Circular No. 215/UB-LXT guiding foreign direct investment activities in Vietnam

 CIRCULAR

OF THE STATE COMMITTEE FOR COOPERATION AND INVESTMENT NO. 215 SC/CI OF FEBRUARY 8, 1995 GUIDING FOREIGN DIRECT INVESTMENT ACTIVITIES IN VIETNAM
TO GUIDE FOREIGN DIRECT INVESTMENT ACTIVITIES IN VIETNAM
BASED ON THE LAW ON FOREIGN INVESTMENT IN VIETNAM dated December 29, 1987 and the Laws amending and supplementing certain articles of the Law on Foreign Investment in Vietnam dated June 30, 1990 and December 23, 1992;

BASED ON Decree No. 18/CP dated April 16, 1993 detailing the implementation of the Law on Foreign Investment in Vietnam;
BASED ON Decree No. 191/CP dated December 28, 1994 on the regulations for the formation, appraisal, and implementation of foreign direct investment projects in Vietnam;
BASED ON Decree No. 39/CP dated June 9, 1993 on the functions and tasks of the State Committee for Cooperation and Investment.
The State Committee for Cooperation and Investment hereby issues this Circular to guide foreign direct investment activities in Vietnam as follows:
MANAGEMENT ORGANIZATION

Part 1:

1. Board of Directors of Joint Ventures

1.1. The management body of a joint venture enterprise is the Board of Directors. Each party appoints its representatives to the Board of Directors in proportion to their capital contribution, but the Vietnamese side must have at least two members on the Board.

In the Board of Directors of a new joint venture enterprise (a joint venture enterprise that has been established and now engages in joint ventures with foreign parties), the existing joint venture enterprise must have at least two members, and at least one of these two members must be a Vietnamese citizen.

The Board of Directors represents the owners who are the participating parties in the joint venture, responsible for managing the assets and operations of the enterprise. Representatives of each party in the Board of Directors are full representatives, accountable to the Board of Directors and the parties they represent.

The Board of Directors shall convene at least once a year. Meetings of the Board of Directors shall be convened by the Chairman of the Board of Directors or requested by two-thirds of the members of the Board of Directors. The General Director or the First Deputy General Director has the right to request the Chairman of the Board of Directors to convene a meeting of the Board of Directors.

Meetings of the Board of Directors are considered valid when at least two-thirds of the members representing the joint venture parties participate.

Members of the Board of Directors may delegate others to attend meetings of the Board of Directors and vote within the scope of the delegation. The power of attorney must bear the registered signature of the delegator and the content of the delegation must not exceed the rights of the delegator.

1.3. a. The Board of Directors performs its management function through the mechanism of making resolutions, urging, and supervising the implementation of those resolutions.

b. The Board of Directors has the authority to decide on matters concerning the enterprise. The following important matters must be decided by the members of the Board of Directors according to the principle of unanimity:

- Long-term and annual production and business plans of the enterprise; budget; borrowing.

- Amending and supplementing the Articles of Association of the joint venture enterprise.

- Appointing and dismissing the Chairman of the Board of Directors, the General Director, the First Deputy General Director, and the Chief Accountant.

c. Other decisions of the Board of Directors only take effect when approved by two-thirds of the members present at the meeting.

d. For important matters decided by the Board of Directors according to the principle of unanimity, if consensus cannot be reached among the members of the Board of Directors causing adverse effects on the operation of the enterprise, the Board of Directors may choose one of the following methods:

- Submitting the matter to a Conciliation Board. The Conciliation Board is established based on the agreement between the joint venture parties, consisting of an equal number of representatives from each party and a representative from the State Committee for Cooperation and Investment participating as the Chairman of the Conciliation Board. The decision of the Conciliation Board is passed by majority rule and is the final decision, which must be implemented by the joint venture parties.

- Requesting the State Committee for Cooperation and Investment to act as a conciliator; in this case, the decision of the State Committee for Cooperation and Investment is the final decision.

- Dissolving the enterprise.

1.4. The Chairman of the Board of Directors has the main responsibilities as follows:

a) Convening and chairing meetings of the Board of Directors;

b) Playing a key role in supervising and urging the implementation of resolutions of the Board of Directors.

The Chairman of the Board of Directors does not directly issue orders to the General Director and the Deputy General Director of the enterprise.

1.5- Within six months before the end of the term, the Board of Directors convenes a meeting to review the activities of the Board during the term; the joint venture parties appoint representatives to the new Board of Directors; handover procedures are carried out between the old and new Boards of Directors.

1.6- When the enterprise concludes its operating period or is dissolved prematurely, the Board of Directors must establish a Liquidation Committee; specify the content and duration of the Liquidation Committee's activities. Upon completion of liquidation, the Board of Directors listens to the report of the Liquidation Committee and handles any arising issues in accordance with the law.

