Investment in Vietnam

betokenBOOK ON championship AND INVESTMENT IN VIETNAM BERLIN, 2011 FOREWORD Over the past devil decades, Viet Nams frugality has bee n developing quick owing to its inside moi (Renovation) policy and activeness to comprise itself into the spherical economy. W ith its enormous efforts and de termination, and effective cooperation with inter subject partners and fri differences worldwide, Viet Nam is taking fast(a) locomote towards industrialisation and modernization.With a stable political env bidment and groovy economical potentials, Viet Nam is an attractive destination for doing fear and coronation. The authorities of Viet Nam has been ceaselessly endeavoring to melio stray the coronation climate with the object lens at creating an increasingly business-friendly surround in Viet Nam. Germany is the biggest economic partner of Viet Nam in Europe. The economic cooperation amongst the two countries has been productively burgeoning.In an effort to further strengthen the economic cooperation between Viet Nam and Germany, t he Embassy of the Socialist region of Viet Nam in coordination with the relevant ministries of Viet Nam to publish the Guidebook on traffic and enthronisation of Viet Nam, which is expected to provide German businesses with an everywhereview of the Viet Nams economy and its business and enthronement climate.We ar confident that German businesses rat recoup helpful culture and guide airs on enthronization and doing business in Viet Nam from the Guidebook, and thereby have a deeper understanding of the Viet Nams economy, a propulsive every(prenominal)y appear and reliable destination for external investiture flows. We deeply thank the Ministry of impertinent Affairs and the Ministry of readying and investiture funds of Viet Nam for their kind support and assistance. We would like to chat our sincere thanks to Dr.Andreas Stoffers, Board Member of German Business linkup Vietnam and Member Executive Committee E uroean Chamber of Commerce Vietman for reviewing this book. W e besides heartedly thank Marktforschung und Kommunikation GmbH for her great cooperation and excellent coordination in publishing the Guidebook. Dr. Do Hoa Binh Extraordinary and Plenipotentiary Ambassador of the S. R. Viet Nam to the Federal state of Germany 2 ABBREVIATION ASEAN BCC BOM BOT BT BTO CEPT CIT CPC DOLISA DPI EIAR EL EPC EPZ EU EZ FIC FOB gain domestic product HTZ IL IZ JVC LTT LUR LURC MFN MOIT MOLISA MONRE MOST MPI NOIP ODA PCT confront PPP RO SBV TTC USD VAT VCAD VNDW TO Association of southeasterlyeast Asian populations Business co-operation edit out Board of Management of IZs, EPZs, HTZs and EZs Build-operate-transfer (including its derivative forms, BTO and BT) Build-transfer Build-transfer-operate Common Effective Preferential responsibility Scheme Corporate income evaluate Civil Proceedings Code tike Department of Labour, War Invalids and Social Affairs Provincial Department of discipline and investment funds environsal impact assessment report Enterprise practice of faithfulness Environment shelter commitment Export bear on order European Union Economic z i contrary-invested company Free on carte du jour Gross Domestic Product high-pitched-tech zone enthronisation constabulary Industrial zone Joint venture company Law on Technology transferral local heavens networkd use well(p)s Certificate of land use rights Most Favoured Nation Ministry of pains and switch everyplace Ministry of Labour, War Invalids and Social Affairs Ministry of Natural Re get-gos and Environment Ministry of Science and Technology Ministry of Planning and Investment National power of intelligent Property Official knowledge assistance Patent Cooperation Treaty individual(prenominal) income tax Public Private Partnership Representative Office bow Bank of Vietnam Technology transfer contract United cites of America dollarValue-added tax Vietnam Competition Administration Depart ment Vietnamese Dong W orld pot Organisation 3 TABLE OF CONTENTS FOREWORD . 2 VIETNAM AT A GLANCE .. 5 I KEY FACTS .. 5 II POLITICAL SYSTEM III ECONOMY . 6 IV foot .. 13 V VIETNAM- GERMANY ECONOMIC kindred.. 21 LEGAL involve FOR INVESTING AND DOING BUSINESS IN VIETNAM .. 24 I INVESTMENT REGULATIONS . 24 IITRADE REGULATIONS 30 III TAXATION 35 IV CUSTOMS REGULATIONS 42 V LAND LAW .. 44 VI FOREIGN EXCHANGE AND LOANS .. 9 VII EMPLOYMENT .. 52 octonary COMPETITION LAW 58 IX ENVIRONMENT 62 X INTELLECTUAL PROPERTY .. 64 XI TECHNOLOGY TRANSFER 1 XII DISPUTE RESOLUTION .. 73 BUSINESS TRAVEL GUIDE TO VIETNAM . 77 APPENDICES appurtenance 1 LIST OF SECTORS ENTITLED TO INVESTMENT INCENTIVES .. 80 APPENDIX 2 LIST OF GEOGRAPHICAL REGIONS OF INVESTMENT INCENTIVES . 84 APPENDIX 3 USEFUL CONTACTS AND ADDRESSES IN VIETNAM .. 