Decree 111/2015/ND-CP on development of supporting industry

1 Chapter I. GENERAL PROVISIONS

DECREE 111/2015/ND-CP

November 03 2015

ON DEVELOPMENT OF SUPPORTING INDUSTRY

Pursuant to Law on Organization dated December 25 2001;

Pursuant to Law on Investment dated November 26 2014;

Pursuant to Law on high technology dated November 13 2008;

Pursuant to Law on Import –Export Duties dated June 14 2005;

Pursuant to Law on Corporate Income Tax dated June 03 2008; law on amending and supplementing a number of articles of Law on Corporate Income tax dated June 19 2013;

Pursuant to Law on Value-Added Tax dated June 03 2008; law on amending and supplementing a number of articles of Law on Value-Added Tax dated June 19 2013;

Pursuant to Law on Tax Administration dated June 03 2008; law on amending and supplementing a number of articles of Law on Tax Administration dated June 19 2013;

Pursuant to Law No. 71/2014/QH13 dated November 26 2014 amending and supplementing a number of articles of Law on Taxation;

Pursuant to Land Law November 29 2013;

Pursuant to Law on State Budget dated December 16 2002;

Upon the request of Ministry of Trade and Industry,

Government passes a Decree on development of supporting industry.

Chapter I. GENERAL PROVISIONS

Article 1. Scope

This Decree regulates assistance policies and incentives to development of supporting industry.

Article 2. Regulated Entities

Individuals, Organizations engage in development of supporting industry in Vietnam.

Article 3. Interpretation

In this Decree, the following terminologies are interpreted as below:

1. Supporting industry means the industry that involves manufacturing materials, accessories, components and spare parts used for assembling finished goods.

2. Supporting industry projects are such investment projects in Vietnam for manufacturing supporting products (hereinafter referred to as supporting products).

The list of prioritized supporting products (hereinafter referred to as the List) includes those specified in the Annex of this Decree and will be adjusted according to the socio-economic development situation in each periods.

4. Supporting industry activities consist of assistance from regulatory bodies, organizations, individuals in supporting industry, international cooperation, human resource training, research and development, assistance in technology transfer, market expansion; investment in supporting product manufacturing; supporting industrial services.

5. Supporting Industry Development Program is a set of contents, promotion activities, assistance activities in supporting industry development in order to promote to manufacture supporting industrial products.

Chapter II. POLICIES ON ASSISTANCE IN DEVELOPMENT OF SUPPORTING INDUSTRY

Article 4. Research and Development

1. Organizations and individuals participating in the field of research and development of supporting products on the List shall be received assistance in the following manner: a) Sponsorship from the Supporting Industry Development Program, Aid from Funds and other funding sources for research and development and training; Provision of partial funding for research and development from the Supporting Industry Development Program, provided that the results of which may be effectively applied; c) Maximum provision of up to 50% funding from the State for projects of trial supporting industrial production.

2. Projects for construction of development and research of supporting production facilities shall receive land given or lease out by the State as stipulated in regulations of law on land; fund for up to 50% of the investment in the research equipment and facilities from the Supporting Industry Development Program.

Article 5. Application and Transfer

1. Organizations and individuals transferring the technology related to manufacturing supporting products on the List shall benefit from technology transfer and other benefits as per the current regulations.

2. Application and transfer of technology in supporting industrial production on the List shall be received assistance from the supporting industry development program as follows:

a) Projects on cooperation between producers and technology Owners shall receive partial funding;

The fabrication of trial supporting products on the List shall be received up to 50% funding.

3. Technology transfer related to material production projects using over 85% of materials from mineral processing including metal ore, non-metal ore and petrochemical products used for manufacturing supporting industrial products shall receive up to 75% funding from the State.

Article 6. Human Resource Development

1. Human training for supporting industry:

a) Supporting products manufacturing projects under the List shall be funded for human training from the Supporting Industry Development Program.

b) Individuals who directly perform duties of the Supporting Industry Development Program shall be provided with advanced training in both Vietnam and abroad under the State training programs.

2. Training Institutions for supporting industry:

a) Organizations, investors and joint venture corporations are encouraged by the State to establish training Institutions directly serving in production of supporting products.

b) Training institutions serving in manufacturing supporting products shall be received aid/assistance assisted from Science and Technology Fund, Training Fund and others;

c) Universities, Research Institutes, existing training institutions are encouraged to provide about force in the supporting industry with advanced training.

