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March 10, 2006

GUIDE BOOK
INVESTING AND DOING BUSINESS IN HO CHI MINH CITY
VIETNAM

Investment and Trade Promotion Center

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ABBREVIATION

- CBD: Central Business District of Ho Chi Minh City


- BCC: Business Cooperation Contract
- BOT: Building – Operation – Transfer
- BT: Buidling – Transfer
- BTO: Building – Transfer – Operation
- DPI: Department of Planning and Investment
- EPZs: Export Processing Zones
- FDI: Foreign Direct Investment
- FIEs: Foreign Invested Enterprises
- FO: 100% Foreign Owned Companies
- HCM: Ho Chi Minh City
- HCMC People’s Committee: Ho Chi Minh City People’s Committee
- HTZs: High-tech Zones
- HEPZA: Ho Chi Minh City Export Processing Zones and Industrial Zones Authority
- JVs: Joint Venture
- IZs: Industrial Zones
- ITPC: Investment and Trade Promotion Center
- MPI: Ministry of Planning and Investment
- HSTP: Saigon High-Tech Park
- VAT: Value Added Tax

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TABLE OF CONTENT

Page

ABBREVIATION............................................................................................................................2

FOREWORD ...................................................................................................................................5

A. REGULATIONS REGULATING FOREIGN INVESTMENTS EFFECTIVE PRIOR TO


JULY 1, 2006...........................................................................................................................6

1. General Regulations on Foreign Investment............................................................................6


1.1. Forms of Investment ............................................................................................................6
1.2. Categorization of investment projects and licensing authority..........................................10
1.3. List of sectors in which investment incentives are applied: ..............................................12
1.4. List of investment areas subject to conditions required by the law ...................................16

2. Investment Licensing Process in Ho Chi Minh City .............................................................17


2.1. Information Providing Agencies........................................................................................17
2.2. Project Guiding Agencies ..................................................................................................17
2.3. Licensing Process...............................................................................................................18
2.3.1. Investment Licensing Procedures ..................................................................................18
2.3.2. Application dossier ........................................................................................................19
2.3.3. Receipt of Application Dossier......................................................................................21
2.3.4. Time for Investment License Issuance ..........................................................................21

B. REGULATIONS REGULATING FOREIGN INVESTMENT EFFECTIVE FROM JULY 1,


2006.........................................................................................................................................21
1. Forms of Investment ..............................................................................................................22
1.1. Direct Investment...............................................................................................................22
1.2. Indirect Investment ............................................................................................................23
1.3. Branches and Representative Offices ................................................................................24

2. Categorization of Investment Projects ...................................................................................25


2.1. Project Categorization........................................................................................................25
2.2 Procedures..........................................................................................................................25
2.3. Lists of investment incentive sectors and geographical areas of investment incentives; list
of sectors in which investment is conditional and list of sectors in which investment is
prohibited ...........................................................................................................................26

3. Licensing Authority ...............................................................................................................27


4. Application dossier ................................................................................................................28
5. Time for investment certificate issuance ...............................................................................28
6. Information Providing Agencies............................................................................................29

C. TAXATION...........................................................................................................................29
1. Corporate Income Tax ...........................................................................................................29
2. Import and Export Duties.......................................................................................................30
3. Value Added Tax ...................................................................................................................32
4. Special Sales Tax (excise tax)................................................................................................32
5. Personal Income Tax..............................................................................................................33

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D. LAND ISSUES ......................................................................................................................33
1. Land Management Regime ....................................................................................................33
2. Foreign Investments in Real Estate........................................................................................34
3. Land Management In Ho Chi Minh City and Incentives in Making Investment in Ho Chi
Minh City ...............................................................................................................................34

E. RECRUITMENT AND LABOR RELATED ISSUES .........................................................35


1. Working Age..........................................................................................................................35
2. Recruiting Procedure .............................................................................................................35
3. Labor Contract .......................................................................................................................35
4. Termination of Labor Contract ..............................................................................................36
5. Illegal Termination of Labor Contract...................................................................................36
6. Working Hours.......................................................................................................................36
7. Annual Leaves .......................................................................................................................37
8. Social and Health Insurance...................................................................................................37
9. Prescribed Rate of Foreign Workers Working for a Business in Vietnam ............................37
10. Procedure to Recruit Foreign Workers ..............................................................................37
11. Work Permit Duration........................................................................................................38
12. Exemption from Work Permit ...........................................................................................38

F. ENVIRONMENT ..................................................................................................................38
1. Environmental Impact Assessment........................................................................................38
2. Implementation Stages...........................................................................................................40
3. Import of Used Equipment.....................................................................................................41

G. INTELLECTUAL PROPERTY ............................................................................................41

H. FINANCIAL MATTERS ......................................................................................................42


1. Accounting and Auditing.......................................................................................................42
2. Banking and Finance..............................................................................................................42
3. Foreign Exchange Management ............................................................................................43

I. IMPORTATION – EXPORTATION ....................................................................................43


1. Importation.............................................................................................................................43
2. Exportation.............................................................................................................................43

J. VISAS ....................................................................................................................................44

K. SOME KEY ENCOURAGED INVESTMENT PROJECTS IN HO CHI MINH CITY ......44


1. Quang Trung Software Park ..................................................................................................44
2. Saigon High-Tech Park..........................................................................................................49
3. Thu Thiem New Township ....................................................................................................52
4. Ho Chi Minh City Export Processing Zones and Industrial Parks ........................................53

CONCLUSION..............................................................................................................................54

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FOREWORD

D espite harsh competition around the globe and among East Asian countries,
Vietnam remains an attractive destination for foreign investment in the
region.

Ho Chi Minh City, the major economic, cultural and scientific-technological hub of
Vietnam, has been maintaining its leading role in attracting foreign direct
investment (FDI) projects into Vietnam.

With the strongest economic potential, the best infrastructure for business activities
and the most reformed municipal government in Vietnam, Ho Chi Minh City is
currently the host for more than 24% of the total FDI capital in Vietnam and more
than 2500 foreign representative offices coming from 57 countries and territories.

Nidec from Japan has announced the plan to raise the invested capital in Ho Chi
Minh City to 1 billion USD from the current 500 million USD. Most recently, Intel
from the US has received the investment license to build its 300 million USD
project in Ho Chi Minh City

Providing useful and updated information is one of ITPC main tasks. That is why
we present to you this third edition of “Guidebook – Investing and Doing Business
in Ho Chi Minh City – Vietnam” that gives foreign investors practical information
and advices as to laws and regulations on FDI, opportunities and incentives
provided by Ho Chi Minh City Government, agencies they should contact when
they do business with or invest in Ho Chi Minh City.

We hope that this Guidebook could help foreign investors and business people in
the course of identifying good opportunities and implementing their business
ventures in Ho Chi Minh City. Please feel free to contact us for any further
information or assistance that you need. We are always at your services.

Investment and Trade Promotion Center (ITPC)

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A. REGULATIONS REGULATING FOREIGN INVESTMENTS EFFECTIVE
PRIOR TO JULY 1, 2006

At present, foreign investment and domestic investment are regulated by different


bodies of law. Direct foreign investment is regulated by the Law on Foreign Investment
(National Assembly 1996, as amended in 2000). Domestic investment is regulated the Law
on Domestic Promotion and Encouragement (National Assembly, 1998). For the first time
ever, the Vietnamese National Assembly in its 2005 fall session passed the new Law on
Investment, effective from July 1, 2006, which regulates both domestic and foreign investors.
The new Law on Investment aims to modernize and simplify establishment procedures, and
eliminate the gap between foreign and domestic investors. In this part of the guide book we
present a summary of the existing investment law. The new Investment Law will be
discussed in the subsequent part to enable the readers to have a thorough understanding of
significant changes of the legal environment for foreign investment in Vietnam.

1. General Regulations on Foreign Investment

1.1. Forms of Investment

Investment projects owned by or in joint-venture with foreign business people are


subject to the Law on Foreign Investment. According to the Law on Foreign Investment and
other relevant legal documents, there are five main forms of foreign investment in Vietnam
(Business Co-operation Contract; Joint-Venture; 100% Foreign Owned Enterprise; Build –
Operate – Transfer; Contribution of Capital to or Purchase of Share in Vietnamese
Enterprises).

(a) Business Co-operation Contract (BCC)

BCCs are contractual arrangements between Vietnamese enterprise(s) or foreign


invested enterprise(s) and foreign parties through which both parties agree to realize in
common one or several specific economic operations/ investments in Vietnam and to share
the resulting rights and obligations. This form of investment does not lead to creation of a
separate legal entity. It allows a greater flexibility in defining the respective rights and
obligations of the Vietnamese and foreign parties (not specifically related to their respective
financial contribution to the project), but “transfers” the direct responsibility engaged through
the operations in Vietnam to the foreign investor in his home country. BCCs are used mostly
in very large contracts where foreign involvement requires the highest level of approval (oil
and gas exploration and processing, post and telecommunication services). The foreign
investor is allowed to set up a “management office” in Vietnam to follow and manage the
BCC.

(b) Joint Ventures (JV)

Joint Ventures under Vietnamese law are foreign invested companies with limited
liability that are jointly formed by:

¾ One or several Vietnamese enterprise(s) and one or several foreign investors


(economic organizations or individuals);

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¾ An existing JV and: a foreign economic organization or individual; or an
overseas Vietnamese; or a medical examination and treatment establishment,
an education and training establishment, or a specific research establishment
which satisfies the conditions stipulated by the Government; or another JV; or
a 100% foreign-owned enterprise in Vietnam or another Vietnamese
enterprise;

¾ An existing 100% foreign-owned enterprise in Vietnam and: a Vietnamese


enterprise; or a medical examination and treatment establishment, an
education and training establishment, or a specific research establishment
which satisfies the conditions stipulated by the Government;

¾ The Vietnamese government and a foreign country’s government in special


cases.

The JV becomes a legal entity only when the investment license is granted by the
relevant authority, notwithstanding the fact that most contractual arrangements between the
relevant parties have to be made prior to that, in order to obtain the license.

Barring exceptional case, the legal capital (total equity) cannot be below 30% of the
total investment capital, and the foreign equity interests cannot be below 30% of the total
legal capital. The foreign contribution to the legal capital can be in form of currency (foreign
or Vietnamese currency originating from investments in Vietnam), equipment, machinery,
plant, buildings and other construction works, value of industrial property rights, technical
know-how, technological process or technical services with their value based on market
prices. Contribution from the Vietnamese partner can also be in currency, but is most often
in the form of the value of land use rights, the value of right to use water and sea surface and
materials.

The legal capital has to be at least 30% of the total investment capital, except for
special cases (construction of infrastructure facilities) when it can be reduced to 20% subject
to approval of the licensing authority.

(c) 100% foreign owned companies (FO)

A 100% foreign owned company is a legal entity with limited liability under
Vietnamese Law, the legal capital of which is entirely held by one or several foreign
investor(s) (economic organizations or individuals). The legal capital has to be at least 30%
of the total investment capital, except for special cases (construction of infrastructure
facilities) when it can be reduced to 20% subject to approval of the licensing authority.
Foreign investors are free to sell their contributions to the legal capital provided that the
licensing authority gives its approval.

(d) Build-Operate-Transfer and related forms (BOT, BTO and BT)

The Law on Foreign Investment has explicitly called for investment in the area of
large infrastructure to be made in the form of BOT (Build – Operate – Transfer), BTO (Build
– Transfer – Operate) and BT (Build – Transfer) contracts.

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¾ A BOT contract is an agreement between an authorized State body of Vietnam
and a foreign investor(s) for the construction and commercial operation of an
infrastructure facility (including expansion, upgrading, and modernization
thereof) for a certain duration in order to recover the invested capital and earn
reasonable profits; upon the expiry of such duration, the foreign investor(s)
shall, without compensation, transfer the facility to the State of Vietnam.

¾ A BTO contract is an agreement between an authorized State body of Vietnam


and a foreign investor(s) for the construction of an infrastructure facility
(including expansion, upgrading, and modernization thereof) upon the
completion of which the foreign investor(s) shall transfer the facility to the
State of Vietnam. The Government of Vietnam shall grant the investor(s) the
right to commercially operate the facility for certain duration in order to
recover the invested capital and earn reasonable profits.

¾ A BT contract is an agreement between an authorized State body of Vietnam


and a foreign investor(s) for the construction of an infrastructure facility
(including expansion, upgrading, and modernization thereof) upon the
completion of which the foreign investor(s) shall transfer the facility to the
State of Vietnam. The Government of Vietnam shall facilitate implementation
of other project(s) by the foreign investor(s) in order to recover the invested
capital and earn reasonable profits.

(e) Contribution of capital to or purchase of share in Vietnamese enterprises

Foreign investors may acquire equity interest in Vietnamese enterprises in the


following forms:

¾ Form of purchase of shares in the securities market (listed or OTC):

• Purchase of shares in the initial issue of a State-owned enterprise being


equitized.

• Purchase of shares in an additional issue of a shareholding company, or


acquisition of shares from shareholders in a shareholding company.

¾ Form of capital contribution:

• Acquisition of the capital contribution share of a member of a limited


liability company; capital contribution to a limited liability company in
order to become new member thereof.

• Capital contribution to a partnership; acquisition of the capital contribution


share of members of a partnership in order to become a capital
contributing member of the partnership.

• Capital contribution to a co-operative union or a co-operative in order to


become a member thereof.

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The maximum level of capital contribution and purchase of shares by foreign
investors in a Vietnamese enterprise shall be 49% of the charter capital of the Vietnamese
enterprise. The Vietnamese government is considering to raise or even remove the cap
according to international commitments it already made or is about to.

(f) Branches and representative office

Beside these forms of investment, the Commercial Law and legal instruments
providing the implementation thereof allow branches and representative offices under certain
conditions. The opening of a representative office or branch is not considered by Vietnamese
law as being a foreign investment and is therefore subject to a different set of regulations. A
license is required for any of these types of activities, issued by the relevant authorities
depending on the industry or service sector where the foreign company wants to operate (the
Ministry of Trade, the General Department for Tourism, the State Bank of Vietnam, the
Ministry of Justice).

¾ Branches: previously, only banks, tobacco companies, airlines and law firms
were allowed to establish branches in Vietnam. Under new Decree 45 of the
Government in 2000, foreign trading companies can also establish branches to
conduct a number of trading activities in Vietnam. However, activities of such
trading branches are very limited. In terms of law, the establishment of a
foreign company branch is simpler than the establishment of a 100% foreign
owned enterprise with the difference that a 100% foreign owned enterprise is a
Vietnamese legal entity separate from its parent company, while a branch still
holds foreign legal entity status and is dependent on its parent company.
Unlike the representative office, branches of foreign companies in Vietnam
are allowed to conduct trading activities in Vietnam.

