Viet Nam - A Guide for Business and Investment - asean-korea centre

Viet Nam - A Guide for Business and Investment

FOREWORDIn recent years, Viet Nam’s economy has benefited from its Government’s open-door policy. With a stablepolitical environment and its economic potential, Viet Nam is an attractive destination for foreign investors.The Vietnamese Government has been endeavouring to create a favorable investment environment bycontinuing to complete Viet Nam’s legal system and introducing important incentives for foreign investors.To provide an overview of the investment environment in Viet Nam, the Foreign Investment Agency,Ministry of Planning and Investment has cooperated with PricewaterhouseCoopers Viet Nam to compileand issue this guidebook.The book is divided into five sections to provide foreign investors with an overview of Viet Nam includingits social, economic and investment environment. The purpose of this book is not to provide a detailedanalysis of Viet Nam’s economy or its foreign investment forms in Viet Nam, but to give a general introductionand supply the necessary information to foreign investors who are looking at potential opportunitiesof investment in the country.We believe that this will be a helpful guidebook for foreign investors in Viet Nam.Viet Nam - A Guide for Business and Investment

Viet Nam - A Guide for Business and InvestmentMAP OF THE SOCIALIST REPUBLIC OF VIET NAM

TABLE OF CONTENTSFOREWORD ..................................................................................................................... 3PART I. VIET NAM: COUNTRY AND PEOPLE ................................................................ 71. GEOGRAPHY ...................................................................................................................... 82. POPULATION ...................................................................................................................... 83. NATURAL RESOURCES ......................................................................................................... 94. POLITICAL STRUCTURE ........................................................................................................ 95. INTERNATIONAL RELATIONS ................................................................................................ 116. INFRASTRUCTURE .............................................................................................................. 127. ENERGY ........................................................................................................................... 148. TELECOMMUNICATIONS ...................................................................................................... 15PART II. THE ECONOMY ................................................................................................ 161. OVERVIEW ....................................................................................................................... 172. PRINCIPAL ECONOMIC SECTORS .......................................................................................... 173. EXTERNAL TRADE .............................................................................................................. 194. OFFICIAL DEVELOPMENT ASSISTANCE (ODA) ......................................................................... 225. FOREIGN DIRECT INVESTMENT (FDI) IN VIET NAM ................................................................... 236. STATE-OWNED ENTERPRISES EQUITIZATION PROCESS ............................................................ 24PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENT ........................... 261. AN OVERVIEW OF THE LEGAL FRAMEWORK .......................................................................... 272. VIETNAM’S WTO ACCESSION ............................................................ ................................... 273. INVESTMENT GUARANTEES ............................................................ .................................... 284. INVESTMENT SECTORS AND REGIONS ENTITLED TO INCENTIVES .............................................. 285. INVESTMENT SECTORS SUBJECT TO CONDITIONS ................................................................... 296. BASIC FORMS OF ENTERPRISES AND FORMS OF DIRECT INVESTMENT ....................................... 297. OTHER FACILITIES FOR BUSINESS AND INVESTMENT IN VIET NAM ............................................. 318. TAX AND TAX INCENTIVES APPLICABLE TO FOREIGN DIRECT INVESTMENT ................................. 369. ACCOUNTING AND AUDITING ................................................................................................ 4010. BANKING AND FINANCE ..................................................................................................... 4011. FOREIGN EXCHANGE MANAGEMENT .................................................................................... 4212. CAPITAL MARKET .............................................................................................................. 4213. LAND .............................................................................................................................. 4314. DOMESTIC AND FOREIGN TRADE ......................................................................................... 4315. LABOUR .......................................................................................................................... 4316. INTELLECTUAL PROPERTY ................................................................................................. 4417. TECHNOLOGY TRANSFER ................................................................................................... 4518. DISPUTE SETTLEMENT ....................................................................................................... 45PART IV. INVESTMENT PROCEDURE ............................................................................. 461. SELECTION OF AN INVESTMENT PROJECT ............................................................................... 472. PROJECT CLASSIFICATION AND LICENSING BODIES .................................................................. 473. LICENSING PROCEDURE ....................................................................................................... 48Viet Nam - A Guide for Business and Investment

PART V. INVESTMENT COSTS IN VIET NAM ................................................................ 52LAND RENTAL APPLIED TO FDI PROJECTS ................................................................................. 53OFFICE SPACE RENTAL ........................................................................................................... 53TELEPHONE COSTS ................................................................................................................ 53UTILITIES COSTS .................................................................................................................... 54EXPATRIATE FACILITIES & COST OF LIVING ................................................................................ 55APPENDIX I : SUMMARY OF WTO COMMITMENTS ................................................................................. 57APPENDIX II : LIST OF MAJOR LEGAL DOCUMENT RELATING TO THE BUSINESS ACTIVITIESOF FOREIGN INVESTORS IN VIETNAM............................................................................... 59APPENDIX III : LIST OF SECTORS ENTITLED TO INVESTMENT INCENTIVE................................................... 63APPENDIX IV : LIST OF GEOGRAPHICAL REGIONS OF INVESTMENT INCENTIVES........................................ 67APPENDIX V : LIST OF CONDITIONAL INVESTMENT SECTORS APPLICABLE TO FOREIGN INVESTORS........... 71APPENDIX VI : USEFUL CONTACTS AND ADDRESSES IN VIETNAM ............................................................ 72 Viet Nam - A Guide for Business and Investment

Aquatic ProductsPART I. VIET NAM: COUNTRY AND PEOPLEViet Nam - A Guide for Business and Investment

PART I. VIET NAM: COUNTRY AND PEOPLE1. GeographyViet Nam is located in the centre of Southeast Asia with a land area of 331,689 square kilometres. It lies in theeastern part of the Indochina peninsula, bordered by China to the North, Laos and Cambodia to the West, theEast Sea and Pacific Ocean to the East and South, and has a beautiful 3,260 km long coastline. It is in an idealposition for the development of the economy in general, and trade and tourism in particular.Three quarters of the country consists of mountains and tropical forests, but the plains are the most denselypopulated areas. The two rice-rich areas are the Red River Delta in the north (15,000 km2) and the MekongRiver Delta in the south (40,000 km2).Hanoi in the North is the capital of the country, and Ho Chi Minh City in the South is the largest commercialcity. Da Nang, in central Viet Nam, is the third largest city and an important seaport.Viet Nam is located in both tropical and temperate zones. The climate is tropical in Southern and Central VietNam, with a wet and a dry season, and warm and humid weather all year round. In the north, there are fourseasons with a distinct winter. The average annual rainfall is around 223cm. The whole country is affected bya strong monsoon influence, with a considerable amount of sunshine and a high rate of rainfall and humidity.2. PopulationViet Nam’s population was estimated at approximately 83.5 million in July 2005, and is expected to grow to 90million in 2010 with an annual growth rate of 1.6%. The mean population density is 253.7 people per squarekilometre. The most populous areas are in the South.There are 54 ethnic groups, of which the largest are Kinh (or ethnic Vietnamese) (population), Tay, Thai,Muong, Chinese and Khmer. Viet Nam’s literacy rate is over 90%. Close to 73% of the population live in ruralareas, and over 60% of the population are under 25 years of age.Hai Phong TD PlazaViet Nam - A Guide for Business and Investment

The Bach Ho’s center oil rig3. Natural ResourcesViet Nam has considerable energy resources such as oil, gas and coal and its 41,000 km long waterways providethe basis for hydropower. The country is rich in minerals such as bauxite, iron ore, lead, gold, preciousstones, tin, chromate, anthracite, granite, marble, clay, white sand and graphite. In addition, Viet Nam has aconsiderable fresh and saltwater fauna, dense tropical forestry resources and it possesses great agriculturalpotential.4. Political StructureViet Nam is a socialist country operating under the leadership of the Communist Party. A nation-wide congress(“National Congress”) of Viet Nam’s Communist Party is held every five years determining the country’sorientation and strategies and adopting its chief policies on solutions for socio-economic development. TheNational Congress elects the Central Committee which in turn elects the Politburo.National AssemblyThe National Assembly is the highest law-making The Standing Committee of the National Assemblybody in the country. It comprises delegates who are is the permanent executive body of the National Assembly.Its principal functions are the interpretationelected for a five-year term from various strata ofpeople and different ethnic groups from all around of the Constitution, Laws and Ordinances, the controlthe country. The National Assembly is both the supremestate authority and the unique legislative activity of the Government, the Supreme People’sof their implementation and the supervision of thebody and has the power to promulgate and amend Court and the Supreme People’s Procuracy.the Constitution and Laws. The National Assemblymeets twice yearly.PART I. VIET NAM: COUNTRY AND PEOPLEViet Nam - A Guide for Business and Investment

PART I. VIET NAM: COUNTRY AND PEOPLEThe President of Viet NamThe President, as the Head of State, is elected by theNational Assembly from its members to representViet Nam in domestic and foreign affairs for a fiveyeartenure. The President has the right to proclaimLaws and Ordinances passed by the National Assemblyand the Standing Committee. The President is thecommander-in-chief of the armed forces and Chairmanof the Council of Defence and Security. In foreignaffairs, the President has the authority to appoint ambassadorsand to sign international agreements andtreaties.The President appoints and dismisses the Prime Ministerand the members of the Government on thebasis of resolutions of the National Assembly or itsStanding Committee. Furthermore, the President hasthe right to nominate key officials such as the ChiefJustice of the Supreme Court and the Chief Procuratorof the Supreme Procuracy, subject to the NationalAssembly’s approval.The 9 th session of the eleventh National AssemblyThe GovernmentThe Government is the highest executive organ ofthe State. The Prime Minister is the leader of theGovernment. The Prime Minister is responsible forthe day-to-day operations of the Government. TheVietnamese Government currently has 20 ministriesand 6 ministerial-level bodies.The People’s Councils and People’sCommitteesViet Nam has 59 provinces and 5 cities directly undercentral authority (including Hanoi, Ho Chi MinhCity, Haiphong, Da Nang, and Can Tho). Provincesare subdivided into districts, provincial cities andmunicipalities. Districts are further divided into communesand townships. Cities directly under the centralauthorities are made up of districts. Urban districtsare divided into precincts, and rural districtsare made up of communes.10 Viet Nam - A Guide for Business and Investment

People’s Councils of various administrative levels areelected by the population of the locality. People’sCouncils are responsible for the supervision of theimplementation of the laws, policies and tasks at thelocal level, and for taking decisions on local socioeconomicdevelopment programs and budgets.People’s Committees of various levels are the executivearm of the People’s Councils. They are also localadministrative authorities, and report to the People’sCouncils of the same level. Chairmen, vice chairmenand members of the People’s Committees are electedby People’s Councils.The People’s Courts and People’sProsecutorsThe Constitution establishes a three-level judicialsystem comprising District Courts, Provincial Courtsand the Supreme People’s Court. In addition, thereis a system of people’s organs of control acting as aprocuracy or public prosecutor to oversee the observanceof laws by judicial bodies and to exercisethe power of public prosecution.Prime Minister Nguyen Tan Dung meets ADB’s President5. International relationsAt present, Viet Nam has established diplomatic relations with 168 countries, and it has economic and tradingrelations with about 165 countries. Viet Nam joined the United Nations in 1977.Viet Nam became an official member of the Association of South East Asian Nations (ASEAN) in 1995, and hasconcluded a cooperation agreement with the European Community. Relationships with multi-national financialinstitutions such as the World Bank (WB), the International Monetary Fund (IMF) and the Asian DevelopmentBank (ADB) are being strengthened. Viet Nam has been participating in the ASEAN Free Trade Area (“AFTA”)since 1996 and became a member of the Asia Pacific Economic Cooperation Forum (APEC) in 1998. Viet Nambecame an official member of the World Trade Organisation (WTO) on 7 November 2006.Viet Nam signed the bilateral trade agreement (BTA) with the United States in 2000. Besides aspects of internationaltrade, the BTA covers a variety of other areas, including intellectual property rights, trade in services,development of investment relations, business facilitation and the obligation to ensure transparency of lawsand regulations. The BTA essentially constitutes a commitment by both countries to open their markets toeach other.Prime Minister Nguyen Tan Dung meets Representativeof the World BankPART I. VIET NAM: COUNTRY AND PEOPLEViet Nam - A Guide for Business and Investment 11

PART I. VIET NAM: COUNTRY AND PEOPLE6. InfrastructureHighway systemThe road system consists of a 210,000 km networkincluding 10,732 bridges and 178 ferries. VietNam has no expressways, and only 26% of nationalhighways have two lanes or more. In recent years,the Government has mobilised a significantly largeamount of capital to upgrade the highway systemwith financial support from international lendingagencies. These include a number of the more importanthighways such as Highway No. 1, which linksHanoi and Ho Chi Minh City and Highway No. 5, whichlinks Hanoi and Hai Phong.Goods TrainInland WaterwaysMy Thuan BridgeRailwayThe rail network consists of about 2,600 km of single–trackline covering several routes. There areabout 260 stations in the network. The longest andmost important route is the Hanoi – Ho Chi MinhCity line, which stretches for 1,730 km. This line isnow serviced by an express train, which makes thejourney in approximately 29.5 hours. The lines connectingViet Nam to China were re-opened a fewyears ago.Often overlooked by foreign investors, the inlandwaterway system offers a cheap and flexible modeof transport.The two major inland waterway systems serve asmajor transportation outlets. The first major inlandwaterway system is in the Red River area in the northwhich stretches for approximately 2,500 km. Alongthis system there are five main ports, of which Hanoiis the largest. The second major inland waterwayextends 4,500 km along the Mekong River and itstributaries in the South and boasts about 30 ports,including Ho Chi Minh City.Loading cargo on Vinashin’s ship in Cai Lan portThe larger river vessels are tug-drawn barges. Officialestimates put the fleet capacity at about 420,000 tonswith speeds ranging from 2 to over 20 km an hour.Smaller, wooden barges are mostly privately owned.12 Viet Nam - A Guide for Business and Investment

PortsViet Nam has eleven major seaports. Ho Chi Minh Cityserves most of the South and now boasts moderncontainer loading facilities. Just a few hours’ drivefrom Hanoi, Hai Phong serves much of the North. TheGovernment has decided to build Cai Lan port, 80km away from Hai Phong, which will play a criticalrole in the development of the North. Da Nang, at thenorth of Han River, serves the central highlands andmuch of the transit traffic to and from Laos.Container loading in Chua Ve port - Hai PhongAirports and Civil AviationThere are three international airports: Ho Chi MinhCity, Hanoi and Da Nang. Currently, the Governmenthas significantly upgraded international airports tohandle the increase in the volume of traffic associatedwith Viet Nam’s invigorated economy. Particularly,Noi Bai airport in Hanoi was upgraded, enlargedand completed for operation in 2002. Four new internationalairports are planned to be constructedin Phu Quoc, Dong Nai, Lao Cai and Quang Ninhprovinces. Long Thanh International Airport in DongNai province shall be constructed in 2007, with anannual transportation capacity of 80 to 100 millionpassengers, becoming one of the biggest airports inthe region. In addition, there are 16 other domesticairports around the country.Loading packages at the airportPART I. VIET NAM: COUNTRY AND PEOPLEViet Nam - A Guide for Business and Investment 13

PART I. VIET NAM: COUNTRY AND PEOPLE7. EnergyAs of November 2004, the electricity output supplied for Vietnam’s economy was 44 billion kWh. Electricityoutput in 2005 reached nearly 53 billion kWh. The Electricity of Vietnam Corporation (“EVN”) aims to generateabout 70-78 billion KWh in 2010 and as high as 167-201 billion kWh in 2020. Achieving this goal requiresthe development of approximately 32 to 37 new power generation projects, totaling 12,400 MW in capacity,including up to 20 hydroelectric plants with 4,000 MW capacity; eight gas or oil power plants (5,200 MW),and seven coal-fired plants (3,200 MW). Implementation of these projects also requires the construction ofabout 15,000 km of 110 – 500kV transmission lines, together with 300,000 km of low medium and low voltagedistribution lines. In order to achieve the above targets, the annual power growth during 2000-2020 shouldachieve 8.8% to 10% to keep pace with the annual GDP growth of 6.6% to 8%. The annual investment requiredto achieve the set target is estimated to be US$1.5 to US$2 billion per year.A view from the Phu My Thermo - Power CenterOver the last few years, an array of large capacity power plants were built and put into operation, such as PhaLai Thermo Power Plant with capacity of 440MW, Tri An Hydroelectric with a capacity of 400MW and Hoa BinhHydroelectric Power Plant with a capacity of 1,920 MW. Further large power plants are under construction orto be constructed, such as the Phu My Thermo Power Center with a total capacity of 3,000 MW, Yaly Hydroelectricwith capacity of 720 MW. In addition, a 3,600 MW hydropower complex at Son La in the North is alsounder construction. Recently, the Phu My 3 Plant has commenced operations and is expected to provide 10%of Viet Nam’s energy requirements. Furthermore, Vietnam plans to complete its first nuclear power plant by2020 as an alternative means on meeting electricity demand.More foreign companies are beginning to enter Vietnamese power market in the form of Build-Operate-Transfer(BOT) projects such as the Mekong Delta’s 715-MW Phu My 2-2 in January 2003. The plant is fuelled by gas fromthe Nam Con Son Basin.14 Viet Nam - A Guide for Business and Investment

Viet Nam has signed up for a US$165 million loan from the WB and the ADB to finance the rehabilitation of theelectricity transmission and distribution systems in Ho Chi Minh City, Hanoi, Nha Trang and Hue. Soft loans andaid from foreign governments are also being spent to improve the system.Additionally, Vietnam has great potential of renewable energy, and its consumption is on the rise. Under thesolar power cooperation program between France and Vietnam, a solar station was installed in Ho Chi MinhCity to provide electricity for the provinces Gia Lai, Quang Nam, and Binh Phuoc.Energy Output from 1999 to 2005Energy Output in million kwh60,00050,00040,00030,00020,00010,000023,60026,60030,80035,80041,10044,00053,0001999 2000 2001 2002 2003 2004 2005Source: Energy Corporation of Viet Nam and General Statistics Office8. TelecommunicationsViet Nam has made great strides in upgrading its telecommunicationssystems, although much remains tobe done. In the last six years, the annual growth ofthe telecommunication market in Vietnam reached30%, specifically, in 2005 and 2006, the growth rateswere more than 50%. Accounting for the last eightmonths of 2006 only, the number of new phones wastwice those of the whole period from 1975 to 2000.The country has achieved more than 24.42 phonesper 100 people. The Government’s relaxation withregard to international calls made over the internetand the spread of mobile phone subscriptions havefurther improved the telecommunication landscape,Checking a microwave stationespecially in rural areas.PART I. VIET NAM: COUNTRY AND PEOPLEViet Nam - A Guide for Business and Investment 15

Production of Electronic parts of Hanel computer - Sai Dong B - HanoiPART II. THE ECONOMY16 Viet Nam - A Guide for Business and Investment

1. OverviewViet Nam has been carrying out economic reformssince 1986 under the “Doi Moi” (Renovation) policy,focusing on market oriented economic management.This has included: (i) restructuring to build amulti-sector economy; (ii) financial, monetary and administrativereform; and (iii) the development ofexternal economic relations.has become one of the fastest-growing economiesin the world, averaging around 8% annual gross domesticproduct (GDP) growth from 1990-1997, 7%from 2000 to 2004, and 8.4% in 2005.2. Principal economic sectorsAchievements during the past few years include thefollowing highlights:One of the most important aspects of economic reformin Viet Nam has been the encouragement of domesticand foreign private investment. For domesticViet Namese companies, the Enterprise Law adoptedin 2000 (which replaced the Company Law and theLaw on Private Enterprises) has had a significant impacton the development of the private sector in VietNam. The Law on Foreign Investment was promulgatedin 1987 and amended in 1990, 1992, 1996 and2000. The Law on Foreign Investment and the EnterpriseLaw (2000) have recently been replaced by thenew Law on Enterprises and the Law on Investmentwhich came into effect on 1 July 2006. The Law onEnterprises and the Law on Investment apply to allenterprises irrespective of the source of investment,i.e. whether the enterprise is established by foreignor Viet Namese investors. These Laws have beendrafted following the policy set out in the 1992 Constitution(as amended on 25 December 2001) and toprepare Viet Nam for its intended accession to theWTO in the spirit to treat all economic sectors equallyregardless of the various types of ownership.Since 1986 Viet Nam has recorded importantachievements in socio-economic fields and Viet Nam- Agriculture/aquaculture – as one of the bases forViet Nam’s socio-economic stabilisation, this industryhas continued to maintain its relatively gooddevelopment with an annual growth rate of over5.4%. This has helped contribute to the maintenanceof socio-economic stability and the provision of improvedsupport to the hunger eradication, povertyalleviation and employment generation programs.The cropping structure has also changed and agriculturalproductivity has increased in many regions.In 2005, aquaculture has increased rapidly, and nowaccounts for 21.1% of the total value of agricultural/aqua cultural production. Export income from aquaticproducts has also increased considerably.- Difficulties and challenges in the industrial sectorhave been overcome, bringing about positiveresults. The industrial growth rate averaged 16.0%over the last five years. In 2005, industrial productionvalue increased by 17.2%, with a growth rate inprivate businesses of 24.1%. This is attributed to theencouraging policies and positive impacts of the formerEnterprise Law. Production capacity has risen inseveral industries, resulting in increased exports.GDP Growth Rate by Economic Sectors2000 2001 2002 2003 2004 2005GDP 6.7 6.8 7.0 7.3 7.6 8.4Agriculture, aquaculture, forestry& fishery4.0 2.7 4.1 3.6 3.5 4.0Industry & construction 10.1 10.4 9.4 10.4 10.2 10.6Services 5.6 6.1 6.5 6.4 7.4 7.5Source: General Statistics OfficePART II. THE ECONOMYViet Nam - A Guide for Business and Investment 17

