Laws of Vietnam

THE PRIME MINISTER

DECIDES:

Article 1.- To promulgate together with this Decision the Regulation on operation of Lao Cai border-gate economic zone, Lao Cai province.

Article 2.- This Decision takes effect 15 days after its publication in "CONG BAO."

Article 3.- Ministers, heads of ministerial-level agencies, heads of government-attached agencies and the president of Lao Cai province's People Committee shall implement this Decision.

Prime Minister
NGUYEN TAN DUNG

Chapter I

GENERAL PROVISIONS

Article 1.- Scope of regulation

This Regulation provides for the operation of, a number of policies towards, and the organization of the state management of, Lao Cai border-gate economic zone; rights and obligations of domestic and foreign organizations and individuals engaged in investment and business activities in Lao Cai border-gate economic zone.

Article 2.- Geographical boundaries of Lao Cai border-gate economic zone

1. Lao Cai border-gate economic zone is an area with specified geographical boundaries belonging to the national territory and sovereignty with functional zones where exist the most favorable investment and business environment under current regulations, embracing socio-economic infrastructure and policies as well as management mechanisms favorable for business activities and suitable to the market mechanisms.

2. Lao Cai border-gate economic zone covers an administrative scope as follows:

a/ The Lao Cai international border-gate area, which comprises Lao Cai, Pho Moi, Coc Leu, Duyen Hai and Kim Tan wards, Van Hoa and Dong Tuyen communes of Lao Cai city; Na Mo village, Ban Phiet commune of Bao Thang district.

b/ The Muong Khuong border-gate area, which comprises the entire Muong Khuong commune of Muong Khuong district.

Article 3.- Development objectives of Lao Cai border-gate economic zone

1. To build and develop Lao Cai border-gate economic zone into a leading motive economic zone, with the development of urban centers, industries, trade and services in the Lao Cai - Hanoi - Haiphong economic corridor under the planning on building of the Vietnam-China border region till 2020.

2. To tap the advantages of land border-gate areas, building the border-gate economic zone into a dynamic trade and service area with favorable policies and mechanisms to promote the export and import of goods and services between Vietnam as well as other countries with China's southwestern market.

3. To create a favorable environment to attract domestic and foreign investment, develop production, trade and services, thus contributing to strongly speeding up Lao Cai province's economic restructuring.

4. To strengthen border security, effectively settling social problems and raising the material and spiritual life of people.

5. To enhance the Vietnam-China relationship of economic, commercial and service cooperation, contributing to the development of the Con Minh - Lao Cai - Hanoi - Haiphong economic corridor and Greater Mekong Sub-region (GMS) cooperation.

Article 4.- Incentive and protective policies

The Socialist Republic of Vietnam Government encourages and protects the lawful rights and interests of domestic and foreign organizations and individuals engaged in investment and business activities in Lao Cai border-gate economic zone in the fields of export, import, temporary import and re-export; transit of goods; bonded warehouses; duty-free shops; exhibition and trade fair; product show; import and export production and processing; border-gate marketplaces; socio-economic infrastructure and housing investment; tourism; financial and banking services as well as other business activities under provisions of Vietnamese law and treaties to which Vietnam is a contracting party.

Article 5.- Rights of organizations and individuals engaged in investment and business activities in Lao Cao border-gate economic zone

In addition to the rights enjoyed under provisions of Vietnamese law and treaties to which Vietnam is a contracting party, enterprises conducting investment and business activities in Lao Cai border-gate economic zone are entitled to the following rights:

1. To enjoy incentives defined in this Regulation.

2. To use infrastructure, public facilities and common services in Lao Cao border-gate economic zone such as roads, technical infrastructure, public lighting, electricity supply, water supply, communication at prices agreed with infrastructure developers.

3. To transfer land use rights and assets attached to land within the land lease or sub-lease duration in accordance with law and land use purposes of invested projects. In case of a change in the original investment purposes of projects, the transfer of land use rights and assets attached to land may be effected only after it is approved by a competent body.

4. To mortgage their land use rights and assets attached to land within the land lease or sub-lease duration at Vietnamese or foreign credit institutions operating in Vietnam under the current provisions of Vietnamese law.

