Decision No. 14/2006/QD-BCN dated May 26, 2006 of the Ministry of Industry approving the planning on development of industries, cottage industries and handicrafts in Vietnam-China border areas up to 2010

DECISION

APPROVING THE PLANNING ON DEVELOPMENT OF INDUSTRIES, COTTAGE INDUSTRIES AND HANDICRAFTS IN VIETNAM-CHINA BORDER AREAS UP TO 2010

THE MINISTER OF INDUSTRY

Pursuant to the Government's Decree No. 55/2003/ND-CP of May 28, 2003, defining the functions, tasks, powers and organizational structure of the Ministry of Industry;

Pursuant to the Prime Minister's Decision No. 120/2003/QD-TTg of June 11, 2003, approving the Strategy on socio-economic development in Vietnam-China border areas;

Pursuant to the Government Office's Official Letter No. 1332/VPCP-CN, authorizing the approval of the Planning on development of industries, cottage industries and handicrafts in Vietnam-China border areas up to 2010;

At the proposal of the director of the Planning Department,

DECIDES:

Article 1.- To approve the Planning on development of industries, cottage industries and handicrafts in Vietnam-China border areas with the following principal contents:

1. Development viewpoints

- Development shall be closely associated with the assurance of security, defense, social order and safety, sovereignty and territorial integrity, with importance attached to the organic relations with neighboring areas as well as the whole country on the basis of coordination and cooperation for mutual benefits, step by step improving the people's economic life and intellectual standards in the areas.

- To mobilize all resources among ethnic minority people in the areas, people in other provinces, low-land enterprises of all economic sectors and foreign investments, particularly from China and ASEAN countries. The State shall concentrate investments in developing infrastructure and adopt policies to support enterprises engaged in industrial, cottage-industrial and handcraft production.

- To bring into the fullest play existing potentials and advantages of border areas, a gate of exchange between Vietnam and ASEAN countries and China, and step up cooperation, import and export with China's border localities.

- To concentrate on developing industries, cottage industries and handicrafts in main border-gate areas, industrial parks and clusters; to encourage development on small and medium scales in other areas located along the border. To combine development of industries, cottage industries and handicrafts with development of tourism. To attach importance to protecting the eco-environment, especially forests and water sources.

2. Development orientations toward 2010

- To concentrate investments in developing industries with advantages, such as mineral extraction and processing on small and medium scales, processing of agricultural and forest products, production of construction materials, small hydropower projects, fertilizers, chemicals and mechanical repair. To prioritize the attraction of investments in the industries of export processing, package manufacture and export packing targeted at the Chinese market. To attach importance to developing cottage industries and handicrafts as well as traditional trades which are labor-intensive and use a lot of local materials such as weaving, making of rattan and bamboo products, woodcarving, carpentry and some other trades, contributing to accelerating economic and labor restructuring in the areas and increasing inhabitants' income.

- Industrial parks shall be built and large and medium production projects executed primarily in Lao Cai and Mong Cai. Small and medium industries, cottage industries and handicrafts shall be distributed in districts and associated with material zones and the industrial systems in the provinces.

- The State encourages and supports the development of cottage industries, handicrafts, trade villages and traditional trades of ethnic minority people; training in and introduction of new trades for border inhabitants for employment and income generation, contributing to hunger eradication and poverty alleviation.

- To step up the prospecting and appraisal of mineral reserves, serving as a basis for the development of mineral extraction in the post-2010 period.

3. Development orientations for each province up to 2010

a/ Dien Bien province

- For Muong Nhe district, in the immediate future, to develop small-scale establishments processing bamboo, rattan and some other forest products to serve local needs, and concurrently supplying, together with other establishments located in the province's center, materials and some products for other areas and for export.

