DECREE OF THE GOVERNMENT
Providing amendments of and additions to a number of Articles of Decree No. 24/2000/ND-CP dated 31 July 2000 promulgating detailed regulations on the implementation of the Law on Foreign Investment in Vietnam
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THE GOVERNMENT
Pursuant to the Law on Organisation of the Government dated 25 December 2001;
Pursuant to the Law on Foreign Investment in Vietnam dated 12 November 1996; the Law amending and supplementing a number of Articles of the Law on Foreign Investment in Vietnam dated 9 June 2000;
Upon the proposal of the Minister of Planning and Investment,

DECREES:

Article 1. To provide amendments of and additions to a number of Articles and Appendix 1 of Decree No. 24/2000/ND-CP dated 31 July 2000 promulgating detailed regulations on the implementation of the Law on Foreign Investment in Vietnam (hereinafter referred to as Decree 24/2000/ND-CP) as follows:
1. Article 1 shall be amended and supplemented as follows:
"Article 1. Scope of Application
This Decree sets forth detailed regulations for implementing the Law on Foreign Investment in Vietnam dated 12 November 1996, the Law amending and supplementing a number of Articles of the Law on Foreign Investment in Vietnam dated 9 June 2000 (hereinafter referred to as the Foreign Investment Law).
This Decree governs foreign direct investment activities in Vietnam, including activities such as the transfer of funds or any other assets to Vietnam by foreign investors to directly carry out production and business activities in order to gain benefits under the forms of the Foreign Investment Law.
Foreign direct investment activities in Vietnam in all aspects must comply with the provisions of the Foreign Investment Law, this Decree and other legislations."
2. Clause 2 of Article 2 shall be amended and supplemented as follows:
"2. Facilities for medical examination and treatment of diseases, educational and training facilities, and scientific research facilities in the country that meet the conditions prescribed by the Government."
3. Article 6 shall be amended and supplemented as follows:
"Article 6. Form of Business Co-operation Contract
1. A business co-operation contract is a document executed between two parties or multiple parties in order to invest and do business in Vietnam without establishing a new juridical person, which stipulates therein the responsibilities of, and the distribution of the business results to, each party.
Enterprises with foreign investment capital are entitled to cooperate with foreign organizations and individuals to perform business co-operation contracts.
2. Business co-operation contracts in the fields of prospecting, exploration and exploitation of oil and gas and a number of other natural resources in the form of production sharing contracts shall be implemented in accordance with the provisions of the relevant laws and the Foreign Investment Law.
4. Article 5 shall be amended and supplemented as follows:
- Paragraph 2 shall be supplemented to Clause 1 as follows:
"Joint venture enterprises shall include enterprises with one hundred per cent (100%) foreign-owned capital already established in Vietnam which make joint venture with subjects listed in points b, c, f, Clause 2 of this Article."
- Clause 2 shall be amended and supplemented with Items e and f as follows:
"e. Joint Venture Enterprises;
f. Enterprises with one hundred per cent (100%) foreign-owned capital."
5. Article 21 shall be amended and supplemented as follows:
"Article 21. Form of enterprise with one hundred per cent (100%) foreign-owned capital
1. An enterprise with one hundred per cent (100%) foreign-owned capital is an enterprise under the ownership of a foreign investor and is established in Vietnam by the foreign investor which shall manage it and be responsible for the business results on its own.
Enterprises with one hundred per cent (100%) foreign-owned capital which have been established in Vietnam may cooperate with each other and/or foreign investors to form new enterprises with one hundred per cent (100%) foreign-owned capital in Vietnam.
2. An enterprise with one hundred per cent (100%) foreign-owned capital is established in the form of a limited liability company having the status of a juridical person under Vietnamese law and is established and operates from the date on which it is issued an Investment License."
6. Article 31 shall be amended and supplemented as follows:
"Article 31. Enterprise re-organization
1. The division, separation, merger, consolidation of an enterprise, and the conversion of a form of investment (hereinafter collectively referred to as "enterprise re-organization"), must be approved by the Investment License Issuing Authority according to the following contents and procedures:
a. "Division of enterprise" is the division of the whole funds and assets of an enterprise with foreign investment capital (referred to as the divided enterprise) to form two or some new enterprises (referred to as the dividing enterprise).
b. "Separation of enterprise" is the transfer of part of the funds and assets of an enterprise with foreign investment capital (referred to as the separated enterprise) to form one or some new enterprises (referred to as the separating enterprise).
c. "Merger of enterprise" is the transfer of the whole funds and assets of one or some enterprises with foreign investment capital (referred to as the merged enterprise) to be merged into another enterprise with foreign investment capital (referred to as the merging enterprise).
d. "Consolidation of enterprise" is the consolidation of the whole funds and assets of two or some enterprises with foreign investment capital (referred to as the consolidated enterprise) to form a new enterprise with foreign investment capital (referred to as the consolidating enterprise).
e. "Conversion of the investment form" is the conversion into another investment form of the Foreign Investment Law by the project which is granted the investment licence subject to a form of the Foreign Investment Law".
