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| GOVERNMENT No. 78-2007-ND-CP SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness Hanoi, 11 May 2007 DECREE ON INVESTMENT ON THE BASIS OF BUILD-OPERATE-TRANSFER (BOT), BUILD-TRANSFER-OPERATE (BTO) AND BUILD-TRANSFER (BT) CONTRACTS The Government Pursuant to the Law on the Organization of the Government 32-2001-QH10 dated 25 December, 2001; Pursuant to the Law on Investment 59-2005-QH11 dated 29 November 2005; Pursuant to the Law on Construction 11-2003-QH11 dated 26 November 2003; Pursuant to the Law on Enterprises 60-2005-QH11 dated 29 November 2005; Having considered the proposal of the Minister of Planning and Investment; DECREES: CHAPTER I General Provisions Article 1 Governing scope 1. This Decree stipulates the sectors, conditions, order, procedures and incentives applicable to investment projects for development of infrastructure facilities on the basis of build-operate-transfer (BOT), build-transfer-operate (BTO) or build-transfer (BT) contract. 2. The Prime Minister shall make decisions on implementation of other similar contractual forms. Article 2 Interpretation of terms In this Decree, the following terms shall be construed as follows: 1. Build-Operate-Transfer Contract (hereinafter referred to as BOT contract) means a contract entered into by an authorized State body and an investor(s) for the construction and commercial operation of an infrastructure facility for a certain period of time; upon the expiry of such period, the investor(s) shall transfer, without compensation, such facility to the State of Vietnam. 2. Build-Transfer-Operate Contract (hereinafter referred to as BTO contract) means a contract entered into by an authorized State body and an investor(s) for the construction of an infrastructure facility upon the completion of which the investor(s) shall transfer such facility to the State of Vietnam. The Government shall grant the investor(s) the right to commercially operate such facility for a certain period of time in order to recover the investment capital and earn profit. 3. Build-Transfer Contract (hereinafter referred to as BT contract) means a contract entered into by an authorized State body and an investor(s) for the construction of an infrastructure facility upon the completion of which the investor(s) shall transfer such facility to the State of Vietnam. The Government shall facilitate implementation of other project(s) by the investor(s) in order to recover the investment capital and earn profit or shall make payments to the investor(s) under the agreement in the BT contract. 4. Project contract means a BOT contract, BTO contract or BT contract. 5. State body authorized to enter into project contracts (hereinafter collectively referred to as authorized State body) means ministries, ministerial equivalent bodies, Government bodies, people’s committees of provinces or cities under central authority (hereinafter referred to as provincial people's committees) or any subsidiary bodies thereof which are authorized to enter into project contracts. 6. Investor(s) means any organization or individual investing capital to perform a project, including: (a) Enterprises of economic sectors established under the 2005 Law on Enterprises. (b) Business households and individuals. (c) Co-operatives and unions of co-operatives established under the Law on Co-operatives. (d) Foreign invested enterprises which were established and have operated in Vietnam; (dd) State owned enterprises which were established prior to the date of effectiveness of the 2005 Law on Enterprises; (e) Foreign organizations and individuals; overseas Vietnamese people and foreigners permanently residing in Vietnam. 7. Project means a collection of proposals relating to the expenditure of capital in order to invest in construction and operation of a new infrastructure facility or in renovation, expansion, modernization, operation or management of existing facilities on the basis of a BOT contract, BTO contract or BT contract as stipulated in this Decree. 8. Infrastructure facilities mean facilities the implementation of which is encouraged in accordance with the provisions of article 3 of this Decree. 9. Other project(s) means any project(s) carried out by the investor for the purpose of recovering investment capital and earning profit and which are conducted concurrently with, or after completion of, an infrastructure facility in accordance with clause 3 of this article. Other project(s) shall be carried out in accordance with the provisions of the law on investment and shall enjoy incentives in accordance with the provisions of this Decree or an agreement in the project contract. 10. BOT enterprise, BTO enterprise or BT enterprise (hereinafter collectively referred to as project enterprise) means any enterprise set up by an investor in accordance with the law of Vietnam to organize and manage the business of a project. A BOT enterprise or BTO enterprise may directly manage or commercially operate the project facility or hire a management organization, provided that the enterprise shall solely bear the responsibilities of such management organization. Article 3 Sectors in which project is implemented 1. The Government encourages the implementation of projects for constructing and operating new infrastructure facilities or for renovating, expanding, modernizing, operating or managing the following existing facilities: (a) Roads, bridges, tunnels and relevant utilities and facilities; (b) Railways and tramways; (c) Airports, seaports, river-ports and ferry-landings. (d) Water plants, drainage systems and waste or sewage treatment systems; (dd) Power plants, power transmission lines; (e) Other infrastructure facilities as decided by the Prime Minister. 2. The Government shall protect the ownership and other legitimate interests of investors carrying out projects in accordance with this Decree and the relevant laws. 3. Investors and project enterprises shall be entitled to recover their capital invested and to earn profit as stipulated in a project contract. Article 4 Capital sources for carrying out projects 1. Investor(s) or the project enterprise must, as agreed in the project contract, arrange capital sources by themselves in order to carry out the project. The Government encourages investors of [good] financial, technical and administrative capacity to jointly raise capital to carry out projects. 