New investment incentives
Unlike the 2005 Investment Law, the new Investment Law in 2014 includes clearer details about business sectors that qualify for investment incentives, such as: production of new materials, new energy, clean energy, renewable energy; production of products with at least 30 per cent value added; and energy-saving products.
In agriculture, the sectors being offered incentives are: cultivation and processing of agriculture, forestry, and aquaculture products; afforestation and forest protection; salt production; fishing and ancillary fishing services; production of plant varieties, animal breeds, and biotechnology products.
In addition, business lines in education and healthcare are specifically regulated under the new Investment Law. Accordingly, the field of education consists of the following sectors: preschool education, compulsory education, vocational education.
The sectors in healthcare are: medical examination and treatment; production of medicines, medicine ingredients, essential medicines, medicines for prevention and treatment of sexually transmitted diseases, vaccines, biological, herbal medicines, oriental medicines; scientific research on preparation technology and/or biotechnology serving creation of new medicines; investment in geriatric centres, mental health centres, treatment for agent orange patients; care centres for the elderly, the disabled, orphans, and street children.
Similarly, other sectors entitled to investment preferences, such as information technology, sports, construction and development of infrastructure, are also clearly included in the purview of the new Investment Law.
Whether the choice of invested areas falls into the abovementioned categories of business sectors, investors will still be eligible to enjoy investment incentives in the following cases:
The investment project's capital is 6 trillion Vietnamese dong and more;
At least 6 trillion in Vietnamese dong for the investment project will be disbursed within 3 years from the date of issuance of the Certificate of Investment Registration or decision on investment policies;
Investment projects conducted in rural areas that employ at least 500 workers;
Hi-tech enterprises, enterprises or organisations operating in science and technology
However, PLF would like to point out the fact that not every investment project is entitled to receive incentives, which are only applied to new investment projects and expansion projects.
It also means that although certain investment projects are implemented under the aforementioned business sectors or satisfy the conditions listed above, they shall not be permitted to enjoy investment preferences if established and brought into operation before the new regulations take effect. Only when investors conduct new investment projects or expand the current ones and meet the conditions on incentives shall such incentives be applied.
Noticeably, projects investing in mineral exploitation, production and trading of goods and services subject to excise tax (except for motor vehicle production) shall not receive the investment incentives mentioned above.
Furthermore, the 2014 Investment Law also offers more forms of support than the 2005 Investment Law, specifically: support for the development of technical infrastructure and social infrastructure within and beyond the perimeter of projects of human resources development; credit support; and support for relocation of manufacturing facilities from urban areas.