DECREE PROMULGATING REGULATIONS ON INDUSTRIAL ZONES, EXPORT PROCESSING ZONES AND HIGH-TECH ZONES
(Issued in conjunction with Decree 36-CP dated 24 April 1997
of the Government)

The government of Vietnam shall encourages Vietnamese enterprises of all economic sectors, foreign economic organizations and individuals and foreign invested enterprises to invest in industrial zones, export processing zones and high-tech zones (hereinafter referred to as industrial zones, except where there are separate regulations for each type of zone) based on these Regulations and the provisions of Vietnamese law.

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>> Article 2

For the purpose of these regulations, the following terms shall be interpreted as follows :

1. "Industrial zones" are zones in which industrial zone enterprises specializing in production of industrial goods and provision of services for industrial production are concentrated; which have fixed geographical boundaries, have no inhabitants are established pursuant to decisions of the Government or the Prime Minister. Export processing enterprises may be located in industrial zones.

2. "Export processing zones" are industrial zones in which export processing enterprises specializing in production of export goods and provision of services for production of export goods and export activities are concentrated; which have fixed geographical boundaries, have no inhabitants are established pursuant to decisions of the Government or the Prime Minister.

3. "High-tech zones" are zones in which high-tech industrial enterprises and enterprises providing services for high-tech development, including scientific-technological research and application, training and related services are concentrated; which have fixed geographical boundaries and are established pursuant to decisions of the Government or the Prime Minister. Export processing enterprises may be located in high-tech zones.

4. "Export processing enterprises" are enterprises specializing in production of export goods, provision of services for production of export goods and export activities which are established and operate in accordance with these Regulations.

5. "Industrial zones enterprises" are enterprises which are established and operate in industrial zones, including production enterprises and service enterprises.

6. "Industrial zone production enterprises" are enterprises producing industrial goods which are established and operate in industrial zones.

7. "Industrial zones service enterprises" are enterprises which are established and operate in industrial zones and which provide infrastructure services in industrial zones or services for industrial production.

8. "Provincial industrial zone management committees"(except where there are separate regulations for each type of management committee) are bodies in charge of direct management of industrial zones or export processing zones located within the geographical territory of a province or city under central authority; or management committees of industrial zones located in regions covering more than one province: or management committees of one industrial zone(in particular cases) or management committees of high-tech zones which are established pursuant to decisions of the Prime Minister.

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>> Article 3

The development of industrial zones must be in compliance with the master plans approved by the Government. In the event of establishment of an industrial zone which have been included in the master plan, the people’ s committee of the province or city under central authority( hereinafter referred to as provincial people’s committee) shall direct the preparation of the feasibility study for the establishment thereof to be submitted for approval according to the current regulations. In the event of the establishment of an industrial zone which has not yet been included in the master plan, the Ministry of Planning and Investment shall chair, co-ordinate consideration by the Ministry of Industry, the Ministry of Construction, the Industrial Zones Management Committee of Vietnam and relevant bodies (if necessary) on the basis of the request of the provincial people’s committee and submit the proposal to establish the industrial zone to the Prime Minister for consideration and decision.

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>> Article 4

Upon submission of the proposal to establish an industrial zone to the Prime Minister for consideration and decision, the project evaluation and appraisal body shall clarify the following issues :

1. whether the industrial zone is included in the master plan approved bay the Government. In case where it is not yet included, the need for adjustment and addition for the master plan must be made clear.
2. Investment in and construction of infrastructure works inside and outside the industrial zone, taking into consideration the technical connections outside the industrial zone, residential areas for employees working in the industrial zone, school and health service facilities serving the industrial zone.
3. Solutions regarding capital sources, power supply, water supply and drainage, transportation, communication, environment, and labour in order to ensure the feasibility of the industrial zone.
4. Industrial production industries in the industrial zone.
5. Plans to promote investment in the industrial zone.

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>> Article 5

The management of investment and construction and management of tendering for the activities of industrial zones enterprises must be in accordance with the provision of Vietnamese laws.

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>> Article 6

• The following types of enterprises may be located in industrial zones:
  • Vietnamese enterprises of all economic sectors;
  • Foreign invested enterprises;
  • Parties to business co-operation contracts under the Law on Foreign Investment in Vietnam.

