RESOLUTION

ON ORIENTATIONS AND SOLUTIONS TO ATTRACT AND MANAGE FOREIGN DIRECT INVESTMENT IN THE COMING TIME

On February 3-4, 2009, the Government held its regular meeting to evaluate the socio-economic situation of January- 2009 and work out directions and solutions to boost economic development. The Government discussed and evaluated the attraction and management of foreign investment capital in Vietnam over the past time and reached agreement on a number of orientations and basic solutions for the coming years.

I. FOREIGN INVESTMENT SITUATION IN THE 2006-2008 PERIOD

The Xth Party Congress's Resolution set the targets of an average gross domestic product growth of 7.5-8% in the 2006-2010 period, striving for 8%: and the society's total investment capital of around 40% of GDP. To achieve these targets, the society will need to raise a total development investment capital of around IISD 160 billion, including around DSD 25.1 billion in foreign investment, or an average of over USD 5 billion each year. In the first three years of the 2006-2010 plan, both disbursed and registered foreign investment capital increased considerably. Registered capital reached USD 97.6 billion, 77.4% higher than the target set for the whole 2006-2010 period: and disbursed capital reached around USD 23.6 billion, 94.4% of the target.

The foreign-invested sector has added an important capital source for development investment and played an increasingly active role in Vietnam's economic restructuring and growth. The foreign-invested sector's proportion in GDP kept rising over years, from 17.02% in 2006 (compared with 15.99% in 2005) to 17.66% in 2007; the sector contributed to raising the entire society's average investment rate to over 45% of GDP in the first three years of the 2006-2010 plan. The foreign-invested sector has played a significant role in export activity, accounting for 44% of the country's total export value in 2008. a 24% increase over 2007. During 2006-2008, foreign-invested enterprises additionally created 370.000 jobs and remitted around USD 5 billion in taxes into the state budget. The legal system governing the organization and operation of foreign-invested enterprises and projects had been increasingly improved with flexible and effective economic administration policies; central and local governments had been more active and dynamic in attracting and managing foreign investment with numerous measures reducing administrative procedures and supporting and creating favorable conditions for investors in project implementation, making Vietnam still an attractive destination for foreign investors.

Despite the above encouraging results, Vietnam's investment environment has over the past time revealed many limitations, some of which have even become more serious given strong and remarkable growth of foreign investment in Vietnam. There remain inconsistencies among investment and business laws and specialized laws; territorial planning and planning of branches, trades, domains and products are poor and inadequate, especially given the thorough decentralization of investment licensing and management to localities, resulting in a general imbalance; poor outside-fence infrastructure still worries investors; trained human resources, especially technical workers and engineers, arc insufficient. Many problems still exists in land recovery, resettlement and site clearance and the observance of the environmental protection law. A number of emerging problems have started adversely affecting the investment environment, restraining the economy's capacity to attract and use investment capital.

The world economic crisis has been reducing and will reduce the global foreign investment capital source, directly affecting Vietnam in the coming time. Transnational corporations have been adjusting their business strategies to tackle difficulties caused by this crisis. This leads to the delay, downscale or non-implementation of licensed foreign-invested projects, consequently decreasing disbursed foreign investment capital against registered capital compared with previous years. Potential investors will consider more carefully and spend more time deciding on their investment in Vietnam, banks will also not make easy lending decisions given common world economic difficulties.

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II. ORIENTATIONS AND REQUIREMENTS FOR FOREIGN INVFSTMENT ATTRACTION AND MANAGFMENT

- To raise awareness about the policy to increasingly attract and manage foreign investment capital affirmed at the Xth National Party Congress, which is "To increasingly attract foreign investment capital, which is set to account for over one-third of the entire society's development investment capital in 5 years (2006-2010). To expand domains, localities and forms to attract foreign investment, focusing on potentially large markets and world leading economic groups, creating drastic changes in the quantity, quality and efficiency of foreign direct investment."