2. The equity of an investor used for carrying out a project shall be raised in accordance with the schedule agreed in the project contract and must reach the following minimum ratio: (a) With respect to projects with total investment capital of below 75 billion Dong, the equity of the investor must not be lower than 30% of the total investment capital of such project; (b) With respect to projects with total investment capital of between 75 billion Dong and below 1,500 billion Dong, the equity of the investor must not be lower than 20% of the total investment capital of such project; (c) With respect to projects with total investment capital of 1,500 or more billion Dong, the equity of the investor must not be lower than 10% of the total investment capital of such project. 3. Investor(s) or the project enterprises shall, as agreed in the project contract, be obliged to raise investment capital in order to carry out the project in accordance with the schedule already undertaken in the project contract and bear all responsibilities in relation to any change in the total investment capital, except for events of force majeure and other cases set out in the project contract. Article 5 Using State owned capital to make capital contributions to, or to support the implementation of, projects 1. Subject to each specific case, State owned capital may be used for making capital contributions to, or supporting the implementation of a project by one of the following methods: (a) Making capital contribution by State owned enterprise(s) for implementation of the project at a ratio of 49% or less of the equity of the investor as stipulated in article 4.2 of this Decree. (b) Carrying out the construction of support facilities or arranging for compensation and site clearance by the authorized State body in order to support the implementation of such project. This amount of capital for support shall not be included in any capital sources for implementing the project stipulated in article 4 of this Decree. 2. Any use of State owned capital for supporting a project in accordance with the provisions of clause 1(b) of this article shall be carried out under a separate project which is independent of the BOT project, BTO project or BT project and must conform with the regulations on management of investment using State owned capital. 3. The use of State Budget funds to serve activities under the responsibility of the authorized State body or other obligations stipulated in the project contract shall be carried out in accordance with guidelines provided by the Ministry of Finance. Article 6 Inter-branch working group 1. Subject to requirements of negotiations or the performance of projects, the authorized State body shall establish an inter-branch working group for a BOT project, BTO project or BT project (hereinafter referred to as inter-branch working group), comprising: (a) A representative of the head of the authorized State body as the head of the group; (b) Representatives of central bodies and local bodies of the locality in which the proposed project will be performed or which is related to the project; (c) A number of independent legal, technical or financial experts as decided by the authorized State body. 2. The inter-branch working group shall have the following duties: (a) To consider criteria for selection of investors for project contract negotiations in accordance with the provisions of articles 10, 11 and 12 of this Decree. (b) To support the authorized State body in entering into project contract negotiations and performing the duties stipulated in this Decree. (c) To take part in resolution of matters arising during implementation of the project; (d) To perform other duties upon the request of the authorized State body. 3. The duration of operation of the inter-branch working group shall be decided by the authorized Sate body subject to the requirements for implementation of the project. 4. The budget for operation of the inter-branch working group, including the budget for performance of the obligations of the authorised State body as agreed in the project contract, shall be funded by the State Budget on the basis of the estimated budget approved by the authority. CHAPTER II Formulation and Publication of Lists of Projects Article 7 Formulation of a list of projects 1. Based on planning, guidelines for socio-economic development from time to time and the provisions of article 3 of this Decree, ministries, ministerial equivalent bodies or Government bodies (hereinafter referred to as ministries in charge of management of branches) and provincial people’s committees shall formulate and approve a list of projects calling for investment capital on the basis of BOT contracts, BTO contracts and BT contracts in their respective branches and localities. The list of projects shall contain the following main items: (a) Name of projects. (b) Objectives of projects. (c) Proposed location of implementation of projects. (d) Summary of essential technical specifications and proposed total investment capital for implementation of the respective projects. (dd) Name, address, telephone number and facsimile number of the authorized State body. 2. The list of projects referred to in clause 1 of this article shall be submitted to the Ministry of Planning and Investment, relevant ministries or branches and the provincial people's committees of the localities in which the proposed projects will be implemented, for their opinions. 3. The document seeking opinions of the bodies referred to in clause 2 of this article must specify the necessity, objectives, location, designed capacity and proposed investment capital and minimum technical and financial requirements of the projects; and recommendations on an authorized State body and forms of selection of investors for project contract negotiations. 