GOVERNMENT ------- No. 12/ND-CP

SOCIALIST REPUBLIC OF VIETNAM Independence- Freedom- Happiness ****** Dated February 18, 1997

DECREE   PROVIDING REGULATIONS OF FOREIGN INVESTMENT IN VIETNAM ********

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

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

Pursuant to the Law on Promulgation of Legal Instruments dated November 12, 1996;

Following the proposal of the Minister of Planning and Investment;

Decrees: Chapter  I General Provisions

Article 1: This Decree makes detailed provisions on the implementation of the Law on Foreign Investment in Vietnam dated November 12, 1996.

Investments in industrial add export processing zones and investments under build-operate-transfer (abbreviated in English as BOT) contracts, build-transfer-operate (BTO) contracts and build-transfer (BT) contracts shall comply with the applicable provisions of this Decree and other legislation of the Government on industrial zones, export processing zones, BOT, BTO and BT.

International credit activities, operations of branches of foreign companies in Vietnam, and other forms of indirect investment and trade are beyond the scope of the regulations of this Decree.

Article 2: Entities participating or co-operating in investments in accordance with the provisions of the Law on Foreign Investment it Vietnam shall include:

1. Vietnamese enterprises:

- State owned enterprises established in accordance with the Law on State Owned Enterprises;

- Co-operatives established in accordance with the Law on Cooperatives;

- Enterprises belonging to socio-political organizations

- Enterprises established in accordance with the Law on Companies;

- Enterprises established in accordance with the Law on Private Enterprises;

2. Vietnamese organizations which are entities referred to in article 65 of the Law on Foreign Investment in Vietnam and which satisfy the criteria stipulated by the Government.

3. Foreign investors.

4. Enterprises with foreign owned capital.

5. Overseas Vietnamese

6. State bodies authorized to enter into BOT, and BT contracts.

Article 3:

Based on the economic and social development planning and orientation for each period, the Ministry of Planning and Investment shall co-ordinate with ministries, branches and people's committees of provinces and cities under central authority (hereinafter referred to as provincial people's committees) to submit to the Government for approval and promulgation a list of regions in which investment is encouraged, a list of encouraged investment projects and specially encouraged investment projects, a list of sectors in which licensing of investment is conditional, and a list of sectors in which investment will not be licensed.

Article 4:

State bodies authorized to issue investment licenses as stipulated in article 55 of the Law on Foreign Investment in Vietnam shall be:

- Ministry of Planning and Investment;

- Qualified provincial people's committees in accordance with the decision of the Government on delegation of licensing authority.

- Based on the proposal of the provincial people's committee and the conditions of each board of management of an industrial zone, the Ministry of Planning and Investment shall submit to the Prime Minister of the Government for a decision on the delegation of authority by the Ministry of Planning and Investment to a broad of management of an industrial zone in respect of the issuance of investment licenses to investment projects in such industrial zone.

Article 5:

1. During its operation in Vietnam, an entity participating or co-operating in an investment as stipulated in article 2 of this Decree must comply with the provisions of the Law on Foreign Investment in Vietnam, the provisions of this Decree and other relevant provisions of the laws of Vietnam. 2. In cases where Vietnamese law does not yet provide for dealing with particular situations relating to foreign investment in Vietnam, the parties may agree in the contract to apply foreign laws provided that such agreement is not inconsistent with the provisions of Vietnamese law.

Article 6: The files of an investment project and official correspondence with State bodies of Vietnam must be in Vietnamese or in Vietnamese and a commonly used foreign language.

Chapter II Forms of Investment

Article 7: 1. A business co-operation contract is a document signed by two or more parties (hereinafter referred to as the business co-operation parties) which stipulates the responsibilities of, and the sharing of business results between, the parties for the purposes of commencing business investment in Vietnam without creating a legal entity. Commercial contracts, contracts for the delivery of raw materials in return for finished products, equipment purchasing contracts with long-term payment plans, and other contracts which do not provide for the sharing of profits or business results are beyond the scope of the regulations of this Decree. Business co-operation contracts for the exploration for or exploitation of oil and gas and a number of other natural resources in the form of a production sharing contract shall be governed by the provisions of the law on petroleum the relevant law, and the Law on Foreign Investment in Vietnam. 2. A business co-operation contract shall be signed by the duly authorized representatives of the business co-operation parties.

Article 8:

A business co-operation contract must contain the following principal matters:

1. The nationalities, addresses, and names of the duly authorized representatives of the business co-operation parties.

2. The objectives and scope of business.

3. The contributions of the business co-operation parties, the sharing of business results, and the schedule for performance of the contract.

4. The main products and the ratio of products for export to products for domestic consumption.

5. The duration of the contract.

6. The rights and obligations of the business co-operation parties.

7. Amendment and termination of the contract and conditions of assignment.

8. Dispute resolution.

A business co-operation contract shall be effective as from the date of issuance of the investment license.

Article 9:

When conducting business, the business co-operation parties may by agreement establish a co-ordination committee to monitor and supervise the performance of the business co-operation contract. The co-ordination committee of a business co-operation contract shall not be the legal representative of the business co-operation parties.

The functions, duties and powers of the co-ordination committee shall be agreed by the parties.

Article 10:

The application file for an investment license in respect of an investment project in the form of a business co-operation contract shall include:

1. The application form for an investment license.

2. The business co-operation contract.

3. Statements certifying the legal status and financial capacity of the parties.

4. The economic-technical explanatory statement.

5. Other files stipulated in articles 38, 39, 45, and 83 of this Decree.