DECISION OF THE PEOPLE'S COMMITTEE OF DANANG CITY
Re: Issuing some preferential policies to attract foreign  direct investment (FDI) to Danang City

THE PEOPLE'S COMMITTEE

- Pursuant to the Law on the Organization of People's Councils and People's Committees (amended) dated 21 June 1994;

- Pursuant to the 2000 Law on Foreign Investment in Vietnam; Decree No. 24/2000/ND-CP dated 31 July 2000 of the Government giving detailed provisions for implementation of the Law on Foreign Investment in Vietnam, and Decree No. 27/2003/ND-CP dated 19 March 2003 amending and supplementing some provisions of Decree No. 24/2000/ND-CP of the Government;

- Pursuant to Decree No. 164/2003/ND-CP dated 22 December 2003 of the Government giving detailed provisions for implementation of the Law on corporate income tax and relevant legal documents on foreign investment in Vietnam;

- Following the proposals of the Director of the Department of Planning and Investment and the head of the Secretariat of the Danang People?s Council and People?s Committee;

DECIDES

Article 1: To issue with this Decision the Regulations for some preferential policies to attract foreign direct investment (FDI) to Danang City.

Article 2: This Decision shall take effect from the date of its signing to 31 December 2010 and it replaces Decision No.25/2003/ QD-UB dated 3 March 2003 stipulating the regulations for some preferential policies to attract foreign direct investment (FDI) to Danang City.  All previous legal documents of the Danang People?s Committee which are inconsistent with this Decision are hereby repealed.

Article 3: The head of the Secretariat of the Danang People's Council and People's Committee, the directors of departments, the chairpersons of People?s Committee of districts, and the heads of related bodies  and organizations shall be responsible for the implementation of this Decision.

ON BEHALF OF THE DANANG PEOPLE'S COMMITTEE
CHAIRMAN
Huynh Nam
(Signed & sealed)

THE REGULATIONS (1)
for some preferential policies to attract foreign direct investment (fdi) to Danang City
(Issued with Decision No. 50/2004/QD-UB dated 10 March 2004 of the People's Committee of Danang City)

Article 1: The People's Committee of Danang City encourages foreign organizations and individuals, and overseas Vietnamese (hereinafter referred to as foreign investors) to invest in Danang City in accordance with the Law on Foreign Investment in Vietnam on the basis of respect of the independence, sovereignty and laws of Vietnam, and of equality and mutual benefits.

The People's Committee of Danang City guarantees to create favourable conditions for foreign investors in Danang City.

Article 2: Administrative procedures

1. The People's Committee of Danang City is fully responsible for investment license issuance for foreign investment projects in Danang City through the one-stop service mechanism at the Danang Investment Promotion Center. The investors shall pay no fees for the completion of such procedures.

2. Time limit for investment license issuance
- With regard to projects issued licenses by the People's Committee of Danang City, the period of time to issue investment licenses will be no more than 10 (ten) working days for projects subject to evaluation and no more than 5 (five) working days for projects subject to registration for issuance of investment licenses.
- With regard to projects issued licenses by the Ministry of Planning and Investment, the period of time to issue investment licenses will be in accordance with the regulations of the Ministry of Planning and Investment.

3. For projects subject to registration for issuance of investment licenses, the foreign investors can submit the application files via the internet network for the consideration of the authorized bodies.

Article 3: Use of Land

1. The City authorities are responsible for the organization of site clearance and compensation and completion of land leasing procedures.

Costs for the site clearance and compensation are regulated as follows:
- For projects with implemented capital of less than 20 million USD, the Danang People?s Committee shall pay 50% of the costs and the remaining 50% shall be paid by the investors (this amount must be paid in advance so that the City authorities can make the payment of compensation costs).
-  For projects with implemented capital of more than 20 million USD, the Danang People?s Committee shall pay 100% of the costs. However, 50% of the costs must be advanced by the investors for the City authorities to make payment of compensation costs. This amount shall be reimbursed to investors by the City authorities immediately after the projects come into operation.

2. After a time limit of from 6 (six) to 12 (twelve) months from the date of taking over the land, if investors do not implement their projects or the implementation does not comply with the schedule anticipated in the investment application files, the City authorities will recover the land and shall not return the costs of site clearance and compensation paid in advance by investors.

3. Land rental

3.1. For projects invested outside industrial zones:

3.1.1. The central area of the City (consisting of Hai Chau and Thanh Khe districts): USD4.8/m2/year.

For investment in the fields of trade, tourism and services: USD6.7/m2/year.

3.1.2. Suburban land adjacent to the central area of the City (consisting of the districts of Son Tra, Ngu Hanh Son, Lien Chieu and the communes of Hoa Tho, Hoa Phat and Hoa Xuan of Hoa Vang district): USD0.7/m2/year.

For investment in the fields of trade, tourism and services: USD1/m2/year.

3.1.3. Land used for seaside resorts from Hai Van Pass to the border of Quang Nam province: USD0.6/m2/year.

3.1.4. Rural areas (the remaining communes of Hoa Vang district excluding the mountainous communes): USD0.18/m2/year.

3.1.5. Mountainous communes (consisting of the communes of Hoa Son, Hoa Phu, Hoa Bac and Hoa Ninh of Hoa Vang district): USD0.02/m2/year.