¾ Representative Office: foreign companies having trade relations with Vietnam,


or investment projects in Vietnam, can apply for permits to open
representative offices in Vietnam. A representative office is not an
independent legal entity and not allowed to conduct direct trading activities
(such as execution of contracts, direct payment or receipt of moneys and sale
or purchase of goods). However, a representative office can:

• Promote the establishment of projects for economic, commercial or


tourism co-operation in Vietnam;

• Seek and expedite opportunities to purchase and sell goods or provide


commercial or tourism services in Vietnam;

• Monitor and activate the implementation of signed contracts of the foreign


business entity or foreign tourism enterprise for which it acts as a
representative;

• Sign contracts for purchase and sale of goods or for provision of services
(except contracts for tourist travel and transport) with Vietnamese business
entities if the representative office is authorized by its parent company to
do so.

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1.2. Categorization of investment projects and licensing authority

1.2.1. Projects categorization

For the purpose of allocation of management functions between Government agencies,


investment projects are principally classified into the following groups:

(a) Group A projects

¾ The following projects (regardless of the amount of investment capital):

• Infrastructure construction of IZs, EPZs and HTZs, urban areas; BOT,


BTO and BT projects;
• Construction and operation of seaports, airports, transportation by sea and
by air;
• Projects in the field of oil and gas;
• Postal and telecommunications projects;
• Publishing; printing services (except technical document printing; packing
printing; label printing; normal pattern printing in textile, garment and
footwear products); press, radio and television broadcasting, advertising
services accompanied with advertisement publishing; cinema activities;
arts performance; bonus game business; healthcare, education, training,
scientific research, medicine producing projects;
• Insurance, finance, auditing and inspection projects;
• Projects for exploitation of rare and precious natural resources;
• Projects in the field of real estate business; and
• National defense and security projects.

¾ Projects with invested capital of US$ 40 million or more in the following


fields: electricity, mining, metallurgy, cement, mechanical engineering,
chemicals, hotels, apartments and offices for lease, entertainment and tourist
areas.

¾ Projects using 5 or more hectares of urban land or 50 or more hectares of land


of other types.

(b) Group B projects: all other projects which are not in Group A projects.

1.2.2. Licensing Authority

Projects with foreign investment capital in Vietnam shall be approved in the form of
investment license. As stipulated by the Law on Foreign Investment in Vietnam, the
authorities to approve and issue investment license include:

¾ The Prime Minister shall approve and the Ministry of Planning and Investment
(MPI) shall issue investment licenses for Group A projects.

¾ The MPI shall issue investment licenses for Group B projects (except projects
under the licensing authority of Provincial People’s Committees or Provincial
Industrial Zones Management Authorities).

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¾ Provincial People’s Committees shall decide and issue investment licenses to
projects which meet the following conditions:

• Be consistent with the approved planning or plan for socio-economic


development; and
• Not included in Group A projects.

¾ In Hanoi and Ho Chi Minh City, the People’s Committee is authorized to issue
investment license for projects the investment capital of which is US$10
million or less; other cities and provinces in Vietnam are authorized to issue
investment license for projects the investment capital of which is US$ 5
million or less. The Vietnamese government is considering raising the value of
projects that municipal authorities are delegated to license.

¾ In Ho Chi Minh City, the Director of the Department of Planning and


Investment or any other person duly delegated by the Ho Chi Minh City
People’s Committee should consider and issue investment licenses for foreign
investment projects which have a total amount of investment capital of US$5
million or less and being one of projects as follows:

• Projects have an export proportion of at least 50% or more (except for the
products stipulated in Decision No.718/2001/QD-BKH dated December 7,
2001, of which the export rate must be at least 80%);
• Non-production projects that fall under the license issuing authority of the
City People’s Committee after the City People’s Committee has approved
in writing the investment policy; or
• Production projects their nature of which is similar to at least 3 projects
that have been licensed previously by the City People’s Committee.

¾ Provincial People’s Committees are not authorized to issue investment


licenses to the following projects (regardless the amount of invested capital):

• Construction of national roads and railways;


• Production of cement, metallurgy, electricity, sugar, alcohol, beer, and
cigarettes, manufacture and assembly of automobiles and motorbikes;
• Travel tours;
• Culture, education and training; and
• Supermarket construction and operation.

¾ Provincial industrial zones or high-tech zones authority shall issue investment


licenses to projects located inside the industrial zones, export-processing zones
or high-tech zones as authorized by the MPI. Most of them are delegated to
issue investment licenses to projects which meet the following conditions:

• Projects conforming to the approved blueprint and charters of industrial


zones and export-processing zones;

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• Projects in the industry and industrial services with an invested capital of
less than US$ 40 million except for Group A projects;
• Projects which can export a certain percentage of their products as
stipulated by the MPI;
• Projects that the investors commit to ensure their own foreign exchange
need;
• Projects with machinery and equipment in conformity with the relevant
provisions. If not, they must get written approval from the competent
authority; and
• Projects that can meet all requirements on environment protection, labor
safety, fire and explosion prevention.

1.3. List of sectors in which investment incentives are applied:

1.3.1. Afforestation and forest regeneration zoning; planting perennial trees on unused
land or barren hills; land reclamation, salt production, aquaculture in
unexploited waters:

• Planting and caring for forests.

• Planting long-term industrial trees and fruit trees on unused land, barren hills or
mountains.

• Exploiting barren land for the purpose of agricultural, forestry and fishery
production.

• Producing, exploiting and refining salt.

• Cultivating and raising aquatic products in unexploited waters.

1.3.2. Building infrastructure facilities, developing public transportation; and


developing education and training, healthcare and ethnic cultures:

• Investing in building and modernizing power plants, transmitting power; building


facilities using power generated by solar energy, wind power and bio-gases.
• Investing in building water plants and water supply systems serving household
and industrial activities; and investing in building drainage systems.
• Investing in building and modernizing bridges, roads, inland waterways, railway,
airports, harbors, railway stations, bus stations and car parks.
• Building technical infrastructure in concentrated residential areas in regions which
have difficult socio-economic conditions.
• Developing public transportation: investing in means of rail transport, sea
transportation, and motor vehicles with 17 or more seats for transporting
passengers and vessels for passenger transportation by waterway.
• Investing in providing Internet connection services, Internet access services and
Internet application services in areas which have difficult socio-economic
conditions; postal services and parcel services.

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• Establishing semi-public schools and private schools at various levels; [providing]
preschool education, general education, professional secondary education and
providing training at college and university levels.
• Setting up establishments for vocational training and improving skill levels of
workers.
• Investing in building museums, libraries, cultural houses, and ethnic dance, song
and music ensembles; producing, manufacturing and repairing traditional musical
instruments; and maintaining and preserving [historical relics], museums and
cultural houses.
• Establishing private hospitals for medical examination and treatment; establishing
facilities for preventing epidemic diseases; establishing relief centers caring for
disabled people and homeless children, and geriatric centers.

1.3.3. Producing and trading in exports: projects for producing and trading in exports
worth more than 50 per cent of the total value of goods produced or traded in a
financial year.

1.3.4. Offshore fishing; processing agricultural, forestry, and aquatic products; and
providing technical services directly catering to agriculture, forestry and fishing
production:

• Offshore fishing.
• Processing agricultural products using domestic materials; processing products
from livestock and poultry; processing and preserving vegetables and fruit;
producing oil, essential oil and fatty substances from plants; producing liquid milk
and products extracted from milk; producing crude powder; producing feed for
livestock, poultry, and aquatic animals; and producing bottled water and canned
fruit juices.
• Producing paper pulp, paper and covers and artificial planks using domestic
agricultural and forestry products.
• Processing and preserving aquatic products from domestic raw material sources.
• Providing support services to agricultural, industrial and perennial trees; providing
support services for husbandry; providing support services for forestry activities;
aquatic product services; domestic animal protection services; multiplication of
breeds and strains and cross-breeding; preservation of agricultural, forestry and
aquatic products; and building facilities for storing and preserving agricultural,
forestry and aquatic products.

1.3.5. Researching, developing science, scientific services technology, and technology


business; consultancy on legal matters, investment, business and management,
protection of intellectual property rights, and technology transfer:

• Investing in building technical facilities and works; laboratories and experimental


stations for applying new technologies to production; and producing new
materials and rare and precious materials.
• Investing in producing computers and software products.
• Providing services: conducting information technology research and training
human resources for information technology.

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• Investing in producing semiconductors and electronic components; producing
telecommunications and internet equipments; applying new technologies to
produce information and telecommunications equipments.
• Applying high technologies; applying new biological technologies to healthcare
services, production of seedlings and animal breeds, biological fertilizers,
biological pesticides, veterinary vaccines; collecting waste; treatment of waste;
resolving environmental pollution, and re-processing scraps and waste materials.
• Applying technologies for using or producing machinery, equipment using
biological energy, wind power, solar power, geothermal energy and tidal power.
• Consultancy on legal matters, investment, business, business management, and
scientific and technical consultancy; protecting intellectual property rights and
transferring technology.

1.3.6. Other sectors

• Cultivating sugar-cane, cotton and tea to serve the processing industry; cultivating
drug materials; and producing seedlings and animal breeds.
• Producing children’s toys; weaving fabrics and perfecting textile products;
producing silk and fibers of various types; and tanning and preliminarily
processing leather.
• Raising livestock and poultry, cultivating aquatic products under a restructuring
program for the agricultural economy on a farm scale.
• Producing basic chemicals, pure chemicals, specialized chemicals, and dyes.
• Investing in producing new drugs for treating human diseases; medical equipment,
orthopedic instruments, special instruments and equipment for disabled people;
building warehouses to preserve new drugs; preserving medical drugs for human
beings in the case of floods, storms, natural calamities and dangerous epidemic
diseases; botanical protection drugs; medical prevention and treatment drugs for
livestock and aquatic products.
• Investing in producing high and medium voltage electrical instruments; diesel
engines; equipment, machinery and accessories for cargo and fishing vessels;
machine-tools, machinery, equipment, accessories and engines catering for
agricultural and forestry production; food processing machines; machines for the
textile and garment industry; machines for the leather industry; mining machinery;
construction machines; industrial robots; locomotives and rail carriages;
automobiles of various types; automobile accessories, transformers; precision
equipment; equipment and machinery for inspecting and controlling safety during
the process of industrial production; producing sample moulds for metal and non-
metal products; building and repairing ships and boats; producing equipment for
treatment of waste; and key industrial products as referred to in a prime
ministerial decision issued from time to time.
• Producing high class steel, alloy steel, non-ferrous metal, rare and precious metals
and porous iron for industrial use; producing specialized cement, sound proof
materials, insulators, synthetic materials replacing wood, construction plastics,
glass fibers, fire-resistant substances; coking coal, activated coal; and producing
fertilizers.
• Producing traditional handicrafts and fine art crafts such as carving; encrusting;
lacquer ware; stone carving; producing bamboo and rattan products; weaving

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carpets, silk and brocade; lace-making; producing pottery and ceramic products
and fine art copper products and specialized paper production (for kites etc).
• Investing in building type 1 markets and exhibition areas; carrying out
commercial promotions; trading in securities; raising capital and lending by
people’s credit funds.
• Maritime, airline, rail, road transport and inland waterway services.
• Investing in building national tourism areas, national parks; investing in building
cultural park areas including all sporting activities, recreational and entertainment
activities.
• Investing in building and operating infrastructure facilities in industrial zones,
export processing zones and high tech zones; investing in producing, processing
and providing high tech services in industrial zones, high tech zones, small and
medium scale zones and industrial complexes.
• Investing in the form of BOT, BTO, and BT contracts.

1.3.7 List of sectors which are especially encouraged in Ho Chi Minh

In Ho Chi Minh City, the authority has especially provided more assistance and
incentives to investors in land related matters, land compensation and clearance,
administrative procedures simplification… for foreign invested projects which are
encouraged as follows:

• High-tech industrial projects;


• Projects for manufacturing of new materials;
• Projects for application of new biological technology;
• Projects using new technologies in production of information and
telecommunication equipment;
• Manufacturing and processing goods for export of 80% of products or more;
• Production of high grade materials and extra materials to manufacture
footwear and garments for export;
• Production of high grade steel, alloy, non-ferrous metal, special metal, steel
billet, sponge iron; refinement of cast iron;
• Training programmers; training skilled workers in mechanical and electronic
industries;
• University education and post graduates education specialising in engineering,
information technology, economics;
• Production of specific medicine for tuberculosis, cardiovascular diseases,
hepatitis, nephritis, cancer, AIDS;
• High-tech hospitals specialising in nervous diseases, cardiovascular diseases,
tropical diseases;
• Tissue banks, blood banks;
• Production of antibiotic materials;
• Building, maintaining and repairing new ocean ships with the tonnage of

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10,000 tons or more; and
• Collection and treatment of waste of various kinds in cities and industrial
zones.

1.4. List of investment areas subject to conditions required by the law

(a) Conditions on investment forms

¾ Investments in the form of BCCs only and the Vietnamese party must be a
specialized organization permitted to operate in the following fields:

• Building of public telecommunications networks, supply of


telecommunications services; trading in international and local courier
services; and
• Activities of press, radio and television broadcasting.

¾ Investments in the form of BCCs 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 seaports and airports (excluding BOT, BTO and BT projects);
• Trading in marine and aviation services;
• Culture (excluding projects in relation to printing technical documents,
packing, trademarks, printing and 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; and
• Consultancy services (excluding technical consultancy).

(b) Conditions of projects to include 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).

(c) 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

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2. Investment Licensing Process in Ho Chi Minh City

2.1. Information Providing Agencies

In Ho Chi Minh City, under the coordination with other concerned government bodies,
the Department of Planning and Investment (DPI) and the Investment and Trade Promotion
Center (ITPC) are the local government departments which have the responsibility for
providing information related to the investment environment to investors during their project
preparation stage.

2.2. Project Guiding Agencies

For projects in the form of evaluation for investment license issuance invested in Ho
Chi Minh City, the investors shall consult the investment guideline from the City authority
before applying for an investment license. The Department of Planning and Investment is
delegated by the Ho Chi Minh City People’s Committee to respond to the questions raised by
the foreign investors concerning the investment guideline. With respect to Group A projects,
projects under the licensing scope of the Ministry of Planning and Investment, projects in
pilot investment fields (such as supermarket etc.) and projects investing in areas which their
detailed planning has not yet been approved to be invested in Ho Chi Minh City, the
Department of Planning and Investment is the one-stop shop and has the responsibility for
contacting and getting the responses from MPI and relevant ministries or organizations
(including the People’s Committee of Ho Chi Minh City).
.