- To attract in a targeted and selective manner foreign investment in important domains, including high technology; auxiliary industries; development of infrastructure and human resources; farm produce processing, development of difficulty-hit, agricultural and rural areas; economical and efficient use of natural resources and energy saving; highly added-value services; export-intensive industries; branches of social security significance (healthcare, pharmaceutical, vaccine and biological industries), environmental safety and national security.

- To review and make consistent laws on enterprises, investment, land, construction and business and specialized laws; to fully formulate and publicize regulations on conditions for specialized investment and business in order to make transparent market access criteria and conditions and production and business conditions; to formulate and promulgate regulations on post-licensing examination, inspection and management of foreign-invested projects under the 2005 Investment Law and Decree No. 108/2006/ND-CP to provide a basis for state management agencies to perform their management, examination and inspection functions.

- To promulgate a law on planning and planning management to prevent imbalanced and rampant licensing, causing redundancy, waste and low investment efficiency given the decentralization of investment licensing and management to localities.

- To settle infrastructure problems that hinder foreign investment such as systems of outside-fence infrastructure, electricity and water supply, roads and seaports; energy supply stability and site clearance.

- To settle problems related to human resources for large-scale foreign-invested projects, especially the shortage of trained human resources and outdated curricula of education and training institutions and vocational schools; to prevent and settle labor disputes to reduce strikes.

- To renew and improve the quality of investment promotion and promulgate a legal document to govern this activity, serving as a uniform legal ground for the state management, coordination and organization of this activity.

- To enhance the state management and coordination among central agencies and between central and local governments which must be associated with the functions, tasks and responsibilities of each agency, To work out a reporting mechanism which enables timely synthesis of information and assessment of situations in order to propose the Government effective administering solutions.

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To attract and manage foreign investment capital in the coming time, ministries, branches and localities should implement the following urgent solutions:

1. Solutions on investment attracting policy

a/ Solutions:

- To continue reviewing laws and policies on investment and business to amend inconsistent and contradictory provisions and supplement insufficient ones; to revise problematic and unclear provisions related to investment and business procedures.

- To promulgate incentives for investment in urban development, development of technical infrastructure (water supply and drainage, urban environment), development of houses for social policy beneficiaries and low-income earners; construction of welfare works (houses, hospitals, schools, cultural and sports facilities) for workers of industrial parks, export-processing zones, hi-tech zones and economic zones; and for agricultural and rural development projects.

- To take measures to speed up disbursement; not to license projects that use outdated technologies or adversely affect the environment: to thoroughly verify land-intensive projects and conditionally allocate land according to project schedules: to take into account the ratio of investment to land area, including land of industrial parks. To review projects having received investment certificates nationwide to adopt appropriate solutions for each type of projects.

b/ Task assignment:

- To assign the Ministry of Planning and Investment:

+ To assume the prime responsibility for, and coordinate with ministries, branches and localities in, reviewing overlapping regulations and mechanisms of coordination among ministries and branches in the formulation of investment-related policies; to propose solutions and submit them to the Prime Minister in the third quarter of 2009.

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To assume the prime responsibility for setting up interdisciplinary teams joined by concerned ministries and branches to promote investment and speed up the disbursement of capital for large-scale projects: to study and propose measures to promptly settle problems arising in the implementation of foreign-invested projects; to propose to the Prime Minister for consideration and decision specific mechanisms and policies applicable to large-scale projects which are significant to economic development of branches and localities.

+ To assume the prime responsibility for, and coordinate with concerned ministries and branches in, studying and submitting to the Prime Minister for promulgation in the third quarter of 2009 investment incentives for projects to build welfare works (houses, hospitals, schools and cultural and sports facilities) for workers of industrial parks, export-processing zones, hi-tech zones and economic zones;

+ To promulgate in the third quarter of 2009 regulations on reporting on foreign investment to replace Joint Circular No. 01/1997/TTLT-BKH-TCTK of the Ministry of Planning and Investment and the General Statistics Office, on reporting regulations applicable to foreign-invested enterprises.

