Law On Foreign Investment Promulgated

Transcription

1 Law On Foreign Investment Promulgated ["Full text" of the Revised Law on Foreign Investment in Vietnam, carried in two installments. Passed by the Ninth National Assembly on 12 November 1996 and promulgated by President Le Duc Anh in a decree dated 23 November 1996] [FBIS Translated Text] [2 Dec, p 2] In order to expand economic cooperation with foreign countries to serve the cause of industrialization, modernization, and national economic development on the basis of the efficient exploitation and use of various resources of the country; Referring to the SRV Constitution of 1992; This law carries stipulations governing direct foreign investment in the SRV. Chapter I: General provisions Article 1: The SRV State encourages foreign investors to invest in Vietnam on the basis of respect for the independence and sovereignty of Vietnam, observance of Vietnamese laws, equality and mutual benefit. The SRV State guarantees the ownership of invested capital and other legal benefits of foreign investors. It creates favorable conditions and provides simple and rapid procedures for foreign investors making investments in Vietnam. Article 2: In this law, the following terms shall have the meanings ascribed to them hereunder: 1. "Direct foreign investment" means a foreign investor bringing into Vietnam his capital in cash or in any kind of assets to carry out investment activities in accordance with the provisions of this law. 2. "Foreign investor" means a foreign economic organization or a foreign individual making investment in Vietnam. 3. "Foreign party" means one or more foreign investors. 4. "Vietnamese party" means one or more Vietnamese enterprises belonging to

2 various economic components. 5. "Two parties" means the Vietnamese party and the foreign party. "Many parties" means the Vietnamese party and various foreign parties, or various foreign parties and the Vietnamese party, or various Vietnamese and foreign parties. 6. "Enterprises with foreign owned capital" means either a joint venture enterprise or an enterprise with 100 percent of foreign- owned capital. 7. "A "joint-venture enterprise" means an enterprise jointly set up by two parties or many parties in Vietnam on the basis of a joint-venture contract or an agreement signed between the SRV Government and the relevant foreign government; or a Vietnamese enterprise engaged in a joint venture with another enterprise which has foreign owned capital; or a joint-venture enterprise which establishes partnership with a foreign investor on the basis of a joint- venture contract. 8. "Enterprise with 100 percent of foreign owned capital" means an enterprise the capital of which is 100 percent owned by a foreign investor. 9. "Business cooperation contract" means a contract signed between two parties or many parties to carry out investment activities without having to establish any [entity as a] legal person. ` 10. "Joint-venture contract" means a contract signed between those parties mentioned in Point 7 above to set up a joint-venture enterprise in Vietnam. 11. "Build-operate-transfer contract" means a contract signed between an authoritative Vietnamese state organ and a foreign investor to build and operate infrastructure projects during a certain period of time. When the time is over, the foreign investor concerned shall have to transfer that project to the Vietnamese State without any compensation. 12. "Build-transfer-operate contract" is a contract signed between an authoritative Vietnamese state organ and a foreign investor to build a infrastructure project. Upon completion of the construction, the foreign investor concerned shall transfer that project to the Vietnamese Government. The Vietnamese Government shall provide the investor concerned the right to operate that project for a certain period of time so as to recover his invested capital and reasonable profits. 13. The "build and transfer" contract is a document signed between a Vietnamese authoritative organ with a foreign investor to build an infrastructure project; and after the construction is completed, the foreign investor shall transfer the project to the Vietnamese Government. The Vietnamese Government shall create conditions for the foreign investor to carry out other projects to recover his invested capital and gain

