Tuesday, May 21, 2019

Investment in Vietnam

exactBOOK ON BUSINESS AND spenditure IN VIETNAM BERLIN, 2011 FOREWORD all oer the past two decades, Viet Nams economy has bee n developing cursorily owing to its Doi moi (Renovation) policy and activeness to integ count itself into the world-wide economy. W ith its enormous efforts and determination, and effective cooperation with exotic partners and fri balances intercontinental, Viet Nam is taking firm steps towards industrialization and modernization.With a stable political environment and great scotch potentials, Viet Nam is an attractive destination for doing argument and investiture. The G everyplacenment of Viet Nam has been ceaselessly endeavoring to improve the enthronization climate with the aim at creating an increasingly business-friendly environment in Viet Nam. Germany is the biggest economic partner of Viet Nam in Europe. The economic cooperation amid the two countries has been fruitfully burgeoning.In an effort to further strengthen the economic coopera tion between Viet Nam and Germany, t he Embassy of the Socialist nation of Viet Nam in coordination with the relevant ministries of Viet Nam to publish the Guidebook on Business and coronation of Viet Nam, which is expected to provide German businesses with an overview of the Viet Nams economy and its business and enthronement climate.We are confident that German businesses nominate find helpful info and guide distinctions on investment and doing business in Viet Nam from the Guidebook, and thereby encounter a deeper under(a)standing of the Viet Nams economy, a dynamically emerging and reliable destination for international investment flows. We deeply thank the Ministry of Foreign affairs and the Ministry of preparedness and enthronisation of Viet Nam for their kind support and assistance. We would like to dribble our sincere thanks to Dr.Andreas Stoffers, Board ingredient of German Business Association Vietnam and Member Executive Committee Euroean Chamber of Commerce Vietman for reviewing this book. W e also heartedly thank Marktforschung und Kommunikation GmbH for her great cooperation and excellent coordination in publishing the Guidebook. Dr. Do Hoa Binh Extraordinary and Plenipotentiary Ambassador of the S. R. Viet Nam to the national Republic of Germany 2 ABBREVIATION ASEAN BCC BOM BOT BT BTO CEPT CIT CPC DOLISA DPI EIAR EL EPC EPZ EU EZ FIC FOB gross domestic product HTZ IL IZ JVC LTT LUR LURC MFN MOIT MOLISA MONRE MOST MPI NOIP ODA per centum PIT PPP RO SBV TTC USD VAT VCAD VNDW TO Association of Southeast Asian Nations Business co-operation contract Board of focusing of IZs, EPZs, HTZs and EZs Build-operate-transfer (including its derivative forms, BTO and BT) Build-transfer Build-transfer-operate Common Effective Preferential Tariff Scheme Corporate income tax Civil transactions Code Provincial Department of Labour, War Invalids and Social Affairs Provincial Department of Planning and coronation Environmental impact assessment re port attempt justice Environment protection commitment deal processing z unmatched European Union Economic z sensation Foreign-invested confederation Free on placard Gross Domestic ProductHigh-tech zone investment Law Industrial zone Joint venture company Law on engineering science Transfer Land utilization seriouss Certificate of set ashore use rights to the highest degree Favoured Nation Ministry of Industry and cover Ministry of Labour, War Invalids and Social Affairs Ministry of Natural Resources and Environment Ministry of Science and Technology Ministry of Planning and investment national Office of Intellectual Property formal phylogenesis assistance unvarnished Cooperation Treaty Personal income tax Public Private Partnership Representative Office assert buzzword of Vietnam Technology transfer contract United States of the States dollarValue-added tax Vietnam Competition Administration Department Vietnamese Dong W orld Trade Organisation 3 TABLE OF CONTENTS FOREWORD . 2 VIETNAM AT A GLANCE .. 5 I KEY FACTS .. 5 II POLITICAL SYSTEM terce parsimoniousness . 6 IV INFRASTRUCTURE .. 13 V VIETNAM- GERMANY ECONOMIC RELATIONSHIP.. 21 sanctioned GUIDE FOR INVESTING AND DOING BUSINESS IN VIETNAM .. 24 I INVESTMENT REGULATIONS . 24 II pile REGULATIONS 30 III TAXATION 35 IV CUSTOMS REGULATIONS 42 V LAND law of nature .. 44 VI FOREIGN EXCHANGE AND LOANS .. 9 VII EMPLOYMENT .. 52 VIII contention LAW 58 IX ENVIRONMENT 62 X INTELLECTUAL PROPERTY .. 64 XI TECHNOLOGY TRANSFER 1 XII DISPUTE RESOLUTION .. 73 BUSINESS TRAVEL GUIDE TO VIETNAM . 77 APPENDICES APPENDIX 1 be given OF SECTORS ENTITLED TO INVESTMENT INCENTIVES .. 80 APPENDIX 2 LIST OF GEOGRAPHICAL REGIONS OF INVESTMENT INCENTIVES . 84 APPENDIX 3 USEFUL CONTACTS AND ADDRESSES IN VIETNAM .. 