- To assign the Ministry of Finance to assume the prime responsibility for. and coordinate with concerned ministries and branches in, studying and submitting to the Government for promulgation in the third quarter of 2009 investment incentives for projects to process farm produce in far areas and economically underdeveloped areas on the list publicized by the Ministry of Agriculture and Rural Development and projects to apply science and technology to production and business to create added value for products and protect the environment (under the National Assembly's Resolution No. 23/2008/QH12 of November 6, 2008. on the 2009 socio-economic development plan).

- To assign the Ministry of Industry and Trade to assume the prime responsibility for, and coordinate with the Ministry of Finance and concerned ministries and branches in. studying and submitting to the Government for promulgation in the third quarter of 2009 mechanisms and policies to mobilize social resources for investment in developing auxiliary and processing industries associated with large projects invested with foreign direct capital under the National Assembly's Resolution No. 23/2008/QH12 of November 6, 2008.

- To assign the Ministry of Construction to study and propose the Prime Minister to submit to the National Assembly guidelines to amend and supplement a number of Construction Law provisions on construction applicable to the grant of investment certificates, such as basic designs in dossiers of application for investment certificates (for investment projects involving construction) in order to create favorable conditions for attracting resources; to propose solutions to problems in raising capital for real estate investment. To submit these guidelines and solutions to the Prime Minister in the third quarter of 2009.

- To assign the Ministry of Natural Resources and Environment:

+ To assume the prime responsibility for reviewing, amending and supplementing regulations on administrative sanctioning in the natural resources and environment domain; to assume the prime responsibility for, and coordinate with the Ministry of Justice, the Government Inspectorate and concerned ministries and branches in. reviewing and submitting to the Prime Minister in the third quarter of 2009 amendments and supplements to such legal documents as the Penal Code, the Inspection Law and other documents concerning the handling of violations of regulations on natural resources and environment.

+ To coordinate with the Ministry of Planning and Investment and local administrations in increasing inspection, examination and handling of licensed projects that improperly or inefficiently use land.

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- To assign People's Committees of provinces and centrally run cities:

+ To direct their advisory agencies to coordinate with line ministries and specialized management agencies in carefully verifying projects in terms of technology, implementation capacity and environmental pollution risks, paying special attention to the projects' capital for reasonable use of natural resources such as land and minerals, and conformity with local socio-economic development plans, approved land use plannings, plannings of branches and regional development strategies to assure reasonable and effective use of resources and promotion of advantages for sustainable development.

+ To direct functional agencies in managing and closely monitoring the project implementation; allocating land according to project implementation schedules; promptly carrying out procedures to recover land and withdraw investment certificates of projects which cannot be implemented or fail to use up allocated land, for allocation to more efficient new projects and simultaneously, within the scope of their competence, proactively paying site clearance compensations and allocating land to investors as committed, especially for large-scale projects which investors are ready to disburse capital for implementation.

+ To reach agreement with the Ministry of Natural Resources and Environment, the Ministry of Planning and Investment, the Ministry of Finance and the Ministry of Agriculture and Rural Development on the promulgation of regulations on minimum investment level/ha for land-intensive investment projects, especially those using rice-growing land.

+ To propose to the Ministry of Planning and Investment and concerned ministries and branches options to settle matters falling beyond their competence for sum-up and report to the Prime Minister.

2. Solutions on planning

a/ Solutions:

- To well elaborate and manage master plans, especially socio-economic development, territorial, detailed land use, branch and major product plannings; to review and promptly adjust outdated master plans; to adopt specific plans to implement approved master plans.

- To widely publicize approved master plans, to speed up site clearance for investment projects: to effectively review, examine and adjust land use master plans, especially for coastal localities, to assure sustainable economic and environmental development.

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b/ Task assignment:

- To assign the Ministry of Planning and Investment:

+ To assume the prime responsibility for, and coordinate with concerned ministries, branches and agencies in. studying and submitting to the Government a scheme to draft the Planning Law for submission to the National Assembly for passage in 2010-2011.

+ To assume the prime responsibility for, and coordinate with ministries, branches and localities in. reviewing master plans to add lacking and adjust outdated ones. To complete review reports in the fourth quarter of 2009.

