Decision No. 09/2017/QD-TTg guides the implementation of the Protocol on supporting the production of motorized transport vehicles between Vietnam and Belarus.

Pursuant to …;

GUIDELINES FOR IMPLEMENTING THE AGREEMENT BETWEEN THE GOVERNMENT OF THE SOCIALIST REPUBLIC OF VIETNAM AND THE GOVERNMENT OF THE REPUBLIC OF BELARUS ON SUPPORTING THE PRODUCTION OF MOTOR VEHICLES WITH ENGINES IN VIETNAM

Pursuant to the Law on Government Organization dated June 19, 2015;

Pursuant to the Law on Treaties dated April 9, 2016;

Pursuant to the Agreement between the Government of the Socialist Republic of Vietnam and the Government of the Republic of Belarus on supporting the production of motor vehicles with engines in Vietnam signed in Moscow on March 23, 2016 (hereinafter referred to as the Agreement);

Pursuant to the Free Trade Agreement between one party being the Socialist Republic of Vietnam and the other party being the Eurasian Economic Union and its member states (hereinafter referred to as the VN-EAEU FTA) signed in Astana, Kazakhstan on May 29, 2015;

Pursuant to Decree No. 95/2012/NĐ-CP dated November 12, 2012, of the Government, detailing the functions, tasks, powers, and organizational structure of the Ministry of Industry and Trade;

At the proposal of the Minister of Industry and Trade;

The Prime Minister issues this Decision to guide the implementation of the Agreement between the Government of the Socialist Republic of Vietnam and the Government of the Republic of Belarus on supporting the production of motor vehicles with engines in Vietnam.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Decision stipulates the procedures for allocating tariff quotas, the process and procedures for issuing import permits under tariff quotas, the rates of import duties within and outside tariff quotas, and the mechanism for coordination among state agencies to implement the import mechanism under tariff quotas for motor vehicles with engines and spare parts and components within the framework of the Agreement.

Article 2. Applicability

1. Competent State Management Authority.

2. Joint ventures meeting the conditions prescribed in Article 4 of this Decision.

Article 3. Explanation of Terms

In this Decision, the following terms shall be understood as follows:

1. Joint venture is a legal entity established by one side being JSC "Minsk Automobile Plant" - the management company of "BELAUTOMAZ" (MAZ) of the Republic of Belarus, or a replacement or reorganized company of MAZ at the request of the Belarusian side, and the other side being a Vietnamese enterprise of interest on Vietnamese territory in accordance with Vietnamese laws.

2. Motor vehicles with engines include certain types of trucks (N) and motor vehicles with engines carrying 10 or more passengers including the driver (M2, M3) as agreed upon by MAZ and the Vietnamese enterprise of interest.

3. Spare parts and components of motor vehicles with engines refer to a set of spare parts and components imported into Vietnam by the joint venture and necessary for the industrial assembly of motor vehicles with engines, excluding those produced in Vietnam.

4. Localization rate means the domestic value-added calculated according to the following formula:

a) Cost of Vietnamese raw materials means the value of raw materials, spare parts, or goods of Vietnamese origin and meeting the criteria of origin in accordance with Chapter 4 (Origin Rules) of the VN-EAEU FTA.

b) Direct labor costs include wages, bonuses, and other benefits of workers directly involved in production as provided for by Vietnamese law;

c) Direct common costs include, but are not limited to administrative and commercial expenses; costs of fixed assets related to the production process (rent, depreciation of buildings, taxes, mortgage interest); factory and equipment rental and interest payments; factory protection costs; insurance costs (factory, equipment, and raw materials used in the production of goods); public utility service costs (energy, electricity, water, and other public utility costs related to the production of goods); research and development, design, and engineering costs; dyeing, molds, tools, depreciation, maintenance, and repair costs of factories and equipment; copyright or license fees (related to machines and technologies with copyrights used in the production process or the right to produce goods); material and product testing and inspection costs; warehouse costs at the factory; recyclable waste processing costs; and costs used in calculating the value of raw materials, that is, port fees, customs clearance fees, and import duties payable on taxable portions.

d) Profit means the net profit of the joint venture after deducting all taxes and fees as prescribed by Vietnamese law;

đ) Final consumer price means the price of goods on the sales invoice.

Article 4. Requirements for Joint Ventures

Joint ventures meeting the conditions include:

1. A legal entity established by one side being JSC "Minsk Automobile Plant" - the management company of "BELAUTOMAZ" (MAZ) of the Republic of Belarus, or a replacement or reorganized company of MAZ at the request of the Belarusian side, and the other side being a Vietnamese enterprise of interest on Vietnamese territory in accordance with Vietnamese laws.

2. MAZ may establish a joint venture for producing trucks (N) and another joint venture for producing motor vehicles with engines carrying 10 or more passengers including the driver (M2, M3) to produce motor vehicles with engines in the Socialist Republic of Vietnam.

3. The portion of capital contributed by Vietnamese enterprises in the joint venture must reach at least 50% of the total registered capital of the joint venture.

