Circular No. 06/1999/TT-BKHĐT guiding on the total investment amount, project evaluation dossier, and investment report.

CIRCULAR

Guidelines on the Total Investment Amount,

Project Appraisal Documents, and Investment Reports

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Pursuant to the provisions of the Investment Management and Construction Regulation issued together with Decree No. 52/1999/NĐ-CP dated July 8, 1999 of the Government (hereinafter referred to as the Investment Management and Construction Regulation), the Ministry of Planning and Investment provides guidelines on the content of the total investment amount, project appraisal files, and investment reports as follows:

I. TOTAL INVESTMENT CAPITAL:

1.1. According to Clause 7 - Article 5 of the Investment Management and Construction Regulation, the total investment amount includes all investment and construction costs (including initial production capital) and is the maximum cost limit of the project determined in the investment decision.

1.2. The total investment amount:

a. Investment preparation capital includes the following expenses:

- Investigation, survey, research for preparing the pre-feasibility study report, feasibility study report;

- Preparation of the pre-feasibility study report, feasibility study report (including consulting services) or preparation of the investment report (if the project falls under Section III below);

- Project appraisal fees.

b. Capital for project implementation preparation includes the following expenses:

- Arrangement of funds (in cases of foreign loans accepted by the State Bank);

- Tendering for project implementation and bid evaluation;

- Technical consulting services, management support consulting, supervision, construction consulting;

- Technology transfer, initial technical support;

- Construction design survey;

- Design, design review;

- Preparation of general estimates, general estimate review;

- Land compensation and clearance;

- Implementation of resettlement related to land compensation and clearance of the project (if applicable);

- Site preparation;

c. Capital for investment implementation includes:

- Equipment costs;

- Construction and installation costs of equipment;

- Other costs:

+ Land and water usage;

+ Training;

+ Fire prevention and explosion control plan according to fire prevention and firefighting regulations;

d. Production start-up costs: Costs of raw materials, fuel, labor for trial operation without load and with load minus the value of recovered products;

e. Final inspection;

f. Interest on borrowed capital during the investment period as determined through credit contracts;

g. Initial working capital for production (for production projects) as prescribed by the Ministry of Finance;

h. Construction insurance costs as prescribed by the Ministry of Finance;

i. Contingency reserve;

k. Project management;

l. Taxes as prescribed;

m. Audit and approval of final accounts.

For some special group A projects approved by the Prime Minister, the total investment amount also includes scientific research and technology costs related to the project. The level of expenditure is decided by the Prime Minister for each project.

1.3. The total investment amount can only be adjusted upwards in the following cases:

a. Changes in investment and construction price levels due to new regulations issued by the Government:

- Changes in electricity, water, land rental, and transportation rates;

- Changes in labor costs;

- Changes or additions to fees and taxes.

b. Changes in exchange rates between Vietnamese currency and foreign currencies for the portion that must use foreign currencies in projects (if the total investment amount specifies the portion of foreign currency to be used).

c. Force majeure cases include:

- Objective force majeure such as natural disasters, enemy attacks, fires.

- Inability to ensure capital mobilization or timely capital allocation (for state budget capital, state investment credit) not due to the fault of the Investor.

II. PROJECT APPRAISAL FILES:

A. Files requesting appraisal of the pre-feasibility study report (referred to as the pre-feasibility report): The files requesting appraisal of the pre-feasibility report of the project are considered valid if they include:

1. The investor's request to the Prime Minister if it is a group A project, and submitted to the authority with the power to decide on investment if it is a group B project (in cases where group B projects require a pre-feasibility study report).

2. The pre-feasibility report prepared in accordance with the contents stipulated in Article 23 of the Investment Management and Construction Regulation and specific contents suitable for each economic and technical sector;

3. Legal documents confirming the legal status and financial capacity of the investor;

4. Documents confirming compliance with industry development plans and local plans;

5. Other relevant legal documents related to the project (if any).

B. Files requesting appraisal of the feasibility study report (referred to as the feasibility report): A file requesting appraisal of the feasibility report of the project is considered valid if it meets the following conditions:

1. For group A projects:

1.1. For non-BOT projects:

a. The investor's request to the Prime Minister;

b. Document approving the pre-feasibility report;

c. Opinion of the direct management agency (Ministry, Provincial People's Committee, City People's Committee, Chairman of the State-Owned Enterprise Management Board) sent to the Prime Minister, clearly stating the investment policy, compliance with planning, project content, comments, evaluations, and recommendations to the investor and the project;

d. Opinions of relevant ministries, sectors, and localities according to their functional and management authority;

e. Appraisal opinion of the lending organization for projects using loan capital regarding the financial efficiency of the project, the ability to provide loan capital for the project, and recommendations on project management methods when the project uses mixed sources of capital;

f. Legal documents confirming the legal status and financial capacity of the investor and other necessary documents such as land use right certificates, planning approval documents, government permits, agreements, and contracts (depending on the characteristics of each project);

g. The feasibility report prepared in accordance with the contents stipulated in Article 24 of the Investment Management and Construction Regulation and suitable for each economic and technical sector.

