Decision No. 108/2003/QĐ-TTg On the establishment and issuance of the Operating Regulations for the Chu Lai Open Economic Zone, Quang Nam Province

Pursuant to …;

On the establishment and issuance of the Operating Regulations of

the Chu Lai Open Economic Zone, Quang Nam Province

___________________

PRIME MINISTER

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the conclusions of the Politburo as stated in Notification No. 79-TB/TW dated September 27, 2002;

The Prime Minister issues this Decision on principles, criteria, and allocation standards for state budget investment capital development phase 2016-2020.

DECISION:

Article 1. Establish the Chu Lai Open Economic Zone within the territory of Quang Nam Province.

Article 2. Issue the Operating Regulations of the Chu Lai Open Economic Zone attached hereto.

Article 3. The Standard Measurement Quality Control Department shall be responsible for organizing and guiding the implementation of the Regulations adopted herein.

Article 4. The Ministers of the Ministries of Planning and Investment, Finance, Defense, Public Security, Home Affairs, Natural Resources and Environment, Construction, Trade, Heads of Ministries, ministerial-level agencies, agencies under the Government, and the Chairman of the People's Committee of Quang Nam Province shall be responsible for implementing this Decision./.

REGULATIONS ON THE OPERATION

OF THE CHU LAI OPEN ECONOMIC ZONE
(Issued together with Decision No. 108/2003/QĐ-TTg dated June 5, 2003)

of the Prime Minister)

Chapter 1:

GENERAL PROVISIONS

Article 1. These regulations stipulate the operation of the Chu Lai Open Economic Zone (hereinafter referred to as the CLOEZ).

Article 2. The CLOEZ is a defined geographic area within the national territory and sovereignty but has a separate economic space with the most favorable investment and business environment according to current regulations, including technical-social infrastructure and management policies and mechanisms that facilitate business activities in accordance with market mechanisms to encourage investment and exports.

The CLOEZ includes the town of Nui Thanh and the communes of Tam Nghia (excluding Chu Lai airport and certain locations determined by the Quang Nam Provincial People's Committee), Tam Quang, Tam Hai, Tam Giang, Tam Hoa, Tam Hiep, Tam Anh, Tam Tien, Tam Xuan 1 in Nui Thanh District; the communes of Tam Thanh, Tam Phu, Tam Thang and An Phu Ward in Tam Ky City, Quang Nam Province; with geographic boundaries determined by geographic coordinates from 108⁰2616 to 108⁰4404 degrees East Longitude and from 15⁰2338 to 15⁰3843 degrees North Latitude :

a) To the East, it borders the East Sea,

b) To the West, it borders the communes of Tam My and Tam Thanh, Nui Thanh District, Quang Nam Province,

c) To the South, it borders Binh Son District, Quang Ngai Province,

d) To the North, it borders Thang Binh District, Quang Nam Province.

Article 3. The CLOEZ is established with the following objectives :

- To apply new systems, mechanisms, and policies to create an equal investment and business environment in line with international practices for various types of businesses of domestic and foreign economic organizations, thereby gaining more experience for international and regional economic integration;

- To apply new models and driving forces for economic development, addressing issues in current economic policy and management mechanisms while not having the conditions to implement nationwide;

- To develop production, creating high-quality and competitive products, promoting exports and expanding into global markets;

- To create jobs and promote training and improve the quality of human resources;

- To exploit advantages in natural conditions, geographical and political positions in international trade and services to promote socio-economic development in Quang Nam Province, contributing to creating momentum for socio-economic development throughout the Central region and narrowing the development gap between this region and other regions in the country.

Article 4. The Government of the Socialist Republic of Vietnam encourages and protects domestic organizations and individuals of all economic sectors, overseas Vietnamese, and foreign investors participating in investment and operations in the CLOEZ in the following fields: infrastructure and urban development investment; industrial development; urban development; trading, service, tourism, entertainment, finance-banking, transportation, insurance, education-training, healthcare, housing, import-export of goods, and all other production and business activities in accordance with Vietnamese laws and international treaties to which Vietnam is a party.

Article 5. Domestic enterprises of all economic sectors and foreign-invested enterprises operating in the CLOEZ are subject to and benefit from the incentives provided in these regulations, other provisions of Vietnamese law, and international treaties to which Vietnam is a party.

Article 6. In addition to the rights granted by Vietnamese law and international treaties to which Vietnam is a party, enterprises operating in the CLOEZ enjoy the following rights :

1. To use infrastructure works, public utilities, and common services for the CLOEZ such as roads, ports, technical infrastructure systems, street lighting, electricity supply, water supply, telecommunications, at agreed prices with infrastructure business enterprises.

