CIRCULAR

GUDING FOREIGN INVESTMENT ACTIVITIES IN VIETNAM

Pursuant to the Law on Foreign Investment in Vietnam dated November 12,1996; the Law Amending and Supplementing a Number of Articles of the Law on ForeignInvestment in Vietnam dated June 9, 2000 (hereinafter referred collectively to as theForeign Investment Law);
Pursuant to the Government’s Decree No.24/2000/ND-CP dated July31, 2000 detailing the implementation of the Law on Foreign Investment in Vietnam(hereinafter referred to as Decree No.24/2000/ND-CP);
Pursuant to the Government’s Decree No.75/CP dated November 1,1995 defining the functions, tasks and powers of the Ministry of Planning and Investment;

The Ministry of Planning and Investment hereby guides the directforeign investment activities in Vietnam as follows:

Chapter I

INVESTMENT PROMOTION AND SELECTION, FORMULATION OF PROJECTS

Article 1.- Elaborating, announcing lists of projects and measuresto encourage investment

1. Basing themselves on the Foreign Investment Law, DecreeNo.24/2000/ND-CP and relevant provisions, the People's Committees of the provinces andcentrally-run cities (hereinafter referred collectively to as the provincial-levelPeople's Committees) shall promulgate regulations on the local State management overforeign investment activities and measures to encourage foreign investment in theirrespective localities; the ministries and branches shall promulgate guiding regulations onforeign investment in domains under their respective managing functions and jurisdiction.The ministries, branches and provincial-level People's Committees should consult with theMinistry of Planning and Investment before promulgating the above legal documents.

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3. The Ministry of Planning and Investment shall make and submit to thePrime Minister for promulgation the lists of State projects calling for foreign investmentcapital. The ministries, branches and provincial-level People's Committees shallpromulgate their own lists of projects calling for foreign investment capital afterreaching agreement with the Ministry of Planning and Investment.

4. The lists of projects calling for foreign investment capital must beenclosed with the project summaries containing preliminary information on the objectives,locations, major technical parameters and the projected participation by the Vietnameseparties according to Forms 1 and 2 of Appendix I to this Circular.

5. The promulgation of the lists of projects calling for foreigninvestment capital aims to create favorable conditions for investors to select investmentprojects and serve as basis for organizing investment mobilization and promotion.

6. In principle, when the lists of projects calling for foreigninvestment capital are announced for each period, the projects mentioned therein areconsidered having been in line with the planning in such period. For projects not on theabove-said lists, which are proposed and selected by the investing parties, theinvestment- licensing bodies shall sum up opinions of concerned agencies and give theircomments on the planning and implementation guidelines so as to create favorableconditions for investing parties to negotiate and compile dossiers of application forinvestment licenses.

7. The ministries, branches and provincial-level People's Committeesshall make regular revision and updating so as to make timely adjustment of the lists ofprojects calling for foreign investment capital in conformity with the planning andinvestment mobilization requirements in each period.

Article 2.- Investment promotion

1. The ministries, branches and provincial-level People's Committeesshall organize the propagation and introduction of the lists of projects calling forforeign investment capital and mobilize investment for each field, each project in form ofdirect contact with foreign investors, organize workshops or other investment promotionactivities within and without the country.

2. The above-mentioned activities may be carried out in coordinationwith the Ministry of Planning and Investment, the Vietnam Chamber of Commerce andIndustry, Vietnam's diplomatic, economic and trade representations overseas or investmentpromotion or consultancy organizations within and without the country.

3. The ministries, branches and provincial-level People's Committeesshall designate main bodies in charge of supplying information on planning and lists ofprojects calling for foreign investment capital; recommending locations, investmentparticipants and other necessary information in service of project elaboration anddeployment at the request of investors.

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Article 3.- Organizing negotiations

1. The Vietnamese parties and the foreign parties shall organize directnegotiations on investment projects in forms of joint venture or business cooperationcontract. In principle, the Vietnamese parties shall negotiate with the foreign partiesunder the already prepared negotiation plans, which anticipate the requirements to be met,particularly matters relating to modes and percentage of capital contribution, investmentcapital borrowing, profit sharing, performance of financial obligations toward theState... For investment projects under the Government's programs and key projects of theministries, branches or localities, the negotiation plans should be submitted to thecompetent bodies for approval.

In the course of negotiation, if meeting with problems, the Vietnameseparties may consult the Ministry of Planning and Investment, provincial-level People'sCommittees or concerned ministries or branches.

2. For investment projects in form of enterprises with 100% foreigninvestment capital, the foreign investors shall reach agreement with the concernedprovincial-level People's Committees on the locations, land rent amounts, plans forcompensation and ground clearance..., according to current regulations.

3. For large-scale or important projects decided by the Government, inorder to ensure the requirement of inter-branch coordination, the competent State bodiesor the Vietnamese parties assigned by the Prime Minister the negotiation responsibilityshall gather comments of concerned agencies or invite their representatives to participatein the negotiations with the foreign parties.

Article 4.- Compilation of project dossiers

Investors may themselves compile dossiers or hire investmentconsultancy service organizations licensed to operate in Vietnam to compile dossiers ofapplication for investment licenses according to the provisions of the Foreign InvestmentLaw, Decree No.24/2000/ND-CP and relevant legal documents. In all circumstances, theinvestors shall have to bear responsibility for the accuracy and truthfulness of thedossiers of application for investment licenses.

Article 5.- Foreign investment consultancy service activities

1. The investment consultancy service organizations of all economicsectors, which are licensed to operate in Vietnam, shall register their investmentconsultancy practice according to the current provisions of law. The ministries, branchesand provincial-level People's Committees shall notify the lists of Vietnamese enterprisesregistering for foreign investment consultancy service business to the Ministry ofPlanning and Investment and coordinate with the latter in managing and guiding activitiesof these enterprises in order the ensure the strict compliance with the orientations andobjectives of attracting foreign investment.

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3. The Ministry of Planning and Investment, other ministries, branchesand provincial-level People's Committees shall regularly disseminate legislation,planning, mechanism and policies on foreign investment, coordinate with and supportinvestment consultancy service organizations in carrying out investment promotionactivities.

4. The investment consultancy service organizations shall operate inaccordance with the provisions in their business registrations or investment licenses (forenterprises set up under the Foreign Investment Law) and the law provisions on privateprofessional practice.

The investment consultancy service organizations shall bearresponsibility before law and investors for the accuracy and truthfulness of theirconsultancy services; where damage is caused to the interests of the Vietnamese State orthe investors, they shall be handled according to current law provisions, depending on thenature and seriousness of their violations.

Chapter II

PROCEDURES FOR GRANTING INVESTMENT LICENSES, ADJUSTED LICENSES

Article 6. - Dossiers of application for investment licenses

1. The granting of investment licenses to foreign direct investmentprojects shall be conducted through either of the two following processes:

- Registration for the granting of investment license.

- Appraisal for the granting of investment license.

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- The project dossiers subject to registration for the granting ofinvestment licenses shall include documents prescribed in Article 106 of DecreeNo.24/2000/ND-CP. The written application of registration for the granting of investmentlicense shall be made according to Form 1 and the documents attached to the applicationshall be made according to set forms in Appendix II to this Circular;

- The project dossiers subject to the appraisal for the granting ofinvestment licenses shall include documents prescribed in Article 107 of DecreeNo.24/2000/ND-CP. The written application for the granting of investment license anddocuments attached to the application shall be made according to set forms in Appendix IIto this Circular.

3. Depending on each specific case as well as the nature of the projectapplying for the investment license, the investment licensing body may request theinvestor to additionally supply some relevant documents and materials such as:

- Materials related to the assessment of environmental impacts of theproject (if the project is on the list of projects which require the report orenvironmental impact assessment, which is announced by the Ministry of Science, Technologyand Environment);

- Documents related to land use (for projects requiring the use ofland);

- Agreements or economic contracts related to the execution ofinvestment projects (for example the renting of workshops and building for the executionof the projects, the organization of raw material supply,...).