87 4 VIETNAM AT A GLANCE I KEY FACTS ? Official name The Socialist Republic of Vietnam. Capital Hanoi. ? Largest city Ho Chi Minh City. ? Administrative subdivisions 58 provinces and 5 municipalit ies (Hanoi, Hai Phong, Da Nang, Ho Chi Minh and Can Tho). ? Official language Vietnamese. ? Location In the center of Southeast Asia, neighboring on China to the north, Laos and Cambodia to the west, and the East sea and Pacific Ocean to the East and South. ? Area 331,690 km2. ? Coast line 3,260 km. ? Climate tropical in confederation monsoonal in north with hot, rainy season (mid May to mid-September) and warm, dry season (mid-October to mid-March). race (2010) 86. 9 jillion, by sector (urban 30% and rural 70%) and by age (less than 15 years old 24. 7%, 15 -64 years old 68. 5% and more than than 65 years old 6. 8%). ? Population density 262 people/km2. ? Literacy 93. 7%. ? Natural resource Energy resources ( inunct, gas, coal, hydropower and wind power) minerals (bauxite, iron ore, lead, gold, precious stones, tin, chromate, anthracite, gimmick materials, granite, marble, clay, white sand and graphite) sea and tropical forestry resources and agricultural potential. ?Currency Vietnamese Dong (VND). ? Exchange rate (April 2011) 1 USD = 20,725 VND. ? gross domestic product (2010) 104. 7 one million million USD. ? GDP per capita (2010) 1,204 USD. ? GDP accepted maturement rate (2010) 6. 78%. ? GDP by orbit (2010) Agriculture (20. 6%), Industry (41. 1%) and Service (38. 3%). ? Exports unprocessed oil, garments, brake shoes, marine products, electronic products and components, funitures, rice, coffee, rubber, tea, pepper. ? Major export grocery stores USA, Japan, China, Australia, Singapore, Germany, South Korea, Malaysia, the Philippines, Netherland. ? entailments Machinery & equipment, petroleum products, pharmaceuticals, fertilizer, steel products, metal, textile, garment and shoe inputs, vehicles. 5 ? II Major import markets China, Japan, South Korea, Taiwan, Singapore, Thailand, USA, Malaysia, India, Germany. POLITICAL SYSTEM The current ramp upment was espouse in 1992 and amended in 2001. It clearly indicates that the State is of the people, by the people and for the people. The people access the State power through the National Assembly and concourses Councils, which are composed of elected representatives who represent the peoples will and aspirations.The Constitution endows all citizens, men and women alike, with equal rights in all political, economic, cultural and social spheres as hygienicspring as in family affairs, the right to and freedom of belief and religion and the right to choose and practice a religion, the right to and freedom of movement and residence in Vietnam, and the right to go abroad and return home as stipulated by laws. The National Assembly is the highest representative body of the people, endowed with the highest State power of the Socialist Republic of Vietnam.It governs constitutional and legislative rights, decides fundamental domestic and outside(prenominal) policies, socioeconomic tasks, and national defence and warrantor issues, etcetera It exercises the right to supreme supervisio n of all activities of the State. The State chairperson is the Head of State, elected by the National Assembly from among its deputies to represent the Socialist Republic of Vietnam in domestic and extraneous affairs. The term of office of the President is the very(prenominal) as that of the Chairman of the National Assembly.The Government is the executive body of the Socialist Republic of Vietnam. It has the same term of office as the National Assembly and administers the effectuation of State affairs in the field of politics, economics, culture, society, national defence and security and foreign dealing. The government is headed by the native Minister and comprises Deputy vertex Ministers, Ministers and other government members. The Supreme Peoples Court is the judicial body of the Socialist Republic of Vietnam.It supervises and directs the judicial cause of local Peoples Courts, Military Tribunals, Special Tribunals and other tribunals, unless otherwise prescribed by the N ational Assembly at the establishment of such Tribunals. The Supreme Peoples Procuracy oversees the enforcement of the law and exercises the right to prosecution, and ensures serious and uniform implementation of the law. III ECONOMY Since the Doi moi (reforms) were introduced in the mid-1980s, Vietnamese economy has changed rapidly.Replacing the old centrally-planned economy, Vietnam has shifted to a new economic structure viz. a socialist-oriented market economy, and has gained significant success. Today the aim of Vietnam is to become a basically industrialized countrified by 2020. 6 Overall achievements Vietnam embarked on Doi moi in 1986 and the uncouth has seen many dramatic changes since. Over the last decade it has recorded an average GDP appendage rate of 7. 3 per centum per annum, be it second in the region after China. Its economy suffered from the 2008-09 economic crisis unless recovered rapidly, with GDP harvest-home rate of 6. 