Article 6.- Capital sources for development of Lao Cai border-gate economic zone

1. Annually, based on the State Budget Law, the state budget balance and important socio-economic infrastructure investment projects already approved by competent state bodies, the Ministry of Planning and Investment shall assume the prime responsibility for, and coordinate with the Finance Ministry and concerned agencies in, arranging capital from targeted-support sources from the central budget for Lao Cai province to implement important projects on socio-technical infrastructure of Lao Cai border-gate economic zone.

2. The State's development investment credit capital.

3. Capital of enterprises and people at home via direct investment projects, various forms of issuance of work bonds or capital partially advanced by potential infrastructure users and forms of co-financed credit.

4. Capital of investment in the forms of Building-Operation-Transfer (BOT), Building-Transfer (BT), Building- Transfer- Operation (BTO) and other forms as prescribed by law.

5. Capital from land funds under provisions of land law for investment in the development of socio-technical infrastructure in common service of Lao Cai border-gate economic zone.

6. ODA capital and preferential credit capital sources, which are prioritized for investment in the construction of socio-technical infrastructure and necessary public facilities of Lao Cai border-gate economic zone.

Chapter II

OPERATION OF LAO CAI BORDER-GATE ECONOMIC ZONE

Article 7.- Planning on functional zones in Lao Cai border-gate economic zone

Lao Cai border-gate economic zone comprises the following functional zones: a trade-industry zone, an industrial park, an urban and population quarter for the development of trade services, and a border-gate management and control zone. The size and location of each zone are identified in the general and detailed plannings of Lao Cai city and the center of Muong Khuong district town.

The trade-industry zone in Lao Cai border-gate economic zone lies adjacent to the Vietnam-China border, with its size specified in the detailed planning approved under Decision No. 366/QD-UBND of February 15, 2006, of the People's Committee of Lao Cai province, and the following characters:

1. Having soled fences to separate activities in the trade-industry zone from those in the other functional zones of the border-gate economic zone.

2. In the trade-industry zone, there are no residents or regular temporary residents (including foreigners).

3. There are two control stations to supervise and check people, goods and means entering and exiting the trade-industry zone. Station No. 1 is located at the border-gate linking with China by a land bridge spanning the Red river. Station No. 2 is located at the end of the trade-industry zone to the inland of Lao Cai province, Vietnam.

Article 8.- Exit, entry and residence in Lao Cai border-gate economic zone

1. Chinese citizens residing in districts bordering on Lao Cai province may enter Lao Cai border-gate economic zone with border laissez-passers issued by competent Chinese agencies and are permitted to temporarily reside in Lao Cai border-gate economic zone for not more than 15 days. If they wish to enter other localities in Lao Cai province than Lao Cai border-gate economic zone, the provincial Immigration Department shall grant travel permits valid for not more than 7 days each and without extension.

2. Foreigners or Vietnamese carrying foreign passports who are not exempt from visa for entry into Lao Cai border-gate economic zone are exempt from visa for entry into Vietnam and permitted to stay in Lao Cai border-gate economic zone for not more than 15 days. If they wish to enter localities other than Lao Cai border-gate economic zone, a visa issued right at the border-gate by the Immigration Office is required.

3. Foreigners and Vietnamese carrying foreign passports and their family members who wish to enter for market probe, working, investment and business activities in Lao Cai border-gate economic zone will be granted multiple entry and exit visas. If they enter for working, investment or business activities, they will be considered for the grant of temporary residence cards valid for 3 years at most.

4. Vietnamese nationals residing in districts, provincial towns or cities of Lao Cai province are permitted to enter China with border laissez-passers issued by competent Vietnamese agencies.

5. Vietnamese nationals are free to enter and exit Lao Cai border-gate economic zone. If they enter Lao Cai border-gate economic zone for exit to foreign countries, the current regulations on exit and entry shall be complied with.

The Ministry of Public Security and the Border-Guard Command shall guide the Police Department and the Border-Guard Command of Lao Cai province to control entry, exit, stay and temporary residence in Lao Cai border-gate economic zone.

