Vietnam legal Document pageVietnam legal Document page
The State Committee Socialist Republic of Vietnam
for Cooperation Independence-freedom-Happiness
and investment htmlhtmlhtml-----
No.2427/UB-TD
html-- Hanoi, 24 November 1994
TO :
Vietnamese economic organizations are required to refer to this guidance while negotiating for, signing foreign investment projects. This is for guidance only; for specific projects, conditions for the formulation of contracts and other documents should b e taken into account. Upon completion of negotiations, investors should base on "Guidance for the formulation of foreign Investment Project Documentation" promulgated by the SCCI to draft project documentation in accordance with applicable regulations.
Project to be formulated in accordance with this guidance and guidance on documentation formulation and in conformity with laws shall be considered for the grant of Investment Licenses by the SCCI, within its authority, in a shortest period of time.
Any difficulties and petitions during the course of execution should be informed on time to the Project Assessment Department of the SCCI.
for The State Committee for Cooperation and Investment Vice Chairman
NGUYEN MAI (Signed)
2. Scale
a. for newly-built works
- In Ho Chi Minh City : At least 150 rooms or 8,000 square metres of floor space or an investment capital of eight million US dollars upwards.
- In Hanoi : at least 100 rooms or 5,000 square metres of floor space or an investment capital of five million US dollars upwards.
- In Haiphong, Vung Tau, Nha Trang and Danang : at least 50 rooms or 2,500 square metres of floor space or an investment capital of 2.5 million US dollars upwards.
b. for works under repair, upgrading or with new investment capital (excluding value of the existing architectural works) : no less than five million US dollars for those in Ho Chi Minh City, two million US dollars, in Hanoi and 800,000 US dollars, in oth er localities.
c. for projects to invest in mountain areas and regions with natural, economic and social difficulties, smaller scale may be considered.
3. Investment form : Joint-Venture Companies
4. Investment rate : (for newly-built works)
- Three-star hotels : USD 50,000 - 80,000/room - four-star hotels : USD 90,000 - 120,000/room - five-star hotels : USD 130,000 - 200,000/room - for-lease offices : USD 600 - 800/square metre of floor space
5. Related activities :
- Not permitted is the running of casinos, jackpots, slot machines, commercial business operations including imports and exports, except for sales of souvenirs.
- for hotel projects having recommendations from the Municipal/Provincial People's Committees, the operation of dancing halls, massage, sauna and karaoke activities may be considered.
6. Site :
In conformity with the plan for tourism development in Vietnam and the urbanization plans approved by the relevant Municipal/Provincial People's Committees.
7. Vietnam's contribution to legal capital
Parties are required to negotiate and reach an agreement that the Vietnamese Party may make the highest contribution to the legal capital in accordance with the laws and which in any cases, no less than 30%. The Vietnamese Party should negotiate with the foreign Party on gradual increases of its legal capital contribution to the joint venture.
8. Machinery, equipment
- All machinery, equipment and means of transport should be brand new. - In principle, the purchases of equipment should be conducted through tenders. If the foreign Party makes its capital contribution in equipment, machinery and means of transport, they must be checked in terms of quality, specifications and prices.
9. Tenders
- Construction is to be carried out by tenders. Where Joint-Venture Parties are professional building, engineering organizations, they shall be given priority to tenders with the same economic and technical conditions. - foreign Party's tender in form of "turn-key" should be minimized to the utmost. special cases shall be considered and decided on by the Ministry of Construction. - Building, engineering organizations to be successful in construction tender must be issued with permits for construction in Vietnam.
10. Joint-Venture term
- Projects of 10 million US dollars downwards: 20 years. - Projects of over 10 million US dollars to 15 million US dollars: 25 years. - Projects of over 15 million US dollars to 25 million US dollars: 30 years. - Projects of over 25 million US dollars to 40 million US dollars: 35 years. - Projects of over 40 million US dollars to 50 million US dollars: 40 years. - Projects of over 50 million US dollars: 45 years.
for projects of which foreign Parties commit to make non-refundable transfer of fixed assets to the Vietnamese Parties at the expiration, the joint-venture terms may be extended as long as five years but the total duration of time cannot exceed 48 years.
