Circular No. 04/2007/TT-BTM guides the export, import, processing, liquidation of imported goods, and consumption of products by foreign-invested enterprises as stipulated in Decree No. 108/2006/NĐ-CP dated September 22, 2006, detailing and guiding the implementation of certain provisions of the Investment Law.

CIRCULAR

Guidelines for export, import, processing, liquidation of imported goods, and consumption of products by foreign-invested enterprises regulated by Decree No. 108/2006/NĐ-CP dated September 22, 2006 of the Government

concerning detailed regulations and guidance on implementation of certain provisions of the Investment Law

Pursuant to Decree No. 29/2004/NĐ-CP dated January 16, 2004 of the Government on functions, tasks, powers, and organizational structure of the Ministry of Trade;

Pursuant to Decree No. 108/2006/NĐ-CP dated September 22, 2006 of the Government detailing and guiding implementation of certain provisions of the Investment Law;

Pursuant to Decree No. 12/2006/NĐ-CP dated January 23, 2006 of the Government detailing implementation of the Commercial Law regarding international trade activities and agency purchase, sale, processing, and transit of goods with foreign countries;

After consultation with relevant ministries, the Ministry of Trade issues guidelines for export, import, processing, liquidation of imported goods, and consumption of products by foreign-invested enterprises under the Investment Law as follows:

- This Circular guides procedures for exporting products; importing machinery, equipment, raw materials, materials, spare parts, components, and other goods for investment activities; processing goods; liquidating imported goods; and consuming products of wholly foreign-owned enterprises, joint ventures, and foreign parties participating in business cooperation contracts (collectively referred to as foreign-invested enterprises).

I. SCOPE OF REGULATION AND APPLICABLE OBJECTS

- Activities related to the purchase and sale of goods and other activities directly related to the purchase and sale of goods by foreign-invested enterprises as stipulated in the Commercial Law are not within the scope of this Circular.

II. GENERAL PROVISIONS

1. Export

- Foreign-invested enterprises have the right to directly export or entrust the export of products produced by the enterprise.

- For goods subject to export licenses issued by the Ministry of Trade or goods subject to specialized management during export, export procedures shall be carried out in accordance with the provisions of Decree No. 12/2006/NĐ-CP dated January 23, 2006.

2. Import

a) Imported Goods

- Foreign-invested enterprises may directly import or entrust the import of machinery, equipment, raw materials, materials, spare parts, components, and other goods necessary for implementing investment activities in accordance with the objectives specified in the Investment License or Investment Certificate.

- For goods subject to import licenses issued by the Ministry of Trade or goods subject to specialized management during import, import procedures shall be carried out in accordance with the provisions of Decree No. 12/2006/NĐ-CP dated January 23, 2006.

b) Conditions for Import

- Goods intended to form fixed assets and goods imported to serve production by foreign-invested enterprises must be consistent with the operational objectives and scale of the investment project.

- Samples of goods imported for teaching purposes or for product display at exhibition halls or booths of foreign-invested enterprises must be consistent with the training scale or the size of the exhibition hall, exhibition, or product introduction.

3. Other Export and Import Activities

a) Temporary Import for Re-export

- Foreign-invested enterprises are allowed to temporarily import the following goods to implement investment projects in Vietnam:

+ Machinery, equipment, transportation means, molds, samples for processing contracts or to serve production activities through leasing or borrowing;

+ Goods for display at trade fairs, exhibitions, exhibition halls, product introduction booths, or for research, production, sample making for teaching, training, or instruction;

+ Products that have been exported for warranty, repair, or replacement and will be re-exported.

- For temporarily imported goods subject to licenses from the Ministry of Trade or subject to specialized management, import procedures shall be carried out in accordance with the provisions of Decree No. 12/2006/NĐ-CP dated January 23, 2006.

- If temporarily imported goods are sold in the domestic market, foreign-invested enterprises must comply with the provisions of Decree No. 12/2006/NĐ-CP dated January 23, 2006 and fulfill tax obligations as prescribed by law.

- The period for temporary import and re-export shall be agreed upon between the foreign-invested enterprise and its partner and registered with customs authorities.

b) Temporary Export for Re-import

- Foreign-invested enterprises are allowed to temporarily export and re-import the following goods to implement investment projects in Vietnam:

+ Machinery, equipment, transportation means, tools, molds, raw materials to serve production and business activities of the enterprise abroad, for processing contracts, or for warranty, repair, or replacement;

+ Goods for display at trade fairs, exhibitions.

