Decree No. 111/2015/ND-CP dated November 03, 2015 of the Government on development of supporting industries

DECREE

On development of supporting industries[1]

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the November 26, 2014 Law on Investment;

Pursuant to the November 13, 2008 Law on High Technology;

Pursuant to the June 14, 2005 Law on Import Duty and Export Duty;

Pursuant to the June 3, 2008 Law on Enterprise Income Tax; the June 19, 2013 Law Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax;

Pursuant to the June 3, 2008 Law on Value-Added Tax; the June 19, 2013 Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax;

Pursuant to the November 29, 2006 Law on Tax Administration; the November 20, 2012 Law Amending and Supplementing a Number of Articles of the Law on Tax Administration;

Pursuant to November 26, 2014 Law No. 71/2014/QH13 Amending and Supplementing a Number of Articles of the Laws on Taxes;

Pursuant to the November 29, 2013 Land Law;

Pursuant to the December 16, 2002 Law on the State Budget;

At the proposal of the Minister of Industry and Trade,

The Government promulgates the Decree on development of supporting industries.

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation

This Decree provides support and incentive policies to develop supporting industries.

Article 2.Subjects of application

Organizations and individuals carrying out supporting industry development activities in Vietnam.

Article 3.Interpretation of terms

In this Decree, the terms below shall be construed as follows:

1. Supporting industries means industries that manufacture materials, details, components and spare parts for manufacturing finished products.

2. Project to manufacture supporting industry products means an investment project in Vietnam to manufacture supporting industry products.

3. List of products of supporting industries prioritized for development means the list of supporting industry products provided in the Appendix to this Decree which may be adjusted to suit the country’s socio-economic development situation in each period.

4. Supporting industry development activities include activities to assist state management agencies, organizations and individuals in supporting industry, human resource training, research and development, supporting the transfer of technologies to manufacture supporting industry products, international cooperation, market development; investment in projects to manufacture supporting industry products; and provision of supporting industry services.

5. Supporting industry development program means a combination of contents and tasks of supporting industry development promotion and assistance activities in order to develop the manufacture of supporting industry products

Chapter II

SUPPORT POLICIES FOR DEVELOPMENT OF SUPPORTING INDUSTRIES

Article 4.Research and development

1. Organizations and individuals researching and developing the manufacture of supporting industry products on the list of products of supporting industries prioritized for development are entitled to:

a/ Funding by the supporting industry development program and support by funds and other financial sources for research, development and training;

b/ Partial funding for research and development by the supporting industry development program in case they make investment on their own in technology research and development that brings about highly effective application results.

c/ Support by the State of up to 50 percent of funds for projects to experimentally manufacture supporting industry products.

2. Projects to build research and development establishments for manufacturing supporting industry products are entitled to land allocation or lease by the State and to land use incentives in accordance with the land law; and to support by the supporting industry development program of up to 50 percent of funds for investment in research equipment.

Article 5.Application and transfer

1. Organizations and individuals transferring technologies to manufacture supporting industry products on the list of products of supporting industries prioritized for development are entitled to incentives under the law on technology transfer and other incentives under current regulations.

2. Technology application and transfer to manufacture supporting industry products on the list of products of supporting industries prioritized for development shall be supported by the supporting industry development program as follows:

a/ Partial funding for cooperation projects and schemes on technology transfer between manufacturing enterprises and units with applied technologies;

b/ Funding of up to 50 percent of costs for experimental manufacture of supporting industry products on the list of products of supporting industries prioritized for development.

3. The State shall support up to 75 percent of technological transfer costs for material production projects using more than 85 percent of materials being products from the intensive processing of domestic minerals including metallic and non-metallic ores and petrochemical products serving the manufacture of supporting industry products.

Article 6.Human resource development

1. Human resource training for supporting industries

a/ A project to manufacture supporting industry products on the list of products of supporting industries prioritized for development is entitled to funding by the supporting industry development program for training human resources;

b/ Individuals personally performing the task of the supporting industry development program shall be prioritized for training at home and abroad to raise their qualifications according to the State’s training programs.

