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State Committee of SOCIALIST REPUBLIC Of VIETNAM
Co-operation and Independence-freedom-Happiness
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Ref: 215 UB/LXT
Hanoi, 8 february 1995
1. Board of Management of the enterprise:
1.1. The board of management (BoM) is the ruling body of the enterprise. The parties shall appoint their respective nominees to be members of the BoM in proportion with their respective capital contribution but the Vietnamese party shall
appoint at least 2 members of the BoM. In a case where a new joint venture enterprise (JVE) is established by an existing JVE and one or more foreign parties, the existing JVE shall appoint at least 2 members of the BoM, one of whom must be a Viet
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The BoM, representing the parties to the JVE as the owners of the JVE, is responsible for the management of all assets and operation of the JVE. Board members of each party are plenipotentiary representatives of the parties and are resp onsible representative of the parties and are responsible to the BoM and their respective parties.
1.2. The BoM shall meet at least once a year. Board meetings are convened by the chairman of the BoM or by request of 2/3 of the Board members. The general director or first deputy general director has the right to request chairman of the BoM to convene BoM meetings. Board meeting shall be deem duly convened if at least 2/3 Board members representing the parties are present. A Board member may appoint his proxy to be present at Board meeting(s) and to vote on his behalf to the extent of such authorization. Any appointment must be executed in writing and signed with the registered signature of the Board member mak ing such appointment and matters for the purpose of which the appointment is made shall in any event not extend beyond the powers and authority of that Board members.
1.3. a) The BoM shall conduct its managerial functions through its resolutions and shall direct and supervise the implementation of such resolutions. b) The BoM has authority to decide most matters of the JVE. Matters listed below shall necessarily be subject to unanimous resolutions of Board members: + long-term and annual production/business plans of the JVE; loans and borrowings; + any amendment of or addition to the charter of the JVE; + appointment or dismiss of chairmen of the BoM, general director, first deputy general director and/or chief accountant. c) Any BoM resolutions relating to other matters shall not be valid unless agreed upon by 2/3 of the Board members present at the meeting. d) If there is disagreement among Board members in respect of significant matters requiring unanimous resolution, which may negatively affect the JVE's operation, then the BoM may at its option: + refer the matter for settlement either: - to a reconciliation council, which shall be established by mutual agreement of all the parties to the JVE and the members of which shall be representatives of the parties thereto in equal proportion and a representative from SCCI in th e capacity of chairman of such reconciliation council; any award or decision of the reconciliation council shall be passed by majority vote and, once passed, be final and binding upon the parties; - to SCCI as an arbitrator, in which case any award or decision made by the SCCI shall be final; or + decide to dissolve the JVE.
1.4. The Chairman of the BoM shall be responsible for the following: a) convening and chairing Board meetings; b) being a key person in supervising and directing the implementation of the BoM resolutions. The Board chairman shall not give his instructions directly to the general director and deputy general director(s) of the JVE.
1.5. The BoM shall, six months prior to expiration of its term, meet to summarize all activities carried out by it during the term and at such meeting parties shall appoint their nominees to be their members of a new BoM and the han d-over shall take place between the existing BoM and the new BoM.
1.6. In a case where the term of the JVE is terminated or the JVE is dissolved prior to expiration of the term, the BoM shall set up a liquidation board and define the content and duration of its activity. After the liquidation is completed the BoM shall consider the report made by the liquidation board on the result of the liquidation and resolve any consequential matters in accordance with law.
1.7. The Board members shall not receive salary but they are entitled to remuneration determined by the BoM for their activities relation to the BoM. Such amounts shall be included in management fees in accordance with Clause 2 of Art icle 74 of Decree 18-CP regulating the implementation of the Law on foreign Investment in Vietnam.
2. Director of the JVE 2.1. The general director and first deputy general director, who are appointed and dismissed by unanimous vote of the BoM, shall be responsible for the management and operation of daily activities of the JVE. If there is more than deputy general director, the BoM shall appoint one of them to be the first deputy general director. If there is only one deputy general director, this person shall function in the same way as the first deputy gen eral director. Either of the general director and first deputy general director must be a nominee of the Vietnamese party and also must be a Vietnamese citizen resident in Vietnam. functions and duties of general director and deputy general directors shall be determined by the BoM. The general director and first deputy general director shall not concurrently be involved in any other activities in any other enterprises, including enterprises of the parties to their JVE.
2.2. In the case where the chairman of the BoM acts concurrently as general director of the JVE, a distinction must be made in the management by him of the JVE between then two functions and any document of the JVE shall, depending on its nature and contents, be signed and sealed by him in the relevant capacity, not stating both his titles in any particular document.
2.3. The general director and deputy general director are responsible to the BoM for the operation of the JVE. The general director shall have the final decision in managing the daily activities of the JVE. The general director shall consult with the first deputy general director before making his decision on matters which may affect dir ectly the implementation of BoM resolutions and other essential matters listed below: + organizational apparatus, personnel, salary, wages and bonus system of the JVE; + appointment, dismissal of key personnel of the JVE; + periodical and annual financial reports of the JVE; + enter into any economic contract. In the case of any disagreement between the general director and first deputy general director in relation to the above matters, the opinion of the general director shall be complied with but the first deputy general director has the ri ght to reserve his opinion and shall either refer the same for consideration to the next BoM meeting or make a proposal to the Board chairman requesting him to convene an ad-hoc BoM meeting for settlement.
2.4. The general director and first deputy general director are responsible for the implementation of BoM resolutions provided that such resolutions are not contrary to the law and the joint venture contract and charter. If any BoM res olution is on the opinion of the general director and first deputy general director not appropriate to the circumstances, they have the right to request the Board chairman to convene an ad-hoc BoM meeting for considering and resolv in The general director and first deputy general director have the right to refuse to comply with any direction or instruction of a personal nature made by the Board chairman or any Board member or any illegal resolution made by the BoM. 2.5. The general director and first deputy general director shall sign labor contracts with the BoM chairman in accordance with currently applicable labor laws.
3. Management company 3.1. In the case of necessity, SCCI shall, depending on the area of business, scope of project and effectiveness of management services, permit an enterprise with foreign invested capital to hire a management company to manage the ent erprise. A decision to hire such a management company shall require approval of the BoM.
3.2. The management contract to be entered into with the management company shall cover the operation, management and exploitation of the project in line with business objectives to be agreed upon by the parties to the contract. The man agement contract shall be subject to the approval of SCCI. The management fee, which shall include marketing and billboard costs, shall be agreed upon by the parties to the management contract, based on the nature and effectiveness of management activity to be carried out.
3.3. foreign management companies shall register their business in the area(s) where they are hired to conduct management services and, as regards services to be provided by them in Vietnam, they shall have to register their act ivities at the people's committee of the province/city directly managed by the central government, where the head office of the enterprise with foreign invested capital is located. Management companies shall during their operation in Vietna m
3.4. The execution and implementation of the management contract shall in no event change or negatively affect the business objectives of project and interests of the State of Vietnam as stipulated in the investment license issued to the pro ject. Any provisions of the management contract stipulating the obligations and interests of each party thereto shall not be inconsistent with or contrary to stipulations of the investment license and other legal documents re
3.5. The management contract shall be submitted to SCCI for approval. Within 15 days following receipt of the file, SCCI shall notify the applicant of its decision in relation thereto.
3.6. The management company shall act by virtue of, under the seal and shall use bank accounts of, the enterprise with invested capital. It shall undertake such work and receive such remuneration as is stipulated in the management co ntract and shall be responsible to the enterprise and the law for the performance by it of its rights and obligations stipulated in the management contract. All tax obligations of the management company to the State of Vietnam shall be covered by the enterprise with foreign invested capital hiring it.
3.8. An enterprise with foreign invested capital shall in any event be responsible under the laws of Vietnam for the whole of its operation, including the operation of the management company as provided for in the management contract and shall be responsible directly for any activities which are conducted beyond framework of the management contract.
3.9. The board of directors of the enterprise shall be responsible for supervising the operation of the management company and assisting in such operations and shall make proposals to the BoM for dealing with any breaches by the man agement company of any stipulations in the management contract.
3.10. Any dispute arising between the management company and the enterprise with foreign invested capital shall be first settled by negotiations and reconciliation measures, failing which it shall be referred to relevant jurisdiction bod y of Vietnam for settlement in accordance with the laws of Vietnam.
Part II fiNANCIAL MATTERS
4. Contribution of capital 4.1. The contribution by the parties to a JVE or an business co-operation contract of their capital must be in compliance with time limits and procedures stipulated in the contract and charter entered into by them. Value of equipment, materials, plant and technology to be contributed as capital contribution shall be agreed upon by the parties. If the capital contribution is made in the form of equipment and machinery, the procedure for valuation and appr oval shall have to be carried out. After such contribution is completed and certified by the BoM, the enterprise shall, no later than 30 days following such certification, have to submit to SCCI a balance sheet in respect t
4.2. Any proceeds from leasing infrastructure works, sale of membership cards and the like shall be deemed to be the enterprise's revenue and shall not be used by any party to the enterprise as its capital contribution.
4.3. Any increase in capital of the enterprise with foreign invested capital shall be conditional upon and subject to the following: a) Conditions of the capital increase. The increase of capital may be permitted only if it is made in order to: + expand the business scope or readjust or supplement operational objectives in order to bring them into line with investment targets set by the State of Vietnam; + maintain production and business activities in case of natural calamities or other difficulties; + adapt to any changes in the market. The increase of capital may not permitted if it is intended to: + obtain more favorable quota(s) for duty-free import of such machinery, equipment, materials, means of transport etc., which are not necessarily required for fundamental construction for the formation of the enterprise; + reach operation objectives which are not relevant compared with the investment targets set by the State of Vietnam; + expand the production scope without satisfying conditions required in respect of land site area, materials, consumer market, and environmental protection. b) Capital increase application An application file for increase of capital shall include: + name, address, area of activity of the enterprise, any license issued to it; + report summarizing the implementation of the investment project to which commitment has been made; + report summarizing the situation with regard to the investment capital (or, in the case of a business co-operation contract, business capital) as stipulated in the license issued to it; + reasons for the increase of capital (whether working or fixed capital); amount of the increase; evidence of the possibilities for making such increase, and the conditions for so doing; + any change or readjustment (if any) of legal capital and capital contribution percentage; + list of machinery and equipment to be imported the cost of which is to be covered by such increase; + opinion of the BoM (of a JVE) or parties (to a business co-operation contract) or general director (of a 100% foreign owned enterprise) on such increase. In principle, SCCI shall consider any increase of capital only in the case the relevant project investor has already implemented the investment capital of the enterprise as stipulated in the investment license or business license and in the capital readjustment documentation.
5. Increase in a Vietnamese party's capital contribution to the legal capital of the JVE; purchase of capital of 100% foreign owned enterprise 5.1. Parties to joint venture enterprises for development of economically significant projects shall in the joint venture contract agree on gradual increase of the Vietnamese party's capital contribution percentage in the enterprise's leg al capital, together with a schedule for such increase, the rate of such increase, and the purchase price.
5.2. As regards 100% foreign owned projects for development of economically significant objects. SCCI shall provided guidelines for foreign project investors to state expressly in their investment licensing applications the right for a Vi etnamese party, subject to mutual agreement between them, to purchase part of the 100% foreign owned enterprise's capital, thus transforming the 100% foreign owned enterprise into a JVE. To that effect, the amount of capital to be trans fe SCCI shall determine which Vietnamese party shall purchase such transfer.
6. Re-investment 6.1. "Re-investment" means the funding of any increase in legal capital or invested capital for a project in Vietnam or the investment in any other project in Vietnam by means of mobilizing any profits received from investment activities in Vie tnam.
6.2. foreign organizations and individuals who re-invest their share of profits shall be repaid the amount of profit tax imposed on their re-invested share of profits. This is conditional on the following: + The re-investment is made in such fields where foreign investment is encouraged by the State of Vietnam; + The re-invested capital is used for at least 3 years; + The legal capital stipulated in the investment license has been contributed in full; + The amount of profit tax imposed on the re-invested profits shall be repaid.