The reorganization of an enterprise must be approved by the Board of Management (for joint venture enterprises) or foreign investors (for enterprises with one hundred per cent (100%) foreign-owned capital) or joint state enterprises (for Business Co-operation Contracts).
Reorganized enterprises must complete dossiers in accordance with provisions provided for in clauses 2 and 3 herein to submit to the Investment Licence Issuing Authority to adjust the Investment License and/or establish a new enterprise with foreign investment capital in accordance with the Foreign Investment Law. In the case of a conversion into a Vietnamese enterprise, the registration should be made in accordance with one of the forms of enterprises as stipulated in Clause 1, Article 2 of Decree 24/2000/ND-CP.
2. The dossier for a proposed enterprise re-organization includes:
a. An application for the enterprise re-organization;
b. Capital assignment documents (with respect to the case of a capital assignment);
c. The resolution of the Board of Management of the concerned joint venture enterprise or decision of the investor (for enterprise with one hundred per cent (100%) foreign-owned capital);
d. The charter of the new enterprise (except in the case of a conversion into a Vietnamese enterprise) or the amended or supplemented charter of the enterprise;
e. The joint venture contract of the new enterprise or the amended or supplemented joint venture contract;
f. The merger or consolidation contract between enterprises;
g. A report on the status of the operation and financial activities of the enterprises before the re-organization;
h. An explanatory statement on the enterprise re-organization;
i. Documents relating to land use rights; and
k. Other documents as required by the Investment License Issuing Authority.
3. An explanatory statement on an enterprise re-organization must have the following principal contents:
a. The name and address of the representative at law, the name and address of the enterprises before and after the enterprise re-organization;
b. The business and production objectives;
c. A plan for the employment of workers;
d. A plan for resolving the rights and obligations of the enterprises before and after the enterprise re-organization; and
e. The time limit for implementing the enterprise re-organization.
4. The decision on re-organization of the enterprise shall be sent to creditors and employees within 15 days from the date of approval.
5. Within thirty (30) working days as from the date of receipt of the full dossiers, the Investment License Issuing Authority shall issue a decision to approve the enterprise re-organization in the form of the issuance of an Investment License. In the event of refusal, the Investment License Issuing Authority must provide clear explanations in writing to the reasons therefore. Where the re-organized enterprises satisfy the conditions as stated in point 2, clause 22, Article 1 of this Decree, they shall be entitled to complete procedures for registration of the Investment License issuance."
7. Article 32 shall be amended and supplemented as follows:
"Article 32. Succession of rights and obligations after an enterprise re-organization
1. After the enterprise re-organization has been made and an Investment License has been granted, the new enterprise shall success the rights and obligations of the former enterprise, except otherwise agreed upon by the parties as approved by the Investment License Issuing Authority. These rights and obligations shall be carried out subject to the plan for resolving the rights and obligations of the enterprises as stated in the explanatory statement on the enterprise re-organization as provided for in Clause 3, Article 31 of this Decree.
2. Depending on the investment fields, areas, scale and conditions of re-organized enterprises, preferences applicable to enterprises after the re-organization shall be automatically applied in accordance with equivalent provisions of the applicable law.
3. Re-organized enterprises shall make the announcement of establishment and termination of their operation in accordance with Articles 27 and 38 of this Decree.
8. Article 46 shall be amended and supplemented as follows:
- Point b, clause 1 shall be amended and supplemented as follows:
"b. Production projects which do not fall under the categories of projects provided for in Clauses 2 and 3 of this Article."
- Point d, clause 2 shall be amended and supplemented as follows:
"d. Production enterprises in an Industrial Zone"
- Point d, clause 3 shall be amended and supplemented as follows:
"d. Enterprises that develop infrastructure for an Industrial Zone, Export Processing Zone, High Technology Zone; production enterprises in an Export Processing Zone;"
- Clause 3 shall be supplemented with a paragraph at the end as follows:
"Preferential conditions stated in Point (a), clause 3 herein shall not apply to production projects in an Industrial Zone having the export ratio of less than 50% of products, except for cases where such projects satisfy two of the conditions stated in Points a, b and e, Clause 2 of this Article."