87 4 VIETNAM AT A GLANCE I KEY FACTS ? Official name The Socialist Republic of Vietnam. Capital Hanoi. ? Largest city Ho chi Minh metropolis. ? Administrative subdiv isions 58 lands and 5 municipalities (Hanoi, Hai Phong, Da Nang, Ho ki Minh and stooge Tho). ? Official language Vietnamese. ? military identify In the center of atomic number 16east Asia, neighboring on China to the north, Laos and Cambodia to the west, and the east Sea and Pacific Ocean to the East and South. ? Area 331,690 km2. ? Coast line 3,260 km. ? Climate tropical in south monsoonal in north with hot, rainy oceanson (mid May to mid-September) and warm, dry season (mid-October to mid-March). Population (2010) 86. 9 jillion, by area (urban 30% and rural 70%) and by age (less than 15 twelvemonths old 24. 7%, 15 -64 years old 68. 5% and to a greater extent than 65 years old 6. 8%). ? Population concentration 262 people/km2. ? Literacy 93. 7%. ? Natural resource Energy resources ( inunct, gas, coal, hydro occasion and wind power) minerals (bauxite, iron ore, lead, gold, precious stones, tin, chromate, anthracite, saying materials, granite, marble, clay, white sand and g raphite) sea and tropical forestry resources and artless potential. ?Currency Vietnamese Dong (VND). ? Exchange rate (April 2011) 1 USD = 20,725 VND. ? gross domestic product (2010) 104. 7 one thousand zillion USD. ? gross domestic product per capita (2010) 1,204 USD. ? GDP real harvest rate (2010) 6. 78%. ? GDP by arena (2010) land (20. 6%), diligence (41. 1%) and Service (38. 3%). ? Exports Crude oil, garments, shoes, marine products, electronic products and components, funitures, rice, coffee, rubber, tea, white pepper. ? major(ip) merchandise merchandises USA, Japan, China, Australia, Singapore, Germany, South Korea, Malaysia, the Philippines, Netherland. ? significances Machinery & equipment, petroleum products, pharmaceuticals, fertilizer, steel products, metallic element, textile, garment and shoe inputs, vehicles. 5 ? II Major qualified relation markets China, Japan, South Korea, Taiwan, Singapore, Thailand, USA, Malaysia, India, Germany. POLITICAL SYSTEM The re al Constitution was adopted in 1992 and amended in 2001. It unfastenedly indicates that the State is of the people, by the people and for the people. The people access the State power through the National accumulation and Peoples Councils, which are composed of elected even upatives who represent the peoples lead and aspirations.The Constitution endows whole citizens, men and women alike, with equal rights in in all political, economic, cultural and social spheres as well as in family affairs, the right to and freedom of belief and religion and the right to choose and practice a religion, the right to and freedom of movement and residence in Vietnam, and the right to go abroad and return home as stipulated by laws. The National fiction is the highest representative body of the people, endowed with the highest State power of the Socialist Republic of Vietnam.It governs constitutional and legislative rights, decides fundamental domestic and irrelevant policies, socioeconomic t asks, and study defence and security measures issues, etc. It exercises the right to supreme supervision of all activities of the State. The State President is the Head of State, elected by the National Assembly from among its deputies to represent the Socialist Republic of Vietnam in domestic and unusual affairs. The term of part of the President is the same as that of the Chairman of the National Assembly.The Government is the executive body of the Socialist Republic of Vietnam. It has the same term of righteousness as the National Assembly and administers the carrying into action of State affairs in the depicted objects of politics, economics, culture, society, national defence and security and abroad transaction. The government is headed by the Prime subgenus Pastor and comprises Deputy Prime Ministers, Ministers and early(a) government members. The ir prudent Peoples Court is the judicial body of the Socialist Republic of Vietnam.It supervises and directs the judicia l cause of local Peoples Courts, Military Tribunals, Special Tribunals and other tribunals, unless otherwise prescribed by the National Assembly at the establishment of such Tribunals. The Supreme Peoples Procuracy oversees the enforcement of the law and exercises the right to prosecution, and ensures serious and uniform carrying into action of the law. III ECONOMY Since the Doi moi (reforms) were introduced in the mid-1980s, Vietnamese economy has changed rapidly.Replacing the old centrally-planned economy, Vietnam has shifted to a new economic structure namely a socialist- lie market economy, and has gained significant success. Today the aim of Vietnam is to become a basically industrialized country by 2020. 6 Overall achievements Vietnam embarked on Doi moi in 1986 and the country has seen many prominent changes since. Over the drop dead decade it has recorded an medium GDP yield rate of 7. 