Laws of Vietnam

Over the past 10 years after the promulgation of the Law on Foreign Investment in Vietnam in 1987, the FDI activities in our country have witnessed important achievements, actively contributing to the attainment of the socio-economic targets and to the success of the renewal cause, taking the country out of the economic crisis, increasing its strength and raising its posture on the international arena. FDI has become one of the important capital sources for development investment, contributing to promoting the economic restructure along the direction of industrialization and modernization, opening up many new production and business lines with new products, raising the managerial capability and technological levels, expanding the export market, creating more jobs and contributing to the expansion of external relations and active integration into the world economy.

However, the FDI activities over the recent years have revealed weaknesses and shortcomings. The perception and viewpoints on FDI were neither unanimous nor fully comprehended by administrations of all levels and branches; the FDI structure still saw irrationalities and the overall socio-economic efficiency of the FDI activities was not high yet; the investment environment remained unattractive; the economic and legal environments remained incomplete as they are being in the process of betterment. The State management over FDI was struck with many weaknesses; the administrative procedures remained troublesome, and the personnel work saw many shortcomings. The FDI growth rate has fallen continuously since 1997 though having shown signs of recuperation in 2000, which is not really stable and may affect the development investment capital sources in the years to come if no remedial measures are taken in time. Meanwhile, the competition to attract FDI in the world and the region is getting fiercer and fiercer, particularly after the regional economic crisis; the world’s economic growth rate is slowing down; the regional economies and leading foreign investors in Vietnam are facing difficulties.

With a view to further improving the investment environment, consolidating the foreign direct investors’ confidence, creating favorable conditions for foreign-invested economic sector to develop, thereby making more contributions to economic development, as well as to the successful attainment of the socio-economic development targets in the time to come, the Government hereby promulgates the Resolution on "further attracting and raising the efficiency of FDI in the 2001-2005 period", with the following major contents:

I. OBJECTIVES AND ORIENTATIONS FOR THE FDI ATTRACTION

1. Objectives:

To implement the 2001-2010 socio-economic development strategy as well as the orientations and tasks of the 2001-2005 socio-economic development plan, the FDI sector must develop in a more stable and efficient manner, especially in terms of quality, than the previous period so as to step up the national industrialization and modernization. More concretely, the FDI activities in the 2001-2005 period must achieve the following targets:

a/ The registered capital of the newly licensed projects: about USD 12 billion.

b/ The realized capital: about USD 11 billion.

c/ By 2005, the FDI shall represent about 15% of GDP, 25% of the total export value and 10% of the total State budget revenue of the whole country (excluding petroleum).

2. Orientations:

a/ To strongly encourage the attraction of FDI into the export goods production and processing industries; industries in service of the development of agriculture and rural economy; projects on the application of information technology, biotechnology, petroleum, electronics, new materials, telecommunications, production and development of socio-economic infrastructure and branches where Vietnam have many competitive edges in association with the modern technologies, thus creating more jobs and contributing to the economic restructure.

b/ To further attract FDI into the geographical areas with many advantages so as to bring into play the role of dynamic areas, creating conditions for associated development of other regions on the basis of promoting their comparative advantages. To encourage and give maximum preferences to FDI in the geographical regions and areas meeting with socio-economic difficulties and step up the investment in the construction of infrastructure projects in these areas with capital from other sources in order to facilitate FDI activities. To concentrate on the attraction of FDI into the industrial parks (IPs), which have been set up under the ratified planning.

c/ To encourage foreign direct investors from all countries and territories to invest in Vietnam, especially those foreign investors that have big financial potential and grasp original technologies from the developed countries; to further attract foreign direct investors in the region. To work out plans to mobilize big consortiums and companies to invest in Vietnam and at the same time pay attention to the small- and medium-sized companies posessing modern technologies; to encourage and create favorable conditions for overseas Vietnamese to invest in the country.

II. IMPLEMENTATION SOLUTIONS

1. To draw up lists of projects calling for FDI

a/ To draw list of national projects calling for FDI in the 2001-2005 period and announce it in 2001, which shall serve as basis for investment mobilization and promotion. To be selected and included in this list, projects must be approved in advance in terms of undertaking and planning thereon and allocated capital for elaboration of feasibility studies. The ministries, branches and localities shall take initiative in drawing up and promulgating lists of projects calling for FDI for their respective branches and localities after reaching agreement with the Ministry of Planning and Investment.

b/ The ministries and branches shall elaborate and adjust the branch plannings and major products to suit the 2001-2010 socio-economic development strategy and 2001-2005 socio-economic development plan; clearly determine the demand for capital from each source, including the FDI capital, so as to achieve the targets and products already set forth in their plans.

