Circular No. 04/1998/TT-BKH guiding the Reporting and Finalizing of Investment Capital for Foreign-Invested Enterprises and Parties to Joint Business Contracts in Vietnam.

CIRCULAR

Guidelines for Reporting and Finalizing Foreign Direct Investment Capital of Enterprises with Foreign Investment and Parties to Business Cooperation Contracts in Vietnam

and Other Relevant Parties

Pursuant to Decree No. 12/CP dated February 18, 1997 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam;

Pursuant to Decree No. 75/CP dated November 1, 1995 of the Government stipulating the functions, tasks, and organizational structure of the Ministry of Planning and Investment;

The Ministry of Planning and Investment hereby issues this Circular to guide the reporting and finalization of foreign direct investment capital of enterprises with foreign investment and parties to business cooperation contracts.

PART I
GENERAL PROVISIONS

1. Joint ventures, wholly foreign-owned enterprises, parties to business cooperation contracts, BOT, BT, BTO enterprises (hereinafter referred to as enterprises), after completing construction projects or project components and putting them into operation, must report and finalize the investment capital they have implemented according to the provisions of this Circular. 2. The report on the finalization of investment capital of enterprises must accurately determine the investment capital implemented annually, by sources of contributed capital and borrowed capital; the total investment capital for construction projects put into operation.

3. Based on the report on the finalization of investment capital of enterprises and the results of the inspection as stipulated in this Circular, the agency issuing the Investment License shall consider issuing a Certificate of Registered Investment Capital Implementation.

PART II
REPORT ON FINALIZATION OF INVESTMENT CAPITAL IMPLEMENTED

Within six months from the date of completion and putting the construction project into operation, enterprises must submit the report on the finalization of investment capital to the agency issuing the Investment License to obtain a Certificate of Registered Investment Capital Implementation according to the following contents and requirements:

I. CONTENTS OF THE REPORT ON FINALIZATION OF INVESTMENT CAPITAL:

The report on the finalization of investment capital must fully reflect all investment costs; The report on the finalization of investment capital includes the following contents:

1. Total investment capital implemented in the project, including:

1.1. Value of machinery and equipment and installation costs of machinery and equipment;

1.2. Construction costs:

Costs for underground works (demolition, foundation, underground structures);

Costs for the main body and finishing;

Costs for internal facilities within the construction;

Landscape construction costs (playgrounds, flower gardens, ornamental plants...);

Environmental protection and fire prevention costs;

Construction insurance.

1.3. Other costs: Interest on borrowed funds, land clearance and compensation costs, project feasibility study, design, supervision, management, inspection, auditing costs, and other reasonable costs in accordance with current regulations.

Penalties for violations of state regulations shall not be included in the finalization of investment capital.

2. Total investment capital implemented divided by year from the investment preparation phase to the completion and operation of the construction; divided by sources of contributed capital and investment capital implemented at each stage of the construction.

For investment projects where the construction and operation of the project are divided into stages specified in the Investment License, the report on the finalization of investment capital shall be carried out according to each stage of the construction.

The costs mentioned in items (1.1), (1.2), and (1.3) above in the report on the finalization of investment capital must be accompanied by certification or auditing reports according to the requirements stipulated in Part III of this Circular.

II. DOCUMENTS FOR THE REPORT ON FINALIZING INVESTMENT CAPITAL:

The dossier for the report on the finalization of investment capital includes:

1. The report on the finalization of investment capital implemented by the enterprise must be prepared according to the model prescribed in Appendix 1 attached to this Circular. For joint ventures: The report must be unanimously approved by the Board of Directors and signed by the General Director.

For wholly foreign-owned enterprises: The report must be signed by the General Director of the Enterprise.

For business cooperation contracts: The report must be jointly signed by authorized representatives of the cooperating parties.

2. Certification, report on the results of valuation of imported machinery and equipment.

3. Report on the results of auditing or inspecting construction costs and other costs.

PART III
REGARDING INSPECTION OF MACHINERY AND EQUIPMENT AND
CONSTRUCTION COSTS

The value of machinery and equipment, construction costs, and other costs in the report on the finalization of investment capital must be inspected or audited according to the following regulations:

I. INSPECTION OF IMPORTED MACHINERY AND EQUIPMENT:

1. Machinery and equipment imported into Vietnam to implement investment projects must be inspected for value and quality before importation or before installation.

Imported machinery and equipment that has been tendered does not need to be inspected according to this Circular.

2. For used machinery and equipment, in addition to complying with the provisions of this Circular and the Investment License, enterprises must also comply with the regulations of the Ministry of Science, Technology, and Environment regarding the importation of used equipment.

3. If there are no other specific provisions in the Investment License or separate regulations on imports, then complete sets of machinery and equipment of investment projects with a total investment capital of 3 million USD or more must be inspected according to the provisions of this Circular.