6.3. Any project investor wishing to re-invest its profits shall submit to SCCI an application file comprising the followings. a) Objectives of the re-investment: to implement a new project or to expand the business scope of the existing project, and the amount of profits to be re-invested. If the re-investment is made for development of a new project, such project shall have been licensed by SCCI. The re-investment of profits for the purpose of raising the invested or legal capital of an existing joint venture ent erprise shall be subject to a unanimous board resolution, and an explanatory report of director shall be required in the case of 100% foreign owned enterprises. b) Certificate (or any receipt or copy thereof certified by notary public) issued by the relevant taxation office clearly stating the tax amount paid.
6.4. Within 15 days following receipt of a duly established application file, SCCI shall notify the applicant of its decision. After the re-investment has been completed, SCCI shall issue a decision certifying that all conditions requ ired are met for the tax amount to be repaid to the project investor.
6.5. The amount of profit tax imposed on the amount of profits which has already been re-invested shall be repaid by the taxation office upon production by the foreign party of the above-mentioned certificate issued by SCCI.
6.6. Any abuse of re-investment made with the purpose of illegal non-payment of tax shall be handled in accordance with law. If the project investor, for any reason, is not able to ensure that the re-investment is made for at least 3 years or if, on investigation, it is found that the amount of profits claimed to be re-invested has not been re-invested actually or in full, then the project investor shall be required to pay back the relevant part of the profit tax repai d any interest thereon.
7. Transfer of assets 7.1. Non-compensatory transfer of a foreign party's assets to a Vietnamese party shall be on a voluntary basis and in such a case provision shall be made in the contract of the enterprise and the investment license. The transferred assets mu st on completion of the project's operation be in normal working condition. In a case where the foreign party has undertaken to transfer, after completing the enterprise's operation and on non-compensatory basis, its assets to the Vietnamese party, SCCI shall, depending on the nature of the project and s chedule for such transfer, consider the granting to it of favorable financial conditions in accordance with the currently applicable laws. Notwithstanding the enterprise is dissolved prior to termination of its operation term, the f
8. Tax and duties 8.1. Capital transfer tax Any transfer of capital or agreement therefor shall be subject to approval SCCI. The transferring party shall submit to SCCI an application together with the transfer agreement, the report on the implementation of the project as of the da te of application, the relevant documentation on juridical status and financial standing of the transferring party, and price of such transfer. If there is any excess of the transfer price over the initial value, the transferring party shall have to pay transfer tax at a rate of 25% of the excess, and any failure to do so shall be handled in accordance with the currently applicable law.
8.2. Import duty Equipment, machinery, spare parts, materials and production/business tools (including means of transport), which are imported into Vietnam as fundamental investment for the formation of the enterprise or for setting up its fixed assets in order to implement the business co-operation contract, shall be exempt from import duty accordance with Article 76 of Decree 18-CP dated 16 April 1993. Such exemption shall also be applied to such equipment and machinery (except means of transport) which are imported for the purpose of increasing the enterprise's fixed assets, thus exp anding its production scope and the capability of the enterprise. The duty-free import of cars shall be in accordance with the provisions of Annex 7 attached hereto.
Part III fORMATION, APPRAISAL, AND IMPLEMENTATION Of INVESTMENT PROJECTS 9. Project formation and appraisal 9.1. The list of documents to be included in each project file as stipulated in Articles 9, 20 and 46 of Decree 18-CP dated 16 April 1993 shall be detailed as follows: a) The Vietnamese party shall submit together with the project file the following: + Copy notarized by notary public of its Decision of Establishment; + Document certifying legal ownership of the assets to be contributed as capital contribution (approval by the relevant competent State body is required in the case of common use assets); + Document certifying legal use of land or evidencing the relevant municipal/provincial people's committee's permission to use land for the purpose of investment and co-operation with foreign partners. b) The foreign project investors being a company or companies, shall in addition submit: + Copy of its Decision of Incorporation or Activity Permit; + financial report for the two last years; + Power of Attorney given to its signatory(ies). c) The foreign project investors being individuals shall in addition submit: + Banker's certificate of the assets to be invested; + Copy passport. d) The joint venture contract and charter shall be initialed page-by-page by authorized representatives of the parties and with the seal at the last page. e) The application for land lease shall be set up in accordance with the guidance thereon of the General Department for Land Management. f) The project file shall be executed in 12 copies, of which one is the original. They are all required to be bound with thick cover for the purpose of long-term filing.
9.2. Project appraisal a) The Prime Minister shall, based on the proposal of the Chairman of SCCI, make decisions relating to projects of Group A. Before submission to the Prime Minister, the Chairman of SCCI shall consult with the State Planning Committee and relevant ministries and localities. In the case of necessity, he shall set up a consulting council to consider and appr aise the project concerned, which shall consist of authorized representatives of the State Planning Committee, the Ministry of finance, the Ministry of Trade, the Ministry of Science. Technology and Environment, the Ministry of Constru ct Within 5 days following receipt of the project file, SCCI shall forward it to the State Planning Committee, the Ministry of Trade, the Ministry of Science. Technology and Environment, the Ministry of Construction, ministries supervis ing scientific/technological branches, the General Department of Land Management and other relevant State bodies. Within 20 days following receipt of the project file sent by SCCI, the recipients shall send to SCCI their written opinion relating to matters which are within their authority. In the case of necessity, the Chairman of SCCI shall, within 30 days following the receipt of the project file, set up a consulting council before submission to the Prime Minister. Within 50 days following receipt of a duly established project file, the Chairman of SCCI shall submit an appraisal assessment to the Prime Minister and within 7 days following notification from the Prime Minister, the Chairman of SCCI sha ll give to the project investor a notice of the same. All the above-mentioned time limits shall not include time required for the project investor to amend and/or supplement the project file. b) The Chairman of SCCI shall, after consulting with the State Planning Committee, the Ministry of finance, the Ministry of Science, Technology and Environment, the Ministry of Trade and other relevant State bodies, issue decisions rel ating to projects of Group B. Within 5 days following receipt of the project file, SCCI shall forward it to the State Planning Committee, the Ministry of finance, the Ministry of Trade, the Ministry of Science. Technology and Environment, the Ministry of Con struction and other relevant State bodies. Within 20 days following days receipt of the project file sent by SCCI, the recipients shall send to SCCI their written opinion relating to matters which are within their authority. Within 45 days following receipt of a duly established project file, the Chairman of SCCI shall notify the project investor of its decision relating to the project. The above-mentioned 45 days period shall not include time required for the project investor to amend and/or supplement the project file.
10. Project implementation 10.1. According to Article 19 of the Law on foreign Investment in Vietnam, the investment license issued by SCCI shall be deemed valid as the certificate of registration of the activities of the enterprise. Enterprise with foreign invested capital and parties to business co-operation contracts shall be permitted to contract shall be permitted to carry out their business in the fields and with the objectives stipulated in the inv estment license issued to them. The registration of professional activity is required for special businesses, namely: lodging; stamp carving; typography and photocopying; hunting gun production and repair; hunting gun bullet producti on 10.2. No later than 90 days following the investment being issued, the parties to the joint venture shall have to convene a meeting, on which the following essential matters shall be decided: + approval of BoM members; appointment by the BoM of its Chairman and Vice Chairman, appointment of General Director, Deputy General Director and Chief Accountant; + approval of the rules for the operation of the BoM, definition of working relationships between the BoM and the Board of Directors, between the BoM Chairman and the General Director and first Deputy General Director; + details of the capital contribution schedule for each party and manner for the realization thereof; proposed method for registration of capital contributed by each of them; + determination of the production and business plan for the enterprise, based on which the Board of Directors shall set up the plan for importation of materials, equipment and manpower recruitment and start the execution of economic contrac ts, labor contracts, service contracts and the like. Minutes of the first BoM meeting shall be sent to SCCI, the People's Committee of the province/city where the enterprise locates its head office, and the project investors.
10.3. After their appointment, the General Director and Deputy General Directors shall promptly implement required administrative procedures, including: + to have the enterprise's stamp made and registered in accordance with the procedure stipulated by the Ministry of the Interior: + to register the enterprise's head office with the people's committee of the relevant province/city; + to open the enterprise's bank accounts, except if the enterprise desires to open a loan capital account at a bank abroad, it shall first have obtained approval from the State Bank of Vietnam for doing so; + to register the accounting principles adopted by the enterprise with the Ministry of finance; + to register the enterprise's manpower recruitment plan with the labor management agency of the relevant province/city or to authorize a labor service company to do the same at the enterprise's request; + to register the enterprise's right to direct importation and set up a list of materials and equipment to be imported as fundamental investment items required for the formation of the enterprise, to be submitted to the Ministry of Trade whi ch shall approve it and issue import quotas to the enterprise; + within 30 days following the date of issuance of the investment license, to publish in a central or local newspaper essential information of the enterprise stated in the investment license issued to it; + to make application for construction permits; + to fulfill relevant procedures for the opening in other locality of the enterprise's representative office(s) or branch(es), the latter being subject to approval from SCCI.
10.4. This post-license procedure shall be applied also to business co-operation contract projects and 100% foreign-owned projects.
10.5. All the procedures listed above shall have to be completed within 6 months following the date of issuance of the investment license to the enterprise, failing which the enterprise shall have to serve on SCCI a notice explaining the reasons therefor and applying for extension of such time limit.
11. Liquidation of the enterprise 11.1. Liquidation of an enterprise shall be applied only in the following events: a) the term of operation for the enterprise as stipulated in the investment license issued to it expires; b) the enterprise is dissolved prior to expiration its term as stipulated in the investment license issued to it for the following reasons: + An event of force mejeure occurs, which prevents the parties from performing their obligations under the contract entered into by them; + The parties fail to perform their respective obligations provided for in the contract, therefore the implementation of the contract becomes impossible; + The enterprise suffers such losses that it is unable to continue its operation (except where it is in insolvency situation); + Other circumstances stipulated in the enterprise's contract and charter; c) A decision of SCCI is issued requiring that the enterprise be dissolved prior to expiration of its operation term by reason of its non-compliance with the activity objectives stipulated in the investment license issued to it or any breach of the laws of Vietnam.
11.2. The Liquidation Board to be established in accordance with Article 39 of Decree 18-CP shall be a working apparatus which will assist the enterprise's BoM and shall fulfill instructions issued by the latter in the liquidation of the en terprise. The establishment and operation of the Liquidation Board shall be stipulated as follows: a) The Liquidation Board is the plenipotentiary representative of the enterprise in the process of liquidation. It shall carry out the liquidation of the enterprise in accordance with the stipulations of the decision establishing it and shall be responsible to the BoM for such activity; b) No later than 30 days following the date of issuance of the decision establishing it, the Liquidation Board shall convene its first meeting to pass the plan and methods for its activity and expenses requirements and submit the same for approval to the BoM. Within 30 days after such submission is made, the BoM shall make its written response to the Liquidation Board, failing which the submission shall be deemed to be approved; c) During the process of liquidation, the enterprise's BoM, General Director, Deputy General Directors and Chief Accountant shall be responsible for providing the Liquidation Board with any information, date, materials, documents and exp enses required for the liquidation and for signing any of the enterprise's papers relating to the liquidation. At the same time they shall supervise the operation of the Liquidation Board. All other activities of the enterprise shall ha d) Notwithstanding that the parties, on expiration of the time limit for the liquidation stipulated in Article 39 of Decree 18-CP dated 16 April 1993, have not completed the liquidation, the Liquidation shall nevertheless terminate its ope ration and the parties shall settle between themselves any matters remaining unresolved. Any dispute arising in connection therewith shall be settled in accordance with Article 100 of Decree 18-CP dated 16 April 1993; e) The Liquidation Board shall have to report on the results of the liquidation to the BoM before submission of the same to SCCI; If the BoM meeting for that purpose is not convened or the BoM does not agree to the report, the Liquidation Board shall nevertheless submit the report to SCCI and terminate its operation. SCCI shall make its final decision on the liq uidation, before which it may in the case of necessity request the relevant professional organization to examine the same, and withdraw the investment license issued to the enterprise and serve a notice thereof to all relevant State bodies a f) No later than 30 days following the completion of the liquidation, the Liquidation Board shall have to publish in the Official Gazette the announcement thereon and return thereon and return the enterprise's stamp to the State agency wher e the enterprise has obtained or registered its seal, and shall notify SCCI of the same.
