Tiếng Việt- 1 Circular No. 12-BKH/QLKT of August 27, 1997 guiding a number of articles in the regulation on domestic investment in the form of build- operate- transfer (B.O.T.) contracts
- 2 Circular No. 06/BXD-CSXD of September 25, 1997 guiding a number of issues on the management of construction in the implementation of the "regulation on domestic investment in the form of build- operate- transfer (B.O.T.) contracts" issued together with Decree No.77-CP of June 18, 1997 of The Government
| THE GOVERNMENT | SOCIALIST REPUBLIC OF VIET NAM |
| No. 77/CP | Hanoi, June 18, 1997 |
THE GOVERNMENT
Pursuant to the Law on Organization of the Government of September 30, 1992;
At the proposal of the Minister of Planning and Investment,
DECREES:
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ON BEHALF OF THE GOVERNMENT
PRIME MINISTER
Vo Van Kiet
ON DOMESTIC INVESTMENT IN THE FORM OF BUILD- OPERATE- TRANSFER (B.O.T.) CONTRACTS
(Issued together with Decree No.77-CP of June 18, 1997 of the Government)
Article 1.- Interpretation of terms:
1. A Build-Operate-Transfer (B.O.T.) project is an investment project for the construction of a works which is managed and operates for business; the collection of service charges on its use is estimated to recover the capital and gain profits within a period; upon the expiry of the contract, such works shall be transferred to the State for further management and use without reimbursement.
2. A B.O.T. enterprise is an owner of investment that manages the construction and operation of one or more B.O.T. projects.
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A newly established B.O.T. enterprise may be a cooperative, a private enterprise, a limited liability company or a stock company.
3. The State agency competent to sign the B.O.T. contract is the parent Ministry, or the Peoples Committee of the province or city directly under the Central Government, that is assigned by the Prime Minister to sign B.O.T. contracts and exercise State management over operation of the B.O.T. works of group A projects; the Peoples Committee of the province or city directly under the Central Government or the district Peoples Committee appointed by the Peoples Committee of the province or city directly under the Central Government as the State agency competent to sign B.O.T. contracts for other projects.
The appointed Ministries or the Peoples Committee of the provinces and cities directly under the Central Government shall have to directly sign B.O.T. contracts and take responsibility as the competent State agencies defined in Chapter VIII of this Regulation.
4. A B.O.T. contract is an agreement with tenets defined in Article 19 of this Regulation, which is signed between a B.O.T. enterprise and a State agency competent to sign the B.O.T. contract which shall serve as legal basis for the implementation of the B.O.T. project.
5. A sub-contract is a contract between a B.O.T. enterprise and the contractor(s) (if any) for the construction of each item of the B.O.T. project.
1. Highways, inter-provincial and inter-district roads;
2. Bridges, quays, sea ports and river ports, ferries, bus terminals;
3. Store houses and facilities, markets or trade centers;
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5. Waste treatment systems in cities, industrial parks and population centers;
6. Power generation and supply;
7. Parks, recreation centers, sports and culture centers;
8. Schools, vocational training schools, hospitals, clinics;
9. Housing projects;
10. Production, business and public services;
11. Other fields of the economy and social services.
Every 6 months, the lists of national and local B.O.T. projects shall be announced on the mass media, including central or local daily newspapers for three consecutive issues.
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The Prime Minister, the Presidents of the Peoples Committees of the provinces and cities directly under the Central Government may consider and approve projects not on the already issued lists of B.O.T. projects.
- To conform with the territorial or branch development planning already ratified by the competent authority.
- The projects pre-feasibility study or economic-technical study (commonly called as pre-feasibility study) has been approved in writing.
- Ensuring the environmental protection standard as prescribed by the State.
- Able to recover capital and make profits.
Article 5.- Competence to ratify the pre-feasibility study:
- The Prime Minister shall, within 20 days from the date of receiving the full dossier, approve the pre-feasibility study of group A projects at the proposals of the Ministry of Planning and Investment and the parent Ministry.
- The Peoples Committees of the provinces and cities directly under the Central Government shall, within 30 days from the date of receiving the full dossier, evaluate and approve the pre-feasibility studies of group B and C projects.