17
2.3. Licensing Process

2.3.1. Investment Licensing Procedures

INVESTMENT LICENSING PROCESS IN HO CHI MINH CITY

INVESTORS Provision of - DPI


Guidance & Support - ITPC

Group A Group B Group B


projects projects projects
outside in
Supporting & HCMC HCMC
DPI EPZs, IZs EPZs, IZs
Co-coordinating or SHTP
& SHTP

MPI DPI HEPZA or


Board of Management
of SHTP

The Relevant MPI and relevant MPI and relevant


Prime Local Ministries Ministries
Minister Departments (if any) (if any)

DPI

MPI Total investment Total investment Total investment Total investment


US$ 10 mil or less over US$ 10 mil US$ 40 mil or less over US$ 40 mil
HCMC PEOPLE’S MPI HEPZA or MPI
COMMITTEE Management
Board of SHTP

INVESTMENT LICENCE

INVESTORS

18
Pursuant to the decentralization of the licensing authority and the type and capital of
foreign investment projects, the investment license for projects in Ho Chi Minh City shall be
issued by one of the following government agencies:

• Ministry of Planning and Investment (Southern Representative Office);

• Ho Chi Minh City People’s Committee;

• Ho Chi Minh City Export Processing Zones and Industrial Zones Authority
(HEPZA); and

• Board of Management of Saigon High-Tech Park.

The application procedure for a foreign investment project shall be:

¾ Registration procedure for investment license issuance: applies to projects which


satisfy all the following conditions:

• (i) not included in Group A projects (see above); (ii) conform with the
approved planning for development of the industry or planning for production
and where the above planning has not yet been approved, the consent of the
ministry in charge of the industry shall be required; (iii) do not require an
environment assessment; and

• Satisfying one of the following conditions: (i) having export ratio of 80% or
more; (ii) investing in industrial zone, not included in Group A projects, and
belonging to the list of areas in which investment is encouraged or especially
encouraged; (iii) being included in the manufacturing sector with invested
capital up to US$5 million.
or

¾ Evaluation procedure for investment license issuance: applies to all other projects
which do not satisfy the requirements to register for investment license issuance.

The application dossier for an investment license must be submitted to the competent
agencies for issuance of the investment license. For projects which qualify the conditions
to register for investment license issuance, the licensing bodies are not permitted to refuse
the investment license issuance.

2.3.2. Application dossier

Application documents must be prepared in Vietnamese language and in another


prevailing foreign language in accordance with a standard form introduced by the MPI.
Depending on the form of investment, an application dossier will include:

Registration for issuance of an Evaluation for issuance of an

19
investment license investment license
Business - Application for registration of - Application for investment license;
Cooperation investment license; - Contract;
Contract - Contract; - Economic – technical explanation
- Documents verifying the legal (the feasibility study);
status and financial position of - Documents verifying the legal status
investors; and financial position of investors;
- Documents relating to technology - Documents relating to technology
transfer (if any); transfer (if any);
- Economic contracts and - Economic contracts and agreements
agreements relating to the relating to the implementation of the
implementation of the project (if project (if any).
any).
Joint - An application for registration of - Application for investment license;
venture investment license - Joint venture contract and charter;
enterprise - Joint venture contract and charter; - Economic–technical explanation (the
- Documents verifying the legal feasibility study);
status and financial position of - Documents verifying the legal status
investors; and financial position of investors;
- Documents relating to technology - Documents relating to technology
transfer (if any) transfer (if any);
- Economic contracts and - Economic contracts and agreements
agreements relating to the relating to the implementation of the
implementation of the project (if project (if any).
any)
100% - An application for registration of - Application for investment license;
foreign investment license; - Charter;
owned - Charter; - Economic – technical explanation;
capital - Documents verifying the legal - Documents verifying the legal status
enterprise status and financial position of and financial position of investors;
investors; - Documents relating to technology
- Documents relating to technology transfer (if any);
transfer (if any); - Economic contracts and agreements
- Economic contracts and relating to the implementation of the
agreements relating to the project (if any).
implementation of the project (if
any).

On a case-by-case basis and depending on the nature of the project for which the
application for issuance of an investment license is made, the investment licensing body may
request the investor to provide a number of supplementary and related documents, such as:

• Design of existing buildings, factories or preliminary design if the project involves


construction;

• A certificate of the Department of Zoning and Architecture for compliance with the
zoning master plan; and

• Legal documents concerning housing and land.

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2.3.3. Receipt of Application Dossier

¾ With respect to projects for which the MPI issues investment licenses: the dossier
shall be submitted to the MPI (the Southern Representative Office) or the
Department of Planning and Investment in Ho Chi Minh City which will support
the investors in following up the application procedure.

¾ With respect to projects for which Ho Chi Minh City People’s Committee issues
investment licenses: the dossier shall be submitted to the Department of Planning
and Investment.

¾ With respect to projects investing in industrial zones or export processing zones in


Ho Chi Minh City: the dossier shall be submitted to the Ho Chi Minh City Export
Processing and Industrial Zones Authority (HEPZA).

¾ With respect to projects investing in Saigon High-Tech Park (SHTP): the dossier
shall be submitted to the Board of Management of Saigon High-Tech Park.

2.3.4. Time for Investment License Issuance

¾ For Group A projects: within 45 working days from the date of receipt of a proper
file.

¾ For Group B projects in the form of registration for investment license issuance:
within 10 working days from the date of receipt of a proper file.

¾ For Group B projects in the form of evaluation for investment license issuance:

• Projects within the investment license issuance authority of the MPI: within 30
working days from the date of receipt of a proper file.

• Projects within the investment license issuance authority of Ho Chi Minh City
People’s Committee: within 20 working days from the date of receipt of a
proper file.

• Projects within the investment license issuance authority of the Department of


Planning and Investment delegated by Ho Chi Minh City People's Committee:
within 10 working days from the date of receipt of a proper file.

• Projects within the investment license issuance authority of Ho Chi Minh City
Export Processing Zones and Industrial Zones Authority (HEPZA) or the
Board of Management of Saigon High-Tech Park: within 7-15 working days
from the date of receipt of a proper file.

B. REGULATIONS REGULATING FOREIGN INVESTMENT EFFECTIVE


FROM JULY 1, 2006

From July 1, 2006 onwards, foreign and domestic investments will be regulated by
the new Investment Law. In this part of the guide book we discuss the salient points of the
new Investment Law concerning the foreign investment activities.

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1. Forms of Investment

According to the new Investment Law, there are two investment forms, namely
indirect or direct investment are available to foreign investors.

(i) Direct investment means a form of investment whereby the investor invests its
capital and participates in the management of the investment activity.

(ii) Indirect investment means a form of investment by way of the purchase of shares,
share certificates, bonds, other valuable papers or by way of intermediary
financial institutions such as a securities investment fund and whereby the
investment does not participate directly in the management of the investment
activities.

Each type of direct or indirect investments is summarized in turn below.

1.1. Direct Investment

(a) Economic organizations in the form of 100% capital of foreign investors or joint
venture between local and foreign investors

Foreign investors are permitted to incorporate economic organizations wholly-owned


by such foreign investors or set up a joint venture with local investors. The economic
organization or the joint venture could follow one of the business types allowed by the Law
on Enterprises, namely:

¾ Private enterprise means an enterprise owned by one individual who shall be


liable for all activities of the enterprise to the extent of all his or her assets. The
private enterprise may not issue any type of securities. Each individual may only
establish one private enterprise.

¾ Partnership means a business has at least two co-owners who jointly conduct
business in one common name. Such co-owners must be individuals who shall be
liable for the obligations of the partnership to the extent of all their assets. The
partnership may not issue any type of security. In addition to co-owners of the
partnership, there are capital-contributing members in the partnership. These
capital-contributing members shall only be liable for the debts of the partnership
to the extent of the amount of capital they have contributed to the partnership.

¾ Limited liability company with one member means an enterprise owned by one
organization or individual. The organization or individual shall be liable for all
debts and other property obligations of the company within the amount of the
charter capital of the company. The limited liability company with one member
may not issue shares.

¾ Limited liability company with 2 or more members means an enterprise in which


a member may be an organization or an individual. The number of numbers shall
not exceed 50. The members of the company shall be liable for the debts and
other property obligations of the enterprise within the amount of capital that they

22
have undertaken to contribute to the company. The share of capital contribution
of each member may be transferred. The limited liability company with 2 or more
members may not issue shares.

¾ Joint stock company means an enterprise in which: the charter capital shall be
divided into equal portions called shares; shareholders may be organizations or
individuals; the minimum number of shareholders shall be three and three shall be
no restriction on the maximum number; shareholders shall be liable for the debts
and other financial obligations of the enterprise only within the amount of capital
contributed to the enterprise; shareholders may transfer their shares to other
persons. The joint stock company may issue all types of securities to raise funds.

¾ Corporate group means a collection of companies having close relations with each
other on the permanent basis in terms of economic interests, technology, market
and other business objectives. The corporate group shall comprise the following
forms: (i) parent company and subsidiary companies and (ii) economic group.

Other than the business types allowed under the Law on Enterprises, foreign investors
can make investment in credit institutions, investment funds, or other financial institutions;
medical service, educational, scientific, cultural, sports and other services establishments
which conduct investment activities for profit-making purposes.

(b) Investment in accordance with contract

The new Investment Law also recognizes foreign investment in the form of the BCC.
An investor is permitted to sign a BCC in order to co-operate in production and share profits
or to share products and other forms of business cooperation.

An investor is permitted to sign a BOT, BTO and BT contract with the competent
State body in order to implement projects for new construction, expansion, modernization
and operation of infrastructure projects in the sectors of traffic, electricity production and
business, water supply or drainage, waste treatment and other sectors as stipulated by the
Prime Minister of the Government.

(c) Capital contribution, purchase of shareholding, merger and acquisition

Investors are permitted to contribute capital to and to purchase shareholding in


companies and branches operating in Vietnam. The ratio of capital contribution and purchase
of shareholding by foreign investors in a number of business sectors and industries shall be
regulated by the Government.

Investors are permitted to merge and to acquire existing investments, i.e., companies
or subsidiaries.

1.2. Indirect Investment

An investor shall be permitted to carry out the following forms of indirect investment
in Vietnam:

• Purchase of shareholding, shares, bonds and other valuable papers.

23
• By way of securities investment funds.

• By way of other intermediary financial institutions.

Any investment by way of purchase or sale of shares, share certificates, bonds and
other valuable papers of individuals and organizations and procedures for conducting indirect
investment activities shall be implemented in accordance with the law on securities and other
provisions of the relevant laws.

1.3. Branches and Representative Offices

Under the Law on Commerce, foreign business entities are entitled to establish
representative offices and branches in Vietnam. The Ministry of Trade shall manage the
licensing of branches and representative office of foreign business entities in Vietnam.
Foreign business entities shall be liable before the law of Vietnam for all of the operations of
their representative offices and branches in Vietnam.

(a) Branches

Unlike the representative office, branches of foreign are allowed to conduct activities
being the purchase and sale of goods and other commercial activities consistent with its
license for establishment in accordance with the law of Vietnam and any international treaty
to which the Socialist Republic of Vietnam is a member. In addition, the branches of foreign
business entities shall have the following rights and obligations:

¾ To rent offices and to lease or purchase the equipment and facilities necessary
for the operation of the branch;

¾ To recruit Vietnamese and foreign employees to work for the branch in


accordance with the law of Vietnam.

¾ To enter into contracts in Vietnam in accordance with the activities stated in


the license for establishment of such branch and in accordance with this Law.

¾ To open Vietnamese Dong and foreign currency accounts at banks which are
licensed to operate in Vietnam.

¾ To remit profits abroad in accordance with the law of Vietnam.

¾ To have a seal bearing the name of the branch in accordance with the law of
Vietnam.

¾ To adopt the accounting system stipulated by the law of Vietnam; where it is


necessary to adopt a different commonly used accounting system, the approval
of the Ministry of Finance of the Socialist Republic of Vietnam must be
obtained.

¾ To report on the operation of the branch in accordance with the law of


Vietnam.

24
(b) Representative Offices

Representative offices of foreign business entities are not allowed (i) to directly
conduct profit making in Vietnam except for carrying out commercial promotion activities
within the scope permitted by license and laws, (ii) to enter into commercial contracts of the
foreign entity or to amend or supplement such contracts already signed except where the
chief of representative office has a valid power of attorney from the foreign business entity.
The representative offices of foreign business entities have the following rights and
obligations:

¾ To operate strictly in accordance with the purposes, scope and duration stated in
the license for establishment of such representative office.

¾ To rent offices and to lease or purchase the equipment and facilities necessary for
the operation of the representative office.

¾ To recruit Vietnamese and foreign employees to work for the representative office
in accordance with the law of Vietnam.

¾ To open accounts in foreign currency and in Vietnamese Dong sourced from


foreign currency at banks which are licensed to operate in Vietnam, and to use
such accounts solely for the operation of the representative office.

¾ To pay taxes, fees and charges and to discharge other financial obligations in
accordance with the law of Vietnam.

2. Categorization of Investment Projects

2.1. Project Categorization

As stated above, prior to July 1, 2006, investment projects shall be classified in


Groups A and B. After July 1, 2006, the investment project shall be classified in two levels
based on the level of invested capital, (i) invested capital less than VND300 billion (eqv.
US$18,750,000) and (ii) invested capital more than VND300 billion.

2.2 Procedures

Investment certificates shall be issued in accordance with one of the two following
procedures: (i) registration for issuance of investment certificate and (ii) evaluation for
issuance of investment certificate.

¾ Registration for issuance of investment certificate: with respect of foreign invested


projects which have an invested capital of less than VND300 billion (eqv.
US$18,750,000) and which are not included in the list of sectors of investment
subject to conditions (see details in item 2.3.3 below), the investor shall perform
the procedures for investment registration at a provincial State administrative
body for investment for issuance of an investment certificate.

25
¾ Evaluation for issuance of investment certificate: with respect of foreign invested
projects which have an invested capital of more than VND300 billion (eqv.
US$18,750,000) regardless whether they are included in the list of sectors of
investment subject to conditions or not, the procedures for evaluation must be
performed for issuance of an investment certificate.

Foreign investors investing in Vietnam for the first time, they must obtain an
investment certificate which is also the business incorporation certificate by either proceeding
with the procedures for investment registration or evaluation of investment. Once a FIE is
established, it is just their new investment projects (if any) that need to be registered.

2.3. Lists of investment incentive sectors and geographical areas of investment


incentives; list of sectors in which investment is conditional and list of sectors in
which investment is prohibited

Based on the master plan and strategies for socio-economic development for each
period and undertakings in international treaties of which the Socialist Republic of Vietnam
is a member, the Government shall issue or amend and add to the list of investment incentive
sectors, the list of sectors in which investment is conditional, the list of sectors in which
investment is prohibited, the list of geographical areas of investment incentives. The
provincial people’s committees shall not be permitted to issue regulations specifying sectors
in which investment is prohibited and sectors in which investment is conditional, or
specifying investment incentives which exceed the brackets stipulated by law.

2.3.1. List of sectors subject to investment incentives

Investment shall be encouraged in the following sectors:

• Breeding, rearing, growing and processing agricultural, forestry and aquaculture


products; production of salt; creation of new plant and animal variety.
• Use of high technology and advanced techniques; protection of the ecological
environment; research, development and creation of high-technology.
• Labor-intensive industries.
• Construction and development of infrastructure facilities and important industrial
projects with a large scale.
• Professional development of education, training, health, sports, physical education
and Vietnamese culture.
• Development of traditional crafts and industries.
• Other manufacturing and service sectors which require encouragement.

