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GUIDE BOOK

INVESTING AND DOING BUSINESS IN HO CHI MINH CITY VIETNAM

Investment and Trade Promotion Center

March 10, 2006

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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

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:

One or several Vietnamese enterprise(s) and one or several foreign investors (economic organizations or individuals);

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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;

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;

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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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.

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.

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: 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.

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).

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.

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

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.

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.

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:

The Prime Minister shall approve and the Ministry of Planning and Investment

(MPI) shall issue investment licenses for Group A projects.

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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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.

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.

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.

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.

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

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.

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).

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2.3. Licensing Process 2.3.1. Investment Licensing Procedures

INVESTMENT LICENSING PROCESS IN HO CHI MINH CITY

Supporting &

Co-coordinating

Group A projects

Provision of

Guidance & Support

Group B projects

in HCMC

EPZs, IZs or SHTP

Group B projects outside HCMC

EPZs, IZs & SHTP

- DPI - ITPC

DPI

Relevant Local

Departments

MPI and relevant Ministries

(if any)

INVESTORS

DPI

Total investment US$ 10 mil or less

HCMC PEOPLE’S COMMITTEE

INVESTMENT LICENCE

INVESTORS

HEPZA or Board of Management

of SHTP

MPI and relevant Ministries

(if any)

Total investment over US$ 10 mil

MPI

MPI

The Prime

Minister

MPI Total investment US$ 40 mil or less

HEPZA or Management

Board of SHTP

Total investment over US$ 40 mil

MPI

DPI

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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:

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

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

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investment license investment license Business Cooperation Contract

- Application for registration of investment license;

- Contract; - Documents verifying the legal

status and financial position of investors;

- Documents relating to technology transfer (if any);

- Economic contracts and agreements relating to the implementation of the project (if any).

- Application for investment license; - Contract; - Economic – technical explanation

(the feasibility study); - Documents verifying the legal status

and financial position of investors; - Documents relating to technology

transfer (if any); - Economic contracts and agreements

relating to the implementation of the project (if any).

Joint venture enterprise

- An application for registration of investment license

- Joint venture contract and charter; - Documents verifying the legal

status and financial position of investors;

- Documents relating to technology transfer (if any)

- Economic contracts and agreements relating to the implementation of the project (if any)

- Application for investment license; - Joint venture contract and charter; - Economic–technical explanation (the

feasibility study); - Documents verifying the legal status

and financial position of investors; - Documents relating to technology

transfer (if any); - Economic contracts and agreements

relating to the implementation of the project (if any).

100% foreign owned capital enterprise

- An application for registration of investment license;

- Charter; - Documents verifying the legal

status and financial position of investors;

- Documents relating to technology transfer (if any);

- Economic contracts and agreements relating to the implementation of the project (if any).

- Application for investment license; - Charter; - Economic – technical explanation; - Documents verifying the legal status

and financial position of investors; - Documents relating to technology

transfer (if any); - Economic contracts and agreements

relating to the 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

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.

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.

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).

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

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

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.

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:

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.

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.

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.

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

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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.

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.

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.

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• 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:

To rent offices and to lease or purchase the equipment and facilities necessary

for the operation of the branch;

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

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.

To open Vietnamese Dong and foreign currency accounts at banks which are

licensed to operate in Vietnam.

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

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

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.

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

Vietnam.

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(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:

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

To rent offices and to lease or purchase the equipment and facilities necessary for

the operation of the representative office.

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

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.

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.

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.

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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.

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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

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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 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.

• Legal status of the investor; • Objectives, scale and location for implementation of

the 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)

Foreign invested projects which have an invested capital of more than VND300 billion (eqv. US$18,750,000) and which are not included in the list of sectors of investment subject to conditions

• Written request for issuance of an investment certificate;

• Documents certifying the legal status of the investor; • Report on financial ability of the investor; • Eco-technical explanatory statement containing the

items in relation to objectives and location of the 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 included in the list of sectors of investment subject to condition regardless of the scale of invested capital

• Explanatory statement of conditions which the investment project must satisfy;

• Legal status of the investor; • Objectives, sale and location for implementation of the

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

For projects subject to registration for issuance of investment certificate: the provincial State administrative body for investment shall issue an investment

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

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:

Corporate Income Tax;

Import – Export Duties;

Value Added Tax;

Special Sales Tax (excise tax);

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.

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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

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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

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(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:

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;

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

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

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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.