78 percent in 2010.ADB forecasts that the economy of Vietnam will increase by 6. 1 and 6. 7 percent in 2011 and 2012 respectively. Vietnam already became a lower middle income country with its GDP per capita of 1,204 USD in 2010. To a large extent, Vietnam has successfully transformed from a centrally-planned economy with heavy bureaucracy and subsidies to a socialist -oriented market economy characterized by strong dynamism and rapidly growing entrepreneurship. The countrys economy has integrated deeply into the global and regional economies, bringing about a sharp rise in trade volumes as well as an influx of foreign investment.The economy is well on the way to being a multi-sector nonplus operating according to market mechanisms. The private sector has enjoyed very favourable conditions created by the Enterprise Law of 2000, which institutionalizes the freedom of all individuals to conduct business in areas not prohibited by law and removes a large result of administrative obstacles that hampered enterprises. With a view to raising the efficiency of the state -owned sector, the government has adopted assertive policy measures to reorganize the sector through equitization.As a result, more than 3,970 state-owned enterprises were equitized by the end of 2010. GDP of Vietnam, 2000-2010 120 9. 0 8. 0 7. 0 80 6. 0 5. 0 60 4. 0 40 3. 0 2. 0 20 1. 0 0 0. 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Year GDP GDP growth rate Source General Statistics Office 7 GDP growth rate (%) GDP ( meg USD) carbon Progress in particular sectors As Vietnams GDP continuously increases the countrys economic structure has also seen illustrious changes. From 1990 to 2010 the share of the agriculture sector reduced from 38. 7 percent to 20. percent, while that of industry and social structure change magnitude from 22. 7 percent in 1990 to 41. 1 percent in 2010. The service sector remained relatively eternal 38. 6 percent in 1990 and 38. 3 percent in 2010. Agriculture still plays a particular role i n Vietnams socio-economic life since it generates about 57 percent of bestow employment and makes crucial part to the expansion of the countrys foreign trade. Vietnam are among the leading countries in terms of agricultural exports such as rice, coffee, cashew nut nuts and aqua-products, etc.Industry continues to grow rapidly in terms of gross create, at an average rate of 10-15 percent per annum. Besides state enterprises, foreign-invested and the private enterprises play an increasingly important role in industrial development and exports. Services are growing at an average rate of 7-8 percent. In 2010 the value added of service sector grew 7. 52 percent with good performances being recorded in the trade, finance, and hotels and restaurant sub-sectors as consumption and touristry remained buoyant. Industry and go continue to increase their sha re in the economy.This reflects market oriented reforms, a graduated reduction in barriers to competition and to private sector deve lopment, and approachs in physical infrastructure. Greater diversification in industrial employment and services lays the foundation for further sustained growth in output and employment. VA growth rate by sector of Vietnam, 2000-2010 12. 0 10. 0 Percent 8. 0 6. 0 4. 0 2. 0 0. 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Year Agriculture Industry Source General Statistics Office 8 Service internationalist economic integrationVietnam has made major steps forward in its commitments to regional and international economic integration. side by side(p) the introduction of Doi moi it subscribe an economic and trade cooperation agreement with the EU in 1995, joined ASEAN in 1995, adhered to CEPT/AFTA in 1996 and became an APEC member in 1998. The Bilateral Trade Agreement (BTA) with the United States was signed in 2000, which resulted in a dramatic increase in the trade volume between the two countries. Vietnam became the 150th member of the World Trade Organization on Janu ary 11, 2007.Vietnams commitments in the WTO increase market access for exports of goods and services of WTOs members and establish greater transparency in regulatory trade practices as well as a more train playing field between Vietnamese and foreign companies. Vietnam undertook commitments on goods (tariffs, quotas and ceilings on agricultural subsidies) and services ( preps of access to foreign service providers and related conditions), and to implement agreements on intellectual property (TRIPS), investment measures (TRIMS), springer valuation, technical barriers to trade, sanitary nd phytosanitary measures, import licensing provisions, anti-dumping and countervailing measures, and rules of origin. At present, Viet Nam has established diplomatic relations with 172 countries and signed 55 bilateral investment agreements and 58 double taxation agreements with countries and