11.3. The Liquidation Board of the joint venture company, which is established by SCCI in accordance with Article 40 of Decree 18-CP dated 16 April 1993, shall have powers and responsibilities other than those of the Liquidation Board set up in accordance with Article 39 of Decree 18-CP, namely: a) The Liquidation Board shall have sole discretion as against the enterprise's board of management in the implementation of liquidation procedures in accordance with the provisions of the decision establishing it and shall be resp onsible to SCCI and the law for so doing; b) No later than 30 days following the date on which the decision to establish it is issued, the Liquidation Board shall have its stamp made and registered for the purpose of carrying out the liquidation process and shall convene its f irst meeting to announce its activity plan and methods and expense requirements and submit the same to SCCI for approval, there upon it shall give a notice of the same to the BoM of the enterprise for implementation. Results of this first meet in c) During the process of liquidation, the Liquidation Board has the right to ask the enterprise's BoM, General Director, Deputy General Directors and the Chief Accountant to provide it with any information, date, materials, documents and exp enses required for the liquidation. If such requirements are for any reason not met, the Liquidation Board shall have the right to apply all necessary measures to ensure the implementation of the liquidation plan.
11.4. If the 100% foreign-owned enterprise or the business co-operation contract terminates its operation on or prior to expiration of it term stipulated in the investment license, the owner of such enterprise or parties to such contract sh all have to carry out the liquidation of its assets and clear any claims in accordance with Articles 53 and 18 of Decree 18-CP dated 16 April 1993. If such liquidation and clearance is carried out improperly or in breach of law, SCCI shall i
12. Opening of branches and representative offices 12.1. If an enterprise with foreign invested capital or party to a partnership wishes to open its branch or representative office for business purposes, the project investor shall together with the project file submit the fol lowing: + document explaining the requirement for the opening of such branch/representative office; + written opinion thereon of the People's Committee of province/city where such branch/representative office is proposed to be located. After issuance to it of the investment license, the project investor shall fulfill the procedure for leasing of a working place and registration of the premises of the branch/representative office with the authority of the province/ city where it opens its branch/representative office.
12.2. Any licensed enterprise wishing to open its branch or representative office in order to expand its business activities shall after obtaining the investment license submit to SCCI an application for setting up the bran ch/representative office, together with following: + document explaining the requirement for the opening of such branch/representative office; + written opinion thereon of the People's Committee of province/city where such branch/representative office is propose to be located. SCCI shall consider the application and make its decision. If approval from SCCI is obtained, the project investor shall fulfill the procedure for leasing of a working place and registration of the premises of the branch/representative of fice with the authority of the province/city where it opens its branch/representative office.
Chapter IV THE MANAGEMENT Of ENTERPRISE WITH fOREIGN INVESTED CAPITAL
13. The distribution of managerial responsibilities and authority among State agencies The Ministries, ministry-level bodies, the offices of the Government and People's Committee of provinces and cities directly managed by the central government (hereinafter in this Chapter referred to as the "Ministries and provincial au thorities") shall in conformity with their respective powers, authority and duties make guidance for and supervise the operation of enterprises with foreign invested capital.
13.1. The Ministries shall: + set up a master plan, issue policies and determine norms and standards; + participate in regular inspections and directly carry out specific inspections and inspections without warning in the framework of their respective functions and powers; If a Ministry plans to carry out such inspections, it shall first serve notice thereof on SCCI and the relevant provincial authorities for co-ordination; + at the proposal of SCCI, deliver their opinions regarding any amendment of or supplement to the investment license; + train managers and qualified workers for enterprise with foreign invested capital at their request; + assess, in co-ordination with SCCI, the socio-economic effect of foreign direct investment activities.
13.2. SCCI shall: + issue its circulars guiding the implementation by enterprises of investment licenses issued to them; + be a key body for co-ordination all Ministries and provincial authorities in carrying out regular inspections in respect of such enterprises and for setting any matter referred to them by the project investors; + request the Ministries and provincial authorities to issue guidelines relating to foreign direct investment; submit to the Prime Minister its proposals for ceasing implementation and making necessary amendment of any decisions of any branches and levels which are contrary to the regulatory documents of the State; + reconcile any disputes on the request of parties thereto; + depending on the nature and scope of the project concerned, consider and decide or in co-ordination with the relevant branches and local authorities consider and decide any adjustment or amendment of or supplement to the inve stment license issued to the project; + decide upon the dissolution of any enterprise prior to expiration of its term in connection with any breach of its investment license and the laws of Vietnam; + assess the socio-economic effect of foreign direct investment.
13.3. Provincial authorities shall conduct their state management in respect of all the enterprises with foreign invested capital located in their geographical area, namely: + to apply administrative procedures, such as: to issue land use right certificates and construction permits, direct the vacating of land sites for the projects, issue permits for the locating of the enterprises' premises, facilitate the registration of residence and travel and introduce Vietnamese workers to the enterprises; + introduce nominees to be BoM members and to hold other positions as well as other key personnel in joint venture enterprise; manage and supervise their functioning; + in accordance with their authority and powers, supervise the contribution by the parties of their respective share of capital and the implementation by them of stipulations of the investment licenses issued to them and other regulatory doc uments; settle any disputes arising among Vietnamese parties and other matters arising in the enterprise; + supervise the implementation of stipulations on financial obligations, the relationships between the manpower and salary and wages system, social order and security and environmental protection, fire fighting and prevention; + co-ordinate with the Ministries to carry out regular inspections and carry out specific inspections and inspection without warning in respect of enterprises but first serving notice thereof on SCCI and the relevant Ministries prior to such inspection being carried out; + assess the socio-economic effect of foreign direct investment in their geographical areas.
14. Inspecting the enterprises' operation Inspections may be regular, specific or without warning. + Regular inspections shall be carried out by SCCI with the participation of the relevant branch and local authorities in respect of the overall implementation of stipulations of the investment license. Such inspections shall be made not more tha n once a year and only in respect of such enterprises where such inspections are deemed necessary; + Specific inspections shall be carried out no more than once a year in the case of necessity by the relevant Ministries and provincial authorities; + Inspections without warning shall be made in a case where the enterprise is found to have admitted any breach of law or suffered any serious hindrance in its operation. The carrying out of such inspections shall be in strict accordance with the currently applicable law. The process-verbal of any inspection made shall have to be signed by a representative of the inspecting team and a representative of the enterprise inspected and the conclusion of the inspection shall be delivered the relevant State bodi es and SCCI. Any organization or individual making a decision to inspect or carrying out such inspection in breach of law or otherwise busing such inspection for causing any hindrance or impediment to the enterprise's operation shall be liable for any damage resulting for causing any hindrance or impediment to the enterprise's operation shall liable for any damage resulting from such illegal inspection and shall be dealt with in accordance with law.
Chapter V SOME GUIDELINES ON THE TARGET Of fOREIGN DIRECT INVESTMENT
1. Guideline for in manufacture and assembly of civil electric products (to be set out in Annex 1 to this Circular);
2. Guideline for investment in assembly and manufacture of cars, motorcycles and spare parts thereof (Annex 2);
3. Guideline for investment in the areas of hotel development, serviced apartments and office space for rent; restaurant/bar business (Annex 3);
4. Guideline for investment in the areas of garment and foot-wear industry (Annex 4);
5. Guideline for investment in the areas of engineering, construction and technical and designing consultancy (Annex 5);
6. Guideline for setting up investment licensing applications (Annex 6);
7. Guideline for duty-free import of cars (Annex 7);
8. Guideline for setting up a report on the operation of an enterprise (Annex 8).
Chapter VI IMPLEMENTATION PROVISIONS
This Circular shall come into force as of the date it is signed. This Circular shall replace the following regulatory documents issued by SCCI: 1. Circular 1621/UB-LXT dated 5 August 1993 guiding the implementation of Decree 18-CP dated 16 April 1993 providing detailed stipulations on the implementation of the Law on foreign Investment in Vietnam;
2. Circular 248/HTDT-VP dated 17 May 1991 clarifying some matters relating to post-license procedure;
3. Circular 1034/HTDT-TD dated 1 August 1992 guiding the re-investment of profits;
4. Decision 698/HTDT-VP dated August 1991 on reporting.
5. Official Letter 718/HTDT-VP dated 20 September 1991 guiding the implementation of Decision 689/HTDT-VP;
6. Official Letter 1661/HTDT-VP dated 16 November 1994 on the processing of investment project files by ministries and local authorities;
7. Official Letter 533/HTDT-TD dated 22 March 1993 stipulating time limits for evaluating foreign investment projects;
8. Official Letter 2308/UB-TD dated 14 November 1994 providing guideline for investment in assembling and manufacturing cars in Vietnam;
9. Official Letter 1536/UB-VP dated 11 August 1994 providing guideline for investment in manufacturing motorcycles and their spare parts in Vietnam;
10. Official Letter 1730/HTDT-TD dated 8 November 1994 providing guideline for investment in manufacturing and assembling civil electric products in Vietnam;
11. Official Letter 112/UB-TD dated 21 November 1994 on co-operation in construction;
12. Official Letter 2427/UB-TD dated 24 November 1994 setting out targets for projects in the garment and foot-wear industry;
13. Official Letter 1541/UB-TD dated 26 July 1993 setting out targets for projects in the areas of hotel development, service apartments and office space for rent, and restaurant and bar business;
14. Official Letter 667/HTDT-TD dated 23 May 1992 on projects in the area of restaurants and bars;
15. Official Letter 1961/UB-VP dated 22 November 1993 guiding the setting up of project files;
16. Official Letter 236/UB-QL dated 11 November 1993 stipulating procedure for increasing capital for enterprises with foreign invested capital and parties to business co-operation contracts;
17. Official Letter 139/HTDT-VP dated 28 January 1993 on transfer of assets after termination of operation term;
18. Official Letter 1412/UB-QL dated 27 July 1994 on import of cars by enterprise with foreign invested capital;
19. Official Letter 501/HTDT-VP dated 16 March 1993 on project implementation.
State Committee for Co-operation and Investment Chairman Minister Dau Ngoc Xuan html---***htmlhtml
GUIDE TO fORMULATING AN ECONO - TECHNICAL APPRAISAL fOR fOREIGN INVESTMENT PROJECTS HANOI - 1995
1. PROPOSED PRODUCTS (SERVICES) AND MARKETS
1.1. Products (services) of the project: The main products (services) to be produced/implemented by the proposed investment: Name (code name) specifications, quality.
1.2. The market areas/(customer groups) which are expected to purchase these products (services): - Domestic market portion:......................% - Export market portion:........................%
1.3. Reasons for selection of the proposed products (services) and the aforesaid markets: - Examination of the supply-demand situation concerning these products (services) in the determined market areas in the past and at present. - The Projected/forecasted supply-demand situation and the bases for these forecasts.
2. PRODUCTION-BUSINESS PROGRAM
htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml---- Name of : Average Yearly Capacity : :htmlhtmlhtmlhtmlhtmlhtml-----: Products and/or :first Production Year :Year :Stabilized : services : : :Prod. year : htmlhtml----:htmlhtmlhtml-----:-----:html-----: :Output: Est.Unit : Rev.: : : : : Price : : : : 1 : : : : : : 2 : : : : : : 3 : : : : : : Total revenue : : : : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml-----
3. SELECTION Of INVESTMENT APPLICATION fORMS 3.1. form of intended investment (Joint Venture, Enterprise with 100 percent foreign invested capital/Business Cooperation Contract).
3.2. Investment in new construction or in renovation and/or expansion of an existing establishment. If the existing establishment is renovated and expanded, describe the existing establishment with the following details: - The state of production and product sales. - The quantity of the staff and employees. - The value of the existing fixed assets (comprising: architectural projects and equipment, facilities).
