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THE GOVERNMENT
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom Happiness
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No. 36-CP

Hanoi, April 24, 1997

 

DECREE

ISSUING THE REGULATION ON INDUSTRIAL ZONES, EXPORT PROCESSING ZONES AND HI-TECH ZONES

THE GOVERNMENT

Pursuant to the Law on Organization of the Government of September 30, 1992;
Pursuant to the Law on Promotion of Domestic Investment of June 22, 1994;
Pursuant to the Law on Foreign Investment in Vietnam of November 12, 1996;
With a view to expanding and raising the effectiveness of the activities of forming, building, developing and managing industrial zones, export processing zones and hi-tech zones;
At the proposals of the Minister of Planning and Investment, the Minister of Science, Technology and Environment, the Minister of Industry and the Chairman of the Vietnam Board of Management of Industrial Zones,

DECREES:

Article 1.- To issue together with this Decree the Regulation on Industrial Zones, Export Processing Zones and Hi-Tech Zones in replacement of the Regulation on Export Processing Zones issued together with Decree No. 322-HDBT of October 18, 1991 of the Council of Ministers (now the Government) and the Regulation on Industrial Zones issued together with Decree No. 192-CP of December 28, 1994 of the Government.

Article 2.- This Decree takes effect after 15 days from the date of its signing. The earlier provisions which are contrary to this Decree are now annulled.

Article 3.- The Ministers, the Heads of the relevant ministerial-level agencies, the Heads of the agencies attached to the Government and the Vietnam Board of Management of the Industrial Zones shall have to guide in detail the implementation of the Regulation issued together with this Decree.

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ON BEHALF OF THE GOVERNMENT THE PRIME MINISTER




Vo Van Kiet

 

REGULATION

ON INDUSTRIAL ZONES, EXPORT PROCESSING ZONES AND HI-TECH ZONES
(issued together with Decree No. 36-CP of April 24, 1997 of the Government)

Chapter I

GENERAL PROVISIONS

Article 1.- The Government encourages Vietnamese enterprises of all economic sectors, foreign economic organizations, foreign individuals and enterprises with foreign invested capital to invest in the industrial zones, export processing zones and hi-tech zones (hereafter commonly referred to as IZs for short, except in cases where there is a separate regulation on a particular type of zones) in accordance with this Regulation and the provisions of Vietnamese law.

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1. An "IZ" is a zone where IZ enterprises specializing in the production of industrial goods and in the provision of services for industrial production are concentrated, having delimited geographic boundaries and no inhabitant, established by decision of the Government or the Prime Minister. In an IZ there may be export processing enterprise(s).

2. An "export processing zone" is an IZ where export processing enterprises specializing in the production of goods for export and in the provision of services for the production of export goods and export activities are concentrated, having delimited geographic boundaries and no inhabitant, established by decision of the Government or the Prime Minister.

3. A "hi-tech zone" is a zone where hi-tech industrial enterprises and units providing hi-tech development services including scientific-technological research and development, training and other related services are concentrated, having delimited geographic boundaries, established by decision of the Government or the Prime Minister. In a hi-tech zone there may be export processing enterprise(s).

4. An "export processing enterprise" is an enterprise specializing in the production of goods for export or in the provision of services exclusively for the production of export goods and export activities, established and operating under this Regulation.

5. An "IZ enterprise" is an enterprise established and operating in an IZ, which may be a production enterprise or a service enterprise.

6. An "IZ production enterprise" is an enterprise producing industrial goods, established and operating in an IZ.

7. An "IZ service enterprise" is an enterprise established and operating in an IZ, providing IZ infrastructure services or services for industrial production.

8. A "provincial Board of Management of the IZ(s)" (except in cases where there is a separate regulation on each type of the Board of Management) is an agency that directly manages IZs and export processing zones located within the geographic administrative boundary of a province or a city directly under the Central Government or a Board of Management of the IZ(s) located in an inter-provincial area or a Board of Management of an IZ (irregular case) or a Board of Management of a hi-tech zone; established by decision of the Prime Minister.

Article 3.- The development of IZs shall comply with the overall planning already approved by the Government. For setting up an IZ which is included in the overall planning, the Peoples Committee of a province or a city directly under the Central Government (commonly referred to as the provincial Peoples Committee) shall direct the elaboration of a report on the feasibility study for the setting up of the IZ and submit it for approval according to current provisions. For setting up an IZ which is not yet included in the overall planning at the proposal of the provincial Peoples Committee, the Ministry of Planning and Investment shall assume the main responsibility and coordinate with the Ministry of Industry, the Ministry of Construction and the Vietnam Board of Management of the IZs and the concerned agencies (if necessary) to submit the plan on the setting up of such IZ to the Prime Minister for consideration and decision.

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1. Whether or not the plan is included in the overall planning already approved by the Government. If not, the necessity to adjust or amend the overall planning must be clarified.

2. The investment in building infrastructure works inside and outside the IZ, including technical links outside the IZ, dwelling quarters for workers and employees working in the IZ, schools, medical examination and treatment establishments in service of the IZ.

3. The solutions to: The sources of capital, power supply, water supply and drainage, communications, information, environment and labor to assure the feasibility of the IZ.

