Laws of Vietnam

DECISION No. 219/1998/QD-TTg OF NOVEMBER 12, 1998 PROMULGATING THE REGULATION ON LAO BAO AREA OF QUANG TRI PROVINCE, WHERE ECONOMIC AND TRADE DEVELOPMENT IS ENCOURAGED

THE PRIME MINISTER

Pursuant to the Law on Organization of the Government of September 30, 1992;

Pursuant to the Agreement on Economic, Cultural, Scientific and Technical Cooperation between the Socialist Republic of Vietnam and the Lao People’s Democratic Republic for the 1996-2000 period as well as for 1996 and 1997;

At the proposals of the Minister of Trade and the President of the People’s Committee of Quang Tri province

DECIDES:

Article 1.- To issue together with this Decision the Regulation on Lao Bao area of Quang Tri province, where economic and trade development is encouraged (hereafter referred to as Lao Bao trade area).

Article 2.- The Lao Bao trade area shall encompass Lao Bao and Khe Sanh district towns and the communes of Tan Thanh, Tan Long, Tan Lien, Tan Lap and Tan Hop of Huong Hoa district, Quang Tri province.

Article 3.- The ministers of Trade, Defense, Planning and Investment, Finance, Construction, and Public Security; the General Directors of Customs, Tourism and Land Administration; as well as the heads of the concerned ministerial-level agencies and agencies attached to the Government shall coordinate with the President of the People’s Committee of Quang Tri province in detailing the implementation of the Regulation issued together with this Decision.

Article 4.- This Decision takes effect 15 days after its signing. The ministers, the heads of the ministerial-level agencies and agencies attached to the Government, and the President of the People’s Committee of Quang Tri province shall have to implement this Decision.

Prime Minister

REGULATION ON LAO BAO TRADE AREA
(Issued together with Decision No. 219/1998/QD-TTg of November 12, 1998 of the Prime Minister)

Chapter I

GENERAL PROVISIONS

This Regulation provides for operations of Vietnamese and foreign organizations and individuals in Lao Bao trade area where economic and trade development is encouraged (hereafter referred to as Lao Bao trade area), which is set up on the basis of the Agreement on Economic, Cultural, Scientific and Technical Cooperation between the Government of the Socialist Republic of Vietnam and the Government of the Lao People’s Democratic Republic, in order to promote economic and trade cooperation between Vietnam and Laos and other countries.

Lao Bao trade area shall encompass Lao Bao and Khe Sanh district towns and the communes of Tan Thanh, Tan Long, Tan Lap, Tan Lien and Tan Hop of Huong Hoa district, Quang Tri province.

Article 2.- The Socialist Republic of Vietnam Government encourages Vietnamese and foreign organizations and individuals to operate in Lao Bao trade area on the basis of respect for Vietnam’s independence and sovereignty, equality, mutual benefit and observance of Vietnamese law as well as international agreements which the Socialist Republic of Vietnam has signed or acceded to.

Article 3.- Vietnamese and foreign organizations and individuals shall operate in Lao Bao trade area in the following forms: trade activities; showrooms, exhibition-cum-fairs; representative offices and branches of foreign and domestic companies; border markets; bonded warehouses; import and export, cross-border transportation, temporary import for re-export, goods transit; sorting of goods for packaging, processing, recycling, assembly; production of export goods and related services such as goods transportation, preservation and warehouses; tourism, hotels, restaurants; post and telecommunications; banking; insurance.

Article 4.- Vietnamese enterprises of different economic sectors, foreign-invested enterprises in Vietnam and foreign enterprises in Lao Bao trade area (hereafter referred to as enterprises of Lao Bao trade area) shall operate under this Regulation, other provisions of Vietnamese law as well as international agreements which Vietnam has signed or acceded to.