PART II. THE ECONOMYThe industrial structure has changed considerably,with the oil and gas industry accounting for 10.4%of the total value of industrial production. A largenumber of specialised industrial zones utilising modernproduction technologies have been developed.Manufacturing accounted for 81.2% of industrialproduction, of which the food processing industryaccounted for 19.3%. Power supply and distribution(5.6%) and water supply (0.3%) accounted for 5.9%.- The services sector has maintained its operationsdespite various difficulties, and has still improvedits quality, meeting the demands of economicgrowth and the people. Trade has been growing relativelywell. Markets are more open and transparentwith the participation of all economic sectors. Businessmethods have become more diversified, andthere has been an annual average increase of about14.8% in total retail sales.Further progress has been recorded in the tourismindustry. Numerous tourist centres have been upgradedand renovated and the types of tourism havediversified, resulting in an increase in tourism revenuein 2005 of 11.5 %.Transport services have met the basic demands ofcargo and passenger transportation. The physicalinfrastructure of the transport sector has improvedconsiderably, with more achievements expectedover the next 5 years with improved roads and portfacilities. The volume of cargo and passengers transportedannually has increased by 9.2% and 9.8% inthe last two years respectively.Post and telecommunications services have developedrapidly. The basic telecommunications networkhas been modernised. Growth in revenue has averagedmore than 17.7% per year.An insurance services market has been establishedwith the participation of domestic and foreign enterprisesfrom all economic sectors. Currently, thereare 32 insurance businesses from all economic sectorsoperating in the Viet Nam insurance business,of which 8 cover life insurance, 1 composite, 16non-life and 7 in brokerage. They include 3 stateowned,11 joint-stock, 6 joint-venture and 12 whollyforeign-owned companies. In addition, there are approximately30 representative offices of foreign insurancecompanies operating in Viet Nam.In 2005, the total value of services increased by 8.2%.The total revenue from the retail sale of domesticgoods and services increased by 20.5% compare to2004, with State Owned Enterprises accounting for12.9% and foreign invested enterprises accountingfor 3.8% of turnover and private domestic businessfor 83.3%.Bai Chay Brigde (supported by Japanese ODA)18 Viet Nam - A Guide for Business and Investment

Industrial growth (% increase on 1994 price)TotalBy ownershipState Non-state FDI1996 14.2 11.6 11.5 21.71997 13.8 10.8 9.5 23.21998 12.5 7.7 7.5 24.41999 11.6 5.4 10.9 21.02000 17.5 13.2 19.2 21.82001 14.6 12.7 21.5 12.62002 14.8 12.5 18.3 15.22003 16.8 11.9 23.3 18.02004 16.6 11.9 22.3 17.42005 17.2 8.7 24.1 20.9Source: General Statistics Office3. External TradeDuring the period of 2001-2005, total export revenueincreased by 17.5% per year. Both the compositionand quality of exports have improved significantly.The proportion of industrial products has risen considerably.Total imports have increased by 18.8% peryear. Export revenue reached US$390 per capital.Exports reached US$32.4 billion in 2005, an increaseof 22.5% compared to 2004. However, due to considerableimports of plant, equipment and materialsused for the industrialisation and modernisation processand for foreign investment projects, the tradedeficit has increased over the past three years. Tradingrelations with foreign countries, especially othercountries in the region, have expanded.PART II. THE ECONOMYSong Than Industrial Zone in Binh Duong provinceCargo loading at sea portViet Nam - A Guide for Business and Investment 19

PART II. THE ECONOMYExport, Import and Trade deficit4000035000300002500020000150001000050000-50001990Main economic indicators199119921993199419951996199719981999200020012002200320042005ExportImpotBudget deficit80706050403020100-10-2091 92 93 94 95 96 97 98 99 00 01 02 03 04 05GDP growthrateInflation rateExportgrowth rateSaving/GDPgrowth rate20 Viet Nam - A Guide for Business and Investment

Top 10 importing countries of Viet Nam in 20056,000,0005,000,0004,000,0003,000,0002,000,0001,000,000-ChinaTuocmenixtanTaiwanJapanThailandMalaysiaUnited StatesIndonexiaGermanyIndiaTop 10 exporting countries of Viet Nam in 20056,000,0005,000,0004,000,0003,000,0002,000,0001,000,000-United StatesJapanChinaTuocmenixtanAustraliaGermanyUnited KingdomMalaysiaTaiwanPhillipinePART II. THE ECONOMYViet Nam - A Guide for Business and Investment 21

PART II. THE ECONOMY4. Official DevelopmentAssistance (ODA)Since 1993, Viet Nam has received increasing assistancefrom the international community for socio-economicdevelopment. ODA has supportedinfrastructure development, contributed to the economicgrowth, and improved the living standard ofViet Nam.By 2006, Viet Nam has established development cooperationrelations with more than 50 bilateral andmultilateral donors and around 600 internationalnon-government organisations (INGOs). Large donorsinclude Japan, World Bank, ADB, France, UNagencies, Germany etc.ODA’s pledges have increased year by year. In 1992-2005, total pledged ODA funds were USD32.5 billion.During 2001-2005, a total of USD14.9 billion of ODAwas pledged to Viet Nam by international donors. Outof these, USD11.2 billion was translated into formalagreements. Eighty percent of commitments tookthe form of loans at preferential rates. Total pledgedODA for 2006 alone were USD3.7 billion..Top 10 Donors by pledged ODA at Consultative Group meeting in 20050 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850 900AustraliaSpainDenmarkUKKoreaGermanyChinaFranceADBWorld BankJapan57.7586386.5105114200397539750835US$ millionThe structure of assistance has shifted in recent years with a significant rise in investment projects, largely forinfrastructure, rural development and human development.ODA by Sectors in 2001-20050 500 1000 1500 2000 2500 3000Environment,science technologyWater supply & drainage;social developmentHealth, education35110841171Energy & Industry1802AgricultureTransportation &Telecommunication18182753US$ million22 Viet Nam - A Guide for Business and Investment

5. Foreign Direct Investment(FDI) in Viet NamCurrent statusSince the introduction of the Law on Foreign Investmentin 1987, leaving aside projects which have expiredor been withdrawn, to date, there have been6,813 active licensed projects with a total registeredcapital of US$ 60.4 billion.By the end of 2006 investors from more than 77countries and territories have invested in Viet Nam.Asia accounts for 67%, Europe 29%, and America4% of the total FDI and other sectors is 7.5%. Topfive countries and territories having invested in VietNam are Taiwan, Singapore, Japan, Korea and Hongkong.These five countries and territories accountfor 58,3% of the licensed projects with a total investmentcapital account for 60,6% of the total foreigninvestment capital of Viet Nam. The next five countriesand territories are British Virgin Islands, France,Netherlands, Malaysia and the USA. These “top ten”countries and territories account for over threequarters of the total licensed projects and foreignregistered capital in Viet Nam.FDI Flow into Viet Nam in the period 1988 - 2006From 1996 to 2006 there has been a tendency towardsinvestment in producing goods for export, infrastructureconstruction, producing import substitutesand in labour-intensive industries. There are more than4,566 projects in the manufacturing and constructionindustries with a total capital of about US$35,4 billion,accounting for 61,89% of the registered capital.FDI Distribution by Sectors by 2006Banking & Finance 6%Culture, health & education 1%Construction 8%Transport,communication & post 3%Office building& appartment 5%Services 2%Hotel & tourism 6%Agriculture & forestry 7%Food industry 6%Infrastructurefor IZ and EPZ 7%New urban construction 2%Heavy industry 27%Oil & gas 3%Light industry 17%PART II. THE ECONOMYViet Nam - A Guide for Business and Investment 23

PART II. THE ECONOMYFDI Distribution by Sectors by 2006While there are foreign invested projects in mostprovinces and cities in Viet Nam, most investmenthas been in the key economic areas in the South includingHo Chi Minh City, Dong Nai, Binh Duong, BaRia, Vung Tau, and in the North including Hanoi, HaiDuong, Hai Phong and Quang Ninh. Particular focushas been in Hanoi and Ho Chi Minh City which havemore developed infrastructure, higher purchasingpower and a more skilled labour force.In recent years there has also been an increase inprojects in the 100% foreign owned form. Theseprojects now account for 76.1% of the total licensedprojects and 58.1% of the registered capital, whilejoint venture enterprises make up 20.6% and 33.3%respectively. There are also 6 licensed foreign investedBOT projects in Viet Nam (water supply andelectricity plants) with a total registered capital ofUS$1.37 billion.The foreign invested sector has seen rapid growth,gradually asserting itself as a dynamic component ofthe economy, and has made an important contributionto enhancing the competitiveness and efficiencyof the economy. In recent years, the foreign investedsector has accounted for a quarter of the country’stotal investment, 43.6% (2004) of industrial output,57.2% (2005) of the national export, and 15.9% ofthe GDP of Viet Nam.FDI Contribution to GDP (%)2000 2001 2002 2003 2004 2005GDP 100.0 100.0 100.0 100.0 100.0 100.0State 39.0 39.0 38.4 39.1 39.2 38.4Non State 47.7 48.0 48.7 46.4 45.6 45.7FDI 13.3 13.0 13.8 14.5 15.2 15.9Source: General Statistics Office6. State-owned enterprisesequitization processThe Government of Viet Nam is very keen to promotethe SOEs reform program, i.e. the reorganisation andrestructuring and development of SOEs and StateOwned Commercial Banks to improve their productivityand efficiency.Since 1986, the Government has pursued the reformof State Owned Enterprises (SOEs) in three phases(restructure, renovation and development) throughthe implementation of 4 key measures:(i) reform of SOE management;(ii) reorganisation and reinforcement of state ownedgeneral corporations;(iii) SOEs equitisation;(iv) transferring, contracting, leasing and selling SOEs.Since 1998, the Government has formulated a detailedreform program focusing on equitisation ofstate companies. By the end of 2005, about 2,203enterprises and businesses had been equitised and127 enterprises were transferred or 76 enterpriseswere sold, 390 enterprises were merged. Small andmedium-sized enterprises account for 77% of equitisedSOEs and there are 54% SOEs with a total capitalof less than 5 billion VND and 23% SOEs with atotal capital from 5 billion VND to 10 billion VND. Accordingto certain surveys, the financial performanceand productivity of most equitised enterprises hasincreased which constitutes a positive sign.24 Viet Nam - A Guide for Business and Investment

The process of equitizing SOEs in Viet NamYearNumber of equitised stateowned enterprisesTotal1992 Started 01992-1995 3 31996 5 81997 7 151998 100 1151999 250 3652000 212 5772001 149 7262002 164 8902003 532 1,4222004 753 2,1752005 754 2,929In addition to the equitisation of SOEs, the Government also issued Decree 103/1999/ND-CP on regulations onselling, transferring, contracting and leasing of small-scale SOEs (i.e. SOEs with state capital of less than VND5 billion) to accelerate the reorganisation of the SOE sector.Major economic objectives of 2006-2010The 10th Party Congress held in 2005 formulated the following key economic targets for the 2006-2010Five Year Socio-Economic Development PlanGDP growth rate:from 7.5% to 8% p.aOf which:- agriculture, forestry & fishery: 3% to 3.2% p.a.- industry & construction 9.5% to 10.2% p.a.- services 7.7% to 8.2% p.a.Industrial outputgrowth rate:- agriculture, forestry & fishery 4.5% p.a.- industry & construction 15.2% to 15.5% p.a.- services 11% to 11.5% p.a.Export turnover growth rate: 16% p.a.Economic structure by 2010:- agriculture, forestry & fishery 15% to 16% GDP- industry & construction 43% to 44% GDP- services 40% to 41% GDPPART II. THE ECONOMYViet Nam - A Guide for Business and Investment 25

The center of Hanoi CapitalPART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENT26 Viet Nam - A Guide for Business and Investment

1. An overview of the legalframeworkBackgroundViet Nam’s common law system has been largely influencedby Chinese, French and Soviet rule. Followingthe open-door policy of 1986, Viet Nam has enactedthe Constitution of 1992 (as amended in 2001) tostrengthen legal institutions and to pave the way for itsparty-led economic reform.To create a favourable environment for the developmentof a multi-sector market economy as well asmore open and stable investment environment, VietNam is making efforts to improve its legal system.During recent years, many laws and regulations havebeen enacted to establish the legal framework for theopen-door policy and to comply with the integration requirementsof international agreements, especially toprepare for Vietnam’s WTO membership, of which themost important laws include:• the Civil Code (2005);• the Labor Code (1994, as amended in 2002);• the Commercial Law (2005)• the Law on Enterprises (2005)• the Law on Investment (2005)• the Law on Credit Institutions (1997, as amenedin 2004)• the Land Law (2004)• the Law on Business Income Tax (2004)• the Law on Accounting (2004)* A list of major legal document relating to the businessactivities of foreign investors in Vietnam is attached atthe end of this book.Main legislation for FDIThe main legislation governing foreign direct investment(FDI) activities is the Law on Investment and theLaw on Enterprises in Viet Nam, both having been adoptedby the National Assembly on 29 November 2005and having entered into force on 1 July 2006.With a view to creating a comprehensive legal frameworkfor FDI activities in accordance with internationalstandards, Viet Nam has signed and acceded to variousbilateral and multilateral arrangements on investment,such as agreements for the promotion and protectionof investment with 46 countries and territories, theASEAN Framework Agreement on Investment (“AIA”),the BTA with the United States of America containingan investment charter, the Convention on the Establishmentof the Multilateral Investment Guarantee Agency(“MIGA”), and other related international investmentagreements.Where the international agreements contain provisionsinconsistent with the provisions of the legal instrumentson FDI, the provisions of those internationalagreements shall be applied.List of countries and territories agreements signing theAgreement on promotion and protection of investmentwith Vietnam: Italy; Australia; Thailand; Belgium; Luxembourg;Malaysia; Philippines; Germany; France; Switzerland;Belarus; Indonesia; Singapore; People’s Republicof China; Armenia; Chinese Taipei; Republic of Korea;Denmark; Sweden; Finland ; Netherlands; Ukraine; Russia;Hungary; Poland; Rumania; Austria; Latvia; Cuba;Lithuania; Laos; Uzbekistan; Argentina; Bulgaria; Algeria;India; Egypt; The Czech Republic; Tajikestan; Chile;Mongolia; Myanmar; Cambodia; P.D.R Korea; UnitedKingdom; Iceland; Japan2. Vietnam’s WTO accessionVietnam official joined WTO on 7 November 2006 andofficially put the commitment into effect from 11 January2007. A summary of the WTO commitment is attachedat the end of this book.The two main positive impacts of Vietnam’s WTO membershipon FDI are:Firstly, considerable import duties reduction on theimports used as the inputs for domestic production aswell as for private and government consumption (inmany cases, import tariff rates on inputs for producingexports and other goods such as machinery and equipmentused to produce exports have been remarkablyreduced during the negotiation process. Moreover, theexporters are also refunded with import duties imposedon input materials used for producing exports.Secondly, liberalization of services market of Vietnam.Viet Nam - A Guide for Business and Investment 27PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENT

PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENTUnder the WTO’s classification, provision of serviceswill be divided into four modes: (i) cross-border (e.g.electronic money transfer services between countries);(ii) abroad consumption (e.g. tourist service); (iii) commercialpresence (e.g. FDI in services in Vietnam); and(iv) movement of natural person (e.g. foreigners comeand provide services in Vietnam). Liberalization of servicessector, especially in modes (i) and (iv), will affectFDI flows in Vietnam. Firstly, the services sub-sectorsused to be closed or restricted from foreign investment(such as distribution, transport, telecommunication, financeetc.) will be largely liberalized (despite some limitedconditions and transitional period of 3 or 5 years).3. Investment guaranteesThe Government of Viet Nam guarantees fair treatmentfor investors. Capital and other legal assets of investorswill not be expropriated or confiscated by law oradministrative measures and businesses with foreigninvested capital will not be nationalised. Foreign investorsare allowed to remit abroad investment capital andprofits, loan principal and interest, and other legal proceedsand assets.Expatriates working for businesses with foreign investedcapital or for a business cooperation contract (BCC)are allowed to remit their income abroad. The Governmentof Viet Nam respects intellectual and industrialproperty rights and the interests of foreign investorsrelating to technology transfer into Viet Nam.Interests of foreign investors are satisfactorily guaranteedin the event of adverse effects caused by a changein law through the application of a number of measures.The Law on Investment warrants that such changes willbe disregarded or that disadvantages to the investorstemming from a change in law will be compensatedby permission to amend its operations, to be grantedcompensatory tax exemptions or by other means ofcompensation for its damages. Moreover, where morefavourable provisions are enacted, existing investorswill be able to take the benefit of these. Disputes offoreign investors can be brought before Vietnamesearbitration centres or a court, or foreign arbitration canbe agreed to in a contract by the parties. By April 2006,the Vietnamese Government had entered into bilateralagreements on the “Most Favoured Nation” status (nowknown as “Normal Trade Relations”) in trade relationswith 87 countries and double taxation agreements withover 43 countries.Upon the completion of company liquidation procedures,foreign investors may transfer abroad any remainingcapital. If the amount of capital to be transferredexceeds the amount of capital contributed orreinvested, the transfer has to be authorised by theMinistry of Planning and Investment. Investors shouldbe aware however that there have been very few liquidationcases carried out in Viet Nam.4. Investment sectors andregions entitled to incentivesThe Government of Viet Nam encourages foreign investorsto invest in the following sectors and regions:(1) Sectors in which investment is entitled to incentives:• Manufacture of new materials and production ofnew energy, manufacture of high-tech products,bio-technology, information technology and mechanical manufacturing;• Breeding, rearing, growing and procesing ofagricultural, forestry and aquacultureproducts,production of salt, creation of new plantand animal varieties;• Utilisation of high technology and advancedtechniques, protection of the ecological environmentand research, development and creation ofhigh-technology;• Labour intensive industries;• Construction and development of infrastructurefacilities and important industrial large-scaleprojects;• Professional development of education, training,health, sports, physical education andVietnamese culture;• Development of traditional crafts and industries;and28 Viet Nam - A Guide for Business and Investment

