Decree 77/CP

DECREE No.77-CP OF JUNE 18, 1997 PROMULGATING THE REGULATION ON INVESTMENT IN THE FORM OF BUILD-OPERATE-TRANSFER (B.O.T) CONTRACT APPLICABLE TO DOMESTIC INVESTMENT 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: Article 1.- To promulgate together with this Decree the "Regulation on Investment in the Form of Build-Operate-Transfer (B.O.T) Contract applicable to the domestic investment. Article 2.- This Decree takes effect 15 days after its signing. The earlier stipulations which are contrary to this Decree are now annulled. Article 3.- The Ministers, the Heads of the ministerial-level agencies, the Heads of the agencies attached to the Government, the Presidents of the People�s Committees of the provinces and cities directly under the Central Government shall have to implement this Decree. On behalf of the Government Prime Minister VO VAN KIET 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) Chapter I GENERAL PROVISIONS 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. A B.O.T. enterprise may be an enterprise that has been lawfully established and is operating, irrespective of its economic sector and organizational form, or an enterprise newly established by a number of selected enterprises and/or individuals as prescribed in Chapter II of this Regulation. 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 People�s 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 People�s Committee of the province or city directly under the Central Government or the district People�s Committee appointed by the People�s 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 People�s 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. Article 2.- The State encourages and supports domestic enterprises and individuals to invest in building and operating socio-economic infrastructure projects as well as production, business and public service projects in the form of B.O.T. contracts in the following fields: 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; 4. Clean water treatment and supply facilities; 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. Article 3.- Annually, basing themselves on the socio-economic development planning and targets, the Government, the People�s Committees of the provinces and cities directly under the Central Government shall announce lists of B.O.T. projects to call for investment and encourage enterprises and individuals to propose investment projects for inclusion into the lists of B.O.T projects. 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. The Prime Minister shall publish the lists of group A projects and appoint competent State agencies to sign B.O.T. contracts. The Presidents of the People�s Committees of the provinces and cities directly under the Central Government shall issue the lists of group B and group C projects and appoint competent State agencies to sign B.O.T. contracts. The Prime Minister, the Presidents of the People�s 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. Article 4.- To be included in the list of B.O.T projects, an investment project must meet the following conditions: - To conform with the territorial or branch development planning already ratified by the competent authority. - The project�s 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 People�s 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. The People�s Committees of the provinces and cities directly under the Central Government shall approve the pre-feasibility studies of group B projects only after consulting the Ministry of Planning and Investment and the parent Ministry; for a project involving more than one provinces, the agreement of the People�s Committee of the concerned province is required. 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; 4. The electricity and water supply for industrial parks; and other infrastructure facilities in direct service of industrial parks; 5. The building of schools, vocational training schools, hospitals and clinics. Article 8.- Where a contribution of the State budget capital is needed, including capital for compensation and site clearance for the implementation of a B.O.T. project, the competence to decide the capital contribution is determined as follows: 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 People�s 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 State�s 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 People�s Committee of the province or city directly under the Central Government shall appoint a representative as the State�s 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. Chapter II SELECTION OF THE B.O.T. ENTERPRISE OR FOUNDING MEMBERS OF THE B.O.T. ENTERPRISE Article 9.- An enterprise or individual wishing to invest in the implementation of a B.O.T. project shall have to send to the competent State agency one set of dossier, including: - 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. Article 10.- The State agency competent to sign the B.O.T. contract shall have the right to request other necessary information to clarify issues on the enterprise�s financial capability and capability to mobilize capital and organize the management and other issues, if necessary. Article 11.- The State agency competent to sign the B.O.T. contract shall have to consider the dossier and verify the applicant�s capability to implement the B.O.T. project, and select an enterprise or individual by sending it/him/her a certificate of capacity for the implementation of the B.O.T. project within 30 days from the date of receiving the full dossier as prescribed in Articles 9 and 10 of this Regulation; in case of refusal, the reasons must be clearly stated. Article 12.- Before making decision, the State agency competent to sign the B.O.T. contract shall have: - 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. Article 13.- The enterprise selected for the implemention of a B.O.T. project, or group of enterprises and/or individuals selected to be the founding members of a B.O.T. enterprise must meet the following conditions: - 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. Article 14.