Article 5.- In addition to their entitlements prescribed by Vietnamese law and international agreements which Vietnam has signed or acceded to, enterprises of Lao Bao trade area shall also be entitled to:

1. Use infrastructure works and services in Lao Bao trade area in accordance with the regulations of the Management Board of Lao Bao trade area;

2. Enjoy preferences provided for in Chapter IV of this Regulation;

3. Transfer the land use right and architectural constructions according to the right land-use purposes of the approved projects. In cases where there is a change in a project’s initial investment purpose, the transfer of the land use right and/or constructions shall be effected only after it is approved by the competent agency(ies).

Article 6.- Enterprises of Lao Bao trade area shall have the following obligations:

1. To observe Vietnamese laws and the provisions of this Regulation;

2. To fulfill their financial obligations as prescribed by Vietnamese law;

3. To comply with the regulations on border security and order; ensure labor safety and industrial sanitation; ecological and environmental protection and other regulations of the Management Board of Lao Bao trade area;

4. To follow the periodical and annual reporting regime in accordance with the provisions of law;

Article 7.- The border people residing in Huong Hoa district, Quang Tri province, (Vietnam) as well as in the opposite district of Savanakhet (Laos), and enterprises of Lao Bao trade area shall be entitled to register business and exchange goods at border markets in Lao Bao trade area according to the Regulation on organization and management of Vietnam-Lao border markets.

Chapter II

EXPORT AND IMPORT OF GOODS AND SERVICES

Article 8.- Goods, equipment, transport means, supplies (referred collectively to as goods), luggage and foreign exchanges brought from foreign countries into Lao Bao trade area and vice versa shall all be subject to the inspection and supervision by the Customs in accordance with the current provisions of Vietnamese law.

Raw materials, materials and goods, which have been purchased by enterprises of Lao Bao trade area from foreign markets but have not been fully used, and such enterprises’ substandard products and discarded materials still of commercial value, may be sold on domestic markets if all prescribed customs procedures are cleared.

The General Department of Customs shall authorize and guide the People’s Committee of Quang Tri province to implement the customs regulations and create favorable conditions for enterprises of Lao Bao trade area to conduct the above-said activities.

Article 9.- Enterprises of Lao Bao trade area shall be allowed to directly import and/or export goods of different categories (except for those banned from import and/or export by the State). The import and/or export of goods which require the State quotas, norms or conditions, shall comply with the regulations and guidance of the Ministry of Trade.

Article 10.- Goods which are processed, temporarily imported for re-export, transported across borders or transited through Lao Bao trade area shall be subject to current regulations on goods processing, temporary import for re-export, cross-border transportation and transit.

Goods transported across borders or transited through Lao Bao trade area in Vietnam for further transportation to a third country shall have to comply with Vietnamese law.

The transportation of goods between Lao Bao trade area and the Delsavan trade area of Laos shall comply with the relevant agreements concluded between the Vietnamese Government and the Lao Government as well as the current regulations of each country.

Article 11.- Goods which are brought into Lao Bao trade area and subject to separate management under the current regulations shall include:

- Gifts;

- Movable assets;

- Goods and appliances of diplomatic missions and international organizations working in Vietnam as well as goods and luggage of people entitled to diplomatic immunity.

Article 12.- Goods of the following categories shall be banned from circulation in Lao Bao trade area:

- Goods which are banned from circulation in Vietnam;

- Goods which are banned from import and export by Vietnam.

The import and/or export through Lao Bao trade area, of goods which are banned from import and/or export by Vietnam but not by Laos and other countries, must be permitted by the Prime Minister.

Article 13.- The Ministry of Trade shall authorize and guide the People’s Committee of Quang Tri province to issue permits for the establishment of representative offices and branches of foreign companies which operate in the field of trade, as well as permits for the organization of commodity exhibition-cum-fairs for domestic and foreign organizations in Lao Bao trade area.