4. TECHNOLOGY, EQUIPMENT AND ENVIRONMENT 4.1. Technology: 4.1.1. Process diagram of the principal technology (or principal technologies). 4.1.2. Outline the main characteristics of the selected technology. 4.1.3. The list of capital equipment and machinery proposed for this investment project:
htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml List of :Origin of:Technical :Quantity:Estimated :Total Equipment:Shipment :specifications: :unit price:cost html---:html---:htmlhtml--:html--:html----:----- : : : : : : : : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml
Note: If this is intended to be second hand/used equipment, list also the manufacturing country, the manufacturing year, the remaining value, comparison with the price of new equipment of the same kind.
4.2. Environment: The impact of the proposed Investment on environment issues and appropriate resolution of same. Solutions of protection from fire, explosion and safety.
5. USE Of RAW MATERIALS, BI-PRODUCTS fOR THE MANUfACTURED PRODUCTS (SERVICES) Of THE INVESTMENT
The demand for raw materials, bi-products:
htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml----- : Annual requirement :htmlhtmlhtmlhtmlhtmlhtmlhtmlhtml--- Raw materials: first year :The..year:Stabilized Requirement : : :production : : :year :htmlhtmlhtmlhtml-----:html---:html----- :Quantity:Estimated :Tentative: : : :Unit price: Value : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml----- I.Imported : : : : : into Vietnam : : : : : : : : : : 1.. : : : : : 2.. : : : : : : : : : : II.Purchased : : : : : in Vietnam : : : : : : : : : : 1.. : : : : : 2.. : : : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml
6. THE USE Of fUEL, ENERGY, WATER AND OTHER SERVICES 6.1. The use of fuel for... years:
htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml : : Annual requirement : :htmlhtmlhtmlhtmlhtmlhtmlhtml Kinds of fuel:Source of: first year :The..year :Stabilized :supply : : :production : : : : year : :htmlhtml--:htmlhtml-:htmlhtml- : :Quantity:Value: Qnty.: Value: Qnty.:Value: 1. : : : : : : : : 2. : : : : : : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml
6.2. The use of power each year: - The requirement for power in one year/work shift, from the first manufacturing year to the first year of stabilized production. - Required max., capacity for the entire investment. - The plan for power availability (ensure the source (self sufficiency), or purchase power from the national power grid).
6.3. The use of water each year: - The demand for one day and night or a work shift. - The source of water and solution to ensure continuous supply. 6.4 The use of fuel, other goods and services( with respect to each kind, it is necessary to determine the volume of use and the equivalent value for each year from the beginning of the requirement to the stabilized year of max., production).
7. SITE AND fLOOR SPACE 7.1. Address (village, district, province), border line and/or geographical co-ordinate of the site (with the map).
7.2. The existing condition of the floor space and the infrastructure system of the site (roads and bridges, power, water, drainage, communications, etc.).
7.3. Land area and/or water surface and/or sea-surface to be used in the project and leasing rate.
7.4. The total amount of compensation and removal costs required to clear the necessary land area based on an agreement with People Committee of the Province or Central City.
8. CONSTRUCTION - ARCHITECTURE
8.1. Items within the framework of the enterprise: htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml- Items : Unit : Scope : Unit price :Settlementin cash htmlhtml---:html:html-:htmlhtml:htmlhtml----- A-Items of news: : : : construction : : : : 1. : : : : 2. : : : : B-Items under : : : : repair,renova- : : : : tion/expansion : : : : 1. : : : : 2. : : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml-
(Items with special structure need footnotes, explanations on specifications)
8.2. Items outside the frame of the Enterprise: htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml-- Items : Unit : Scope : Unit price :Settlementin cash htmlhtml---:html:html-:htmlhtml:htmlhtml----- A-Items of news: : : : construction : : : : 1. : : : : 2. : : : : B-Items under : : : : repair,renova- : : : : tion/expansion : : : : 1. : : : : 2. : : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml--
8.3. Construction solution: the height and categories of construction.
8.4 The special requirements of techniques, technology and special installed equipment for installation (if any).
8.5. The requirements and sources of building materials supply.
8.6. A chart of the total follow space (attached herewith any drawings).
8.7. The total construction implementation schedule.
8.8. The conditions for the invitation or final selection of tenders for design and/or construction.
9. ORGANIZATIONAL STRUCTURE Of THE NEW ENTERPRISE
10. EMPLOYEES AND SALARIES: 10.1. Employee structure:
htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml--- : Year 1 : Year... :htmlhtmlhtmlhtmlhtmlhtmlhtml----- Year : Vietnamese:Expatriates:Vietnamese:Expatriates htmlhtml---:html-----:html-----:html----:htmlhtml A.Direct : : : : employees : : : : 1. : : : : 2. : : : : : : : : B.Indirect : : : : employees : : : : 1. : : : : 2. : : : : : : : : C.Administ. : : : : &operational : : : : employees : : : : 1. : : : : 2. : : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml---
10.2. Annual salary expenditure/budget calculation:
htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml---- Year : I : II : III htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml---- A- for Expatriates: : : : - In section: : : : - In section: : : : * Total salary : : : expenditure/budget : : : for expatriates: : : : : : : B- for Vietnamese : : : employees : : : - In section: : : : - In section: : : : * Total salary : : : expenditure/budget : : : for Vietnamese employees : : : : : : C- Total salary fund : : : of the Project : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml-
10.3. form of employees recruitment and training
10.4. Training expenditures
11. TOTAL INVESTMENT CAPITAL AND SOURCE Of CAPITAL
11.1. Working capital USD
htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml Components : Year htmlhtmlhtmlhtml : I : ... : Stabilized : : : production : : : year htmlhtmlhtmlhtmlhtmlhtml-----:----: ----:htmlhtml- 1- Production expenditures : : : - Imported materials and bi-products : : : - Imported raw materials and bi-products : : : - Salaries and social insurance : : : - Water, power and fuel supply costs : : : - Spare parts : : : 2. Stocks and A/R : : : - Raw materials in stock : : : - Bi-products in stock : : : - finished-products in stock : : : - Account receivable sales : : : 3. Cash : : : * Working capital in total : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml
11.2. fixed capital: USD
htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml----- Components : Year htmlhtmlhtml----- : I : ... : Stabilized : : : production : : : year htmlhtmlhtmlhtmlhtmlhtml-----:----: ----:htmlhtml 1. Investment preparation costs : : : 2. Compensation removal costs : : : required to clear the necessary : : : land area, land filling cost : : : and the value of the : : : right to use the land that : : : Vietnamese party contributes : : : to the legal capital (if any). : : : 3. The value of houses and : : : existing infrastructure : : : 4. Costs on new construction : : : or/and renovation of plants, : : : workshop and associated : : : infrastructure. : : : 5. Costs on machinery, equipment, : : : tools. : : : 6. Costs on the transfer of : : : technology (In case capital : : : contribution or lump sum payment) : : : (if any). : : : 7. Initial training costs. : : : 8. Other costs. : : : * fixed Assets in total : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml-----
11.3. Sources of capital
11.3.1. Legal capital, including:
htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml Contributing : Value of :Percentage of total:form of capital Party : the contributed: capitalization : contribution : capital : : htmlhtml-:htmlhtml----:htmlhtmlhtml-:htmlhtml--- Party A, : : : contributor : : : : : : Party B, : : : contributor : : : : : : Party C, : : : contributor : : : ... : : : ... : : : Total : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml
11.3.2. Total loans:.... US dollars - Estimated interest rate:......% per year - The Party which is responsible for the loan arrangement. - Loan conditions (terms, length, guarantees....)
11.4. Capital mobilization schedule htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml Type of Capitals : Year :htmlhtmlhtmlhtml : I : ... : Stabilized : : : production : : : year htmlhtmlhtmlhtmlhtmlhtml-----:----: ----:htmlhtml- 1- Legal capital, in which : : : - Party A : : : - Party B : : : - Party C : : : 2- Loans : : : Total capital : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml
12. fiNANCIAL ANALYSIS
12.1. Turnover (value): Unit: 1,000 USD htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml Market, Product(s) : Year and / or :htmlhtmlhtmlhtml services : I : ... : Stabilized : : : production : : : year htmlhtmlhtmlhtmlhtmlhtml-----:----: ----:htmlhtml- 1- : : : 2- : : : 3- : : : Total: : : : : : : Total Annual Turnover: : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml-----
12.2. Cost of production (services): htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml : Year :htmlhtmlhtmlhtml factors : I : ... : Stabilized : : : production : : : year htmlhtmlhtmlhtmlhtmlhtml-----:----: ----:htmlhtml- : : : 1- Raw materials purchased in Vietnam : : : 2- By-products purchased in Vietnam : : : 3- Imported raw materials : : : 4- Imported by-products : : : 5- Packages and/or packaging materials : : : 6- fuel : : : 7- Power energy : : : 8- Water : : : 9- Salaries of workers and : : : employees directly involved : : : in production : : : 10- Social insurance : : : 11- Building & Machinery Maintenance : : : costs : : : 12- Royalty for the transfer of : : : technology : : : 13- Depreciation of fixed capital: : : : 14- Depreciation on principal reparation : : : 15- Expenses for renting offices and/or : : : land (if any) : : : 16- Administrative - operational costs : : : 17- Sales, marketing costs : : : 18- Asset insurance costs : : : 19- Cost of treating disposable materials: : : 20- Turnover tax, import-export taxes : : : 21- Credit interest : : : 22- Other costs : : : Total: : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml----- 12.3. The estimated profit-loss:
htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml : Year :htmlhtmlhtmlhtml Targets : I : ... : Stabilized : : : production : : : year htmlhtmlhtmlhtmlhtmlhtml-----:----: ----:htmlhtml- : : : 1- Total turnover : : : 2- Total costs (including the losses : : : of the previous year) : : : 3- Before - tax profits : : : 4-Profit tax : : : 5- After - tax profits : : : 6- funds : : : 7- Profits shares: : : : - Party A : : : - Party B : : : - Party C : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml
12.4. The efficiency of production/business: - Working capital circulation (Total turnover/working capital) - After - tax profit/total turnover - After - tax profit/total invested capital - Net present value (NPV) - Payback period - Internal rate of return (IRR) - Projected break even point 12.5. financial obligations to the Government Name Year htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml : Year :htmlhtmlhtmlhtml Name : I : ... : Stabilized : : : production : : : year htmlhtmlhtmlhtmlhtmlhtml-----:----: ----:htmlhtml- 1. Total taxes: : : : Among them: : : : * Royalty : : : * Turnover tax, special sales tax : : : * Import duty : : : * Export duty : : : * Profit tax (Income tax) : : : * Remittance tax : : : 2. Land, water surface leasing costs : : : 3. Others (if any) : : : Total : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml
12.6. foreign Currency balances sheet: htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml : Year :htmlhtmlhtmlhtml Name : I : ... : Stabilized : : : production : : : year htmlhtmlhtmlhtmlhtmlhtml-----:----: ----:htmlhtml- : : : 1. Total foreign : : : Currency : : : Earnings : : : 2. Total foreign : : : Currency expenses : : : 3. foreign currencies balance : : :
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12.7. Socio - Economical effects of the Project (Creation of new production powers, new professions in Vietnam)
14. SUMMARIES AND APPLYING INCENTIVES - feasibility and efficiency of the project - Petition of incentives and measures that Vietnamese Government should apply to guarantee the success of the project.
Annex 1.
GUIDELINES fOR INVESTMENT IN MANUfACTURE AND ASSEMBLY Of CIVIL ELECTRONIC PRODUCTS
The State Committee for Co-operation and Investment (SCCI), with the consent of the Ministry of Heavy Industry, provides guidelines for investment in manufacture and assembly of civil electronic products as follows.
1. Any foreign company making investment in the civil electronic industry shall comply with the foreign investment laws of Vietnam and must be a company which manufactures electronic items, semi-products and products and spare par ts therefor.
Vietnamese partners must be electronic business organizations or otherwise such business organizations which are involved in the electronic industry and which have obtained a permit for carrying out their professional activities .
