General incentive policy in Ben Tre province september 2006

1. Ben Tre at a glance

Ben Tre is one of the thirteen provinces located in the Mekong Delta Region, with natural area of 2,322 square kilometers and 65 kilometers bordering the South China Sea. It is 86 kilometers far from Ho Chi Minh City and 120 kilometers far from Can Tho. Road and waterway transportation is quite convenient, close with the girdle of the dynamic southern economic development zone of Viet Nam. A newly-built national road is linked with the provinces in the region (new route from Rach Mieu, Ham Luong Bridge and Co Chien Ferry). The bridge of Rach Mieu will be completed in 2007. However, Ben Tre has no airport or shipping port.

Administratively, Ben Tre has seven districts and one township and approximately 1.4 million people of 63 percent in the working age. Thirty percent of labour force is trained and provided jobs (about 30,000 workers per annum). The economic growth rate for period 2001-2005 was 9.22% and 11.24% in 2005. The income per capita is around US$473. Fishery economy and garden based economy are the two contributors of Ben Tre. Ben Tre is famous for ecological tourism activities. National grid and water supply are sufficient for production needs.

2. Investment outside the IPs in Ben Tre

(According to Decision 1229/2006/QD-UBND dated 15 May 2006 of PPC of Ben Tre)

Investment in the projects which are encouraged in Ben Tre province (outside the industrial park) shall be benefited the incentives as follows:

2.1 Land lease rate and payment mode:

Land lease price is calculated between 0.25% - 0.5% comparing the current land price stipulated by Provincial People's Committee (PPC). The land lease price is stable for a period of 5 years.

- The payment can be done annually.

- If the investors pay one time for the whole project cycle, the price shall be reduced 10 percent

- Water surface lease: depending on specific projects. Rent price for reference mentioned in the Decree 142/2005/ND-CP is:

+ From 10 to 100 million VND per square kilometer/year for fixed water surface lease; and

+ From 50 to 250 million VND per square kilometer/year for unfixed water surface lease.

2.2 Exemption of land lease

The exemption of land lease shall be applied as follows:

- The investors shall not pay land lease money in the process of capital construction (18 months as maximum).

- After completion of factory construction and putting it into operation, the investors shall be exempted seven (7) years from land lease money for the projects in which investment is specially encouraged.

- After completion of factory construction and putting it into operation, the investors shall be exempted three (3) years from land lease money for the projects in which investment is encouraged.

-  In the period of temporary construction stop or interval to projects facing difficulties certified by the license issuing body, land rent money shall be exempted.

2.3 Reduction of land lease money:

The reduction of land lease shall be applied as follows:

- The co-operatives shall be granted fifty (50) percent reduction from land lease money to the land used for their production and service.

- Land rent to use for agricultural and forestry production, fishery and salt farming damaged caused by natural disasters or fire shall be reduced from land lease money according to the ratio of damage or the number of damaged years.

- Land rent money shall be granted fifty (50) percent in the period of temporary production cease due to natural disasters, fire or force majeure.

2.4 One-price mechanism:

The price of electricity, water and telecommunication shall be applied equally for both domestic and foreign investors. The price is stipulated by the Government.

2.5 Corporate Income Tax (CIT)

Both domestic and foreign investors shall be applied at the same rate:

- The rate of 10 (ten) percent shall be applied for a period of fifteen (15) years for newly-formed foreign owned health care, medical manufacturing, education and training and scientific research units.

- The rate of 20 (twenty) percent shall be applied for a period of ten (10) years to the projects in which investment is encouraged and specially encouraged.

After completing the tax incentive period, the rate of twenty-eight (28) percent shall be applied.

2.6 CIT Exemption and Reduction:

2.6.1 Regarding newly-formed enterprises:

- Newly-formed enterprises or units belonging to all business sectors in which law does not ban shall be exempted from CIT for two (2) years commencing from the time when their operations start to earn profits and granted a fifty (50) percent reduction for the two (2) subsequent years.

- Newly-established enterprises or units using more than fifty (50) employees in a year shall be exempted from CIT for two (2) years commencing from the time when their operations start to earn profits (not include the period for carrying forward loss) and granted a fifty (50) percent  reduction for the three (3) subsequent years.

- Newly-formed enterprises or units belonging to the sectors in which investment is encouraged and specially encouraged shall be exempted from CIT for two (2) years commencing from the time when their operations start to earn profits (not include the period for carrying forward loss) and granted a fifty (50) percent reduction for the three (3) subsequent years. If investment project uses at least fifty (50) labors as average in a year, it shall be exempted from CIT for two (2) years commencing from the time when their operations start to earn profits and granted a fifty (50) percent reduction for the five (5) subsequent years.

- Newly-formed foreign owned health care, medical manufacturing, education and training and scientific research enterprises or units shall be exempted from CIT for four (4) years commencing from the time when their operations start to earn profits (not include the period for carrying forward loss) and granted a fifty (50) percent  reduction for the nine (9) subsequent years.

- BOT, BTO and BT enterprises shall be exempted from CIT for a period of four (4) years commencing from the time when their operations start to earn profits (not include the period for carrying forward loss) and granted a fifty (50) percent  reduction for the nine (9) subsequent years.

Regarding investment expanded enterprises or units.

