permitted to be destroyed in Vietnam, they must be re-exported to the processing-ordering party.

5. The donation of machinery, equipment, raw materials, auxiliary materials, discarded materials and/or faulty products is stipulated as follows:

a/ The processing-ordering party must have a written document on the donation;

b/ The donatee shall have to fill the import procedures according to the import and export regulations; pay import tax (if any) and register the property according to current regulations.

c/ The Ministry of Trade so approves.

Section 2. ORDERING THE GOODS PROCESSING ABROAD

Article 19.- General provision

1. Traders of all economic sectors shall be entitled to order the overseas processing of goods of various kinds which are permitted to be circulated in the Vietnamese market for business purpose as prescribed by law.

2. The exportation of machinery, equipment, raw materials, auxiliary materials and materials for the processing and the importation of processed products shall comply with the law provisions on import and export.

3. Contracts for ordering the overseas processing of goods and the customs procedures applicable to the import and export of processed goods shall comply with the provisions in Article 12 and Article 16 of this Decree.

Article 20.- Rights and obligations of enterprises which order the overseas processing of goods.

1. Being entitled to temporarily export machinery, equipment, raw materials, auxiliary materials and materials or transiting machinery, equipment, raw materials, auxiliary materials and materials from a third country to the processing-taking party for the performance of the processing contract.

2. Being entitled to re-import processed products. Upon the termination of a processing contract, being allowed to re-import machinery, equipment and surplus raw materials, auxiliary materials and materials.

3. Being entitled to sell processed products as well as machinery, equipment, raw materials, auxiliary materials and materials already exported for the performance of the processing contract on the market of the country where the processing is conducted or another market and shall have to pay tax according to current regulations.

4. Being exempt from import tax and/or export tax on machinery, equipment, raw materials, auxiliary materials and materials, which are temporarily exported and re-imported as well as imported processed products; if they are not re-imported, export tax must be paid in accordance with the Law on Export Tax and Import Tax.

For raw materials, auxiliary materials and materials procured from abroad for processing and the processed products are imported, import tax thereon must be paid in accordance with the Law on Export Tax and Import Tax;

5. Being entitled to send specialists and technicians abroad to examine and inspect processed products before acceptance.

Chapter IV

GOODS SALE AND/OR PURCHASE AGENCY FOR FOREIGN TRADERS

Article 21.- Conditions for Vietnamese traders to act as goods sale and/or purchase agents for foreign traders

1. Vietnamese traders shall be permitted to act as goods sale and/or purchase agents for foreign traders when they have business registration certificates for the goods items in line with the goods under agency.

2. If acting as sale agents, Vietnamese traders shall have to open a separate bank account for payment of the agency sales of goods under the guidance of the State Bank of Vietnam. Traders may make payment in goods which are not on the lists of goods banned from export and/or goods subject to conditional export. In cases where payment is made in goods on the list of goods subject to conditional exports, the approval of the competent agency is required.

3. If acting as purchase agents, Vietnamese traders shall have to request foreign traders to transfer money in a convertible foreign currency via banks so that Vietnamese traders buy goods according to the agency contracts.

Article 22.- Goods under agency

1. Traders that meet all the conditions defined in Article 21 of this Decree shall be entitled to sign contracts for acting as agents for sale and/or purchase of goods which are outside the list of goods banned from import or export.

2. For goods on the list of goods subject to conditional import and export, traders shall be only entitled to sign agency contracts within the goods quantity or value limits approved by the competent agency as stipulated in Article 5 of this Decree.

Article 23.- Goods sale and/or purchase agency contracts with foreign traders

The conclusion and performance of goods sale and/or purchase agency contracts with foreign traders shall have to comply with the provisions on the goods purchase and sale agents in Section 6, Chapter II of the Commercial Law.

Article 24.- Tax obligations

1. Goods under the sale and/or purchase agency contracts shall be subject to tax and other financial obligations in accordance with the provisions of Vietnamese laws.

2. Vietnamese traders shall have to register, declare and pay various taxes and other financial obligations relating to goods under the sale and/or purchase agency contracts and their business activities as prescribed by law.