4. The Ministry of Planning and Investment, relevant ministries or branches and the provincial people’s committees of the localities in which the proposed projects will be implemented shall provide their opinion about the list of projects and the issues referred to in clause 3 of this article within 30 working days from the date of receipt of the list. Article 8 Publishing lists of projects 1. Upon agreement with the relevant bodies referred to in article 7.4, the ministries, branches and the provincial people’s committees shall publish the lists of projects on the website of respective ministries, branches and localities and at the same time in three consecutive issues of central and local daily newspapers. 2. The List of projects shall be published periodically once each year and must contain the main items stipulated in article 7.1 of this Decree. 3. For further information about projects, investors should directly contact the authorized State body designated in the list of projects. Article 9 Formulation and approval of proposals for projects 1. Based on the published list of projects referred to in article 8, the authorized State body shall appoint a domestic or foreign consultant contractor to formulate a proposal for a project and tender invitation documents for selection of investor(s) for project contract negotiations. 2. The proposal for a project shall comprise the following main items: (a) Necessity of investing in construction of facilities, favourable conditions and difficulties; (b) Proposed capacity, location and construction area, project items and need for land use; (c) Analyses and preliminary selection of technology or technique; terms for provision of supplies, equipment, fuel, energy or services; technical infrastructure; plan of site clearance and resettlement (if any); effects of the project on the ecological environment; fire and explosion fighting and prevention; and security; (d) Preliminary calculation of the total investment capital, duration of implementation of the project and plan for raising capital in accordance with the schedule and socio-economic efficiency of the project. 3. The authorized State body shall consider and decide on approval of the proposal for the project. 4. The budget for formulation of proposals for a project and tender invitation documents shall be funded by the State Budget. Ministries, branches and provincial people’s committees shall prepare on their own initiative a budget for implementation of the works referred to in this article on an annual basis. CHAPTER III Selection of Investors for Project Contract Negotiations Article 10 Tendering for selection of the investor(s) for project contract negotiations 1. Except for the cases stipulated in articles 11 and 12 of this Decree, the authorized State body must hold open domestic or international tendering for selection of the investor(s) for project contract negotiations. 2. The tender invitation documents shall comprise the following items: (a) Instructions for tenderers; (b) Minimum technical, commercial and financial requirements of the project; criteria for assessment; preferential conditions; taxation and other conditions; (c) Proposal for the project; (d) Draft project contract, including the items set out in article 15; (dd) Other relevant documents as determined by the authorized State body. 3. Subject to the scale and nature of the project, the authorized State body shall decide on the method of tendering for selection of the investor(s) for project contract negotiations. 4. The Ministry of Planning and Investment shall make detailed regulations on tender invitation documents, and the method, order and procedures for tendering for selection of investors for project contract negotiations. Article 11 Appointment of investors to directly enter into project contract negotiations The appointment of the investor(s) to directly enter into project contract negotiations shall only be conducted when one of the following conditions is satisfied: 1. The authorized State body has carried out pre-qualification of investors for project contract negotiations, but there is only one investor who satisfies the requirements of the pre-qualification; 2. The project is required to be implemented in order to satisfy an urgent requirement for use of infrastructure facilities or to ensure a continuous requirement for use of products or services, but it is unable to carry out tendering for selection of the investor(s) for project contract negotiations; 3. Other cases as decided by the Prime Minister. Article 12 Projects proposed by investors 1. An investor may propose on its own initiative a project other than those in the list of projects which is published in accordance with the provisions of article 8 of this Decree, and must prepare a proposal for the project. 2 The proposal file for a project submitted to the authorized State body shall comprise the following items: (a) Proposal for the project containing the items specified in article 9.2 of this Decree; (b) Document evidencing the legal status and the technical and financial capacity of the investor; (c) Other documents necessary for explaining the proposal for the project. 3. Where the proposal for the project conforms with the master plan approved by the authority, the authorized State body shall organize the collection of opinions from the relevant bodies and decide to approve the proposal for the project in accordance with the procedures specified in clauses 2, 3 and 4 of article 7. Where the proposal for the project has not yet been included in the approved master plan, the authorized State body shall submit it to the ministry in charge of management of the relevant branch for consideration and addition to the master plan under its authority, or for submission to the Prime Minister for his approval of and addition to the master plan. 4. The authorized State body shall consider and decide on approval of the proposal for the project in accordance with the provisions of clause 2 of this article and notify the investor in writing of its decision to approve or refuse the proposal for the project within forty five (45) working days from the date of receipt of the valid file. Where the proposal for the project is approved, the authorized State body shall enter into project contract negotiations with the investor in accordance with the provisions of Chapter IV of this Decree. 