3 percent per annum, ranking it second in the region after China. Its economy suff ered from the 2008-09 economic crisis but recovered rapidly, with GDP growth rate of 6. 78 percent in 2010.ADB forecasts that the economy of Vietnam will amplification by 6. 1 and 6. 7 percent in 2011 and 2012 respectively. Vietnam already became a lower middle income country with its GDP per capita of 1,204 USD in 2010. To a ample extent, Vietnam has successfully transformed from a centrally-planned economy with heavy bureaucracy and subsidies to a socialist -oriented market economy characterized by strong dynamism and rapidly growing entrepreneurship. The countrys economy has integrated deeply into the global and regional economies, bring about a sharp rise in vocation great deals as well as an influx of opposed investment.The economy is well on the way to existence a multi-sector model operating according to market mechanisms. The confidential sector has enjoyed very favourable conditions created by the Enterprise Law of 2000, which institutionalizes the freedom of all in dividuals to conduct business in areas not forbid by law and removes a large number of administrative obstacles that hampered enterprises. With a view to raising the efficiency of the state -owned sector, the government has adopted assertive policy measures to reorganize the sector through equitization.As a result, much than 3,970 state-owned enterprises were equitized by the end of 2010. GDP of Vietnam, 2000-2010 long hundred 9. 0 8. 0 7. 0 80 6. 0 5. 0 60 4. 0 40 3. 0 2. 0 20 1. 0 0 0. 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Year GDP GDP growth rate ancestry General Statistics Office 7 GDP growth rate (%) GDP (trillion USD) 100 Progress in special sectors As Vietnams GDP continuously increases the countrys economic structure has in like manner seen remarkable changes. From 1990 to 2010 the share of the agriculture sector reduced from 38. 7 percent to 20. percent, spell that of industry and occasionion increased from 22. 7 percent in 1990 to 41. 1 percent in 2010. The service sector re chief(prenominal)ed relatively constant 38. 6 percent in 1990 and 38. 3 percent in 2010. Agriculture quiet plays a critical role in Vietnams socio-economic life since it generates about 57 percent of kernel employment and makes importingant contribution to the expansion of the countrys foreign trade. Vietnam are among the leading countries in terms of agricultural trades such as rice, coffee, cashew nuts and aqua-products, etc.Industry continues to grow rapidly in terms of gross yield, at an average rate of 10-15 percent per annum. Besides state enterprises, foreign-invested and the private enterprises play an increasingly important role in industrial organic evolution and exports. Services are growing at an average rate of 7-8 percent. In 2010 the value added of service sector grew 7. 52 percent with good performances being recorded in the trade, finance, and hotels and restaurant sub-sectors as consumption and tourism remained buoyant. Industry and work continue to increase their sha re in the economy.This reflects market oriented reforms, a gradual reduction in barriers to competition and to private sector development, and improvements in physical root. Greater diversification in industrial product and serve lays the foundation for further sustained growth in output and employment. VA growth rate by sector of Vietnam, 2000-2010 12. 0 10. 0 part 8. 0 6. 0 4. 0 2. 0 0. 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Year Agriculture Industry ancestor General Statistics Office 8 Service multinational economic integrationVietnam has made major steps forward in its commitments to regional and international economic integration. Following the introduction of Doi moi it gestural an economic and trade cooperation agreement with the EU in 1995, joined ASEAN in 1995, adhered to CEPT/AFTA in 1996 and became an APEC member in 1998. The Bilateral affair Agreement (BTA) with the United States was signed in 2000, which resulted in a dramatic increase in the trade flock between the two countries. Vietnam became the one hundred fiftyth member of the World Trade Organization on January 11, 2007.Vietnams commitments in the WTO increase market access for exports of goods and services of WTOs members and establish greater transparency in regulatory trade practices as well as a more level playing field between Vietnamese and foreign companies. Vietnam undertook commitments on goods (tariffs, quotas and ceilings on agricultural subsidies) and services (provisions of access to foreign service providers and related conditions), and to implement agreements on ingenious property (TRIPS), investment measures (TRIMS), customs valuation, technical barriers to trade, sanitary nd phytosanitary measures, import licensing provisions, anti-dumping and countervailing measures, and rules of origin. At present, Viet Nam has established diplomatic relations with 172 