In 2019, the project “Household wood processing and export factory” invested by Dong Hoi Development Company Limited was extended and exempted from land rent for more than 10 years. Immediately after that, the investor “cooperated economically”, allowing another enterprise to freely operate on the project land, while they enjoyed billions of dong in profits every year.
From July 20 to 28, Nghe An Electronic Newspaper published the articles “An “elephant head, mouse tail” project in Dong Hoi Industrial Park”; “What violations did the “elephant head, mouse tail” project in Dong Hoi Industrial Park commit?”.
In order for readers to understand how Dong Hoi Development Company Limited has taken advantage of the policy, first, it is necessary to clearly present the procedures for extending the progress and exempting land rent for the Project "Household and Export Wood Processing Factory".
Specifically as follows: On March 2, 2016, the Investment Project for a civil and export wood processing factory of Dong Hoi Development Company Limited (address: Tan Minh hamlet, Quynh Lap commune, Hoang Mai town) was granted Investment Registration Certificate No. 2037241126 by the Management Board of the Southeast Economic Zone. The project implementation progress is stated on the specific license as follows: "In the first quarter of 2016, construction and equipment procurement of items will be implemented; in the second quarter of 2016, the project will be put into operation". However, this project was then "frozen".
By 2018, the Investment Project for a civil and export wood processing factory was one of the investment projects in the Southeast Economic Zone "inspected" by the province's interdisciplinary inspection team for compliance with the laws on investment, construction, and land (the inspection results were approved by the Provincial People's Committee in Decision No. 5732/QD-UBND dated December 26, 2018). Pursuant to Decision No. 5732/QD-UBND, dated January 3, 2019, the Southeast Economic Zone Management Board issued Decision No. 09/QD-KKT approving Dong Hoi Development Company Limited to extend the investment schedule by 24 months. Specifically, the Southeast Economic Zone Management Board commented: “Approval to extend the investment schedule of the Project to invest in the construction of a wood processing factory for civil use and export in Quynh Lap commune, Hoang Mai town, invested by Dong Hoi Development Company Limited; Investment registration certificate No. 2037241126, first issued by the Southeast Economic Zone Management Board on March 2, 2016; Project implementation progress after approval to extend the schedule is as follows: Twenty-four (24) months from June 13, 2018, requiring the investor to complete the remaining procedures on investment, land, and construction in the first quarter of 2019, Complete the project and put it into operation on June 13, 2020”.
On April 25, 2019, the Southeast Economic Zone Management Board issued Decision No. 107/QD-KKT to lease land to Dong Hoi Development Company Limited to implement the Project of investing in a wood processing factory for civil use and export in Dong Hoi Industrial Park. On May 27, 2019, the Southeast Economic Zone Management Board signed Land Lease Contract No. 09/HDKT-KKT with Dong Hoi Development Company Limited, at this time with Mr. Le Truong The as Director and legal representative. According to the contract, Dong Hoi Development Company Limited is leased 19,995 m2Land in Quynh Lap commune, Hoang Mai town, Dong Hoi Industrial Park for a term of 50 years; responsible for paying annual land rent; using land for the correct purpose stated in the Investment Registration Certificate; not transferring the right to use the above land to a third party...
A short time later, on June 7, 2019, the Southeast Economic Zone Management Board continued to issue Decision No. 153/QD-KKT on "exemption of land rent for Dong Hoi Development Company Limited to implement the Project of investing in a civil and export wood processing factory in Dong Hoi Industrial Park, Quynh Lap Commune, Hoang Mai Town, Nghe An Province". According to this decision, Dong Hoi Development Company Limited is exempted from rent for 19,995 m2land for a period of 10 years and 11 months (from June 2019 to the end of April 2030). The decision also clearly states the reasons for exemption and the basis for tax exemption; at the same time, citing the provisions of Clause 5, Article 8, Decree No. 35/2017/ND-CP, Dong Hoi Development Company Limited must manage and use the land for the correct purposes stated in the land lease decision and land lease contract, otherwise, it will have to return to the State budget the exempted land rent.
