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LEGAL GUIDE TO INVESTMENT IN VIETNAM

Statistics show that over 90% of the wealthy / financially free have more than one source of income. In contrast, people with a lower quality of life, with more difficulty, have only one source of income. Having multiple sources of income (while maintaining your primary job) can be seen as a factor in your financial success. One of the reasons that the rich get richer, the poor are getting poorer, and the middle class is often indebted is how they generate different sources of income. If you put your savings to sleep in your bank account, you will definitely never receive more money than you save. In contrast, the wealthy generate passive income from investments in financial markets in a deliberate way, and they often invest very early. Investment in Vietnam is usually not very complicated if investors have already had experience in this field, especially for those who are domestic investors. As for foreign investors who wish to invest in Vietnam, the procedures are a bit more intricate. So what legal procedures need to be carried out by investors and what should they keep in mind when they want to invest in something in Vietnam. Let’s unravel the complex legal procedures of investment in Vietnam through the following article with Doanh Tri Law. 

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I. Forms of investment in Vietnam 

In accordance with the Law on Investment in Vietnam, there are 5 forms of investment that investors could choose. 

  • Investment in establishing economic organizations.

  • Capital contribution investment, share purchase, capital contribution purchase.

  • Implementation of investment projects.

  • Investment in the form of a BCC contract.

  • New forms of investment, new types of economic organizations are regulated by the Government.

II. Investment in establishing economic organizations

Investors shall establish economic organizations in accordance with the following provisions of the Law on Investment 

  • Domestic investors establish economic organizations according to the provisions of the law on enterprises and the law corresponding to each type of economic organization;

  • Foreign investors establishing economic organizations must satisfy the market access conditions for foreign investors specified in Article 9 of the Law on Investment (Article 9 of the Law on Investment regulates Industry, occupation and market access conditions for foreign investors and listed some specific fields of investment which are limited to foreign investors).

  • Before establishing an economic organization, the foreign investors must have an investment project, and carry out the procedures for granting or modifying the Investment Registration Certificate, except for the establishment of a small and medium-sized business creative start-up and creative start-ups funds in accordance with the law on SME support.

From the date of issuance of the Enterprise Registration Certificate or another document of equivalent legal validity, the economic organization established by the foreign investor is the investor implementing the investment project as prescribed in Certificate of investment registration.

III. Implementation of investment activities for foreign-invested economic organizations

Economic organizations must satisfy the conditions and carry out investment procedures as prescribed for foreign investors when investing in establishing other economic organizations; capital contribution investment, share purchase, capital contribution purchase from other economic organizations; Investing in the form of BCC if the economic organization falls into one of the following cases:

  • Having foreign investors holding more than 50% of the charter capital or having the majority of the general partners being foreign individuals if the business organization is a partnership;

  • Having an economic organization specified at Point a of Clause 1, Article 23, Law on Investment (Having foreign investors holding more than 50% of the charter capital or having the majority of the general partners being foreign individuals if the business organization is a partnership;) holding more than 50% of the charter capital;

  • Having foreign investors and the business organizations specified at Point a of this Clause holding more than 50% of the charter capital.

Economic organizations other than those mentioned above shall comply with investment conditions and procedures prescribed for domestic investors when investing in the establishment of economic organizations. other; investment in the form of capital contribution, share purchase, purchase of capital contributions from other economic organizations; Investment in the form of a BCC contract.

Foreign-invested economic organizations established in Vietnam, if there is a new investment project, shall carry out procedures to implement such investment projects without necessarily establishing a new economic organization.

The Government regulates in detail the investment order and procedures for the establishment of economic organizations and the investment activities of foreign investors and foreign-invested economic organizations.

IV. Investment in the form of capital contribution, share purchase, purchase of capital contribution

Investors have the right to contribute capital, purchase shares or buy capital contributions of economic organizations.

Foreign investors' capital contribution, share purchase, or capital contribution purchase of economic organizations must satisfy the following regulations and conditions:

  • The market access conditions for foreign investors are provided for in Article 9 of the Law on Investment (Article 9 of the Law on Investment regulates Industry, occupation and market access conditions for foreign investors and listed some specific fields of investment which are limited to foreign investors).