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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

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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

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.

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.

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%.

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

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

High-quality infrastructure facilities.

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 …

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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

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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

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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.

54

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

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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 Address: 86 Le Thanh Ton St., Dist. 1 Tel: (84.8) 8291054-8291055-8231238 Fax: (84.8) 8296988 Website: www.hochiminhcity.gov.vn Department of Foreign Affairs Address: 6 Alexandre De Rhodes St., Dist.1 Tel: (84.8) 8224224-8223055 Fax: (84.8) 8297785-8251436 Department of Planning and Investment Address: 32 Le Thanh Ton St., Dist.1 Tel: (84.8) 8272192-8297834 Fax: (84.8) 8290817-8295008 Website: www.dpi.hochiminhcity.gov.vn Service of Trade Address: 59-61 Ly Tu Trong St., Dist.1 Tel: (84.8) 8292991-8239572 Fax: (84.8)8224536 Website: www.trade.hochiminhcity.gov.vn Tax Department of HCMC Address: 140 Nguyen Thi Minh Khai St., Dist.3 Tel: (84.8) 9304415-9300373 Fax: (84.8) 9304641 Website: www.hcmtax.hochiminhcity.gov.vn Customs Department Address: 02 Ham Nghi St., Dist.1 Tel: (84.8) 8211403-8290912 Fax: (84.8) 8290096 Department of Science and Technology Address: 244 Dien Bien Phu St., Dist.3 Tel: (84.8) 9325671-8250600 Fax: (84.8) 9325584-8250601 Website: www.doste.hochiminhcity.gov.vn Department of Natural Resource and Environment Address: 63 Ly Tu Trong St., Dist.1 Tel: (84.8) 8293653-8256667 Fax: (84.8) 8231806 Website: www.landhousing.hochiminhcity.gov.vn

MPI (Southern Representative Office) Address: 178 Nguyen Dinh Chieu Street, Dis. 3 Tel: (84.8) 9306671 – Fax: (84.8) 9305413 Service of Tourism Address: 140 Nguyen Dinh Chieu St., Dist.3 Tel: (84.8) 8242903 Fax: (84.8) 8293056 Website: www.tourism.hochiminhcity.gov.vn Service of Construction Address: 60 Truong Dinh St., Dist.3 Tel: (84.8) 9326214-9327765 Fax: (84.8) 9325056 Website:www.constructiondpt.hochiminhcity.gov.vn Service of Communication and Public Works Address: 63 Ly Tu Trong St., Dist.1 Tel: (84.8) 8290451-8290452 Fax: (84.8) 8290458 Service of Culture & Information Address: 164 Dong Khoi St., Dist.1 Tel: (84.8) 8224053-8265555 Fax: (84.8) 8223221 Website: www.svhtt.hochiminhcity.gov.vn Service of Finance & Pricing Address: 140-142 Nguyen Thi Minh Khai St., Dist.3 Tel: (84.8) 9303797 Fax: (84.8) 9303254 Website: www.tcvg.hochiminhcity.gov.vn Service of Health Address: 59 Nguyen Thi Minh Khai St., Dist.1 Tel: (84.8) 9309912-9309431 Fax: (84.8) 9309088 Website: www.medinet.hochiminhcity.gov.vn Department of Posts and Telecommunications Address: 59-61 Ly Tu Trong, Dist.1 Tel: (84.8) 8224437 Fax: (84.8) 8223989 www.ict-hcm.gov.vn People’s Court of HCMC Address: 131 Nam Ky Khoi Nghia St., Dist.1 Tel: (84.8) 8292447 Fax: (84.8) 8297758

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Service of Labor, War Invalids & Social Affairs Address: 159 Pasteur St., Dist.3 Tel: (84.8) 8291302 Fax: (84.8) 8294032 Service of Agriculture and Rural Development Address: 176 Hai Ba Trung St., Dist.3 Tel: (84.8) 8297652 Fax: (84.8) 8294764 Service of Industry Address: 163 Hai Ba Trung St., Dist.3 Tel: (84.8) 8296322-8298018 Fax: (84.8) 8221778 Service of Justice Address: 143 Pasteur St., Dist.3 Tel: (84.8) 8297052-8243156 Fax: (84.8) 8243155