- The preliminary design on architectural scheme for projects withconstruction works being part mentioned in the economic and technical exposition.

4. The project dossiers of application for investment licenses forpeculiar projects (investment projects in forms of BOT, BTO, BT, projects for petroleumprospection, exploration and exploitation,...) shall be made according to the provisionsof relevant legal documents.

Article 7.- Receipt of project dossiers

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For investment projects licensed by the provincial-level People’sCommittees: The project dossiers shall be addressed to the provincial Planning andInvestment Services;

For projects in industrial parks, export processing zones and hi-techparks: The project dossiers shall be addressed to the Industrial Parks Management Boardsunder the authorization mechanism of the Ministry of Planning and Investment.

2. When receiving the project dossiers, the recipients shall check thevalidity of the dossiers, particularly in the following matters:

- The number of dossier sets to be submitted and the list of documentswhich must be included in the project dossier as prescribed.

- The validity of the project dossier: The pages of the application forinvestment license, joint venture or business cooperation contract and theenterprise’s charter must be signed by the competent representatives of the investingparties.

- The documents certifying the legal status financial capability of theinvestors; the investors shall bear responsibility for the legality of the abovecertifying documents.

3. After submitting the project dossiers, investors or their authorizedrepresentatives shall be granted the receipt of the project dossiers.

Article 8.- General provisions on investment project considerationand appraisal

1. For investment projects subject to the process of registration forthe granting of investment licenses. The investment-licensing bodies shall consider thevalidity of the project dossiers according to the provisions in Articles 105 and 106 ofDecree No.24/2000/ND-CP and the provisions in Article 9 of this Circular.

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Article 9.- Examination of legal status and financial situation ofthe parties

1. The investment-licensing bodies shall consider and examine the legalstatus of investors through the documents on the establishment of enterprises (forinvestors being enterprises) or documents evidencing their legal status (for foreigninvestors being individuals);

2. The investment-licensing bodies shall consider and appraise the financialcapabilities of investors through the following documents:

- For investors being operating enterprises: To examine the alreadyaudited financial reports in the two latest years, with attention being paid to turnoverasset values, annual profits;

- For investors being newly set-up enterprises to execute projects orinvestors being foreign individuals: To consider the capital mobilizing capabilities ofinvestors; the banks' certification of the investors' accounts (for investors beingforeign individuals); the support from the parent companies (if any).

The investment-licensing bodies may request Vietnamese diplomatic,economic or trade representations overseas to supply information on the legal status andfinancial capability of foreign investors participating in the investment.

3. Vietnamese enterprises of all economic sectors participating in theinvestment cooperation with foreign countries must satisfy the following conditions:

- Being set up under the provisions of law;

- Having the lawful ownership over the capital-contributing assets.Where State assets (including the land use right value) are used for capital contribution,the permission of the competent State bodies is required;

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Article 10. - Appraisal of the investment projects’compatibility with the planning and socio-economic benefits

- The investment projects must belong to production or business domainsin line with the planning. For projects belonging to domains or operating in locations,for which the planning has not yet specified, the investment-licensing bodies shallconsult with the branch-managing ministries and the Ministry of Planning and Investment.

- Considering the capability to generate new production capacity, newproduction and business lines, new products and expand the product outlets and export.

- Considering the capability to generate jobs for laborers,particularly projects with training programs for Vietnamese laborers to gradually replaceforeigners.

- Analyzing the economic benefits of the projects, the amounts to beremitted into the State budget. Encouraging projects capable of making large payment tothe State budget, of exporting products or providing services paid in foreign currencies.

Article 11. - Appraisal of the technical levels and applicabletechnology the rational use and protection of natural resources, the protection ofecological environment.

- The importation of machinery and equipment for project execution mustcomply with the provisions in Articles 72, 73 and 74 of Decree No.24/2000/ND-CP.

- The technological transfer and the contribution of capital withtechnologies by investors must comply with the provisions in Articles 80 and 81 of DecreeNo.24/2000/ND-CP.

- For projects on the list of projects subject to the elaboration ofreports on environmental impact assessment, the investors shall have to expose in thedossiers of application for investment licenses the assessment of environmental impacts ofthe projects with contents made according to forms set by the Ministry of Science,Technology and Environment.

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Article 12.- Appraisal of the rationality of the land use, valuationof the assets used for capital contribution by the Vietnamese parties.

Where the Vietnamese parties contribute capital with the land use rightvalue or with the assets under the State ownership, the project appraisal should focus onthe following matters:

- Considering the rationality of the land use (acreage, use tempo) ascommitted by the investors in the application for investment licenses, businesscooperation contracts, joint venture contracts, the enterprises' charters and theeconomic-technical exposition; the Vietnamese parties which contribute capital with theland use right value shall have to complete the procedures for land lease and fulfilltheir obligations towards the Vietnamese State under the current provisions of law, makethe ground clearance compensation according to the Finance Ministry’s regulations,the provincial-level People's Committees and should reach prior agreement with the foreignparties on the value of expense for ground clearance compensation.

- The consideration of plans for compensation and ground clearanceshall comply with the provisions in Article 46 of the Foreign Investment Law and Article89 of Decree No.24/2000/ND-CP. Besides, the following cases may be considered:

+ Where the provincial-level People’s Committee cannot arrange inadvance the funding sources, they may reach agreement with the foreign investors onadvancing necessary expenses by the investors. Such expenses shall be calculated into theinvestment capital of the projects.

+ Where the provincial-level People’s Committee can arrange thefunding sources, the expenses for compensation and ground clearance shall be refunded bythe investors or included in the land rentals.

- Where the Vietnamese parties contribute capital with State-ownedassets, such assets must be valued by the competent bodies managing the Vietnamese partieson the basis of the market prices at the time of capital contribution, which must beaccepted by the parties. If the capital-contributing assets belong to the State budget'scapital source or originate from the State budget, the Vietnamese parties shall have tofulfill the financial obligations towards the Vietnamese State according to the currentprovisions of law.

Article 13.- The process of considering and appraising projects

1. The process of considering projects subject to registration for thegranting of investment licenses:

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- If having requests for supplements or amendments to the projectdossiers, within 7 working days after the receipt of the dossiers, theinvestment-licensing bodies shall notify the investors of their requests for supplementsor amendments to the project dossiers.

2. The process of considering projects subject to the appraisal for thegranting of investment licenses:

The process of appraising investment projects licensed by the Ministryof Planning and Investment is stipulated in Article 109 of Decree No.24/2000/ ND-CP. Theprocess of appraising investment projects licensed by the provincial-level People'sCommittees is stipulated in Article 110 of Decree No.24/2000/ND-CP.

3. The time limit for investors to send their documents supplementingor amending the project dossiers shall be 30 working days after the receipt of the writtenrequests of the investment-licensing bodies. If necessary, the investors may make and sendtheir applications for extension of the supplement and amendment time limit to theinvestment- licensing bodies for approval. Past the above time limit, if no reply isreceived, the investment-licensing bodies shall send dispatches to the investors notifyingthem that their application for investment licenses are considered no longer valid forconsideration.

Article 14.- Investment licenses

1. The investment licenses are made according to uniform form set bythe Ministry of Planning and investment for each form of investment prescribed in Forms 1,2 and 3 of Appendix III to this Circular.

2. When compiling and issuing the investment licenses, theinvestment-licensing bodies shall pay attention to some following points:

a/ Regarding the forms:

- The investment licenses issued by each investment-licensing bodyshall be numbered in successive order from No.1 when such body starts issuing theinvestment licenses under the Government's decisions on responsibility division or theMinistry of Planning and investment's authorization decisions.