2.3.2. Geographical areas subject to investment incentives

Investment shall be encouraged in the following areas:

• Areas with difficult socio-economic conditions; areas with especially difficult


socio-economic conditions.
• Industrial zones, export processing zones, high-tech zones and economic zones.

26
2.3.3. List of sectors in which investment is conditional

Sectors in which investment is subject to conditions shall comprise:

• Sectors impacting on national defense and security, social order and safety.
• Banking and finance sector.
• Sectors impacting on public health.
• Culture, information, the press and publishing.
• Entertainment services.
• Real estate business.
• Survey, prospecting, exploration and mining of natural resources; the ecological
environment.
• Development of education and training.

In addition to the conditional investment sectors as mentioned above, the sectors in


which investment is subject to conditions shall comprise investment sectors in accordance
with the schedule for implementation of international undertakings in international treaties of
which the Socialist Republic of Vietnam is a member. Where an enterprise with foreign
owned capital invested in a sector in which investment was unconditional but during the
course of the investment activity the list of sectors in which investment is conditional was
amended with the result that the relevant sector was included, the investor shall be permitted
to continue its investment activity in that sector.

2.3.5. List Of Sectors In Which Investment Is Prohibited

Investment activities shall be prohibited in the following sectors:

• Projects which are detrimental to national defense and security, and the public
interest.
• Projects which are detrimental to historical and cultural traditions and ethics, and
Vietnamese fine customs.
• Projects which harm the people’s health, or which destroy natural resources and
the environment.

• Projects for the treatment of toxic wastes brought into Vietnam; projects for the
manufacture of any type of toxic chemicals or for the use of chemical agents
prohibited by international treaties.

3. Licensing Authority

For projects subject to registration for issuance of investment certificate, the


provincial State administrative body shall be the authority granting investment certificate to
investor. For projects subject to the evaluation for issuance of investment certificate, the

27
Government shall provide regulations on the State body which has authority to evaluate
investments and issue investment certificates.

4. Application dossier

Project Application dossier

Foreign invested projects which • Legal status of the investor;


have an invested capital of less • Objectives, scale and location for implementation of
than VND300 billion (eqv. the investment project;
US$18,750,000) and which are • Invested capital, project implementation schedule;
not included in the list of • Land use requirements and undertakings on
sectors of investment subject to environmental protection;
conditions. • Proposal for investment incentives (if any);
• Report on financial ability of the investor; and
• Joint venture contract or business co-operation
contract and charter of the enterprise (if any)

Foreign invested projects which • Written request for issuance of an investment


have an invested capital of certificate;
more than VND300 billion • Documents certifying the legal status of the investor;
(eqv. US$18,750,000) and • Report on financial ability of the investor;
which are not included in the • Eco-technical explanatory statement containing the
list of sectors of investment items in relation to objectives and location of the
subject to conditions investment, land use requirement; investment scale;
invested capital; project implementation schedule,
technological or environmental solutions; and
• Joint venture contract or business co-operation
contract, charter of the enterprise (if any).

Foreign invested projects • Explanatory statement of conditions which the


included in the list of sectors of investment project must satisfy;
investment subject to condition • Legal status of the investor;
regardless of the scale of • Objectives, sale and location for implementation of the
invested capital investment project;
• Invested capital, project implementation schedule;
• Land use requirements and undertakings on
environmental protection;
• Proposal for investment incentives (if any);
• Report on financial ability of the investor; and
• Joint venture contract or business co-operation
contract and charter of the enterprise (if any).

5. Time for investment certificate issuance

¾ For projects subject to registration for issuance of investment certificate: the


provincial State administrative body for investment shall issue an investment

28
certificate within a time limit of 15 days from the date of receipt of the complete
and valid file for investment registration.

¾ For projects subject to the evaluation for issuance of investment certificate: the
time limit for evaluation of investment shall not exceed 30 days from the date of
receipt of a complete and valid file. In necessary cases, the above time limit may
be extended, but not beyond 45 days.

6. Information Providing Agencies

In Ho Chi Minh City, under the coordination with other concerning government
bodies, the Department of Planning and Investment (DPI) and the Investment and Trade
Promotion Center (ITPC) are the local government departments which have the responsibility
to provide information related to the investment environment to investors during their project
preparation stage.

C. TAXATION

The tax system in Vietnam consists of the following main taxes:

¾ Corporate Income Tax;

¾ Import – Export Duties;

¾ Value Added Tax;

¾ Special Sales Tax (excise tax);

¾ Personal Income Tax.

Each of these taxes is administered by the General Department of Taxation (Ministry


of Finance) except for the export-import duties (General Department of Customs).

In Ho Chi Minh City, the Department of Tax is responsible for collecting taxes and
for tax finalization. The Department of Customs will be in charge of import and export
duties.

1. Corporate Income Tax

Currently FIEs are subject to a standard corporate income tax of 28%. Preferential
rates of 10%, 15% and 20%, respectively will be applied depending on whether a project is
qualified for one or more criteria as follows:
• Investment in sectors where investments are encouraged, for example, high export
ratio, manufacturing agricultural products, afforestation, infrastructure etc.
• Investment in geographic locations where investment incentives are applied.

• Investments in industrial parks or export processing zones.

29
Preferential rates are only available for a certain period from 10, 12 or 15 years except
for special cases, where the preferential rate applies to the entire duration of the project (such
as investment in Saigon High-tech Park, export processing zones or industrial zones in Ho
Chi Minh City). Upon expiry of the preferential period, the rate generally reverts to the
standard rate of 28%.

In addition to preferential corporate income tax, other tax preferential treatment


includes exemption from and reduction of corporate income tax for a period from 2 to 4 years
or reduction of corporate income tax for a period from 2, 3, 5 to 9 years to projects which
satisfy partly or wholly certain conditions such as: investment in encouraged investment
sectors or location, newly established projects, satisfying certain number of labourers,
investment in industrial zone, export processing zone etc.

2. Import and Export Duties

(a) Export duties

Export is an encouraged area in Vietnam. Thus, export duties are only charged on a
few items, basically natural resources such as minerals, forest products and scrap metal.
Rates range from 0% - 45%. The price for the computation of export duties is the Free-On-
Board (FOB) price of the invoice.

(b) Import Duties

Generally, all goods crossing the Vietnamese borders are subject to import duties.
Consumer goods, especially luxury goods, are subject to high import duties, while machinery,
equipment, materials and supplies needed for production, especially those items which are
not produced domestically, enjoy lower rates of import duties, or even a 0% tax rate. A
number of types of goods in transit and charitable relief goods are exempted from import
duties.

There are three categories of import duty rates:

• The standard rate which applies to countries other than those below

• A preferential or MFN rate which applies to countries which have signed a most
favoured nation (MFN) agreement with Vietnam; or

• An especially preferential rate which applies to countries which have signed


agreement on especially preferential rate with Vietnam– (now mainly applied to
ASEAN countries under the Common Effective Preferential Tariff Scheme).

FIEs and foreign parties to BBCs which invest in investment encouraged fields are
entitled to an exemption of import duties on the equipment, machinery; specialized transport
means imported to form part of their fixed assets; components, details and spare parts
accompanying the equipment, machinery and specialized transportation means mentioned
above, construction materials which have been not yet locally produced.

In addition, import tax exemption will be granted to other cases, namely among others,
(i) goods imported for direct use in scientific research and development of technology and

30
technology which are not yet able to be produced domestically and (ii) raw materials,
materials and component parts imported for production of projects on the list of sectors where
investment is especially encouraged or on the list of regions with specially difficult socio-
economic conditions.

Imports used for export activities (raw materials and commodities, intermediate inputs,
finished goods used in the manufacturing process) are normally exempted from import taxes;
tariffs are not paid for such imports if foreign invested enterprises are located within an
Export Processing Zone. If foreign invested enterprises are located elsewhere, they have to
pay tariffs within 275 days from the date of import and shall be reimbursed the amount of
import tax paid upon export of the processed good in proportion of the quantity of exported
goods.

The new Law on Foreign Investment allows foreign invested enterprises


manufacturing products for export to set up “bonded warehouses”, where imported inputs
destined for export processing can be kept in inventory with import taxes levied only on the
fraction of the inputs that are not used in the export processing process. Foreign invested
enterprises are allowed to set up such bonded warehouses under the following conditions:

• They must export at least 50% of their total production;

• The warehouse has to be located in an “appropriate” area allowing custom control


(ports, airports);

• Products stocked in the warehouse cannot be sold on the Vietnamese market


except with a special authorization delivered by the Ministry of Trade and after
the corresponding import taxes are paid; and

• Stocked products in a bonded warehouse being damaged have to be re-exported or


destroyed.

(c) Customs Valuation

Customs valuation should be made at the same time the customs declaration for
imported goods is registered with the customs agencies. The customs valuation shall be
computed in Vietnam Dong. The exchange rate for determining the customs value of
imported goods is an average exchange rate of the inter-banks foreign currency market
announced by the State Bank of Vietnam.

The primary basis for customs value under the regulations is “transaction value”,
which is defined as the price actually paid or payable for the goods when sold to export to
Vietnam adjusted compulsorily including (or excluding) certain payments specified in the
regulations in (or from) such price.

The following methods of determining the customs value will be alternately resorted
where the customs value cannot be determined on the basis of the transaction value of
imported goods:

(i) Method of determining the customs value in accordance with the transaction
value of identical imported goods; or

31
(ii) Method of determining the customs value in accordance with the transaction
value of similar imported goods; or

(iii) Method of determining the customs value in accordance with the deducted
value (comprising of selling price in the Vietnamese market less reasonable
costs and profit derived after importation); or

(iv) Method of determining the customs value in accordance with the calculated
value (comprising of costs and profit for producing imported goods but subject
to a number of adjustments such as transaction value); or

(v) Method of assumption.

3. Value Added Tax

In Vietnam, the value added tax (VAT) replaced the turnover tax from 1st of January
1999. VAT applies to goods and services circulated and consumed in Vietnam and is
collected through production, trading and provision of services. When supplying goods
and/or services subject to VAT, the business must charge VAT on the value of goods or
services supplied. In addition, VAT applies on the duty paid value of imported goods. The
importer must pay VAT to Customs at the same time as they pay import duties.

Applicable VAT rates include 0%, 5%, and 10%. The 0% rate applies to export of
goods and certain services including sales to EPZs. VAT is calculated by multiplying the
taxable price (net of tax) by applicable VAT rate. With respect to imported goods, VAT is
calculated on the import price plus import duty plus special sale tax (if applicable).

The VAT system of Vietnam is also characterised by 2 types of VAT payers:


deduction method VAT payers and direct method VAT payers. Most companies and
business organizations are deduction method VAT payers. It means that the businesses will
have to pay the output tax (i.e., VAT collected from their customer) after deducting the input
tax (i.e., VAT the businesses have paid to their suppliers). The businesses must file VAT
returns monthly to the tax authorities. The tax authorities, in their turn, will process the tax
return and issue a tax assessment notice to the tax payment. The payable VAT must be paid
to the State budget on the following month.

The direct method generally applies to small business households which do not keep
proper accounting records (there are currently over 1 million family businesses). For these
businesses, VAT is calculated at a deemed rate on gross turnover.

4. Special Sales Tax (excise tax)

Special sales tax is levied on (i) cigarettes, cigars; (ii) spirits; (iii) beers; (iv)
automobiles of less than 24 seats; (v) assorted types of petrol, naphtha, reformat components,
and other components to be mixed in petrol, (vi) air conditioners with capacity of 90,000
BTU or less, (vii) playing cards, (vii) votive paper and (viii) some special services, including
dancing halls, massage lounges, karaoke parlors, casinos, jackpots, betting entertainments,
golf, and lotteries.

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Sspecial sale tax rates range from 10% to 80%. Goods and services subject to the
special sale tax are also subject to the VAT. The subsequent sale or trading will be subject to
VAT and not special sales tax. Special sale tax on imports is calculated on the basis of price
of taxable import plus import duties.

5. Personal Income Tax

Currently, the following individuals are subject to personal income tax:

• Vietnamese citizens being in Vietnam, or working or being on business trips


overseas;

• Other individuals who do not have Vietnamese citizenship but reside indefinitely
in Vietnam; and

• Foreigners working in Vietnam including foreigners who do not live in Vietnam


but who have income sourced in Vietnam such as royalties and technology
transfer fees.

A foreigner residing in Vietnam for 183 days or more within a tax year will be
considered a tax resident, unless tax treaties between Vietnam and other countries provide
otherwise.

A distinction is made between regular and irregular income and different tax rates are
applied. With respect to regular income, the personal income tax shall apply if the monthly
income is more than 5,000,000 VND (about USD320) for Vietnamese citizens residing in
Vietnam or more than 8,000,000 VND (about USD500) for foreigners and Vietnamese
citizens working overseas, respectively. A Vietnam tax resident is subject to progressive tax
rates with the highest marginal rate of 40% (taking into account the surtax). A non-resident
foreigner who stays in Vietnam is subject to a flat 25% tax rate on Vietnam income.

Irregular income is taxes separately on each transaction.

Expatriates or foreign individuals working in Vietnam are allowed to transfer their


income abroad after income tax and other payroll withholdings have been paid.

D. LAND ISSUES

1. Land Management Regime

All land in Vietnam is owned by the People and is administered by the State. In Ho
Chi Minh City, the administration of land including the granting of land use rights is carried
out by the City People’s Committee. Land use rights are granted for specified purposes.

FIEs can lease land from the State or from other legitimate organizations holding a
legitimate land use right for a maximum of 50 years. In addition, a joint venture may obtain
the right to use land if the Vietnamese partner to such joint venture contributes its right to use
land as part of capital contribution.

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In case FIEs lease land from the State and pay land rental annually, such FIEs will
have a limited land use right. For example, FIEs are not allowed to create pledge or
mortgage or give guaranty using the value of their land use right. FIEs also cannot sub-lease
their land use right. However, FIEs can transfer or sell the assets attached to the land and the
ultimate buyer shall sign a new land lease with the State.

If FIEs lease land from the State and make one payment of land rental for the entire
term of the land lease, they will have full rights over the land and assets attached to the land,
for example, assign/sell their land use rights and assets attached thereto, or sub-lease their
land use rights and assets.

2. Foreign Investments in Real Estate

With respect to investment projects in residential houses and their investors make one
payment of land rental for the entire term, the investors will be entitled to build residential
houses for sale and for lease. If the payment of land rental is made annually, the FIE is
permitted to build residential houses for lease only. A joint venture who invests in residential
houses for sale and has the land contributed by the Vietnamese party will not be required to
pay land rental.

3. Land Management In Ho Chi Minh City and Incentives in Making Investment in


Ho Chi Minh City

To lease land for foreign investment projects, the foreign investor must submit to the
Ho Chi Minh City Department of Natural Resources and Environment or the Management
Board of the Southern Part of Ho Chi Minh City the following documents:

• Application for Land Lease;


• Investment License;
• Land Cadastral Map; and
• Plan of site clearance and relocation compensation obtained by the investors and
approved by the Ho Chi Minh City People’s Committee.

