BUYING FROM VIETNAM
VIETNAM: LAND AND PEOPLE
GEOGRAPHY
Vietnam occupies a land area of 330,000 sq. km. and measures 1,650 km from its northern border with China to its southernmost tip at the Eastern Sea. Situated in the heart of Southeast Asia, with 3,260 km of spectacular coastline, Vietnam offers ideal advantages for economic development, trade and tourism.
Mountains and tropical forest cover three quarters of Vietnam, but the flatlands make up the most heavily populated portion of the country. The country's two "rice bowls" lie in the Red River delta in the north and the Mekong River delta in the south.
Hanoi, in the north, is the country's capital, while Ho Chi Minh City, in the south, is the largest commercial city. Danang, in the central part of the country, is the third largest city and an important port.
Vietnam has two climates. The southern and central regions have a tropical climate with dry and rainy seasons and are normally humid throughout the year. In the north, the four seasons, including a distinct winter, are more defined. Average annual rainfall is about 223 cm.
POPULATION
Vietnam's population stood at around 78 million in 1999. The average population density is 227 people per sq. km. The annual growth rate is 1.7%.
Of the 54 ethnic groups, those of Kinh (Vietnamese) descent account for 88% of the total population. The literacy rate is about 90%. Approximately 70% of the population is employed in agriculture and more than half is under the age of 25.
NATURAL RESOURCES
In addition to having significant potential in energy sources such as oil, gas and coal, Vietnam is also very rich in other minerals, including bauxite, iron ore, copper, gold, precious stones, tin, chromate, apatite, and building materials, such as granite, marble, clay, silica sand, and graphite. This mineral wealth is complemented by significant marine resources, tropical forest, and agricultural potential.
(Map of Vietnam)
HISTORY
Vietnamese history dates back more than 4,000 years to when the ancient Vietnamese people founded their first nation under the name "Van Lang ".
The recent history of Vietnam is best characterized as one long, continuous struggle for freedom and independence. The country was ruled by the Chinese feudalists for nearly a thousand years from 111 B.C. to 939 A.D. It was also colonized by France for almost 100 years from 1859 to 1945.
During the Second World War, Vietnam was occupied by Japanese troops, but the French administration continued until March 9, 1945 when it was toppled by the Japanese. Vietnam regained its power from the Japanese in August 1945 and was declared independent on September 2 in the same year, giving the birth to the Democratic Republic of Vietnam. Right after the declaration of independence, the country was immediately plunged into a war against the French attempts to re-colonize, which lasted for another nine years. The war ended in 1954, leaving the country divided at the 17th parallel. The north remained as the Democratic Republic of Vietnam, led by the communists, while the south fell under the influence of the West, namely the United States.
The U.S. involvement in Vietnam grew in the 1950s and escalated into a full-fledged war in March 1965 when the first U.S. troops landed in Vietnam. Although U.S. troops were completely withdrawn by the end of March 1973 as a result of the Paris Peace Accords, the war continued until April 30, 1975, when the south was liberated. The nation was reunified as the Socialist Republic of Vietnam in January 1976.
INTERNATIONAL LINKS
As a result of the country's foreign policy of "being the friend of all countries," Vietnam has enjoyed increasing rapprochement with other countries. Relations with China were normalized in 1991 and have been expanding and developing since then. U.S.-Vietnam diplomatic relations were re-established in July 1995. A bilateral trade agreement was signed by the two countries in July 1999. Vietnam became a full member of ASEAN in July 1995 and in the same year, signed a cooperation treaty with the European Union. Vietnam currently maintains diplomatic relations with more than 160 countries, including all the world powers, and has economic and trade links with nearly 150 countries and territories. Ties with multilateral credit organizations such as World Bank, IMF and ADB have been resumed. The nation's international and regional economic integration process is being stepped up. Vietnam has been a member of ASEAN Free Trade Area (AFTA) since January 1st, 1996 and a full member of APEC since 1998. The country is also in the process of negotiating WTO membership.
THE POLITICAL STRUCTURE
Vietnam is a socialist country under the leadership of the Communist Party. The Party holds a national congress every five years to outline the country's overall direction and future course as well as to formalize policies.
The National Assembly, which includes 450 members as maximum, representing all walks of life throughout the country, and is open to non-Party members, is the highest State authority and the only body with constitutional and legislative power. The President of the State and the Prime Minister are elected by the National Assembly.
The President has the right to nominate candidates for a number of key positions, including the Chief Justice of the Supreme Court and the Procurator-General of the Supreme People's Procuracy. Nominees are then approved by the National Assembly.
The Prime Minister, who is charged with the day-to-day handling of the government, has the right to nominate and dismiss the members of his cabinet, though only with the approval of the National Assembly.
The Vietnamese Government now consists of 17 ministries and 12 ministerial agencies. The Ministry of Trade (MOT) is responsible for state management of both international and domestic trade while the Ministry of Planning and Investment is responsible for economic planning and management of both domestic and foreign investment.
In Vietnam, laws and ordinances are enacted by the National Assembly while decrees guiding the implementation of laws and ordinances are issued by the Government.
Vietnam is divided into 61 provinces and cities under the direct control of the central authority. Provinces are divided into districts, provincial capitals and towns. The districts are further divided into wards and villages. Municipalities remain under central authority and are divided into precincts and townships, which in turn are divided into wards.
Local People's Councils are elected by the local population in each area. The Councils have the duty to maintain respect for the law, to carry out state policies and tasks assigned from above, and to decide on local economic and social development plans and budgets.
Local People's Committees are the executive bodies of local People's Councils and serve as local administrative bodies, responsible to the Local People's Councils at the same level. The Chairmen, Vice Chairmen and members of the People's Committee are elected by the People's Council.
VIETNAM'S ECONOMY AND FOREIGN TRADE
AN OVERVIEW
The Sixth National Congress of Vietnam's Communist Party, held in December 1986, adopted an overall economic renovation policy. Popularly known as "Doi Moi," the policy initially aimed at shifting economic priority from heavy industry to three major economic programs namely: production of food, production of consumer goods and production of exports; reducing state intervention in business; and encouraging foreign and domestic private investment. The Seventh and Eighth National Congresses of the Party held in 1991 and 1996 respectively reaffirmed its commitment to a socialist oriented multi-sectorial economy operating under the market mechanism and state management, and called for more structural reforms.
One of the most important aspects of economic reforms in Vietnam is the encouragement of domestic and foreign private investment. The Company Law, the Law on Private Businesses, the Law on Encouragement of Domestic Investment and especially, the Law on Businesses (which replaced the Company Law and the Law on Private Businesses and is considered most liberal) have had profound impacts on the development of the private sector in Vietnam. The first Law on Foreign Investment in Vietnam was promulgated by Vietnam's National Assembly in December 1987. After being amended twice, the law was repealed and replaced by a new Law on Foreign Investment that was passed in November 1996. The new Law was amended again in May 2000 to create an even more favorable environment for foreign direct investment. The Law is now considered among the most liberal investment laws in the region.
In the area of external trade, import and export restrictions have been greatly reduced. Vietnam has been gradually moving from state monopoly on foreign trade to free trade. The country is now a member of AFTA and APEC and is negotiating for the accession into WTO.
At present, by law, all Vietnamese businesses including private companies have the intrinsic right to handle export and import business within their registered scope of business. Foreign trading companies are allowed to set up branches and/or representative offices in the country to conduct and/or promote trade. As a result, the number of companies which are engaged in export and import business rose from only 50 in 1986 when the reform was initiated to around 12,000 in the year 2000.
Both tariff and non-tariff barriers to trade have been reduced and/or gradually eliminated. Import duties have been substantially reduced while most export products enjoy zero export tax rate. Most commodities and goods are now freely imported into and exported from Vietnam. The number of products subject to export or import prohibition or restriction has been reduced. The requirement of government approval of contracts and prices as well as licenses for lot shipments has been abolished.
Other important reforms that have been taking place over the past 15 years in Vietnam include: Prices and domestic trade have been liberalized and most subsidies have been removed. Multiple exchange rates have been replaced with a single rate reflecting market forces. A tight monetary policy has been adopted to check inflation. The tax system has been reformed with the broadening of the tax base and the introduction of new taxes such as VAT and corporate income tax to replace turnover tax and profit tax respectively. The banking system was also reformed into a two-tier system, which separated a central state bank from commercial banks and opened the way for the entry of private sector. In the agricultural sector, land reform gave usage rights and tenure to farmers who have the right to inherit, exchange, transfer, mortgage and lease their land use rights. State-owned enterprises and companies were re-organized with the reduction and/or removal of the state intervention, subsidies and other privileges, while at the same time, given greater autonomy in their business. The government has also approved the equitization (privatization) of state-owned companies and enterprises.
The "Doi Moi" policy has produced good results. Despite the adverse impacts of the recent regional economic crisis, Vietnam's GDP doubled during the 1990 - 2000 period. The share of GDP by economic sectors is changing positively. As a proportion of the economy, agriculture has dropped to 24.1% in 2000 from 40.8% in 1990. Industry including construction took up 36.9% of the economy, up from 22.8% in 1990 while the share of services increased slightly from 36.4% to 39% during the same period. Inflation dropped from three digits in the 80s to less than 10% since mid 90s. The exchange rate with the US dollar has remained relatively stable. State revenue rose from 15.2% of GDP in 1990 to 27.2% in 2000. Domestic saving and investment also increased from 14.4% and 13.2% in 1991 to 27% and 22.1% of GDP respectively in 2000.
The private sector has also been growing rapidly. As a result, the share of GDP by the private sector, including the foreign invested sector, substantially increased, accounting for around 63.5% of the GDP in 2000. Last year, companies with foreign capital alone produced about 14% of the GDP, 34% of the total industrial output and 22% of export earnings. Such figures are all the more striking when one considers that the private sector was almost nonexistent prior to the inception of economic renovation in 1986.
Exports grew an average of nearly 20% annually from 1990 to 2000, about 2.6 times higher than the GDP growth rate. In 2000, export earnings reached around US$14.45 billion, more than seven times higher than export revenue in 1990. As a result, the ratio of goods and services export - import turnover to the GDP has increased from 62.1% in 1990 to 104.7% in 2000. Trade deficits have been narrowing from around US$4 billion in 1996 to less than US$ 1.2 billion in 2000. Vietnam has gone a long way from food importer to the world third biggest rice exporter. The country has also emerged as the second biggest coffee exporter in the world after only Brazil.
Relations with multilateral financial organizations such as the World Bank, the International Monetary Fund (IMF), the Asia Development Bank (ADB) as well as other country donors have been resumed and/or expanded. During the 1996-2000 period, the international community committed to provide Vietnam with Official Development Aid (ODA) in an amount of US$17.5 billion of which US$6.1 billion was actually disbursed during the same period.
MAIN EXPORT SECTORS
AGRICULTURAL PRODUCE
Although its share in GDP has been decreasing over the recent years, agriculture still represents an important economic sector, accounting for about 24% of the GDP and employing nearly 70% of the work force. Over the last ten years, agricultural growth has averaged about 4.3% per annum. The agricultural sector will continue to receive priority in the country's economic planning and development. The Government has adopted various policies to increase and encourage public and private investment in infrastructure development; farming, processing and storage of agricultural, forestry, and fishery products, especially for export; as well as the production of fertilizer and manufacturing of related equipment and machinery.
Agricultural products are still the country's main exports, currently accounting for nearly 25% of the total export value. Vietnam has moved from a food importer to the world's third largest rice exporter and also emerged as the world's second biggest exporter of coffee and pepper.
Currently, main export items include seafood, rice, coffee, rubber, pepper, tropical vegetables and fruits, cashew nuts, tea, milk and sugar.
The country's agricultural export is forecasted to grow an average of 4% per annum during the next ten years. As a proportion of the export, agriculture is estimated to drop to 22% by 2005 and 17.2% by 2010.
SEAFOOD
Vietnam's S-shaped coastline, which is over 3,200 km in length, together with many archipelagos and islands, supports a vibrant seafood industry. Seafood is one of the country's important exports. Earnings from seafood exports reached around US$ 1.4 billion in 2000, increasing 52% over 1999 and accounting for nearly 10% of the country's total export value.
Main products available for export include fish (such as tongue sole, mahi-mahi, anchovy fish, red snapper, Spanish mackeret, cat fish and tuna Yellowfin), shrimp (such as black tiger, cat tiger, swimming crabs), and cephato pods and mollusks frogle (such as cuttlefish, squid, baby octopus, surf clams, baby clams, froglegs and scallops).
Vietnam's seafood has been exported to around 60 countries of which Japan, the US, the EU, China, South Korea and Taiwan are the biggest importers. In 2000, the seafood export to Japan increased by 18% over the previous year and accounted for about 33.0% of the country's total seafood export value. Although, the United State is a new market, Vietnam's seafood value exported to the US is increasing steadily. In 2000, Vietnam's export of seafood to the US market reached US$ 304 million, about 2.5 times higher than in 1999 and accounting for about 21% of the country's total seafood exports. The volume exported to South Korea, China and Taiwan also increased in 2000 and took up 24% of Vietnam's seafood exports. The EU is also an important market. With the EU recent grant of the export right to 40 Vietnamese leading seafood exporters, Vietnam's seafood exports to the market is expected to increase in 2001 and the following years.
The Government of Vietnam is operating a financial support scheme to help boost offshore fishing. The country is expected to export between US$ 1.6 and 1.7 billion worth of seafood in 2001.
RICE
Vietnam has come a long way from a food importer to a rice exporter. The country started to export rice in 1989 and has become the third largest exporter in the world. In 2000, Vietnam exported 3,476,000 tons of rice, accounting for 4.6% of the country's total export value.
The Mekong River delta in the south and the Red River in the north are the country's two "rice bowls". Vietnam exports mainly white rice with quality ranging from 5%, 10%, 15%, 20% to 25% broken. The major export markets currently include Indonesia, Iraq, Africa, Cuba, Philippines and Malaysia.
The quantity of rice available for export during the 2001 - 2005 period is forecasted at around 4 million tons a year. Rice export quota has recently been abolished and private companies now can handle rice export without any restrictions.
COFFEE
Vietnam has emerged as the second biggest exporter of coffee in the world after only Brazil. In 2000, Vietnam exported 733,000 tons, an increase of 52% over the previous year. Most of coffee is exported in the form of raw beans. The country currently has 420,000 ha of coffee (about 23,000 ha more than 1999) of which robusta coffee accounts for 95% in terms of area and 99% in terms of production. The Central Highland is the country's "coffee bowl". The Vietnam National Coffee Corporation - a state-owned company is currently the biggest exporter.
The major export markets in 2000 included the EU (41%), non-EU European countries (21.5%), and North and Latin America (16.4%).
In 2001, Vietnam is expected to export around 750,000 tons of coffee of which 82.5% will go to Europe and America. The country is also planning to increase the production of arabica coffee.
PEPPER
Like coffee, Vietnam has become the world second biggest exporter of pepper. In 2000, Vietnam exported 37,000 tons of pepper. Vietnamese pepper has penetrated into 40 countries and territories. India, Singapore, the US, Netherlands, China and Hong Kong are major markets of which India is the biggest importer. Pepper production is rapidly expanding in Vietnam. The country is expected to export around 40,000 tons in 2001.
VEGETABLES AND FRUITS
Vegetables and fruits are among the major exports from Vietnam. Their export value in 2000 increased by 103% as compared with 1999, reaching US$ 213 million. China was the biggest importer followed by Taiwan, Japan, the U.S. and Russia. Produce exported to China included cabbage, carrot, potato, onion, mangosteen, coconuts, pineapple etc. Vietnamese vegetables and fruits have also successfully penetrated into many markets in Europe, America, Asia-Pacific and Africa-Southwest Asia.
The export value of vegetables and fruits is forecasted to reach around US$ 300 million in 2001, an increase of 41% over the year 2000.
RUBBER
In 2000, Vietnam exported 273,000 tons of rubber, earning US$ 166 million, an increase of 3% in terms of quantity and 13% in terms of value as compared with the previous year. The quality of rubber produced in the country is very high. For example, in 1995, standard rubber accounted for 91% of the total quantity of rubber produced in the country.
Like vegetables and fruits, China is the biggest importer of Vietnamese rubber. In addition, Malaysia, South Korea, Taiwan and France are expected to be potential markets in 2001, especially for latex rubber.
Vietnam's rubber export is forecasted to reach around 300,000 tons in 2001, earning US$ 195 million, an increase of 7% in terms of quantity and 35% in terms of value as compared with 1999.
CASHEW NUTS
Vietnam exported 34,000 tons of cashew nuts in the year 2000, earning US$ 167 million, an increase of 86% in terms of quantity and 52% in terms of value. The country is expected to export around 35,000 tons in 2001, earning about US$ 170 million. Major importers in the year 2000 were China (40%), the US (30%), Australia (10%). Other markets included the EU, Canada, and some countries in the Middle East.
At present, there are 60 cashew nut processing establishments in Vietnam with the total capacity of more than 220,000 tons of materials a year. The area under cashew cultivation is expected to increase from about 250,000 ha in 2000 to between 280,000 and 300,000 ha by 2005. Cashew nut export is forecasted to reach 40 - 45 thousand tons by the same year.
TEA
According to FAO estimation, Vietnamese tea export currently takes up 3.5% of the world market. In 2000, the country exported 55,000 tons of tea, earning US$ 69 million, an increase of 51% in terms of quantity and 53% in terms of value as compared with 1999. The state-owned Vietnam National Tea Corporation was the biggest exporter. The biggest importer of Vietnamese tea in the year 2000 was Iraq, Iran and followed by Taiwan, Britain, Russia and Japan.
Tea export is forecasted to be around 56,000 tons in 2001.
MILK AND SUGAR
Milk and sugar are new exports. In 2000, Vietnam exported US$72.4 million worth of milk products including canned condensed milk, powder milk and nutritious powder. Milk export is expected to increase by 10% this year as compared with last year. Vinamilk - a state-owned milk company is the biggest producer and exporter.
Sugar is also a new and expanding industry in Vietnam. In 2000, the industry produced 1,164,000 tons of sugar of which 80,000 tons was exported.
INDUSTRIAL PRODUCTS
The industrial sector currently employs about 12% of the country's work force and generates around 37% (including construction) of the GDP. Light manufacturing, particularly in food processing, textiles and footwear, dominates the sector. Heavy industry, located mainly in the north, makes up a modest portion of industrial output. Over the past ten years, the industrial sector has grown an average of 14% per annum. The private sector has been playing an increasingly important role in industrial development in Vietnam. Foreign invested firms alone produced around 34% of the country's industrial output in the year 2000.
The industrial export currently accounts for more than 30% of the country's total export value and is forecasted to reach US$20-21 billion a year by 2010, about 5 times higher than at present and accounting for about 40% of the total export. At present, textiles and garments and footwear are main industrial exports from Vietnam.
TEXTILES AND GARMENTS
The textiles and garment industry presently accounts for 21% of industrial output, but it is a key source of employment and the country's second biggest export after crude oil. Total textile and garment export earnings reached around US$ 1.9 billion in 2000, accounting for 13% of the total export value.
The major export markets currently include the EU, Japan, other European countries and North America of which the EU and Japan are the biggest importers, accounting for 35.8% and 32% of Vietnam's textiles export respectively.
The bilateral trade agreement on textiles and footwear singed between Vietnam and the EU in October 2000 under which the EU commits to increase quota for Vietnamese textiles by about 20% starting from 2001 will certainly help boost Vietnamese textiles export to the market. The expected approval of the US-Vietnam Trade Agreement that reduces import tariff imposed on Vietnamese textiles imports from 30-90% to 3% will also greatly help Vietnamese exporters to penetrate into this giant market. Vietnam is also negotiating with ASEAN countries such as Singapore, Philippines and Indonesia for use of their unused quota to boost the country's textiles export to EU.
Textiles and garment will continue to be Vietnam's major industry and export in the years to come. It is striving to achieve the export target of US$ 7-7.5 billion a year by 2010. The industry is forecasted to produce 385 million pieces of products in 2001 of which the state-owned National Textiles and Garment Corporation will produce 62 million, other state owned and private companies produce 245 million and foreign invested firms produce 8 million. The export value is expected to reach US$ 2.2 billion in the year 2001.
FOOTWEAR
Since 1992, the leather and footwear industry has recorded rapid growth. Its yearly production capacity (including foreign companies) now reaches nearly 370,000 million pairs of shoes and sandals - more than 7 times higher than in 1992. The private sector (including foreign companies) that currently accounts for about 65% of the industry's production capacity is playing an increasingly important role. Many giant footwear producers such as Nike, Adidas, Bata, Fila etc. have established their factories in Vietnam to produce for export.