5. Where two or more investors submit proposals for implementation of one project at the same time, the authorized State body shall hold tendering for selection of an investor for project contract negotiations in accordance with the provisions of article 10 of this Decree. CHAPTER IV Negotiation and Signing of Project Contracts Article 13 Preparation and approval of investment projects for construction of facilities 1. After a decision on selection of the investor(s) for project contract negotiations is made in accordance with the provisions of article 10, 11 or 12 of this Decree, the authorized State body shall direct the investor(s) to prepare an investment project for construction of a facility which shall be used as the basis for the negotiations. 2. The investment project for construction of a facility shall be prepared and approved in accordance with the laws on construction. Where the project negotiations are successful, costs for preparation of the investment project for construction of a facility shall be charged to the investment capital of the project. Article 14 Negotiations and signing of project contract and relevant contracts 1. The authorized State body shall preside over the project contract negotiations and agree with the selected investor(s) on a Government guarantee (if any). With respect to a project which requires a Government guarantee, the authorized State body shall submit it to the Prime Minister for his consideration and approval of the requirement for a guarantee prior to project contract negotiations. 2. The negotiations of contracts for land lease, construction, installation of machinery and equipment, consultancy services, inspection, purchase of raw materials, sale of products, services, provision of technical services, loans, mortgage or pledge of property and other contracts may be conducted concurrently with the project contract negotiation. The authorized State body shall activate the negotiation of relevant contracts in order to ensure they are consistent with the project contract. 3. The project contract and relevant contracts shall be evaluated concurrently with the evaluation and issuance of an investment certificate in accordance with article 17 of this Decree. Article 15 Contents of project contracts 1. A project contract shall contain the following main items: . Names, addresses and authorized representatives of the parties entering into the project contract; . Objectives, scope of operation of the project and other projects; method and schedule of payment of capital invested in construction of facilities (in respect of BT projects); . Capital sources, financial ability, total investment capital and schedule of implementation of the project; . Capacity, technology and equipment; requirement for design and technical standards of the facilities; quality standards; . Provisions regarding control and inspection of the quality of the facilities; . Provisions regarding protection of the environment and natural resources; . Conditions relating to the use of land, infrastructure facilities and support facilities necessary for construction and operation; . Schedule of construction of the facilities, the duration of operation of the project enterprise and the time of transfer of the facilities; . Rights and obligations of the parties; undertakings to provide guarantees and to share risks between the parties entering into the project contract; method of dealing with risks which might occur at the fault of one of the parties; . Provisions regarding prices, fees and other charges (including methods of determination of prices, fees and other receivables; conditions and terms of adjustment thereof); . Obligation to maintain normal operation of the project facilities; . Provisions on consultancy and inspection of design, equipment, construction, acceptance, operation, and maintenance of the project facilities; . Technical conditions, status of operation, quality of the facilities upon transfer; principles used for valuation of the facilities and order of transfer of the facilities; . Conditions for adjustment of the project contract; . Circumstances of early termination of the project contract and conditions for assignment of the project contract; . Methods of resolution of disputes between the parties entering into the project contract; . Dealing with breaches of the obligations in the project contract; . Events of force majeure and principles for resolution; . Provisions regarding assistance and undertakings of Government bodies; . Responsibilities of the investor(s) and the project enterprise for technology transfer and training of managerial and technical skills for operation of the facilities after transfer; . Validity of the project contract. 2. The rights and obligations of a project enterprise, [and] the relationship between the project enterprise and the investor shall be agreed by the parties in the project contract. To confirm these issues, the parties may agree in the project contract on the implementation of one of the following methods provided that all provisions of the project contract must be complied with: (a) The project enterprise, after being established in accordance with the provisions of article 20 of this Decree, shall enter into the project contract and, together with the investor, shall constitute a party to such contract. (b) The project enterprise shall assume the rights and obligations of the investor relating to the implementation of the project. The assumption must be legalized by a written document signed between the project enterprise, the investor and the authorized State body. This document shall constitute an integral part of the project contract. 