• Other manufacturing and service sectors whichrequire encouragement.(2) Regions in which investment is entitled to incentives:• Regions with difficult or especially difficultsocio-economic conditions, such as mountainous regions, remote or underdevelopedregions; and• Industrial zones, exporting zones, high-techzones and economic zones.From time to time, the Government issues detailed listsof sectors and regions in which investment is entitledto incentives, thus setting out the prerequisite requirementsinvestors need to adhere to be entitled to investmentincentives and certain benefits. The new Lawon Investment only sets out generally which sectoraland/or geographic areas are entitled to investment incentives.The types of incentives and their extent (e.g.tax holidays or reductions, exemption from land fees)are governed by the specific tax, land and other specificregulations.5. Investment sectors subject toconditionsIn other fields, also as published by the Government,foreign investment will not be licensed or only licensedunder special conditions. For sectors in the List of ConditionalInvestment Sectors, the investment is subjectto certain conditions, which include: television, productionand publishing cultural products, telecommunication,and transportation by all means, cigarette production,exploring and processing natural resources,real-estate business, education, medical services, distribution.These conditions may take the form of certain requirementsfor the establishment of a company, the scopeof operations available for the project, the foreign anddomestic ownership structure of the project, the applicableform and type of legal entity available for theinvestment project, certain business conditions andlargely depend on Vietnam’s international concessionsand policy to open its market to foreign investors in anumber of sensitive sectors.6. Basic forms of enterprises andforms of direct investmentAccording to the Law on Enterprises, a foreign-investedenterprise may be established as either asole member limited liability or a limited liability withmore than one member, or a joint stock company,or a partnership. The Law on Investment providesfor three basic forms of direct investment: jointventures, 100% foreign owned enterprises (“100%FOEs”) and business cooperation contracts (“BCC”).During the process of investment in Viet Nam, businesseswith foreign invested capital and BCCs are allowedto restructure their investment by way of division,separation, merger or consolidation or foreigninvestors may convert their investment into a differentlegal form. Foreign investors can also transfertheir interest to other entities. Furthermore, foreigncompanies with on-going business relations with VietNam may open representative offices or branches inViet Nam.Forms of EnterprisesLimited Liability CompanyA limited liability company is a legal entity establishedby its members by way of capital contribution to thelimited liability company. The capital contribution ofeach member is treated as equity. The members ofa limited liability company are liable for the financialobligations of the limited liability company to the extentof their capital contributed – or undertaken tobe contributed - to the limited liability company. Themanagement structure of a limited liability companycomprises the members’ council, the chairman of themember’s council, the (general) director and a boardof supervision (where the limited liability company hasmore than 10 members).A limited liability company established by one or moreforeign investors may take the form of either a 100%-FOE (where all members are foreign investors) or ofa foreign-invested joint-venture enterprise betweenone or more foreign investors and one or more domesticinvestors.Viet Nam - A Guide for Business and Investment 29PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENT

PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENTNew blocks in Vung Tau cityJoint Stock CompanyA joint stock company is a legal entity established by itsfounding shareholders on the basis of their subscriptionof shares of the joint stock company. The chartercapital of a joint stock company is divided into sharesand each founding shareholder holds a number ofshares corresponding to their subscribed and paid-upshares in the joint stock company.A joint stock company is required to have at least threeshareholders (with no maximum number of shareholders).The management structure of a joint stock companycomprises of the general meeting of shareholders,the board of management, the chairman of the boardof management, (general) director and a board of supervision(where the joint stock company has morethan 10 individual shareholders or if a corporate shareholderholds more than 50% of the shares of the jointstock company).A joint stock company may take the form of a jointventure between foreign investors and domesticinvestors.PartnershipA partnership may be established between an individualor a legal entity and the general partner who isrequired to be an individual. The general partner hasunlimited liability for the operations of the partnership.Forms of direct investmentJoint venturesA joint venture may be established as a limited liabilitycompany with more than one member, or as a jointstock company or as a partnership company and is alegal entity with limited liability established on the basisof a joint venture contract between:.(1) A Vietnamese and a foreign party;(2) A Vietnamese party and a 100%FOE;(3) A joint venture enterprise and a foreign party;(4) A joint venture enterprise and a 100%FOE; or(5) Two joint venture enterprises.Profits and risks are distributed among the parties inproportion to their legal capital contribution/shares inthe JV unless the parties have agreed otherwise in thejoint venture contract.100%FOEUnder Vietnamese law, a 100% FOE is a legal entity setup by one or more foreign investors under a form ofenterprise as set out above.30 Viet Nam - A Guide for Business and Investment

BCCsA BCC is an agreement between one or more foreigninvestors and one or more Vietnamese partners withthe objective of cooperating to operate one or morespecific business activities. This form of investmentdoes not constitute a new legal entity and the investorshave unlimited liability for the debts of the BCC. Thisform of investment is generally only chosen by foreigninvestors with respect to projects where investment isrestricted to a BCC, such as certain telecommunicationsprojects or projects in relation to airline, railwayor sea transportation. A BCC provides, however, moreflexibility than a joint venture or a 100%FOE. Within theframework of Vietnamese law, the parties involved arefree to decide on the subject, contents, interests, obligationsand responsibilities of and relations among theparties, and to specify these in the contract.7. Other facilities for businessand investment in Viet NamBranchesThis is not a common form of foreign direct investmentbut banks, tobacco companies, airlines, law firms, andforeign companies operating in fields of culture, education,tourism are allowed to establish branches in VietNam. Foreign companies may also establish branchesin Viet Nam to conduct trading activities and activitiesdirectly related to trading of goods. The establishmentof such trading branches and the scope of commercialactivities of such trading branches, however, will onlybe available as scheduled in Vietnam’s internationalcommitments. In terms of law, the establishment of aforeign company branch is simpler than the establishmentof a 100%FOE with the difference that a 100%FOE is a Vietnamese legal entity separate from its parentcompany while a branch still holds foreign legalentity status and is dependent on its parent company.Branches of foreign companies in Viet Nam are alsodifferent from representative offices in the way that abranch is allowed to conduct commercial activities inViet Nam.Representative officesForeign companies having business relations with VietNam, or investment projects in Viet Nam, can apply toopen representative offices in Viet Nam. A representativeoffice is not an independent legal entity and is notallowed to conduct direct commercial activities (suchas execution of contracts, direct payment or receiptof moneys, sale or purchase of goods or provision ofservices). However, a representative office can:• act as a liaison office to study the business environment;• search for trade and/or investment opportunitiesand partners;• act on behalf of its head office to negotiate andsign contracts for the supply or purchase of goodsand services at the authorisation of the parentcompany (care needs to be taken for tax purposes);• supervise and accelerate the implementation ofcontracts;• act on behalf of the parent company to superviseand direct the implementation of investment projectsin Viet Nam;• Publicise and promote its company’s goods and/orservices.A representative office may, however, not engage inany profit generating activities.Build - operate - transfer (BOT), Build -transfer (BT) and Build - transfer - operate(BTO) ContractsForeign investors may sign a BOT, BT and BTO contractwith a competent State body to implement infrastructureconstruction projects in Vietnam often in the fieldsof traffic, electricity production and trade, water supplyor drainage, waste treatment. Rights and obligations offoreign investor will be regulated by the signed BOT, BTand BTO contract.Under the BOT form, the investor is fully in chargeof construction and management of a project over aspecific duration after which the project is to be transferredto the State without any compensation.Under the BTO form, title has to be transferred to theState immediately upon completion of constructionbut the State allows the investor to operate the projectover a period of time agreed by both parties in theViet Nam - A Guide for Business and Investment 31PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENT

PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENTcontract so that the investor can recover capital andreasonable profits.Under the BT form, the project is transferred to theState on completion of construction and the Statepays the investor by way of the right to implementanother project or making payment as agreed in theBT contract.According to the most recent draft of the new BOT Decree(“Draft BOT Decree”), the Government of Vietnamwill encourage investors of both public and privatesectors to participate in BOT, BTO and BT projects (i)for construction, operation of brand new, renovated orexpanded infrastructure facilities, and (ii) for modernisation,operation and management of existing projectworks listed below:• Roads, bridges, tunnels, and other associated utilities;• Railway and tramp-way;• Airports, sea-ports, river-ports, and ferries;• Water supply plants, waste sewerage and treatmentsystems;• Power plants, power transmission lines; and• Other projects as may be decided by the PrimeMinister.Preferential treatments for BOT, BTO, BT projects• Corporate Income Tax (CIT): Under the laws currentlyin force in Vietnam, BOT, BT and BT Enterprisesare (i) entitled to an applicable CIT rate of10% for the whole term of their projects, (ii) a CITexemption for 4 years as from the first profit-makingyear; and (iii) a 50% CIT reduction for subsequent9 years. Questionably, under the Draft BOTDecree, these incentives are not made available toBT Enterprises.• Import Duties: BOT, BTO and BT Enterprises andtheir sub-contractors may be entitled to importduty exemptions for the purpose of project implementationin accordance with the laws on importduties.• Industrial property objects which are under protectionduration, know-how, technological processand technical assistance for the project implementationmay be exempted from all types of tax applicableto technology transfer and revenue earnedfrom royalties.• Land Use:o BOT, BTO and BT Enterprises are exempted from paymentof land use fees for the land area allocated tothem by the State (in the case of land allocation), orThe North Thang Long Industrial Zone - Hanoi32 Viet Nam - A Guide for Business and Investment

exempted from payment of land rental (in the case ofleasing land) for the whole span of their projects.“EPZ Enterprises”, respectively) are granted with thefollowing preferential treatments:o During the term of the projects, the BOT, BTO and BTenterprises are, subject to approval of the competentState bodies, permitted to pledge or mortgage assetsand land use rights (“LURs”) in accordance with thelaws on land of Vietnam.Government Guarantee Undertaking: The Governmentof Vietnam will, depending on the nature of each ofBOT, BTO and BT projects, appoint an authorised bodyto issue, on behalf of the Government, guarantees forloans, provision of raw materials, consumption of products,and any other contractual obligations in favourof the investors, the BOT, BTO and BT Enterprises, andother enterprise participating in these projects if aGovernment guarantee undertaking is required underthe relevant BOT, BTO or BT contract.Industrial Zones/ Export Processing Zones/HighTech Zones (“Industrial Zones”) /Economic ZonesIn 1991 the Vietnamese Government introduced a policyto develop these special administrative zones in aneffort to geographically diversify investment locations,to accelerate export, and to create more jobs.Industrial Zone & Export Processing ZoneIndustrial Zone (“IZ”) is a zone in which enterprisesspecialising in the production of industrial goods andthe provision of services for industrial production areconcentrated.Export Processing Zone (“EPZ”) is an industrial zonespecialising in the production of goods for exports andthe provision of services for such production and exportactivities.Investment in IZs and EPZs is generally regulated byDecree No. 108/2006/ND-CP of the Government dated22 September 2006 implementing the Law on Investment(“Decree 108”).Developers of IZs and EPZs and iinvestors operatingand doing business in these zones (collectively referredto herein as “IZs Developers” and “IZ Enterprises” and• Corporate Income Tax (“CIT”):Depending on certain criteria, investment in IZ/EPZwill be entitled to 10%, 15%, or 20% CIT rate, andup to 4 years of CIT exemption from the first profitmakingyear, and 9 years of 50% reduction of theCIT rate from the subsequent year;• Import Duties and Value Added Tax: IZ Developers,IZ Enterprises and EPZs Enterprises may be exemptedfrom payment of import duties and valueadded tax on goods imported for the purposes ofestablishment and implementation of their investmentprojects.• Land Use:Incentives include preferential land rental rate, exemptionfrom payment of land use fees for the landarea allocated to the investor by the State , or exemptedfrom payment of land rental (in the case ofleasing land) for the whole span of their projects.o Where IZ Developers, IZ Enterprises and EPZ Enterprisespay their land rental on an annual basis, theyhave the rights to (i) mortgage or use as guarantee assetsattached to land, (ii) sell or contribute as capitalassets attached to land, (iii) sell or lease out factories,offices and warehouse built in the IZ; and (iv) sub-leasethe land area on which infrastructure facilities havebeen completed (please note that the right mentionedin (iv) is only applicable to IZ Developers). Those IZDevelopers, IZ Enterprises and EPZ Enterprises whopay the land rental for the entire term of their leaseone-off, are entitled to additional rights. In particular,during the term of their land lease or sub-lease, theyare permitted to (i) assign the value of their LURsProduction line of a motor part in Tan Thuan Export Processing Zone- Ho Chi Minh cityViet Nam - A Guide for Business and Investment 33PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENT

PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENTand assets attached to the land leased out to them;(ii) sub-lease LURs and assets attached to land; (iii)contribute the value of LURs and assets attached toland as capital to joint ventures; (iv) mortgage or useas guarantee LURs and assets to credit institutionsoperating in Vietnam.(1) During the past few years, the IZ system has beendeveloped all over the country, playing an importantrole in attracting foreign investment to Viet Nam. 136IZs have been licensed; with 3 Industrial Zones beinga 100% foreign owned project, 14 by joint ventureenterprises, and 119 by Vietnamese enterprises. Thetotal area of IZs is more than 28,919 hectares, 51%of which has been leased out. In addition, eight economiczones have also been licensed with total areaof over 270,000 hectares.To date there have been 2,318 foreign investmentprojects with a registered capital of US$19.9 billionoperating in IZs, accounting for 34.7% of the totalforeign investment in Viet Nam. Most of these projectsare textiles, garments, shoes, electronic assembly,mechanical manufacturing, plastics, and foodprocessing enterprises.High-Tech ZoneA High-Tech Zone is multi-function economic-technicalzone with a defined boundary which is establishedin accordance with a decision of the Prime Ministerto conduct high-tech in research, development andapplication , to nurture high-tech enterprises, to trainhigh-tech human resources and to manufacture andtrade high-tech products. (2)Investment in high-tech zones is subject to the Regulationson High-Tech Zones (“HTZs”) which are issuedin accordance with Decree No. 99/2003/ND/CP ofthe Government on 28 August 2003 (“Decree 99”)and Decision 53/2004/QD/TTg of the Governmentdated 5 April 2004.The Government of Vietnam strongly encourages investmentin the following high-tech sectors:• Information technology, communications and computersoftware technology;• Bio-technology serving agricultural, aquacultureand medical sectors;• Microelectronic, fine mechanical, mechanical-electronic,optical-electronic and automatic technologies;• New material technology and new energy technology;and• Some other special technologies.Under the applicable laws of Vietnam, foreign anddomestic investors operating and doing business inHTZs, and foreign and Vietnamese individuals workingfor investment projects in HTZs are entitled to the followingpreferential treatments:• CIT: investors are entitled to (i) a 10% CIT ratefor the entire duration of their projects; (ii) a 4year-CIT exemption as from their taxable incomeis incurred, and (iii) a 50%-CIT reduction for thesubsequent 9 years.• PIT: Those Vietnamese individuals (includingoverseas Vietnamese) whose PIT obligations andincome level are equal to those of foreign individualsare entitled to the same PIT exemption orreduction as that applies to foreign individuals.• Land Use: An uniform land lease pricing appliesto both foreign and domestic investors in HTZs.Exemptions of land rent may be granted to thoseinvestors in the projects on research and developmentof technology or on high-level skills trainingin science and technology. During the term ofleasing or sub-leasing land, investors are allowedto sub-lease, assign and mortgage land use rightsand assets attached to their leased land plots tocredit institutions operating in Vietnam.• Housing: Favourable conditions may be madeavailable to the investors and workers in HTZs interms of their housing and residence.• Visas: Multiple entry visas with a term compatiblewith the term of employment are issued to foreignindividuals and overseas Vietnamese who invest orwork in HTZs.(1) Data used in this section is mainly from the IZ website at www.khucongnghiep.com.vn.(2) High-tech products are defined as “products created on the basis of application of high technology”. “High technology” is defined as “the technology integrated from achievement of advancedtechnology and science which has the ability to create a sudden increase in labour productivity, features, quality and added value of products, to form new production or service industries withhigh socio-economic effectiveness, a great effect on socio-economic development and national defence and security.”34 Viet Nam - A Guide for Business and Investment

• Credit Assistance: The Development AssistanceFund of Vietnam is ready to extend medium orlong-term credits with soft interest rates, and issueloan guarantees to Vietnamese manufacturers inHTZs. In addition, all investors directly exportingtheir products may be entitled to an export creditassistance and export award.• Additional incentives may be granted to the investorsin “especially important projects”.Economic ZoneAn Economic Zone is a zone which has an economicarea separated from the general investment and businessenvironment and with especially favourable conditionsfor investors.An Economic Zone (“EZ”) is an identified geographicalzone with privileges on investment environment, preferentialstable policies, flexible management, givingbest condition to business activities of the domesticand foreign investor.Investment in EZs is currently regulated by Decree108.Developers of EZs and investors operating and doingbusiness in these zones (collectively referred to hereinas “EZs Developers” and “EZ Enterprises”) are grantedwith the following preferential treatments:• CIT:- EZ Developers and EZ Enterprises are entitled to(i) an applicable CIT rate of 10% of their annual taxableprofits for a term of 15 years as from the firstprofit-making year, (ii) an exemption from CIT for4 years from the first profit-making year, and a reductionof 50% of the CIT rate for a further 9 yearsfrom the 5th profit-making year.- A preferential CIT rate of 10% is applicable for thewhole term of a high-tech project, where:(i) the high- tech project satisfies the requirementsset out in Article 5.2 of Decree 99; and(ii) it is the large- scale project playing a significantrole in the commercial development and the socioeconomicdevelopment of the location.• PIT: A 50% PIT reduction may be granted to bothVietnamese and foreigner working in the EZ.• Import Duties and Value Added Tax: EZ Developersand EZ Enterprises are entitled, for a term of 55years as from their commencement of operation,to (i) an exemption from payment of import dutieson materials, equipment, components and semiproductswhich have not yet been produced domesticallyand which are required to be importedfor the purpose of production within the EZ.Import and export duties are not levied upon thefollowing imports and exports:(i) Goods imported from overseas to a non-tariffarea;(ii) Goods exported from a non- tariff area to overseas;(iii) Goods transferred from or sold by a non- tariffarea to an EPZ or any enterprise; and(iv) Goods not subject to export duty, with Vietnamorigin, and transported into a non- tariff area.• VAT: Goods produced and services provided innon- tariff areas, and goods imported and servicesprovided from overseas to non- tariff areas are exemptedfrom VAT.• Special Sales Tax (“SST”): Goods produced andservices provided in non- tariff areas, and goodsimported and services provided from overseas tonon- tariff areas are exempted from SST (exceptfor certain types goods or services).• Land Use:EZ Developers and EZ Enterprises are permitted to- Assign LURs, lease, sub- lease land on which infrastructurefacilities have been constructed;- Lease -or buy factories, offices and warehouses inthe EZ;- Lease land or to be allocated with land with orwithout payment of land use fee in order to constructand trade all or part of the infrastructure facilitiesin the EZ;Viet Nam - A Guide for Business and Investment 35PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENT

PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENT- Build factories, offices and warehouses in the EZfor sale or rent;- Determine the rental applicable to the leased orsub-leased land on which infrastructure facilitieshave been constructed.- Build houses for sale or rent, construct infrastructuresystem for lease or sub-lease, or transfer LURsof the land on which infrastructure facilities havebeen constructed;Overseas Vietnamese are allowed to buy a house attachedwith LUR;Foreign individuals investing or working in the EZ arepermitted to rent houses attached with LURs;EZ Developers and EZ Enterprises have the same rightsas IZ Developers and IZ Enterprises in relation to saleof assets attached to LURS, mortgage, lease, subleaseand assignment of LURs as mentioned above.There are currently nine EZs operating in Vietnam. Thefirst key EZs should be named is Chu Lai in Quang NamProvince with 116 registered projects with the totalinvestment capital of US$1.4 billion, of which 33 areforeign-invested projects. Other big EZs include DungQuat in Quang Ngai Province, Chan May in Hue City andNhon Hoi in Binh Dinh Province.8. Tax and tax incentives applicableto foreign direct investmentThe tax system in Viet Nam consists of the followingmain taxes:• Business Income Tax• Capital Assignment Profits Tax• Value Added Tax• Special Sales Tax (Excise tax)• Land Rentals• Personal Income Tax• Social insurance and health insurance• Other TaxesCorporate Income Tax (“CIT”)Effective from 1 January 2004, Viet Nam has one CITregime applicable to both domestic and foreign investedenterprises, with a standard CIT rate of 28%.Preferential rates of 10% for a period of 15 years, 15%for a period of 12 years and 20% for a period of 10years are available where certain criteria are met (e.g.investment in industries or locations whereby investmentis encouraged, high number of employees, businessexpansion, etc). When the period for preferentialrates expires, the rate generally reverts to the standardrate. There are also tax relief whereby an entityis entitled to CIT exemption for up to 4 years after thefirst profit making year and 50% CIT reduction up to 9years subsequently.In particular, tax rates applicable to exploitation ofoil and gas and other precious resources companiesrange from 28% to 50% depending on each project.Taxpayers may carry forward their losses for five yearswhilst carrying back is not permitted. Tax loss carry forwardplan must be registered with the tax authoritiesin the tax finalisation declaration for the year the lossincurred. Loss from transfer of land use rights/landlease rights is only allowed to set-off with income fromtransfer of land use rights/land lease rights.There are 45 Double Tax Agreements (DTAs), of which44 are in effect and 1 is not effective yet. DTAs can beused to protect a foreign entity from being subject toCIT in Vietnam if certain criteria are met.• Foreign Contractor Withholding Tax (withholdingtax)• Import-export tariffs• Natural Resources TaxCapital Assignment Profits TaxCIT of 28% applies on the gains derived from capitaltransfer. The taxable income is the difference betweenthe transfer value and the original value of the transferredcapital less any reasonable transfer expenses.36 Viet Nam - A Guide for Business and Investment