The country? footwear and leather product export value in 2000 reached approximately US$ 1.46 billion, nearly 13 times higher than in 1993. Major export products include sport shoes, canvas shoes, lady shoes, leather shoes, slippers and sandals.
The biggest importers of footwear from Vietnam are the EU, the US and Japan. In 1998, the EU imported around 80% of Vietnam's footwear export and footwear accounted for 35% of the country's total export to the market. Vietnam is now the second biggest exporter of footwear to the EU after China. The country's footwear export to the US and Japan in 1998 was US$ 99 million and US$ 87.3 million respectively.
Vietnam's footwear export is expected to reach nearly US$ 2 billion this year. The industry has also set the target of exporting 350 million pairs of shoes and sandals and 50 million bags a year by the year 2005. The major markets will continue to be the EU, the US and Japan.
ELECTRONICS
Electronic industry in Vietnam is still very young and dominated by foreign invested manufacturers.
In 2000, this industry earned US$ 728 million worth of electronics export, an increase of 33.7% over the previous year. Major exports include computer parts and televisions. Leading exporters in 2000 are Fujitsu Vietnam, Vietnam Electronics and Information Corporation and Daewoo Electronics.
HANDICRAFTS
Major handicrafts available for export from Vietnam include art ceramics and porcelain, rattan and bamboo wares, wooden products, embroideries and lacquer wares.
Production of handicrafts for export is given high priority in Vietnam not only for hard currency earning but also more importantly for the purpose of employment generation, especially in the rural area where unemployment and underemployment rate is quite high.
The year 2000 marked strong recovery of Vietnam's handicraft export after many years of downturn following the collapse of the traditional markets in the former Soviet Union and Eastern Europe. In 2000, the country's handicraft export value reached US$ 236 million, increasing by about 40% over 1999. The demand for Vietnamese handicrafts is increasing substantially in other markets in recent years, especially in Japan, the US and the EU. Currently, Vietnamese handicrafts are highly appreciated abroad because of their beautiful designs, variety and cultural character as well as competitive prices due to locally-supplied cheap and abundant materials and labor.
In 2001, Vietnamese handicraft export value is expected to increase by around 40%, reaching US$ 330 million of which the major markets will be EU, Japan and North America.
CRUDE OIL AND MINERALS
Vietnam's oil reserves, estimated at 1.7 billion barrels, are among the largest in the world. The country started to produce oil in 1986 through a joint venture with the former Soviet Union. Since then around 35 production sharing contract have been sign between PetroVietnam, the state-owned oil company, and various foreign oil companies. Oil production reached 16.3 million tons in 2000 and expected to reach 20 million tons a year by 2005. All of the current oil production is for export. Crude oil export accounted for 24% of the total export in 2000. The construction of the country's first oil refinery with the capacity of 6.5 million tons a year has begun and the refinery is expected to start operation in 2004.Till then all crude oil production will be exported.
Commercially exploitable natural gas reserves, estimated at 150-170 billion cubic meters, represent another huge potential export. A joint venture with large foreign capital has been signed recently to produce gas for domestic consumption and export.
Vietnam is very rich in coal, especially anthracite. The reserves are estimated at 3-3.5 billion tons. The nation extracted 11 million tons of coal in 2000 of which 3.25 million tons were exported to about 20 countries. The industry expects to extract about 13 million tons of coal a year by the year 2005.
Other minerals available for export include tin, granite, marble and silica sand.
LABOR
Vietnam's well educated but inexpensive work force is one of the country's primary assets. Traditions emphasizing learning and respect for authority as well as low wages and a high literacy rate (90%) are often cited as the most attractive aspects of Vietnamese labor. The country's workforce is very young and currently estimated at over 40 million. At the growth rate of around 3.5% a year, every year 1.3 - 1.5 million new workers enter the market.
Recognizing that human resources are the best comparative advantage Vietnam has in international competition and that they will play a pivotal role in the country's socio-economic development, the government of Vietnam recently called for deeper reform in education and training and considered it one of the top priority programs. The country set forth a target to increase the number of trained workers. To this end, a number of measures have been approved including gradual increase of state allocations for education and training, encouragement of financial sponsorship and contribution from individuals and social and economic organizations; the establishment of a national education fund and credit funds for education and training; encouragement of private schools; exemption of educational fees and provision of incentive scholarships for students at teacher training schools; and increasing teachers' salaries.
Vietnam started to export labor in the late 70s through labor cooperation with the former Soviet Union and socialist countries in Eastern Europe. Labor export has been expanding both in terms of number of workers working abroad and in terms of export markets. Labor export is playing an increasingly important role not only in easing unemployment problem in the country, especially in the rural area but also in earning hard currency and training work skills. Last year, around 25,000 workers were dispatched to work abroad. At present, about 90,000 Vietnamese workers are working in various countries including Libya, South Korea, Taiwan etc.
Vietnam is trying to achieve the target of dispatching 50,000 workers to work abroad in 2001 as well as the long-term target of earning US$ 4.5 - 6 billion a year by 2010 from labor export.
TOURISM
Vietnam's great natural beauty, coupled with its open-door policy, has propelled the tourism industry to a high rate of growth. The sector recorded an average growth of nearly 40% annually since 1991 until the break out of the regional crisis in 1997. However, the industry has been recovering steadily and rapidly after some years of slight downturn. In 2000, the industry hosted around 2.1 million arrivals of foreign tourists, mainly from ASEAN, the US, Japan, France, Australia, an increase of 19% over 1999.
Major investment has been made in the area of hotel construction, transportation, training, and tourism service industries. Unlike the situation of several years ago, hotel rooms are now over-supplied. Four- and -five star international hotels are now abundant in Hanoi, Ho Chi Minh City and other major tourist locations. For budget travelers, second-tier and "mini-hotels" are plentiful, easy to find and very cheap. Many tourist resorts and facilities have been built with foreign capital and are managed with international expertise.
The government has also greatly relaxed its control on travel business. Foreign companies may now set up 100% foreign owned branches or joint venture company with Vietnamese partners to operate international travel business.
Vietnam forecasts that the country will receive between 2.4-2.5 million foreign tourist arrivals in 2001, earning over US$ 1 billion, an increase of 18% over last year. The industry is expected to become the second biggest earner of foreign currency in the field of service after labor export this year.
MAIN IMPORT SECTORS
Last year, Vietnam imported around US$ 15.64 billion worth of goods and services. Currently, machinery, equipment, materials, intermediate inputs and fuel account for nearly 95% of the total import value of which machinery and equipment make up 26-27% while materials, intermediate inputs and fuel take up 69%. Consumer goods account for only around 5% of the total import value.
MAIN FOREIGN TRADE DATA
Unit: US$ million
Year 1991 1993 1995 1997 1999 2000
EXPORT 2,087 2,985 5,449 9,185 11,540 14,455
IMPORT 2,388 3,924 8,155 11,529 11,622 15,639
Main Exports
Rubber 50.0 74.6 193.5 191.0 146.8 166.0
Coffee 74.0 110.6 595.5 497.5 585.3 501.0
Tea 14.0 26.0 26.5 48.3 45.0 69.0
Rice 255.0 363.0 546.8 870.9 1,025.0 668.0
Pepper 18.0 14.0 38.8 67.5 137.3 145.0
Vegetable and fruit 12.0 20.0 56.0 71.2 105.0 213.0
Seafood 285.0 427.2 621.4 782.0 917.0 1,478.0
Textile and garment 158.0 335.0 850.0 1,502.6 1,747.0 1,892.0
Handicrafts 6.8 21.0 19.0 43.0 168.2 236.0
Electronics 0.5 3.5 8.3 440.1 585.1 782.0
Main Imports
Motor car 11.0 100.0 231.0 136.1 88.6 134.0
Motorcycles 4.0 286.6 460.0 233.0 399.2 787.0
Cottons 61.0 20.3 77.0 109.7 90.0 101.0
Cement 0.5 9.6 76.4 51.7 0.6 0.0
Steel 25.0 233.0 365.0 510.0 418.9 812.0
Urea 236.0 205.0 339.0 275.5 189.4 200.0
Petroleum oil 485.0 687.4 830.0 1,123.0 1,054.0 2,057.0
Electronic parts 29.7 116.9 113.8 465.6 518.0 748.0
Chemicals 37.0 99.0 233.0 216.0 258.0 306.5
MAJOR TRADING PARTNERS
The former Soviet Union and socialist countries in Eastern Europe used to be Vietnam's major trading and economic allies. For example, in 1988 the former Soviet Union accounted for 40% of Vietnam's exports and 65% of import. The economic and political collapse of these allies in the late 80s and early 90s forced Vietnam to expand and diversify her trade relations with other markets. In 1999, the country's trade with countries in Asia - Pacific accounted for about 62% of her total trade. The EU and North America have become important trade partners of Vietnam.
TRADE WITH ASEAN
Vietnam's trade with ASEAN was insignificant in the 80s mainly due to political confrontation between the two sides and partially due to Vietnam's concentration on trade with the former Soviet Union and Eastern Europe. However, it was expanding and growing rapidly and steadily in the early 90s until the recent regional economic crisis. ASEAN countries, especially Singapore quickly replaced the role of the former Soviet Union and Eastern European countries in supplying important products to Vietnam such as petroleum, fertilizers and other materials. Singapore also played a significant role in re-exporting Vietnamese products to other markets. In 1995, ASEAN accounted for one third and one fourth of Vietnamese imports and exports respectively as compared with only 4% of the country's total trade in 1986.
However, the growth of trade between Vietnam and ASEAN slowed in recent years as a direct consequence of the recent regional crisis. Another reason for this drop might be the similarity of export and import structure and the rapid expansion of Vietnam's direct trade with other markets throughout the world, especially in Europe and America, thus diminishing the role of regional countries as middlemen. In 2000, Vietnam's exports to ASEAN were US$ 2.8 billion, an increase of just 6.2% over 1999 and accounting for 18% of the country's total export value while imports from ASEAN was US$ 4.5 billion, an increase of 37% over 1999 and accounting for 28.9% of the total import.
Vietnam became the seventh member of ASEAN in July 1995 and started to implement AFTA since the beginning of 1996. The country commits to complete the AFTA implementation by 2006 as the latest. As of the end of 2000, Vietnam had cut taxes on 4,200 items in accordance with the Common Effective Preferential Tariff (CEPT). The country has also pledged to reduce rates to below 20% on a further 730 items in 2001, 510 in 2002 and 660 in 2003. With the exception of 51 sensitive items and 131 items that are not listed by CEPT, the 0 and 5 per cent tax rate will be applied to all 6,130 listed items by January 1, 2006. The reduction and elimination of tariff and non-tariff barriers under AFTA, together with the regional economic recovery, will certainly help boosting trade between Vietnam and other ASEAN members.
As a group, ASEAN is still the biggest trade partner of Vietnam accounting for about 22% of the country's total trade in 1999.
VIETNAM - ASEAN TRADE
Unit: US$ million
Export Singapore Indonesia Philippines Thailand Malaysia Lao PDR Cambodia ASEAN
1998 1,080 316.1 392.7 295.3 114.9 73.3 75,2 2,349
1999 822.1 421 393.3 312.7 256.9 164.3 91.1 2,463
2000 885.7 248 477.7 389.0 413.5 66.4 132.7 2,615
Import
1998 2,291.7 256.5 67.6 673.7 247.0 144.3 42.1 3,725.0
1999 1,883.3 285.2 46.1 556.3 309.0 195.0 12.8 3,289.0
2000 2,760.0 348.7 63.3 813.0 385.0 111.6 37.5 4,552.0
Balance
1998 - 1,211.6 59.6 325.1 - 378.4 - 134.1 - 71.0 33.1 - 1,375.9
1999 - 1,061.2 135.8 347.2 - 243.6 - 52.1 - 30.7 78.3 - 825.6
2000 - 1,874.3 - 100.7 414.4 - 424.1 28.5 - 45.2 95.2 - 1,906.4
TRADE WITH SINGAPORE
Trade between Vietnam and Singapore has steadily developed since the early 90s. During the last decade, Singapore was always the biggest or the second biggest trade partner of Vietnam only after Japan. The two-way trade between the two countries reached US$ 3.6 billion last year of which Vietnam's exports to Singapore was US$ 885.7 million and Singapore's exports to Vietnam was US$ 2,760 million, thus making Singapore the biggest exporter to Vietnam and resulting in US$ 1,874 million trade surplus in favor of Singapore.
Vietnam exports to Singapore three main groups of products namely: unprocessed products including crude oil, coal, semi-processed products such as coffee, pepper, rubber, seafood and industrial products like footwear. Among Vietnamese exports to Singapore unprocessed products account for 60-70%. There is potential market for Vietnamese vegetables and fruits and handicrafts in Singapore. The country is also seriously looking into the possibility of joint investment with Singapore to produce electronic parts in Vietnam for export. Vietnam's exports to Singapore is forecasted to reach US$ 950 million in 2001.
Major Singapore's exports to Vietnam include petroleum, fertilizer, steel, machinery...
TRADE WITH MALAYSIA
Vietnam's export to Malaysia has increased substantially from US$ 115.2 million in 1998 to US$ 413.5 million in 2000 while the growth of imports from Malaysia has slowed. The value of imports from Malaysia in 2000 was US$ 385 million as compared with US$ 309 million in 1999 and US$ 249 million in 1998.
Vietnam's major exports to Malaysia include crude oil, rice, machinery, seafood, groundnuts, electronic parts, and coffee.
TRADE WITH INDONESIA
Vietnam's export to Indonesia dropped significantly from US$ 421 million in 1999 to US$ 248 million in 2000 mainly due to Indonesia's lower demand for rice. Apart from rice, Vietnam's exports to Indonesia currently include groundnuts, tapioca, raw sugar...
The value of imports from Indonesia in 2000 was US$ 348 million as compared with US$285 million in 1999 and US$ 256.5 million 1998. Products imported into Vietnam from Indonesia include urea, insecticide and herbicide.
There are opportunities for further developing trade between the two countries through counter trade in which Vietnam may exchange her agricultural produce for equipment, machinery, industrial materials, chemicals and fertilizer from Indonesia. Apart from exportation and importation of complementary goods and commodities, Vietnam may look into the possibility of importing cashew nuts and raw palm oil from Indonesia for export processing or Indonesia may consider to increase the import of crude oil from Vietnam for blending with her oil.
TRADE WITH THAILAND
Economic and trade relations between Vietnam and Thailand did not take off until the early 90s. Since then, two-way trade between the two countries has recorded rapid growth from only US$ 70 million in 1990 to around US$ 500 million in 1995 and US$ 1,202 million last year. Vietnam's exports to Thailand in the year 2000 reached US$ 389 million, increasing by 24% over the preceding year while imports from Thailand increased by 46% during the same period, reaching US$ 813 million.
Major imports from Thailand include motorcycle parts, PPC, petrol, steel while Vietnam's exports to Thailand mainly include mechanical products and parts, crude oil, coal, leather, frozen seafood.
TRADE WITH PHILIPPINES
Vietnam has been running big trade surplus with Philippines for the last several years. Last year Vietnam's exports to Philippines reached US$ 477 million, an increase of 21.5% over the preceding year while the value of imports from Philippines was only US$ 63 million, increasing by 37% during the same period.
Major exports from Vietnam to Philippines include computer parts, coal and rice. However, several Vietnamese products are currently imported into Philippines through third countries. Products imported into Vietnam from Philippines range from fertilizer, machinery and chemicals.
TRADE WITH CHINA
As a result of rapid economic development in both countries and their normalization of diplomatic relations in 1991, trade between Vietnam and China in general and cross border trade in particular has been expanding rapidly during the last decade.
Vietnam's export to China last year reached around US$ 1,534 million, an increase of 78.6% as compared with the preceding year. China is the biggest importer of rubber and vegetables and fruits from Vietnam. Seafood, agricultural produces are also major exports to China.
Major imports from China include equipment, motorcycles, steel, fertilizer and chemicals.
TRADE WITH JAPAN
Japan has been and will continue to be an important economic and trade partner of Vietnam. Japan is currently the biggest ODA donor for Vietnam, accounting for 40% of the total foreign aid to Vietnam. Japan has also been Vietnam's biggest importer for many years, resulting in Vietnam's trade surplus with Japan. Last year, the two-way trade between the two countries reached US$ 4,872 million of which Japan's exports to Vietnam were US$ 2,250.6 million and Vietnam's exports to Japan were US$ 2,621.7 million. Japan currently imports around 18% of Vietnamese exports while Japanese export to Vietnam accounts for only about 0.6% of her total export value.
Vietnam major exports to Japan include crude oil, textiles and garments, seafood, footwear and electronic parts while major imports from Japan are equipment, automobile, computers and electronics, fertilizer, steel and chemicals.
Along with the recent decision of the Japanese government to grant MFN treatment to Vietnamese exports, efforts of Vietnamese businesses and government in penetrating into Japanese market including the acceleration of negotiation and signing of a bilateral trade agreement will certainly further enhance trade between the two countries. The two-way trade between Vietnam and Japan is expected to reach US$ 5 billion in 2001.
TRADE WITH THE EU
The EU has always been an important market for Vietnam. Vietnam has been enjoying trade surplus with EU for several years and this surplus is expected to continue in the near future. Last year, Vietnam's exports to EU reached US$ 2,836.6 million, accounting for 19.6% of the country's total export value while the importation from EU was US$ 1,310 million, accounting for 8.4% of the country's total import value.
About 90% of Vietnam's trade with EU is done with France, Germany, Belgium, Italy, Netherlands, Sweden and Britain.
Vietnam's major exports to EU include footwear, textiles and garments, seafood, tea, coffee, rubber and cashew nut. There is also potential market in EU for other products from Vietnam such as fish sauce, spices, instant noodle, vegetable oil. 90% of imports from EU are steel, fertilizer and petroleum products.
Except for textiles and garments that are subject to import quota, other products from Vietnam continue to enjoy GSP treatment when they are imported into EU. The bilateral trade agreement on textiles and garments and footwear recently signed between EU and Vietnam under which EU commits to increase quota for textiles and garments from Vietnam by 20% starting from this year will certainly help to boost Vietnamese exports to this big market.
Apart from the above-mentioned exports, Vietnam is currently trying to promote wooden products, household plastic, processed food, and electronic goods and parts into EU.
TRADE WITH RUSSIA AND OTHER CIS MEMBERS
Russia continues to be Vietnam's main export and import market among members of CIS (Community of Independent States that consists of the former Soviet Republics). Last year, Vietnam exported to Russia US$ 122 million and imported from Russia US$ 240 million worth of goods. Vietnam's exports to Russia include agricultural produce, processed food, handicrafts, textiles and garment, and footwear while Russian exports to Vietnam are mainly equipment and machinery, fertilizers and steel.
The current economic recovery in Russia, as well as the recent further expansion of diplomatic and economic cooperation between the two sides are creating new opportunities for further development of trade between the two sides. The two-way trade between Vietnam and Russia is expected to be about US$ 400 million in 2001.
Vietnam's trade with Ukraine and other CIS members has also been developing, although the turnover is still modest. Like the case of Russia, the main obstacles for Vietnamese exports entering these markets include difficulties in payment, high import tariff and poor quality. Vietnam's export to Ukraine in 2000 was estimated at US$ 23 million, an increase of 37% and the country's import from Ukraine was around US$ 86 million, increasing by 86%.
TRADE WITH EASTERN EUROPE
Although Vietnam's export to Eastern European countries has been growing at an average of 20% annually in recent years, Vietnam's export and import turnover with these countries is still small, accounting for only 3-5% of their total trade. The main obstacle hindering trade between the two sides is payment method.
Major exports from Vietnam to these markets include agricultural produce, seafood, processed food, tea, rubber, textiles and garments, footwear and handicrafts.
Vietnam imports from these markets mainly equipment and machinery, chemicals and materials.
There are new opportunities for further expansion of Vietnam's export into these markets, resulted from the stable development of Eastern European economies and the application of preferential tax rates for many imports from Vietnam by Hungary, Rumania, Poland and Bulgaria.
TRADE WITH THE U.S.
The U.S. - Vietnam diplomatic relations were normalized in 1995. Since then, trade between the two countries has kept expanding despite the absence of the U.S. MFN for Vietnamese exports.
The two-way trade value between the U.S. and Vietnam in 2000 reached US$ 1,084 million, an increase of 29% and 139% as compared with 1999 and 1996 respectively. Vietnam is running a trade surplus with the U.S. Last year, Vietnam exported to the U.S. US$ 732 million worth of goods while the U.S. exports to Vietnam was US$ 351.7 million.
