Directive No. 13/2005/CT-TTg on certain measures to create new changes in attracting foreign direct investment in Vietnam

DIRECTIVE OF THE PRIME MINISTER

On some solutions to create new changes

in attracting foreign direct investment in Vietnam

After more than 17 years of implementing the Law on Foreign Investment, the economic sector with foreign invested capital has continued to develop and has made significant contributions to the country's socio-economic development. The management of foreign investment has gradually become systematic. The Vietnamese Law on Foreign Investment, after several revisions and supplements, is now considered relatively attractive compared to other countries in the region. In particular, over the past four years, implementing Resolution No. 09/2001/NQ-CP dated August 28, 2001, of the Government and Directive No. 19/2001/CT-TTg dated August 28, 2001, of the Prime Minister on enhancing the attraction and effective utilization of foreign investment in Vietnam during the period 2001-2005, the investment environment has continued to improve, curbing the decline in foreign investment inflows into the country and recently showing signs of recovery.

However, the activities of foreign investment in Vietnam still have some weaknesses and limitations that have not been fully addressed, especially in planning, legal and policy formulation, state management, investment promotion... Meanwhile, the implementation of Resolution No. 09/2001/NQ-CP and Directive No. 19/2001/CT-TTg has not been thorough enough and has not yielded high effectiveness.

To build upon the achieved results and address the aforementioned weaknesses and limitations, aiming to create new breakthroughs in attracting and utilizing foreign investment in accordance with the spirit of the Central Committee's Resolution No. 9 (Session IX) and continue to vigorously implement Resolution No. 09/2001/NQ-CP dated August 28, 2001, of the Government, the Prime Minister instructs all Ministries, ministerial-level agencies, government agencies, and provincial People's Committees (hereinafter collectively referred to as Ministries and provincial People's Committees) to thoroughly understand and promptly implement the following tasks:

I. SOME BASIC DIRECTIONS

1. Regarding guiding principles

a) In the 2005 plan and the subsequent years up to 2010, it is necessary to instill at all levels of government the Party's viewpoint on strengthening the attraction and improving the efficiency of using foreign investment as set out in the Central Committee's Resolution No. 9 (Session IX). Based on this, achieve consensus both in understanding and action among Ministries and sectors, as well as between central and local authorities in attracting, managing, and utilizing foreign investment.

b) Gradually reduce and eventually eliminate protective measures with time limits and conditions for industries that need to be developed and have competitive potential; gradually open the market in line with the schedule for international economic integration commitments. Do not issue restrictive documents or stop granting investment permits that are inconsistent with the Law on Foreign Investment and related legal regulations and international commitments.

c) Diversify forms of attracting foreign investment; create the most favorable conditions for projects to operate effectively; encourage expansion of investment scale, technological innovation, and diversification of investment objectives in line with the provisions of the Law on Foreign Investment and industry and product development plans.

d) Continue to innovate and enhance the quality of investment promotion work; intensify market research and investor partner studies to effectively attract foreign investment, particularly from multinational corporations; focus more on important sectors of the economy, especially high-tech and core technology fields.

đ) Develop proactive plans to implement international commitments. In the short term, focus on implementing in 2005 the commitments under AFTA, the bilateral agreement between Vietnam and the United States, the Joint Initiative between Vietnam and Japan, as well as agreements with the EU. At the same time, urgently prepare for the implementation of commitments when joining the World Trade Organization (WTO).

2. Regarding planning work

a) Promptly develop the Strategy for Attracting and Utilizing Foreign Investment until 2010 and beyond, aligning with the socio-economic development strategy, clearly defining goals, tasks, and solutions for each year and phase.

b) Review and adjust industrial planning in conjunction with territorial planning to eliminate restrictions and distinctions between domestic and foreign investments, creating conditions for the foreign investment sector to participate more in developing industries and regions. Accelerate the construction of missing industry plans such as university and vocational school networks, along with licensing conditions and standards for projects investing in these sectors.

c) During the completion of planning, emphasize encouraging all economic components, including foreign investment, to participate in building social and economic infrastructure, especially transportation, seaports, power supply, water supply, hospitals, schools, entertainment areas, urban zones... Industry and product plans must adhere to the principle that planning serves only as guidance and encourages participation from all economic components.