- To assign line ministries and localities to proactively review master plans on socio-economic development, land use, branches, domains and products for adjustment and supplementation or submission to competent agencies for prompt adjustment and supplementation to meet the country's socio-economic development requirements.

- To assign the Ministry of Agriculture and Rural Development:

+ To announce a list of agricultural, forestry and fishery projects, especially those in far and economically underdeveloped areas, prioritized for foreign investment up to 2020, and submit it to the Prime Minister in the third quarter of 2009.

+ To study and propose solutions to prevent farmers from breaching contracts on material supply for farm produce processing mills and submit them to the Prime Minister in the third quarter of 2009.

+ To assign the Ministry of Culture. Sports and Tourism to announce a list of tourist projects calling for foreign investment, especially national tourist zones, tourist complexes and specialized tourist zones, to give an impulse to tourism development in potential areas; to propose incentives and supports for tourism investment projects and submit them to the Prime Minister before July 2009.

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- To assign the Ministry of Information and Communication to assume the prime responsibility for, and coordinate with ministries, branches and localities in, reviewing plannings on information technology-communication infrastructure in the socio-economic infrastructure master plan; to propose solutions to raising the effectiveness of combination of plannings on information technology-communication infrastructure and on other infrastructure.

3. Solutions on infrastructure improvement

a/ Solutions:

- To review, adjust, approve and publicize infrastructure plannings up to 2020. To make the fullest use of resources to invest in infrastructure development, especially non-state budget funds to prioritize water supply and drainage, environmental sanitation (treatment of solid waste and wastewater); and systems of bridges and express ways, initially the North-South route and the two Vietnam-China economic corridors; to improve the quality of railway services, initially the North-South express railway and railway along the two Vietnam-China economic corridors, railroads connecting clusters of big seaports and big mines with the national railway system, and inner-city railways of Hanoi and Ho Chi Minh City; to generate and use electricity from new energies such as wind, tide, solar energy; post and telecommunications and information technology projects.

- To raise the competitiveness of Vietnam's seaport system; to call for investment in big ports of economic regions such as Hiep Phuoc - Thi Vai and Lach Huyen.

b/ Task assignment:

- To assign the Ministry of Planning and Investment:

+ To assume the prime responsibility for, and coordinate with the Ministry of Construction, the Ministry of Transport and concerned ministries, branches and localities in. reviewing, adjusting, approving and publicizing infrastructure plannings up to 2020 and submit them to the Government before October 2009.

+ To assume the prime responsibility for, and coordinate with ministries, branches and localities in, studying and proposing policies on public-private partnerships (PPPs) in infrastructure development in 2009.

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To assign the Ministry of Transport to review transport projects prioritized for foreign investment and prepare necessary investment procedures to call for foreign investment; to coordinate with the Ministry of Finance and agencies in proposing incentive policies for projects that have very large investment capital demands and are difficult to recover capital such as railways, seaports, express ways and express railways, and report them to the Prime Minister in the fourth quarter of 2009.

To assign the Ministry of Construction to assume the prime responsibility for, and coordinate with ministries, branches and localities in, amending and completing regulations on house construction and urban center and real estate business and submit them to the Prime Minister in the third quarter of 2009.

4. Solutions on human resources

a/ Solutions:

To complete legal documents on investment cooperation in education and training, to create favorable conditions to attract foreign investment in labor training of different levels, contributing to achieving the target of raising the rate of trained laborers to 40% under the 2001-2010 education strategy.