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>> Article 7

• In industrial zones, domestic and foreign investors, Vietnamese enterprises of all economic sectors and foreign invested enterprises shall be permitted to invest in the following fields :
  • Construction and operation of infrastructure works;
  • Production, processing and assembly of industrial products for export and sale in the domestic market; development of and doing business in patents, technical know-how and technological procedures;
  • Scientific-technological research and application to improve quality of goods and create new products;
  • Industrial production support services.

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An industrial zone enterprise shall have a legal basis to operate in an industrial zone upon obtaining a decision on approval on investment form, or being granted an investment license and business registration certificate by, competence State authority.

In respect of foreign invested enterprises, valid investment licenses shall be business registration certificates as provided for in Article 60 of the Law on Foreign Investment in Vietnam.

In respect of domestic investor, decisions on establishment of their enterprises according to the current regulations stipulated for each type of enterprises shall be required prior to investment in industrial zones.

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>> Article 9

The duration of operation of industrial zone enterprises shall not exceed fifty(50) years and shall not exceed the duration of operation of the infrastructure development company of the industrial zones. This duration shall be calculated from the date of issuance of the decision on approval of investment or the investment licence by the competent authority to the enterprise.

In special cases, the duration of operation of an industrial zone enterprise may exceed that of the infrastructure development company of the industrial zone subject to the approval of the Prime Minister based on the proposals of the provincial people’s committees and the body issuing the decision on approval of investment or the investment licence.

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>> Article 10

Industrial enterprises shall have the following rights:

1. To sub-lease land in industrial zones in accordance with the current regulations for each type of enterprise for construction of buildings and architectural works for production and business purposes. The duration of land leases in industrial zones shall conform with the duration of operation of industrial zone enterprises as specified in decisions on approval of investment or investment licences.
2. To use infrastructure works, public utilities and services provided inside industrial zones subject to payment.
3. To organize production and business to provide services in accordance with decisions on approval of investment licences, business registration certificates, contracts, or charters of enterprises.
4. To export and import directly as stipulated by law.
5. To hire public facilities, means of production and business’ industrial zone.
6. Within the permitted term of production and business, industrial zone enterprises shall be entitled to assign their share of capital in accordance with current stipulations of the law. The assignment of capital shall only be effective upon approval of the contract for assignment of capital by the body issuing the decision on approval of investment or the investment licence.

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>> Article 11

Industrial zone enterprises shall have the following obligations:

1. To comply with the law, these regulations, the regulations on management of industrial zones, decisions on approval of investment or investment licences or business registration certificates.
2. To register at the provincial industrial zone management committee the quantity and volume of products for export and for sale in the domestic market (in the case of industrial zone enterprises); the quantity of waste products and scraps which remain of commercial value to be sold by export processing enterprises in the domestic market and the quantity of goods bought in the domestic market by export processing enterprises (in the case of export processing enterprises). Enterprises in high-tech zones shall register the transfer of high technology in addition to the registration of the above according to the type of the above according to the type of enterprise.
3. To fulfil financial obligations to the State of Vietnam
4. To open foreign currency accounts and Vietnamese Dong accounts at banks which are licensed to operate in Vietnam .
• To be permitted to open accounts at foreign banks for the purpose of receipt of loans where required by foreign creditors and approved by the State Bank of Vietnam.
5. To comply with the regulations on accounting and statistical systems and insurance as stipulated by laws.
6. To comply with the regulations on security, order, occupational safety, industrial hygiene, ecological and environment protection, and fire and explosion control.
7. To submit periodical and annual reports to provincial industrial zone management committees.

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CHAPTER III
CONSTRUCTION AND OPERATION OF INFRASTUCTURE
WORKS IN INDUSTRIAL ZONES

>> Article 12

The Government of Vietnam shall encourage and create favourable conditions for Vietnamese enterprises of all economic sectors and foreign investors under the form of joint ventures with Vietnamese enterprises to invest in, construct and operate infrastructure works of industrial zones ( herein after referred to as industrial zone infrastructure development companies) to be established and operated in accordance with the provisions of the law. Depending on its scale and characteristics, an industrial zone may have one or more industrial zone infrastructure development company.