The reviewing agency is responsible for the quality of the project.

1.2. For BOT projects:

a. Request from the investor and the competent state agency;

b. Feasibility report prepared in accordance with the contents stipulated in Article 24 of the Investment Management and Construction Regulation and suitable for each economic and technical sector;

c. Opinion of the direct management agency as specified above in point 1.1;

d. Signed contract;

e. Ancillary contracts (if any);

f. Draft Articles of Association if it is a newly established company or the amended Articles of Association if the company is already operational;

g. Legal documents confirming the legal status and financial capacity of the Investor and other necessary documents such as land use rights certificates, planning approval documents from competent authorities, permits from the Government, agreements, contracts, and accords (depending on the characteristics of each project);

h. Opinions of relevant agencies and organizations regarding issues within their jurisdiction or related to their interests;

i. The appraisal opinion of the financing organization for projects using borrowed funds on the financial efficiency of the project, the ability to provide loans for the project, and recommendations for project management methods when the project uses a mix of different sources of funding;

The application dossier for the feasibility report appraisal of the project, prepared by the Investor and submitted to the Ministry of Planning and Investment for appraisal;

2. For Group B and C projects:

2.1. For projects not falling under the BOT, BTO, BT categories include:

a. The proposal of the Investor sent to the authority with investment decision-making power;

b. The opinion of the direct management agency on the investment policy, compliance with planning, project content, comments, evaluations, and recommendations;

c. Opinions of relevant agencies within their functions and powers;

d. The appraisal opinion of the financing organization for projects using borrowed funds on the financial efficiency of the project, the ability to provide loans for the project, and recommendations for project management methods when the project uses a mix of different sources of funding;

e. Legal documents confirming the legal status and financial capacity of the Investor and other necessary documents such as land use rights certificates, planning approval documents from competent authorities, permits from the Government, agreements, contracts, and accords (depending on the characteristics of each project);

f. The feasibility report prepared in accordance with Article 24 of the Investment Management Regulation. The investment report is prepared according to Section III of this Circular;

The approving agency shall be responsible for the quality of the feasibility report (or the investment report of the project);

2.2. For BOT projects belonging to Groups B and C as stipulated in Clause 1.2 above;

3. The Investor shall bear full responsibility for the accuracy and legality of the information, data, and documents submitted in the project dossier;

Directly managing agencies of the Investor and relevant agencies shall be responsible for their opinions on the project;

III. INVESTMENT REPORT:

1. Projects that only need to prepare an investment report include:

- Projects with capital below one billion dong;

- Repair and maintenance projects using public funds;

- Projects in sectors that have standard designs and technical standards approved by the sectoral management ministry based on overall planning for each region;

2. Contents of the investment report include:

a. Determining the Investor:

It is necessary to determine the Investor of the project (state agency, enterprise, individual), including clarifying:

- The legal status of the Investor (with a document confirming legal status);

- The financial capacity of the Investor (with a document confirming);

b. The necessity and investment objectives:

- Justification for the necessity of investment;

- Development goals of the project: culture, education, agricultural production, industry, services;

- Direct objectives of the project (if it is production, whether the product is consumed domestically or exported, aimed at profit or another goal);

c. Products or services: Justification for the type of products and services of the project;

d. Form of investment and capacity:

- New construction, deepening investment, upgrading existing facilities, or maintaining;

- Determining the scale of capacity;

e. Equipment and machinery: Clearly stating the name, quantity, origin, and value of equipment;

f. Sources of raw materials, semi-finished products, and other input factors;

g. Marketability of products or services;

h. Location and land area:

- The location of the facility and its compliance with planning;

- Total land area, layout plan, and documents confirming land use rights;

- Current land conditions and compensation costs for land clearance (if applicable);

i. Components and quantities; main technical requirements of each component, norms, and unit prices applied by industries and localities for the project (residential buildings, schools, health stations: using norms of the Ministry of Construction; roads: using norms of the Ministry of Transport; water resources: using norms of the Ministry of Agriculture and Rural Development);

k. Investment capital:

+ Required investment capital: Calculated based on volume and unit price (as prescribed by ministries and localities) and divided into: Construction and installation, equipment, other KTCB (if any);

+ Sources of investment capital:

Clearly identify the sources of investment capital:

. State budget capital;

. Borrowed credit capital;

. Self-raised capital of the Investor or raised from the people;

l. Conclusions about the project:

- Economic and social benefits;

- Debt repayment capability;

- Environment: Positive and negative impacts;

m. Recommendations for preferential policies for the project:

- Preferential policies during implementation;

- Preferential policies after implementation;

This Circular takes effect fifteen days from the date of signature. During implementation, if any issues requiring supplementation or amendment are discovered, timely proposals should be made to the Ministry of Planning and Investment for completion.