To study and adjust the labor restructuring in response to the economic restructuring; to raise the skills of laborers, especially fanners whose farm land is recovered for projects.

b/ Task assignment:

- To assign the Ministry of Education and Training:

+ To assume the prime responsibility for finalizing a draft decree to amend and supplement or replace Decrees No. 06/2000/ND-CP. No. 18/2001/ND-CP and No. 165/2005/ND-CP towards clearly defining types of training involving foreign elements, compulsory procedures under the investment law and procedures peculiar to the education sector, based on which to specifically guide criteria, conditions and order for establishment, operation and management according to regulations applicable to each type of training institution, and submit them to the Prime Minister in the third quarter of 2009;

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- To assign the Ministry of Labor, War Invalids and Social Affairs:

+ To assume the prime responsibility for. and coordinate with ministries and branches in, performing the assigned tasks under the Prime Minister's Decision No. 1129/QD-TTg of August 18, 2008, promulgating the plan to implement June 5, 2008 Directive No. 22/CT-TW of the Secretariat of the Party Central Committee, on enhancement of leadership and direction of the establishment of harmonious, stable and progressive labor relations at enterprises, concentrating on solutions to reducing illegal strikes.

+ To draft the (amended) Labor Code and solutions to realizing the labor law by increasing examination, inspection and dissemination of the labor law among employees and employers.

+ To formulate schemes to renew and develop vocational training in the 2008-2020 period and to supply laborers meeting human resource requirements of enterprises and foreign investors, paying special attention to training in industries and trades in shortage of labor and re-training in geographical areas where are concentrated industrial parks and large labor-intensive projects and job change training for farmers whose land is recovered for investment projects.

- To assign People's Committees of provinces and centrally run cities:

+ To basically handle illegal strikes occurring in their localities.

+ To direct specialized and local agencies in increasingly disseminating the labor law among employees and employers; and increasing inspection and examination of the observance of the labor law by enterprises in their localities.

5. Solutions on coordination in state management of foreign investment operation

a/ Solutions:

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- To increase training and refresher training for foreign investment administrators; to raise the capacity and efficiency of functional agencies in performing the state management of foreign investment.

- To review and evaluate the decentralization of state management of foreign investment over the past time, to identify problems and promptly make appropriate adjustments and supplements.

b/ Task assignment:

- To assign the Ministry of Planning and Investment:

- Based on reviews and evaluation on the decentralization of state management of foreign investment, to assume the prime responsibility for, and coordinate with ministries, branches and localities in. studying and proposing the Prime Minister to promulgate documents on coordination in foreign investment management between central and local governments and submit them to the Prime Minister in the fourth quarter of 2009.

- Ministries and branches conducting project verification shall issue replies according to the deadline set in Decree No. 108/2006/ND-CP; and concurrently take responsibility for issues to be verified under their functions, tasks and competence, especially planning, land, environment, technology and conditions to be satisfied under specialized laws, to provide a basis for local state management agencies to grant investment certificates to projects.

- The Ministry of Finance, the Ministry of Industry and Trade, the State Bank and provincial-level People's Committees shall quickly report and monthly update information on the receipt, grant of investment certificates and disbursed capital of foreign-invested projects falling within their competence to the Ministry of Planning and Investment, and quarterly, biannually and annually review and evaluate investment activities in their localities to propose appropriate solutions for the foreign-invested sector.

6. Solutions on investment promotion:

a/ Solutions:

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- To complete project profiles for projects on the national investment list calling for foreign investment in the 2006-2010 period as a basis for calling investors; to make a list of projects calling for foreign investment in the 2011-2015 period and subsequent years.

- To survey, study and develop the model of central and local investment promotion agencies; to elaborate legal documents on investment promotion to create a uniform legal corridor for state management, and coordination and organization of investment promotion activities.

- To well implement the national investment promotion program for the 2007-2010 period. To quickly establish investment promotion sections in some key regions, To continue combining investment promotion with high-ranking leaders' visits and work trips to other countries.

- To increase training and refresher training for investment promotion officers.

b/ Task assignment:

- To assign the Ministry of Planning and Investment:

+ To elaborate and submit to the Prime Minister in the third quarter of 2009 for promulgation legal documents on investment promotion towards enhancing the state management of investment promotion and specifying coordination in investment promotion between agencies: and long-term and intensive investment promotion strategies.

+ To study investment trends and strategies of a number of potential partners to proactively work out schemes to mobilize foreign investors, creating remarkably quantitative and qualitative changes in foreign direct investment. To report thereon to the Prime Minister in the third quarter of 2009.