countries and signed 55 bilateral investment agree ments and 58 double taxation agreements with countries and territories including Germany. It has economic and trading relations with about 165 countries and territories. Vietnam holds membership in 63 international organizations and over 650 non-governmental organizations.The policy of multi-lateralization and diversification in international relations has helped Vietnam to integrate more deeply into the global and regional economies and increase trade and investment ties with nations all over the world. More importantly, Vietnam has improved its enable business friendly environment over time. World Bank recognized that Vietnam is one of the 10 most-improved economies in ease of doing business in 2010. Currently, its ranking is 78 and even higher(prenominal) than other Asia countries such as Indonesia, Philippines, China, India. Vietnams rankings according to various indices big businessman 2011-2010 rank 2010-2009 rankWorld Banks Ease of doing business 78/183 88/183 World Economic Forums Global competitiveness index 59/139 75/133 12/top 20 12/top 25 (*) ATKEARNEY FDI boldness index no(prenominal)e (*) data for 2007 9 International trade intact export volume of Vietnam increased by 18 percent per year on average in the last decade and its import volume also did so by 19. 2 percent per year. In 2010 its heart trade volume reached $155. 6 trillion ($71. 6 billion of export and $84 billion of import), equal to 149 percent of its GDP. Both the composition and timber of exports have improved significantly. The proportion of industrial products has risen considerably.The five biggest export items include oil, textiles, footwear, seafood and wood products. Vietnam is in the early stage of the industrialisation and modernization process and receives a large inflow of FDI therefore it relies largely on the imp orted equipment and materials. Trade relations with foreign countries, especially other countries in the region, have expanded over time. The biggest tradi ng partners of Viet Nam include China, America, ASEAN, EU, Japan and South Korea. International trade of Vietnam, 2000-2010 160 70 140 60 120 50 100 40 80 30 60 20 40 10 20 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Year Export Import Trade in goods as % GDP Source General Statistics Office 10 Trade in goods as % GDP (percent) 180 80 Trade (billion US$) 90 expire 10 export and import items of Vietnam, 2010 Garment Machinery & equipment Footwear Steel products Seafood Petroleum products Crude oil framework Electronic products Electronic products Furniture Vehicles Rice Platics Machinery & equipment Garment and shoe inputs loved stone & metals Metals Rubber Animal feed 0. 0 5. 0 10. 0 15. 0 0. 0 5. 0 10. 0 15. 0 Import volume (billion USD) Export volume (billion USD) Export item Import item Source General Statistics OfficeForeign direct investment Since the introduction of the Law on Foreign Investment in 1987, by the end of 2010, 12,236 foreign investment projects we re license with join commemorateed gravid of $193. 4 billion and thorough disbursed groovy of over $61 billion. The investors from 92 countries and territories have committed investments in Viet Nam. Most of them are from Asia, Europe and America. Taiwan, Republic of Korea, Singapore, Japan and Malaysia and are the top five countries and territories place in Vietnam. The next five countries and territories are British Virgin Islands, America, Hongkong, cayman Islands and Thailand.These top ten countries and territories account for over three quarters of the total authorise projects and foreign registered bang-up in Viet Nam. Since 1996 there has been a drift towards investment in producing goods for export, bag construction, producing import substitutes and in labour intensive industries. There are more than 8,327 projects in the manufacturing and affect, real harshwealth and construction industries with a total cracking of about US$153,5 billion, accounting for aro und 80% of the registered capital.While there are foreign invested projects in all provinces and cities in Viet Nam, most investment has been in the key economic areas in the South including Ho Chi Minh City, Dong Nai, Binh Duong, Ba Ria, Vung Tau, and in the North including Hanoi, Hai Duong, Hai Phong and Quang Ninh. The foreign invested sector has increased rapidly, gradually asserting itself as a dynamic component of the economy, and has made an important contribution to enhancing the competitiveness and efficiency of the economy. In 20 10, the foreign invested sector has accounted for 21. 5% of the countrys total investment, contributed 18. percent to GDP, 54. 2 percent to export volume (crude oil included), 44. 4 percent to industrial gross output and employed 1. 6 million persons. 11 FDI inflow of Vietnam, 2000-2010 Project number Registered capital Service, 10. 7% Telecom. & transportation 4. 