4. The manufacturing industries in the IZ.

5. The investment mobilization plan for the IZ.

Article 5.- The management of investment and construction and the management of bidding with regard to the operations of IZ enterprises must comply with current provisions of Vietnamese law.

Article 6.- There may be the following types of enterprises in an IZ:

a/ Vietnamese enterprises of all economic sectors.

b/ Enterprises with foreign invested capital.

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Article 7.- Vietnamese and foreign investors, Vietnamese enterprises of all economic sectors and enterprises with foreign invested capital in an IZ may invest in the following fields:

1. Building and operation of infrastructure works.

2. Production, processing, assembly of industrial products for export and consumption on the domestic market, development and trading of patents, technical know-how and technological processes.

3. Scientific-technological development and research to improve the quality of products and create new products.

4. Services in support of the industrial production.

Chapter II

IZ ENTERPRISES

Article 8.- An IZ enterprise shall have the full legal basis for operating in an IZ after it is granted by a competent State agency an investment approving decision or investment license and a business registration certificate.

For an enterprise with foreign invested capital, its investment license shall be as valid as a business registration certificate as prescribed in Article 60 of the Law on Foreign Investment in Vietnam.

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Article 9.- The operating duration of an IZ enterprise shall not exceed 50 years and the operating term of the IZ infrastructure development company, counting from the date on which the enterprise is granted by a competent agency a decision approving the investment or a license for investment in the IZ.

In special cases, the operating duration of an IZ enterprise may exceed the operating term of the IZ infrastructure development company if it is so approved by the Prime Minister at the proposals of the provincial People’s Committee and the agency that has issued the investment approving decision or investment license.

Article 10.- An IZ enterprise shall be entitled to:

1. Rent land in the IZ in accordance with current provisions on each type of enterprise for the building of workshops and architectures in service of production and business. The IZ enterprise may rent land in the IZ for a term compatible with its operating duration written in the investment approving decision or investment license.

2. Use infrastructure works, public utilities and services available in the IZ and pay for such use.

3. Organize production and business, provide services in compliance with the investment approving decision or investment license, the business registration certificate, contracts and the Charter of the enterprise.

4. Conduct direct import and export in accordance with the provisions of law.

5. Rent public utilities, production and business means and hire services outside the IZ.

6. Within the permitted duration of production and business, the IZ enterprise is entitled to assign its capital in accordance with current provisions of law. The assignment of capital shall be effective only after the capital assignment contract is approved by the agency that has issued the investment approving decision or investment license.

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1. Abide by law, this Regulation, the Regulation on the management of the IZ, its investment approving decision or investment license and business registration certificate.

2. Register with the provincial Board of Management of the IZ(s): the quantities or volumes of goods for export and consumption on the domestic market (for IZ enterprises); quantities of defective products, waste materials which are still of commercial value and sold by export processing enterprises into the domestic market and the quantities of goods purchased from the domestic market into export processing enterprises (for export processing enterprises). For IZ hi-tech enterprises, they shall have to register not only the above-mentioned contents according to their type but also hi-tech transfers to be effected.

3. Fulfill financial obligations toward the State.

4. Open accounts for foreign currency(ies) and Vietnam Dong at the banks licensed to operate in Vietnam.

An IZ enterprise may open at foreign banks accounts for borrowings if it is so required by the foreign lender and approved by the State Bank of Vietnam.

5. Practice the accounting, statistical and insurance regimes in accordance with the provisions of law.

6. Observe the regulations on security, order, labor safety, industrial hygiene, ecological and environmental protection and fire and explosion prevention and fight.

7. Observe the regime of periodical and yearly reporting to the provincial Board of Management of the IZ(s).

Chapter III

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Article 12.- The Government encourages and creates all favorable conditions for Vietnamese enterprises of all economic sectors and foreign investors through joint ventures with Vietnamese enterprises to invest, build and operate IZ infrastructure works (hereafter referred to as IZ infrastructure development company) in accordance with the provisions of law. Depending on its size and nature, an IZ may have one IZ infrastructure development company or more.

Article 13.- After the issue of the investment approving decision or investment license by the competent level, the provincial People’s Committee shall consider and decide case by case on permitting an IZ infrastructure development company which is a Vietnamese enterprise of any economic sector (not applicable to any Vietnamese enterprise as a party to a joint venture established under the Law on Foreign Investment in Vietnam) to delay the payment of the land rent for a given period of time (depending on the size of each investment project, the operating location and financial capability of the enterprise) by allowing the enterprise to register such land rent as a debt to the State Budget capital.

On this basis, the provincial Peoples Committee shall consider and decide on the deferred payment of land rent by each IZ enterprise which is a Vietnamese enterprise of any economic sector (not applicable to any Vietnamese enterprise as a party to a joint venture established under the Law on Foreign Investment in Vietnam), based on the agreement between the IZ enterprise and the IZ infrastructure development company on the time for the deferred payment which shall not exceed the period allowed by the provincial People’s Committee for the IZ infrastructure development company to delay payment of the land rent.