Article 9.- Management of motor vehicles in Lao Cai border-gate economic zone

1. Permitting motor vehicles to enter and exit Lao Cai border-gate economic zone for cargo and passenger transportation between Lao Cai border-gate economic zone and China. These vehicles entering inland Vietnam must abide by provisions of Vietnamese law and treaties which Vietnam has signed or acceded to.

2. For Chinese means of road transport entering and exiting Lao Cai border-gate economic zone, if having no permits for international transportation, procedures for temporary import and re-export must be carried out; if they exit and enter within a day, only certification by customs office at the border-gate control station is required and they must park in prescribed terminals or yards under the management of relevant functional bodies.

Article 10.- Investment incentives

All investment projects in Lao Cai border-gate economic zone are entitled to maximum incentives applicable to geographical areas facing exceptional socio-economic difficulties under the Investment Law, the Corporate Income Tax Law, the Value-Added Tax Law and other incentives under treaties to which Vietnam is a contracting party. In case different incentives are prescribed by various legal documents for one matter, the highest incentive will apply.

Article 11.- Finance and credit of Lao Cai border-gate economic zone

1. Enterprises of different economic sectors which conduct investment, production and business activities in Lao Cai border-gate economic zone may be considered by Vietnam Development Bank for the State's credit capital loans under the Government's the regulations on State's development investment credit.

2. Organizations and business enterprises operating in Lao Cai border-gate economic zone, if suffering from losses after making finalization with tax offices, may carry forward their losses to subsequent years, which will be deducted from their taxable incomes. The loss carrying-forward duration must not exceed 5 years.

3. People working in Lao Cai border-gate economic zone who are liable to personal income tax under provisions of law, are entitled to a 50% reduction of their payable tax amounts.

4. Raw materials and supplies imported into Lao Cai border-gate economic zone (excluding the trade-industry zone) for the production of export goods are subject to import tax, which will be refunded after products are exported under provisions of law.

5. Domestic and foreign organizations and individuals conducting business activities in Lao Cai border-gate economic zone shall implement financial, book-keeping and financial-report regimes in accordance with current provisions of Vietnamese law.

6. Trading, payment and commercial and service transactions in Lao Cai border-gate economic zone may be effected in Vietnam dong, Chinese yuan and convertible foreign currencies as provided for by the State Bank of Vietnam.

Chapter III

OPERATION OF THE TRADE-INDUSTRY ZONE

Article 12.- The trade-industry zone's operation covers the following major business forms

1. Manufacturing, processing, reprocessing, assembling and packing exports, imports and goods in service of the zone.

2. Commodity trading (including export, import, transportation from/to border gates, temporary import for re-export, border-gate marketplace, duty-free shop, duty-free supermarket).

3. Service provision (sorting, packing, delivery, preservation, warehousing, bonded warehouses, post and telecommunications, finance, banking, transportation, insurance, recreation and entertainment, restaurant, hotel, healthcare,')

4. Trade promotion (trade fair and exhibition, goods display shops, branches and representative offices of domestic and foreign companies and other trade activities).

Article 13.- Goods and service exchange relations of the trade-industry zone

1. Relations of goods and service exchange between the trade-industry zone and other functional zones in Lao Cai border-gate economic zone as well as the inland are export and import relations, which must comply with Vietnamese legal provisions on export and import and go through customs procedures in accordance with Vietnam's Law on Customs. The relations of goods and service exchange between the trade-industry zone and foreign countries are considered relations of exchange between foreign countries.

2. Economic organizations operating in the trade-industry zone may export to and import from foreign countries all goods and services not banned by Vietnamese law.

Economic organizations and individuals in the border-gate economic zone and the inland may only import from the trade-industry zone goods and services not banned from import by Vietnamese law and export into the trade-industry zone goods and services not banned from export by Vietnamese law.

The export and import of goods on the lists of those subject to conditional export or import and goods subject to restricted business must comply with the current provisions of Vietnamese law.

3. Goods processed, temporarily imported for re-export or transshipped via the trade-industry zone must comply with the current provisions of Vietnamese law on processing, temporary import for re-export and treaties to which Vietnam is a contracting party.