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>> Article 13

Upon obtaining the approval of investment or the investment license issued by the competent authority, the provincial people’s committee shall, depending on each particular case, consider and decide whether to permit industrial zone infrastructure development company which are Vietnamese enterprises in different economic sectors(except Vietnamese enterprises which are parties to joint venture enterprises established under the Law on Foreign Investment in Vietnam) to defer payment of land rental for a certain period of time( depending on the side of the investment project, area of operation, financial standing of the enterprise) by way of land rental arrears to be paid to the State Budget.

On that basis , the provincial people’s committee shall consider and decide on the deferral of payment of land rental by industrial zone enterprises which are Vietnamese enterprises in different economic sectors (except Vietnamese enterprises which are parties to joint venture enterprises established under the Law on Foreign Investment in Vietnam) based on an agreement on the period of time for deferral of land rental payment between the industrial zone infrastructure development companies provided that the period of time shall not exceed the period of time for deferral of land rental payment granted to the industrial zone infrastructure development companies by the provincial people’s committee.

Industrial zone infrastructure development companies which are Vietnamese enterprises in different economic sectors (except Vietnamese enterprises which are parties to industrial zone infrastructure development companies which are joint venture enterprises established under the Law on Foreign Investment in Vietnam) shall be entitled to loans at favorable interest rates from the State in order to mobilize capital source as provided for by the laws for investment and construction of infrastructure works of industrial zones.

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>> Article 14

1/ Industrial zone infrastructure development companies shall have the following rights :

1. To formulate and submit proposal for overall development of infrastructure works inside industrial zones and to propose the need for development of related infrastructure works outside industrial zones in order to provide for the State management bodies to make plans of development and assign implementation tasks ;

2. To construct infrastructure works in accordance with approve plans, designs and schedules. If companies fail to fulfil construction plans according to schedule due to reasons of force majors or other legitimate reasons, then the companies must, at least thirty (30) days prior to expiry of the term, apply to the competence authorities extension of the construction term. After expiry of the construction tern, if companies fail to apply for an extension of the stipulated term or if its extension is not granted due to use of land for improper purposes, the competence State authorities shall consider and decide on sanctions in respect of the unused parts of land, in case of recurrence, revocation measures shall be applied;

3. To maintain and repair infrastructure works inside industrial zones throughout the period of companies;

4. To ensure industrial hygiene and environmental and ecological protection;

5. To report periodically and annually to the provincial

6. Industrial zone management committee.

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>> Article 15

In cases where the construction of workshop buildings requires phased use of land, industrial enterprises shall be entitled to sub-lease the entire land area needed at on time, but they shall have a plan for the phased used of the leased land area for a maximum term of two years. Industrial zone enterprises must send their plans for phased used of the leased land area to the industrial zone infrastructure development company (which has the sub-leased land), the department of land administration and the provincial industrial zone management committee. If the companies fail to fulfil the committed plan for land use due to reasons of force major or other legitimate reasons, then the companies must, at least thirty (30) days prior to expiry of the stipulated term, apply to the competent authority for an extension of the right to use land. After the expiry of the stipulated term . if company fail to apply for an extension of the right to use land. After expiry of the stipulated terms . if the company fail to apply for an extension of the term or if its extension is not granted due to use of land for improper purpose. The competent State authority shall consider and decide on sanction in respect of the sub- leased part of land: in case of recurrence, revocation measure shall be apply

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CHAPTER IV
LABOUR RELATION IN INDUSTRIAL ZONE ENTERPRISE

>> Article 16

Labor relation in industrial zone enterprise shall be regulated in accordance with the provision of the labor code of Vietnam date 23 June 1994 and other related legal instrument

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>> Article 17

Depending on the specific conditions of the provincial industrial zone management committees shall decide on the establishment of labor recruitment of the centers under provincial industrial zone management committees which shall implement all function of labor recruitment centers as provided for in decree 72 CP date 31 October 1995 of the government making detail provision for the implementation of a number of Article of labor code with respect to employment.

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>> Article 18

Labour recruitment for industrial zone enterprise shall be in compliance with decree 72 CP and related guidance document.