1.7- Members of the Board of Directors do not receive salaries but may receive remuneration related to the activities of the Board of Directors as decided by the Board of Directors. These expenses must be recorded in the management costs specified in Clause 2 of Article 74 of Decree No. 18/CP detailing the implementation of the Law on Foreign Investment in Vietnam.

2. General Director of Joint Venture Enterprise

2.1- The General Director and the First Deputy General Director are appointed and dismissed by the Board of Directors, responsible for managing and directing the daily operations of the joint venture enterprise.

In cases where the joint venture enterprise has multiple Deputy General Directors, the Board of Directors designates a First Deputy General Director. In cases where the joint venture enterprise has only one Deputy General Director, the Deputy General Director functions as the First Deputy General Director. The General Director or the First Deputy General Director must be a person from the Vietnamese side and must be a Vietnamese citizen residing in Vietnam.

In the case where a joint venture enterprise has multiple Deputy General Directors, the Board of Directors shall designate a first Deputy General Director. In the case where the joint venture enterprise only has one Deputy General Director, such Deputy General Director shall have the functions of a first Deputy General Director. The General Director or the first Deputy General Director must be a person from the Vietnamese side and a Vietnamese citizen residing in Vietnam.

The functions and tasks of the General Director and Deputy General Directors are decided by the Board of Directors.

The General Director and the First Deputy General Director shall not concurrently hold positions in other enterprises, including joint venture enterprises.

2.2. In cases where the Chairman of the Board of Directors concurrently holds the position of General Director of the joint venture enterprise, it is necessary to distinguish between the two different functions when managing the enterprise; based on the nature and content of each document, sign and stamp with the appropriate position, without recording both positions on one document.

2.3. The General Director and the First Deputy General Director are responsible to the Board of Directors for the operation of the enterprise.

The General Director has the final authority in managing the daily operations of the enterprise. The General Director must consult with the First Deputy General Director before making decisions that directly affect the implementation of the resolutions of the Board of Directors and the following important issues:

- Organizational structure, staff, salaries, bonuses of the enterprise.

- Appointment and dismissal of key positions within the enterprise's departments.

- Periodic and annual settlement reports of the enterprise.

- Signing economic contracts.

When there are differing opinions between the General Director and the First Deputy General Director regarding the above issues, the opinion of the General Director must be followed, but the First Deputy General Director may reserve their opinion and bring it to the Board of Directors for review at the next meeting or request the Chairman of the Board of Directors to convene an extraordinary meeting to resolve the issue.

2.4. The General Director and the First Deputy General Director are responsible for implementing the resolutions of the Board of Directors if such resolutions do not contravene the law, the Charter, and the Joint Venture Contract. If they find the resolutions of the Board of Directors unsuitable for the actual situation, the General Director and the First Deputy General Director have the right to request the Chairman of the Board of Directors to convene an extraordinary meeting of the Board of Directors to consider and resolve the matter.

The General Director and the First Deputy General Director have the right to refuse to comply with individual directives or orders from the Chairman or individual members of the Board of Directors, or resolutions of the Board of Directors that contravene the law.

2.5. The General Director and the First Deputy General Director enter into Labor Contracts with the Chairman of the Board of Directors in accordance with current labor laws.

3. Enterprise Management Company

3.1. In cases deemed necessary, based on the business sector and project scale, some foreign-invested enterprises may hire a management company. The application for hiring a management company must be approved by the Board of Directors if it is deemed effective.

3.2. The management company contract is a contract for operating, managing, and exploiting facilities according to business indicators agreed upon by the parties. The management company contract includes management fees and must be approved by the State Committee for Cooperation and Investment.

The State Committee for Cooperation and Investment may not approve the management company contract if it deems that it does not ensure business efficiency, thereby affecting state interests.

Management fees paid to the management company are agreed upon based on the nature and effectiveness of the management activities; management fees include signage and marketing fees. Management fees paid to the management company constitute a part of the total management costs of the enterprise and should only account for a reasonable proportion of the total management costs of the enterprise. It is not permissible for management costs to exceed a reasonable level due to the hiring of a management company.

3.3. A foreign management company must be a registered business entity in the relevant field and must register with the People's Committee of the province or centrally-administered city where the headquarters of the foreign-invested enterprise is located when operating in Vietnam, and must comply with Vietnamese laws.

3.4. The signing and implementation of the management contract shall not alter or adversely affect the project objectives and Vietnamese state interests as stipulated in the Investment License. All provisions regarding responsibilities and benefits of each party in the Management Contract shall not contravene the provisions in the Investment License and Vietnamese laws.

