CIRCULAR
GUIDING THE LIQUIDATION OF MACHINERY, EQUIPMENT, TRANSPORT MEANS, SUPPLIES AND RAW MATERIALS OF FOREIGN-INVESTED ENTERPRISES

- Pursuant to the Governments Decree No.29/2004/ND-CP of January 16, defining the functions, tasks, powers and organizational structure of the Ministry of Trade;

- Pursuant to the Governments Decree No.24/2000/ND-CP of January 31, 2000 detailing the implementation of the Law on Foreign investment in Vietnam;

- The Ministry of Trade hereby guides in detail the liquidation of machinery, equipment, transport means, supplies and raw materials of foreign-invested enterprises as follows:

I. GENERAL PROVISIONS:

1. Objects of application and scope of regulation

Joint venture enterprises, enterprises with 100% foreign capital, export-processing enterprises and parties to business cooperation contracts (hereinafter referred collectively to as foreign-invested enterprises) may liquidate machinery, equipments, transport means, supplies and raw materials under their ownership according to the forms and contents prescrib3ed in this Circular.

2. Liquidation forms

a. Sale on the Vietnamese market;

b. Export;

c. Donation, presentation;

d. Destruction;

3. Liquidation contents

a. Supplies and equipment redundant upon the completion of capital construction for the formation of foreign-invested enterprises;

b. Assets of foreign-invested enterprises after operation termination or dissolution;

c. Machinery, equipment, transport means, supplies and raw materials of operating foreign-invested enterprises.

4. Liquidation conditions

a. Foreign-invested enterprises may conduct the liquidation according to the forms and contents prescribed in this Circular only after obtaining the written approval of the Trade Ministry or agencies authorized by the Trade Ministry and must fulfill the financial obligations related to the liquidated assets according to the provisions of the Law on Export Tax and Import Tax and other relevant law provisions.

b. Particularly for operating foreign-invested enterprises, apart from complying with the provisions of this Item, they must also meet the following conditions:

- They may liquidate machinery, equipment and transport means only in one of the following cases:

+ Where the depreciation duration expires;

+ Where machinery, equipment or transport means are broken;

+ Where machinery, equipment or transport means are no longer suitable to enterprises production/business activities;

+ Where their production scales down or their operation objectives change;

+ Where their machinery, equipment or transport means are replaced with new ones furnished with more advanced technologies.

- They may liquidate supplies and/or raw materials only in one of the following cases:

+ Where supplies and/ore raw materials are redundant or left in stock;

+ Where supplies and/or raw materials are not up to quality standards;

+ Where supplies and/or raw materials are no longer suitable to their production/business activities.

II. PROCEDURES FOR LIQUIDATION OF MACHINERY, EQUIPMENT, TRANSPORT MEANS, SUPPLIES AND RAW MATERIALS

1. Liquidation dossiers

a. A dossier of liquidation of supplies and equipment redundant after the foreign-invested enterprises capital construction completion consists of:

- The enterprises written request, clearly stating the liquidation form and list of to be-liquidated supplies and/or equipment, made according to a set form;

- The report on settlement of the construction work, including the contents on settlement of imported supplies and equipment, and proposed measures to deal with supplies or equipment redundant after the work construction completion.

b. A dossier of liquidation of assets upon the foreign-invested enterprises operation termination consists of:

- The written request of the enterprises asset liquidation board, clearly stating the liquidation form and list of to be-liquidated machinery, equipment, transport means supplies and/or raw materials, made according to a set form;

- The investment-licensing agencys decision approving the enterprises operation termination;

- The decision on establishment of the asset liquidation board, issued by the joint-venture enterprise managing board or the foreign investor (for enterprises with 100% foreign capital), or business cooperation parties, except fro cases where the establishment of liquidation boards is not required as prescribed in Article 47 of the Planning and Investment Ministrys Circular No.12/2000/TT-BKH of September 15, 2000 guiding foreign investment activities in Vietnam;

- The liquidation plan, approved by the joint-venture enterprises managing board or the foreign investor (for enterprises with 100%foriegn capital), or business cooperation parties.
c. A dossier of liquidation of machinery, equipment and/or transport means of operating foreign-invested enterprises consists of:

