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THE
STATE COMMITTEE FOR COOPERATION AND INVESTMENT
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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No.
333-UB/LTX
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Hanoi,
February 28, 1994
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CIRCULAR
GUIDING
THE IMPLEMENTATION OF THE REGULATIONS ON INVESTMENTS IN THE FORM OF
BUILD-OPERATE-TRANSFER CONTRACTS
To implement
the Article 18 of the Regulation on Investments in the form of
"Build-Operate - Transfer Contracts" (BOT) (enacted in conjunction
with Decree No. 87 CP, dated November 23, 1993) having reached agreement with
the relevant Ministers, the State Committee for Cooperation and Investment
provides the guidance on the Implementation of the Regulation as follows:
I. GENERAL
PROVISIONS
1. Investors
entering into BOT contracts with authorized State bodies shall be foreign
individuals or organizations who implement BOT projects as a person being
directly responsible for organizing the implementation of the BOT project,
namely, designing, construction, equipment supply, completion, operation,
maintenance and transfer of the project to the Vietnamese Government. In order
to be able to negotiate with the State body, the investor shall prove its
technical, financial standing and experience f or ensuring the implementation
of the BOT project.
The investor
shall provide enough proof of his authority to sign BOT contract, evidence of
his financial, technical ability as well as his professional experience
required for the implementation of the BOT project.
In the event
that the investors are Vietnamese entrepreneurs who implement the BOT project
by themselves, special procedures shall apply.
2. In order
to conduct a BOT project, any concerned investor must establish a BOT company
subject to the law of Vietnam. A BOT company shall enjoy the status of
Vietnamese juridical person and its operation shall be allowed after obtaining
investment license and certificate of registration of its Charter issued by the
SCCI. The BOT Company's activities shall be in accordance with the BOT
contract, the Investment License, the Company Charter and other relevant laws
of Vietnam.
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4. The
transfer of a BOT project shall be made by either the BOT company or the
investor, subject to the agreement between the company and the investor, being
approved by the State body which has the power to enter into a BOT contract,
but in any case, the investor shall still be the one fully responsible for the
whole project as regulated in point (1).
5. The State
body having the power to enter into a contract is responsible for supervision
and investigation of the implementation of the project, commissioning the
project in accordance with the contents, conditions and schedule specified in
the BOT contract. During the implementation period of a BOT project from the
building, the operation to the transfer of the project, the State body having
power to enter into a contract can remind the BOT Company and the State
Committee for Cooperation and Investment of any problems occurred (if any) and
if necessary, can jointly with the investor work out the solution to handle
these problems.
In carrying
out the functions of supervision, investigation and commissioning, the State
body having power to enter into a contract can invite local or foreign experts,
organizations who are experienced in specific areas to give comment and advice.
It the investor uses an independent specialized organization to supervise and
commission the project, it must be approved by the State body having a power to
enter into a contract.
6. The State
body which having power to enter into a contract with the BOT company includes
Ministries, General Department or Department, People's Committee of Province or
City.
7.
Sub-contractors as regulated in Article 6.1. of the Regulation are allowed to
participate in the bid and being awarded a part of work of a BOT Company.
Sub-contractors,
including local ones, after signing contract with a BOT Company, must register
its operation at the State body having power to enter into a contract and are
allowed to operate only after having completed the registration procedures.
II.
PREFERENTIAL TREATMENT AND INVESTMENT GUARANTEE
1.
Preferential treatment in respect of taxation
(1.1) The BOT
Company shall be entitled to pay tax as stipulated in Article 3 of the
Regulations.
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(1.2.)
foreign sub-contractors participating in the BOT project on the basis of the
sub-contract signed with the BOT company (including sub-contractors established
in the form of consortium with Vietnamese enterprises shall be subject to taxes
which are applicable to foreign contractors according to Circular No 30 TC/TCT
dated 19 July 1992 of the Ministry of finance.
Vietnamese
sub-contractors participating in BOT projects shall fulfill their tax
obligations in accordance with the stipulations applicable to Vietnamese
enterprises.
(1.3.) BOT
Company and sub-contractors carrying out the BOT project shall be exempted from
payment of import duty in respect of equipment, machinery, accessories,
materials, supplies (including transportation facilities) imported into Vietnam
for the purposes of investigation, designing, construction, maintenance and
operation of the BOT project. If commercial conditions are similar, priority
will be given to local purchase instead of importation of the above items.
