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Official Gazette

Tuesday, September 27, 2022

New decree promotes hi-tech investment

Updated: 14:29’ - 01/09/2010


Since the enactment of the 2000 Law on Science and Technology, the National Assembly has promulgated many laws concerning this domain, such as the Law on Intellectual Property, the Law on Information Technology and the Law on Technology Transfer in 2006; the Law on Quality of Products and Goods and the Law on Chemicals in 2007; the Law on Atomic Energy, the Law on Biodiversity and the Law on High Technologies in 2008; and the Law on Telecommunications and the Law on Radio Frequencies in 2009, which have created a relatively complete legal framework for scientific and technological development.

However, as reviewed by participants in a seminar entitled “Foreign direct investment in Vietnam after the economic downturn” held in last May in Hanoi, the recent flow of long-term foreign direct investment (FDI) in the hi-tech manufacturing sector in Vietnam saw a setback according to the International Monetary Fund’s criterion of attraction of “good FDI capital”.

Statistics provided by the Foreign Investment Agency show that the FDI capital structure experienced a substantial change during 2002-09. In 2001, FDI capital invested in the industry and construction sectors accounted for 85% of the total investment, which plummeted to only 22% in 2009. Meanwhile, FDI in the service sector tended to rise, from 7% to 77% of the total investment, in the same period.

In a bid to attract greater investment in science and technology for socio-economic development, the Decree specifies procedures for establishing wholly foreign-owned science and technology institutions, science and technology joint-ventures and setting up branches or representative offices of foreign science and technology institutions in Vietnam.

In line with this Decree, the Prime Minister has just issued Decision No. 49/2010/QD-TTg, effective as of September 6, 2010, approving a list of 46 high technologies eligible for development investment incentives and a list of 76 hi-tech products prioritized for investment.

Under the Decree, a foreign-invested science and technology institution may be founded to make foreign direct investment when it has obtained an investment license from a competent state administration; adopts an operation charter which defines its operation areas in compliance with Vietnamese laws; is staffed with sufficient qualified personnel and has a working office and a physical-technical foundation for performing scientific researches, experiments, tests, services and other activities compliant with its operation charter and Vietnamese laws; has obtained a written approval of its establishment from the provincial-level People’s Committee in the locality where it is headquartered; and satisfies environmental protection requirements.

Such an institution may conduct scientific and technological activities in Vietnam only after completing operation registration procedures, obtaining a scientific and technological operation registration certificate and paying prescribed fees and charges. The Prime Minister will decide on establishment of wholly foreign-owned science and technology institutions while the Science and Technology Minister is assigned to decide on other science and technology institutions.

After obtaining investment decisions, foreigners may register scientific and technological activities under the law on investment.

Foreign science and technology institutions may open in Vietnam their branches or representative offices under treaties to which Vietnam is a contracting party to conduct scientific and techno-logical activities and related activities under the Law on Science and Technology and this Decree. They are not allowed to set up sub-branches or representative offices of existing branches.

To set up a branch or representative office, a foreign institution must be lawfully recognized in the country in which it has been founded or registered operation, has operated for one year or more (for those wishing to set up representative offices) or five years or more (for those wishing to set up branches), adopts an operation charter for such branch or representative office, and commits to strictly comply with Vietnamese laws and relevant treaties. A dossier for setting up a Vietnam-based branch or representative office should be filed with the Science and Technology Ministry, which is competent to grant, re-grant, amend, supplement or extend a branch or representative office license. 

A license for setting up a Vietnam-based branch or representative office is valid for 5 years at most and will become invalid when the foreign science and technology institution’s operation registration certificate or equivalent paper expires.

A branch or representative office may voluntarily stop its operation before expiration of its license or will terminate its operation upon expiration of its license without extension. It will be subject to compulsory stoppage if it fails to commence operation within six months after obtaining the first-time license or three months after obtaining license extension or is detected to have committed a violation in making the application dossier or during operation or its parent foreign institution’s operation registration expires or is revoked.

In addition to foreign investment, cooperation with foreign parties in science and technology has become relatively common for domestic entities. The new regulations allow Vietnamese entities to cooperate with foreign parties in such forms as provision of aid, financial assistance or donation for scientific and technological activities; entry into scientific and technological contracts or association with foreign parties or participation in scientific and technological activities organized by foreign parties, such as joining science and technology organizations or societies and participating in scientific and technological research, training, consultation, conferences and seminars held by international organizations or foreign parties, and cooperation to perform scientific and technological tasks in Vietnam or overseas.

Cooperation with foreign parties in science and technology must be conducted under written contracts or agreements.

According to Dr. Tran Dinh Thien, director of the Institute of Economics, foreign investment projects registered to date mainly focus on mining natural resources, developing real estate or providing services based on natural advantages of the country, such as tourist resorts and golf courses. FDI in high technologies expected to create a new competitive edge for the national economy remains modest. Hopefully, the new Decree would be followed by guiding documents to create a complete framework for attracting foreign investment in science and technology.-

The new regulation lists six areas in which foreign cooperation and investment is encouraged, including:

-    Basic research into natural sciences;

-    Research into application and development of information technology, bio-technology, new material technology, automation technology and electro-mechanic technology, atomic energy and new energy forms, space technology, mechanical and machine-manufacturing technology, farm produce and food preservation and processing technologies, waste treatment technology;

-    Training and development of human resources for hi-tech industries;

-    Development of hi-tech industries;

-    Transfer of technologies and scientific and technological services;

-    Setting up of or contribution to science and technology development funds.-



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