- Clause 7 shall be supplemented as follows:
"7. In case where an enterprise with foreign investment capital or a business cooperation contract invests in several areas and/or in different geographic regions which have different preferential rates of enterprise income tax, preferential rates will be applied subject to each business area and region if the enterprise has independent accounting for each; If the enterprise is unable to have independent accounting, then preferential rates will be applied subject to the investment capital ratio."
9. Clause 2 of Article 48 shall be amended and supplemented as follows:
"2. Projects specified in Clause 2 of Article 46 of this Decree are entitled to enterprise income tax exemption as follows:
a. Production enterprises in an Industrial Zone which have product export ratio of less than 50% and fail to satisfy conditions stated in points a, b and e, Clause 2 of Article 46 will be exempted from enterprise income tax for two (2) years from the time when the business makes profits.
b. Remaining projects which are not mentioned in point a, clause 2 of this Article will be entitled to an exemption from enterprise income tax for two (2) years from the time when the business makes profits and a reduction of fifty per cent (50%) for the three (3) subsequent years."
10. Article 57 shall be amended and supplemented as follows:
- Clauses 5 and 6 shall be amended and supplemented as follows:
"5. Enterprises with foreign investment capital and business co-operation parties investing in a project that falls under the List of projects for which investment is especially encouraged or invest in a geographical area with especially harsh socio-economic conditions as provided for in the Appendix attached to this Decree are entitled to exemption of import duty for the raw materials, materials and components used for production for a period of five (5) years as from the commencement of production.
6. Enterprises with foreign investment capital and business co-operation parties investing in the manufacture of electrical, electronic or mechanical components or parts are entitled to exemption of import duty for the raw materials, materials and components used for production for a period of five (5) years as from the commencement of production."
- Clause 10 shall be supplemented to the end of Article 57 as follows:
"10. The Ministry of Trade shall cooperate with relevant Ministries and branches to issue documents guiding the detailed classification of raw materials, materials and components used for production entitled to exemption of import duty for a period of five (5) years as from the commencement of production as stated in clause 5 and 6 of this Article."
11. Article 59 shall be amended and supplemented as follows:
Article 59. Price for computing import duty
"The price for computing import duty for imported goods shall be applied in accordance with the provisions stipulated in Article 1 of Decree No. 60/2002/ND-CP of the Government dated 6 June 2002 providing regulations on the determination of the price for tax calculation applicable to imported goods subject to the principle of the Treaty implementing Article 7 of the Common Agreement on tariff and trade."
12. Clauses 1 and 3 of Article 67 shall be amended and supplemented as follows:
"1. Enterprises with foreign investment capital and foreign business co-operation parties are entitled to buy foreign currency from banks authorized to do business in foreign exchange in order to meet their current transactions and other authorized transactions in accordance with the provisions of the laws concerning foreign exchange control."
"3. The Government of Vietnam guarantees to assist in the balancing of foreign currency for enterprises with foreign investment capital and business co-operation parties that invest in the construction of infrastructure and certain other important projects in the event that banks permitted to trade foreign currency are unable to satisfy fully their foreign currency demand as stated in Clause 1 of this Article."
13. Paragraph 1, Clause 2 of Article 81 shall be amended as follows:
"2. The value of the transferred technology used as capital contribution shall be agreed upon by the parties."
14. Clause 1 of Article 83 shall be amended and supplemented as follows:
"1. Enterprises with foreign investment capital and business co-operation parties shall directly recruit Vietnamese workers and foreigners in accordance with the provisions of the Labour Code."
15. Article 84 shall be amended and supplemented as follows:
"Article 84. Salaries paid to Vietnamese workers
The minimum wages and salaries for Vietnamese workers working in an enterprise with foreign investment capital or for business co-operation parties shall be paid in accordance with the provisions stipulated by the Ministry of Labour, War Invalids and Social Affairs."
16. Article 85 shall be amended and supplemented as follows:
"Article 85. Land lease, payment of land rent and land use tax
1. Enterprises with foreign investment capital and business co-operation parties are entitled to lease land from the State of Vietnam to implement their investment projects and must pay rent in accordance with the regulations of the Ministry of Finance.
2. Where the Vietnamese Party makes capital contributions by way of land use right values originated from being transferred or allocated by the State with a collection of land use fees, but the land rents have been paid for the transfer or the paid land use fees are not originated from the Budget, then it shall not have to change into the land lease form and it shall have obligations to pay land use taxes in accordance with the applicable law."