The management company operates under the name, seal, and account of the foreign-invested enterprise; is assigned tasks and receives remuneration as specified in the Management Contract; and is responsible to the enterprise and the law for fulfilling the rights and obligations recorded in the Management Contract.

3.6. The management company is responsible for paying taxes as prescribed by current regulations.

3.7. In all cases, the foreign-invested enterprise is liable for all activities of the enterprise before Vietnamese law, including the activities of the management company based on the Management Contract. The management company is directly responsible to Vietnamese law for activities outside the scope of the Management Contract.

The enterprise director is responsible for supporting and supervising the activities of the management company; recommending the Board of Directors to handle breaches of the Management Contract by the management company.

3.9. Any disputes between the management company and the foreign-invested enterprise shall first be resolved through negotiation and mediation. If these methods fail to resolve the dispute, it will be brought to the Vietnamese Economic Court for resolution in accordance with Vietnamese law.

Part II:

FINANCIAL ISSUES

4. Capital Contribution:

4.1. The implementation of capital contributions by the parties participating in the joint venture enterprise or in the Business Cooperation Contract must be carried out in accordance with the schedule and method stipulated in the Contract and the Enterprise Charter.

The price of equipment, materials, factories, technology used for capital contribution shall be agreed upon by the parties. When contributing capital through equipment, machinery, etc., the parties must organize an evaluation and acceptance. After completing the capital contribution through equipment, machinery, etc., and receiving confirmation from the Board of Directors, the enterprise must submit a settlement report to the State Committee for Cooperation and Investment no later than thirty days from the date of Board of Directors' confirmation.

4.2. Rental income from infrastructure leasing, membership card sales at golf courses, and similar revenues are the enterprise's revenue, not to be used to replace any party's capital contribution in a joint venture.

4.3. The increase in the enterprise's capital with foreign investment shall only be permitted and carried out according to the following procedures:

a. Conditions for increasing capital:

- Increasing capital to expand production scale or adjust and supplement business objectives in accordance with the State of Vietnam's investment encouragement policies.

- Increasing capital to maintain business operations in cases of natural disasters or other difficulties.

- Increasing capital to respond to market fluctuations.

Cases where capital increase is not permitted:

- Increasing capital to raise the import tax exemption quota for machinery, equipment, materials, raw materials, transportation means, etc., which are not actually necessary for the basic construction to form the enterprise.

- Increasing capital for business objectives that are inconsistent with the State of Vietnam's investment policies.

- Increasing capital without meeting the conditions to expand the production scale such as lack of land area, raw materials, consumption markets, environmental protection, etc.

b. Main contents of the application for capital increase:

- Name, address, field of operation, license already issued.

- Project implementation status.

- Capital investment situation (or operating capital for Joint Venture Contracts) as stipulated in the license.

- Reasons for capital increase (increase in fixed capital or working capital); additional capital amount: proof of additional capital sources and conditions for implementing the capital increase.

- Adjustment of statutory capital and contribution ratio of each party (if applicable).

- List of imported machinery and equipment due to increased capital.

- Opinion of the Board of Directors (for joint ventures), of the parties involved in the Joint Venture Contract, and of the General Director (for wholly foreign-owned enterprises) regarding the content of the capital increase.

In principle, the State Committee on Cooperation and Investment will only consider capital increases when the investor has completed the enterprise's investment capital as specified in the investment license, business license, and capital adjustment documents.

5. Increase in the Vietnamese Party's contribution to the statutory capital of a joint venture; acquisition of part of the capital of a wholly foreign-owned enterprise.

5.1. For important economic entities, the parties in the joint venture agree in the Joint Venture Contract on gradually increasing the Vietnamese Party's contribution to the statutory capital, including the timing of the capital increase, the proportion of the increase, and the transfer price.

5.2. For wholly foreign-owned projects in important economic sectors, the State Committee on Cooperation and Investment guides foreign investors to reflect in their investment applications the possibility for Vietnamese enterprises, based on agreements, to acquire a portion of the enterprise's capital to convert it into a joint venture. The investment application must clearly specify the transfer ratio, transfer period, and transfer price.

The State Committee on Cooperation and Investment decides which Vietnamese enterprises may acquire the transferred capital.

6. Reinvestment:

6.1. "Reinvestment" refers to using profits earned from investments in Vietnam to increase the statutory capital or investment capital of ongoing projects or to invest in another project in Vietnam.

6.2. Foreign organizations and individuals who use distributed profits for reinvestment are entitled to a refund of the corporate income tax paid on the reinvested profits under the following conditions:

- Reinvestment in areas encouraged by the State of Vietnam for investment.

- The reinvested capital must be used for three years or more.

- Full statutory capital as recorded in the investment license has been contributed.

- The corporate income tax paid on the reinvested profits will be refunded once the reinvestment is completed.

