Three matters for manufacturing enterprises in Viet Nam to note

Wednesday, Sep 10, 2014 09:19

The law can be hard to maneuver, and so when it comes to business law, a lot of money may be at stake. The law, as regards the manufacturing industry, utilizes different provisions depending upon the characteristics of the specific sector. PLF Law firm takes the time to elucidate three of the trickier aspects of active manufacturing enterprises.

Firstly, the location in which manufacturing enterprises can build headquarters is subject to several conditions that vary according to the nature of the work. If a business falls under the heading of production, processing, or farming, it is not permitted to be headquartered in densely populated areas. Instead, it must build at a distance from these urban areas, in effect creating a buffer zone.

If a company wishes to place its headquarters within city limits, their headquartered activities are limited to purchasing, selling and displaying goods. If the aforementioned restricted activities are necessitated, then the company may build factories or branches in adjacent areas beyond the buffer zone.

Recently, the People's Committee of HCM City promulgated Decision No 200/2004/QD-UBND on August 18th, 2014 which added caveats to the blanket ban on headquartering in urban areas. The decision clarified that:

"The HCM City People's Committee shall not grant new business registration certificates to enterprises located in densely populated areas and operating in the following sectors, namely: basic chemical manufacturing and the manufacturing of batteries, storage batteries, pesticides, refrigerants, alum, detergents, dyes, or paints. In the event that residentially located enterprises need to conduct production activities, enterprises may apply for business registration of the above mentioned sectors and commit to refrain from such conduct at the headquarters.

Enterprises that are already in densely populated areas and could be categorized as one of the aforementioned business sectors must comply with the relocation plan of the Municipal People's Committee.

Secondly it is important to note, environmental protection standards and regulations must be strictly adhered to. Depending on the nature, scale and capacity of a project, the project owner must register with the Environmental Protection Committee or draft an assessment report on the projected environmental impact and submit to the appropriate authority for evaluation and approval.

Enterprises are obligated to register with the Environmental Protection Committee as prescribed by law. If a company fails to comply with the requirement, enterprises not subject to investment project establishment regulations will be fined VND2 million to VND3 million. Those who are subject to investment project establishment regulations will face fines ranging from VND40 million to VND50 million. Additionally, enterprises are also required to submit approved Environmental Impact Assessment Reports; failure to do so will incur fines from VND200 million to VND250 million. Apart from financial penalties, enterprises found to be in violation of said requirements will also be suspended from operation from 6 to 12 months.

Thirdly, there are different regulations regarding which sublicences are required by different types of businesses. Enterprises in certain manufacturing and trading sectors are required to apply for one to several business licences, business eligibility certificates or other documentation (collectively referred to as "sublicences") as provided for by law, before they can operate.

For instance, enterprises that make seals, deal with industrial explosive material production or those involving the use of industrial explosives must possess a Certificate of Security and Order Qualification.

Meanwhile, enterprises that manufacture food packaging materials must have a Certificate of Food Safety Qualification, and a certification of conformity with food safety regulations for their products.— PLF – LAW FIRM

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