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/GP for the investment licenses issued by the Ministry of Planning andinvestment. (For example: No.01/GP,

/GP-(letter indicating the name of province/city) for the investmentlicenses issued by the provincial-level People’s Committees. (For example No.01/GP-HN);

/GP-KCN-(letter indicating the name of province city) for theinvestment licenses issued by the provincial-level Industrial Parks Management Boards.(For example: No.01/GP-KCN-HN).

The letters indicating the names of provinces/cities are prescribed inAppendix III to this Circular.

b/ Regarding the contents:

- Name and addresses of investors: To be inscribed accurately accordingto the proposal in the dossiers of application for investment licenses;

- The headquarters of the to be set-up enterprises: Inscribing theaddresses of main offices and production branches (not inscribing the addresses oftransaction offices or branches);

- Business objectives and scope: Prescribing major products of theprojects. For projects on manufacture of products subject to output control, prescribingthe designed capacity of each type of product. For projects requiring the minimumpercentage of product export according to regulations or with committed percentage ofproduct export, thereby the projects have enjoyed preferences, the product exportpercentages must be clearly stipulated;

- The registered investment capital and the registered legal capital:To be inscribed as committed in the dossiers of application for investment licenses. Forthe legal capital or the capital contributed by the parties for the performance ofbusiness cooperation contracts: Prescribing clearly the contributed capital and mode ofcapital contribution by each party;

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Article 15.- Adjusting investment licenses

In the course of operation, foreign-invested enterprises and parties tothe business cooperation contracts may propose the adjustment of the terms prescribed inthe investment licenses.

The investment- licensing bodies shall approve the proposals offoreign-invested enterprises and parties to business cooperation contracts in form ofgranting the adjusted licenses or issue written approvals for cases of adjusting a numberof specific provisions.

The provincial-level People’s Committees shall issue writtenapprovals and notify such to the investment-licensing bodies which need not to adjust theinvestment licenses for the following cases:

+ Opening transaction branches, transaction offices; commoditywarehouses; product showrooms (without the manufacturing character) in the localities;

+ Relocating offices, investment locations within the provinces,centrally-run cities where the enterprises are headquartered.

Article 16.- Competence to adjust the investment licenses

The competence to adjust the investment licenses is stipulated inArticle 111 of Decree No.24/2000/ND-CP.

The provincial-level People’s Committees and the provincial-levelIndustrial Parks Management Boards shall decide the adjustment of investment licensesafter getting written approval of the Ministry of Planning and Investment in the followingcases:

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+ Where the objectives of projects on the list of domains subject toconditional investment are changed or supplemented, the percentage of capital contributionby the Vietnamese parties to joint ventures has reduced, the export percentage has beenreduced to below the prescribed levels for products requiring the export percentages;

+ Where the investment form has been changed from the joint venture orbusiness cooperation contract into enterprises with 100% foreign capital.

For assigned or authorized projects which, due to adjustment ofinvestment licenses, have become Group A projects provided for in Article 114 of DecreeNo.24/2000/ND-CP, the investment-licensing bodies shall transfer the dossiers to theMinistry of Planning and Investment for considering the adjustment and effecting themanagement.

Article 17.- Dossiers for investment license adjustment

1. A dossier for investment license adjustment shall include:

- The application for adjustment of investment license, signed by the general directoror the first deputy general director;

- The resolution of the Managing Board of the joint-venture enterpriseor the agreement reached between business cooperation parties or the proposal of theforeign investor (for enterprises with 100% foreign capital) on the application foradjustment or supplement of investment license;

- The report on the project deployment and execution from the date of being granted theinvestment license to the time of applying for the adjustment.

2. Apart from the above-mentioned documents, depending on the contentsof adjustment or supplement of the investment license, the foreign invested enterprisesand business cooperation parties should supplement the following documents:

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2.2. In case of change or supplement of operation objective, thefollowing documents shall be added:

- The exposition of the adjustment of the operation objectives, clearlystating solutions to achieve new objectives like markets, capital, technology,..

- The branch-managing ministry’s comments on projects formanufacture of products subject to output control, for which the investment license hasstipulated the designed capacity of each type of products.

2.3. In case of setting up branches as production establishments, thefollowing documents shall be added:

- The exposition on the setting up of a branch as a productionestablishment (the contents and scale of operation of the branch, investment capital,product consumption...)

- The provincial-level People’s Committee’s comments on thelocation, the land rental level (if any) for the location selected for the branch to beused as production establishment;

- The branch-managing ministry’s comments on the project formanufacture of products subject to output control, for which the investment license hasstipulated the designed capacity of each type of product.

2.4. In case of division, separation, merger, consolidation ofenterprises, the documents prescribed in Article 31 of Decree No.24/2000/ND-CP shall besupplemented together with the decisions on enterprise division, separation, consolidationor merger prescribed in Articles 41, 42, 43 and 44 of this Circular;

2.5. In case of restructuring of investment capital, there should bethe following documents and materials explaining the reasons therefor:

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+ The financial conditions ensuring the adjustment of investmentcapital;

+ The additional list of machinery and equipment (if any).

3. The number of dossier sets: Foreign-invested enterprises andbusiness cooperation parties shall submit 3 sets of dossiers, including at least oneoriginal set.

The dossiers on investment license adjustment shall be printed andbound with covers for preservation according to the archival regulations.

In some cases of necessity, the investment licensing bodies may requestthe additional submission of dossier sets prescribed above

Article 18.- The time limits for investment license adjustment

The investment-licensing bodies shall effect the adjustment ofinvestment licenses within the time limits prescribed in Article 111 of DecreeNo.24/2000/ND-CP. The above-said time limits shall not include the time foreign-investedenterprises and business cooperation parties to make supplementary expositions of thedossiers.

Article 19.- Adjusted licenses

The adjusted licences shall be made in sets forms prescribed inAppendix III to this Circular and according to the following conventions:

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- The serial number of the adjusted license: to be the same as thenumber of the original investment license;

- The series of letters following the serial number of the investmentlicense are conventionalized as followed:

/GPDC and the ordinal number of the time of adjustment of theinvestment license for the adjusted licenses issued by the Ministry of Planning andInvestment. (Example: No.01/GPDC1);

/GPDC and the ordinal number of the time of adjustment of theinvestment license- (letters indicating the name of province/city) for the adjustedlicenses issued by the provincial-level People’s Committees. (Example:No.01.GPDC1-HN);

/GPDC and the ordinal number of the time of adjustment of theinvestment license-KCN- (letters indicating the name of the province/city), for theinvestment licenses issued by the Industrial Parks Management Boards. (Example:No.01/GPDC1 - KCN-HN).

2. For the investment licenses previously granted by the Ministry ofPlanning and Investment and now transferred to the provincial/municipal People'sCommittees or the Industrial Parks Management Board for management, their serial numbersshall be kept in tact like the original investment licenses, the series of lettersfollowing the serial number of such investment licenses are conventionalized as follows:

/GPDC and the ordinal number of the time of adjustment of theinvestment license- BKH- (letters indicating the name of the province/city), for theadjusted licenses issued by the provincial-level People's Committees. (Example:No.01/GPDC1 - BKH-HN);

/GPDC and the ordinal number of the time of adjustment of theinvestment license- BKH- KCN- (letters indicating the name of the province/city), for theadjusted licenses issued by the industrial Parks Management Boards. (Example: No.01/GPDC1-BKH- KCN- HN).

Chapter III

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Article 20.- The business cooperation contract coordinating board

Business cooperation parties may set up coordinating boards to performtheir business cooperation contracts under the provisions in Article 8 of DecreeNo.24/2000/ND-CP and make registration with the provincial/municipal Planning andInvestment Services or the provincial-level Industrial Parks Management Boards. Thecoordinating boards have no legal person status and no seals.

Article 21. - Executive offices of foreign business cooperationparties

Foreign parties to business cooperation contracts may set up executiveoffices to perform the business cooperation contracts under the provisions in Article 9 ofDecree No.24/2000/ND-CP.

