Circular No. 1818/1999/TT-BKHCNMT guiding the determination and recognition of special investment encouragement projects under Clause 5, Annex I, Appendix 1 of Government Decree No. 10/1998/NĐ-CP dated January 23, 1998.

CIRCULAR

Guidelines for determining and recognizing special investment encouragement projects under Clause 5, List I, Appendix 1 of Decree No. 10/1998/NĐ-CP dated January 23, 1998 of the Government

(Projects producing new materials, rare materials, applying new biotechnology; new technology for manufacturing information equipment, telecommunications, electronics, and computing)

Pursuant to Decree No. 22/CP dated May 22, 1993 of the Government on the tasks, powers, and organizational structure of the Ministry of Science, Technology and Environment;
Decree No. 10/1998/NĐ-CP dated January 23, 1998 of the Government on certain measures to encourage and ensure foreign direct investment activities in Vietnam,
The Ministry of Science, Technology, and Environment provides guidelines for determining and recognizing special investment encouragement projects under Clause 5, List I, Appendix I of Decree No. 10/1998/NĐ-CP as follows:

GENERAL PROVISIONS:

I. Scope and Applicability

This Circular stipulates standards, procedures, review processes, and confirmation of eligibility for preferential treatment for foreign direct investment projects in Vietnam that fall under the category of special investment encouragement projects as specified in Clause 5, List I, Appendix 1 of Decree No. 10/1998/NĐ-CP (hereinafter referred to as special investment encouragement projects), specifically:

a. Projects producing new materials, rare materials;

b. Projects applying new biotechnology;

c. Projects using new technology to produce information equipment, telecommunications;

d. Projects using electronic technology, computer technology.

I.2. Preferential Treatment

Projects meeting the criteria set forth in this Circular shall enjoy special investment encouragement policies as provided in Decree No. 12/CP dated February 18, 1997 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam and in Decree No. 10/1998/NĐ-CP.

I.3. Explanation of Terms

Some terms used in this Circular are understood as follows:

a. "New materials" are types of new materials produced in Vietnam and included in the list of new materials prescribed by the Ministry of Science, Technology, and Environment. This list may be amended and supplemented as appropriate at different times.

b. "Rare materials" are materials included in the list of rare materials prescribed by the Ministry of Science, Technology, and Environment. This list may be amended and supplemented as appropriate at different times.

c. "New technology" is new technology applied in Vietnam and included in the list of new technologies prescribed by the Ministry of Science, Technology, and Environment. This list may be amended and supplemented as appropriate at different times.

d. "Advanced technology production line" refers to specialized production lines where automated equipment controlled by programs must account for at least one-third (1/3) of the value of the production line; there should be no heavy manual labor stages on the production lines; production lines must be arranged in spaces ensuring industrial hygiene, occupational safety, and environmental protection standards; enterprise management systems must be advanced (computerized in areas such as production management, material supply, marketing, etc.).

e. High-tech components and parts:

- In the field of electronics, these include circuit boards, capacitors, resistors, relays, coils, electron beam guns, various types of display tubes, integrated circuits (ICs), electronic chips, etc., used in electronic products.

- In the fields of automation, machinery, and equipment manufacturing, these include components and parts with precision grades of level 2 or higher, hydraulic and pneumatic control valves, cam mechanisms, directional actuators, high-precision tools, micrometers, and accurate measuring instruments.

Computer software used in automatic device control systems, information equipment, technological management systems, and enterprise management systems are also considered high-tech components.

II. STANDARDS FOR DETERMINING SPECIAL INVESTMENT ENCOURAGEMENT PROJECTS

II.1. STANDARDS FOR DETERMINING PROJECTS PRODUCING NEW MATERIALS AND RARE MATERIALS

A. Projects Producing New Materials:

1. The project's product must be new material (Appendix 1).

2. The production technology line must reach advanced levels.

3. Ensure environmental standards as prescribed by the Vietnamese State.

B. Projects Producing Rare Materials:

1. The project's product must be rare material, but does not include projects for mining or processing rare materials (Appendix 2).

2. The production technology line must reach advanced levels.

3. Ensure environmental standards as prescribed by the Vietnamese State.

II.2. STANDARDS FOR DETERMINING PROJECTS APPLYING NEW BIOLOGICAL TECHNOLOGY

1. The technology applied in the project must be new technology (Appendix 3).

2. The production technology line must reach advanced levels.

3. Application of new technology must result in high-yield, high-quality products.

4. Ensure international, regional Asian, and Vietnamese biosafety standards.

5. Ensure environmental standards as prescribed by the Vietnamese State.

II.3. STANDARDS FOR DETERMINING PROJECTS USING NEW TECHNOLOGY TO PRODUCE INFORMATION EQUIPMENT AND TELECOMMUNICATIONS

1. The technology applied in the project must be new technology (Appendix 4).

2. The production technology line must reach advanced levels.

3. Application of new technology must result in high-yield, high-quality products.

4. Ensure economic and technical standards in the information and telecommunications sectors internationally and regionally.