- To develop a number of establishments manufacturing bricks and tiles, doing mechanical repair, and producing hand-held tools to meet local needs. To step by step build industrial spots in the district's center and Sin Thau national border-gate area so as to attract investment, and an industrial spot in the resettlement area of Son La hydropower project. To develop the production of construction materials to serve the construction of infrastructure in the locality and the resettlement area, focusing on such products as construction stones, tunnel bricks, baked bricks and tiles and some other kinds of materials. To tap existing potentials, restructure plants and form specialized material zones for developing the processing of agricultural and forest products.

b/ Lai Chau province

In three border districts (Muong Te, Sin Ho and Phong Tho), to focus on developing small hydropower projects, extracting and processing minerals; producing construction materials; processing agricultural and forest products such as bamboo, rattan and other products; processing cattle meat and feeds; mechanical repair and manufacturing agricultural tools to meet local needs. To step by step build Muong So industrial cluster in Phong Tho so as to attract investment in the processing of minerals and production of cement and construction materials; and build Le Loi - Nam Hang industrial cluster in Sin Ho and Muong Te districts so as to attract paper production, roofing stone production and small engineering work.

c/ Lao Cai province

In Lao Cai city and 4 border districts (Bat Xat, Bac Ha, Bao Thang and Sa Pa), to develop the extraction and processing of minerals (apatite, copper and iron ores), processing of agricultural and forest products for export, processing of products for export to Yunnan province, China, small- and medium-scale hydropower projects; small-scaled and home-based processing of agricultural and forest products; to develop cottage industries and handicrafts to create jobs for ethnic minority people. To maintain the processing of goods for export to China in Thanh Thuy border gate area.

d/ Cao Bang province

To bring into play the potential and strengths of border districts (Bao Lac, Bao Lam, Ha Quang, Thong Nong, Tra Linh, Trung Khanh, Phuc Hoa, Ha Lang and Thach An), especially in border-gate areas, for rapid industrial development, concentrating on processing minerals, agricultural and forest products, and export processing. At the same time, to attach importance to developing small hydropower projects, cottage industries and handicrafts.

e/ Lang Son province

For border districts (Trang Dinh, Van Lang, Cao Loc, Loc Binh and Dinh Lap) and large border gates such as Huu Nghi, Chi Ma and Tan Thanh, to concentrate on developing industries to serve export activities, such as processing, assembly and packaging. For other areas, to focus on developing the processing of agricultural and forest products such as anise flower, forest plantation timber and bamboo; to double the coal extraction capacity and the capacity of the Na Duong thermal power plant after 2010; to study the medium-scale extraction and screening of bauxite ore for export. To boost production of construction materials, development of cottage industries, handicrafts and trade villages to create jobs for border inhabitants.

g/ Quang Ninh province

In Mong Cai town, to concentrate on developing the processing of agricultural and aquatic products for export to China; processing and packing of products for export via Mong Cai border gate and for sale to tourists. In border districts (Binh Lieu and Hai Ha), to develop mainly small industries and handicraft-making households to meet mostly local needs.

4. Objectives of development of industries, cottage industries and handicrafts in Vietnam-China border districts up to 2010

To strive for an annual growth rate of 20-21% in industrial production value in the 2006-2010 period and of 15-17% in the 2011-2020 period. By 2010 the industrial production value shall triple that of 2004, amounting to about VND 2,800 billion, accounting for about 8% of total industrial production value of seven border provinces.

Within the next five years, to attract about 30,000-35,000 laborers, bringing the total number of industrial laborers to about 55,000-65,000 by 2010.

By 2010, to ensure that 100% of rural households shall have access to electricity (of which 70% shall have access to electricity from the national power grid while 30% from small hydropower sources and other kinds of energy); with industrial production supplied with sufficient electricity of increasing quality.

To develop a number of industrial parks in border-gate areas in order to attract foreign investors and domestic enterprises to produce, process and assemble products for export to China and regional countries. To establish small processing industrial clusters associated with material zones.