2. To continue perfecting the legal system, mechanism and policies on FDI

a/ To continue studying the formulation, adjustment and perfection of the legal system related to FDI, creating favorable conditions for the FDI activities to develop strictly according to the orientations of the socio-economic development strategy and meet the requirements of the active integration into the world economy.

b/ To study, elaborate and finalize legal documents on FDI along the following directions:

- Establishing a common legal framework applicable to both domestic investment and FDI in order to create a stable and equal environment for production and business; concurrently applying a number of regulations on the conditions for investment and preferences suited to each subject and domain in each period.

- Diversifying FDI forms in order to exploit more channels for investment attraction; studying and experimenting such investment forms as partnerships and capital management companies; amending and supplementing the Government’s Decree No.103/1999/ND-CP of September 10, 1999 on the assignment, sale, contracting and lease of State enterprises along the line of allowing foreign direct investors to purchase, contract, manage and hire domestic enterprises; studying the model of open economic zone.

- Broadening the fields where FDI is attracted to according to the commitments in the course of active integration into the world economy. Step by step opening the real estate market for overseas Vietnamese and foreign direct investors to invest in Vietnam; formulating a mechanism whereby FDI enterprises may build and trade in dwelling houses as well as build, trade in and develop new urban quarters; encouraging investment in the fields of scientific, technological and information services, technological transfer and human resource development; step by step expanding investment cooperation in the fields of trade, service and tourism.

In 2001, it is necessary to perform the following urgent tasks:

- Elaborating a project on broadening the fields where FDI is attracted to on the basis of reviewing and assessing the fields where FDI has been permitted on the experimental basis as well as the fields where investment licensing is not allowed or restricted; adjusting the list of products which must ensure the export percentage of at least 80%.

Basing themselves on the above-mentioned project and current regulations, investors may take initiative in selecting investment projects in strict compliance with the provisions in Article 3 of the Government’s Decree No.24/2000/ND-CP of July 31, 2000 detailing the implementation of the Law on Foreign Investment in Vietnam. The State management agencies must not arbitrarily impose any restrictions on FDI.

- Elaborating a Regulation on the experimental transformation of FDI enterprises into joint-stock companies and creating conditions for them to be listed at the securities market. Studying the amendment of specific provisions on time limit for negotiation on BOT projects as well as the rules and competence to appoint foreign direct investors to implement BOT projects in a number of necessary cases.

- Issuing the regulations on permitting foreign direct investors to invest in import and domestic distribution services in the spirit of the Government’s Decree No.24/2000/ND-CP of July 31, 2000. To shorten the list of goods other than those purchased by FDI enterprises for export.

- Studying the supplement and amendment of the Government’s Decree No.60/CP of July 5, 1994 on dwelling house ownership right and residential land use right in urban areas and Decree No.61/CP of July 5, 1994 on the purchase, sale and trading of dwelling houses in accordance with the provisions of the Civil Code and the Law Amending and Supplementing a Number of Articles of the Land Law; promulgating the Government’s Decree specifying the purchase of dwelling houses by overseas Vietnamese who have investment projects and reside in Vietnam.

- Promulgating as soon as possible legal documents guiding the implementation of policies and regulations on investment cooperation with foreign countries in the domain of education and training as well as scientific research under the Government’s Decree No.06/2000/ND-CP of March 6, 2000 in order to further attract qualitative investment projects and manage operations of investment projects in this domain.

c/ To continue with the roadmap of reducing investment expenses and proceeding to the one- price regime, to be uniformly applied to both domestic investment and FDI under the Prime Minister’s Decision No.53/1999/QD-TTg of March 26, 1999.

In 2001, to uniformly apply the motorized transport means registration fee, seaport charge, charge of advertisement on the mass media and charge of visiting cultural, historical and revolutionary relics.