4. Goods transported between Vietnam and China via the trade-industry zone must comply with current regulations of each country and with relevant agreements signed between the Vietnamese and Chinese governments.

5. There exists in the trade-industry zone a customs organization which conducts inspection and supervision of exports and imports according to law.

Article 14.- Preferential policies towards the trade-industry zone

1. Investment projects of domestic and foreign organizations or individuals in the trade-industry zone are entitled to a corporate income tax rate of 10% for 15 years after their projects start business operation; to corporate income tax exemption for 4 years after taxable income is generated and a 50% reduction of payable tax amounts for 9 subsequent years.

2. Services and goods which are processed, assembled, reprocessed and consumed in the trade-industry zone, and goods and services imported from overseas into the trade-industry zone are free from value added tax.

3. Special consumption tax-liable goods and services processed, assembled, reprocessed and consumed in the trade-industry zone and special consumption tax-liable goods and services imported from overseas or inland Vietnam into the trade-industry zone are not liable to special consumption tax. Particularly for cars of under 24 seats, tax shall be paid as prescribed by law.

4. Goods brought from overseas or inland Vietnam into the trade-industry zone are temporarily free from export or import tax. Only when goods brought from overseas into the trade-industry zone for import into Vietnam and goods brought from inland Vietnam into the trade-industry zone are exported to foreign countries shall they be subject to import or export tax.

5. Goods processed, reprocessed or assembled in the trade-industry zone will be free from export tax when they are exported to foreign countries. Goods processed, reprocessed or assembled in the trade-industry zone without using raw materials and components imported from overseas will be free from import tax when they are brought into inland Vietnam. If raw materials and components imported from overseas are used, when they are brought into inland Vietnam, import tax shall be paid for the imported raw materials and components constituting such commodity products and they must go through export and import procedures and subject to customs inspection and supervision,

6. Domestic and foreign tourists, when entering the trade-industry zone, may buy and bring into inland Vietnam imported goods (goods not on the list of those banned from import), are exempt from import tax, value added tax and special consumption tax (if any) for goods valued at not more than VND 500,000/person/day. If the goods value exceeds VND 500,000, the excessive amount shall be taxed under the current regulations like other ordinary imported goods.

Chapter IV

STATE MANAGEMENT OF LAO CAI BORDER-GATE ECONOMIC ZONE

Article 15.- Organization of the Lao Cai Border-Gate Economic Zone Management Board

1. The Lao Cai Border-Gate Economic Zone Management Board is set up by decision of the president of Lao Cai province People's Committee, functioning as a state management body attached to the Lao Cai province People's Committee to perform the unified management of Lao Cai border-gate economic zone, build up and develop Lao Cai border-gate economic zone according to the planning, plans and schedule already approved by competent state bodies and to its Operation Regulation in order to ensure the centralized and unified state management of activities in all domains of investment, socio-cultural-economic development in Lao Cai border-gate economic zone.

2. The Lao Cai Border-gate Economic Zone Management Board has the legal person status, its own seal, staff and operation fund allocated from the state budget.

Article 16.- Tasks and powers of the Lao Cai Border-gate Economic Zone Management Board

The Lao Cai Border-Gate Economic Zone Management Boards has tasks and power as decided by the Lao Cai province People's Committee president, including:

1. To assume the prime responsibility for, and coordinate with Lao Cai province's functional bodies in, formulating the master plan for the Lao Cai province People's Committee to submit to the Prime Minister for approval; to formulate detailed planning on functional zones, detailed planning and plans on the use of land in Lao Cai border-gate economic zone, to manage, disseminate, guide, check and inspect the implementation of this Operation Regulation, plannings and plans already approved by competent state bodies.

2. To make lists of investment projects and annual plans on investment capital for capital construction, including schemes on the issue of work bonds and submit them to competent bodies for approval according to regulations.

3. To formulate price, charge and fee brackets for application in Lao Cai border-gate economic zone and submit them to competent authorities for consideration and promulgation according to law.

4. To act as a major body in settling problems arising in the course of formulation and execution of production and business investment projects and activities in Lao Cai border-gate economic zone.

