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THE
GOVERNMENT
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No.
87-CP
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Hanoi,November
22, 1993.
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DECREE
ON INVESTMENTS IN THE FORM OF BUILD-OPERATE-TRANSFER
CONTRACTS
THE GOVERNMENT
Pursuant to the Law on the
Organization of the Government dated 30 September, 1992.
Pursuant to the Law on Foreign Investment in Vietnam dated 29 December,
1987, the Laws on Amendment to and Addition to a Number of Articles to the Law
on Foreign Investment dated 30 June, 1990 and 23 December, 1992 In order to
encourage investment in construction and development of infrastructures in
Vietnam
Following recommendations from the Minister - Chairman of the State
Committee for Cooperation and Investment
DECREES:
Article 1.
To issue
with this Decree the Regulations on Investments in the Form of Build - Operate
- Transfer Contracts (abbreviated as BOT).
Article 2.
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Article 3.
This
Decree shall be of full force and effect as of the Date of issue.
FOR
THE GOVERNMENT
PRIME MINISTER
Vo Van Kiet
REGULATIONS
ON INVESTMENT IN THE FORM OF BUILD-OPERATE-TRANSFER
CONTRACTS
Chapter I
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Article 1.
In these
Regulations, the following shall have the meanings ascribed to them
thereunder:
1. "Build - Operate -
Transfer project" ( abbreviated as BOT) means any project approved by the
Government to be implementation in accordance with these Regulations for the
purpose of constructing (including expanding, upgrading, and modernizing) and
commercially operating infrastructure projects and other projects which are
permitted by the Government to be carried out on the basis of a BOT contract in
a certain duration and at the end of the duration, the project shall be
transferred, without compensation, to the Vietnamese Government.
2. "BOT company" means
any company with foreign owned capital which is established in accordance with
the Vietnamese legislation for the purpose of carrying out a BOT project.
3. "State Body which is
authorized to entered into a contract with the BOT company" means any
administrative State body nominated by the Government to be a party of the
contract.
4. "BOT contract"
means any contract which is entered into between a BOT company and a State
body with the power to carry out the BOT project.
5. "Ancillary contract"
means any contract entered into between the BOT company and ancillary
contractors for matters relating to the implementation of the BOT project.
6. "Ancillary
contractors" mean any foreign or Vietnamese constructors, suppliers,
users, financiers, insurers, consultants or investors... who enter into
ancillary contracts with the BOT company for the purpose of participating in
the BOT projects.
7. "Separate legal
documents" mean any legal documents issued by an authored State body to
regulate specific matters of BOT projects.
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1. The
Government of Vietnam encourages all foreign organizations and individuals to
invest capital and technology in the form of BOT contract. The Government shall
protect the right of ownership of invested capital and ensure other legal
rights of foreign organizations and individuals. It shall create favorable
conditions and simple procedures for foreign organizations and individuals to
invest into BOT projects in Vietnam.
2. The Government has
established a regime of preferential treatment for BOT companies and foreign
ancillary contractors in accordance with the provisions of Chapter II of these
Regulations.
Chapter II
PREFERENTIAL TREATMENT
AND INVESTMENT GUARANTEE
Article 3.
1. BOT
company shall be subject to the following taxes and tax rates:
+ Profits tax at the rate of 10%
on all profits. The BOT company shall be exempted from payment of profits tax
for a period of 4 years as from the first profit making year and a 60% tax
reduction for a further period of 4 successive years.
+ With holding tax at the rate
of 5% on all profits transferred abroad.
+ Turnover tax at the most
preferential rate in the tariff and/or to possible reduction of or exemption
from turnover tax depending on the Prime Minister's decision in each particular
contract.
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3. The BOT company and foreign
ancillary contractors carrying out the BOT project shall be exempted from
payment of import duty in respect of equipment, machinery's, accessories,
manufacturing and operational equipment (including transportation vehicles),
and materials imported into Vietnam for the purpose of constructing and
operating the project. If these commodities are assigned or sold in Vietnam, it
must be permitted by the Ministry of Trade and import duty, turnover tax and other
taxes as provided by Vietnamese laws, must be paid.
4. Where the BOT company or
ancillary contractors receive a profit from an assignment of contract, it shall
be subject to tax at a rate of 25% of that profit.