The investor is required to prepare the application for land lease. Other documents
will be supported by the Department of Planning and Investment (DPI) in coordination with
other relevant Departments. An application for land lease can be submitted to the
Department of Natural Resources and Environment at the same time with the application for
investment license at the Department of Planning and Investment. Within twenty working
days of receiving the application for land lease, the Department of Natural Resources and
Environment will submit the documents to the City People’s Committee for its consideration
and issuance of the decision on land lease.

With respect to the projects which are encouraged and the land compensation for such
projects is large, the Ho Chi Minh City People’s Committee will consider to support foreign
investors the clearance or compensation expenses with the amount that does not exceed the
total land rental paid.

In some specific cases, the Ho Chi Minh City People’s Committee will support the
investors by carrying out the compensation and clearance in advance or demolishment and

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resettlement for inhabitants in the areas. After getting the investment lisence, the investors
have to reimburse the Ho Chi Minh City such compensation and clearance expenses plus
interest (equivalent to the current interest rate of the State Bank).

During the process of project preparation, the investor could also obtain information
about urban planning and architecture, rental charges, legality, land status, source and land
categories of Ho Chi Minh City at the Department of Planning and Investment (DPI) or
Investment and Trade Promotion Center (ITPC).

The Information and Housing Registration Center (Department of Natural Resources


and Environment) is responsible for providing cadastral map to investors within two (02)
working days of receiving the requests. If the maps are not available, within two (02)
working days, the Department will inform and instruct the investors the procedures for setting
up the map of the project location.

E. RECRUITMENT AND LABOR RELATED ISSUES

Vietnamese people and foreigners working in Vietnam are subject to the Labor Code.
The Labor Code has created a legal framework which sets out the rights and obligations of
employers and employees, working hours, labor contracts, payment of social insurance,
overtime work, strikes, and termination of employment contracts, etc.

1. Working Age

The minimum working age in Vietnam is 15. Workers of 13 years of age or more can
be hired under an apprentice contract.

2. Recruiting Procedure

Foreign invested enterprises may recruit Vietnamese employees directly or may


contract with an employment service agency to do so, and must notify the list of recruited
employees to the local body in charge of State administration of labor.

3. Labor Contract

The labor contract must be in writing and in accordance with the model labor contract
issued by the Ministry of Labor, War Invalids and Social Affairs. Verbal agreements may be
entered into with domestic servants or the worker doing temporary work for less than three
months. A labor contract can be one of the following types:

¾ An indefinite term labor contract is a contract in which the two parties do not
determine the term and the time for termination of the validity of the contract;

¾ A definite term labor contract is a contract in which the two parties determine
the term and the time for termination of the validity of the contract as a period
of twelve (12) months to thirty six (36) months; and

¾ A labor contract for a specific or seasonal job with duration of less than twelve
(12) months.

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For contracts lasting less than three months, a written contract is not required. The
probation period can last up to a maximum of two months. The salary of a worker during the
probation period cannot be less than 70% of the agreed salary. During the probation period,
contracts can be terminated by either party without a notice period and payment of
indemnities.

4. Termination of Labor Contract

An employer can terminate a labor contract early in any of the following


circumstances:

(i) The employee repeatedly fails to perform his or her work in accordance with
the labor contract;

(ii) An employee is disciplined or dismissed in accordance with the Labor Code;

(iii) Where the employee is ill or suffers injury and remains unable to work after
receiving treatment for a period of one year for an indefinite term contract, six
months in the case of a definite term of contract and half the contract term in
the case of a specific or seasonal job;

(iv) The employer is forced to reduce its production and employment while trying
to recover from a natural disaster, a fire or an event of force majeure; and

(v) The employer ceases operations.

Except unilateral termination in item (ii) above, an advance notice of 45 days is


required for an indefinite term contract, 30 days for a definite term contract with duration of
one year to three years and three days for a specific or seasonal job less than one year.

An employer has no right to terminate a labor contract:

• of an employee who is suffering from an illness or injury caused by a work-related


accident or occupational disease and is under medical care; or
• of an employee is on annual leave, personal leave of absence or any type of leave
permitted by the employer; or
• of a female employee for reason of marriage, pregnancy, taking maternity leave,
or raising a child under twelve (12) months old, except where the enterprise ceases
its operation.

5. Illegal Termination of Labor Contract

If an employer unlawfully terminates the employment of an employee, the employee


must be re-employed and the employee must pay compensation equal to the amount of lost
wages. Where the employee refuses to return to work, the employee must be paid lost wages
plus an allowance equal to half a month’s salary for each year of employment plus
allowances (if any).

6. Working Hours

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The law provides for an 8-hour working day or 48-hour working week. The
employee may work overtime but the overtime should not exceed 4 hours per day and 200
hours per years. In certain special case stipulated by the Government, the overtime can be
increased to a maximum of 300 hours per year.

From 2 October 1999, a number of organizations such as Government offices,


administrative agencies and socio-political organizations have implemented a 40-hour
working week. Businesses in other economic sectors, including businesses with foreign
invested capital, are also encouraged to adopt a 40 hours working week.

7. Annual Leaves

The employee with 12 months service is entitled to an annual leave with full pay with
the following specifications:

• 12 days for a person working in normal conditions;


• 14 days for a person taking heavy, noxious or dangerous job or working in places
with harsh living conditions or for persons under 18 years of age; and
• 16 days for persons taking especially heavy, noxious and dangerous jobs or
working in place with especially harsh living conditions.

The number of days of annual leave shall be increased proportionally to the period of
employment in an enterprise or with an employer by one additional day for every five years
of employment.

8. Social and Health Insurance

An employer is required to contribute 15% and 2% of total wages to the Social


Insurance Fund administered by the State to cover social insurance and health insurance,
respectively for his employees. The contribution by the employees for social insurance and
health insurance is 5% and 1%, respectively.

9. Prescribed Rate of Foreign Workers Working for a Business in Vietnam

In Vietnam, businesses which are operating under the State-owned Enterprise Law,
the Enterprise Law or the Law on Foreign Investment, are allowed to recruit foreign workers
at a maximum rate of 3 percent of their total workforce. Businesses who want to hire foreign
workers in excess of the prescribed maximum rate must get an approval of the local
government authority.

The prescribed recruitment rate is not applied for contractors, business organizations
belonged to the State administrative agencies, armed forces, socio-political organizations,
representative offices, State-owned non-production units; healthcare, cultural, educational
and sports services, foreign project offices in Vietnam and branches of foreign lawyers
organizations operating in Vietnam and cooperatives.

10. Procedure to Recruit Foreign Workers

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To recruit the foreign workers, the employer must apply for the work permit for such
foreigner workers at the Province’s Department of Labor, War Invalids and Social Affairs or
the authorized EPs and IZs Authority.

A dossier applying for a work permit shall consist of:

• An application for issuance of a work permit for foreign worker prepared by the
employer in the form prescribed by the Ministry of Labor, War Invalids and
Social Affairs; and
• Documents of the employee including, but not limited to, an application signed by
the employee, legal record, health certificate, and professional degrees.

After having the work permit, the employer must sign a labor contract in writing with
the employee (not including foreign workers assigned by the foreign party to work in
Vietnam) and send a copy thereof to the authority which has issued the work permit.

11. Work Permit Duration

The work permit has the same duration as the duration of the labor contract to be
signed or of job assignment from parent company but in any case, the period should not
exceed 36 months.

12. Exemption from Work Permit

Work permit is exempted for:

• Foreigner who works in Vietnam for less than three months or comes to Vietnam
to handle an urgent mission;
• Foreigner who is member of Board of Management of enterprises established
legally;
• Foreigner who is head of a representative office, or a branch of foreign company
in Vietnam; and
• Foreign lawyer that has a Law Practice Permit issued by the Ministry of Justice of
Vietnam.

In cases where work permit is not required, the employer has to submit to the
Province’s Department of Labor, War Invalids and Social Affairs a list of foreign workers
comprising their name, age, nationality, passport number, the starting and ending date of the
work, the job assumed by the worker. This list shall be submitted 7 days prior to the start
working date.

F. ENVIRONMENT

1. Environmental Impact Assessment

Not all foreign investment projects are required to make environmental impact
assessment. Environmental impact assessment is required with respect to investment projects
that can potentially cause environmental pollution on a wide scale, easily cause
environmental hazards, or are difficult to control and determine environmental standards
(Group I projects).

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(a) List of projects required to submit reports for environmental appraisal-Group I
projects

1. Works located in or adjacent to environmentally sensitive areas, nature


reservation areas, and tourist sites, historical and cultural sites of national and
international importance.

2. Planning:
• Regional Development;
• Sartorial Development;
• Urban Areas;
• Industrial Zones/Export-Processing Zones.

3. In the field of oil and gases:


• Exploitation;
• Processing;
• Transportation;
• Oil and Petroleum Depot (with capacity of 20,000 m3 and higher).

4. Cast-iron Steel and non-ferrous metal factories (with capacity of 10,000 tons
of product/year and higher).
5. Leather tanning (with capacity of 10,000 products/year and higher).
6. Textiles factories (with capacity of 20 million m of cloth/year and higher).
7. Paint factories (with capacity of 1,000 tons of product/year and higher).
8. Sugar factories (with capacity of 100,000 tons of sugar-cane/year and higher).
9. Food-processing factories (with capacity of 1,000 tons of product/year and
higher).
10. Frozen food factories (with capacity of 1,000 tons of product/year and higher).
11. Thermo-electricity factories (with capacity of 200 MW/year and higher).
12. Pulp and paper factories (with capacity of 40,000 tons of pulp/year and higher).
13. Cement factories (with capacity of 1,000,000 tons of cement/year and higher).
14. Tourist and entertainment sites (with area of 100 ha or larger).
15. Airports.
16. Ports (for ships of tonnage of 10,000 DWT or higher).
17. Railways, highways for automobiles (from Class I to Class III according to
Standard TCVN 4054-85) those are longer than 50 km.
18. Hydro-power plants (with reservoirs of capacity of 100 million m3 or higher).
19. Irrigation works (for working, drainage, prevention of sea water, etc. with area
of 10,000 ha or larger).
20. Waste treatment (concentrated waste water treatment complex with capacity
of 100,000 m3/ (day and night) or higher; landfill site for soil waste).
21. Exploitation of minerals and construction materials (total volume of minerals
and soil and stone of 100,000 m3/year or higher).
22. Forestry farm for wood exploitation (all).
23. Aqua-culture (total area of 200 ha or larger).
24. Production, warehousing, and use of hazardous chemicals (all).
25. Atomic Reactors (all).

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(b) Group II includes all other projects which shall be registered as having
satisfied environmental standards on the basis of self-preparation and self-analysis of their
own environmental impact evaluation reports. If located in industrial zones/export
processing zones, projects in Group I are not required to make an environmental impact
appraisal; instead they shall be registered as having satisfied environmental standards.

A report of environmental impact assessment is not required in case of establishment of


head offices, or projects in banking and finances, and communication, schools, books and
stationery shops.

A decision on approval of an environmental impact evaluation report or a certificate of


"registration of satisfaction of environmental standards" shall be the legal basis for the
Department of Natural Resource and Environment to consider and permit a project to proceed.

2. Implementation Stages

(a) Application for Investment License Stage

The application dossier of a Group I project shall contain a section or separate chapter
summarizing the potential impact of the project on the environment. This shall be the basis
for consideration by the Department of Natural Resource and Environment of Ho Chi Minh
City in the process of appraisal.

In respect of Group II projects, a "registration of satisfaction of environmental


standards" must be prepared for submission to the Department of Natural Resource and
Environment for consideration.

The application dossier to be submitted shall include:

• Application for registration of satisfaction of environmental standards;


• Three copies of the registration of satisfaction of environmental standards
(English copy of the report shall be required);
• One copy of the feasibility study or technical-economic explanatory statement in
respect of the project.

(b) Design and Construction Stage

After issuance of an investment license and determination of a project site for a Group
I project, an environmental impact evaluation report must be prepared for submission to the
Department of Natural Resource and Environment of Ho Chi Minh City.

The application dossier to be submitted for appraisal shall include:

• An application for appraisal of the environmental impact evaluation report;

• Seven copies of the environmental impact evaluation report (English copy of the
report shall be required);

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• One copy of the feasibility study or technical-economic explanatory statement in
respect of the project.

(c) Completion of Construction Stage

Prior to operation of construction works, the Department of Natural Resource and


Environment shall have the responsibility for:

• Co-coordinating with the construction permit-issuing body in inspecting waste


treatment facilities and other safety conditions in accordance with the
provisions on environmental protection;
• Where construction works are found not to satisfy the approved environmental
protection options, requesting the investor to take necessary measures in
accordance with the appraised environmental impact evaluation report or the
certified registration of satisfaction of environmental standards;
• Issuing a permit to the project after all requirements for environmental
protection have been fulfilled.

3. Import of Used Equipment

To be imported into Vietnam, used equipment must satisfy requirements for labor
safety and hygiene, environmental protection and quality of products and services as
provided by Vietnamese law.

G. INTELLECTUAL PROPERTY

In recent years the Government has taken various measures to strengthen legal
protection of intellectual property. Since 1995, the National Assembly passed the Civil Code,
which has a chapter devoted to the protection of intellectual property rights. Recently, the
National Assembly adopted the Law on Intellectual Property, effective July 1, 2006, which
systemizes intellectual property objects, conditions for registration or protection of
intellectual property rights and enforcement measures.

Vietnam is a long time signatory to the Paris Conventions for the Protection of
Industrial Property, the Madrid Agreement Concerning the International Registration of
Marks and the Patent Cooperation Treaty (PCT). Vietnam is also a member of the World
Intellectual Property Organization (WIPO), which was established by the Stockholm
Convention in March 1993. On 27 June 1997, Vietnam signed the Agreement on the
Establishment of Copyrights Relations with the US. Recently, in 2004 Vietnam became a
member to the Berne Convention on Copyrights.

According to Vietnamese law, industrial property objects are required to be registered


in order to enjoy protection in Vietnam (first to file basis). Patents are protected for a period
of 20 years. A certificate of utility solutions may be granted for 10 years. A certificate of
industrial design is granted for 5 years and may be renewed every 5 years; however the total
effective period of a certificate of industrial design cannot exceed 15 years. Certificates of
trademark registration are granted for 10 years with no restrictions of the number of renewals.
It is not necessary to register a well-known trademark as the well-known trademark is
protected on the use basis not depending on the registration.

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The National Office of Industrial Property (NOIP under management of the Ministry
of Science and Technology) is the authority responsible for registration of industrial property
objects including, among others, trademarks, patents, industrial designs, utility solutions,
integrated circuits, and appellation of origin. Foreign organizations and individuals who seek
to register their IP rights in Vietnam must use a trademark and patent agent to file the
applications for registration at the NOIP.