The following industries will be developed in the Vietnam-China border areas:

a/ Mineral extraction and processing;

b/ Agricultural and forestry product and food processing, cottage industries and handicrafts;

c/ Small hydropower projects;

d/ Production of construction materials;

e/ Production of chemicals and fertilizers;

f/ Mechanical repair.

The industrial production growth targets for border districts in the seven provinces are as follows:

5. Orientations for development of specialized industries up to 2010

a/ Mineral extraction and processing

- To increase investment in the work of surveying, assessing and classifying the prospects of mineral spots in the areas so as to collect reliable data for extraction and processing activities.

- Small- and medium-scale mineral extraction and sorting activities should be combined with small-scale activities of supplying input materials (crude or pure ores) for deep processing while the export of crude ores will be restricted as much as possible. For certain minerals (crude and pure) the processing of which cannot yet attract domestic investment and for which domestic demands are not great, they may be exported in exchange for such raw materials as coke coal and fat coal to serve domestic steel refining. Such export shall comply with the provisions of law.

b/ Agricultural and forest product and food processing, cottage industries and handicrafts, and trade villages

- For localities where exist big border gates and localities where intensive commodity agricultural and forestry production zones are being or have been formed, medium- and large-sized industrial establishments using advanced technologies should be built to turn out products for export. To make use of capital sources, technologies and equipment of Chinese enterprises for investment in the processing of agricultural and forest products for export to the Chinese market.

- For localities where Vietnam-Chine economic exchange activities have not yet been developed, exist poor infrastructure and small intensive agricultural and forest production zones, small-sized processing or preliminary processing establishments (run by households or cooperatives) should be developed, traditional trades restored and developed and low-land trades introduced, creating conditions for border inhabitants to exploit and use on-spot raw materials for producing valuable products to meet local and export demands, thereby increasing their income and improving their living standards.

c/ Orientations for development of the electricity industry

- To make the fullest use of topographical and hydrological conditions for building small hydropower stations to meet local electricity needs and help stabilize the regional electricity grid. For areas where commune clusters have been formed and economic activities are fairly developed, if conditions permit, hydropower stations with a capacity of up to 5,000 kW shall be constructed to supply electricity for the areas and for the electricity grid.

- For areas far from commune centers and homes scattered in mountainous areas where the national electricity grid cannot reach, hydropower mini-stations shall be built to supply electricity or other kinds of energy shall be provided to these areas and homes.

- In districts located along the entire borderline, about 37 small hydropower stations are planned to be constructed with total investment of VND 3,115 billion. To strive to build 10-13 stations by 2010 and the rest in the 2011-2020 period. Total investment for the 2006-2010 period shall be VND 1,110 billion.

d/ Orientations for development of production of construction materials

- To exploit and use available natural resources for production of cheap construction materials to meet local demands and serve the relocation of people to border-adjacent areas.

- To make in-depth and new investments to increase production capacity and procure technologies and equipment so as to ensure the quality of products to meet domestic demands and compete with imported goods.

e/ Orientations for development of chemical and fertilizer industries

- To maintain the production of certain fertilizers to meet the needs of localities located along the borderline. To study and build DAP, superphosphate and NPK plants in Lao Cai.

- To build some plants to process micro-organic fertilizers from byproducts of agricultural product-processing establishments to serve local agricultural production.

- To make investment in expanding the production of yellow phosphorus and chemical products of phosphoric base.

- To conduct market research for building some package-making establishments to serve the packaging of goods for export.

f/ Orientations for development of the engineering industry

- For deep-lying and remote districts, to invest in establishments producing knives, hoes and shovels and in small repair establishments to meet daily-life needs.

- For towns and townships where exist national or international border gates, such as Lao Cai, Mong Cai, Dong Dang (Lang Son), Ta Lung, Soc Giang (Cao Bang) and some other border gates, to invest in establishments repairing means of transport to serve the cross-border transportation of goods and in establishments assembling vehicles and machines to meet their own and neighboring provinces' needs.