A tax reduction of 50% is available when a foreign investor’scapital is transferred to an enterprise which isestablished under Vietnamese laws.refund are: input VAT is larger than output VAT in 3consecutive months; exporters; input VAT on fixed assetsacquired, etc.Value Added Tax (“VAT”)Import DutyVAT applies to goods and services consumed in VietNam (including goods and services purchased fromabroad) and are collected during production, trading,provision of services and import stages. When supplyinggoods and/or services subject to VAT, the businessmust charge VAT on the value of goods or servicessupplied. The importer must pay import VAT to the customsoffice at the same time they pay import duties.The Viet Nam VAT system has three rate categories:0%, 5%, and 10% (the standard rate). The 0% rate appliesto exported goods and exported services (withsome exceptions). Exported goods are goods sold tooverseas or to export processing zones/export processingenterprises. Exported services are servicesprovided to and being consumed overseas. The 5%rate applies to areas of the economy concerned withthe provision of essential goods and services. The standardcommon 10% rate applies to other activities andgoods not specified as subject to the 5% rate. Additionally,there are 29 categories of goods and services thatare VAT exempt.The Vietnamese VAT system is also characterised bytwo types of VAT payers: deduction method VAT payersand direct method VAT payers. All companies andbusiness organisations are deduction method VAT payers.They will issue VAT invoices, charge output VAT tocustomers and claim input VAT through conventionalVAT returns.The direct method generally applies to small businesshouseholds which do not keep proper accounting recordsand foreign contractors (foreign companiesperforming business in Vietnam/having contracts withVietnamese customers without establishing alegal entity in Viet Nam) who do not want to maintainVietnamese accounting records. For these businesses,VAT is calculated at a deemed rate on gross turnover.VAT refund is eligible. Some of the examples for VATGenerally, all goods crossing Vietnamese borders aresubject to import/export duties. Import duty rates areclassified into three categories: ordinary rates, preferentialrates and special preferential rates.Preferential rates are applicable to imported goodsfrom countries that enjoy most-favoured-nation status(“MFN”) with Viet Nam. Currently, 89 countries enjoyMFN with Viet Nam. Special preferential rates are applicableto imported goods from countries that havespecial agreement with Viet Nam (such as ASEAN countries).Viet Nam joined ASEAN Free Trade Area (AFTA)in 1996. Under the AFTA Common Effective PreferentialTariff (CEPT) Scheme, Viet Nam has committed togradually eliminate all import tariffs in its Inclusion List.The ordinary rates are generally imposed at 150% ofthe preferential rates.Export DutyThe export of goods is encouraged by the Governmentof Viet Nam. Thus, export duties are only charged on afew items, basically natural resources such as mineralsand forest products but also on rice, seafood and scrapmetal. Export rates range from 0% - 45%.Customs PostViet Nam - A Guide for Business and Investment 37PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENT

PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENTLoading packages at the Hai Phong PortSpecial Sales Tax (Excise Tax) (“SST”)SST applies to the production or import of certain luxury goods (i.e. cigarettes, liquor, beer, petrol, automobilescarrying less than 24 people, air-conditioners up to 90,000 BTU, playing cards, votive paper) and the provision ofcertain services (i.e. discotheques, massage parlours, karaoke bars, casinos, golf clubs, entertainment with bettingand lotteries). SST rates range from 10% to 80%. Goods and services subject to SST are also subject to VAT.Withholding TaxForeign companies performing business in Vietnam/having contracts with Vietnamese customers without establishinga legal entity in Viet Nam are subject to “Foreign Contractor Withholding Tax” (FCWT), which includes a VATand a CIT element. Withholding tax also applies to payments of interest, royalties, licence fees, and cross borderlease charges. Withholding tax applies on the income derived from Viet Nam, regardless of where the services areperformed, inside or outside Viet Nam.FCWT can be calculated in three ways.Method 1: Deduction Method (“VAT registration”)The FC maintains full Vietnamese Accounting System (“VAS”). The FC registers for VAT, issues Vietnamese VATinvoices to its Vietnamese customers and files conventional VAT returns (i.e. VAT payable equals output VAT lessinput VAT) with the Vietnamese tax authorities. The FC also pays CIT on the actual net profits derived from thecontract, based on their accounting records.38 Viet Nam - A Guide for Business and Investment

Method 2: Withholding Method (“no VAT registration”)According to this method, VAT and CIT will be withheld by the Vietnamese customer at a deemed percentage of thetaxable turnover. Various rates are specified for different business activities. The FC’s responsibility to file for andpay taxes is thus passed to the Vietnamese party. The VAT and CIT rates are summarised below:Industry Effective VAT rate Deemed CIT rateTrading: distribution, supply of goods, materials,machinery and equipment in Vietnam1% 1%Services 5% 5%Construction, installation without supply ofmaterials or machinery, equipment.Construction, installation with supply ofmaterials or machinery, equipment.5% 2%3% 2%Transportation 1.25% 2%Manufacturing, otherbusiness activities2.5% or 1.25% 2%Interest Exempt 10%Royalties Exempt 10%Method 3: Hybrid methodtion of the lease contract, the land rental shall be keptstable until the expiration of the lease and shall not beThis is a combination of method 1 and 2, whereby the subject to any adjustment.FC would maintain a simplified VAS for VAT conventionfiling purpose and pay CIT on a deemed basis like underPersonal Income Tax (“PIT”)Method 2.Currently, the following individuals are liable to payNatural Resource Taxpersonal income tax (PIT):Under Vietnamese Law, the State manages natural resources• Vietnamese citizens residing in Viet Nam;and royalties need to be paid to the Statefor the utilization of natural resources. Royalties range• Vietnamese citizens residing overseas and expatriatesworking in Viet Nam;from 0% to 40% and are levied for companies exploitingprecious stones and coal, and companies utilizing• Other individuals residing in Viet Nam indefinitely;andforest products, marine products or natural water.Land RentalsWhere the land is rented from the State, the tariff• Foreigners working in Vietnam and in receipt ofincome including employees of business, culturalor social organisations, representative offices andbranches of foreign companies, foreign contractorsand individuals working independently.frame for land rental is determined by the Government.Based on such tariff frame the People’s Committee ofthe relevant province will determine the specific landrental tariff. The land rental is kept stable for a periodof at least five years from the investment licence date.Where land rentals have been paid for the whole dura-A foreigner residing in Viet Nam for more than 183days within a tax year will be considered a tax resident,unless DTAs between Viet Nam and other countriesprovide otherwise. A tax resident is subject to progressivetax rates with the highest marginal rate of 40%. Aforeigner who stays in Viet Nam less than 183 days inPART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENTViet Nam - A Guide for Business and Investment 39

PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENTa consecutive 12 month period is considered as nonresidentin Vietnam. Non-residents are subject to a25% tax rate on Viet Nam-sourced income. However,this will need to be also considered in light of the provisionsof any DTAs that may apply.Vietnamese nationals working in Viet Nam are subjectto PIT rate up to 40%.There is 5% on the income from technological transferof more than VND15 million for each contract and10% on the income from lottery winnings of more thanVND15 million for each winning.From the strict reading of the PIT regulations all fringebenefits are taxable. However, there is an exceptionfor staff training fees, airfare for expatriate employeesto home country, school fee for expatriates’ childrenpaid directly to school in Vietnam.Expatriates or foreign individuals working in Vietnamare allowed to transfer their income abroad after incometax and other payroll withholdings have beenpaid.There are certain tax exempt categories, such as attractionallowance for working in remote areas/areaswith difficult conditions, hardship allowance for toxic,hard, dangerous jobs, etc.There is a general requirement to withhold 10% PITfrom payments to individuals who are not employees.Social security and health insuranceThe employer must contribute 15% of the salary andcertain allowances stated in the labour contracts forVietnamese employees for social security purposes.The employee has to contribute 5%.Additionally, health insurance contribution in respectof Vietnamese employees is also required at 1% forthe employee’s contribution and 2% for the employer’scontribution.Accounting Standards and tailored specifically for theVietnamese situation. The new Vietnamese AccountingSystem (VAS) comprises 4 components: (i) a chart ofaccounts with detailed accounting guidelines, (ii) financialreports system, (iii) accounting voucher system,and (iv) accounting books system. Application of VASis compulsory for all businesses operating in Viet Nam,with certain exceptions in specialised areas.In March 2002, the first four accounting standardswere introduced as a step towards the move to a moretransparent financial management system. The Ministryof Finance intends to implement all accountingstandards by the end of 2003.The measurement units used for statistical and accountingpurposes should be the units applicable inViet Nam. Accounts should be described in the Vietnameselanguage using Vietnamese Dong. However,other languages and foreign currencies may be usedwith the agreement of the parties and subject to theapproval of the Ministry of Finance.According to Vietnamese law, the Chief Accountant,not the Board of Directors of a business entity is responsiblefor the accuracy of the financial statementsof the entity. A statutory audit is only compulsory forforeign invested enterprises and commercial banks.Large state-owned enterprises are encouraged tohave their accounts audited.Quarterly financial statements should be submittedwithin 15 days of the end of the quarter, and annualfinancial statements should be audited and submittedwithin three months of the end of the year.There are 16 accounting firms operating in Viet Namincluding foreign invested, state-owned and privatedomestic companies. Viet Nam is in the process of developingauditing standards. As of 30 November 2004,Vietnam has issued 16 accounting standards and 27auditing standards which are modelled after the internationalstandards with some changes to suit the domesticsituation.9. Accounting and Auditing10. Banking and FinanceIn December 1994, a new accounting system for businessentities was introduced based on the InternationalVietnam’s credit institutions comprise State-ownedbanks, joint-stock banks, joint venture banks, 100% for-40 Viet Nam - A Guide for Business and Investment

eign-owned banks, branches of foreign banks, creditcooperatives, finance leasing companies and financecompanies. Currently, there are 6 state-owned banks(5 commercial banks and 1 policy bank - the Bank forSocial Policy), 37 joint-stock banks, 5 joint-venturebanks, 31 licensed foreign banks operating 38 foreignbank branches, 6 finance companies and 10 financeleasing companies. Under the WTO commitments, Vietnamcommitted to permit the establishment of 100%foreign owned banks from 1 April 2007. The scopeof operations of foreign bank branches, joint venturebanks and 100% foreign-owned banks are also graduallyexpanded to comply with Vietnam’s commitmentsunder WTO and other bilateral/multilateral internationalagreements. After 5 years from the date of accessionto WTO, Vietnam has to lift all restrictions to the right ofa foreign bank branch to accept deposits in VietnameseDong from Vietnamese natural persons with whichthe bank does not have a credit relationship.Currently, foreign credit institutions are allowed to holdup to 30% of the charter capital of a joint stock bank,in which the maximum shares held by one foreign institutionis 10%. The Government is drafting a newregulation to expand the limit of shares held by a foreigncredit institution being a strategic shareholder ofa joint stock bank to 20% of the charter capital of suchjoint stock bank.The Law on Credit Institutions, which came into forceon 1 October 1998, as amended in 2004, providesTransaction coner of Viet Nam bank for Foreign Tradea wide range of products and services which a bankmay offer, from traditional financial products to fundsmanagement and insurance services. The regulationson the securities market also permit domestic banksto establish securities companies to participate in thesecurities market. This is the legal basis for the convergenceof the financial industry sectors (banking, capitalmarkets, insurance and funds management) in the futurewith the development of the stock market.Since 1998, with support from multilateral donor institutions,the Government has outlined a comprehensivereform and restructuring program to improvethe efficiency of the commercial banking system. Theprogram includes four components: (i) restructuringjoint-stock banks through mergers and closure to reducethe number of joint stock banks by half; (ii) transformingstate-owned commercial banks into independentbusinesses; (iii) improving and strengthening thesupervision and inspection of commercial banks andcreating a “level playing field”; and (iv) establishing assetsmanagement corporations as a tool for resolvingnon-performing loans. As part of the restructuring program,since 2005, two State-owned commercial banks(Bank for Foreign Trade of Vietnam - Vietcombank andMekong Housing Bank) have been in the process of equitisationon a pilot basis. It is planned that after the pilotimplementation, all other State-owned commercialbanks will be equitised in the coming years.New monetary instruments have been introduced,such as repurchasing agreements (“Repos”), discount-Viet Nam - A Guide for Business and Investment 41PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENT

PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENTing and swaps, etc., narrowing the gap to internationalfinancial markets.11. Foreign Exchange ManagementAll buying, selling, lending and transfer of foreign currencyneed to be made through credit institutions andother financial institutions authorised by the State Bankof Vietnam (“SBV”).Outflow of foreign currency by transfer is authorisedfor certain transactions such as payment for importsand services abroad, refund of loans contracted abroadand payment of interest accrued thereon, transfers ofprofits and dividends, and revenues from transfer oftechnology.As a general rule, all monetary transactions in Vietnammust be undertaken in Vietnamese Dong. Exceptionsare applicable to payments for exports made betweenprincipals and their agents, and payments for goodsand services purchased from institutions authorised toreceive foreign currency payments such as paymentsfor air tickets, shipping and air freight, insurance andinternational communications.The obligation of residents to sell a part of their foreigncurrency revenues from current transactions toa local authorised bank has been abolished in 2003and foreign invested enterprises may, subject to certainconditions, buy foreign currency from the banksto fulfil certain foreign currency obligations from theirtransactions.Foreign invested enterprises may open an offshorebank account only with the prior approval of the SBV.Furthermore, where the foreign party to a BOT, BTO orBT requires an offshore account to successfully implementthe project, such an account may be opened.Foreign investors and foreigner working in Vietnam arepermitted to transfer abroad capital investment profitsand income legally earned in Vietnam and – as mentionedabove – remaining invested capital at the liquidationof an investment project.12. Capital MarketThe Securities Trading Centres were opened in Ho ChiMinh City in 2000 (“HCMC STC”) and in Hanoi in 2005(“HN STC”). HA STC only acts as an OTC market for unlistedshares that meet certain conditions. It is plannedthat the HCMC STC will be upgraded to an official StockExchange in 2007.Until the end of September 2006, 51 companies arelisted in the HCMC STC and there are 15 companieswhose shares are tradable in the HN STC. These securitiescentres create a new channel for long-term capitalmobilisation, which will boost the equitisation of Vietnameseand foreign invested enterprises and thus theeconomic reform process.Currently, foreign investors may acquire up to 49% ofa listed company. and 30% of a non-listed company.Bonds may be freely held. The Government is draftinga new regulation to stipulate the limits of shares heldby foreign investors in listed and non-listed companiesbased on Vietnam’s commitments under bilateral andmultilateral international treaties. Under Vietnam’sWTO commitments, after one year from the date ofaccession to the WTO, the 30% foreign equity limitationfor acquisition of Vietnamese enterprises shall beeliminated (except for the acquisition of shares of jointstock banks and a number of certain sectors).In the territory of Vietnam, the purchase and sale ofsecurities by foreign investors must be implemented inVietnamese Dong.In order to purchase shares in an unlisted company,the foreign investor has to open a special VietnameseDong account at a bank permitted to operate in Vietnam,and register such account with the State Bank ofVietnam. All transactions in relation to the purchaseand sale of shares, receipt of dividends and remittanceof profits must be carried out through such special account.With respect to foreign investors investing in listedcompany, they must obtain a transaction code from asecurities company, and open a specialised Vietnamesedong securities trading account at such securitiescompany in order to service the activities of purchaseand sale of securities at Securities Trading Centres.The country’s securities market environment has beenfurther improved in recent years by the speeding-up ofthe process of equitisation of State-owned enterprisesand foreign invested enterprises. The first regulationon equitisation of foreign invested enterprises on a pi-42 Viet Nam - A Guide for Business and Investment

lot basis was issued in 2003. To date, 12 foreign investedenterprises have been equitised. With the issuanceof the new Law on Enterprises and Law on Investment,that came into force from 1 July 2006, foreign investedenterprises now may be established in the form of ajoint stock company.13. LandIn Vietnam, land is considered to be the property of thepeople, and subject to the exclusive administration ofthe State. The latter, represented by the central andlocal land departments, is responsible for the managementof land use rights and leases to individuals,households and domestic and foreign invested economic,political and social organisations. There is noprivate ownership of land.Subject to certain conditions, domestic land users havethe right to use, transfer, lease, inherit (for individualsonly), or mortgage their land use rights (“LUR”), or usethe LUR as capital contribution to a joint venture.Foreign land users are entitled to lease land from theState in general or from Vietnamese or foreign investedenterprises authorised to sub-lease land in industrialand export-processing zones. For foreign land users,the maximum lease period is generally 50 years,although in special cases this term may be extendedto 70 years. Foreign invested enterprises may only usethe land for the permitted purpose. Where the entireland rent under the lease for the LUR has been paid forthe whole land lease duration, foreign invested enterprisesmay mortgage their LUR with banks licensed tooperate in Viet Nam (including foreign bank branches,joint venture banks and 100% foreign owned banks),sub-lease, transfer LUR, or use the LUR as capital contributionto a joint venture.14. Domestic and Foreign TradeVietnamese enterprises are free to carry out tradingactivities in Viet Nam and are allowed to directly exportand import all goods, except for certain restrictedgoods where a special business licence must be obtainedfrom the relevant State authority.Foreign invested enterprises in Viet Nam may directlydistribute or set up a distribution network to sell theproducts they manufacture in Vietnam, and can exporttheir products directly. However, the establishment ofpure trading businesses not associated with manufacturingactivities with foreign invested capital is still restricted,subject to Vietnamese’s commitments underbilateral and multilateral international agreements towhich Vietnam is a party.Under Vietnam’s WTO commitments, for commissionagents’ services/ wholesale and retailing services,upon accession, Vietnam will allow the establishmentof joint venture companies in which the foreign capitalcontribution shall not exceed 49%. As of 1 January2008, the 49% capital limitation shall be abolished.100% foreign owned companies licence will be permittedfrom 1 January 2009.Upon accession, foreign invested companies engagingin distribution services will be permitted to engage inthe commission agents’, wholesale and retail businessof legally imported and local produced products, exceptfor cement, tyres (excluding tyres of airplanes),papers, tractors, motor vehicles, cars and motorcycles,iron/steel, audiovisual devices, wine and spirits, andfertilizers. From 1 January 2009, commission agent,wholesale and retail business of tractors, motor vehicles,cars and motorcycles are allowed. These limitationswill be removed after 3 years from the accessiondate. The establishment of outlets for retail services(beyond the first one) shall be allowed on the basis ofan Economic Needs Test.15. LabourA large, skilled and inexpensive labour force is one ofthe main attractions for foreign investors in Vietnam.Vietnam’s population was estimated approximately83.1 million in July 2005, and it is expected to grow to90 million in 2010 with an annual growth rate of 1.6%.Over 61.6% of the population are under 25 years ofage. Approximately 15.5% of the population are consideredto be trained or skilled workers (with elementaryqualifications or higher). This situation is improvingas a result of updated training programs in training andeducation centres. There are currently substantial interestand new investments in quality training and education,a priority concern for the Government.The Labour Code issued in July 1994 (as amended in2002) has created a legal framework which sets out theViet Nam - A Guide for Business and Investment 43PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENT

PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENTrights and obligations of employers and employees, inrelation to working hours, labour agreements, paymentof social insurance, overtime work, strikes, and terminationof employment contracts, among other things.In addition, there are several specific implementingdecrees and circulars related to the provisions of theLabour Code.The law provides for an eight hour working day and 48hour working week. An employer and an employee mayagree that an employee work overtime, but this mustnot exceed 200 hours a year (in special cases, suchlimit may be extended to 300 hours subject to the approvalof the relevant State competent authority). Witheffect from 2 October 1999, a number of organisationssuch as Government offices, administrative agenciesand socio-political organisations have implemented a40 hour working week. Businesses in other economicsectors, including businesses with foreign investedcapital, are also encouraged to adopt a 40 hour week.In any employment contract wages and salaries shouldbe defined clearly in Vietnamese Dong (except for employeesworking for foreign representative offices andbranches: their salaries are still quoted in US dollarsand paid in Vietnamese Dong). The wages of employeesworking in foreign invested enterprises are subjectto minimum rates determined by the Ministry ofLabour, War Invalid and Social Affairs from time to time.The current weekly minimum wage is as follows:- VND870,000 (approximately US$54) for unskilledworkers in urban districts of Hanoi and Ho Chi MinhCity;- VND790,000 (approximately US$49) in rural districtsof Hanoi and Ho Chi Minh City; urban districts of HaiPhong; Ha Long City in Quang Ninh province; BienHoa City in Dong Nai province; Vung Tau City inBa Ria - Vung Tau province; Thu Dau Mot Town andThuan An, Di An, Ben Cat and Tan Uyen districts inBinh Duong province;- VND710,000 (approximately US$44) for otherprovinces.Currently, an employer is also required to contribute15% of total wages to a social insurance fund administeredby the State, and 2% for health insurance purposes.The contribution by the employees is 5% and 1%,respectively. Expatriates are not required to contributeto the health and social insurance funds.As of 1 January 2007, the new Law on Social Insurancewill come into force. The salary subject to social insurancecontribution requirement will be capped at 20times of the minimum salary applicable to domestic enterprises(currently, VND450,000/month). Before 2010,the rates of contribution to the social insurance fund bythe employers and the employees remain unchanged(i.e. 15% and 5%, respectively). From 2010, such rateswill increase 1% in every two years, until they reach8% for employees and 18% for employers. In addition,from 1 January 2009, the employer and the employeeare required to contribute 1% of the salary (subject tothe above cap) to the unemployment insurance fund.16. Intellectual PropertyIn recent years the Government has taken various measuresto increase the legal protection of intellectualproperty, and created an environment of respect of intellectualproperty compared with other neighbouringcountries. Intellectual property rights are protected bythe Civil Code (1995 and 2005), the Law on IntellectualProperty (2005) and a host of subordinate legislation.Production of Electronic parts of Hanel computer - Sai Dong B - HanoiTelecommunication center44 Viet Nam - A Guide for Business and Investment

Vietnam is a long time signatory to the Paris Convention,the Madrid Agreement on International TrademarkRegistration, and the Patent Cooperation Treaty (“PCT”)and became a member of the World Intellectual PropertyOrganisation in 1976. On 27 June 1997, Vietnamentered into an Agreement on Copy Rights with the US.According to the Vietnam - US Bilateral Trade Agreement,Vietnam is further under the obligation to adhereto the Berne Convention.The National Office of Industrial Property (“NOIP”) is theauthority responsible for the registration of industrialproperty and the resolution of disputes with regard toindustrial property in the first instance. Foreign organisationsand individuals who seek to register their industrialownership should file their applications through anauthorised agent, who will transfer their application tothe NOIP. Also, trademark licence agreements must beregistered with NOIP. The Office of Copyright Protectionunder the Ministry of Culture and Information has alsobeen established and is responsible for the protectionof copyright. Works may be registered with the Ministryof Culture and Information; registration is, however, nota prerequisite for copyright protection.Currently, patents are protected for a period of 20years. A certificate of utility solutions may be grantedfor 10 years. A certificate of industrial design is grantedfor 5 years and may be renewed every 5 years howeverthe total effective period of a certificate cannotexceed 15 years. Certificates of trademarks are grantedfor 10 years with no restrictions of the number ofrenewals. Some moral rights of copyrighted works areprotected indefinitely and other rights up to 50 yearspost mortem auctoris.17. Technology TransferVietnam encourages the transfer of advanced technologyinto the country. Foreign investors contributingcapital in the form of technology transfer are exemptfrom all Vietnamese taxes relating to the transfer oftechnology. For projects using private capital, there isno cap on the royalty.Contracts for the transfer of technology from foreigncountry to Vietnam and vice versa, and technologytransfer contracts with value of at least 500 millionVND (approximately US$31,250) must be registeredwith the Ministry of Science and Technology or its authorisedbody. Franchise contracts must be registeredwith the Ministry of Trade or its authorised body.18. Dispute SettlementIn Vietnam, legal disputes may be settled by negotiation,in court or by domestic or foreign arbitration.The judiciaryThe hierarchy of Vietnamese courts include: (i) SupremePeople’s Court; (ii) Provincial People’s Courts;and (iii) District People’s Courts. The courts operate infive divisions such as: (i) Criminal division; (ii) Civil division;(iii) Administrative division; (iv) Economic division;and (v) Labour division.Unlike common law countries, Vietnam does not followthe doctrine of precedent under which cases decidedby judges in the past are used as authority for latercases. Judgements are based only on legislation, andprinciples of interpretation of the law.Running parallel to the court systems is the People’sProcuracy which is responsible for supervising theoperation of judicial authorities and exercising thepower of public prosecution. The People’s Procuracycan lodge protest against a judgement and asked forits review.Arbitration and Dispute ResolutionTo supplement the court system, Vietnam has a systemof independent arbitration centres, established underthe new Commercial Arbitration Ordinance (2003). Anarbitral award given by an arbitration centre or an arbitrationpanel established by the parties in accordancewith the provisions of the Ordinance will be enforceablein Vietnam without prior needing to be recognized.Disputes with the involvement of foreign investors maybe also settled by a foreign arbitration. In 1995, Vietnambecame a member of the 1958 New York Conventionon the Recognition and Enforcement of ForeignArbitral Awards. An arbitral award given by a foreignarbitration will be enforceable in Vietnam after it isrecognised by a Vietnamese court.Viet Nam - A Guide for Business and Investment 45PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENT

Ground Breaking Ceremony of Saigon Premier Container TerminalPART IV. INVESTMENT PROCEDURE46 Viet Nam - A Guide for Business and Investment

1. Selection of an InvestmentProject2. Project Classification andLicensing BodiesBased on the socio-economic development planningand orientation for each five year period, the Ministryof Planning and Investment issues a list of: (i) speciallyencouraged investment projects; (ii) encouraged investmentprojects; (iii) geographical regions in whichinvestment is encouraged; (iv) sectors in which thelicensing of investment is conditional; and (v) sectorsin which investment will not be licensed.Leaving aside sectors in which the licensing of investmentis conditional or in which investment willnot be licensed, an investor may on its own initiativeselect investment projects, investment partners, thelocality, the duration of investment, the markets forthe sale of products and its charter capital contributionproportion in accordance with the provisions ofthe Law on Investment and other related legal instruments.Also, the investor may generally decide onthe form of investment.However, a number of investment sectors that areunconditional for Vietnamese enterprises but conditionalfor FIEs (e.g. exploitation and processingof mineral resources, and investment in the fieldsof import, export, trading and distribution etc.). TheLaw on Investment and Decree 108, provide forsuch list of investment sectors, however, relevantsectorial legislation shall provide for what form of“conditions” that an FIE is required to meet. In certainindustries, this may mean that the FIE may onlyoperate in the form of a foreign-invested JVE witha majority or minority participation of a Vietnameseenterprise. In other sectors, FIEs operating in conditionalinvestment sectors may nevertheless operateas 100% FOEs but meet certain conditions such astheir capital structure, project-specific experienceand so forth...Annually, the Ministry of Planning and Investmentpublishes a list of national projects calling for foreigninvestment capital. Ministries, branches and provincialPeople’s Committees also publish such lists ofprojects for their respective industries and localities.In principle, the projects included in those lists areregarded as complying with current planning.The authority to approve investment projects is currentlydivided amongst (i) the Prime Minister of theGovernment (“PM”) with the scope of approval is limitedto the “investment policy”, (ii) the People’s Committeesin the provinces and cities under the centralState administration (“PCs”), and (iii) the managementboards of industrial zones, export processingzones, high-tech zones and economic zones in theprovinces and cities under the central State administration(“MBs”).The hierarchy of the investment approval and licensingauthority is as follows:• PM:– Projects regardless of capital source or capitalamount within specific sectors (airports, seaports,mining, oil & gas, TV broadcasting, casinos,cigarette manufacturing, universities, developmentof IZs, EPZs, HTZs and ECs (“Zones”)– Projects regardless of capital source with capitalamount over VND1,500 billion within specificsectors (electricity, metallurgy, alcohol & beerproduction, trading etc.)– FDI projects regardless of capital amount withinspecific sectors (sea transportation, post, telecom& internet networks, printing etc)• PCs:– Projects outside Zones and not within PM approvalauthority– Projects for development of infrastructure inZones in localities with no MA• MBs:– Projects in Zones and not within PM approvalauthority– Projects for development of infrastructure inZonesAll investment certificates (previously called “investmentlicences”) are now issued by either the relevantPCs or MBs. However, in specialised sectors such asbanking or insurance, the relevant line ministries arestill empowered with the approval and licensing authorityas previously were.PART IV. INVESTMENT PROCEDUREViet Nam - A Guide for Business and Investment 47

PART IV. INVESTMENT PROCEDURE3. Licensing ProcedureDepending on the size and the sector of investment,different licensing and registration procedures willbe applied:– Business Registration;– Investment Registration; or– Investment EvaluationInvestors must follow different licensing and registrationsteps depending on the size and the sectorof investment.Business Registration:Small domestic enterprises, whose investment is lessthan VND15 billion (approx. US$945,000) not fallingwithin conditional investment sectors (as describedbelow) are subject to business registration.However, they are subject to the Investment Registrationin the event (i) they fall within a conditionalsector, or (ii) if they wish to apply for investment incentivesrecorded in their license.Investment RegistrationFDI projects with the total invested capital of lessthan VND300 million (approx. US$19 million) whichdo not fall within conditional sectors, require registrationof investment and issuance of an investment certificate.The investment certificate also serves as thebusiness registration of a corporate entity.Domestic invested projects with the total investedcapital of between VND15-300 billion (approx. US$19million) are also subject to this registration procedure.Local investors tend to set up their corporate entityseparately and then file for registration of any projectwithout receiving an investment certificate. Enterprisescan register additional investment projects withoutthe need to create a legal entityInvestmentCertificateFDI projects

Investment EvaluationForeign and domestic invested projects with a total invested capital of VND300 billion or more (US$19 million)or below VND300 billion but falling within conditional sectors must undergo an investment evaluation.There are 3 different types of evaluation as shown below:INVESTMENT EVALUATIONFDI and Domesticprojects < VND300billion (approx.

PART IV. INVESTMENT PROCEDUREFDI projects

Viet Nam - A Guide for Business and Investment 51PART IV. INVESTMENT PROCEDURE

Song Than Industrial Zone in Binh Duong provincePART V. INVESTMENT COSTS IN VIETNAM52 Viet Nam - A Guide for Business and Investment

Land rental applied to FDI ProjectsUrban landUS$0.32 – US$13.4 m2/yearNon-urban landUnit: US$/m2/yearType of commune Minimum rate Maximum rate1. Commune with boundary adjoining the inner areas ofHCMC and Hanoi2. Commune with boundary adjoining the inner areas ofVung Tau, Bien Hoa and Hai Phong Cities3. Other regions- In deltas- In midlands- In mountainous regions0.16 1.130.09 1.250.062 0.460.038 0.350.025 0.26Source: Ministry of Natural Resources and EnvironmentLand rental applicable to projects locating in IZ and EPZ:The rent is subject to the agreement between investors and IZ infrastructure development companies dependingon location, facilities, duration of rent and other terms. The following is the typical cost prevailingin 2006 and reflects a number of examples only:Unit: US$/m2/yearLocation Minimum rate Maximum rateSurrounding area of Hanoi Negotiable 1.3Surrounding area of HCM- Land only- Built in factoryOther provinces(Da Nang, Hai Phong, etc.)Office Space RentalInternational class office buildings cost from US$15-34/m2/month, while local standard office costs fromUS$3-16/m2/month in the central business areas inHanoi and Ho Chi Minh City.NegotiableTelephone CostsDomestic CallsInstallation Fee: From VND600,000 to 800,000(including VAT)(Equivalent to approximately US$37.5 to 50)Subscription Fee: VND27,000/month (equivalent toapproximately US$1.7)0.822.5Negotiable 1.18Communication Fee (intra-city, to landline telephone):PART V. INVESTMENT COSTS IN VIETNAMViet Nam - A Guide for Business and Investment 53

PART V. INVESTMENT COSTS IN VIETNAM+ To 200 mins: VND120 (equivalent to US$0.0075min)+ From 201 to 1000 mins: VND80/min (equivalent to US$0.005)+ Over 1000 mins: VND40/min (equivalent to US$0.0025/min)International Calls (IDD)Prices for international call rates have been reduced significantly in recent years. Applied from June 2006,the official rates include the following two types:+ US$0.054 for the first six seconds + US$0.009 for each additional second; or+ US$0.06 for the first six seconds + US$0.01 for each additional second.Internet calling is also available and has improved in quality thanks to more reliable and increased bandavailabilityin Vietnam.Utilities CostsElectricity Cost (per kWh, inclusive of VAT)Residential:VNDUSDFor the first 100 kWh 550 0.03For kWh from 101 to 150 900 0.06For kWh from 151 to 200 1,210 0.08For kWh from 201 to 300 1,340 0.08For kWh from 301 1,400 0.0954 Viet Nam - A Guide for Business and Investment

Industrial: Peak and off-peak hoursWater costs (VND per cum) depends on each provinceVNDUSDFrom 110kVa) Normal hours 785 0.05b) Off-peak hours 425 0.03c) Peak hours 1,325 0.08From 22kV to under 110kVa) Normal hours 815 0.05b) Off-peak hours 445 0.03c) Peak hours 1,370 0.09From 6kV to under 22kVa) Normal hours 860 0.05b) Off-peak hours 480 0.03c) Peak hours 1,430 0.09Under 6kVa) Normal hours 895 0.06b) Off-peak hours 505 0.03c) Peak hours 1,480 0.09Expatriate facilities & cost of livingVisaBusiness Visa: The process takes officially five days. The cost varies depending on the validity of the visa,ranging from US$15 to US$50. This type of visa also requires an authorisation letter.Tourist Visa: The process takes officially five days. The cost is US$6.00 for single entry, application to bemade at the embassy or consulate. The easiest method is to obtain a single entry 30 days tourist visa.Transportation CostsTaxi fare: (Airport Taxi)Noi Bai Airport to Centre of Hanoi: VND150,000 (USD10)/taxi (one stop)Ho Chi Minh Airport to Centre of HCMC: VND50,000/taxi or VND5,000/kmPART V. INVESTMENT COSTS IN VIETNAMViet Nam - A Guide for Business and Investment 55

PART V. INVESTMENT COSTS IN VIETNAMToll fees: (North Thang Long – Noi Bai Airport and Chuong Duong Bridge) VND per vehicle:Car and van < 12 seats: 12,000Bus >12 seats and truck < 4T 20,000Truck 4-10T 24,000Lorry > 10T 36,000Rates of Major HotelsIn Hanoi (approximate minimum rates):In Ho Chi Minh City:Sofitel Metropole US$186Park HyattUS$180SedonaUS$140SheratonUS$167Hilton OperaUS$122SedonaUS$163DaewooUS$117CaravelleUS$158SheratonUS$109Sofitel PlazaUS$122HorisonUS$97RenaissanceUS$102Sofitel PlazaUS$90LegendUS$101NikkoUS$96New WorldUS$90MeliaUS$87MajesticUS$8656 Viet Nam - A Guide for Business and Investment

APPENDIX ISummary of WTO commitmentsThe package of Vietnam’s accession documents consists of:• Vietnam’s commitments ongoods – the 560-page list for“schedule of tariffs, quotas andceilings on agricultural subsidies,and in some cases thetimetable for phasing in thecuts• Vietnam’s commitments onservices – the 60-page document(also a “schedule”) describingin which services itis giving access to foreignservice providers and any additionalconditions, includinglimits on foreign ownership• The working party’s 260-pagereport – describing Vietnam’slegal and institutional set upfor trade, along with commitmentsit has made in many ofthese areas.These are some highlights:GOODS: Schedule of Concessionsand Commitments onGoods For the majority of agriculturaland non-agricultural goods,Vietnam is promising ceilings (or“bound” rates) on duties rangingbetween zero and 35%. Some ofthese invoice reductions phasedover periods up to 2014, the preciseend date varying from productto product.Among products with higher ceilingsare: alcoholic drinks, tobaccoproducts, instant coffee and somerelated products, new and usedmotor vehicles and components,and roof tiles. Used vehicles lessthan five years old can be chargedadditional flat-rate duties up tospecified limits.These “bound” rates are legal ceilings.The actual duties that Vietnamcan charge (the “applied” rates)can be lower than the committedrates. Among the details of Vietnam’scommitments is a promisenot to charge higher applied rateson rapeseed (also known as cotzaor canola) and derived meal, oiland other products than the dutiesactually charged on soy products– allowing the oilseed products tocompete with soy.In the separate working party report,Vietnam has also reservedthe right to charge applied dutiesin the form of specific duties (e.g.dollars per ton) instead of percentagesof the price (“ad valorem”) solong as the result stays below thecommitted ceilings.A handful of products are goingto be protected with tariff quotas(higher duties for quantities outsidethe quotas, and lower duties forquantities within the quotas): eggs,tobacco, sugar, and salt (whichVietnam says is the main incomesource for 100,000 poor farmersin coastal areas). But Vietnam willexpand the quotas until they disappearaccording to agreed timetables.Vietnam has also signed the “plurilateral”Information TechnologyAgreement (“plurilateral” meaningonly some WTO members havesigned). For these products, Vietnamhas agreed to allow importsin duty-free. In some cases, thezero duty will apply immediately;in others it will be achieved graduallyover periods ending in 2010 to2014.In agriculture, Vietnam has promisednot to subsidize exports. It willbe allowed to support its farmersdomestically with trade-distortingsupports (“Amber Box” or “AggregateMeasurement of Support”, i.e.supports that have a direct impacton prices or quantities produced)of up to 3,961.5 billion Vietnamesedong (currently about US$246million) in addition to the usual allowancefor developing countries(known as “deminimis”) of up to10% of the value of domestic agriculturalproduction. As with all WTOmembers, Vietnam can also spendunlimited amounts on supportsthat do not distort trade (“GreenBox” supports).SERVICES: Schedule of SpecificCommitments on Trade in ServicesVietnam has made commitmentson a range of services. In somecases Vietnam reserves the right tolimit foreign ownership of servicecompanies operating in Vietnam– for example in some telecommunicationsservices the eventuallimits can be 49% or 65%, dependingon the service. In a few cases,permitted foreign ownership is im-APPENDIX IViet Nam - A Guide for Business and Investment 57

APPENDIX Imediately 100% (for example accountancy).In many cases, the permittedforeign ownership is phasedin to reach 100% after a few years(for example express delivery courierservices after five years).As is normal in this sector, the effectof the commitments dependsalso on complex relationships withdomestic regulations – for examplein the first two years, 100%-foreign-ownedarchitectural firms canonly serve foreign companies. Thecommitments and some of the regulationsare in the “schedule” (lists)of commitments; other informationon the regulations is in the workingparty report.THE WORKING PARTY REPORT:Report of the Working Party onthe Accession of VietnamThe working party report outlinesthe economic context, and the institutionaland legal framework. Itincludes Vietnam’s commitments toundertake reforms or to preservereforms that have been introducedin order to secure membership.Among the commitments are:Foreign exchange: Vietnam willabide by IMF and WTO rulesState enterprises: commercialbusiness (i.e. except for supplyingthe government) will be conductedon commercial terms without interferencefrom the government.A number of products are listed assubject to state trading enterprisesbecause of consumption restrictions,for cultural and moral reasons,or because they are “naturalmonopolies”: tobacco products,petroleum, cultural products suchas newspapers, journals and audiovisualmaterials, and aircraft.Privatization and equitization ofstate enterprises: this will be handledtransparently, with Vietnamsupplying annual reports while theprogram lastsPricing and price controls: Vietnamwill comply with WTO agreementsand notify the WTO of actions ittakes to control prices.Policy-making and enforcingframework: a number of administrativeand legal structures havebeen introduced or strengthenedso that WTO provisions are applied,including the possibility of investigationand judicial view to dealwith complaints about this.Trading rights (the right to importand export): this was a subject oftough negotiations partly becauseof different registration proceduresfor foreign and domestic traders. Anew law has now harmonized theprocedure for both. Among themany additional details are a commitmentthat all foreign firms andindividuals will be able to engage inimporting and exporting as importers/exporters“of record” so longas they register, and importers willbe able to choose their domesticdistributors.Exercise duties: the different dutiescharged on alcoholic drinks attractedparticular attention in thenegotiations. Vietnam has agreedto simplify the structure within 3years by applying a single rate forall forms of beer and a single ratefor all spirits containing 20% alcoholor more. This has allayed concernsfrom some countries thatthe previous structure might discriminateagainst imported beersthat have different packaging, oragainst imported spirits with higheralcohol content.Quantitative and other restrictions:quotas, bans and otherrestrictions will be abolished, includingimport bans on cigarettes,cigars and used vehicles, or onlyapplied according to WTO rules.WTO agreements dealing withrules: Vietnam will comply withthe Customs Valuation, Rules ofOrigin, Pre-shipment inspection,Anti-dumping, Safeguards, Subsidies,and Trade-Related InvestmentMeasures agreements, withsome provisions phased in over aperiod.Export restrictions: Vietnammaintains export controls on someproducts such as rice, and somewood products and minerals (toprevent illegal exploitation). It ispledging to apply controls on theseproducts in a way that conforms toWTO agreements.Standards: Vietnam will apply theTechnical Barriers to Trade, andSanitary and Phytosanitary Measuresagreements without a transitionperiod.Government procurement: Vietnamwill consider signing the GovernmentProcurement Agreementafter it has become a WTO member.Intellectual property: almost 33pages of the report describe in detailthe administrative and legal setup in the country. Vietnam will complywith the Trade-Related Aspectsof Intellectual Property Rights(TRIPS) Agreement immediately,without any transition period.(Source: Saigon Times)58 Viet Nam - A Guide for Business and Investment