6.3. When using profits for reinvestment, the foreign investor prepares a dossier to submit to the State Committee on Cooperation and Investment. The dossier includes:

a. Determining the reinvestment target: Implementing a new project or expanding the production scale of an ongoing project; the amount of reinvested profit.

If the profits are used to reinvest in a new project, the project must have been granted an investment permit by the State Committee on Cooperation and Investment. If the profits are used to increase the investment capital or statutory capital of an ongoing joint venture, approval from the Board of Directors is required; if the profits are used to increase the investment capital or statutory capital of an ongoing wholly foreign-owned enterprise, an explanation from the General Manager is required.

b. Certificate (or receipt or certified copy) from the tax authority indicating the amount of corporate income tax paid.

6.4. Within fifteen days of receiving a complete and valid dossier, the State Committee on Cooperation and Investment informs the investor of its decision. Once the reinvestment is completed, the State Committee on Cooperation and Investment issues a decision confirming that the investor meets the conditions for tax refund.

6.5. Corporate income tax corresponding to the reinvested profits will be refunded by the tax authority after the foreign party submits the confirmation certificate from the State Committee on Cooperation and Investment.

6.6. Any abuse of reinvestment activities to evade corporate income tax will be handled according to the law. If the investor fails to ensure a reinvestment period of three years or more for any reason, or if it is found through inspection that the reinvested profits were not actually reinvested, the investor must return the tax refund, including interest.

7. Asset Transfer:

7.1. The non-compensatory transfer of assets from the foreign party to the Vietnamese party is based on the voluntary principle, as stipulated in the Contract and the Investment License. Assets transferred upon completion of the project must be in operational condition.

For projects where the foreign party commits to transferring non-compensatory assets to the Vietnamese party after the project's completion, the State Committee on Cooperation and Investment, based on the nature of the project and the transfer period, allows the enterprise to enjoy financial benefits as prescribed.

7.2. In cases where the enterprise is dissolved before the agreed term and the foreign party has fully recovered its capital and achieved satisfactory profits, the foreign party still must carry out the non-compensatory asset transfer to the Vietnamese party.

8. Tax.

8.1. Capital Transfer Tax:

The transfer of capital or the Contract must be approved by the State Committee for Cooperation and Investment. The transferring party shall submit to the State Committee for Cooperation and Investment an application for transfer, accompanied by: the transfer contract; a report on the implementation status of the project up to the time of requesting the transfer; documentation regarding the legal status and financial situation of the transferee; the transfer price.

In cases where the transfer value exceeds the initial value, the transferring party must pay the capital transfer tax at a rate of 25% on the difference in value. Evading the capital transfer tax will be dealt with according to current laws.

8.2. Import Tax:

Equipment, machinery, spare parts, materials, production and business means (including transportation vehicles) imported into Vietnam for basic investment construction projects forming enterprises or to create fixed assets for joint venture contracts are exempt from import tax as stipulated in Article 76 of Decree 18/CP dated April 16, 1993. This exemption also applies to equipment and machinery (excluding transportation vehicles) imported to increase fixed assets for expanding the scale and production capacity of enterprises.

The importation of tax-exempt motor vehicles shall be carried out in accordance with Appendix 7 attached to this Circular.

Part 3:

FORMATION, REVIEW, IMPLEMENTATION OF INVESTMENT PROJECTS

9. Formation, Review of Projects

9.1. Each set of project files, the number of items of documents in accordance with Articles 9, 20, and 46 of Decree 18/CP dated April 16, 1993, shall be specified as follows:

a. For the Vietnamese party participating in joint ventures or cooperative operations, the following documents must be submitted along with the file:

- A certified copy of the Decision on Establishment of the enterprise.

- Proof of legal ownership of the assets intended for capital contribution, in cases where state-owned assets are used for capital contribution, such use must be approved in writing by the competent state authority.

- Proof of lawful land use rights or permission granted by the Provincial People's Committee to use land for foreign cooperation and investment.

b. For foreign investors who are companies:

- A certified copy of the License for Establishment or Operation of the company;

- Financial reports of the company for the two most recent years;

- Power of attorney for the representative to sign documents.

c. For foreign investors who are individuals:

- Certification from the Bank regarding the assets that the investor intends to invest;

- A certified copy of the individual's passport.

d. Joint venture contracts and Business Cooperation Contracts must be signed by authorized representatives of each party on every page, with the final page stamped.

e. Application for land lease in accordance with the guidelines of the Land Administration General Department.

g. The number of sets of project files to be submitted is twelve, including one original set. Project files should be bound into volumes with hard covers for long-term preservation.

9.2. Review of Projects.

a. The Prime Minister decides on Class A projects based on recommendations from the Chairman of the State Committee for Cooperation and Investment.