  • Ensure national defense and security in accordance with this Law

  • Provisions of land law on conditions for receiving land use rights, conditions of land use in islands, communes, wards, border towns, communes, wards, and coastal town

V. Forms of capital contribution, share purchase, capital contribution purchase

Investors may contribute capital to economic organizations in the following forms:

  • Purchase of first-issued shares or additional shares of a joint-stock company;

  • Capital contribution to limited liability companies and partnerships;

  • Contributing capital to other economic organizations other than those specified above (Joint-stock company, limited liability companies and partnerships). 

Investors purchase shares or capital contributions from economic organizations in the following forms: 

  • Purchase of shares of a joint stock company from a company or a shareholder;

  • Purchase of equity interests from members of limited liability companies to become members of limited liability companies;

  • Purchase of equity interests from capital contributors in a partnership to become a capital contributor of a partnership;

  • Purchase capital contributions of members of other economic organizations other than those specified above (limited liability companies, partnership, a joint stock company) 

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VI. Procedures for investment in the form of capital contribution, share purchase, capital contribution purchase

Investors contributing capital, buying shares, buying capital contributions of economic organizations must satisfy the conditions and carry out the procedures for changing members and shareholders according to law provisions corresponding to each type of group. economic function.

Foreign investors shall carry out the procedures for registration of capital contribution, share purchase, or capital contribution purchase of an economic organization before changing members or shareholders if falling into one of the following cases:

  • Contribution of capital, purchase of shares, purchase of capital contribution increases the ownership ratio of foreign investors in economic organizations conducting conditional market access for foreign investors;

  • Contribution of capital, purchase of shares, purchase of capital contribution leads to foreign investors and business organizations specified at Points a, b and c, Clause 1, Article 23 of the Law on Investment (Economic organizations must satisfy the conditions and carry out investment procedures as prescribed for foreign investors when investing in establishing other economic organizations; capital contribution investment, share purchase, capital contribution purchase from other economic organizations; Investing in the form of BCC if the economic organization falls into one of the following cases: Foreign investors hold more than 50% of the charter capital or the majority of general partners are foreign individuals for economic organizations being partnerships; Having an economic organization specified at Point a of this Clause holding more than 50% of the charter capital; Having foreign investors and the business organizations specified at Point a of this Clause holding more than 50% of the charter capital) holding more than 50% of charter capital of an economic organization in the following cases: increasing the percentage of foreign investors' ownership in charter capital from less than or equal to 50% to over 50%; increase the proportion of foreign investors' ownership in charter capital when foreign investors already own more than 50% of charter capital in economic organizations;

  • Foreign investors contribute capital, purchase shares, purchase capital contributions of economic organizations having certificates of land use rights in islands, communes, wards or townships; coastal communes, wards and towns; other areas affecting national defense and security.

An investor other than those specified in Clause 2 of this Article shall carry out the procedures for changing shareholders or members in accordance with relevant laws when making capital contribution, purchasing shares or buying capital contributions of business organizations. practice. Where there is a need to register the capital contribution, share purchase, or capital contribution purchase of an economic organization, the investor shall comply with the provisions of Clause 2 of Article 26 of Vietnam Law on Investment mentioned above.

The Government shall detail the dossiers, order and procedures for capital contribution, share purchase and capital contribution purchase of economic organizations specified in Article 26 of Vietnam Law on Investment.

 

VII. Investment in the form of BCC (Business Cooperation Contract) contract

  • BCC contracts signed between domestic investors to comply with civil law.

  • A BCC contract is signed between a domestic investor and a foreign investor or between foreign investors carrying out the procedures for issuance of an investment registration certificate as prescribed in Article 38 of Vietnam Law on Investment.

  • The parties to a BCC contract establish a coordination board to perform the BCC contract. Functions, duties and powers of the coordination board are agreed by the parties.

- BCC contract content

BCC contract includes the following main contents:

  • Names, addresses, and authorized representatives of the parties to the contract; transaction address or investment project implementation location;

  • Objectives and scope of business investment activities;

  • Contribution of the parties to the contract and distribution of business investment results among the parties;

  • Contract performance schedule and duration;

  • Rights and obligations of the parties to the contract;

  • Modification, assignment or termination of the contract;

  • Liability for breach of contract, method of dispute settlement.

