“An Export processing zone (EPZ) is an industrial zone where gather enterprises specialising in manufacturing exports, providing services for the production or manufacture of exports, and export activities. This article will cover the legislation by which importing and distribution rights of such export processing enterprises in domestic market are regulated.“
In domestic trading, export processing enterprises are permitted to import a certain number of goods to serve internal purposes; only when a separate branch is established outside of the EPZ will they have the right to distribute products.
Importing right of export processing enterprises
It is legal for export processing enterprises to import from the local market several items to serve internal purposes (but not for sale in the EPZ), i.e. construction materials used to build structures in enterprises; stationery, food, and consumer goods serving the administration of their office apparatus and daily activities of their staff members and workers.
Export processing enterprises and their suppliers may choose whether or not to carry out the import and customs procedures for the aforementioned goods.
Distribution right of export processing enterprises
According to the provision at Clause 6 of Article 21 of the Decree No. 29/2008/ND-CP amended and supplemented by Clause 9 of Article 1 of the Decree No. 164/2013/ND-CP, export processing enterprises, which are granted Business License in goods purchase and sale and other activities directly related to goods purchase and sale in Viet Nam, must establish separate branches outside of the export processing enterprises and EPZ in order to conduct those activities.
Presently, such regulation is rather causing numerous complications for export processing enterprises since the inception of additional branches outside of the EPZ will undoubtedly result in extra costs of management, warehousing, personnel, etc. In addition, due to the fact that the EPZ is an industrial zone with defined geographical boundaries, entering and leaving the EPZ will also make it difficult for the management of the external branches.
Existing laws have yet to provide detailed regulations on the establishment of branches of export processing enterprises. Therefore, the current Law on Enterprise’s provisions on setting up branches of enterprises in general shall apply to export processing enterprises who wish to form branches outside of the EPZ. Furthermore, the relationship between export processing enterprises and their inland branches is prescribed to be export and import relationship. Export processing enterprises and branches engaging in the purchase and sale of goods must comply with the provisions on procedures and financial obligations applying to exports and imports.
PLF Law Firm