3. The parties may agree in the project contract on other items, including the right of the lender(s) to take over all or part of the rights and obligations of the project enterprise (hereinafter referred to as project step-in right) in the case where the project enterprise or the investor(s) fails to perform its obligations under the project contract or loan agreement(s) provided that the lender(s) must perform all of the respective obligations of the project enterprise or the investor(s) as stipulated in the project contract. The conditions, procedures and contents of the project step-in right of the lender(s) must be specified in the loan agreement(s), security agreement(s) for loans or other agreements signed between the project enterprise or the investor(s) and the lender(s) and must be approved by the authorized State body. Article 16 Application of foreign laws to govern contractual relations With respect to projects with foreign invested capital, the parties entering into a project contract, the parties entering into contracts whose contractual obligations are guaranteed by the authorized State body in accordance with article 38 of this Decree and parties entering into other contracts relating to the project shall be allowed to agree in the Contract on application of foreign laws provided that such agreement is not inconsistent with the basic principles of the law of Vietnam. Article 17 Evaluation and issuance of investment certificates 1. The Ministry of Planning and Investment shall be the core point to organize evaluation and issuance of investment certificates to projects. 2. Procedures for evaluation and issuance of investment certificates shall be performed as follows: (a) An investor shall submit ten (10) sets of the file, including at least one set of original copies, to the Ministry of Planning and Investment for evaluation and issuance of an investment certificate. The project file shall comprise: . Project contract; . Investment project for construction of facilities and other projects (in the case of BT projects); . Joint venture contract and charter of the project enterprise (if any); . Initialled contracts relating to implementation of the project or preliminary agreements for purchase of raw materials or sale of products (if any). (b) Within a time-limit of three working days from the date of receipt of the valid file in accordance with the provisions of clause 1(a) of this article, the Ministry of Planning and Investment shall seek opinions from relevant ministries, branches and provincial people's committees; (c) Within a time-limit of fifteen (15) working days from the date of receipt of the valid file, the bodies referred to in clause 1(b) of this article shall provide their written opinions about the project. (d) Within a time-limit of fifteen (15) working days from the date of receipt of the written opinions of the relevant bodies, the Ministry of Planning and Investment shall issue an investment certificate to the project. Article 18 Contents of investment certificates An investment certificate shall include the following main contents: . Names and addresses of the investor(s) and the project enterprise; . Number and date of issuance of the business registration certificate (in the case of investors which have established an economic organization); . Objectives and location of implementation of the project; . Total investment capital of the project; . Investment incentives and Government guarantee (if any) consistent with the project contract. Article 19 Security for obligation to perform project contract 1. An investor must provide security in the form of a bank guarantee for its obligations under the project contract or security for other obligations in accordance with the civil law. The amount of money as security for the obligation to implement the project contract must be equal to the following minimum percentage: (a) One percent (1%) of the total investment capital of the project in respect of projects with total investment capital of 1,500 billion Dong or more. (b) Two percent (2%) of the total investment capital of the project in respect of projects with total investment capital from 75 billion Dong to below 1,500 billion Dong; (c) Three percent (3%) of the total investment capital of the project in respect of projects with total investment capital of below 75 billion Dong. 2. The security for the obligation to implement the project contract shall be effective from the date on which the contract is officially signed to the date of completion of the construction work. CHAPTER V Implementation of Projects Article 20 Business registration, establishment and organization of management of project enterprises 1. With respect to projects funded by domestic investment capital, upon completion of the procedures stipulated in article 17 of this Decree, the investor shall carry out business registration to establish a project enterprise or amend its business registration certificate (in the case of investors which have established an economic organization). Documents, order and procedures for business registration or for amendment of business registration shall be subject to the provisions of the Law on Enterprises. 2. The investment certificate issued to a foreign investor(s) in accordance with the provisions of article 17 of this Decree shall also be the business registration certificate of the project enterprise. 3. The organizational structure of the management apparatus, and rights and responsibilities of the project enterprise shall be decided by the investor consistent with the Law on Enterprises, the Law on Investment and relevant laws. Article 21 Conditions for commencement of implementation of projects The authorized State body and an investor(s) shall agree in the project contract on conditions for commencement of implementation of the project. Article 22 Entering into sub-contracts to proceed with implementation of project A project enterprise shall be entitled to decide by itself on selection of contractors for consultancy, procurement of goods or construction and installation and to enter into other contracts to implement the project. The result of the selection of a contractor must be notified to the authorized State body. Article 23 Preparation of construction site 1. The project enterprise shall preside over and co-ordinate with the authorized State body and the provincial people’s committee of the locality in which the project will be implemented in establishing a council for site clearance for construction in accordance with the plan set out in the approved investment project for construction of a facility. Special cases shall be decided by the Prime Minister. 