This Legal note contains the results of the legal review on investment on beer manufacture of foreign investor in Vietnam.
SB Law has evaluated and considered the requirement of Client and also reviewed Document on Planning for development of Vietnam’s Beer – Alcohol – Beverage Industry by 2025 and the orientation towards 2035.
A. LEGAL BASIS
(i) Law on Investment No.67/2014/QH13 passed by National Assembly of Socialist Republic of Vietnam on November 26, 2014;
(ii) Law on Enterprise No.68/2014/QH13 passed by National Assembly of Socialist Republic of Vietnam on November 26, 2014;
(iii) Decision No.3690/QD-BCT on approval for the planning for development of Vietnam Beer – Alcohol – Beverage Industry by 2025 and the orientation towards 2035;
(iv) Researching document on Planning for development of Vietnam’s Beer – Alcohol – Beverage Industry by 2025 and the orientation towards 2035 issued by the Industrial policy and strategy Institute of the Ministry of Industrial and Trade;
(v) The Construction Law No. 50/2014/QH13 passed on June 18, 2014, by the XIIIth National Assembly of the Socialist Republic of Vietnam at its 7th session;
(vi) Decree No. 59/2015/NĐ-CP on Construction project management;
(vii) Law on Environmental Protection No. 55/2014/QH13 passed on June 23, 2014 at the 8th National Assembly, 7th session of the Socialist Republic of Vietnam;
(viii) Decree No. 18/2015/ND-CP on environmental protection planning, strategic environmental assessment, environmental impact assessment and environmental protection plans;
(ix) Circular No. 27/2015/TT-BTNMT on strategic environmental assessment, environmental impact assessment and environmental protection plans.
B. PRELIMINARY COMMENTS
Pursuant to Decision No.3690/QD-BCT on approval for the planning for development of Vietnam Beer – Alcohol – Beverage Industry by 2025 and the orientation towards 2035 and Researching Document on Planning for development of Vietnam’s Beer – Alcohol – Beverage Industry by 2025 and the orientation towards 2035 issued by the Industrial policy and strategy Institute of the Ministry of Industrial and Trade, the specific targets of beer – alcohol – beverage industry in general and beer industry in particular shall be required as follows:
– Total production of beer is expected to reach 4.1 billion liters, that of alcohol is expected to reach 350 million liters (in which, total production of industrial alcohol holds about 35%), and that of beverage is expected to reach 6.8 billion liters by 2020. The export turnover is also expected to reach USD 450 million;
– By 2025, the total production of beer is expected to reach 4.6 billion liters, that of alcohol is expected to reach 350 million liters (in which, total production of industrial alcohol holds about 40%), and that of beverage is expected to reach 9.1 billion liters. The export turnover is also expected to reach USD 600 million.
Therefore, Client has high possibility to invest on Vietnam Beer – Alcohol – Beverage Industry. However, Client shall satisfy specific conditions of the Ministry of Industry and Trade as follows:
- Concentrate on adopting modern technologies and equipments to improve the product quality and minimize the consumption of raw materials and fuels; associate or merge in large-scale enterprises;
- Be encouraged on producing alcohol-free beer and luxury with competitive price in order to boost export. Keep on establishing and developing certain nationally-kwon brands of beer;
- Except for factories that produce beer for domestic sale, the construction of beer factories with scale of under 50 million liters/year is not encouraged.
C.PROCEDURE FOR SETTING UP A BEER FACTORY IN VIETNAM
Under Vietnam Law, in order to setup a beer factory in Vietnam, Client shall have to undergo following steps:
Step 1. Pre-licensing Procedures
Client shall have to determine where to locate its beer factory in Vietnam. We would like to note that, location of the proposed beer factory must strictly comply with master plan of Vietnamese Government.
According to the planning for region-based sector on beer industry of Vietnam Government, the Ministry of Industrial and Trade requires that:
(i) Improve the beer production capacity in regions where the beer output is still low in comparison with the population there such as the northern midlands and mountains, the central highlands and the Mekong river delta.
(ii) By 2025, the proportion of beer output in each region nationwide is expected to reach: 7% (which equivalent to 322 million liters) in the Northern Midlands and Mountains (in which, 2% (92 million liters) in the Northeast and 5% (230 million liters) in the Northwest), 23.3% (1,071.8 million liters) in the Red River Delta, 24.8% (1,140.8 million liters) in the North Central Coast and the Central Coast (in which, 15% (690 million liters) in the North Central Coast and 9.8% (450.8 million liters) in the South Central Coast), 4% (184 million liters) in the Central Highlands, 31.4% (1,444.4 million liters) in the Southeast and 9.5% (437 million liters) in Mekong River Delta.