17. Article 88 shall be amended and supplemented as follows:
"Article 88. Authority to decide on the land lease
The Provincial People's Committee shall decide on the lease of land to foreign invested projects in accordance with provisions of the land law."
18. Article 89 shall be amended and supplemented as follows:
"Article 89. Compensation, site clearance and the land lease dossier
1. In circumstances where the State of Vietnam grants a land lease, the Provincial People's Committee of the locality where the investment project is located is responsible for organizing the implementation of compensation and site clearance, and completing the formalities for leasing the land. The expenses for the compensation and site clearance may be accounted to the project's investment capital. The Provincial People's Committee shall reach an agreement with the enterprise that leases land on the financial resources for implementing the compensation and site clearance.
2. In the event that the Vietnamese Party contributes capital in the form of the value of land use rights, the Vietnamese Party is responsible for compensation and site clearance, and completing the formalities for obtaining the land use rights. The expenses for implementing the compensation and site clearance may be included in the portion of capital contribution of the Vietnamese Party or shall be agreed upon by the Parties.
3. The unit price for compensation shall be applied in accordance with the general regulations of the State.
4. With respect to projects the Investment Licenses of which are issued by Provincial People's Committees, the consideration of the grant of a land lease shall be carried out simultaneously with the consideration of the grant of an Investment License.
5. With respect to projects the Investment Licenses of which are issued by the Ministry of Planning and Investment, documents relating to land that accompanies the dossier for seeking the issuance of an Investment License shall include the following contents:
a. The location and area of the land to be used;
b. The land rental price proposed by the Provincial People's Committee on the basis of the frame of land rental prices prescribed by the Ministry of Finance; and
c. The plan for the compensation and site clearance.
6. The formalities and the dossier for a land lease or a land sub-lease shall be implemented in accordance with the guidelines of the Ministry of Natural Resources and Environment."
19. Article 92 shall be amended and supplemented as follows:
"Article 92. Mortgage of the value of land use rights and properties affixed to the land
1. An enterprise with foreign investment capital is entitled to mortgage the value of land use rights and properties affixed to the land during the term of the land lease or sub-lease at a Vietnamese credit institution, permitted to operate in Vietnam in accordance with the provisions of law in the following circumstances:
a. The enterprise with foreign investment capital has paid land rent for many years and the remaining lease period for which land rent has already been paid is at least five (5) years;
b. A joint venture enterprise in which the Vietnamese Party has contributed capital in the form of the value of land use rights, and the remaining period of the capital contribution in the form of land use rights is at least five (5) years.
2. The value of the mortgaged land use rights shall include the expenses for the compensation and site clearance and the paid land rent minus the land rent for the period already used.
3. The dossier and formalities for a mortgage of the value of land use rights are implemented in accordance with the guidelines of the Ministry of Natural Resources and Environment and the State Bank of Vietnam."
20. Article 95 shall be amended and supplemented as follows:
"Article 95. Assessment of the architectural approach and plan
For projects investing in the field of construction of works such as bridges, roads, airports, ports; industrial works under Group A; infrastructure of Industrial Zones, Export Processing Zones, High-Tech Zones, Urban Zones, tourist resorts, public recreation places, art performance works, advertisements, buildings, hotels, offices and apartments; schools, hospitals, sport works, then the dossier for seeking the issuance of an Investment License must include a drawing of the master-plan of the facility's total areas.
The assessment of the master-plan of the facility's total areas shall be carried out during the course of assessment of the investment project."
21. Clause 1 of Article 98 shall be amended and supplemented as follows:
"1. The Investor shall be responsible before Vietnamese law for the quality of the facility, safety of the facility, fire and explosion prevention and fighting, environmental protection; labour safety and labour hygiene during the period of construction of the facility as well as during the entire period of utilization of the facility."
22. Article 105 shall be amended and supplemented as follows:
- Point b of Clause 1 shall be amended and supplemented as follows:
"b. [They] are consistent with the approved branch development or product masterplans. In case where such masterplans have not been approved yet, an approval from the branch management Ministry shall be needed;"
- Clause 2 shall be amended and supplemented as follows:
"2. In addition to the conditions stipulated in Clause 1 of this Article, projects in the category to be registered for the issuance of an Investment License must satisfy one of the following conditions:
a. Projects having product export ratio from 80% or more;
b. Projects invest in an Industrial Zone which are not under Group A but under the list of specially encouraged investment fields or under the list of encouraged investment fields;
c. [They] operate in a production field having the size of their investment capital up to five (5) million United States dollars."