An IZ infrastructure development company which is a Vietnamese enterprise of any economic sector (not applicable to any Vietnamese enterprise joining the IZ infrastructure development company which is a joint venture enterprise established under the Law on Foreign Investment in Vietnam) may borrow concessional loans from the State; mobilize capital from various sources in accordance with the provisions of law for investing in building IZ infrastructure works.

Article 14.-

1. An IZ infrastructure development company shall be entitled to:

a/ Mobilize investment in the IZ on the basis of the detailed development planning already approved.

b/ Sub-lease to the enterprises stated in Article 6 of this Regulation the land together with the infrastructure works built thereon in accordance with the provisions of Decree No. 11-CP of January 24, 1995 of the Government detailing the implementation of the Ordinance on the Rights and Obligations of Foreign Organizations and Individuals Renting Land in Vietnam and Decree No. 85-CP of December 17, 1996 of the Government detailing the implementation of the Ordinance on the Rights and Obligations of Domestic Organizations Assigned or Leased Land by the State. The provincial Land Administration shall, with the authorization of the provincial People’s Committee, grant land sub-lease certificates according to a simple administrative procedure on the basis of the land sub-lease contract signed between the IZ infrastructure development company and an IZ enterprise.

c/ Lease or sell to IZ enterprises the workshops built in the IZ by the IZ infrastructure development company.

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d/ Set the sub-lease rate for the land with the infrastructure works built thereon, the rate for lease or sale of workshops and the service charges after consulting the provincial Board of Management of the IZ(s).

2. An IZ infrastructure development company shall be obliged to:

a/ Elaborate and submit the master plan on the development of infrastructure works in the IZ and propose the related infrastructure works which need to be developed outside the IZ so that the State management agencies can have foundation to elaborate the development plan and assign responsibilities for implementation.

b/ Build infrastructure works according to the approved planning, design and timetable. If due to a force majeure or other plausible reasons the company fails to fulfill the construction plan on schedule, at least thirty (30) days before the prescribed deadline, the company shall have to apply for an extension thereto at a competent agency. If after the prescribed deadline the company has not yet applied for an extension or the extension is not permitted because the company has used the land for the wrong purpose, the competent State agency shall consider and decide legal measures to be taken regarding the unused part of the land or the land shall be recovered if the violation is repeated.

c/ Render maintenance to the IZ infrastructure works throughout the operating duration of the company.

d/ Ensure the industrial hygiene and environmental and ecological protection.

e/ Observe the regime of periodical and yearly reporting to the provincial Board of Management of the IZ(s).

Article 15.- Even when the building of workshops is carried out in phases, an IZ enterprise is still allowed to rent the whole necessary area of land in one time provided that it has a plan on the phased use of the whole rented land area for a maximum period of two (2) years. The IZ enterprise shall send such plan to the IZ infrastructure development company (which has sub leased the land), the provincial Land Administration and the provincial Board of Management of IZs. If due to a force majeure or a plausible reason the IZ enterprise fails to fulfill the land use plan as already committed, at least thirty (30) days before the prescribed deadline, it must apply for an extension of the land use right. Past the prescribed deadline, if the enterprise has not yet applied for an extension of its land use right or the extension is not permitted because the enterprise has used the land for the wrong purpose, a competent State agency shall consider and decide the legal measures to be taken regarding the unused part of the rented land; if the violation is repeated the land shall be recovered.

Chapter IV

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Article 16.- The labor relations in an IZ enterprise shall be subject to the provisions of Vietnams Labor Code of June 23, 1994 and other relevant provisions of law.

Article 17.- Depending on the concrete conditions of each provincial Board of Management of the IZ(s), the provincial Peoples Committee shall decide on setting up an employment service center attached to the provincial Board of Management of the IZ(s) to perform fully the functions of an employment center as stipulated in Decree No. 72-CP of October 31, 1995 of the Government detailing and guiding the implementation of a number of articles of the Labor Code on employment.

Article 18.- The recruitment of employees for IZ enterprises shall comply with the provisions of aforesaid Decree No. 72-CP and the relevant guiding documents.

Chapter V

MANAGEMENT OF FINANCE AND FOREIGN EXCHANGE

Article 19.- The tax obligations of IZ enterprises:

1. Vietnamese enterprises of all economic sectors investing in the IZs and the IZ infrastructure development companies which are Vietnamese enterprises of all economic sectors shall pay taxes at a preferential rate in accordance with current provisions.

2. IZ enterprises with foreign invested capital, foreign parties to business cooperation contracts and IZ infrastructure development companies which are joint ventures established under the Law on Foreign Investment in Vietnam shall pay taxes as follows:

a/ Profit tax at a rate (this profit tax rate shall apply throughout the project implementation period) of:

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- For export processing enterprises:

+ 10 per cent of the earned profit and they shall be exempt from profit tax for 4 years from the time they start to make profit if they are production enterprises.

+ 15 per cent of the earned profit and they shall be exempt from profit tax for 2 years from the time they start to make profit if they are service enterprises.