5. Ensure environmental standards as prescribed by the Vietnamese State.

II.4. STANDARDS FOR DETERMINING PROJECTS USING ELECTRONIC TECHNOLOGY AND COMPUTER TECHNOLOGY

1. The technology applied in the project must be listed in the Catalogue of Electronic and Computer Technologies (Appendix 5).

2. The production technology line must reach advanced levels, with products capable of being exported or having quality equivalent to imported products of the same type.

3. Project scale:

a. Annual revenue per capita must reach $70,000 or more. For enterprises with a statutory capital of over $30 million and employing more than 1,000 people, they are deemed to meet the criteria set out in point a above.

b. The average value of technological equipment per capita must be $40,000 or more. For enterprises specializing in producing computer software, they are deemed to meet the criteria set out in point b above.

c. The localization rate (the ratio of the value of high-tech components and parts produced by the enterprise itself) must reach at least 2% of annual revenue, or the total value of components produced by the enterprise and other enterprises in Vietnam must reach at least 15% of annual revenue.

d. Costs for research and development, training, and instruction shall account for at least 2% of annual revenue. If such activities are conducted free of charge, the value of such free services shall also be included in the aforementioned ratio. For businesses with annual revenues of US$10,000,000 or more, the annual costs for research and development, training, and instruction shall not be less than US$200,000. In cases where a technology transfer contract approved by the competent state authority exists, the business shall be deemed to meet the standards set forth in this point during the first four years (counting from the date the technology transfer contract was approved).

4. Ensure economic and technical standards in the field of electronics and information technology at both global and regional levels.

5. Ensure environmental standards as prescribed by the Vietnamese State.

III. IMPLEMENTATION

III.1. APPLICATION DOCUMENTS FOR SPECIAL INVESTMENT INCENTIVE PROJECTS

To be considered for confirmation as a special investment incentive project under Part II of this Circular, the investor must submit to the investment license issuing authority the following documents:

a. For new projects, the following documents are required:

- Application form for a special investment incentive project.

- An explanation of the technology applied in the project (comparing the content of the technology applied in the project with the standards prescribed in this Circular).

These documents are submitted together with the application for an Investment License. The determination and recognition of benefits will be carried out concurrently with the process of reviewing the Investment License application. If the enterprise meets the standards stipulated in Part II of this Circular, the recognition of benefits will be recorded in the Investment License.

b. For ongoing projects, the following documents are required:

- Application form for a special investment incentive project.

- An explanation of the technology applied in the project (comparing the content of the technology applied in the project with the standards prescribed in this Circular).

- Copy of the Investment License.

III.2. AUTHORITY TO REVIEW SPECIAL INVESTMENT INCENTIVE PROJECTS

a. For projects licensed by the Ministry of Planning and Investment: Based on the opinion of the Ministry of Science and Technology confirming the application of technology in the project in accordance with this Circular, the Ministry of Planning and Investment decides on the special investment incentive regime for the project.

b. For projects licensed under delegated authority:

Based on the opinion of the provincial Department of Science and Technology confirming the application of technology in the project in accordance with this Circular, the local authority delegated to issue Investment Licenses, Industrial Park Management Board, Export Processing Zone Management Board, and High-Tech Zone Management Board may decide on the special investment incentive regime for the project.

c. The authority confirming the application of technology in the project must complete the confirmation within thirty days for cases that meet the criteria to enjoy incentives.

d. In cases where the enterprise does not meet the criteria to enjoy incentives as prescribed in Part II of this Circular, the authority confirming the application of technology in the project must notify the Investment License issuing authority in writing of the reasons within twenty days from the date of receipt of all valid documents.

e. During operation, if the enterprise no longer meets the criteria stipulated in Part II of this Circular, it will be suspended from enjoying investment incentives.

The enterprise has the right to appeal to the competent authority regarding the enjoyment or non-enjoyment of incentives in accordance with the Law on Complaints and Petitions.

IV. IMPLEMENTATION PROVISIONS

This Circular takes effect fifteen days after the date of signature. During implementation, if any difficulties arise, organizations and individuals concerned are requested to promptly report them to the Ministry of Science and Technology for specific guidance on resolution.