23. Article 106 shall be amended and supplemented as follows:
"Article 106. Registration for the issuance of an Investment License
1. A registration dossier for the issuance of an Investment License shall include:
a. A registration application for the issuance of an Investment License;
b. The Joint Venture Contract and Charter of the Joint Venture Enterprise, or the Charter of the enterprise with one hundred per cent (100%) foreign-owned capital, or the Business Co-Operation Contract; and
c. Documents confirming the legal status and financial standing of the parties.
2. The registration dossier for the issuance of an Investment License shall be made into three (3) sets, of which there must be at least one set containing the originals of the above documents and all of them shall be submitted to the Investment License Issuing Authority.
3. The Investment License Issuing Authority shall consider the registration dossier for the issuance of an Investment License, if conditions and procedures provided for in Articles 105 and 106 of this Decree are fully met, it shall issue the Investment License without consultation with any other agencies.
4. Within a time limit of fifteen (15) working days as from the date of receipt of the full legitimate dossier, the Investment License Issuing Authority shall notify the Investor of its approval decision in the form of an Investment License.
5. The Ministry of Planning and Investment shall promulgate statutory instruments providing guidelines for projects to prepare the registration dossier for the issuance of an Investment License."
24. Clause 2 of Article 112 shall be amended and supplemented as follows:
"2. Ministries, branches and Provincial People's Committees shall consult with the Ministry of Planning and Investment for opinions prior to promulgating within their authority statutory instruments concerning foreign direct investment activities; in the event of different opinions, the Prime Minister of the Government must be informed thereof for consideration and decision. Provincial People's Committees shall not be permitted to provide regulations on financial and tax preferences and other preferences beyond their competence."
25. Article 113 shall be amended and supplemented as follows:
"Article 113. Co-ordination in state management activities
1. Ministries, branches and Provincial People's Committees and investment license issuing authorities in the fields of banking, insurance, securities and legal consultancy shall perform the State management and the coordination regime in the management of foreign investment activities.
2. Provincial People's Committees are responsible for handling in a timely manner matters that fall under their authority and provide guidelines to enterprises in order for them to operate in strict accordance with the stipulations of the Investment License and the provisions of law. During the course of handling such matters, if Ministries, branches and Provincial People's Committees have different opinions on the same problem, then such problem shall be submitted to the Prime Minister for consideration and decision.
3. The Ministry of Planning and Investment shall compile and provide information about the status of foreign investment to Ministries, branches and Provincial People's Committees, and shall meet on a periodical basis subject to the hand-over regime with the Ministry of Finance, the Ministry of Trade, the Ministry of Natural Resources and Environment, the State Bank and the relevant Provincial People's Committee in order to handle in a timely manner matters that arise, to respond to petitions of enterprises with foreign investment capital and business co-operation parties, to propose policies and measures for improving the investment environment."
26. Point a, Clause 1 of Article 114 shall be amended and supplemented as follows:
"1. The Prime Minister of the Government decides on Group A projects which consist of:
a. Projects in the following fields, regardless of the size of investment capital:
- Construction of infrastructure for an Industrial Zone, Export Processing Zone, High Technology Zone, Urban Zone; BOT, BTO and BT projects;
- Building and operating of seaports, airports; and operating of sea or air transportation;
- Oil and gas activities;
- Post and telecommunication services;
- Publication, printing service (except for projects of printing technical documents; packing, trademarks, printing common decorating items on garment and leather products), press; radio, television broadcasting; advertisement services together with advertisement publication; cinema activities; art performance, trading games with bonus; facilities for medical examination and treatment of diseases; general education, training at college, university, postgraduate and equivalent levels; scientific research; and production of drugs for treatment of human diseases;
- Insurance, finance, auditing and inspection;
- Exploration or exploitation of rare and precious natural resources;
- Construction of residential houses for sale;
- Projects in the field of national defence and security."
27. Clause 2 of Article 115 shall be supplemented with Items e and g as follows:
"e) Projects in the fields of culture, education and training;
g) Construction and trade of supermarkets."
28. Clause 1 of Article 116 shall be amended and supplemented as follows:
"1. Co-ordinating with relevant Ministries and branches to prepare and announce the planning and a list of projects attracting foreign investment in its locality after having agreed with the Ministry of Planning and Investment, based on the approved socio-economic development masterplan; and organizing investment campaigns and promotions."
