Circular No. 04/2003/TT-BKH guiding the examination and appraisal of investment projects; amending and supplementing certain points regarding the Appraisal Report File, Investment Report, and Total Investment Ceiling.

CIRCULAR

Guidelines on reviewing and appraising investment projects; amending and supplementing certain points regarding project appraisal files, investment reports, and total investment amounts.

Amending and supplementing certain points regarding project appraisal files, investment reports, and total investment amounts.

_________________________

Pursuant to Decree No. 07/2003/ND-CP dated January 30, 2003 of the Government (referred to as Decree No. 07/CP) on amending and supplementing certain articles of Decree No. 52/1999/ND-CP dated July 8, 1999 of the Government on promulgating the Investment and Construction Management Regulations (referred to as Decree No. 52/CP) and Decree No. 12/2000/ND-CP dated May 5, 2000 of the Government on amending and supplementing certain articles of Decree No. 52/CP (referred to as Decree No. 12/CP);

Pursuant to Decree No. 61/CP dated June 6, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Planning and Investment; The Ministry of Planning and Investment issues this Circular guiding the review and appraisal of investment projects; amending and supplementing certain points regarding project appraisal files, investment reports, and total investment amounts as follows:

I. GENERAL PROVISIONS ON THE OBJECT AND SCOPE OF APPLICATION

1. On the object of application:

This Circular guides the work of reviewing and appraising investment projects as prescribed in the Investment and Construction Management Regulations issued together with Decrees No. 52/CP, No. 12/CP, and No. 07/CP of the Government, specifically:

- Projects in Group A that must prepare a Preliminary Feasibility Study Report (PFSTR) according to regulations must be submitted for examination and approval by the Prime Minister and permission to invest granted.

- Projects in Group A that do not need to prepare a PFSTR may directly prepare a Detailed Feasibility Study Report (DFSR) and submit it for review to the Prime Minister to obtain permission to invest.

- Projects in Group A after being approved by the Prime Minister for investment and projects in Groups B and C must undergo appraisal before making an investment decision.

2. On the scope of application:

2.1. National key projects decided on investment principles by the National Assembly shall be appraised by the State Appraisal Council for Investment Projects and submitted to the Prime Minister for investment decisions in accordance with specific regulations of the Prime Minister.

2.2. Investment projects of overseas representative offices of Vietnam, projects requiring confidentiality related to national security and defense, and projects purchasing intellectual property rights shall be appraised based on the decision of the Prime Minister upon proposal and recommendation from the submitting agency.

2.3. Group A projects using Official Development Assistance (ODA) funds shall be appraised in accordance with Clause 3, Article 18 of Decree No. 17/2001/ND-CP dated May 4, 2001 of the Government on the Management and Use of Official Development Assistance (hereinafter referred to as Decree No. 17/CP) and submitted to the Prime Minister for decision.

2.4. Domestic investment projects under Build-Operate-Transfer (BOT) contracts shall be appraised in accordance with the BOT Investment Regulation issued together with Decree No. 77/CP dated June 18, 1997 of the Government.

II. APPROVAL OF PFSTR AND PERMISSION TO INVEST

1. Projects required to prepare and submit a PFSTR for approval by the Prime Minister and permission to invest include:

a) Projects required to prepare a PFSTR as stipulated in Clause 4, Article 1 of Decree No. 07/CP, including:

- Projects in Group A not included in approved socio-economic development plans, industry development plans, or construction plans; or lacking a formal investment principle decision from competent authorities.

- For Group B projects where a PFSTR is necessary, the authority responsible for investment decisions will decide on preparing a PFSTR.

b) Group A projects that do not need to prepare a PFSTR and can directly prepare a DFSR include:

Projects having one of three types of approved plans (industry development plan, overall socio-economic development plan, or construction plan) and receiving agreement from the approving authority for the remaining plans.

2. Procedures for approving PFSTRs:

- Projects in Group A required to prepare a PFSTR must be submitted to the Prime Minister for examination, approval, and permission to invest.

