JOINT CIRCULAR No. 14/KHĐT-TM GUIDING THE PROCESSING OF EXPORT GOODS FOR FOREIGN-INVESTED ENTERPRISES UNDER THE LAW ON FOREIGN INVESTMENT IN VIETNAM

JOINT CIRCULAR

Guidelines for foreign-invested enterprises to undertake processing for export under the Law on Foreign Investment in Vietnam

According to the Law on Foreign Investment in Vietnam

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Pursuant to the Government Decree No. 18/CP dated April 16, 1993 detailing the implementation of the Law on Foreign Investment in Vietnam;

Pursuant to the Government Decree No. 33/CP dated April 19, 1994 on State management of export and import activities;

To expand production and business methods for foreign-invested enterprises;

The Ministry of Planning and Investment and the Ministry of Trade issue guidelines for foreign-invested enterprises to undertake processing for export as follows:

I. GENERAL PROVISIONS

1. Processing goods for export includes production, manufacturing, assembly, packaging, etc., transforming raw materials, auxiliary materials, semi-finished products, etc., provided by the party placing the work, into products or semi-finished products according to the requirements of the party placing the work.

2. The legal basis for processing activities is the processing contract. The processing contract must comply with regulations governing foreign trade and must be approved by the Ministry of Trade.

Only foreign-invested enterprises meeting the conditions stipulated below shall be considered for permission to accept processing and sub-processing.

II. CONDITIONS FOR ACCEPTING PROCESSING OF EXPORT GOODS AND SUB-PROCESSING AND PROCEDURE FOR APPROVING PROCESSING CONTRACTS

1. Conditions for accepting processing of export goods.

1.1. In the investment license of the enterprise, there must be a function for processing. For enterprises whose investment license does not include a processing function, if they have a need for processing, they must obtain written approval from the Ministry of Planning and Investment.

1.2. The goods accepted for processing must be consistent with the goods specified in the investment license.

2. Sub-processing:

During the processing of export goods, foreign-invested enterprises may carry out sub-processing of certain stages or all stages of the processing process with domestic enterprises, but must ensure one of the following conditions:

- The stage being subcontracted is not part of the production line of the enterprise.

- The production line capacity cannot meet seasonal demand.

- Due to the special nature of the product.

The Ministry of Trade will examine and decide each specific case.

3. Procedure for approving processing contracts and sub-processing contracts.

3.1. Foreign-invested enterprises that meet the conditions stipulated in point 2.1 and have a need to accept processing must submit the following documents to the Ministry of Trade for examination and approval of the contract:

- Application for review of the processing contract.

- The processing contract and its appendices (two copies in Vietnamese or English).

- Analysis of the effectiveness of processing.

- Copy of the investment license and/or written approval from the Ministry of Planning and Investment.

3.2. Foreign-invested enterprises that meet the conditions for sub-processing as stipulated in point II.2 must submit the following dossier to the Ministry of Trade:

- Copy of the approval letter for the processing contract issued by the Ministry of Trade.

- Sub-processing contract signed with domestic enterprises.

3. Within ten days from the date of receipt of complete and valid documents, the Ministry of Trade will examine and approve the processing contract. If the Ministry of Trade does not approve, it must notify the enterprise in writing.

III. OTHER PROVISIONS

1. After completing the processing, foreign-invested enterprises must return the entire product to the party placing the work, and may not sell or act as agents to sell the product of the party placing the work in the Vietnamese market.

2. The parties involved in the processing contract must bear responsibility for the material consumption quota of each processing contract.

The Ministry of Trade only confirms the material consumption quota attached to the contract, and customs authorities will settle accounts based on the quota agreed upon by the parties signing the contract.

In cases where the parties involved in the processing contract engage in fraudulent behavior regarding material consumption quotas, they will be dealt with according to current laws.

3. Foreign-invested enterprises are responsible for submitting reports to the Ministry of Planning and Investment and the Ministry of Trade on the results of implementing export processing contracts quarterly and annually before the fifth day of the next quarter or year.

IV. IMPLEMENTATION PROVISIONS

1. Foreign-invested enterprises wishing to accept processing of export goods without a processing function recorded in their investment license must apply to the Ministry of Planning and Investment for written approval to accept processing of export goods.

From January 1, 1997, foreign-invested enterprises without a processing function specified in their investment license or written approval from the Ministry of Planning and Investment shall not be allowed to process export goods.

Foreign-invested enterprises must fulfill all financial obligations and be subject to state management by relevant agencies regarding processing of export goods.

2. For processing contracts already approved by the Ministry of Trade before the issuance of this Circular, they can only be implemented until December 31, 1996. If foreign-invested enterprises wish to continue accepting processing of export goods, they must comply with the provisions of this Circular.

This Circular takes effect from the date of signature, all previous regulations contrary to this Circular are abolished.