Directive No. 13/1999/CT-TTg On Rectifying and Reorganizing the Tobacco Production and Business Industry.

DIRECTIVE

On Rectifying and Reorganizing the Production and Business Activities of the Tobacco Industry

To implement Decision No. 392-CT dated November 12, 1990 of the Chairman of the Council of Ministers (now Prime Minister) on rectifying the organization of cigarette production and circulation, and Directive No. 278-CT dated August 3, 1990 on prohibiting the importation and circulation of foreign-made cigarettes in the domestic market. After nearly nine years of implementation, initial results have been achieved, contributing to stabilizing the Vietnamese tobacco industry and increasing revenue for the state budget. However, compared to the requirements set forth, the results obtained remain low. Domestic tobacco production facilities are still scattered and lack concentration, with many districts and counties having cigarette factories. Additionally, the guidance and supervision of relevant ministries and local levels are insufficiently strict. This has led to inefficient operations at small local tobacco production facilities, prolonged losses at some enterprises, non-compliance with environmental standards, unregistered trademarks, and substandard product quality. Smuggled cigarettes in the domestic market have not decreased and are showing a worsening trend, affecting domestic cigarette production. To address these issues, the Prime Minister requests that relevant ministries, provincial people's committees, and the Vietnam Tobacco Corporation implement the following urgent measures:

1. The State shall unify management over the tobacco industry. This policy must be consistently reflected in state management from planning, policies, investment development measures, import and export of machinery and equipment for production, raw materials, auxiliary materials, products, trademark registration, product quality control, advertising, marketing, and other economic policies. The State shall have a monopoly on cigarette production; only state-owned enterprises and joint ventures with foreign partners that have been licensed and meet the required conditions may produce cigarettes. It is necessary to quickly reorganize and stabilize this sector from production to circulation according to the goal of improving the quality of domestically produced cigarettes and tobacco leaves, meeting market demands, and promoting exports.

2. Investment policy for the tobacco industry:

- In the field of cigarette production: No new production facilities for cigarette manufacturing will be constructed except those already permitted and those preparing for joint ventures or cooperation to produce high-end cigarettes. Investments should focus on deepening technological modernization, upgrading machinery and equipment, enhancing product quality, and producing high-quality tobacco threads domestically to replace imports. This is to strengthen the competitiveness of domestic enterprises, especially as Vietnam integrates into the international community.

- Cease new projects for cooperation or joint ventures with foreign countries in cigarette production, processing, or manufacturing, and do not increase international brands of cigarettes.

- Encourage investment in developing domestic tobacco raw material cultivation and processing, aiming to replace imports and promote exports, gradually reducing the current trade deficit.

3. For related ministries and sectors:

Ministry of Industry:

- Direct the Vietnam Tobacco Corporation and localities to implement the Strategic Plan for the Tobacco Industry until 2010 approved by the Prime Minister.

- Lead together with the Ministry of Planning and Investment, the Ministry of Finance, the Central Enterprise Management Reform Board, local people's committees, and the Vietnam Tobacco Corporation in drafting a plan to reorganize cigarette production facilities under the principle of state monopoly on production, centralizing production units; only maintain operations of cigarette production facilities with an annual capacity exceeding 50 million packs, equipped with advanced technology and modern machinery, ensuring environmental protection. The reorganization must be thorough, creating favorable conditions for effective business operations. Small-scale production and trading units that incur losses and tax arrears should be merged, redirected to other businesses, or dissolved. The Vietnam Tobacco Corporation plays a leading role, acting as the central management body for organizing and reorganizing the tobacco industry.

- Cigarette production facilities must be directly managed by the ministry level, provincial people's committees, or municipal people's committees directly under the central government. Immediately review all cigarette production facilities and strictly control their production and business activities. District-level people's committees shall not directly manage cigarette production organizations, preventing private traders from exploiting the name of state-owned enterprises to produce and sell cigarettes.

- Strictly manage the current production capacity and equipment capabilities of cigarette manufacturing enterprises nationwide. Enterprises are not allowed to expand or construct new facilities beyond the current total production capacity for cigarettes.

- Coordinate with the Ministry of Agriculture and Rural Development, the Ministry of Finance, and provincial people's committees to direct the Vietnam Tobacco Corporation and tobacco enterprises to develop plans and investment programs; establish reasonable purchasing mechanisms to develop tobacco raw material regions, particularly in remote and economically disadvantaged areas, contributing to poverty reduction programs, meeting domestic production needs, replacing imports, and eventually exporting raw materials and producing flavorings, auxiliary materials, equipment, and spare parts domestically; to reduce imports and support the development of the domestic mechanical industry.

The Ministry of Planning and Investment:

- Evaluate the business activities of enterprises engaged in joint ventures or cooperations with foreign countries in cigarette production. Violations of the law must be dealt with strictly according to the law. Any investment in equipment upgrades, replacement of old equipment, or importation of cigarette manufacturing machines by enterprises must be consulted with the Vietnam Tobacco Corporation and approved in writing by the Ministry of Industry.