Ho Chi Minh City EPZs & IZs Authority (HEPZA) Address: 35 Nguyen Binh Khiem, Dist.1 Tel: (84.8) 8290405 Fax: (84.8) 8294271 Ho Chi Minh City High-Tech Park Address: 86 Le Thanh Ton, Dist.1 Tel: (84.8) 8275075-8275359 Fax: (84.8) 8275075-8275641 Email: xtdthitechpark@hcm.vnn.vn or hcmhitechpark@hcm.vnn.vn Board of Management of Saigon South Address: 59-61 Ly Tu Trong, Dist.1 Tel: (84.8) 8238379 Fax: (84.8) 8238379 Investment and Trade Promotion Center (ITPC) Address: 51 Dinh Tien Hoang Str., Dist. 1 Tel: (84.8) 910 1302 Fax: (84.8) 824 2391

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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 Vietnam Address: New World Hotel, 76 Le Lai, Dist.1 Tel: (84.8) 8243563-8243588 Fax: (84.8) 8243572 British Business Group Address: 25 Le Duan, Dist.1 Tel/Fax: (84.8) 8225172 French Chamber of Commerce in Vietnam Address: Saigon Trade C.37 Ton Duc Thang,

Dist.1 Tel: (84.8) 9100308 Fax: (84.8) 9100309 German Business Association Address: 257 Hoang Van Thu, Ward 2, Tan Binh

Dist. Tel:(84.8) 8295215 (ext 115) Fax: (84.8) 8244550 Website: www.gba-vietnam.org Indian Business Chamber in Vietnam Address: 2A-4A Ton Duc Thang, 2 FL, Dist.1

Construction Enterprises Association of Ho Chi Minh City Address: 253 Hai Ba Trung, Dist.3 Tel: (84.8) 8294541 Fax: (84.8) 8294541 Handicraft and Wood Processing Association Address: 177 Ly Chinh Thang, Dist.3 Tel: (84.8) 8468854 Fax: (84.8) 8468834 Association of Textile-Garment-Embroidery & Knitting in Ho Chi Minh City Address: 73 Bau Cat 3, Ward 12, Tan Binh Tel: (84.8) 8493978 Fax: (84.8) 8428301 Shoes & Leather Association of Ho Chi Minh City Address: 18D Ngo Quyen, Dist.5 Tel: (84.8) 8592699 Fax:(84.8) 8592699

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Tel: (84.8) 8238132 Fax: (84.8) 8238530 Italian Business Association Address: 203 Dong Khoi, Dist.1 Tel: (84.8) 8226430 Fax: (84.8) 8226431 Australian Business Group of Vietnam Address: New World Hotel, 76 Le Lai, Dist.1 Tel: (84.8) 8243745 Fax: (84.8) 8243751 Canada-Vietnam Business Association Address: New World Hotel, 76 Le Lai, Dist.1 Tel: (84.8) 8243754 Fax: (84.8) 8243754 Danish Consulate General Address: 18 FL, Room 1, 115 Nguyen Hue, Dist.1 Tel: (84.8) 8219375 Fax: (84.8) 8219371 Hong Kong Business Association Address: New World Hotel, #322, 76 Le Lai,

Dist.1 Tel: (84.8) 8243757 Fax: (84.8) 8243758 Indonesia Business Association Address: 18 Phung Khac Khoan, Dist.1 Tel: (84.8) 8223799 Fax: (84.8) 8299493 Japan Business Association Address: Sun Wah Tower, 115 Nguyen Hue, Dist.1 Tel: (84.8) 8219369 Fax: (84.8) 8219370 Dutch Business Association in Vietnam Address: C/Consulate General of Netherlands,

Saigon Tower, 9th FL, 29 Le Duan, Dist.1 Tel: (84.8) 8236278 Fax: (84.8) 8236279 Swiss Business Association Address: C/o HCMC University of Technology

Building A4, 3/F, 286 Ly Thuong Kiet, Dist.1

Tel: (84.8) 8650880 Fax: (84.8) 8650881 Website: www.swissvietnam.com The Council of Taiwanese Chamber of Commerce in Vietnam