In the event
that the BOT Company, the sub-contractors sell the equipment and supplies
referred to in Clause 1.3. in the Vietnamese market, permission of the Ministry
of Trade shall be required import duty and turnover tax shall be paid.
(1.4.) Where
the parties to the BOT Company, foreign sub-contractors conduct any assignment
of capital, they shall be subject to an assignment tax as stipulated in Clause
4, Article 3 of the Regulations.
The assignment
by the parties in the BOT Company shall be subject to the approval of the State
Committee for Cooperation and Investment.
2. Opening
and operation of accounts ; ensuring foreign exchange balance
(2.1.) The
opening of bank accounts (including the opening of bank accounts for loan
capital at overseas banks) by the BOT Company shall be in accordance with
Circular No 06/TT-NH 7 dated 18 September 1993 of the State Bank.
foreign
sub-contractors participating in a BOT project may open bank account in foreign
currencies or Vietnamese currency at Vietnamese banks or joint venture banks or
foreign bank branches operating in Vietnam.
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(2.2.) In
accordance with Article 5 of the Regulations, the Government shall ensure the
conversion of the revenue received by the BOT Company from Vietnamese currency
into foreign currencies for the purpose of repaying the loan capital,
expenditures and profit repatriation.
Where the BOT
Company wants to remit abroad additional profit in exceed of the profits
obtained as stated in the contract and at the point of time when Vietnam faces
to difficulties in respect of foreign exchange, upon the proposal of the BOT
Company and , in consultation with the State Bank and the Ministry of Trade,
the State Committee for Cooperation and Investment shall consider the
possibility to approve such remittance in the forms of buying exported goods of
equivalent value and/or being able to pa y in Vietnamese dong for other
expenses in Vietnam which should be paid in foreign currencies under the law.
3. Mortgage
on assets and the right to use the land
(3.1.) Assets
of the BOT Company which are used for securing the loans towards the mortgagee
shall be under the ownership of the BOT, including plants, buildings
architectural works and other premises. The mortgagee on properties with the
right to use the land on which construction works erected, must be approved by
the State body having power to enter into a contract.
Where the BOT
Company fails to fulfill its obligations contemplated in the loan agreement
with mortgaged assets, the mortgaged assets shall be treated in a way agreed by
the parties but the mortgagee must use the mortgaged assets to continue the
implementation of the project. If it is impossible to continue the
implementation of the project, then the mortgaged assets shall be auctioned and
those who buy these assets must continue the implementation of the project. If
the mortgaged assets are planned to be used for other purpose, it must be
approved by the State body having power to enter into a contract.
Where the BOT
Company fails to fulfill its obligations as contemplated in the mortgage
contract and/or being dissolved prior to the expiry date, after wages,
salaries, insurance, taxes having been paid, then loans (including interests)
which are secured b y the mortgaged assets shall be given priority to be paid
out of proceeds achieved from liquidation of the assets against other
liabilities.
(3.2) The
mortgage in a form of land use right (without any construction) for securing
loan by BOT Company shall only be applied if required and it must be approved
by the State body having power to enter into a contract.
Where the BOT
Company fails to fulfill its obligations as contemplated in the loan agreement,
the mortgagee or a third party appointed by the mortgagee shall be able to
takeover the land use right but it must be used for the purpose of the project.
If the land use right is planned to be used for other purpose, it shall be
approved by the State body having power to enter into a contract.
Where the BOT
company fails to fulfill its obligations as contemplated in the loan agreement
and/or being dissolved prior to the expiry date, after wages, salaries ,
endurance, taxes having been paid , then loans (including interests) which are
mortgag ed by the land use right ,shall be given priority to be paid out of
proceeds achieved from liquidation of the construction against other
liabilities.
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4. Conditions
for increasing rates, fees and other revenues of the BOT Company.
During the
course of operation of the BOT project, any increase in prices, fee and other
revenues within the range stipulated in the BOT contract must be notified to
the State body having power to enter into contract one month prior to the date
or commencement of implementation.
Where the
increase in prices, fees, and other revenues of the BOT Company is higher than
the proposed and agreed ceiling level in the BOT contract , the BOT company
shall negotiate with the State body having power to enter into a contract and
subject to the approval of the State Committee for Cooperation and Investment.