In conjunction with the Ministry of Industry, implement the tasks assigned to the Ministry of Industry by the Prime Minister in this Directive. Propose measures for handling (including revoking licenses) for joint ventures and cooperative production facilities with foreign countries that do not comply with general regulations and are not operating effectively.

- Inspect investors who have been granted investment permits in the tobacco industry by various ministries and localities but do not meet the requirements set out in this Directive, and propose solutions to be submitted to the Prime Minister for consideration and decision.

The Ministry of Finance:

Strictly enforce the Special Consumption Tax Law, collect taxes accurately and fully, and do not grant tax exemptions or reductions to any enterprise producing or trading in cigarettes, whether under central or local management. End the prolonged arrears in tax payments and strictly punish tax evasion according to current laws.

- Study and propose policies to the Prime Minister regarding the exemption from Value Added Tax on the purchase of high-quality tobacco leaves from regions where such crops are grown, replacing imported raw materials and for export.

- Consider allowing the tobacco industry to borrow funds at preferential interest rates for investment in tobacco leaf cultivation areas, processing, and storage of tobacco leaves for export. Study protective policies for domestically grown tobacco plants and insurance policies for tobacco.

Together with the Ministry of Industry and Vietnam Tobacco Corporation, develop a plan to affix labels on all domestically produced cigarettes to be implemented at the beginning of the year 2000.

The Ministry of Trade:

- Based on the Commercial Law, coordinate with the Ministry of Industry and other relevant ministries and sectors to study and propose legal documents to the Prime Minister concerning promotions and marketing of tobacco products, preventing excessive marketing activities.

Promptly issue business regulations for tobacco products to review organizations and individuals engaged in cigarette trading, aiming to reorganize and regulate the network of agents, wholesalers, and retailers of cigarettes, ensuring easy control and management of cigarette sales.

- Direct the Central Market Management Agency to propose effective measures and organize their implementation to ban the consumption of smuggled and counterfeit cigarettes, and strictly handle according to the law the acts of counterfeiting trademarks and selling fake or smuggled goods.

- Cease granting permission for temporary importation and re-exportation of foreign cigarettes.

The Ministry of Science, Technology, and Environment:

- Review trademark registrations for tobacco products. Develop mechanisms to cooperate with related agencies to ensure strict and convenient trademark registration procedures for tobacco products.

Coordinate with the Ministry of Trade and the Ministry of Health to take measures to prevent the consumption of unregistered and substandard tobacco products, and resolve copyright disputes. Announce annually in the first quarter the list of tobacco brands allowed to circulate in the market; promptly guide the implementation of Government Directive No. 199/TTg dated April 3, 1997, concerning solid waste management to ensure environmental hygiene.

Ministry of Health:

- Coordinate with the Ministry of Science, Technology, and Environment to complete quality standards for tobacco products according to Vietnamese Technical Standards (TCVN) necessary for product quality management and registration, aiming to minimize health impacts on consumers. From now on, cigarette manufacturing facilities must register product quality before production and circulation.

The Ministry of Culture and Information:

- Coordinate with the Ministry of Trade to study and propose to the Prime Minister certain forms of information dissemination about tobacco products to consumers at appropriate levels and ban tobacco advertising in all forms. Implement measures to manage printing of tobacco packaging to prevent the production of counterfeit cigarettes from the outset.

The Ministry of Public Security:

- Coordinate with the Ministry of Trade (Market Management Agency), General Customs Department, Ministry of Finance (Tax Administration总局),各省市政府直属中央的机构和机关根据本地区管理范围内的烟草企业进行整顿的方针。地方各级公安机关直接处理或与职能机关合作处理违反规定的企业。

People's Committees of provinces and centrally governed cities:

- Coordinate with ministries and central agencies to implement policies for restructuring tobacco enterprises within their jurisdiction.

Supervise tobacco enterprises to ensure compliance with state regulations. Directly handle or coordinate with competent authorities to address violations by enterprises.

各有关部委、省市政府直属中央的机构和机关应配合大众传媒机构开展广泛宣传，深入贯彻打击走私烟草的方针和措施，特别是边民，使他们不直接参与或协助烟草走私活动，严格遵守政府总理1997年10月11日第835/1997/CT-TTg号指示关于在新形势下的打击走私斗争。采取措施限制并要求烟草销售者签署承诺书，不销售走私外国烟草，并严格管理国有企业或社会团体，坚决不允许这些企业参与外国烟草走私活动。教育说服并严厉处理故意协助烟草走私运输的车主或驾驶员。

各部部长、相当于部长的机关负责人、政府机关负责人、各省市政府主席以及越南烟草总公司总经理负责组织实施本指示。