territories including Germany. It has economic and trading relations with about one hundred sixty- quintet te countries and territories. Vietnam holds membership in 63 international organizations and over 650 non-governmental organizations.The policy of multi-lateralization and diversification in international relations has helped Vietnam to integrate more deeply into the global and regional economies and increase trade and investment ties with nations all over the world. More importantly, Vietnam has improved its enable business friendly environment over time. World Bank recognised that Vietnam is one of the 10 more or less-improved economies in ease of doing business in 2010. Currently, its ranking is 78 and even higher(prenominal) than other Asia countries such as Indonesia, Philippines, China, India. Vietnams rankings according to various indices Index 2011-2010 rank 2010-2009 rankWorld Banks Ease of doing business 78/183 88/183 World Economic Forums spherical competitiveness index 59/139 75/133 12/top 20 12/top 25 (*) ATKEARNEY FDI confidence index handbill (*) data for 2007 9 In ternational trade Total export volume of Vietnam increased by 18 percent per year on average in the last decade and its import volume also did so by 19. 2 percent per year. In 2010 its total trade volume reached $155. 6 billion ($71. 6 billion of export and $84 billion of import), equal to 149 percent of its GDP. Both the composition and lineament of exports hasten improved significantly. The proportion of industrial products has risen considerably.The five biggest export items allow in oil, textiles, footwear, seafood and wood products. Vietnam is in the early point in time of the industrialisation and modernisation process and receives a large inflow of FDI therefore it relies largely on the imp orted equipment and materials. Trade relations with foreign countries, especially other countries in the region, have spread out over time. The biggest trading partners of Viet Nam include China, America, ASEAN, EU, Japan and South Korea. International trade of Vietnam, 2000-2010 16 0 70 one hundred forty 60 120 50 100 40 80 30 60 20 40 10 20 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Year Export outcome Trade in goods as % GDP Source General Statistics Office 10 Trade in goods as % GDP (percent) 180 80 Trade (billion US$) 90 evanesce 10 export and import items of Vietnam, 2010 Garment Machinery & equipment Footwear brace products seafood Petroleum products Crude oil Fabric Electronic products Electronic products Furniture Vehicles Rice Platics Machinery & equipment Garment and shoe inputs Precious stone & metals Metals Rubber Animal feed 0. 0 5. 0 10. 0 15. 0 0. 0 5. 0 10. 0 15. 0 Import volume (billion USD) Export volume (billion USD) Export item Import item Source General Statistics OfficeForeign direct investment Since the introduction of the Law on Foreign coronation in 1987, by the end of 2010, 12,236 foreign investment projects were authorised with total registered cracking of $193. 4 billion and total disbursed pileus of over $61 billion. The investors from 92 countries and territories have committed investments in Viet Nam. Most of them are from Asia, Europe and America. Taiwan, Republic of Korea, Singapore, Japan and Malaysia and are the top five countries and territories investing in Vietnam. The next five countries and territories are British Virgin Islands, America, Hongkong, Cayman Islands and Thailand.These top ten countries and territories account for over three billet of the total licenced projects and foreign registered working capital in Viet Nam. Since 1996 there has been a tendency towards investment in producing goods for export, infrastructure plait, producing import substitutes and in labour intensive industries. There are more than 8,327 projects in the manufacturing and processing, real estate and winding industries with a total capital of about US$153,5 billion, accounting for nearly 80% of the registered capital.While there are foreign invested projects in all provinces and cities in Viet Nam, most investment has been in the light upon economic areas in the South including Ho Chi Minh City, Dong Nai, Binh Duong, Ba Ria, Vung Tau, and in the North including Hanoi, Hai Duong, Hai Phong and Quang Ninh. The foreign invested sector has increased rapidly, gradually asserting itself as a dynamic component of the economy, and has made an important contribution to enhancing the competitiveness and efficiency of the economy. In 20 10, the foreign invested sector has accounted for 21. 5% of the countrys total investment, contributed 18. percent to GDP, 54. 2 percent to export volume (crude oil included), 44. 4 percent to industrial gross output and employed 1. 6 million persons. 11 FDI Inflow of Vietnam, 2000-2010 Project number Registered capital Service, 10. 7% Telecom. & transit 4. 1% Service, 19. 2% Processing & manufacturing 48. 