3. Regarding legal and policy formulation

a) In 2005 and subsequent years, focus on drafting, promulgating, and guiding the implementation of the Law on Investment and the Law on Enterprises applicable to both domestic and foreign investment. When the general Law on Investment is passed by the National Assembly, relevant Ministries and provincial People's Committees should proactively review related legal documents concerning foreign investment, amend, supplement, or abolish contents that are no longer appropriate. The issuance of foreign investment policies must ensure consistency, transparency, and predictability; policies issued later must adhere to the principle of inheritance, non-retroactivity, and be more attractive than before.

b) Continue to study expanding investment areas and diversifying forms of foreign investment in line with the enterprise reform and international economic integration roadmap, such as parent-subsidiary company structures and acquisition-merger forms for enterprises with foreign investment.

Provisionally, select additional foreign-invested enterprises to undergo conversion to joint-stock companies in accordance with Decree No. 38/2003/NĐ-CP dated April 15, 2003 of the Government. On the other hand, it is necessary to evaluate the implementation of pilot shareholding reform for foreign-invested enterprises, on this basis propose mechanisms and policies to facilitate the listing of foreign-invested joint-stock companies on the stock market, prepare plans to expand the application of joint-stock company form for foreign-invested enterprises in the future.

b) Continue to perfect tax regulations in a direction that does not affect investment incentives, particularly for projects that have been granted investment permits.

c) Continue to study solutions aimed at reducing investment costs, enhancing business efficiency of foreign-invested enterprises, especially in areas such as transportation tariffs and advertising tariffs.

4. Regarding State Management

a) Continue to improve investment procedures vigorously, enhance the effectiveness of state management over foreign investment towards expanding the delegation of investment permit issuance and foreign investment management; apply registration systems suitable for the implementation of international commitments; establish coordination mechanisms between ministries and provincial people's committees in state management and supervision of foreign investment activities; publicize administrative procedures towards simplification and increased monitoring; shorten the time for review and issuance of investment permits.

b) Regularly review, assess, and promptly resolve any difficulties arising from foreign investment projects to create favorable conditions for enterprises to accelerate the progress of effective project implementation; consider revoking investment permits for projects that no longer have the capacity and conditions for implementation according to legal procedures and processes. Implement regular reporting meetings on foreign investment among ministries and provincial people's committees.

c) Ministries, ministerial-level agencies, and provincial people's committees strictly follow the procedures for drafting and promulgating regulatory legal documents; terminate the issuance of documents beyond authority or offering incentives contrary to current laws.

5. Regarding Investment Promotion Activities

a) Innovate strongly in terms of content and methods of investment promotion; focus on promoting investment by sector, region, and specific partners, emphasizing attracting investments from multinational corporations as well as small and medium-sized enterprises.

b) Allocate funds for investment promotion activities as a separate expense within the annual operating budget of ministries, sectors, and localities as determined in Resolution No. 09/2001/NQ-CP dated August 28, 2001 of the Government and Directive No. 19/2001/CT-TTg dated August 28, 2001 of the Prime Minister.

c) Establish an investment promotion fund based on state budget allocations (drawn from revenues of the economic sector with foreign investment) combined with raising contributions from organizations and enterprises.

d) Strengthen research on economic conditions, investment markets, policies of countries, large corporations, and companies to develop appropriate investment attraction policies; study laws, policies, and measures for attracting foreign investment from countries in the region to timely adopt appropriate strategies. Enhance investment promotion units at representative offices in key countries and regions to proactively promote investment for each project, each corporation, and potential investors, especially multinational corporations.

đ) Strengthen external information activities, propaganda, and publication of materials introducing the image of the country, socio-economic development policies, and foreign investment policies of Vietnam to serve the purpose of attracting foreign investment.