During the performance of a BCC contract, the contracting parties may agree to use assets formed from business cooperation to establish an enterprise in accordance with the law on enterprises.

Parties to a BCC contract have the right to agree on other contents that are not contrary to law.

VIII. Selection of investors to implement investment projects

Investor selection is conducted through one of the following forms:

  • Auction of land use rights in accordance with the law on land;

  • Bidding to select investors in accordance with the law on bidding;

  • Approve investors as prescribed in Clauses 3 and 4 of Article 29 of Vietnam Law on Investment.

The selection of investors to execute an investment project according to the provisions mentioned above (Auction of land use rights in accordance with the law on land; Bidding to select investors in accordance with the law on bidding; Approve investors as prescribed in Clauses 3 and 4 of Article 29 of Vietnam Law on Investment) shall be made after the investment policy is approved, unless the investment project is not subject to the approval of the owner. investment promotion.

Where the land use right auction organization has only one person registered to participate or the auction fails in accordance with the law on land or where the auction organization chooses an investor with only one house With registered investment in accordance with the law on bidding, the competent authority shall carry out procedures for investor approval when the investor meets the conditions prescribed by relevant laws.

For an investment project subject to investment policy approval, the competent authority approves the investment policy and at the same time approves the investor not through auctions of land use rights, bidding for investor selection. in the following cases:

  • The investor has the right to use land, unless the State recovers the land for the purposes of national defense and security or recovers the land for socio-economic development for the benefit of the nation or the public in accordance with regulations. of law and land;

  • Investors receive transfer, capital contribution, lease agricultural land use rights to execute investment projects for non-agricultural production and business, which are not in the case of land recovery by the State in accordance with law. About land;

  • Investors implementing investment projects in industrial parks or hi-tech zones;

  • Other cases not subject to auction or bidding as prescribed by law.

+ Jurisdiction to approve investment policy of the National Assembly

The National Assembly approves investment guidelines for the following investment projects:

  1. Investment projects that greatly affect the environment or have the potential to seriously affect the environment, include:

  • Nuclear power plant

  • An investment project requiring a change of the use purpose of a special-use forest, a watershed protection forest or a border protection forest of at least 50 hectares; protective forests for wind and sand shielding, and protection forests for wave and sea encroachment of at least 500 hectares; production forests of 1,000 ha or more;

  1. An investment project requiring change of the use purpose of land under wet rice cultivation with 02 crops or more with an area of 500 hectares or more;

  2. An investment project requiring relocation of 20,000 or more people in mountainous areas or 50,000 or more people in other regions;

  3. An investment project that requires a special mechanism or policy to be decided by the National Assembly.

+ Jurisdiction to approve investment policy of the Prime Minister

Except for the investment projects specified in Article 30 of this Law, the Prime Minister approves investment policies for the following investment projects:

  1. An investment project, irrespective of the capital source, falls in one of the following cases:

  • An investment project that requires relocation of 10,000 people or more in mountainous areas or 20,000 people or more in other regions;

  • New construction investment project: airport, airport; runways of airports and airfields; the passenger terminal of the international airport; cargo terminals of airports and airfields with a capacity of at least 1 million tons / year;

  • New investment project on passenger transportation by air;

New construction investment project: a harbor, a port area of ​​a special seaport; ports, port areas with investment capital of 2,300 billion VND or more, belonging to seaports of class I;

  • Oil and gas processing investment project;

  • Investment projects dealing in betting and casino activities, except for video games with prizes for foreigners;

  • Housing investment projects (for sale, lease, or lease purchase), urban areas in the following cases: investment projects with land use scale of 50 ha or more or of less than 50 ha but with a population of 15,000 or more in urban areas; investment projects with a land use area of ​​100 hectares or more or a size of less than 100 hectares but with a population of 10,000 or more in non-urban areas; investment projects, irrespective of the size of the land area, population under the protected scope of relics recognized by competent authorities as national monuments or special national monuments;

  • Project on investment in construction and infrastructure business of industrial parks and export processing zones;

  1. Investment projects of foreign investors in the field of telecommunications services business with network infrastructure, afforestation, publishing, journalism;

  2. Investment projects at the same time falling under the authority to approve investment policies of at least 02 provincial-level People's Committees;

  3. Other investment projects subject to investment policy approval or investment decision by the Prime Minister in accordance with law.

