Circular No. 12/BKH-QLKT guiding certain provisions of the Investment Regulation under the Build-Operate-Transfer (BOT) Contract form applicable to domestic investment (issued together with Decree No. 77/CP dated June 18, 1997 of the Government).

CIRCULAR

GUIDANCE ON CERTAIN PROVISIONS OF THE REGULATION ON INVESTMENT UNDER THE BUILD-OPERATE-TRANSFER CONTRACT FORM APPLICABLE TO DOMESTIC INVESTMENT
(ISSUED ALONGSIDE DECREE NO. 77/CP OF JUNE 18, 1997 OF THE GOVERNMENT)

TO CREATE FAVORABLE CONDITIONS AND PROMOTE THE RAPID IMPLEMENTATION OF THE REGULATION ON INVESTMENT UNDER THE BUILD-OPERATE-TRANSFER CONTRACT FORM (ABBR. AS BOT) APPLICABLE TO DOMESTIC INVESTMENT ISSUED BY DECREE NO. 77/CP OF THE GOVERNMENT ON JUNE 18, 1997 (HEREINAFTER REFERRED TO AS THE DOMESTIC BOT REGULATION), THE MINISTER OF PLANNING AND INVESTMENT PROVIDES ADDITIONAL GUIDANCE ON CERTAIN PROVISIONS OF THE DOMESTIC BOT REGULATION AS FOLLOWS:

1. REGARDING THE APPLICATION OBJECTS OF THE DOMESTIC BOT REGULATION

THE APPLICATION OBJECTS OF THE DOMESTIC BOT REGULATION INCLUDE:

a. STATE ENTERPRISES

b. ENTERPRISES OF POLITICAL AND SOCIAL ORGANIZATIONS

c. COOPERATIVES

d. JOINT-STOCK COMPANIES

đ. LIMITED LIABILITY COMPANIES

e. PRIVATE ENTERPRISES

g. VIETNAMESE CITIZENS AGED 18 YEARS AND OLDER

h. VIETNAMESE RESIDENTS ABROAD AGED 18 YEARS AND OLDER

i. FOREIGNERS AGED 18 YEARS AND OLDER WHO HAVE BEEN RESIDING LONG-TERM IN VIETNAM

2. REGARDING THE AUTHORIZED STATE AUTHORITIES TO SIGN BOT CONTRACTS

a) FOR GROUP A PROJECTS, THE AUTHORIZED STATE AUTHORITIES TO SIGN BOT CONTRACTS ARE DESIGNATED BY THE PRIME MINISTER ON A CASE-BY-CASE BASIS. THE AUTHORIZED AUTHORITIES MAY BE THE MINISTRIES MANAGING THE SECTORS OR THE PEOPLE'S COMMITTEES OF PROVINCES AND MUNICIPALITIES DIRECTLY UNDER THE CENTRAL GOVERNMENT.

b) FOR GROUP B AND C PROJECTS, THE AUTHORIZED STATE AUTHORITIES TO SIGN BOT CONTRACTS ARE THE PEOPLE'S COMMITTEES OF PROVINCES AND MUNICIPALITIES DIRECTLY UNDER THE CENTRAL GOVERNMENT WHERE THE PROJECTS ARE IMPLEMENTED. IN THIS CASE, THE PEOPLE'S COMMITTEES OF PROVINCES AND MUNICIPALITIES DIRECTLY UNDER THE CENTRAL GOVERNMENT MAY DELEGATE THE PEOPLE'S COMMITTEES OF DISTRICTS AND COUNTIES OR SECTORS MANAGING THE SECTORS TO NEGOTIATE AND SIGN BOT CONTRACTS.

THE RIGHTS AND RESPONSIBILITIES OF THE AUTHORIZED STATE AUTHORITIES TO SIGN BOT CONTRACTS ARE IMPLEMENTED ACCORDING TO THE PROVISIONS OF CHAPTER VIII OF THE BOT REGULATION.