To present to the Prime Minister, the Chairman of the State Committee for Cooperation and Investment seeks opinions from the National Planning Commission, relevant Ministries, and related localities. If necessary, the Chairman of the State Committee for Cooperation and Investment establishes an Advisory Board to review the project, including authorized representatives from the National Planning Commission, Ministry of Finance, Ministry of Trade, Ministry of Science, Technology, and Environment, Ministry of Construction, Office of the Government, Land Administration General Department, related sectors, domestic and international experts.

Within five days of receiving the project file, the State Committee for Cooperation and Investment sends the project file to the National Planning Commission, Ministry of Trade, Ministry of Science, Technology, and Environment, Ministry of Construction, the Ministry managing the economic and technical sector, Land Administration General Department, and other relevant Ministries.

Within twenty days of receiving the project file, the relevant Ministries provide their opinions in writing to the State Committee for Cooperation and Investment on matters within their jurisdiction.

Within thirty days of receiving the project file, if necessary, the Chairman of the State Committee for Cooperation and Investment establishes an Advisory Board to review the project before presenting it to the Prime Minister.

Within fifty days of receiving a valid project file, the Chairman of the State Committee for Cooperation and Investment submits the review opinion to the Prime Minister. Within seven days of receiving the Prime Minister's decision, the Chairman of the State Committee for Cooperation and Investment informs the investor of the decision.

Throughout the entire period mentioned above, the time taken by the investor to amend and supplement the investment project file is not counted.

b. The Chairman of the State Committee for Cooperation and Investment decides on Class B projects after seeking opinions from the National Planning Commission, Ministry of Finance, Ministry of Science, Technology, and Environment, Ministry of Trade, and other relevant Ministries.

Within five days of receiving the project file, the Chairman of the State Committee for Cooperation and Investment sends the file to the National Planning Commission, Ministry of Finance, Ministry of Trade, Ministry of Science, Technology, and Environment, Ministry of Construction, and other relevant Ministries.

Within twenty days of receiving the project file, the relevant Ministries provide their opinions in writing to the State Committee for Cooperation and Investment on matters within their jurisdiction.

Within forty-five days of receiving a valid project file, the Chairman of the State Committee for Cooperation and Investment will inform the investor of the decision.

Throughout the entire forty-five-day period mentioned above, the time taken by the investor to amend and supplement the investment project file is not counted.

10. Implementation of Projects.

10.1. In accordance with Article 19 of the Law on Foreign Investment in Vietnam, the Investment License issued by the State Committee for Cooperation and Investment simultaneously serves as the Business Registration Certificate for the enterprise.

Foreign-invested enterprises and parties involved in Business Cooperation Contracts are permitted to operate in industries as specified in the Investment License and Business License. For special business activities: renting accommodation; engraving seals; printing and photocopying, manufacturing and repairing hunting rifles; producing hunting rifle ammunition and renting hunting rifles; businesses using explosives, strong poisons, radioactive substances; cosmetic surgery; practicing medicine and pharmacy... registration of practice must be made in accordance with relevant regulations.

10.2. Within ninety days from the date of issuance of the Investment License, the parties to the joint venture must convene a meeting to decide on the following main issues:

- Approving the list of Board of Directors members; the Board of Directors elects the Chairman and Vice Chairmen of the Board, appoints the General Director, Deputy General Directors, and Chief Accountant.

- Approving the operational regulations of the Board of Directors, determining the working relationship between the Board of Directors and the Management Board, between the Chairman of the Board of Directors and the General Director, First Deputy General Director.

- Specifying the progress and methods of capital contribution by each party; measures for acceptance of each party's contributed capital.

- Determining the production and business program and plan of the enterprise as the basis for the Management Board to develop import plans for materials and equipment, recruitment plans for labor, signing economic contracts, labor contracts, service contracts...

The minutes of the first session of the Board of Directors must be sent to the State Committee for Cooperation and Investment, the People's Committee of the province/city where the enterprise is headquartered, and the investors.

10.3. After being appointed, the General Director and Deputy General Directors immediately proceed with administrative procedures such as:

- Engraving and registering the seal of the enterprise according to the model provided by the Ministry of Home Affairs;

- Registering the headquarters of the enterprise with the People's Committee of the province/city;

- Opening an account for the enterprise at a bank. In case of opening an account abroad for borrowed funds, approval from the State Bank of Vietnam is required;

- Registering accounting systems with the Ministry of Finance;

- Registering the recruitment plan for labor with the provincial/city labor management agency or entrusting a labor supply company to recruit labor as required by the enterprise;

- Registering direct import/export rights, compiling a list of imported equipment and materials to implement basic construction investment projects to form the enterprise, submitting it to the Ministry of Commerce for review and issuance of import permits;

- Within thirty days from the date of issuance of the Investment License, the joint venture enterprise must publish in central or local newspapers the contents specified in the Investment License;

- Processing construction permit applications;

- Processing applications to establish representative offices or branches of the joint venture enterprise in other locations (if applicable). The establishment of branches of the enterprise must be approved by the State Committee for Cooperation and Investment.