2. Institutions that train human resources for supporting industries:

a/ The State shall encourage organizations and individuals to invest and enter into joint venture and cooperation in building institutions to train human resources for manufacturing supporting industry products;

b/ Institutions that train human resources for manufacturing supporting industry products are entitled to funds and assistance from science and technology, training and other funds;

c/ The State shall encourage universities, research institutes and existing training institutions to participate in training human resources for supporting industries.

Article 7.International cooperation in supporting industries

1. Expanding international cooperation in supporting industry activities, especially with foreign countries, territories, organizations and individuals, multinational corporations, and foreign economic groups with advanced scientific and technological levels in order to attract investment and establish links between Vietnamese and foreign organizations and individuals operating in supporting industries.

2. Promoting the search for and transfer of state-of-the-art technologies to Vietnam so as to enhance the capacity of domestic supporting industry enterprises.

3. Stepping up international cooperation in the development of supporting industry human resources, prioritizing cooperation with regional and global advanced universities, colleges and vocational training institutions in training students of supporting industry disciplines; attracting and effectively employing highly qualified professionals and talented youths in researching and teaching supporting industries in Vietnam.

Article 8.Market development support

Supporting industry products on the list of products of supporting industries prioritized for development are entitled to:

1. Prioritized participation in the national trade promotion program.

2. Part of their brand name registration cost and funds for participation in domestic and foreign exhibitions and fairs, market information access and service charges covered by the supporting industry development program.

Article 9.Supporting industry development center

1. A supporting industry development center shall be established from re-organizing existing units of the Ministry of Industry and Trade to perform one of the following tasks:

a/ To carry out technology application and transfer to support the experimental manufacture of supporting industry products on the list of products of supporting industries prioritized for development;

b/ To support enterprises in building manufacturing administration systems up to international standard;

c/ To train technical managers for the manufacture of supporting industry products;

d/ To promote trade; to organize exhibitions and fairs;

dd/ To promote domestic and foreign investment in supporting industries.

2. The supporting industry development center must fully satisfy the following conditions:

a/ Its technical infrastructure, testing - experimental manufacturing equipment and facilities and professional managers satisfy development requirements of supporting industries;

b/ Possessing consulting experts on  technology, intellectual property rights and business administration for supporting industries;

c/ Being capable of associating with domestic and foreign manufacturing, research and training institutions to serve activities of supporting industries.

Article 10.Supporting industry development program

1. Objective:

To support organizations and individuals to build capacity to develop supporting industries.

2. Contents:

a/ To support the building of enterprise capacity: business administration; manufacturing administration; to establish cooperation and connection between supporting industry product manufacturers and customers, becoming product suppliers of multinational corporations and other domestic and foreign manufacturers of supporting industry products; to promote and support outlets of supporting industry products;

b/ To support training of human resources to meet requirements of manufacture of supporting industry products;

c/ To support research and development, application, transfer and renovation of technologies in the experimental manufacture of components, spare parts and materials;

d/ To disseminate and provide information on policies, markets and capacity of Vietnam’s supporting industries through organizing seminars, publishing bulletins and publications, and advertising in other mass media;

dd/ To implement international cooperation on the development of supporting industries; to attract foreign investment in supporting industries;

e/ To support the development of technical standards and regulations for supporting industry products on the list of products of supporting industries prioritized for development meeting international and regional standards;

g/ To build and update the database on domestic and foreign supporting industries on a website specialized in supporting industries.

3. Funds:

a/ Funds for implementation of the supporting industry development program:

- State budget according to the current budget decentralization;

- Organizations’ and individuals’ fund for development of supporting industries;

- Funds contributed by organizations and individuals at home and abroad;

- Other lawful funds in accordance with law.

b/ Planning and fund estimation:

- The Ministry of Industry and Trade shall prepare and include the fund estimate in its annual budget estimate for submission to the Ministry of Finance, the Ministry of Planning and Investment and relevant units under regulations;

- Provincial-level People’s Committees shall prepare and include fund estimates in their local annual budget estimates for submission to competent agencies for approval under regulations.