Chapter III

ENTRY, EXIT, RESIDENCE, TRAVELING AND COMMUNICATION

Article 14.- Nationals of the Lao People’s Democratic Republic (hereafter referred to as Lao nationals) residing in provinces that share the borders with Quang Tri province shall be allowed to travel in and out of Lao Bao trade area with their identity cards or border laissez-passers, issued by the Lao competent agency(ies). Their stay duration in Lao Bao trade area shall not exceed 7 days. If they wish to travel to other places in Quang Tri province at the invitation of Vietnamese organizations and/or individuals in the province, the inviting organizations and/or individuals shall have to send a written request to the Quang Tri province’s Police Department for the issue of travel permits. A travel permit is only valid for one travel and not more than 5 days and shall not be extended.

Lao nationals residing in other provinces as well as foreigners who enter Lao Bao trade area for market study and preparation for investment and/or business activities shall be exempt from entry and exit visas. Their stay duration in Lao Bao trade area shall not exceed 15 days. If they wish to visit other places of Quang Tri province or other provinces and/or cities of Vietnam, the Entry-Exit Management Agency (the Vietnamese Ministry of Public Security) shall grant them visas for multiple entries and exits for no more than 3 months at Lao Bao border-gate.

Article 15.- Foreigners and overseas Vietnamese operating in Lao Bao trade area shall be allowed to regularly travel in and out of Lao Bao trade area with travel permits valid for multiple travels, issued by the Police Department of Quang Tri province, which correspond to their operation duration in Lao Bao trade area. The Ministry of Public Security shall authorize and guide the Police of Quang Tri province in the performance of the above-mentioned task.

Article 16.- Vietnamese citizens shall be entitled to freely travel in and out of Lao Bao trade area through the defined gates. If they want to go abroad through Lao Bao trade area, they must strictly comply with the regulations on entry and exit.

Article 17.- Vietnamese citizens and foreigners working in Lao Bao trade area shall be allowed to reside therein. The residence and temporary stay in Lao Bao trade area shall comply with the regulations of the Management Board of Lao Bao trade area.

Article 18.- After fulfilling the necessary procedures with the post and telecommunications management agency, foreigners working in Lao Bao trade area can assess to Vietnam’s post and telecommunications services, organize their own internal communication systems to run the production and business activities within enterprises of Lao Bao trade area, where they are involved in investment and business activities.

Chapter IV

PREFERENTIAL POLICIES

Article 19.- In addition to preferences provided for by the Law on Foreign Investment in Vietnam (for foreign-invested enterprises and foreign enterprises), the Law on the Domestic Investment Promotion (for Vietnamese enterprises of all economic sectors), by other legal documents for investment projects in mountainous, deep-lying and far-flung areas as well as by international agreements which Vietnam has signed or acceded to, enterprises of Lao Bao trade area shall also be entitled to preferences prescribed in this Chapter.

Article 20.- Trade and service activities in Lao Bao trade area shall be eligible for preferences under the policies for economic development in mountainous, island, deep-lying, far-flung areas and areas of ethnic minorities in accordance with the current stipulations of the Government.

Article 21.- Enterprises of Lao Bao trade area shall enjoy enterprise income tax exemption for the first four years after their taxable incomes are generated and the 50% reduction of the payable tax amounts for four subsequent years at most.

Article 22.- Enterprises of Lao Bao trade area which use their gained profits for re-investment in Lao Bao trade area for three years or more shall be refunded with their income tax amounts already paid on the profits used for re-investment.

Article 23.- Enterprises of Lao Bao trade area, which, after final tax settlement with the tax agency, suffer from losses, shall be allowed to transfer such losses to the subsequent year and the loss amounts shall be deducted from their taxable incomes. The loss-transfer duration shall not exceed 5 years.

Article 24.- Goods and services used for production, processing and re-processing in Lao Bao trade area for export or consumption in Lao Bao trade area shall be exempt from value added tax.

Article 25.- All goods and service relations between Lao Bao trade area and the rest of the country shall be the import-export relations.

1. Goods of Vietnamese origin and goods imported from foreign countries into Lao Bao trade area shall be exempt from import tax;

2. Goods of Vietnamese origin brought into Lao Bao trade area and goods produced, processed, re-processed and assembled in Lao Bao trade area, when being exported, shall be exempt from export tax.