Major Vietnamese exports to the U.S. in 2000 included seafood, footwear, coffee and textiles and garments while the U.S. exports to Vietnam were mainly fertilizer, steel, computers and parts, equipment and parts, leather goods and footwear, pharmaceuticals and chemicals.
THE U.S. - VIETNAM TRADE
Unit: US$ million
Year 1996 1997 1998 1999 2000
EXPORT 207.468 346.534 468.629 563.251 732.440
IMPORT 245.789 416.019 325.683 334.754 351.758
Main Exports
Coffee 3.250 73.233 86.311 59.212 69.932
Rubber 127 696 670 1.612 1.563
Tea 569 .374
Rice 100.242 63.500 39.030 4.915 10.656
Footwear 99.31310 102.692 87.793
Seafood 28.526 42.551 81.551 125.595 304.359
Textiles & garments 8.714 23.040 26.343 34.708 49.569
Vegetables and fruits 1.230 5.030 2.559 3.209 2.178
Cashew nut 12.478 14.652 16.734 21.179 44.703
Crude oil 99.604 91.370
Others 52.901 123.559 116.118 109.920 69.943
Main Imports
Fertilizer 12.774 6.411 22.493 39.174 21.157
Steel 7.960 1.022 2.926 2.416 3.754
Computer & Electronics 13.441 12.221
Equipment & Parts 11.941 9.481 2.269 90.819 113.064
Footwear & Textiles 37.255 39.017
Pharmaceuticals/ chemicals 14.875
Others 231.114 399.105 297.995 151.679 147.670
After 4 years of hard negotiation, a bilateral trade agreement was signed between the U.S. and Vietnam in July 2000. Once the U.S. Congress and Vietnamese National Assembly approve this agreement, Vietnamese goods and services exported to the U.S. will enjoy permanent MFN treatment (normal trading relations) with tax rates reduced from an average of 40% to an average of 3%. Thus, the approval of the U.S. - Vietnam trade agreement will certainly create great opportunities for boosting Vietnamese exports to the U.S., especially textiles and garments of which the difference between the popular rates and the MFN rates are 44.8% and 55.5% respectively. On the other hand, under the same agreement, Vietnam must also open Vietnamese market to U.S. companies and reduce the rates of 247 tariff lines within 3 to 6 years.
BUSINESS AND FOREIGN TRADE ENVIRONMENT
LEGAL ENVIRONMENT
In an effort to create an environment conducive for the development of a multi-sectorial market oriented economy, Vietnam has been working hard to improve its social-economic legal system. Apart from the passage of the new Civil Code, which recognizes four categories of legal entities and seven kinds of individual ownership, in October of 1995 and the Labor Code in 1994, by the National Assembly, the adoption and subsequent amendment of foreign investment laws, the Law on Business, banking laws, tax laws, the Law Encouraging Domestic Investment, the Trade Law, the Law on Cooperatives, the Bankruptcy Law, the Insurance Law and Ordinance on Intellectual Property Right etc. were seen as major steps towards this goal.
A 1990 Ordinance on Economic Arbitration created a rudimentary system of commercial arbitration. This was augmented by a number of non-government arbitration organizations. Foreign arbitrator’s awards have been enforceable in Vietnam since October 1995, when Vietnam joined the New York Convention of 1958.
In 1994, the National Assembly officially sanctioned the establishment of economic courts, which replaced the state economic arbitration system and began dealing with matters of bankruptcy, fraud and embezzlement in July of that year. However, contractual disputes still remain largely in the hands of arbitrators.
By law, trade and investment disputes between the Vietnamese and foreign parties to a foreign trade contract or a joint venture enterprise or a business cooperation contract may be settled either by a Vietnamese economic court at the provincial level, by a Vietnamese or foreign or international arbitration body or by an arbitration tribunal established by agreement between the parties. However, disputes within foreign invested enterprises or between foreign invested companies and Vietnamese economic organizations will be settled only by Vietnamese arbitration organizations or courts under the Vietnamese law.
THE TRADE LAW
The Trade Law was adopted, for the first time, in May 1997 by the National Assembly of Vietnam. It consists of 264 articles. Notable items of the law include: basic trade principles and policies, foreign businesses undertaking trade activities in Vietnam, purchase and sale of goods and commodities, trade representation, trade brokerage, purchase and sale trust, agency, processing for trade, auction, bidding, forwarding, quality inspection, advertising, goods display, trade fairs and exhibitions and settlement of trade disputes.
To guide the implementation of the Law, the government issued Decree No 57 dated 31 July 1998, regulating export and import activities, processing for trade, and sale and purchase agency and Decree No 45 dated 6 September 2000, regulating the establishment and operation of representative offices and branches of foreign companies in Vietnam.
Perhaps the most important element of the above legislation from the standpoint of businesses is that the right to handle export and import business has been expanded to all business entities in all economic sectors. Vietnamese companies including private firms have the intrinsic right to export and import within the scope of registered business lines. They no longer have to apply for export and import business licenses from the Ministry of Trade. Instead, they just need to register with provincial customs authorities. Under this new law, in addition to representative offices, foreign companies can now set up branches in Vietnam to undertake certain profit making trading activities. Vietnamese businesses including private firms are allowed to act as sale and/or purchase agents in Vietnam for foreign firms and individuals. The law also respects the freedom in business such as freedom to select partners, freedom to decide on contract form and/or content, freedom to amend, supplement or terminate contract etc.
Other attractive aspects of this legislation include: the list of exports and imports subject to prohibition, quota and conditions has also been substantially shortened. Vietnamese Trade Law allows the precedence of the provisions of international treaties to which Vietnam is a signatory. It also allows contracting parties to apply foreign laws and/or international commercial practices if they are not inconsistent with Vietnamese laws or where an international treaty to which Vietnam is a signatory provides for the application of such foreign laws.
FOREIGN TRADE ENVIRONMENT
Foreign trade is subject to unified state management. In line with its foreign policy of "being the friend of all countries", as well as its policy of economic integration into the region and the world, the Government of Vietnam encourages and has been adopting policies to expand and boost trade with foreign countries.
Vietnam encourages all economic sectors to produce goods for export and engage themselves in export business. Currently, the government particularly encourages the production and exportation of labor-intensive products including agricultural produce, seafood, textiles and garments, leather goods and footwear, and handicrafts.
In the area of importation, on the one hand, Vietnam gives priority to the importation of materials, equipment, high technology and advanced production processes that are required for industrialization and modernization. On the other hand, the country restricts the importation of goods that are adequately manufactured and supplied by domestic producers. However, as the country's process of economic integration into the region and the world is being accelerated, these restrictions have been rapidly reduced and will continue to be reduced.
OPEN TRADING RIGHT
The first influential policy to encourage trade in general and export in particular is to extend the trading right widely to businesses. Unlike under the centrally planned economy where only small number of state-owned foreign trade companies had the right to handle export and import business, the trading right is now extended to all businesses of all economic sectors. Under Decree No 57 issued on 31 July 1998, international trading right is given to following businesses:
• Vietnamese business entities of all economic sectors (including private firms) established in accordance with the laws have the right to handle export and import business within their registered business lines.
• Branches of Vietnamese companies and firms are allowed to sign foreign trade contracts in accordance with the authorization of the parent companies and within the registered business lines of the parent companies.
• Foreign trading companies may establish branches in Vietnam in accordance with Vietnamese laws to handle export and import business within certain licensed business lines.
• The Law on Foreign Investment in Vietnam regulates that companies with foreign capital may sign foreign trade contracts to import their own equipment, machinery and materials or parts needed for the construction and operation of their own projects as well as to export their own products. Recently, as an additional measure to encourage export, the government allows companies with foreign capital to export goods not produced by themselves as well.
Those who do not have the right to sign foreign trade contracts may contract to authorize companies who have such right to do so within the scope of the latter's registered or licensed business lines.
By law, companies need no longer apply for international trading business licenses. Instead, they just have to register their export and import code with provincial customs authorities. Vietnamese firms and foreign invested companies are allowed to open representative offices and/or branches abroad to enhance their trade.
Decree No 57 has been having and will continue to have a profound impact on export promotion at the company level. Previously, small producers, especially private firms had to go through trading companies to sell their goods overseas. Today, any businesses that are established in accordance with the laws including private firms can directly engage in export and import business. As a result, the number of firms that are directly engaged in international trading has increased sharply from only around 50 in 1986 to more than 2,000 in 1998 and about 12,000 at present. The share of export by the private sector in 2000 (excluding companies with foreign capital) reached 20% of the country's total export value.
LESS GOVERNMENT CONTROL
Government control on export and import business has greatly relaxed. Companies are now free to select partners and agree on terms and conditions of the deal including prices. The approval of foreign trade contracts is no longer required. Permits for lot shipments have been abolished. Customs procedures have been simplified including the setting up of green lanes. The list of goods that are subject to quota or licenses has been substantially shortened. For example, there is no longer export quota except for products that are controlled by quota imposed by importing countries.
FINANCIAL INCENTIVES
Export and import taxes are the major tools to manage foreign trade. Most of export goods now enjoy export tax rate of 0%. Currently, there remain only 12 export products which are subject to export tax ranging from 0% to 5%. Consumer goods, especially luxury items and goods which can be supplied locally are normally subject to high import duties, while capital goods and materials, particularly those are not yet being produced in Vietnam, enjoy lower or even zero rates. Materials and supplies imported for production of exports and goods in transit through Vietnam are exempt from import duty. Goods for use in scientific research or study and humanitarian goods may also be imported tax free. In general, import tax has been substantially reduced and will continue to be reduced. The highest rate is now 60% (for very few items) instead of 200% several years ago. About 52% of tariff lines are now between 0% and 5%.
Other preferential taxes and/or tax reduction or exemption may be granted to companies producing exports and/or export goods. For example, export goods are subject 0% rate of VAT. Businesses may defer the payment of value added tax on materials and supplies imported for the production of export goods within the time limit for the deferment of import tax payment prescribed by the Law on Export Tax and Import Duty.
Vietnamese companies (including private firms) producing exports may find it easier to access land-use rights and may be given a 50-70% reduction of land rent or enjoy the exemption of land rent for 3 to 6 years. Export oriented companies may enjoy a corporate income tax rate of 25% (as compared with standard rate of 32%) and are exempt from extra corporate income tax (if any). They may also enjoy exemption of other taxes.
Foreign invested companies producing exports may enjoy preferential corporate income tax rates which are as low as 10% for the whole life of investment plus tax holidays of up to 4 years and a 50% reduction for another 4 years or even 8 years in special cases. (Please see Tax Incentives section at Foreign Investment Incentives for more details). They may also enjoy preferential land rent rates. In addition, an export-oriented project with foreign capital may need only registration for licensing, which means it is automatically licensed within 15 days from the date of complete and valid registration.
The exchange rate has been frequently adjusted in conformity with its market value to encourage exports. Companies producing exports are given priority in buying foreign exchange, as well as in loans from state owned banks for importing and buying materials and supplies for export production.
The Export Support Fund was established by the government in 1999 to
Provide full or partial support for interest on banks? loans for the purchase of agricultural products when world market prices fall, adversely affecting domestic production and for the reserve of agricultural products for export;
Provide definite financial support for a number of export goods categories that suffer losses due to their low competitiveness of objective risks;
Reward the search for and expansion of new export markets, new export items, export goods with high quality recognized and certified by international organizations, high and efficient export value.
The Export Award Fund has been set up under the management of the Ministry of Trade to provide financial incentives to exporters who succeed in exporting new products and/or to new markets and/or in big volume. The export quota award system has also been put into place to encourage successful exporters.
OTHER GOVERNMENT SUPPORTS
The government is stepping up its efforts to enhance trade with the outside world. The country's process of regional and global economic integration is being accelerated. Vietnam is now a member of AFTA and APEC and commits to complete AFTA by 2006 as the latest. The country is also in the process of negotiating WTO membership. Expansion of bilateral trade with other countries has also been given high priority. The government has signed bilateral trade agreements with several countries including the EU (on textiles and garments and footwear under which quota for textiles and garments from Vietnam will be increased by 20% starting from 2001) and the U.S. that would give Vietnam MFN trading status. The country is speeding up negotiations on bilateral trade agreements with many others including Japan to open markets for Vietnamese products. Counter trade with a number of traditional markets is allowed and encouraged. Trade through passages other than international and national gateways is allowed. Cooperation with other countries to expand trade with third parties has also received attention. For example, the government is negotiating with Singapore, Philippines and Indonesia to use their unused quota to increase export of textiles and garments to Europe and North America.
The recent establishment of Vietnam Trade Promotion Agency (VIETRADE) under the Ministry of Trade to coordinate and step up trade promotion activities and strong government support for business associations are among many other new efforts of the government to further promote trade with the outside world. In addition, Vietnamese companies including private firms and foreign invested enterprises are allowed by law and encouraged to set up representative offices and/or branches abroad. Foreign trading and tourist companies are also allowed to do the same in Vietnam.
FOREIGN COMPANIES OPERATING IN VIETNAM
BRANCHES
The Trade Law and the Ordinance on Tourism and the Decrees guiding the implementation of the Laws provide that foreign companies may establish branches to undertake certain trading and tourist activities. Branches are similar to 100% foreign owned projects in that they are permitted to make money but their legal status is slightly different. While 100% foreign owned enterprises are Vietnamese legal entities separate from their parent companies, branches are still foreign entities affiliated to their parent companies.
Under the current law, foreign companies which satisfy the following criteria may set up branches in Vietnam:
They are legally registered in accordance with the law of their home countries;
They have been operating for not less than five years since their registration;
They are to operate in Vietnam within the business lines open to foreign companies.
Each foreign company is allowed to set up one branch which, in turn, is not allowed to set up its own representative offices in the country. The director of a foreign company branches may be a foreigner or a Vietnamese.
Foreign company branches operating in trading activities may engage in the following business lines:
Exporting goods produced in Vietnam including: handicrafts; unprocessed and processed agricultural produce (except rice and coffee); and consumer goods;
Importing for distribution in Vietnam certain goods including:
Equipment and machinery used for mining and processing of agricultural and fishery products;
Materials for production of medicine for people and animals;
Materials for production of fertilizers and insecticides.
Importers must apply for licenses from the Ministry of Trade to import the above mentioned goods and pay for imports with foreign currency earned from their exports from Vietnam. The value of imports must not exceed that of exports.
The Ministry of Trade is responsible for the issuance, amendment and withdrawal of licenses for branches operating in trading while the General Department of Tourism is responsible for licenses for branches operating in tourism.
REPRESENTATIVE OFFICES
Companies interested in conducting thorough research and establishing themselves more slowly in the Vietnamese economy may set up representative offices rather than immediately entering into a branch or a foreign investment project. Although a representative office is not a legal entity and cannot engage in direct business activities (such as executing contracts, making or receiving direct payments, and buying or selling goods), setting up a representative office gives a foreign company time to assess various market sectors, examine opportunities and, if appropriate, enter into a relationship with a suitable partner. In addition to conducting negotiations and evaluating opportunities, these offices can promote and demonstrate products and services, engage advertising agencies, identify and assess buyers, and open showrooms. Finally, a representative office gives a foreign company legal visibility in Vietnam and demonstrates a commitment to the country. The chief of a representative office, if authorized by the parent company, can sign export or import contracts with Vietnamese partners but the parent company (not the representative office) is legally responsible for the performance of the contract.
Each company is allowed to set up one or more representative offices that in turn is not allowed to establish sub-representatives offices. Companies that are legally registered in accordance with the law of their home countries may apply for setting up representative offices in Vietnam.
Provincial People's Committees are responsible for the issuance, amendment and withdrawal of representative office licenses.
FOREIGN TRADE CONTRACT AND VIETNAMESE LAWS
In accordance with the Trade Law, a foreign trade contract is a contract for sale and purchase of goods signed between one Vietnamese party and one party abroad. Contracts for exchange of goods between export processing zones or duty free shops located in Vietnam and local businesses are also considered export or import contracts and subject to the legislation governing foreign trade except that Vietnamese individuals may sell to buyers located in export processing zones.
Validity of Contract
By law, a foreign trade contract is considered legally valid if (1) it is signed by the parties that enjoy full legal status or, in other words, are permitted to handle export and import business; (2) the contracted goods are legally trade-able in the countries of the contracting parties; (3) its contents include the main contents of a sale or purchase contract stipulated in the Trade Law of Vietnam; and (4) it is made in written form.
Who May Sign Contract?
The legal status of the foreign party to a foreign trade contract or in other words, whether a foreign party may legally sign a foreign trade contract is determined in accordance with the law of its home country.
Vietnamese Trade Law stipulates that only Vietnamese legal entities that are permitted to do export and import business are allowed to sign foreign trade contracts (Please see Open Trading Right section above for more details).
Contractable Goods
Goods contracted under foreign trade contracts must be those, which are permitted for trade in the countries of the contracting parties.
Currently, in Vietnam, most commodities and goods are freely imported and exported. However, as in most countries, certain items are prohibited from import and/or export, including firearms and ammunitions, narcotics, toxic chemicals, precious or rare plants and animals, pro-war and pro-violence cultural products, firecrackers, antiques of high value, logs and sawn timber etc. From time to time, certain other items may be temporarily controlled by quota or require special import/export licenses from Ministry of Trade or other line ministries or may be temporarily banned from importation or exportation, for reasons of health, environmental and/or infant industry protection.
Contract Contents
By law, the contracting parties are free to determine on the contents of foreign trade contracts. However, a foreign trade contract must include the main contents of a sale and purchase contract stipulated in the Trade Law if it is to be considered legally valid.
The main contents of a sale or purchase contract stipulated in the Trade Law include the name of goods, quantity, specifications and/or quality, price, method of payment, location and time for delivery and receipt of goods. However, as we know well, a foreign trade contract normally includes other contents as well such as: packing, marking, shipping, insurance, quality inspection, dispute settlement etc.
Contract Form
By law, foreign trade contracts must be made in written form. Telegram, telex, email and other electronic communications are also considered written form.
Although, the Trade Law does not require amendments and/or supplements to foreign trade contracts to be made in written form, the business practice in Vietnam still requires them to be made in writing. Therefore, it is always better if this requirement is clearly stipulated in foreign trade contracts.
Laws Governing Contract
A foreign trade contract involves parties from different countries; therefore, laws governing foreign trade contracts are much more complicated than laws governing domestic sale and purchase contracts. There are normally three sources of laws governing foreign trade contracts as follows:
International Treaties
Vietnamese Trade Law allows the contracting parties to a foreign trade contract to apply the provisions of an international treaty to which Vietnam is a signatory in case there are differences between the treaty and the Trade Law of Vietnam. Although, Vietnam is not yet a signatory to the UN treaty on international sale and purchase of goods signed in Vienna in 1980 (CISG – 1980), the provisions of this treaty are allowed to apply if the treaty is referred to, except those which are contrary to the country’s basic principles of social and law system.
National Laws
The contracting parties may agree to apply Vietnamese laws or foreign laws to their foreign trade contract provided that foreign laws are not inconsistent with Vietnamese laws or where an international treaty to which Vietnam is a signatory provides for the application of such foreign laws. The agreement to apply foreign laws may be included right in the contract, or supplemented after the conclusion of contract or during the execution of contract or even after the occurrence of disputes.
If a foreign trade contract does not refer to a particular governing law, Vietnamese laws governing foreign trade (including the Trade Law and other relevant laws such as the Civil Code, the Ordinance on Economic Contracts etc.) shall apply in case the dispute is settled by a Vietnamese court.
International Commercial Practices
The contracting parties may agree to apply international commercial practices if they are not contradicting Vietnamese laws. As Vietnamese Trade Law and other relevant laws governing trade had not been in place until recently and because of their simplicity and incompletion, the Incoterms published by the International Chamber of Commerce is widely and frequently applied in foreign trade contracts to which Vietnamese companies are parties. However, as we know well, there are various versions of Incoterms of which the latter does not exclude the former; therefore, the year of Incoterms publication should be mentioned in contracts if it is referred to.
Transaction and Conclusion of Contract
Apart from the above-mentioned pre-requisite requirements, the transaction, conclusion and implementation of a foreign trade contract to which a Vietnamese company is a party must also comply with other relevant provisions of the Trade Law and/or other relevant laws governing contracts for sale and purchase of goods. Following is the overview of some of such provisions and practical guides.
Offers and Acceptance of Offers
As defined by the Trade Law, an offer is a proposal to enter into a contract for sale and purchase of goods within a certain time limit, which is made to one or more designated persons and includes the principal contents of a foreign trade contract. An offer may be an offer to sell or an offer to buy. According to this definition, an offeror is not held liable for his/her general offer that is not targeted at a designated person or group of persons.