To complete before June 2002 the reimbursement to FDI enterprises of legal capital amounts they have actually invested in building outside-fence power projects.

d/ To renew and improve monetary policies related to the FDI activities along the direction of gradually reducing, proceeding to the eradication of compulsory foreign exchange settlement when conditions permit. To use flexibly and efficiently monetary instruments and policies such as exchange rates and interest rates according to the market principles under the State macro management.

e/ To continue reforming tax system in conformity with the national socio-economic development situation and international commitments along the direction of simplifying tax laws, step by step applying a common tax system to both domestic investment and FDI. To elaborate tax policies to encourage FDI in the production of accessories and spare parts, raising the products’ localization percentage; to allow projects on the production of auxiliary materials for export goods to enjoy preferences like investment projects on the production of export goods. To effectively protect a number of important products for an adequate period of time.

In 2001, to promulgate policies to encourage operation of foreign investment funds operating in Vietnam; to soon apply the regulations on tax payment declaration and at the fiscal year’s end, to conduct final tax settlement on the basis of the results of independent audit; the tax agencies shall conduct re-inspection in necessary cases.

f/ To promptly remove difficulties and problems regarding land and ground clearance in order to step up the project implementation tempo. To allow, on an experimental basis, individuals in the country who have been granted long-term land use right, to sublease land to foreign direct investors within their land use terms.

To seek ways to satisfy the demand of foreign enterprises which invest in the implementation of big projects in Vietnam and need to mortgage the value of the right to use land already assigned or leased to them for a long term to borrow capital from credit institutions operating overseas in cases where credit institutions in Vietnam are incapable of meeting their capital demand.

In 2001, it is necessary to do the following urgent things:

- To step up the tempo of compensation payment and ground clearance, creating favorable conditions for the implementation of FDI projects. The local People’s Committees shall resolutely organize the forced ground clearance for cases where the State’s policies and regulations have been properly applied but the concerned subjects still fail to execute them.

- To issue legal documents guiding the granting of land use right certificates to enterprises operating in industrial parks and export processing zones.

- To issue legal documents guiding the handling of responsibilities and obligations of joint-venture parties towards the land contributed as capital to joint ventures in cases where the enterprises change their investment forms, go bankrupt or dissolve ahead of time.

3. To raise the State management effectiveness

a/ The investment licensing bodies shall have to regularly revise and classify the already licensed FDI projects so as to take appropriate and timely measures to remove difficulties for FDI enterprises.

For enterprises having commenced their production and business, the ministries, branches and provincial-level People’s Committees should, within the ambit of their respective jurisdictions, encourage, commend or reward them in time so that such enterprises may well operate and continue develop, and at the same time, take appropriate measures to remove difficulties for them, particularly those related to the product consumption markets and tax obligations.

For ongoing projects, the ministries, branches and provincial-level People’s Committees shall actively support enterprises to remove difficulties, especially those in the compensation payment and ground clearance, so as to quickly complete the capital construction, and put enterprises into production and business.

Projects, which have not yet been deployed but the implementation thereof is deemed feasible, must be implemented within given periods of time and the obstacles must be removed, including the adjustment of such projects’ objectives and operation scope.

For projects that have not yet been deployed but the implementation thereof is impossible, the investment licenses must be withdrawn to give place to other investors.

b/ To closely control the establishment of new IPs and evaluate the situation of setting up those IPs for which establishment decisions have been issued; the Ministry of Planning and Investment shall, in October 2001, submit to the Prime Minister a plan on terminating or rescheduling the construction of unfeasible IPs.

In 2001, to amend and supplement the Regulation on Industrial Parks, Export Processing Zones and Hi-Tech Parks, issued together with the Government’s Decree No.36/CP of April 24, 1997 along the direction of narrowing the gap between and proceeding to the unified mechanism and policies for, domestic investment and FDI in IPs, adding new models of small IPs in service of development of branches and trades in rural areas and urban renovation, adjusting the mechanism and policies on investment in infrastructure development inside and outside fences, and separating the lease of natural land from infrastructure business.

c/ To further implement the policy on decentralizing the State management over FDI to the provincial-level People’s Committees on the basis of ensuring the principle of centralism and unified management over the planning, structure, policies and mechanisms; to attach importance to the decentralization of State management over the post-licensing activities of the FDI projects; to enhance the guidance and inspection activities of the ministries and centrally-run branches. To work out a mechanism to severely handle violations of laws, policies and planning in the implementation of the policy on decentralization of the State management over the FDI; to invalidate the investment licenses granted not according to regulations.

4. To improve the administrative procedures

To boost the administrative reform related to the FDI activities. To study the elaboration of the one-door and one-coordinator management mechanism and organize the management at the central and local levels according to that mechanism in order to facilitate the FDI activities.