APPENDIX IIList of major legal document relating to the business activities offoreign investors in Viet NamNo.Legal document NoIssued byAuthoritiesContent of legal documentForeign Investment1Law No. 59/2005/QH11 dated29/11/2005National Assembly2Law No. 60/2005/QH11 dated29/11/2005National AssemblyLaw on Investment providing investmentprocedure, investment incentives,right and obligations of theinvestors.Law on Enterprises providing type ofenterprise, establishment procedures,organisation and operation of enterprisesDecree 88/2006/ND-CP3 Government Decree on business registrationdated 29/8/20064Decree 108/2006/ND-CPdated 22/9/2006Government5Decree 101/2006/ND-CPdated 21/9/2006GovernmentDecree providing guidelines for implementationof a number of articles ofLaw on investmentProviding regulations on re-registrationor conversion by enterprises withforeign invested capital, and registrationfor change [of investmentlicences] for investment certificatesby enterprises with foreign investedcapital in accordance with the Law onEnterprises and the Law onInvestment6Decision 1088/2006/QD-BKHdated 19/10/2006Ministry of Planningand InvestmentCircular 03/2006/TT-BTC7 Ministry of Financedated 19/10/2006Decision on promulgating sampleform of documents for carrying outinvestment procedures in VietnamProviding guidelines for implementationDecree 88APPENDIX IIForeign Exchange Control8Ordinance No. 28/2005/PL-UBTVQH 11dated 13/12/2005The StandingCommittee ofNational AssemblyOrdinance on foreign exchange controlDecree 160/2006/ND-CP9 Governmentdated 28/12/2006Providing guidance for implementingOrdinance on foreign exchange control10Decree 134/2005/ND-CP on1/11/2005GovernmentRegulation on Foreign Borrowing andRepayment of EnterprisesViet Nam - A Guide for Business and Investment 59

Labour11 Labour Code dated 23/6/1994 National Assembly Law on Labour12Law No. 35/2002/QH10 dated2/4/2002Law No. 74/2006/QH11 dated29/11/2006National AssemblyLaw on amendments and supplementsto a number of articles of the LabourCode dated 23/6/1994LandAPPENDIX II131415Law No.13/2003/QH11 dated26/11/2003Decree 181/ND-CP dated29/10/2004Decree 182/ND-CP dated29/10/2004National AssemblyGovernmentGovernmentLaw on landProviding guidance for the implementationof a number of article of theLaw on landSanctioning administration violation inthe area of landIntellectual Property16Law No. 50/2005/ QH11 dated29/11/2005National AssemblyLaw on Intellectual Property17Law No. 80/2006/QH11 dated29/11/2006GovernmentLaw on Technology TransferImport - Export18Law No. 45/2005/QH11 dated14/6/2005National AssemblyLaw on Import – Export19Law No.29/2001/QH10 dated29 June 2001, and the LawNo.42/2005/QH11 dated 14June 2005National AssemblyCustoms Law20Decree 149/2005/ND-CPdated 8/12/2005GovernmentMaking detailed provisions for theimplementation ofthe Law on Export and Import DutiesVarious Taxes21Law No. 78/2006/QH11 dated29/11/2006National AssemblyLaw on tax management22Law No. 09/2003/QH11 dated17 June 2003National AssemblyLaw on Business Income Tax23Decree 164/2003/ND-CPdated 22/12/2003 as amendedby Decree 152/2004/ND-CP dated 6/8/2004GovernmentProviding guidance on the implementationof Business Income Tax Law60 Viet Nam - A Guide for Business and Investment

24Circular 128/2003/TT-BTCdated 22/2/2003 as amendedby Circular 88/2004/TT-BTCdated 7/9/2004Ministry of FinanceRegulating in detail the implementationof the Decree 16425Law No. 07/2003/QH11 dated17 June 2003 and Law No.02/1997/QH9 dated 10 May1997National AssemblyLaw on Value Added Tax26Decree No.158/2003/ND-CPdated 10 December 2003 andDecree 156/2005/ND-CP dated15/12/2005GovernmentRegulating in detail the implementationof the Law on VAT and the Law onAmendment and Supplement to a numberof articles of the Law on VAT27Circular 120/2003/TT-BTCdated 12 December 2003 andCircular 115/2005/TT-BTCdated 16/12/2005Ministry of FinanceProviding guidance on the implementationof Decree No. 158/2003/ND-CPdated 10 December 2003 of theGovernment, regulating in detail theimplementation of the Law on ValueAdded Tax (VAT)28Law No. 05/1998/QH10 onSpecial Sales Tax, dated 20May 1998,Law No. 08/2003/QH11 dated17 June 2003 and Law No.57/2005/QH11 dated29/11/2005National AssemblySpecial Sales Tax29Decree 149/2003/ND-CP dated4/12/2003 and Decree156/2005/ND-CP dated15/12/2005GovernmentProviding guidance on the implementationof Special Sales Tax Law3031Circular 119/2003/TT-BTCdated 12/12/2003, Circular18/2005/TT-BTC dated8/3/2005 and Circular115/2005/TT-BTC dated16/12/2005Ordinance No.35/2001/PL-UBTVQH10 dated 19 May 2001;the Ordinance No.14/2004/PL-UBTVQH10 dated 24 March2004Ministry of FinanceThe StandingCommittee of theNational AssemblyProviding guidance on the implementationof Decree 149 and Decree 156Ordinance on income tax of highincome earnersAPPENDIX II32Decree No 147/2004/ND-CPdated 23 July 2004GovernmentStipulating in detail the implementationof the Ordinance on income tax of highincome earners33Circular 12/2005/TT-BTC dated4/2/2005 and CircularNo.81/2004/TT-BTC dated 13August 2004Ministry of FinanceProviding guidelines for implementationof Government Decree 147Viet Nam - A Guide for Business and Investment 61

Real Estate Business34Law No. 63/2006/QH11 dated29/6/2006National AssemblyLaw on real estate business35Law No. 56/2005/QH11 dated29/11/2005National AssemblyLaw on Resident HousingEducation36Law No. 38/2005/QH11 dated14/6/2005National AssemblyEducation LawAPPENDIX II3738Decree 06/2000/ND-CP dated6/3/2000Circular 14/2005/TTLT-BGD&DT – BKH&DT dated14/4/2005GovernmentMinistry of Education&Training – Ministryof Planning &InvestmentCooperation and investment with foreigncountries in the areas of examinationand treatment of diseases, trainingand education, scientific researchProviding guidance to implement ofDecree 06Post & Telecommunication39 Ordinance dated 25/5/2002 National Assembly Post & TelecommunicationTransportation40Law No. 35/2005/QH11 dated14/6/2005National AssemblyLaw on Rail Way41Law No. 66/2006/QH11 dated29/6/2006National AssemblyLaw on Civil Aviation42Law No. 40/2005/QH11 dated14/6/2005National AssemblyMaritime Law43Decree 10/2001/ND-CP dated19/3/2001GovernmentConditions for operating business maritimeservices62 Viet Nam - A Guide for Business and Investment

APPENDIX IIIList of sectors entitled to investment incentive(Issued together with Government Decree No.108 /2006/ND-CP dated 22 September 2006. making detailed regulationsand providing guidelines for implementation of the Law on Investment)A. LIST OF SECTORS TO WHICHSPECIAL INVESTMENT INCEN-TIVES SHALL BE GIVEN:formation, telecommunicationsand Internet equipment; pivotalinfo-technology products.propagation and hybridization ofseeds and breeds of animals withhigh economic efficiency.I. Production of new materials,new energy; production ofhigh-tech products, bio-technologyproducts, info-technologyproducts; productionof manufactured mechanicalproducts1. Production of composite materials,light construction materials,rare and precious materials.2. Production of high qualitysteel, alloy, special metals,sponge iron; steel billets.3. Production of new energy:Construction of plants using solarenergy, wind energy, bio-gas,geothermal energy, tides.4. Production of medical equipmentfor analytical and extractivetechnologies in medicalsector; orthopaedic instruments,wheelchairs, specialised instrumentsfor the disabled;5. Projects applying advancedtechnology, biotechnology toproduce medicines meeting internationalGMP standards; productionof drug materials for antibiotics.6. Production of computers; in-7. Production of semiconductorsand high-tech electronic components;production of softwareproducts, website applications;provision of software services;research on information technology;training human resources inthe field of info-technology.8. Production and manufactureof precision mechanical equipment;equipment and machineryfor examination and controlof safety during the process ofindustrial production; industrialrobots.II. Cultivation and processingof agricultural, forestryand aquatic products; makingsalt; production of man-madestrains, new seeds and breedsof animals.9. Afforestation and taking careof forests;10. Cultivation of agricultural,forestry and aquatic products inuncultivated land, unexploitedwaters;11. Catching of marine productsat offshore sea.12. Production of new strains;13. Production, exploitation andrefining of salt.III. Use of high-technology;modern technology; protectionof ecological environment;research on, development andfostering of high-technology.14. Application of high-technology;application of new technologieswhich have not beenapplied in Vietnam; applicationof biotechnology.15. Pollution treatment and environmentalprotection; manufactureof equipment for treatmentof environmental pollution,equipment for observation andanalysis of environment.16. Collection and treatment ofliquid waste, gaseous waste, solidwaste; recycling and reuse ofwaste;17. Research on, developmentand fostering of high-technologyIV. Employment of large numberof employees18. Projects regularly employing5,000 or more employees.APPENDIX IIIViet Nam - A Guide for Business and Investment 63

APPENDIX IIIV. Construction and developmentof infrastructures andimportant projects19. Construction and operationof infrastructure facilities in industrialzones, export processingzones, high-tech zones andeconomic zones, and of importantprojects established undera decision of the Prime Minister.VI. Development of facilitiesin educational, training, medical,gymnastic and sports sectors20. Construction of drug detoxificationcentres or tobacco detoxificationcentres.21. Setting up establishmentsproviding sanitation services toprevent and fight against epidemics;22. Establishment of geriatriccentres, and relief centres concentratingon care for the disabledand orphans;23. Construction of sports centresfor training and coachingathletes with high performance;sports centres for the disabled;sports centres with equipmentand facilities for exercises andcontests, meeting requirementsof international sportingevents;VII. Other sectors of productionand service24. Investment in research anddevelopment (R&D) accountingfor 25% or more of turnover;25. Services of salvage in thesea.26. Construction of tenementsfor employees working in industrialzones, export processingzones, high-tech zones, economiczones; construction ofdormitories for college studentsand construction of housing forpeople entitled to social benefits.B. LIST OF SECTORS TO WHICHINVESTMENT INCENTIVESSHALL BE GIVEN:I. Production of new materials,new energy; production ofhigh-tech products, bio-technologyproducts, info-technologyproducts, manufacturedmechanical products1. Production of sonic, electricand thermal highly-insulatingmaterials; wood-substitute syntheticmaterials; fire-proof materials,construction plastics,fibreglass, special cement,…2. Production of non-ferrousmetals; cast-iron refining.3. Production of moulds for metaland non-metal products.4. Construction of new powerplants, electricity transmissionand distribution networks.5. Production of medical equipment;building storage for preservationof pharmaceuticalproducts and for storing humanmedicaments for prevention ofand fighting against natural disasters,calamities, dangerousepidemics;6. Production of equipmentfor testing toxic substances infoodstuffs;7. Development of petrochemicalindustry;8. Production of coke, activatedcarbon.9. Production of crops protectiondrugs, insecticides, preventiveand curative drugs foranimals and aquatic creatures,veterinary drugs.10. Materials for production ofdrugs, preventive and curativedrugs for social diseases; vaccines,medical bio-products,medicines from pharmaceuticalmaterials, oriental medicines;11. Construction of establishmentsfor biological testing, andfor evaluating effects of drugs;construction of establishmentsmeeting criteria for production,preservation and testing ofdrugs; cultivation, reaping andprocessing of pharmaceuticalmaterials.12. Development of resourcesof pharmaceutical materials andproduction of drugs from pharmaceuticalmaterials; projectsfor researching on and provingthe scientific basis of orientalmedicine prescriptions, and formulatingtesting criteria in respectof oriental medicine prescriptions;conducting a surveyof and compiling statistics onvarious types of pharmaceuticalmaterials used for productionof drugs; collection, inheritanceand application of oriental medicineprescriptions; search for,64 Viet Nam - A Guide for Business and Investment

exploitation and utilisation ofnew pharmaceutical materials.13. Production of electronicproducts.14. Production of machinery,equipment and componentspacks in the fields of exploitationof petroleum, mining, and energy;manufacture of large-sizelifting and lowering equipment;manufacture of machine toolsfor metal processing; metallurgyequipment;15. Production of high and mediumvoltage electric devices;large-size generators.16. Production of diesel engines;production and building of, andrepair to ships; production ofequipment and spare parts forcargo ships, fishing boats; manufactureof dynamic and hydraulicmachinery and parts, and compressingmachines;17. Production of equipment,vehicles and machinery for construction;production of technicalequipment for the transportationindustry; production of locomotivesand carriages;18. Production of machine tools,machinery, equipment, spareparts serving agricultural andforestry production; food processors;equipment used in irrigation;19. Production of equipment andmachinery for the textile andgarment industry; production ofmachinery for the leather industry.II. Cultivation and processingof agricultural, forestryand aquatic products, makingsalt; production of man-madestrains, seeds and breeds ofanimals20. Cultivation of medicinalplants;21. Preservation of post-harvestagricultural products; preservationof agricultural and aquaticproducts and foodstuffs;22. Production of bottled orcanned juice from fruits;23. Production and refining offeed for cattle, poultry, aquaticcreatures;24. Technical services in supportof cultivation of industrial plantsand forestry plants, animal husbandry,aquaculture, protectionof plants and domestic animals.25. Production, propagationand hybridization of seeds andbreeds of animal.III. Use of high technology,modern technologies; protectionof ecological environment;research on, development andfostering of high technology26. Production of equipment fordealing with oil-overflow.27. Production of equipment forwaste treatment.28. Construction of technical establishmentsand facilities: laboratories,experimental stationsfor application of new technologiesto production; establishmentof research institutes.IV. Employment of lots of employees:29. Projects regularly employing500 to 5,000 employees.V. Construction and developmentof infrastructure facilities30. Construction of infrastructurefacilities in service of productionand operation of cooperativesand community life inrural areas;31. Projects for operation of infrastructurefacilities and productionin complexes of industriesand trades in rural areas.32. Construction of water plantsor water supply systems in serviceof living needs or industries;construction of drainage systems;33. Construction and improvementof bridges, roads, airports,ports, railroad stations, bus stations,parking lots; opening ofmore railroad routes;34. Construction of technical infrastructuresfor densely-populatedareas in localities providedin Appendix B issued togetherwith this Decree.VI. Development of facilities ineducational, training, medical,gymnastic, sports and nationalcultural sectors35. Construction of infrastructurefacilities of educational andtraining establishments. Con-APPENDIX IIIViet Nam - A Guide for Business and Investment 65

APPENDIX IIIstruction of private and peoplefoundedschools and educationaland training establishments atall levels: pre-schools; popularschools; secondary vocationalschools; colleges and universities.36. Establishment of peoplefoundedhospitals and privatehospitals.37. Construction of gymnastic andsports centres, exercising clubs,gymnastic and sports clubs; establishmentsfor production andmanufacture of or for repair toequipment and devices used forgymnastic and sports exercises.38. Establishment of national culturalhouses, groups of singersand dancers performing nationalmusic and dance; theatres, filmstudios, film printing and developingestablishments, cinemas;production and manufacture of,and repair to national musicalinstruments; renovation and conservationof museums, nationalcultural houses and cultural andartistic schools.39. Construction of national tourismareas, eco-tourism areas;construction of cultural parksincluding sports areas and entertainmentareas.VII. Development of traditionaltrades40. Formulation and developmentof traditional trades in relation toproduction of fine-art and handicraftproducts; processing of agriculturalproducts and food; productionof cultural products.VIII. Other production or servicesectors41. Provision of the Internet connection,access and applicationservices, and establishment oftelephone booths in regions includedin Appendix B issued togetherwith this Decree.42. Development of means of publictransportation including: developmentof ships and airplanes,means of railroad transportation,automobiles of 24 seats or morefor transportation of passengersby land; modern and high-spedboats for transportation of passengersby river; container ships,ocean-going vessels.43. Projects for relocation of productionestablishments out of innercities.44. Construction of type-I marketsand exhibition areas.45. Production of children’s toys.46. Projects for raising capitaland lending capital by People’scredit funds.47. Legal consultancy; consultancyon intellectual property andtechnology transfer.48. Production of various types ofmaterials for pesticides.49. Production of basic chemicals,purified chemicals, specialisedchemicals and dyes.50. Production of materials forcleansers, and additives for thechemical industry.51. Production of paper, cardboard,artificial planks directlyfrom sources of agricultural andforestry materials at home; productionof paper-pulp.52. Weaving fabric, completingtextile products; producingsilk and fibres of various kinds;tanning and semi-processing ofhides.53. Investment projects in industrialzones, established under adecision of the Prime Minister.66 Viet Nam - A Guide for Business and Investment

APPENDIX IVList of geographical regions of investment incentives(Issued together with Decree No 108/2006/ND-CP dated 22 September 2006, making detailed regulationsand providing guidelines for implementation of the Law on Investment)No Province Regions with specially difficultsocio-economic conditionsRegions with difficult socio-economicconditions1 Bac Kan All districts and towns2 Cao Bang All districts and towns3 Ha Giang All districts and towns4 Lai Chau All districts and towns5 Son La All districts and towns6 Dien Bien All districts and Dien Bien city7 Lao Cai All districts Lao Cai city8 Tuyen Quang Na Hang and Chiem Hoa districts Ham Yen, Son Duong and Yen Son districts,and Tuyen Quang town9 Bac Giang Son Dong district Luc Ngan, Luc Nam,Yen The and Hiep Hoadistricts10 Hoa Binh Da Bac and Mai Chau districts Kim Boi, Ky Son, Luong Son, Lac Thuy, TanLac, Cao Phong, Lac Son and Yen Thuy districts11 Lang Son Binh Gia, Dinh Lap, Cao Loc, LocBinh, Trang Dinh, Van Lang and VanQuan districtsBac Son, Chi Lang and Huu Lung districts12 Phu Tho Thanh Son and Yen Lap districts Doan Hung. Ha Hoa, Phu Ninh, Song Thao,Thanh Ba, Tam Nong and Thanh Thuy districts13 Thai Nguyen Vo Nhai and Dinh Hoa districts Dai Tu, Pho Yen, Phu Luong, Phu Binh andDong Hy districtsAPPENDIX IVViet Nam - A Guide for Business and Investment 67