Normally, the time limit for acceptance of an offer should be specified in the offer. Otherwise, by law, the offeror is liable for thirty (30) days from the time when the offer is dispatched to the offeree, or to be more exact, from the date of the offer.
The Trade Law defines that an acceptance of an offer is a notice communicated by the offeree to the offeror of the former’s full acceptance of the offer. An acceptance of an offer with amendment(s) and/or addition(s) to one or more of the principal contents of the offer is deemed to be a rejection of the offer and to constitute a counter offer, or in other words, a new offer from the offeree. An acceptance of an offer with amendment(s) and/or addition(s) without affecting the principal contents of the offer may be considered an acceptance of the offer unless it is immediately rejected by the offeror. An offeror may, at his own option, accept an acceptance of the offer after the expiry of the time limit for its acceptance by immediately notifying the acceptor of the offer thereof.
Conclusion of Contracts
By law, a foreign trade contract is considered having been entered into at the time when it is signed by concerning parties or at the time when the offeror receives the full acceptance in writing of the offer within its validity from the offeree.
All correspondence and negotiations in relation to a contract made prior to its conclusion will become invalid as from the time when the contract is entered into unless otherwise agreed by the contracting parties.
Implementation of Contract
Quality Examination
Whether or not mentioned in the contract, by law, prior to delivery, the seller must examine the quality of goods at his own expense and provide certificates of quality in accordance with the conditions agreed with the buyer. In the absence of specific agreement on the examination, the seller must examine the quality of goods in accordance with the terms normally applicable to that type of goods.
Where it is agreed in a contract that the buyer or its representative may participate in the quality examination prior to delivery, the seller must ensure that the buyer or its representative can do so and remain responsible for the quality of the goods despite the buyer or its representative’s participation in the quality examination.
Where the buyer or its representative fails, despite having been advised by the seller of the need, to attend the examination as agreed in the contract, the seller is entitled to deliver the goods in accordance with the contract.
The buyer has the right to examine the delivered goods at the destination.
By law, pre-shipment inspection of goods by an independent inspection organization is not obligatory.
Delivery of Goods and Documents
As a rule, a seller must deliver the contracted goods and their documents in accordance with the terms and conditions agreed in the contract. However, contracts sometimes do not cover everything. The Trade Law requires that where the quality of goods is not specified in the contract, the seller must deliver goods of average quality. The Law also states that where the packaging of the contracted goods is not specified in the contract, the seller must deliver goods in the packaging that is commonly used for that type of goods. Packaging must ensure safety of goods during transportation, taking into account the possibility of transits in normal loading and unloading conditions as well as the time and means of transportation.
By law, a seller may, subject to the consent of the buyer, authorize a third person to perform the obligation to deliver the goods. However, the seller remains responsible to the buyer for the delivery of goods by the authorized person. A seller is deemed having performed its delivery obligation upon its delivery of goods to the carrier in accordance with the terms of delivery agreed by the two parties.
A seller may deliver goods earlier than the agreed time or in partial shipments only where it is so agreed in the contract or accepted by the buyer.
Wrong Delivery
If the contracted goods are delivered in excess of the contacted quantity the buyer may, at his own discretion, refuse or except the excess quantity. In the former case, the seller must recover the excess quantity at his own cost while in the later case the buyer must pay for the excess quantity at the price agreed by the two parties. In case a seller delivers uncontracted goods together with the contracted goods, the buyer has the right to refuse such uncontracted delivery.
Where a seller fails to deliver the contracted goods in sufficient quantity as agreed in the contract the buyer may, at his own option, either accept the delivery and pay for only the actual delivered quantity or take necessary legal actions against the seller in accordance with the Law.
The seller must be liable and bear all incurred costs where the delivered goods do not conform with the contract unless it can disprove its fault.
The seller will be relieved of his responsibility for insufficient and/or wrong delivery and/or unconformity of delivered goods if the buyer fails to lodge claims within the time-limit agreed in the contract. The buyer will also be relieved of responsibility for receipt of excess goods if the seller fails to lodge claims within the agreed time-limit. If time-limit for claims is not specified in the contract, by law, the time-limit for quantity and quality claims is 3 and 6 months respectively from the date of delivery.
Suspension of Delivery
The seller has the right to suspend delivery
If the buyer breaches the terms of payment agreed in the contract. In this case, the buyer is entitled to suspend delivery until the buyer completes payment.
If the buyer is declared bankrupt or becomes insolvent prior to the agreed delivery time. In this case, the seller is discharged from the delivery obligations and has the right to dispose the goods.
If the seller has to retain and/or dispose of the contracted goods due to the buyer’s fault as mentioned above, the buyer must bear all the damage and relevant reasonable expenses.
Transfer of Ownership
The provisions of the Trade Law on transfer of ownership are very simple. They just states that the ownership of goods is passed from the seller to the buyer at the time the seller delivers the goods to the buyer, unless otherwise agreed by the two parties or stipulated by law, and that where a contract provides that certain conditions must be satisfied before the seller can deliver the goods to the buyer or before the buyer can receive the goods from the seller, the ownership of the goods may pass from the seller to the buyer only upon the satisfaction of those conditions. Also by law, the seller must guarantee the buyer’s ownership of the delivered goods to avoid any dispute with any third party. After the ownership has been passed from the seller to the buyer, the seller must not undertake any action that infringes upon the latter’s ownership.
However, in practice, as mentioned above, Incoterms are widely and frequently referred to in foreign trade contracts signed with Vietnamese parties; therefore, the provisions of the Incoterms with regards to transfer of ownership will normally apply provided that they are referred to in the contract.
Payment
The Trade Law requires a buyer to make payment in cases where goods are lost or damaged after the ownership has passed from the seller to the buyer, unless the loss and/or damage is caused due to the seller’s fault. However, under the same Law, a buyer has the right to defer the whole or partial payment in case where, upon the receipt of delivery, the goods are found damaged or defective until the seller has rectified such damages and/or defects, unless otherwise agreed in the contract. Where there is evidence that the seller has been deceptive or has failed to make delivery or the contracted goods are under a dispute between the seller and a third party, the buyer also has the right to withhold the whole or partial payment until the above problems have been settled.
The mode and time of payment should be agreed in the contract by the contracting parties. In practice, payment by irrevocable letter of credit through banks is the most popular method used in foreign trade contracts signed with Vietnamese parties.
EXPORT PROCESSING CONTRACT AND VIETNAMESE LAWS
Foreign companies may sign export processing contracts with Vietnamese counterparts under which the latter undertake to produce export goods as required and with materials and inputs provided by the former. By law, the Vietnamese party may lease and/or borrow equipment and machines from the foreign party for the purpose of implementing the processing contract. Equipment, machinery, materials and inputs temporarily imported for export processing are exempt from import tax. The payment for processing costs can be in kind of the products produced under the processing contract. The goods produced under processing contracts must be those which are permitted for trade.
Like foreign trade contracts, export-processing contracts must be made in writing. By law, an export-processing contract must include but is not limited to the following contents:
Names and addresses of contracting parties;
Name(s) and quantity(ies) of product(s) to be produced;
Processing price;
Time and mode of payment;
List with names, quantities and values of materials and inputs to be imported and/or to be supplied locally (if any);
Norms for consumption of materials and inputs and percentages of material and input waste in processing;
List with names and values of equipment and machines to be leased, loaned or donated by the foreign party (if any) to the Vietnamese party;
Measures to deal with waste materials and discarded products and principles for dealing with leased and/or borrowed machinery and equipment, surplus materials and inputs after the termination of the processing contract;
Trade mark and origin of products to be processed;
Place and time of delivery;
Time of contract validity.
FOREIGN EXCHANGE CONTROLS
Generally, the inflow of foreign currency into Vietnam is welcomed with minimum restrictions while the transfer of foreign currency out of the country is still controlled.
Under the current law, all foreign currency income generated in Vietnam from exports, services and any other sources must be deposited at or sold to licensed banks in the country, except special cases with the approval of the State Bank. Vietnamese companies, foreign invested enterprises, parties to business cooperation contracts, foreign contractors and foreign branches must sell upon the receipt at least 50% of their current foreign currency earnings. Normally, banks give priority in sale of foreign currency to the companies who need foreign exchange for importation of materials and supplies for production of exports.
TRANSPORTATION AND COMMUNICATIONS
PORTS
Vietnam has eight national seaports and about 20 provincial seaports along her 3,260 km of coastline, and many inland river-ports. However, there are currently three most important ports serving the north, the center and the south.
Saigon Port is currently the most important port in the country in general and in the south in particular. The port is located right in the center of Ho Chi Minh City - the country's biggest economic and commercial hub. The port serves not only Ho Chi Minh City but also the whole Mekong River delta. It has around 500,000 sq.m. of warehouse and can accommodate vessels up to 25,000 DWT. The handling capacity of Saigon Port is around 24 million tons a year including general cargo, containers, bulk cargo, ro/ro and passengers. In 1998, the port handled 7,700,000 tons of cargo, accounting for about 14% of the total cargo shipped through ports in the country. Around 85% of the cargo handled by the port in 1998 was export and import cargo.
Located right in the center of a big city, Saigon Port has its own disadvantages resulting from the lack of land and heavy traffic. To overcome these problems, another deep seaport is being constructed in Vung tau - Thi vai.
Haiphong Port is another important port located in the north. The port is about 100 km from Hanoi Capital City. Haiphong Port started operation in 1876 and is actually a river port which can accommodate vessels up to 10,000 DWT as a maximum. It has about 432,000 sq.m. of warehouse and can handle 8,250,000 tons of cargo a year including general, bulk and liquid cargo and containers. In 1998, Haiphong Port handled around 5.5 million tons of cargo, accounting for about 10% of the total cargo shipped through ports in the country. Around 65% of the cargo handled by the port in 1998 was export and import cargo.
The port is being upgraded and expanded to be able to handle more containers. High way No 5 linking Hanoi Capital City with Haiphong has also recently been upgraded and expanded. To overcome the disadvantage of Haiphong river port, a deep seaport is being constructed in Cailan Bay - about 80 km north of Haiphong Port.
Danang Port serves as the gateway to the central area of Vietnam as well as to Laos PDR. It can accommodate vessels up to 30,000 DWT and handle 3,800,000 tons of cargo a year including general cargo and containers. The port currently has 186,225 sq.m. of warehouse. In 1998, Danang Port handled around 1,120,000 tons of cargo of which 84% was foreign trade cargo.
SHIPPING
There are many shipping companies in Vietnam including centrally and locally run state-owned companies as well as foreign joint ventures. Companies most involved in the transportation of export and import cargo are Vinalines, Gematrans and Saigonship - APM, HAMATCO, DAMATOCOSCO and Saigonship.
Vinalines is currently the biggest shipping corporation in Vietnam in terms of DWT capacity. It is a state-owned organization under the jurisdiction of the Ministry of Transportation. The corporation consists of various shipping and maritime service subsidiary companies. The most important shipping companies under Vinalines include Vosco, Vitranchart, Vinaship and Falco. These four leading companies currently operate 48 ships with total capacity of 568,030 DWT. VOSCO specializes in the operation of bulk and specialized ships. Vitranchart mainly operates general cargo ships while Falco concentrates on the operation of liquid tankers.
Gematrans is a joint venture shipping company set up in 1989 by Vinalines and French CGM in which Vinalines holds 51% of the stake. This company is operating 11 container ships with total capacity of 4,000 TEU and currently transports about 30% of the country's export and import cargo.
Saigonship - APM is another joint venture between Saigonship and Danish AP Moller in which the latter holds 75% of the stake. This company currently operates 11 container ships mainly serving the routes from Saigon to Hongkong, Kaoshiung, Busan and Singapore. It takes up another 30% of the international shipping market in Vietnam.
HAMATCO, DAMATOCOSCO and Saigonship are locally run state-owned companies under the jurisdiction of the authority of Hanoi, Danang and Hochiminh City respectively. The market share of these three companies is insignificant.
AIRPORTS
There are three international airports: Ho Chi Minh City, Hanoi and Danang. Currently, their facilities are inadequate to handle the increase in the volume of traffic associated with Vietnam's invigorated economy. The government is already planning major upgrading and expansion including US$ 380 million for Noibai Airport in Hanoi and US$ 420 million for Tan Son Nhat Airport in Ho Chi Minh City. At present, a new terminal is being constructed at Noibai Airport while the upgrading and expansion of Tan Son Nhat Airport is under the bidding process. In addition, there are 13 other domestic airports around the country.
TELECOMMUNICATIONS
Vietnam has made great strides in upgrading its telecommunication systems, although much remains to be done. The country has now about 4.3 telephone lines per 100 people, almost 40 times as many as in 1993. Vietnam now has direct communication channels with more than 40 countries and indirect connection with almost all other countries in the world. Direct dialing is now easy and the cost has been continuously dropping, although still remains high. A shortage of telephone lines has led to a surge in the use of mobile telephones and pagers.
BANKING
Traditionally, in Vietnam, the role of the banking system was to fulfill the capital allocation requirements of the centrally planned state economy. As such there was no separation between commercial and state banking.
Vietnamese banking system was reorganized in 1990, separating the State Bank (central bank) from commercial banks and paving the way for the entry of the private sector. The banking sector now has more participants, is more diversified and offers an expanded menu of financing activities. Currently, there are five state-owned banks, more than 50 private joint-stock banks, 5 foreign joint venture banks and more than 20 totally foreign owned bank branches operating in the country.
As mentioned above, payment by irrevocable letter of credit through banks is the most popular method of payment applied in foreign trade contracts signed with Vietnamese partners. Before the reorganization of the banking system, only the Bank for Foreign Trade of Vietnam (Vietcombank) was responsible for handling foreign trade payment. To date, most of the above mentioned banks are engaged in foreign trade payment business. However, Vietcombank still dominates the service.
INSURANCE
The most popular terms of delivery applied in foreign trade contracts signed with Vietnamese partners include CIF, CIP, C & F and FOB. This means the responsibility of buying insurance for foreign trade goods may be either on the part of the seller or the buyer depending on the term of delivery agreed in the contract. By Vietnamese law, insurance buyers may purchase the service at any insurance company operating in Vietnam or abroad. In practice, Vietnamese companies usually secure insurance service from Vietnamese insurers operating in Vietnam unless otherwise agreed in the contract.
Prior to the establishment of Doi Moi, the Vietnam Insurance Company, commonly known as BaoViet, had a monopoly in the insurance business. The company focused primarily on insurance for import-export, small scale maritime and river navigation insurance, and motor vehicle insurance. Since the introduction of economic reforms, however, the demand for insurance has taken off as domestic and foreign investors have increasingly sought new insurance services to protect their capital.
Under the new Insurance Law, which came into effect on 1 April 2001, apart from Vietnamese state-owned and private joint-stock insurance companies, foreign joint venture insurance firms and subsidiary branches wholly owned by foreign insurance companies are also allowed in Vietnam. Currently, there are seven Vietnamese state-owned and joint - stock insurers and around ten foreign joint venture insurance firms and 100% foreign owned insurance branches operating in the country. However, BaoViet still dominates the insurance market in Vietnam.
CERTIFICATE OF ORIGIN
In Vietnam, certificates of origin are currently issued by the Ministry of Trade, the Vietnam Chamber of Commerce and Industry (VCCI) and a number of industrial zones.
The Ministry of Trade issues:
Form D certificates of origin for products of Vietnamese origin for export to ASEAN countries;
Form A certificates of origin for footwear products of Vietnamese origin for export to the EU.
Vietnam Chamber of Commerce and Industry issues:
Form A certificates of origin for products of Vietnamese origin enjoying GSP (Generalized System of Preferences),
Form T certificates of origin for textiles and garments of Vietnamese origin for export to the EU in accordance with the Vietnam-EU Trade Agreement on Textiles and Garments,
Form O and form X certificates of origin for coffee of Vietnamese origin in accordance with the regulations of the International Coffee Organization - ICO),
Certificates of origin Form B, Form for hand woven textiles, Form for handicrafts, Form for exports to Mexico as requested by the importing countries or the importers.
A number of industrial zone authorities may be authorized by the Ministry of Trade and/or the Vietnam Chamber of Commerce and Industry to issue certificates of origin for products manufactured in their zones.
Products qualified for Vietnamese origin must be wholly produced or processed beyond simple processing stage in Vietnam and must meet the requirements with regards to product origin stipulated by importing countries in accordance with international agreements such as agreements on GSP, ASEAN Common Effective Preferential Tariff (CEPT), Vietnam-EU Agreement on Textiles and Garments etc.
RESOLUTION OF DISPUTES
Parties are encouraged to resolve disputes through negotiations or conciliation through a third organization or individual. Where negotiation or conciliation fails, disputes may be resolved by a Vietnamese or foreign or international arbitration body or a Vietnamese or foreign court as agreed in the contract or by the two parties.
Vietnamese Trade Law regulates that disputes arising from a foreign trade contract signed with a Vietnamese party shall be resolved by a Vietnamese court, unless otherwise agreed by the parties or provided by international treaties to which Vietnam is a signatory.
Remedies for contract breach provided for by Vietnamese Trade Law include specific performance of contract, penalty for breach, compensation for damages and termination of contract.
There must be mutual agreement on arbitration if disputes are to be resolved through arbitration. Agreement on arbitration can be in the form of an article on arbitration in the contract or a separate agreement normally signed by the parties following the occurrence of disputes. Once, there is a mutual agreement on arbitration between the parties, courts will no longer resolve the dispute even if either of the parties involved makes a law suit at a court.
Vietnam has been a signatory of the New York Convention of 1958 since 1995; therefore, the award by an arbitrator in any other member country of the Convention is, subject to certain resolution, now enforceable in Vietnam and vice versa. For countries, which are not members of the New York Convention arbitrator's awards are recognized and enforceable on reciprocal basis. Vietnam has adopted the Ordinance to recognize and enforce foreign arbitrator's awards and is preparing to enact a new ordinance on arbitration.
Vietnamese arbitration bodies which are legally competent to resolve commercial disputes include Vietnam International Arbitration Center established in accordance with the Prime Minister's Decision No 204/TTG issued in 1993 and economic arbitration centers established in accordance with the Prime Minister's Decision No 116/CP issued in 1994. The Vietnam International Arbitration Center was established in 1993 through the merger of the Foreign Trade Arbitration Committee (established in 1963) and the Maritime Arbitration Committee (established in 1964). The center is competent to resolve disputes arising from domestic and international commercial activities. The arbitration procedures of the center are set out in details in the center's arbitration rules, which can be obtained at the center at 9 Dao Duy Anh Street, Hanoi, Vietnam, Tel: 5742021, Fax 5742020/ 5742030.
By law, provincial courts are legally competent to resolve disputes involving foreign parties.
INTELLECTUAL PROPERTY RIGHTS
Vietnam recognizes the importance of protecting intellectual property rights, which include patents, trademarks and service marks, copyright and industrial designs. In recent years, the government has taken a number of steps to ensure the proper legal guarantees for such rights. In 1988, Vietnam passed legislation protecting trademarks and patents, and in December of 1994, the country introduced a new copyright law. The areas of technology transfer and industrial-property rights are less established.
Vietnam is a long-standing party to the Paris Convention for the Protection of Intellectual Property Rights, the Stockholm Convention and the Madrid Agreement for the International Registration of Marks. The nation became a member of the Patent Cooperation Treaty in March 1993.
PATENTS AND INDUSTRIAL DESIGNS
There are two basic kinds of patents in Vietnam, those for inventions and those for innovations (including utility solutions). The term for an invention or innovation patent is 15 years from the priority date, whereas the term for utility solutions is six years. The validity of a certificate of industrial design is for five years and can be renewed for successive five-year terms up to a total of 15 years. Some items, such as those relating to national defense and health, are entitled to certificates rather than full patents.
Licensing contracts must be approved by the Ministry of Science, Technology and Environment (MOSTE) and registered with the NOIP before they are put into effect. The term of a license is limited to seven years from its approval by the MOSTE. A compulsory license may be issued if the patentee fails to use the patent or to license it for use in another invention that depends on it.
TRADEMARKS
Vietnam has a fairly sophisticated trademark law in place. According to Vietnam's Ordinance on Trade Marks, a trademark is a sign used to distinguish goods or service of the same kind, of different manufacturers and commercial companies. A trademark can take the form of a letter, word, number, image, picture, design or any combination of these. Some basic generic names and geographic names (Hanoi) cannot be registered. In order to be valid, a trademark must be registered; otherwise it does not exist. A trademark will be protected for 10 years from the filing date, renewable for additional 10-year periods.
At any time during the term of registration, a registration may be canceled upon the request of a third party if it can be shown that the mark does not meet the registrability requirements or if the public is likely to be misled because the mark is similar or identical to a well known trademark.
