Law Amending and Supplementing Certain Provisions of the Law on Foreign Investment in Vietnam No. 41-LCT/HĐNN8

LAW

AMENDMENTS AND SUPPLEMENTS TO CERTAIN ARTICLES

OF THE FOREIGN INVESTMENT LAW IN VIETNAM

To encourage and create more favorable conditions for foreign organizations and individuals to invest in Vietnam and for Vietnamese economic organizations of all economic sectors to expand investment cooperation with foreign entities;

Pursuant to Article 83 of the Constitution of the Socialist Republic of Vietnam;

This Law amends and supplements certain provisions of the Foreign Investment Law in Vietnam adopted by the National Assembly of the Socialist Republic of Vietnam on December 29, 1987.

Article 1

Articles 2, 3, 5, 6, 7, 8, 10, 11, 12, 16, 25, 27, 29, 30, and 37 are amended and supplemented as follows:

1- Points 2, 4, 5, 6, and 10 of Article 2 are amended and supplemented as follows:

"2. "Vietnamese Party" means a party consisting of one or more Vietnamese economic organizations having legal personality under various economic sectors."

"4. "Both Parties" means the Vietnamese Party and the Foreign Party."

"Multiple Parties" means the Vietnamese Party and multiple Foreign Parties, or the Foreign Party and the Vietnamese Party, or multiple Vietnamese Parties and multiple Foreign Parties."

"5. "Business Cooperation Contract" is a document signed between both parties or multiple parties regarding business cooperation."

"6. "Joint Venture Contract" is a document signed between both parties or multiple parties concerning the establishment of a joint venture enterprise, or a document signed between a joint venture enterprise and a foreign organization or individual to establish a new joint venture enterprise in Vietnam."

"10. "Joint Venture Enterprise" is an enterprise established in Vietnam by both parties or multiple parties based on a joint venture contract or agreement signed between the Government of the Socialist Republic of Vietnam and the Government of a foreign country, or a new enterprise established in Vietnam by a joint venture enterprise cooperating with a foreign organization or individual based on a joint venture contract."

2- Article 3 is supplemented with a paragraph at the end as follows:

"Vietnamese private economic organizations are allowed to engage in business cooperation with foreign organizations or individuals in fields and conditions prescribed by the Council of Ministers."

3- Article 5 is amended and supplemented as follows:

"Both parties or multiple parties may cooperate in business based on a business cooperation contract, such as production cooperation sharing products and other forms of business cooperation.

The objects, contents of business, rights, obligations, responsibilities of each party, and relations among the parties shall be agreed upon and recorded in the business cooperation contract."

4- Article 6 is amended and supplemented as follows:

"Both parties or multiple parties may cooperate to establish a joint venture enterprise.

A joint venture enterprise may cooperate with foreign organizations or individuals to establish a new joint venture enterprise in Vietnam.

A joint venture enterprise has legal personality under Vietnamese law."

5- Article 8 is amended and supplemented as follows:

"The contribution of the Foreign Party or multiple Foreign Parties to the statutory capital of a joint venture enterprise is not subject to a maximum limit, according to the agreement of the parties but not less than 30% of the statutory capital.

For a joint venture enterprise involving multiple parties, the minimum contribution ratio of each Foreign Party and each Vietnamese Party shall be prescribed by the Council of Ministers.

The value of each party's contribution shall be determined based on international market prices and recorded in the establishment document in Vietnamese currency or foreign currency as agreed by the parties."

6- Article 12 is amended and supplemented as follows:

"The leadership body of a joint venture enterprise is the Board of Directors.

Each party designates its representatives to participate in the Board of Directors in proportion to their contributions to the statutory capital of the joint venture enterprise.

In the case of a two-party joint venture, each party must have at least two members on the Board of Directors.

In the case of a multi-party joint venture, each party must have at least one member on the Board of Directors.

If there is one Vietnamese Party and multiple Foreign Parties or one Foreign Party and multiple Vietnamese Parties in a joint venture enterprise, then the Vietnamese Party or the Foreign Party must have at least two members on the Board of Directors.

The Chairman of the Board of Directors shall be elected by mutual agreement of the parties.

The General Director and Deputy General Directors shall be appointed by the Board of Directors to manage daily operations of the enterprise and shall be responsible to the Board of Directors for the enterprise's activities.

The General Director or the First Deputy General Director must be a Vietnamese citizen."

7- Paragraph 4 of Article 16 is amended and supplemented as follows:

"The salary and allowances of Vietnamese workers shall be paid in Vietnamese currency or foreign currency from the enterprise's account opened at a bank."

8- Paragraph 1 of Article 27 is amended and supplemented as follows:

"Depending on the field of investment, the investment area, the scale of investment capital, the volume of export goods, the volume of substitute goods for essential imports that are not yet produced domestically or insufficiently produced, the nature and duration of operation, the competent state management agency for foreign investment may grant tax exemption on profit income for joint venture enterprises for a maximum period of 2 years starting from the year of profitable operation, and reduce 50% of the profit tax for a maximum period of 2 years thereafter."

9- Article 29 is amended and supplemented as follows:

"Foreign-invested enterprises and foreign parties engaging in business cooperation based on land, water surface, sea surface usage contracts with Vietnam must pay rent; in cases of resource exploitation, they must pay resource taxes."

10- In Articles 7, 10, 11, 25, 30, and 37, the term "both parties" shall be replaced by "multiple parties."

Article 2

The Council of Ministers shall amend and supplement detailed implementing regulations for the Foreign Investment Law in Vietnam in accordance with this Law.

This Law was adopted by the National Assembly of the Socialist Republic of Vietnam, eighth session, seventh meeting, on June 30, 1990.