+ Jurisdiction to approve the investment policy of the People's Committee of the province

  1. Except for the investment projects specified in Articles 30 and 31 Vietnam Law on Investment ( which are approved by The Prime Minister and The National Assembly), the People's Committee of the province shall approve the investment policy for the following investment projects:

  • Investment projects that request the State to allocate or lease land without auction, bidding or transfer, and investment projects that request permission to change the land use purpose, except for cases of land allocation. land, land lease, or permission to change the land use purpose of a household or individual that is not required to obtain a written approval from the People's Committee of the province in accordance with the law on land;

  • Housing investment projects (for sale, lease, or lease purchase), urban areas in the following cases: an investment project with a land use scale of less than 50 hectares and a population of less than 50 hectares. 15,000 people in urban areas; investment projects with a land use scale of less than 100 ha and a population of less than 10,000 people in non-urban areas; investment projects, irrespective of the size of the land area, the population in the restricted area or the historic inner city (determined in the urban planning scheme) of the special-grade urban area;

  • Golf course construction and business investment project (golf);

  • Investment projects of foreign investors, foreign-invested economic organizations implemented in islands, communes, wards or townships; coastal communes, wards and towns; other areas affecting national defense and security.

  1. For investment projects specified at Points a, b and d, Clause 1 of this Article, implemented in industrial parks, export processing zones, hi-tech zones or economic zones in conformity with the planning already approved by competent authorities. for approval, the Management Board of industrial parks, export processing zones, hi-tech parks and economic zones shall approve the investment policy.

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IX. Appraisal documents and contents of the request for approval of investment intentions

  1. An application for approval of investment policy of an investment project proposed by the investor includes:

  • A written request for investment project implementation, including a commitment to bear all costs and risks if the project is not approved;

  • Documents on the legal status of the investor;

  • Documents proving the financial capacity of the investor including at least one of the following documents: financial statement of the investor for the last 2 years; commitment to financial support of the parent company; commitment to financial support of a financial institution; guarantees on investors' financial capacity; other documents proving the financial capacity of the investor;

  • Proposal for investment project includes the following main contents: investor or form of investor selection, investment objectives, investment scale, investment capital and capital raising plan, location , time limit, implementation schedule, information on current land use at the project site and proposed land use demand (if any), labor demand, proposal for investment incentives project's socio-economic impact and efficiency, preliminary environmental impact assessment (if any) in accordance with the law on environmental protection.

  • In case the law on construction stipulates the preparation of pre-feasibility study report, the investor may submit the pre-feasibility study report instead of the investment project proposal;

  • In case the investment project does not request the State to allocate land, lease land, or permit the change of land use purposes, submit a copy of the land use right paper or other documents identifying the site use right to carry out an investment project;

  • Explanation of technologies used in investment projects, for projects subject to technology appraisal and consultation in accordance with the law on technology transfer;

  • BCC contract for an investment project in the form of a BCC contract;

  • Other documents related to the investment project, requirements on conditions and capacity of the investor as prescribed by law (if any).

  1. An application for the approval of investment intentions for an investment project prepared by a competent state agency includes:

  • Statement of approval of investment policy;

  • Proposal for an investment project with the following main contents: investment objectives, investment scale, investment capital, location, duration, implementation schedule, impact, socio-economic efficiency project association; information on current land use status at the project implementation site, land recovery conditions for projects subject to land acquisition, expected land use requirements (if any); preliminary assessment of environmental impact (if any) in accordance with the law on environmental protection; expected form of investor selection and conditions for investors (if any); special mechanisms and policies (if any).

In case the law on construction stipulates the preparation of a pre-feasibility study report, the competent state agencies may use the pre-feasibility study report in lieu of the investment project proposal.