COPYRIGHT
Vietnam's Civil Code passed in October 1995 extends copyright protection to original works in the form of written works; works expressed orally; stage performances; films, video recording, television and sound broadcast; photographic works; musical works; sculptures and works of fine arts; architectural works; computer software; scientific projects and textbooks; geological maps; translations, adaptations or transformed works; and anthologies. The ordinance also distinguishes between the moral and economic rights conveyed in the copyright. While the author can sell the economic rights, the moral rights are retained in perpetuity. The economic rights are protected for the life of the author plus fifty (50) years. In special circumstances, for example posthumous works and television programs, protection lasts for fifty (50) years from the first publication. The Office of Copyright Protection, part of the Ministry of Culture, administers the law.
INCENTIVES FOR FOREIGN INVESTMENT
The first Law on Foreign Investment in Vietnam was promulgated by Vietnam's National Assembly in December 1987. After being amended twice, the law was repealed and replaced by a new Law on Foreign Investment which was passed in November 1996. The new law was amended again in May 2000 with a view to creating an environment more conducive for foreign direct investment. The Law and its amendments and supplements are further detailed and guided in government Decree No 24/2000/ND-CP enacted on 31 July 2000. Vietnam's Law on Foreign Investment is considered one of the most liberal foreign investment laws in the region.
The following gives a brief overview of foreign investment incentives.
GENERAL GUARANTEES AND INCENTIVES
Perhaps the most important elements of the above legislation from the standpoint of potential investors are the guarantees which promise that investors will receive "fair and equitable treatment" and that capital and other lawful assets of foreign investors will not be requisitioned or expropriated by administrative measures and enterprises with foreign capital will not be nationalized.
Foreign investors? legitimate interests are protected from detrimental legislative changes. In the event that there are changes in the law of Vietnam that adversely affect the interests of enterprises with foreign capital or parties to business cooperation contracts, those interests stated in their investment or business licenses or guaranteed by the previous law will continue to apply or will be dealt with satisfactorily by the Vietnamese authority through measures such as:
Change the stated objective of the project;
Grant a tax reduction or exemption in accordance with the law;
Deem the adverse effect on the investor to be a loss and carry such loss forward to the following years;
Consider payment of fair compensation where necessary.
In addition, the Law also guarantees that beneficial legislative changes will also be applied to licensed investors.
The investor's industrial property rights and legitimate interests in technology transfers are also protected. Under the legislation, foreign investors are entitled to remit their capital and profits abroad and expatriates working in foreign invested projects in Vietnam have the right to repatriate their incomes. Investors are allowed to buy foreign currency at commercial banks to meet the need of operation or other legitimate needs. In special cases, with the approval of the State Bank of Vietnam, companies with foreign capital are entitled to open accounts abroad.
Investors may invest in any form including joint-venture company, 100% foreign owned company, business cooperation contract, BOT, BT or BTO. They may take initiative in selecting the investment projects, the investment partners, regions and duration of investment, markets for products, the legal capital contribution percentages, in accordance with the provisions of the legislation on foreign investment.
In the case of a joint venture, there is no ceiling to the share of capital contributed by foreign investors; the general director need not to be a Vietnamese residing in Vietnam; and only the appointment or dismissal of the general director and the first deputy general director, and amendments of or additions to the joint venture charter require unanimous vote of the board. Other issues can be decided on a majority basis.
Companies with foreign capital will be autonomous in their operation. Investors are entitled to convert the form of investment, divide or separate and consolidate or merger their companies in accordance with the law. They may recruit labor directly from market if labor supply organizations fail to supply within 15 days of request. They can also directly handle the importation of equipment, machinery, materials and other supplies for the construction and operation of their project, as well as the export and/or distribution of their products in Vietnam.
Apart from duty exemption for certain items imported as contribution to legal capital, for the production of exports or for the implementation of projects which are especially encouraged by the government, Vietnam also grants incentive corporate income and remittance tax rates as well as generous tax holidays and/or reductions for projects in priority sectors and regions (Please see Taxation and Tax Incentives section below for more details).
Foreign-invested enterprises and business cooperation parties may open branches and/or representative offices outside the provinces or cities where they are headquartered or at the major operating locations of the business cooperation contracts in order to carry out business activities according to the provisions in the investment licenses. Where it is necessary to step up exports, foreign-invested enterprises may open (with the approval of MPI) their branches or representative offices overseas in order to carry out transactions, marketing and product-selling activities.
TAX INCENTIVES
CORPORATE INCOME TAX
While Vietnamese companies are subject to a standard corporate income tax rate of 32% and preferential tax rates of 25%, 20% and 15%, the standard corporate income tax rate applicable to foreign invested enterprises or the parties to BCCs is 25%. Investment projects that are encouraged by the government may obtain incentive rates of 20%, 15% or 10%. Corporate income tax rates and holidays and/or reductions are specified in the investment license. Foreign invested companies are allowed to carry losses in whatever tax year forward to the following year and set off against the profits of the subsequent year for a maximum of five years.
STANDARD RATE
The standard tax rate of 25% is applicable to hotels, office buildings and apartments for lease (except cases of investment in regions where investment is encouraged or non-compensation transfer of assets to the Vietnamese State upon the expiry of operation duration), finance, banking, insurance, trade, service providing projects (except projects in industrial parks, export-processing zones and hi-tech parks).
For prospection, exploration and exploitation of oil and gas as well as a number of other rare and precious natural resources, corporate income tax rates shall comply with the Petroleum Law and other relevant legislation.
PREFERENTIAL RATE
With a view to attracting foreign investment into the sectors, regions and projects where foreign investment is encouraged, the government has granted lower tax rates, tax reductions, and temporary tax holidays as follows:
20% rate for projects which meet one of the following criteria;
a) They are industrial park enterprises operating in the field of services;
b) They are production projects not falling under the project categories mentioned in Standard Rate section above and in point 2 and 3 below.
15% rate for projects which meet one of the following criteria:
a) They are on the list of projects of investment encouragement;
b) The investment is made in regions with difficult socio-economic conditions;
c) They are service firms located in export-processing zones;
d) They are industrial park enterprises which export more than 50% of their products;
e) They transfer the assets without compensation to the Vietnamese State upon the expiry of the operation duration.
10% rate for projects which meet one of the following criteria:
a) They meet two of the criteria mentioned in point 2 above;
b) They are on the list of projects where investment is specially encouraged;
c) They invest in regions with extremely difficult socio-economic conditions specified in the list of regions where investment is encouraged;
d) They are projects developing infrastructure in industrial parks, export processing zones, hi-tech parks; and export-processing enterprises;
e) They are in the fields of medical examination and treatment, education and training, and scientific research.
DURATION OF PREFERENTIAL RATES
The preferential corporate income tax rates mentioned above shall be applied throughout the life of investment to projects which meet one of the following criteria:
a) They are on the list of projects where investment is specially encouraged;
b) They are in regions with extremely difficult socio-economic conditions specified in the list of regions where investment is encouraged;
c) They are projects developing infrastructure in industrial parks, export-processing zones or high-tech parks;
d) They are projects invested in industrial parks, export-processing zones or high-tech parks;
e) They are in the fields of medical examination and treatment, education and training, scientific research.
The corporate income tax rate of 10% shall be applied for a period of 15 years from the date when the project start their production or business operation, except the projects enjoying preferential rates for their whole life as mentioned above. Thereafter, the standard rate of 25% will apply.
The corporate income tax rate of 15% shall be applied for 12 years from the date of the commencement of production or business operation of the project, except for projects enjoying preferential rates for their whole life as mentioned above. Thereafter, the standard rate of 25% will apply.
The corporate income tax rate of 20% shall be applied for 10 years after the project start production or business operations, except for projects enjoying preferential rates for their whole life as mentioned above. Thereafter, the standard rate of 25% will apply.
Overseas Vietnamese investing in the country under the Foreign Investment Law shall be entitled to the 20% reduction of the corporate income tax as compared with projects of the same type, except for projects enjoying the tax rate of 10%.
EXEMPTION AND REDUCTION
Projects enjoying the 20% rate will be given corporate income tax exemption for one year after the first profitable year and a 50% reduction for two subsequent years.
Projects enjoying the 15% rate will be given corporate income tax exemption for two years after the first profitable year and a 50% reduction for three subsequent years.
Projects enjoying 10% rate and projects invested in regions where investment is encouraged will be given corporate income tax exemption for four years after the first profitable year and a 50% reduction for four subsequent years, except for projects which are exempt from corporate income tax for eight years.
BOT, BTO and BT projects invested in regions specified in the list of investment encouragement; high-tech industrial enterprises, high-tech service enterprises in hi-tech parks; forestation projects and infrastructure construction; and business projects in regions with extremely difficult socio-economic conditions; large-scale projects exerting great socio-economic impacts and being on the list of projects where investment is especially encouraged shall be entitled to corporate income tax exemption for 8 years after the first profitable year.
The tax exemption and reduction duration shall be calculated consecutively from the first profitable year.
The above-said corporate income tax exemption and reduction shall not apply to projects enjoying the standard rate mentioned above.
TAX REFUND FOR REINVESTMENT
Foreign investors who use their profits and other lawful income from their investment activities in Vietnam for reinvestment in operating projects or investment in new projects in accordance with the Foreign Investment Law shall be refunded a part or whole of the paid corporate income tax on the reinvested profit amounts (except cases prescribed in the Petroleum Law), if they meet the following conditions:
a) Reinvestment in projects enjoying preferential corporate income tax rates;
b) The reinvested capital shall be used for 3 years or more;
c) Having fully contributed legal capital or capital for the business cooperation contracts inscribed in the investment licenses.
The rates of refund are as follows:
a) 100% if the profits are reinvested in projects enjoying 10% corporate income tax;
b) 75% if they are reinvested in projects enjoying 15% corporate income tax rate;
c) 50% if they are reinvested in projects enjoying corporate income lax rate of 20%.
WITHHOLDING (REMITTANCE) TAX
The overseas profit transfer tax rates shall apply as follows:
3% rate for:
a) Overseas Vietnamese investing in Vietnam under the Foreign Investment Law;
b) Foreign investors investing in industrial parks, export processing zones or hi-tech parks;
c) Foreign investors whose contribution to legal capital or business cooperation capital is USD 10 million or more;
d) Foreign investors investing in regions with extremely difficult socio-economic conditions specified in the list of regions where investment is encouraged.
5% rate for foreign investors whose contribution of legal capital or capital for business cooperation contracts is between USD 5 million and under 10 million and for foreign investors who have invested in projects on medical examination and treatment, education and training or scientific research.
7% rate for foreign investors who have contributed legal capital or capital for the performance of business cooperation contracts in cases other than those mentioned above.
IMPORT TAX EXEMPTION
Foreign-invested enterprises and business cooperation parties shall be exempt from import tax for goods imported for the purpose of creating fixed assets, project expansion, and technological replacement and renewal including:
a) Equipment and machinery;
b) Specialized transport means included in the technological process and specialized means for transportation of workers (buses of 24 seats or more, watercraft);
c) Components, parts, spare-parts, accessories, assembly supports, molds, auxiliaries accompanying equipment, machinery, specialized transport means mentioned above;
d) Materials and parts imported for manufacturing equipment and/or machinery in the technological process or components, parts, spare parts, accessories, assembly supports, molds, auxiliaries accompanying equipment and/or machinery;
e) Construction materials which are not produced locally;
f) Materials and supplies imported for the implementation of BOT, BTO and/or BT projects; species of plants and animals, animal breeds and specialized agricultural chemicals permitted to be imported for implementation of agricultural, forestry or fishery projects;
g) Other of goods and materials required for projects invested in sectors and regions where investment is specially encouraged as determined by the Prime Minister.
Foreign-invested enterprises and business cooperation parties investing in the fields of hotels, offices and apartments for lease, dwelling houses, trade centers, technical services, supermarkets, golf courses, tourist sites, sports complexes; holiday and recreation resorts; medical examination and treatment establishments; and training, culture, finance, banking, insurance, auditing, consulting services shall also be entitled to import tax exemption for the goods mentioned in points a, b, c, d, e above except in respect of equipment which enjoys a one-off import tax exemption as specified by the government.
Foreign-invested enterprises and business cooperation parties investing in projects specified in the list of projects where investment is specially encouraged or in regions with extremely difficult socio-economic conditions specified in the government list will enjoy import tax exemption on imported raw materials for 5 years from the date of the commencement of production.
Foreign-invested enterprises and business cooperation parties investing in the production of components, mechanical, electrical and/or electronic accessories will be exempt from import tax on raw materials for 5 years from the date of the commencement of production.
Raw materials, spare parts, accessories and materials imported for the production of export goods will also be exempt from import tax.
Foreign-invested enterprises and business cooperation parties producing export goods may defer the payment of import tax on raw materials and materials imported for the production of export goods for a certain period of time in accordance with the Law on Export Tax and Import Duty or as decided by Ministry of Finance based on production cycles of the export led products. Beyond the above-said time limit, foreign-invested enterprises and/or business cooperation parties shall have to pay the import tax which will be reimbursed proportionately when finished products are exported.
Foreign invested enterprises and business cooperation parties which sell their products to be used as direct inputs for production of exports shall be exempt from import tax on raw materials imported for manufacturing such inputs.
To facilitate the importation of materials for export production, the Government allows enterprises that export 50% or more of their production to establish bonded warehouses under the guidance and supervision of the customs authority. Goods delivered into bonded warehouses are temporarily free from payment of import duties.
VALUE ADDED TAX (VAT)
Foreign-invested enterprises and business cooperation parties may defer the payment of value added tax on raw materials and materials imported for the production of export goods within the time limit for the deferment of import tax payment prescribed by the Law on Export and Import Duty.
Foreign-invested enterprises and business cooperation parties shall not have to pay value- added tax for:
a) Equipment, machinery and specialized transport means included in the technological process which are imported to create fixed assets of the foreign-invested enterprises or to perform business cooperation contracts, even though those equipment, machinery and specialized transport means can be supplied locally;
Value added tax will also not be imposed on equipment and machinery imported as part of complete equipment and machinery lines which are not liable to VAT, even though they can be locally supplied.
b) Construction materials which are not produced locally and are imported to create fixed assets of foreign-invested enterprises or to perform business cooperation contracts;
c) Materials and parts imported for production of inputs to be supplied to export manufacturing enterprises.
TECHNOLOGY TRANSFER TAX
Foreign investors may contribute the value of transferred technology as capital of investment projects but not exceeding 20% of the legal capital.
Invention patents, technical know-how, technological processes, technical services which are used as capital contribution shall be exempt from all technology transfer-related taxes.
NATURAL RESOURCES TAX
Also known as "natural resources royalties," the natural resources tax is paid to the State which, under the Vietnamese law, manages all natural resources on behalf of the people. The tax, which ranges from 1% to 50%, is primarily levied on companies in the oil and gas industries or on those involved in exploiting rare or precious resources such as gems and coal. In special cases, there may be a reduction in the tax rate for projects which suffer from unforeseen natural disasters or accidents, business losses, and for mine reopening projects. Joint ventures in which the Vietnamese partner has contributed natural resources as part of the capital are exempt from the natural resources tax.
LAND RENT
Foreign invested enterprises and parties to BCCs which are granted the right to use land or water and sea surfaces must pay rent as stipulated by the Ministry of Finance. The rental rates are determined on the basis of location (in city or rural areas), availability of infrastructure (transportation, electricity, water supply and sewage) and business line of project.
There may be an exemption and/or reduction of land rent in general and for projects which invest in regions with special social-economic difficulties or regions of investment encouragement; and for the period of construction or during the period before harvestation in case of afforestation projects in particular. A 5% reduction of the rent payable by investors will be given to those who pay rent for a period of 5 years. Greater reductions will be granted if rent is paid for a longer period but the total reduction will not exceed 15%. BOT, BTO and BT projects are exempt from land rent.
The land rent applicable to a particular project remains stable for at least 5 years. Any increase in land rent must not exceed 15% of the previously applicable rent. If the rent has been paid for the entire duration of the land lease, it will be kept stable for the whole term. If there is an increase in land rent tariff over the rent approved in the investment license the investor is entitled to enjoy the rent specified in the investment license for another 5 years commencing from the date of the increase in the land rent tariff.
INCENTIVES THROUGH INVESTMENT FORMS AND OPTIONS
The law on foreign investment allows three basic forms of investment: joint ventures (JVs), 100% foreign owned enterprises, and business cooperation contracts (BCCs). The maximum duration for licenses is fifty years from the date of issuance, although in special cases, with the approval of the Standing Committee of the National Assembly, the government may grant up to seventy years. Foreign trading companies, banks, accounting and law firms also may be allowed to open branch offices in Vietnam. Representative offices are another option for companies with existing commercial ties with the country, however, they are not a form of foreign investment of such.
JOINT VENTURES
A foreign joint venture company is established on the basis of a joint venture contract between one or more Vietnamese parties and one or more foreign parties, or between one or more existing foreign invested enterprises with one or more Vietnamese partners, or between one or more existing joint ventures with one or more foreign investors, or among existing two or more foreign joint ventures operating in Vietnam. They are formed and become a legal entity in the form of a limited company after obtaining an investment license from the competent licensing authority. Joint ventures between existing foreign invested enterprises and the Vietnamese and/or the foreign party are often referred to as "new" joint ventures.
Foreign investors can contribute investment capital in the form of foreign currency, Vietnamese currency originating from investment in Vietnam such as profits, money gained from the sale of assets or transfer of capitals, equipment, machinery, plant and other construction works, the value of industrial property rights, technical know-how, technology and technical services.
The Vietnamese partner's contribution can take any of the above forms as well as the value of the right to use the land, sea and water surface and natural resources.
There is no ceiling to the share contributed by foreign partners. The general director who is responsible for day-to-day operation of and legally represents the joint venture need not be a Vietnamese citizen permanently residing in Vietnam. Only important issues such as the appointment or dismissal of the general director and the first deputy general director, and any amendments of or additions to the joint venture charter require, by law, a unanimous vote by members of the board attending the meeting. Other matters, depending on the agreement among partners, can be decided on a unanimous or majority basis by members present at the meeting.
Any party to a joint venture has the right to transfer its contributed capital provided that priority is given to the other parties in the joint venture company and the transfer conditions offered to outside investors must not more favourable than those offered to parties in the joint venture.
As mentioned above, joint ventures are allowed to enter into "new" joint ventures with Vietnamese and/or other existing joint ventures and/or foreign investors.
The joint venture offers a number of distinct advantages over BCCs and 100% foreign owned enterprises. The form allows the foreign investor to take advantage of local know-how and expertise and gives the enterprise a local advocate with possibly invaluable connections and insights. Finally, in practice, license approval may prove easier.
100% FOREIGN OWNED ENTERPRISES
The 100% foreign owned enterprise is a legal entity under Vietnamese law, with limited liability, distinct from the parent company. The management structure of the entity may take any form. In terms of liability and tax treatment, 100% foreign owned enterprises are effectively the same as joint ventures.
100% foreign owned enterprises can cooperate with a Vietnamese party and/or foreign invested joint ventures to set up "new" joint ventures in Vietnam.
100% foreign owned enterprises offer a number of advantages. Operations can be commenced more quickly and there is less likelihood of failure. There are no Vietnamese partners to give rise to lengthy negotiations of a joint venture contract, misunderstandings or different interpretations of laws.
BUSINESS COOPERATION CONTRACTS (BCCS)
A Business Cooperation Contact, or BCC, as they are commonly known, is an agreement between one or several foreign investors and one or several Vietnamese partners to cooperate to implement a project, to produce certain goods or to provide certain services. Because it creates no legal entity and is more easily amended, BCCs are more flexible than joint ventures or 100% foreign owned enterprises. There is also much less legislation governing BCCs than joint ventures. Basically, a BCC can do whatever the partners want it to: parties are free to determine their respective rights and duties but must define in the contract mutual responsibilities and the sharing of business profits and losses. The contract must be approved by the licensing authority, which will determine the method for calculating taxable profits, and must include information such as the duration of the relationship, a list of equipment and materials to be imported, the procedures for settling disputes, etc.
There appear to be no limitations on duration, management structure or repatriation of profits under BCCs. Foreign partners may set up their offices in Vietnam to act as their representatives in the performance of contracts. These offices have their own seals, may open accounts, recruit labor, sign contracts and conduct business activities within the scope of rights and obligations prescribed in the investment licenses and the business cooperation contracts.
REPRESENTATIVE OFFICES AND BRANCHES
As mentioned above, foreign-invested enterprises and business cooperation parties may open branches and/or representative offices outside the provinces or cities where they are headquartered or at the major operating locations of the business cooperation contracts in order to carry out business activities according to the provisions in the investment licenses. Where it is necessary to step up the export, foreign-invested enterprises may open (with the approval of MPI) their branches or representative offices overseas in order to carry out transaction, marketing and product-selling activities.