2. The State of Vietnam encourages foreign companies to enter into joint ventures with Vietnamese businesses for production of civil electronic products.
3. Provision shall be made in the investment licensing application, which shall set out the plan for transferring technology and gradual increase in the percentage of locally-made electronic products.
Any assembly project may be approved unless its output shall be only IKD products. The locally-made spare parts and replacements for such products shall amount to 20% of the value of such products during the first two years and this rat io shall gradually be increased in the subsequent years.
4. In a case of a project for assembly of civil electronic products for export, a commitment of the foreign party on the availability of a market for such products shall be made.
5. Monopoly in the production and trading of electronic products is not a policy of the State of Vietnam. It shall create a healthy environment for competition and utilize a system of taxes, levies, duties and other regulatory means in orde r to protect the interests of manufacturers and consumers.
6. The State of Vietnam fully encourages any transfer of high technology and technique to be applied in manufacture of either special or civil electronic spare parts, items, replacements, semi-products and products; it encourages production of the same to be used in production, manufacture of electro-cybernetic equipment for economic, educational, health-care and other purposes.
7. Any plant, equipment, machinery, materials and other means of production to be contributed by the Vietnamese party as its capital contribution shall be required to be evaluated by the relevant competent authorities in accordance with guid ance provided by the Ministry of finance.
People's Committee of provinces and cities and Vietnamese organizations intending to be parties to any investment project with foreign partners for production of electronic products in Vietnam shall take account of the stipulations of thes e guidelines when contacting foreign companies for establishing any investment project.
Annex 2 : GUIDELINES fOR INVESTMENT IN MANUfACTURE AND ASSEMBLY Of CARS, MOTORCYCLES
I. Car manufacture, assembly :
The State Committee for Co-operation and Investment (SCCI), with the consent of the Ministry of Heavy Industry, provides guidelines for investment in manufacture and assembly of cars, motorcycles as follows:
1. foreign company making investment in manufacture and assembly of cars must be car manufacturing firms having sound financial capacity and necessary technology for car manufacturing. Trading companies can contribute capital together with car man ufacturing firms in projects for manufacturing or/and assemblying cars.
2. The State of Vietnam encourages investment projects in the form of joint venture.
3. In the application for issuing Investment License, the programs for production of car spare parts and accessories must be stated. It is necessary for car manufacturing, assemblying companies at least from the 5th year of production, to make in V ietnam cars using car spare parts, accessories which amount to 5% of the value of each car and ensure the gradual increase of such ratio so that after the 10th year from the year in which the production commenced, it shall amount to at least 30% of th
The State of Vietnam will grant priority and especially favourable conditions for projects which having domestic manufacture program with great scale, high technology and quick implementation.
Production of car spare parts, accessories will be implemented according to capacity of each firm as well as guidance of the Ministry of Heavy Industry.
4. Each project must commit concretely on technology transference, training on profession and management for Vietnamese staff working in the company.
5. Investment projects commiting to export cars in whole piece or car spare parts, accessories will be granted other favourable tax conditions.
II. Production of motorcycles and spare parts, accessories thereof.
1. Any foreign company making investment in the motorcycle and spare parts, accessories thereof industry shall comply with the foreign investment laws of Vietnam and must be a company which manufactures motorcycles and spare parts, access ories thereof.Trading companies are not permitted to invest in this field.
2. The State of Vietnam encourages foreign companies to establish joint ventures with Vietnamese businesses in the field of manufacturing motorcycles and spare parts, accessories thereof in Vietnam.
3. Provision shall be made in the investment licensing application, which shall set out the plan for transferring technology and gradually Vietnamise the production of motorcycles in Vietnam.
foreign motorcycle manufacturers shall not be permitted by the State of Vietnam to assemble CKD motorcycles only. They are required, from the 2nd year of production, to make in Vietnam motorcycle items which amount to 5 - 10% of the value of e ach motorcycle and ensure the gradual increase of such ratio so that after 5 or 6 years from the year in which the production commenced, it shall amount to at least 60% of the value of each motorcycle.
4. Monopoly in the production and trading of motorcycles is not a policy of the State of Vietnam, therefore no application should be made with any proposal on any monopoly period. The State of Vietnam shall create a healthy envir onment for competition and shall utilize a system of taxes, levies, duties and other regulatory means in order to protect interests of manufacturers and consumers.
5. The State of Vietnam fully encourages any transfer of high technology and production of CKD motorcycle and any parts or replacements therefor for export and also encourages motorcycle manufacturers to produce items and replacements that may be utilized in other industries such as the automobile or machinery industries.
People's Committees of provinces and cities and Vietnamese organizations intending to be parties to any investment project with foreign partners for production of cars and motorcycles in Vietnam are kindly requested to take account of th e stipulations of these guidelines when contacting foreign companies for establishing any investment project.
Annex 3 :
GUIDELINES fOR INVESTMENT IN THE AREAS Of HOTEL DEVELOPMENT, SERVICE APARTMENTS AND OfFICE SPACE fOR RENT, AND RESTAURANT/BAR BUSINESS
I. Hotel development
1. Standard required for a hotel to be developed: 3 or more star standard. 2. Scope a. As a newly developed project, a hotel shall have + if in Ho Chi Minh City: at least 150 rooms, or 8,000 sq.m. in total floor area developed, or invested capital of US$ 8 million upwards;
+ if in Hanoi: at least 100 rooms, or 5,000 sq.m. in total floor area developed, or invested capital of US$ 5 million upwards;
+ if in Haiphong, Vungtau, Nhatrang, Danang: at least 50 rooms, or 2,500 sq.m. in total floor area developed, or invested capital of US$ 2,5 million upwards;
+ if in other localities: invested capital of US$ 1 million upwards.
b. As a project which has been renovated or upgraded, a hotel shall have invested capital (not inclusive of any value of the pre-existing assets) of no less than US$ 5 million if in Ho Chi Minh City, US$ 2 million if in Hanoi and US$ 800, 000 if in other localities.
c. An investment project which is smaller in scope shall be considered if it is implemented in areas with difficult geographical or socio-economic conditions.
3. form of investment: Joint venture company. If a foreign investor proposes to establish a 100% foreign-owned investment project, the relevant provincial/municipal shall consult with SCCI in order to produce a consistent opinion before starting any negotiation with the foreig n investor.
4. Investment rate (to be applied to newly developed projects only)
3-star hotels: US$ 50,000 - 80,000 per room 4-star hotels: - 90,000 - 120,000 - 5-star hotels: - 130,000 - 200,000 - Office space for rent: 600 - 800 per sq.m. of floor Apartment for rent (without services) - 500 - 800 -
5. Public activities + Any casino activity or jackpot or slot machine playing and any, commercial activity (including export/import activity) are prohibited, except sales of souvenirs. + Bar, massage, sauna, karaoke may be permitted for hotel projects at the proposal of the People's Committee of relevant province/city.
6. Location The location of a hotel project shall be conformity with the masterplan for development of the Vietnam General Department of Tourism and urban masterplan as approved by the provincial/municipal People's Committee.
7. Legal capital of a Vietnamese party. Parties to an investment project shall negotiate and agree so that the Vietnamese party may make its legal capital contribution ratio as high as possible in accordance with law and such ratio shall in any event not be less than 30%. The Vietn amese party shall negotiate with its foreign partner(s) in order to, during the process of the operation of the investment project, gradually increase its capital contribution ratio.
8. Machinery and equipment + All the equipment, machinery and means of transport shall be brand new. + The procurement of equipment shall, in principle, be carried out through bidding. If a foreign party makes its capital contribution in form of equipment, machinery and means of transport, the same shall be evaluated in terms of the ir quality, technical specifications and price.
9. Contracting + Construction work shall be carried out through bidding. In a case where any or all of the parties to a joint venture is/are specialized construction/engineering organization(s), priority in bidding shall be given to such party(ies), pro vided they offer the same economic and technical standards as those offered by any other construction/engineering organizations. + The number of "turn-key project" to be developed by foreign contractors shall be restricted to a minimum, except specific cases, which shall be considered by and subject to decision of the Ministry of Construction. + Any construction/engineering organization which carries out the development of any construction work shall have obtained permission granted by Vietnamese authorities for carrying out its professional activity.
10. Joint Venture duration + Project with capital of US$ 10 million downwards: 20 years + Project with capital of US$ 10 - 15 millions: 25 years + Project with capital of US$ 15 - 25 millions: 30 years + Project with capital of US$ 25 - 40 millions: 35 years + Project with capital of US$ 40 - 50 millions: 40 years + Project with capital of US$ 50 million upwards: 45 years.
In a case where the foreign party commits to transfer on completion of the joint venture operation on a non-compensatory basis its fixed assets to the Vietnamese party, such duration as stipulated above may be extended with a 5 year extension but shall in any event not exceed 48 years.
11. Management contract + A management contract may be entered into between a joint venture and a hotel management company, subject to approval of SCCI. + The management fee, which shall include any billboard and marketing fees, shall (in a case of a hotel development joint venture) in principle not amount to more than 3% of such joint venture's revenue and 10% of its annual pre-tax profits. + Duration of a management contract shall not exceed 10 years.
12. Taxes and rentals These shall be applied in accordance with the currently applicable laws.
13. Other matters + Any compensation or vacancy expenses shall be part of the capital contribution of the Vietnamese party, or the foreign party, or part of joint venture expenses, but shall not be included in value of the right to use land. + Joint ventures shall comply with stipulations of the Ministry of finance and the State Bank of Vietnam on depreciation, accounting principles, opening of bank accounts, and foreign exchange transactions. + Waste treatment and environmental protection measures shall be applied. + General stipulations of the Ministry of Construction on fundamental construction management shall be complied with. + A process-verbal is required to be made on evaluation of assets to be contributed by the Vietnamese party as its legal capital contribution.
II. Restaurant and bar business + Administration of the branches and ministries and local authorities shall direct any economic organizations belonging to them not to contact, negotiate or enter into any co-operation or investment contract with any foreign partners fo r restaurant/bar development and business. + In a case of any such contract which has been executed but the investment license not issued in connection with it, the relevant local authorities shall require the Vietnamese organization involved in such matter to commence negotiation wi th its foreign partners in order to switch their business objectives to an area of production, failing this such a contract shall be canceled. SCCI shall not accept such kinds of contract nor consider issuance of any investment license in respe ct + In a case of projects in respect of which SCCI investment licenses have been issued, the People's Committee of provinces/cities shall assign to the relevant departments and organizations the task of regularly inspecting and control ling the same in an effort to prevent any social evils as may take place in such places.
Annex 4 :
GUIDELINES fOR INVESTMENT IN THE AREAS Of GARMENTS AND fOOT-WEAR INDUSTRY
1. form of investment + Investment shall be in the form of contract-based business co-operation or a joint venture enterprise, or a 100% foreign owned enterprise. + Investment in the form of a joint enterprise is encouraged. + Any project for processing of product shall not be approved, where the material costs and the sale price of product are not in full in the expenses and incomes of the project.
2. Product and market a. Joint venture enterprises and enterprises under business co-operation contracts shall export at least 80% of their products. b. 100% foreign owned enterprises shall export at least 90% of their products. In any event, if any export to be made into a specific market requires a quota to be obtained, then the foreign party shall procure that such export shall be consumed in that market. The State of Vietnam shall assist such export only if ci rcumstances permit it to do so.
3. Investment rate a. The investment rate in the garment industry shall not exceed US$ 2 million per 1 million of products per year (with standard product being deemed to be a shirt). b. The investment rate in the foot-wear industry shall not exceed US$ 3 million per 1 million pairs of shoes per year (with standard product being deemed to be a material shoe).
4. Location The location of a project shall be conformity with masterplan for development of the relevant locality, as approved by the relevant provincial/municipal People's Committee.
5. Area of land in use The area of land in use shall not exceed 7,000 sq.m. per US$ 1 million of invested capital. No land shall be reserved for any extension in future. Efforts should be made in urban and industrial areas to develop multistory building in ord er to economize land.
6. Equipment and machinery + All the equipment, machinery and means of transport shall be brand new. + Any used equipment to be imported shall be, according to the conclusion of the relevant evaluation organization, at least 80% usable and meet all requirements in terms of its quality as well as environmental protection and working safety req uirements and shall be at a reasonable price.