4. The joint venture must be established and operate for a minimum period of 10 years and a maximum period of 30 years.

5. MAZ or a replacement or reorganized company of MAZ shall not transfer its capital in the joint ventures to any third party from a third country.

6. The localization rate that the joint venture must achieve will gradually increase, reaching 40% in 2020 and 60% in 2026.

7. Motor vehicles with engines produced by the joint venture for use in the Socialist Republic of Vietnam must meet technical requirements, standards, and conformity assessment procedures as prescribed by Vietnamese laws.

Chapter II

QUOTA DUTY LIMIT

Article 5. Quantity of Quota Duty

1. The total quantity of tariff quotas for all joint ventures until 2020 is as follows:

2. The Ministry of Industry and Trade allocates annual tariff quotas to joint ventures based on the total quota quantity specified in Clause 1 of Article 5 of this Decision and the actual implementation of the production plan submitted by the joint venture to the Ministry of Industry and Trade.

3. The quantity of tariff quotas allocated for the following year may be reduced depending on the achievement of the planned localization rate of the joint venture and the implementation of the previous year's tariff quota according to the following formula:

 Where:

a) M is the quota duty for the joint venture as specified in Clause 1 of Article 5 of this Decision;

b) A is the percentage of the planned localization rate of the previous year that was not achieved;

c) B is the quota duty specified in Clause 1 of Article 5 of this Decision that was not fully utilized in the previous year and carried over to the following year;

d) C is 30% of M allocated for the following year if the joint venture only implements between 50 - 80% of the quota duty of the previous year (M of the preceding year) as specified in Clause 1 of Article 5 of this Decision;

đ) D is 50% of M allocated for the following year if the joint venture only implements less than 50% of the quota duty of the previous year (M of the preceding year) as specified in Clause 1 of Article 5 of this Decision.

4. In case there is an adjustment to the quota duty quantity specified in Clause 1 of Article 5 of this Decision, the Ministry of Industry and Trade shall notify the Belarus side before January 31 each year.

Article 6. Import Duties within and outside Quotas

1. The rate of import duty within the tariff quota is 0% if the goods meet the origin criteria as prescribed in Chapter 4 (Origin Rules) of the VN-EAEU FTA and are confirmed by a Certificate of Origin issued clearly indicating a value added content of 55% calculated in accordance with Chapter 4 (Origin Rules) of the VN-EAEU FTA. The value of Vietnamese raw materials is excluded from the calculation of the value added content.

2. For the rate of import duty outside the quota:

a) In case goods have a Certificate of Origin under the Vietnam-EAEU FTA Agreement (Certificate of Origin model EAV), the tariff rate for imports outside the quota is the current import tariff rate committed to under the Vietnam-EAEU FTA Agreement;

b) In case goods are not accompanied by a Certificate of Origin model EAV, the tariff rate for imports outside the quota shall be determined according to relevant Vietnamese tax laws.

Chapter III

PROCEDURE FOR GRANTING IMPORT LICENSES UNDER QUOTAS AND IMPORTS UNDER QUOTAS

Article 7. Procedures and formalities for issuing import licenses under tariff quotas

1. Joint ventures submit their annual production plans to the Ministry of Industry and Trade, which must include:

a) Types and quantities of vehicles expected to be produced;

b) Detailed list of components in spare parts and components;

c) Tariff codes corresponding to motor vehicles and spare parts and components expected to be imported at the 8-digit level according to the current Vietnamese Export and Import Goods List;

d) Progress towards achieving the localization ratio as committed to in Clause 6, Article 4 of this Decision;

đ) Expected implementation of technology transfer agreements and human resource training.

2. Within thirty days from receiving the production plan sent by the joint venture, the Ministry of Industry and Trade will notify the result of approving this production plan. In cases where clarification or additional information on the production plan is required, the Ministry of Industry and Trade will notify the joint venture with specific requirements for the additional information to be provided.

Within ten days from receiving the supplementary information for the production plan submitted by the joint venture, the Ministry of Industry and Trade will notify the approval or rejection result of the plan.

3. Based on the annual production plan of the joint venture approved by the Ministry of Industry and Trade, the joint venture submits an application to the Ministry of Industry and Trade requesting issuance of an import license under the quota for importing motor vehicles and/or spare parts and components, along with a Certificate of Origin model EAV issued by the competent authority of the Republic of Belarus in accordance with the Protocol. The application must clearly state:

a) The quantity registered for all vehicle models, the expected import time;

b) The eight-digit tariff headings in the current Vietnamese Export and Import Goods List, consistent with the approved production plan (excluding spare parts and components of motor vehicles produced within the territory of Vietnam).

4. The Ministry of Industry and Trade issues an import license under the quota based on the approved production plan and the specific import request of the joint venture within fourteen days from receipt of the complete application documents. This license may be issued with a validity period until December 31 of each year.

Article 8. Import Procedures

Based on the import license under the quota issued by the Ministry of Industry and Trade and Vietnamese law provisions, customs authorities at the ports where import procedures are carried out will consider allowing clearance of imported consignments according to the principle of automatic rollover reduction up to the quota volume for each item specified in the license.

