Particularly, export-processing firms are allowed to sell their products in the local market provided that domestic sales do not exceed 10% of their annual revenues, according to the draft amended decree of the Ministry of Planning and Investment.

Export-processing companies are those established and operating in export-processing zones or the firms based in industrial parks and economic zones that export all of their products. Under the current regulations, such companies are not restrained from domestic sale.

Section 2, Article 15 of the Government’s Decree 108/2006 permits export-processing firms to launch into the domestic market the products not listed as banned items, the products greatly demanded by the local market and production scraps not forbidden for export or allowed for import.

Under Vietnam’s commitment to the World Trade Organization (WTO), tax incentives for enterprises meeting the export rates will be removed five years after WTO accession. It is to say export-processing firms have no longer enjoyed corporate income tax incentives since late 2011.

If exporting all the products made of imported materials, enterprises will be tax exempt. However, when selling a portion of their products in the home market, they will have to pay taxes under the prevalent law.

Meanwhile, export-processing firms using domestic materials are subject to supervision of customs agencies.

If the draft decree is approved, then export-processing firms will be restricted from domestic sale, while tax incentives are no longer available for them. As such, it will be more difficult for export-processing zones to lure investors, said consulting firms.

A new point in the draft decree is that localities can only set up new industrial parks when the operational ones are 60% occupied. This provision is aimed to hinder massive development of industrial parks, causing waste of money and farmland, said experts.

At present, industrial park planning and development is dispersed. Several localities have industrial park occupation rates of less than 60%, but still ask for establishment of new industrial parks.

There are currently 267 industrial parks nationwide, mainly in the southeast region, the Red River Delta and the Mekong Delta, with an occupation rate of slightly above 45%.