- For IZ enterprises:

+ 15 per cent of the earned profit for those which export less than 50 per cent of their products and they shall be exempt from profit tax for 2 years from the time they start to make profit; For enterprises which export from 50 per cent to 80 per cent of their products they shall enjoy a 50 per cent reduction of profit tax for 2 subsequent years; 10 per cent of the earned profit for those which export more than 80 per cent of their products and they shall be exempt from profit tax for 2 years from the time they start to make profit and enjoy a 50 per cent reduction of profit tax for two subsequent years ;

+ 20 per cent of the earned profit for service enterprises and they shall be exempt from profit tax for one year from the time they start to make profit.

- For IZ infrastructure development companies: 10 per cent of the earned profit and they shall be exempt from profit tax for 4 years from the time they start to make profit and enjoy a 50 per cent reduction of profit tax for four subsequent years.

The tax rate adjustment as well as the profit tax reduction and exemption already stipulated in the investment license shall comply with the provisions of Article 58, Decree No. 12-CP of February 18, 1997 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam. The use of the shared profits for reinvestment and the reimbursement of the already paid profit tax for the reinvested profit shall comply with the provisions in Article 59, Decree No. 12 of February 18, 1997 of the Government.

b/ When transferring its profits abroad, an IZ enterprise shall have to pay a tax of 5 per cent of the transferred profits.

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Article 20.- The Vietnamese commercial banks, joint venture banks between Vietnam and foreign countries and Vietnam-based branches of foreign banks shall be entitled to operate in IZs when approved by the Governor of the State Bank of Vietnam and the provincial Board of Management of the IZ(s).

The foreign exchange management in IZs shall comply with the stipulations of the Government and the provisions of Chapter VII of this Regulation.

Chapter VI

ORGANIZATION OF MANAGEMENT OF IZS

Article 21.- The contents of the State management over the IZs include:

1. Elaborating strategies, planning, plans and policy for the development of IZs;

2. Issuing legal documents on IZ activities;

3. Providing for and guiding the formation, building, development and management of IZs ;

4. Granting, adjusting and withdrawing licenses of different types and proceeding with relevant administrative procedures;

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6. Supervising, inspecting and monitoring IZ activities and dealing with newly arising issues.

Article 22.- The Ministries, ministerial-level agencies, agencies attached to the Government (hereafter referred commonly as Government agencies) shall perform the task of the State management over the IZs and the provincial Boards of Management of the IZ(s) according to their functions, tasks and powers prescribed by current provisions and may authorize the provincial boards of management of the IZ(s) to perform a number of tasks of State management over IZs.

Article 23.- Responsibilities for the State management over the IZs:

1. The Ministry of Planning and Investment shall:

- Assume the main responsibility and coordinate with the Ministry of Industry, the Ministry of Construction and the Vietnam Board of Management of the IZs in elaborating an overall planning for the development of IZs throughout the country in consistence with the socio-economic development strategy in each period and submit it to the Government for approval.

- Sum up and submit to the Government annual and five-year plans for the development of IZs. Ensure the factors for achieving the major balances in the annual State plans on the solutions stated in Clauses 2 and 3, Article 4 of this Regulation.

- Submit to the Government for promulgation the legal documents concerning the mechanism and policy on economic management and the promotion of domestic and foreign investment so as to speed up the development of IZs.

- Grant, adjust and withdraw investment licenses according to its competence.

- Authorize, with the permission of the Prime Minister, the provincial boards of management of the IZ(s) to grant, adjust and withdraw investment licenses of foreign investment projects in IZs at the proposals of the provincial Peoples Committees (for a Board of Management of the IZ located in an inter-provincial area, the proposal shall be made by such Board itself, for a Board of Management of the hi-tech zone(s), the proposal shall be made by the Ministry of Science, Technology and Environment).

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- Issue the model Regulation on the management of the IZs.

- Organize the supervision, inspection and assessment of the socio-economic efficiency of the implementation of investment projects in IZs according to its licensing competence.

- Assign the capital construction investment plan to each provincial Board of Management of the IZ(s) within the framework of the yearly plan of the Peoples Committee; or the Peoples Committee of the province where the Board of Management of the IZ has its head office if the IZ is located on an inter-provincial area; or the Ministry of Science, Technology and Environment if it is a hi-tech zone.

2. The Ministry of Industry shall:

- Together with the Ministry of Planning and Investment elaborate the master plan for the development of IZs and submit it to the Government for approval.

- Assume the main responsibility and coordinate with the Vietnam Board of Management of the IZs in guiding the listing of business lines the investment of which in each IZ or export processing zone is encouraged, banned or restricted.

- Grant permits for exploitation of natural resources, production of industrial explosives and other permits according to its competence as prescribed by law.

- Participate in the evaluation of investment projects in IZs related to the industries under its management as stipulated by the Government.

- Organize the quality control of industrial products and the supervision of industrial safety according to its competence as prescribed by law.

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- Direct economic organizations specializing in the industries under its management to take part in the development of IZs.

3. The Ministry of Construction shall:

- Participate in the elaboration of the overall planning on the development of IZs.

- Approve the concrete zoning of IZs in the provinces and the cities directly under the Central Government except otherwise decided by the Prime Minister.

- Participate in the evaluation of investment projects in IZs as stipulated by the Government.

