Hong Kong: Vietnam - Legal Overview - Export Processing Zone and Industrial Zones

Last Updated: 20 November 1995
Most Read Contributor in Hong Kong, September 2016
The laws of Vietnam are complex and new legislation is constantly being introduced. What follows is no more than an introductory overview that we hope will assist investors to decide which areas of law they will need to research further.

This summary is, necessarily, selective and is no substitute for detailed legal advice.

(A) EPZs

1. The motivation behind the creation of EPZs was a desire on the part of the Government to encourage and develop export industries and attract investment, particularly foreign investment with potential for transfer of technology.

2. Decree 322 HDBT of 18 October 1991, and the ancillary Regulations on Special Processing Zones of the same date (together the "EPZ legislation") set out the regulations for the establishment and administration of such zones.

3. Each EPZ is supervised and run by a Management Committee, on which are representatives of the Ministries of Finance, Trade and the Interior, the State Bank, the Customs Department, and People's Committee. It has responsibility, broadly, to establish a scheme for the development and operation of the EPZ, and to promote investment and construction within the zone.

4. Any enterprise wishing to operate inside a designated EPZ, must apply to the Management Committee, which has the authority to grant an Investment Licence. The application process is intended to be quick and easy and replaces the usual investment licence application procedure via the SCCI.

5. Favourable conditions apply to Infrastructure Development Companies (either domestic enterprises or enterprises established under the Law on Foreign Investment) set up for the purpose of constructing and operating infrastructure projects within an EPZ. They may, in accordance with the plans set out by the Management Committee, seek investment for the EPZ and may sublet land to enterprises investing within the EPZ, lease and sell buildings or make charges for services provided.

6. EPZS, themselves, as their name suggests, are dedicated to the production of goods for export, though supporting service industries are also permitted. Vietnamese Banks and insurance companies (including foreign bank and insurance branches) are permitted to establish branches within an EPZ.

7. Each EPZ must be physically divided and fenced off from the surrounding area. No-one may live in an EPZ without permission from the Management Committee.

8. For customs purposes an EPZ is considered as if it were outside Vietnam. Any goods brought in from, or sent out to, the rest of Vietnam (other than to or from another EPZ) are liable for import or export duty.

9. Vietnamese Dong may not be used in an EPZ. Al] sales, purchases and payments must take place using a freely convertible currency.

10. Foreign invested enterprise or foreign parties investing via a business co-operation contract may invest in an EPZ.

11. Incentives to do so are offered as follows:-

- 10% profits tax for production enterprises and 15% profits tax for service industries. (This compares with a standard rates elsewhere of 25%, though preferential rates of 10%, 15%, 20% may be available in certain circumstances);

- Tax holidays of 4 years for production enterprises and 2 years for service industries; A refund of tax already paid, provided profits are reinvested either into an EPZ or elsewhere in Vietnam for at least 3 years;

- Equipment, raw materials and goods imported into the EPZ and goods exported from it are duty free;

- Goods transported from one EPZ to another are also exempt from import and export duties.

12. EPZ enterprises must adhere to the terms of their investment licence and generally, the Law on Foreign Investment. The EPZ legislation, however, specifically states that they have the right to:-

- lease land for the purpose of construction of buildings and plant necessary for its business;
- use the infrastructure services provided, in return for payment of the appropriate fee;
- export to foreign markets;
- import equipment and materials required;
- make decisions and plans for the Organisation of its business;
- fix the price of products;
- hire staff, preference being given to the employment of Vietnamese workers.

13. At the same time, an EPZ enterprise, like its counterparts investing elsewhere in Vietnam, is obliged to: -

- open and maintain accounts at a Vietnamese Bank keep accounting records and comply with audit requirements, insure its assets and against other risks, implement fire safety precautions, provide for environmental protection, provide for labour safety and hygiene and adhere to the foreign investment and other laws of Vietnam.

(B) LZs

1. Many similarities exist between LZs and EPZS:-

- in both, infrastructure development involving foreign and domestic enterprises is encouraged;

- both are organised and administered by a Management Committee, constituted by separate Charter, which plans the zone, promotes investment and has authority to grant investment licences to those wishing to operate within the zone;

- both may receive investment from domestic Vietnamese entities and foreign invested enterprises.

2. The main difference lies in relation to the type of business to be carried on. An EPZ is restricted to industries producing for export, (with supporting service industries). Enterprises within an IZ on the other hand, though still limited to production, may do so either for export or for sale to the domestic market. Again supporting service industries are permitted.

3. Incentives to set up in an LZ are offered to foreign invested enterprises though to a lesser degree than those available in an EPZ:-

- an 18% profit tax rate applies to production enterprises.

- A reduction to 12% is permitted provided a minimum of 80% of the enterprise's goods are exported.

- A tax holiday of 2 years is allowed

- a 22% profit tax rate, with a 1 year tax holiday entitlement is available for service industries.

4. The rules regarding foreign exchange control within an LZ are no different to those applied in Vietnam as a whole. Similarly, no special exemptions apply in respect of import or export duties payable.

NOTE: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

If you would like further advice please contact: David Ellis, Johnson Stokes & Master, 16th Floor, Princes Building, 10 Chater Road, Hong Kong; Tel 2843 4226; Fax no. : 2845 9121. Alternatively do a text search "Johnson Stokes and Master" and "Business Monitor".

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.