Article 7. International Cooperation in supporting industry

1. Promote international cooperation in the supporting industry, especially among nations, territories, entities, multinational groups, foreign groups with advanced science and technology to attract investors and to create bond among organizations and individuals operating in the supporting industry both in Vietnam and overseas.

2. Promote searching and advanced technology transfer activities to Vietnam in order to enhance the capacity of domestic supporting industry enterprises.

3. Boost international cooperation in human development serving in supporting industry, give priority to train students majored in supporting industry related fields at universities, colleges and vocational schools in local region and all over the world; attract and employ high-qualified workers and talent young generations in the field of researching and teaching supporting industry in Vietnam.

Article 8. Assistance in market expansion

Supporting products under the List shall:

1. Be given priority to participate in national trade promotion program.

2. Receive partial funding for trademark registration, participation in domestic and oversea fairs/ exhibitions, market access and service charges from the Supporting Industry Development Program.

Article 9. Supporting Industry Development Center

1. Supporting industry development center is founded on the basis of rearrangement of the existing units of ministry of trade and industry in order to carry out the following duties:

a) Carry out technology transfer and application, support manufacturing of trial supporting products under the List;

b) Assist enterprises in setting up a production management system to suit the international standards;

c) Provide employees with advanced training in the area of technical management in supporting industry;

d) Carry out trade promotion; organize fairs/exhibitions;

đ) Promote both domestic and foreign investment to boost the development of supporting industry.

2. An supporting industry development center shall only be established when all of the following conditions are satisfied:

a) Infrastructures, equipment for testing and manufacturing trial supporting products and the professional management team to meet the requirements of supporting industry development.

b) There are consultants in the fields of technology, intellectual property and business management related to supporting industry;

c) There are possibilities of associating with domestic and foreign manufacturers, research and training centers to serve in supporting industry.

Article 10. Supporting Industry Development Program

1. Objective:

Support individuals, organizations in improving their competence in development of supporting industry.

2. Contents:

a) Assist in improving enterprise competence: business administration, production management, connect supporting industrial product manufacturers with customers, supply products to multinational groups and other domestic and foreign supporting industrial manufacturers; promote consuming market;

b) Support in training labor force to meet the needs of supporting industrial production;

c) Assist in research and development, technology application and transfer and renovation in trail manufacturing of components, accessories and materials;

Disseminate knowledge and information on policies, market and Vietnam’s supporting industry capability through various forms such as workshops, news, publications and advertisements posted on other mass media;

Promote international cooperation and attract foreign investment in the supporting industry;

Assist in setting up technical standards and specifications of supporting products on the List to comply with the international and regional standards;

Create and update the database of domestic and foreign supporting industries on a dedicated supporting industry web portal.

3. Funding:

a) Funding for the execution of the Supporting Industry Development Program:

- Funding from the State according to the applicable regulations;

- Funding from entities for carrying out the development of supporting industry;

- Sponsorships and contributions from domestic and foreign individuals and organizations;

- Other lawful sources of capital regulated in Vietnam Law.

b) Planning and Estimation:

- The Ministry of Trade and Industry makes and aggregates estimates of funding for supporting industry into its combined annual budget and submits to Ministry of Finance, Ministry of Planning and Investment and other relevant agencies;

- People’s Committees of provinces and central – affiliated cities (hereinafter refer to as provinces) shall make and aggregate the estimation of funding for supporting industry into the local annual budget estimate and submit it to competent authorities to approve.

4. The Prime Minister shall promulgate specific regulations on the development, management and execution of the Supporting Industry Development Program.

Chapter III. INCENTIVE POLICIES ON THE SUPPORTING INDUSTRY

Article 11. Subjects of incentives and procedures for certification of incentives

1. Subjects

Projects for manufacturing supporting products under the List includes new investment projects, technology development and renovation projects, new production processes and new production projects with the increase in productivity by at least 20%.

2. Procedure for certification of incentives:

a) The small and medium-sized enterprises shall submit the application for certification of incentives for their projects for manufacturing supporting products to local competent authorities where these projects are located or to the Ministry of Trade and Industry. The local competent authorities send the Decision of certification of incentives to the Ministry of Trade and Industry;

b) Entities that are not mentioned above shall submit their application for certification of incentives to the Ministry of Trade and Industry.