2. To enjoy investment incentives stipulated in these regulations.

3. To transfer land use rights and assets attached to the land during the lease period according to the law, consistent with the project's intended land use purpose. In case there is a change in the initial investment purpose of the project, the transfer of land use rights and assets attached to the land can only be carried out after approval by the competent authority.

4. To mortgage the value of land use rights and assets attached to the land during the lease period with credit institutions operating in Vietnam and foreign credit institutions in accordance with the law.

Article 7. The CLOEZ will be developed through the following main sources of capital:

- State budget funds to support the construction of important infrastructure projects essential for the operation of the CLOEZ.

- State credit investment development funds.

- Capital of domestic enterprises and residents: through direct investment projects and forms of issuing construction bonds or advance funding for users who need infrastructure. Expand the form of joint financing.

- Foreign capital: strongly encouraging the attraction of foreign direct investment, including the application of BOT, BT, BTO investment forms; capital of credit organizations, capital of foreign organizations and individuals.

Technical and social infrastructure projects of the CLOEZ will be included in the list of ODA-funded projects.

Chapter 2:

ORGANIZATION AND OPERATION OF THE CHU LAI OPEN ECONOMIC ZONE

Article 8. The CLOEZ consists of two areas: the Duty-Free Area and the Duty-Paying Area. The scale and location of each area will be determined in the Detailed Plan of the CLOEZ.

The duty-free zone within the Chu Lai International Transshipment Terminal (hereinafter referred to as the Duty-Free Zone) is the area determined in the detailed planning attached to a part of the Ky Ha Port (Free Port Area). The Duty-Free Zone is enclosed by a physical fence from surrounding areas. There is no residential area within the Duty-Free Zone.

The bonded zone is the remaining area of the Chu Lai International Transshipment Terminal outside the Duty-Free Zone. Within the bonded zone, there are industrial zones, export processing zones, special entertainment zones, tourist areas, residential and administrative areas.

Article 9. Activities of the Duty-Free Zone associated with the Free Port Area at the Ky Ha Port include production activities for export goods and goods for immediate consumption (including processing, recycling), trade in goods (including export, import, transshipment, temporary import for re-export, distribution, retail supermarket), trade in services (classification, packaging, transportation and delivery of transit goods, storage, warehousing, postal, telecommunications, financial, banking, transport, insurance, entertainment, catering), promotion of trade (product introduction, exhibitions; establishment of branch offices and representative offices of domestic and foreign companies, including financial and banking organizations), and other trading activities.

Article 10. The exchange of goods and services between the Duty-Free Zone and foreign countries and among businesses within the Duty-Free Zone shall be treated as exchanges between foreign countries. Economic organizations operating within the Duty-Free Zone are allowed to export to and import from foreign countries all goods and services not prohibited by Vietnamese law. Goods imported into the Duty-Free Zone from abroad or exported from the Duty-Free Zone to foreign countries are exempt from import duties and export duties.

There is no limitation on the storage time of goods within the Duty-Free Zone.

For the Free Port Area at the Ky Ha Port, foreign vessels are permitted to directly enter the port for cargo operations without undergoing immigration procedures for crew members, except for vessel clearance procedures at buoy number 0.

Article 11. Goods entering and exiting the bonded zone within the Chu Lai International Transshipment Terminal must comply with the laws regarding commodity types, export duties, and import duties, but the most favorable customs procedures shall be applied.

Goods can freely circulate between the bonded zone and the domestic market.

Article 12. The exchange of goods between the Duty-Free Zone and the bonded zone within the Chu Lai International Transshipment Terminal and the domestic market shall be treated as exchanges between foreign countries and Vietnam, and must comply with the provisions of Vietnamese law governing the management of export and import goods.

Individuals and economic organizations within the bonded zone and the domestic market are only allowed to import goods and services from the Duty-Free Zone that are not prohibited by Vietnam for import, and to export goods and services to the Duty-Free Zone that are not prohibited by Vietnam for export.

Goods imported from the Duty-Free Zone into the bonded zone and the domestic market, or goods exported from the domestic market and the bonded zone into the Duty-Free Zone, must pay import duties or export duties and be subject to inspection and supervision by the customs checkpoint.

Raw materials, supplies, and goods imported by enterprises within the Duty-Free Zone from the international market but not fully utilized, along with by-products still having commercial value, may be sold in the domestic market after completing customs procedures.