FOREIGN EXCHANGE INCENTIVES
Although by law, foreign-invested enterprises and foreign business cooperation parties have to open foreign currency accounts and Vietnam dong accounts at banks licensed to operate in Vietnam, in special cases, foreign-invested enterprises may open accounts at banks overseas with the approval of the Vietnam State Bank.
Foreign-invested enterprises and foreign business cooperation parties are entitled to buy foreign currency(ies) at commercial banks licensed to deal in foreign currencies so as to satisfy their current operation requirements and other licensed dealings in accordance with the legislation on foreign exchange management.
For particularly important projects where the investment is made under the Government's programs, the Prime Minister shall decide and specify in the investment licenses state obligations as to the balance of foreign currency(ies) for foreign-invested enterprises and foreign business cooperation parties.
The Vietnamese Government ensures its support in balancing foreign currency(ies) for foreign-invested enterprises and business cooperation parties which invest in infrastructure construction and a number of other important projects in cases where commercial banks fail to fully satisfy their foreign currency demands.
Foreign investors are allowed to transfer abroad:
a) Profits earned from business activities and dividends;
b) Revenues from service provision and technology transfer;
c) Principal of and interest on foreign loans;
d) Investment capital;
e) Other money amounts and assets under their lawful ownership.
f) The assets under their lawful ownership after the termination of operation and dissolution of their enterprises except that they have seek the approval of the investment licensing body in case the transfer amount is larger than the initial capital and reinvestment capital.
Expatriates working in foreign-invested enterprises or under business cooperation contracts shall be entitled to transfer abroad their salaries and other lawful incomes in foreign currency(ies) after having paid the income tax and other expenses.
SPECIAL INVESTMENT INCENTIVES
BOT, BT, BTO
Often mistakenly referred to as a fourth form of investment, Build-Operate-Transfer contracts were added to the Law on Foreign Investment in Vietnam in December of 1992. The new Law on Foreign Investment in Vietnam passed in November 1996 includes additions on Build-Transfer and Build-Transfer-Operate contracts. Theoretically, BOT, BT and BTO projects may be joint ventures or 100% foreign owned , but in practice joint ventures with Vietnamese partners are more greatly encouraged by the government. BOT, BT and BTO contracts are signed between one or more investors and a Vietnamese government agency mainly for the construction of infrastructure projects such as bridges, power plants, water supply plants, airports, roads and railways.
BOT projects can take advantage of a number of incentives, including exemption from land rent as well as duty on goods and equipment imported to execute the contracts, preferential corporate income tax rates for the whole duration of the contract, corporate income tax holidays and reductions, a low withholding tax rate and a guarantee from the government on the conversion of revenue earned in local currency into hard currencies.
INDUSTRIAL AND EXPORT PROCESSING ZONES
Industrial zones (IZ) which also host export processing enterprise can be developed and operated by joint venture or Vietnamese companies (100% foreign owned investment is not permitted in the development and operation of industrial zones.). The investor constructing and operating the zone or investing in the zone is granted generous tax incentives including a preferential corporate income tax rate for the entire duration of the project, corporate income tax holidays and reductions and low withholding tax rate (See Tax section for more details). Goods and foreign exchange imported into export processing zones or export processing enterprises or exported therefrom are exempted from import or export duties and subject to simple and convenient customs controls. (However, goods and foreign exchange movements between export processing zones or export processing enterprises and the domestic market are subject to the export and import law and foreign exchange control rules).
In addition, investors wishing to establish projects in export processing or industrial zones submit their applications to the local IZ board of management for licensing within 15 days instead of to the Ministry of Planning and Investment or the provincial people's committee which approve projects outside the zone and respectively have 45 or 30 day limit within which to do so. They also register their export and distribution plan and pay tax at the local IZ management board.
Investing in industrial zones is one of the ways to avoid the infrastructure problem in Vietnam because the zones are usually conveniently located near a port and/or airport and/or strategic markets, and have their own infrastructure system including power plants, water supply and treatment system and telecommunication connections. Investors in the zone can avoid the problems of securing and clearing land which are generally the most time consuming and vexing problems for investors.
OTHER INCENTIVES
LICENSING PROCEDURES
The new government decree guiding the implementation of the Law on Foreign Investment in Vietnam includes a number of amendments and additions to simplify and streamline the licensing process.
Under the new decree, investment projects are divided into two categories of which one requires only registration for licensing and the other requires appraisal for licensing. Previously, Ministry of Planning and Investment (MPI) served as the only "one stop" shop for licensing applications. Under the new law, not only MPI but also provincial people's committees and the management boards of industrial and export processing zones are delegated and authorized to evaluate and issue investment licenses.
Investment licensing bodies must not refuse to grant investment licenses to the projects which are qualified for registration for investment license. They have 15 days from the date of receiving valid applications to grant licenses to investors. The maximum time limit for evaluation and issuance of an investment license to projects which require the approval of the Prime Minister has also been shortened from 60 days to 45 days from the date of receipt of the complete and valid investment application file. Provincial people's committees and the management boards of industrial zones have 30 days and 15 days respectively to grant licenses.
The documentation and evaluation process has also been simplified. For example, in accordance with the new regulations, for projects which are not specified in the list that requires an environmental impact evaluation report, the investor needs only set out in the investment application file an explanation of any factors which may have an environmental impact and measures proposed to deal with those factors. If advanced international environmental standards are applied, the investor is only required to register with the State management body in charge of environment. The leasing of land and the evaluation of planning and architecture (of projects involving construction) are now considered and approved during the course of project evaluation and the investment licensing process. After the technical design has been approved by the competent authority the investor is entitled to commence construction work without any construction permit which was previously required before construction could commence.
The official fee for a foreign investment license has been abolished.
LAND-USE RIGHTS
Under the new Law, if the Vietnamese party contributes land-use right as capital to a joint venture, it must be responsible at its own expense for relocation, land clearance and fulfillment of all necessary administrative procedures to have the land use rights. The remaining value of the land-use rights will be considered as the joint venture asset to be liquidated in case it is declared bankrupt or dissolved.
If the land-use rights are leased from the State, the government body who leases the land-use right must be responsible at its own expense for relocation, land clearance and fulfillment of all necessary administrative procedures to grant the land use rights to the lessee.
Foreign invested companies have the right to use the assets fixed to the land and the value of the land-use rights as collateral at credit organizations legally operating in Vietnam for loans.
PRIORITY SECTORS AND REGIONS
PROJECTS 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 new breeds with high quality and economic efficiency;
Agricultural farming, forestation, aquaculture;
Production of new materials, rare and precious materials, application of new bio-technologies and new technologies for manufacture of information and telecommunication equipment;
Hi-tech industries;
Investment in research and development;
Manufacture of waste treating equipment;
Production of antibiotics raw materials;
Pollution treatment and environmental protection, waste treatment;
Investment under BOT, BTO or BT contracts.
PROJECTS WITH INVESTMENT ENCOURAGEMENT
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 from 30% or more of the production cost).
With intensive employment of Vietnamese laborers and efficient use of natural resources available in Vietnam;
Processing of farm produce, forest products (excluding timber), aquatic products:
Preservation of food; post-harvest preservation of farm produce;
Mineral exploration, exploitation and intensive processing;
Development of petro-chemical industry; construction and operation of oil and gas pipelines, depots, ports;
Manufacture of equipment, detail groups in oil, gas, mineral or fuel exploitation; manufacture of big lifting and lowering equipment;
Manufacture of high-quality steel, alloy, nonferrous metals, special metals, steel cast, spongy iron for industrial use;
Manufacture of machine tools for metal working, metallurgical equipment,
Manufacture of precision tools, safety check and inspection equipment; manufacture of molds for metal and non-metal products;
Manufacture of medium- and high-voltage electric equipment;
Manufacture of diesel engines through advance technologies and techniques: manufacture of dynamic and hydraulic machines and spare parts, compressors;
Manufacture of automobile and motorbike spare parts: manufacture and assembly of construction equipment, machines and vehicles; manufacture of technical equipment for transport service;
Shipbuilding: manufacture of equipment and spare parts for freighters, fishing ships;
Manufacture of information and telecommunications equipment, electronic components and equipment, informatics technology;
Manufacture of agricultural equipment spare parts, machines, irrigation and drainage equipment;
Production of assorted insecticide raw materials, basic chemicals, pure chemicals, dyes, specialized chemicals, cleansing raw materials, chemical additives;
Production of special-type cement, composite materials, sound-proof, electric-insulated and heat-resistant materials, wood substitute composite materials, refractory materials, construction plastic, glass fibers;
Production of light construction materials;
Production of paper pulp, silk, assorted yarns and special fabric for industrial use;
Manufacture of high-class raw materials for production of export footwear and garments;
Manufacture of high-quality packing materials for export goods;
Manufacture of medical equipment in analytical technology and extracting technology in medicine;
Production of drug raw materials, medicines of GMP international standards;
Improvement, development of energy sources;
Mass transit;
Construction and renovation of bridges, land roads, airports, harbors, railway stations, bus terminals, railways;
Construction of water plants, water supply and drainage systems;
Construction-commercial operation of infrastructures of industrial parks, export processing zones, hi-tech parks.
REGIONS WHERE INVESTMENT IS ENCOURAGED
Provinces Regions with Extremely Difficult Socio- Economic Conditions Regions with Difficult Socio- Economic Conditions
Ha Giang All districts and provincial capital
Cao Bang All districts and provincial capital
Lai Chan All districts and provincial capital
Lao Cal All districts and provincial capital
Son La All districts and provincial capital
Bac Kan All districts and provincial capital
Tuyen Quang All districts and provincial capital
Lang Son All districts and provincial capital
Yen Bai All districts and provincial capital
Thai Nguyen All districts, provincial capital and Thai Nguyen City
Bac Giang All districts and provincial capital
Vinh Phuc Districts: Lap Thach, Tam Duong and Binh Xuyen Districts not in Section A
Phu Tho All districts, provincial capital and Viet Tri city
Hoa Binh All districts and provincial capital
Bac Ninh Districts: Que Vo, Yen Phong, Gia Binh, Luong Tai and Thuan Thanh
Ha Noi Soc Son district
Ha Tay Districts: Ba Vi, My Duc, Phuc Tho, Quoc Oai, Thach That and Ung Hoa
Quang Ninh Districts: Ba Che, Binh Lieu, Quang Ha, Hoanh Bo, Tien Yen., Dong Trieu and Mong Cai provincial capital Yen Hung district and provincial towns of Cam Pha, Uong Bi
HaiPhong Districts: Vinh Bao and Tien Lang
Hai Duong Chi Linh district All districts not included in Section A
Hung Yen All districts and provincial capital
Thai Binh All districts and provincial capital
Ha Nam All districts and provincial capital
Nam Dinh All districts and Nam Dinh city
Ninh Binh Districts: Nho Quan, Yen Mo and Gia Vien Tam Diep provincial town and all districts not in Section A
Thanh Hoa Districts: Lang Chanh, Thuong Xuan, Quan Hoa, Ba Thuoc, Ngoc Lac, Nhu Xuan, Cam Thuy, Thach Thanh, Quan Son and Muong Lat Districts not in Section A
Nghe An Districts: Ky Son, Tuong Duong, Con Cuong, Quy Chau., Que Phong, Quy Hop, Nghia Dan, Anh Son, Tan Ky, Thanh Chuong, Do Luong Cua Lo provincial town and districts not in Section A
Ha Tinh All districts Ha. Tinh provincial capital
Quang Binh All districts Dong Hol provincial capital
Quang Tri Quang Tri provincial capital and all districts Dong Ha provincial town
Thua Thien - Hue All districts Hue City
Da Nang Districts: Hoa Vang, Thanh Khe, Ngu Hanh Son and Lien Chieu
Quang Nam All districts and Hol An provincial town Tam Ky provincial capital
Quang Ngai All districts Quang Ngai provincial capital
Binh Dinh All districts Quy Nhon city
Phu Yen All districts Tuy Hoa provincial capital
Khanh Hoa Districts: Khanh Son and Khanh Vinh Districts not in Section A
Binh Thuan All districts Phan Thiet provincial capital
Ninh Thuan All districts Phan Rang provincial capital
Kon Tum All districts and provincial capital
Gia Lai All districts and provincial capital
Dak Lak All districts and Buon Ma Thuot city
Lam Dong All districts, provincial towns and Da Lat city
Dong Nai Districts: Dinh Quan, Tan Phu and Xuan Loc
Binh Phuoc All districts and provincial capital
Binh Duong Districts: Ben Cat, Phu Giao, Tan Uyen and Dau Tien
Tay Ninh All districts
Ho Chi Mnh City Districts: Can Gio and Cu Chi
Ba Ria-Vung Tau Districts: Long Dat and Xuyen Moc
Long An All districts Tan An provincial capital
Dong Thap All districts and provincial capital
Tien Giang All districts and provincial capital My Tho city
Ben Tre All districts and provincial capital
Vinh Long All districts and provincial capital
Tra Vinh All districts and provincial capital
An Giang All districts and Long Xuyen City
Can Tho All districts and provincial towns Can Tho city
Soc Trang All districts and provincial towns
Bac Lieu All districts and provincial towns
Ca Mau All districts and provincial towns
Kien Giang All districts and provincial towns
ESTABLISHING CONTACTS WITH SUPPLIERS
There are no hard and fast rules to ensure that a buyer will land on the right Vietnamese supplier. Many businesspeople rely on their gut feeling and intuition while others take the hard-nosed way and cover their flanks all the way. Almost everyone, though, would like to meet his supplier in the deal.
The main brokers in such transactions are the government and business associations, specifically the various departments and agencies under the Ministry of Trade, including Vietnam Trade Promotion Agency (VIETRADE), Vietnam trade representatives abroad, and other trade support institutions. The first approach, whether it is made from the buyer's home country or in person during one of his trips to Vietnam, will in most cases be made through a government body or a business association. At present, there are hardly any privately owned computerized database services in Vietnam that sell information directly to interested importers. However, as mentioned previously, the number of exporters and importers has rapidly increased from 50 in 1986 to more than 12,000 last year and will continue to increase; therefore, the government and business associations may not know all potential suppliers for a specific product. Although buyers who prefer to do it alone can of course choose a supplier from trade directories, this is not the most popular of techniques because of the practical and psychological difficulties of wading through thousands of impersonal names with nothing to recommend them.
Inquiries received by the government or business associations are often replied in two ways. The names and contact addresses of potential exporters are given to the buyer so that he can contact exporters directly or inquiries are either publicized or communicated to registered exporters, who in turn contact the buyer and make an offer. However, information provided by the government or business associations, in particular the names of suppliers for a specific product, does not constitute a guarantee of the reliability of the suppliers. For this, only the buyer is responsible. It is advisable that buyers should visit the plant of the supplier and check out its facilities, machines and workers and meet various government bodies, business associations and consulting companies to cross check a particular supplier.
VIETNAM TRADE OFFICES ABROAD
Foreign buyers can select and contact suppliers from their home country through the Vietnam trade offices in 40 countries/territories. These are usually attached to Vietnam embassies and consulates except for some, which are housed in separate buildings.
Each trade office varies in the services and facilities available but all offer basic information assistance. Inquiries on agricultural products, garments and textiles, footwear and handicrafts should receive a prompt response as the information is usually on hand in the embassies/consulates or trade offices. A "scare" or non-standard information can pose difficulties and the inquiries might have to be forwarded back to Vietnam for action. It is often quicker if the buyer asks an embassy/consulate or trade office for the names and contact addresses of potential suppliers and contacts them directly.
VIETNAM TRADE PROMOTION AGENCY (VIETRADE)
In an effort to promote trade, especially export, the government set up an organization namely Vietnam Trade Promotion Agency or briefly called VIETRADE under the Ministry of Trade.
Export assistance and information is the main job of VIETRADE. It processes buyers? inquiries, maintains contacts with exporters, publicizes inquiries to suppliers, publishes trade directories and bulletins, industrial studies, product monographs and export handbooks. VIETRADE also provides other business matching services such as coordination and assistance to Vietnamese exporters in participation in exhibitions and trade fairs abroad and at home, organization of Vietnamese selling missions visiting abroad and hosting foreign buying missions. Given enough time and notice, it can match buyers and sellers and arrange meetings.
Buyers can contact VIETRADE at the following addresses:
Hanoi Head Office: 20 Ly Thuong Kiet Str.,
Hanoi, Vietnam
Tel: 84-4-9347627/ 9347653/ 9347654
Fax: 84-4-9344260
Email: vietra@hn.vnn.vn
Ho Chi Minh City Office: 35-37 Ben Chuong Duong Str.,
Ho Chi Minh City, Vietnam
Tel: 84-8-8297282, 8210654
Fax: 84-8- 8291011, 8293596
Email: hcmvietra@hcm.vnn.vn
Many local centers for promotion of trade and investment have also recently been established and financed by provincial governments. The main job of these centers is to process buyers? inquires and assist them to make contact with suppliers in their provinces (Please see the Useful Addresses section).
TRADE SUPPORT INSTITUTIONS
BUSINESS ASSOCIATIONS
Founded in 1963, VCCI is an independent and non-government organization with members throughout the country. Apart from representing the interests of the business community in Vietnam, VCCI is also engaged in trade promotion and export development. Foreign buyers may contact VCCI for help in selecting and making contacts with suppliers. Inquiries received by VCCI may be publicized in VCCI weekly business newspaper and magazine or communicated to local exporters for reply. Apart from hosting buying missions from abroad, VCCI also provides foreign individual visitors with services such as identifying and checking out local suppliers, sponsoring business visas, arranging business meetings and/or tailor made business tours, and interpretation etc. for which fees are charged. VCCI has its head office in Hanoi and branch offices in Ho Chi Minh City, Vung Tau and Cantho in the south, Danang in the centre, Haiphong in the north and representative offices in some other major cities.
Apart from VCCI, many other non-government industrial and trade associations have recently been established in Vietnam. Noticeable organizations include the Textiles and Garments Association, the Leather and Footwear Association, the Food Association, the Coffee Association, the Tea Association, the Association of Seafood Exporters and Producers etc. Promotion of trade with the outside world is also one of their main responsibilities. However, many of these associations are still young and staffed with personnel seconded by dominant members; therefore, the neutrality of their business matching services may not be guaranteed.
TRADE SERVICE AND CONSULTING COMPANIES
There is a number of state-owned or privately owned trade service and consulting companies (including foreign firms), which provide business-matching services. Many of these companies operate on once-off fee basis. They can provide services such as identifying and checking out local suppliers, sponsoring business visa, arranging business meetings and/or tailor made business tours, and interpretation etc. for which fees are charged. The greatest advantage of using trade service and consulting companies is that the users may save time and money in the process of establishing contacts with suppliers and do not have any obligations whatsoever to the brokers later on besides the payment of service fees.
FOREIGN EMBASSIES AND TRADE OFFICES IN VIETNAM
Foreign buyers may also approach their embassies/consulates and trade offices in Vietnam to be assisted in the selection of Vietnamese business suppliers. Currently, Vietnam hosts nearly 50 foreign embassies and consulates. Many countries have embassies in the Capital of Hanoi and consulates in Ho Chi Minh City - the country's commercial hub. Some large economic and trade suppliers such as Japan, South Korea, Taiwan, Australia and the U.S. etc. have trade offices housed separately from their embassies/consulates in Hanoi and/or Ho Chi Minh City.
TRADE DIRECTORIES AND WEB-SITES
Foreign buyers can also identify potential suppliers by wading through trade directories and web-sites. There are many trade directories published in Vietnam including those published by VIETRADE and the Trade Information Center under the Ministry of Trade, as well as by various business associations and local trade promotion centers. A number of trade support institutions have also been operating web-sites providing information on trade and trade suppliers. However, the biggest problem of identifying suppliers through directories and web-sites is that you never know who are reliable and may end up in a waste of communication time and money.
TRADE SHOWS
Vietnamese companies often participate in international exhibitions and trade fairs broad to promote their products. They sometimes organize their own trade shows outside the country. Many trade shows are also held in Vietnam throughout the year where foreign traders are invited to participate and/or visit. Foreign buyers interested in Vietnamese products can contact Vietnamese embassies and/or trade offices in their home countries or VIETRADE to be advised of the events. Most important among trade shows held in Vietnam is a regular national economic exhibition that takes place in Hanoi in around April every year. This event is a good opportunity for foreign buyers to get a general picture of Vietnamese economy and meet Vietnamese suppliers.