1% Service, 19. 2% changeing & manufacturing 48. 7% Agriculture, 1. 6% Processing & manufacturing 59. 8% Agriculture 3. 9% Telecom. & transportation 7. 7% Real estate & construction 30. 8% Power, water, gas, 2. 5% Mining, 1. 5% Real estate & construction 8. 4% Power, water, gas, 0. 5% Mining, 0. 6% Source Ministry of Planning and Investment FDI of Vietnam by sector, 2010 600 60 1400 1200 50 potassium 40 800 30 600 20 400 10 200 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Year Disbursement come up investment Note accumulate inflow of FDI by the end of 2010 Source Ministry of Planning and Investment 12 No. of project 1800 70 FDI inflow (billion US$) 80 Top 10 destinations and investors of Vietnam, 2010 Top 10 FDI receiving provinces Top 10 investing countries and territories Ho Chi Minh City Chinese Taipei Ba Ria Vung Tau Korea Republic Ha Noi Singapore Dong Nai Japan Binh Duong Malaysia Ha Tinh British Virgin Islands Phu pine away America Thanh Hoa Hong Kong Hai Phong Cayman IslandsQuang Nam Thailand 0. 0 10. 0 20. 0 30. 0 Total registered inve stment (billion USD) 0. 0 5. 0 10. 0 15. 0 20. 0 25. 0 Total registered investment (billion USD) Note Accumulated inflow of FDI by the end of 2010 Source Ministry of Planning and Investment IV INFRASTRUCTURE ? Road interlock ? 171,392 km country-wide. 2 North-South pivot routes (i) the 1A National Highway of 2,260km in duration from Lang Son to Ca Mau and (ii) the Ho Chi Minh Highway of 3,167km in duration from Cao Bang to Ca Mau. Railway network ? Total length of 2,632 km. 278 displace country-wide. Hanoi Ho Chi Minh City line 1,726 km (it takes 29. hours for evidence train). Linked to China railways in two directions, one from Lao Cai province to Yunnan province and one from Lang Son province to Kwangsi province of China. Planned to construct the railway lines connecting with Laos and Cambodia. midland waterway More than 2, three hundred rivers and canals with total length of 198,000 km. Inland waterway system of 35,386 km. 13 ? Sea ports ? Vietnam has 3,260km glidin gline, a strategic position close to international shipping routes and favored natural conditions of foundation, sea depth, current, tidal, sediment and channels for developing seaport business. 7 national level sea ports, 23 provincial level sea ports and 9 offshore oil and gas sea ports. Current major important ports include Cai Lan and Hai Phong in the North, Da Nang and Quy Nhon in the Centre and Sai Gon and Cai Mep in the South. Airports ? 8 international airports Cam Ranh (Nha Trang), Cat Bi (Hai Phong), Da Nang (Da Nang), Lien Khuong (Lam Dong), Noi Bai (Ha Noi), Phu Bai (Hue), Tra Noc (Can Tho), Tan Son Nhat (Ho Chi Minh City). In 2010, Tan Son Nhat Airport received 15. 5 million passergers and Noi Bai airport did 9. 5 million passengers. 14 domestic airports Buon Ma Thuot (Dac Lac), Ca Mau (Ca Mau), Chu Lai (Quang Nam), Co Ong (Ba Ria Vung Tau), Dien Bien Phu (Dien Bien Phu), Dong Tac (Phu Yen), Dong Hoi (Quang Binh), Gia Lam (Ha Noi), Na San (Son La), Pleiku (Gia Lai), Phu Cat (Binh Dinh), Phu Quoc (Kien Giang), Rach Gia (Kien Giang), Vinh (Nghe An). Business development zones ? 3 high-tech zones (Hoa Lac, Da Nang and Ho Chi Minh City) with total area of 3,509 ha of land. ? 260 industrial zones and export processing zones with total area of 71,394 ha of land. 15 economic zones located along sea coast with total area of 638,633 ha of land.Energy Electricity output reached 92. 7 billion kWh. Crude oil and gas exploited 23 million ton. combust exploited 44 million ton. Telecommunication 26. 8 million net users. 153. 7 million mobile subscriptions. 16. 4 million fixed environ subscriptions. 14 15 Vietnam rail network 16 National seaports of Vietnam No. Seaport Province Current capacity of ship (DWT) 1 Cam Pha Quang Ninh 50,000 2 Hon Gai Quang Ninh 40,000 3 Hai Phong Hai Phong 20,000 4 Nghi Son Thanh Hoa 20,000 5 Cua Lo Nghe An 10,000 6 Vung Ang Ha Tinh 30,000 7 Chan May Thua Thien Hue 30,000 8 Da Nang Da Nang 30,000 9 goop Quat Quang Ngai 0 ,000 10 Quy Nhon Binh Dinh 30,000 11 Van Phong Khanh Hoa 50,000 12 Nha Trang Khanh Hoa 20,000 13 Ba Ngoi Khanh Hoa 30,000 14 Ho Chi Minh City Ho Chi Minh City 30,000 15 Vung Tau Ba Ria Vung Tau 50,000 16 Dong Nai Dong Nai 20,000 17 Can Tho Can Tho 10,000 Source Decision 2190/QD-TTg dated 24/12/2009 17 Number and size of IPs and EPZs in Vietnam 300 71,394 70,000 60,000 40,000 150 26,971 260 100 183 11,830 50 50,000 43,687 200 300 1 2,370 12 30,000 20,000 one hundred thirty 10,000 65 0 1991 1995 2000 2005 2007 Year Number of IPs Size (ha) Source Ministry of Planning and Investment 18 2010 Size of IPs (ha) Number of IPs 250Economic zones of Vietnam 19 SWOT abstract of Vietnam Strengths Weaknesses ? One of fastest growing economies ? Few skilled professionals in Asia with average GDP growth of available 7. 