- Evaluate the technical designs of the constructions of Group A projects and guide the provincial Peoples Committees (the provincial Department of Construction or the municipal chief architect) in evaluating the technical designs of the constructions of Group B projects (foreign investment) and Group B and C projects (domestic investment). Once the technical designs have been approved, investors can start building the projects without construction permits.

- Direct the specialized economic organizations under its management to take part in the development of IZs.

- Issue the model Regulation on the management over the building of IZs as a basis for the provincial boards of management of IZs to organize the implementation thereof.

4. The Ministry of Science, Technology and Environment shall:

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- Assume the main responsibility and coordinate with the concerned Government agencies in working out the mechanism and policy to promote the development of hi-tech zones. Guide the selection of industries and industrial businesses the investment of which in hi-tech zones is given priority in consistence with the scientific and technological development strategy in each period.

- Recommend personnel for the posts of head, deputy heads, and members of the Board of Management of the hi-tech zone(s) to the Prime Minister for consideration and appointment. Decide on the assisting apparatus of the Board of Management of the hi-tech zone(s) at the proposal of the head of the Board in accordance with the stipulations and general guidance of the Government Commission for Organization and Personnel.

- Propose the Ministry of Planning and Investment to authorize, by decision of the Prime Minster, the Board of Management of the hi-tech zone(s) to grant, adjust and withdraw investment licenses of foreign investment projects in the hi-tech zone(s) and propose the Ministry of Trade to authorize the Board of Management of the hi-tech zone(s) to consider and approve the import-export plans of hi-tech zone enterprises.

5. The Ministry of Trade shall decide to authorize the provincial Board of Management of the IZ(s) to consider and approve the import-export plans of IZ enterprises regarding the import of goods for the formation of these enterprises and for their business and production activities and the export of goods produced by these enterprises according to the business and production purposes set in their investment licenses or investment approving decisions. The Ministry of Trade shall authorize the provincial boards of Management of the IZ(s), which have been authorized to license investment in IZs, at the proposal of the provincial Peoples Committee (for the Board of Management of the IZ(s) located on an inter-provincial area, the proposal shall be made by the board itself and for the Board of Management of the hi-tech zone(s), the proposal shall be made by the Ministry of Science, Technology and Environment) .

6. The Government Commission on Organization and Personnel:

- Recommend or give comments on the personnel eligible for the posts of Head of the provincial Board of Management of the IZ(s), head, deputy heads and members of the Board of Management of the hi-tech zone(s) to the Prime Minister for consideration and appointment.

- Propose the personnel eligible for the posts of head, deputy heads and members of a Board of Management of an IZ located in an inter-provincial area to the Prime Minister for consideration and appointment.

- Assume the main responsibility and coordinate with the Vietnam Board of Management of the IZs in issuing general regulations on the regime of salaries of employees and public servants; the organizational apparatus, personnel training and fostering; procedures for appointing leading officials; and procedures for considering and approving the annual payroll of a provincial Board of Management of the IZ(s).

7. The Vietnam Board of Management of the IZs shall:

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- Act as a sole coordinator for receiving, synthesizing and submitting to the Prime Minister for settlement the proposals of the Government agencies, provincial Peoples Committees, provincial boards of Management of the IZ(s) and convey to them the Prime Ministers directive opinions about the matters of and relating to IZs.

- Be authorized by the Prime Minister to resolve in time newly arising matters relating to IZs and held responsible to the Prime Minister for these matters.

- Coordinate with the Government agencies and the provincial Peoples Committees in elaborating legal documents, policies, planning and plans concerning the formation, building, development and management of IZs and the related investment projects outside IZs.

- Coordinate with the Ministry of Industry in guiding the listing of business lines the investment on which in IZs and export processing zones shall be encouraged, banned or restricted

- Coordinate with the Government Commission on Organization and Personnel in guiding the organizational and personnel work of the provincial boards of Management of the IZ(s).

- Coordinate with the provincial boards of Management of the IZ(s) in elaborating the planning on the development of human resources for IZs, organize training and fostering for managerial officials of IZs.

- Take part in the evaluation of the planning of IZs and investment projects in IZs.

- Recommend the personnel for the key posts of the provincial Boards of Management of the IZ(s) as prescribed in Article 28 of this Regulation.

- Organize preliminary review and sum-up meetings and submit to the Prime Minister regular and irregular reports on the building, development and management of IZs.

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The Government agencies shall have to supply the legal documents issued by themselves to the provincial boards of management of the IZ(s). The Office of the Government shall supply the legal documents of the Government and the Prime Minister concerning IZs to the provincial boards of Management of the IZ(s).

Article 25.- The trade, financial, customs, police and other specialized agencies shall set up in each IZ or each cluster of IZs their own representative offices competent to deal with the relevant matters. These offices shall be set up by their superior agencies which shall also define their operations, direct, provide technical guidance as well as decide and assign the personnel and funding for these offices operations.

Article 26.- The provincial People’s Committee of a locality having an IZ(s) shall have the following tasks and powers:

1. Perform the function of State management over IZs and provincial Board of Management of the IZ(s) within its territory. Be responsible for managing and solving according to its competence the problems confronted by the IZ(s) located within its territory. Coordinate with the Government agencies in solving those problems which are beyond its competence.