The assignment of the contract
must be accepted by the State Committee for Cooperation and Investment.
Article 4.
The BOT
company shall be permitted to open bank accounts at banks in foreign
countries in cases where the lending party requests so and the State Bank of
Vietnam so accepted, in order for the BOT company to borrow capital, repay and
discharge the loan, Other provisions stipulated in article 80 of Decree 18-CP
dated 16 April, 1993 of the Government, which regulate in details the
implementation of the Law on Foreign Investment, shall apply to the BOT
company.
Article 5.
The
Government shall ensure that the revenue received by the BOT company during its
period of operation be converted from Vietnamese currency into foreign
currencies, in accordance with the contract. The amount converted must fully
satisfy the repayment requirements for loans (including interests) in relation
to loan capital, all expenditure requiring foreign currency, and the shared
profits of foreign investors which are transferred abroad. At the proposal of
the BOT company and on the basis of recommendations from the State Bank and
the Ministry of Trade, the State Committee for Cooperation and Investment shall
make a decision to permit the BOT company to use its other lawful income in Vietnamese
currency for settlement by way of products of value in the market, purchase of
export goods and payment of other expenses in foreign currency if such payment
required by Vietnamese regulations.
Article 6.
1. When
required, the BOT company shall be permitted to mortgage assets of the company
provided that the authorized State body, who is party to the BOT contract,
approves.The assets which can be mortgage or use as securities include:
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b/ Other assets which the BOT
company has ownership to.
c/ The right to use the land in
accordance with Vietnamese laws.
d/ Other rights in accordance
with the contract which has economical value.
2. The mortgage of those assets
and rights of the BOT company must be used for purposes which continue on the
performance of the BOT project in accordance with the provisions of the BOT
contract.
Article 7.
The
Government shall ensure, for the BOT company, the rights to use land, roads, and
other supporting public facilities in order for the BOT company to carry out
the project on the basis of the detailed plan stated in the BOT contract. The
right to use land, which is necessary for the implementation of the project,
shall be exempted from payment of rent.
Article 8.
1. A
Vietnamese enterprises, which enters into an ancillary contract with the BOT
company for participation in the BOT project must be accepted by a State body
which has the authority to the BOT contract.
2. When necessary, the
Government may nominate a Vietnamese bank or financial institution to act as
guarantor for the performance of financial obligations by Vietnamese
enterprises stated in the contract.
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The
proposed charges or fees for the use of the BOT project must be stipulated in
the BOT project. Where an increase or reduction in fees or charges is
foreshadowed and provided for in one of the agreed terms of the BOT contract,
the BOT company shall be required to notify the
State Committee for Cooperation
and Investment of the increase or reduction no later than 30 days prior to its
implementation. In the event that there is a need for and increase in fees or
charges, not foreshadowed and provided for in one of the agreed terms of the
BOT contract, the BOT company shall prepare a proposal and submit it to the
State Committee for Cooperation and Investment for approval.
Article 10.
Provisions
on entry, exit, residency, travel, labour, wages, accounting standards,
transfer of technology, any other provisions of the current regulations on
foreign investment shall apply to the BOT project.
Chapter III
METHODS FOR CARRYING OUT
BOT PROJECTS
Article 11.
1.
Pursuant to the objective of socio-economic development, the State Committee
for Cooperation and Investment shall coordinate with the State Planning
Committee, relevant Ministries and government agencies, and People's Committee
of provinces and cities under the central authority in establishing plans and a
list of BOT projects for foreign investment attraction. The State Committee
for Cooperation and Investment shall coordinate with the State Planning
Committee, relevant Ministries and government agencies, and People's Committees
of provinces and cities under the central authority, where BOT projects are
being carried out, to manage and direct the implementation of the BOT projects.
A proposed BOT projects of a foreign investor, which is not in the list, may be
carried out, provided that the approval of the Government is obtained.
2. Depending on the nature and
scale of the project, the Government shall decide from one of the following,
which method is suitable for the implementation of the BOT project: a tender, a
selection of contractor, or direct negotiation with the investors of the
project.
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Article 12.
The
Committee which appraises the BOT project shall be a State Committee which
appraises projects, established in accordance with the provisions of Decree
No.366-HDBT dated 7 November, 1991 of the Council of Ministers (presently the
Government).
Article 13.