Ho Chi Minh City Business Associations Address: 51 Ben Chuong Duong, Dist.1 Tel: (84.8) 8293389 Fax: (84.8) 8215448 Email: uaic@smelink.netnam.vn Website: www.uaic.hcmcity.com Electronics and Information Technologies Association Address: 118 An Duong Vuong, Ward 9, Dist.5 Tel: (84.8) 8340985 Fax: (84.8) 8325756 Email: phu10@hcm.vnn.vn Food and Foodstuff Association Address: 9 Quang Trung, Go Vap Dist. Tel: (84.8) 9966797 Fax: (848) 8940060 Email: ffahcmc@hcm.vnn.vn Website: www.ffa.hcmcity.com Rubber-Plastics Association of Ho Chi Minh City Address: 177 Hai Ba Trung, Ward 6, Dist.3 Tel: (84.8) 8294139 Fax: (84.8) 8298599 Email: hoicaosunhua@hcm.fpt.vn Website: www.vnplas.com Chemical and Cosmetics Association Address: 51 Ben Chuong Duong, Dist.1 Tel: (84.8) 8218093 Fax: (84.8) 8218093 Electric Wire and Cable Association Address: 70-72 Nam Ky Khoi Nghia, Dist.1 Tel: (84.8) 8299443 Fax: (84.8) 8299437 Young Business People Association of Ho Chi Minh City Address: 4 Alexandre de Rhodes, Dist.1 Tel: (84.8) 8273137 Fax: (84.8) 8273138 Email: hcm-yba@hcm.vnn.vn Website: www.ybahcm.com Mechanical and Electrical Association Address: 35 Le Loi, Dist.1 Tel: (84.8) 8222195 Fax: (84.8) 8290168

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Address: 9th FL, 8 Nguyen Hue, Dist.1 Tel: (84.8) 8297917 Fax: (84.8) 8298057 European Chamber of Commerce in Vietnam Address: 257 Hoang Van Thu, Ward 2, Tan Binh

Dist. Tel:(84.8) 8455528 Fax: (84.8)8455527 Korean Business Association Address: C/Kotra-Diamond Plaza, #10, 34 Le Duan, Dist.1 Tel: (84.8) 8223944 Fax: (84.8) 8223941 Spain Economic & Commercial Section Address: 25 Phung Khac Khoan, Dist.1 Tel:(84.8) 8250173 Fax:(84.8) 8250174 Japan External Trade Organization Address: Unit 1403, 14th FL, Sun Wah Tower, 115

Nguyen Hue St., Dist Tel: (84.8) 8219363 Fax: (84.8) 8219362 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

Fruits Association Address: 58 Nguyen Binh Khiem, Dist.1 Tel: (84.8) 8296098 Fax: (84.8) 8296098 Business Women Club Address: 51 Ben Chuong Duong, Dist.1 Tel: (84.8) 8293390 Fax: (84.8) 8215448 Ho Chi Minh City Computer Association Address: 79 Truong Dinh, Dist.1 Tel: (84.8)8222876 Fax: (84.8) 8250053 Email: hca@hcm.vnn.vn Website: www.hcahochiminhcity.gov.vn Oversea Vietnamese Business Club Address: 242 Tran Binh Trong, Dist.5 Tel: (84.8) 8305785 Fax: (84.8) 8305787 Email: ovclub@hcm.vnn.vn Website: www.ov-club.com

5.2.3. Consulates in Ho Chi Minh City AUSTRALIA MEXICO

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Address: 5B Ton Duc Thang, Dist.1 Tel: (84.8) 8296035 Fax: (84.8) 8296031 BRAZIL Address: 48 Truong Son, Tan Binh Dist. Tel: (84.8) 8486090 Fax: (84.8) 8487666 BELGIUM Address: 115 Nguyen Hue, Dist.1 Tel: (84.8) 8219304 Fax: (84.8) 8219231 CAMBODIA Address: 41 Phung Khac Khoan, Dist.1 Tel: (84.8) 8292751 Fax: (84.8) 8292744 CANADA Address: 335 Dong Khoi, Dist.1 Tel: (84.8) 8294528 Fax: (84.8) 8294528 CHINA Address: 39 Nguyen Thi Minh Khai, Dist.1 Tel: (84.8) 8292457 Fax: (84.8) 8295009 CUBA Address: 45 Phung Khac Khoan, Dist.1 Tel: (84.8) 8297350 Fax: (84.8) 8295293 CZECH REPUBLIC Address: 28 Mac Dinh Chi, Dist.1 Tel: (84.8) 8290585 Fax: (84.8) 8226043 FRANCE Address: 27 Nguyen Thi Minh Khai, Dist.1 Tel: (84.8) 8297231 Fax: (84.8) 8291675 GERMANY Address: 126 Nguyen Dinh Chieu, Dist.3 Tel: (84.8) 8291967 Fax: (84.8) 8231919 HUNGARIA Address: 22 Phung Khac Khoan, Dist.1

