Decision No. 117/2000/QD-TTg On certain policies and financial mechanisms for shipbuilding projects in the Vietnamese shipbuilding industry

DECISION OF THE PRIME MINISTER

On Certain Policies and Financial Mechanisms for Shipbuilding Projects

of the Vietnamese Shipbuilding Industry

 PRIME MINISTER

Pursuant to the Law on Government Organization dated September 30, 1992;

Pursuant to Resolution No. 11/2000/NQ-CP dated July 31, 2000 of the Government;

Pursuant to Decree No. 51/1999/NĐ-CP dated July 8, 1999 of the Government detailing the implementation of the Law on Encouraging Domestic Investment (amended) No. 03/1998/QH10;

Considering the proposal of the Ministry of Transport (report No. 2157/GTVT-KHĐT dated July 7, 2000);

To encourage and create conditions for the development of the domestic shipbuilding industry,

 DECISION:

Article 1. The following projects (collectively referred to as shipbuilding projects) shall be subject to certain preferential policies and financial mechanisms as stipulated herein:

1. Investment projects for building new ships carried out by domestic shipyards, including specific types such as: Seagoing cargo ships with a carrying capacity of 3,000 tons or more; Mud suction vessels with a capacity of 1,000 cubic meters per hour or more; Oil tankers with a carrying capacity of 1,000 tons or more; Liquid gas carriers with a volume of 1,200 cubic meters or more; Fishing vessels with a power of 300 horsepower or more; Seagoing passenger ships with 100 seats or more.

2. Investment projects for deepening, upgrading, expanding, and constructing new shipyards.

3. Projects to purchase newly built ships as specified in Clause 1 above.

Article 2. Preferential Policies and Financial Mechanisms

1. For shipyards:

a) For shipyards belonging to all forms of economic organization:

Exemption from export tax on ship products of the shipyard and exemption from import tax on machinery, equipment, and transportation means (part of the production line) intended to form fixed assets and raw materials, semi-finished products serving shipbuilding that are not produced domestically or do not meet the prescribed standards.

Exemption or reduction of land rental fees according to Article 18 of Decree No. 51/1999/NĐ-CP dated July 8, 1999 of the Government on Detailed Regulations Implementing the Law on Encouraging Domestic Investment (amended).

Exemption from income tax for two years from the date of taxable income and a 50% reduction in tax payable for the next two years.

Purchase foreign currency at banks to import machinery, equipment, and materials for building new ships according to current regulations.

b) For state-owned shipyards, in addition to the incentives mentioned in Point a above, they also receive:

A one-time supplementary allocation to reach 50% of the working capital quota for each enterprise based on the national budget's capability.

The State supports infrastructure construction funds from the budget for wharves, berms, piers, floating docks, and sunken docks when implementing projects to build and upgrade shipyards. The remaining portion (workshops, equipment) can borrow development investment credit from the Development Support Fund with an interest rate of 3.5% per year, with a maximum loan term of 12 years, including a 2-year grace period.

2. For enterprises purchasing newly built ships as specified in Clause 1 of Article 1 of this Decision, they may borrow development investment credit from the Development Support Fund with the following benefits:

The loan amount for a project equals 85% of the total investment (15% self-funded by the enterprise).

The maximum loan term is 12 years, including a 2-year grace period.

The loan interest rate is 5% per year.

Article 3. Support Policies for Science and Technology

Priority use of state budget funds allocated for science for research topics directly serving the construction of new ship products.

Article 4. Other Protective and Encouragement Policies

1. Not allowing the construction of new ships abroad if domestic shipyards have the necessary capacity.

2. Limiting the purchase of used ships.

3. In cases where international bidding must be conducted for new ship construction projects, it must be done through joint ventures or consortia between foreign contractors and Vietnamese contractors.

4. Permitting direct assignment of contracts for experimental ship construction projects or for special technical characteristics requiring specialized equipment and technology.

Article 5. Procedures for Granting Preferences

The procedures for granting preferences for shipbuilding projects as stipulated in Article 1 of this Decision shall be implemented according to guiding documents for the Law on Encouraging Domestic Investment (amended).

Article 6. Responsibilities of Borrowers

Submit and approve the investment project plan according to current regulations.

Use borrowed funds for their intended purpose.

Enterprises purchasing ships must purchase hull insurance.

Fulfill repayment of principal and interest to lending organizations according to the commitments in the credit agreement.

Comply with all borrowing conditions as stipulated in Decree No. 43/1999/NĐ-CP dated June 29, 1999 of the Government on State Development Investment Credit.

Be responsible under the law for failing to fulfill commitments in the credit agreement.

Article 7. Responsibilities of Relevant Ministries and Sectors

Ministry of Transport: Coordinate with relevant ministries and sectors, based on market demand and the actual capacity of the Vietnamese shipbuilding industry, announce the annual list of new ships permitted for import. Limit permits for purchasing used ships.

Ministry of Planning and Investment and Ministry of Finance: Allocate investment funds for shipbuilding infrastructure projects according to the annual investment plan and supplement sufficient working capital as stipulated in Point b, Clause 1, Article 2 of this Decision.

Ministry of Science, Technology, and Environment examines and reports to the Prime Minister for decision on adding the ship model testing pool of the Institute of Marine Vessel Science and Technology (Vietnam Ship Industry Corporation) to the list of key laboratories to be invested in Phase I (2000-2005) according to Decision No. 850/QĐ-TTg dated September 7, 2000 of the Prime Minister.

Ministry of Science, Technology, and Environment takes the lead, coordinating with the Ministry of Planning and Investment, Ministry of Finance, and Ministry of Transport to determine scientific research topics and new technology applications directly serving the construction of new ships to be supported from the science fund.

State Bank of Vietnam guides commercial banks to meet the foreign currency needs of shipyards for importing machinery, equipment, and materials for building new ships.

The Development Support Fund ensures sufficient capital and appropriate loans in accordance with the progress of each shipbuilding project at sea that has been appraised in accordance with the regulations.

The Vietnam Shipbuilding Industry Corporation mobilizes all resources to strive to meet the development needs of the maritime fleet; proactively coordinates with relevant ministries, sectors, and localities to respond to programs related to new ship construction.

Article 8. THIS DECISION SHALL TAKE EFFECT 15 DAYS AFTER THE DATE OF SIGNATURE.

The Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies involved, Chairpersons of provincial People's Committees under the central government, Chairpersons of the Management Boards and General Directors of the Corporation 91 are responsible for implementing this Decision./.