3 reasonable profits. 14. "An export processing zone" is an industrial zone specializing in export-oriented production and carrying out the services for the export-oriented production and the export of goods. An export processing zone has a specific geographical boundary and it is set up by or allowed to be set up by the government. 15. "An export processing enterprise" is an enterprise specializing in export-oriented production or carrying out export services or export activities. It is set up and operated in accordance with the state regulations on export production enterprises. 16. "An industrial zone" is a zone specializing in the production of industrial goods and carrying out services for industrial production. It is set up by or allowed to set up by the government. 17. "An industrial zone enterprise" is an enterprise which is set up and operated in an industrial zone. 18. "Investment capital" is the capital needed for the execution of an investment project and includes the prescribed capital and the loan capital. 19. "The prescribed capital" of a foreign invested enterprise is the capital needed for the formation of the enterprise and is prescribed in the charter of the enterprise. 20. "Contributed capital" is the capital contributed by each party to the prescribed capital of an enterprise. 21. "Reinvestment" is the use of profits and other legal revenues arising from investment activities in Vietnam to invest more in the existing project or to invest in a new project in Vietnam in conformity with the stipulations of this law. Article 3: Foreign investors may invest in Vietnam in any sector of the national economy. The State of Vietnam encourages foreign investors to invest in the following sectors and areas: 1. Sectors: A. Export-oriented production; B. Breeding, planting, or processing of agricultural, forestry, or marine products;

4 C. Using of high technology or modern techniques, protecting the environment, or investing in research and development; D. Production which is labor intensive and efficiently uses the natural resources in Vietnam; and E. Building of infrastructure projects and important industrial production enterprises. 2. Areas: A. Mountainous, isolated, or remote areas; and B. Regions of socioeconomic hardship. The State of Vietnam shall not allow foreign investment in sectors and areas that may cause damage to the national defense and security, historic relics, culture, fine traditions and customs, or environment. Based on its development plan and direction in each period, the government shall announce a list of areas in which foreign investment is encouraged; a list of investment categories in which foreign investment is encouraged or especially encouraged; a list of investment categories in which certain conditions shall be applied for foreign investment; and a list of investment categories in which foreign investment is not allowed. Private economic organizations of Vietnam may cooperate with foreign investors in sectors and according to conditions set forth by the government. Chapter II: Forms of Investment Article 4. Foreign investors may invest in any of the following forms: 1. Business cooperation contract; 2. Joint venture enterprise; 3. Enterprise with 100 percent foreign owned capital. Article 5. Two or more parties may, in pursuance to a business cooperation contract, enter into cooperative business activities such as profit sharing, or product sharing, or other forms of cooperative business activity.

5 The parties shall agree upon and expressly state, in a business cooperation contract, the objects and nature of the business, terms of business, the rights, obligations, and responsibility of each party, and the relationship between them. Article 6. Two or more parties may establish a joint venture enterprise in Vietnam on the basis of a joint venture contract. Joint venture enterprise may enter into a business contract with foreign investors or with Vietnamese businesses to form new businesses in Vietnam. A joint venture enterprise is established in the form of a limited liability company. They are legal entities and are subject to the laws of Vietnam. Article The foreign party to a joint venture enterprise may make its contribution to the prescribed capital in: a. Foreign currency, and Vietnamese currency which originates from investment in Vietnam. b. Equipment, machinery, factory, and other buildings; c. The value of technological property, technical expertise, technological processes, and technical services. 2. The Vietnamese party to a joint venture enterprise may make its contribution to prescribed capital in: a. Vietnamese and foreign currency; b. The value of land use right in accordance with the legal stipulations on land; c. Natural resources. d. Equipment, machinery, factory, and other buildings; e. The value of technological property, technical expertise, technological processes, and technical services. 3. All contributions to prescribed capital by parties in forms other than those described in sections 1 and 2 of this article must be approved by the government.