4. Inspection of machinery and equipment installed before the effective date of this Circular shall be decided by the Ministry of Planning and Investment if deemed necessary.

5. Customs authorities at ports approved by the Ministry of Trade may allow the importation of machinery and equipment without requiring enterprises to present inspection certificates for imported machinery and equipment.

6. After completing the inspection, the inspection organization must issue an Inspection Certificate. The Inspection Certificate must include the following contents:

Name of the inspection organization;

Location and time of the inspection;

Name, code, specifications, year of manufacture, country of manufacture, manufacturer, quantity, condition, quality, unit price, value of machinery and equipment.

Conclusion on the value and quality of machinery and equipment;

Legal responsibility confirmation of the inspection organization: stamp, signature.

II. INSPECTION AND AUDIT OF CONSTRUCTION COSTS.

1. In cases where construction is not carried out through bidding, enterprises must conduct inspection or audit of construction costs. The content of the inspection or audit of construction costs includes:

The legal validity of the economic contracts that have been signed;

The volume of work completed for each construction installation item;

1.2- Group II: Includes other principal investors and project management boards not covered by Group I above.

The appropriateness of unit prices applied to each type of work;

The quantity and cost increases or decreases compared to the project's cost plan;

Other costs (land clearance compensation costs, interest on borrowed funds, etc.) of the project.

Evaluation and conclusion on the actual construction costs of the project put into operation and use.

2. After completing the appraisal or audit, the appraisal or audit organization must issue an Appraisal Report on Construction Costs to the project sponsor.

III. IMPLEMENTATION OF THE APPRAISAL:

1. Organizations conducting appraisals, imported equipment, and machinery according to this Circular are Vietnam Appraisal Company or foreign companies permitted to operate in Vietnam, and state organizations with appraisal functions in Vietnam; foreign appraisal companies for the appraisal of equipment and machinery before importation.

Organizations conducting appraisals or audits of construction costs are Vietnamese or foreign appraisal or audit companies permitted to operate in Vietnam; state organizations with functions to review construction costs.

2. The appraisal organization conducts appraisals based on contracts with enterprises and is responsible for the results of the appraisals they conduct. If collusion or fraud is discovered during the appraisal process, it will be handled according to the law.

3. The appraisal fee is paid by the enterprise and is included in the project investment costs.

4. Quality and technical construction appraisals comply with current regulations.

5. In cases where the appraisal results do not conform to the purchase-sale documentation or are lower than the values declared by the enterprise, the enterprise must adjust the actual value according to the appraisal results.

IV. RE-APPRAISAL:

1. When necessary, the agency issuing the Investment License or the Ministry of Planning and Investment may request another appraisal organization to conduct a re-appraisal of all or part of the costs already appraised in the final settlement report of the enterprise.

2. A re-appraisal is considered coincident if the value of the re-appraised portion has a difference not exceeding 5% and not more than 500,000 USD compared to the values already appraised in the enterprise's final settlement report according to the project investment capital.

3. The enterprise has the right to request an explanation and confrontation if the re-appraisal result differs in value from the costs already appraised in the enterprise's final settlement report but must comply with the decision of the agency issuing the Investment Registration Confirmation Certificate. All complaints and disputes regarding appraisals and re-appraisals shall be resolved according to the law.

4. If the re-appraisal result is recognized as accurate, then the previous appraisal organization must pay the re-appraisal costs.

If the re-appraisal result differs from the previously recognized accurate appraisal result, then the enterprise must pay the re-appraisal costs.

PART IV
ISSUANCE OF INVESTMENT CAPITAL REGISTRATION CONFIRMATION CERTIFICATE

1. Within thirty days from the date of receipt of a complete and valid final settlement report on investment capital submitted by the enterprise, the agency issuing the Investment License is responsible for reviewing and issuing the Investment Capital Registration Confirmation Certificate of the project according to the model attached as Appendix II to this Circular.

2. Within ten days from the date of issuance of the Investment Capital Registration Confirmation Certificate of the project, the agency issuing the Investment License for projects under the Government's classification and delegation of the Ministry of Planning and Investment must send the original Investment Capital Registration Confirmation Certificate of the project to the Ministry of Planning and Investment and the Ministry of Finance.

3. Reporting procedures for the issuance of the Investment Capital Registration Confirmation Certificate of the project shall be carried out according to the regulations applicable to the issuance of the Investment License.

PART V
IMPLEMENTING PROVISIONS

This Circular takes effect 15 days from the date of signature.

2. This Circular replaces Circular No. 2163/UB-QL dated October 4, 1995 of the State Committee for Cooperation and Investment - now the Ministry of Planning and Investment.