To the projects in which investment is expanded or enterprises/units install new technology chain; renew equipment and machines, technology; improve ecological environment, or increase production capacity, they shall be reduced for incremental income as follows:

- To the projects in which investment sector does not include in the list of Decision 1229/2006/QD-UB shall be exempted from CIT for one (1) year commencing from the time when their operation starts to earn profits and granted a fifty (50) percent reduction for the two (2) subsequent years.

- To the projects in which investment is encouraged and specially encouraged as mentioned in the list of Decision 1229/2006/QD-UB shall be exempted from CIT for one (1) year commencing from the time when their operation starts to earn profits and granted a fifty (50) percent reduction for the four (4) subsequent years.

- Seedlings, breeding producing enterprises or rural clear water supply units (public service) shall be exempted from CIT for two (2) years commencing from the time when their operations start to earn profits and granted a fifty (50) percent for the three (3) subsequent years. No need to apply for investment incentive.

2.7 Personal income tax (PIT)

The PIT exemption shall be applied as follows:

- Individual investors shall be exempted from PIT for 5 years for income benefited from capital contribution or share purchase of enterprise, of investment support fund, or of national technology and scientific development fund.

- Investors shall be fully exempted from PIT for the income benefited from contribution of intellectual ownership, know-how and technology procedure.

2.8 Other taxes (such as import tax)

- Free import tax is applied for machines and equipment to form fixed assets of enterprises to the projects in which investment is encouraged and especially encouraged.

- To the projects in which investment is specially encouraged, free import tax applied for the first five years to materials or semi-products which Vietnam has not yet been able to produce.

- Other taxes shall be applied according to current tax regulations (Such as Decree 164/2003/ND-CP, 152/2004/ND-CP...).

2.9 Labor incentives

If investor employs local laborers (poor persons, social policy benefited person, or displaced and resettled people) shall be supported a part of training cost, from VND300,000 to VND1,000,000. This training cost shall be disbursed via local vocational training centers.  

2.10 Administrative procedures

The ONE STOP PROCEDURE shall be applied in granting investment license.

IPC Ben Tre shall be responsible for support of all potential investors and enterprises. Contact IPC at the below address.

2.11. Procedures for insurance of investment certification (FDI)

2.11.1 Registration for insurance of investment certification:

Project document shall be made in three (3) copies, and at least one (1) copy shall be an original.

Project documents shall include:

An application for registration of an investment certification;

The join venture contract and the charter of a joint venture enterprise, or the charter of an enterprise with 100% foreign owned capital; and

A document verifying the legal status and the financial report of parties.

The period of receiving investment certificate is within 10 days as maximum.

2.11.2 Evaluation for issuance of investment certification:

Project document shall be made in five (8) copies, at least one (1) copy shall be an original.

Project documents shall include:

An application for an investment certification;

The join venture contract and the charter of a joint venture enterprise, or the charter of an enterprise with 100% foreign owned capital, or a business cooperation contract;

Technical economic explanatory statements; and

A document verifying the legal status and the financial report of parties.

The period of granting an investment certificate is within 20 days as maximum. All documents shall be submitted to the Department of Planning and Investment for taking into account.

2.12 Business registration (Domestic enterprises)

Documents shall be applied for each kind of enterprise according to stipulation of Enterprise Law (simple procedures):

Period of granting a business registration certificate is within 7 days as maximum. In the process of treating investment papers, please kindly contact IPC Ben Tre for further support.

Some basic price and cost for reference

Some basic price of commodities and services in Ben Tre province for reference are as follows (US$1~ VND16,000):

Water price: between VND 3,300 and VND 4,800/m3.

Electricity price: price applied for the whole country. For instance: using 110 KVA and above: i) normal hours: VND830 per kWh; ii) low demand hours: VND440 per kWh and iii) peak demand hours: VND1,410 per kWh.

Telecommunication: approximately VND 400,000 VND including installment charge (not a phone set). Monthly-use fee shall be paid depending on the number of minutes called. For instance, local call will be VND120 per minutes, VND700/minute for inter-district call and international call is up to the destination, approximately US$0.40 - 0.6 per minute, (0.040 - 0.06 US$/minute for a 6-second block). Users can use internet phone card for cheaper price, or use other cheap services including 171, 177, 178, 179...). Internet, Email and ADSL services are available and at appropriate price.

Transport by container barge: from 1 - 1,5 million VND for one 40-feet container (from Ben Tre to HCMC port); transport by 10-13 ton truck:  price is between 1.5 and 2 million VND per truck. Transport by truck to HCM city is around 4 hours and by barge is around 14 hours.

Labour wage and insurance: the minimum wage is VND710,000/month (FDI sector) for unskilled workers. Skilled workers are paid based on their qualification. Social and health insurance payment is totally 23 percent, of 17 percent paid by Employer and 6 percent by Employee.

Building for rent is available. The rate is between US$500-800 for five-to-six room building/house per month.

Hotels: hotel is available. The rate is between VND200,000-300,000 per night.  

The Provincial Contact Person (for any further information and clarification)

IPC Ben Tre:
Name: Mr. Nguyen Truc Son - Director
Address: 28 Le Dai Hanh Street, Ward 3,
Ben Tre Township, Ben Tre Province, Vietnam
Tel: (84-75) 817358, 825340
Mobile: 091 363 4242
Fax: (84-75) 825340, 817358
Email: ipcbentre@vnn.vn.

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