6 Article 8. There shall be no ceiling to the proportion of contributions made by a foreign party or parties to the prescribed capital of a joint venture enterprise, but it must not be lower than 30 percent of the prescribed capital, except in cases determined by the government. In the case of multi-partied joint venture enterprises, the minimum proportion of capital contribution of each of the Vietnamese parties shall be determined by the government. For enterprises with important economic significance -- which will be defined by the government -- the parties involved shall agree to increase gradually the capital contribution proportion of the Vietnamese party in the joint venture enterprise's prescribed capital. Article 9. The value of the capital contribution made by each party shall be appraised on the basis of the international market price at the time of the contribution. The time schedule for the contributions is to be agreed upon among the parties; the agreement must be put down in the joint venture contract and approved by the state agency responsible for foreign investment management. Equipment and machinery to be used as capital contributions must have an evaluation certification which is issued by independent evaluation organizations. Parties shall be held responsible for the reliability and preciseness of the value of their capital contributions. When it is deemed necessary, the state agency responsible for foreign investment management is entitled to appoint an evaluation organization to re-evaluate the capital contribution shares of parties. Article 10. The parties shall share the profits and bear the risks associated with a joint venture enterprise in accordance with the proportion of their respective contributions to its capital, except when the joint venture contract decides otherwise. Article 11. The board of management, which is the body in charge of leadership of a joint venture enterprise, comprises representatives of parties involved in the joint venture enterprise. Each party to a joint venture enterprise shall appoint members to the board of

7 management in proportion to its contribution to the prescribed capital of the enterprise In the case of two-partied joint ventures, each party has at least two members appointed to the board. In the cases of multi-partied joint ventures, each party has at least one member appointed to the board. In the cases of joint venture enterprises with only one Vietnamese party forming joint venture with various foreign parties, or one foreign party forming joint venture with many Vietnamese parties, then the single Vietnamese or foreign party has the right to appoint at least two members to the board of management. In the board of management of an enterprise formed as a joint venture between another joint venture enterprise operating in Vietnam with a foreign or Vietnamese party, the joint venture operating in Vietnam should be entitled to appoint at least two board members, and at least one of them should be from the Vietnamese party. Article 12. The chairman of the board of management shall be appointed in accordance with the agreement between the parties. The chairman of the board of management is responsible for convening and conducting meetings of the board of management, and overseeing the implementation of resolutions of the board of management. The director general and deputy directors general shall be appointed and dismissed by the board of management and shall be held responsible to the board of management and to Vietnam's laws for the operation of the joint venture enterprise. Either the director general or the first deputy director general of the board of management shall be a Vietnamese citizen. The duties and authority of the chairman of the board of management, the director general, and the first deputy director general shall be detailed in the statutes of the enterprise. Article 13. The board of management decides on the schedule of its own regular meetings. Irregular meetings of the board of management can be convened at the request either of the chairman of the management board, or two third of the members of the board of management, or the director general, or the first deputy director general. Meetings of the board of management shall be convened by the chairman of the board of management. A board of management meeting should be attended by at least two thirds of the members of the board of management who represent parties in the joint venture.

8 Article The board of management makes decision, on the principle of unanimous agreement of the members present at the meeting, for the most important matters related to organization and operation of the joint venture enterprise such as: appointment and dismissal of the director general, first deputy director general, and chief accountant; adjustments and additions to the of enterprise statutes; ratification of the annual financial income-expenditure statement; decisions on project finance; and the obtaining of loans for investment. Parties to a joint venture can agree to put down in the enterprise statutes other matters that they think necessary to be agreed on by the principle of unanimous agreement. 2. For other matters outside section 1 of this article, the board of management decides on the principle of the absolute majority of members of the board of management who are present at the meeting. Article 15. Foreign investors are entitled to establish in Vietnam enterprises with 100 percent foreign owned capital. An enterprise with 100-percent foreign owned capital must be under the form of a limited liability company. It is a legal entity under Vietnamese law. An enterprise with 100-percent foreign owned capital is allowed to cooperate with a Vietnamese enterprise to set up a joint venture enterprise. In the case of a [private] establishment deemed by the government to be an important economic establishment, a Vietnamese state enterprise can negotiate with the owner of the establishment to purchase a part of the ownership to set up a joint venture. Article 16. The prescribed capital of a foreign invested enterprise must be at least 30 percent of the investment capital of the enterprise. In special circumstances, this percentage can be lower if it is approved by the state body in charge of foreign investment. During the course of operation, a foreign invested enterprise must not reduce its prescribed capital. Article 17. The operation period of a foreign invested enterprise is the period of its business