3. The Ministry of Planning and Investment and the agency issuing the Investment License will directly guide and handle projects that have completed the installation of machinery and equipment and construction works before this Circular takes effect./.

ANNEX 1

FINAL SETTLEMENT REPORT ON THE VALUE OF INVESTED CAPITAL

ENTERPRISE...

Based on the Law on Foreign Investment in Vietnam adopted by the National Assembly of the Socialist Republic of Vietnam on November 12, 1996;

Based on Decree No. 12/CP dated December 18, 1997 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam;

Based on Circular No.... /BKH dated... month... year 1997 of the Ministry of Planning and Investment guiding the final settlement of the value of invested capital for foreign-invested projects in Vietnam;

After completing the construction and installation (machinery, equipment) of the project: (project name)...

Enterprise Name...

established pursuant to Investment License No.... issued on... month... year 199..., with its headquarters located at... hereby submits to (the agency issuing the Investment License)...

The final settlement report on the value of invested capital of the project with the following contents:

1. Invested capital actually implemented:

a. Total invested capital implemented in the project:... USD

Divided by years:

19...

19...

b. Sources of capital utilized:

Statutory capital:... USD

(For joint venture enterprises, divided as follows:

Vietnamese side contributes... US dollars, accounting for...% (... percent) of statutory capital equal to...;

Foreign side contributes... US dollars, accounting for...% (... percent) of statutory capital equal to...;

Borrowed capital:... USD

c. Value of machinery and equipment:... USD Of which imported:... USD

d. Construction costs:... USD

e. Other costs:... USD

2. Attached documents:

a. Appraisal reports and appraisal certificates of the appraisal company (name of the company) regarding the results of the appraisal of equipment and machinery values for the project.

b. Appraisal or audit reports and appraisal or audit files of the appraisal or audit company (name of the company) regarding the results of the appraisal or audit of construction costs for the project.

c. For joint venture enterprises: this report must be approved by the Board of Directors (with representatives of the joint venture parties) and authorized by the General Manager to sign.

Project sponsors

ANNEX 2

MODEL 1: FOR JOINT VENTURE ENTERPRISES

THE MINISTER OF PLANNING AND INVESTMENT

(OR HEAD OF THE INVESTMENT LICENSE ISSUING AUTHORITY)

Based on the Law on Foreign Investment in Vietnam adopted by the National Assembly of the Socialist Republic of Vietnam on November 12, 1996;

Pursuant to Decree No. 12/CP dated February 18, 1997 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam;

BASED ON THE INVESTMENT LICENSE NUMBER.../GP DATED... MONTH... YEAR... ISSUED BY... PERMITTING THE ESTABLISHMENT OF...

CONSIDERING THE APPLICATION OF... AT..., BASED ON THE FINAL ACCOUNT REPORT ON INVESTMENT CAPITAL AND THE ATTACHED APPRAISAL RESULTS SUBMITTED ON... MONTH... YEAR...,

Enterprise (in capital letters): ...

Article 1.

THE ENTERPRISE... HAS REGISTERED THE ACTUAL CAPITAL AS FOLLOWS:

a. THE ENTERPRISE'S INVESTMENT CAPITAL IS...

b. THE ENTERPRISE'S STATUTORY CAPITAL IS...

Where:

THE VIETNAMESE PARTY CONTRIBUTES... US DOLLARS, REPRESENTING...% (... PERCENT) OF THE STATUTORY CAPITAL EQUAL TO...

THE FOREIGN PARTY CONTRIBUTES... US DOLLARS, REPRESENTING...% (... PERCENT) OF THE STATUTORY CAPITAL EQUAL TO...

Article 2.

THIS CERTIFICATE IS AN INTEGRAL PART OF THE INVESTMENT LICENSE NUMBER.../GP DATED... MONTH... YEAR..., AND SIMULTANEOUSLY SERVES AS A CERTIFICATE OF REGISTRATION FOR AMENDMENTS TO THE CHARTER OF... AND BECOMES EFFECTIVE FROM THE DATE OF SIGNATURE.

THE BOARD OF DIRECTORS OF THE JOINT VENTURE ENTERPRISE IS RESPONSIBLE FOR THE TRUTHFULNESS AND ACCURACY OF THE FINAL ACCOUNT REPORT ON INVESTMENT CAPITAL.

Article 3.

THIS INVESTMENT CAPITAL REGISTRATION CONFIRMATION IS PREPARED IN... ORIGINAL COPIES,... COPIES ISSUED TO...; ONE COPY ISSUED TO THE ENTERPRISE... AND ONE COPY REGISTERED WITH THE MINISTRY OF PLANNING AND INVESTMENT (OR THE AUTHORITY ISSUING THE INVESTMENT LICENSE).