7% Agriculture, 1. 6% Processing & manufacturing 59. 8% Agriculture 3. 9% Telecom. & raptus 7. 7% Real estate & construction 30. 8% Power, water, gas, 2. 5% Mining, 1. 5% Real estate & construction 8. 4% Power, water, gas, 0. 5% Mining, 0. 6% Source Ministry of Planning and Investment FDI of Vietnam by sector, 2010 600 60 1400 1200 50 deoxyguanosine monophosphate 40 800 30 600 20 400 10 200 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Year spending Total investment Note Accumulated inflow of FDI by the end of 2010 Source Ministry of Planning and Investment 12 No. of project 1800 70 FDI inflow (billion US$) 80 Top 10 destinations and investors of Vietnam, 2010 Top 10 FDI receiving provinces Top 10 investing countries and territories Ho Chi Minh City Chinese Taipei Ba Ria Vung Tau Korea Republic Ha Noi Singapore Dong Nai Japan Binh Duong Malaysia Ha Tinh British Virgin Islands Phu Yen America Thanh Hoa Hong Kong Hai Phong Cayman IslandsQuang Nam Thailand 0. 0 10. 0 20. 0 30. 0 Total registered investment (billion USD) 0. 0 5. 0 10. 0 15. 0 20. 0 25. 0 Total registered investment (billion USD) Note Accum ulated inflow of FDI by the end of 2010 Source Ministry of Planning and Investment IV INFRASTRUCTURE ? Road network ? 171,392 km country-wide. 2 North-South flag routes (i) the 1A National Highway of 2,260km in length from Lang Son to Ca Mau and (ii) the Ho Chi Minh Highway of 3,167km in length from Cao Bang to Ca Mau. Railway network ? Total length of 2,632 km. 278 stations country-wide. Hanoi Ho Chi Minh City line 1,726 km (it takes 29. hours for express train). Linked to China lines in two directions, one from Lao Cai province to Yunnan province and one from Lang Son province to Kwangsi province of China. Planned to construct the railway lines connecting with Laos and Cambodia. Inland waterway More than 2,ccc rivers and canals with total length of 198,000 km. Inland waterway system of 35,386 km. 13 ? Sea ports ? Vietnam has 3,260km coastline, a strategic position close to international shipping routes and favored intrinsic conditions of foundation, sea depth, current, tidal, deposition and channels for developing seaport business. 7 national level sea ports, 23 provincial level sea ports and 9 offshore oil and gas sea ports. Current major important ports include Cai Lan and Hai Phong in the North, Da Nang and Quy Nhon in the Centre and Sai Gon and Cai Mep in the South. Airports ? 8 international airports Cam Ranh (Nha Trang), Cat Bi (Hai Phong), Da Nang (Da Nang), Lien Khuong (Lam Dong), Noi Bai (Ha Noi), Phu Bai (Hue), Tra Noc (Can Tho), Tan Son Nhat (Ho Chi Minh City). In 2010, Tan Son Nhat Airport legitimate 15. 5 million passergers and Noi Bai airport did 9. 5 million passengers. 14 domestic airports Buon Ma Thuot (Dac Lac), Ca Mau (Ca Mau), Chu Lai (Quang Nam), Co Ong (Ba Ria Vung Tau), Dien Bien Phu (Dien Bien Phu), Dong Tac (Phu Yen), Dong Hoi (Quang Binh), Gia Lam (Ha Noi), Na San (Son La), Pleiku (Gia Lai), Phu Cat (Binh Dinh), Phu Quoc (Kien Giang), Rach Gia (Kien Giang), Vinh (Nghe An). Business development zones ? 3 advanced zo nes (Hoa Lac, Da Nang and Ho Chi Minh City) with total area of 3,509 ha of land. ? 260 industrial zones and export processing zones with total area of 71,394 ha of land. 15 economic zones located along sea coast with total area of 638,633 ha of land.Energy Electricity output reached 92. 7 billion kWh. Crude oil and gas exploited 23 million ton. Coal exploited 44 million ton. Telecommunication 26. 8 million Internet users. 153. 7 million mobile subscriptions. 16. 4 million fixed phone subscriptions. 14 15 Vietnam rail network 16 National seaports of Vietnam No. Seaport Province Current capacity of ship (DWT) 1 Cam Pha Quang Ninh 50,000 2 Hon Gai Quang Ninh 40,000 3 Hai Phong Hai Phong 20,000 4 Nghi Son Thanh Hoa 20,000 5 Cua Lo Nghe An 10,000 6 Vung Ang Ha Tinh 30,000 7 Chan May Thua Thien Hue 30,000 8 Da Nang Da Nang 30,000 9 Dung Quat Quang Ngai 0,000 10 Quy Nhon Binh Dinh 30,000 11 Van Phong Khanh Hoa 50,000 12 Nha Trang Khanh Hoa 20,000 13 Ba Ngoi Khanh Hoa 30,000 14 Ho Chi Minh City Ho Chi Minh City 30,000 15 Vung Tau Ba Ria Vung Tau 50,000 16 Dong Nai Dong Nai 20,000 17 Can Tho Can Tho 10,000 Source Decision 2190/QD-TTg date 24/12/2009 17 Number and size of IPs and EPZs in Vietnam 300 71,394 70,000 60,000 40,000 150 26,971 260 100 183 11,830 50 50,000 43,687 200 300 1 2,370 12 30,000 20,000 130 10,000 65 0 1991 1995 2000 2005 2007 Year Number of IPs surface (ha) Source Ministry of Planning and Investment 18 2010 Size of IPs (ha) Number of IPs 250Economic zones of Vietnam 19 SWOT Analysis of Vietnam Strengths Weaknesses ? i of fastest growing economies ? Few skilled professionals in Asia with average GDP growth of available 7. 2% per year over the last decade ? High bureaucratic barriers ? Stable political and social security ? Weak infrastructure (power, ? Abundance of gracious resources transferee) (labour force of 46. 