- The investor of Group A projects or the authority responsible (for projects without identified investors) must prepare and submit a PFSTR file to the Prime Minister, simultaneously sending copies to the relevant ministry, the Ministry of Planning and Investment, the Ministry of Finance, the Ministry of Construction (for construction-related projects), and the provincial People's Committee where the project is located to provide opinions on matters within their respective management functions.

- For Group B projects requiring a PFSTR, the authority responsible for investment decisions will examine and approve the PFSTR, allowing preparation of a DFSR. The investor is responsible for preparing and submitting the PFSTR file to the authority for examination and approval.

3. Documents to be submitted to the Prime Minister for approval of PFSTR and permission to invest:

Documents to be submitted to the Prime Minister for approval of PFSTR and permission to invest include:

- A request from the investor or the authority responsible (for projects without identified investors) to the Prime Minister for approval of the PFSTR and permission to invest, accompanied by the PFSTR of the project.

The content of the PFSTR of the project is specified in Article 23 of Decree No. 52/CP, adapted to fit the economic and technical sector.

- Legal documents confirming the legal status of the investor.

- Proposed funding mobilization plan for the project; if the investor is a business entity, a preliminary financial capacity report of the investor is also required.

- Legal documents related to the location and land use of the project and other relevant legal documents.

4. Time limit for reviewing documents by state agencies and approving PFSTRs:

- Within thirty working days, the relevant ministries must provide written comments on the project to the Prime Minister to serve as a basis for deciding on the approval of the PFSTR and permission to invest.

- The time limit for the Prime Minister to review and decide on the approval of the PFSTR and permission to invest is regulated in the Government's Work Regulations issued together with Decree No. 23/2003/ND-CP dated March 12, 2003 of the Government.

III. REVIEWING AND APPRAISING INVESTMENT PROJECTS

1. Review projects submitted to the Prime Minister for investment permission:

1.1. Projects in Group A are permitted to immediately prepare the Feasibility Study Report without needing to prepare the Preliminary Investment Plan Report, which must be reviewed before submitting to the Prime Minister for investment permission prior to evaluation and decision-making.

Projects not required to be reviewed for investment permission:

- Projects in Groups B and C;

- Projects in Group A that have been approved by the Prime Minister with the Preliminary Investment Plan Report and granted investment permission.

1.2. The organization of reviews for Group A projects, carried out by state management agencies, shall be submitted to the Prime Minister for consideration and granting of investment permission as follows:

- For projects using state budget funds: The Minister, Head of a ministry-level agency, government agency, central financial management agency of the Communist Party Central Committee, and central agencies of political-social organizations as specified in the State Budget Law (hereinafter referred to as the Minister), and the Chairman of the People's Committee of the province where the Group A project is located shall organize the review and submit to the Prime Minister for investment permission.

- For projects using state development credit funds, state-guaranteed credit funds, enterprise development investment funds, and other sources of funds: The sectoral management ministry and provincial People's Committees shall organize the review of projects of enterprises under their management and submit to the Prime Minister for investment permission.

- Projects for operating industrial zones, export processing zones, and high-tech zones according to Decree No. 36/CP dated April 24, 1997 of the Government on Industrial Zone Regulations, Export Processing Zones, and High-Tech Zones shall be organized for review by the Ministry of Planning and Investment and submitted to the Prime Minister for approval to establish and grant investment permission.

- For projects using funds from enterprises operating under the Enterprise Law registered in one locality but investing in another locality: The People's Committee of the province where the project is located shall organize the review of the Feasibility Study Report and submit to the Prime Minister for investment permission.

1.3. Documents for submission for review and application for investment permission for Group A projects include:

- A request to the Prime Minister for investment permission accompanied by the Feasibility Study Report of the project and the Investor's Application for Investment Permission.

The Feasibility Study Report of the project shall be prepared in accordance with the provisions of Article 24 of Decree No. 52/CP and shall be detailed in accordance with the economic and technical sectors.

