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COUNCIL Of MINISTERS SOCIALIST REPUBLIC Of VIETNAM
No 49-HDBT Independence-freedom-Happiness
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Hanoi, 4 March 1991.
Pursuant to the Law on foreign Investment in Vietnam, dated 29 December 1987 and the Law on Amendment and Addition to the Law on foreign Investment in Vietnam, dated 30 June 1990;
Pursuant to the Ordinance on the Transfer of foreign Technology into Vietnam dated 10 December 1988 ; and
On the Proposal of the Chairman of the State Committee of Science.
DECREES
CHAPTER I
General Provisions
Article 1
This decree is intended to provide detailed provisions for the implementation of the Ordinance on the Transfer of foreign Technology into Vietnam (hereinafter referred to as the Ordinance).
Article 2
Participants in the transfer of technology :
1. The transfer of technology referred to in clause 1 of article 2 of the Ordinance means;
- foreign legal entities (economic, financial and scientific organizations; companies and enterprises);
- Non-governmental organizations;
- foreign individuals;
- Enterprises and corporations with foreign owned capital which are Vietnamese legal entities; and
- Overseas Vietnamese.
2. The transferee of technology referred to in clause 2 of article 2 of the Ordinance means;
- Vietnamese legal entities (economic, financial and scientific organizations, companies and enterprises; State, collective and private economic units; institutes, universities and other associations);
- Enterprises and corporations with foreign owned capital which are Vietnamese legal entities; and
- Vietnamese individuals.
Article 3
Contents of technology transfer :
The following are transfers of technology :
1. The transfer of ownership or the right to use all types of industrial property, including:
- Inventions;
- Industrial designs;
- Trade marks;
as defined in article 4 of Chapter I of the Ordinance on the Protection of Industrial Property Rights dated 28 January 1989.
The buying and selling of trade without the transfer of the associated industrial property rights shall not constitute a transfer of technology.
2. The transfer through the purchase, sale or supply of the following (with or without equipment) :
- Technical know-how;
- Technological projects and processes;
- Preliminary designs and technical designs;
- formulate, drawings, graphs, diagrams, charts; and
- Other technical knowledge and expertise.
3. The provision of the following forms of consultancy of support services:
- Technical support, selection of technology, instructions for the installation of equipment, trial operations of various types of technology;
- Research, analysis, evaluation exploration of opportunities, and feasibility studies for investment and technology innovation projects;
- Consultation in relation to technology management; organization and operation of production and technology processes;
- Training and improvement of the professional, technical and managerial skills of administrators, technicians and other workers; and
- Support services in relation to the collection, processing and supply of information on markets, technology, law, resources and the environment.
The importing of conventional machinery, equipment, and materials shall not be considered to amount to the transfer of technology and shall not fall within the areas covered by the Ordinance.
Article 4
Basic requirements of technology to be transferred into Vietnam :
1. Technology to be transferred into Vietnam shall be obliged to achieve at least one of the following :
(a) The raising of the technological level of production by :
- Increasing labour productivity;
- Economical use of resources, fuel, materials and energy;
- Improvement in design and in product quality ; or
- Creation of new products to satisfy local consumption and export requirements.
(b) The efficient exploitation of local resources such as raw materials and fuel; job creation and employment of available manpower ; or the exploitation and development of recyclable resources.
2. Technology to be transferred shall be guaranteed :
(a) Not to result in any effects which may be detrimental to the environment such as :
- Land, water or air pollution;
- Damage to natural fauna and flora;
- Ecological imbalances ; and
- Damage to the cultural and social aspects of populated areas.
(b) To comply with requirements for occupational safety, industrial conditions and working environments.
It, due to the nature of the technology transferred, any of the above effects appear which are detrimental to the workers or to the environment, the two parties to the technology transfer shall devise appropriate remedial measures. These measures shall be considered to be part of the technology to be transferred and shall be explained in detail in the relevant technology transfer contracts.