6. Planning of industrial parks, clusters and spots

- To concentrate on calling for investment in building infrastructures in and increasing occupancy rates in industrial parks already planned. From now to 2010, no new industrial parks and clusters shall be planned. After 2010, depending on the practical situation, expansion or building of some industrial parks and clusters shall be planned.

- By 2010, along the entire borderline, four industrial parks of Tang Loong, Dong Pho Moi , Bac Duyen Hai (Lao Cai) and Hai Yen - Mong Cai (Quang Ninh) will be built with total planned area of 700-800 ha, and 9 industrial clusters will be formed, including Muong So industrial cluster (Phong Tho) , Le Loi - Nam Hang industrial cluster (Sin Ho), Sin Quyen copper sorting cluster (Bat Xat), Cam Duong industrial cluster (Lao Cai); Tong Ba industrial cluster (Ha Giang); Mien Dong industrial cluster (Cao Bang); Dong Dang industrial cluster (Lang Son), Ninh Duong and Hai Hoa - Mong Cai industrial clusters (Quang Ninh), each covering an area of 2.5-30 ha. In addition, industrial spots will be built in association with mineral extraction and processing establishments or trade villages.

7. Demands for investment capital for industrial development

It is projected that VND 3,600-3,700 billion shall be needed for investment during the 2006-2010 period, specifically:

Unit of calculation: VND billion

8. Solutions and policies for realizing the planning

a/ Solutions and policies for mobilizing investment capital

To call and encourage all economic sectors, especially state enterprises, to make investment in developing mountainous industries. It is projected that capital mobilized from state enterprises shall account for 60-65%; the private sector, 10-15%; and the foreign-invested sector, 20-25%.

State budget capital (at both central and local levels) shall be mostly used for investment in infrastructure in small industrial clusters located in mountainous border districts (except Mong Cai town and Lao Cai city) and common infrastructure in the localities.

Through programs and projects on socio-economic development in mountainous areas, the State shall continue providing reasonable supports for economic development. It is necessary to integrate programs and projects with one another in the same locality and to create the most favorable conditions for beneficiary farmers and population communities to participate in formulating and implementing programs and projects under the motto "The people know, the people discuss, the people do, the people supervise and the people benefit."

Investment projects on industrial, cottage industrial and handicraft production carried out in border areas shall be considered and provided with the State's development investment credits according to the provisions of law.

Enterprises that invest in producing products in border districts for consumption and export and employ many local laborers shall be provided by provincial authorities with interest rate supports if they borrow loans from credit institutions located in the provinces.

b/ Land and infrastructure construction policies

Investment projects shall be prioritized to be arranged in industrial parks or clusters according to the provinces' plannings or as requested by investors, and enjoy preferences in land rents and infrastructure construction supports, specifically as follows:

Regarding land rent rates and land rent exemption and reduction:

- For investments in mountainous border districts (except Mong Cai town, Lang Son and Lao Cai cities), border-gate economic zones, industrial parks and clusters, land rents and land use levies shall be exempted or reduced at the highest level in accordance with the provisions of law applicable to the localities.

- All the aforesaid projects shall be entitled to supports from compensation and ground clearance funds in accordance with the provisions of law applicable to the localities.

Regarding infrastructure construction supports:

- For projects located within industrial parks or clusters, towns and cities, the State shall make investment in infrastructural works up to the fences of plants, such as electricity supply, water supply and drainage, roads, information and communication.

- For projects located elsewhere, the localities shall, depending on their budget capability, support part of funds for building the above-said works.

- The provinces shall support funds for destroying objects that obstruct the building of works.

c/ Financial policies

Investment projects located in border areas shall enjoy enterprise income tax, personal income tax and overseas profit remittance tax rates applicable to the localities as provided for by law.

To create conditions for enterprises to obtain concessional loans at low interest rates or borrow state capital for investing in industrial production projects capitalized at VND 50 billion or more in border communes.

d/ Technology solutions and policies

To encourage scientific research agencies and organizations, universities, cadres training schools and individual scientists and craftsmen to conduct research and apply technical advances and new technologies in border areas.