- In cases where 2 or more enterprises, groups of enterprises and/or individuals want to implement the same B.O.T. project, a bid shall be organized to select the B.O.T. enterprise or founding members of the B.O.T. enterprise. 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. Chapter III ESTABLISHMENT, BUSINESS REGISTRATION OF THE B.O.T. ENTERPRISE AND APPLICATION FOR INVESTMENT LICENSE TO IMPLEMENT THE B.O.T. PROJECT Article 15.- If it is necessary to set up a new B.O.T. enterprise, the establishment and business registration procedures shall comply with the provisions of the relevant laws (the Corporate Law, the Law on Private Enterprises, the Law on Cooperatives) and the related legal documents guiding the enforcement thereof. A dossier of application for the establishment of a B.O.T. enterprise includes also the certificate of capacity for the implementation of the B.O.T. project as stipulated in Article 11 of this Regulation. Article 16.- In cases where a new B.O.T. enterprise is not set up and an enterprise which has been already established and operating is selected to implement the B.O.T. project, the latter shall have to make an additional business registration at the agency that has granted it a business registration certificate, as prescribed by law. 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. Article 17.- The application for investment license to implement a B.O.T. project of group A shall be conducted after the B.O.T. enterprise has registered its business or made the additional business registration. 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. Article 18.- The competence to allow investment and grant investment licenses, the investment application dossiers, order, procedures and time-limit for the granting of licenses, and the contents of an investment license for the implementation of B.O.T. projects without using State capital shall comply with the provisions on domestic investment projects provided for in the Regulation on the Management of Investment and Construction issued together with Decree No.42-CP of July 16, 1996 and the relevant guiding documents. Chapter IV THE SIGNING OF THE B.O.T. CONTRACT AND THE COMPLETION OF PREPARATION FOR INVESTMENT Article 19.- A B.O.T. contract may be discussed and negotiated right after the B.O.T. enterprise or founding members of the B.O.T. enterprise is(are) selected in accordance with the provisions of Chapter II of this Regulation and must be signed within 7 days after the granting of the investment license for the implementation of the B.O.T. project. A B.O.T. contract must include at least the main contents of the model B.O.T. contract issued together with this Decree. Article 20.- Within 7 days after signing a B.O.T. contract, the B.O.T. enterprise shall have to deposit an amount of money equal to 0.5% of the total investment capital for group A projects and 1% of the total investment capital for group B and C projects at the bank nominated by the State agency competent to sign the B.O.T. contract. 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. Article 21.- Depending on concrete conditions of each project, a B.O.T. enterprise may sign the following major sub-contracts: - 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. Article 22.- A construction permit is not required for the construction of a B.O.T. project provided that before starting the construction, the B.O.T. enterprise sends a dossier of the project�s technical design to the People�s Committee of the province or city directly under the Central Government, where the project is to be implemented, for inspection, supervision and file keeping. Chapter V IMPLEMENTATION OF INVESTMENT Article 23.- A B.O.T. enterprise may deploy the implementation of the investment project when the following conditions are met: - Having been granted the investment license; - A B.O.T. contract has been signed; - The project�s 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. Article 24.- In cases where the construction of a B.O.T. project fails to start within the time-limit stated in the B.O.T. contract, if the B.O.T. enterprise and the State agency competent to sign the B.O.T. contract have not otherwise agreed upon, the B.O.T. project shall be considered unimplemented and the State agency competent to sign the B.O.T. contract shall remit the deposited money prescribed in Article 20 of this Regulation into the State budget, withdraw the investment license and the land assignment or land lease certificate. Article 25.- The State agency competent to sign the B.O.T. contract shall have to organize the site clearance in the area of land assigned or leased for the implementation of the B.O.T. project. 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 State�s shares at the B.O.T. enterprise as stipulated in Article 8 of this Regulation. Article 26.- The State agency competent to sign the B.O.T. contract shall have to organize the evaluation and ratification of the project�s technical design. In case of non-ratification, the required specific changes must be stated clearly together with the way of making supplements or amendments thereto. 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. Article 28.- The B.O.T. enterprise shall coordinate with the State agency competent to sign the B.O.T. contract in evaluating the project�s technical matters and quality; monitoring and supervising the construction and the after-test acceptance of the project�s items as well as the whole project in accordance with the ratified design. Article 29.- In case of a scarcity of public utility services such as the supply of electricity, water... or only a limited number of objects entitled to use the public utilities, the B.O.T. enterprise shall be given priority to provide services or to use public utilities to implement the B.O.T. project. In this case, the State agency competent to sign the B.O.T. contract shall have to support the B.O.T. enterpris