I.Vietnam –Emerging Land for Opportunities II. Foreign Direct Investment in Vietnam III. Post-WTO Investment Climate and Legal Frameworks IV. Investment-Related Costs

1. Thank you June 2010 VIPC Viet Investment Power 1 VIETNAM Emerging Land for Opportunities JESSIE LAN VO Deputy CEO Assistant

2. CONTENT I. Vietnam –Emerging Land for Opportunities II. Foreign Direct Investment in Vietnam III. Post-WTO Investment Climate and Legal Frameworks IV. Investment-Related Costs 2 June 2010 VIPC Viet Investment Power

3. I. Vietnam –Land for Opportunities 1. Vietnam at a glance Geography - Population(‘09): 85.79 mil. - Centre of Southeast Asia - Area: 331,698 sq. km - Coastline: 3,260 km Society - Growth rate (’07): 1.2% - Under 30 yrs old: >60% - Literacy rate: >90% Infrastructure - National highways: 86,327 km - Railways:3,219 km - Int’l airports: Hanoi,Da Nang & HCMC - Int’l seaports: 11( CaiLan, Danang, Van Phong, etc.) - 150 IPs with area of 31,436 ha - 8 EZs with area of 323,940 ha Economy - Real GDP: 94.68 bil. US$ - Real GDP growth rate(‘09):5.2%, year 2010e: 8.5% - Real GDP per capita(‘09): US$ 1052,year 2010e:1200 US$ - Export turnover( May 2010): US$ 6.1bil. 3 June 2010 VIPC Viet Investment Power

5. - Brisk and steady economic growth

6. - Transportation hub of Southeast Asia

7. - Abundant young labor force at low price

8. - Member of WTO, APEC, ASEAN, ASEM

9. - Favorable FDI promotion policies

10. - Rapidly improving infrastructure4 I. Vietnam – Land for Opportunities June 2010

11. II. Foreign Direct Investment in Vietnam 1. FDI inflows to Vietnam( 1988- May 2010) 5 June 2010 VIPC Viet Investment Power

12. II. Foreign Direct Investment in Vietnam 2. FDI distribution by sector(1988-2007) 6 June 2010 VIPC Viet Investment Power

13. II. Foreign Direct Investment in Vietnam 3. Top ten countries investing to Vietnam 7 June 2010 VIPC Viet Investment Power

14. IIII. Post-WTO Investment climate & Legal framework 1. Vietnam’s commitments to WTO Schedule of concessions & commitments on goods: Bound rates for 10,600 tariff lines An average cut from 17.4% to 13.4% phased over 5-7 years since 2007 Largest reduction applied to garments & textiles, fish& fish products, wood & paper, other manufactured goods, machinery, electrical & electronic items Committed to be member(fully or partially) to initiatives for IT products, garments & textiles, medical equipment, aircraft, chemicals, construction, equipment etc. Tariffs cut phased over 3-5 years since 2007 Schedule of specific commitments on trade in services Open door in 11 out of 12 service sectors(or 110 out of 115 sub-sectors), including: business services, communication, construction & related engineering, distribution, health, insurance, education, tourism, environment, finance, entertainment, transportation, etc. Commitments put in force right after WTO accession. In some cases, they’re phased over 2-4-6 years since 2007 8 VIPC Viet Investment Power

15. III. Post-WTO Investment climate & Legal framework 2. Investment-related obligations TRIMS (effective from 11 Jan 2007): Eliminate the application of requirements on trade balance, foreign exchange control on imports, export performance, export restrictions, local contents Intellectual Property Rights: Comply with TRIPS Agreement upon accession Transparency: Make public draft WTO-related legal instruments for public comments; Make public all legal documents; Provide WTO members with annual reports on equalization program 9 June 2010 VIPC Viet Investment Power

17. Breeding, rearing, growing & processing of agricultural, forestry & aquaculture products, production of salt, creation of new plant & animal varieties;