Investment projects for producing export goods and transporting transit goods shall be implemented according to general regulations.

Article 13. Foreign investors are permitted to invest in international telecommunications services for the exclusive use of the Chu Lai International Transshipment Terminal, following the integration roadmap committed by Vietnam, with service fees determined by the investors themselves.

Chapter 3

INVESTMENT INCENTIVES

Article 14.

1. Direct foreign investment projects in the Chu Lai International Transshipment Terminal are approved through the registration process for investment license issuance. Domestic investment projects are reviewed and approved according to current regulations with the simplest procedures.

2. All investment projects in the Chu Lai International Transshipment Terminal shall enjoy maximum incentives applicable to areas with particularly difficult socio-economic conditions under the Law on Foreign Investment in Vietnam 1996, the Law Amending and Supplementing Certain Provisions of the Law on Foreign Investment in Vietnam 2000, and the Law Encouraging Domestic Investment (amended) 1998, as well as other incentives under international treaties to which Vietnam is a party. In cases where different legal documents provide different levels of incentives for the same issue, the highest level of incentive shall apply.

Article 15.

1. Goods and services produced and consumed in the Duty-Free Zone and goods and services imported from abroad into the Duty-Free Zone are exempt from value-added tax.

2. Goods and services from the domestic market and the bonded zone brought into the Duty-Free Zone are subject to a zero percent value-added tax rate; goods and services from the Duty-Free Zone brought into the bonded zone and the domestic market must pay value-added tax at the current prevailing rates.

3. Goods and services subject to special consumption tax produced and consumed in the Duty-Free Zone or imported from abroad into the Duty-Free Zone are exempt from special consumption tax.

4. Goods and services subject to special consumption tax brought from the Duty-Free Zone into the bonded zone and the domestic market must pay special consumption tax.

5. Goods originating from the bonded zone and the domestic market and goods imported from abroad into the Duty-Free Zone are exempt from import duties.

6. Goods produced, processed, recycled, or assembled in the Duty-Free Zone when exported to foreign countries are exempt from export duties.

7. Goods produced, processed, recycled, or assembled in the Duty-Free Zone using imported raw materials and components from abroad when imported into the domestic market of Vietnam only need to pay import duties on the portion of imported raw materials and components constituting the product or goods.

Article 16. Organizations and individuals who successfully mobilize official development assistance funds and direct foreign investment projects in the Chu Lai International Transshipment Terminal shall be rewarded according to the Regulations issued by the Management Board of the Chu Lai International Transshipment Terminal, after obtaining approval from the Ministry of Finance.

Article 17. Domestic enterprises belonging to various economic sectors investing in production and business at the Chu Lai Open Economic Zone shall be provided with state credit loans from the Development Support Fund in accordance with current regulations.

Article 18. Allow Vietnamese individuals, overseas Vietnamese residents, foreigners permanently residing in Vietnam, and foreign investors to invest in constructing housing for sale or lease; to invest in building infrastructure for lease or transfer of land use rights after infrastructure development within the Chu Lai Open Economic Zone. Permit overseas Vietnamese residents, foreigners permanently residing in Vietnam, and foreign investors to purchase housing within the Chu Lai Open Economic Zone.

Article 19. Apply a single pricing policy for goods, services, and land rental fees for both domestic and foreign individuals and businesses without distinction.

Chapter 4:

LAND USE

Article 20. The entire area of land and water bodies planned for investment and development in the Chu Lai Open Economic Zone shall be allocated once to the Management Board of the Chu Lai Open Economic Zone. The Management Board of the Chu Lai Open Economic Zone shall organize compensation and clearance according to general regulations to allocate land and lease land that have been compensated and cleared to investors. Allocation and leasing of land and water bodies for specific projects shall be decided by the Management Board of the Chu Lai Open Economic Zone based on project needs, regardless of the scale of area. The Management Board of the Chu Lai Open Economic Zone shall uniformly manage and be responsible for the effective use of allocated land and water bodies.

Individuals and domestic economic organizations allocated land or leased land, and foreign organizations and individuals leasing land to implement investment projects.

Article 21. The rent for land shall be determined by the Management Board of the Chu Lai Open Economic Zone for each project and each phase in accordance with actual conditions and ensuring incentives for investment based on the framework price set by the State.

Pilot auctioning of land use rights and tendering of projects including land use rights in the allocation and leasing of land in the Chu Lai Open Economic Zone for investors.