3. Time limit of certification of incentives

In consideration of the application for incentive certification, the certifying agency shall inform the applicant of the result of the incentive certification within 30 working days;

b) If the application fails to meet the conditions of certification, the certifying agency shall inform the applicant to submit the complete application in writing within 05 working days from the date of receiving the application; the certifying agency shall inform the result of the incentive certification within 30 working days from the date of receipt of the complete dossier.

4. Post-verification:

The projects for manufacturing supporting products on the List, which are not eligible for incentives shall have incentive withdrawn and compensation shall be paid for the incentives.

5. The Ministry of Trade and Industry shall specify the application for incentives and procedure for post verification.

Article 12. Incentive policies for supporting industrial production projects under the List

1. Common Incentive policies:

a) Corporate income tax:

a) Tax incentives under Law No. 71/2014/QH13 amending and supplementing a number of articles of Law on Taxation dated June 26 2013.

b) Import Duties:

Imported commodities that are imported to create fixed assets shall be exempted from import duties as stipulated in Law on Import – Export Duties and its instructional documents.

c) Credit:

- Supporting industrial production projects under the List shall be granted loans at investment credit rate from the source of investment credit of the State.

- Supporting industrial production projects under the List shall be granted short-term loans in VND by credit institutions and branches of foreign banks at the interest rate not exceeding the maximum interest rate regulated by the State Bank at that time.

d) Value-added tax:

Value-Added Tax of revenue from supporting products on the List may be declared monthly, quarterly or yearly. The Ministry of Finance shall provide detailed guidelines on this point.

đ) Environmental protection:

Supporting industrial production projects under the List shall take loans at the concessional rate from Vietnam Environmental Protection Fund for pollution treatment and environmental protection items of the projects.

2. Incentives for small and medium-sized enterprises:

Besides these common incentives stipulated in Clause 1 of this Article, small and medium-sized enterprises manufacturing supporting products under the List are also entitle to the following incentives:

a) Investment credit:

These small and medium-sized enterprises may take loans of up to 70% its investment on the basis of guarantee provided by the organization permitted to guarantee for SMEs if it meet all of the following conditions:

The total value of mortgage or pledge to the credit organization, excluding mortgage or pledges for other kinds of loans, is at least 15% of the loan; Owner’s equity capitalized in the project is at least 20%, after deducting equity invested in other projects;

At the time of request for guarantee, there are no outstanding liabilities to the state budget, bad debts to credit institutions or other economic organizations.

b) Water surface/land rents:

- Exempted or reduced land/water space rent as stipulated in Land Law;

-With regard to special or large-scale projectswhich may have significant socio-economic effectiveness and need greater incentives, the Ministry of Finance shall cooperate with the Ministry of Planning and Investment to make a decision on the basis of the proposal of the People's Committee of the province where the projects are located in accordance with regulations of law on land.

3. Besides the common incentives prescribed in Clause 1 of this article, projects in manufacturing supporting products on the List located in disadvantageous or extremely disadvantageous areas shall benefit from region-based investment incentives.

Article 13. Incentive policy management

1. Where the information provided by entity under incentives specified in this Decree is found untrue and take the advantage of incentives with wrong purposes, the incentives shall be withdrawn.

2. In the case that an entity is entitle to various level of the same incentives, the highest level shall be applied.

3. Ministries, Departments and People’s Committees of provinces shall be responsible for directing incentive examination, inspection and revocation.

Chapter IV. IMPLEMENTATION ORGANIZATION

Articles 14. Responsibilities of Ministries and Departments

1. The Department of Trade and Industry shall take charge of the management on supporting industry development according to the following tasks:

a) Formulate and submit plan estimation to competent authorities passing legal normative documents on supporting industry development.

b) Take charge of developing plan and prepare plan estimation for the Supporting Industry Development Program and aggregate estimated budget into the 5-year socio-economic development plan and annual socio-economic development plan of the Ministry of Trade and Industry.

c) Review, update the List in accordance with the reality in each period and submit it to Government for approval;

d) Develop and submit to the Prime Minister for approval; set up, manage and execute the Supporting Industry Development Program;

đ) Approve the existing units rearrangement scheme of the Ministry of Trade and Industry to found Supporting Industry Development Centers;

Take charge of and cooperate with the Ministry of Science and Technology to establish and pass the national technical standards, set up and announce the basic standards on material, raw material, components and parts; develop the national standards on raw material, material, components and parts in accordance with international standards and propose the Ministry of Science and Technology for issuance;

g) Take charge of and cooperate with Ministries, Departments and local authorities to direct and handle with concerns related to the development of supporting industry;

h) Cooperate with domestic and foreign organizations and individuals to mobilize capital, attract investors and other sources of funding for the development of supporting industry.

i) Direct to conduct the incentive certification and post-verification procedure;

k) Take charge of and cooperate with the Ministry of Finance to develop Joint Circular providing guidance on budget estimation, management and expense for the Program of Supporting Industry Development;

l) Take charge of and cooperate with Ministries, Departments and People’s Committees of province in examination, inspection and withdrawal of incentives.