29. Article 117 shall be amended and supplemented as follows:
- Point a of Clause 1 shall be amended and supplemented as follows:
1. The Ministry of Planning and Investment shall be the focal authority to solve matters that arise during the course of promotion, formation, commencement and implementation of investment projects, including:
a. To provide guidelines for, and co-ordinate with Ministries, branches and Provincial People's Committees in, making masterplans, plans and lists of national projects calling for foreign investment capital, preparation of programs, plans of investment promotion, proposal of appointment of officers and arrangement of representatives of investment promotion organizations in regions and nations which have potentials to invest in Vietnam to submit to the Prime Minister; and to conduct investment promotional activities;"
- Clause 3 shall be supplemented as follows:
"3. The Ministry of Planning and Investment shall participate in and coordinate with the Ministry of Justice in order to regularly review legal documents relating to foreign investment activities, request competent authorities to provide amendments and additions or annul legislations which are contrary to the provisions of the law on foreign investment and other legislations having higher validity."
30. Clause 3 of Article 121 shall be amended and supplemented as follows:
"3. Current regulations which provide more preferences than the previous respective regulations will automatically apply. The Investment License Issuing Authority, based on requests of investors, shall amend the Investment License for investors to enjoy preferences from the date when current legal documents stipulating such preferences become effective."
31. Clause 3 of Article 123 shall be amended and supplemented as follows:
"3. Standards, conditions and procedures for rewarding shall be applied in accordance with regulations of the Government on emulation and rewarding."
32. Article 3, Clause 1, points a and b, Article 46, Clause 2, point a and Clause 3, point b, Clause 4, point a, Article 48, Clause 4, Article 57, Clause 8, Article 79, Clause 4, Article 81, Clause 3, Article 82, Clauses 2 and 4, Article 87, Clause 2, Article 90, Article 113, Clause 3 and Article 117, Clause 1, point c shall be amended and supplemented as follows:
- For Article 3, Clause 1, points a and b, Article 46, Clause 2, point a and Clause 3, point b, Clause 4, point a, Article 48, Clause 4, Article 57, Clause 8, the words the List of projects for which investment is especially encouraged shall be replaced by the words the List of fields for which investment is especially encouraged, and the words the List of projects for which investment is encouraged shall be replaced by the words the List of fields for which investment is encouraged;
- For Article 79, Clause 4, in the last paragraph, the words "The General Department of Customs" shall be replaced by the words "The Ministry of Finance";
- For Article 81, Clause 3, the last paragraph, Article 82, Clauses 2 and 4, and Article 117, Clause 1, point c, the words "the Ministry of Science, Technology and Environment" shall be replaced by the words "the Ministry of Science and Technology";
- For Article 87, Clause 2 and Article 113, Clause 3, the words "the General Department of Cadastral" shall be replaced by the words "the Ministry of Natural Resources and Environment";
- For Article 90, the words "the point in time" shall be replaced by the words "the time".
33. Exhibit 1 of Decree 24/2000/ND-CP shall be amended and supplemented as the Exhibit attached to this Decree.
Article 2. Implementation provisions
1. This Decree shall take effect 15 days after the date of announcement on the Official Gazette. All previous provisions which are inconsistent with this Decree are hereby repealed.
2. The Ministers, Heads of ministerial-level bodies, Heads of Government bodies and Chairmen of People's Committees of provinces and cities Under Central authority shall be responsible for the implementation of this Decree.