4. The Prime Minister shall prescribe in detail the formulation, management and implementation of the supporting industry development program.

Chapter III

INCENTIVE POLICIES FOR SUPPORTING INDUSTRIES

Article 11.Eligible projects and procedures for incentive certification

1. Eligible projects:

Projects manufacturing supporting industry products on the list of products of supporting industries prioritized for development include new investment projects and technology expansion and renewal projects that use new equipment and manufacturing processes and record an increase of at least 20 percent in manufacturing capacity.

2. Procedures for incentive certification:

a/ Small- and medium-sized enterprises shall send dossiers of request for certification for projects to manufacture supporting industry products on the list of products of supporting industries prioritized for development to competent agencies of the localities where the projects are located or to the Ministry of Industry and Trade. Competent local agencies shall send incentive certification decisions to the Ministry of Industry and Trade;

b/ For projects other than those specified above, dossiers of request for certification shall be submitted to the Ministry of Industry and Trade.

3. Time limit for incentive certification:

a/ Based on an enterprise’s dossier of request for certification, certification agencies shall notify the result to the enterprise within 30 working days;

b/ In case the dossier lacks documents for incentive certification, within 5 working days after receiving the dossier, the certification agency shall send a written notice to the requesting organization or individual to supplement the dossier; within 30 working days after receiving a complete and valid dossier, the certification agency shall notify the incentive approval result.

4. Post-incentive inspection:

Projects manufacturing supporting industry products on the list prioritized for development that fail to meet the conditions for incentives will have their incentives removed and shall compensate for incentives they have enjoyed.

5. The Ministry of Industry and Trade shall prescribe in detail incentive dossiers and post-incentive inspection procedures.

Article 12.Incentive policies for projects manufacturing supporting industry products on the list of products of supporting industries prioritized for development

1. General incentives:

a/ Enterprise income tax:

To enjoy tax incentives in accordance with Law No. 71/2014/QH13 of November 26, 2014 Amending and Supplementing a Number of Articles of the Law on Taxes.

b/ Income tax:

To be exempted from income tax for imports to create fixed assets in accordance with the Law on Import Duty and Export Duty and guiding documents.

c/ Credit:

- Projects manufacturing supporting industry products on the list prioritized for development are entitled to loans at investment credit interest rates from the state investment credit source;

- To borrow short-term loans in Vietnam dong from credit institutions and foreign bank branches at interest rates conformable with the ceiling interest rate set by the State Bank in each period.

d/ Value-added tax:

Turnover of supporting industry products on the list of products of supporting industries prioritized for development may be declared for value-added tax on a monthly, yearly or temporary basis. The Ministry of Finance shall detail this Point.

dd/ Environmental protection:

Projects manufacturing supporting industry products on the list of products of supporting industries prioritized for development are entitled to soft loans from the Vietnam Environment Protection Fund for their environmental pollution treatment and environmental protection contents.

2. Incentives for small- and medium-sized enterprises:

In addition to general incentives specified in Clause 1 of this Article, small- and medium-sized enterprises manufacturing supporting industry products on the list of products of supporting industries prioritized for development are entitled to:

a/ Investment credit:

They may borrow up to 70 percent of investment capital from credit institutions with the guarantee of organizations providing credit guarantee for small- and medium-sized enterprises when meeting the following conditions:

- Having the total value of assets lawfully mortgaged or pledged at the credit institution at least equal to 15 percent of the loan value after deducting the value of the assets mortgaged or pledged for other loans;

- Putting at least 20 percent of its equity capital in the investment project after deducting the equity capital amount arranged for other projects;

- By the time of guarantee request, owing no state budget debts or non-performing loans to other credit institutions and economic organizations.

b/ Land and water surface rent:

- They are entitled to land and water surface rent reduction or exemption in accordance with the land law;

- For a project of special significance or large scale bringing about socio-economic benefits that needs a higher support level than the above-mentioned level, the Ministry of Finance shall coordinate with the Ministry of Planning and Investment in submitting such level to the Prime Minister for decision in accordance with the land law at the proposal of the provincial-level People’s Committee of the locality where the project is located.