IN CASE THE IMPLEMENTATION OF BOT PROJECTS IS RELATED TO MANY SECTOR MANAGEMENT MINISTRIES AND/OR PROVINCES AND MUNICIPALITIES DIRECTLY UNDER THE CENTRAL GOVERNMENT, THEN THE SECTOR MANAGEMENT MINISTRIES AND/OR THE PEOPLE'S COMMITTEES OF PROVINCES AND MUNICIPALITIES DIRECTLY UNDER THE CENTRAL GOVERNMENT WITHIN THEIR SCOPE OF RIGHTS AND RESPONSIBILITIES SHALL BE RESPONSIBLE FOR COOPERATING AND SUPPORTING THE AUTHORIZED STATE AUTHORITIES TO SIGN BOT CONTRACTS TO ENSURE THAT THEY PERFORM THEIR RESPONSIBILITIES AS REQUIRED.

THE CRITERIA AND CONDITIONS FOR DETERMINING GROUP A, B, AND C PROJECTS IN THIS POINT AND OTHER POINTS IN THIS CIRCULAR ARE PROVIDED IN DECREE NO. 42/CP OF JULY 16, 1996 ON THE ISSUE OF THE REGULATIONS ON INVESTMENT MANAGEMENT AND CONSTRUCTION.

3. REGARDING THE PROCEDURE FOR ESTABLISHING AND ANNOUNCING THE LIST OF BOT PROJECTS

a) COLLECTING AND ESTABLISHING THE LIST OF BOT PROJECTS:

- THE MINISTRY OF PLANNING AND INVESTMENT COLLECTS AND ESTABLISHES THE LIST OF GROUP A PROJECTS, INCLUDING:

* INFRASTRUCTURE DEVELOPMENT PROJECTS FOR ECONOMIC AND SOCIAL PURPOSES THAT HAVE BEEN IDENTIFIED TO IMPLEMENT THE APPROVED ECONOMIC AND SOCIAL DEVELOPMENT PLANS.

* PROJECTS PROPOSED BY SECTOR MANAGEMENT MINISTRIES OR THE PEOPLE'S COMMITTEES OF PROVINCES AND MUNICIPALITIES DIRECTLY UNDER THE CENTRAL GOVERNMENT.

* PROJECTS PROPOSED BY ENTERPRISES, WITHOUT REGARD TO THE ECONOMIC COMPONENT.

- THE DEPARTMENTS OF PLANNING AND INVESTMENT OF PROVINCES AND MUNICIPALITIES DIRECTLY UNDER THE CENTRAL GOVERNMENT COLLECT AND ESTABLISH THE LIST OF GROUP B AND C PROJECTS TO BE IMPLEMENTED IN THEIR LOCALITIES, INCLUDING:

* PROJECTS IDENTIFIED TO IMPLEMENT THE LOCAL ECONOMIC AND SOCIAL DEVELOPMENT PLANS THAT HAVE BEEN APPROVED BY THE AUTHORIZED AUTHORITIES.

* PROJECTS PROPOSED BY SECTOR MANAGEMENT DEPARTMENTS OR THE PEOPLE'S COMMITTEES OF COUNTIES AND DISTRICTS.

* PROJECTS PROPOSED BY ENTERPRISES, WITHOUT REGARD TO THE ECONOMIC COMPONENT.

b) PREPARING AND APPROVING THE FEASIBILITY STUDY OR TECHNICAL REPORT ON THE NECESSITY OF THE PROJECT (COLLECTIVELY REFERRED TO AS THE FEASIBILITY STUDY) FOR PROJECTS LISTED IN THE INITIAL LIST OF BOT PROJECTS.

- ORGANIZATIONS AND INDIVIDUALS PROPOSING BOT PROJECTS ARE RESPONSIBLE FOR PREPARING THE FEASIBILITY STUDY AND REPORTING IT TO THE MINISTRY OF PLANNING AND INVESTMENT AND THE SECTOR MANAGEMENT MINISTRIES FOR GROUP A PROJECTS, AND THE DEPARTMENTS OF PLANNING AND INVESTMENT AND SECTOR MANAGEMENT DEPARTMENTS FOR GROUP B AND C PROJECTS.