Article 9. Revocation of Quota Import Licenses

A quota import license may be revoked if the joint venture is found to violate any of the following circumstances:

1. The joint venture does not operate in accordance with Vietnamese law.

2. The joint venture fails to meet the localization rate requirement within ten years from the date the Protocol becomes effective as committed in Clause 6, Article 4 of this Decision.

3. MAZ or the replacement company or organization of MAZ transfers its shareholding in the joint venture to a third party from another country.

4. The joint venture fails to fulfill its obligations under agreements related to technology transfer.

5. The joint venture does not implement specific activities to contribute to the development of the Vietnamese automotive parts manufacturing industry; develop an automobile maintenance and repair service system; train technical skills for local labor and support motor vehicles, spare parts, and components produced by the joint venture to penetrate other markets, including the Eurasian Economic Union.

Article 10. Change of Authorized Enterprise under the Protocol

The Ministry of Industry and Trade will take the lead in reviewing and evaluating the proposal from Belarus regarding a replacement enterprise for MAZ or a newly organized enterprise from MAZ based on criteria set forth in the Decree, and confirm to Belarus that the new enterprise meets the conditions for authorization within twenty-eight days from receipt of the request and necessary documents.

Chapter IV

MECHANISM FOR COORDINATION OF MANAGEMENT BETWEEN GOVERNMENT AGENCIES

Article 11. Mechanism for coordination in issuing import permits under quota

1. The Ministry of Industry and Trade shall take the lead:

a) Implement the procedure for examining and issuing import permits under tariff quotas;

b) Changing the Belarusian enterprise and notifying relevant ministries and agencies if it agrees with Belarus's proposal for such change.

2. The Ministry of Industry and Trade shall take the lead in coordinating with relevant ministries to examine and approve the production plans of joint ventures to issue import permits under tariff quotas. In this regard:

a) The Ministry of Science and Technology shall carry out the examination and approval of the degree of disaggregation of imported spare parts and components listed in the production plan in accordance with current regulations;

b) The Ministry of Finance shall review the compatibility of the List of motorized vehicles and spare parts and components proposed to enjoy tax exemption benefits under tariff quotas in the production plan at the level of eight-digit detail with the current Vietnamese Export and Import Goods List.

3. Before January 31 each year, the Ministry of Industry and Trade shall notify the Ministry of Finance about the adjusted quantity of tariff quotas.

4. The Ministry of Industry and Trade shall notify the Ministry of Finance about the List of motorized vehicles and spare parts and components expected to be imported by each joint venture immediately after approving the production plan of the joint venture.

5. The Ministry of Planning and Investment shall implement the mechanism for announcing the list of domestically produced spare parts according to its functions and tasks, and update for joint ventures about production facilities in Vietnam that have produced specific types of spare parts with detailed specifications and technical standards. At the same time, the Ministry of Planning and Investment shall inspect the process of joint ventures directly negotiating with production facilities regarding orders for spare parts for automobiles manufactured and assembled in Vietnam.

Chapter V

INSPECTION AND REPORTING REGIME

Article 12. Inspection

1. The Ministry of Industry and Trade shall inspect the production process; evaluate the implementation of tariff quotas, the fulfillment of localization rate commitments by each joint venture, and adjust the amount of duty-free tariff quotas for the following year.

2. The Ministry of Finance shall inspect the clearance of imported consignments to ensure that motorized vehicles and/or spare parts and components are imported tax-free in accordance with the List of motorized vehicles and spare parts and components sent by the Ministry of Industry and Trade and within the import permit issued by the Ministry of Industry and Trade under tariff quotas.

3. The Ministry of Transport shall inspect motorized vehicles and spare parts and components produced by joint ventures for use on Vietnamese territory to ensure that these vehicles and components meet the technical standards and requirements and conformity assessment procedures stipulated in relevant Vietnamese laws and regulations.

Article 13. Reporting Obligations

1. Joint ventures are obligated to comply with Vietnamese law.

2. By January 15 each year, joint ventures must report to the Ministry of Industry and Trade on their business operations in the previous year, the implementation of tariff quotas, and the execution of the localization rate plan, including a clear record of:

a) The quantity of motorized transport vehicles and spare parts and components imported duty-free;

b) Types and quantities of vehicles produced;

c) Information necessary to calculate the localization rate (costs of Vietnamese raw materials, direct labor costs, direct general costs, profit, final consumer price);

d) The latest update of the annual financial report.

Chapter VI

IMPLEMENTING PROVISIONS

Article 14. Effective Date

This Decision takes effect from May 15, 2017.

After the Protocol comes into force, every five years, the Ministry of Industry and Trade shall coordinate with relevant ministries and agencies to review and assess the fulfillment of localization rate commitments by each joint venture and consider recommending the revocation of the joint venture's permit if, after ten years, the joint venture fails to achieve the localization rate committed to in Clause 6, Article 4 of this Decision.

Article 15. Responsibility for Implementation

2. The Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial and centrally-administered city People's Committees are responsible for implementing this Decision./.

2. The Ministers of the Ministries of Industry and Trade, Finance, Planning and Investment, Science and Technology, and Transport are responsible for implementing this Decision./