ON BEHALF OF THE GOVERNMENT
PRIME MINISTER

(Signed and sealed)

PHAN VAN KHAI

GOVERNMENT
SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
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EXHIBIT I
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I. LIST OF FIELDS WHERE INVESTMENT IS SPECIALLY ENCOURAGED

- Producing and processing products, at least 80% of which is for export;
- Processing of agricultural, forestry and aquacultural products (except for wood) using domestic raw material sources, at least 50% of which is for export;
- Production of new varieties of high quality and high economic efficiency;
- Production of agricultural, forestry and aquacultural products;
- Production of high-quality steel, alloy, non-ferrous metal, special metal, steel blanks and sponge iron, metallurgy for industries;
- Manufacture of machinery, equipment and component's pack for the exploitation of petroleum, mining and energy; and manufacture of large-size lifting equipment; manufacture of machine tools for metal processing; metallurgy machineries;
- Production of medical equipment in the analysis technology and medical extraction technology;
- Production of equipment for checking poison in foodstuff;
- Production of new or rare and precious materials; application of new biotechnology; new technology for manufacturing communication and telecommunication equipment;
- Production of information technology products;
- High-tech industry;
- Investments in researches and development (R&D) accounted for 25% of the revenue;
- Manufacture of equipment for the treatment of waste;
- Treatment of pollution and environmental protection and treatment of waste;
- Production of materials used for the production of antibiotic;
- Investment under BOT, BTO and BT contracts;

II. LIST OF FIELDS WHERE INVESTMENT IS ENCOURAGED

- Exploration, exploitation and processing of deep-lying minerals;
- Producing and processing products, at least 50% of which is for export;
- Producing and processing products, at least 30% of which is for export and using various domestic raw materials and materials (which account for at least 30% of production cost);
- Regularly using more than 500 labourers;
- Processing of agricultural, forestry and aquacultural products (except natural wood in water) from domestic material sources;
- Maintenance of food stuff and agricultural products after harvesting;
- Development of the petro-chemical industry; construction and operation of oil and gas pipelines, storehouse and petroleum ports;
- Manufacture of accuracy mechanical equipment; safety checking and controlling equipment; manufacture of moulds for metal and non-metallic products;
- Manufacture of electrical medium and high voltage devices;
- Manufacture of diesel engines with advanced technique and technology; manufacture of engines and spare parts for dynamics and hydraulics and compressing machines;
- Manufacture of spare parts for automobiles and motorbikes; manufacture and assembly of equipment, vehicles and machineries for construction; manufacture of technical equipment for transportation;
- Building of ships and manufacture of ship dynamics, equipment and spare parts for cargo ships and fishing boats;
- Production of communication and telecommunication equipment;
- Production of electronic and informatics components and equipment;
- Manufacture of equipment, spare parts and agricultural machineries and irrigation and drainage equipment;
- Manufacture of garment and textile equipment;
- Production of raw materials for insecticides;
- Production of various insecticides, plant protection drugs, veterinary drugs having the domestic added value of more than 40%;
- Production of basic chemicals, pure chemicals, dyeing materials and specialised chemicals;
- Production of materials for detergent and additive in chemistry;
- Production of cement for special use, composite materials, sound-proofing materials, electrical insulating materials, heat-proofing materials and wood-substitute synthetic materials; fire resistant materials, construction plastics, glass fibres;
- Production of light-weighed construction materials;
- Production of paper powder;
- Production of silk, fibre of various kinds, and special fabric materials used in industries;
- Production of high-quality materials for production of footwear and garment for export;
- Production of high quality packaging for export;
- Production of materials for the medicine production and drugs for treatment of people's diseases meeting the GMP international standards;
- Improvement and development of energy sources;
- Public passenger transportation;
- Construction and innovation of bridges, roads, railways, airports, ports, train stations and bus stations;
- Construction of water supply factories and water drainage and supply systems;
- Construction of and trading in infrastructure of industrial zones, export processing zones and high-tech zones;
- Technical services for agriculture, forestry and fishery.

III. LIST OF AREAS WHERE INVESTMENT IS ENCOURAGED

No. City/
Province A
Localities with extremely difficult socio-economic conditions B
Localities with difficult socio-economic conditions
1 Ha Giang All districts and townships
2 Cao Bang All districts and townships
3 Lai Chau All districts and townships
4 Lao Cai All districts and townships
5 Son La All districts and townships
6 Bac Can All districts and townships
7 Tuyen Quang All districts and townships
8 Lang Son All districts and townships
9 Yen Bai All districts and townships
10 Thai Nguyen All districts and townships and Thai Nguyen city
11 Bac Giang All districts and townships