II. ASSIGNMENT OF RESPONSIBILITIES FOR IMPLEMENTATION

To implement the above measures, the Prime Minister assigns specific responsibilities to ministries and provincial people's committees as follows:

1. The Ministry of Planning and Investment

a) Take the lead and coordinate with relevant ministries and sectors to continue researching proposals to expand investment attraction fields and diversify forms of foreign investment. In the first quarter of 2005, submit to the Prime Minister proposals to extend the deadline for submitting applications to convert foreign-invested enterprises to joint-stock companies under Decree No. 38/2003/NĐ-CP dated April 15, 2003 of the Government and basic principles for applying the parent-subsidiary model with foreign investment in Vietnam on a trial basis.

b) Draft and submit to the Government in the second quarter of 2005 a regulation on cooperation between ministries, sectors, and provincial people's committees regarding state management of foreign investment activities to enhance management effectiveness and guide licensing authorities to ensure the following requirements:

- Processing project files and organizing reviews quickly, ensuring processing deadlines; implementing investment permits and applying investment incentives in accordance with legal provisions.

- Publicizing review standards and related information during the review process.

- Establishing sanctions for projects that fail to meet deadlines.

- Strengthening reporting and statistics on foreign investment.

- Strengthening inspection and supervision to promptly detect and strictly punish violations by organizations, individuals, enterprises, and state agencies in foreign investment activities.

c) Draft and submit to the Prime Minister in the second quarter of 2005 strategic guidelines for attracting and utilizing foreign investment until 2010 - Vision 2020.

d) Take the lead and coordinate with ministries, sectors, and provincial people's committees to draft and submit to the Prime Minister in the second quarter of 2005 a list of national projects calling for direct foreign investment for the period 2006-2010.

d) To chair and coordinate with relevant ministries, sectors, and provincial People's Committees to review and submit to the Government in the third quarter of 2005 proposals for adjusting the list of sectors not permitted to invest in and conditional investment sectors in a transparent and specific manner consistent with international commitments.

e) To chair and coordinate with the Ministry of Finance to submit to the Prime Minister in the second quarter of 2005 a proposal to establish an Investment Promotion Fund to attract foreign direct investment and official development assistance (ODA) funds.

f) To chair and coordinate with the Ministry of Foreign Affairs to submit to the Prime Minister in the second quarter of 2005 a proposal to strengthen staff representing Vietnam in investment promotion activities in key regions such as the United States, Japan, some European Union countries, and Asia-Pacific countries.

g) To chair the establishment of a multi-ministry working group to develop and submit to the Prime Minister in the second quarter of 2005 comprehensive policies to encourage private economic sectors, including foreign investment, to participate in the construction of infrastructure projects, building houses for sale, or housing for workers in industrial zones and export processing zones.

h) To chair regular quarterly meetings on foreign direct investment between ministries, sectors, and provincial People's Committees starting from the second quarter of 2005, aimed at promptly resolving difficulties and obstacles faced by approved projects to ensure their effective operation.

i) To chair and coordinate with the Ministry of Finance and related ministries and sectors to develop and submit to the Prime Minister in the second quarter of 2005 preferential regimes for high-tech enterprises investing outside high-tech zones.

k) To chair and coordinate with the Ministry of Justice to submit to the Prime Minister in the second quarter of 2005 a proposal to accede to the 1965 Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States.

2. Ministry of Finance

a) To chair and coordinate with relevant ministries and sectors to issue regulatory guidelines in the second quarter of 2005 for joint-stock companies with foreign investment capital to be listed on the stock market; management regulations and incentive policies for investment funds operating in Vietnam.

b) From 2006 onwards, allocate budgetary funds for investment promotion activities in the annual regular budgets of ministries, sectors, and localities.

c) Continue to issue accounting and auditing standards in 2005 in line with international accounting and auditing standards.

d) To chair and coordinate with the Ministry of Planning and Investment and related ministries and sectors to issue guidance on handling issues arising during the implementation of new corporate income tax regulations in a fair and transparent manner among entities eligible for investment incentives. To chair and coordinate with related ministries and sectors to submit to the Prime Minister in the second quarter of 2005 a list of special investment encouragement projects according to Article 37 of Decree 164/2003/NĐ-CP detailing the implementation of the Law on Corporate Income Tax.