1. Executive offices of foreign business cooperation parties may be setup as proposed according to either of the two following process:

- Simultaneously with the submission of application for investmentlicenses, the foreign business cooperation parties, if deeming it necessary, shall proposethe setting up of executive offices to the investment-licensing bodies and if approved,the setting up of executive offices shall be prescribed in the investment licenses;

- After a period of deploying the business cooperation contracts, theforeign business cooperation parties, if deeming it necessary, shall propose the settingup of executive offices to the investment-licensing bodies and if approved, the setting upof executive offices shall be prescribed in the adjusted licenses.

2. For projects on business cooperation contracts, the proposal by thecooperation parties on the setting up of the coordinating boards can be madesimultaneously with the proposal by the foreign business cooperation parties on thesetting up of executive offices to carry out activities in conformity with the rights andobligations prescribed in the business cooperation contracts.

3. After the investment- licensing bodies approve the setting up ofexecutive offices, the foreign business cooperation parties shall carry out procedures forregistration under the current regulations.

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Article 22.- Managing Boards of joint-venture enterprises

1. Within 30 days after being granted the investment licenses, thejoint-venture parties shall inform each other in writing of the lists of persons to jointhe Managing Board and persons nominated for the posts of chairman and vice-chairman ofthe Managing Board as prescribed in Articles 11 and 12 of the Foreign Investment Law,Article 17 of Decree No.24/2000/ND-CP, in conformity with the agreement prescribed in thejoint-venture contract and the charter of the joint-venture enterprise.

2. The appointment or replacement of Managing Board members by theVietnamese parties are stipulated as follows:

- For Vietnamese parties being State enterprises, enterprises ofpolitical organizations or socio-political organizations, the appointment of people to theManaging Boards must be approved by their immediate superior managing bodies;

For a number of important projects, the appointment of people to theManaging Boards of the joint-venture enterprises may be decided by the Prime Minister orthe heads of the competent bodies.

- For Vietnamese parties being enterprises set up under theCooperatives Law, the Enterprise Law, the appointment of people to the Managing Boardsmust be approved by their own Managing Boards, the Members' Council and the enterpriseowners.

Article 23.- Responsibilities of members of the Managing Boards ofjoint-venture enterprises

The Managing Boards of joint-venture enterprises are the leading bodiesof the joint-venture enterprises, consisting of representatives of the parties to thejoint ventures. The parties’ representatives in the Managing Boards are theplenipotentiary representatives who take responsibility before the Managing Boards and theparties they represent.

Each Managing Board member takes personal responsibility before theManaging Board for the work assigned to him/her.

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The joint-venture parties shall participate in the management of thejoint-venture enterprises through their members in the Managing Boards of thejoint-venture enterprises, without direct interference into the management andadministration of the enterprises.

Article 25.- Meetings of Managing Boards of joint-ventureenterprises

1. The Managing Boards of joint-venture enterprises shall effect theappointment and dismissal of personnel and organize meetings according to the provisionsin Article 13 of the Foreign Investment Law, Articles 18 and 25 of DecreeNo.24/2000/ND-CP.

2. The minutes of the Managing Board meetings must be approved by theManaging Boards immediately before the conclusion of the meetings, each of which shallcontain the following main contents:

- The time and venue of the meeting;

- The total number of participating members, Managing Board membersauthorized by other members to participate in the meeting;

- The agenda and content of the meeting;

- Summary of opinions expressed at the meeting;

- Issues voted, the voting results for each issue and the decisionsapproved;

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3. Basing themselves on the minutes of meetings, the Managing Boardsmay promulgate resolutions and decisions of the Managing Boards on each specific issue.Such resolutions and decisions must fully contain the full names, titles and signatures ofall participating members.

4. Managing Board members may authorize other persons to attend theManaging Board meetings and vote within the authorized scope. The authorization lettersmust bear the authorizers’ registered signatures and the authorization contents mustnot go beyond the authorizers' powers.

Article 26. - Mechanism for approving decisions of the ManagingBoards of joint-venture enterprises

- The Managing Boards exercise the management of the enterprisesthrough their resolutions as provided for in Article 14 of the Foreign Investment LawArticle 18 of Decree No.24/2000/ND-CP.

Where consensus can not be reached among Managing Board members onmatters which must be approved on the principle of consensus (other than matters to beapproved on the principle of consensus prescribed in Foreign Investment Law), thusadversely affecting the enterprise's activities, the Managing Board may propose theinvestment- licensing body to act as the conciliator. Where the conciliation fails, thefollowing steps shall be taken as provided for in Article 122 of Decree No.24/2000/ND-CP.

- Within 6 months before the expiry of its term of office, the ManagingBoard shall meet to review its activities during such term; the joint-venture partiesshall nominate people to join the Managing Board for the new term; and conduct the workhand-over between the outgoing Managing Board and the new Managing Board.

- Upon the expiry of its operation duration or the prematuredissolution of the enterprise, the Managing Board shall have to set up the LiquidationBoard and direct its operation under the provisions in Articles 39 and 40 of DecreeNo.24/2000/N D-CP and Article 47 of this Circular.

Article 27.- Executive apparatus of the joint-venture enterprises

1. The Managing Board shall nominate the general director,deputy-general directors and the chief accountant (or finance director) according to theprovisions in Article 25 of Decree No.24/2000/ND- CP.

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The nomination shall be notified in writing to the other parties atleast 30 days before the replacement. The Managing Board may request the parties tonominate other replacement when the former nominees fail to satisfy the requirements.

Article 28.- Rights and responsibilities of the general director and the firstdeputy-general director

The rights and responsibilities of the general directors and the firstdeputy-general directors of joint-venture enterprises are prescribed in Article 20 ofDecree No.24/2000/ND-CP.

Where the Managing Board chairman is concurrently the general directorof an enterprise, these two functions must be distinguished when administering theenterprise, basing him-herself on the nature and content of each document to decide thesignature and stamping under the appropriate title.

Where the general director or the first deputy- general director of anenterprise is not a Managing Board member, he/she may attend meetings of the ManagingBoard but shall not be allowed to vote on matters of the Managing Board.

The general director and the first deputy-general director shall haveto execute the decisions of the Managing Board. Where a decision of the Managing Board isnot suited to the reality, depending on each specific case, if necessary, the generaldirector and the first deputy-general director may propose the Managing Board chairman toconvene an extraordinary meeting of the Managing Board for consideration and settlement.

The general director and the first deputy-general director may refuse to abide by thedecisions of individual members of the Managing Board or the illegal resolutions of theManaging Board.

The general director and the first deputy-general director sign laborcontracts with the Managing Board's representative in accordance with the currentprovisions of the labor legislation.

Article 29.- Setting up the Managing Boards of enterprises with100% foreign capital

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Chapter IV

WORK TO BE DONE AFTER THE INVESTMENT LICENSES ARE GRANTED

Article 30.- Administrative procedures

After being appointed, the general director of a foreign-investedenterprise and representatives of the business cooperation parties shall carry out theadministrative procedures including:

1. Publishing the announcement on the enterprise's establishment oncentral or local newspapers as provided for in Article 27 of Decree No.24/2000/ND-CP.

2. Registering the enterprise's headquarters and staff at theprovincial/municipal Planning and Investment Service or the provincial-level IndustrialParks Management Board of the locality where the enterprise is headquartered;

3. Engraving and registering seats at the provincial police of thelocality where the enterprise is headquartered;

4. Opening the enterprise's accounts at banks;

5. Carrying out procedures to register the application of foreignaccounting regime with the Ministry of Finance if they so wish;

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7. Registering the procedures for exit, entry residence... forforeigners; registering the professional practice (as provided for in Article 28 of DecreeNo.24/2000/ND-CP); registering for use of communication and information means; registeringthe goods quality, trademarks...;

8. Other administrative procedures as prescribed.

Article 31.- Work to be done after obtaining the investmentlicenses

After obtaining the investment licenses and the establishment of theenterprise, the general director of a foreign-invested enterprise or representatives ofthe business cooperation parties shall perform the following tasks, including:

1. Carrying out the procedures to apply for the land use rightcertificate at the provincial-level People's Committee;

For enterprises in industrial parks, export processing zones or hi-tech parks, signing the contract for land sublease and the use of public land areas inindustrial parks, export processing zones or hi-tech parks with enterprises engaged in theconstruction of and dealing in infrastructures of industrial parks, export processingzones and hi-tech parks.