Article 26.- Goods imported from foreign countries for participation in commodity exhibitions, fairs and shows for sale in Lao Bao trade area shall be exempt from import tax but still subject to special consumption tax and value-added tax in accordance with the current regulations.

1. Goods produced, processed, re-processed and assembled in Lao Bao trade area, when being imported into Vietnamese market, shall enjoy the 10% reduction of the current import tax rate set for each goods category. In cases where the processed or re-processed goods have their intra-area contents of 20% or more, when being imported into the Vietnamese market, shall enjoy import tax reduction corresponding to the percentage of intra-area contents of those goods.

2. Goods of Lao origin which are imported from Lao Bao trade area into Vietnam shall enjoy import tax reduction under Decision No.181/1998/QD-TTg of September 21, 1998 of the Government.

Article 28.- Enterprises of Lao Bao trade area shall be exempt from land rents for the first five years from the date they sign the land-lease contracts and shall, from the sixth year on, enjoy the land rent rate equivalent to 30% of the rate applicable to the mountainous districts of Quang Tri province.

Article 29.- Organizations and/or individuals that make contributions to the mobilization of non-refundable investment capital (capital outside the State budget) for investment in economic and social projects in Lao Bao trade area shall be entitled to a certain sum of money as reward at the levels prescribed by the Ministry of Finance.

Article 30.- In the period from 1999 to 2005, the State shall annually make separate investment in Lao Bao trade area through the provincial budget, which shall not be lower than 50% of the total annual budget revenue collected in Lao Bao trade area. The investment capital levels and lists of infrastructure construction projects entitled to separate investment shall be proposed by the People’s Committee of Quang Tri province and decided by the Ministry of Planning and Investment after consulting the Ministry of Finance.

Chapter V

FINANCIAL-ACCOUNTING REGIME

Article 31.- Enterprises of Lao Bao trade area shall observe the financial-accounting regime in accordance with the current regulations of Vietnamese law applicable to each type of enterprises.

Article 32.- The purchase, sale, payment and other commercial transaction relations among enterprises of Lao Bao trade area shall be effected in Vietnam dong, Lao kip and other convertible foreign currencies prescribed by the State Bank of Vietnam.

The purchase and sale of goods in service of the daily life of individuals working in Lao Bao trade area shall be effected in Vietnam dong.

Article 33.- Enterprises of Lao Bao trade area shall, when exporting goods and services with foreign currency revenues, have to comply with Vietnam’s current regulations on the management of foreign exchange.

Article 34.- The carrying of foreign currencies from foreign countries into Lao Bao trade area and vice versa must comply with Vietnam’s regulations on the management of foreign exchange.

Chapter VI

ORGANIZATION OF MANAGEMENT OF LAO BAO TRADE AREA

Article 35.- The People’s Committee of Quang Tri province shall set up a Management Board of Lao Bao trade area so as to exercise the centralized and uniform management of operations of Lao Bao trade area.

The Ministry of Trade, the Ministry of Defense, the Ministry of Public Security, the Ministry of Construction, the Ministry of Finance and the Ministry of Planning and Investment; the General Department of Customs, the General Department of Tourism, the General Land Administration and the concerned agencies shall coordinate with the People’s Committee of Quang Tri province in organizing the effective management of operations of the Management Board of Lao Bao trade area.

Article 36.- The People’s Committee of Quang Tri province shall have the responsibilities:

1. To ratify the overall development planning, plans and regulation on operations of Lao Bao trade area, lists of development investment projects and detailed plans to be carried out in Lao Bao trade area; direct the elaboration of the plan for the construction of Lao Bao trade area and submit it to the competent levels for approval, and exercise the management of the projects in strict compliance with the approved plan; decide the ratification of Group B- and C- construction investment projects, based on the agreement reached with the Ministry of Planning and Investment;

2. To set up the Lao Bao trade area’s infrastructure construction and development company which shall be a State enterprise;

3. To coordinate with the ministries and branches stipulated in Article 35 of this Regulation in organizing the management of Lao Bao trade area;