1. The
duration of the BOT project shall be stated in the contract and stipulated in
the investment license, pursuant to Article 15 of the Law on Foreign
Investment in Vietnam.
2. The BOT company must ensure
that the operation of the BOT projects is in accordance with the terms of the
contracts, including terms relating to the transfer of technology for the usage
and operation of the project up until the time when it is transferred to the
Vietnamese Government.
3. At the end of the duration,
the BOT company shall transfer to the Vietnamese Government, without
compensation, the whole of the BOT project in its normal operational state.
Chapter IV
BOT CONTRACT, ANCILLARY
CONTRACT, AND BOT INVESTMENT LICENSE.
Article 14.
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+ All matters relating to the
planning of the BOT project.
+ The procedures for submitting
and checking the planning.
+ The commitment to accurately
construct the project following the approved plan.
+ The right to use land, roads,
and other supporting facilities which are necessary for the implementation of
the project.
+ The rights and obligations of
parties in relation to the operation of the project.
+ The provisions in relation to
the collection of fees and other charges from the operation of the project.
+ The duty to maintain the
normal operation of the project.
+ The operational duration of
the project.
+ The consultation, examination
and approval of the details of plans and equipment, supervision of the
construction and acceptance,operation, maintenance and transfer of the project.
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+ Measures to be taken
where the BOT company ceases its operation prior to the expire of the
duration of the operation.
+ Provisions on the assignment
of contract.
2. To carry out the project,
the BOT company may enter into the following contracts:
+ Contract for the right to use
the land.
+ Contract for the construction.
+ Contract for the provision of
appraisal and consultation services.
+ Contract for the supply of
goods and provision of technical services.
+ Loan contract and other forms
of finance.
+ Contract of mortgage.
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3. In respect of issues which
are not regulated by the Laws of Vietnam, the parties may, when drawing up a
contract, apply foreign laws, provided that the approval from the State
Committee for Cooperation and Investment must be obtained.
Article 15.
1.
Disputes relating to the performance of ancillary contract entered into by the
BOT company and ancillary contractors shall first be resolved by way of
negotiation and conciliation. Where the dispute remains unresolved by after
negotiation, then an the basis of an agreement between the parties, the dispute
shall be referred to an international arbitration body of Vietnam, an
arbitration council agreed to be set up by the parties, an arbitration body of
a third country or an international arbitration body.
2. Disputes between the State
body which is authorized to enter into a BOT contract and the BOT company in
respect of the performance of the contract shall be resolved through
negotiation and conciliation.
Where the dispute is not
resolved by way of negotiation and conciliation, the parties to the dispute
shall refer it to an arbitration council agreed to be established by the
parties, for resolution. The procedures carried out by the arbitrator shall be
determined by both parties.
3. The parties of the dispute
shall reach an agreement on the governing laws.
4. The decision of the
arbitrator shall be dully implemented in accordance with Vietnamese laws.
Article 16.
1. On the
basis of a decision of the Prime Minister of the Government approving the BOT
contract, the State Committee for Cooperation and Investment shall issue a BOT
investment license.
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+ The main terms of the contract
commitments of the Government and other relevant State bodies.
+ The duration of the project,
and requirements relating to the state of the project and to its normal
operation prior to its transfer to the Government of Vietnam.
+ Tax and financial obligations
which the BOT project subject to.
+ The right to use land and
other supporting facilities.
+ The fees and other charges to
be collected by the BOT company during the period of operation of the project.
+ Conditions of the Government
which ensure the conversion of the Vietnamese currency into foreign currency.
+ Conditions relating to the
export and import of equipment, machinery's, and goods.
Chapter V
PROVISIONS ON
IMPLEMENTATION
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Investment
project similar to the form of BOT shall be carried out on the basis of the
principles stipulated in these Regulations.
Article 18.
The
Minister Chairman of the State Committee for Cooperation and Investment, the
Minister Chairman of the State Planning Committee, the Minister of Energy, of
Heavy Industry, of Transportation, and Communication, of Construction, of
Finance, of Trade, of Science, Technology and Environment, the GovernorGeneral
of the State Bank, the Director General of the General Department for Land
Management and other bodies of the Government, within their competence and
powers, shall be responsible for the promulgation of provisions on the
guidance of the implementation of these Regulations.