9 cooperation contract. The operation period is written into the investment license of each project, in conformity with state regulations, and it must not exceed 50 years. According to stipulations set forth by the National Assembly Standing Committee, the government may grant a longer operation period to a particular project but it must not be more than 70 years. Article 18. Foreign investors may invest in industrial zones or export processing zones under the stipulations of Article 4 of this law. Vietnamese businessmen of all economic sectors may cooperate with foreign investors to invest in an industrial zone or an export processing zone under points 1 and 2 of Article 4 in this law or they can set up their own enterprise. The trading relations between an enterprise in the Vietnamese market with an export processing enterprise is considered an import- export relation. Therefore, it must observe the law on import and export. Export processing enterprises may purchase raw materials, equipment, and goods from the national market under a simple and convenient procedure set forth by the government. The government shall issue regulations on industrial zones and export processing zones. Article 19. Foreign investors engaged in infrastructure construction may sign build-operate-transfer contracts, build-transfer-operate contracts, or build-transfer contracts with a Vietnamese authoritative organ. Foreign investors be entitled to enjoy the rights and be liable to carry out all obligations stated in the investment license. The government shall issue concrete regulations on investment under build-operate-transfer contracts, build- transfer-operate contracts, and build-transfer contracts. Chapter III: Investment Guarantee Measures. Article 20. The Government of the Socialist Republic of Vietnam guarantees that all foreign investors in Vietnam shall be treated fairly and equitably. Article 21.

10 While investing in Vietnam, the capital and other legal assets of foreign investors shall not be requisitioned or expropriated through administrative measures. An enterprise with foreign owned capital shall not be nationalized. The Government of the Socialist Republic of Vietnam protects the industrial copyrights and guarantees the legitimate interests of foreign investors in the process of technological transfer in Vietnam. When the changing of stipulations in Vietnamese laws causes damage to the interests of foreign investors and other parties of the business cooperation contract after a business license has been granted, the government shall introduce measures to compensate for the lost interests of the investors. Foreign investors in Vietnam are allowed to transfer abroad: 1. Their profits derived from business operations; 2. Any payments due as a result of provision of technology or services; 3. The principal of any loan made in the course of a business operation together with interest thereon; 4. Their invested capital; and 5. Other sums of money and assets lawfully owned by them. Article 23. Foreigners working in Vietnam for foreign invested enterprises or for any parties of the business cooperation contract, after paying taxes as stipulated by Vietnamese law, are authorized to transfer abroad their legal incomes. Article 24. Resolution of any dispute among parties to a business cooperation contract or parties to a joint venture as well as any dispute among foreign invested enterprises or between the parties of a business cooperation contract with a Vietnamese enterprise shall be attempted by negotiation and conciliation first. If, however, the parties to a dispute fail to conciliate, the dispute shall be referred to a Vietnamese arbitration body or judicial body under Vietnamese law. The parties of a joint venture enterprise or of a business cooperation contract can choose another arbitration body to settle their dispute if this was written into their agreement. Any dispute arising from build-operate-transfer contracts, build- transfer-operate

11 contracts, or build- transfer contracts shall be settled by the method set forth in the contract. Chapter IV: Rights and Obligations of Foreign Investors and Foreign Invested Enterprises. Article 25. Foreign invested enterprises and the parties of a business cooperation contract are allowed to recruit personnel for their business and they shall give priority to Vietnamese citizens in their recruitment. They shall only recruit foreigners for jobs that require technical or management qualifications which are not available in Vietnam. However, they must train Vietnamese personnel for these jobs. The rights and obligations of employees working in foreign invested enterprises shall be stipulated by the labor contract, the collective labor agreement, and the laws on labor. Article 26. The employers, Vietnamese employees, and foreign workers shall observe the laws on labor and other related laws and respect each other's honor, dignity, and customs. Article 27. Foreign invested enterprises shall respect the Vietnamese workers' rights to join political or socio-political organizations under Vietnamese law. [3 Dec, p 2] Article 28: Enterprises with foreign owned capital: The foreign parties that participate in a business cooperation contract and whose assets and civil responsibility are insured by a Vietnamese insurance company or any other insurance company will be authorized to operate in Vietnam. Article 29: The transfer of foreign technologies to Vietnam through foreign investment projects must be carried out under the form of making capital contributions--based on the value of the technologies transferred or purchased--as specified in a contract and in accordance with the law on technologies transfer.