The Office of Copyright Protection under the Ministry of Culture and Information is
responsible for the protection of copyright.

In Ho Chi Minh City, the Department of Science and Technology and the Department
of Culture and Information have the responsibility to respond to investors for intellectual
property related matters.

H. FINANCIAL MATTERS

1. Accounting and Auditing

All businesses operating in Vietnam must apply Vietnamese Accounting System


(VAS). Vietnam Dong and Vietnamese language must be used in accounting. VAS consists
of four components:

(1) system of accounting vouchers;

(2) chart of accounts;

(3) system of accounting ledgers; and

(4) system of financial reports.

FIEs may apply other foreign or international accounting system and use other
languages or foreign currency units after getting the approval of the Ministry of Finance. The
chief accountant is responsible for the accuracy of the financial statements of the business.

Foreign-invested enterprises are obligated to have annual audit and copies of the
audited annual statements of FIEs must be sent to local tax authorities.

2. Banking and Finance

Credit institutions of Vietnam include state owned banks; commercial , investment


and development banks; joint-stock or share holding banks; branches or representative offices
of overseas banks; credit cooperatives and finance companies. A bank can serve investors
with usual financial products, insurance or funds management. According to the regulations
on the securities market, domestic banks may set up securities companies to participate in the
securities market.

Generally, financing requirements for foreign investors doing business in Vietnam


include documentary letters of credit for export, access to long-term finance for investment,
and access to short-term finance or discounting facilities of commercial receivables for liquid
capital.

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Doing business in Vietnam, foreign investors first have to open capital account at an
authorized bank. All transactions concerning invested capital will use this capital account.
Investors can open other bank accounts in Vietnam Dong or in a foreign currency at any bank
and that bank accounts are used for other purposes of business operations.

3. Foreign Exchange Management

All transactions concerning foreign currency (trading, lending and transferring) must
be carried out through credit institutions licensed to operate in Vietnam.

In Vietnam, it is required that monetary transactions should be in Vietnam Dong. A


few exceptions are permitted such as, among others, payments for goods or services to
organizations authorized to receive foreign currency payments and for consigned transactions.

Foreign invested companies and several institutions (commercial banks, financial


institutions, companies in insurance, post telecommunications and maritime industries…)
may open an offshore bank account with the approval or authorization by the State Bank to
carry out foreign currency transactions.

Capital investment profits and income legally earned in Vietnam are permitted to be
transferred abroad or repatriate after the obligations of taxation have been made in
accordance with Vietnamese laws.

I. IMPORTATION – EXPORTATION

1. Importation

Foreign invested enterprises (FIEs) are allowed to import their required inputs,
materials etc. necessary for their operations in compliance with the business lines stated in
their investment licenses. In the post licensing procedures, foreign-invested enterprises must
obtain an export-import enterprise code from local Customs Departments (for example, the
Ho Chi Minh City Department of Customs if the FIEs is located in the Ho Chi Minh City).
The export-import enterprise code will be used to administer any import or export made by
the FIEs.

Once a year, foreign invested enterprises have to submit (for registration) an import plan to
the Ho Chi Minh City Service of Trade. It is important that this plan be detailed enough to
avoid subsequent problems with the Custom administration.

Foreign invested enterprises are subject to the common import restrictions and tariff rates as
defined by the standard trade regulation. Periodically, the Government authorized the
Ministry of Trade to announce (i) list of goods banned from export or import, (ii) list of
import-export goods subject to permits of the Ministry of Trade, and (iii) list of goods subject
to permits of other competent ministries.

2. Exportation

Export activities are clearly encouraged by the Vietnamese administration. Export


restrictions have been relaxed in the recent years, with the authorization for foreign invested

43
enterprises to engage in export activities beyond their “standard” production range without
the obligation to conduct such trade through a trading service company. Furthermore, the
high ratio of export will enable FIEs to request for a preferential corporate income from the
tax authorities.

J. VISAS

Visa is necessary to visit Vietnam from most countries. Business and tourist visas for
Vietnam are available and can be obtained from Vietnamese diplomatic or consular offices in
foreign countries upon submission of an application form, photographs, a passport (valid at
least 6 months) and an invitation letter (or other documents indicating the purpose of the
visit). No later than five days after the fulfillment of formalities for a visa application, entry
visas will be issued by an office managing entry and exit under the Ministry of Police, a
consular office under the Ministry of Foreign Affairs, a foreign representative diplomatic
office, or a Vietnamese consulate overseas.

Passport holders from some countries with whom Vietnam has signed bilateral
agreements with, including Thailand, Malaysia, Indonesia, Singapore, Lao, Japan, South
Korea, Norway, Sweden, Denmark, Finland and the Philippines do not need entry visa for a
definite stay.

If a foreigner wishes to enter the country for fact-finding or exporting the possibilities
of doing business or is arriving for the first times, tourist visas should be probably appropriate.
Tourist visas obtained through travel agents are valid for 15 days and usually cannot be
extended in Vietnam (but a new visa may be obtained).

Foreign investors including their relatives who enter Vietnam to implement licensed
investment projects may be granted single-entry visa or multiple-entry visa valid for use
within a period not exceeding twelve (12) months. Upon expiry of the period of a visa, if the
person holding the visa requires continuing entering and exiting Vietnam, he or she must
complete the application procedures for a new visa.

K. SOME KEY ENCOURAGED INVESTMENT PROJECTS IN HO CHI MINH


CITY

1. Quang Trung Software Park

Quang Trung Software Park was established in Ho Chi Minh City in July 2000 by the
Ho Chi Minh City government. With 43 hectares area, Quang Trung Software Park is the
largest software park in the South of Vietnam. It is one of twelve main projects in the Ho Chi
Minh City’s 5-year economic, scientific development plan and will become an image of the
Ho Chi Minh City – a modern city in the 21st century. Its development foundation relies on
the 6 following principles:

(1) Provision of high standard infrastructure and services to meet the current and
upcoming requirements in software research, development, manufacture and
export.

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(2) Continuous incubation and formation of new software companies, training of
software developers and managers for both domestic and international
enterprises (including oversea employment).

(3) Provision of excellent and adaptable working and living environment for
software developers (24 hours per day).

(4) Convergence of IT training quality with Certificates and Degrees of


International standard such as: Cisco Systems, Cadence, Sun Microsystems,
NIIT, Houston Community College Systems... within Quang Trung and its
nurturing relation with the Software Park.

(5) Encouragement of investments by Overseas Vietnamese through preferential


policies.

(6) Utilization of public − private partnerships and international cooperation.

Companies moving into Quang Trung Software Park will enjoy the following 4
advantages:
(a) Space, Location and Growth

Quang Trung Software Park occupies an area of over 430.000m2 with a lot of green
spaces and expansion by a possible 10 hectares. It is reachable from the Tan Son Nhat
International Airport in 15 minutes and from the downtown of the Ho Chi Minh City in 30
minutes.

The need of application of software products and services in Ho Chi Minh City and in
the southern key economic zone is a great opportunity for Quang Trung Software Park
development.

Being the largest economic and the second largest scientific and educational centre of
the country, Ho Chi Minh City has full resources to support software city development and
the mutual interactions will make Ho Chi Minh City become a real software city of Vietnam
and in the region in the 21st century.
(b) Network Infrastructure

• Advanced and dedicated telecommunication station connects directly to


International Internet gateway for direct single-hop and with high speed
and multi-services:

• Advanced LAN, WAN technology: Gigabit Ethernet, Frame Relay, and


IP... with quality assurance, high speed, and good provision with best
result.

• All Internet services ports are opened to meet the use of video, multimedia,
voice, and data.

• Security and secrecy for information and data.

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• Network management with new drawing interface from the concentration
point.

• Competitive cost of using Internet services (below the average price of


Internet use in 5 countries: Thailand, Malaysia, Singapore, China, and
India).

(c) Complex Functions

• Diversified production.

• Trade, including export and promotion of oversea employment.

• Customized and preparatory training (ISO 9000 or CMM, English,


software development) and world standard research.

• Exhibition, marketing and conferences.

• Recreation, healthcare, shopping, restaurant and housing.

• Management, including provision of software developers and related


professional experts, strong link to academic and IT community in Ho Chi
Minh City and close cooperation with the other Software Parks in Asia.

(d) High Quality Services, But Low Cost

• Vietnam has a big amount of talents on mathematics and Information


technology, winning high prizes at the international competition; and
plentiful and high-level human resource in Ho Chi Minh City.

• Rate of changing company of Vietnamese is at low level.

• Services of housing, caring, shopping, entertainment and health - care are


very convenient.

• Cost of labor is low as compared to those in other countries.

• Office rental and Internet service cost is lower than in other areas.

• Human power and resource exploitation in Ho Chi Minh City is at no cost


through the support of Quang Trung Software City.

(e) Who Can Joint Quang Trung Software Park?

If you want to:

• Expand your business related to software research, development,


production and distribution, or

• Provide tailored and short-cutting knowledge and skill training for young
and senior software developers, or

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• Found your own business in all fields above

• Achieve excellent management in your company (ISO 9000 or CMM


certified within first two years in Quang Trung Software City)

• Have all managers and programmers speak English well.

• Have good programmers (international certification, Master degrees…)

• Comply with Intellectual Property Right.

Then you are qualified to joint the Quang Trung Software City with all its excellent
functional services and to benefit from all appropriate advantages and preferential policies
made by the Vietnam’s Government and Ho Chi Minh City People’s Committee. You can
rent the existing intelligent buildings or you can build it for your use according to the area
design by the Quang Trung Software City.

The ownership form of your business, e.g. private enterprise, company with limited
liability, joint venture, stock company, state-owned enterprise, representative office, trade
agent, is solely your own choice in accordance with Vietnam's law of commerce and law of
foreign investment.

• If you have advantages and latest technologies in installing and running networks
to connect dozens thousands customers in and outside of Quang Trung using at
the same time the Internet through Quang Trung - owned gateway;

• If you are able to design, construct and commercialize intelligent buildings for
rent by other companies in Quang Trung;

• If you want to start or run your venture capital company in Quang Trung - an area
with hundreds of software firms and an advanced institute for mathematics,
physics and informatics within a 6 million people city with its dozen universities
and colleges;

• If you want to provide banking and insurance services to hundreds firms and
dozens thousands programmers in Quang Trung;

• If you can construct and commercialize restaurants, shopping malls, entertainment


industry, hotels and housings for such concentrated area of 15,000 - 20,000
workers many of them work over night;

Then you are fully qualified to joint Quang Trung as a professional, excellent service
provider.

(f) Quang Trung Software Park Development Company

The Quang Trung Software Park Development Company (QTSC) is the company
directly managing and trading services in Quang Trung Software Park. It also provides free-
of-charge services to the investors in the process of business establishment, obtaining
investment licenses, import-export services, procedures of land provision and land lease,
construction permits, multiple entry visa and some other supports.

47
Contact address:
Quang Trung Software Park Development Company
Ward Tan Chanh Hiep, District 12, Ho Chi Minh City, Vietnam
Tel: (848) 7155055; Fax: (84.8) 8914113
Website: www.quangtrungsoft.com.vn
E-mail: qtsc@quangtrungsoft.com.vn

48
2. Saigon High-Tech Park

The Saigon High-Tech Park was established by Decision No. 145 of the Prime
Minister in October 24, 2002. This is one of the nation’s only two high-tech park projects,
signifying the Government’s commitment to invest in high technology. The launch of the
Project mainly based on the full support of Ho Chi Minh City Government and the scientific
community. The park covers 913 hectares and is 15 kilometers from Ho Chi Minh City
downtown. It is designed on the model of a technical economic zone, attracting foreign
investment and mobilizing domestic high-tech resources. It combines production, trading and
research, boosting technological transfer, developing the high-tech industry and human
resource for the industrial.

(a) High-tech sectors of priority in Saigon High-Tech Park

• Microelectronics - Information Technologies - Telecommunications;


• Biotechnology in Medical, Pharmaceutical and Environment Applications;
• Precision Mechanics - Automation/Robotics;
• Advanced Material Sciences, Nano-technology.

(b) Special Investment Incentives

¾ Corporate income tax incentives (for high-tech manufacturers and high-tech


manufacturing support services):

• Tax rate treatments: 10% which is applied throughout the duration of


investment project.
• Corporate income tax shall be exempted for 4 consecutive years
commencing from the first profitable year and will be granted the
reduction of 50% in the following 9 years.
• Tax exemption for income from contributing capital by industrial property
right, technical know-how, technological process for implementing project.

¾ Income tax of high income earners: Individuals being Vietnamese and


Vietnamese residing overseas working in projects in high-tech park shall be
entitled to exemption and reduction of income tax applicable to high income
earners to the extent that the level of tax payable is equal to that applicable to
foreigners with the same level of income.

¾ VAT and import duties exemption for:

• Machinery, equipment, construction materials which local enterprises can


not meet the need of quality, and specialized vehicles as part of the fixed
asset of the enterprise.
• Production raw material used for products to be exported.

• Export products and services shall be applied VAT rate 0%.

¾ Competitive service fees; incentives for land rental, land lease…

49
¾ Convenient, favorable environment for research and manufacturing (internet
gate, one-stop investment application services, on-site custom clearance).

¾ High-quality infrastructure facilities.

¾ Multiple visas for expatriates.

(c) Constituents to be invited


• Small, medium and large high-tech enterprises.
• Scientific research and training institutions.
• Enterprises and companies providing support services at high standard
(marketing, technology transfer, business, consultancy, quality control,
telecommunication …).

(d) Board of Management of Saigon High-Tech Park

The Management Board of SHTP which was created by the Government in 2002 to
implement a “one-stop” shop for investors has full responsibility for direct state
administration, development and operation of the Park, and outsource services as needed in
response to tenants’ demand. For projects invested in this Park with investment capital up to
US$ 40 million, the Board of Management will grant investment licenses. It also provides a
single point of contact for all issues of construction, land use, labor, taxation, and customs …

50
Organization chart

Contact address:
Board of Management of Saigon High-Tech Park
86 Le Thanh Ton, District 1, Ho Chi Minh City, Vietnam
Tel: 848. 8275359 – 8275075
Fax: 848. 8275641 – 8275075
E-mail: shtp@hochiminhcity.gov.vn
www.shtp.hochiminhcity.gov.vn

51
3. Thu Thiem New Township

Thu Thiem New Township is Ho Chi Minh City’s new and modern center of trade,
finance, service, tourism, trade fair & exhibition, administrative, culture, greeneries and
residence. It is located on an area of 770 ha on the Thu Thiem peninsular, opposite the
District 1, the Central Business District (CBD) of HO CHI MINH CITY, on the other side of
Saigon River.

Thu Thiem has the potential to be developed into the new CBD to support and enjoy a
symbiosis relationship with the Old CBD. They will form the heart of HO CHI MINH CITY
and serves as the financial, commercial and entertainment centers of HO CHI MINH CITY.