Exhibition and trade fairs calendar published yearly by VIETRADE can be of use to those who are interested in participating and/or visiting trade shows where Vietnamese products are displayed. VIETRADE is currently planning permanent trade shows in Hanoi and Ho Chi Minh City.
CHECKING SUPPLIERS
As mentioned above, in Vietnam, the number of firms engaged in export and import business has increased sharply within a short period of time from around 50 in 1986 to more than 12,000 at present. Many of these companies are new and small and lack the experience, expertise or capacity to handle export business or big orders. As a result of export encouragement policy, the number of exporters and importers in the country will continue to increase in the future. Therefore, checking out a supplier to make sure that he has the integrity to honor the contract and the resources to deliver the order promptly is the first crucial step. Try to avoid teaming up with the wrong party or the wrong contact person early on and then are frustrated later when things get bogged down.
Do not rush into negotiation or signing deals before checking out the supplier. Unlike in some other countries, there are not yet credit investigation firms operating in Vietnam; therefore, a visit by the buyer himself to the supplier's plant to check out its facilities, machines and workers is a good way to ascertain the latter's true capacity. Meetings with as many as possible government bodies, business associations, as well as Vietnamese and foreign businesspeople operating in the country may help you understand more about and cross check your potential suppliers. Buyers may even hire a trade service or business consulting company to do the checking at a reasonable cost.
BUSINESS PRACTICES
It is impossible to encapsulate all Vietnamese business practices in one section of one book. To even attempt to do so, one is forced to generalize. The reader should remember that there are many exceptions to every rule and every generalization. The advice below will help prevent mistakes but visitors should not attempt to memorize the following sections. They are meant as a starting point, not as rigid rules which must be followed.
Don’t fret if you make a few mistakes along the way. That is part of the adventure of learning! The most important element is to show respect and courtesy, not to get all the "rules" right. The Vietnamese are very forgiving people, and many local government officials and businessmen are knowledgeable of and accustomed to Western business practices. Nevertheless, trying to follow the local customs and niceties will go a long ways towards expressing your respect and willingness to learn a different culture.
BUSINESS MEETINGS
The most important business ritual is the business meeting. Few buyers would do business with a supplier they have not met in person. Although, exporters are normally eager to sell, they are often reluctant to sign contracts with buyers whose integrity and capacity to honor payment are in doubt. The personal meetings, especially the initial meeting, allow the participants to gauge each other and develop a sense of trust and understanding. The process of establishing operations in Vietnam will require even more business meetings since face to face discussions, rather than telephone calls or emails or letters, are still the way that most things actually get done. This is partly due to tradition but also results from a lack of an established legal system. If a deal goes sour, parties are often left with little legal recourse. Only the relationship remains. (Please see more at (Build Relationships section below)
SETTING UP THE FIRST MEETING
If you are visiting Vietnam as part of a buying mission or have asked the government or a business association or an agent in the country to set up a meeting with a supplier, then all details will most likely be taken care of. It is normally much easier for a buyer to request an appointment with a supplier than vice versa; therefore you can set up appointments with suppliers directly from your home country or while you are in the country. In this case, it is advisable to send a letter, a fax or an e-mail requesting an appointment in which you should also explain how you become to know the other party, introduce about your company and state the purpose of your visit. Be sure to include some information about your company (if any) such as company's brochures or annual reports etc. This will help the Vietnamese party to understand about your company, avoid embarrassing and irrelevant questions and will enable the organizations to assign the right person to meet you.
Space meetings generously apart, as some will inevitably run over. Visitors should be punctual. Failure to show up on time not only shows disrespect but also is thought connote that you are not serious or reliable.
SEATING
There are two general formats for seating at meetings, depending on the purpose of the meeting. Normally, for courtesy visits with high-ranking officials, the seating will place the most senior representative of both parties side by side. An alternative seating arrangement for courtesy visits and the common one for business meetings is with the most senior representatives facing each other at the middle of the table with their advisors and interpreters on either side.
STRUCTURE OF MEETINGS
1) Introduction and Exchange of Business Cards
Business meetings often open with an exchange of cards and shaking of hands. It has become quite common for both men and women to shake hands. Usually the most senior host will show his or her hand first, although this is not a strict rule. To show respect to high-ranking officials, lightly grasp their hand between both of yours. Do not kiss Vietnamese on cheeks or ladies' hands as a form of greeting. It is also customary to present business cards at this time (see Business Card section for details).
2) Opening Discussion
Meetings can often be opened either by the host welcoming the visitor or by the visitor thanking the host for the reception, followed by the introduction of members of the two sides.
For the first meeting, the Vietnamese side normally starts discussion with introduction about its company including history, business lines, production capacity, export turnover and major markets etc. These introductions should not be interrupted. Instead, take notes while remaining attentive and then ask questions after the introduction has been brought to a close.
For the visitor, it is advisable to spend some time to introduce yourself and firm before moving to discussion of the issues you came to speak about. This introduction is important to the Vietnamese, who are often reluctant to commit to anything until they know a little about you.
3) Farewell
As a good host, the Vietnamese party will not tell you how much time they have for you and rarely initiate the closure of the meeting. Instead, it is expected that the guest will signal a close of discussions. At the end of the meeting it is customary for both parties to stand and to shake hands.
DRESS
Previously, officials and businessmen tended to dress informally at meetings. Although jackets were more common in the north, officials might have worn a shirt and tie with no jacket. Now the trend is towards more formal dress at meetings. Officials will frequently wear a suit, especially for the first meeting with a new contact.
Perhaps because the climate is cooler, the north tends to be a little more formal than the South. Suits and ties tend to be standard dress for men, whereas in the south generally a short or long-sleeved shirt, tie and dress pants are adequate.
Dress also varies some with the seasons. Between October and April, when the weather is cooler, formal dress is considered to be suit and tie for men while during the hotter summer months, formal dress for men is a white shirt and tie. Women should wear conservative clothes which cover the shoulders and knees.
The best rule for foreign businessmen is "when in doubt, go formal." To dress too casually would be taken as a sign of disrespect. For the first meeting, foreign businessmen should wear a suit. Shirts and long pants are worn by both sexes. At follow-up meetings, foreign businessmen should follow the lead of their host.
NAMES
The surname of the Vietnamese is the first listed, followed by the middle name and then the first name. However, Vietnamese are usually addressed by their "first name" (the one coming last) rather than their family name. Thus, Mr. Tran Viet Dung should be called Mr. Dung, although his family name is Tran. This avoids confusion as many Vietnamese have the same surname. For example, approximately half of all the Vietnamese have the surname "Nguyen" which many families adopted during the Nguyen dynasty when the emperors allowed the people to take their family name.
BUSINESS CARDS
Instead of verbal introduction, Vietnamese businesspeople tend to use business cards to introduce themselves. Business cards should be handed to all those attending a meeting because it is sometimes difficult to discern who the important players are and who will play what role in the future. Generally, a business card should be handed to the senior most person first. Cards should be presented with two hands to very important officials, but for all others there is no required etiquette. By reading your hosts? cards carefully, you can show respect and clarify the function of the person with whom you are speaking. Don’t disregard the cards or shove them in your pocket. Basically, treat them with respect but don’t obsess over them.
In the case of large delegations, the exchange of cards may only take place between the senior most representatives. Other members of the group can exchange cards after the meeting is complete.
INTERPRETERS
Most Vietnamese businesspeople engaged in foreign trade transactions can speak English. If an interpreter is necessary for a business meeting, a foreign buyer may use his own local staff (if any) as interpreter or an interpreter from the local supplier. Vietnamese exporters normally prefer using their own interpreters not only because they want to ensure business secrecy but also because these interpreters are familiar with the business under discussion. Therefore, the best strategy is to leave interpretation job at the hand of the local supplier.
Always address the person with whom you are meeting, rather than the interpreter. If you are meeting with a group and it is unclear who is leading the other party, address the person seated in the center or the senior most official present. Nod and smile while listening to the Vietnamese party speaking to demonstrate that you are listening. Do not interrupt the Vietnamese party since this will make the interpreter's job very difficult as well as being considered impolite. Instead, note down points and raise them when the other party has finished. When speaking through an interpreter, speak in short phrases and pause occasionally to avoid losing the interpreter.
POSTURE
It is important not to be too aggressive during a business meeting, but this does not mean one need be compliant. Instead, visitors should state their position clearly, firmly but politely, with the appropriate degree of respect.
Be open and honest, explaining clearly any foreseeable problems. If the Vietnamese party later thinks that you were devious or that you have hidden something, they will stonewall further negotiations. Spell out terms verbally, even when a written proposal or translation has been provided, to minimize future misunderstandings. If necessary, explain your company's point of view and needs. Think of the initial negotiations as an educational process.
Keep in mind as well that the posture of your Vietnamese counterparts may not indicate their level of interest. Following meetings, many foreign investors misinterpret the warmth and enthusiasm of their hosts to indicate a strong interest in the matter in hand, only to find out in later meetings that the Vietnamese counterpart was disinterested. The positive attitude of the Vietnamese party may be merely a polite courtesy to the visitor and should not be taken to indicate the level of interest.
BUSINESS MEALS AND FUNCTIONS
As negotiations progress, you may find yourself meeting with your prospective partner over meals. This is a time to get to know each other personally and build trust. It is normal in Vietnam to ask friends personal questions about topics such as incomes, age or family. However, if you do not want to reply you can simply smile and say a few "throw away" lines. It is a good idea to toast before the meal. You can toast the mutual friendship and future success, express your happiness at being in Vietnam or state how glad you are that you are working with the other party. It is customary to applaud your own speech. Always wait until the most senior person leaves before departing. As with business meetings, if you are guests, you should signal your leaving at the appropriate time.
BUSINESS COMMUNICATION
LETTERS
Traditional business letter writing style is appropriate in Vietnam. For letters of introduction or other more personal matters, however, a handwritten letter will carry more weight than a typewritten one.
PHONE CALLS
Phone calls tend to be brief and to the point. They are not used as a substitute for personal meetings, so it is best to avoid trying to discuss substantive issues over the phone until you are sure the other party is accustomed to this style of communication (they rarely are).
FAXES AND E-MAILS
E-mails are not yet popular in Vietnam. Faxes or e-mails do not necessarily convey the same sense of urgency in Vietnam as they do in many countries. Because of the high telecommunication costs in Vietnam, many faxes or e-mails will not be answered or acknowledged immediately. Instead the Vietnamese party will wait until they have all the relevant information and then reply. Faxes and e-mails may also be delayed by the method of delivery. In many Vietnamese organizations, faxes and e-mails are not delivered directly to the person named but must first go through a central official in the organization, who then passes it on to the named party. Finally, if there is no interest in the contents of the fax or e-mail or a problem in providing an answer, the receiving parties may never reply. By having someone in the country representing your interests, you can alleviate some of this miscommunication.
BODY LANGUAGE
In Vietnam, actions may speak louder than words, especially in initial meetings with officials or businessmen unfamiliar with Western customs. For instance, crossing your legs, with your foot pointing towards the other party, is considered impolite in Vietnam, although many Vietnamese will forgive foreigners who do so. Dressing too casually for the first meeting may be taken as a sign of disrespect. Crossing your arms or putting your hands on your hips may be taken to mean that you are upset. Touching someone on the head or calling to the other party with your finger (palm upward) suggests you think the person is below you and is therefore considered quite rude. Women laughing loudly in public, drinking alcohol or smoking are considered abnormal by many people.
LOSING FACE
As in many other Asian countries, Vietnamese place a great deal of importance on saving face. Understanding this concept is essential to effective negotiations. It is especially important never to cause a Vietnamese to lose face in front of others. Offering indirect advice or solutions is far more effective than direct criticism, which is considered quite severe in Vietnam.
When a problem arises in Vietnam, it is best to go to the relevant party and point out the problem as well as a number of potential solutions. This must be done with tact and respect. To project a condescending attitude is to insult the other party.
If one only points out the problem but offers no solution it may take a long time to resolve the problem since the other party is obliged to create a solution. Instead, providing a number of realistic and equitable options allows the partner to merely review them for fairness. It creates less work for the partner and may resolve the issue more quickly.
The same goes for proposals. When making a proposal, suggest a number of ways the other party might structure the deal as well. This will dramatically cut the time necessary for the other party to figure out the right approach.
THE SMILE
Many foreigners misunderstand the meaning of the smile of Vietnamese. While Vietnamese smile for all the same reasons as people of other nationalities, a smile can also convey different, more subtle meanings. Two examples:
1) Lack of Understanding: when a Vietnamese does not understand something that is said, it is very common for them to smile. They will rarely tell you they do not understand. If it is clear they do not understand, do not confront the issue directly as this may cause them to lose face. Instead, apologize for being unclear and try to explain it a different way. With officials or businesspeople, you have to do this indirectly. If the other person is a member of your staff, ask him or her to repeat back to you what you have said to make sure you did not make any mistakes in communicating.
2) Nervousness or Irritation: Vietnamese people do smile sometimes when they are nervous or irritated (the opposite of Western approaches). For instance, if you become angry, you may notice that the Vietnamese party smiles or shows no expression at all. This shows that they are embarrassed for you. Foreigners are often nonplussed when they observe two Vietnamese riding motorbikes who nearly collide and then drive off smiling. This is not a sign of joy but nervousness or "I’m sorry. Forgive me" or "Take it easy. It is nothing serious."
Once foreigners understand that the smile can convey many meanings other than happiness, they can usually begin to distinguish the "true" smiles from those which conceal irritation, nervousness or misunderstanding.
GIFTS
Do not encourage corruption. There is a fine line between gift-giving and bribery. Nevertheless, it is common in Vietnam for small gifts to be exchanged on certain occasions to express your respect, appreciation or gratitude. Gifts are usually exchanged at the end of meetings or parties.
BUSINESS HOURS
Official business hours are generally Monday through Friday between 7:30 am and 4:30 p.m., with a lunch hour sometime between 12:00 a.m. and 1:30 p.m. Many companies, especially private firms work on Saturday as well. Shops are usually open until 9:00 p.m. or later, while restaurants may stay open as late as 10:00 p.m. or 11:00 p.m. Most suppliers are happy to work with visiting buyers overtime.
There are five official holidays amounting to a total of eight days in Vietnam. The most important is the four-day lunar new year holiday, known as Tet. Officially, the holiday only lasts four days, but some businesses are closed for longer than the prescribed government holiday. This holiday, which typically falls between late January and mid February, is a time of family gathering and gifts giving among friends. Business generally slows down for ten days before and ten days after the celebration. Therefore, it is best not to try to undertake any business in Vietnam immediately before or after the holiday. The other important public holidays are listed below.
January 1 New Year's Day
April 30 Liberation of South Vietnam
May 1 International Labor Day
September 2 National Day
ESTABLISH A PRESENCE
The style of communication and negotiation in Vietnam makes it difficult, if not impossible, to do business with Vietnam long distance. Time and again, successful traders and investors emphasize the importance of establishing a presence in Vietnam. Flying in and out of the country is likely to waste your company's time and money if there is no one on the ground maintaining contact with Vietnamese partners, pushing your initiatives forward and safeguarding your interests. If you are not ready to establish a representative office or branch, consider appointing a local agent or representative on a temporary basis. The country's Trade Law allows foreign companies to appoint local firms as their sale or purchase agents.
BUILD RELATIONSHIPS
With a smaller and inexperienced legal infrastructure to rely on, it is imperative that business people build relationships with their partners, as well as all the relevant authorities and officials. Personal trust can have an equal importance as the price and quality of products in the success of a business transaction. Meet everyone possible, since you never know who will have the final sign off on your deal.
Vietnamese believes that human interaction and contact form the basis of a successful business relationship. Impersonal goals are meaningless to Vietnamese. Frequent meetings, consultations, correspondence and even involvement in each other's private life are necessary to establish and maintain a relationship. It is not fruitful to be formal and business-like all the time. This partially explains why Vietnamese often spend much of their time visiting or entertaining or just sitting with their friends and business partners.
BE PATIENT
Business dealings often take longer in Vietnam than they do in many other countries. The most important quality in a negotiator is patience. Although, exporters normally understand the importance of prompt action or punctuality, deadlines are not always strictly observed, sometimes due to inexperience or lack of information needed to make a decision in time. As in some other Asian countries, decisions are normally reached on consensus basis therefore it is sometimes difficult for the deadlines to be met. Allow for more time in everything you do (negotiations, travel, license approval process, etc.). In negotiations, patience is considered a virtue and can prevent the use of time as a tactic to force concessions.
TREAT VIETNAMESE WITH RESPECT
It is important not to behave in a condescending manner. Although the Vietnamese realize they have much to learn in the business arena, they are very proud people and can detect a condescending attitude quickly. Treating the Vietnamese with respect and courtesy will get you a long way.
GET IT DOWN ON WRITING
Westerners prefer doing business the standard way and that everything should be put in writing. Most Asians, including Vietnamese, have no objection to this except that in practice they rely more on personal relationships. (Please see more at Build Relationships section above). Good and tried-and-tested friends or partners may find it unnecessary to put small changes in an agreement in writing.
Although, it is advisable to put all agreements in writing to protect the interests of both sides and avoid unnecessary disputes, getting everything in writing early on is not the solution and can even backfire. A written agreement means nothing if the Vietnamese side has not time to fully understand and digest the contents. The Vietnamese may agree to something during discussions, especially if they are pressured. After having had time to think about the consequences, they may decide the agreement is not in their best interest and try to make changes.
The best strategy is to be open and try to anticipate and address problems as well as possible solutions during the negotiations. Give the Vietnamese side some time to discuss and reach consensus among themselves before presenting a detailed contract or a written minute confirming points discussed and/or agreed in previous meetings for their signature.
FOLLOW-THROUGH
It is important for foreign traders to be realistic and to follow through on all promises. This includes simple promises to send additional information on your company as well as more important agreements. It is important also to send thank you letters following meetings with partners and officials. By showing respect and courtesy you will win allies, while failure to keep a promise will be remembered for some time.
ASSISTING YOUR SUPPLIERS
Vietnamese people are hard working, eager to learn and quick at adaptation. However, one of the common and major problems faced by Vietnamese exporters is their lack of information or failure to keep up with the fast changes of the world demand, tastes and requirements. Therefore, they may need advice and technical assistance from their foreign partners to meet requirements and conditions of market access or adapt their products to suit the market. Successful buyers often emphasize the need for their technical involvement in the production of export goods in Vietnam. Many buyers spend a lot of time working with factories from the top management to the lower levels, educating processing techniques and talking to them about planning, quality controls, schedules and coordination etc.
BASIC TRAVEL INFORMATION
IMMIGRATION
VISAS
A valid visa is required for entry into Vietnam. Legally, tourist visas are not valid for business visits. Vietnam has signed bilateral agreements with Thailand and Philippines to exempt entry visa for their citizens visiting the other country for a certain period of time.
In order to obtain a business visa, a businessperson should be sponsored by an organization in Vietnam. The sponsorship can be by the visitor's Vietnamese partner or the visitor's representative office or branch or a trade-support institution, or a consulting firm or another authorized agent. There is usually a visa-handling fee in addition to the embassy stamp fees for this service.
Business people should send the following information to the sponsoring agency at least seven days before they wish to pick up their visa from the Vietnamese Embassy abroad:
• Full name
• Date of birth
• Nationality
• Passport number
• Name of company or organization
• Port and date of entry and exit or tentative schedule
• Location of embassy and date for visa pickup
• Brief statement of the purpose of the visit
Visitors must submit visa application forms with photographs and their passports to the Vietnamese Embassy in their country for visa issuance and pay a visa stamp fee.
A one-month renewable visa will generally be issued. Multiple entry-exit visas, which are good for three to six months may be obtained for visitors who have regular business in Vietnam.
ENTRY AND DEPARTURE REQUIREMENTS
Currently, visitors must fill only one duplicate form for both emigration and customs declaration purposes when entering Vietnam of which one copy should be retained by visitors for departure. Visitors should declare all valuables such as cameras and computers etc., but foreign and Vietnamese currency equivalent to under US $3,000 and VND 5 million respectively need not be declared. There is no restriction on books or other printed matter apart from pornographic or politically sensitive material. However, books and other media such as video cassettes must be screened. It is illegal to bring letters, packages or correspondence for others into or out of the country. It is also illegal to export antiques or Buddhas. All luggage is x-rayed on arrival and departure. Remember to keep your baggage claim tag, as it may be requested on arrival.
Airport departure tax is US$ 10 in Hanoi and US$ 12 in Ho Chi Minh City for international flights and VND 25,000 for domestic passengers.