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Article 6.- Sources of capital for the implementation of B.O.T. projects:
1. A B.O.T. project shall be implemented with one of the following sources of capital:
- 100% non-State budget capital, including borrowed capital from inside and outside the country.
- Capital contributed by the State budget, enterprises and/or individuals, including borrowings from inside and outside the country.
2. For each B.O.T. project, the capital owned by the B.O.T. enterprise must represent at least 30% of the total investment capital for the implementation of the B.O.T. project.
Article 7.- Fields prioritized for B.O.T. projects to be implemented with non-State budget capital:
1. Roads leading to tourist centers, sea or river ports, railway stations and airports;
2. Bridges on the above-said transport routes;
3. Markets and trade centers, recreation centers and parks in population areas;
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5. The building of schools, vocational training schools, hospitals and clinics.
1. The Prime Minister shall decide the contribution of investment capital for the implementation of group A projects at the proposal of the Ministry of Planning and Investment;
2. The Presidents of the Peoples Committees of the provinces and cities directly under the Central Government shall decide the contribution of investment capital for the implementation of group B and C projects.
3. The State budget capital contributed for the implementation of a B.O.T. project shall be considered the States shares at the B.O.T. enterprise.
Depending on the competence to decide the contribution of capital for the implementation of a B.O.T. project, the Prime Minister or the President of the Peoples Committee of the province or city directly under the Central Government shall appoint a representative as the States owner of the above-said shares in accordance with the provisions of Chapter VII of the Law on State Enterprises promulgated on April 20, 1995.
The amount and form of capital contribution shall be decided depending on each B.O.T. project.
SELECTION OF THE B.O.T. ENTERPRISE OR FOUNDING MEMBERS OF THE B.O.T. ENTERPRISE
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- A self-introduction of its/his/her professional, financial, technical capability and experiences; the recommendations of contractors to be hired to supply the required services;
- The plan for capital mobilization;
- Written commitments of banks or other capital providers for the implementation of the B.O.T. project.
- The report on business results, the inventory of assets of the previous year, if it is an operating enterprise.
- To inspect the veracity of each document in the dossier defined in Article 9 of this Regulation.
- To consider, evaluate the financial capability as well as managerial capacity of organization(s) and/or individual(s) that commit themselves to lending capital and of organizations expected to be hired for construction or supply of relevant services.
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- To ensure the timely and adequate mobilization of capital needed for the complete construction of the project;
- To have technicians and managerial personnel with good knowledge and experiences in the management of construction and exploitation of projects.
In cases where the enterprise or individual wishing to invest in the B.O.T. project fails to have enough technical workers and managerial staff, it must nominate another organization or individual that meets the prescribed technical and managerial qualifications to be hired to perform relevant services and work.
The enterprise or individual that has proposed the B.O.T. project shall be given priority in consideration and selection for the implementation of such project.
The order, procedures and mode for the selection of investment partner(s) shall comply with the Regulation on Bidding issued together with Decree No.43-CP of July 16, 1996.
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A dossier for additional business registration must include the certificate of capacity for the implementation of the B.O.T. project as mentioned in Article 11 of this Regulation.
With regard to B.O.T. investment projects of group B and group C, the application for investment licenses may be conducted simultaneously with the application for the establishment of enterprises or the additional business registration.
THE SIGNING OF THE B.O.T. CONTRACT AND THE COMPLETION OF PREPARATION FOR INVESTMENT
A B.O.T. contract must include at least the main contents of the model B.O.T. contract issued together with this Decree.
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The deposit may be included in the capital for the implementation of the B.O.T. project and shall be withdrawn only after the construction has started and the investment in the construction of the B.O.T. project has accounted for more than 1% of the total investment capital of the project.
- Sub-contracts on the sale of products;
- Sub-contracts on the supply of materials and fuel;
- Sub-contracts on construction and installation;
- Sub-contracts on the project management, operation, preservation and maintenance.
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- Having been granted the investment license;
- A B.O.T. contract has been signed;
- The projects technical design has been approved by the State agency competent to sign the B.O.T. contract;
- Having been granted a certificate of land assignment or land lease.