Article 22. Infrastructure Development Companies in the Chu Lai Open Economic Zone shall be permitted by the Management Board of the Chu Lai Open Economic Zone to construct and manage public works, provide services related to infrastructure, transfer land use rights, and lease land to other businesses, only required to register with the Management Board of the Chu Lai Open Economic Zone regarding the purpose of land use.

The transfer price of land use rights and subleasing of land shall be implemented through market mechanisms.

Article 23. Enterprises and organizations in the Chu Lai Open Economic Zone must submit application documents to the Management Board of the Chu Lai Open Economic Zone before constructing projects. The Management Board of the Chu Lai Open Economic Zone shall issue a decision within seven days from the date of receiving complete valid documents.

Project management within the Chu Lai Open Economic Zone shall be carried out in accordance with national regulations.

Chapter 5:

FINANCIAL REGIME, LABOR, BUSINESS ORGANIZATION, EXPORTS AND IMPORTS, RESIDENCE AND COMMUNICATION INFORMATION

Article 24.

1. Foreigners and overseas Vietnamese residents researching the market and preparing for investment, participating in work, investment, and business activities in the Chu Lai Open Economic Zone and their family members shall be granted multiple-entry visas with validity periods corresponding to their working and investment periods in the Chu Lai Open Economic Zone.

2. Residency and temporary residence within the Chu Lai Open Economic Zone shall be implemented in accordance with the regulations of the Quang Nam Provincial Public Security Department.

3. The Ministry of Public Security shall guide the Quang Nam Provincial Public Security Department in implementing the above provisions.

Article 25. Transactions such as buying, selling, transferring, and other commercial dealings between economic organizations and individuals within the Chu Lai Open Economic Zone may be conducted in freely convertible currency through bank accounts. Ordinary goods transactions serving daily life shall be settled in Vietnamese Dong.

Article 26.

1. Banks operating within the Chu Lai Open Economic Zone may open foreign exchange counters in accordance with current regulations.

2. Goods transported into or out of the Chu Lai Open Economic Zone must be priced in foreign currency; all fees submitted to state management agencies within the Chu Lai Open Economic Zone shall be calculated in Vietnamese Dong, while other fees may be calculated in foreign currency or Vietnamese Dong.

Chapter 6:

STATE MANAGEMENT OF THE OPEN ECONOMIC ZONE CHU LAI

Article 27. The Management Board of the Chu Lai Open Economic Zone, established by the Prime Minister, aims to centrally and uniformly manage operations across investment and economic development fields in the Chu Lai Open Economic Zone.

The Management Board of the Chu Lai Open Economic Zone is a state management agency with legal personality, bearing the national emblem seal, having staffing and operational funds provided by the state budget, and being the focal point for balanced basic construction capital from the state budget.

The Director of the Management Board of the Chu Lai Open Economic Zone shall be appointed by the Prime Minister. Deputy Directors shall be appointed by the Chairman of the People's Committee of Quang Nam Province.

Ministries of Trade, Defense, Public Security, Construction, Finance, Planning and Investment, Natural Resources and Environment, General Administration of Tourism, and relevant agencies shall cooperate with the People's Committee of Quang Nam Province to authorize and guide the Management Board of the Chu Lai Open Economic Zone to effectively implement a one-stop administrative mechanism.

Article 28. The Management Board of the Chu Lai Open Economic Zone shall perform tasks and powers prescribed for provincial industrial zone management boards, border economic zone management boards, and the regulations stipulated herein.

The Management Board of the Chu Lai Open Economic Zone has the following tasks and powers:

1. Develop the overall master plan and operational charter of the Chu Lai Open Economic Zone for submission to the Quang Nam Provincial People's Committee for approval by the Prime Minister; prepare detailed plans for submission to the Ministry of Construction for approval; organize the dissemination, guidance, and inspection of the implementation of the overall master plan, detailed plans, and operational charter.

2. Develop a list of investment projects and annual basic construction investment plans for submission to the competent authority for approval and organization of implementation.

3. Issue business registration certificates, investment permits, investment incentives certificates, and origin certificates for goods in the Chu Lai Open Economic Zone and other certificates authorized by the competent state authority.

4. Allocate or lease land and water bodies to investors to implement investment projects.

5. Develop pricing frameworks and fees for submission to the competent authority for issuance and implementation in the Chu Lai Open Economic Zone.

6. Serve as the focal point for resolving issues arising during the formation, implementation, and operation of investment, business, and activities within the Chu Lai Export Processing and Industrial Zone (KKTM Chu Lai).