3. Projects manufacturing supporting industry products on the list of products of supporting industries prioritized for development in localities with socio-economic difficulties or extreme socio-economic difficulties are entitled to investment incentives applied in the localities in addition to general incentives in Clause 1 of this Article.

Article 13.Incentive policy management

1. If the projects enjoying incentives under this Decree have made inaccurate declaration or used the incentives for improper purpose, they will have such incentives recovered.

2. In case a project is entitled to a number of incentives of the same type, it may enjoy only the highest incentive under current regulations.

3. Ministries, sectors and provincial-level People’s Committees shall, within the ambit of their functions and competence, guide the examination and inspection and decide to recover incentives.

Chapter IV

ORGANIZATION OF IMPLEMENTATION

Article 14.Responsibilities of ministries and sectors

1. The Ministry of Industry and Trade shall perform the state management of supporting industry development activities according to the following contents:

a/ Elaborating and submitting to competent agencies for promulgation or promulgating according to its competence legal documents on supporting industry development;

b/ Planning and estimating budgets for the implementation of the supporting industry development program and including the budget estimates in its five-year and annual socio-economic development plans;

c/ Reviewing and updating the list of products of supporting industries prioritized for development to suit the practical conditions of each period, and submitting it to the Prime Minister for approval;

d/ Drafting regulations on development, management and implementation of the supporting industry development program and submitting them to the Prime Minister for approval;

dd/ Approving the scheme on reorganization of its existing units to establish a supporting industry development center;

e/ Assuming the prime responsibility for, and coordinating with the Ministry of Science and Technology in, developing and promulgating national technical standards and developing and publishing basic standards on materials, details, components and spare parts; developing and proposing the Ministry of Science and Technology to publish national standards on materials, details components and spare parts in line with international standards;

g/ Assuming the prime responsibility for, and coordinating with ministries, sectors and localities in, guiding and removing hindrances to the development of supporting industries;

h/ Cooperating with domestic and foreign organizations and individuals in attracting investment and resources to serve the development of supporting industries;

i/ Guiding incentive certification and post-incentive inspection procedures;

k/ Assuming the prime responsibility for, and coordinating with the Ministry of Finance in, drafting a joint circular guiding the development, management and use of funds of the supporting industry development program;

l/ Assuming the prime responsibility for, and coordinating with relevant ministries and sectors and provincial-level People’s Committees in, conducting examination and inspection and deciding to withdraw incentive policies.

2. The Ministry of Finance shall:

a/ Assume the prime responsibility for arranging non-business funds for the implementation of the supporting industry development program in accordance with the Law on State Budget and guiding the establishment and management of the use of such funds;

b/ Supplement detailed guidance on tax incentive policies for development of supporting industry products within its competence;

c/ Guide or promulgate the process for projects entitled to state investment credit loan within its competence, ensuring transparent and simplified procedures for the Vietnam Development Bank to comply with;

d/ Coordinate with the Ministry of Industry and Trade in guiding, inspecting and supervising the use of funds for implementing the supporting industry development program;

dd/ Guide the value-added tax declaration specified at Point d, Clause 1, Article 12 of this Decree.

3. The State Bank of Vietnam shall:

a/ Coordinate with the Ministry of Finance and the Ministry of Industry and Trade in prescribing in detail the implementation of credit policies specified in Article 12 of this Decree, ensuring fast and simple procedures and secure loan sources;

b/ Coordinate with ministries, sectors and localities in inspecting and supervising the implementation of credit policies, removing arising difficulties and proposing measures to remove difficulties in the course of implementation.