- THE AUTHORITY AND PROCEDURES FOR APPROVING THE FEASIBILITY STUDY ARE IMPLEMENTED ACCORDING TO THE INVESTMENT AND CONSTRUCTION MANAGEMENT REGULATIONS ISSUED ALONGSIDE DECREE NO. 42/CP OF JULY 16, 1996 AND THE PROVISIONS OF ARTICLE 5 OF THE DOMESTIC BOT REGULATION.

c) ANNOUNCING THE LIST OF BOT PROJECTS

- THE PRIME MINISTER ANNOUNCES THE LIST OF GROUP A PROJECTS NATIONWIDE, AND THE CHAIRMEN OF THE PEOPLE'S COMMITTEES OF PROVINCES AND MUNICIPALITIES DIRECTLY UNDER THE CENTRAL GOVERNMENT ANNOUNCE THE LIST OF GROUP B AND C PROJECTS IN THEIR LOCALITIES.

- THE LIST OF BOT PROJECTS ANNOUNCED ONLY INCLUDES PROJECTS WITH FEASIBILITY STUDIES THAT HAVE BEEN APPROVED BY THE AUTHORIZED AUTHORITIES AND SATISFY THE CONDITIONS SET OUT IN ARTICLE 4 OF THE DOMESTIC BOT REGULATION.

- THE LIST OF BOT PROJECTS ANNOUNCED IS PUBLISHED THROUGH NATIONAL MEDIA FOR GROUP A OR LOCAL MEDIA FOR GROUP B AND C.

THE LIST OF BOT PROJECTS IS ANNOUNCED ONCE EVERY SIX MONTHS. IF THERE IS NO NEW LIST, THE PREVIOUS LIST WILL BE RE-PUBLISHED.

THE LIST OF BOT PROJECTS BELONGING TO GROUP A MUST BE KEPT AT THE MINISTRY OF PLANNING AND INVESTMENT AND THE DEPARTMENTS OF PLANNING AND INVESTMENT OF PROVINCES AND MUNICIPALITIES DIRECTLY UNDER THE CENTRAL GOVERNMENT ACROSS THE COUNTRY. THE LIST OF BOT PROJECTS BELONGING TO GROUP B AND C MUST BE KEPT AT THE DEPARTMENTS OF PLANNING AND INVESTMENT OF PROVINCES AND MUNICIPALITIES.

ANYONE INTERESTED HAS THE RIGHT TO RECEIVE A COPY OF THE ANNOUNCED LIST OF BOT PROJECTS WITHOUT PAYMENT.

- THE CONTENTS OF THE ANNOUNCED LIST OF BOT PROJECTS MUST INCLUDE AT LEAST:

* PROJECT NAME

* PROJECT TYPE

* PROJECT OBJECTIVE

* LOCATION WHERE THE PROJECT IS INTENDED TO BE IMPLEMENTED

* INITIAL TECHNICAL INDICATORS OF THE PROJECT

* NAME, ADDRESS, TELEPHONE NUMBER, AND FAX NUMBER (IF AVAILABLE) OF THE AUTHORIZED STATE AUTHORITY DESIGNATED OR DEPUTIZED TO SIGN THE BOT CONTRACT. NAME, ADDRESS, TELEPHONE NUMBER, AND FAX NUMBER (IF AVAILABLE) OF THE UNIT OR STAFF RESPONSIBLE FOR RECEIVING AND PROCESSING DOCUMENTS REGARDING THE SELECTION OF BOT ENTERPRISES OR FOUNDING MEMBERS OF BOT ENTERPRISES, NEGOTIATING THE CONTENTS OF THE BOT CONTRACT.

d) EXPENSES FOR ESTABLISHING AND ANNOUNCING THE LIST OF BOT INVESTMENT PROJECTS

EXPENSES FOR ESTABLISHING AND ANNOUNCING THE LIST OF BOT INVESTMENT PROJECTS ARE DRAWN FROM THE STATE BUDGET. ANNUALLY, THE MINISTRY OF PLANNING AND INVESTMENT AND THE PEOPLE'S COMMITTEES OF PROVINCES AND MUNICIPALITIES DIRECTLY UNDER THE CENTRAL GOVERNMENT INITIATE THE BUDGET FOR SUFFICIENT FUNDS TO STUDY AND APPROVE THE FEASIBILITY STUDY, AND ANNOUNCE THE LIST OF BOT PROJECTS.