- For temporarily exported goods subject to licenses from the Ministry of Trade or subject to specialized management, export procedures shall be carried out in accordance with the provisions of Decree No. 12/2006/NĐ-CP dated January 23, 2006.

- If temporarily exported goods are sold in the foreign market, foreign-invested enterprises must fulfill tax obligations as prescribed by law.

- The period for temporary export and re-import shall be agreed upon between the foreign-invested enterprise and its foreign partner and registered with customs authorities.

c) In-Place Export and Import

- Foreign-invested enterprises are permitted to carry out in-place export of goods produced in Vietnam under the following conditions:

+ Foreign-invested enterprises conducting in-place export must enter into an export contract specifying clear delivery of goods in Vietnam according to the buyer's designation, which is a foreign trader;

+ Vietnamese traders or other foreign-invested enterprises wishing to conduct in-place import must enter into an import contract with the foreign trader who has entered into a purchase contract with the in-place exporter, specifying clear delivery of goods in Vietnam according to the seller's designation, which is a foreign trader.

Vietnamese traders or foreign-invested enterprises with import needs must enter into an import contract with the foreign trader who has signed a purchase contract with the local exporting enterprise, specifying clearly that delivery shall take place in Vietnam at the designation of the seller, who is the foreign trader.

- A foreign-invested enterprise is permitted to import machinery, equipment, tools, materials for the purpose of creating fixed assets and raw materials for production under the following conditions:

+ The foreign-invested enterprise must enter into an import contract with the foreign trader who has signed a purchase contract with a Vietnamese trader, clearly stipulating the receipt of goods in Vietnam according to the seller's designation, which is the foreign trader.

+ The Vietnamese trader or the foreign-invested enterprise exporting locally must sign an export contract, clearly stipulating the delivery of goods in Vietnam according to the buyer's designation, which is the foreign trader;

d) Importing goods for marketing and promotion

Foreign-invested enterprises that have been granted an Investment License or Certificate of Investment and wish to import goods of the same type as those produced by the enterprise for marketing purposes, product introduction serving investment activities, and for promoting product consumption shall register their import plan with the Ministry of Trade.

4. Liquidation of imported goods

a) Foreign-invested enterprises are allowed to liquidate imported goods including: machinery, equipment, transportation means, raw materials, materials, and other imported goods owned by the enterprise through the following forms: export, sale on the domestic market, donation, destruction.

b) Goods subject to liquidation include:

- Surplus materials and equipment after completing basic construction to form the enterprise;

- Machinery, equipment, transportation means, raw materials, and other goods when the enterprise is still operating;

- Assets of the enterprise after dissolution and cessation of operations.

c) Conditions for liquidating imported goods:

Imported goods can only be liquidated if they meet one of the following conditions:

- For machinery, equipment, and transportation means:

+ Expiration of depreciation period;

+ Damage;

+ To reduce production scale or change business objectives;

+ To replace new machinery, equipment, and transportation means.

- For raw materials and other goods:

+ Surplus, inventory;

+ Not meeting quality standards;

+ Not suitable for the enterprise's production and business activities.

5. Processing

a) Foreign-invested enterprises are allowed to accept processing and reprocessing products in accordance with the objectives specified in the Investment License or Certificate of Investment, specifically:

- Accepting processing from foreign traders, accepting and reprocessing for domestic traders.

- Hiring domestic processing services, placing orders abroad for one or more production stages that the foreign-invested enterprise's machinery and equipment cannot meet in terms of quantity or quality.

b) Processed goods must not belong to the List of Prohibited Export and Import Goods; goods subject to export and import licenses must obtain such licenses before entering into processing contracts with the Ministry of Trade.

c) Foreign-invested enterprises may only engage in processing activities after completing basic construction investment to form the enterprise and beginning production and business operations.

6. Purchase and Sale of Goods between Export Processing Zones and the Domestic Market

a) The purchase and sale of goods between export processing zones and the domestic market are carried out in accordance with Article 15 of Decree No. 108/2006/ND-CP dated September 22, 2006, of the Government. Goods purchased or sold by export processing zones to the domestic market must not belong to the List of Prohibited Export and Import Goods as stipulated in Decree No. 12/2006/ND-CP dated January 23, 2006. Goods subject to licensing or specialized management must be approved in writing by the Ministry of Trade or the specialized management agency before being purchased or sold in the domestic market.

b) The relationship of purchase and sale of goods between export processing zones and the domestic market is an import-export relationship. Export processing zones may directly handle export and import procedures at customs authorities without having to approve import plans with export processing zone management boards, industrial parks, high-tech zones, economic zones, and trading areas.

c) The sale of scrap and waste generated during production shall be carried out in accordance with the guidelines of environmental management agencies.

d) The purchase of office supplies and goods from the domestic market to serve daily operations of export processing zones does not require customs procedures but only needs to be registered with export processing zone management boards, industrial parks, high-tech zones, economic zones, and trading areas.