12 The Vietnamese Government encourages quick transfer of technologies, especially advanced technologies. Article 30: Enterprises with foreign-owned capital: After completing basic construction and shaping up an enterprise, the parties participating in a business cooperation contract must review the construction project and have the construction cost settled. This financial settlement must be authenticated by an appraisal organization. Enterprises with foreign-owned capital: The parties participating in a business cooperation contract must organize bidding [for support services] in accordance with government stipulations on bidding. Article 31: Enterprises with foreign-owned capital: The parties participating in a business cooperation contract have the right to be self-governed in business in accordance with the objectives specified in their investment license; to import equipment and machinery, materials, and means of transportation; and to export and market their products either directly or through a representative so as to carry out their investment project in accordance with the law. Enterprises with foreign-owned capital: The parties participating in a business cooperation contract must give priority to the purchase of their equipment, machinery, materials, and means of transportation in Vietnam, provided these goods have the same technological and commercial qualities. Article 32: Enterprises with foreign-owned capital can open their branch offices outside the provinces and cities that are under the direct jurisdiction of the central government where their main offices are located to carry out business activities within the scope of their activities and within the targets already specified in their investment license. This must be approved by the people's committee of the relevant province or city under the direct jurisdiction of the central government where their branch offices are located. Article 33: Enterprises with foreign-owned capital: The foreign party participating in a business cooperation contract must guarantee its own requirements for foreign currency needed for its operations. The Vietnamese government guarantees assistance in obtaining foreign currency needed for infrastructure building projects, such as manufacturing essential import substitutes, and for a number of other important projects.

13 Article 34: All parties in a joint-venture enterprise have the right to transfer their capital share value in the enterprise [to another taker] but priority must be given to other partners in the same joint-venture enterprise. In case a capital share is to be transferred to a taker outside the joint-venture enterprise, the transfer conditions must not be more advantageous than those already offered to other partners in the joint-venture enterprise. The transfer must be approved by all parties in the joint-venture enterprise. These stipulations are also applied to the transfer of rights and obligations of the parties participating in a business cooperation contract. Enterprises with 100 percent foreign-owned capital have the right to transfer their capital shares, but priority must be given to Vietnamese enterprises. A capital transfer will become effective only after the state management organ on foreign investment approves the agreement on capital transfer. If capital transfer generates profits, the transferree shall be liable to pay income tax at a rate of 25 percent of the profits earned. The transfer of capital to Vietnamese enterprises shall be eligible for a tax reduction or tax exemption. Article 35: Enterprises with foreign-owned capital may open bank accounts in both Vietnamese currency and foreign currency with Vietnamese banks, joint venture banks, or branches of foreign banks located in Vietnam. In special cases where approval of the Vietnam State Bank is granted, enterprises with foreign owned capital may open borrowing accounts at overseas banks. Article 36: The conversion of Vietnamese currency into foreign currency shall be effected at the official exchange rates published by the Vietnam State Bank at the time of transaction. Article 37: Enterprises with foreign-owned capital and foreign parties to a business cooperation contract shall follow the Vietnamese accounting system. The application of another generally accepted accounting system must be approved by the Finance Ministry. The depreciation of fixed assets applied to enterprises with foreign-owned capital and