CHAPTER II
Technology Transfer Contracts
Article 5
Every transfer of technology which takes place and is commercial in nature or binding in terms of rights and obligations shall take place pursuant to a contract in writing (hereinafter referred to as the contract).
The written contract document shall serve as the basis upon which each party may perform its undertakings, shall guarantee the legal requirements for the import of technology, equipment, payment, and the settlement of disputes.
Article 6
Principal provisions to be included in technology transfer contracts :
All technology transfer contracts shall include the following principal information :
1. Names and addresses of the transferor and transferee of the technology and names and positions of the individual; representatives of each of those parties; and
2. Definitions of terms used in the contracts.
3. Details of technology to be transferred:
- Name (technology or business);
- Detailed description of principal contents (according to the classification of the contents of the technology to be transferred as defined in article 3 of Chapter I);
- Technical and economic value of each item of technology to be transferred ; and
- Results estimated to be achieved following, completion of the technology transfer (economically, technically, socially).
4. Provisions which relate specifically to industrial property rights, including the supply of documents which describe the industrial property and all other legal documents which certify the industrial property rights as being protected.
5. Time, schedule and place at which the technology is to be provided. Where the technology is transferred with accompanying equipment, there shall be included a list of that equipment, details of and plans for the delivery of each type of equipment.
Where technology is transferred as part of an investment or as part of the construction of a factory, it shall be necessary to define the relationship between the implementation schedule provided in the technology transfer contract and the schedule of th at investment or construction.
6. Payments :
Prices, conditions and modes of payment (including type of currency to be used, place where payment is to take place, time limits and percentages).
Where the technology to be transferred consists of a number of different items it is necessary to stage clearly the mode by which each item will be paid for in accordance with the contract.
Where item or part of the technology transferred is no longer valid (due to the expiry of a protected industrial property right or to the technical know-how becoming public information), the parties shall negotiate further the provisions in relation to pa yment.
7. Undertakings shall be made by both parties in relation to the following:
- Quality of technology
- Reliability of technology
- Duration of guarantees
- Guarantee of confidentiality during the validity of the project
- Environment protection and occupational safety ; and
- Other undertakings of the two parties necessary to ensure that the transfer of technology is problem free.
8. Necessary training programs in relation to the transferred technology :
- Responsibilities of the two parties for training;
- form, contents and areas of training;
- Duration, and location of training;
- Training expenses and other related provisions ; and
- Objectives and level of skills to be achieved from training.
9. Duration of contracts and provisions allowing changes to be made by the parties to the duration or expiry of them.
10. Issues in relation to disputes arising from contracts :
- Laws to be applied;
- Method of resolution to be adopted ; and
- Bodies to be used in the resolution of disputes.
Article 7
When examining the contents of a technology transfer, the two parties shall define clearly the contents of the technology, the skill, expertise and consultancy business, the types of resources, materials and machines which Vietnam can supply and the condi tions attached to using them as substitutes for imports and the replacement process.
Article 8
Provisions not to be included in contracts :
The following provisions shall not be included in contracts.
1. Provisions which compel the transferee of technology to buy or conditionally receive the following objects (in terms of quantity, quality and specifications) from the transferor or party appointed by the transferor:
- Raw materials, other materials;
- Production facilities such as machines, equipment, and vehicles;
- Intermediate products; and
- Unskilled labour.
Specific guarantees which are required for the technology, in terms of resources, materials, accessories, capital goods or skilled manpower with technical expertise shall be explained in detail and agreed to by both parties.
2. Provisions which compel the transferee of technology to agree to and abide by specified limits in relation to the following :
- Scope of production and quantity of products (or groups of products) to be produced over a specified period of time;
- Prices, volume and area of product consumption ; or
- Appointment of sales agents or commercial representatives and the activities of and relationship between the transferee of technology and those agents and representatives.
3. Provisions which restrict the export market of the transferee of the technology by :
- Specifying those markets which may not be exported to ;
- Specifying those markets which may be exported to ; or
- Specifying the volume and composition of the groups of products which are to be exported to a particular market during a particular time period.