CURRENCY
The Vietnamese currency is the dong, which is commonly abbreviated as VND. The currency is not fully convertible. Although, it is legally required that all transactions inside Vietnam should be carried out in VND, it is still quite common to see invoices presented and paid in US dollars. Visitors should keep in mind that this is now technically illegal at all but approved exchange agents. The dollar:dong rate as of March 2001 was 1:14,500.
Traveler’s checks should be denominated in dollars and may be exchanged at banks in most major metropolitan areas. Credit cards are increasingly accepted at major hotels, some restaurants and a few shops but are not as widely used in other establishments.
GETTING INTO AND AROUND VIETNAM
FLIGHTS
International flights are available from Hanoi, Ho Chi Minh City and Danang. Vietnam Airlines as well as other major airlines have booking offices in both cities. Daily flights on Vietnam Airlines and Pacific Airlines, which was founded in 1993 and is 40% owned by Vietnam Airlines, are available to most major cities within Vietnam. Both airlines now use Airbus or Boeing aircraft on major routes. The ticket rates for foreigners on domestic routes are higher than for Vietnamese.
AROUND TOWN
Licensed taxis are abundant in both Hanoi and Ho Chi Minh City. They are usually booked by phone although they can sometimes be hailed on the street. Airport transfer varies from US$ 10 to US$ 20 in Hanoi and US$ 5 to US$ 10 in Ho Chi Minh City, depending on the type of car hired. A mini bus service operated by Vietnam Airlines is also available between the airport and some major hotels in Hanoi and Ho Chi Minh City at a very cheap fare. Taxi fares are around US$ 0.40 - 0.50/km in Hanoi and Ho Chi Minh City depending on the taxi company and the type of taxi used. Most hotels and travel agencies can provide a car and driver on a daily or weekly basis. Unlicensed taxis are much cheaper but not recommended.
A relaxed way to travel between two points is to take a three-wheeled "cyclo" (bicycle rickshaw). This is not recommended for daily transportation to or from business meetings, because it is thought to connote that your company is poor. When you do take a cyclo, be sure to negotiate the fare beforehand. It is however, unwise to take a cyclo late at night unless it is recommended by hotel staff, who should also help to negotiate the fee.
Motorcyclists will often offer rides to foreigners and motorcycles are for rent as well. Neither of these options is recommended, as the traffic is quite dangerous.
ACCOMMODATION
The quality and availability of international standard hotels has increased dramatically in recent years, especially in Ho Chi Minh City and Hanoi. Unlike four or five years ago, five-and four-star international hotels are now abundant in both Ho Chi Minh City and Hanoi. Supply currently outstrips demand. Three- to five- star hotel rates ranges between US$ 40 and US$100 for a standard room. For budget travelers, second-tier and "mini-hotels" are plentiful, easy to find and very cheap.
USEFUL ADDRESSES
VIETNAM TRADE PROMOTION AGENCY (VIETRADE)
Buyers can contact VIETRADE at the following addresses:
Hanoi Head Office: 20 Ly Thuong Kiet Str.,
Hanoi, Vietnam
Tel: 84-4-9347653, 9347654
Fax: 84-4-9344260, 9348142
Email: vietra@hn.vnn.vn
Hochiminh City Office: 35-37 Ben Chuong Duong Str.,
Hochiminh City, Vietnam
Tel: 84-8-8297282, 8210654
Fax: 84-8- 8291011, 8293596
Email: hcmvietra@hcm.vnn.vn
VIETNAM TRADE OFFICES ABROAD
ARGENTINA
11 De Septiembre 1442
Capital Federal Argentina
Tel: 5411-4783 1802
Fax: 5411-4899 1819 KOREA REP.
Rm 401, Byuksong Bldg.
13/3/4 Changchon-dong
Mapo-gu, Seoul, Korea
Tel: 822-322 3660
Fax: 822-322 3770
Email: tmanhhung@hotmail.com
AUSTRALIA
797 Bourke St. Redfern Sydney,
NSW 2016 Australia
Tel: 612-93101872
Fax: 612-93101929
Email: tvuvn@ihug.com.au
KUWAIT
P.O. Box 425. Saimiya, Kuwait
Tel: 965-5615977
Fax: 965-5645305
Email: tvvnkw@hotmail.com
BELGIUM
Av. Bel Air, 29
1180 Bruxelles
Tel: 32-2 343 62 95
Fax: 32-2 347 03 35
Email: canh.cuong@worldonline.be
JAPAN
50-11, Motoyoyogi-cho Shibuya-ku
Tokyo 151-0062
Tel: 813-3466-3315/ 3436
Fax: 813-3466-3360
Email: vntrade@coconet.ne.jp
BULGARIA
Sofia 1113, Iuri Gagarin Str.,
Block 154A, Ap.3 - Bungaria
Tel: 359-2 963 31 82 / 971 45 97
Mobile: 359-88450736
Fax: 359-2 963 31 73
Email: (1) vietor@inet.bg (2) trungthuc@mail.ru
MALAYSIA
No 4 Pesiaran stonor, 50450
Kuala Lumpur, Malaysia
Tel: 603-2414692
Fax: 603-2414696
Email: thongtr@tm.net.my
CANADA
153 Gilmour street, Ottawa,
Ontario, K2P 0N8-Canada
Tel: 1613-2373816
Fax: 1613-2373858
Email: vinatrade@earthlink.net MYANMAR
36, Wingaba Road, Bahan Township
Yangon, Myanmar
Tel: 95-1-548905
Fax: 95-1-543494 95-1-549302
Email: vinemb.myr@mtpt400.stems.com
CAMBODIA
67, Samdech Pan (ex. 214 st.)
Phnom Penh, Cambodia
Tel: 85512-852 533
Fax: 85523-362 682
Email: tvcpc@camnet.com.kh LAOS
76-Sisangvone Road ane Naxay,
Vientiane, Laos
Tel: 856-21 413410
Fax: 856-21 413115
CHINA
32 Guang Hua LuJian Guo Men Wai
Beijing
Post Code: 100600
Tel: 8610-65325415
Fax: 8610-65325415/65325720
Email: vinaemba@mailhost.cinet.com.cn PHILIPPINES
Unit 3B, LPL Center, 130 Alfaro st,,
Salcedo Village, Makati City, Philippines
Tel: 632-813 4048
Fax: 632-750 0161
Email: haoplp@surfshop.net.ph
CUBA
Cable16 # 514 E/S ta, 7mn Miramar
Lahabana
Tel: 537-241525
Fax: 537-2453333
Email: vinacom@ceniai.inf.cu POLAND
Ul, Polna 48 M. 21 00-644 Warszawa
Tel: 48-22 825 81 63
Fax: 48-22 825 81 06
Email: tvu@frico2.onet.pl
CZECH-SLOVAKIA
Step?nsk? 4/534, 12 00 Praha 2
Tel: 4202-24942135
Fax: 4202-24942132
voquivan@volny.cz RUMANIA
B-dul lancu de Hunedoara nr.66 Bl. 12B, Sc. B, Et. 4,
Ap.46-49 Sector 1, Bucuresti
Mobil: 094577710
Tel/fax: 401-2113738
EGYPT
23, Kambez streetDokki - Giza - Cairo. A.R.E
Tel: 202-3485721
Fax: 202-3485721
Email: ndt@intouch.com RUSSIA
No 30-1st Tverskaya Yamskaya Str.,
Moscow 125047
Tel: 7095-251 22 85 / 250 08 48
Fax: 7095-250 05 34
Email: vietor@online.ru
FRANCE
44, Avenue de Madrid 92.200
Neuilly Sur Seine
Tel: 331-46248577 / 46248078
Fax: 331-46241258
Email: secovif@wanadoo.fr SINGAPORE
No.10, Leedon Park
Singapore 267887
Tel: 65 64683747
Fax: 65 64670458
Email: vntrade@singnet.com.sg. URL: www.vinatradesingapore.org
GERMANY
Burohaus Storkower Str. 158/109
10407 Berlin
Tel: 49-30-2298198 / 2292374
Fax: 49-30-2291812 / 2292374
Email: doan.tvberlin@t-onlin.de SWEDEN
Upplandsgatan 38 5th Floor 11328
Stockholm, Sweden
Tel: 468-322666
Fax: 468-321580
Email: tvus@hotmail.com
HONGKONG
17/F., Golden Star Building 20,
Lockhart Road, Hongkong
Cable: VINACOR HONGKONG
Tel: 852-2529 3721
Fax: 852-2865 7573
Email: vinacorhk@ctimail3.com SWITZERLAND
18A, ch. Francois-Lehmann
1218-Le Grand Saconnex Gen'e (Suisse)
Tel: 4122-7982485
Fax: 4122-7980724
Email: bvcuong@hotmail.com
7, ch, Taverney 128-Le Grand Saconnex
Gen'e (Suisse)
Tel: 4122- 7887023
Fax: 4122- 7887024
HUNGARY
1068 Budapest VI Bencz? utca 18.
Hunggary
Tel: 36-1 352 7956
Fax: 36-1 343 3836
Email: commer@elender.hu SOUTH AFRICA REP.
479 Lukas Str., Lukasrand Pretoria 0181,
The Republic of South Africa
Tel: 27-12 343 7673
Fax: 27-12 343 2110
Email: vnto@worldonline.cc.za
INDIA
17, Kautilya Marg, Chanakyapuri,
New Delhi - 110 021
Tel: 9111-3012123
Fax: 9111-3017714
Email: sqdelhi@del3.vsnl.net.in TAIWAN
3F, No. 65, Sung Chiang Road,
Taipei, Taiwan
Tel: 8862- 25166626
Fax: 8862- 2504 1761 / 2516 6625
INDONESIA
25, JL. Teuku Umar Jakarta,
Indonesia
Tel: 62-21 3100359
Fax: 62-21 3100359 THAILAND
83/1 Wireless Road Bangkok 10330, Thailand
Tel: 662- 6508 454
Fax: 662- 2526 950
Email: tvvnbkk@anet.net.th
IRAQ
AL Mansour-71/7/17 Dauodi Str.,
Baghdad - Iraq
Tel: 9641-5439510
Fax: 9641-5411388 TURKEY
Istanbul Turkey Gayrettepe Besiktas,
Hattat Halim Sok 17.D3
Mobile: 090 5357 687 094
Tel: 90212-2748 009
Fax: 90212-2747881
Email: vuvanqui@hotmail.com
IRAN
180 Lavasani Str., Tehran - Iran
Tel: 9821-2293530
Fax: 9821-2830876
Email: dinh@www.dci.co.ir
UNITED KINGDOM
12-14 Victoria Road London W8 5 Rd,
Tel: 44-020 793 731 74
Fax: 44- 020 793 846 25
ITALIA
Via, Po, 22, 00 198 Roma
Tel: 390-684 13913
Fax: 390-684 140 72
Email: thuongvu@tin.it
UKRAINE
Ukraine, 01011, Kiev Leskova Str. 5
Tel: 380-44 294 8116
Fax: 380-44 294 8116
Email: tradevn@dsqvn.kiev.ua
UNITED STATE OF AMERICA
1730 M Str., Suite 501, NW.
Washing ton DC. 20036
Tel: 202-463-9425
Fax: 202-463-9439
Email: vinatrade@aol.com UZBEKISTAN
Tashkent, 700060 Nukus Str., 16-7
Tel: 371-1339673 / 1338817
Fax: 371-1339673
Email: phong@naytov.com
FOREIGN EMBASSIES AND TRADE OFFICES IN VIETNAM
REPUBLIC OF ARGENTINA
8th Floor Deaha Business Center
360 Kim Ma Str., Hanoi
Tel: 8315578, 8315262, 8315263
Fax: 8315577
REPUBLIC OF ARAB EGYPT
Villa 6, Van Phuc Quarter,
Ba Dinh District, Hanoi
Tel: 8460219
Fax: 8460218
DEMOCRATIC AND PEOPLE'S REPUBLIC OF ALGERIA
12 Phan Chu Trinh Str., Hanoi
Tel: 8253868
Fax: 8260830
UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND
4th-5th Central Buiding
31 Hai Ba Trung Str., Hanoi
Tel: 8252510,827560-5,8267556-9
Fax: 8265762,8252349
REPUBLIC OF INDIA
58-60 Tran Hung Dao Str., Hanoi
Tel: 8244990
Fax: 8244998
REPUBLIC OF POLAND
3 Chua Mot Cot Str., Hanoi
Tel: 8452027
Fax: 8236914
KINGDOM OF BELGIUM
48-50 Nguyen Thai Hoc Str., Hanoi
Tel: 8452263, 8235005-6
Fax: 8457165
FEDERATIVE REPUBLIC OF BRAZIL
14 Thuy Khue Str., Hanoi
Tel: 8430817, 8432544
Fax: 8432542
BRUNEI DARUSSALAM
4 Thien Quang Str., Hanoi
Tel: 8264816/7/8/9
Fax: 8222092
REPUBLIC OF BULGARIA
Nui Truc, Van Phuc Quarter, Hanoi
Tel: 8452908
Fax: 8460856
CANADA
31 Hung Vuong Str., Hanoi
Tel: 8235500
Fax: 8235333, 8235351
KINGDOM OF CAMBODIA
71 Tran Hung Dao Str., Hanoi
Tel: 8253788, 8253789, 8256473
Fax: 8265225
REPUBLIC OF CUBA
65 Ly Thuong Kiet Str., Hanoi
Tel: 8254775
Fax: 8252426
KINGDOM OF DENMARK
19 Dien Bien Phu Str., Hanoi
Tel: 8231888
Fax: 8231999
FEDERAL REPUBLIC OF GERMANY
29 Tran Phu Str., Hanoi
Tel: 8453836/7, 8430245/6
Fax: 8453838
KINGDOM OF THE NETHERLANDS
6th floor, Daeha Business Center,
Kim Ma Str., Hanoi
Tel: 8315650
Fax: 8315655
REPUBLIC OF KOREA
4th Floor, Deaha Business Center,
Kim Ma Str., Hanoi
Tel: 8315111/6
Fax: 8315117
UNITED STATES OF AMERICA
7 Lang Ha Str., Hanoi
Tel: 8431500/7
Fax: 8350484, 8432510
REPUBLIC OF HUNGGARY
43-47 Dien Bien Phu Str., Hanoi
Tel: 8452858
Fax: 8233049
ISLAMIC REPUBLIC OF IRAN
54 Tran Phu Str., Hanoi
Tel: 8232068, 8232069
Fax: 8232120
REPUBLIC OF IRAQ
66 Tran Hung Dao Str., Hanoi
Tel: 8254141
Fax: 8254055
REPUBLIC OF ITALY
9 Le Phung Hieu Str., Hanoi
Tel: 8256246, 8256256
Fax: 8267602
STATE OF ISRAEL
68 Nguyen Thai Hoc Str., Hanoi
Tel: 8433140/1/2/3
Fax: 8435760
REPUBLIC OF INDONESIA
50 Ngo Quyen Str., Hanoi
Tel: 8253084, 8253353
Fax: 8259274
LAO PEOPLE'S DEMOCRATIC REPUBLIC
22 Tran Binh Trong Str., Hanoi
Tel: 8254576
Fax: 8228414
MALAYSIA
Fortuna Building, Lang Ha Str., Hanoi
Tel: 8313400
Fax: 8313402
UNION OF MYANMAR
A3 Van Phuc Quarter, Hanoi
Tel: 8453369
Fax: 8452404
MONGOLIA
39 Tran Phu Str., Hanoi
Tel: 8453009, 8436256
Fax: 8454954
KINGDOM OF NOWAY
Metropole Center,
56 Ly Thai To Str., Hanoi
Tel: 8262111
Fax: 8260222
FEDERAL REPUBLIC OF YUGOSLAVIA
47 Tran Phu Str., Hanoi
Tel: 8452343
Fax: 8456173
THE RUSSIAN FEDERAL
58 Tran Phu Str., Hanoi
Tel: 8454631/2, 8453897
Fax: 8456177
JAPAN
27 Lieu Gia Str., Hanoi
Tel: 8463000
Fax: 8463048
NEW ZEALAND
32 Hang Bai Str., Hanoi
Tel: 8241481
Fax: 8241480
AUSTRALIA
Van Phuc, Cong Vi, Hanoi
Tel: 8317755, 8317733
Fax: 8317711, 8317757
REPUBLIC OF FRANCE
57 Tran Hung Dao Str., Hanoi
Tel: 8252719
Fax: 8264236
REPUBLIC OF FINDLAND
Central Building,
31 Hai Ba Trung Str., Hanoi
Tel: 8266788
Fax: 8266766
REPUBLIC OF THE PHILIPPINES
27 B Tran Hung Dao Str., Hanoi
Tel: 8257873, 8257948, 8261826
Fax: 8265760
ROMANIA
5 Le Hong Phong Str., Hanoi
Tel: 8454131, 8454132
Fax: 8233996
REPUBLIC OF CZECH
13 Chu Van An Str., Hanoi
Tel: 8454131, 8454132
Fax: 8233996
KINGDOM OF THAILAND
63 Hoang Dieu Str., Hanoi
Tel: 8235092/4
Fax: 8235088
REPUBLIC OF TURKEY
4th Floor, North Star Building,
4 Da Tuong Str., Hanoi
Tel: 8222460
Fax: 8222458
KINGDOM OF SWEDEN
2 Nui Truc Str., Hanoi
Tel: 8454824, 8235853
Fax: 8232195
CONFEDERATION OF SWITZERLAND
77B Kim Ma Str., Hanoi
Tel: 8232019, 8232022
Fax: 8232045
DEMOCRATIC PEOPLE'S REPUBLIC OF KOREA
25 Cao Ba Quat Str., Hanoi
Tel: 8453008
Fax: 8321221
PEOPLE'S REPUBLIC OF CHINA
46 Hoang Dieu Str., Hanoi
Tel: 8453736, 8235517, 8232844
Fax: 8232826
REPUBLIC OF SINGAPORE
41-43 Tran Phu Str., Hanoi
Tel: 8233965
Fax: 8233992
SLOVAK REPUBLIC
6 Le Hong Phong Str., Hanoi
Tel: 8454334, 8454335
Fax: 8454145
JAPAN EXTERNAL TRADE ORGANIZATION (JETRO)
3rd floor, 63 Ly Thai To Str., Hanoi
Tel: 8250630
Fax: 8250552
TAIPAI ECONOMIC AND CULTURAL OFFICE
2D Van Phuc, Ba Dinh District, Hanoi
Tel: 8234404
Fax: 8234422
KOREA TRADE PROMOTION AGENCY (KOTRA)
3rd floor Deaha Business Center
360 Kim Ma, Ba Dinh District, Hanoi
Tel: 8315177 / 8315178
Fax: 8315176
DEPARTMENT OF EXPORT PROMOTION OF THAILAND
6 Cao Ba Quat, Ba Dinh District, Hanoi
Tel: 7330671
Fax: 7330669
MAJOR INDUSTRIAL AND TRADE ASSOCIATIONS
VIETNAM CHAMBER OF COMMERCE AND INDUSTRY (VCCI)
9 Dao Duy Anh Str., Hanoi
Tel: 84-4-5742143
Fax: 84-4-5742020, 5742622
VIETNAM ASSOCIATION OF SEAFOOD EXPORTERS AND PRODUCERS
10-12 Nguyen Cong Hoan Str., Hanoi
Tel: 84-4-7715055
Fax: 84-4-7715084
LEATHER AND FOOTWEAR ASSOCIATION
25 Ly Thuong Kiet Str., Hanoi
Tel: 84-4-8265715
Fax: 84-4-8259216
HANOI SMALL AND MEDIUM ENTERPRISES ASSOCIATION
64 Nguyen Luong Bang Str., Hanoi
Tel: 84-4-5114757
Fax: 84-4-5114757
VIETNAM COOPERATIVE ALLIANCE
77 Nguyen Thai Hoc Str., Hanoi
Tel: 84-4-8431768
Fax: 84-4-8431883
VIETNAM TEXTILE AND APPAREL ASSOCIATION
25 Ba Trieu Str., Hanoi
Tel: 84-4-9349608
Fax: 84-4-8262269
VIETNAM COFFEE AND COCOA ASSOCIATION
5 Ong Ich Khiem Str., Hanoi
Tel: 84-4-7336520
Fax: 84-4-7337498
VIETNAM TEA ASSOCIATION
Address: 49 Tang Bat Ho Str., Hanoi
Tel: 84-4-8213710
Fax: 84-4-8212663
VIETNAM FOOD ASSOCIATION (VIETFOOD)
Address: 42 Chu Manh Trinh Str.,
District 1, Hochinminh City
Tel: 84 8 8299786
Fax: 84 8 8232641
(Source: Vietnam Trade Promotion Agency)
Source: http://ambibusiness.blogspot.com/2008/10/vietnam-information-2000.html