+ To act as the key agency in managing and coordinating investment promotion activities at home and abroad (including overseas investment promotion representative agencies).

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+ To organize training and refresher training and cooperate with domestic and overseas agencies and organizations in providing training and refresher training for investment promotion officers.

- To assign the Ministry of Foreign Affairs to quickly establish investment promotion sections in a number of key regions. To coordinate with concerned ministries and branches (the Ministry of Finance, the Ministry of Planning and Investment) in promptly completing procedures and conditions for the establishment and operation of investment promotion sections in a number of key regions as directed by the Prime Minister in the Government Office's Notice No. 103/TB-VPCP of May 9, 2007, on the Prime Minister's conclusions on the scheme to increase foreign investment promotion sections in a number of key regions and March 17. 2008 Joint Circular No. 01/ 2008/TTLT-BKH-BNG of the Ministry of Planning and Investment and the Ministry of Foreign Affairs, guiding the establishment of foreign investment promotion sections in a number of key regions.

- To assign ministries, branches and provincial-level People's Committees:

+ To continue reviewing, updating and supplementing lists of projects calling for investment in conformity with investment needs and development plannings of localities, branches, domains and products.

+ To proactively formulate projects profiles for projects proposed by their branches and localities, which were approved under the Prime Minister's Decision No. 1290/QD-TTg of September 26, 2007. promulgating the list of national projects calling for foreign investment in the 2006-2010 period, and submit them to the Ministry of Planning and Investment before June 2009.

7. Other solutions

a/ To drastically direct the successful implementation of the scheme to simplify administrative procedures in state management domains in the 2007-2010 period, which is the Government's central task and a breakthrough in administrative reform through 2010. to continue attracting foreign investment.

b/ To continue raising effectiveness of the prevention and control of corruption, negative practices and harassment to investors. To raise the sense of personal responsibility in work, thrift practice and waste control in state management agencies.

c/ To well build the system of foreign investment information management under the Prime Minister's Decision No. 43/2008/QD-TTg of March 24, 2008, ensuring information supply for management and administration.

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e/ To maintain regular dialogues between leaders of the Government, ministries and branches and investors, especially the annual business forum, to promptly settle difficulties and problems in the implementation of current policies and laws, ensuring effective operation of projects to continue building investors' confidence in Vietnam's investment and business environment, creating a pervasive and positive effect on new investors.

f/ To increase inspection and examination: According to their functions and tasks, the Government Inspectorate, ministries, branches and localities shall adopt plans to increase inspection and examination of the observance of policies and laws on foreign investment in general and the implementation of this Resolution in particular.

The Ministry of Planning and Investment shall act as the key agency and coordinate with the Government Office, ministries, branches and provincial-level People's Committees in implementing the solutions specified in this Section; report to and propose the Prime Minister to chair dialogues between leaders of the Government, ministries and branches and investors.

To ensure the prompt and comprehensive implementation of this Resolution, the Government uniformly permits the application of fast-track procedures for the formulation, modification, amendment and supplementation of a number of legal documents which are planned for submission to the Government or the Prime Minister in the second and third quarters of 2009.

IV. ORGANIZATION OF IMPLEMENTATION

Given difficulties prompted by the current world economic decline, maintaining economic growth and assuring people's living conditions are heavy duties. The Government, ministries, branches and localities should uniformly, flexibly, promptly and effectively implement administering solutions adopted and promulgated by the Government. Al resources of all economic sectors, including the foreign-invested sector's important contributions should be tapped to the utmost for investment consumption stimulation, generation of incomes and jobs for laborers and raising of tax revenues.

The Government instructs ministers, heads of ministerial-level agencies, heads of government-attached agencies and presidents of People's Committees of provinces and centrally run cities, based on their assigned functions and tasks, to adopt plans to promptly implement, and take responsibility to the Government and the Prime Minister for the implementation of, the guidelines, tasks and solutions specified in this Resolution after its promulgation; and biannually report on implementation results to the Prime Minister and to the Ministry of Planning and Investment for review and report to the Government for adoption of appropriate administering measures.-

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