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CHAPTER V
MANAGEMENT OF FINACIAL AND FOREIGN EXCHANGE

>> Article 19

Tax payment obligation of industrial zone enterprise

1. Vietnamese enterprise of different sector investing in industrial zones and infrastructure development companies which are Vietnamese enterprises of different economic sectors shall implement their tax obligation at the preferential rate as stipulated by current regulation.
2. Industrial zone enterprises with foreign invested capital and foreign parties to business co-operation contracts and industrial zone infrastructure development companies which are joint venture enterprises establish under the law on foreign investment in Vietnam shall pay by tax as follow

(a) Profit tax should be paid as the following rate (the profit tax rate should be applied for the entire duration of the project):
With the respect to high-tech industrial enterprises and hi-tech service enterprises in high-tech zone : ten (10) percent of profits earn and eight year tax holiday should be applied from commencement of profit-making

with respect to export processing enterprises:

- Ten (10) of the profits earned and four year tax holiday should be applied from commencement of profit – making in the case of production enterprises:
- Fifteen (15) percent of profits earn and two years holiday shall be applied from commencement of profit- making in the case of services enterprises .

With respect to industrial zone enterprises :

- Fifteen (15) percent of profit- earned and two years holiday shall be applied from commencement of profit-making in the case of enterprises exporting less than fifty (50) percent of their products ; where between fifty (50) and eighty(80) percent of their products are exported , the profit tax should be reduced by fifty (50) percent for further two years; ten (10) percent of the profits earned and two years tax holiday should be applied from commencement of profit-making in case of enterprises exporting more than eighty (80) percent of their products and the profit tax should be reduced by fifty (50) Percent for further two years ;

• Twenty (20)percent of profits earned and an one year tax holiday should be applied from commencement of profit- making in the case of services enterprises.

With respect to industrial zone infrastructure development companies . Ten(10) percent of profits earned and four years tax holiday should be applied from commencement of profit- making and the profits tax should be reduced by fifty (50) percent for further four years .

The adjustment of tax rate as well as exemptions from and reduction of profit tax which are stipulated in investment licenses should be carried out in accordance with the provision of Article 58 of decree 12-CP dated 18 February1997 of the government making detail regulation on the implementation of the law on foreign investment in Vietnam . The use of distributed profits for reinvestment and refund of profits tax paid on reinvested profits should be carried out in accordance with the provisions of Article 59 of decree 12-CP dated 18 February 1997 of the government .

1. when remitting profits abroad, industrial zone enterprises shall pay withholding tax at the rate of five percent of the profits remitted abroad.
2. Other taxes and fees according to regulations at the time of tax payment every year.

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>> Article 20

Commercial bank of Vietnam, joint venture bank between Vietnam and foreign countries, and branches of foreign banks in Vietnam shall be entitled to operate in industrial zones upon approval by the Governor of the State bank of Vietnam and the provincial industrial zone management committee.

The management of foreign currency in industrial zones shall be carried out as stipulated by the Government and in the provisions of chapter VII of these Regulations .

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CHAPTER VI
MANAGEMENT OF INDUSTRIAL ZONES

>> Article 21

State management of industrial zones shall consist of the following :

1. To devise strategies and to make plans and policies for development of industrial zones;
2. To promulgate legal documents in relation to the operation of industrial zones;
3. To make stipulations and provide guidance on the establishment, construction, development and management of the operation of industrial zones;
4. To grant, adjust and revoke licenses of different kinds and to implement related State administrative procedure;
5. To establish organizational structure and to provide training to personnel;
6. To examine, inspect and supervise the operation of industrial zones and resolve any problems that arise.

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>> Article 22

Ministries, ministerial equivalent bodies, and Government bodies(hereafter referred to as Government bodies) shall carry out the tasks of State management of industrial zones and provincial industrial zone management committees within their respective functions, duties and powers provided for by law and shall authorize provincial industrial zone management committee to carry out certain tasks of State management of industrial zones.

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>> Article 23

Responsibilities for State management of industrial zones:

1. Ministry Of Planning And Investment:

In co-ordination with the Ministry of Industry, the Ministry of Construction, and the industrial zone management committee of Vietnam, to devise master plans for development of industrial zones throughout the country in accordance with the social-economic development strategy for each period for submission to the Government for approval.

To compile and submit to the Government annual and five year development plans. To ensure conditions for the implementation o f the balances in the state annual plans regarding the solutions mention in points 2 and 3 of Article 4 of these Regulations.