- The Investor's Application for Investment Permission shall be defined as follows:

+ For projects using state budget funds, the content of the Application for Investment Permission shall be as stipulated in Clause 4, Article 1 of Decree No. 07/CP;

+ For projects using state development credit funds, state-guaranteed credit funds, the content of the Application for Investment Permission shall be as stipulated in Clause 4, Article 1 of Decree No. 07/CP (excluding related opinions of relevant ministries, sectors, and localities);

+ For projects using enterprise development investment funds and other sources of funds, the content of the Application for Investment Permission shall be as stipulated in Clause 4, Article 1 of Decree No. 07/CP (excluding contents on technology plans, financial capacity, project investment effectiveness, and related opinions of relevant ministries, sectors, and localities).

- Legal documents confirming the legal status of the Investor: Decision on establishment (for administrative and public service units); Business Registration Certificate (for enterprises).

- Documents confirming the ability to mobilize project funding sources; for operating enterprises, there must be an audited financial report for the two most recent years (for enterprises operating more than two years), or for the previous year (for enterprises operating less than two years).

- Documents related to location and land use: Land Use Right Certificate (for projects where the investor already has a Land Use Right Certificate) or documents introducing the location and agreement on land lease from the competent authority (for projects where the investor does not yet have a Land Use Right Certificate);

- Other necessary documents:

+ Approval documents for planning;

+ Agreements on compensation and resettlement plans (for projects requiring resettlement);

+ Agreements, contracts, accords, and other documents related to issues involved;

1.4. Contents to be reviewed and included in the Review Report for application for investment permission:

a) Contents to be reviewed for projects:

- For projects using state budget funds, state development credit funds, state-guaranteed credit funds, the review of the Feasibility Study Report shall be based on the content of the Application for Investment Permission as stipulated in Clause 4, Article 1 of Decree No. 07/CP.

- For projects using enterprise development investment funds and other sources of funds, the contents to be reviewed include:

+ The alignment of the project with approved socio-economic development plans, industry development plans, and construction plans;

+ National resource utilization policies, primarily land use;

+ Project effectiveness;

+ State incentives and support for the project;

+ Project implementation timeline;

+ The capability of the Investor to implement the project;

+ Environmental, ecological, fire prevention, safety, resettlement, security, and defense impacts.

b) The Review Report for projects submitted to the Prime Minister for investment permission:

The competent authority organizing the review of projects and preparing the Application for Investment Permission to submit to the Prime Minister. The Review Report and Application for Investment Permission shall be prepared in accordance with the provisions of Clause 4, Article 1 of Decree No. 07/CP based on:

- Examination and assessment of the legality, completeness, and level of achievement of the Feasibility Study Report submitted for investment permission;

- Compilation of opinions from related agencies;

- Observations and recommendations of the reviewing authority regarding the project.

1.5. Organization of project reviews and submission to the Prime Minister for investment permission:

a) The Investor is responsible for organizing the preparation of the Feasibility Study Report and submitting the application for project review to the competent authority for review and reporting to the Prime Minister. The Investor shall bear responsibility for the legality, accuracy, truthfulness, and completeness of the submitted documents.

The number of files is 10 sets. In case of need for supplementation, the Reviewing Authority will request the Investor to submit additional files.

b) The organization conducting the review shall be responsible for sending the files to the Ministry managing the sector, the Ministry of Planning and Investment, the Ministry of Construction (for investment projects involving construction), the Ministry of Finance, and other relevant ministries, sectors, and localities related to the project to seek their opinions.

Based on the contents of the files, the agencies receiving the files to seek opinions shall focus on providing comments and evaluating issues within their functions and responsibilities, and provide written opinions to the reviewing authority of the project and bear responsibility for those opinions.

c) Based on examining the project files, the opinions of relevant ministries, sectors, and localities, the organization conducting the review shall be responsible for compiling and preparing a Review Report to send to the Prime Minister. The organization conducting the review shall be responsible for the content and results of the review.

For Group A investment projects funded by local government budgets, before submitting to the Prime Minister for consideration and approval of investment, the reviewing authority of the project must seek the opinions of the People's Council on the main contents of the project and publicly announce them through local mass media.

In cases where it is necessary to implement the project urgently, the reviewing authority of the project must submit for the opinion of the Standing Committee of the People's Council to report to the People's Council at the nearest session and publicly announce before submitting to the Prime Minister.