đ) To chair and coordinate with the Ministry of Construction and the Ministry of Planning and Investment to develop and submit to the Prime Minister in the second quarter of 2005 a mechanism to regulate the business of selling houses by foreign-invested enterprises.

e) To chair and coordinate with the Ministry of Planning and Investment and related ministries and sectors to direct and monitor the review and amendment of local investment incentives in the areas of taxation and budget, reporting to the Prime Minister in the second quarter of 2005.

f) To chair and coordinate with the Ministry of Justice to submit to the Prime Minister in 2005 a proposal to ratify the amended Kyoto Protocol.

3. The Ministry of Science and Technology

a) In 2005, to establish a system for providing intellectual property information on the Internet.

b) To chair and coordinate with the Ministry of Justice to submit to the Prime Minister in 2005 a proposal to join the Madrid Protocol.

c) To chair and coordinate with related ministries and sectors to develop and submit to the Prime Minister a proposal to handle localization issues in accordance with international commitments.

d) To accelerate the drafting and submission to the National Assembly for approval of the Intellectual Property Law.

Study and guide localities to establish specific conditions for investing in and constructing inland waterway transportation infrastructure, new and repaired inland waterway vessels outside the area, to ensure effective operation during the rainy season.

a) To report to the Prime Minister in the second quarter of 2005 on the current status of industrial waste; to coordinate with related ministries and sectors to study and develop a comprehensive plan for the recycling and treatment of industrial waste.

b) To develop and submit to the Prime Minister in the second quarter of 2005 a proposal to enhance the capacity of urban environmental companies to handle industrial waste.

c) To chair and coordinate with the Ministry of Planning and Investment and related ministries and sectors to direct the review and amendment of local investment incentives in the area of land to align with the provisions of the Land Law, reporting to the Prime Minister in the second quarter of 2005.

5. Ministry of Industry

a) To submit to the Prime Minister in the second quarter of 2005 the following planning proposals:

- Comprehensive development plan for the motorcycle industry until 2010.

- Planning for industrial parks dedicated to supporting industries.

b) To direct Vietnam Electricity Corporation to develop a final solution to refund construction costs for facilities outside the fence of foreign-invested enterprises within the second quarter of 2005.

c) To serve as the lead in continuing discussions with Japan regarding automobile and motorcycle-related matters in the Action Plan of the Vietnam-Japan Joint Initiative, and to report the results of these discussions to the Prime Minister.

6. Ministry of Posts and Telecommunications:

a) To chair and coordinate with the Ministry of Planning and Investment and the Ministry of Industry to develop and submit to the Prime Minister in the second quarter of 2005 a comprehensive plan for the development of the electronics industry until 2010, including policies to attract foreign investment in this sector.

b) To coordinate with the Ministry of Planning and Investment to review and remove restrictions on foreign direct investment in the postal and telecommunications sector (investment conditions, forms of investment, conversion from joint business contracts to joint ventures...) in line with bilateral and multilateral international commitments in the third quarter of 2005.

7. Ministry of Labor, Invalids and Social Affairs

a) Submit to the Government in the second quarter of 2005 a proposal to amend Decree No. 105/2003/NĐ-CP dated July 19, 2003, towards easing restrictions on the number of foreign workers that foreign-invested enterprises are allowed to recruit.

b) Develop and submit to the Prime Minister in the second quarter of 2005 a plan for vocational training for workers to meet the needs of enterprises.

c) Study and submit to the Prime Minister in the second quarter of 2005 a proposal to review and abolish the provision on indefinite-term labor contracts; examine the necessity and rationality of applying overtime pay during paid leave.

8. Ministry of Education and Training

a) Take the lead and coordinate with the Ministry of Planning and Investment to immediately issue Circulars guiding the implementation of Decree No. 06/2000/NĐ-CP dated March 6, 2000 of the Government on cooperation in investment with foreign countries in the field of education and training.

b) Develop and submit to the Prime Minister in the second quarter of 2005 a plan for the network of universities to serve as a basis for attracting foreign investment in line with the schedule for implementing international commitments.