4. The Ministry of Planning and Investment shall:

a/ Allocate funds for implementing the supporting industry development program in accordance with the Law on the State Budget, and call for ODA capital to establish a supporting industry development center in accordance with law;

b/ Assume the prime responsibility for, and coordinate with ministries and sectors in, formulating policies to encourage foreign investors to use locally made supporting industry products.

5. The Ministry of Natural Resources and Environment shall:

a/ Coordinate with the Ministry of Finance and related ministries and sectors in reviewing and proposing supplementary land incentive and environmental policies for projects manufacturing supporting industry products on the list of products of supporting industries prioritized for development;

b/ Add regulations guiding the implementation of incentive and refund mechanisms for projects manufacturing supporting industry products on the list of products of supporting industries prioritized for development located in industrial parks which sublease land with infrastructure from industrial park investors that have already paid land rental to the State.

6. The Ministry of Labor, War Invalids and Social Affairs shall:

a/ Assume the prime responsibility for, and coordinate with related ministries and sectors in, reviewing, amending and supplementing current regulations on foreign specialists and highly qualified workers who are directly involved in development of supporting industries in order to simplify to work permit-granting procedures;

b/ Coordinate with the Ministry of Industry and Trade in training to raise the knowledge and skills of workers directly working in supporting industries.

7. Ministries, ministerial-level agencies and government-attached agencies shall, within the ambit of their tasks and powers, coordinate with the Ministry of Industry and Trade in, performing the state management of supporting industry development under regulations.

Article 15.Responsibilities of provincial-level People’s Committees

In performing the state management of supporting industry development, provincial-level People’s Committees shall:

1. Elaborate, modify and promulgate guidelines, policies and legal documents on supporting industry development, and support the development of supporting industries in conformity with law and local conditions.

2. Develop and approve, and organize the implementation of, local supporting industry development programs.

3. Ensure local budget funds for the implementation of local supporting industry development programs.

4. Assign competent local agencies to organize incentive certification and make annual summary reports on projects with incentive certification to the Ministry of Industry and Trade.

5. Promote and attract capital for local supporting industry development programs.

6. Make annual reports on the situation of local supporting industry development to relevant ministries and sectors.

Chapter V

IMPLEMENTATION PROVISIONS

Article 16.Transitional handling

Projects currently manufacturing supporting industry products on the list of products of supporting industries prioritized for development are further entitled to existing incentives as well as new incentives prescribed in this Decree.

Article 17.Effect

This Decree takes effect on January 1, 2016, and annuls the Prime Minister’s Decisions No. 12/2011/QD-TTg of February 24, 2011, on policies on development of a number of supporting industries and No. 1483/QD-TTg of August 26, 2011, promulgating the list of products of supporting industries prioritized for development and relevant documents.

Article 18.Implementation responsibilities

1. The Ministry of Industry and Trade shall coordinate with other ministries, sectors and provincial-level People’s Committees in implementing the Decree, and report to the Prime Minister on the implementation of this Decree and new arising issues that need to be handled.

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies and chairpersons of provincial-level People’s Committees shall implement this Decree.-

On behalf of the Government
Prime Minister
NGUYEN TAN DUNG

Appendix

List of products of supporting industries prioritized for development

(To the Government’s Decree No. 111/2015/ND-CP of
November 3, 2015)

I. TEXTILE AND GARMENT:

- Natural fibers: cotton, jute, hemp, silk worm;

- Synthetic fibers: PE, viscose;

- Knitting yarn, woven yarn, high tenacity polyester yarn, Spandex yarn, high tenacity nylon yarn;

- Fabric: technical fabric, non-woven fabric, knitted fabric, woven fabric;

- Sewing threads for the textile and garment sector;

- Chemicals, additives and dyes for dying and finishing fabric;

- Garment accessories: buttons, mex, zippers, elastic bands.

