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THE
STANDING COMMITTEE OF NATIONAL ASSEMBLY
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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No:
35-L/CTN
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Hanoi,
June 22, 1994
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LAW
ON
PROMOTION OF DOMESTIC INVESTMENT
With a view to mobilizing and
using effectively all sources of capital, national resources, labor and other
potentials of the country to contribute to socio-economic development, to bring
prosperity to the people and strength to the country and build and equitable
and civilized society;
Pursuant to Article 84 of the 1992 Constitution of the Socialist Republic of
Vietnam;
This law provides for the promotion of domestic investment.
Chapter I
GENERAL PROVISIONS
Article 1.- The State
protects and encourages Vietnamese organizations and citizens, Vietnamese
residing abroad, foreigners residing for a long time in Vietnam, to invest in
socio-economic fields on Vietnamese territory according to provisions of
Vietnamese law.
The Government shall issue
concrete regulations concerning investment by Vietnamese residing abroad and
foreigners residing for a long time in Vietnam.
Article 2.-
In this Law, the expressions herebelow are understood as follows:
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2- "Investor" is an
organization or individual, as provided for in Article 1 of this Law, who
directly invests capital as provided for in Article 4 of this Law.
Article 3.-
Investment capital includes: Vietnamese currency, convertible foreign
currencies, gold, silver, gems, transferable stock, factory buildings,
construction, equipment, machinery, other production means or land use value,
industrial property used for investment in Vietnam.
Article 4.-
Investment under this Law may assume one of the following forms:
1- Investment for establishing
production and business in any economic sector;
2- Investment for enlarging the
scale, raising the production capacity, research on the development and
renovation of technology utilized by existing production and business
establishments:
3- Purchase of shares in
companies, capital contributions to businesses, including State businesses
allowed to diversify their form of ownership.
Chapter II
ASSURANCE AND ASSISTANCE OF INVESTMENT
Article 5.- The State
recognizes and protects the right to ownership of property, investment capital,
profit as well as other legal rights and interests of investors.
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In case of utter necessity when,
for reason of national defense, security or national interest, the State
decides to purchase or requisition the property of an investor, the investor
shall be compensated or indemnified according to current market prices and
shall be afforded favorable conditions to invest in an appropriate field and
area.
Article 7.-
The State shall undertake the following measures to assist domestic investment
activities:
1- Allotting or renting land as
provided for in the land legislation;
2- Building the infrastructure
of industrial zones for renting them as the ground to build production and
business establishments;
3- Establishing and encouraging
investment support funds for mid-term and long-term investment loans. The
Government provides regulations for the organization and activities of
investment support funds;
4- Contributing capital, via
investment support funds, commercial banks, financial companies, to production
and business ventures belonging to various economic sectors on the basis of
mutual benefit;
5- Providing for investment
credit guarantee for banks, credit organizations and financial companies;
6- Supporting the implementation
of programs and services for encouraging investment. This includes:
a/ Management and business
consultation;
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c/ Organizing job-training and
the training of technical workers;
d/ Training and raising
management skills;
e/ Supplying economic
information.
7- Disseminating and transferring
technology along with creating conditions for investors to use, at preferential
fees, new technology created by State funds.
Article 8.-
Investors are entitled to hire experts, who are foreigners or Vietnamese
residing abroad to work in domestic investment projects. The order and
procedure of exit and entry are the same as for foreigners working in
enterprises with foreign invested capital.
Experts who are foreigners or
Vietnamese residing abroad working in domestic investment projects, after paying
their income tax according to the regulations of Vietnamese law, are entitled
to transfer abroad their income according to the foreign exchange management
regulation of the Vietnamese State.
Chapter III
PREFERENTIAL AREAS OF INVESTMENT
Article 9.- The following
investment project are eligible for preferential treatment:
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a/ Afforestation, growing
perennial trees on unused land, bare lands, bare hills and mountains,
practicing aquaculture in unexploited waters, fishing in sea areas far from the
shore;
b/ Building infrastructure:
developing urban public transportation; developing education, training, health
care, national culture, scientific and technological research;
c/ Processing agricultural,
forest and aquaculture products; different technical services of direct benefit
to agriculture, forestry and fishery;
d/ Production of export goods;
e/ Industrial branches which
need priority development in each period of socio-economic development;
traditional branches and skills.
2- Investment in ethnic minority
areas, mountain areas, islands and other difficult areas;
3- Investment in setting up
production establishments using modern technology or production ventures using
a large labor force.
The Government shall draw up a
list of branches and skills for each field and each territorial area,
technological norms and labor force employment for priority investment
according to the plan and orientation of the State.
Article 10.-
Apart from preferential systems prescribed by the law and ordinances on current
taxes, investment projects defined in Article 9 of this Law are entitled to
additional tax preferences as follows:
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2- Production and business
establishments which augment their investment capital or reinvest their
remaining profit in enlarging production and raising productivity or renovating
technology, are exempt from revenue tax on the increased profit of the
subsequent year brought about by this new investment;
3- Investment projects which
need special encouragement are exempt by the Government from import tax on the
equipment, machinery and spare parts, that investors directly import or import
through an agency, for building production establishments. In case the
equipment, machinery and spare parts exempted from import tax are used for an
unauthorized purpose, the investor shall have to reimburse the exempted import
tax and be penalized as prescribed by law.