2. Take part in the elaboration of the overall planning on the development of IZs, direct the drawing up of the plan to set up an IZ(s) and working out the detailed zoning of IZs.

3. Monitor and supervise the implementation of the planning, construction regulations and norms, regulations on labor, the ecological and environmental protection and the maintenance of security and order in IZs.

4. Assume the main responsibility for drawing up the site clearance plan and organize the implementation thereof, resettle the inhabitants living in the areas to be cleared; allocate land to IZs and land outside the IZs for the building of infrastructure works in service of the development of IZs.

5. Grant licenses for the establishment of Vietnamese enterprises according to its competence in accordance with current provisions.

6. Propose the Ministry of Planning and Investment to authorize, by decision of the Prime Minister, the provincial Board of Management of the IZ(s) to grant, adjust and withdraw investment licenses of foreign investment projects in IZs, propose the Ministry of Trade to authorize the provincial Boards of Management of the IZ(s) to consider and approve the import and export plans of IZ enterprises.

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8. Recommend the personnel eligible for the post of head of the provincial Board of Management of the IZ(s) to the Prime Minister for consideration and appointment; decide the posts of deputy heads and members and the assisting apparatus of the Board in compliance with the provisions and guidance of the Government Commission on Organization and Personnel.

9. Assume the main responsibility for organizing the evaluation of the technical designs of Group B projects (foreign investment), Group B and Group C projects (domestic investment).

10. Supply the documents issued by itself and the materials and information relating to IZs to the provincial Board of Management of the IZ(s).

Article 27.- The provincial Board of Management of the IZ(s) as an agency directly managing the IZ(s) shall have the following tasks and powers:

1. Work out the regulation on the management of the IZ(s) on the basis of the model Regulation issued by the Ministry of Planning and Investment and submit it to the provincial Peoples Committee for approval. The Regulation on the management of an IZ located in an inter-provincial area shall be submitted to the Ministry of Planning and Investment for approval. The Regulation on the management of a hi-tech zone shall be approved by the Ministry of Science, Technology and Environment.

2. Organize the elaboration of the detailed planning and manage the implementation thereof, the implementation of the construction timetable and the plan on the development of IZs, including: the planning on the development of infrastructure works, the planning on the arrangement of business lines; take part in the development of the related infrastructure works outside the IZ and dwelling quarters for employees and workers working therein.

3. Urge and supervise the building of the related infrastructure works inside and outside an IZ(s), ensuring that they are built and put into operation in accordance with the approved planning and schedule.

4. Support the mobilization of investment in IZs.

5. Receive applications for investment together with the investment projects, organize the evaluation of and grant licenses to foreign investment projects as authorized .

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7. Coordinate with the agencies performing State management over labor in supervising and inspecting the observance of the provisions of law on labor contracts, collective labor agreements, labor safety, and wages.

8. Manage service activities in IZs.

9. Seek agreement with the IZ infrastructure development companies in setting the price rate for sub-leasing the land with the infrastructure works already built thereon and service charges in accordance with current policies and laws.

10. Grant, adjust and withdraw certificates according to its competence or as authorized; grant, adjust and withdraw licenses as authorized.

11. Be invited to send its representative to the meetings of the Government agencies and provincial Peoples Committee to discuss the formation, building, development and management of IZs.

12. Send regular and yearly reports on the situation of the formation, building, development and management of IZs to the provincial Peoples Committee, the Vietnam Board of Management of IZs and the concerned Government agencies as prescribed by law .

Article 28.- The provincial Board of Management of the IZ(s) is composed of a head, a number of deputy heads, a number of members, has an assisting apparatus; be allowed to use a national emblem seal.

The head of the provincial Board of Management of the IZ(s) shall be appointed by the Prime Minister at the proposal of the provincial People’s Committee, the evaluation remark of the Minister-Chairman of the Government Commission on Organization and Personnel and the opinion of the Chairman of Vietnam Board of Management of the IZs.

The head, deputy heads and members of a provincial Board of Management of the hi-tech zone(s) shall be appointed by the Prime Minister at the proposal of the Minister of Science, Technology and Environment, the evaluation remark of the Minister-Chairman of the Government Commission on Organization and Personnel and the opinion of the Chairman of the Vietnam Board of Management of the IZs.

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The assisting apparatus of a Board of Management of an IZ located in an inter-provincial area shall be decided according to the guidance of the Government Commission on Organization and Personnel.

Article 29.- The provincial Board of Management of the IZ(s) is a State budget accounting unit. All budget revenues in an IZ shall be remitted to the State budget. All expenditures for the operations of the provincial Board of Management of the IZ(s) shall be covered by the State budget.

Article 30.- The provincial Board of Management of the IZ(s) shall have to coordinate with the functional agencies in elaborating, synthesizing and submitting to the competent State management agencies the plan on the development of the IZ(s) and the subject matters specified in Clauses 2 and 3, Article 4 of this Regulation; shall, together with the competent agency, allocate the planned expenditures after the plan is approved.

Article 31.- The provincial Board of Management of the IZ(s) that manages more than one IZ shall have its representative in each IZ.