Within 30
days from the date of receipt of the proposal from the BOT Company, the State
Committee for Cooperation and Investment shall reply in writing.
5. Technology
Transfer and Ecological and Environmental Protection
Any
technology transfer in a BOT Project shall comply with regulations on
technology transfer of Vietnam.
The term of
technology transfer may be longer than that stipulated in the regulations on
technology transfer, depending on stipulated in the regulations on technology
transfer, depending on the nature of specific contracts, and shall be approved
by the Ministry of Science, Technology and Environment.
BOT Projects
shall be conducted in compliance with all regulations on ecological and
environmental protection of Vietnam. In case of absence of the Vietnamese laws,
the BOT contract shall clearly define measures for ecological and environment
protection which must be approved by the Ministry of Science, Technology and
Environment.
III. STATE
MANAGEMENT Of THE BOT PROJECTS
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- To
determine the method of implementing the project, suitable to the nature, scope
and specific conditions of each BOT project.
- To
cooperate with Ministries, Branches and local governments concerned, in the
preparation of the feasibility study of a BOT project, tender documents and in
the organization of bid and selection of the winning bidder.
- To
negotiate and sign BOT contract.
- To be the
focal point for handling investors' requirements in relation with the
implementation of the project.
- To
supervise, inspect and organize the commissioning of the project during the
course of implementation and completion of the project in accordance with the
provisions specified in the BOT project.
(2) The State
Committee for Cooperation and Investment shall have the following
responsibilities :
- To grant
Investment License and certificate of registration of the BOT Company Charter.
- To
supervise and inspect the implementation of the BOT contract and the operation
of the BOT Company.
- To be the
local point for handling issues relating to obligations of the BOT Company and
to ensure all Commitments made by the Government of Vietnam in respect of the
implementation of the BOT project.
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To give their
comments to the State body having power to enter into a contract during the
course of the implementation of a BOT project; to perform the State management
function within the area assigned.
(4)
Investment License, Charter of the BOT Company.
(4.1.)
Investment license shall be issued by the State Committee for Cooperation and
Investment to the investors on the basis of the BOT contract. The details of
the Investment license are contemplated in Article 16 of the Regulations and
also includes the followings :
- Approval of
the BOT contract entered into between the State body having power to enter into
a contract and the investor.
- Some other
provisions that the investor or the State Committee for Cooperation and
Investment find necessary to be included in the Investment License.
- Approval of
the establishment of the BOT Company and the BOT Company Charter.
(4.2.) A BOT
Company Charter includes the following details :
- Capital
structure and contribution of the parties to the company.
- Prescribed
capital, investment capital.
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-
Organization and management of the BOT Company.
- Power and
responsibilities of the Board of Management, Board of Directors.
- Procedures
and meetings of the Board of Management.
- Cases and
procedures of dissolution and liquidation of the Company.
- Dispute
settlement.
- Rights and
obligations of the BOT Company and the investor.
- Procedures
in respect of amendment of the Company Charter.
IV.
DISPUTE SETTLEMENT AND OTHER PROVISIONS
1. Dispute
settlement
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Where the
Vietnamese Government signs an agreement on investment promotion and protection
with the investor's government, the dispute settlement shall be subject to the
provisions of the agreement.
2.
Infringement settlement
The BOT
companies, foreign sub-contractors, Vietnamese sub-contractors, Vietnamese
business entities participating in a BOT project shall strictly observe the
provisions of the contracts, the Investment License and the laws of Vietnam.
Any infringement shall be settled and prosecuted for contractual obligations,
civil liabilities, administrative responsibilities of criminal responsibility,
depending on the degree of seriousness of the infringement.
In order to ensure
the commitment to implement a BOT project, upon the granting of the Investment
License, the investor has to make a deposit decided by the State body having
power to enter into a contract on the contract-by-contract basis. This amount
will be refunded when the BOT project is put into full operation.
3. Other
provisions
The labour
recruitment, industrial property protection, insurance, auditing, accounting,
statistics, customs, entry, exit, residency and other provisions not referred
to in the Regulations and this Circular, shall be applied in accordance with
Decree 18/C P dated April 16, 1993 and other related legal documents.
This Circular
shall be of full force and effect from the date of its signing. During the
course of implementation, if any issues required to be guided, amended or
adjusted, Ministries shall provide timely guidance or keep the State Committee
for Cooperation and Investment informed for solution.
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