2 million people ? Underdeveloped load-bearing(a) young, motivated and educated industries. workforce 60% of population under 35 years old) ? Competitive business and production costs (cost labor, industrial land rent, energy cost, elephone cost, marine transportation, taxation) ? Available mineral and natural resources (coal, oil & gas, iron ore, bauxite, rare earth,.. ) ? Central location in South East Asia, long distance coast. Opportunities Threats ? Global integration (ASEAN, APEC, WTO membership) one of the worlds most open economies ? High inflation ? High trade deficit ? D evaluation of VND ? Higher demand for consumer goods and capital goods with better ? Banking and finance sector in infant stage quality because of being a lower middle income country, aiming at ? Low national reserves. an industrialized country and ncreasing urban population ? Export oriented and labour intensive industries ? Infrastruture (road, railway, seaport, airport, power) projects funded by international donors or foreign investors. 20 V VIETNAM- GERMANY ECONOMIC RELATIONSHIP Trade Germany is the biggest trade partner of Vietnam in Europe. In 2010, scorn the global economic downturn, bilateral trade reached nearly USD 6 billion, a substantial increase over the previous year. Total export value of Vietnam to Germany reached nearly USD 4 billion, accounting for 19% of total Vietnams export to the EU while its import value from German amounted to USD 2 billion.Vietnams main export items to Germany are garments, footwear, coffees, furnitures, see foods, leather and leather apparel, office machinery, iron, metal products, articles of plastics, ceramic products, crude rubber. Germany is the second-largest market worldwide for robusta coffee and black pepper of Vietnam. Main import items from Germany to Vietnam include machines (in minelaying, construction and civil engineering, textile, food and beverage,), aircraft, units for electricity generation nd distribution, passenger cars, chemical products, pharmaceutical products, measurement, control and regulation technology products, industrial plants, p lastics, lifting and use equipment, medical equipment and orthopedic appliances, engines, iron, metal products, elec tronic components After WTO accession, Vietnam is becoming an emerging and lucrative market in Asia. As Vietnam is accelerating its industrialization process to become an industrialized country by 2020, the trend towards sophisticated production facilities is intelligible and it is likely to result in increased demand for hi -tech machinery made in Germany.Investment There have been over 230 German companies operating and investing in Vietnam, including many Germanys leading groups such as Siemens, Deutsche Bank, Mercedes, Metro, Bosch etc. By the end of April 2011, German companies have invested in 163 projects with registered capital of USD 825 million in Vietnam. ternary fourths of total investment projects and two thirds of investment capital of Germany mainly concentrate in manufacturing, processing, technique services, tuition and communication technology, b anking and finance services.Although German investment projects have been located in 26 locatio ns in Vietnam, most of them have been implemented in Ho Chi Minh City, Hanoi, Binh Duong and Dong Nai. In the upcoming time, the active implementation of mega infrastructure development and energy projects partially funded by German ODA such as the metro line No. 2 Ben Thanh An Suong in Ho Chi Minh City (with length of 11 km and total investment capital of USD 1. 25 billion), O Mon IV thermo power, Phu Lac wind power, Vietnamese Green Line, will have positive impacts on promoting German investment flow into Vietnam.German foreign trade and investment promotion is well positioned in Viet Nam. German companies and investors can access to supports and advices from AHK Vietnam, German Business Association (GBA), a correspondent of Germany Trade and Invest (GTAI) in Vietnam. 21 Development cooperation Vietnam is an important partner of Germany in development cooperation. As one of the biggest donors among the EU members, Germany has provided Vietnam with more than EUR 1 billion in ODA since 1990. During 2011 2012, Germany committed nearly EUR 300 million for Vietnam. This is a clear evidence for strong support by Germany to the development of Vietnam.German-Vietnamese development cooperation focuses on the three antecedency areas (i) Sustainable economic development and vocational training (ii) Environmental policy, conservation and sustainable use of natural resources (iii) Health. German development cooperation has been utilizing effectively and contributing positively to socio-economic development of Vietnam, especially in vocational training, human resource development, infrastructure, clean energy source. During the visit of German Chancellor Dr. Angela Merkel to Viet Nam in October 2011, Hanoi Declaration was signed by Prime Minister Nguyen Tan Dung and Chancellor Dr.Angela Merkel. It is the start of the strategic partnership between Vietnam and Germany. Export and import between Vietnam and Germany, 2007-2010 4000 3500 Value (USD million) 3000 2500 2000 1500 1000 500 0 2007 2008 Export from Vietnam to Germany 2009 2010 Year Import to Vietnam from Germany Source German Federal Statistical Office 22 Gernam investment flow into Vietnam by sector, 2010 Registered capital Service, 10. 