12 Vinh Phuc District of Lap Thach, Tam Duong, Binh Xuyen Districts not listed in Column A
13 Phu Tho All districts and townships and Viet Tri city
14 Hoa Binh All districts and townships
15 Bac Ninh District of Que Vo and Yen Phong, Gia Binh, Luong Tai, Thuan Thanh
16 Hanoi District of Soc Son
17 Ha Tay Districts of Ba Vi, My Duc, Phuc Tho, Quoc Oai, Thach That and Ung Hoa
18 Quang Ninh Districts of Ba Che, Binh Lieu, Quang Ha, Hoanh Bo, Tien Yen, Dong Trieu, Mong Cai District of Yen Hung and the townships of Cam Pha and Uong Bi
19 Hai Phong Districts of Vinh Bao and Tien Lang
20 Hai Duong District of Chi Linh All other districts which are not listed under Column A
21 Hung Yen All districts and townships
22 Thai Binh All districts and townships
23 Ha Nam All districts and townships
24 Nam Dinh All districts and Nam Dinh city
25 Ninh Binh Districts of Nho Quan, Yen Mo and Gia Vien District of Tam Diep and all other districts which are not listed under Column A
26 Thanh Hoa Districts of Lang Chanh, Thuong Xuan, Quan Hoa, Ba Thuoc, Ngoc Lac, Nhu Xuan, Cam Thuy and Thach Thanh, Muong Lat, Quan Son All other districts not listed under Column A
27 Nghe An Districts of Ky Son, Tuong Duong, Con Cuong, Quy Chau, Que Phong, Quy Hop, Nghia Dan, Anh Son, Tan Ky, Thanh Chuong, Do Luong Cua Lo township and all other districts which are not listed under Column A
28 Ha Tinh All districts Ha Tinh township
29 Quang Binh All districts Dong Hoi township
30 Quang Tri Quang Tri township and districts Dong Ha township
31 Thua Thien- Hue Hue city
32 Da Nang Districts of Hoa Vang and municipal districts of Thanh Khe, Ngu Hanh Son, Lien Chieu
33 Quang Nam All districts and Hoi An township Tam Ky township
34 Quang Ngai All districts Quang Ngai township
35 Binh Dinh All districts Quy Nhon city
36 Phu Yen All districts Tuy Hoa township
37 Khanh Hoa Districts of Khanh Son and Khanh Vinh All other districts which are not listed under Column A
38 Binh Thuan All districts Phan Thiet city
39 Ninh Thuan All districts Phan Rang township
40 Kon Tum All districts and townships
41 Gia Lai All districts and townships
42 Dac Lac All districts and Buon Ma Thuot city
43 Lam Dong All districts and townships and Da Lat city
44 Dong Nai Districts of Tan Phu, Xuan Loc and Dinh Quan
45 Binh Phuoc All districts and townships
46 Binh Duong Districts of Ben Cat and Tan Uyen, Phu Giao and Dau Tien
47 Tay Ninh All districts
48 Ho Chi Minh City Districts of Can Gio and Cu Chi
49 Ba Ria - Vung Tau Districts of Long Dat and Xuyen Moc
50 Long An All districts Tan An township
51 Dong Thap All districts and townships
52 Tien Giang All districts and townships My Tho city
53 Ben Tre All districts and townships
54 Vinh Long All districts and townships
55 Tra Vinh All districts and townships
56 An Giang All districts and Long Xuyen township
57 Can Tho All districts and townships Can Tho city
58 Soc Trang All districts and townships
59 Bac Lieu All districts and townships
60 Ca Mau All districts and townships
61 Kien Giang All districts and townships

IV. LIST OF INVESTMENT FIELDS WITH CONDITIONS
1. Conditions on investment forms:
1.1 Investments under the form of business cooperation contracts only and the Vietnamese Party is the specialized organization permitted to trade in these fields:
- Building of public telecommunications networks, supply of telecommunications services; trading in international and local courier services;
- Activities of press, radio and television broadcasting.
1.2 Investments under the form of business cooperation contracts or joint venture enterprises only:
- Exploitation and processing of oil and gas, precious and rare mineral resources;
- Air, railway and sea transportation; public passenger transportation; construction of sea-ports and airports (excluding BOT, BTO and BT projects);
- Trading in marine and aviation services;
- Culture (excluding projects printing technical documents, packing, trademarks, printing decorating items on garment and leather products; processing and drawing cartoons by using the computer drawing technique; entertainment and sportive places);
- Afforestation (excluding the afforestation conducted indirectly through Vietnamese organizations, households and individuals having land allocated by the State or leased from the State under the category of production forest, protection forest and are supported by the investors in terms of funds, seeds, technique, fertilizer and product collection and purchase subject to contracts);
- Travel tourism;
- Production of industrial explosives;
- Consultancy services (excluding technical consultancy).
2. Conditions of projects must be accompanied by investment to develop raw material sources:
- Production and processing of milk;
- Production of vegetable oil and sugar from sugar cane;
- Processing of wood (excluding projects using imported wood).
3. Projects investing in import services and domestic distribution services and projects of offshore fishing and exploitation: shall be carried out subject to the stipulations of the Prime Minister.

V. LIST OF FIELDS IN WHICH INVESTMENT LICENCES WILL NOT BE ISSUED
1. Projects which are prejudicial to the national security, defence and public interests;
2. Projects which are detrimental to the historical and cultural relics; fine customs and traditions of Vietnam;
3. Projects which are prejudicial to the ecological environment; projects for treatment of toxic waste imported from foreign countries into Vietnam;
4. Projects for production of toxic chemicals or use of toxic agents which are prohibited in accordance with international treaties.