9. Ministry of Health

Complete and submit to the Prime Minister in the third quarter of 2005 a plan for the health sector to serve as a basis for attracting foreign investment in the fields of medical examination and treatment, pharmaceutical production and supply, vaccines, biological products, medical equipment, etc., in line with the schedule for implementing international commitments.

10. Ministry of Culture and Information

Take the lead and coordinate with the Ministry of Planning and Investment to develop and promulgate in the third quarter of 2005 a list of sectors not permitted to invest and those subject to conditional investment approval in the cultural and information sectors, in a transparent, specific manner, and in line with the schedule for implementing international commitments.

11. Ministry of Trade

a) Take the lead and coordinate with the Ministry of Planning and Investment to develop in the second quarter of 2005 a plan to attract foreign investment in the service sector (including import services and distribution services) in line with the schedule for implementing international commitments; submit to the Government for amendment and supplementation of relevant legal regulations if necessary.

b) Take the lead and coordinate with the Ministry of Finance to issue in the second quarter of 2005 guidelines on calculating accumulated depreciation in the calculation of imported fixed assets.

c) Take the lead and coordinate with the Ministry of Finance, the Ministry of Science and Technology, the Ministry of Foreign Affairs, the Ministry of Industry, and the Ministry of Transport to review and amend unreasonable provisions related to transaction costs in the operation of goods circulation, customs procedures, quality standards, and e-commerce, and report to the Prime Minister on the results of implementation in the fourth quarter of 2005.

12. Ministry of Justice

a) Develop and submit to the Prime Minister in the second quarter of 2005 a plan to enhance capacity in the work of inspecting the issuance of legal documents.

b) Take the lead and coordinate with ministries and provincial People's Committees to develop and promulgate in the second quarter of 2005 guidelines for ministries and provincial People's Committees to perform their functions in supporting enterprises in the implementation of laws.

c) Take the lead and coordinate with ministries and provincial People's Committees to expand the national database of legal regulations to all localities.

13. State Bank of Vietnam

Take the lead in establishing a working group comprising representatives from relevant ministries and sectors to study and submit to the Prime Minister a plan for developing the check/draft circulation system and alternative payment systems to replace cash payments.

14. Ministries, Sectors, and Provincial People's Committees

a) In the second quarter of 2005, within the scope of their assigned functions and tasks, ministries, sectors, and provincial people's committees shall carry out the following tasks:

- Take the lead and coordinate with the Ministry of Planning and Investment to submit to the Prime Minister for immediate adjustment of industry, product, and territorial development plans towards eliminating restrictions and discrimination between domestic and foreign investments, abolishing monopolies, maintaining protection only under conditions and according to schedules consistent with international commitments, creating favorable conditions for attracting foreign investment, especially in service, steel, power, cement, infrastructure, etc. sectors; develop and submit to the Prime Minister plans for missing areas in education and vocational training.

- Review licensing procedures and project implementation stages for foreign direct investment projects to eliminate unnecessary stages and procedures; inspect and review investment incentives with illegal content to report to the Prime Minister for consideration and decision.

- Review and develop specific plans for implementing multilateral and bilateral international commitments related to foreign investment.

- Review and develop specific plans to implement agreements in the Action Plan for the Vietnam-Japan Joint Initiative aimed at improving the business environment and enhancing Vietnam's competitiveness.

- Develop support plans for businesses of all economic components in the process of international integration and joining the World Trade Organization (WTO).

b) Further intensify anti-corruption efforts and reduce harassment related to foreign investment within the scope of their assigned functions and tasks.

15. Implementation

a) The Ministry of Planning and Investment shall take the lead and coordinate with the Government Office to be responsible for monitoring, summarizing, and reporting to the Prime Minister on the implementation of this Directive.

b) Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of People's Councils, and Chairpersons of provincial People's Committees directly under the Central Government shall strictly and fully implement this Directive. In cases where issues arise beyond their authority, they must report to the Prime Minister for consideration and guidance to ensure implementation./.