7. Legal capital of a Vietnamese party Legal capital of a Vietnamese party shall not be less than 30%. The Vietnamese party shall during the process of business have a right to purchase the foreign party's capital contribution, subject to agreement by both the parties.
8. Duration for investment Maximum term of operation shall be: + for less than US$ 3 million projects: 20 years; + for US$ 3 - 5 million project: 25 years; + for US$ 5 million or more projects: 30 years; + for US$ 30 million or more projects: 35 years. If the foreign party on termination of the operation term transfers on a non-compensatory basis its assets to the Vietnamese party, then the maximum term above may be extended with a 5 year extension. A longer extension of term may be cons idered for large projects or projects to be implemented in areas with difficult socio-economic conditions.
9. Taxes and rentals These shall be in accordance with the currently applicable stipulations.
10. Other matters + Any compensation or vacancy expenses shall be part of the capital contribution of the Vietnamese party or the foreign party, or party of joint venture expenses, but shall not be included in the value of the right to use land to be con tributed as its capital contribution or otherwise in value of land rentals to be payable to the State. + Joint ventures shall comply with stipulations of the Ministry of finance and the State Bank of Vietnam on depreciation, accounting principle, opening of bank accounts, and foreign exchange transactions. + The projects shall have obtained approval of the relevant provincial/municipal People's Committee together with its recommendations on the land area and rental. + A proces - verbal is required to be made on evaluation of assets to be contributed by the Vietnamese party as its legal capital contribution (if any or all of such assets is / are State assets).
Annex 5 :
GUIDELINES fOR INVESTMENT IN THE AREAS Of ENGINEERING, CONSTRUCTION AND TECHNICAL AND DESIGNING CONSULTANCY
SCCI shall accept and consider a project in the areas of engineering, construction and technical and designing consultancy if the following conditions are met:
I. Engineering and construction projects
1. Any party to an engineering or construction project shall be an organization specialized in so doing, which has its juridical person status and a duly set up certificate thereof. In addition if it is a foreign party, it shall have a reg istered capital of at least US$ 5 million and average annual revenue in the last 5 years of at least US$ 20 million.
2. Legal capital of a joint venture project or business co-operation contract shall be at least US$ 1 million, of which value of engineering machinery and equipment shall be no less than US$ 500,000.
3. Transfer of appropriate technology is required.
II. Technical and designing consultancy projects
1. Any party to a technical or designing consultancy project shall be organization specialized in such work, which has juridical person status and a certificate legally made in respect thereof.
2. The foreign party shall have evidence of its capability to implement its proposed project.
3. Legal capital of a project shall be of at least US$ 100,000 and all equipment and technology required shall be made available in full.
4. Transfer of appropriate technology is required.
form 1 Investment application for licensing a business cooperation contract
Date:......................
To: The State Committee for Cooperation and Investment
An investment application under the foreign Investment Law of Vietnam is here with being submitted by the undersigned to the State Committee for Cooperation and Investment.
I. Name of Parties, comprising: - Vietnamese party (-ies): - foreign party (-ies): Wish to apply for a Business License in order to implement the Business Cooperation Contract signed on .......... with the purpose of activity as follows: - - -
II. We wish to apply for the following Investment Incentives: - - - ......
III. The documents enclosed with this Application comprise: 1. Certification concerning juridical person status, as well as the Company's Annual Report certified by a Banking or financial Institution: 2. Legalized Power (s) of Attorney for signing this Application and the Business Cooperation Contract: 3. Business Cooperation Contract: 4. The economic and technical feasibility studies; 5. The surveyor's inspection report regarding used equipment (if such equipment is intended for importation into the SR of Vietnam)
Vietnamese party (ies) foreign party (ies) (Signature, seal) (Signature, seal)
GUIDANCE fOR A BUSINESS COOPERATION CONTRACT
Based on the foreign Investment Law of Vietnam and relevant legal documents, the parties mentioned hereinafter wish to implement investment activities in the Socialist Republic of Vietnam as outlined in the scope of this Business Coop eration Contract.
A. The Vietnamese party (ies) : 1. Company name: 2. Authorized representative: Title: 3. Head Office: Telephone: Telex: fax: 4. The main line of business: 5. License for establishment of a Vietnamese company: Registered at: Date: - Registered capital: Company account opened at: Account number: B. The foreign party (ies) 1. Name of the company or individuals: 2. Authorized representative: Title: Nationality: Resident Address: 3. Head Office: Telephone: Telex: fax: 4. The main business line: 5. License for establishment of a foreign company: Registered at: Date: financial status (registered capital): Company account opened at: Account number: (Note: If either contracting party comprises more than one member, then each member shall describe all the aforesaid details. Each party needs to appoint its own delegated representative). Agree to sign this Business Cooperation Contract with the following terms an conditions:
Article 1: Objectives of the Business Cooperation: (State in detail a clear description of the intended content and scope of the Business Cooperation). Article 2: 1. Location: Commune (Ward)/District (Precinct)/Province (City) 2. Production capacity: htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml----- Goods/Services*: Unit : first : Year No... : Stabilized : : years : : production : : : : year htmlhtml----:html:html-:htmlhtml:htmlhtmlhtml-- : : : : : : : : : : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml----- * Split into main and auxiliary products (if applicable) 3. The product(s) of this Business Cooperation Contract shall be marketed as follows: - To the Vietnamese market: percentage of products projected to be sold annually. - To the foreign market: percentage of products projected to be sold annually.
Article 3: Responsibilities of each Party in implementing this Business Cooperation Contract as follows:
htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml Vietnam party foreign party htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml Tasks :Quantity:Value:Scheduled :Quantity:Value:Scheduled Responsi- : : :completion: : :completion bilities : : :(after the: : :(after the : : :date of : : :date of : : :receipt of: : :receipt of : : :the : : :the : : :business : : :business : : :license) : : :license) htmlhtml--:html--:-----:html----:html--:-----:html---- 1 Initial : : : : : : preparation : : : : : : 2. Workshop, : : : : : : offices(b) : : : : : : 3.Main : : : : : : equipment (a): : : : : : 4.Transport : : : : : : equipment, : : : : : : offices : : : : : : equipment : : : : : : auxiliary : : : : : : equipment (a): : : : : : 5. Building : : : : : : materials (a): : : : : : 6. Raw : : : : : : materials, : : : : : : spare : : : : : : parts : : : : : : accessories : : : : : : to serve : : : : : : annual : : : : : : production : : : : : : 7. Labor : : : : : : 8. Technical : : : : : : experts : : : : : : 9.Production : : : : : : organization : : : : : : 10.Sale of : : : : : : products : : : : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml
Note: (a): Enclose details in Annex No...... attached with this Contract. (b): Clarify if existing building(s) is(are) to be renovated or rebuilt. At the time when the actual financial contribution is made, if the projected values shown above, differ from the actual contributed values, the two parties must agree to these differences and report same to the State Committee for Co operation and Investment for consideration and approval. In case, either party is unable to carry out his/her responsibilities as agreed upon, this party must inform the other party within... days of the reasons as well as the measures taken to remedy the situation. Actual and true lo sses caused by the delay or inability of one party to carry out its responsibility (ies) must be compensated for accordingly.
Article 4: Duration of this Contract is for... years from the date of grating the business license. Any changes to the duration of this contract shall have to be agreed upon by the contracting parties and reported to the State Committee for Coo peration and Investment for consideration and approval. Either contracting party wishing to extend the agreed duration of this contract, must so inform the Party at least. .. months before the expiry of the contract. If the parties agree to the extension of the Contract, they must submit an appl ication for consideration by SCCI, at least six (6) months before the expiry of the contract. If all conditions for termination of the Contract cannot be implemented, the contract shall remain in effect provided that contract continuation is approved by SCCI.
Article 5: The schedule for implementing this Contract after the date on which the Investment License by SCCI has been issued, is as follows: 1. a/ from month... to month... Importation (if permitted) or building materials for the main production area/plant of the office: b/ from month... to month... Construction of the main production area/plant or the office: 2. from month... to month... Importation of equipment and machinery: 3. from month... to month... Production/trial operation: 4. from month... Official production:
Article 6: 1. This Business Cooperation Contract uses the monetary unit of...(state the specific currency) for all financial matters. Any and all currency conversions for the purpose of accounting administration or making payments, shall be made in accordance with the official ratter made public by the State Bank of Vietnam at each time. 2. The contracting parties must implement all payments envisioned in the contract, through an account in Vietnamese currency and a foreign currency account opened at... (the Bank in Vietnam) (the commercial Bank of Vietnam, a foreign Bank branch in Vietnam, a joint venture bank between a Vietnamese Bank and a foreign bank)
Article 7 : 1. The accounting system for implementing this contract is... (the name of the system agreed on upon by the parties) and is approved by the Ministry of finance and falls within the control of a Vietnam authorized financial agency. 2. The depreciation rates of the fixed assets belonging to this business Cooperation are as follows: - Workshop:......% year - Equipment: % year - Other fixed assets: % year
Article 8 : 1. The foreign party (ies) must fully carry out its. their financial obligations towards the State of Vietnam as stipulated in the Business License in accordance with the following method... 2. The Vietnamese party (ies) undertake (s) to fully carry out its/their financial obligation towards the State of Vietnam in accordance with current laws and provisions of the financial obligations as described in the Business License.
Article 9: The contracting parties agree to share products and/or profits or losses through the implementation of the Contracts as follows: - The Vietnam Party (ies) (Do clearly state each party if necessary). - The foreign party (ies): (Do clearly state each party if necessary).
Article 10: Disputes among the parties, related to, or arising from the contract must first be resolved through negotiation. In case of continued disagreement, the disputes shall be brought to... (clearly state the name of the arbitration org anization and address). Decision of... (the name of the above-said organization) is final and shall the observed by both parties.
Article 11: This Business Cooperation Contract may be terminated ahead of schedule and/or in the following cases: a) In cases where force majeure such as natural disasters, war, etc..., renders the investment activities inoperable provided of course that this force majeure is indeed the actual cause of obstruction to or unacceptable del ay in the implementation/ continuation of the contract and that the parties have already applied all possible measures to overcome the impact of force majeure disasters but without success, the party in whose area the force majeure has occurr ed In addition, the contracting parties shall immediately inform the State Committee for Cooperation and Investment about all measure taken to overcome the situation. b) In case the business entity is unable its operations due to serious losses of due to breach of contract terms leading to serious economic losses for the other contracting party(ies). c) As a result of a decision by the State Committee for Cooperation and Investment.
Article 12: Upon contract expiration, the parties agree to apportion the business cooperation assets in relation to their share holding capacity and responsibility as follows: (Describe in detail condition in relation to each party's approved rights, responsibilities, assets, etc..)
Article 13: All other terms relating to the business cooperation agreement but not specifically provided for in this Business Cooperation Contract, shall be implemented by the party (ies) in accordance with the current stipulations of the for eign Investment Law of Vietnam and other stipulation in the Business License issued by SCCI.
Article 14: The Business Cooperation Contract may be added and/or amended after a written agreement between the Parties and with approval of SCCI.
Article 15: This Contract shall take effect from the date of approval of the Contract and the Application for Investment by SCCI.
Article 16: This Business Cooperation Contract is signed in (location) on (date)... in ... originals in the Vietnamese version and in... (a widely used foreign language). These two versions are of equal legal validity.
The foreign party The Vietnamese party (signature, title and (Signature title and seal, if any) seal, if any) In case there are several In case there are several foreign parties, state the foreign parties, state the name of name of each party and each party and affix appropriate seal affix appropriate seal (if any) (if any)
-form II Investment application for licensing a joint venture Date:............
To: The State Committee for Cooperation and Investment An investment application under the foreign Investment Law of Vietnam is herewith being submitted by the undersigned to the State Committee for Cooperation and Investment.