Where the transferor of the technology is producing and consuming a similar product in a particular market, or has granted a license to a third party for the exclusive use of the industrial property rights (monopoly license) thereby enabling them to recei ve technology similar to that being transferred, the production and export of products shall take place in accordance with the agreements contained in the contracts and in accordance with the Vietnamese laws and international conventions on industrial pro perty rights to which Vietnam is a party.
4. Provisions which provide that the transferee of technology shall not research and develop further the technology transferred or receive similar technology from other sources.
5. Provisions which prohibit the transferee of technology from utilizing freely the technology after the duration of the contract or the industrial property rights contained in the contract have expired.
Where special circumstances exist (due to the nature of the technology transferred, or to the state of the national economy) the authorized State body in charge of technology transfers may consider and allow one or more of the restrictive provisions refe rred to above, to be included in the contract.
Article 9
Price of the technology to be transferred:
The price of the technology to be transferred shall be agreed upon by the two parties on the basis of equality and mutual benefit. Price fixing procedures shall accord with the value of the technology, and the prices and price fixing procedures of similar technology in international markets at the time of calculation.
Article 10
Mode of payment
Payment may be made by either package payment, installment payment or a combination of both. The amount of "installment payments" depends on the nature of technology, but shall not in total exceed by five (5) per cent or more the net selling price of the products produced or the services provided as a result of the technology transferred.
The two parties may agree upon the currency to be used for payment or for payment to be made in kind. All payments made in cash and cash transfers shall take place in accordance with the regulations of the State of Vietnam.
Where payments are made in kind (goods) then depending on the nature of the goods involved (whether or not they are included in a quota), the two parties shall clearly define this method of payment in the contract and shall carry it out in accordance with the regulations of the management of export and import business of the Council of Ministers of Vietnam.
Article 11
Duration of contracts :
1. The duration of a contract is the period of time for which it is valid commencing from the time of approval and issue of a license for technology transfer by either the authorized Vietnamese body in charge of technology transfer or the bodies invested with such power, as referred to in articles 15 and 20 of this Decree.
2. The duration of the contract shall be determined and agreed upon by the two parties, but shall be no longer than seven years.
3. The authorized State body in charge of technology transfers may, in special circumstances at the request of the two parties, approve of contracts the duration of which are longer than seven years.
Article 12
Information of technological improvements and innovations :
If, during the performance of a contract, the transferor or transferee of the technology creates some improvement or innovation in relation to the technology transferred, each party may officially request that the other party inform it of the existence an d preliminary contents of these changes and, where necessary, propose official negotiations aimed at the purchase or receipt of the improvements and innovations.
Article 13
Supply of improvements and innovations in the technology transferred :
1. Upon being requested to supply information on improvements and innovations, each party shall be responsible to transfer the information to the other party first, on the basis of agreement, equality and mutual benefit.
In the event that one party deliberately fails to transfer, brings undue pressure to bear on the other party, or transfers the innovations and improvements to a third party on more favorable conditions thereby causing material damage to the other party, t he other party may officially request that the authorized State body in charge of technology transfer intervene or treat it as a dispute arising under the contract and which shall be resolved in accordance with article 14 of this Decree.
2. The transfer of improvements or innovations shall be effected in the same manner as the ordinary transfer of technology and may be done by way of a new technology transfer contract or supplementary technology transfer contract in accordance with the te rms contained in the original contract.
Article 14
Resolution of disputes :
1. The parties shall attempt to resolve all disputes which arise during the performance of the contract by negotiation and reconciliation.
2. failing such resolution, the dispute shall be referred to arbitration and the laws to be applied shall be those previously decided and agreed upon in the contract, in accordance with section 10 of article 6 of this Decree. The disputing parties may sel ect one of the following forms of arbitration :
- The foreign Trade Arbitration Council affiliated to the Vietnamese Chamber of Commerce and Industry or an arbitrator of a third country or international arbitration; or
- An arbitration council mutually agreed upon by the two parties.