11. Management contracts
- Management contract(s) shall be signed between the Joint-Venture Company and hotel management company(ies) and submitted to the SCCI for consideration. - In principle, management fees including use of name and marketing fees cannot exceed 3% of the turnover and 10% of the annual compound interest (pre-tax interest) of the Joint-Venture Company. - The term for a management contract is no longer than 10 years.
12. Tax, rental
Subject to applicable regulations.
13. Other matters
- Payments of costs for compensation, vacancy shall constitute the legal capital contributions made by the Vietnamese Party or the foreign Party or the Joint-Venture Company's expenses, they shall not be included in land use right value. - The Joint-Venture Companies are required to apply Ministry of finance, Vietnam State Bank's regulations on depreciation, accounting system, account opening, and foreign exchange control. - Measures for waste treatment and environmental protection should be worked out. - Ministry of Construction's general regulations on capital construction control must be observed. - Minutes on evaluation of assets to be contributed to the legal capital by the Vietnamese Party must be prepared.
Guidance for a number of key elements of foreign investment projects in garment and footwear manufacture
1. Investment form :
- Business cooperation on the basis of contracts, joint-venture enterprises and 100 percent - foreign owned enterprises.
- form of joint-venture enterprises is promoted.
- Unacceptable are processing projects not adding all material costs and selling prices of products to the projects' expenditures and incomes.
2. Products and product outlets :
a. for Joint - Ventures Enterprises and Business Cooperation Contracts : at least 80% of the products are to be exported.
b. for 100 percent-foreign-owned enterprises : at least 90% of the products are to be exported.
In any cases of exports to markets requiring quotas, the foreign Party shall ensure the outlets for the export products; the Vietnamese State shall only provide it with the quotas, if possible.
3. Investment rate :
a. Tailoring : not exceeding 2 million US dollars per million products each year (in shirt equivalent).
b. footwear manufacture : not exceeding 3 million US dollars per million pairs of shoes each year (in canvas shoe equivalent).
4. Site :
In conformity with the local plan approved by the relevant Municipal/Provincial People's
5. Usable land area :
Not exceeding 7,000 m2 for 1 million US dollars of invested capital. Land is not to be reserved for future use. It is advisable to erect high buildings in cities and industrial estates in order to save land.
6. Equipment, machinery :
Essential equipment and machinery and means of transport shall be brand new.
Before importation, second-hand equipment must be inspected; it must be 80% new in terms of quality, help ensure product quality and meet requirements for environmental protection, labour safety and reasonable prices. Means of transport, must be brand new .
7. Vietnamese Party's legal capital contribution :
No less than 30%. In the course of business, the Vietnamese Party is entitled to re-purchase the capital contributed by the foreign Party on the agreed basis.
8. Investment term :
- for projects of less than three million US dollars : up to 20 years
- for projects of from three to five million US dollars : up to 25 years
- for projects of over five million US dollars : up to 30 years
- for projects of over 30 million US dollars : up to 35 years.
Where the foreign Party makes non-return transfer of assets to the Vietnamese Party at the termination of operations, the term may be extended as five years as longer than the terms set above. for projects of very large scale or in localities with less fa vourable socio-economic conditions, they may be considered for longer terms.
9. Tax, rental :
Subject to applicable regulations.
10. Other matters :
- Payments of costs on compensation, vacancy are advisable to be included in the capital contributions made by the foreign Party or the Vietnamese Party, or in the expenditure of the enterprise to be set up; they are not to be attributed to the value of t he right to use land to be contributed by the Vietnamese Party to the capital or to the rental to be paid to the State.
- Parties to the Joint Ventures or enterprises are required to abide by regulations of the Ministry of finance and the State Bank of Vietnam in relation to depreciation, accounting system, account opening, foreign exchange control.
- The projects shall obtain approvals from the relevant Municipal/Provincial People's Committees attached with their opinions on land area and land rental.
- Minutes on evaluation of assets to be contributed to the capital by the Vietnamese Party (if it makes capital contribution by State - owned property).