2. The provincial people's committee of the locality in which the project will be implemented shall be responsible for completing the procedures for allocation or lease of land for implementation of the project in accordance with law and the conditions for land use already undertaken in the project contract. 3. Costs of compensation and site clearance shall be paid by the project enterprise and included in total investment capital of the project, except for a case where State Budget funds are used to support compensation and site clearance as stipulated in article 5.1(b) of this Decree and unless otherwise stipulated in the project contract. Article 24 Preparation of technical designs and commencement of construction of facilities A project enterprise shall prepare a technical design of the facility in accordance with the law on construction and submit it to the authorized State body for supervision and inspection. Where the technical design is inconsistent with the approved basic design, the project enterprise must submit it to the authorized State body for consideration and decision. Article 25 Supervision of construction process and acceptance of facilities 1. A project enterprise may supervise by itself, or hire an independent consultancy organization to supervise, the construction process and accept various work items and the whole facility in accordance with the approved design. 2. The hired consultancy organization shall be responsible to the project enterprise and before the law for the quality of the project facility. Article 26 Management and commercial operation of facilities The BOT enterprise, BTO enterprise or the management organization specified in article 2.10 of this Decree shall conduct management and commercial operation of the whole facility in accordance with the conditions agreed in the project contract. Article 27 Service fees and prices 1. Charges and fees applicable to products or services provided by a project enterprise shall be determined on the principle of sufficient cost recovery taking into account their balance with the market price and assurance of interest of the project enterprise and [service or product] users; and must be specified in the project contract. 2. Conditions for increase in prices, fees and other charges must be agreed upon and provided for in the project contract. Upon any changes in prices or fees and other charges, the project enterprise must provide 30 days prior notice to the authorized State body. Any changes in prices and fees applicable to products or services controlled by the State or other charges other than those contemplated and agreed in the project contract must be approved by the authorized State body. Article 28 Support for collection of service fees Project enterprises shall be given all favourable conditions to collect properly and in full service fees and prices as well as other legitimate charges from commercial operation of the project facility. Where necessary, the project enterprise may request the authorized State body to support the collection of fees or other charges from commercial operation of the project facility. Article 29 Obligation to supply services and operate facilities Project enterprises shall have the obligation: 1. To provide equal treatment to all legitimate users of products and services provided by the project enterprise. Any exercise of the right to conduct commercial operation of the project facility in order to discriminate against, or to refuse to provide services to, any user shall be strictly prohibited. 2. To ensure periodical maintenance or repairs of the facility under the project contract, to ensure that the project operates in accordance with its design. 3. To supply products and services in the quantity and with the quality as agreed in the project contract for the duration of commercial operation until the facility is transferred. 4. To ensure and maintain the regime of use of the facility in accordance with the conditions stipulated in the project contract. CHAPTER VI Transfer of Facilities and Termination of Project Contracts Article 30 Transfer of project facilities 1. With respect to BOT projects, upon expiry of the duration of commercial operation of a project facility as stipulated in the BOT Contract, the investor shall transfer, without compensation, the project facility and the documents relating to exploitation or operation of the facility to the State. The property to be transferred shall not include any debts incurred by the project enterprise. All the financial obligations of the investor and the project enterprise to the State relating to the project must be fulfilled before the time the project is transferred. 2. With respect to BTO projects and BT projects, upon completion of construction, the investor shall transfer the facility to the State in accordance with the conditions stipulated in the BTO contract or BT contract and the provisions of articles 32 and 33 of this Decree. In addition to the conditions specified in this clause, the transfer of facilities of a BT project must comply with the provisions of clauses 5 and 6 of article 31 of this Decree. Article 31 Procedures for handover of facilities of BOT projects 1. One year before the transfer takes place, the investor must publish in a daily central and local newspaper the transfer of the project to the State and the order, procedures and time-limit for liquidation of contracts and for discharge of debts. 2. One year before the deadline for transfer as stated in the project contract, the authorized State body shall organize an inspection of the quality of the facility in order to identify damage (if any) and to request the project enterprise to repair and maintain the facility. 