5 Agriculture, Telecom. & 5. 4 transportation 0. 4 Real estate & construction 1. 0 Project number Processing & manufacturing 53. 6 Processing & manufacturing 46. 7 Service, 34. 2 Agriculture 2. 0 Power, water & gas, 29. Telecom. & Mining, 0. 7 transportation Real estate & 10. 5 construction Power, water & gas, 2. 0 3. 9 Mining, 0. 0 Source Ministry of Planning and Investment 23 LEGAL GUIDE FOR INVESTING AND DOING BUSINESS IN VIETNAM I INVESTMENT REGULATIONS On 1 July 2006, the investment regime comprised of a unified Enterprise Law (EL), which regulates corporations, and a parkland Investment Law ( IL), which regulates investment, came into effect. The promulgati on of these two important legislations is considered a significant watershed for improvement of the legal environment on investment activities and corporate governance in Vietnam. . Overview To do business under the IL and EL, foreign investors are required to obtain investment certificates from an appropriate Licensing Authority. Under the IL, investors whitethorn invest in all sectors not prohibited by law. prohibited by law include Areas ? Investment projects detrimental to national defence, security, and the public interest ? Investment projects detrimental to historical and cultural traditions and the ethics or customs of Vietnam ? Investment projects harming peoples health or destroying natural resources and the environment and ?Investment projects treating venomous waste imported to Vietnam and investment projects manufacturing toxic chemicals banned by international law. 2. Licensing Investors shall follow the licensing and registration steps depending on the size and the s ector of the investment project. Investment Certification Process 24 Conditional sectors Investment projects in conditional sectors shall satisfy certain conditions in order to be licence. Conditional sectors include ? publicize and television ? Production, publishing and distribution of cultural products ?Exploration and exploitation of minerals ? Establishment of infrastructure for telecommunications network, transmission and provision of internet and telecommunications services ? Establishment of public postal network and provision of postal services and express services ? Construction and operation of river ports, sea ports, terminals and airports ? Transportation of goods and passengers by railway, airway, roadway and sea and inland waterways ? patrimonial of aquaculture ? Production of tobacco ? Real estate business ? Import, export and distribution business Education and training ? Hospitals and clinics and ? Other investment sectors in international treaties of which Viet nam is a member and which restrict the opening of the market to foreign investors. Investment Registration Foreign investment projects with a total invested capital of less than VND 300 billion (US$ 15 million) and not falling in a conditional sector are subject to investment registration and foreign investors of such projects shall carry out the procedures for investment registration in order to be granted an investment certificate.The investment certificate also serves as the business registration of the corporate entity. Enterprises can subsequently register additional investment projects without the need to create a separate entity. The investor should submit industry documents for investment registration to the Licensing Authority. The Licensing Authority shall check the documents and issue the investment certificate to the investors within 15 workin g years of receiving the valid application.Investment Evaluation Any investment project with a total invested capital of VND 30 0 billion (US$ 15 million) or more or investment projects falling in conditional sectors shall tolerate an investment evaluation by the Licensing Authority and other relevant authorities. There are two opposite types of evaluation ? evaluation for investment projects regardless of total invested capital falling into conditional sectors and ? evaluation for investment projects with total invested capital of VND300 billion or more that do not fall into conditional sectors.For the evaluation of investment projects with total invested capital of VND 300 billion or more, along with the application documents, the applicant essential also submit an economic technical explanation of the investment project to the