2. Responsibilities of the Ministry of Finance:

a) Take charge of drawing up the budget for the Supporting Industry Development Program as per Law on State Budget, direct to draw up estimation and manage spending of The Supporting Industry Development Program.

b) Issue detailed guidelines on tax incentives for the development of supporting products within its jurisdiction;

c) Instruct or issue the policy to entities eligible for loan from State investment credit, within its jurisdiction, to ensure a simple and transparent procedure and facilitate the execution of loan procedure of Vietnam Development Bank.

d) Corporate with the Ministry of Trade and Industry in funding estimation and management of the Program of Supporting Industry Development;

đ) Take charge of in instructing the value-added tax declaration promulgated in Point d, Clause 1, Article 12 of this Decree.

3. Responsibilities of the State Bank of Vietnam:

a) Cooperate with the Ministry of Finance and Ministry Of Trade and Industry to release detailed guidelines on the implementation of credit policies prescribed in Article 12 of this Decree to ensure a simple procedure and loan security;

b) Cooperate with the Ministries, Departments and local authorities to instruct and supervise the implementation of these credit policies, handle with arising problems and propose solutions during the period of implementation.

4. Responsibilities of the Ministry of Planning and Investment:

a) Take charge of arranging funding for the Supporting Industry Development Program as per Law on State Budget, mobilize ODA and establish the Supporting Industry Development Center under Vietnam Law;

b) Take charge of and cooperate with Ministries, Departments to draw up incentive policies in foreign investment in order to promote in-house supporting products consumption.

5. Responsibilities of the Ministry of Environment and Natural Resources:

a) Cooperate with the Ministry of Finance and relevant Ministries and Departments to review and propose to supplement incentive policies on land and environment for supporting industrial production projects under the List;

b) Promulgate regulations on provision of execution and refund mechanism of supporting industrial production projects under the List invested in industrial zones that lease land having infrastructure from the Owner of this industrial zones who leased land from the State and have already paid the land rent.

6. Responsibilities of the Ministry of Labor – War Invalids and Social Affairs:

a) Take charge of and cooperate with relevant Ministries, Departments to review, amend and supplement the current regulations of oversea specialists and qualified workers who directly operating in the field related to supporting industry to simplify the procedure for the issuance of work permit.

b) Cooperate with the Ministry of Trade and Industry to provide employees with advanced training who directly work in the supporting industry.

7. Ministries, ministerial-level agencies and Governmental authorities within its jurisdiction shall coordinate with the Ministry of Trade and Industry for management of the supporting industry development as regulated.

Articles 15. Responsibilities of People’s Committees of provinces

The People’s Committees of provinces performing the management of the supporting industry development shall be responsible for:

1. Formulate, amend and issue legal normative documents and policies on development and assistance to the supporting industry in accordance with Vietnam law and local conditions.

2. Develop, adopt and implement the Supporting Industry Development Program in located locals.

3. Secure the local budget to organize the Supporting Industry Development Program.

4. Assign a local competent authority to implement the incentive certification, prepare annual aggregate report on incentive-certified projects and submit to the Ministry of Trade and Industry.

5. Promote, mobilize and attract capital invested in the Supporting Industry Development Program in local.

6.Annually report to relevant Ministries and Departments on the progress of development of supporting industry.

Chapter V. PROVISIONS OF IMPLEMENTATION

Article 16. Transitional treatment

The existing projects for manufacturing supporting products under the List shall be received the existing new incentives prescribed in this Decree.

Article 17. Entry into force

This Decree comes into effect from January 01 2016 and nullifies the Decision no. 12/2011/QD-TTg dated February 02 2011 on policy on development of supporting industry and Decision No. 1483/QD-TTg on the issuance of List dated August 26 2011 of the Prime Minister and related documents.