4. To direct and create conditions for the Management Board of Lao Bao trade area in fully performing their assigned tasks as defined in this Regulation;

5. To direct the Management Board of Lao Bao trade area in receiving and evaluating dossiers of direct investment in Lao Bao trade area by business organizations and individuals and issuing licenses thereto, as authorized by the Ministry of Planning and Investment or the Ministry of Trade;

6. To direct the People’s Committee of Huong Hoa district and other provincial functional agencies in coordination with the Management Board of Lao Bao trade area to take measures for ensuring social security, order and safety, thus creating favorable conditions for the operations of enterprises of Lao Bao trade area;

7. To reach agreement with the authorities of the Lao province of Savanakhet on the principles for coordination, administration and management of operations of Lao Bao trade area and Delsavan trade area on the basis of the Government’s Regulation, and in conformity with the special friendship between the peoples of the two countries as well as their current respective legislation.

Article 37.- The Management Board of Lao Bao trade area shall have the following tasks and powers:

1. To elaborate the development planning, plans and the regulation on operation of Lao Bao trade area and submit them to the People’s Committee of Quang Tri province for ratification, popularize such planning, plans, projects and regulation, and organize and inspect the implementation thereof;

2. To make lists of investment projects and implementation plans and submit them to the competent agency(ies) for ratification and organization of implementation;

3. To grant, withdraw business licenses and investment licenses as authorized respectively by the Ministry of Trade and the Ministry of Planning and Investment, after consulting the People’s Committee of Quang Tri province; to monitor and inspect the compliance with the granted licenses;

4. To set levels of prices and charges to be effected in Lao Bao trade area and submit them to the competent State agency(ies) for consideration and promulgation;

5. To grant business registration certificates, certificates of goods’ origin in Lao Bao trade area and other certificates when mandated by the competent State agency(ies);

6. To act as the main body in settling problems arising in the course of formulation and execution of investment and business projects and take part in operations of Lao Bao trade area;

7. To coordinate with agencies prescribed in Article 35 of this Regulation and the local administration in ensuring that all activities in Lao Bao trade area conform to this Regulation and the operation charter of Lao Bao trade area.

8. To manage the construction projects financed by the sources of investment capital budget in Lao Bao trade area.

9. To coordinate with the Management Board of Delsavan trade area of Laos in ensuring that operations of the two trade areas comply with the agreements concluded between the Government of the Socialist Republic of Vietnam and the Government of the Lao People’s Democratic Republic as well as the agreements made between Quang Tri province and Savanakhet province.

Article 38.- The Management Board of Lao Bao trade area shall have its legal person status, its own seal, bank accounts, full-time personnel and fund for operation to be allocated by the State budget.

All budget revenues in Lao Bao trade area must be remitted into the State budget.

1. Handling of civil and commercial disputes in Lao Bao trade area:

The Management Board of Lao Bao trade area shall have the responsibility to conciliate disputes arising in the process of operation of enterprises of Lao Bao trade area as well as disputes between enterprises of Lao Bao trade area and organizations and/or individuals outside the area;

In case of unsuccessful conciliation, the disputes shall be settled in accordance with the provisions of Vietnamese law.

2. Criminal cases occurring in Lao Bao trade area shall fall within the jurisdiction of courts as prescribed by Vietnamese law.

Chapter VIII

IMPLEMENTATION PROVISIONS

Article 40.- Operations of enterprises of Lao Bao trade area other than those prescribed in this Regulation shall comply with the corresponding provisions of the Commercial Law, the Law on Foreign Investment in Vietnam, the Law on Domestic Investment Promotion, the Law on State Enterprises, the Law on Private Enterprises, the Law on Companies, the Law on the State Bank, the Land Law, and other legal documents of the State of Vietnam as well as international agreements which Vietnam has signed or acceded to.

Article 41.- Preferences for enterprises of Lao Bao trade area provided for in this Regulation shall, as allowed by the Vietnamese Government, be applicable to enterprises which have been licensed for operation before the date of promulgation of this Regulation.

Prime Minister