4- A dividend from the form of
investment defined in Item 3 of Article 4 from this Law is exempt from income
tax or revenue tax during a period of three years from the first dividend.
The Government shall provide
concrete levels of investment preference.
Article 11.-
An investor who forms and efficiently runs a new production and business
establishment, as provided for in Article 9 of this Law, shall be given
priority consideration for mid-term and long-term credit loans from the
investment support fund; if such an establishment is located in an ethnic
minority area, mountain area, island or other difficult areas, it shall be
considered for preferential interest rates from the investment support fund.
Ventures producing export goods,
in the aforementioned priority categories, shall receive a credit guarantee and
export credit.
Chapter IV
RIGHTS AND OBLIGATIONS OF INVESTORS
Article 12.- Under the
law, the investor is entitled to:
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2. Choose the form of
investment;
3. Enjoy investment preferences
as stipulated in this Law;
4. Take the initiative in
investment, production and business;
5. Hire labor in unlimited
numbers; pay salaries as agreed with the workers but the salary must not be
lower than the minimum wage defined by the Government;
6. Travel abroad to execute an
investment project, as provided for by the Government.
Article 13.-
The investor has the obligation to:
1- Conduct business according to
licenses and seriously execute the prescriptions of the Law in Accounting and
Statistics;
2- Pay taxes and fulfill other
financial obligations as prescribed by law;
3- Observe provisions of the law
regarding the defense of the Fatherland, national security, social safety and
public order;
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5- Accomplish all obligations as
defined in the Labor Code;
6- Observe the Law on Protection
of the Environment, Protection of Historical and Cultural Relics and Sites of
Scenic Beauty.
Article 14.-
In case the investor changes in the period covered by the preferences, if the
new investor continues the investment project, he shall automatically receive
the preferences from the remaining period and shall have the responsibility to
implement strictly the obligations under the preferences of the licensed
investment project.
Article 15.-
When the investor is no longer eligible for preferences under this Law, the
preferences shall be withdrawn partly or entirely.
Article 16.-
Vietnamese residing abroad, who are investors under this Law, are entitled to transfer
abroad:
1- Profit obtained during the
course of production and business with the investment capital legally
transferred from abroad;
2- Principal and interest from
foreign loans in the process of production and business;
3- Investment capital legally
transferred from abroad;
4- Other sums of money and
property under their lawful ownership.
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Article 17.-
When transferring profit abroad, according to Point 1 of Article 16 of this
Law, Vietnamese residing abroad shall pay a tax representing 5% (five percent)
of the amount transferred.
Chapter V
STATE MANAGEMENT OF THE PROMOTION OF INVESTMENT
Article 18.-
1- The Government exercises unified
State management of investment and promotion of investment.
The Government appoints
competent agencies to assist the Government achieve its function of State
management of the promotion of investment.
2- The State management agency
for the promotion of investment has the following tasks and authority:
a/ To elaborate and submit to
the Government for adoption a list of branches, occupations and territorial
areas eligible for investment preferences;
b/ To guide and supervise the implementation
of support measures and the regime of investment preferences;
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Article 19.-
The People's Committee of the provinces or cities directly under the Central
Government have the following tasks and authority:
1- To exercise State management
in the promotion of domestic investment in the localities according to the
provisions of the law;
2- To elaborate and publish a
list of projects in which investment needs to be encouraged with an eye to the
orientation for socio-economic development in the localities;
3- To receive applications for
investment preferences. Within 30 days from the day the application is
received, they must decide whether or not to issue the investment preference
warrant pursuant to the provisions of the law.
Chapter VI
HANDLING OF VIOLATIONS
Article 20.- The investor
who commits fraudulent acts to enjoy investment preferences or violates other
provisions of this Law, shall have to reimburse the money he receives from the
preferences and depending on the degree of violation, be subjected to
administrative sanction or be investigated for penal liability as prescribed by
law.
Article 21.-
Those taking advantage of their position and authority to impede investment, to
grant investment preferences contrary to the law, engage in acts of harassment
againt investors or violate other provisions of this Law, shall be liable for
damages and depending on the degree of violation, shall be disciplined or
investigated for penal liability as prescribed by law.
Chapter VII
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Article 22.- This Law
takes effect from the 1st of January, 1995.
Any previous provisions contrary
to this Law are now annulled.
Article 23.-
Production and business establishments in the categories of investment preferences,
provided in Article 9 of this Law, and set up before the Law on Promotion of
Domestic Investment took effect, shall enjoy investment preferences for the
remaining period, as provided for by this Law.
The State shall not reimburse
the amounts of tax and other obligatory contributions made by the businesses
during the period prior to this Law becoming effective.
Article 24.-
The Government shall issue detailed provisions for the implementation of this
Law.
This Law was adopted by the
National Assembly of the Socialist Republic of Vietnam, Ninth Legislature,
Fifth Session, on June 22, 1994.
CHAIRMAN
OF THE NATIONAL ASSEMBLY
Nong Duc Manh
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