II. LEATHER AND FOOTWEAR:

- Tanned leather;

- Leatherette;

- Shoe soles, shoe caps and shoelaces;

- Tanning chemicals;

- Brined hide;

- Shoe sewing thread;

- Shoe glue, decorative accessories like buckles, eyelets and hooks.

III. ELECTRONICS:

- Basic electronic-optoelectronic components: transistor, integrated circuit, sensor, resistance, capacitor, diode, antenna, thyristor;

- Quartz components;

- Electronic microchips;

- Materials for manufacture of electronic components: semi-conductor, hard and soft magnetic materials, active insulator;

- Components of electronic products: plastic components, rubber components, electromechanical details, glass components;

- Batteries for laptops, cell phones;

- Electric wire and cables, LED lights, headphones and speakers;

- Cell phone chargers;

- Screens of all kinds.

IV. AUTOMOBILE MANUFACTURE AND ASSEMBLY:

- Engines and engine details: engine block, piston, crankshaft, connecting rod, gear, exhaust assembly, cylinder, intake assembly, camshaft, piston ring, engine valve;

- Lubricating system: oil filter, cooler, radiator, oil pump and valves of various kinds;

- Cooling system: radiator, water tank, cooling fan, thermostat, water pump;

- Fuel supply system: fuel tank, fuel filter, air filter, fuel pump lines, carburetor, fuel injection system;

- Frame - body shell - door: punched sheet metal details, chassis, truck body, steps, door assembly;

- Suspension system: leaf spring, spring, shock absorber;

- Wheel: tire, wheel rim of aluminum alloy;

- Force transmission system: clutch, gear box, wheel drive, universal shaft;

- Steering system;

- Braking system;

- Electric-electronic components:

+ Power source: accumulator, generator;

+ Ignition devices: spark plug, compressor, voltage transformer;

+ Starter relays, electric starter motors;

+ Electric wire, connectors, fuses, sensors of various kinds, automatic control devices, processing units;

- Lighting and signaling system: lamp, horn and meters of various kinds;

- Automobile exhaust treatment system;

- Automobile plastic parts;

- Rubber parts and shock-absorbing materials;

- Windshields, wipers, seats.

V. MANUFACTURING MECHANICAL ENGINEERING:

- Molds, models and clamps: pressing mold, casting mold, processing clamp, testing clamp;

- Tools - cutters: lathe cutter, circular saw, drill bit;

- Components and spare parts of mechanical working machines and welding machines;

- Components and spare parts of motors, agricultural machines and shipbuilding machines;

- Components and spare parts of agricultural, forestry and fisheries and salt-making machines and equipment;

- Measuring and testing devices used in mechanical engineering: caliper, three-dimensional measuring apparatus, metal composition analyzer, welded joint- ultrasonic testing machine;

- Machinery details: high-intensity bolt and screw, ball bearer, bushing, gear, valve, joints of various kinds, crankcase, punched detail, variable speed box, hydraulic cylinder;

- Engineering steel.

VI. PRODUCTS OF SUPPORTING INDUSTRIES FOR HI-TECH INDUSTRIES:

- Models and molds: models, molds and plastic molds of high precision;

- High-quality standard mechanical engineering details: nuts, bolts and screws of high precision for use in electronic, electromechanical and electronic medical equipment and industrial robots;

- Electronic components and microchips for development of peripheral devices, computers, household appliances, audiovisual equipment, solar cells; microprocessors and controllers (programmable logic controllers (PLCs), CNC controllers, etc.)

- Part and spare part assemblies for systems of equipment for generating electricity from new and renewable energy sources;

- High-quality plastic details: precision drive units, highly durable and enduring, heat- and abrasion-resistant plastic details.

- Sensors: gas sensor, accelerometer, magnetic field sensor; biological sensor, temperature sensor, humidity sensor, light sensor, pressure sensor, etc.;

- New generation engines: electric motor, magnetic drive motor, servo motor (stepper motor), reluctance motor, linear motor;

- Precision actuators.-

THE END