To prioritize investment in establishments conducting research, applying and transferring technical advances and technologies in the preservation and processing of agricultural and forest products and in the extraction and processing of minerals. To encourage the private sector to make long-term investments in science and technology and set up scientific and technological enterprises.

Annually, ministries and branches shall earmark capital for and assign state research agencies to perform scientific research tasks to deal with technological and equipment problems and difficulties encountered by enterprises in border areas.

The scientific and technological development assistance fund shall give priority to investment in technology renewal and Internet connection to provide information free of charge and support technology transfer for industries in the border provinces.

e/ Market solutions and policies

If enterprises located in border areas have their products on display at domestic and overseas trade fairs and exhibitions, they shall be supported by the provinces with funds for display stall rents and other expenses.

The State shall support consultancy work for meeting and seeking foreign partners so as to develop product outlets.

Enterprises that directly produce products for export shall enjoy the highest preferences applicable to the localities in accordance with the provisions of law on import and export.

f/ Human resource solutions

To hold free-of-charge training courses in business start-up and management for entrepreneurs and managers of enterprise operating in mountainous provinces according to the Prime Minister's Decision No. 143/2004/QD-TTg of August 10, 2004, approving the program on human resource training support for small- and medium-sized enterprises in the 2004-2008 period.

To give school fee reduction or exemption to pupils living in border areas and ethnic minority pupils studying at training schools (universities, professional intermediate, preliminary technical and vocational training schools).

The provinces shall be responsible for training laborers for investment projects at the request of investors and support part or all of training expenses calculated on the basis of vocational training expense norms prescribed by the State.

Where enterprises themselves train laborers, they shall receive supports from the provincial budget to cover 50% of training expenses at the maximum level of VND 1,000,000 per laborer. This support level shall only apply to local people recruited for the first time and signing long-term labor contracts.

For cadres living in lowland areas and voluntarily going to work for a long term in disadvantaged mountainous border districts and the provinces' cadres who are sent to training courses, if they obtain a master degree or a doctoral degree, they shall be provided by the provinces a lump sum of VND 10 million or 20 million each respectively.

g/ Solutions to investment in developing material zones

Localities shall draw up detailed plannings on development of material zones associated with processing plants. Enterprises investing in material zones under such plannings shall be exempted from land rent. Local people are encouraged to plant appropriate industrial trees in planned material zones.

To organize the proper implementation of the Prime Minister's Decision No. 80/2002/QD-TTg of June 24, 2002, on policies to encourage contractual consumption of agricultural commodities.

Agricultural extension centers of border provinces shall give special priority to supplying border areas with high-quality plant varieties and animal breeds at reasonable prices and to providing technical advice and transfer to farmers to develop material zones in service of the processing industry.

h/ Environmental protection solutions

For mineral extraction and processing activities, permits shall be granted only upon the availability of designs for and specific solutions to environmental protection and earth fill-up after extraction (including small-scale extraction).

For the processing of agricultural and forest products, especially small-sized paper production projects, investment licenses shall be granted only upon the availability of wastewater treatment solutions and systems.

For fertilizer and chemical plants, special attention should be paid to the treatment of waste matters discharged from the projects during investment and operation.

For polluting production establishments, pollution remedy roadmaps and solutions should be worked out. The State shall support part of funds for pollution remedy and assign research institutes under ministries and branches to transfer technologies and technical solutions for this purpose.

i/ Promotion of industrial extension work

The provinces' industrial extension centers shall grant maximum preferences to border districts in training to expand and introduce new jobs among local inhabitants and providing supports for small- and medium-sized enterprises investing in the localities under the Government's Decree No. 134/2004/ND-CP of June 9, 2004, on encouraging the development of rural industries.

