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CHAPTER
II
Forms
of Investment
Article 4
Foreign investors may invest in Vietnam in
any of the following forms:
1. Business co-operation on the basis
of a business co-operation contract;
2. Joint venture enterprise;
3. Enterprise with one hundred (100)
per cent foreign owned capital.
Article 5
Two or more parties may, on the basis of a
business co-operation contract, enter into a business
co-operation, such as profit sharing production, product
sharing co-operation, or other business co-operation.
The parties shall agree on, and expressly
state in the business co-operation contract, the objects,
nature and duration of the business, their respective rights,
obligations and responsibilities, and the relationship between
them.
Article 6
Two or more parties may, on the basis of a
joint venture contract, co-operate to establish a joint
venture enterprise in Vietnam.
A joint venture enterprise may co-operate
with foreign investor(s) or Vietnamese enterprises to
establish a new joint venture enterprise in Vietnam.
A joint venture enterprise shall be
established in the form of a limited liability company and
shall be a legal entity in accordance with the law of Vietnam.
Article 7
1. The foreign party to a joint venture
enterprise may make its contribution to the legal capital
in:
(a) Foreign currency or Vietnamese
currency originating from investments in Vietnam;
(b) Equipment, machinery, plant and
other construction works;
(c) The value of industrial property
rights, technical know-how, technological processes and
technical services.
2. The Vietnamese party to a joint
venture enterprise may make its contribution to the
legal capital in:
(a) Vietnamese currency or foreign
currency;
(b) The value of the right to use
land in accordance with the law on land;
(c) Resources, the value of the right
to use water and sea surfaces in accordance with the
law;
(d) Equipment, machinery, plant and
other construction works;
(e) The value of industrial property
rights, technical know-how, technological processes and
technical services.
3. Contribution of capital by the
parties in forms other than those stipulated in clauses
1 and 2 of this article must be approved by the
Government.
Article 8
Capital contribution of a foreign party or
foreign parties to the legal capital of a joint venture
enterprise shall be agreed by the parties and shall not be
limited provided that the contribution is not less than thirty
(30) per cent of the legal capital, except in cases stipulated
by the Government.
In the case of a multi-party joint venture
enterprise, the minimum capital contribution to be made by
each Vietnamese party shall be determined by the Government.
With respect to important economic
establishments as determined by the Government, the parties
shall agree to increase gradually the proportion of the
Vietnamese party's contribution to the legal capital of the
joint venture enterprise.
Article 9
The value of the capital contribution made
by each party to a joint venture enterprise shall be
calculated by reference to the market price at the time of
contribution. The capital contribution schedule shall be
agreed by the parties, stated in the joint venture contract
and approved by the body in charge of State management of
foreign investment.
The value of equipment and machinery
contributed as capital must be certified by an independent
inspection organization.
The parties shall be responsible for the
truth and accuracy of the value of their respective capital
contributions. Where necessary, the body in charge of State
management of foreign investment has the right to appoint an
inspection organization to revalue the capital contribution of
each party.
Article 10
The parties shall share the profits and
bear the risks associated with a joint venture enterprise in
proportion to their respective capital contributions, except
where it is otherwise agreed by the parties as stated in the
joint venture contract.
Article 11
The board of management shall be the body
in charge of the management of the joint venture enterprise
and shall comprise representatives of the parties to the joint
venture enterprise.
Each party to a joint venture enterprise
shall appoint members to the board of management in proportion
to its capital contribution to the legal capital of the joint
venture enterprise.
In the case of a two-party joint venture
enterprise, each party shall have at least two members on the
board of management.
In the case of a multi-party joint venture,
each party shall have at least one member on the board of
management.
If a joint venture enterprise has one
Vietnamese party and more than one foreign party, or one
foreign party and more than one Vietnamese party, the
Vietnamese or foreign party concerned shall have the right to
appoint at least two members to the board of management.
In respect of a joint venture enterprise
established by an existing joint venture enterprise in Vietnam
and a foreign investor or a Vietnamese enterprise, the
existing joint venture enterprise shall have at least two
members on the board of management, one of whom must be
appointed by the Vietnamese party.