ANNEX 1

LIST OF NEW MATERIALS

1. High-strength alloy steels;

2. Steels resistant to mechanical abrasion;

3. Spring steel, leaf spring, locomotive wheel;

4. Steels resistant to chemical and thermal corrosion;

5. Die-casting steels, stainless steels;

6. Low-alloy high-strength steels;

7. Dual-phase low-alloy steels;

8. Composite metallic materials;

9. High-voltage ceramic insulating materials;

10. High-tech ceramics (heat-resistant, wear-resistant) used in ceramic and tile production technology;

11. Piezoelectric ceramics;

12. High-voltage glass insulating materials;

13. Polymer ceramic insulating materials;

14. High-molecular composite materials used in electrical and electronic engineering under harsh environmental conditions;

15. Organic electronic materials.

16. Super-clean inorganic oxides;

17. Super-durable materials used in textile, fiber, weaving, leather shoe industries;

18. High-molecular composite base materials;

19. Technical rubber materials;

20. Synthetic rubber;

21. Metal-to-metal adhesive;

22. Metal-to-rubber adhesive;

23. High-molecular composite carbon fiber;

24. Special oil-resistant, heat-resistant, chemical-resistant paints;

25. Conductive polymers;

26. Polymer emulsions (Acrylic Copolymer, Styrene Acrylic, Polyvinyl Acetate Copolymer, Polyvinyl Acetate Homopolymer);

27. PVC plastic;

28. Composite capacitors;

29. Materials for manufacturing sensors;

30. Electronic ceramic materials;

31. Materials for manufacturing optoelectronic components;

32. Materials for producing optical amplification cables;

33. Electronic and optoelectronic materials based on polymers;

34. New materials with energy storage capabilities for use in electrical and electronic devices;

35. High-molecular materials for medical use;

36. High-molecular materials for pharmaceutical use;

37. High-molecular materials for cosmetic use;

38. High-molecular materials for veterinary drug use;

39. High-molecular composite carbon fiber materials for medical use;

40. Special high-molecular film materials;

41. Thin film materials;

42. Reverse osmosis membrane materials;

43. Advanced magnetic materials;

44. Optoelectronic and photonic materials.

ANNEX 2

LIST OF PRECIOUS AND RARE MATERIALS

1. Titanium metal materials;

2. Platinum metal materials;

3. Other precious rare metal materials (W, Mo);

4. Rare earth metal materials;

5. Rare earth metal oxide materials;

6. Rare earth ferroalloys;

7. High-tech materials based on rare earth elements;

8. Zircon materials;

9. Stellite materials;

10. Synthetic diamond materials.

ANNEX 3

LIST OF NEW BIOTECHNOLOGY TECHNOLOGIES

1. New vaccine production technology for humans;

2. Antibiotic production technology for humans;

3. Production technology for biological products used in human diagnosis and treatment;

4. Tissue and cell culture technology for medical use;

5. Surgical suture and biofilm production technology for medical use;

6. Technology for preserving, storing, and separating blood products used for diagnosis and treatment of humans;

7. Technology for producing new generation veterinary vaccines (for livestock and poultry);

8. Technology for producing diagnostic and therapeutic kits for crops and livestock;

9. Technology for producing improved plant seedlings through advanced tissue culture, cell culture, pollen culture, and genetic modification to resist pests, diseases, and adverse climatic conditions;

10. Technology for producing biological insecticides;

11. Technology for producing biological fertilizers;

12. Technology for treating solid and liquid waste using biotechnology;

13. Technology for producing hormones controlling sex differentiation in fish species;

14. Technology for embryo transfer and nuclear transplantation in cattle, buffalo, and goats;

15. Technology for producing nutrient-rich products (from animals and plants) for the health protection of humans and livestock;

ANNEX 4

LIST OF NEW TECHNOLOGIES FOR PRODUCING INFORMATION AND TELECOMMUNICATIONS EQUIPMENT

1. Asynchronous Transfer Mode (ATM) transmission technology;

2. Synchronous Digital Hierarchy (SDH) levelization technology;

3. Optical cable production technology;

4. Technology for producing large-capacity (10,000 lines or more) digital telephone exchanges capable of providing multimedia services, used in intelligent networks (IN) and broadband integrated services digital network (B-ISDN);

5. Technology for producing smart switching systems (based on neural principles);

6. Technology for producing high-speed optical and radio transmission devices;

7. Technology for producing multimedia terminal devices, network access devices, and satellite and space information system terminals;

8. Global mobile phone production technology;

9. Information laser technology;

10. Technology for producing encoding devices operating across different frequency bands;

ANNEX 5

LIST OF ELECTRONICS AND COMPUTER TECHNOLOGIES

1. Technology for producing optoelectronic, mechanical-optoelectronic components;

2. Technology for producing flat screens and high-resolution screens;

3. Technology for producing integrated circuits (ICs);

4. Technology for producing sensors;

5. Technology for producing multifunctional integrated receivers (TV, video, monitors...);

6. Technology for producing advanced medical electronic equipment (scanners, electrocardiograms, electroencephalograms, endoscopes, microsurgery...);

7. Technology for producing hard drives and laser discs;

8. Technology for producing computers and peripheral devices;

9. Technology for producing large-capacity RAM;

10. Technology for producing digital electronic measuring devices;

11. Technology for electronic machining with laser and plasma beams;

12. Technology for manufacturing robots for production automation;

13. Technology for producing software products, particularly multimedia-oriented software;

14. Technology for manufacturing simulation systems;

15. Technology for producing human-machine communication systems through language and images.