5. To coordinate with local administrations and relevant agencies in ensuring that all activities in Lao Cai border-gate economic zone comply with this Operation Regulation as well as plannings and plans already approved by competent state bodies.

6. To manage and use development investment capital sources in Lao Cai border-gate economic zone, to manage construction projects financed with the state budget at Lao Cai border-gate economic zone according to regulations.

7. To formulate industrial, trade, service and tourist investment promotion programs and submit them to the provincial People's Committee for approval and organize the implementation thereof, to recommend, negotiate on and promote domestic and foreign investment.

8. To closely coordinate with the Ministry of Defense and the Ministry of Public Security in well executing defense- or security-related projects.

9. To periodically report to concerned ministries and branches as well as Lao Cai province People's Committee on the implementation of plannings, plans, the formulation and implementation of policies at Lao Cai border-gate economic zone.

10. To perform other tasks assigned in each period by the Prime Minister and the Lao Cai province People's Committee.

Article 17.- Organizational apparatus of the Lao Cai Border-Gate Economic Zone Management Board

1. The Board leadership:

The Lao Cai Border-Gate Economic Zone Management Board is composed of its head and deputy heads.

The head and deputy heads of the Lao Cai Border-Gate Economic Zone Management Board are appointed by the Lao Cai province People's Committee president.

2. The assisting apparatus and administrative staff of the Lao Cai Border-Gate Economic Zone Management Board are defined by the provincial People's Committee.

Article 18.- Responsibilities of the Lao Cai province People's Committee

1. To organize the formulation of master plan of Lao Cai border-gate economic zone and submit it to the Prime Minister for approval and to approve the detailed planning on functional zones of Lao Cai border-gate economic zone.

2. To approve detailed land use planning and plans on functional zones in Lao Cai border-gate economic zone.

3. To perform the state management of investment projects in Lao Cai border-gate economic zone according to approved plannings; to submit for approval or to approve according to its competence lists of development investment projects and annual development investment capital plans of Lao Cai border-gate economic zone.

4. To promulgate specific incentive policies conformable with current regulations for implementation of priority recruitment and employment of local labor; to support vocational training for local labor; to encourage and attract laborers with high professional qualifications and skills from other localities to work in Lao Cai border-gate economic zone.

5. To allocate funds for administrative and non-business activities as well as development investment capital for the Lao Cai Border-Gate Economic Zone Management Board according to annual plans.

6. To direct the Lao Cai Border-Gate Economic Zone Management Board to fulfill all tasks defined in this Regulation and fully implement relevant policies in the area, resettlement, social policies and job creation in order to ensure the people's life as well as the living and working conditions for laborers in Lao Cai border-gate economic zone.

7. To direct district/town People's Committees and functional agencies of the province to apply measures to ensure social order and safety, to create favorable conditions for activities of enterprises, to efficiently carry out ground clearance and compensation, to combat smuggling and trade fraud as well as other illegal acts in the province which are related to the operation of Lao Cai border-gate economic zone.

8. To agree in writing with the administration of Yunnan province of China on the principle of cooperation on support and coordination in the management of the operation of Lao Cai border-gate economic zone, compliance with the current laws of each country and development of cooperative relations between regional countries.

Article 19.- Responsibilities of ministries and branches for state management at Lao Cai border-gate economic zone

Concerned ministries and branches shall, according to their respective functions, tasks and powers, coordinate with the Lao Cai province People's Committee in guiding the Lao Cai Border-Gate Economic Zone Management Board to perform the functions and tasks under its jurisdiction in economic development, investment, construction, planning, natural resource and environment management, urban development and management, labor management, export and import and other domains according to law and this Regulation.

Chapter V

IMPLEMENTATION PROVISIONS

Article 20.- Other regulations related to activities of organizations and individuals in Lao Cai border-gate economic zone which are not included in this Regulation must comply with relevant provisions of the Commercial Law, the Investment Law, the Enterprise Law, the Land Law as well as other legal documents and treaties to which Vietnam is a contracting party.

Article 21.- Incentive policies and mechanisms prescribed in this Regulation may apply to domestic and foreign organizations and individuals which have conducted business and investment activities in Lao Cai border-gate economic zone for their remaining operation duration.