Licensing Authority. This covers the economic technical instructive statement, 25 objectives, scale, location, investment capital, implementation schedule, land use needs, and technological and environmental solutions of the investment project.For the evaluation of investment projects falling in conditional sectors, in addition to the application documents, the investor shall also demonstrate compliance with requirements specialized to that conditional sector. When assessing the application documents, the Licensing Authority may liaise with other relevant Ministries and authorities in evaluating the proposed investment project. Items to be evaluated shall comprise ? compliance with master planning/ govern for technical infrastructure, master planning/zoning for land use, master planning for construction, master planning for utilization of minerals and other natural resources land use requirements ? project implementation schedule ? environmental solutions. The time-limit for evaluation of investment shall not exceed thirty (30) days from the date of receipt of a complete and valid file. In necessary cases, the above time -limit may be extended, but not beyond forty five (45) days. Applying for Construction License Filing for Investment Certificate Apply ing for the approval of Report on environment effects evaluation Agreement on land/ expression/office renting Evaluating preliminary technical design Environmental protection ommitment Land/building/office renting contract 26 Projects subject to Projects subject to environmental protection construction license commitment Investment Certificate Projects subject to Report on environmental effects evaluation fluttering List for Investors 3. Licensing Authority Licensing Authority 3. 1 The Board of Management (BOM) of industrial zones (IZs), export processing zones (EPZs), high-tech zones (HTZs), and economic zones (EZs) are responsible for licensing foreign investments within their zones. 3 . 2National important BOT projects and PPP projects are licensed by the Ministry of Planning and Investment (MPI). Oil and gas projects, credit institutions, insurance projects and law firms are licensed by Ministry of Trade and Industry, State Bank of Vietnam, Ministry of Finance and Ministry of Justice respectively. 3 . 3 The Provincial Peoples Committee is the authority responsible for all other foreign investments. Licensing applications shall be submitted to these bodies, who will confabulate with other relevant governmental authorities (where so required) before issuing final approval. . 4 The Prime Minister will approve the by-line investment projects (unless they are not included in the O.K. master plan) (a) The following investment projects, irrespective of the source of investment capital and scale of investment construction and commercial operation of airports air transportation construction and commercial operation of national sea ports exploration, mining and processing of petroleum exploration and mining of minerals radio and television broadcasting commercial operation of casinos production of cigarettes stablishment of university training establishments and 27 establishment of IZs, EPZs, HTZs and EZs. (b) The following investment projects, irrespec tive of the source of investment capital but with a total invested capital of VND 1,500 billion or more in the following sectors business in electricity, processing of minerals, metallurgy construction of railway, road and internal waterway infrastructure and production and business of alcohol, beer (c) The following projects with foreign-invested capital in the following sectors commercial operation of sea transportation onstruction of networks for and supply of postal and delivery, telecommunications and internet services, construction of wave transmission networks printing and distributing newspapers and printed matter, publishing and establishment of independent scientific research establishments. 4. Forms of Investment and Enterprise Under the Law on Investment and the Law on Enterprises foreign investors may choose the following forms of investment in Viet Nam Investment forms Invest in business development Establish economic organizations (100% capital of foreign inv estors or joint venture) Purchase shares or contribute capital to participate in forethought of investment activities Invest in contractual forms of BBC, BO, BTO, BT, PPP and M of enterprises. While foreign investors are allowed to taint shares in many domestic companies without limitation, there are ownership limitations for certain companies listed on the Vietnam stock reciprocation and pecuniary sectors. Foreign ownership cannot exceed 49 percent of listed companies and 30 percent of listed companies in the financial sector. Forms of enterprises Limited liability company (with one member or more than one member)

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