The compensation and site clearance expenses must be clearly stated in the B.O.T. contract.
In cases where the competent State agency uses State budget capital to pay for the compensation and site clearance expenses, such capital shall be considered the States shares at the B.O.T. enterprise as stipulated in Article 8 of this Regulation.
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Article 27.- In the process of investment implementation, a B.O.T. enterprise shall have the rights:
- To decide on its own the mode of bidding, the appointment of bidders, or to conduct survey or design the project by itself;
- To decide on its own the mode of bidding, the appointment of bidders, or to procure equipments, conduct the construction and installation or management of the project by itself;
- To decide on its own the mode of mobilizing additional capital for the construction of the project;
- If the B.O.T. project is similar to a group A project as classified in the Regulation on the Management of Investment and Construction and the State capital contribution represents 30% or more of the prescribed capital, the B.O.T. enterprise shall implement the investment in accordance with Decree No.42-CP of July 16, 1996 of the Government.
In this case, the State agency competent to sign the B.O.T. contract shall have to support the B.O.T. enterprise in filling procedures and making the necessary dossier for priority use of services and public utilities.
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The project prices and service charges and other collections shall be determined and readjusted by the B.O.T. enterprise, depending on concrete conditions of the market, except for the following cases:
- If the B.O.T. enterprise directly manufactures and directly sells products and provides services, which are included in the list of products and services with their prices managed by the State, the prices and charges set or readjusted by the B.O.T. enterprise must not exceed the price ceiling set by the State;
- If the B.O.T. enterprise manufactures products or provides services, which are supplied and distributed exclusively by the State through State corporations, the specific prices and charges shall be agreed upon by the B.O.T. enterprise and the concerned State corporation but must not exceed those set by the State.
In case of necessity, B.O.T. enterprises shall have the right to request support from the State in accordance with the provisions of law so that they may collect charges from the operation of B.O.T. projects.
It is strictly forbidden to use the right of operating a B.O.T. project to discriminate against the service users or deny them the services.
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- To conduct the periodical maintenance and repair of the project as prescribed by the already signed contract to ensure the projects operation according to design;
- To supply products and services with the quantity and quality agreed upon in the B.O.T. contract throughout the whole business process till the delivery of the project;
- To observe the regulations on regular use of the project like others of the same type throughout country. The roads, bridges, ferries... under construction must ensure round-the-clock use during the whole business process.
PRIVILEGES FOR B.O.T. ENTERPRISES
Article 36.- A B.O.T. enterprise shall be eligible for:
1. The exemption or reduction of turnover tax (or the value added tax) in accordance with the current tax legislation.
2. The lowest turnover tax (or enterprise income tax) rate as prescribed by the Law on Turnover Tax (or the Law on Enterprise Income Tax); the turnover tax exemption for the first two years and a 50% reduction of the tax for 4 subsequent years after the project is put into use and yields profits. The 50% tax reduction for 6 to 8 years applied to B.O.T. projects in special territorial areas shall be decided on a case-by-case basis by the Prime Minister.
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All borrowings with the mortgage of assets must be used to continue the construction and operation of the project in accordance with the B.O.T. contract.
- Pay for the equipment and machinery rent from overseas;
- Import machinery and equipment and other products and services for the implementation of the project;
- Pay foreign debts (including both principal and interests).
POWERS AND RESPONSIBILITIES OF THE STATE AGENCIES COMPETENT TO SIGN B.O.T. CONTRACTS
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- Acting as a party signing the contract with the B.O.T enterprise.
- Acting as the agency that exercises State management over the operation of the B.O.T. project.
- To negotiate and make decision on contents of the B.O.T. contract. In cases where an issue to be negotiated and included in a B.O.T. contract is beyond its competence, such agency must consult the agency competent to decide the said issue before making decision.
- To strictly and fully perform obligations prescribed in the B.O.T. contract; to compensate the B.O.T. enterprise for any damage caused by the non-performance or improper performance of the obligations as committed.