Article 32.-

1. The evaluation of foreign investment projects and granting of investment licenses thereto by the provincial Board of Management of the IZ(s) under the authorization of the Ministry of Planning and Investment by decision of the Prime Minister shall be conducted as follows:

- The project evaluation contents shall comply with the provisions of Article 92 of Decree No. 12-CP of February 18, 1997 of the Government.

- Within 15 days from the date of receipt of the project dossier, the provincial Board of Management of the IZ(s) shall complete the evaluation of the project and grant an investment license thereto.

If, within 7 days after the aforesaid time limit has expired, it still fails to grant an investment license, the provincial Board of Management of the IZ(s) shall notify in writing the investor as well as the concerned agencies thereof stating clearly the reason

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Any request made by the provincial Board of Management of the IZ(s) to the investors concerning the adjustment and supplement of the project dossier shall be satisfied within 7 days from the date of receipt of the project dossier If, after 7 days from the date on which the request is made by the provincial Board of Management of the IZ(s), the investor fails to reply in writing, the investment application attached with the investment project dossier shall be no longer valid.

2. Investment licenses granted to investors and investment project dossiers shall conform to the form set and issued by the Ministry of Planning and Investment.

2. Within 7 days after granting an investment license, the provincial Board of Management of the IZ(s) shall send the granted investment license to the provincial Peoples Committee, the Ministry of Planning and Investment (the original), and the Ministry of Finance, the Ministry of Trade, the branch managing Ministry, the Vietnam Board of Management of the IZs and the concerned State management agencies (the copies).

Article 33.- The competence to issue investment approving decisions or grant investment licenses as well as the procedures for evaluating domestic investment projects and foreign investment projects of Group A in IZs shall comply with current provisions.

Chapter VII

A NUMBER OF PROVISIONS EXCLUSIVELY APPLICABLE TO EXPORT PROCESSING ZONES AND EXPORT PROCESSING ENTERPRISES

Article 34.- Export processing zones and export processing enterprises are separated from the outside area by fencing walls with gates.

Article 35.- Only the investors, employees, workers and public servants working in the export processing zones and export processing enterprises and those persons having working relations with the agencies, organizations and enterprises in export processing zone and the export processing enterprises may have access to the export processing zones and export processing enterprises.

Article 36.- Vietnamese citizens and foreigners shall not be allowed to reside in the export processing zones and export processing enterprises. If residence in an export processing zone or export processing enterprise is necessary for carrying out a work, it must be permitted by the provincial Board of Management of the IZ(s).

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Article 38.- Goods, luggages and foreign exchange imported from abroad into export processing zones or export processing enterprises ( directly or through border gates of Vietnam) and exported abroad from export processing zones or export processing enterprises (directly or through border gates of Vietnam) shall be exempt from import or export duty, subject to the customs control in accordance with the provisions of the customs legislation of Vietnam and the payment of customs fees (if any).

Article 39.-

1. Goods of the export processing enterprises exported abroad or imported from abroad into export processing zones or export processing enterprises must be accompanied with certificates of origin issued by competent agencies, and the customs procedure therefor shall be completed at the IZ customs offices. The goods declared in the customs declaration form must comply with the investment approving decision or investment license and the business registration certificate.

2. The export goods transported from a checking point of the customs office at the export processing zone or export processing enterprise to a border gate of Vietnam and the imported goods transported reversely shall be packed in containers, cases and packages sealed up by the customs office and accompanied by customs officers.

Article 40.- The goods exchange relationships between the enterprises on the domestic market and the export processing enterprises is regarded as the import-export relationships and must comply with the import-export legislation of Vietnam. In this case, the purchaser and the seller shall have to complete the customs procedures at the IZs in accordance with the customs legislation of Vietnam and shall be exempt from the procedure for considering and approving their import-export plans.

The export processing enterprises are entitled to purchase raw materials, supplies, goods from the domestic market into the export processing zones or export processing enterprises; Any waste materials and defective products of the export processing zones or export processing enterprises, which are still of commercial value, may be sold into the domestic market according to the simple and convenient customs procedure.

The purchase and sale of goods between the enterprises in the same export processing zone or between the export processing enterprises and the IZ enterprises in the same IZ or hi-tech zone must be permitted by the provincial Board of Management of the IZ(s) and subject to the control of the customs office.

Article 41.-

1. The luggages and foreign exchange brought by foreigners working in an export processing zone or export processing enterprises (including investors and foreigners working therein) into or out of Vietnam upon their entry or exit shall complete the customs procedure at the customs office at a border gate of Vietnam.

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Article 42.- The export processing enterprises may sign processing and service contracts with Vietnamese enterprises of all economic sectors and enterprises with foreign invested capital in accordance with the provisions of law.

Article 43.-

1. The customs procedures must be open, rapid and convenient. The head of the customs office at the IZ shall have to guide the export processing enterprises in completing the customs procedures.

2. The customs control shall be conducted in the presence of the goods or luggage owner or his/her lawful representative.

3. The head of the customs office at the IZ shall be entitled to request to inspect without advance notice the goods in the warehouse of an export processing enterprise on grounds that the goods are illegally imported or exported.