  1. Appraisal contents of an investment policy approval request include:

  • Assessment of the investment project's conformity with the national planning, regional planning, provincial planning, urban planning and special administrative - economic unit planning (if any);

  • Assessment of land use demands;

  • Preliminary assessment of the socio-economic efficiency of the investment project; preliminary assessment of environmental impact (if any) in accordance with the law on environmental protection;

  • Evaluation of investment incentives and conditions for enjoying investment incentives (if any);

  • Evaluation of technologies used in investment projects, for projects subject to technology appraisal or consultation in accordance with the law on technology transfer;

  • Assessment of the investment project's conformity with urban development objectives and orientations, housing development programs and plans; preliminary investment phasing plan ensures synchronous requirements; preliminary structure of housing products and the reserve of land for social housing development; preliminary plans on investment in construction and management of urban infrastructure inside and outside the project scope, for investment projects on construction of houses and urban areas.

  1. Contents of appraisal of an investment policy approval request concurrently with investor's approval include:

  • Evaluation contents specified in Part 3 above;

  • The ability to satisfy the conditions for land allocation or land lease in case of land allocation or land lease not through auctions of land use rights, bidding for investor selection; the ability to meet the conditions for changing the land use purpose for projects requiring change of land use purpose;

  • Assessment of the foreign investor's satisfaction of the market access conditions (if any);

  • Other conditions for investors in accordance with relevant laws.

+ Order and procedures for approval of investment intentions of the National Assembly

  1. The dossiers specified in Clauses 1 and 2, Article 33 of this Law (An application for the approval of investment policy of an investment project proposed by the investor, An application for the approval of investment intentions for an investment project prepared by a competent state agency) shall be sent to the Ministry of Planning and Investment.

  2. Within 15 days after receiving a complete dossier, the Ministry of Planning and Investment shall report to the Prime Minister for setting up a State Appraisal Council.

  3. Within 90 days from the date of its establishment, the State Appraisal Council shall organize the appraisal of the dossier and make an appraisal report covering the appraisal contents specified in Article 33 of this Law for submission to the Government.

  4. At least 60 days before the opening of a session of the National Assembly, the Government shall make and send a dossier of request for approval of investment intentions to the agency in charge of verification of the National Assembly.

  5. An application for an investment policy approval includes:

  • Statement of the Government;

  • Documents specified in Clause 1 of this Article;

  • The appraisal report of the State Appraisal Council;

  • Other relevant documents.

  1. Contents of examination of an investment policy approval request include:

  • The satisfaction of criteria for determining investment projects falls within the competence of the National Assembly to approve investment policies;

  •  Necessity to implement the investment project;

  • Conformity of the investment project with the strategy, national planning, regional planning, provincial planning, urban planning and special administrative - economic unit planning (if any);

  • Objectives, scale, location, time, progress of implementation of the investment project, demand for land use, site clearance plan, relocation and resettlement, main technology selection plan, environmental protection solutions;

  •  Total investment capital, source of capital;

  • Assessment of socio-economic efficiency, defense and security assurance and sustainable development of the investment project;

  • Special mechanisms and policies, investment incentives and supports and applicable conditions (if any).

  1. The Government and related agencies, organizations and individuals are responsible for providing sufficient information and documents for verification; explain the issues of the investment project at the request of the agency in charge of verification of the National Assembly.

  2. The National Assembly shall consider and ratify a resolution on investment policy approval with the contents specified in Clause 1, Article 3 of Vietnam Law on Investment (Investment policy approval means approval by a competent state agency on the project's objectives, location, scale, schedule, and duration; Investor or investor selection form and special mechanisms and policies (if any) to implement investment projects).

  3. The Government shall detail the order and procedures for appraisal of the State Appraisal Council.

+ Order and procedures for the Prime Minister's approval of investment intentions

  1. The dossiers specified in Clauses 1 and 2, Article 33 of Vietnam Law on Investment shall be sent to the Ministry of Planning and Investment.

  2. Within 03 working days from the date of receipt of a complete dossier, the Ministry of Planning and Investment shall send a dossier to consult state agencies related to the appraisal contents specified in Article 33 of the Ministry of Planning and Investment. This law.

  3. Within 15 days after receiving the dossier, the consulted agency shall give its opinion on the contents of its state management scope and send it to the Ministry of Planning and Investment.

  4. Within 40 days after receiving the dossier, the Ministry of Planning and Investment shall organize the appraisal of the dossier and make an appraisal report including the appraisal contents specified in Article 33 of this Law and submit it to the Prime Minister. the Prime Minister approved the investment policy.

  5. The Prime Minister shall consider and approve an investment policy covering the contents specified in Clause 1, Article 3 of this Law.