18. Utilization of high technology & advanced techniques, protection of the ecological environment & research, development & creation of high technology

19. Labor intensive industries;

20. Construction &development of infrastructure facilities & important industrial large-scale projects;

21. Professional development of education, training, health, sports, physical education & Vietnamese culture;

22. Development of traditional crafts & industries; and

23. Other manufacturing & service sectors which require encouragementRegions entitled to Incentives: - Regions with specially difficult socio-enonomic conditions; - Regions with difficult socio-economic conditions; and - Industrial zones, Export processing zones, High-tech zones & Economic zones

24. IIII. Post-WTO Investment climate & Legal framework 4. Incentives on Corporate Income Tax Standard rate: 28% Preferential rates of 10%, 15% and 20% for a period of 15 years, 12 years and 10 years are available depending on the scope of activities and location of the investment. Tax holidays: A complete exemption from CIT for a certain period( 4 yrs at maximum) followed by a period where tax is charged at half rate ( 9 yrs at maximum) Losses: Carry forward losses for 5 years Other incentives: Exemption or deduction of land use tax, land use fee, land rent, and water surface rent 11 June 2010 VIPC Viet Investment Power

25. IIII. Post-WTO Investment climate & Legal framework 5. Import Duty Exemption & Reduction Exemption applied to projects in investment encouraged sectors & regions on: Machinery & equipment, specialized means of transportation & construction materials( which can not be produced in Vietnam) comprising the fixed assets of certain projects Raw materials, spare parts, accessories, other supplies, samples, machinery & equipment imported for the processing of goods for export and finished products imported to stock to the processed goods Preferential ratesapplied to imported goods from countries that enjoy MFN with Vietnam(89 countries).Rates vary by the category of goods. Special preferential rates applied to imported goods from countries that signed special agreement with Vietnam(e.g.ASEAN ) Ordinary ratesare 150% of preferential rates VIPC Viet Investment Power

26. IIII. Post-WTO Investment climate & Legal framework 6. Forms of Investment 100% foreign-owned enterprise – Limited liability company – Joint stock company – Partnership – Holding company Joint venture Business cooperation contract BOT, BTO, BT Capital contribution, purchase of shareholding, M&A 13 June 2010 VIPC Viet Investment Power

27. 14 III. Post-WTO Investment climate & Legal framework 7. Licensing & Registration Procedure Projects fall in conditional sectors YES Investment Evaluation Procedures Investment Registration Procedures YES NO Investment capital is more than VND 300 mil. (approx. US$ 19 mil.) Respond within 45 working days Respond within 15 working days June 2010 VIPC Viet Investment Power

28. 15 III. Post-WTO Investment climate & Legal framework Provincial People’s Committee Management Boards of IPs,EZs Department of Planning & Investment Projectsoutside IPs & EZs Projects inside IPs & EZs Projects for infrastructure development of IPs, EZs 8. Investment Licensing Bodies June 2010 VIPC Viet Investment Power

29. IV. Investment-related cost 1. Monthly-wage(Source: JETRO survey, May 2009) 16 June 2010 VIPC Viet Investment Power

30. IV. Investment-related cost 2. Land price, office rent (Source: JETRO survey, May 2009) 17 June 2010 VIPC Viet Investment Power

31. IV. Investment-related cost 3. Public Utility & Transportation expenses(Source: JETRO survey, May 2009) 18 June 2010 VIPC Viet Investment Power

32. IV. Investment-related cost 5. Taxation(Source: JETRO survey, May 2009) 19 June 2010 VIPC Viet Investment Power

33. Thank you VIPC Viet Investment Power 20 THANK YOU! VIPC Capital Management Corporation 8 Nguyen Hue St., Dist.1, HCMC, Vietnam Tel: (84-8) 38277478/79 – Fax: (84-8) 38277488 Email: info@vipc.com.vn - www.vipc.com.vn June 2010