4. In cases where there are grounds that the goods, foreign exchange or Vietnamese currency are illegally imported or exported or illegally brought into or out of an export processing zone or export processing enterprise, the head of the bordergate customs office or a higher level shall be entitled to check them in accordance with the provisions of the customs legislation of Vietnam.

Article 44.- The goods transported from one export processing zone or enterprise to another on the territory of Vietnam shall be packed in containers, cases and packages sealed up by the customs office, accompanied by customs officers, and shall be exempt from import or export duty.

Article 45.- The foreigners working in export processing zones or enterprises who bring foreign exchange into Vietnam shall complete the customs procedure at the bordergate customs offices upon their entry; they are allowed to bring abroad their unused foreign exchange upon their exit.

Article 46.- The bringing of foreign exchange from the Vietnamese territory into export processing zones or enterprises and vice versa shall comply with Vietnams Regulation on the management of foreign exchange.

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The purchase and sale of goods in service of the daily life of the workers and employees of an export processing enterprise shall be effected in the Vietnamese currency.

Article 48.- When exporting goods or providing services in return of a foreign currency(ies), the export processing enterprises shall deposit such amount of foreign currency into their bank accounts. The export processing enterprises expenses shall be effected through these accounts.

Article 49.- All violations of the provisions of this Chapter shall, depending on their nature and seriousness, be regarded as the violations of the customs procedure, the customs control regime or acts of smuggling or illegal cross-border transport of goods, foreign exchange or the Vietnamese currency and they shall be handled in accordance with the customs legislation of Vietnam.

Chapter VIII

A NUMBER OF PROVISIONS EXCLUSIVELY APPLICABLE TO HI-TECH ZONES

Article 50.- The objective of the hi-tech zones is to develop hi tech industries, attract foreign high technologies, receive and transfer high technologies and enhance the capability of local high technologies.

The Government agencies shall have to give primary priority to the assignment of investment plans, mobilization of financial assistance and investment in order to tap all sources of capital: budgetary capital, foreign financial assistance capital, borrowings, and joint venture capital of Vietnamese and foreign investors for the building and development of hi-tech zones according to the overall planning. The Government agencies, the provincial Peoples Committees of the localities which are under the planning for the building and development of hi-tech zones shall create every favorable condition, ensure simple administrative procedures, apply the maximum preferential treatment policy as prescribed by law for the Vietnamese and foreign investors, hi-tech research and development institutions and the organizations engaged in the provision of hi-tech services to invest in hi-tech zones.

Article 51.- The Government encourages the Vietnamese overseas, including those holding Vietnamese nationality or those Vietnamese holding a foreign nationality, and economic organizations in foreign countries which are set up with the capital contributions of Vietnamese overseas to invest in building and developing hi-tech zones in Vietnam If doing so, these organizations and individuals shall enjoy the preferential treatment in accordance with the provisions in Article 44 of the Law on Foreign Investment in Vietnam and the stipulations of the Government on the measures to encourage the Vietnamese overseas to invest in Vietnam.

Article 52.- The Government encourages and creates favorable conditions for foreign scientists and experts, foreign hi-tech enterprises to work, operate and invest in building and developing hi-tech zones in Vietnam.

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Article 54.- The scientific-technological research and development, training and service units in a hi-tech zone shall enjoy the preferential treatment according to current provisions on scientific-technological activities.

Chapter IX

HANDLING OF DISPUTES AND VIOLATIONS

Article 55.- All criminal cases occurring in IZs shall fall under the jurisdiction of the Peoples Court in accordance with the provisions of law.

All civil and economic disputes involving one party which is an IZ enterprise shall be settled in accordance with the provisions of law, except otherwise provided for.

Article 56.- The Vietnamese and foreign investors, IZ enterprises, IZ infrastructure development companies, organizations, individuals, public servants and State agencies, that violate the provisions of this Regulation shall be, depending on the seriousness of their violations, handled in accordance with the provisions of law.

Article 57.- The Vietnamese and foreign investors, IZ enterprises, IZ infrastructure development companies, organizations and individuals shall have the right to make complaints or initiate lawsuits against any decision or act of any State employee or agency, which is at variance with this Regulation and causes difficulties and troubles.

The making of complaints, initiation of lawsuits and the settlement thereof shall comply with the provisions of law.

Chapter X

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Article 58.- Other provisions relating to the operations of IZ enterprises which are not included in this Regulation shall comply with the corresponding articles and clauses of the Law on Foreign Investment in Vietnam, the Law on Promotion of Domestic Investment, the Law on State Enterprises, the Law on Cooperatives, the Law on Companies, the Law on Private Enterprises, the Land Law and other legal documents.

Article 59.- This Regulation takes effect after 15 days from the date of its signing. Those IZs established before the effective date of this Regulation shall still be subject to the provisions of this Regulation, except in cases where the continued implementation of the Regulation on export processing zones (Decree No. 322-HDBT of October 18, 1991 of the Council of Ministers, now the Government), and the Regulation on IZs (Decree No. 192-CP of December 28, 1994 of the Government) for a maximum period of 1 (one) year from the effective date of this Regulation is proposed by the provincial Board of Management of the IZ(s) and approved by the Prime Minister.