Address: 215A-B Hoang Van Thu, Phu Nhuan Dist. Tel: (84.8) 8445520 Fax: (84.8) 8423960 MALAYSIA Address: 2 Ngo Duc Ke, Dist.1 Tel: (84.8) 8299023 Fax: (84.8) 8299027 NORWAY Address: 21-23 Nguyen Thi Minh Khai, Dist.1 Tel: (84.8) 8296869 Fax: (84.8) 8296866 NETHERLANDS Address: 29 Le Duan, Dist.1 Tel: (84.8) 8235932 Fax: (84.8) 8226905 NEW ZEALAND Address: 41 Nguyen Thi Minh Khai, Dist.1 Tel: (84.8) 8226907 Fax: (84.8) 8226905 PANAMA Address: 7A Le Thanh Ton, Dist.1 Tel: (84.8) 8250334 Fax: (84.8) 8236447 POLAND Address: 2 Tran Cao Van, Dist.1 Tel: (84.8) 8290114 Fax: (84.8) 8290114 RUSSIA Address: 40 Ba Huyen Thanh Quan, Dist.3 Tel: (84.8) 8292936 Fax: (84.8) 9303937 SINGAPORE Address: 65 Le Loi, Dist.1 Tel: (84.8) 8225173 Fax: (84.8)8251600 SWISSLAND Address: 2 Ngoc Duc Ke, Dist.1 Tel: (84.8) 8258780 Fax: (84.8) 8258760 SWEDEN Address: 8A/11 D1 Thai Van Lung, Dist.1

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Tel: (84.8) 8290130 Fax: (84.8) 8292410 INDIA Address: 49 Tran Quoc Thao, Dist.3 Tel: (84.8) 9304114 Fax:(84.8) 9307495 INDONESIA Address: 18 Phung Khac Khoan, Dist.1 Tel: (84.8) 8223799 Fax: (84.8) 8294938 JAPAN Address: 13-17 Nguyen Hue, Dist.1 Tel: (84.8) 8291341 Fax: (84.8) 8225316 KOREA Address: 65 Le Loi, Dist.1 Tel: (84.8) 8225757 Fax: (84.8) 8225750 LAOS Address: 93 Pasteur, Dist.1 Tel: (84.8) 8297667 Fax: (84.8) 8299272

Tel: (84.8) 8236800 Fax: (84.8) 8236817 THAILAND Address: 77 Tran Quoc Thao, Dist.3 Tel: (84.8) 8222637 Fax: (84.8) 9326002 UNITED KINGDOM Address: 25 Le Duan, Dist.1 Tel: (84.8) 8298433 Fax: (84.8) 8221971 USA Address: 4 Le Duan, Dist.1 Tel: (84.8) 8229433 Fax: (84.8) 8229434 DENMARK Address: 20 Phung Khac Khoan, Dist.1 Tel: (84.8) 8228289 ROMANIA Address: 33/6 Dang Van Ngu, Phu Nhuan Dist. Tel: (84.8) 9911204 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 BRANCH Address: 12th Floor, Saigon Tower, 29 Le Duan Blv, Dist.1 Tel: (84.8) 8295585 Fax: (84.8) 8295618 DEACONS VIETNAM Address: 8th Floor, Saigon Center, 65 Le Loi Str., Dist.1 Tel: (84.8) 8294882-3 Fax: (84.8) 8294880 ERNST & YOUNG Address: Saigon Riverside Office Center 2A-4A Ton Duc Thang Str., Dist. 1 Tel: (84.8) 8245252

LUCY WAYNE & ASSOCIATES Address: 8th Floor, Central Plaza-17 Le Duan Blv, Dist. 1 Tel: (84.8) 8244395 Fax: (84.8) 8244396 NETVIET CO.LTD Address: #302 Saigon House, 386 Hoang Dieu Str, Ward 6, Dist.4 Tel: (84.8) 8265571 Fax: (84.8) 8265572 PHILLIPS FOX Address: #607 Saigon Tower-29 Le Duan Blv, Dist.1 Tel: (84.8) 8221717 Fax: (84.8) 8221818