2. Registering the import plan at the provincial/municipal TradeService of their locality;

3. Carrying out procedures for approval of the technical design of theconstruction project;

4. Effecting the consultancy, design bidding or selection; organizingthe bidding for goods procurement... according to the current law provisions on bidding;

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6. Other tasks as prescribed.

Article 32.- Opening overseas branches, representative offices

The opening of overseas branches and representative offices offoreign-invested enterprises, prescribed in Article 29 of Decree No.24/2000/ ND-CP, shallbe effected as follows:

1. In case of necessity, foreign-invested enterprises may open theiroverseas branches and/or representative offices on the following conditions:

- The enterprises have deployed their production and businessactivities, without breaching laws;

- The opening of overseas branches or representative offices aims tocarry out activities of transaction, marketing, sale of products of the enterprises,particularly to boost the export activities.

2. When having the need to open overseas branches or representativeoffices, foreign-invested enterprises shall toward dossiers to the Ministry of Planningand Investment, which include:

- The application for opening overseas branch or representativeoffices;

- The explanation of the purpose and reasonability of the opening ofoverseas branches or representative offices; modes of operation, capital transfermanagement of profits collected from overseas branches, representative offices.

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4. Within 60 days after being allowed to open overseas branches orrepresentative offices, the enterprises shall have to report to the representativeagencies of the Socialist Republic of Vietnam in such foreign countries on the opening oftheir branches or representative offices.

5. All transactions of transferring money from Vietnam to foreigncountries and vice versa, which are related to the operations of the branches orrepresentative offices must be effected through the enterprises' accounts and comply withthe regulations on foreign exchange management.

Profits and incomes (if any) of the overseas branches or representativeoffices must be transferred back to Vietnam within 6 months after the end of the fiscalyear of the host countries. If past such time limit, this has not yet been done, it mustbe reported to the Vietnam State Bank with the reasons therefor clearly stated.

Article 33.- Hiring managerial organizations

The hiring of managerial organizations shall comply with Article 30 ofDecree No.24/2000/ND-CP and the joint regulations of the Ministry of Planning andInvestment and the Ministry of Finance on hiring of managerial organizations.

All disputes between the managerial organizations and enterprises anddisputes between managerial organizations and other economic organizations of Vietnamshall be settled according to Article 24 of the Foreign Investment Law and Article 122 ofDecree No.24/2000/ND-CP.

Article 34.- Report on project settlement, report on investmentcapital disbursement

1. Within 6 months after projects are completely build and put intooperation and use, foreign- invested enterprises or business cooperation parties shallhave to complete the report on project settlement and make registration with theinvestment-licensing bodies. For projects with various construction items where investmentis phased out, if such construction items, when completed, are put into operation and useseparately and deemed necessary, they may be settled independently. For this case, afterthe construction of the entire projects are completed, the foreign- invested enterprisesor business cooperation parties must complete the total settlement of the entire projects.

The expense to be settled is the entire lawful expense made in theinvestment process in order to put the projects into operation and use. The total expensestated in the project settlement report constitutes part of the report on investmentcapital disbursement.

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Article 35. - Dossiers on project settlement reports, investmentcapital disbursement reports

1. The dossiers on project settlement report or investment capitaldisbursement report comprise the project settlement report or the investment capitaldisbursement report, the certificate of expertise of imported machinery and equipment, andthe report on the results of auditing the construction expense.

The project settlement report and the investment capital disbursementreport shall be made according to Forms 1 and 2 of Appendix IV to this Circular.

The project settlement reports and the investment capital disbursementreports must be signed by the enterprise general directors or the authorizedrepresentatives of the business cooperation parties; in case of joint venture enterprises,they must be unanimously adopted by Managing Boards.

2. The project settlement report shall include the following principalcontents:

a/ The expense for project construction, including:

- Expense for underground work (destruction and dismantlement,foundation, underground projects);

- Expense for the construction frame and completion;

- Expense for equipment and furniture inside the project.

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- Expense for environmental protection, fire prevention and fighting,construction insurance....

b/ Expense for machinery and equipment, including:

- Expense for procurement;

- Expense for transportation;

- Insurance expense;

- Expense for installation, adjustment.

c/ Other expenses including those for investment preparation, groundclearance compensation, the land use right value contributed as capital by the Vietnameseparty, interests on borrowed money in the construction process, training, auditing,expertise and other reasonable expenses arising in the course of implementing theinvestment projects.

Fines paid due to the faults of the enterprises or business cooperationparties must not be calculated into expenditure.

3. The investment capital disbursement report shall include:

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b/ The implemented working capital (if any);

c/ In the investment capital disbursement report, the spent amountsshould be divided for each year from the stage of investment preparation to the time ofcompletion of construction and putting the project into operation and use; dividedaccording to sources of contributed capital and borrowed capital.

4. For investment projects with investment licenses stipulating thatthe construction and commercial operation shall be divided into various stages, theproject settlement report and the investment capital disbursement report shall be madeaccording to the prescribed stages.

Article 36.- Auditing project construction cost

The project construction cost stated in the project settlement reportmust be audited.

After performing the audit, the auditing organizations shall issue thereports on auditing results to investors.

Article 37. - Expertise of imported machinery and equipment

1. Equipment and machinery imported for project implementation must beexpertised according to the provisions in Article 73 of Decree No.24/2000/ND-CP.

2. The expertising charges shall be calculated into the investmentexpense of the projects.

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- The name of the expertising organization;

- The venue and time of conducting the expertise;

- Names, codes, specifications, year of manufacture, country ofmanufacture; manufacturers, quantity, technical status, capacities, quality, unit pricesand value of the equipment and machinery;

- The conclusions on the value and quality of the equipment andmachinery;

- Determination of the legal liability of the expertising organization:seal, signature.

Article 38.- Re-expertise of imported machinery and equipment

1. In case of necessity, the investment- licensing bodies may requestanother expertising organization to perform the re-expertise of machinery and equipmentimported for project implementation.

2. The enterprises shall have the right to ask for the explanation ofto question the re-expertise results, but have to abide by the decisions of theinvestment-licensing bodies. All complaints about and disputes over the expertise,re-expertise shall be handled according to the provisions of law.

Article 39.- Certifying the registration of project settlementreports, investment capital disbursement reports

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In case of necessity, the investment-licensing bodies may appraise theproject settlement reports and the investment capital disbursement reports and request theforeign-invested enterprises or business cooperation parties to adjust the investmentcapital according to reasonable expenses.

The investment-licensing bodies shall issue the certificates of projectsettlement report registration, the certificates of investment capital disbursement reportregistration for use by foreign-invested enterprises and business cooperation parties asbasis for carrying out procedures for liquidation of the imported machinery, equipment,raw materials and materials according to Article 102 of Decree No.24/2000/ND-CP.

Chapter V

REORGANIZATION OF ENTERPRISES

Article 40.- Division, separation, merger or consolidation of enterprises

1. A foreign-invested enterprise may be divided into two or a number ofenterprises operating under the Foreign Investment Law. After being divided into newenterprises, the divided enterprise shall terminate its existence.

2. A foreign-invested enterprise may be separated by transferring partof the property of the existing enterprise (called the separated enterprise) to set up oneor several new enterprises operating under the Foreign Investment Law (called separatingenterprises); transferring part of the rights and obligations of the separated enterpriseto the separating enterprises while still maintaining the existence of the separatedenterprise.