Thus, Client needs to research, evaluate and examine all the region-based sector of Vietnam in order to choose the suitable location to implement such investment project.
Having studied the planning for development of beer industry in all region-based sector of Vietnam, SB Law hereby recommend some provinces having availability for setting up new beer factories:
– HOA BINH PROVINCE: Hoa Binh People’s Committee has enacted Decision No. 2156/QD-UBND dated on 23th December, 2014 approved the Planning for development of Beer – Alcohol – Beverage in Hoa Binh province by 2020 and orientation towards 2025 Period 2016 – 2020, quantity of beer increases an average as 35,05%/year, achives 84,3 million liters by 2020; Period 2021 – 2025, quantity of beer increases an average as 7,9%/year, archives 180 million liters by 2025;
– HA GIANG PROVINCE: Decision No.2588/QD-UBND issued by Ha Giang People’s Committee mentioned that in period 2016-2020: the industry on producing beer achives about 84,0 billion Vietnamese Dong/year. In orientation towards 2025: beer production industry archives about 200,0 billion Vietnamese Dong. This Decision also proposes to build an industry zones of beer manufacture in Bac Quang District with the primary products shall be non-pasteurized beer, fresh beer by 2020 with the quantity as about 7,0 million liters/year, by 2025 as 10,0 million liters/year.
– DONG NAI PROVINCE: Dong Nai People’s Committee has announced Decision No.1666/QD-UBND that require to build some beer manufactories (fresh beer, black beer…) with capacity under 5 million liters/year. Besides, Dong Nai People’s Committee also encourages setting up a new beer factory with capacity as 50-100 million liters/year.
Client shall need to liaise with competent authorities in such provinces for leasing land lot for setting up beer factory. However, in case Client wishes to invest in other provinces/cities, Client needs to acquire existing beer factories in such locations.
Step 2. Licensing procedures
Upon completion of Step 1, Client shall apply for Investment Registration Certificate and Business Registration Certificate. Pursuant to Law on Investment No. 67/2014/QH13 passed by National Assembly of Socialist Republic of Vietnam on November 26, 2014, before establishing an enterprise and starting on manufacture, the Investor need to submit the investment project dossiers to the registry offices of Province Industrial Zones Authority for granting the Investment Registration Certificate. The time schedule to carry out this procedure shall be 15 (fifteen) working days from submission of required application dossier to relevant competent authority.
After having been granted the Investment Registration Certificate, Client shall carry out the procedure to apply for a Enterprise Registration Certificate. The time schedule to carry out this procedure shall be 07 (seven) working days from submission of required application dossier to relevant competent authority.
Step 3. Post-licensing procedures
After step 2, Client shall carry out the following procedures:
- Signing land lease contract with competent authority/industrial park. The New Company in Vietnam shall officially enter into land lease contract with competent authority or industrial park depending on specific location of the factory. Land lease period can be up to 50 years (extendable). After that, Competent Authority shall grant Certificate of Land Use Right to Client.
- Obtaining Construction Permit: Before starting construction work, Client shall be required to obtain construction permit from competent authority. Generally, construction contractor shall be responsible for obtaining the Construction Permit for Client;
- Environmental Impact Assessment (EIA) procedures. Pursuant to Annex II of Decree No. 18/2015/ND-CP of Vietnam Government, all construction projects for beer breweries must conduct EIA. The People’s Committee of the province shall assess and approve EIA reports on projects for beer breweries in the province, except construction projects for beer with capacity of 30,000,000 liters of products per year shall be assessted and approved by The Ministry of Natural Resources and Environment. In some particular cases, People’s Committee of the province shall authorize the management board of industrial zones to assess the EIA report. The time schedule of assessment of EIA reports shall be 30 (thirty) or 45 (forty five) working days from submission of required application dossier to relevant competent authority.
SB Law hereby consider that the projects for beer manufacture in Vietnam always be supported and given incentives by Vietnam Government. Therefore, we are willing to assist and support Client from getting approved and put Client’s investment project into operation in Vietnam in the near future. Once again, thank you your kind co-orperation. If you have any further inquyry, please feel free to contact us.
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