Article 25.- Import and export procedures

When importing or exporting goods under the sale and/or purchase agency contracts with foreign traders, Vietnamese traders shall complete the procedures applicable to import and export goods as stipulated in this Decree.

Article 26.- Return of goods

Goods sold in Vietnam under the sale agency contracts for foreign traders shall be re-exported if they are not sold in Vietnam. The tax refund shall comply with the provisions of the taxation legislation of Vietnam.

Chapter V

HANDLING OF VIOLATIONS

Article 27.- Handling of traders' violations

Traders that violate the provisions of this Decree shall, depending on the seriousness of their violations, be administratively handled or examined for penal liability according to the provisions of law.

Article 28.- Handling of violations by State employees

State employees who abuse their positions and powers, acting against the provisions of this Decree shall, depending on the seriousness of their violations, be disciplined or examined for penal liability according to the provisions of law.

Chapter VI

IMPLEMENTATION PROVISIONS

Article 29.- Implementation provisions

1. This Decree takes effect 30 days after its signing. The previous provisions which are contrary to this Decree are hereby annulled.

2. The General Department of Customs shall have to provide data on enterprises that have registered their import and export business codes, on the export and import values according to the lists of goods and markets as well as relevant data on goods import and export to the Ministry of Trade according to the regulations agreed upon by the Ministry of Trade and the General Department of Customs.

3. The Ministry of Trade shall coordinate with the General Department of Customs, the Ministry of Finance and the People's Committees of the provinces and cities directly under the Central Government in supervising the implementation of the provisions of this Decree.

4. The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government and the presidents of the People's Committees of the provinces and cities directly under the central Government shall have to guide and implement this Decree.

On behalf of the Government

Prime Minister

PHAN VAN KHAI

Appendix 1

LIST OF GOODS BANNED FROM IMPORT AND EXPORT

(issued together with Decree No. 57/1998/ND-CP of July 31, 1998 of the Government)

I. GOODS BANNED FROM EXPORT

1. Weapons, ammunitions, explosives, military technical equipment.

2. Antiques,

3. Narcotics of all kinds.

4. Toxic chemicals.

5. Logs, sawed timber, peeled timber, firewood, charcoal, wood products made of Group IA timber and semi-refined products made of Group IIA timber on the list issued together with Decree No. 18-HDBT of January 17, 1992; rattan used as raw material.

6. Wild animals, and precious and rare natural animals and plants.

II. GOODS BANNED FROM IMPORT

1. Weapons, ammunitions, explosives, military technical equipment.

2. Narcotics of all kinds.

3. Toxic chemicals.

4. Cultural products with decadent and reactionary contents.

5. Fireworks of all kinds. Children's toys harmfully affecting personality education and social order and safety.

6. Cigarettes (except for personal effects in allowable quotas).

7. Used consumer goods (except for such transferred property as goods used to meet the needs of individuals with diplomatic status from various countries and international organizations and personal effects in allowable quotas).

8. All kinds of automobiles and self-propelled means with right-hand drive (including those in CKD form components).

9. Used parts of automobiles, motor cycles and motor three-wheelers, including chassis attached with used automobile engines.

Appendix 2

LIST OF GOODS SUBJECT TO CONDITIONAL IMPORT AND EXPORT

(Issued together with Decree No. 57/1998/ND-CP of July 31, 1998 of the Government)

I. LIST OF IMPORT AND EXPORT GOODS SUBJECT TO QUOTAS:

1. Rice.

2. Goods subject to quotas set for Vietnam by foreign economic organizations and countries;

II. IMPORTS AND EXPORTS WHICH REQUIRE PERMITS:

A. Imports

3. Petroleum;

4. Fertilizers;

5. Motor cycles and components for complete assembly;

6. Tourist cars with 12 seats or less;

7. Iron and steel;

8. Cement;

9. Refined sugar, crude sugar as raw material;

10. Assorted writing paper, printing paper;

11. Liquors;

12. Construction glass;

13. Goods subject to specialized management according to the list already approved by the Government.

B. EXPORTS

14. Goods subject to specialized management according to the list approved by the Prime Minister.-