CHAPTER III
Management and Approval of Technology Transfer Contracts.
Article 15
The State Committee of Science shall be the State body which is authorized to manage contracts of technology transfer from foreign countries into Vietnam.
The power to approve technology transfer contracts is delegated in accordance with article 20 of this Decree.
Article 16
Application for approval of technology transfer contracts :
The transferor, or transferee of technology on behalf of one or both of them may submit an application for the approval of a contract.
When applying for approval of a contract, the two parties shall submit the following documents :
1. An application for the approval of a contract completed in accordance with official printed form of the State Committee for Science.
2. The technology transfer contract and all attached appendices.
3. A feasibility study.
The feasibility study may be made by either party and must contain the justifications for the contract, supplements to analyses and calculations regarding markets, materials, technology, economy, finance and efficiency of technology transfer.
4. Information ensuring the status of each party as a legal entity, their property rights and all other necessary details in relation to the two parties participating in the technology transfer contract, such as :
- Name and address of the company;
- The guarantor or sponsoring organization;
- Bank, account number, capital; and
- Documents verifying industrial property rights.
The languages to be used in the contract and all attached documents shall be Vietnamese and a widely used foreign language agreed upon by the two parties in the contract. Both versions shall be equally valid.
Article 17
Decision to approve contracts:
The State Committee for Science or bodies to which the power to approve technology transfer contracts has been delegated shall, within three months of receipt of the application referred to in the provisions of article 16 of this Decree, communicate its d ecision to approve of or refuse the technology transfer contract.
The communication of approval shall be effected by the issue of the technology transfer license. The State Committee for Science shall publish official forms of technology transfer licenses to be used in relation to all kinds of technology transfer contra cts.
Article 18
false statements and dealing with false statements :
1. Where Vietnamese State bodies have sufficient evidence that a false statement has been made, the license permitting technology transfer shall be withdraws and the contract automatically declared invalid. Where the contract is invalid, the market of the statement shall be responsible for all economic and financial consequences which flow as a result.
2. Where an individual or agency provides information alleging that a false statement has been made and the performance of a contract is suspended while that information is examined, the informant or informing agency shall be responsible for all consequen ces, financial, economic and social, caused by the provision of that information in the event that no false statement has been found to have been made.
Article 19
Amendments to contract :
Technology transfer contracts may be subject to additions, amendments, or cancellations in part provided that both parties unanimously agree and send a written proposal to the body which originally approved the contract and granted the technology transfer license. The body shall then within one month of receiving the parties' request to change the contract, deliver its findings in writing.
The additions, amendments, and cancellations in part of the contract shall be effective only when the findings referred to above are made known.
Article 20
Delegation of power to approve technology transfer contracts :
The delegation of power to approve of technology transfer contracts in accordance with article 18 of the Ordinance is designed to create favorable condition for ensuring the timely signing and implementation of the contracts.
1. The State Committee for Science shall study, investigate, decide, approve of and issue licenses in respect of the following contracts :
- Contracts worth more then one million (1,000,000) US dollars (regardless of the source from which they are paid);
- Contracts (central and local) worth more than five hundred thousand (500,000) US dollars which are financed by the State Treasury;
- Contracts of branches which require national security guarantees such as national defense and interior affairs; and
- Contracts which may have exceptional consequences.
2. The Ministries, other State Committees and bodies under the Council of Ministers, people's committees of the provinces, towns and special zones under central authority shall, after consulting the State Committee for Science, study, investigate, decide , approve of and issue licenses in respect of the following contracts :
- Contracts worth less than one million (1,000,000) US dollars which are financed by means other than the State Treasury; and
- Contracts worth less than five hundred thousand (500,000) US dollars which are financed by the State Treasury.
3. The approval of all technology transfer contracts which are within the framework of foreign investment shall take place in accordance with the articles contained in Chapter V of this Decree.