3. The authorized State body shall only take over the transfer if the facility and equipment or property relating to the operation of the facility have been maintained and repaired as agreed in the project contract. 4. The investor and the authorized State body shall prepare documents of handover of the facility to serve as the legal basis for the transfer of the facility. 5. The investor and the project enterprise must ensure that the property to be transferred shall not be used to provide a guarantee for the implementation of a financial obligation or shall not be mortgaged or pledged as security for other obligations of the project enterprise arising before the time of such transfer. 6. The project enterprise shall be responsible for technology transfer, training and provision of necessary operational guidelines to the entity assigned by the State to further operate the facility. 7. The project enterprise shall be responsible for carrying out periodical warranty or maintenance to ensure technical conditions for normal operation of the facility in accordance with the requirements of the project contract. Article 32 Conditions for handover of facilities Upon the handover of a facility, the authorized State body and the investor must consider whether all the conditions for transfer stipulated in the project contract have been met, including the following issues: 1. Status of the facility upon transfer. 2. List of assets transferred, including documents relating to surveys, design, construction, installation, operation, maintenance and management of the facility. 3. Document on inspection of the value and quality of the facility transferred. 4. Responsibilities of the parties for the continuous operation of the facility transferred. 5. Duration, conditions for maintenance and warranty of the facility after it has been transferred. 6. Conditions for environmental protection. 7. Other contracts and conditions necessary for the maintenance and operation of the facility after it has been transferred. Article 33 Take-over and use of facilities after being handed over 1. The authorized State body shall take over the transfer of the facilities in accordance with the conditions stipulated in the project contract and prepare the apparatus in charge of such take-over to enable normal operation of the facilities after the transfer. 2. The authorized State body may assign the facilities to an enterprise with management and technical qualifications to continue managing and operating such facilities. Article 34 Effectiveness of project contracts 1. A project contract shall terminate upon expiry of the duration as agreed in the contract. 2. The operation of a project shall be terminated and the investor shall bear all responsibilities under the project contract if the construction of the project facility is not commenced within the agreed period, unless otherwise agreed in the project contract. CHAPTER VII Investment Incentives and Guarantees in Respect of Investors and Project Enterprises Article 35 Tax incentives 1. BOT Enterprises and BTO Enterprises shall be entitled to corporate income tax incentives as stipulated in respect of projects included in the list of sectors entitled to special investment incentives. Incentives relating to corporate income tax rates applicable to such enterprises shall apply for the whole duration of implementation of the project. 2. Project enterprises and sub-contractors shall be exempt from import duty for implementation of projects in accordance with the law on export and import duties. 3. Objects of industrial property currently within the period of protection, technical know-how, technological processes and technical services for implementation of a project shall be exempt from taxes relating to technology transfer and income from royalties. 4. In addition to the tax incentives stated in clauses 1, 2 and 3 of this article, investors and project enterprises must pay other taxes in accordance with law. 5. Tax incentives for other projects which are performed by investors in order to recover capital [invested] in BT projects shall apply in accordance with the provisions of this article or as agreed in the project contract consistent with the law on investment and relevant laws, taking into account the time for recovery of capital [invested] in BT project facilities and profitability of other projects. Article 36 Taxes applicable to contractors participating in implementation of project 1. Any foreign contractor(s) (if any) participating in the implementation of a project shall pay taxes and shall be entitled to tax incentives in relation to exemption from or reduction of taxes in accordance with the law on taxation applicable to foreign contractors. 2. Any Vietnamese contractor(s) shall perform tax obligations in accordance with the law on taxation applicable to Vietnamese enterprises. Article 37 Incentives relating to land use A project enterprise shall be exempt from land use fees for the area of land allocated by the State or shall be exempt from land rent for the whole duration of implementation of the project. Article 38 Guarantees for obligations of investors, project enterprises and other enterprises Where necessary, subject to the nature of a project, the Government shall appoint an authorized body to provide on behalf of the Government a guarantee for loans, provision of raw materials, sale of products and other contractual obligations to the investor, project enterprise or other enterprises participating in the implementation of the project as defined in the project contract and a guarantee for the obligations of State enterprises which have a monopoly over sale of raw materials or purchase of products and services of the project enterprise. Article 39 Right to mortgage property 1. During the implementation of a project, project enterprises shall be permitted to mortgage or pledge property and land use rights in accordance with law. 2. Any mortgage or pledge of property by a project enterprise must be approved by the authorized State body and must not affect the objectives, progress and operation of the project stipulated in the project contract, and must be consistent with law. Article 