The above-mentioned land rental rates are standard and shall be adjusted by coefficient K from 0.8 to 1.2 based on the specific conditions of investment locations.

For Ba Na Resort and some particular projects, the land rental for each project shall be considered and decided by the Danang People?s Committee. In the case that the investors make full payment for the entire land rent duration within one year from the date of taking over the land, they will enjoy a 30% reduction of the total rental.

3.2. For projects invested in industrial zones under the management of the City

3.2.1. For manufacturing projects:

3.2.2.  For projects in the fields for trading or services: The land rental rate is 1.4 times higher than the price for manufacturing projects and these projects will be located in trade-service areas.

4. Period of exemption from and reduction of land rental

4.1. For projects invested outside industrial zones:

The periods of exemption from land rental from the date of completion of the capital construction to the commencement of operation of projects are as follows:
- 12 years for projects belonging to the list of sectors where investment is specially encouraged.
- 10 years for projects belonging to the list of sectors where investment is encouraged.
- 7 years for remaining projects (not belonging to the above categories).

Projects with implemented capital of more than 10 million USD or projects investing in the midland and mountainous areas are exempted from land rental for 2 (two) more years.

4.2. Investment projects in industrial zones

In industrial zones under the management of the City, the foreign investors shall enjoy an exemption from land rental (including infrastructure cost) from the date of completion of the capital construction to the commencement of operation of projects as follows:
- 11 years for projects belonging to the list of sectors where investment is specially encouraged.
- 9 years for projects belonging to the list of sectors where investment is encouraged.
- 6 years for remaining projects (not belonging to the above categories).

Projects with implemented capital of more than 10 million USD are exempted from land rental for 2 (two) more years.
The list of sectors where investment is specially encouraged and list of sectors where investment is encouraged are stated in the Appendix attached to this Decision.

Article 4. Preferential treatment for corporate income tax

Projects invested in Danang City shall be entitled to the corporate income tax exemption for five (5) years in addition to the terms of corporate income tax exemption and reduction stipulated in Decree No. 164/2003/N?-CP dated 22 December, 2003 of the Government.

Article 5: The City authorities shall have responsibility for the construction of power and water works outside the boundaries of the sites according to the required plan of investors. In a case that these works have not been built promptly by the City authorities, they may be done by investors in accordance with their plans. Construction costs will be reimbursed to the investors.

Article 6: Organizations and individuals making outstanding achievements in promotion and improvement of the efficacy of foreign direct investment attraction shall be rewarded according to the regulations. Any organizations and individuals breaching the regulations of this Decision shall, depending on the characteristic and the seriousness of the breach, be dealt with or prosecuted for criminal liability according to the provisions of the law.

Article 7: The head of the Secretariat of the Danang People's Council and People's Committee, the directors of the concerned agencies, foreign investors in Danang; heads of related bodies, organizations and individuals shall be responsible for the implementation of these Regulations.

In the process of implementation, if facing difficulties, impediments or new issues, the bodies and localities should promptly inform the Danang Investment Promotion Center for their submission in a general report to the People's Committee of Danang City in order to make suitable amendments, additions or supplements.

FOR THE PEOPLE'S COMMITTEE OF DANANG CITY
Chairman
Huynh Nam
(Signed and sealed)
 

APPENDIX
(Promulgated with Decision No. 50/2004/QD-UB dated March 10, 2004 of the People's Committee of Danang City)

I. LIST OF FIELDS WITH SPECIAL INVESTMENT ENCOURAGEMENT

-  Production or processing with 80% or more of the products for export

- Processing of agricultural products, forest products (excluding timber) or aquatic products from domestic raw materials, with 50% of the products for export

- Production of plant and animal breeds with high quality and economic efficiency

-  Agricultural farming, forestation, aquaculture

-  Production of high-quality steel, alloys, non-ferrous metals, special metals, steel blanks and sponge iron, metal for industries

- Manufacture of machinery, equipment and component packs for the exploitation of petroleum, mining and energy; manufacture of large-size lifting equipment; manufacture of machine tools for metal processing; metal working machinery

- Production of medical equipment for analysis technology and medical extraction technology

-  Production of equipment for checking contaminants in foodstuff

- Production of new materials, and rare and precious materials and the application of new biotechnologies: new technologies for manufacture of information and telecommunication equipment

-  Production of information technology products

-  Hi-tech industries

- Investment in research and development (R&D) accounting for 25% of the revenue

- Manufacture of waste treatment equipment

- Production of materials for antibiotics

- Pollution treatment and environmental protection, waste treatment

- Investment under BOT, BTO or BT contracts 

II. LIST OF FIELDS WITH INVESTMENT ENCOURAGEMENT

- Development of 5-star hotels and tourist resorts

- Exploration, exploitation and processing of deep underground minerals

- Production or processing with 50% or more of products for export

- Production or processing with 30% or more of the products for export and with the use of large percentages of domestic raw materials and materials (valued at 30% or more of the production cost)