  6. For an investment project specified in Clause 3, Article 31 of this Law, the Prime Minister shall designate an investment registration agency of a province or centrally run city to grant an investment registration certificate to it. the whole project.

  7. The Government shall detail the order and procedures for the appraisal of investment projects for which investment policy is approved by the Prime Minister.

+ Order and procedures for approval of investment policy by the People's Committee of the province

  1. The dossiers specified in Clauses 1 and 2, Article 33 of this Law shall be sent to the investment registration offices.Within 35 days from the date of receiving the dossier, the investment registration agency must notify the result to the investor.

  2. Within 3 working days after receiving a complete dossier, the investment registration agency shall send a dossier to consult State agencies related to the appraisal contents specified in Article 33 of this document. This law.

  3. Within 15 days after receiving the dossier, the consulted agency shall give its opinion on the contents of its state management scope and send it to the investment registration agency.

  4. Within 25 days from the date of receiving the dossier, the investment registration agency shall make an appraisal report including the appraisal contents specified in Article 33 of this Law and submit it to the provincial-level People's Committee.

  5. Within 7 working days after receiving the dossier and appraisal report, the People's Committee of the province approves the investment policy, in case of refusal, it must notify in writing and clearly state the reason.

  6. The People's Committee of the province shall consider and approve an investment policy covering the contents specified in Clause 1, Article 3 of this Law.

XI. Investment projects that require application for an investment registration certificate

  1. Cases in which investment registration certificates must be issued include:

  • Investment projects of foreign investors;

  • Investment projects of economic organizations specified in Clause 1, Article 23 of Vietnam Law on Investment.

  1. Cases in which the procedures for issuance of an investment registration certificate are not required include:

  • Investment projects of domestic investors;

  • Investment projects of economic organizations specified in Clause 2, Article 23 of Vietnam Law on Investment;

  1. Investment in the form of capital contribution, share purchase, or capital contribution purchase of economic organizations.

  2. For investment projects specified in Articles 30, 31 and 32 of Vietnam Law on Investment, domestic investors and economic organizations defined in Clause 2, Article 23 of Vietnam Law on Investment shall execute investment projects. after the investment policy is approved.

  3. In case an investor wishes to have an investment registration certificate with respect to an investment project specified at Points a and b, Clause 2 of this Article, the investor shall carry out the procedures for the grant of a registration certificate. investment specified in Article 38 of Vietnam Law on Investment.

XII. Procedures for granting Investment Registration Certificates

  1. Investment registration agencies shall grant investment registration certificates for investment projects subject to investment policy approval specified in Articles 30, 31 and 32 of Vietnam Law on Investment within the following time limit:

  • 05 working days from the date of receipt of the written approval of investment policy concurrently with investor's approval for the investment project subject to the issuance of an Investment Registration Certificate;

  • 15 days from the date of receipt of the request for an investment registration certificate from the investor, for an investment project other than those specified at Point a of this Clause.

  1. For an investment project not subject to investment policy approval specified in Articles 30, 31 and 32 of this Law, the investor shall be granted an investment registration certificate if the following conditions are satisfied. here:

  • The investment project is not in the sectors or trades banned from business investment;

  • There is an investment project location;

  • The investment project conforms to the planning specified at Point a, Clause 3, Article 33 of this Law;

  • Satisfying the conditions for investment rate per land area, number of employees used (if any);

  • Satisfying the market access conditions for foreign investors.

  1. The Government shall detail the conditions, dossiers, order and procedures for the grant of investment registration certificates.

XIII. Contents of the Investment Registration Certificate

  1. Name of the investment project.

  2. Investors.

  3. Number of the investment project.

  4. Location of the investment project, area of land to be used.

  5. Objective and scale of the investment project.

  6. Investment capital of an investment project (including capital contributed by the investor and raised capital).

  7. Operational term of the investment project.

  8. Implementation schedule of an investment project, including:

  • Progress of capital contribution and capital mobilization;

  • The progress of the implementation of the main objectives of an investment project, if an investment project is divided into phases, the progress of each stage must be specified.

  1. Forms of investment incentives and supports and bases and conditions for application (if any).

  2. Conditions for investors implementing investment projects (if any)

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