Attached to the Review Report sent to the Prime Minister must be copies of the opinions of relevant ministries, sectors, and localities, and the opinions of the People's Council or the Standing Committee of the People's Council.

1.6. Time limit for review and approval of investment:

- Within three working days from the date of receipt of complete and valid files, the reviewing authority shall be responsible for sending the project files to relevant ministries, sectors, and localities to seek their opinions.

- Within fifteen working days from the date of receipt of complete files, relevant ministries, sectors, and localities shall be responsible for providing written comments and sending them to the organization conducting the review.

- Additional requests for supplementary explanations regarding the project shall be carried out within twenty working days from the date the organization conducting the review receives the project files.

- Within thirty working days from the date of receipt of complete and valid files (excluding the time waiting for supplementary explanation documents), the organization conducting the review shall submit a review report and request for investment approval to the Prime Minister.

- The time limit for the Prime Minister to consider and decide on investment approval is stipulated in the Government's Working Regulations issued together with Decree No. 23/2003/NĐ-CP dated March 12, 2003.

2. Project Appraisal for Investment Decision

2.1. All investment projects using state budget funds, state-guaranteed credit, state development credit, and capital invested by state-owned enterprises must organize an appraisal before approving the investment decision.

Projects using other sources of capital, the person authorized to make the investment decision shall decide on organizing the project appraisal.

The organization of the appraisal for Group A projects may only be carried out after obtaining permission from the Prime Minister for investment.

Projects in Group B not included in approved industry plans must have written approval from the authority responsible for approving the plan to meet the conditions for submission and appraisal to decide on investment.

2.2. The person authorized to make the investment decision is responsible for organizing the project appraisal before making the investment decision.

2.3. The files for appraising investment projects include:

a) For Group A projects:

- The proposal of the Investor submitted to the competent authority for investment decision (for projects where the Investor does not self-appraise and approve) accompanied by the completed Feasibility Study Report of the project after the Prime Minister's approval for investment.

- The review files of the project and the Report of the reviewing authority submitted to the Prime Minister for investment permission;

- The investment permission document of the Prime Minister;

- The appraisal opinion of the lending organization (for projects using loan capital) on the financial plan, repayment plan, and approval for lending;

- Documents and data updates on land compensation and resettlement plans (for projects requiring resettlement);

For projects that have been approved by the Prime Minister with the Preliminary Technical and Economic Feasibility Report, additional documents not included in the files for approval of the Preliminary Technical and Economic Feasibility Report should be supplemented such as: Confirmation documents about the ability to mobilize various sources of capital for the project; Financial reports certified by an auditing organization in the last two years (for enterprises operating more than two years) or of the previous year (for enterprises operating less than two years); Agreements on land compensation and resettlement plans (for projects requiring resettlement); Agreements, contracts, agreements, and other documents related to the issues mentioned above;...

b) For Group B and C projects:

- The proposal of the Investor submitted to the competent authority for investment decision (for projects where the Investor does not organize the appraisal and make the investment decision) accompanied by the Feasibility Study Report of the project.

The feasibility study report is prepared in accordance with the provisions of Article 24 of Decree 52/CP and is detailed according to the economic and technical sector.

- The approval document for the Preliminary Technical and Economic Feasibility Report by the authority authorized to make the investment decision (for Group B projects with a Preliminary Technical and Economic Feasibility Report);

- Legal documents confirming the legal status of the investor: Establishment decision (for administrative units and public services); Business registration certificate (for enterprises).

- Confirmation documents about the ability to mobilize various sources of capital for the project; Financial reports certified by an auditing organization in the last two years (for enterprises operating more than two years) or of the previous year (for enterprises operating less than two years).

- The appraisal opinion of the lending organization (for projects using loan capital) on the financial plan, repayment plan, and approval for lending; recommendations on project management methods for projects using multiple sources of capital.