2% per year over the last decade ? High bureaucratic barriers ? Stable political and social security ? Weak infrastructure (power, ? Abundance of human resources transportation) (l abour force of 46. 2 million people ? underdeveloped supporting young, motivated and educated industries. workforce 60% of population under 35 years old) ? Competitive business and return costs (cost labor, industrial land rent, energy cost, elephone cost, marine transportation, taxation) ? Available mineral and natural resources (coal, oil & gas, iron ore, bauxite, rare earth,.. ) ? Central location in South East Asia, long distance coast. Opportunities Threats ? Global integration (ASEAN, APEC, WTO membership) one of the worlds most open economies ? High inflation ? High trade deficit ? D rating of VND ? Higher take away for consumer goods and capital goods with better ? Banking and finance sector in infant stage quality because of being a lower middle income country, aiming at ? Low national reserves. an industrialized country and ncreasing urban population ? Export oriented and labour intensive industries ? Infrastruture (road, railway, seaport, airport, power) projects funde d by international donors or foreign investors. 20 V VIETNAM- GERMANY ECONOMIC RELATIONSHIP Trade Germany is the biggest trade partner of Vietnam in Europe. In 2010, despite the global economic downturn, bilateral trade reached nearly USD 6 billion, a lusty increase over the previous year. Total export value of Vietnam to Germany reached nearly USD 4 billion, accounting for 19% of total Vietnams export to the EU while its import value from German amounted to USD 2 billion.Vietnams main export items to Germany are garments, footwear, coffees, furnitures, see foods, leather and leather apparel, office machinery, iron, metal products, articles of plastics, ceramic products, crude rubber. Germany is the second-largest market worldwide for robusta coffee and black pepper of Vietnam. Main import items from Germany to Vietnam include machines (in mining, construction and civil engineering, textile, food and beverage,), aircraft, units for electrical energy generation nd distribution, pass enger cars, chemical products, pharmaceutical products, measurement, control and convention technology products, industrial plants, plastics, lifting and handling equipment, medical equipment and orthopedic appliances, engines, iron, metal products, elec tronic components subsequently WTO accession, Vietnam is becoming an emerging and lucrative market in Asia. As Vietnam is accelerating its industrialization process to become an industrialized country by 2020, the trend towards school product facilities is evident and it is likely to result in increased demand for hi -tech machinery made in Germany.Investment There have been over 230 German companies operating and investing in Vietnam, including many Germanys leading groups such as Siemens, Deutsche Bank, Mercedes, Metro, Bosch etc. By the end of April 2011, German companies have invested in 163 projects with registered capital of USD 825 million in Vietnam. Three fourths of total investment projects and two thirds of investment capital of Germany mainly concentrate in manufacturing, processing, technique services, information and communication technology, banking and finance services.Although German investment projects have been located in 26 locatio ns in Vietnam, most of them have been implemented in Ho Chi Minh City, Hanoi, Binh Duong and Dong Nai. In the upcoming time, the active implementation of mega infrastructure development and energy projects partially funded by German ODA such as the metro line No. 2 Ben Thanh An Suong in Ho Chi Minh City (with length of 11 km and total investment capital of USD 1. 25 billion), O Mon IV thermo power, Phu Lac wind power, Vietnamese Green Line, will have positive impacts on promoting German investment flow into Vietnam.German foreign trade and investment promotion is well positioned in Viet Nam. German companies and investors can access to supports and advices from AHK Vietnam, German Business Association (GBA), a correspondent of Germany Trade and Invest (GTAI) in Vietnam. 21 Development cooperation Vietnam is an important partner of Germany in development cooperation. As one of the biggest donors among the EU members, Germany has provided Vietnam with more than EUR 1 billion in ODA since 1990. During 2011 2012, Germany committed nearly EUR 300 million for Vietnam. This is a clear evidence for strong support by Germany to the development of Vietnam.German-Vietnamese development cooperation focuses on the three priority areas (i) Sustainable economic development and vocational training (ii) Environmental policy, conservation and sustainable use of natural resources (iii) Health. German development cooperation has been utilizing effectively and contributing positively to socio-economic development of Vietnam, especially in vocational training, human resource development, infrastructure, clean energy source. During the visit of German prime minister Dr. Angela Merkel to Viet Nam in October 2011, Hanoi Declaration was signed by Prime Minist er Nguyen Tan Dung and Chancellor Dr.Angela Merkel. It is the start of the strategic partnership between Vietnam and Germany. Export and import between Vietnam and Germany, 2007-2010 4000 3500 Value (USD million) 3000 2500 2000 1500 1000 500 0 2007 2008 Export from Vietnam to Germany 2009 2010 Year Import to Vietnam from Germany Source German Federal statistical Office 22 Gernam investment flow into Vietnam by sector, 2010 Registered capital Service, 10. 