10.4. For investment projects under the form of Business Cooperation Contracts and wholly foreign-owned enterprises, the implementation of administrative tasks after obtaining the Investment License shall be carried out similarly to joint venture enterprises.

10.5. All tasks stipulated above must be completed within no more than six months from the date of issuance of the Investment License. If the enterprise fails to complete these tasks beyond this period, a report explaining the delay and requesting an extension must be submitted to the State Committee for Cooperation and Investment.

11. Liquidation of the enterprise.

11.1. Enterprise liquidation applies only in the following cases:

a. The enterprise concludes its term of operation as specified in the Investment License.

b. The enterprise is dissolved before the term specified in the Investment License when:

- The joint venture parties cannot fulfill the Contract due to force majeure reasons.

- The joint venture parties fail to fulfill their obligations as stipulated in the contract, thus the project lacks conditions to continue operations.

- The enterprise operates at a loss to the extent that it can no longer sustain operations (except in cases where the enterprise cannot repay maturing debts).

- Due to other reasons specified in the contract or the Enterprise Charter.

c. The enterprise is dissolved before the term due to a decision by the State Committee for Cooperation and Investment when the enterprise violates the operating objectives specified in the Investment License or violates Vietnamese laws.

11.2. The liquidation committee of the joint venture enterprise established in accordance with Article 39 of Decree 18/CP serves as the working body of the Board of Directors of the enterprise, subject to the direction of the Board of Directors in carrying out the liquidation tasks.

The establishment and operation of the liquidation committee must comply with the following provisions:

a. The liquidation committee is the full representative of the enterprise in the liquidation process, conducting liquidation activities in accordance with the contents recorded in the decision establishing the liquidation committee and bearing legal responsibility for those activities.

b. Within thirty days from the date of the decision establishing the committee, the liquidation committee convenes its first session to approve the plan, method, and budget for activities, which are then submitted to the Board of Directors for approval. Thirty days after receiving the approval submission, the Board of Directors responds in writing to the liquidation committee; if there is no response beyond this period, it is considered as approval of the submission.

c. During the liquidation process, the Board of Directors, General Director, Deputy General Directors, and Chief Accountant have the duty to provide information, data, and funding for the liquidation activities, sign relevant documents of the enterprise related to liquidation, while supervising the activities of the liquidation committee. Other activities of the enterprise must cease when the enterprise reaches the end of its operating term specified in the Investment License or in the dissolution decision.

d. Upon expiration of the liquidation period as stipulated in Article 39 of Decree 18/CP dated April 16, 1993, if the parties have not completed the liquidation, the liquidation committee will still terminate its activities. Joint venture parties must handle all remaining matters themselves; disputes are resolved according to the provisions of Article 100 of Decree 18/CP dated April 16, 1993.

e. Before reporting the results of the liquidation to the State Committee for Cooperation and Investment or announcing the results of the liquidation, the liquidation committee must report the results of the liquidation to the Board of Directors.

In case the Board of Directors does not convene a meeting or does not agree with the liquidation result report, the Liquidation Committee still sends the liquidation result report to the State Committee for Cooperation and Investment and terminates its activities. The State Committee for Cooperation and Investment may request specialized agencies to re-examine the liquidation results before making a final decision on the liquidation of the enterprise, revoking the Investment License, and notifying that decision to relevant authorities. The examination costs shall be borne by the enterprise.

f. Not later than thirty days after the completion of liquidation, the Liquidation Committee publishes the bulletin regarding the completion of liquidation and returns the enterprise's seal to the authority where it was registered or issued, and notifies the State Committee for Cooperation and Investment thereof.

11.3. The Liquidation Committee of the joint venture enterprise established by the State Committee for Cooperation and Investment pursuant to Article 40 of Decree 18/CP dated April 16, 1993 has different powers and responsibilities compared to the Liquidation Committee established pursuant to Article 39 of Decree 18/CP. Specifically:

a. The Liquidation Committee has full independent authority over the enterprise's Board of Directors in conducting liquidation activities consistent with the contents recorded in the establishment decision and is responsible to the State Committee for Cooperation and Investment and the law for those activities.

b. Not later than thirty days from the date of the establishment decision, the Liquidation Committee shall engrave and register the committee's seal for the purpose of liquidation work and hold the first session to report the plan, method, and budget for the activity to the State Committee for Cooperation and Investment for approval, while also informing the enterprise's Board of Directors and implementing it. The outcome of this first session is not dependent on the presence or absence of Board of Directors members. If the Board of Directors objects or fails to comply, the Liquidation Committee will continue the liquidation according to the approved plan, simultaneously reporting to the State Committee for Cooperation and Investment for appropriate measures.

c. During the period of conducting enterprise liquidation, the Liquidation Committee has the right to request the Board of Directors, General Director, Deputy General Director, and Chief Accountant to provide information, data, materials, and funds for the liquidation activities. In cases where these requests are not met, the Liquidation Committee has the right to take necessary measures to ensure the liquidation plan.