The Plan of Thu Thiem New Township was approved by the Government in early
2002 and oriented to develop the technical infrastructure in the period from 2002 to 2020. It
involves 6 following functional areas:

• Commercial, finance and service center (15%).


• International exhibition and trade fair area (5%).
• High-end residential area (15-20%).
• Central Square and main transport network (30-35%).
• Parks, greeneries and water surface (intensive and topic-specific) (20%).
• Public utilities and reserved land (10%).

In the first phase of the project from 2002 to 2005, the requirements mainly focus on
the planning and preparing for the construction of the whole township and also developing
the infrastructure (transport, power, telecommunication network, water supply, drainage,
sewerage, environment sanitation and technical infrastructure).

Key work items proposed for the first phase of the project

• International Trading Center


• Financial area
• International Convention and Exhibition Center
• Recreation and Sport Center
• Central Square
• Ecological Park and public area for entertainment
• Central Lake Park with pedestrian circulation and open space system
• Hotels and Offices
• Residential areas
• Transportation system, especially public transport and major infrastructure
systems.

Investment and Construction Authority for Thu Thiem Urbanized Area (Thu
Thiem I.C.A.): was established in 2001 by the Ho Chi Minh City People’s Committee to be
in charge of the investment and construction management in this area.

Contact address

Investment and Construction Authority for Thu Thiem Urbanized Area

52
86B Le Thanh Ton Street, District 1, Ho Chi Minh City, Vietnam
Tel: (84.8) 8274159; Fax: (848) 8274160
E-mail: bqltt@hcm.vnn.vn
Website: www.thuthiem.com.vn

4. Ho Chi Minh City Export Processing Zones and Industrial Parks

The Government of Vietnam encourages Vietnamese enterprises of all economic


sectors, foreign economic organizations and foreign invested enterprises to invest in
industrial zones, export processing zones and high-tech zones.

In Ho Chi Minh City, there are 2 EPZs and 11 IZs being in operation. They are
purpose-built facilities, carefully planned to maximize potential and flexibility for investors,
with their ideally infrastructure conditions:

• Location: located on the main transportation roadside of the Ho Chi Minh City or
next to port about 5 – 8 km away from the inner city.
• Power source: connected directly to the national power network.
• Water source: connected to the water system of the Ho Chi Minh City.
• Land rental: ranging from 30 USD/m2 – 108 USD/m2/40 years depending on
leased area, location, lease time, term of payment and condition of infrastructure.

The Ho Chi Minh City Export Processing and Industrial Zones Authority (HEPZA) is
the authorized body in charge of activities of all these EPZs and IZs and is entrusted by the
MPI to grant, amend, and withdraw investment licenses for projects and to implement a “one-
stop-service” for investors, making the logistics and formalities of investing in EPZs and IZs
in Ho Chi Minh City as simple as possible. For all projects in Ho Chi Minh City’s Export
Processing Zones and Industrial Zones with investment capital up to US$40 million, HEPZA
has the authority to grant investment licenses. It also provides a singe point of contact for all
issues of construction, land use, labor, taxation, environmental impact and customs.

Vietnam’s Government is particularly keen to promote certain new businesses and


offers strong incentives in the shape of tax exemptions and eased licensing requirements.

These businesses are:

• Projects which export 80% or more of their output;


• Machinery production;
• IT, telecommunication and electronics;
• Bio-technology;
• Waste treatment;
• New materials or new energy resources.

53
CONCLUSION
The purpose of this guidebook is to give you an overview of the legal framework on
foreign investment in Ho Chi Minh City and Vietnam. You are encouraged to contact the
following authorities for more detailed information.

1. Investment & Trade Promotion Center


51 Dinh Tien Hoang Street
District 1, Ho Chi Minh City
Vietnam
Tel: (84-8)8236 738
Fax: (84-8) 8242391
Email: itpc@hcm.vnn.vn
Website: www.itpc.hochiminhcity.gov.vn

2. Department of Planning and Investment of Ho Chi Minh City


32 Le Thanh Ton Street
District 1, Ho Chi Minh City
Vietnam
Tel: (84.8) 8294988
Fax: (84.8) 8295008/8290817
Email: ipdpi@hcm.vnn.vn
Website: http://www.dpi.hochiminhcity.gov.vn

54
5. Useful contacts and addresses in Ho Chi Minh City

5.1. Office of Government departments and agencies

People’s Committee of Ho Chi Minh City MPI (Southern Representative Office)


Address: 86 Le Thanh Ton St., Dist. 1 Address: 178 Nguyen Dinh Chieu Street, Dis. 3
Tel: (84.8) 8291054-8291055-8231238 Tel: (84.8) 9306671 – Fax: (84.8) 9305413
Fax: (84.8) 8296988
Website: www.hochiminhcity.gov.vn Service of Tourism
Address: 140 Nguyen Dinh Chieu St., Dist.3
Department of Foreign Affairs Tel: (84.8) 8242903
Address: 6 Alexandre De Rhodes St., Dist.1 Fax: (84.8) 8293056
Tel: (84.8) 8224224-8223055 Website: www.tourism.hochiminhcity.gov.vn
Fax: (84.8) 8297785-8251436
Service of Construction
Department of Planning and Investment Address: 60 Truong Dinh St., Dist.3
Address: 32 Le Thanh Ton St., Dist.1 Tel: (84.8) 9326214-9327765
Tel: (84.8) 8272192-8297834 Fax: (84.8) 9325056
Fax: (84.8) 8290817-8295008 Website:www.constructiondpt.hochiminhcity.gov.vn
Website: www.dpi.hochiminhcity.gov.vn
Service of Communication and Public Works
Service of Trade Address: 63 Ly Tu Trong St., Dist.1
Address: 59-61 Ly Tu Trong St., Dist.1 Tel: (84.8) 8290451-8290452
Tel: (84.8) 8292991-8239572 Fax: (84.8) 8290458
Fax: (84.8)8224536
Website: www.trade.hochiminhcity.gov.vn Service of Culture & Information
Address: 164 Dong Khoi St., Dist.1
Tax Department of HCMC Tel: (84.8) 8224053-8265555
Address: 140 Nguyen Thi Minh Khai St., Dist.3 Fax: (84.8) 8223221
Tel: (84.8) 9304415-9300373 Website: www.svhtt.hochiminhcity.gov.vn
Fax: (84.8) 9304641
Website: www.hcmtax.hochiminhcity.gov.vn Service of Finance & Pricing
Address: 140-142 Nguyen Thi Minh Khai St., Dist.3
Customs Department Tel: (84.8) 9303797
Address: 02 Ham Nghi St., Dist.1 Fax: (84.8) 9303254
Tel: (84.8) 8211403-8290912 Website: www.tcvg.hochiminhcity.gov.vn
Fax: (84.8) 8290096
Service of Health
Department of Science and Technology Address: 59 Nguyen Thi Minh Khai St., Dist.1
Address: 244 Dien Bien Phu St., Dist.3 Tel: (84.8) 9309912-9309431
Tel: (84.8) 9325671-8250600 Fax: (84.8) 9309088
Fax: (84.8) 9325584-8250601 Website: www.medinet.hochiminhcity.gov.vn
Website: www.doste.hochiminhcity.gov.vn
Department of Posts and Telecommunications
Department of Natural Resource and Address: 59-61 Ly Tu Trong, Dist.1
Environment Tel: (84.8) 8224437
Address: 63 Ly Tu Trong St., Dist.1 Fax: (84.8) 8223989
Tel: (84.8) 8293653-8256667 www.ict-hcm.gov.vn
Fax: (84.8) 8231806
Website: People’s Court of HCMC
www.landhousing.hochiminhcity.gov.vn Address: 131 Nam Ky Khoi Nghia St., Dist.1
Tel: (84.8) 8292447
Fax: (84.8) 8297758

55
Service of Labor, War Invalids & Social
Affairs Ho Chi Minh City EPZs & IZs Authority
Address: 159 Pasteur St., Dist.3 (HEPZA)
Tel: (84.8) 8291302 Address: 35 Nguyen Binh Khiem, Dist.1
Fax: (84.8) 8294032 Tel: (84.8) 8290405
Fax: (84.8) 8294271
Service of Agriculture and Rural
Development
Address: 176 Hai Ba Trung St., Dist.3 Ho Chi Minh City High-Tech Park
Tel: (84.8) 8297652 Address: 86 Le Thanh Ton, Dist.1
Fax: (84.8) 8294764 Tel: (84.8) 8275075-8275359
Fax: (84.8) 8275075-8275641
Service of Industry Email: xtdthitechpark@hcm.vnn.vn or
Address: 163 Hai Ba Trung St., Dist.3 hcmhitechpark@hcm.vnn.vn
Tel: (84.8) 8296322-8298018
Fax: (84.8) 8221778 Board of Management of Saigon South
Address: 59-61 Ly Tu Trong, Dist.1
Service of Justice Tel: (84.8) 8238379
Address: 143 Pasteur St., Dist.3 Fax: (84.8) 8238379
Tel: (84.8) 8297052-8243156
Fax: (84.8) 8243155 Investment and Trade Promotion Center
(ITPC)
Address: 51 Dinh Tien Hoang Str., Dist. 1
Tel: (84.8) 910 1302
Fax: (84.8) 824 2391

56
5.2. Organizations providing information and supporting foreign investors

5.2.1. Local government agencies

- Investment and Trade Promotion Center (ITPC)


Address: 51 Dinh Tien Hoang Str., Dist.1
Tel: (84.8) 9101302
Fax: (84.8) 8242391
Email: itpcinfo@hcm.vnn.vn
Website: www.itpc.hochiminhcity.gov.vn

- Department of Planning & Investment (DPI)


Address: 30-32 Le Thanh Ton Str, Dist.1
Tel: (84.8) 8272192
Fax: (84.8) 8295008
Email: ipdpi@hcm.vnn.vn
Website: www.dpi.hochiminhcity.gov.vn

- Service of Trade (SOT)


Address: 59-61 Ly Tu Trong St., Dist.1
Tel: (84.8) 8292991-8239572
Fax: (84.8)8224536
Website: www.trade.hochiminhcity.gov.vn
E-mail: stm@hcm.fpt.vn

5.2.2. Business Associations

BUSINESS FOREIGN ASSOCIATIONS VIETNAM BUSINESS ASSOCITAIONS


The American Chamber of Commerce in Construction Enterprises Association of
Vietnam Ho Chi Minh City
Address: New World Hotel, 76 Le Lai, Dist.1 Address: 253 Hai Ba Trung, Dist.3
Tel: (84.8) 8243563-8243588 Tel: (84.8) 8294541
Fax: (84.8) 8243572 Fax: (84.8) 8294541

British Business Group Handicraft and Wood Processing


Address: 25 Le Duan, Dist.1 Association
Tel/Fax: (84.8) 8225172 Address: 177 Ly Chinh Thang, Dist.3
Tel: (84.8) 8468854
French Chamber of Commerce in Vietnam Fax: (84.8) 8468834
Address: Saigon Trade C.37 Ton Duc Thang,
Dist.1 Association of Textile-Garment-
Tel: (84.8) 9100308 Embroidery & Knitting in Ho Chi Minh
Fax: (84.8) 9100309 City
Address: 73 Bau Cat 3, Ward 12, Tan Binh
German Business Association Tel: (84.8) 8493978
Address: 257 Hoang Van Thu, Ward 2, Tan Binh Fax: (84.8) 8428301
Dist.
Tel:(84.8) 8295215 (ext 115) Shoes & Leather Association of Ho Chi
Fax: (84.8) 8244550 Minh City
Website: www.gba-vietnam.org
Address: 18D Ngo Quyen, Dist.5
Tel: (84.8) 8592699
Indian Business Chamber in Vietnam Fax:(84.8) 8592699
Address: 2A-4A Ton Duc Thang, 2 FL, Dist.1

57
Tel: (84.8) 8238132
Fax: (84.8) 8238530
Italian Business Association Ho Chi Minh City Business Associations
Address: 203 Dong Khoi, Dist.1 Address: 51 Ben Chuong Duong, Dist.1
Tel: (84.8) 8226430 Tel: (84.8) 8293389
Fax: (84.8) 8226431 Fax: (84.8) 8215448
Email: uaic@smelink.netnam.vn
Australian Business Group of Vietnam Website: www.uaic.hcmcity.com
Address: New World Hotel, 76 Le Lai, Dist.1
Tel: (84.8) 8243745 Electronics and Information Technologies
Fax: (84.8) 8243751 Association
Address: 118 An Duong Vuong, Ward 9, Dist.5
Canada-Vietnam Business Association Tel: (84.8) 8340985
Address: New World Hotel, 76 Le Lai, Dist.1 Fax: (84.8) 8325756
Tel: (84.8) 8243754 Email: phu10@hcm.vnn.vn
Fax: (84.8) 8243754
Food and Foodstuff Association
Danish Consulate General Address: 9 Quang Trung, Go Vap Dist.
Address: 18 FL, Room 1, 115 Nguyen Hue, Dist.1 Tel: (84.8) 9966797
Tel: (84.8) 8219375 Fax: (848) 8940060
Fax: (84.8) 8219371 Email: ffahcmc@hcm.vnn.vn
Website: www.ffa.hcmcity.com
Hong Kong Business Association
Address: New World Hotel, #322, 76 Le Lai, Rubber-Plastics Association of Ho Chi
Dist.1 Minh City
Tel: (84.8) 8243757 Address: 177 Hai Ba Trung, Ward 6, Dist.3
Fax: (84.8) 8243758 Tel: (84.8) 8294139
Fax: (84.8) 8298599
Indonesia Business Association Email: hoicaosunhua@hcm.fpt.vn
Address: 18 Phung Khac Khoan, Dist.1 Website: www.vnplas.com
Tel: (84.8) 8223799
Fax: (84.8) 8299493 Chemical and Cosmetics Association
Address: 51 Ben Chuong Duong, Dist.1
Japan Business Association Tel: (84.8) 8218093
Address: Sun Wah Tower, 115 Nguyen Hue, Dist.1 Fax: (84.8) 8218093
Tel: (84.8) 8219369
Fax: (84.8) 8219370 Electric Wire and Cable Association
Address: 70-72 Nam Ky Khoi Nghia, Dist.1
Dutch Business Association in Vietnam Tel: (84.8) 8299443
Address: C/Consulate General of Netherlands, Fax: (84.8) 8299437
Saigon Tower, 9th FL, 29 Le Duan, Dist.1
Tel: (84.8) 8236278 Young Business People Association of Ho
Fax: (84.8) 8236279
Chi Minh City
Address: 4 Alexandre de Rhodes, Dist.1
Swiss Business Association Tel: (84.8) 8273137
Address: C/o HCMC University of Technology Fax: (84.8) 8273138
Building A4, 3/F, 286 Ly Thuong Kiet, Email: hcm-yba@hcm.vnn.vn
Dist.1 Website: www.ybahcm.com
Tel: (84.8) 8650880
Fax: (84.8) 8650881
Mechanical and Electrical Association
Website: www.swissvietnam.com
Address: 35 Le Loi, Dist.1
Tel: (84.8) 8222195
The Council of Taiwanese Chamber of Fax: (84.8) 8290168
Commerce in Vietnam