To submit to the Government for promulgation legal documents relating to the mechanisms and policies for economic management and encouragement of domestic and foreign investment in Vietnam for the purpose of promotion of the development of industrial zones.

To grant, adjust and revoke investment licenses issued to foreign investment projects in industrial zones at the request of provincial people’s committee; to so authorize inter-provincial industrial ones management committees, and to so authorize high-tech zone management committees at the request of the Ministry of Science, Technology and Environment, provided that this is allowed by the Prime Minister.

To appraise Group A projects within its jurisdiction for submission to the Prime Minister for consideration and approval of investment in industrial zones.

To issue standard charters for management of industrial zones.

To conduct examinations and inspections of and to evaluate the social-economic efficiency of implementation of investment projects in industrial zones. Within its investment within its investment license-issuing authority.

To arrange investment and capital construction plans for provincial industrial zone management committees within the annual plans of provincial people’s committee; in the case of inter- provincial industrial zones, the plans shall be arranged within the annual plans of the people’s committee of the province or city in which the head office of the inter- provincial industrial zone is located;

In the case of high-tech zones, the plan shall be included in the annual plan of the Ministry of Science, Technology and Environment.

2. Ministry of Industry :

To devise, together with the Ministry of Panning and Investment, master plans for development of industrial zones for submission to the Government for approval.

In co-ordination with the industrial zones management committee of Vietnam, to provide guidelines for the determination of the list of industries investment in which to be encouraged, prohibited or restricted in industrial zones and export processing zones.

To grant licenses for exploitation of natural resources and production industrial explosives and other licenses within its jurisdiction as provided by the law.

To take part in the appraisal of investment projects in industrial zones relating to industries falling under its management as provided for by the Government.

To conduct specialized inspection and to evaluate the social-economic efficiency of investment projects in sectors under its management.

To direct specialized economic organizations in industrial sectors falling under its management to take part in the development of industrial zones.

3. Ministry of Construction:

To take part in devising the master plans for development of industrial zones.

To approve the detailed plans of industrial zones in provinces and cities under central authority, except for the cases otherwise stipulated by the Prime Minister.

To take part in the appraisal of investment projects in industrial zones as provided for by the Government.

To appraise the technical designs of Group A projects and direct provincial people’s committees (or Departments of Construction or Chief Architects of cities) to appraise the technical designs of construction works of Group B projects (in case of foreign investment) and Group B and C projects (in case of domestic investment). After approval of the technical design the investor shall be allowed to committee construction without possession of a construction permit.

To provide guidance to specialized economic organizations under its management participating in the development of industrial zones.

To issue standard charters for management of construction in industrial zones on the basis of which provincial industrial zone management committees may organize implementation.

4. Ministry of Science, Technology and Environment :

To exercise generally the function of State management of science, technology and environment in industrial zones within the scope of its functions, duties and powers in accordance with applicable provisions and to exercise directly the function of state management of the establishment, construction and development of high-tech zones.

To co-ordinate with relevant Government bodies to devise mechanisms and policies for promotion and development of high-tech zones; to provide guidelines on selection of industries and technologies to be given priority for investment in high-tech zones in accordance with the strategy for development of science and technology for each period.

To recommend personnel to assume the positions of head, deputy heads and members of the High-Tech Zones Management Committee for consideration and appointment by the Prime Minister; to decide on the supporting staff the High-Tech Zones Management Committee at the request of the head of the High-Tech Zones Management Committee in accordance with the regulations and general guidelines of the Organization and Personnel Committee of the Government.

To request the Ministry of Planning and Investment to submit the Prime Minister for decision on the authorization by the Ministry of Planning and Investment of the High-Tech Zones Management Committee to issue , adjust and revoke investment licences for foreign investment projects in high-tech zones and to request the Ministry of Trade to authorize the High-Tech Zones Management Committee to approve import-export plans for high-tech zones enterprises.

5. The Ministry of Trade:

The Ministry of Trade shall decide on the authorization of provincial industrial zone management committees to approve import-export plans for industrial zones enterprise in respect of imports of goods for the establishment of the enterprise and for production and business for the enterprise and in respect of exports of goods produced by an enterprise in accordance with the production and business targets specified in its investment licence or decision on approval of investment. With respect to provincial industrial zone management committees which have been authorize to grant investment licences in industrial zones, the authorization by The Ministry of Trade shall be made at the request of the provincial people’s committees.. (With respect to inter-provincial industrial zone management committees, the request must be made by the inter-provincial area; and with respect to high-tech zone management committees, the request must be made by the Ministry of Science, Technology and Environment.)