11.4. When the operation ends at the time or before the time specified in the Investment License, the sole foreign investor and the parties involved in the Business Cooperation Contract must carry out asset liquidation and settlement of outstanding debts in accordance with Articles 53 and 18 of Decree 18/CP dated April 16, 1993. In cases where the sole foreign investor and the parties involved in the Business Cooperation Contract fail to strictly and legally perform liquidation and settlement, the State Committee for Cooperation and Investment will coordinate with relevant agencies to take necessary measures for liquidation, settlement of outstanding debts, and protection of creditors' legitimate rights.

12. Establishing branches and representative offices.

12.1. In the application for an Investment License, if the foreign-invested enterprise requires establishing a branch or representative office to conduct business activities, the investor must submit the project dossier along with the application.

- Explanation of the necessity of establishing a branch or representative office.

- Opinion of the People's Committee of the province or city where the branch or representative office is planned to be located.

After obtaining the investment license, the investor shall proceed with procedures for leasing premises and registering the branch or representative office at the People's Committee of the province or city where the branch or representative office is to be established.

12.2. After obtaining the Investment License, due to business needs, if the enterprise wishes to establish a branch or representative office, it shall submit to the State Committee for Cooperation and Investment an application for permission to establish a branch or representative office accompanied by the following documents:

- Explanation of the necessity of establishing a branch or representative office.

- Opinion of the People's Committee of the province or city where the branch or representative office is planned to be established.

The State Committee for Cooperation and Investment shall examine and decide on granting permission to establish a branch or representative office. After receiving approval from the State Committee for Cooperation and Investment, the investor shall proceed with procedures for leasing premises and registering the branch or representative office at the People's Committee of the province or city where the branch or representative office is to be established.

Part 4:

MANAGEMENT OF FOREIGN-INVESTED ENTERPRISES

13. Allocation of state management functions:

Ministries, ministerial-level agencies, government agencies, and provincial-level People's Committees (hereinafter collectively referred to as Ministries and provincial-level People's Committees) in accordance with their legal powers and duties are responsible for guiding and inspecting the operations of foreign-invested enterprises.

13.1. Ministries:

- Draft planning, issue policies, and set standards and norms.

- Participate in regular inspections: directly conduct specialized inspections and spot checks within the scope of their functions and powers.

Prior to conducting specialized inspections or spot checks, Ministries shall notify the inspection schedule to the State Committee for Cooperation and Investment and the People's Committee of the province where the project is located for coordination.

- Provide opinions on adjusting or amending the investment license upon the proposal of the State Committee for Cooperation and Investment.

- Train skilled workers upon the request of foreign-invested enterprises.

- Coordinate with the State Committee for Cooperation and Investment to evaluate the economic and social effectiveness of direct foreign investment.

13.2. State Committee for Cooperation and Investment:

- Issue circulars guiding enterprises to implement the Investment License.

- Serve as the coordinating body with ministries and provincial-level People's Committees to organize regular inspections of enterprises; serve as the focal point for resolving issues arising from investors' requests.

- Recommend relevant ministries and provincial People's Committees to issue guiding documents related to foreign direct investment; recommend the Prime Minister to suspend enforcement and request amendments to regulations of sectors and levels that contravene state legal documents.

- Mediate disputes at the request of the parties.

- Depending on the nature and scale of the project, decide or coordinate with relevant sectors and localities to consider adjustments, modifications, and supplements to the Investment License.

- Decide to dissolve enterprises ahead of schedule when they violate the Investment License and Vietnamese laws.

- Analyze the economic and social effectiveness of foreign direct investment activities.

13.3. Provincial People's Committees shall implement state management over all enterprises with foreign investment capital within their territorial jurisdiction. Specifically, this includes:

- Conducting administrative procedures: issuing Land Use Right Certificates, Construction Permits, directing land clearance, permitting establishment of headquarters, registration of residence, travel, and introducing Vietnamese laborers to enterprises.

- Introducing individuals to participate in the Board of Management and other positions in joint ventures, as well as key officials to participate in management and supervision of the operations of those officials.

- Supervising the implementation of capital contributions, provisions of the Investment License, and other legal documents; resolving internal disputes among Vietnamese parties; addressing issues arising in enterprises within their authority.

- Monitoring compliance with financial obligations, labor relations and wages, public order and safety, and environmental protection and fire prevention.

- Participating with ministries in regular inspections of enterprises. Conducting specialized inspections and spot checks directly on enterprises. Prior notice must be given to the State Committee for Cooperation and Investment and relevant ministries for coordination.

- Evaluating the economic and social effectiveness of foreign direct investment activities within their territorial jurisdiction.

14. Inspect enterprise activities.

- Regularly inspect the comprehensive implementation of the Investment License provisions, chaired by the State Committee for Cooperation and Investment, with participation from relevant sectors and localities. Such regular inspections shall not exceed once a year for enterprises deemed necessary.

- When necessary, conduct specialized inspections organized by ministries and provincial People's Committees. Specialized inspections shall be conducted once a year.

- Conduct spot inspections when enterprises show signs of violating laws or experiencing incidents, following procedures prescribed by law.

- Inspection records must bear signatures of representatives of the inspection team and the inspected enterprise. Inspection conclusions shall be sent to relevant agencies and the State Committee for Cooperation and Investment.

- Organizations and individuals making decisions and conducting inspections contrary to law, taking advantage of inspections to cause inconvenience to enterprise operations, shall be responsible for damages caused by such inspections and be subject to legal sanctions.

Part 5:

SOME GUIDELINES ON FOREIGN DIRECT INVESTMENT POLICIES

1. Guidelines for investing in the production and assembly of consumer electronic products.

(Appendix 1 of this Circular)

2. Guidelines for investing in vehicle assembly and production, motorcycles, and spare parts.

(Appendix 1 of this Circular)

3. Guidelines for investing in hotel construction, apartment buildings, rental offices: restaurant operation.

(Appendix 3 of this Circular)

4. Guidelines for investing in the garment and footwear industries.

(Appendix 4 of this Circular)

5. Guidelines for investing in construction, installation, and technical consultancy and design services.

(Appendix 5 of this Circular)

6. Guidelines for preparing project investment documentation.

(Appendix 6 of this Circular)

7. Guidelines for importing tax-exempt vehicles.

(Appendix 7 of this Circular)

8. Guidelines for reporting enterprise operational status.

(Appendix 8 of this Circular)

Part 6:

IMPLEMENTING PROVISIONS

This Circular takes effect from the date of signature.

This Circular replaces the following documents of the State Committee for Cooperation and Investment:

1. Circular No. 1621/UB-LXT dated August 5, 1993 guiding the implementation of Decree No. 18/CP dated April 16, 1993 detailing the implementation of the Law on Foreign Investment in Vietnam.

2. Circular No. 238/HTĐT-VP dated May 15, 1991 guiding certain tasks to be carried out after the issuance of the License.

3. Circular No. 1034/HTĐT-TĐ dated August 1, 1992 guiding the use of profits for reinvestment.

4. Decision No. 698/HTĐT-VP dated August 19, 1991 regarding reporting procedures.

5. Letter No. 781/HTĐT-VP dated September 20, 1991 guiding the implementation of Decision No. 698/HTĐT-VP.

6. Letter No. 1661/HTĐT-VP dated November 16, 1994 regarding the examination of investment project files at Ministries and localities.

7. Letter No. 533/HTĐT-TĐ dated March 22, 1993 regarding the time frame for reviewing foreign investment projects.

8. Letter No. 2308/UB-TĐ dated November 14, 1994 guiding automobile assembly and production investments in Vietnam.

9. Letter No. 1536/UB-VP dated August 11, 1994 guiding motorcycle and spare parts production investments in Vietnam.

10. Letter No. 1730/HTĐT-TĐ dated September 8, 1994 guiding consumer electronics production and assembly investments in Vietnam.

11. Letter No. 112/UB-TĐ dated January 21, 1994 cooperating in the construction sector.

12. Letter No. 2427/UB-TĐ dated November 24, 1994 regarding garment and footwear projects.

13. Letter No. 1541/UB-TĐ dated July 26, 1993 regarding hotel, apartment, rental office, and restaurant projects.

14. Letter No. 667/HTĐT-TĐ dated May 23, 1992 regarding restaurant projects.

15. Letter No. 1961/UB-VP dated September 22, 1993 guiding the preparation of project files.

16. Letter No. 2361/UB-QL dated November 11, 1993 regarding procedures for increasing capital for foreign-invested enterprises and parties involved in Joint Venture Contracts.

17. Letter No. 139/HTĐT-VP dated January 28, 1993 regarding asset transfer after the termination of the Contract.

18. Letter No. 1412/UB-QL dated July 27, 1994 regarding the import of passenger vehicles by foreign-invested enterprises.

19. Letter No. 501/HTĐT-VP dated March 16, 1993 regarding project implementation.