7. Coordinate with local authorities and relevant agencies to ensure all activities within the Chu Lai Export Processing and Industrial Zone comply with this Regulation and the Operating Regulations of the Chu Lai Export Processing and Industrial Zone.

8. Carry out tasks related to managing and utilizing budget revenues reinvested within the Chu Lai Export Processing and Industrial Zone in accordance with regulations; manage construction projects funded by state budgets within the Chu Lai Export Processing and Industrial Zone.

9. Organize, implement, introduce, and negotiate to promote domestic and foreign investments.

Article 29. The state budget will support infrastructure investment in the Chu Lai Export Processing and Industrial Zone corresponding to the revenue generated within the zone as follows:

a) 100% of the revenue for the first ten years from the date of the Decision on establishment;

b) 50% of the revenue from the eleventh year to the twentieth year;

c) From the twenty-first year onwards, it shall be implemented according to general regulations.

Allow the Management Board of the Chu Lai Export Processing and Industrial Zone to use land funds to generate capital for infrastructure development.

The Management Board of the Chu Lai Export Processing and Industrial Zone is permitted to issue domestic construction bonds to raise investment capital beyond the control limit set for Quang Nam Province.

The Management Board of the Chu Lai Export Processing and Industrial Zone may collect fees or charges for using infrastructure and public utility facilities within the Chu Lai Export Processing and Industrial Zone.

Article 30. The People's Committee of Quang Nam Province is responsible for:

1. Directing the preparation of the overall master plan and Operating Regulations of the Chu Lai Export Processing and Industrial Zone for approval by the Prime Minister; directing the preparation of detailed plans for approval by the Ministry of Construction; implementing management of projects in accordance with approved planning, authorizing the Management Board of the Chu Lai Export Processing and Industrial Zone to approve domestic investment projects within its authority; approving the list of development investment projects and annual basic construction investment plans within the Chu Lai Export Processing and Industrial Zone.

2. Deciding on exemptions and reductions in land rental fees and supporting training costs for workers within the Chu Lai Export Processing and Industrial Zone.

3. Coordinating with relevant ministries and sectors to organize the management of the Chu Lai Export Processing and Industrial Zone.

4. Directing and creating conditions for the Management Board of the Chu Lai Export Processing and Industrial Zone to fully perform the tasks stipulated in this Regulation.

5. Directing the People's Committees of Tam Ky City and Nui Thanh District to carry out land clearance and coordinating with functional agencies of the province to work with the Management Board of the Chu Lai Export Processing and Industrial Zone to implement measures to ensure security and social order, facilitating the operations of enterprises within the Chu Lai Export Processing and Industrial Zone.

Article 31. Ministries and sectors performing state management functions over the Chu Lai Export Processing and Industrial Zone and delegating to the Management Board of the Chu Lai Export Processing and Industrial Zone the performance of functions and tasks within their jurisdiction in areas such as investment, construction, planning, natural resource and environmental management, urban management and development, land management, labor, import and export, and other fields as prescribed by law and this Regulation.

For areas not delegated to the Management Board of the Chu Lai Export Processing and Industrial Zone, ministries and sectors and the People's Committee of Quang Nam Province shall perform state management functions over the Chu Lai Export Processing and Industrial Zone by organizing subordinate units within the Chu Lai Export Processing and Industrial Zone to execute their duties and powers to facilitate the activities of investors and enterprises within the Chu Lai Export Processing and Industrial Zone.

Article 32. Customs of the Chu Lai Export Processing and Industrial Zone shall supervise and manage goods circulating between the non-tariff area and abroad and goods circulating between the non-tariff area and the remaining territory of Vietnam.

Chapter 7:

IMPLEMENTING PROVISIONS

Article 33. Other provisions relating to the activities of organizations and individuals within the Chu Lai Export Processing and Industrial Zone not specified in this Regulation shall be implemented in accordance with the corresponding provisions of the Commercial Law, Foreign Investment Law in Vietnam, Law on Encouragement of Domestic Investment, Enterprise Law, Land Law, other legal documents, and international treaties to which Vietnam is a party.

Article 34. The incentives provided for enterprises operating within the Chu Lai Export Processing and Industrial Zone under this Regulation shall be applicable to enterprises that have been operating within the Chu Lai Export Processing and Industrial Zone before the issuance of this Regulation.

When new preferential mechanisms and policies are issued, they shall be applied to the Chu Lai Export Processing and Industrial Zone.