đ) The competent state agency signing the BOT contract shall actively mobilize, study, and seek individuals or enterprises capable of implementing the announced BOT project nationwide. Provincial People's Committees or city People's Committees in the Central region or the Northern mountainous region may publicize, mobilize, and seek individuals or enterprises with headquarters in Hanoi or Ho Chi Minh City to become BOT enterprises or to establish BOT enterprises in their localities.

4. On selecting the BOT enterprise or founding member of the BOT enterprise

a) To verify the authenticity of each document in the file prescribed in Article 9 of the Domestic BOT Regulation, the competent state agency signing the BOT contract shall:

- Use its own accounting experts or hire accounting experts from independent auditing companies to recheck the self-introduction regarding the expertise, finance, technology, and experience of the enterprise or contractor; the capital mobilization plan; the report on business results and asset summary of the previous year.

- Through telephone, fax, or mail, request banks or other financiers to confirm their commitments regarding the provision of capital for the implementation of the BOT project.

b) Provide additional explanation on the standards stipulated in Article 13 of the Domestic BOT Regulation.

- Ensuring the timely and sufficient mobilization of the required capital means that the total investment capital of the BOT enterprise and the capital committed to be provided by financiers equals the actual capital needed for the BOT project.

- An organization having sufficient technical staff to perform services and work related to the design and construction of the BOT project is an organization or individual who has successfully performed similar services and work for at least one similar project as the planned BOT project. Having technical and management staff with sufficient experience and knowledge in construction and operation management means having sufficient technical and management staff as in another enterprise that has managed construction and operation of similar projects.

c) The certificate of capability to implement the BOT project shall be applied according to the model issued together with this Circular.

d) In case two or more enterprises, groups of enterprises, or individuals have the desire to implement the BOT project, they must organize a bidding process in accordance with Article 14 of the Domestic BOT Regulation.

5. On preparing and signing the BOT contract and other investment preparation procedures

Immediately after the selection of the BOT enterprise or founding member of the BOT enterprise, the competent state agency signing the BOT contract shall promptly carry out the following tasks together with them:

a) Negotiate and agree on the contents of the BOT contract;

b) Complete the procedures for establishment and registration of business for the BOT enterprise in accordance with the laws;

- If the BOT enterprise is an existing and operating enterprise, then supplementary business registration shall be carried out. In this case, the BOT enterprise can be a state-owned enterprise, an enterprise of political-social organizations, a cooperative, a private enterprise, a limited liability company, or a joint-stock company.

- If the newly established BOT enterprise will be a cooperative, then the procedures for business registration shall be carried out in accordance with the laws on cooperatives and relevant regulations.

- If the newly established BOT enterprise will be a private enterprise, then the procedures for establishment and business registration shall be carried out in accordance with the laws on private enterprises and relevant regulations.

- If the newly established BOT enterprise will be a limited liability company or a joint-stock company, then the procedures for establishment and business registration shall be carried out in accordance with the laws on companies and relevant regulations.

c) Design the technical project and approve the technical design of the BOT project;

d) Complete the procedures for obtaining investment permits;

đ) Complete the procedures for land allocation or lease and implement land allocation or lease to carry out the project;

The competent state agency signing the BOT contract shall proactively guide and support the selected BOT enterprise or founding member of the BOT enterprise to complete the necessary procedures as mentioned in Points b, c, d, and đ of this Article.

When the BOT contract has been negotiated and agreed upon by the BOT enterprise or representative of the founding member of the BOT enterprise and the competent state agency signing the BOT contract, the aforementioned necessary procedures must be completed.

e) Sign the BOT contract;

6. On ancillary contracts

Simultaneously with negotiating the BOT contract, the BOT enterprise or representative of the founding member of the BOT enterprise may negotiate and prepare to sign additional ancillary contracts such as product sales contracts, raw material supply contracts, fuel supply contracts, construction and installation contracts, management, operation, maintenance, and repair contracts, and other contracts deemed necessary.

The competent state agency signing the BOT contract shall monitor the negotiation and agreement process of the ancillary contract contents to adjust the contents and terms of the BOT contract in a timely manner if deemed necessary.

7. On organizing the management of the BOT enterprise

a) For the case where a new BOT enterprise is established:

- If the newly established BOT enterprise is a cooperative, the management organization of the enterprise shall operate in accordance with the corresponding provisions of the Law on Cooperatives and relevant regulations.