58
Address: 9th FL, 8 Nguyen Hue, Dist.1
Tel: (84.8) 8297917
Fax: (84.8) 8298057

European Chamber of Commerce in Fruits Association


Vietnam Address: 58 Nguyen Binh Khiem, Dist.1
Address: 257 Hoang Van Thu, Ward 2, Tan Binh Tel: (84.8) 8296098
Dist. Fax: (84.8) 8296098
Tel:(84.8) 8455528
Fax: (84.8)8455527 Business Women Club
Address: 51 Ben Chuong Duong, Dist.1
Korean Business Association Tel: (84.8) 8293390
Address: C/Kotra-Diamond Plaza, #10, 34 Le Fax: (84.8) 8215448
Duan, Dist.1
Tel: (84.8) 8223944 Ho Chi Minh City Computer Association
Fax: (84.8) 8223941 Address: 79 Truong Dinh, Dist.1
Tel: (84.8)8222876
Spain Economic & Commercial Section Fax: (84.8) 8250053
Address: 25 Phung Khac Khoan, Dist.1 Email: hca@hcm.vnn.vn
Tel:(84.8) 8250173 Website: www.hcahochiminhcity.gov.vn
Fax:(84.8) 8250174
Oversea Vietnamese Business Club
Japan External Trade Organization Address: 242 Tran Binh Trong, Dist.5
Address: Unit 1403, 14th FL, Sun Wah Tower, 115 Tel: (84.8) 8305785
Nguyen Hue St., Dist Fax: (84.8) 8305787
Tel: (84.8) 8219363 Email: ovclub@hcm.vnn.vn
Fax: (84.8) 8219362 Website: www.ov-club.com

Malaysia Business Chamber


Address: Unit 2, Me Linh Point Tower, 2 Ngoc
Duc Ke, Dist.1
Tel: (84.8) 8299023-8293132-8243654
Fax:(84.8) 8231882

New Zealand Trading Commission


Address: New Zealand Consulate 41 Nguyen Thi
Minh Khai, Dist.1
Tel: (84.8) 8226906
Fax:(84.8) 8223950

Singapore Business Group


Address: Me Linh Point, 2A Ngo Duc Ke, Dist.1
Tel: (84.8) 8237850, ext: 266
Fax:(84.8) 8299800

Business Association Overseas Vietnamese


Address: 147 Nguyen Dinh Chieu, Dist.1
Tel: (84.8) 9301503
Fax:(84.8) 9301920

5.2.3. Consulates in Ho Chi Minh City

AUSTRALIA MEXICO

59
Address: 5B Ton Duc Thang, Dist.1 Address: 215A-B Hoang Van Thu, Phu Nhuan
Tel: (84.8) 8296035 Dist.
Fax: (84.8) 8296031 Tel: (84.8) 8445520
Fax: (84.8) 8423960

BRAZIL MALAYSIA
Address: 48 Truong Son, Tan Binh Dist. Address: 2 Ngo Duc Ke, Dist.1
Tel: (84.8) 8486090 Tel: (84.8) 8299023
Fax: (84.8) 8487666 Fax: (84.8) 8299027

BELGIUM NORWAY
Address: 115 Nguyen Hue, Dist.1 Address: 21-23 Nguyen Thi Minh Khai, Dist.1
Tel: (84.8) 8219304 Tel: (84.8) 8296869
Fax: (84.8) 8219231 Fax: (84.8) 8296866

CAMBODIA NETHERLANDS
Address: 41 Phung Khac Khoan, Dist.1 Address: 29 Le Duan, Dist.1
Tel: (84.8) 8292751 Tel: (84.8) 8235932
Fax: (84.8) 8292744 Fax: (84.8) 8226905

CANADA NEW ZEALAND


Address: 335 Dong Khoi, Dist.1 Address: 41 Nguyen Thi Minh Khai, Dist.1
Tel: (84.8) 8294528 Tel: (84.8) 8226907
Fax: (84.8) 8294528 Fax: (84.8) 8226905

CHINA PANAMA
Address: 39 Nguyen Thi Minh Khai, Dist.1 Address: 7A Le Thanh Ton, Dist.1
Tel: (84.8) 8292457 Tel: (84.8) 8250334
Fax: (84.8) 8295009 Fax: (84.8) 8236447

CUBA POLAND
Address: 45 Phung Khac Khoan, Dist.1 Address: 2 Tran Cao Van, Dist.1
Tel: (84.8) 8297350 Tel: (84.8) 8290114
Fax: (84.8) 8295293 Fax: (84.8) 8290114

CZECH REPUBLIC RUSSIA


Address: 28 Mac Dinh Chi, Dist.1 Address: 40 Ba Huyen Thanh Quan, Dist.3
Tel: (84.8) 8290585 Tel: (84.8) 8292936
Fax: (84.8) 8226043 Fax: (84.8) 9303937

FRANCE SINGAPORE
Address: 27 Nguyen Thi Minh Khai, Dist.1 Address: 65 Le Loi, Dist.1
Tel: (84.8) 8297231 Tel: (84.8) 8225173
Fax: (84.8) 8291675 Fax: (84.8)8251600

GERMANY SWISSLAND
Address: 126 Nguyen Dinh Chieu, Dist.3 Address: 2 Ngoc Duc Ke, Dist.1
Tel: (84.8) 8291967 Tel: (84.8) 8258780
Fax: (84.8) 8231919 Fax: (84.8) 8258760

HUNGARIA SWEDEN
Address: 22 Phung Khac Khoan, Dist.1 Address: 8A/11 D1 Thai Van Lung, Dist.1

60
Tel: (84.8) 8290130 Tel: (84.8) 8236800
Fax: (84.8) 8292410 Fax: (84.8) 8236817

INDIA THAILAND
Address: 49 Tran Quoc Thao, Dist.3 Address: 77 Tran Quoc Thao, Dist.3
Tel: (84.8) 9304114 Tel: (84.8) 8222637
Fax:(84.8) 9307495 Fax: (84.8) 9326002

INDONESIA UNITED KINGDOM


Address: 18 Phung Khac Khoan, Dist.1 Address: 25 Le Duan, Dist.1
Tel: (84.8) 8223799 Tel: (84.8) 8298433
Fax: (84.8) 8294938 Fax: (84.8) 8221971

JAPAN USA
Address: 13-17 Nguyen Hue, Dist.1 Address: 4 Le Duan, Dist.1
Tel: (84.8) 8291341 Tel: (84.8) 8229433
Fax: (84.8) 8225316 Fax: (84.8) 8229434

KOREA DENMARK
Address: 65 Le Loi, Dist.1 Address: 20 Phung Khac Khoan, Dist.1
Tel: (84.8) 8225757 Tel: (84.8) 8228289
Fax: (84.8) 8225750
ROMANIA
LAOS Address: 33/6 Dang Van Ngu, Phu Nhuan
Address: 93 Pasteur, Dist.1 Dist.
Tel: (84.8) 8297667 Tel: (84.8) 9911204
Fax: (84.8) 8299272
CHILE
Address: 79/1/1 Phan Ke Binh, Dist. 1
Tel: (84.8) 9102903

5.2.4. Consulting and law firms

BAKER & MCKENZIE – HO CHI MINH LUCY WAYNE & ASSOCIATES


BRANCH Address: 8th Floor, Central Plaza-17 Le Duan
th
Address: 12 Floor, Saigon Tower, 29 Le Duan Blv, Dist. 1
Blv, Dist.1 Tel: (84.8) 8244395
Tel: (84.8) 8295585 Fax: (84.8) 8244396
Fax: (84.8) 8295618
NETVIET CO.LTD
DEACONS VIETNAM Address: #302 Saigon House, 386 Hoang Dieu
Address: 8th Floor, Saigon Center, 65 Le Loi Str., Str, Ward 6, Dist.4
Dist.1 Tel: (84.8) 8265571
Tel: (84.8) 8294882-3 Fax: (84.8) 8265572
Fax: (84.8) 8294880
PHILLIPS FOX
ERNST & YOUNG Address: #607 Saigon Tower-29 Le Duan Blv,
Address: Saigon Riverside Office Center 2A-4A Dist.1
Ton Duc Thang Str., Dist. 1 Tel: (84.8) 8221717
Tel: (84.8) 8245252 Fax: (84.8) 8221818

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Fax: (84.8) 8245250
PRICEWATERHOUSECOOPERS
FRESHFIELDS BRUCKHAUS Address: 4th Floor, Saigon Tower 29 Le Duan,
DERINGER Dist.1
Address: #1108, Saigon Tower, 29 Le Duan Blv, Tel: (84.8) 8230796
Dist.1 Fax: (84.8) 8251947
Tel: (84.8) 8226680
Fax: (84.8) 8226690 RUSSIN & VECCHI
Address: 15/FR Osic Bldg, 8 Nguyen Hue Str.,
FREEHILLS Dist.1
Address: Unit2 10/F Saigon Center, 65 Le Loi Str., Tel: (84.8) 8243026
Dist.1 Fax: (84.8) 8243113
Tel: (84.8) 8242733
Fax: (84.8) 8242736 VISION & ASSOCIATES
Address: 4/F Han nam Bldg, 65 Nguyen Du,
INVESTCONSULT GROUP Ben Nghe Ward, Dist.1
Address: 15 Nguyen Thi Dieu Str., Ward 6, Dist.3 Tel: (84.8) 8236495
Tel: (84.8) 9304868 Fax: (84.8) 8236496
Fax: (84.8) 9304872
WHITE & CASE LLP
JOHNSON STOKES & MASTER (“JSM”) Address: Suite 405-4th Floor, The Metropolitan
Address: 6/F Saigon Tower, 29 Le Duan Blv, Building, 235 Dong Khoi Str., Dist.1
Dist.1 Tel: (84.8) 8210888
Tel: (84.8) 8228860 Fax: (84.8) 8236902
Fax: (84.8) 8228864
YKVN LAWYERS
KELVIN CHIA PARTNERSHIP Address: Metropolitan
Address: R#308 Saigon Tower, 29 Le Duan, Dist.1 Suite 402, 235 Dong Khoi St., Dist.1
Tel: (84.8) 8224986 Tel: (84.8) 8236880-Ext.0417
Fax: (84.8) 8225441 Fax: (84.8) 8236975
Email: ykvnhcmc@fmail.vnn.vn
KPMG Website: www.ykvn-law.com
Address: 10/F Sun Wah Tower, 115 Nguyen Hue
Blv, Dist.1
Tel: (84.8) 8219266
Fax:(84.8) 8219268

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* Business costs in HCMC
1. Labor costs

- Entry-level salaries for selected job positions


- Overtime regulations

Entry-level salaries for selected job positions


(US$1= 15,800 dong)

Per month
Position US$
1 Workers (General Industry)
c Skilled workers 102~138
d Unskilled workers 39~46
2 Engineers (Mid-level engineers) 200~319
3 Mid-level managers 611~736
4 Legal minimum wage 40~45/month
5 Bonus payments Minimum bonus is
(fixed bonuses+variable bonuses) basic wage * 1 month
6 Social security burden ratio c 17% (social
(cEmployer,dEmployee) insurance:15%, health
insurance:2%), d 6%
(social insurance: 5%,
health insurance: 1%)

Overtime Regulations
(Overtime working payment is compared to basic salary rate)

1 Overtime on weekdays 150%


2 Overtime on weekend 200%
3 Overtime on holidays 300%
4 Working time at night shift from 10:00 P.M to 6 A.M 130%
or from 09:00 P.M to 5 A.M

2. Telecom expenses
US$1=15,800dong

US$ Remarks
1 Telephone installation fee 70.48 (10% VAT included)
2 Telephone charge (cMonthly basic c0.6 dUp to 200 min. a
charge, dCall charge per min.) d0.003~0.008 month: US$0.008, from
201 to 1,000 min.:
US$0.005, 1,001 min.
or more: US$0.003
3 International call charge (per min.) c2.70, d2.10 c: Mon~Sat,
7:00~23:00

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d: otherwise
4 Mobile phone charge (cMonthly c7.69 (10%VAT included)
basic charge, dCall charge per min.) d0.12~0.17

5 Internet connection fee (telephone cnil, d6.41 (10% VAT included; e


line) (cInitial contract fee,d e0.00~0.69 differs by time)
Monthly basic charge, eConnection
fee per hour)
6 Internet connection fee (broad c51.26, d76.89, ADSL, Transfer
band)(cInitial contract fee,d enil rate:1.5~8Mbps
Monthly basic charge, eConnection
fee per hour)

3. Transportation costs

US$1= 15,800dong

US$ Remarks
1 Container transport (40 foot c900 Saigon Port->
container) (plant -> nearest port -> d3,300 cYokohama Port,d
cYokohama Port, dLos Angeles Los Angeles Port
Port)
2 Taxi fare (per km) 0.323

4. Public utilities cost

US$1=15,800 dong

US$ Remarks
1 Electricity rate for business use cnil For foreign
(cmonthly basic charge, dcharge per d0.05~0.07 manufacturers;
kWh) normal hour
(4:00~18:00);
differs by voltage
2 Electricity rate for general use cnil For foreigners,
(cmonthly basic charge, dcharge per d0.08~0.09 normal hour
kWh) (4:00~18:00); differs
by voltage
3 Water rate for business use (cmonthly cnil 10%VAT included;
basic charge, dcharge per cu. m) d0.22 sewage charge
included
4 Water rate for general use (cmonthly cnil 10%VAT included;
basic charge, dcharge per cu. m) d0.13 sewage charge
included
5 Gas rate for business use (cmonthly 0.45~0.54/kg LPG
basic charge, dcharge per cu. m)
6 Gas rate for general use (cmonthly 0.61~0.64/kg LPG
basic charge, dcharge per cu. m)

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5. Land and office space rental applied to FDI projects

Urban land
Unit: US$0.18-US$12/m²/year

Non-urban land
Unit:US$/m²/year

Type of commune Minimum rate Maximum rate


Commune with boundary 0.18 1.08
adjoining the inner areas of
HCMC and Hanoi

Land rental applicable to projects locating in IZs and EPZs in HCMC

The rent is subject to the agreement between investors and IZ infrastructure


development companies depending on location, facilities, and duration of rent. The
following is the typical cost prevailing in 2000 and is one of the examples only:

Unit: USS$/m²
Minimum rate Maximum rate
Land only 30~108 US$/40 years
Built-in-factory 2.0~2.2 US$/m²/month

Office space rental

International class office buildings costs US$ 16.50-US$33.0/m²/month, while local


standard office costs from US$2.00/m²/month in business area in Hanoi and Ho Chi Minh
City.

65
Due to the general nature of its contents, this Guide Book should not be regarded as legal
advice.
This Guide Book was prepared with the assistance of YKVN Law Firm ( www.ykvn-law.com)

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