Article 21
Registration of contracts :
After a decision to approve and grant a license in respect of a contract has been made, the Ministries or Committees concerned shall, within two weeks, copy and send all relevant documentation to the State Committee for Science.
Article 22
Managing and guiding the implementation of contracts :
The State Committee for Science shall be responsible for managing, storing and classifying all technology transfer contracts, for periodically informing all related bodies of matters necessary for the creation of favorable conditions for the implementati on of contracts and for avoiding the import of any technology already in existence in the country.
The Ministries and the provincial people's committee shall monitor the performance of all technology transfer contracts approved and shall inform the foreign Trade Bank concerned of matters necessary for the raising of foreign currency which is required w here payment is made by installments. This monitoring shall assist in evaluating the standard of handling of the technology transferred, particularly when extensions to contracts are being considered.
CHAPTER IV
Rights and Obligations of the Contracting Parties in the Transfer of Technology
Article 23
Taxes on transfer of technology :
1. The transferor of technology shall in accordance with the taxation laws of Vietnam in force at the time pay income tax and import duty on all machinery and equipment which is related to the transfer of technology.
2. In order to encourage the transfer of foreign technology into Vietnam, the transferor shall be exempt from all income tax for a period of three years from the date of promulgation of this Decree.
Article 24
All foreigners entering Vietnam for the purposes of studying, preparing for, signing and implementing technology transfer contracts shall be considered to be entering Vietnam in preparation for, and for the implementation of, and investment project, and s hall, accordingly, be entitled to benefit from all regulations of the State of Vietnam on customs, immigration, residence, communication and transport, in accordance with Chapter 10 of Decision No. 28-HDBT of the Council of Ministers dated 6 february 1991 which provides detailed regulations for the implementation of the Law on foreign Investment in Vietnam.
Article 25
The signatories to a technology transfer contract are obligated to implement strictly its terms. All breaches of technology transfer licenses which occur for reason of personal gain shall be punished in accordance with the laws of Vietnam.
CHAPTER V
Technology Transfer in foreign Investment
Article 26
The following shall be considered to continue technology transfers in foreign investment:
1. Technology transferred by a foreign party in the form of capital contribution in whole or in part for the establishment of an enterprise of joint venture enterprise with a Vietnamese party in accordance with the Law on foreign Investment in Vietnam.
2. Technology transferred by a foreign party in the form of capital contribution in whole or in party to a business co-operation contract entered into with a Vietnamese party in accordance with the Law on foreign Investment in Vietnam.
Article 27
Technology transfer contracts which form part of foreign investment shall be made separately and included in the documents filed when an application is made for an investment license.
Article 28
The State Committee for Co-operation and Investment shall consider, investigate, decide and issue investment licenses and shall also issue licenses in respect of technology transfer contracts in foreign investment, after obtaining an official written opin ion from the State Committee for Science.
After the issue of licenses, the State Committee for Co-operation and Investment shall copy and send to the State Committee for Science the particular sections relevant to the technology transfer contract.
CHAPTER VI
final Provisions
Article 29
This Decree shall be of full force and effect as of the date of its promulgation.
Article 30
The Chairmen of the State Committee for Science, the State Planning Committee and the State Committee for Co-operation and Investment, the Minister of Commerce, foreign Affairs and finance, the Governor of the State Bank of Vietnam, and the General Direct or of the General Department of Customs shall, within the scope of their function and authority, be responsible for issuing circulars which provide regulations on the implementation of this Decree.
Article 31
The Chairman of the State Committee for Science shall be responsible for drafting and submitting to the Council of Ministers all documents necessary for the implementation of article 19 of the Ordinance on Technology Transfer.
Article 32
Ministers, chairmen of State Committee, heads of bodies of the Council of Ministers and chairmen of the people's committee of the provinces, cities and special zones under central authority shall be responsible for the implementation of this Decree.
for the Council of Ministers
Vice Chairman
VO VAN KIET