- Regularly employing over 500 persons

- Processing of farm produce, forest products (except domestic natural wood), aquatic products from domestic material sources

- Preservation of food; post-harvest preservation of farm produce

- Development of petro-chemical industry; construction and operation of oil and gas pipelines, depots, ports

- Manufacture of precision tools, safety checking and inspection equipment; manufacture of molds for metal and non-metal products

- Manufacture of medium and high-voltage electrical equipment

- Manufacture of diesel engines using advanced technology and techniques: manufacture of dynamic and hydraulic machines and spare parts, compressors

- Manufacture of automobile and motorcycle spare parts: manufacture and assembly of construction equipment, machinery and vehicles; manufacture of technical equipment for transport services

- Shipbuilding: manufacture of ship engines, equipment and spare parts for freighters, fishing vessels

- Manufacture of information and telecommunications equipment

- Manufacture of electronic and informatics components and equipment 

- Manufacture of agricultural equipment spare parts, machines, irrigation and drainage equipment

- Manufacture of garment and textile equipment

- Production of assorted raw materials for insecticides

- Production of various insecticides, plant protection drugs, and veterinary drugs with domestic added value of more than 40%

- Production of base chemicals, pure chemicals, dyes, special-use chemicals

- Production of raw materials for cleansers, chemical additives

- Production of special-type cement, composite materials, sound-proofing, electrical-insulated and heat resistant materials, wood substitute composite materials, refractory materials, construction plastic, glass fibers

- Production of light construction materials

- Production of paper pulp

- Production of silk, assorted yarns and special fabrics for industrial use

- Manufacture of high-class raw materials for production of export footwear and garments

- Manufacture of high-quality packings for export goods

- Manufacture of medical equipment for analytical technology and extracting technology in medicine

- Production of drug raw materials, and medicines for treatment of human diseases meeting the GMP international standards

- Improvement and development of energy sources

- Public transportation

- Construction and renovation of bridges, roads, airports, harbors, railway stations, vehicle terminals, railways

- Construction of water plants, water supply and drainage systems

- Construction-commercial operation of the infrastructure of industrial parks, export processing zones and hi-tech parks

- Technical services for agriculture, forestry and fishery.

INCENTIVES ON TAX

1. Incentives on corporate income tax

1.1. For Hoa Khanh, Hoa Cam and Lien Chieu Industrial Zones:

1.2. For Danang and Danang Aquatic Products Service Industrial Zones:

* For projects which belong to the list of encouraged investment projects and / or assign its asset to Vietnamese State without any compensation after expiry of operation. 

* Besides, from 20th March 2003, projects also enjoy amendment incentives provided by Danang People?s Committee as follows:

 - In 13 years if total implemented capital from 15 million USD or over.

- In 10 years if total implemented capital from 10 million USD to 15 million USD.

- In 7 years if total implemented capital up to 10 million USD.

* Note: These incentives are applied throughout the duration of investment projects. 

2. Incentives for withholding tax

- Tax rate of 3% of the profit transferred. This rate is applied for all the Export Processing Zone and Industrial Zone Enterprises.

3. Incentives on corporate income tax for reinvestment

Enterprises which reinvest their profit and other legal incomes from investment operation in Vietnam shall be entitled to a refund of 50 and 100 percentage of profits tax already paid provided that the following conditions are satisfied:

- The reinvest is made in a sector where investment is encouraged.

- The reinvest capital is used for 3 years or more.

- The legal capital stated in the Investment License has been fully contributed.   

4. Investment preferences on export and import

Enterprises shall be entitled to exemption from import duties in respect of the following:

- Equipment, machinery and specific means of transportation imported into Vietnam for the purpose of forming the fixed assets of the enterprises.

- Raw materials, supplies imported for the purpose of making equipments, and machinery which form part of the technological process or making parts, spare parts, support structures, molds and accessories of the above equipments and machineries.

- Construction materials that cannot be produced in Vietnam imported for the purpose of forming the fixed assets.

- Enterprise producing goods for export shall be permitted to temporarily defer payment of import duties in respect of raw materials imported for manufacturing goods for export in a time regulated by the State.

- Goods, luggage and foreign currency imported into processing zones or processing enterprises from overseas and exported overseas from processing zones or processing enterprises will be exempt from export and import duties.

5. Land Rental Incentives:

- Land rental in Hoa Khanh, Hoa Cam and Lien Chieu Industrial Zones is applied with a very preferential price.

- Exemption from land rental: Foreign investors is completely exempted from land rental (including Industrial infrastructure charge applied for Hoa Khanh, Hoa Cam and Lien Chieu Industrial Zones) during the time of carrying out basic construction and 7 years from the date of finishing construction. 

* Besides, from 20th March 2003, projects also enjoy amendment incentives provided by Danang People?s Committee as follows:

- In 13 years if total implemented capital from 15 million USD or over.

- In 10 years if total implemented capital from 10 million USD to 15 million USD.

- In 7 years if total implemented capital up to 10 million USD.

* Note: In case of not implementing invested capital as stipulated above, time of land rental exemption will not be over 50% of those incentives.

Source: Da Nang city - industries & investments, Vietnam (Danang website)