In order to create substantial changes in the administrative procedures, the following solutions should be applied in 2001:

- Enhancing the close coordination among the centrally- and locally-run State management agencies in managing the FDI activities; clearly defining powers and responsibilities of each agency in the settlement of arising problems; applying the regime of periodical briefings among ministries, centrally-run branches and localities where exist many FDI projects; maintaining regular contact between the State management agencies and foreign direct investors.

- Strongly improving the administrative procedures related to FDI activities along the direction of further simplifying the investment licensing, broadening the scope of projects to be registered for investment licensing. Setting up inter-branch working team with the Ministry of Planning and Investment assuming the prime responsibility for systematically revising all kinds of licenses and regulations related to the FDI activities, thereby suggesting the cancellation of licenses or regulations unnecessary for the FDI activities.

- The ministries, branches and localities shall clearly specify and publicize administrative procedures, simplify and reduce unnecessary procedures; resolutely and strictly handle cases of harassment, authoritarianism, negative acts and irresponsibility committed by public employees.

5. To boost investment mobilization and promotion

a/ To renew the contents and mode of investment mobilization and promotion. To implement investment promotion programs according to branches, domains and geographical areas with specific projects and partners, focusing on foreign partners with great financial potentials and original technologies. On the basis of the list of national projects calling for FDI, to thoroughly prepare for a number of important investment projects, select and directly invite a number of big consortiums in the concerned branches and domains to negotiate and invest in such projects.

b/ To attach importance also to investment promotion in order to attract new FDI projects and activities in support of investors to effectively implement the underway FDI projects. To remove difficulties and obstacles in time in order to facilitate operations of the FDI enterprises. To commend or reward in time enterprises and foreign investors with outstanding achievements in business and practical contributions to the national construction. At the same time, to criticize and strictly handle cases of breaching Vietnamese laws.

- To diversify investment promotion activities through the Party’s and State’s external relation activities, international forums and investment promotion cooperation activities within the AIA, ASEAN, APEC and ASEM cooperation framework as well as the symposiums on investment at home and abroad; to combine various investment promotion means such as mass media, Internet, direct contact...

- To boost the propagation and introduction on the FDI activities so as to create a new image on Vietnam; to formulate a unified public assessment of the FDI.

- Vietnamese diplomatic and trade missions shall have to well mobilize and promote investment in Vietnam, arrange personnel to take charge of investment promotion in a number of key geographical areas. To post more personnel for the work of investment promotion in the ministries, branches and localities.

- To arrange financial sources for investment promotion activities in the annual budget regular expenditures of the ministries, branches and localities.

- To intensify the study of the economic situation, investment markets and overseas investment policies of foreign countries, big consortiums and companies so as to adopt appropriate policies on investment attraction; to study laws, policies and measures to attract FDI from the regional countries in order to work out timely and appropriate counter-tactics.

- To elaborate and perfect the FDI information system, which shall serve as basis for making policies and managing the FDI activities, expanding the external propagation by using the modern information technology. To establish and put into operation a website on FDI in service of the provision of updated information on investment orientations, policies and legislation, to introduce projects calling for investment and compliment on successful projects...

6. The personnel and training work

To attach importance to the strengthening of personnel work and training of cadres and technicians working in the foreign-invested economic sector. In 2001, the following projects must be finalized:

- Elaborating the Regulation on Vietnamese officials participating in the Managing Boards and the management of joint-venture enterprises, which clearly determine the political and professional criteria for selection thereof; the responsibilities, obligations and interests of officials working in the FDI enterprises.

- Organizing different forms of training for officials involved in the FDI work and officials managing FDI enterprises; organizing regular professional training and law dissemination for Vietnamese officials working in the FDI enterprises.

- Organizing the training of skilled workers for FDI enterprises, first of all in service of the big IPs.

III. ORGANIZATION OF IMPLEMENTATION

1. The Ministry of Planning and Investment shall assume the prime responsibility and coordinate with the Government Office in acting as the prime agencies in monitoring, urging, inspecting, summing up and periodically reporting the situation on implementation of this Resolution to the Prime Minister according to the latter’s assignment.

In the course of implementation, if problem arise, they must be promptly reported to the Prime Minister for direction.

2. The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government, the presidents of the People’s Committees of the provinces and centrally-run cities shall have to implement this Resolution.

On behalf of the Government
Prime Minister
PHAN VAN KHAI