- Other necessary documents:

+ Approval documents for planning;

+ Certificate of land use rights (for projects where the Investor already has a certificate of land use rights) or a document introducing the location and agreement on leasing land from the competent authority (for projects where the Investor does not yet have a certificate of land use rights);

+ Documents on compensation and clearance, resettlement plans (for projects requiring resettlement);

+ Agreements, contracts, accords, other relevant documents related to the project;

2.4. Contents to be reviewed for the project and the Review Report:

a) The contents to be reviewed for the project shall be carried out in accordance with Article 27 of Decree No. 52/CP.

b) The contents of the Review Report of the reviewing agency shall refer to the Appendix attached to this Circular.

2.5. Organization for reviewing the project to make investment decisions:

a) General provisions on organizing the review of the project:

The person authorized to decide on investment shall use specialized agencies under their direct management that have the capacity to review the project and may invite specialized agencies of other ministries and sectors, consulting organizations, or experts with the necessary capacity to participate in the review. Agencies participating in the review, consulting organizations, and consulting experts must be those agencies and individuals who did not participate in preparing the project.

Consulting organizations must ensure the conditions and capacities as prescribed by the Ministry of Construction and bear legal responsibility before the law and the Investor regarding the contents committed in the Contract, particularly the economic and technical contents determined in the consulting products and bear responsibility for the consequences resulting from errors concluded in their Review Report.

b) Organizing the review and approval of investment projects:

- For projects using state budget funds managed by ministries, sectors, government agencies, financial management agencies of the Central Party Committee, central agencies of political-social organizations, ministers, heads of agencies assigned to a subordinate agency to organize the review. The reviewing agency is responsible for soliciting opinions from relevant agencies and units on the review content, compiling the opinions to report to the minister or head of the agency authorized to decide on investment according to regulations.

- For projects using state budget funds managed at provincial level, the People's Committee of the province assigns the Provincial Department of Planning and Investment to organize the review. The Provincial Department of Planning and Investment is responsible for soliciting opinions from the Provincial Department of Finance, the Provincial Department of Construction (for construction investment projects) and other relevant agencies on the review content, compiling the opinions to report to the Chairman of the Provincial People's Committee to decide on investment according to regulations.

- For projects of state-owned enterprises using development credit capital of the State, credit guaranteed by the State, development capital of enterprises, and other sources, the organization of the project review is regulated as follows:

+ Projects of state-owned enterprises directly under State Corporations shall be reviewed and approved or authorized to be reviewed and approved by the Chairman of the Board of Management of the State Corporation (for Group B and C projects).

+ Projects directly invested in by State Corporations shall be reviewed and approved by the Chairman of the Board of Management of the State Corporation.

+ Projects of independent enterprises (not belonging to State Corporations) shall be reviewed and approved by the Chairman of the Board of Management of the enterprise (for enterprises with a Board of Management) or organized by the General Director or Director of the enterprise (for enterprises without a Board of Management).

- Projects of districts and communes must prepare an Investment Report and approve it according to Point d, Clause 4, Article 1 of Decree No. 07/CP.

2.6. The time limit for reviewing the feasibility study report shall be implemented in accordance with Article 29 of Decree No. 52/CP.

3. Some other provisions on the review and examination files of investment projects

The provisions in Article 24 of Decree No. 52/CP on the main contents of the Feasibility Study Report and the provisions in Article 27 of Decree No. 52/CP on the contents to be reviewed for investment projects are general provisions applicable to all types of projects. To suit each sector of economy-technology, based on the above Articles 24 and 27, the Ministries managing the sectors need to draft guidelines on the contents of the Feasibility Study Report and specific contents to be reviewed for projects suitable to the requirements of their sectors and coordinate with the Ministry of Planning and Investment to issue them by July 2003.

