Vietnam Introduces Favorable Policies for Supporting Industries

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By Stefano Miggiano

Sept. 22 – On February 24, 2011, the Vietnamese government issued Decision No.12/2011/QT-TTg pursuant to the Prime Minister’s Decision No. 49 10/QT-TTg of July 19, 2010, approving the list of prioritized high technologies. The Decision took effect on April 15, 2011.

The new regulations aspire to encourage the development of the following industries: manufacturing mechanical engineering, electronics-informatics, manufacturing and assembly of automobiles, textile and garment, leather-footwear and high-tech industry development.

The Decision defines the meaning of supporting industries as: an industry that manufactures materials, spare parts, details, accessories and semi-finished products for supplying to industries that manufacture and assemble finished products for use as production materials or consumer goods, or for supplying to the stage of assembling and manufacturing finished products (Art.2.1/2).

Through these regulations, the State hopes to encourage and create conditions for domestic and foreign organizations, as well as individuals, to develop these supporting industries, and there are several advantages provided by the new regulation (Art.3), as can be seen below.

Market development promotion (Art.3.1.a/b/c)
Projects within the supporting industries may be advertised free of charge on the web site of the Ministry of Industry and Trade and provincial-level Industry and Trade Departments. Furthermore, projects of the supporting industries shall be prioritized for receiving funds from trade and investment promotion programs. The State also provides assistance to supporting industry projects classified under high technology, according to the Law on high technologies (Law No.21/2008/QH12 on High Technology).

Infrastructure related promotion (Art. 3.3.a/b/c/d)
The allocation of land, suitable areas, locations, and rental rates shall be aided and prioritized for projects that are classified under the supporting industries.

Furthermore, such projects shall receive assistance and be given opportunities in job recruitment and training and enjoy other special support policies under the Prime Minister’s Decision No. 105/2009/QD-TTg of August 19, 2009. Small-medium enterprises that invest in manufacturing projects within the supporting industries are also entitled to incentive policies on production grounds, according to Government’s Decree No. 56/2009/ND-CP of June 30, 2009, on development assistance for small and medium-sized enterprises.

Promotion in science and technology and human resource training (Art. 3.4.a/b/c/d)
The national scientific and technological development fund, and other funds related to scientific and technological activities, could support projects within the supporting industries to cover part of the expenses for technology transfer and purchase of design copyright. Moreover, funds have been scheduled from the state budget to cover part of expenses for human resource training under current regulations and to encourage human resource development in high tech industries.

Finance (Art.3.6 a/b/c/d)
Projects which manufacture products within the supporting industries framework are entitled to import/export duty incentives under the current law on import/export duties. Benefits are provided to small-medium enterprises investing in projects which fall under the supporting industries.

All of these measures taken by Vietnam’s government are a big step forward, especially if we think that there have been nascent electronics and mechanical engineering complexes cropping up in Vietnam: Samsung Electronics Vietnam will continue to pour in capital to build the “Samsung Complex” that may cost some US$1.5 billion during 2015-2020.

Moreover, major producers of cars (Mercedes-Benz), motorbikes (, Piaggio), and printers (Canon) for example are coming in to Vietnam; so Decision No.12/2011/QT-TTg represents a big opportunity for supporting industry growth within the Vietnamese economy.

Dezan Shira & Associates is boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in Vietnam. To contact the firm, please email vietnam@dezshira.com, visit www.dezshira.com, or download the firm’s brochure here.

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