Gov’t makes an exception for Microsoft, welcomes large technology groups

 

 

Microsoft plans to relocate its Nokia smartphone plant to Vietnam, but its equipment was not new enough to be brought to Vietnam under the new regulation.

Under Circular No 20 which takes effect September 1, used machines and equipment will only be allowed to enter Vietnam if they have been used no more than five years and are at least 80 percent brand-new.

Microsoft said that it will gradually scale down production in other countries and gather strength for the factory in Bac Ninh province in Vietnam.

The number of production lines at the Bac Ninh factory would increase from six in late 2013 to 39 by the end of the year.

Microsoft was unable to bring the equipment to Vietnam before Sept. 1.

However, the Ministry of Science and Technology (MST) has found a solution to the problem, which allows Microsoft to bring its production lines to Vietnam in a legal way.

The ministry at a government meeting some days ago proposed to delay the enforcement of Circular No 20, which was agreed to by the Prime Minister.

With the green light turned on, Microsoft will be able to bring used equipments that does not meet the standards stipulated in Circular 20.

Explaining the decision to delay the enforcement of the circular, an official of MST said the aim is to help remove the difficulties enterprises may face when making investments in Vietnam.

He refused to answer the question if the decision was made just because of Microsoft.

In fact, the legal document is not only an obstacle for Microsoft, but to many foreign investors as well.

The Japanese Business Association has lodged a complaint to relevant ministries, saying that the unclear provisions in the circular and its prompt enforcement will make it difficult for enterprises to set up their business plans.

An analyst warned that foreign investors who have been in Vietnam for many years will face big problems with the circular when they need to replace the equipment of their production lines.

Under the circular, they will have to import brand-new equipment, but next-generation equipment may not fit the existing old production lines.

Commenting about the Prime Minister’s decision to delay the enforcement of the circular, an analyst said he agrees that it is necessary to create favorable conditions for Microsoft to set up its production base in Vietnam but that it could be done differently.

“I think it’d be better to give Microsoft a favor, allowing it to bring old equipment to Vietnam and give it an exception, rather than lower the requirements on the quality of imported equipment,” he said.