Article 2.- Organization of implementation

1. The Ministry of Industry

a/ To publicize the planning; assume the prime responsibility for, and coordinate with concerned ministries, branches and localities in, organizing the implementation of this planning after it is approved;

b/ To earmark possible maximum funds from the national industrial extension source for the border provinces to promote the development of industries, cottage industries and handicrafts;

c/ To study and propose a mechanism of combining the scientific research tasks of the Ministry's institutes and schools with the settlement of technological and equipment problems faced by small- and medium-sized enterprises and trade villages in border areas.

2. The Ministry of Finance

To assume the prime responsibility for, and coordinate with the Ministry of Planning and Investment, the Ministry of Industry and the border localities in, studying and developing stable and long-term financial, credit and tax preferences with a view to attracting investment in developing industries, cottage industries and handicrafts in border areas.

3. The Ministry of Trade

To assume the prime responsibility for developing mechanisms and policies to support trade promotion in the border localities and seek outlets for cottage industry and handcraft products, especially the Chinese market. To coordinate with the Chinese side in organizing fairs of the border localities' industrial, cottage industrial and handicraft products in order to promote mutual trade and exchange.

4. The Ministry of Agriculture and Rural Development

To assume the prime responsibility for developing mechanisms and policies to develop material zones in service of the processing of agricultural and forest products in border areas.

5. The Ministry of Science and Technology

To study and propose measures to promote technology transfer and the application of new scientific and technological advances in border areas.

6. The Ministry of Transport

To study and integrate projects on building border belt roads with those on developing industrial parks and clusters in the region.

7. The People's Committees of the seven northern border provinces

a/ To assume the prime responsibility for developing preferential mechanisms and policies on land rent, land use, ground clearance support, etc., in accordance with the provisions of law with a view to attracting investment in developing industries, cottage industries and handicrafts in border areas;

b/ To organize free-of-charge training courses for entrepreneurs and enterprise managers; to develop programs and systems to support small- and medium-sized enterprises in border areas in technology management and application of technical advances to production;

c/ To guide industrial extension work in the localities;

d/ To coordinate with the Ministry of Industry in managing the implementation of this planning after it is approved.

8. State groups and corporations

a/ Vietnam electricity corporation shall proactively, together with the localities, draw up a planning on development of small- and medium-sized hydropower stations and plans on electricity supply for border areas with a view to achieving the set objectives;

b/ Vietnam tobacco corporation and Vietnam paper corporation shall study and, together with the provinces, approve various programs (on hunger eradication and poverty alleviation, afforestation, etc.) to expand and develop certain material zones in the border region with a view to creating jobs for border inhabitants and serve the corporations' production activities;

c/ Vietnam steel corporation and Vietnam coal - mineral industrial group shall prioritize the execution of projects on extracting and processing iron, lead and zinc ores and other minerals in border areas according to the planning;

d/ Vietnam chemical corporation shall coordinate with the localities and concerned units in studying and formulating projects on producing fertilizers, chemicals and processing packages in border areas;

e/ The Hanoi beverage corporation shall coordinate with the localities in studying and developing beer material areas in certain areas where conditions permit; support the border localities where exist the traditional alcohol production trade to establish and develop brand names for local alcohol.

Article 3.- This Decision takes effect 15 days after its publication in "CONG BAO."

Article 4.- The director of the Ministry's Office, the Ministry's chief inspector, directors of the Ministry's departments, the director of the Industrial Strategy and Policy Research Institute, Vietnam National Coal and Mineral Industries Group, the Electricity of Vietnam, Vietnam Tobacco Corporation, Vietnam Paper Corporation, Vietnam Steel Corporation, Vietnam Chemical Corporation, the Hanoi Beverage Corporation, and concerned organizations and individuals shall have to implement this Decision.

APPENDIX

(enclosed with Decision No. 14/2006/QD-BCN of May 26, 2006)
LIST OF INVESTMENT PROJECTS IN VIETNAM-CHINA BORDER DISTRICTS IN THE 2006-2010 PERIOD