Article 18. Responsibility for Implementation

1. The Ministry of Trade and Industry shall be responsible for cooperating with other Ministries, Departments, the People’s Committees of provinces to deploy this Decree and report to the Prime Minister on the implementation status and arising issues needing solving.

2. Ministers, Heads of ministerial – level agencies, Heads of governmental agencies, President of People’s Committees of provinces shall be responsible for implementing this Decree./.

 

ANNEX

(Attached with Decree No. 111/2015/ND-CP dated November 03 2015 by Government)

I. TEXTILE & GARMENT INDUSTRY

- Natural fiber: cotton, silk, jute, hemp fiber;

- Synthetic fiber: PE, Viscose;

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

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

- Sewing threads for textile and garment

- Chemicals, auxiliary chemicals, fabric dyes

- Accessories: buttons, zippers, mex

II. FOOTWEAR – LEATHER INDUSTRY

- Leather

- Leatherette;

- Shoe soles, shoelace, toe shoe

- Chemicals used in leather tanning;

- Salty leather

- Sewing thread for shoe

- Shoe goo, decorative accessories ...

III. ELECTRONICS INDUSTRY

- -Basic electronics –optoelectronics components; transistors, integrated circuits, sensors , resistors , capacitors , diodes , antennas , thyristor;

- Quartz components;

- IC

- Material used for manufacturing electronic components, Semi-conductors, hard magnetic materials, active insulators;

- Electronic products components; plastic components, rubber components, glass components and mechanical-electronic components;

- Laptop battery and cell phone battery

- Wires, cables, LED light bulbs, headphones and speakers

- Cell phone battery chargers

- Screens

IV. AUTOMOBILE INDUSTRY:

- Engine and engine components: piston, crankshaft, connecting rod , gear , exhaust , cylinder , cylinder head assembly kits , camshaft , rings, engine valves;

- Lubrication system: oil filters, coolers, radiators, oil pumps and valves;

- Cooling system: radiators, thermostat valves, water pumps, air cooling fans;

- Fuel supply system: fuel tanks, fuel filter;

- Frame – hull – door: punch –late-shaped components, trunk, chassis, doors, doorstep;

- Suspension system: Tweezers, springs, dampers

- Wheels: Tires, aluminum rims;

- Transmission system: clutch, gearbox, axles, propeller shaft;

- Driving system

- Braking system;

- Electric – Electronic components:

- Power supply: Generators, accumulators;

- Ignition system: spark plug, high voltage transformer;

+ Starter relay, electric starter;

+ Wires, connectors, fuses, sensors, automatic control devices, processors;

- Lighting system and signals: indicators, horns, gauges;

- Automobile exhaust treatment system;

- Plastic components;

- Rubber components, buffering material;

- Windshields, wiper blades, seats

V. MECHANICAL FABRICATION SECTOR:

- Molds, fixtures: processing fixtures, testing fixtures, stamping molds, casting molds;

- Tools – cutters: drill, turning cutters, milling cutters;

- Mechanical processing components and accessories, welders;

- Components and accessories of shipping building, agricultural machines and driving machines;

- Components, equipment and accessories for processing agriculture, forestry, aquaculture and salt

- Measurement devices: rulers, 3D - coordinate measuring machines, metal analyzers, ultrasonic welding machines

- Other machine components: high-strength bolts, high tensile fasteners, bearings , silver lining, valves, joints, punch plates, variable speed boxes, hydraulic cylinders;

- Fabricated steel.

VI. SUPPORTING PRODUCTS USED IN HI-TECH INDUSTRY

- Types of mold: high precision molds, high precision mold for plastic casting;

- High standard mechanical parts: types of nuts, bolts, screws and high - precision equipment used in electronics, mechanical electronic parts, medical electronics, industrial robots

- Types of electronic components , electronic circuits used for creating equipment : Peripheral equipment , computers , electronic appliances, audiovisual equipment , solar cells ; microprocessors ; controllers (programmable logic controllers PLC , CNC , ... ) ;

- Components and accessories used for new power generator and renewable generator

- High quality plastic components: high precision drive train, durable, heat-resistant and wear-resistant plastic components;

- Types of sensors: air sensor, acceleration sensors, magnetic sensors, biological sensors, temperature sensors, moisture sensors, light sensors , pressure sensors .

- New generation engines: electric motors, , magnetic motors, servo motors, reluctance motors, linear motors.