7. Consumption of Products in the Vietnamese Market

a) Foreign-invested enterprises are allowed to sell wholesale or retail directly or through agents the products they produce in Vietnam. The consumption of products by enterprises is not restricted by geographical area or state control over the prices of goods and services. In cases where goods and services are managed by the state regarding pricing, the price range announced by competent state authorities must be applied. For goods subject to distribution according to specific state regulations, such regulations shall be followed.

b) Foreign-invested enterprises that have been granted an Investment License or Certificate of Investment specifying that they can act as agents to sell products produced in Vietnam for other enterprises continue to be eligible to act as agents for product sales. For other cases, the Ministry of Trade will consider each case individually.

III. DOCUMENTS AND PROCEDURES

1. Documents and Procedures for Export, Import, Processing with Foreign Countries, Liquidation of Imported Goods, and Exemption from Import Duties on Imported Goods

a) Foreign-invested enterprises are allowed to directly handle export, import, processing with foreign countries, exemption from import duties on imported goods, and liquidation of imported goods that have been exempted from import duties at customs authorities.

The liquidation of imported goods that have paid import duties by foreign-invested enterprises is decided by the enterprise based on compliance with the conditions for liquidating imported goods as stated in Clause c, Section 4, Part II of this Circular.

The liquidation of imported goods under the exclusive import business rights reserved for state trading enterprises shall only be permitted after obtaining approval from the Ministry of Trade through a written document.

b) Export, import, processing with foreign countries, and exemption from import tax shall be carried out in accordance with the regulations of the Customs Law.

c) The documents for the liquidation of imported goods that have been exempted from import tax to be submitted to the customs authority include:

- Liquidation of surplus materials and equipment imported after the completion of basic construction works:

+ A letter requesting liquidation (attached with a list of items proposed for liquidation), clearly stating the form of liquidation.

- Liquidation of machinery, equipment, transportation means, and other goods when the enterprise is still operating:

+ A letter from the enterprise requesting liquidation, clearly stating the form of liquidation and the list of machinery, equipment, transportation means, materials, and other goods proposed for liquidation;

+ An inventory of depreciation of machinery, equipment, and transportation means or a report on the inspection of damaged machinery, equipment, and transportation means;

- Liquidation of machinery, equipment, materials, and other goods after a foreign-invested enterprise has a decision to dissolve or cease operations:

+ A letter from the enterprise requesting liquidation, clearly stating the form of liquidation and the list of machinery, equipment, transportation means, materials, and other goods proposed for liquidation;

+ An inventory of depreciation of machinery, equipment, and transportation means or a report on the inspection of damaged machinery, equipment, and transportation means.

+ A decision from the investment permit issuing agency or investment certificate approving the dissolution or cessation of operations of the enterprise;

+ A plan for asset liquidation.

d) The documents for the liquidation of imported goods under the exclusive import business rights reserved for state trading enterprises to be submitted to the Ministry of Trade include:

+ A letter from the enterprise requesting liquidation attached with a list of goods proposed for liquidation;

+ An explanation detailing the reasons for liquidation and the specific form of liquidation (if liquidation is through destruction, then specify the destruction plan; if through sale, gift, or donation, then specify the recipients).

đ) The documents for importing goods for marketing and promotional purposes to be submitted to the Ministry of Trade include:

- A letter requesting importation attached with a list of imported goods (name, quantity, value);

- A report explaining the importation of goods for marketing and promotional purposes (clearly stating the basis for determining the quantity and value of goods proposed for importation).

- A confirmation document of registration for implementing the promotional program (for importation needs for promotion).

- A copy of the Investment Permit or Investment Certificate.

2. Time limit for the Ministry of Trade's resolution

Within five working days from the date of receipt of complete documents, the Ministry of Trade shall issue a written response to the enterprise regarding the approval or disapproval of the enterprise's request.

IV. IMPLEMENTATION PROVISIONS

1. This Circular shall take effect fifteen days after its publication in the Official Gazette.

2. The Circulars No. 23/1999/TT-BTM dated July 26, 1999, No. 22/2000/TT-BTM dated December 15, 2000, No. 26/2001/TT-BTM dated December 4, 2001, and Circular No. 01/2005/TT-BTM dated January 6, 2005 issued by the Ministry of Trade are hereby repealed.