Article 12
The chairman of the board of management
shall be appointed by the parties to the joint venture
enterprise. The chairman of the board of management shall be
responsible for convening and chairing meetings of the board
of management and for monitoring the execution of any
resolutions of the board of management.
The general director and deputy general
directors shall be appointed and dismissed by the board of
management. They shall be responsible before the board of
management and the law of Vietnam for the management and
running of the operations of the joint venture enterprise.
The general director or the first deputy
general director shall be a Vietnamese citizen.
The duties and powers of the chairman of
the board of management, the general director and the first
general director shall be stated in the charter of the joint
venture enterprise.
Article 13
The board of management shall decide on
regular meetings.
Extra-ordinary meetings of the board of
management may be convened at the request of the chairman of
the board of management, two thirds of the board members, the
general director or the first deputy general director.
Meetings of the board of management shall be convened by the
chairman of the board of management.
Meetings of the board of management must
have a quorum of at least two thirds of the members of the
board of management representing the parties to the joint
venture.
Article 14
1. Principal matters which relate to
the organization and operation of the joint venture,
comprising the appointment and dismissal of the general
director, the first deputy general director and the chief
accountant; amendments of and additions to the charter of
the enterprise; approval of final annual financial
statements and final financial statements of capital
construction and loans for investment, shall be decided by
the members of the board of management who are present at
the meeting on the basis of the principle of unanimous
decision.
The joint venture parties may agree on
and state in the joint venture charter other issues which
require unanimous decision.
2. With respect to matters which are
not referred to in clause 1 of this article, the board of
management shall decide on the basis of the principle of
simple majority voting by members who are present at the
meeting.
Article 15
Foreign investors may establish in Vietnam
an enterprise with one hundred (100) per cent foreign owned
capital.
An enterprise with one hundred (100) per
cent foreign owned capital shall be established in the form of
a limited liability company and shall be a legal entity in
accordance with the law of Vietnam.
An enterprise with one hundred (100) per
cent foreign owned capital may co-operate with a Vietnamese
enterprise to establish a joint venture enterprise.
With respect to important economic
establishments as determined by the Government, Vietnamese
enterprises shall, on the basis of agreements with the owner
of the enterprise, be permitted to purchase a part of the
capital of the enterprise to convert such enterprise into a
joint venture enterprise.
Article 16
The legal capital of an enterprise with
foreign owned capital must be at least thirty (30) per cent of
its invested capital. In special cases and subject to approval
of the body in charge of State management of foreign
investment, this proportion may be lower than thirty (30) per
cent.
During the course of its operation, an
enterprise with foreign owned capital must not reduce its
legal capital.
Article 17
The duration of an enterprise with foreign
owned capital and the duration of a business co-operation
contract shall be stated in the investment licence for each
project in accordance with regulations of the Government, but
shall not exceed fifty (50) years.
Pursuant to regulations made by the
Standing Committee of the National Assembly, the Government
may, on a project by project basis, grant a longer duration
but the maximum duration shall not exceed seventy (70) years.
Article 18
Foreign investors may invest in industrial
zones and export processing zones in any of the investment
forms stipulated in article 4 of this Law.
Vietnamese enterprises in any economic
sector may co-operate with foreign investors to invest in
industrial zones and export processing zones in any of the
investment forms stipulated in clauses 1 and 2 of article 4 of
this Law or may establish their wholly owned enterprises.
The transfer of goods between enterprises
operating in the Vietnamese market and export processing
enterprises shall be deemed to be an export-import activity
and shall be regulated by the provisions of the law on export
and import. The Government shall provide simple and convenient
procedures for export processing enterprises to purchase raw
materials, materials and other goods from the Vietnamese
market.
The Government shall make regulations on
industrial zones and export processing zones.
Article 19
Foreign investors investing in the
construction of infrastructure facilities may enter into
Build-Operate-Transfer contracts, Build-Transfer-Operate
contracts, or Build-Transfer contracts with an authorized
State body of Vietnam. Foreign investors shall be entitled to
the rights and be subject to the obligations stipulated in
such contract.
The Government shall make detailed
regulations on investment on the basis of
Build-Operate-Transfer contracts, Build-Transfer-Operate
contracts, and Build-Transfer contracts.
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