I. Name of Parties, comprising:
- The Vietnamese Party (ies) (the name of the Company) (ies): - The foreign Party(ies) (the name of the Company(ies) or individual)(s): Wish to apply for an Investment License on order to implement the Joint Venture Contract signed on... with the main purposes of activities as follow: - - - II. We wish to apply for the following Investment Incentives: - - - III. The documents enclosed with this Application comprise: - The Joint Venture Contract. - The Joint Venture Charter/Articles of Association. - Certification concerning juridical person status, the Company's Annual Report certified by Banking or financial Institution. - Legalized Power(s) of Attorney for signing this Application, the JV Contract and the Chapter of the JVC. - The economic and technical feasibility studies; - The appointed surveyor's inspection report regarding used or second hand equipment (if such equipment are intended for importation into the SR of Vietnam).
Vietnamese party(ies) foreign party (Signature and seal) (Signature and seal)
Guidance for a joint venture contract
Based on the foreign Investment Law of Vietnam and relevant legal documents, the Parties mentioned hereinafter have signed a Joint Venture Contract to establish in the Socialist Republic of Vietnam, a Joint Venture Company as fo llows: A. The Vietnamese Party(ies) (1): 1. Name of the company: 2. Delegated representative: Title: 3. Head office: Telephone Telex fax 4. Main line of business: 5. Certificate of Incorporation No: Registered at: Date: Registered capital: Account opened at the Bank: Account number: B. The foreign Party(ies) (1): 1. Name of the company or individuals: 2. Delegated representative: Title Nationality Resident address 3. Head office: Telephone Telex fax 4. Main line of business: 5. Certificate of incorporation No: Registered at: Date: financial status (registered capital): Account opened at the Bank: Account number:
Article 1: 1. The Parties agree to establish the JV Company in the S.R Vietnam with the purpose of (state in detail the objective of the JV Company): 2. a) The name of the JV Company is: b) The transaction name of the JVC in foreign language is:. .......
Article 2: 1. Address of the JV Company: - Head office: - Main production factory/workshop: - Branch(es): - Representative office(s): 2. Production capabilities:
htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml---- Goods/Services : Unit : first : Year : Stabilized : : year : No... : production year htmlhtml----:html--:html---:html-:htmlhtmlhtml-- : : : : : : : : : : : : htmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtmlhtml----
* Divided into main and auxiliary products (if applicable)
3. Products of the JV Company will be marketed as follow: - At the Vietnamese market: percentage of products planned to be sold annually. - At foreign markets: percentage of products anticipated to be sold annually and expected value. Article 3: 1. Total invested capital of the JVC: 2. Legal capital of the JVC is ..., to which: a) The Vietnamese party contributes... accounting for. ... percentage of the legal capital, comprising: - Cash; - Value of the equipment, machinery; - Value of the transfer of technology enclosed transferring technology contract; - Workshops, land sites, or other contribution in accordance with the foreign Investment Law... (value). b) The foreign Party contributes... accounting for...% of the legal capital, comprising: - Value of the foreign currency... - Value of the equipment, machinery... - Value of the transfer of technology enclosed transferring technology contract. - Other contributions, copyright fees,... (In case this is a "multiparty joint venture", describe in detail the legal capital and capital contribution percentages by each party). Details in quantity, technical specifications, unit prices ect. are presented in Annex No... of the JV Contract. (1) 3. Loans (if any): - The amount............... - The interest of loans: not be more than ........... % or LIBOR + ................. % The other conditions for the loan In addition to its legal capital, the JV company may acquire loans or credits in order to increase its capital for business purposes.
Article 4: The two parties undertake to contribute their respective capital fully and on time, as follow:
Article 5: Any party unable to complete the payment schedule as agreed upon above, shall have to inform the other party stating the reasons why and the measures to be taken by this party, in order to resolve the situation before... (the date). The delinquent party agrees to provide compensation to the other party for losses (if any)
Article 6: The program for gradual increase of capital contribution if the Vietnamese Party(ies) shall be stated as below: from year ................... to year The gradual increase of capital contribution of the Vietnamese Party(ies) is carried out in accordance with the following methods (1).
Article 7: The term of this JV Contract is .... years, commencing from the date of the issuing of the JV Investment License. Any changes to this term shall have to be agree upon by all parties concerned and reported to SCCI for approval.
Article 8: Commencing from the date of the issuing of the JV investment license, this contract shall be implemented following the schedule below: 1. a) from month.... to month..... Importation (if applicable) of building materials for the main production area/plan or the office: b) from... to month... Construction of the main production area/plant of the office: 2. from ... to month... Importation of equipment and machinery related to the actual production: 3. from month ..... to month... Production/trial operation: 4. from month... Official production:
Article 9: Other responsibilities the joint venture parties: a) The Vietnamese Party(ies)... (Such as: to apply of Investment license, entry visa, rent land, supply electric power, water, finance, building materials, equipment, construction, permission, etc...) b) The foreign Party(ies).... (Such as: supply of equipment, expertise, technology, finance, loans, building materials, market, training, technical management, etc...)
Article 10: After fulfilling all financial obligation towards the State of Vietnam, the remaining profits of the JV Company are extracted to establishing the Developing Production fund, the Welfare fund and other appropriate funds, (The Scope and the principles of using each fund shall be decided by the Bo ard of Management in conformity with the Laws of the Socialist Republic of Vietnam.) The net profits of the JV Company are shared as follows:.... (state clearly the rates of profits shared for each JV party).
Article 11: Any disputes between the Parties arising in respect of the implementation of the Contract, is resolved as first through negotiations. In case where the parties in dispute cannot agree with each other, the disputes shall be brought to ... (state clearly the name of the arbitration organization and address). The decision of... (The above organization) is final and the JV parties must carry out.
Article 12: The Joint Venture company may be dissolved ahead of schedule or terminated as stipulated in Article 18 of the JV Charter.
Article 13: This Joint Venture Contract may be terminated ahead of schedule or in the following cases: a) Where force majeure such as natural disasters, war, etc..., render the investment activities inoperable although the parties have already applied all possible measures to overcome it but without success provided of course that this f orce majeure is indeed the actual cause of obstruction to or unacceptable delay in the implementation/continuation of the contract and the party in whose area the force majeure has occurred must fathom the consequence and immediately inform the o th b) In case the business activity is unable to continue its operations due to serious losses or due to breach of contract leading to serious economic losses of the other Party(ies). c) As a result of a decision by the State Committee for Cooperation and Investment.
Article 14: All other relating terms that are not stipulated in the JV Contract and the JV Charter, shall be implemented by the parties in accordance with the foreign Investment Law of Vietnam and in the JV Investment License granted by the SCCI.
Article 15: The JV Contract may be added and/or amended after a unanimous decision of the Board of Management of the JVC and must be approved by SCCI.
Article 16: This Contract shall take effect immediately after the Investment Application is approved by SCCI.
Article 17: The JV Contract is signed in (location)..., on... (date) in the Vietnamese version and in the ... version (a widely used foreign language). Both versions are of equal validity.
The foreign party The Vietnamese party (Signature, title and (Signature title and seal, if any) seal, if any) In case there are several In case there are several foreign parties, state foreign parties, state the name of each party and name of each party and affix appropriate seal affix appropriate seal (if any) (if any)
Guidance for a Charter of a joint venture company
This Charter, prepared on the basis of the JV Contract has been signed on date...
Article 1: * The company... is a Joint Venture Company between:
Case 1: (the two parties joint venture): Company A; Certificate of Incorporation... Address:.............. Company B; Certificate of Incorporation... Address: ............. ** The foreign party, comprising: . Company C, certificate of Incorporation......... . Company D, certificate of Incorporation......... Represented by Company
Case 2 (A multiparty joint venture): * The Vietnamese Party (ies): . Company A, certificate of Incorporation......... . Company B, certificate of Incorporation......... ** The foreign Parties: . Company f, certificate of Incorporation.......... . Company f, certificate of Incorporation..........
Case 3 (A new joint venture) * The Joint Venture enterprise company... set up in accordance with License No. on date... granted by the SCCI. ** The foreign Parties certificate of Incorporation.
Article 2: The JVC... is a company with limited liability, having a juridical person status in accordance with the Vietnamese Law.
Article 3: The JV company... is set up in the Socialist Republic of Vietnam with the aim of: (describe the business and production objectives of the JV Company). 1. The name of the JV company:... 2. The translation name of the JVC in the foreign language.
Article 4: 1. The address of the JV company: - The head office:... - The main production factory/workshop:... - The branch(es):... - The Representative office:... 2. The Products of the JV Company will be marketed as follow: - In the Vietnamese market: (percentages of the products planned to be sold annually. - In foreign markets: the percentages of the products planned to be sold annually.
Article 5: 1. The total investment capital of the company is... 2. The company's legal capital is..., of which: . The Vietnamese Party contributes..., accounting for. .. percent of the total legal capital. . The foreign party contributes..., accounting for... percent of the total legal capital. 3. In addition to its legal capital, the JV company may acquire loans from Banks of/and credits organization or credits. The loans must be decided by unanimous decision of the Board of Management of the JV and in conformity with pro visions of the Laws of Vietnam.
Article 6: Duration of the JV Company is... years commencing from the date the JV Investment License is issued. Any changes to this term must be agreed unanimously by the Board of Management and reporter to SCCI for consideration and app roval.
Article 7: 1. The Board of Management, comprises... members, including: . The Vietnamese party(ies)... . The foreign party(ies) 2. The term of the members of the Board of Management is... years. The post of the Chairman of the Board may be taken in turn by each Party representative. The Chairman of the Board of the first term nominated by party... 3. Each party has the right to replace its Board representative(s) at any time provided that the other Party must be informed in advance at least... days. This replacement must not in any case adversely influence or obstruct the activities of the Joint Venture.
Article 8: The Board of Management decides all issues on its meetings. The meetings of the Board are convened by its Chairman at least once a year. Ad hoc meetings are convened in accordance with the decision of the Chairman of the Board, or at the request of the General Director or the first Deputy Genera Director, or at the request of a minimum of a two-third majority (2/3) of the Board members. The notice of the meeting must be given to all members of the Board at least .. Any meeting of the Board of Management can be convened only with the attendance of over two-thirds of its members, representing the parties to the joint venture.
Article 9: The following issues must be decided unanimously by the Board members: * The long-term and annual production as well as the business plans of the Joint Venture; the budget loans; * Any amendment of addition to the JV company's Charter; * The appointment/removal of the Chairman of Board, the General Director, the first Deputy General Director and the Chief Accountant. All other decisions of the Board can only be valid provided they are approved by at least two thirds of the Board members.
Article 10: The day to day operational responsibilities of the JV Company fall within the General Director and the first Deputy General Directors. * The General Director shall be nominated by the...(the name of the party the Joint Venture).
Article 11: The General Director and the first Deputy General Director are accountable to the Board of Management for the activities of the Joint Venture company. * fulfillment of the production and business plans, implementation of decisions of the Board and reporting on the business results to the Board of management. * Signing of labor contracts in conformity with the provisions of Vietnamese Law. * Signing economical contracts within their own power or by proxy of the Board and implementing same. * Act before State Bodies, the Court and third parties on all issues relating to activities of the JV Company within the framework of this Charter. In case there are conflicting opinions in operational matters between the General Director and the first Deputy General Director, the General Director has the right to decide. The first Deputy General Director has the right to res erve his opinions and lodge Petition to the Chairman of the Board requesting that an adhoc meeting be convened if it is necessary. * The authorities and responsibilities of the General Director, the Deputy General Directors and other key personnel appointed by the Board shall be reflected in the labor contract signed between them and the Board of Man agement.
Article 12: All employees of the JV Company are recruited and employed in conformity with the provisions of the Laws of Vietnam. Vietnamese citizens are given priority in being recruited. The right and obligation of the employees are described in the Labor Contract signed between the employees and the General Director of the JV Company: the collective labor agreement signed between the Labor Collective and the Gen eral Director of the JV Company.
Article 13: Procurement of equipment, spare parts, raw materials, accessories, etc... is directly carried out by The JV Company or may be delegated to one of the parties, but in every case, this procurement must be reviewed/authorized and app roved by the Board of Management.