- If the newly established BOT enterprise is a private enterprise, the organizational structure of the management of the enterprise shall apply in accordance with the corresponding provisions of the Law on Private Enterprises and relevant regulations.

- If the newly established BOT enterprise is a limited liability company or a joint-stock company, the management organization of the enterprise shall apply in accordance with the corresponding provisions of the Law on Companies and relevant regulations.

b) For the case where the BOT enterprise is an existing operating enterprise:

- The BOT enterprise must establish a separate branch to organize the management of construction, business operations, and exploitation of the BOT project.

- The organizational structure, authority, and responsibilities of the branch within the construction management organization, business operation, and exploitation of BOT projects shall be determined by the enterprise implementing the BOT project.

- Branches established for managing construction, organizing business operations, and exploiting BOT projects must maintain separate accounting records clearly distinguished from the accounting work and reporting related to the production and business activities of the BOT enterprise.

8- State management over the business operation of service provision in BOT projects

a) The state agency authorized to sign the BOT contract is also the state management agency for the business operation of service provision in BOT projects.

b) To effectively manage the state and create favorable conditions for the BOT enterprise in designing, constructing, and organizing business operations of service provision in BOT projects, the state agency authorized to sign the BOT contract needs to promptly and effectively perform the following tasks:

- Conducting preliminary feasibility studies, determining minimum quality standards for the BOT project, quantity and quality of products and services; assessing the initial impact of the project on the environment and ecology;

- Providing necessary information for conducting feasibility studies at the request of enterprises or individuals planning to implement the BOT project;

- Selecting the BOT enterprise or founding members of the BOT enterprise;

- Reviewing and approving technical design of the project;

- Cooperating with the BOT enterprise to monitor the quality of construction, progress of the project, ensuring compliance with the design and plan;

- Resolving land areas planned for the implementation of the BOT project; - Cooperating or supporting the BOT enterprise to complete investment preparation procedures, construction, and operation according to the BOT contract;

- Jointly issuing internal regulations on fee collection and payment with the BOT enterprise;

- Supervising the organization of fee collection for using the BOT project to ensure two objectives: first, the BOT enterprise shall not abuse its position to collect excessive fees from users; second, promptly and appropriately refusing and penalizing users of the BOT project who intentionally fail to pay fees as prescribed;

- Requesting the BOT enterprise to report on financial status, business results, technical condition of the project, maintenance and repair status of the project, whenever deemed necessary;

- Implementing or requesting other state agencies to implement legitimate requests of the BOT enterprise during the construction and business operation of the project.

9. Supporting the BOT enterprise in cases of scarcity of public services

a) In cases where the supply of electricity, water, and other public services does not meet the requirements of production and daily life in the area where the BOT project is implemented, the BOT enterprise shall enjoy preferential treatment like other enterprises providing such services throughout the construction and business operation of the project. If the BOT enterprise needs to install a separate supply network, the state agency authorized to sign the BOT contract and the service provider agency shall have the responsibility to support the BOT enterprise to timely complete the project according to the enterprise's requirements.

b) For cases with restrictions on user groups: for example, during the construction of the BOT project, vehicles and other mechanical equipment serving the construction of the BOT project must pass through sections of roads or streets prohibited for transport and mechanical vehicles. In this case, the state agency shall guide the BOT enterprise to be permitted to use that section of road for a certain period during the day when traffic density is lowest (such as from midnight to 5 am) until the completion of the project for use.

10. Regarding the budget for the state agency authorized to sign the BOT contract to perform its functions.

The state agency authorized to sign the BOT contract shall be provided with a reasonable budget from the state budget to carry out the tasks stipulated in Article 41 and 42 of the Domestic BOT Regulation.

The central government budget shall provide funding for the state agency authorized to sign the BOT contract for Group A projects.

The provincial or centrally-administered city budget shall provide funding for the state agency authorized to sign the BOT contract for Group B and C projects within their respective jurisdictions.

11. This Circular shall take effect fifteen days from the date of signature. During the implementation of this Circular, if difficulties or obstacles arise, it is recommended that relevant state agencies and organizations submit their opinions to the Ministry of Planning and Investment for research and appropriate amendments.