IV. AMENDMENTS AND SUPPLEMENTS TO SOME PROVISIONS ON REVIEW FILES OF PROJECTS, INVESTMENT REPORTS, AND TOTAL INVESTMENT CAPITAL

4.1. Amend the provisions on the Files for Requesting Review of the Preliminary Feasibility Study Report and the Files for Requesting Review of the Feasibility Study Report:

The provisions on the files submitted to the Prime Minister for approval of the Preliminary Feasibility Study Report, permission to invest, and the files for requesting review of the Feasibility Study Report in this Circular replace the provisions on the files for requesting review of the Preliminary Feasibility Study Report and the files for requesting review of the Feasibility Study Report stipulated in Section II of Circular No. 06/1999/TT-BKH dated November 24, 1999 of the Ministry of Planning and Investment guiding the contents of Total Investment Capital, Project Review Files, and Investment Reports (hereinafter referred to as Circular No. 06/1999/TT-BKH) and in Section II of Circular No. 07/2000/TT-BKH dated July 3, 2000 of the Ministry of Planning and Investment guiding amendments and supplements to some contents of Circular No. 06/1999/TT-BKH (hereinafter referred to as Circular No. 07/2000/TT-BKH).

4.2. Amend the provisions on preparing the Investment Report:

Point 3.1 - Section III (projects only require preparation of an Investment Report) stipulated in Circular No. 11/2000/TT-BKH dated September 11, 2000 of the Ministry of Planning and Investment guiding amendments and supplements to some contents of Circular No. 06/1999/TT-BKH dated November 24, 1999 of the Ministry of Planning and Investment is now amended to be consistent with the provisions of Decree No. 07/CP as follows:

Projects that only require preparation of an Investment Report include:

- Projects with small investment capital (under 3 billion VND); projects for repair and maintenance using public funds;

- Small-scale social infrastructure projects (Category C projects as defined in Section 4, Part III of the Investment Project Classification Appendix issued together with Decree No. 12/CP) using budget funds (not for business purposes) that are consistent with socio-economic development plans and have been decided on by the competent authority regarding investment orientation.

- For investment projects involving the purchase of individual machines and equipment, the Ministry of Planning and Investment will provide further guidance after reaching consensus with relevant ministries.

4.3. Amend and supplement the Total Investment Ceiling:

1. The costs for tender preparation as stipulated in Circular No. 07/2000/TT-BKH dated July 3, 2000 of the Ministry of Planning and Investment shall be amended and supplemented as follows:

- Tender preparation costs:

+ Costs for preparing the tender invitation, organizing prequalification, and evaluating prequalification submissions;

+ Costs for preparing the tender documentation;

+ Costs for announcing the tender in accordance with the law.

2. Supplement the Total Investment Ceiling as specified in Point 1.2 of Circular No. 06/1999/TT-BKH dated November 24, 1999 of the Ministry of Planning and Investment as follows:

- Supplement item b (project implementation preparation capital) with the cost item: preparation and review of the Environmental Impact Assessment Report.

- Supplement item m/ with costs for project supervision and evaluation, and transfer the cost item for final account approval review from item m/ to item n/.

This Circular takes effect fifteen days after its publication in the Official Gazette. Any issues encountered during implementation should be reported by relevant ministries, sectors, localities, and units to the Ministry of Planning and Investment for timely consideration and supplementation.

ANNEX

(Attached to Circular No. 04/2003/TT-BKH dated June 17, 2003
CONTENTS OF THE PROJECT REVIEW REPORT
(by the agency or organization conducting the project review submitted to the authority with decision-making power

 for investment)

- Legal and procedural aspects of the submitted review and approval documentation;

- Summary of the main contents of the project proposed by the investor;

- Summary of opinions from participating review agencies, or consultants (if any);

- Comments and evaluations on the accuracy of data, arguments, construction standards, calculations, conclusions, and recommendations in each section of the project including:

+ Investment objectives and their alignment with approved planning;

+ Location and land area usage;

+ Technology, design capacity, architectural solutions, technical standards, and grade of construction;

+ Resource utilization and national resource management plan (if applicable);

+ Environmental protection measures, compensation for land clearance and resettlement (if applicable);

+ Total investment amount, sources of investment, ability to mobilize funds, legality and rationality in fund mobilization and use;

+ Implementation method of the project;

+ Construction period and key milestones of the project.

- Overall assessment of the project's economic and financial effectiveness and feasibility;

- Issues identified in the feasibility study report and their resolution methods, responsibilities, and deadlines for the investor and related levels and sectors;

- Specific recommendations.