Minister of Planning and Investment

(OR THE HEAD OF THE AUTHORITY ISSUING THE INVESTMENT LICENSE)

MODEL 2: FOR 100% FOREIGN CAPITAL ENTERPRISES

THE MINISTER OF PLANNING AND INVESTMENT

(OR HEAD OF THE INVESTMENT LICENSE ISSUING AUTHORITY)

Based on the Law on Foreign Investment in Vietnam adopted by the National Assembly of the Socialist Republic of Vietnam on November 12, 1996;

Pursuant to Decree No. 12/CP dated February 18, 1997 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam;

BASED ON THE INVESTMENT LICENSE NUMBER.../GP DATED... MONTH... YEAR... ISSUED BY... PERMITTING THE ESTABLISHMENT OF...

CONSIDERING THE APPLICATION OF... AT..., BASED ON THE FINAL ACCOUNT REPORT ON INVESTMENT CAPITAL AND THE ATTACHED APPRAISAL RESULTS SUBMITTED ON... MONTH... YEAR...,

Enterprise (in capital letters): ...

Article 1.

THE ENTERPRISE... HAS REGISTERED THE ACTUAL CAPITAL AS FOLLOWS:

a. THE ENTERPRISE'S INVESTMENT CAPITAL IS...

b. THE ENTERPRISE'S STATUTORY CAPITAL IS...

Article 2.

THIS CERTIFICATE IS AN INTEGRAL PART OF THE INVESTMENT LICENSE NUMBER.../GP DATED... MONTH... YEAR..., AND SIMULTANEOUSLY SERVES AS A CERTIFICATE OF REGISTRATION FOR AMENDMENTS TO THE CHARTER OF... AND BECOMES EFFECTIVE FROM THE DATE OF SIGNATURE.

THE GENERAL MANAGER OF THE ENTERPRISE IS RESPONSIBLE FOR THE TRUTHFULNESS AND ACCURACY OF THE FINAL ACCOUNT REPORT ON INVESTMENT CAPITAL.

Article 3.

THIS CERTIFICATE IS PREPARED IN... ORIGINAL COPIES,... COPIES ISSUED TO...; ONE COPY ISSUED TO THE ENTERPRISE... AND ONE COPY REGISTERED WITH THE MINISTRY OF PLANNING AND INVESTMENT (OR THE AUTHORITY ISSUING THE INVESTMENT LICENSE).

Minister of Planning and Investment

(OR THE HEAD OF THE AUTHORITY ISSUING THE INVESTMENT LICENSE)

MODEL 3: FOR JOINT OPERATING CONTRACTS

THE MINISTER OF PLANNING AND INVESTMENT

(OR HEAD OF THE INVESTMENT LICENSE ISSUING AUTHORITY)

Based on the Law on Foreign Investment in Vietnam adopted by the National Assembly of the Socialist Republic of Vietnam on November 12, 1996;

Pursuant to Decree No. 12/CP dated February 18, 1997 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam;

BASED ON THE INVESTMENT LICENSE NUMBER.../GP DATED... MONTH... YEAR... ISSUED BY... PERMITTING THE ESTABLISHMENT OF...

CONSIDERING THE APPLICATION OF... AT..., BASED ON THE FINAL ACCOUNT REPORT ON INVESTMENT CAPITAL AND THE ATTACHED APPRAISAL RESULTS SUBMITTED ON... MONTH... YEAR...,

Enterprise (in capital letters): ...

Article 1.

THE JOINT OPERATING PARTIES... HAVE REGISTERED THE ACTUAL CAPITAL AS FOLLOWS:

a. THE ENTERPRISE'S INVESTMENT CAPITAL IS...

b. THE ENTERPRISE'S STATUTORY CAPITAL IS...

Article 2.

THIS CERTIFICATE IS AN INTEGRAL PART OF THE INVESTMENT LICENSE NUMBER.../GP DATED... MONTH... YEAR..., AND SIMULTANEOUSLY SERVES AS A CERTIFICATE OF REGISTRATION FOR AMENDMENTS TO THE JOINT OPERATING CONTRACT OF THE PARTIES... AND BECOMES EFFECTIVE FROM THE DATE OF SIGNATURE.

THE JOINT OPERATING PARTIES ARE RESPONSIBLE FOR THE TRUTHFULNESS AND ACCURACY OF THE FINAL ACCOUNT REPORT ON INVESTMENT CAPITAL.

Article 3.

THIS CERTIFICATE IS PREPARED IN... ORIGINAL COPIES,... COPIES ISSUED TO...; ONE COPY ISSUED TO THE ENTERPRISE... AND ONE COPY REGISTERED WITH THE MINISTRY OF PLANNING AND INVESTMENT (OR THE AUTHORITY ISSUING THE INVESTMENT LICENSE)./

Minister of Planning and Investment

(OR THE HEAD OF THE AUTHORITY ISSUING THE INVESTMENT LICENSE)