3. Two or more foreign-invested enterprises (called consolidatedenterprises) may be consolidated into a new enterprise (called the consolidatingenterprise) by transferring their entire property, rights, obligations and legitimateinterests to the consolidating enterprise and at the same time terminating theirexistence.

4. Two or more foreign-invested enterprises (called merged enterprises)may be merged together into a foreign-invested enterprise (called the merging enterprise)by transferring all their property, rights, obligations and legitimate interests to themerging enterprise and at the same time terminating their existence.

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Article 41.- Procedures for enterprise division

1. The procedures for enterprise division are stipulated as follows:

- The to be-divided enterprise shall file the application for divisionof enterprise, enclosed with the dossiers specified in Clause 1, Article 31 of DecreeNo.24/2000/ND-CP and the decision on enterprise division;

- The decision on enterprise division must be adopted by the ManagingBoard of the joint-venture enterprise or foreign investor (for enterprises with 100%foreign capital) and contain the following principal details:

+ The name of the to be-divided enterprise;

+ The names of the to be-set up enterprises;

+ The principle and procedures for division of the enterprise'sproperty;

+ The plan on labor employment, the time limit and procedures fortransferring the contributed capital of the divided enterprise to the newly set-upenterprises;

+ The principles for settling the obligations of the dividedenterprise; the time limit for effecting the division of enterprise.

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2. The investment-licensing bodies shall approve the division ofenterprises, terminate the operation of divided enterprises and grant the establishmentpermits to the new enterprises according to current regulations.

3. The new enterprises must either jointly bear responsibility for theunpaid debts, labor contracts and other property obligations of the divided enterprise oragree to let one of them do this; carry out the procedures for establishment as prescribedfor the enterprises after being granted the investment licenses.

Article 42. - Procedures for enterprise separation

1. The procedures for enterprise separation are stipulated as follows:

- The to be-separated enterprise shall file the application forenterprise separation, enclosed with the dossiers specified in Clause 1, Article 31 ofDecree No.24/2000/ND-CP and the decision on enterprise separation;

- The enterprise separation decision must be adopted by the ManagingBoard of the joint-venture enterprise or the foreign investor (for enterprises with 100%of foreign capital) and contain the following principal details;

+ The names of the separated enterprise;

+ The names of to be- set up separating enterprises;

+ The plan on labor employment;

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The enterprise separation decision must be sent to all creditors andnotified to the laborers within 15 days from the date the decision is adopted.

2. The investment-licensing body shall approve the enterpriseseparation in the following order:

Granting the adjusted license to the separated enterprise, includingthe approval of the enterprise separation and granting investment licenses to newly set upenterprises according to current regulations.

3. In principle, the separated enterprise shall continue to bearresponsibility for its unpaid debts, labor contracts and other property obligations beforethe enterprise separation takes place. The separated enterprise and the separatingenterprises may also mutually agree that the separating enterprises shall be fully orpartly responsible for the above-said obligations. The separating enterprises shall carryout the administrative procedures and post-establishment procedures as prescribed for theenterprises after being granted the investment licenses.

Article 43.- The procedures for enterprise consolidation

1. The enterprise consolidation procedures are stipulated as follows:

- The consolidated enterprises shall file their applications forenterprise consolidation, enclosed with the dossiers specified in Clause 1, Article 31 ofDecree No.24/2000/ND-CP and the contract for enterprise consolidation;

- The enterprise consolidation contract shall be signed between theconsolidated enterprises and adopted by the Managing Board of the joint-venture enterpriseor foreign investor (for enterprises with 100% foreign capital), which includes thefollowing principal contents:

+ The names of the consolidated enterprises;

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+ The consolidation procedures and conditions; the plan for laboremployment; the time limit, procedures and conditions for conversion of property,conversion of contributed capital of the consolidated enterprises into the contributedcapital of the consolidating enterprise; the time limit for effecting the consolidation;the draft charter of the consolidating enterprise;

The consolidation contract must be sent to all creditors and notifiedto the laborers within 15 days after its adoption.

2. The investment-licensing bodies shall ratify the enterpriseconsolidation, terminate the operation of the consolidated enterprises and license theestablishment of new enterprises according to current regulation.

3. In principle, the consolidating enterprise may enjoy the legitimaterights and interests, take responsibility for the unpaid debts, labor contracts and otherproperty obligations of the consolidated enterprises, except otherwise agreed upon amongthe enterprises. The consolidating enterprise shall carry out the procedures as prescribedfor the enterprises after being granted the investment license.

Article 44. - The procedures for enterprise merger

1. The procedures for enterprise merger are stipulated as follows:

- The merged enterprises shall file their applications for enterprisemerger, enclosed with the dossiers specified in Clause 1, Article 31 of DecreeNo.24/2000/ND-CP and the contract for enterprise merger;

- The enterprise merger contract shall be signed between the mergedenterprises and the merging enterprise and adopted by the Managing Board of thejoint-venture enterprise or the foreign investor (for enterprises with 100% foreigncapital), which includes the following principal contents:

+ The name of the merging enterprise;

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+ The merger procedures and conditions.

+ The plan for labor employment the time limit and conditions forproperty conversion; the conversion of the contributed capital of the merged enterprisesinto the contributed capital of the merging enterprise; the time limit for effecting themerger;

The merger contract must be sent to all creditors and notified to the laborers within15 day after its adoption.

2. The investment-licensing bodies shall ratify the enterprise merger,terminate the operations of the merged enterprises and grant the adjusted investmentlicenses to the merging enterprise or the investment licenses to the newly set upenterprises according to current regulations.

3. In principle, the merging enterprises may enjoy the legitimaterights and interests, bear responsibility for the unpaid debts, labor contracts and otherproperty obligations of the merged enterprises, except otherwise agreed upon among theenterprises.

Chapter VI

TEMPORARY CESSATION OF OPERATION OR SLOWING DOWN OF THE TEMPO,TERMINATION OF OPERATION, LIQUIDATION, DISSOLUTION OF ENTERPRISES

Article 45.- Temporary cessation of operation or slowing down of the projectimplementation tempo

The temporary cessation of operation or slowing down of the projectimplementation tempo shall comply with Article 36 of Decree No.24/2000/ND-CP. Theforeign-invested enterprises and business cooperation parties shall report to theinvestment- licensing bodies, the Ministry of Finance and the tax offices on the durationof temporary cessation of business operation. During the temporary cessation period, theforeign-invested enterprises and the business cooperation parties shall have to pay theiroutstanding tax amounts, still take responsibility to the creditors and have to performthe contracts already signed with the customers and the laborers, except otherwise agreedupon with the customers and the laborers.

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The investment-licensing bodies shall notify in writing theforeign-invested enterprises and business cooperation parties of the approval of temporarycessation of operation or the slowing down of project implementation tempo. The writtenapproval of the investment-licensing bodies shall clearly state the duration of temporarycessation of operation or slowing down of project implementation tempo for use as basisfor the consideration of exemption or reduction of financial obligations of theenterprises.

Article 46. - Operation termination

1. Foreign-invested enterprises and business cooperation parties shallterminate their operations according to the provisions in Article 37 of DecreeNo.24/2000/ND-CP.

2. Foreign-invested enterprises and business cooperation parties, whenterminating their operations, shall have to do the following:

- Terminating their production and business activities andtransactions. In case of need to continue performing the already concluded economiccontracts, the foreign-invested enterprises and business cooperation parties shall have toreport it to the investment-licensing bodies for approval;

- Closing the accounting books;

- Protecting the assets;

- Letting the laborers leave their jobs while waiting for settlement ofregimes and policies as prescribed by law.

- Proceeding with the liquidation of the enterprise's assets or thebusiness cooperation contracts.

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+ Dispersing their assets in any form;

+ Paying undue debts;

+ Giving up the right to claim the collectible amounts;

+ Converting non-secured debts into secured debts;

+ Signing new economic contracts.