- The enterprises written request, clearly stating the reasons for liquidation, liquidation form and list of to be-liquidated machinery, equipment and/or transport means, made according to a set form;

- The depreciation list of to be-liquidated machinery, equipment and/or transport means, in case of liquidation upon depreciation expiry;

- The record on assessment of broken machinery, equipment and/or transport means, in case of liquidation for replacement of broken ones;

- The investment-licensing bodys written approval, in case of liquidation for reduction of operation costs, renewal of technologies, or change of operation objectives.

d. A dossier of liquidation of supplies and raw materials of operating foreign-invested enterprise consist of:

- The enterprises written request, clearly stating the reasons for liquidation, liquidation form and list of to be-liquidated supplies and/or raw materials, made according to a set form;

- The quality assessment certificate, proving that raw materials or materials are of inferior qualify and not up to standards for production, issued by traders providing goods assessment services, prescribed in the Governments Decree No.20/1999/ND-CP of April 12, 1999 on commercial provision of goods assessment services and the Trade Ministrys Circular No.33/1999/TT-BTM of November 18, 1999 guiding the implementation of Decree No.20/1999/ND-CP.

2. Procedures for liquidation of machinery, equipment, transport means, supplies and raw materials of export-processing zones

The liquidation of machinery, equipment, transport means, supplies and raw materials of export-processing zones must comply with the provisions of this Circular and the provisions on goods purchase and sale between export-processing enterprise and domestic enterprise

3. Time limit for reply to liquidation applicants

Within 15 days after receiving the complete and valid dossiers, the Trade Ministry or agencies authorized by the Trade Ministry shall reply in writing to the liquidation applicants. In case of disapproving the liquidation, the Trade Ministry of agencies authorized by the Trade Ministry must clearly state the reasons therefore in their written replies to foreign-invested enterprises.

III. RESPONSIBILITIES OF THE TRADE MINISTRY AND AGENCIES AUTHORIZED BY THE TRADE MINISTRY IN CONSIDERING AND APPROVING THE LIQUIDATION

1. Responsibilities of the Trade Ministry

The Trade Ministry shall have to consider and approve the liquidation of machinery, equipment, transport means, supplies and raw materials for the following projects:

a. Investment projects on oil and gas exploration and exploitation;

b. Projects which are granted one investment license each, but have independent cost-accounting production establishments located in different provinces:

c. Investment projects dealing in duty-free shops;

d. Investment projects in the banking sector, licensed by the State Bank;

e. Investment projects dealing in prize-winning games.

2. Responsibilities of agencies authorized by the Trade Ministry

Agencies authorized by the Trade Ministry shall have to consider and approve the liquidation of machinery, equipment, transport means, supplies and raw materials of foreign-invested enterprises engaged in projects other than those mentioned in Item 1, Section III of this Circular.

IV. ORGANIZATION OF IMPLEMENTATION

1. Quarterly, agencies authorized by the Trade Ministry shall report to the Trade Ministry on the liquidation of machinery, equipment, transport means, supplies and raw materials of foreign-invested enterprises within their authorized scope.

2. The Planning and Investment Department shall periodically examine the liquidation of machinery, equipment, transport means, supplies and raw materials of foreign-invested enterprises by the agencies authorized by the Trade Ministry.

V. IMPLEMENTATION EFFECT

1. This Circular takes effect 15 days after its publication in the Official Gazette.

2. This Circular replaces the provisions of Section VIII, and Point 4, Item 1, Section IX, of the Trade Ministrys Circular No.22/2000/TT-BTM of December 15, 2000 guiding the implementation of the Governments Decree No.24/2000/ND-CP of July 31, 2000 which details the implementation of the Law on Foreign Investment in Vietnam regarding export, import and other commercial activities of foreign-invested enterprises; and item 3, Section I of the Trade Ministrys Circular No.26/2001/TT-BTM of December 4, 2001 amending and supplementing above-said Circular No.22/2000/TT-BTM.