6. Organization and Personnel Committee of the Government:

To propose or provide evaluation comments on personnel to assume the position of heads of provincial industrial zone management committees and head, deputy heads and members of the High-Tech Zone Management Committee for consideration and appointment by the Prime Minister.

To recommend personnel to assume the positions of heads, deputy heads and members of inter-provincial industrial zone management committees for consideration appointment by the Prime Minister.

In co-ordination with the Industrial Zones Management Committee of Vietnam, to issue general regulations on the salary system for public servants and Government employees; organization structure, training and improvement of personnel, procedures for annual approve of staffing plans provincial industrial zone management committees.

7. Industrial Zones Management Committee of Vietnam:

The Industrial Zones Management Committee of Vietnam shall be under the direct control of the Prime Minister in order to assist the Prime Minister in providing the guidelines for preparation, construction, development and management of those industrial zones which have been planned and approved.

To act as a focal point for co-ordination and submission of the requests of Government bodies, provincial people’s committees and provincial industrial zone management committees to Prime Minister for resolution; to convey the guidance of the Prime Minister to Government bodies, provincial people’s committees and provincial industrial zone management committees in respect of all matters of and relating to industrial zones .

To be authorized by the prime Minister to handle in a timely manner any new problems which arise in relation to industrial zones and to be responsible to the Prime Minister for those problems.

To be co-ordinate with Government bodies and provincial people’s committees in preparing legal instruments, policies, zoning, and plans relating to the establishment, construction, development and management of industrial zones and relevant investment projects outside industrial zones.

To co-ordinate with the Ministry of Industry in identifying the lists of industries investment in which is to be encouraged, prohibited and restricted in industrial zones and export processing zones.

To co-ordinate with the Organization and Personnel Committee of the Government in providing guidelines on the implementation of tasks relating to the organization and personnel of provincial industrial zone management committees.

To co-ordinate with provincial industrial zone management committees in preparing plans for development of man-power resources for industrial zones and organizing training and improvement of management staff of industrial zones

To participate in the appraisal of planning and investment projects in industrial zones.

To give recommendations on personnel assuming the key positions of provincial industrial zone management committees as stipulated in Article 28 of these Regulations.

To organize interim and final review meetings and to make periodical and emergency reports on the construction, development and management of industrial zones to the Prime Minister.

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>> Article 24

The issuance of legal instruments making detailed guidelines for the implementation of these Regulations must comply with the provisions of the Law on Promulgation of Legal Instruments dated 12 November 1996 and its implementing legal instruments.

Government bodies shall be responsible for providing the Legal instruments promulgated by them to provincial industrial zone management committees. The office of Government shall provide provincial industrial zone management committees with legal instruments relating to industrial zones.

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>> Article 25

Bodies specializing in commerce, finance, customs, security and other matters shall establish competent representative offices for the purpose of dealing directly with the works in each industrial zone or each group of industrial zones. These bodies shall be established, supervised, directed and professionally guided by their superior bodies.

The staff and operational expenses of these bodies shall be determined and allocated by their superior bodies.

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>> Article 26

People’s committees of provinces in which industrial zones are located shall have the following duties and rights:

1. To exercise the function of State management over the industrial zones and the provincial industrial zone management committees within their territory. To be responsible for management and resolution of problems of industrial zones located within the scope of their delegated authority. In respect of matters beyond the scope of their delegated authority, they shall co-ordinate with Government bodies for resolution.
2. To take part in preparation of master plans for development of industrial zones, to provide guidelines on formation of projects for establishment of industrial zones and to prepare detailed plans for industrial zones.
3. To supervise and inspect the implementation of plans, construction procedures and standard, and regulations on labor, environmental and ecological protection, security and order in industrial zones.
4. To preside over the preparation of plans for and organization of site clearance, re-settlement of inhabitants in areas to be cleared, and allocation of land to industrial zones and for construction infrastructure works outside the industrial zones for the purpose of development industrial zones.
5. To issue licences for establishment of Vietnamese enterprises within the scope of their delegated