14 Yen Bai Luc Yen, Mu Cang Chai and TramTau districts15 Quang Ninh Ba Che and Binh Lieu districts, CoTo island district, and other islandsand isles of the provinceTran Yen, Van Chan, Van Yen and Yen Binhdistricts, and Nghia Lo townCam Pha district16 Hai Phong Island districts of Bach Long Vy andCat Hai17 Ha Nam Ly Nhan and Thanh Liem districtsAPPENDIX IV18 Nam Dinh Giao Thuy, Xuan Truong, Hai Hau andNghia Hung districts19 Thai Binh Thai Thuy and Tien Hai districts20 Ninh Binh Nho Quan, Gia Vien, Kim Son, Tam Diepand Yen Mo districts21 Thanh Hoa Muong Lat, Quan Hoa, Ba Thuoc,Lang Chanh, Thuong Xuan, CamThuy, Ngoc Lac, Nhu Thanh and NhuXuan districtsThach Thanh and Nong Cong districts22 Nghe An Ky Son, Tuong Duong, Con Cuong,Que Phong, Quy Hop, Quy Chau andAnh Son districts23 Ha Tinh Huong Khe, Huong Son and VuQuang districts24 Quang Binh Tuyen Hoa, Minh Hoa and Bo TrachdistrictsTan Ky, Nghia Dan and Thanh Chuong districtsDuc Tho, Ky Anh, Nghi Xuan, Thach Ha,Cam Xuyen and Can Loc districtsThe remaining districts except Tuyen Hoa,Minh Hoa and Bo Trach districts25 Quang Tri Huong Hoa and Dac Krong districts The remaining districts except Huong Hoaand Dac Krong districts26 Thua Thien – Hue A Luoi district Phong Dien, Nam Dong, Quang Dien,Huong Tra, Phu Loc and Phu Vang districts27 Da Nang Hoang Sa island district28 Quang Nam Dong Giang, Tay Giang, Nam Giang,Phuoc Son, Bac Tra My, Nam Tra My,Hiep Duc, Tien Phuoc, Nui Thanhdistricts, and Cu Lao Cham island29 Quang Ngai Ba To, Tra Bong, Son Tay, Son Ha,Minh Long, Binh Son and Tay Tradistricts, and Ly Son island district30 Binh Dinh An Lao, Vinh Thanh, Van Canh, PhuCat and Tay Son districtsDai Loc and Duy Xuyen districtsNghia Hanh and Son Tinh districtsHoai An and Phu My districts68 Viet Nam - A Guide for Business and Investment

31 Phu Yen Song Hinh, Dong Xuan, Son Hoa and Song Cau, Tuy Hoa and Tuy An districtsPhu Hoa districts32 Khanh Hoa Khanh Vinh and Khanh Son districts,Truong Son island district,and other islands of the provinceVan Ninh, Dien Khanh and Ninh Hoa districts,Cam Ranh town33 Ninh Thuan All districts34 Binh Thuan Phu Quy island district Bac Binh, Tuy Phong, Duc Linh, Tanh Linh,Ham Thuan Bac and Ham Thuan Namditricts35 Dac Lac All districts36 Gia Lai All districts and town37 Kon Tum All districts and town38 Dak Nong All districts39 Lam Dong All districts Bao Loc town40 Ba Ria – Vung Tau Con Dao island district Tan thanh district41 Tay Ninh Tan Bien, Tan Chau, Chau Thanhand Ben Cau districts42 Binh Phuoc Loc Ninh, Bu Dang and Bu Dop districtsThe remaining districts except Tan Bien,Tan Chau, Chau Thanh and Ben Cau districtsDong Phu, Binh Long, Phuoc Long andChon Thanh districts43 Long An Duc Hue, Moc Hoa, Tan Thanh, Duc Hoa,Vinh Hung and Tan Hung districts44 Tien Giang Tan Phuoc district Go Cong Dong and Go Cong Tay districts45 Ben Tre Thanh Phu, Ba Tri and Binh Dai districtsThe remaining districts except ThanhPhu, Ba Tri and Binh Dai districts46 Tra Vinh Chau Thanh and Tra Cu districts Cau Ngang, Cau Ke and Tieu Can districts47 Dong Thap Hong Ngu, Tan Hong, Tam Nongand Thap Muoi districts48 Vinh Long Tra On districtThe remaining districts except Hong Ngu,Tan Hong, Tam Nong and Thap Muoi districtsAPPENDIX IV49 Soc Trang All districts Soc Trang town50 Hau Giang All districts Vi Thanh town51 An Giang An Phu, Tri Ton, Thoai Son, TanChau and Tinh Bien districtsThe remaining districts except An Phu, TriTon, Thoai Son, Tan Chau and Tinh BiendistrictsViet Nam - A Guide for Business and Investment 69

52 Bac Lieu All districts Bac Lieu town53 Ca Mau All districts Ca Mau city54 Kien Giang All districts, and islands and isles ofthe province55 Other regions High-tech zones and economiczones entitled to incentives, establishedunder a decision of the PrimeMinisterHa Tien town, Rach Gia townIndustrial zones and export processingzones established under a decision of thePrime MinisterAPPENDIX IV70 Viet Nam - A Guide for Business and Investment

APPENDIX VList of conditional investment sectors applicable to foreigninvestors(Issued together with Decree No. 108/2006/ND-CP dated 22 September 2006, making detailed regulationsand providing guidelines for implementation of the Law on Investment)1. Radio-broadcasting, televising2. Production, publication and distribution of cultural products.3. Exploitation and processing of minerals.4. Establishment of infrastructure facilities of telecommunications networks, broadcasting and transmissionnetworks, provision of telecommunications and Internet services.5. Construction of public postal networks, provision of postal and express services.6. Construction and operation of river ports, sea ports, airports.7. Transportation of cargoes and passengers by railroad, by air, by land, by sea, by inland waterway.8. Catching of marine products.9. Production of cigarettes.10. Trade in properties.11. Doing business in export-import and distribution sectors.12. Investment in education and training sector.13. Hospitals, clinics;14. Other investment sectors in international treaties of which Vietnam is a member and which require Vietnamto commit to restricting the opening of the market to foreign investors.Investment conditions applicable to foreign investors with investment projects included in investmentsectors that are stipulated in this Appendix must conform to provisions of international treaties of whichVietnam is a member.APPENDIX VViet Nam - A Guide for Business and Investment 71

APPENDIX VIUseful contacts and addresses in Viet NamGOVERNMENT AGENCIESAPPENDIX VIMinistry of Foreign Affairs1 Ton That Dam, HanoiTel.: (84-4) 8458201Fax: (84-4)8436488Ministry of Planning and Investment2 Hoang Van Thu, HanoiTel.: (84-4) 8455298Fax: (84-4)8234453Ministry of Finance28 Tran Hung Dao, HanoiTel.: (84-4)2202828Fax: (84-4)2208020/2208021Ministry of Trade21 Ngo Quyen, HanoiTel.: (84-4)8253915Fax: (84-4)9342136Ministry of Agriculture and Rural Development2 Ngoc Ha, HanoiTel.: (84-4)8459670Fax: (84-4)7330752Ministry of Transport80 Tran Hung Dao, HanoiTel.: (84-4) 9422079Fax: (84-4)9422386Ministry of Construction37 Le Dai Hanh, HanoiTel.: (84-4)9760271Fax: (84-4)9762153Ministry of Industry54 Hai Ba Trung, HanoiTel.: (84-4) 8258311Fax: (84-4)8265303Ministry of Aquaculture10 Nguyen Cong Hoan, HanoiTel.: (84-4)8326714Fax: (84-4)7716702Ministry of Science and Technology39 Tran Hung Dao, HanoiTel. : (84-4)8252731Fax: (84-4)8252733Ministry of Environment and Resource83 Nguyen Chi Thanh, HanoiTel: (84-4)8343914Fax: (84-4)8352131Ministry of Post & Telecommunication18 Nguyen Du, HanoiTel: (84-4)9435602Fax: (84-4)8263477Ministry of Justice58-60 Tran Phu, HanoiTel: (84-4)7336213Fax: (84-4)8431431Office of Government1A Hoang Hoa Tham , HanoiTel. : (84)8043579Viet Nam Chamber of Commerce & Industry9 Dao Duy Anh, HanoiTel: (84-4)5742022/5742143/5742031Fax: (84-4)5742030/574202072 Viet Nam - A Guide for Business and Investment

PROVINCIAL DEPARTMENTS OF PLANNING AND INVESTMENT (DPI)Hanoi DPI17 Tran Nguyen Han - Hoan Kiem - HanoiTel: 04.8256637/ 04.8260257Fax: 04.8251733Quang Ninh DPIHong Ha ward, Ha Long city,Quang Ninh provinceTel: 033.835687/033.835693Fax: 033.838072Tuyen Quang DPITran Hung Dao str, Minh Xuan, Tuyen Quang town,Tuyen Quang provinceTel: 027.822814/027.821366Fax: 027.823160Thai Nguyen DPINo. 17 Doi Can, Thai Nguyen city,Thai Nguyen provinceTel: 0280.855688/0280.854211/ 0280.759605Fax: 0280.851363Hai Phong DPINo. 1 Dinh Tien Hoang, Hong Bang, Hai PhongTel: 031.842614/031. 842119Fax: 031.842021Cao Bang DPIXuan Truong str. Hop Giang, Cao Bang town,Cao Bang provinceTel: 026.858743 /026.852535Fax: 026.853335Bac Can DPIGroup 4, Duc Xuan ward, Bac Kan town,Bac Kan provinceTel: 0281.871287Fax: 0281.871287Lang Son DPINo 2 Hoang Van Thu, Chi Lang, Lang Son town, LangSon provinceTel: 025.812122/ 025.812561Fax: 025.813067Dien Bien DPIMuong Thanh ward, Dien Bien city,Dien Bien provinceTel: 023.825409/ 023.825896Fax: 023.825944Lai Chau DPIPhong Chau 1, Phong Tho town,Tam Duong district, Lai Chau provinceTel: 023.876501/ 023.876735Fax: 023.876437Son La DPIKhau Ca str, Son La town, Son La provinceTel : 022.859866/Fax: 022.852032Lao Cai DPI266 Hoang Lien str, Kim Tan, Lao Cai town,Lao Cai provinceTel: 020.840810Fax: 020.842411APPENDIX VIHa Giang DPI156 Tran Hung Dao, Ha Giang town,Ha Giang provinceTel: 019.866256/ 019.867051Fax: 019.867623Yen Bai DPIYen Ninh str, Dong Tam, Yen Bai city,Yen Bai provinceTel: 029.852409/029.853052Fax: 029.851626Viet Nam - A Guide for Business and Investment 73

APPENDIX VIHoa Binh DPINo. 3 Tran Hung Dao str, Hoa Binh town,Hoa Binh provinceTel: 018.851457Fax: 018.853152Phu Tho DPITran Phu str, Tan Dan, Viet Tri city,Phu Tho provinceTel: 0210.847778Fax: 0210.840955/ 0210.84741Vinh Phuc DPINo 40, Nguyen Trai str, Vinh Yen town,Vinh Phuc provinceTel: 0211.862480 /0211.842743Fax: 0211.862480Ha Nam DPI15 Tran Phu, Phu Ly, Ha Nam province.Tel: 0351.852701/ 0351.854317Fax: 0351.852701Hai Duong DPI58 Quang Trung, Hai Duong city,Hai Duong provinceTel: 0320.853574/0320.855762Fax: 0320.850814Thai Binh DPI233 duong Hai Ba Trung, Thai Binh city,Thai Binh provinceTel: 036.831774/ 036.830437Fax: 036.830326Bac Giang DPINguyen Gia Thieu str, Bac Giang town,Bac Giang provinceTel: 0240.854317/0240.859606Fax: 0240.854923Nam Dinh DPI172 Han Thuyen, Nam Dinh city,Nam DInh province.Tel: 0350.648482/0350.645227Fax: 0350.647120Bac Ninh DPINo 6 Ly Thai To str, Suoi Hoa ward, Bac Ninh town,Bac Ninh provinceTel: 0241.822569/0241.824902Fax: 0241.825777Ninh Binh DPI15 Le Hong Phong, Ninh Binh town,Ninh Binh provinceTel: 030.871156/ 030.874913Fax: 030.873381Ha Tay DPINo 2 Phung Hung - Ha _ong city, Ha Tay provinceTel: 034.824184/ 034.828064Fax: 034.824608Hung Yen DPINo 8 Chua Chuong, Hien Nam, Hung Yen, Hung YenprovinceTel: 0321.865127Fax:Thanh Hoa DPI45B Le Loi str, Lam Son ward, Thanh Hoa city, ThanhHoa provinceTel: 037.852366/037.756149Fax: 037.851451Nghe An DPITruong Thi ward, Vinh city, Nghe An provinceTel: 038.844636/ 038.843102Fax: 038.59224674 Viet Nam - A Guide for Business and Investment

Ha Tinh DPIPhan Dinh Phung, Ha Tinh town, Ha Tinh provinceTel: 039.856750 /039.881267Fax: 039.855576Quang Binh DPINo 9 Quang Trung, Dong Hoi, Quang Binh.Tel: 052.824611/052.824635Fax: 052.821520Quang Tri DPI34 Hung Vuong, Dong Ha town, Quang Tri provinceTel: 053.550167Fax: 053.851760Da Nang DPINo 47 Ngo Gia Tu, Hai Chau 1 ward, Hai Chau, DaNang cityTel: 0511.822759Fax:Thua Thien Hue DPITon Duc Thang str, Hue cityTel: 054.822538 /054.824680Fax: 054.821264Quang Nam DPINo 02 Tran Phu, Tam Ky town, Quang Nam provinceTel: 0510.810394 /0510.810866Fax: 0510.810396Quang Ngai DPINo. 96 Nguyen Nghiem, Quang Ngai city,Quang Ngai provinceTel: 055.822868/055.826266Fax:Phu Yen DPINo 2A Dien Bien Phu, Tuy Hoa town,Phu Yen provinceTel: 057.841112Fax:Khanh Hoa DPINo 01 Tran Phu str, Nha Trang city,Khanh Hoa province.Tel:058.824243Fax: 058.812943/058.824243Ninh Thuan DPIThe 16th April str, Phan Rang town,Thap Cham, Ninh Thuan provinceTel: 068.822694/068.825880Fax: 068.825488Binh Thuan DPINo 290 Tran Hung Dao, Binh Hung ward,Phan Thiet city, Binh Thuan provinceTel: 062.821128/062.827170/062.831890Fax: 062.828656Gia Lai DPINo 02 Hoang Hoa Tham str, Pleiku city,Gia Lai provinceTel: 059.822204/059.823717Fax: 059.823808Kon Tum DPI123B Tran Phu str, KonTum town,Kon Tum provinceTel: 060.862710/060.862546Fax: 060.864253APPENDIX VIBinh Dinh DPINo 35 Le Loi str, Quy Nhon city, Binh Dinh provinceTel: 056.818888/056.818889Fax: 056.824509/056.818887Dak Nong DPIGia Nghia town, Dac Nong provinceTel: 050.543689/050.544676Fax:Viet Nam - A Guide for Business and Investment 75

Dak Lak DPINo. 17 Le Duan str, Buon Ma Thuot city,Dak Lak provinceTel: 050.852702Fax: 050.812187Binh Duong DPINo 188, Binh Duong str, Phu Hoa ward,Thu Dau Mot town, Binh Duong provinceTel: 0650.822926/0650.827954Fax: 0650.825194APPENDIX VILam Dong DPINo 04 Tran Hung Dao str, Da Lat city,Lam Dong provinceTel: 063.822311/063.830306Fax: 063.834806Ho Chi Minh City DPINo. 32 Le Thanh Ton, District 1, Ho Chi Minh cityTel: 08.8297834/08.8272192/08.8293174Fax: 08.8295008Binh Phuoc DPIThe 14th National Highway, Dong Xoi town,Binh Phuoc provinceTel: 0651.879253/0651.870772Fax: 0651.887088Long An DPINo. 61 Truong Cong Dinh, ward 1, Tan An town,Long An provinceTel: 072.823461/072.286199Fax: 072.825044Can Tho DPI61/21 Ly Tu Trong, An Phu ward, Can Tho city, CanTho provinceTel: 071.830235/071.730259/071.830630Fax: 071.830570Tien Giang DPINo.38 Nam Ky Khoi Nghia str, My Tho city, TienGiang province.Tel: 073.873381/073.871961Fax: 073.875487Ba Ria - Vung Tau DPINo. 01 Nguyen Chi Thanh, ward 2, Vung Tau city.Tel: (064)852401/852320/858286/851381/852502 (ext. 0 or 25)Dong Nai DPINo 2 Nguyen Van Tri, Thanh Binh, Bien Hoa city,Dong Nai provinceTel: 061.824283/061.827116Fax: 061.941718Vinh Long DPINo. 1 Trung Nu Vuong, ward 1, Vinh Long town,Vinh Long provinceTel: 070.823319/070.834031Fax: 070.828033Tra Vinh DPINo.19A Nam Ky Khoi Nghia, Tra Vinh townTel: 074.862289/074.866300Fax: 074.864348Tay Ninh DPI300 Cach Mang Thang tam, ward 2, Tay Ninh town,Tay Ninh provinceTel: 066.822166/066.827638Fax: 066.827947Ben Tre DPINo. 6 Cach Mang Thang Tam str, ward 3, Ben Tretown, Ben Tre provinceTel: 075.821280/075.817358Fax: 075.82554376 Viet Nam - A Guide for Business and Investment

Hau Giang DPINo. 2 Hoa Binh, Vi Thanh town, Hau Giang provinceTel: 071.870214/071.870210Fax: 071.878871Dong Thap DPINo. 11, Vo Truong Toan, ward 1, Cao Lanh town,Dong Thap provinceTel: 067.851101/067.851101/067.851960Fax: 067.852955An Giang DPINo. 8/18 Ly Thuong Kiet, Long Xuyen town, AnGiang province.Tel: 076.852913Fax: 076.853380Kien Giang DPINo. 29 Bach Dang, Rach gia town,Kien Giang provinceTel: 077.862037Fax: 077.862037Soc Trang DPIMANAGEMENT BOARDS (MB) OF INDUSTRIALZONES/EXPORT PROCESSING ZONES/ECONOMICZONES/HI-TECH ZONES (IZ/EPZ/EZ/HTZ)Hanoi IZs/EPZs MBD8A, D8B Giang Vo, Ba Dinh, Ha NoiTel: 04.7721156Fax: 04.7721152Hoa Lac HTZ MBFirst floor, Building 17T7, Trung Hoa - Nhan ChinhNew City Town, Hoang Dao Thuy str, Thanh Xuan,HanoiTel: 04.2511478Fax: 04.2511529Hai Phong IZs MBNo. 24 Cu Chinh Lan, Hong Bang, Hai Phong cityTel: 031.823206Fax: 031.842426Quang Ninh IZs MBNguyen Van Cu, Ha Long city, Quang Ninh provinceTel: 033.836573Fax: 033.838022No.21B Tran Hung Dao, Soc Trang town, Soc TrangprovinceTel: 079.822333Fax: 079.822333Bac Lieu DPINo.23 Hai Ba Trung, ward 3, Bac Lieu town, BacLieu provinceTel: 0781.827616Fax: 0781.823874Thai Nguyen IZs MBTan Quang commune, Song Cong town, Thai NguyenTel: 0280.845435Fax: 0280.845434Phu Tho IZs MBTan Dan ward, Viet Tri city, Phu Tho provinceTel: 0210.843021Fax: 0210.844997APPENDIX VICa Mau DPINo. 93 Ly Thuong Kiet, ward 5, Ca Mau cityTel: 0780.831332/0780.825972Fax: 0780.830773Vinh Phuc IZs MBThird floor, Vinh Phuc Provincial People’s Committee,Nguyen Trai str, Vinh Yen town, Vinh Phuc provinceTel: 0211.843403Fax: 0211.843407Viet Nam - A Guide for Business and Investment 77