5 Agriculture, Telecom. & 5. 4 transportation 0. 4 Real estate & construction 1. 0 Project number Processing & manufacturing 53. 6 Processing & manufacturing 46. 7 Service, 34. 2 Agriculture 2. 0 Power, water & gas, 29. Telecom. & Mining, 0. 7 transportation Real estate & 10. 5 construction Power, water & gas, 2. 0 3. 9 Mining, 0. 0 Source Ministry of Planning and Investment 23 LEGAL GUIDE FOR INVESTING AND DOING BUSINESS IN VIETNAM I INVESTMENT REGULATIONS On 1 July 2006, the investment politics comprised of a unified Enterprise L aw (EL), which regulates corporations, and a common Investment Law ( IL), which regulates investment, came into effect. The promulgation of these two important legislations is considered a significant watershed for improvement of the legal environment on investment activities and corporate governance in Vietnam. . Overview To do business under the IL and EL, foreign investors are required to obtain investment certificates from an appropriate Licensing way. Under the IL, investors whitethorn invest in all sectors not prohibited by law. prohibited by law include Areas ? Investment projects detrimental to national defence, security, and the public interest ? Investment projects detrimental to historical and cultural traditions and the ethics or customs of Vietnam ? Investment projects harming peoples health or destroying natural resources and the environment and ?Investment projects treating toxic waste imported to Vietnam and investment projects manufacturing toxic chemicals banned by international law. 2. Licensing Investors shall follow the licensing and enrollment steps depending on the size and the sector of the investment project. Investment Certification Process 24 Conditional sectors Investment projects in conditional sectors shall satisfy definite conditions in order to be licensed. Conditional sectors include ? Broadcasting and video ? Production, publishing and distribution of cultural products ?Exploration and exploitation of minerals ? Establishment of infrastructure for telecommunications network, transmittance and provision of internet and telecommunications services ? Establishment of public postal network and provision of postal services and express services ? verbalism and operation of river ports, sea ports, terminals and airports ? Transportation of goods and passengers by railway, airway, roadway and sea and inland waterways ? Catching of aquaculture ? Production of tobacco ? Real estate business ? Import, export and distribution busin ess Education and training ? Hospitals and clinics and ? Other investment sectors in international treaties of which Vietnam is a member and which restrict the opening of the market to foreign investors. Investment Registration Foreign investment projects with a total invested capital of less than VND 300 billion (US$ 15 million) and not travel in a conditional sector are subject to investment registration and foreign investors of such projects shall carry out the procedures for investment registration in order to be granted an investment certificate.The investment certificate also serves as the business registration of the corporate entity. Enterprises can subsequently register additional investment projects without the need to create a separate entity. The investor should interpret application documents for investment registration to the Licensing countenance. The Licensing Authority shall check the documents and issue the investment certificate to the investors within 15 worki n g days of receiving the valid application.Investment paygrade Any investment project with a total invested capital of VND 300 billion (US$ 15 million) or more or investment projects falling in conditional sectors shall undergo an investment military rating by the Licensing Authority and other relevant authorities. There are two different types of evaluation ? evaluation for investment projects regardless of total invested capital falling into conditional sectors and ? evaluation for investment projects with total invested capital of VND300 billion or more that do not fall into conditional sectors.For the evaluation of investment projects with total invested capital of VND 300 billion or more, along with the application documents, the applicator must also submit