4. Foreign-invested enterprises and business cooperation parties shallmake the announcement on operation termination as provided for in Article 38 of DecreeNo.24/2000/ND-CP with the following contents:

+ The names and addresses of the enterprises or business cooperationparties subject to operation termination;

+ The business operation scope;

+ The date of issuing the operation termination decision;

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Article 47.- Setting up liquidation boards

1. The liquidation boards shall be sect up under the provisions ofArticle 39 of Decree No.24/2000/ND-CP.

2. The Managing Boards of joint-venture enterprises or foreigninvestors (for enterprises with 100% foreign capital) or business cooperation partiesshall not have to set up the liquidation boards in the following cases:

- The parties have not yet proceeded with the project implementation orhave proceeded with the implementation of some administrative procedures but do not owedebts of wages, social insurance premiums to the laborers, taxes to be paid to the Stateor debts to a third party;

- The parties have not yet contributed legal capital as provided for inthe investment licenses or have already contributed the capital which, however, have notyet been accepted and certified by the Managing Boards or the business cooperation partiesand at the same time the joint obligations towards the State or a third party have not yetarisen;

For the above cases, alter settling by themselves the existingproblems, the parties shall send reports thereon to the investment-licensing bodies,stating their commitment that there exist no more disputes among themselves and that allobligations and responsibilities towards the Vietnamese State or a third party have beenfulfilled.

15 days after receiving the reports enclosed with the certification bythe tax offices of the localities where the enterprises are headquartered, theinvestment-licensing bodies shall issue decisions to dissolve the foreign-investedenterprises or terminate the effect of the business cooperation contracts. The partiesshall have to submit the originals of the investment licenses and operation dossiers tothe investment-licensing bodies and their seats to the seal-granting bodies.

Article 48.- Liquidation boards set up by investment-licensing bodies

1. A liquidation board set up by decision of the investment-licensingbody (as prescribed in Clause 2, Article 39 of Decree No.24/2000/ND-CP) is composed of:

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- A representative of the investment-licensing body;

- A representative of the provincial Tax Department of the locality where theenterprise is headquartered;

- A representative of the provincial Service of Labor, War Invalids andSocial Affairs of the locality where the enterprise is headquartered.

In some cases of necessity, the investment-licensing bodies may alsoinvite the representatives of other relevant bodies and organizations.

2. The operation of liquidation boards set up by decisions of theinvestment-licensing bodies is stipulated as follows:

- The liquidation boards have full power and are independent from theManaging Boards of the enterprises in conducting the liquidation in compliance of theprovisions of Vietnamese law and the contents prescribed in the establishment decisions.

- The liquidation boards take responsibility before theinvestment-licensing bodies and Vietnamese law for their activities.

- Within 30 days, the liquidation boards shall hold their first meetingto discuss their operation plans, mode and funding before they are submitted to theinvestment-licensing bodies for approval and at the same time to notify the ManagingBoards of the joint- venture enterprises or foreign investors (for enterprises with 100%foreign capital) or business cooperation parties thereof for implementation. If necessary,the heads of the liquidation boards may convene extraordinary meetings of the boards.

- To request the Managing Boards of joint-venture enterprises orforeign investors or business cooperation parties, general directors, deputy-generaldirectors, chief accountants and concerned individuals to supply dossiers, documents,vouchers, accounts and funding in service of the liquidation activities.

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Article 49. - Report on liquidation results

The liquidation boards shall make liquidation reports and dossiers asprescribed in Article 37 of Decree No.24/2000/ND-CP, including:

- The liquidation reports approved by the Managing Boards ofjoint-venture enterprises, foreign investors (for enterprises with 100% foreign capital)or business cooperation parties.

- Documents certifying by the tax and customs offices of thefulfillment of the financial obligations.

- Other documents, if any.

Where the liquidation boards are set up by decisions of theinvestment-licensing bodies, the boards shall submit the liquidation plans and reports onthe liquidation results to the latter for approval. After getting the approval, theliquidation boards shall conduct the liquidation, report the liquidation results to theinvestment-licensing bodies and notify the Managing Boards of joint-venture enterprises,foreign investors or business cooperation parties thereof.

Within 15 days after receiving the complete and valid liquidationdossiers, the investment-licensing bodies shall decide to dissolve the enterprisesterminate the business cooperation contracts.

Article 50.- Liquidation assets

The assets of foreign-invested enterprises and business cooperationparties shall include moveables and immoveables.

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Where the Vietnamese parties contribute capital with the land use rightvalue and the joint-venture parties or business cooperation parties have not fullycontributed the capital, the land use right value and other assets, if any, of theVietnamese parties a determined in proportion to the actually contributed capital amountsof the foreign panics according the capital contributing percentages inscribed in theinvestment licenses.

Article 51.- Handling procedures in cases bankruptcy

1. The liquidation boards shall report to the investment-licensingbodies for the termination of the liquidation and switching to the settlement of the casesaccording to the bankruptcy procedures under Article 44 of Decree No.24/2000/ND-CP.

2. The liquidation boards shall notify the Managing Boards ofjoint-venture enterprises, foreign investors (for enterprises with 100% foreign capital),business cooperation parties and creditors of the liquidation termination for filing theapplication to the court for settlement by bankruptcy declaration as provided for inArticles 7, 8 and 9 of the Law on Enterprise Bankruptcy.

3. The enterprise bankruptcy shall be handled in the order andprocedures prescribed by the legislation on enterprise bankruptcy.

Chapter VII

ENTERPRISES' REGIMES OF REPORTING, STATISTICS, COMMENDATION AND HANDLING OF VIOLATIONS

Article 52. - Contents of the statistical reports

1. The periodical statistical report and statistical surveys (calledcollectively the statistical reports) shall be applied nationwide to foreign-investedenterprises and foreign business cooperation parties, regarding:

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- The method of calculation of norms, calculation units;

- Reporting period.

2. The statistical data reported by foreign-invested enterprises andbusiness cooperation parties are legally valid documents for evaluation of production andbusiness results, the performance of obligations of the units as provided for in theinvestment licenses. The statistical reports must be made fully with norm calculation inaccordance with the prescribed contents and methods and submitted as scheduled.

Article 53. - Reporting, statistical regimes

1. Foreign-invested enterprises and business cooperation parties shallhave to send their audited annual financial reports to the Finance Ministry, the Planningand Investment Ministry and the Statistical Department.

Foreign-invested enterprises and business cooperation parties shallimplement the statistical report regime according to specific regulations promulgated bythe Ministry of Planning and Investment and the General Department of Statistics.

2. For business cooperation contracts, the parties thereto shall agreeon the appointment of a coordinating board or a party to represent them in performing thereporting and statistical work while other parties shall have to supply data for therepresenting party.

Article 54. - Commendation

Foreign-invested enterprises, business cooperation parties andindividuals that have recorded outstanding achievements in foreign investment activitiesshall be commended according to the provisions of Article 123 of Decree No.24/2000/ND-CP,based on the following principal criteria:

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- Having created a good working environment;

- Having achieved good results in production and business;

- Having strictly observed the State's regulations on financialobligations, reporting and statistical regimes...;

- Having well settled matters related to the recruitment, employmentand treatment of laborers;

- Having involved the trade unions and other mass organizations inactivities according to the provisions of law;

- Having actively participated in social activities and maintained goodrelations with the local administration and people.

2. For individuals:

- Having well fulfilled their assigned tasks and responsibilities;

- Having actively contributed to the operation of their enterprises aswell as the activities of the labor collectives therein.

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Foreign-invested enterprises, business cooperation parties, foreigninvestors and laborers that violate the provisions of investment licenses and ofVietnamese laws shall be sanctioned according to law.