As the investor of a "suspended" project, for a short period of time, Dong Hoi Development Company Limited was considered for approval to extend the progress, complete land lease procedures, and be exempted from land rent... Thus, it has received the "full attention" of the Southeast Economic Zone Management Board. However, Dong Hoi Development Company Limited still continues to not implement the project. Even after nearly 4 months of receiving Decision No. 153/QD-KKT exempting land rent, Dong Hoi Development Company Limited violated the regulation "not to transfer the right to use the above land to a third party..." clearly stated in Land Lease Contract No. 09/HDKT-KKT. Specifically, it has transferred 19,995 m2project land to Minh Long 68 Trading and Service Company Limited (located in Tinh Gia district, Thanh Hoa province) to enjoy monthly "profit".
This content is stated in the Economic Cooperation Contract No. 02/2019/HDHTKT/ML-HD, signed on October 4, 2019 between Dong Hoi Development Company Limited (at that time, Ms. Nguyen Thi Hoa was the Director) and Minh Long 68 Trading and Service Company Limited. The contract has a term of 10 years. In which, it is stated that Dong Hoi Development Company Limited contributes capital in terms of land and legal entity of the Project to invest in a wood processing factory for civil and export purposes (Article 5). At the same time, it is responsible for handing over the land and documents to ensure the construction of the factory; completing paperwork to open roads to the project land, connecting electricity, assessing environmental impacts, fire prevention and fighting; providing necessary documents for production and business activities; paying annual land rent to the Management Board of Dong Nam Economic Zone and taxes and fees related to land use rights; responsible for the legality of the project (Article 4).
With the above "contributions" in the "economic cooperation", Dong Hoi Development Company Limited will receive a profit of 1.8 billion VND/year in the first 5 years; 2.16 billion VND/year in the next 3 years; 2.4 billion VND/year in the last 2 years. Specifically, this content is stated in Article 3 (Sharing business results), Economic Cooperation Contract No. 02/2019/HDHTKT/ML-HD as follows: Party A (ie Dong Hoi Development Company Limited - PV) will receive a profit of 150 million VND/month (If the total profit is not enough to pay Party A, Party B (Minh Long 68 Trading and Service Company Limited - PV) must pay the full amount). After 5 years, Party B will pay a fixed profit of 180 million VND/month to Party A, calculated from October 1, 2024 to October 1, 2027. After the above period, Party B will pay Party A a fixed interest rate of 200 million VND/month. Party B will transfer interest to Party A from the 5th to the 10th of each month.
Article 3 also stipulates: Immediately after signing the contract, Party B will transfer a deposit of 1 billion VND to Party A, a deposit for Party B to build the factory. If Party B receives the site handover from Party A for more than 3 months without investing in construction, Party B will lose the deposit of 1 billion VND to Party A and the expenses Party B has incurred. Party A will not be responsible and will unilaterally cancel the cooperation contract with Party B due to breach of contract. The deposit will be deducted from the profit that Party B must pay to Party A after 6 months from the time Party B receives the site handover from Party A (Party B will deduct it gradually each month). After deducting all the above deposit, Party B will continue to pay profit to Party A as agreed in Article 3 in the following month.
With the information in the Economic Cooperation Contract No. 02/2019/HDHTKT/ML-HD, it can be understood that Dong Hoi Development Company Limited under the Directors Le Truong The and Nguyen Thi Hoa had absolutely no intention of implementing the Project of Investing in a Wood Processing Factory for Civil and Export. They only established and completed the documents and procedures to be licensed by the State, represented by the Southeast Economic Zone Management Board, to implement the project; then found partners to "sell", and then earned monthly profits of 150 - 200 million VND, within a period of 10 years, matching the period of exemption from land rent for project implementation.
Asked the responsible person of the Southeast Economic Zone Management Board: Is it true that in this project, the State's policy is being exploited? The answer: Yes! The representative also said that, for that reason, in the Inspection Minutes, as well as in Document No. 885/KKT-KHDT dated July 12, 2022 of the Board sent to the People's Committee of Hoang Mai town regarding the proposal to impose administrative sanctions on Dong Hoi Development Company Limited, both pointed out the violations and proposed to apply remedial measures. Specifically: "Forcing the party contributing capital with land use rights to pay the illegal profits gained from the act of contributing capital with land use rights during the violation period as prescribed in Point b, Clause 6, Article 19, Decree No. 91/2019/ND-CP".