Bac Giang IZs MBNo 48 Ngo Gia Tu str, Bac Giang city, Bac GiangprovinceTel: 0240.554133Fax: 0240.554133Nam Dinh IZs MBKm 105, National Highway No. 10,Loc Vuong ward, Nam Dinh cityTel: 0350.680806Fax: 0350.680335APPENDIX VIBac Ninh IZs MBNo. 10 Phu Dong Thien Vuong str, Bac Ninh town,Bac Ninh provinceTel: 0241.825232Fax: 0241.825236Ha Tay IZs MBNo. 2 Phung Hung - Ha Dong town -Ha Tay provinceTel: 034.501388Fax:Hung Yen IZs MBPho Noi, My Hao district, Hung Yen provinceTel: 0321.942862Fax: 0321.942927Ha Nam IZs MBHo Chau Giang, Quang Trung ward, Phu Ly town,Ha Nam provinceTel: 0351.850569Fax: 0351.850569Ninh Binh IZs MBNo. 2 Vo Thi Sau str, Dong Thanh ward,Ninh Binh town, Ninh Binh provinceTel: 030.876129Fax: 030.873302Thanh Hoa IZs MBNo. 15A Hac Thanh str, Lam Son ward,Thanh Hoa cityTel: 037.850107Fax: 037.850105Nghe An IZs MBHighway 3/2 Hung Phuc ward, Vinh city,Nghe An provinceTel: 038.835146/038.520354Fax: 038.832657Ha Tinh IZs MBNo. 75 Nguyen Chi Thanh str, Ha Tinh town,Ha Tinh provinceTel: 039.881237Fax: 039.881237/ 039.882992Hai Duong IZs MBNo. 57 Quang Trung str, Hai Duong cityTel: 0320.844723Fax: 0320.844723Thai Binh IZs MBNo. 81, Bo Xuyen str, Thai Binh city,Thai Binh provinceTel: 036.740872Fax: 036.740872Thua Thien Hue IZs MBUnit 8 Phu Bai town, Huong Thuy district,Thua Thien Hue provinceTel: 054.861765Fax: 054.861805Da Nang IZs/EPZs MBNo. 58 Nguyen Chi Thanh, Da Nang cityTel: 0511.810653Fax: 0511.83001578 Viet Nam - A Guide for Business and Investment

Quang Nam IZs MBNo. 30 Hung Vuong str, Tam Ky town,Quang Nam provinceTel: 0510.811589Fax: 0510.859869Quang Ngai IZs MB25 Hung Vuong Highway, Quang Ngai city,Quang Ngai provinceTel: 055.828514Fax: 055.828514Dung Quat IZs MBNo. 39 Hai Ba Trung str, Quang Ngai city, Hai BaTrung str, Quang Ngai city, Quang Ngai provinceTel: 055.711788Fax: 055.825828Binh Dinh IZs MBNo. 65 Tay Son, Quy Nhon city, Binh Dinh provinceTel: 056.646257Fax: 056.846616Dak Nong IZs MBNo. 1 Le Lai, Gia Nghia town, Dak Nong provinceTel: 050.544592Fax: 050.544591Ho Chi Minh City IZs/EPZs MBNo. 35 Nguyen Binh Khiem, Dakao ward, Distric 1,Ho Chi Minh cityTel: 08.8290405/08.8290414Fax: 08.8294271Ba Ria - Vung Tau IZs MBNo.124 Vo Thi Sau str, Thang Tam ward,Vung Tau city, Ba Ria - Vung Tau provinceTel: 064.816640Fax: 064.858531Can Tho IZs/EPZs MBNo. 105 Tran Hung Dao, Ninh Kieu district,Can Tho city, Can Tho provinceTel: 071.830238Fax: 071.830773Phu Yen IZs MBNo. 353 Tran Hung Dao, Tuy Hoa town,Phu Yen provinceTel: 057.828250Fax: 057.828949Khanh Hoa IZs MBNo. 13B Hoang Hoa Tham, Nha Trang city,Khanh Hoa provinceTel: 058.527872Fax: 058.527873Dong Nai IZs MBNo. 26 2A road, Bien Hoa 2 Industrial Zone,Dong Nai provinceTel: 061.892378Fax: 061.892379Tay Ninh IZs MBKm 32, An Binh, An Tinh commune, Trang Bang,Tay Ninh provinceTel: 066.882300Fax: 066.882300APPENDIX VIBinh Thuan IZs MBNo. 119 Tran Hung Dao str, Phan Thiet city,Binh Thuan provinceTel: 062.821243Fax: 062.821243Binh Duong IZs MBNo. 5 Quang Trung, Thu Dau Mot town,Binh Duong provinceTel: 0650.831215Fax: 0650.823984Viet Nam - A Guide for Business and Investment 79

Vietnam - Singapore IZs MBNo. 8 Huy Nghi highway, Thuan An, Binh DuongTel: 0650.743901/0650.743902/0650.743904Fax: 0650.743903Chu Lai Open Economic Zone MBNo. 1 Tran Phu, Tam Ky town, Quang Nam provinceTel: 0510812847Fax: 0510812842APPENDIX VIBinh Phuoc IZs MBHighway 14, Tan Phu district, Dong Xoai town,Binh Phuong provinceTel: 0651.887524Fax: 0651.887523Long An IZs MB65B Bao Dinh str, District 2, Tan An town,Long An provinceTel: 072.825449Fax: 072.825442Tien Giang IZs MBNo. 27 Nam Ky Khoi Nghia, district 4,My Tho city, Tien Giang provinceTel: 073.871808Fax: 073.871808Vinh Long IZs MBNo.85 Trung Nu Vuong, district 1,Vinh Long town, Vinh Long provinceTel: 070.820972Fax: 070.820972Dong Thap IZs MBNo. 466 Nguyen Sinh Sac, district 1, Sa Dec town,Dong ThapTel: 067.865471Fax: 067.865471Kon Tum IZs MBNo. 145 Ure str, Kon Tum town, Kon Tum provinceTel: 060.910606Fax: 060.910606Nhon Hoi Economic Zone MBNo. 83 Le Hong Phong, Quy Nhon city,Binh Dinh provinceTel: 056.820957/056.820958(ext.105)Fax: 056.820965Soc Trang IZs MBNo. 146 Hai Ba Trung, district 1, Soc Trang town,Soc Trang provinceTel: 079.611936Fax: 079.611187Ben Tre IZs MBNo. 20 3/2 Str, District 2, Ben Tre town,Ben Tre provinceTel: 075.817718Fax: 075.817718Dak Lak IZs MBNo. 01A, Ba Trieu, Buon Ma Thuot city,Dak Lak provinceTel: 050.856339Fax: 050.856339Quang Binh IZs MBNo. 317 Ly Thuong Kiet str, Dong Hoi city,Quang Binh provinceTel: 052.828513Fax: 052.828516FOREIGN EMBASSIES IN VIET NAMAlgeria, 13 Phan Chu Trinh, HanoiTel: (84-4)8253865Fax: (84-4)826083080 Viet Nam - A Guide for Business and Investment

Argentina, 8th F, Daeha Business Centre,360 Kim Ma, HanoiTel:(84-4)8315578/8315262/8315263Fax: (84-4)8315577Austria, 8th F, Prime Centre,53 Quang Trung, HanoiTel: (84-4)9433050/9433501Fax: (84-4)9433055Canada, 31 Hung Vuong, HanoiTel: (84-4)7345000Fax: (84-4)7345049Chile, Suite 1201-1203, 12F,Tung Shing Square, 2 Ngo Quyen, HanoiTel: (84-4)9351147/48Fax: (84-4)9351150Australia, 8 Dao Tan St., HanoiTel. (84-4)8317755Fax: (84-4)8317711Bangladesh, 7thF, Daeha Centre,360 Kim Ma, HanoiTel: (84-4)7716625Fax: (84-4)7716628Belarus, 52 Tay Ho, HanoiTel: (84-4)7197126Fax: (84-4)719 7125Belgium, 9thF, 49 Hai Ba Trung, HanoiTel: (84-4)9346179-81Fax:(84-4)9346183Brazil, 14 Thuy Khue, HanoiTel: (84-4)8432544Fax: (84-4)8432542Brunei, 27 Quang Trung, HanoiTel: (84-4)9435249/50/51Fax: (84-4)9435201China, 46 Hoang Dieu St., HanoiTel. (84-4) 8453736,Fax: (84-4) 8232826Cuba,65 Ly Thuong Kiet, HanoiTel: (84-4)9424775Fax: (84-4)9422426Czech Republic, 13 Chu Van An, HanoiTel: (84-4)8454131Fax: (84-4)8233996Denmark, 19 Dien Bien Phu, HanoiTel: (84-4) 8231888Fax: (84-4)8231999Egypt, 63 To Ngoc Van, HanoiTel: (84-4)8294999Fax: (84-4)8294997European Union (EU),56 Ly Thai To, HanoiTel: (84-4)9341300Fax: (84-4)9341361APPENDIX VIBulgaria, 5 Van Phuc Quater,Kim Ma, HanoiTel: (84-4)8252908Fax: (84-4)8460856Finland, 31 Hai Ba Trung, HanoiTel: (84-4)8266788Fax: (84-4)8266766Cambodia, 71A Tran Hung Dao, HanoiTel: (84-4)9424788Fax: (84-4)8265225France, 57 Tran Hung Dao St., HanoiTel. (84-4)9437719Fax: (84-4)8437236Viet Nam - A Guide for Business and Investment 81

Germany, 29 Tran Phu St., HanoiTel: (84-4)8430245Fax: (84-4)8453838Laos, 22 Tran Binh Trong, HanoiTel: (84-4) 9424576Fax:(84-4)8228414Hungary, 12thF, Daeha Business Centre,360 Kim Ma, HanoiTel: (84-4)7715714Fax:(84-4)7715716Lybia, A3 Van Phuc Quarter,Kim Ma, HanoiTel: (84-4) 8453379Fax: (84-4) 8454977APPENDIX VIIndia, 58-60 Tran Hung Dao, HanoiTel: (84-4)8244989Fax:(84-4)8244998Indonesia, 50 Ngo Quyen St., HanoiTel: (84-4)8253353Fax: (84-4)8259274Malaysia, 43-45 Dien Bien Phu, HanoiTel: (84-4)7343836Fax: (84-4)7343829Mexico, T11, 14 Thuy Khue, HanoiTel: (84-4)8470947/ 48Fax: (84-4)8470949Iran, 54 Tran Phu, HanoiTel: (84-4)8232068Fax: (84-4)8232120Mongolia, V5, Van Phuc Quarter, HanoiTel: (84-4)8453009Fax: (84-4)8454954Iraq, 66 Tran Hung Dao, HanoiTel: (84-4)9424141Fax: (84-4)9424055Myanmar, A3 Van Phuc Quater,Kim Ma, HanoiTel: (84-4)8453369fax: (84-4)8452404Israel, 68 Nguyen Thai Hoc, HanoiTel: (84-4)8433140Fax: (84-4)8435760Italy, 9 Le Phung Hieu, HanoiTel: (84-4)8256256Fax:(84-4)8267602Japan, 27 Lieu Giai, HanoiTel: (84-4)8463000Fax: (84-4)8463043Korea (Democratic People’s Republic of),25 Cao Ba Quat, HanoiTel: (84-4)8453008Fax: (84-4)8231221Netherlands, 6th F, Daeha Business Centre, 360Kim Ma, HanoiTel: (84-4)8315650Fax: (84-4)8315655New Zealand, 5th Floor, 63 Ly Thai To, HanoiTel: (84-4) 8241481Fax: (84-4)8241480Norway, 56 Ly Thai To, HanoiTel: (84-4) 8262111Fax:(84-4)8260222Palestine, E4B Trung Tu DiplomaticQuarter, HanoiTel: (84-4)852401382 Viet Nam - A Guide for Business and Investment

Panama, Hanoi Central Office Building, 44B LyThuong Kiet, HanoiTel: (84-4)9365213Fax: (84-4)9365214Spain, Deaha Business Center,360 Kim Ma, HanoiTel: (84-4)7715207Fax: (84-4)7715206Philippines, 27B Tran Hung Dao, HanoiTel: (84-4)9437948Fax: (84-4)8265760Sweden, 2 Nui Truc, HanoiTel: (84-4)7260400Fax: (84-4)8232195Poland, 3 Chua Mot Cot St., HanoiTel: (84-4)8452027Fax:(84-4)8236914Switzerland, 15thF, G.P.O. Box 42,44B Ly Thuong Kiet, HanoiTel: (84-4)9346589Fax:(84-4)9346591Romania, 5 Le Hong Phong, HanoiTel: (84-4)8452014Fax: (84-4)8430922Turkey, 4 Da Tuong, HanoiTel: (84-4)8222460Fax:(84-4)8222458Russian, 191 La Thanh, HanoiTel: (84-4)8336991/2Fax: (84-4)8336995Thailand, 63-65 Hoang Dieu St., HanoiTel: (84-4)8235092Fax: (84-4)8235088Singapore, 41-43 Tran Phu St. HanoiTel: (84-4)8233966,Fax: (84-4)7337627Ukraine, 6B Le Hong Phong, HanoiTel: (84-4)7344484Fax: (84-4)7344497South Africa, 3F,31 Hai Ba Trung, HanoiTel: (84-4)9362000Fax:(84-4)9361991South Korea , Deaha BusinessUnited Kingdom, Central Building,31 Hai Ba Trung, HanoiTel: (84-4)9360500Fax: (84-4)9360561APPENDIX VICenter, 360 Kim Ma, HanoiTel: (84-4)8315111- 6Fax: (84-4)8315117United States, 7 Lang Ha, HanoiTel: (84-4)7721500Fax: (84-4)7721510Viet Nam - A Guide for Business and Investment 83

KPMG in VietnamHanoiHo Chi Minh CityLevel 16thLevel 10thVietcombank TowerSun Wah Tower198 Tran Quang Khai 115 Nguyen HueHoan Kiem District, HanoiDistrict 1, Ho Chi Minh CityMain servicesInvestment & Business Development ConsultancyLegal Practices Intellectual Property ServicesTel 84.4.5373262 Fax 84.4. 537328326/41Thai Ha Str., Dong Da Dist., HanoiEmail : incom@hn.vnn.vnWebsite: www.investconsultgroupservices.comTel: +84 (4) 9360380 Tel: +84 (8) 8219266Fax: +84 (4) 9360381 Fax +84 (8) 8219267kpmghanoi@kpmg.com.vnkpmghcmc@kpmg.com.vnAAR offers one of the most comprehensive legal networks of anyinternational firm in the Asia region.When you require local knowledge and experience in Vietnam – orSingapore, China, Hong Kong, Indonesia, Cambodia, Thailand – AARis there, on the ground.Services in VietnamBangkokBeijingBrisbaneHong KongJakartaMelbournePerthPhnom PenhPort MoresbyShanghaiSingaporeSydney•Assurance & Business Advisory Services•Business & Technology Solutions•Tax Consulting & Compliance•Legal Services•Corporate Finance & Recovery•Human Resource Consulting•Executive Search/ Recruitment Serviceswww.aar.com.auHo Chi Minh CityHanoi4th Floor, Saigon TowerUnit 1, 4/F, International Centre29 Le Duan Boulevard, District 1 17 Ngo QuyenHo Chi Minh City, VietnamHanoi, VietnamTel (84) (8) 823 0796 Tel (84) (4) 8 251 215Fax (84) (8) 8251947 Fax (84) (4) 8 251 737Senior Partner: Mr. Ian LydallPartner: Mrs. Dinh Thi Quynh VanEmail: ian.lydall@vn.pwc.comEmail: dinh.thi.quynh.van@vn.pwc.comKELVIN CHIA PARTNERSHIPis an international law firm established in Singapore with offices inVietnam, China, Japan, Thailand, Myanmar, North Korea and Cambodia.With a team of experienced lawyers we are able to service your legalrequirements in foreign investment, commerce, finance, banking, tax,company, labour, insurance, intellectual property, information technologyand telecommunications, energy, mining, real estate, constructionand dispute resolution in Vietnam and beyond.Hanoi Head Office8 Tran Hung Dao, HanoiTel: (84-4) 8 244 852Fax: (84-4) 8 244 853Website: www.pham.com.vnPractice:Contact:Ho Chi Minh City Office8, Nguyen Hue, 1st District,Ho Chi Minh CityTel: (84 8) 8 235 803Fax: (84 8) 8 235 832Company incorporation, Investment, Import &Export, Tax, Banking & Financial, IntellectualProperty, Land and EmploymentPham Vu Khanh Toan, Managing PartnerHANOI BRANCH OFFICEUnit 12-03, 53 Quang Trung StreetTel: (84-4) 822 8787/88, Fax: (84-4) 943 9875E-mail: kcp.hn@kcpartnershiphn.com.vnHO CHI MINH CITY BRANCH OFFICEUnit 1105, Saigon Tower29 Le Duan Street, District 1,Tel: (848) 822-4986 Fax: (848) 822-5441E-mail: kcp@kcpartnership.com.vnWebsite: www.kcpartnership.com84 Viet Nam - A Guide for Business and Investment

Ernst & Young was the first international Big-Four firm to establish inVietnam since 1992. We have offices in Ho Chi Minh City and Hanoi,which are complemented by Ernst & Young worldwide network of107,000 people with offices located in more than 140 countries. Weprovide a full range of professional services.Assurance and AdvisoryBusiness ServicesTaxation ServicesTransaction Advisory ServicesHo Chi Minh City OfficeHanoi Office8th Floor, Saigon Riverside Office Centre 15th Floor, Daeha Business Centre2A-4A Ton Duc Thang Street, District 1 360 Kim Ma Street, Ba Dinh DistrictHo Chi Minh CityHa NoiTel: +84 8 8245252Tel: +84 4 831 5100Fax: +84 8 8245250Fax: +84 4 831 5090Email: eyhcmc@vn.ey.comEmail: eyhanoi@vn.ey.comWebsite: www.ey.com/vnBaker & McKenzie, a leading global law firm, has been providing dedicatedlegal and business services across the spectrum of corporate law in Vietnamfor over 10 years. To find out how we can add value to your business, pleasecontact:13/F, Vietcombank Tower12/F, Saigon Tower198 Tran Quang Khai Street29 Le Duan Blvd.Hoan Kiem DistrictDistrict1Hanoi, VietnamHo Chi Minh City, VietnamTel: +84 4 825 1428Tel: +84 4 829 5585Fax: +84 4 825 1432Fax: +84 4 829 5618www.bakernet.comINVESTIPInvestment & Business ConsultancyTechnology Transfer ConsultancyLegal Advice ServicesInternational Intellectual Property AgencyInformation & PublicationsInvestment and Business Consulting ServicesLegal AdvicesFinancial Consulting ServicesIntellectual Property ServicesHead Office in Hanoi:Add: 61 Ngo Hue, Hai Ba Trung District, HanoiTel: (+84-4) 9764 136/ 9764 138/ 976 4139Fax: (+84-4) 976 4118Email: investpro@fpt.vnWebsite: www.investpro.com.vnHanoi Head Office8 Ton That Thiep Str., Ba Dinh Dist.Tel.: (844) 747-2500 - 747 2508Fax: (844) 747-2504 - 747 2505E-mail: investiphn@netnam.vnHo Chi Minh City Office31 Han Thuyen Str., District 1Tel.: (848) 822 3959 - 829 2400Fax: (848) 822 8603E-mail: investipsgn@hcm.vnn.vnWebsite: http://www.investip.com.vnYKVN is a full service Vietnamese law firm with a diversified national andinternational practice. All the founders of YKVN were trained by White &Case LLP, a New York-based international law firm. YKVN is internationallyrecognized as a leading law firm in Vietnam and has received 4 internationalawards during the last 2 years: “National Law Firm of the Year” for 2004 and2005 by the International Financial Law Review (IFLR); “National Deal Firm of theYear” and “Asset & Corporate Finance Deal of the Year” for 2005 by Asian LegalBusiness (ALB).YKVN has two closely-integrated offices in Hanoi and Ho Chi Minh City.Hanoi OfficeInternational Center Suite 30117 Ngo Quyen Street Hanoi VietnamTel: (84-4) 934 5410Fax: (84-4) 934 5412hanoi.office@ykvn-law.comWebsite: www.ykvn-law.comHo Chi Minh OfficeThe Metropolitan Suite 1602235 Dong Khoi StreetHo Chi Minh City VietnamTel: (84-8) 822 3155Fax: (84-8) 823 6908hcmc.office@ykvn-law.comPBC PARTNERS is a legal and consulting firm having offices in Ho ChiMinh City and Hanoi. Our substantial human resources enables PBCPARTNERS to provide a wide range of professional services in corporatelegal, intellectual property and business & investment. Our contactdetails are as follows:Ho Chi Minh City Head OfficeSuite 1501, 15th Floor,Bitexco Office Building19-25 Nguyen Hue Boulevard,District 1, Ho Chi Minh CityTel. (84-8) 8206448Fax. (84-8) 8206450E-mail. pbc@pbcpartners.comHanoi OfficeSuite 403, 4th Floor,131 Office Building131 Bui Thi Xuan StreetHai Ba Trung District, Hanoihttp://www.pbcpartners.comTel. (84-4) 9743326Fax. (84-4) 9743327E-mail. pbchanoi@pbcpartners.comViet Nam - A Guide for Business and Investment 85