40 Right to buy foreign currency 1. During the construction and commercial operation of facilities, investors or project enterprises shall be permitted to buy foreign currency from credit institutions authorized to conduct foreign exchange activities in order to serve current transactions, capital transactions and other transactions in accordance with the law on foreign exchange control, including: (a) Payments for lease of equipment and machinery from abroad. (b) Import of machinery, equipment and other products or services to carry out the project. (c) Repayment of foreign loans (including principal and interest thereon). (d) Repayment of bank loans in foreign currency (including principal and interest thereon) for the purpose of import of machinery, equipment and other products or services to carry out the project. (dd) Remittance of capital, profit, proceeds from investment liquidation, payments for provision of technology, services and intellectual property and other legitimate income abroad (applicable to foreign investors). 2. The Government shall ensure or assist the foreign currency balance of projects for energy, construction of traffic works and waste treatment. Article 41 Assurance of provision of public services 1. Project enterprises shall be permitted to use land, roads and other support facilities to implement projects in accordance with law. 2. Where public services or facilities are scarce or limited to only certain cases, project enterprises shall be given priority in the provision of services or in being granted the right to use public facilities to implement the project. 3. The authorized State body shall be responsible for assisting project enterprises in completing the necessary procedures and documents in order to obtain priority in using public services and facilities. Article 42 Dispute resolution 1. With respect to projects funded by domestic investment capital, any dispute as between the authorized State body and an investor(s) or a project enterprise or between the project enterprise and economic organizations participating in the implementation of the project whose contractual obligations are guaranteed by the authorized State body as referred to in article 38 of this Decree, shall be first resolved through negotiation and conciliation. In the case of failure to resolve such dispute through negotiation and conciliation, the parties may refer the dispute to a Vietnamese arbitration organization or a court of Vietnam for resolution in accordance with Vietnamese law. 2. With respect to projects with foreign invested capital, all disputes shall be first resolved through negotiation and conciliation. In the case of failure to resolve such dispute through negotiation and conciliation, the parties may resolve the dispute in accordance with the following provisions: (a) Disputes as between the authorized State body and a foreign investor(s) or a project enterprise shall be resolved at an arbitration [body] or a court of Vietnam, unless otherwise agreed in the project contract. (b) Disputes as between a project enterprise and a foreign organization or individual or Vietnamese economic organization(s) or disputes as between foreign investors shall be resolved in accordance with the provisions of article 12.3 of the Law on Investment. Article 43 Assurance of capital and property 1. Investment capital and legitimate property of the investors shall not be nationalized or expropriated by administrative action. 2. In necessary cases where acquisition and requisition of the State’s property are required in accordance with the provisions in article 6 of the Law on Investment, the State must assure payment or compensation for property and capital of the investors at market prices or by other methods as agreed. CHAPTER VII Implementation Provisions Article 44 Effectiveness This Decree shall be of full force and effect fifteen (15) days from the date of publication in the Official Gazette and shall replace the following Decrees: 1. Decree 77-CP of the Government dated 18 June 1997 issuing regulations on investment on the basis of build-operate-transfer (BOT) contracts applicable to domestic investment. 2. Decree 62/1998/ND-CP of the Government dated 15 August 1998 issuing regulations on investment on the basis of build-operate-transfer (BOT), build-transfer-operate (BTO) and build-transfer (BT) contracts applicable to foreign investment in Vietnam. 3. Decree 02/1999/ND-CP of the Government dated 27 January 1999 on amendment of and addition to a number of articles of the regulations on investment on the basis of build-operate-transfer (BOT), build-transfer-operate (BTO) and build-transfer (BT) contracts applicable to foreign investment in Vietnam. Article 45 Grandfather clause 1. Project enterprises which use domestic investment capital and which were established prior to the date of effectiveness of this Decree shall not be required to carry out procedures for business reregistration. 2. Project enterprises with foreign owned capital which were established prior to the date of effectiveness of this Decree may or may not carry out [procedures for] re-registration subject to the provisions of article 170.2 of the Law on Enterprises and relevant provisions. Re-registration shall not be allowed to affect undertakings in project contracts. 3. Projects which were issued with an investment licence prior to the date of effectiveness of this Decree shall not be required to carry out procedures for re-issuance of an investment certificate, unless the investor so requests. 4. An investor who entered into a project contract prior to the date of effectiveness of this Decree and who has not been granted an investment license or investment certificate shall not be required to amend the project contract but shall be required to carry out procedures for issuance of an investment license in accordance with this Decree. Article 46 Organization of implementation 1. The Ministry of Planning and Investment shall preside over and co-ordinate with relevant ministries and branches Other posts | ||||||||||||||||||||||||||
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