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Fax: (84.8) 8245250 FRESHFIELDS BRUCKHAUS DERINGER Address: #1108, Saigon Tower, 29 Le Duan Blv, Dist.1 Tel: (84.8) 8226680 Fax: (84.8) 8226690 FREEHILLS Address: Unit2 10/F Saigon Center, 65 Le Loi Str., Dist.1 Tel: (84.8) 8242733 Fax: (84.8) 8242736 INVESTCONSULT GROUP Address: 15 Nguyen Thi Dieu Str., Ward 6, Dist.3 Tel: (84.8) 9304868 Fax: (84.8) 9304872 JOHNSON STOKES & MASTER (“JSM”) Address: 6/F Saigon Tower, 29 Le Duan Blv, Dist.1 Tel: (84.8) 8228860 Fax: (84.8) 8228864 KELVIN CHIA PARTNERSHIP Address: R#308 Saigon Tower, 29 Le Duan, Dist.1 Tel: (84.8) 8224986 Fax: (84.8) 8225441 KPMG Address: 10/F Sun Wah Tower, 115 Nguyen Hue Blv, Dist.1 Tel: (84.8) 8219266 Fax:(84.8) 8219268

PRICEWATERHOUSECOOPERS Address: 4th Floor, Saigon Tower 29 Le Duan, Dist.1 Tel: (84.8) 8230796 Fax: (84.8) 8251947 RUSSIN & VECCHI Address: 15/FR Osic Bldg, 8 Nguyen Hue Str., Dist.1 Tel: (84.8) 8243026 Fax: (84.8) 8243113 VISION & ASSOCIATES Address: 4/F Han nam Bldg, 65 Nguyen Du, Ben Nghe Ward, Dist.1 Tel: (84.8) 8236495 Fax: (84.8) 8236496 WHITE & CASE LLP Address: Suite 405-4th Floor, The Metropolitan Building, 235 Dong Khoi Str., Dist.1 Tel: (84.8) 8210888 Fax: (84.8) 8236902 YKVN LAWYERS Address: Metropolitan Suite 402, 235 Dong Khoi St., Dist.1 Tel: (84.8) 8236880-Ext.0417 Fax: (84.8) 8236975 Email: ykvnhcmc@fmail.vnn.vn Website: www.ykvn-law.com

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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)

Skilled workers Unskilled workers

102~138 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

(fixed bonuses+variable bonuses) Minimum bonus is

basic wage * 1 month 6 Social security burden ratio

( Employer, Employee) 17% (social

insurance:15%, health insurance:2%), 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

or from 09:00 P.M to 5 A.M 130%

2. Telecom expenses

US$1=15,800dong

US$ Remarks 1 Telephone installation fee 70.48 (10% VAT included) 2 Telephone charge ( Monthly basic

charge, Call charge per min.) 0.6

0.003~0.008 Up to 200 min. a

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.) 2.70, 2.10 : Mon~Sat, 7:00~23:00

64

: otherwise 4 Mobile phone charge ( Monthly

basic charge, Call charge per min.)7.69

0.12~0.17

(10%VAT included)

5 Internet connection fee (telephone line) ( Initial contract fee,

Monthly basic charge, Connection fee per hour)

nil, 6.41 0.00~0.69

(10% VAT included; differs by time)

6 Internet connection fee (broad band)( Initial contract fee,

Monthly basic charge, Connection fee per hour)

51.26, 76.89, nil

ADSL, Transfer rate:1.5~8Mbps

3. Transportation costs

US$1= 15,800dong

US$ Remarks 1 Container transport (40 foot

container) (plant -> nearest port -> Yokohama Port, Los Angeles

Port)

900 3,300

Saigon Port-> Yokohama Port, Los Angeles 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

( monthly basic charge, charge per kWh)

nil 0.05~0.07

For foreign manufacturers;

normal hour (4:00~18:00);

differs by voltage 2 Electricity rate for general use

( monthly basic charge, charge per kWh)

nil 0.08~0.09

For foreigners, normal hour

(4:00~18:00); differs by voltage

3 Water rate for business use ( monthly basic charge, charge per cu. m)

nil 0.22

10%VAT included; sewage charge

included 4 Water rate for general use ( monthly

basic charge, charge per cu. m) nil

0.13 10%VAT included;

sewage charge included

5 Gas rate for business use ( monthly basic charge, charge per cu. m)

0.45~0.54/kg LPG

6 Gas rate for general use ( monthly basic charge, charge per cu. m)

0.61~0.64/kg LPG

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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 adjoining the inner areas of HCMC and Hanoi

0.18 1.08

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 Built-in-factory

30~108 US$/40 years 2.0~2.2 US$/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.

66

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)