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

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