14 foreign parties to a business cooperation contract shall be implemented according to government regulations. The annual financial reports of enterprises with foreign-owned capital and foreign parties to a business cooperation contract shall be audited by an independent Vietnamese auditing company or by another independent auditing company licensed to operate in Vietnam in accordance with the auditing regulations. Annual financial reports shall be submitted to finance agencies and state management agencies in charge of foreign investment. Article 38: Enterprises with foreign-owned capital and foreign parties to a business cooperation contract shall pay income tax at a rate of 25 percent of the profits earned; in cases where there is a need for investment promotion, income tax at a rate of 20 percent of the profits earned shall apply; in cases where many investment promotion criteria are used, income tax at a rate of 15 percent of the profits earned shall apply; in cases where there is a special need for investment promotion, income tax at a rate of 10 percent of the profits earned shall apply. With regard to oil and gas and a number of precious and rare resources, the income tax rate shall be determined by the Law on Oil and Gas and other related laws. Article 39: Depending on the area and scope of investment defined under Article 3 of this Law, enterprises with foreign-owned capital and foreign parties to a business cooperation contract may be eligible for an income tax exemption for a maximum period of two years commencing from the first profit-making year, and also for a 50- percent income tax reduction for a maximum period commencing from the subsequent two years. In cases where enterprises with foreign-owned capital and foreign parties to a business cooperation contract carry out projects that meet many investment promotion criteria, these entities shall be eligible for an income tax exemption for a maximum period of four years commencing from the first profit-making year, and also for a 50-percent income tax reduction for a maximum period commencing from the subsequent four years. In cases where there is a special need for investment promotion, an income tax exemption for a maximum period of eight years shall apply. Article 40:

15 In the course of operations, joint venture enterprises shall be entitled to carry forward the losses in any given tax year to the subsequent tax year and to use the profits earned in the subsequent years to make up for those losses; the time for loss recovery, however, cannot exceed five years. Article 41: After paying earnings taxes, joint venture enterprises shall put aside 5 percent of the profits in a reserve fund, which has the maximum limit of 10 percent as compared with the enterprise's prescribed capital. The proportion of profits to be set aside for welfare and other funds shall be agreed on by the parties in the enterprise, and is to be stated in the enterprise's statutes. Article 42: In cases of capital being reinvested in projects encouraged by the government, the earnings taxes that had been paid for the profit to be used in reinvestment shall be refunded, in part or in full. The government shall determine the proportions of earnings tax to be refunded on the bases of field, locality, form, and term of the investment. Article 43: While transferring profits overseas, foreign investors shall pay an amount of tax equal to 5, 7, or 10 percent of the profits transferring overseas, depending on the proportion of the capital share contributed by foreign investors to the enterprise's prescribed capital, or to actually-utilized capital in cooperative business contract. Article 44: Vietnamese nationals residing abroad investing in the country in accordance with the provisions of this law shall be entitled to a 20 percent earnings tax rebate as compared to projects of the same type, except where an earnings tax rate of 10 percent is applicable. They are also entitled to the tax rate of 5 percent for the profits they transfer abroad. Article 45: In pursuance of regulations issued by the government, the state agency responsible for foreign investment management shall make decisions on: earnings tax rates, the time limit for earnings tax rebate or exemption, and tax rates for profits transferred overseas for cases mentioned in Articles 38, 39, 43, and 44 of this law. Tax rates and the time limit for tax rebate or exemption shall be stated in investment licenses.

16 In the implementation process of investment projects, should there be any changes in investment circumstances, the earnings tax rebate and exemption for enterprises with foreign-invested capital and for foreign parties involved in cooperative business contracts shall be decided by the Ministry of Finance. Article 46: Enterprises with foreign-invested capital and foreign parties involved in cooperative business contracts shall pay rent for their use of land, and river or sea surface. In cases of natural resources exploitation, they shall pay a natural resources tax as determined by law. The government shall determine exemption or discount of rent for land and river or sea surface in cases of the following projects: build-operate-transfer; build-transferoperate; build-transfer; and investment in mountainous areas, remote and out-of-the-way areas, or areas with difficult socioeconomic conditions. Article 47: Export and import taxes for goods imported or exported by enterprises with foreign-invested capital and by parties involved in cooperative business contracts are determined by the Law on Import and Export Tax. Import tax exemption shall be given to equipment, machinery and specialized transport means that belong to an assembly line imported into Vietnam to be used as fixed assets of enterprises with foreign- invested capital, or as fixed assets to fulfill cooperative business contracts or to expand the scale of current investment projects, or transport means imported to transport workers. The government shall determine exemption or rebate for import and export taxes for special goods where investment encouragement is needed. Article 48. Processing enterprises shall be entitled to import and export tax exemption on goods exported overseas from the processing zone and goods imported from overseas to the processing zone. Processing enterprises and enterprises with foreign- invested capital in industrial zones shall be entitled to preferential tax treatment in the cases of encouragement and special encouragement determined by the government as stipulated by Articles 38, 39, 43, and 44 of this law. The government shall determine in detail preferential tax rates for each type of processing enterprise and enterprises with foreign-invested capital in industrial zones.