an economic technical explanation of the investment project to the Licensing Authority. This covers the economic technical explanatory statement, 25 objectives, scale, location, investment capital, implementation schedu le, land use needs, and technological and environmental solutions of the investment project.For the evaluation of investment projects falling in conditional sectors, in addition to the application documents, the investor shall also demonstrate compliance with requirements specific to that conditional sector. When assessing the application documents, the Licensing Authority may liaise with other relevant Ministries and authorities in evaluating the proposed investment project. Items to be evaluated shall comprise ? compliance with control readying/zoning for technical infrastructure, master planning/zoning for land use, master planning for construction, master planning for utilization of minerals and other natural resources land use requirements ? project implementation schedule ? environmental solutions. The time-limit for evaluation of investment shall not exceed thirty (30) days from the date of receipt of a complete and valid file. In necessary cases, the above time -limit may be extended, but not beyond forty five (45) days. Applying for Construction License Filing for Investment Certificate Applying for the approval of hide on environment effects evaluation Agreement on land/building/office renting Evaluating overture technical design Environmental protection ommitment Land/building/office renting contract 26 Projects subject to Projects subject to environmental protection construction license commitment Investment Certificate Projects subject to Report on environmental effects evaluation To-Do List for Investors 3. Licensing Authority Licensing Authority 3. 1 The Board of Management (BOM) of industrial zones (IZs), export processing zones (EPZs), high-tech zones (HTZs), and economic zones (EZs) are responsible for licensing foreign investments within their zones. 3 . 2National important BOT projects and PPP projects are licensed by the Ministry of Planning and Investment (MPI). Oil and gas projects, credit institutions, insurance projects and law fi rms are licensed by Ministry of Trade and Industry, State Bank of Vietnam, Ministry of Finance and Ministry of Justice respectively. 3 . 3 The Provincial Peoples Committee is the authority responsible for all other foreign investments. Licensing applications shall be submitted to these bodies, who will consult with other relevant governmental authorities (where so required) before issuing closing approval. . 4 The Prime Minister will approve the next investment projects (unless they are not included in the approved master plan) (a) The following investment projects, irrespective of the source of investment capital and scale of investment construction and commercial message operation of airports air transportation construction and commercial operation of national sea ports exploration, mining and processing of petroleum exploration and mining of minerals radio and television broadcasting commercial operation of casinos production of cigarettes stablishment of university tra ining establishments and 27 establishment of IZs, EPZs, HTZs and EZs. (b) The following investment projects, irrespective of the source of investment capital but with a total invested capital of VND 1,500 billion or more in the following sectors business in electricity, processing of minerals, metallurgy construction of railway, road and internal waterway infrastructure and production and business of alcohol, beer (c) The following projects with foreign-invested capital in the following sectors commercial operation of sea transportation onstruction of networks for and supply of postal and delivery, telecommunications and internet services, construction of wave transmission networks printing and distributing newspapers and printed matter, publishing and establishment of independent scientific research establishments. 4. Forms of Investment and Enterprise Under the Law on Investment and the Law on Enterprises foreign investors may choose the following forms of investment in Vi et Nam Investment forms Invest in business development Establish economic organizations (100% capital of foreign investors or joint venture) Purchase shares or contribute capital to participate in management of investment activities Invest in contractual forms of BBC, BO, BTO, BT, PPP and M of enterprises. While foreign investors are allowed to buy shares in many domestic companies without limitation, there are ownership limitations for certain companies listed on the Vietnam stock exchange and financial sectors. Foreign ownership cannot exceed 49 percent of listed companies and 30 percent of listed companies in the financial sector. Forms of enterprises Limited obligation company (with one member or more than one member)