Article 14: 1. The currency used by the JV Company is a monetary... unit (state the specific currency). Conversion of this currency used for purchases as well as accounting purposes, shall be executed in accordance with the official exchange rates pub lishes by the State Bank of Vietnam at the time of the actual payment. 2. The JV Company executes payments and accounting administration though the account of Vietnamese and foreign currencies at a Bank in the Socialist Republic of Vietnam, (Commercial Bank of Vietnam, a foreign bank branch in Vietnam, a joint venture bank between a Vietnamese Bank and a foreign bank).
Article 15: 1. The accounting system used by the JV Company is... (the name of the system already upon). It must be approved by the Ministry of finance of Vietnam and is controlled by the authorized financial agency of Vietnam. 2. The depreciation rate of fixed assets is as follows: - Plant/factory Workshops:... percent/year; - Equipment:... percent/year; - Other fixed assets:... percent/year; 3. The fiscal year of the JV company usually commence from... and ends on... every year. The first fiscal year of the Joint Venture Co. commences from the date of issue of the Investment License and ends on... Every year, the join Venture prepares the financial balance sheet and other financial report in conformity with the provisions of Vietnamese Law. The JV Company sets up the Developing production fund, the Welfare fund and other funds. The nature of the score, the source and the using of each fund shall be decided by the Board of Management on the basis of profits and in conformity wit h the Laws of Vietnam.
Article 16: The assets of the JV Company are insured at (state the name and address of the insurance organization)... and shall not be nationalized, seized or transferred to any other owners by administrative measures.
Article 17: The JV Company used its assets in conformity with the state objectives of operation and function of each asset. The Joint venture parties do not unilaterally have the right of private ownership of the assets of the JV Company, including the assets they have contributed to the legal capital.
Article 18: The JV Company may be dissolved ahead of schedule terminated in the following cases: a) The expiry of the JV contract as stipulated in the Investment License (possibly with or without completing all the conditions stipulated in the Contract). b) The parties agree to abdicate their contractual responsibilities in agreement with the JV Contract and in conformity with the stipulation of the Vietnamese Law. c) The arbitration Organization as stated in Article 11 of the JV Contract declares the contract terminated. d) As a result of a decision by SCCI.
Article 19: At least six months before termination of the contract term of the JV Company, or within one month after the decision to dissolve JV Company ahead of schedule, the Board of Management shall set up the Liquidation Board of the J oint Venture (that will comprise at least three members) and stipulate in detail the task of the Liquidation Board. The members of the Liquidation Board may be recruited among the staff of the JV Company or experts outside the Joint Venture compa ny All expensive arising from liquidating the JV Company shall be paid by the Joint Venture and is payable before any other obligations of the JV Company are met.
Article 20: The Board of Management of the Liquidation of the JV Company shall report to SCCI the founding and commencement operation date (s). from this time on, the Board of Liquidation shall represent the JV Company before the Court and other administrative organizations with respect to all questions relating to Liquidation. The term of operation of Liquidation Board shall not be more then six (6) months. In special cases with the approval of SCCI, this term may be exten de The representative offices and branches of the JV Company shall terminate its operation at the same time the dissolution of JV Company, in accordance with the term of dissolution of the JV Company.
Article 21 : After termination of all activities, the remaining assets of the JV Company, having paid all liabilities as stipulated by the Vietnams Law, with be distributed in the following form : (State the form of handling, say. the non- refundable to the Vietnamese party distribution in accordance with the auction sale where as the legal capital contribution in accordance with...)
Article 22 : The JV Company establishes the Examination Board to Conduct Examination of the financial and business activities of the JV Company. The Board of Management will nominate the head and the members of the examination Board comprising... m embers. The Examination Board have the term of... year. The examination Board is responsible in the Board of Management for its activities. The examination Board shall submit to the Board of Management reports on examination activities and its evaluation of the annual report of the JV Company.
Article 23 : This JV Charter may be added and/or amended with the unanimous decision of the Board of management and must be approved by SCCI.
Article 24 : This JV charter takes full effect form the date of the issue by SCCI of the Certificate of Registration of the Charter, in the form of the investment License.
Article 25: The Charter of the JV Company is signed in..(location), on. . .(date), in Vietnamese and in... (a widely used foreign language). Both versions are of equal validity.
The foreign party The Vietnamese party
(Signature, title and (Signature title and seal, if any) seal, if any) in case there are several in case there are several foreign parties, state Vietnamese parties, state the name of each party the name of each party and affix appropriate seal and affix appropriate seal (if any) (if any)
form III Investment application for licensing an enterprise with 100 percent foreign owned capital Date :......
To : The state Committee for Cooperation and investment.
An investment application under the foreign investment Law of Vietnam is herewith being submitted by the undersigned to the state Committee for Cooperation and Investment.
I. Company.... Wishes to be issued with an investment license in order to establish in Vietnam an Enterprise with 100 percentage foreign owned capital in accordance with the Charter attached with main purposes and activities as follows : - - - II. We wish to apply for the following Investment Incentives : - - - III. The Documents enclosed with this Application comprise: 1- The Charter of the Enterprise with 100 percentage foreign owned capital. 2- Certification concerning juridical person status, the Company's Annual Report certified by Banking or financial Institution; 3- Legalized Power (s) of Attorney for signing this Application and the Charter of the Proposed Enterprise; 4- The economic and technical feasibility studies; 5- The appointed surveyor's inspection report concerning used equipment (if such equipment are intended for importation into the SR of Vietnam)
The investor (or the Authorized Representative) (Signature and Seal)
Guidance for a charter of an enterprise with 100 percent foreign owned capital
Article 1 The enterprise... with 100 percent foreign owned capital wishing by the following owned (s) to be established in the Socialist Republic of Vietnam : 1. The name of the Company or Individual : 2. The authorized representative : Title : Nationality : Resident address : 3. Head office : Telephone : Telex : fax : 4. Main business line (s) : 5. The Certificate of Incorporation of the Company : Registered at : Date : financial status (registered capital) : Company's account opened at the Bank : Account number : (Note : if the investors comprise many members, then each member shall describe all the details mentioned above).
Article 2 : The Enterprise... is established in the form of a Company of limited liability, and is a Vietnamese juridical person.
Article 3 : 1. The Enterprise with 100 percent foreign owned capital wishes to be established in the Socialist Republic of Vietnam for the purposes of : ( describe the objective of production and business of the Enterprise). 2. The name of the Enterprise is ... 3. the transaction name of the Enterprise in foreign language is...
Article 4: 1. Address of the Enterprise : - Head office : - Main factory/plant, workshop : - Branch (es) : - Representative Office : 2. Production capacity :
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3. The products of the Enterprise will be marked as follows: - In Vietnam market: ..... % of products anticipated to be sold annually. - In foreign markets : ...... ..% of products anticipated to be sold annually - In foreign markets : ..... % of products anticipated to be sold annually.
Article 5 : 1. The total invested capital of (the name of the Enterprise) is...(value). 2. The legal capital of the Enterprise is... 3. Loans or credit : - Amount : - Anticipated interest rate : - Conditions of loan and repayment schedule :
Article 6 The time within the legal capital of the Enterprise is to be realized is as follows : (State clearly the time schedule deadline for transferring the foreign capital into Vietnam).
Article 7 State the divestment schedule of the foreign capital from the Enterprise to appropriate economic organizations of Vietnam and transfer of same in the from of a Joint Venture (if applicable) : - from year... onwards : ... % of capital - from year.. . onwards : ... % of capital Part of Capital will be transferred to Vietnamese organizations under following conditions : (1)
Article 8 The duration of the Enterprise is ... year commencing from the date of issue of the Investment License. Changes to the duration of operation of the Enterprise to SCCI for approval.
Article 9 The schedule for implementing this contract after the date on which the Investment License by SCCI has been issued, is as follows : 1. a/ from month... to month... Importation (if applicable) of building materials (if permitted) of the main production area/plant or the office b/ from month... to month... Construction of the main production area/ plant and of the office : 2. from month... to month... Importation of equipment and machinery : 3. from month... to month... Trial operation : 4. from month... Official production :
Article 10 1. The Enterprise uses... as a monetary unit for accounting purposes. Conversion of this currency to foreign currencies or vice- versa shall be executed in accordance with the official exchange rates published by the state Bank of Vietnam at the time of the actual payment/financial transaction. 2. The Enterprise shall execute all payments and accounting envisioned by the charter, through accounts in Vietnamese and foreign currencies opened at... (the commercial bank of Vietnam, the foreign bank branches in Vietnam, the Joint Ventures between the bank of Vietnam and foreign banks).
Article 11: 1. The accounting system used in the Enterprise is... (the name of the system) and is approved by the Ministry of finance and falls within the control of Vietnamese authorized financial agency. 2. The depreciation rates of fixed assets are as follows: (State the depreciation rates for each kind of asset of the Enterprise). 3. The fiscal year of the Enterprise usually commences from ..... and end on ...... every year. for the first year however, the fiscal year of the Enterprise commences from the date of issue of the Investment License and end on ....19.... 4. Each year, the Enterprise makes an accounting report in conformity with Vietnamese Government stipulations. All financial statements of the Enterprise shall be submitted to SCCI and the Tax collection offices of the Ministry of fi nance within three (3) months from the date of the termination of the fiscal year
Article 12 The Enterprise shall set up the Production Development fund, the Welfare fund and other funds. The nature of the scope, the source and principle of using each fund shall be decided by the General Director on the basis of accrued profits and in conformity with the Law of the Soc ialist Republic of Vietnam.
Article 13 The assets of the Enterprise are insured at ..... (state the name and address of the insurance organization) and are not to be nationalized, appropriated or transferred into any other form of ownership by administrative measures.
Article 14 The Enterprise shall fulfill all financial obligation towards the State of Vietnam as stipulated in the Investment License.
Article 15 1. The authorized representative of the Enterprise in charge of relations with the State Agencies and the court is nationality .........., passport number: ......... 2. State the organization, management and operation of the Enterprise (state clearly the form of organization and management). Possibly there is a Board of Directors and an executive body of the Enterprise; or a foreign individual ( as the head of the Enterprise) who will directly control and operate the Enterprise. Describe the function, tasks, rights and obligations of each department of the Enterprise according to the management form selected by the owner.
Article 16 The Enterprise may be dissolved ahead of schedule or cease to exist in the following cases:
a/ In case where force majeure such as natural disasters, war, etc.., renders the Enterprise inoperable. In such case, the owner of Enterprise shall immediately inform the State Committee for Co - operation and Investment about all meas ures to overcome the situation (albeit unsolvable.) b/ In accordance with an appropriate decision by SCCI. c/ When the operation as stipulated in the Investment License expires, or terminates ahead of schedule as stipulated in this Article.
Article 17 The remaining assets of the Enterprise after termination of its operation shall be disseminated as follows ............ ( state clearly, for example, how the remaining assets shall be transferred to a Vietnamese economic org anization or shall be sold with propriety to the Vietnamese economic organization or shall be put up for auction, etc...) 1. In case the Enterprise goes into bankruptcy, all arising issues shall be resolved in accordance with the Law of Vietnam. If there are no provisions in conformity with the Law of Vietnam on bankruptcy, the Law of ..... (describe that Law) shall be applied. 2. The liquidation (should it arise ) of assets of the Enterprise shall be executed by the Liquidation Board. The rights and responsibility of the Liquidation Board shall be decided by the owner of the Enterprise, according to the Law of Vietnam.
Article 18 All other terms relating to the operation of the Enterprise which are not provided for in this Charter, shall be executed by the Enterprise in accordance with applicable provisions of the foreign Investment Law of Vietnam, relevant leg al regulation as well as with appropriate provisions describe in the Investment License issued by the SCCI.
Article 19 This Charter may be added and/or amended on the basis of a proposal made writing by the authorized representative of the Enterprise as stipulated in Article 15 of this Charter and after approval of same by SCCI.
Article 20 This Charter shall take effect from the date State Committee for Cooperation and Investment approves the investment application of the Enterprise.
Article 21
This Charter is singed in .......( location), on .... (date), in........ originals the Vietnamese version and in .....(a widely used foreign language). Both version are of equal validity.
The investor ( Signature, title and seal, if any)
Note: