Decision No. 53/1999/QD-TTg on certain measures to encourage foreign direct investment.

Pursuant to …;

On certain measures to encourage foreign direct investment

PRIME MINISTER

Pursuant to the Government Organization Law dated May 30, 1992,

Pursuant to the Law on Foreign Investment in Vietnam dated November 12, 1996;

To encourage and facilitate further the activities of enterprises includes with foreign direct investment capital;

At the proposal of the Ministry Ministry of Science and Technology Planning and Investment;

DECISION:

Article 1. Prices of goods and services.

Adjust prices for some goods and services as follows:

1. Electricity sales price.

As of July 1, 1999, the electricity sales price for production (normal hours, voltage from 6KV to 120KV) for enterprises with foreign investment capital shall be 7.5 cents/kWh.

Based on the aforementioned electricity sales price, the Government Price Board shall specify the specific electricity sales price applicable to production, business, and service activities of enterprises with foreign investment.

2. Telecommunication rates.

As of July 1, 1999, the installation fee for telephones for enterprises with foreign investment capital and foreigners shall be applied at the level prescribed for domestic enterprises and Vietnamese citizens.

As of July 1, 1999, the monthly telephone rental fee for enterprises with foreign investment capital and foreigners shall be 10 USD per unit; the intra-city call rate shall be calculated according to the tariff applied to domestic enterprises and Vietnamese citizens.

As of July 1, 1999, international telecommunications rates currently in effect from Vietnam to other countries shall be reduced by an average of 10%; as of July 1, 1999, the surcharge on telecommunications rates from hotels shall not exceed 15% compared to the rates at post offices.

The General Post Office Administration, based on the aforementioned prices and rates, after consulting with the Government Price Board, shall specify the detailed installation fees for telephones, monthly telephone rental fees, intra-city call rates, and international telecommunications rates from Vietnam to other countries.

3. Clean water price.

As of July 1, 1999, the People's Committees of provinces and centrally-administered cities shall implement the pricing schedule for clean water sales according to usage purposes without distinction between domestic enterprises, enterprises with foreign investment capital, Vietnamese citizens, and foreigners, as stipulated in Circular No. 02/TTLB dated April 28, 1997 of the Ministry of Construction and the Government Price Board.

Article 2. Fees and charges.

1. As of July 1, 1999, a unified admission fee schedule shall be applied for Vietnamese and foreigners at each historical and revolutionary site; cultural works.

The Ministry of Finance and the People's Committees of provinces and centrally-administered cities shall be responsible for guiding and supervising the implementation of this regulation.

2. The Ministry of Finance shall submit to the Government for amendment of Decree No. 193/CP dated December 29, 1994 of the Government in the direction of only collecting administrative fees for the registration of property tax records of enterprises with foreign investment capital to be implemented as of July 1, 1999.

3. As of July 1, 1999, the fee for establishing representative offices of foreign economic organizations in Vietnam shall be collected at a rate of 1 million VND; no fee shall be collected for renewal.

4. Pursuant to Decree No. 04/1999/NĐ-CP dated January 30, 1999 of the Government, the Ministry of Finance shall decide within its authority or submit to the Prime Minister to reduce or abolish fees and charges issued by ministries, sectors, People's Committees of provinces and centrally-administered cities, and provincial management boards of industrial zones beyond their authority, contrary to the nature and purpose of the collection of fees and charges to be implemented as of July 1, 1999. Currency for specifying service prices, fees, and charges.

Article 3. As of July 1, 1999, Vietnamese Dong shall be used to specify all types of service prices, fees, and charges except where otherwise specified. Service prices, fees, and charges specified in US dollars in Articles 1 and 2 of this Decision shall be converted into Vietnamese Dong according to the average transaction exchange rate on the inter-bank foreign exchange market published by the State Bank of Vietnam.

Wages of Vietnamese workers employed in enterprises with foreign investment capital.

Article 4. 1. As of July 1, 1999, the minimum wage and wages of Vietnamese workers employed in enterprises with foreign investment capital shall be determined and paid in Vietnamese Dong based on the conversion of the current minimum wage and wages specified in US dollars to Vietnamese Dong according to the average transaction exchange rate on the inter-bank foreign exchange market published by the State Bank of Vietnam.

2. As of July 1, 1999, when the consumer price index increases by 10% or more compared to the most recent adjustment, the minimum wage and wages of Vietnamese workers employed in enterprises with foreign investment capital shall be adjusted accordingly. 2. The Ministry of Labor, Invalids, and Social Affairs shall adjust the application areas of the minimum wage according to Decision No. 385/LĐTBXH-QĐ dated April 1, 1996 of the Ministry of Labor, Invalids, and Social Affairs to be implemented as of July 1, 1999.

The minimum wage stipulated in this clause shall apply to projects granted investment licenses after this Decision takes effect, and for projects granted investment licenses before this Decision takes effect, enterprises with foreign investment capital and labor collectives may voluntarily agree to implement the wage provisions of this clause to maintain stable production and employment for workers.

3. The Ministry of Finance shall submit to the Government for detailed regulations on the implementation of Point b, Clause 2, Article 16 of the Trade Union Law. For enterprises with foreign investment capital, the trade union fund contribution system shall not be applied from the wage fund.