17 Article 49: In addition to the taxes mentioned in this law, enterprises with foreign-invested capital and foreign parties involved in cooperative business contracts must pay other taxes as determined by law. Article 50: Foreigners and Vietnamese nationals working for enterprises with foreign-invested capital and for parties involved in cooperative business contracts must pay personal income tax as determined by law. Article 51: Enterprises with foreign-invested capital and foreign parties involved in cooperative business contracts are responsible for the enforcement of legal stipulations on the protection of the environment. Article 52: Enterprises with foreign-invested capital and cooperative business contracts terminate their operation in the following cases: 1. Expiration of the term of business as determined by the investment license; 2. By recommendation of one or more parties with approval from the state agency responsible for foreign investment management; 3. By decision made by the state agency responsible for foreign investment management as a result of serious violations to the law and to the conditions of the investment license; 4. By announcement of bankruptcy; 5. Other circumstances as determined by law. Article 53: 1. Upon termination of operation as in the cases of Sections 1, 2, 3, and 5 of Article 52 of this law, enterprises with foreign- invested capital and parties involved in cooperative business contracts must conduct liquidation of the enterprise's assets and liquidation of contracts, and fulfill obligations as determined by law. 2. When enterprises with foreign-invested capital are announced bankrupted, they

18 shall be dealt with in accordance with the legal stipulations on enterprise bankruptcy. Chapter V: State Management of Foreign Investment Article 54: State management of foreign investment consists of the following duties: 1. To set up strategies, master plans, and plans for foreign investment policies; 2. To promulgate legal documents related to foreign investment activities; 3. To provide guidance to sectors and localities in carrying out activities related to foreign investment; 4. To issue and revoke investment licenses; 5. To regulate coordination between state agencies in managing foreign investment activities. 6. To supervise, inspect, and oversee foreign investment activities. Article 55: The government is the unified state management authority on foreign investment in Vietnam. The government shall regulate the authority of the Ministry of Planning and Investment as regards issuing investment licenses. The license-issuing authority must take into account all socioeconomic development plans and the sphere, nature, and scale of projects. Provisions must be made to share the authority to issue investment licenses with people's committees of provinces and cities under direct management by central government. Separate provisions must also be available for the issuance of investment licenses for investment projects in industrial and processing zones. Article 56: The Ministry of Planning and Investment is the state body in charge of managing foreign investment. It assists the government in managing foreign investment activity in Vietnam. The Ministry of Planning and Investment has the following duties and powers: 1. To devise, and submit to the government for approval, strategies and plans to attract

19 foreign investment capital; to draft laws and policies on foreign investment; to coordinate with other ministries, ministerial agencies, and other agencies of the government in carrying out state management duties in foreign investment; and to guide the people's committees of provinces and cities that are under direct management by the central government in implementing the laws and policies in foreign investment; 2. To define categories of foreign investment projects; provide guidelines in investment procedures; and regulate investment promotion and consultation activities; 3. To receive draft investment proposals, consider them, and issue investment licenses for projects that fall within its jurisdiction; 4. To solve issues that arise during the processes of formation, consideration, and implementation of investment projects; 5. To evaluate the socioeconomic efficiency of foreign investment activity; 6. To inspect and supervise foreign investment activities in Vietnam within the framework of the law. Article 57: Ministries, ministerial agencies, and other agencies of the government shall carry out state management duties in foreign investment in accordance with their respective role and authority, as follows: 1. To coordinate with the Ministry of Planning and Investment in drafting laws, policies, and plans for foreign investment activity; 2. To set plans for all categories of proposals that need to call for foreign investment in the respective sectors; and carry out the necessary activities to promote and accelerate foreign investment; 3. To participate in consideration of investment proposals; 4. To guide and handle all procedures related to the processes of formation and implementation of investment projects; 5. To inspect and supervise, within their respective sectors, the operation of enterprises with foreign-invested capital and parties involved in cooperative business contracts; 6. To carry out other duties within their jurisdiction as determined by law.