- To supervise the performance of the B.O.T. contract so as to ensure that the B.O.T. enterprise abides by its commitments; to request the B.O.T. enterprise to pay compensation to the user(s) and the State for damage caused by the B.O.T. enterprises non-performance or improper performance of obligations as committed.
The agency competent to sign the B.O.T. contract is the only State agency that shall directly consider and solve issues already agreed upon in the B.O.T. contract.
- To make the pre-feasibility study, determine the minimum criteria on the quality of a B.O.T. project as well as on the quantity and quality of products and services; to make preliminary evaluation of the projects impacts on the environment and ecology;
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- To select the B.O.T. enterprise or its founding members;
- To evaluate and ratify the projects technical design;
- To coordinate with the B.O.T. enterprise in controlling the projects construction quality, the construction tempo, in accordance with the design and plan;
- To clear the site of the area already planned for the implementation of the B.O.T. project;
- To coordinate with or support the B.O.T. enterprise in completing the pre-investment procedures, in building and operating the project in accordance with the B.O.T. contract;
- To meet or request other State agencies to meet the legitimate demands of the B.O.T. enterprise in building and operating the B.O.T. project;
- To perform other tasks prescribed by law, including the issue of regulations on the supply and use of products and services from the B.O.T. project.
TRANSFER OF THE B.O.T. PROJECT
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- The B.O.T. project is completed and put into use before schedule and the total actual investment capital is lower than the total projected investment capital;
- The project is not completed and put into use on schedule as agreed upon and the total actual investment capital is higher than the total projected investment capital, except for cases of force majeure;
Cases of force majeure include: storm, flood, fire, earthquake, the bankruptcy of the equipment supplier or the capital provider and other causes by court decisions.
One month before the expiry of the B.O.T. contract, the State agency competent to sign the B.O.T. contract and the B.O.T. enterprise shall have to complete the inventory of assets and re-evaluate the fixed assets, assess the maintenance and repair of fixed assets before the transfer as agreed upon in the B.O.T. contract.
The State agency shall take over the project only after its machinery and equipment have gone through the maintenance and repair as agreed upon.
The State agency competent to sign the B.O.T. contract shall not take responsibility for the debts of the B.O.T. enterprise as well as for the contracts signed by the B.O.T. enterprise with other enterprises, if it is not so agreed in advance by the B.O.T. enterprise and the State agency competent to sign the B.O.T. contract.
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If the two parties fail in their negotiation, the dispute shall be settled by an Arbitration Center selected by the two parties or at the Economic Court. The procedures for the settlement of disputes shall comply with the current regulations, depending on the type of the juridical body.
Article 50.- A B.O.T. contract shall terminate in one of the following cases:
1. The contracts duration has expired;
2. A B.O.T. enterprise may terminate a B.O.T. contract ahead of time for the following reasons:
- It is not granted in time the land assignment or land lease certificate or the assigned or the leased land area is smaller than the area agreed upon in the B.O.T. contract;
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- It is not given priority in using public utility services or other public facilities provided for in Article 29 of this Regulation.
3. The State agency competent to sign the B.O.T. contract cancels such contract due to changes in the socio-economic development strategy and plan.
In cases where a B.O.T. contract ceases to be effective due to causes stipulated in Points 2 and 3 of this Article, the State agency competent to sign the B.O.T. contract shall have to refund all the costs that the B.O.T. enterprise has paid for the implementation of the B.O.T. project.
Pending a list of the B.O.T. projects, the parent ministries, the Peoples Committees of the provinces and cities directly under the Central Government shall propose or consider and ratify projects at the requests of the enterprises and/or individuals wanting to make investment in the B.O.T. form.
- 1 Circular No. 06/BXD-CSXD of September 25, 1997 guiding a number of issues on the management of construction in the implementation of the "regulation on domestic investment in the form of build- operate- transfer (B.O.T.) contracts" issued together with Decree No.77-CP of June 18, 1997 of The Government
- 2 Circular No. 12-BKH/QLKT of August 27, 1997 guiding a number of articles in the regulation on domestic investment in the form of build- operate- transfer (B.O.T.) contracts
- 3 Decree No. 42-CP of July 16, 1996, of the Government promulgating the regulation on the management of investment and construction