To foster greater development momentum for high-tech zones in Vietnam, and to better meet the requirements of the Fourth Industrial Revolution, on February 1st, 2024, the Government issued Decree No. 10/2024/ND-CP regarding high-tech zones ("Decree 10"), replacing Decree No. 99/2023/ND-CP on the regulations for high-tech zones ("Decree 99"). Decree 10 introduces several crucial provisions as follows:
1. Specific regulations on the construction and development directions of high-tech zones ("HTZs")
Decree 10 supplements the inclusion of agricultural areas applying high technology within the scope of HTZs. Accordingly, this provision aims to attract more investment into agriculture utilizing high technology.
Decree 10 not only regulates issues directly related to HTZs but also stipulates certain matters concerning the technical social infrastructure system serving HTZ activities (constructed outside the HTZ boundaries). These include educational, healthcare, sports, cultural facilities, greenery, parks, commercial areas, services, accommodation facilities, and residential areas directly serving the labor force working within the HTZ. Thus, it is evident that HTZs are directed by the State to become not only centers for research, application, and development of high technology but also driving forces and economic development nuclei for a region or area.
2. Specific regulations on preferential policies to encourage investment in HTZs
2.1. Prioritizing the allocation of funds from the state budget for investing in the construction of HTZs
Decree 10 clearly delineates the State's policy of prioritizing support for investment capital development from the state budget, official development assistance (ODA), credit support, preferential credit interest subsidies, and other assistance to prepare for investment, land clearance, construction of technical infrastructure systems (inside and outside HTZs), social infrastructure... to serve the development of science and technology within high-tech zones. Additionally, Decree 10 also establishes mechanisms to allow the use of funds from government bonds, local government bonds for implementing compensation projects, support and resettlement of large-scale technical infrastructure investment projects, social infrastructure that plays a pivotal role.
2.2. Investment projects in HTZs are entitled to high-level investment incentives and support as stipulated
Decree 10 defines the principle that HTZs (regardless of specific geographical locations on the ground) are all designated as investment incentive areas, enjoying investment incentives applicable to areas with particularly difficult economic and social conditions—these are high-level incentives reserved for investment projects. According to current regulations, the incentives that enterprises may enjoy include:
a. Corporate income tax exemption for 4 years and a 50% reduction in payable tax for the next 9 years; applying a corporate income tax rate of 10% for 15 years.
b. Import tax exemption for imported goods used for fixed asset formation of investment projects; import tax exemption for raw materials, supplies, components (similar to cases where domestically produced materials are unavailable) imported for production of the project within 5 years from the start of production.
c. Land and water surface rent exemption during basic construction period (not exceeding 3 years); land rent exemption for 15 years after the basic construction period.
3. Detailed provisions on the rights and obligations of investors in constructing and operating infrastructure in HTZs ("Infrastructure Investors")
3.1. Regarding the rights of Infrastructure Investors
Decree 10 stipulates on the principle that Infrastructure Investors only have the right to lease assets attached to the land they invest in building (technical infrastructure systems, construction of workshops, offices), without the right to sublease land use rights, nor the right to transfer the value of land use rights and assets attached to the land.
Specifically, Decree 10 outlines two investment cases in constructing and operating infrastructure in HTZs based on funding sources, including: (+) cases where the state budget does not invest in constructing technical infrastructure systems in HTZs ("Projects without State Budget"), and (+) cases where the state budget invests in constructing part of the technical infrastructure systems in HTZs ("Projects with State Budget").
a. In the case of Projects with State Budget, Infrastructure Investors will:
- Be leased land by the HTZ Management Board (HTZMB) to invest in constructing technical infrastructure systems ("Facilities") and be allowed to sublease the Facilities upon completion (for public land use areas and technical infrastructure areas).
- Have land allocated by the HTZMB for investing in constructing Facilities, assets attached to the land; be allowed to sublease the Facilities upon completion of construction (for areas serving production and business investment projects). In this case, Infrastructure Investors must return the land to the HTZMB after completion of construction.
b. In the case of Projects without State Budget
Infrastructure Investors will be leased land by the State to invest in construction of facilities/assets attached to the land for subleasing upon completion of construction.
3.2. Regarding the obligations of Infrastructure Investors
Decree 10 also stipulates the obligations of Infrastructure Investors, besides meeting conditions regarding real estate business, land (conditions assigned by the State for land allocation, land leasing... to implement projects), they must also meet notable conditions including:
- Registering and committing to the industry, type of investment project attracted to the high-tech zone based on the direction of high-tech zone development approved by the Prime Minister's decision to establish or expand the high-tech zone;
- Committing to attract investment projects currently operating high technology in accordance with prescribed principles, criteria;
- Establishing and implementing a mechanism for inspecting, supervising the implementation status of investment projects, the implementation status of commitments to meet principles, criteria for investment projects.
Thus, Decree 10 enhances the responsibility of Infrastructure Investors in ensuring the attraction of high-tech investment projects into HTZs.
4. Detailed provisions on the rights and obligations of investors implementing investment projects within HTZs ("Investors")
Decree 10 requires investment projects implementing high-tech activities that are not subject to the requirement of investment policy approval or issuance of Investment Registration Certificates, Investors are responsible for conducting procedures to request confirmation of investment projects meeting high-tech operation principles. Accordingly, high-tech operation principles applicable to investment projects implemented within HTZs include:
- Objectives and contents of investment project activities are in line with the mission of the HTZ.
- Application of environmentally friendly measures, energy efficiency.
- Compliance with planning, technical infrastructure supply capacity, and social infrastructure of the HTZ and relevant legal regulations.
- Investors proposing investment projects must have financial capabilities or mobilize other lawful resources to meet the requirements for investment capital for construction, maintenance, and operation of the project; have technological capacity, management capacity to ensure the construction, implementation of the investment project according to the schedule, plan.
- Priority is given to investment projects with a higher investment rate (investment project costs calculated per unit of land area) than the average investment rate in that functional zone.
- Meet corresponding criteria for each type of regulation.
Investors should note that commitments to implement the principles, criteria of Investors are recorded in the Decision approving investment policy/Investment Registration Certificate/Decision on land allocation without land use fees/Decision on land lease/Rental contract (subleasing land) or documents confirming investment projects meeting high-tech operation principles. In cases where Investors fail to meet the prescribed commitments, Investors will be subject to sanctions including:
- Not being entitled to investment incentives,
- Ceasing or partially ceasing, terminating or partially terminating project activities if after 01 year or according to the time limit prescribed in the decision to suspend the investor's activities, the violation cannot be remedied in accordance with the provisions of the Investment Law and related legal regulations.
5. Special incentives for workers at HTZs
Decree 10 stipulates the following special incentives for workers working at HTZs:
- Being leased, purchased, or lease-purchased houses, accommodation facilities serving workers at HTZs.
- Upon establishing HTZs, there must be a feasible plan to build residential areas, adjacent or surrounding public facilities to ensure the livelihoods of experts, workers working at HTZs.
- The state budget is allowed to be used to construct technical infrastructure systems, social infrastructure outside the HTZ fence to serve workers working at HTZs.
- For foreign workers, Decree 10 provides a mechanism allowing investors, experts, workers, and family members (including father, mother, spouse, children under 18 years old or over 18 years old living with that person), who are foreigners, to be considered for multiple-entry visas with a validity period appropriate to the duration of direct work at HTZs (without specifying a maximum entry period).
These provisions create maximum favorable conditions for workers to work at HTZs with peace of mind, thereby contributing to attracting a high-quality workforce to work at HTZs.
Decree 10 takes effect from May 1, 2024.
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