20 Article 58: People's committees of provinces, and cities under direct management of the central government, shall carry out state management duties in foreign investment in accordance with their respective role and authority, as follows: 1. To devise and publicize, on the basis of socioeconomic development plans that have been previously endorsed, lists of proposals that need to call for foreign investment in the respective locality; and to carry out the necessary activities to promote and accelerate foreign investment; 2. To participate in consideration of foreign investment proposals in the respective locality; 3. To receive draft investment proposals; to consider and issue investment licenses for projects, in the respective locality, that fall within its jurisdiction as determined by the government; 4. To handle all administrative procedures related to the processes of formation and implementation of investment projects that fall within the jurisdiction of the respective locality; 5. To carry out management duties over production and business operation of enterprises with foreign-invested capital and parties involved in cooperative business contracts in the respective locality; 6. To inspect and supervise operation of enterprises with foreign-invested capital, and of parties involved in cooperative business contracts. Article 59. All parties, one of the parties, or a foreign investor may submit, to the state body in charge of foreign investment, an application for an investment license. The application shall include an application form for an investment license, the business cooperation contract, the joint venture contract, the charter of the enterprise, a study of the economic and technical feasibility of the project, and other related documents. Article 60. The application shall be considered by the state body in charge of foreign investment and its decision shall be communicated to the investors within 60 days from the date of receipt of the application. An approval shall be issued in the form of an investment license.

21 An investment license is also deemed a certification of business registration. Article 61. All joint venture contracts, business cooperation contracts, and charters of the enterprise; and the changing of business operations, production levels, or the contribution of the prescribed capital must be approved by the state body in charge of foreign investment. Article 62. The state ministries, ministerial-level organs, government offices, provincial people's committees, and the people's committees of cities that are directly subordinated to the Central Government shall be responsible for the settlement of procedures relating to the execution of an investment project within 30 days from the date of the receipt of the necessary documents. Article 63. Any violations of the legal stipulations on foreign investment committed by the foreign investors, foreign- invested enterprises, parties of the business cooperation contract, organizations, individuals, state officials, and state organizations shall be dealt with by the laws. Article 64. The foreign investors, foreign-invested enterprises, parties of the business cooperation contract, organizations, and individuals may complain or take legal action against state officials or organs for illegal decisions or actions that cause embarrassment or difficulties for the business. The complaint or legal proceedings and the settlement of the complaint or legal proceedings shall be conducted in accordance with the laws. Chapter IV: Implementation Provisions. Article 65. The government shall issue regulations on the cooperation between local hospitals, schools, and institutes of technological, scientific and technical, or natural science research with foreign counterparts in conformity with this law. Article 66. In conformity with the stipulations of this law and depending on the economic

22 relation with each country, the government of the Socialist Republic of Vietnam may sign agreements on cooperation and investment with foreign governments. Article 67. This law shall come into effect on the day of its promulgation. This law shall replace the Law on Foreign Investment in Vietnam promulgated on 29 December 1987, the Law on Amendment of and Addition to a Number of Articles of the Law on Foreign Investment in Vietnam promulgated on 30 June 1990, and the Law on Amendment of and Addition to a Number of Articles of the Law on Foreign Investment in Vietnam promulgated on 23 December Article 68. The government shall issue details for the execution of this law. This law was approved on 12 November 1996 by the Tenth Session of the Ninth National Assembly of the Socialist Republic of Vietnam. National Assembly Chairman Nong Duc Manh signed.