The Ministry of Labor, Invalids, and Social Affairs shall submit to the Government for amendment of Decree No. 58/CP dated March 3, 1996 of the Government to delegate authority to provincial Departments of Labor, Invalids, and Social Affairs and provincial management boards of industrial zones to issue work permits for foreigners working in enterprises with foreign investment capital with simplified procedures, to be implemented as of July 1, 1999; the duration of the work permit shall correspond to the term of the labor contract signed between the enterprise and the foreign worker.

Article 5. Issuing work permits.

Recruitment and training of workers.

Article 6. Recruitment and training of workers.

Foreign-invested enterprises shall recruit Vietnamese workers through Vietnamese labor supply organizations. If within the maximum period of thirty days from the date of receiving the labor supply request from the enterprise, the Vietnamese labor supply organization fails to meet the requirements, then the enterprise may directly recruit Vietnamese workers.

The Ministry of Labor, Invalids, and Social Affairs shall submit to the Government for amending Decree No. 72/CP dated October 31, 1995, and Decree No. 85/1998/NĐ-CP dated October 20, 1998, of the Government to implement the above provisions from July 1, 1999.

The Ministry of Labor, Invalids, and Social Affairs shall organize and consolidate labor supply organizations to improve the quality of labor supply for foreign-invested enterprises. The Ministry of Labor, Invalids, and Social Affairs shall coordinate with People's Committees of provinces and centrally-run cities to organize vocational training to supply labor for foreign-invested enterprises.

Article 7. - Some cases of value-added tax implementation.

1. Foreign-invested enterprises and foreign parties participating in joint venture contracts are temporarily exempted from paying value-added tax on imported raw materials and components for export production during the period they are temporarily exempted from import duties under the laws on export tax and import tax.

2. The Ministry of Finance shall submit to the Government for amending and supplementing Decree No. 281/1998/NĐ-CP dated May 11, 1998, and Decree No. 102/1998/NĐ-CP dated December 21, 1998, of the Government to provide that the following items imported by foreign-invested enterprises and foreign parties participating in joint venture contracts to create fixed assets (exempted from import duties according to Article 63 of Decree No. 12/CP dated February 18, 1997, and Article 10 of Decree No. 10/1998/NĐ-CP dated January 28, 1998, of the Government) are not subject to value-added tax:

Specialized equipment, machinery, and transportation means included in the production line to create fixed assets of the enterprise; Domestic construction materials not yet produced to create fixed assets of the enterprise.

Article 8. Trading goods with export processing enterprises.

1. Except for goods prohibited from export, domestic enterprises and individuals are allowed to sell goods to export processing enterprises, exempted from export taxes, and only required to file declarations with customs authorities in export processing zones.

2. Export processing enterprises are permitted to sell their products to the domestic market:

Raw materials and semi-finished products for enterprises directly producing export goods;

Goods listed in the Catalogue of goods substituting essential imports where there is a domestic demand for imports;

Scrap materials and by-products still having commercial value.

Procedures and payment of import duties for the aforementioned goods shall be carried out in accordance with current regulations.

Article 9. Land use rights of industrial zone enterprises and export processing enterprises.

Industrial zone enterprises and export processing enterprises shall be granted land use certificates within the term of the contract signed with infrastructure development and operation enterprises in industrial zones and export processing zones. The General Department of Land Administration shall issue necessary documents to implement the above provisions.

Article 10. Encouraging the construction of worker housing and infrastructure outside the fence.

Enterprises of all economic sectors and foreign-invested enterprises are encouraged to lease land at the lowest possible price and enjoy maximum tax exemptions and reductions to invest in building worker housing and infrastructure outside the fences of industrial zones and foreign-invested enterprises (educational, health facilities, etc.).

Article 11. Additional measures to encourage investment. .

1. Foreign-invested enterprises meeting any of the following conditions shall enjoy incentives equivalent to those for projects in the List of specially encouraged investment projects.

a) Exporting 80% or more of their products;

b) Exporting 50% or more of their products and utilizing a large number of domestic labor, raw materials, and components (accounting for 30% or more of production costs);

c) Investing in areas with difficult socio-economic conditions, meeting one of the following conditions: Exporting 50% or more of their products in the fields of breeding, growing, processing agricultural, forestry, and aquatic products; Exporting 50% or more of their products and employing over 500 workers; Exporting 30% or more of their products and utilizing a large amount of domestic raw materials and components (accounting for 30% or more of production costs);

d) Producing high-value-added mechanical, electrical, and electronic parts and components, utilizing a large amount of domestic raw materials and components;

e) Processing minerals mined in Vietnam.

2. Projects producing mechanical, electrical, and electronic parts and components shall be exempted from import duties on production materials for three years from the start of production.

3. Foreign investors investing in mountainous, remote, and far-flung areas shall enjoy a corporate income tax rate of 5% for repatriating profits abroad.

4. Foreign-invested enterprises encountering difficulties in implementing projects and temporarily suspending construction or operations shall have their land rental fees reduced or waived corresponding to the suspension period.

5. Foreign-invested enterprises already allocated rice export quotas are permitted to purchase paddy and rice raw materials directly from producers in accordance with guidelines issued by the Ministry of Trade.

Article 12. - Implementation clause.

1. This Decision takes effect fifteen days from the date of signing;

2. The Minister, Heads of ministerial-level agencies, Heads of government agencies, and Chairpersons of provincial people's committees under the direct control of the central government shall be responsible for implementing this Decision.