Chapter VIII

REGIME OF WORKING COORDINATION IN MANAGEMENT OF FOREIGN INVESTMENTACTIVITIES

Article 56. - Common responsibility in working coordination

Within the scope of their respective functions and powers, theprovincial-level People's Committees (with the provincial/municipal Services of Planningand Investment as the main actor), the ministries, branches and the provincial-levelIndustrial Parks Management Boards shall have to closely coordinate with one another inthe management of foreign investment activities. The Ministry of Planning and Investmentshall act as the main player for joint coordination in performing this tasks.

Article 57.- Information, reporting regimes

1. General provisions:

- The Ministry of Planning and Investment shall assume the mainresponsibility in summing up the situation on receiving projects, granting and adjustinginvestment licenses and the situation on the implementation of foreign investment projectsthroughout the country.

- The provincial-level People's Committees and the provincial-levelIndustrial Parks Management Boards shall sum up the situation on foreign investmentactivities in their respective localities and industrial parks.

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- The weekly brief reports on the receipt of projects, the granting andadjustment of investment licenses for foreign investment projects which fall under theinvestment license granting and adjusting competence of the provincial-level People'sCommittees and Industrial Parks Management Boards shall be made by theprovincial/municipal Services of Planning and Investment and the provincial-levelIndustrial Park Management Boards and sent to the Ministry of Planning and Investment onevery Friday according to Forms 1 and 2, Appendix VI to this Circular.

- The monthly brief reports on the implementation of foreign investmentprojects in localities shall be made by the provincial/municipal Services of Planning andInvestment and sent to the Ministry of Planning and Investment on the 20^th ofevery month according to Form 3 of Appendix VI to this Circular.

- The monthly-reports on the foreign investment situation throughoutthe country shall be made by the Ministry of Planning and Investment on the 23^rdof every month in service of the monthly regular meeting of the Government.

3. Periodical report regime:

- Quarterly, biannually and annually, the provincial-levelPeople’s Committees shall send their sum-up reports on foreign investment activitiesin their respective localities (including projects in industrial parks, export processingzones and hi-tech parks) to the Ministry of Planning and Investment. The provincial-levelIndustrial Parks Management Boards shall have to sum up the situation and supplyinformation on projects in the industrial parks for reporting to the Ministry of Planningand Investment and concerned provincial-level People’s Committees for general sum-upof foreign investment activities in the localities.

The quarterly and biannual reports shall be sent no later than the 15^thof the first month of the following quarter. The annual reports shall be sent no laterthan January 31 of the following year.

- Annually, the Ministry of Planning and Investment shall sum up thesituation on foreign investment activities for reporting it to the Prime Minister andnotifying it to the concerned ministries, branches and provincial-level People'sCommittees.

Article 58.- Exchange of opinions on foreign investment situation

1. The Ministry of Planning and Investment shall assume the primeresponsibility in organizing briefings according to regions, territories with theprovincial-level People's Committees on the situation of foreign direct investment inlocalities and at the same time notify the latter of new legal documents and policiesrelated to foreign investment activities and guide the implementation thereof.

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Article 59. - Coordination in settling arising matters

The investment-licensing bodies shall act as the main coordinators insettling problems arising in the course of implementation of projects of foreign-investedenterprises and business cooperation parties.

Basing themselves on the practical situation, the ministries, branchesand localities shall take initiative in organizing working sessions with bodies involvedin the management of foreign investment activities for coordinated settlement of arisingmatters and notify the investment-licensing bodies of these arising problems.

Where the arising problems are beyond their jurisdiction, theinvestment-licensing bodies and concerned bodies shall report them to their immediatesuperior agencies for settlement or sum up opinions to be reported to the Prime Minister.

The Ministry of Planning and Investment shall have to sum up problemsarising in the course of deploying the implementation of foreign investment projects forcoordination with concerned bodies in working out plans for settlement and proposingpolicies and measures for improving the investment environment.

Article 60.- Mechanism for coordination in inspection work

1. General provisions:

- The inspection of foreign-invested enterprises shall be carried outperiodically, extraordinarily or according to specialized branches, through thecoordinator being the investment-licensing bodies.

- The inspection records must be signed by the representative of theinspection team and the representative of the inspected enterprise.

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2. Periodical inspections:

- The provincial-level People's Committees and the provincial-levelIndustrial Parks Management Boards take the prime responsibility in organizing theperiodical inspection of foreign-invested enterprises and business cooperation parties intheir respective localities. The periodical inspection team is composed of representativesof agencies involved in the State management of foreign investment activities.

- Periodical inspection contents: Comprehensive inspection of theobservance of the provisions of the investment licenses, evaluation of the operationefficiency of the enterprises and acceptance of their proposals on arising problems thatneed to be solved.

- The agencies taking the prime responsibility for the inspection shallnotify the enterprises of the plans for periodical inspection at least 7 working daysbefore conducting the inspection.

3. Specialized inspection:

- The specialized inspection shall be conducted by the specializedmanagement bodies with a view to evaluating the observance of law provisions related totheir management scopes according to their respective competence. Depending on thecharacters of each branch, each field, the ministries or branches may authorize theirprovincial/municipal Services, committees or branches to conduct the inspection.

- The specialized inspection plans and contents shall be elaborated bythe specialized management bodies arid notified to the Ministry of Planning and Investment(for the inspections organized by ministries or branches), or the provincial-levelPeople's Committees (for the inspections organized by local Services, committees,branches) at least 15 days before conducting the inspection.

- The agencies taking the prime responsibility for inspection shallnotify the enterprises of the specialized inspection plans at least 7 working days beforeconducting the inspection.

4. Extraordinary inspection:

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For big or complicated projects, when necessary the Ministry ofPlanning and Investment shall coordinate with specialized ministries and theprovincial-level People’s Committees in conducting the inspection.

Chapter IX

IMPLEMENTATION PROVISIONS

Article 61.- Implementation provisions

This Circular takes effect as from October 1, 2000 and replacesCirculars No.03/BKH- QLDA dated March 15, 1997 and No.04/1998/TT-BKH of May 18, 1998 ofthe Ministry of Planning and Investment. The previous regulations contrary to thisCircular shall all be annulled.

MINISTER OF PLANNING AND INVESTMENT




Tran Xuan Gia

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(Promulgated together with Circular No.12/2000/TT-BKH of the Ministry ofPlanning and Investment guiding foreign investment activities)

Appendix I

List forms and summary of projects calling for foreign investment capital

Form No.1

List of projects calling for foreign investment capital

Form No.2

Summary of projects calling for foreign investment capital

Appendix II

Forms of foreign investment project dossiers

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Application of registration for granting of investment license

Form No.2a

Application for contractual business cooperation

Form No.2b

Business cooperation contract

Form No.3a

Application for establishment of joint-venture enterprises

Form No.3b

Joint-venture contract

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Joint-venture enterprise’s charter

Form No. 4a

Application for establishment of enterprises with 100% foreign capital

Form No. 4b

Charter of enterprise with 100% foreign capital

Appendix III

Forms of investment license and adjusted license

Form No.1

Investment license granted to business cooperation contracts

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Investment license granted to joint-venture enterprises

Form No.3

Investment license granted to enterprises with 100% foreign capital

Form No.4

Adjusted license

Table

Letters indicating provinces, cities

Appendix IV

Forms of project settlement, investment capital disbursement report

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Project settlement report

Form No.2

Investment capital disbursement report

Form No.3

Certification of registration for project settlement

Form No. 4

Certification of registration for investment capital disbursement report

Appendix V

Forms of decisions on reorganization, termination, dissolution of enterprises

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License for adjustment of enterprises with 100% foreign capital

Form No.2

Decisions ratifying the conversion into Vietnamese enterprises

Form No.3

Decisions terminating operation of enterprises (or business cooperation contracts)

Form No. 4

Decisions setting up liquidation boards of investment-licensing bodies

Form No. 5

Documents ratifying liquidation reports (where liquidation boards are set up by Managing Boards, investors or business cooperation parties).