Decision No. 22/2003/QD-BTC On the financial mechanism for using land funds to create capital for infrastructure construction

Pursuant to …;

Regarding the financial mechanism for using land funds to generate capital for constructing infrastructure

vốn xây dựng cơ sở hạ tầng

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THE MINISTER OF FINANCE

Pursuant to the Land Law and the Law amending and supplementing certain Articles of the Land Law in 1998 and 2001;

Pursuant to Decree No. 04/2000/NĐ-CP dated February 11, 2000 of the Government on implementing the Law amending and supplementing certain Articles of the Land Law; Decree No. 66/2001/NĐ-CP dated September 28, 2001 of the Government amending and supplementing certain provisions of Decree No. 04/2000/NĐ-CP dated February 11, 2000 on implementing the Law amending and supplementing certain Articles of the Land Law;

BASED ON DECREE NO. 178/CP DATED OCTOBER 28, 1994 OF THE GOVERNMENT ON THE TASKS, POWERS AND ORGANIZATIONAL STRUCTURE OF THE MINISTRY OF FINANCE;

After receiving opinions from relevant ministries, sectors, and provincial people's committees; Based on the proposal of the Director of the State Asset Management Agency;

DECISION:

Article 1. Scope of Application.

1- This Decision applies to cases of using land funds to generate capital for constructing infrastructure as stipulated in Section 2 Chapter IV of Decree No. 04/2000/NĐ-CP dated February 11, 2000 of the Government on implementing the Law amending and supplementing certain Articles of the Land Law, Clause 10 Article 1 of Decree No. 66/2001/NĐ-CP dated September 28, 2001 of the Government amending and supplementing certain provisions of Decree No. 04/2000/NĐ-CP dated February 11, 2000 on implementing the Law amending and supplementing certain Articles of the Land Law.

2- The list of infrastructure construction projects that use land funds to generate capital has been approved by the Prime Minister including:

- Projects for constructing technical infrastructure and social infrastructure outside urban areas and rural residential areas: transportation, irrigation, electricity, water supply and drainage, schools, hospitals (health stations), squares, sports fields, and other infrastructure projects;

- Urban infrastructure construction projects;

- Residential area infrastructure construction projects;

- Other infrastructure construction projects.

3- The land fund for generating capital for constructing infrastructure is the land included in the annual land use plan approved by the Prime Minister, comprising:

- Land allocated with payment of land use fee;

- Leased land, land allocated through other forms now converted to land allocation with payment of land use fee (change of land use purpose).

4- Forms of using the land fund to generate capital.

a- Allocating land at the location where the infrastructure project is located;

b- Allocating land outside the construction area of the infrastructure project;

c- Allocating land due to expansion of land acquisition scope for infrastructure transportation projects. The expanded land area will be used to generate capital for constructing infrastructure;

d- Using land with favorable conditions for production, business, living, and services to allocate land to generate capital for constructing common infrastructure of the locality.

Article 2. Scope of Application.

Domestic economic organizations (hereinafter referred to as investors or organizations) registered to operate real estate business, having sufficient capital and technical qualifications as prescribed by law to implement investment projects; if winning the bid for construction works or winning the auction for land use rights (hereinafter referred to as land auction) shall be allocated land within the project using the land fund to generate capital for constructing infrastructure. In the case of using the land fund to generate capital as stipulated in Point d Clause 4 Article 1 of this Decision, the applicable subjects also include domestic individuals (hereinafter referred to as individuals) having sufficient capital and technical qualifications.

Article 3. Financial mechanisms applied to projects using the land fund to generate capital for constructing infrastructure.

Investment projects using the land fund to generate capital must conduct bidding for construction works or auctioning land for the project to generate capital for infrastructure construction as follows:

- Within an investment project for constructing infrastructure, if bidding for construction works has been conducted, there will be no land auction; the winning bidder will be allocated land with payment of land use fee; If conducting a land auction, the winning bidder will be responsible for implementing the construction of infrastructure works.

- In the case of only one (01) investor requesting to implement the project, if meeting the conditions stipulated in Article 7 of this Decision, direct assignment tendering shall be implemented.

The winning bidder of construction works or land auction shall not be allowed to subcontract under any form.

Article 4. Establishing and publicizing the list of projects using the land fund to generate capital for constructing infrastructure.

Based on the List of projects using the land fund to generate capital for constructing infrastructure and the annual plan for using the land fund to generate capital for constructing infrastructure approved by the Prime Minister according to Article 22 of Decree No. 04/2000/NĐ-CP dated February 11, 2000 of the Government on implementing the Law amending and supplementing certain Articles of the Land Law, the People's Committee of provinces and centrally-administered cities (hereinafter referred to as Provincial People's Committee) shall instruct the establishment and approval of projects using the land fund to generate capital for constructing infrastructure; Publicize and disclose for twenty days on local mass media (radio, television, newspapers) and post at communes, wards, towns, districts, counties, and cities within provinces where the land for generating capital for constructing infrastructure is located regarding: 1- The list of infrastructure construction works using the land fund already approved by competent authorities, divided into two parts:

a- The list of infrastructure construction works subject to bidding corresponding to the allocated land;

b- The list of land subject to auction corresponding to infrastructure construction works

2- The list of land used to generate capital for each infrastructure construction work: location, area, current land use type, permitted land use change type according to the land use plan, and other information related to the project using the land fund to generate capital for constructing infrastructure.

3- The list of land used to generate capital for constructing common infrastructure of the locality as stipulated in Point d Clause 4 Article 1 of this Decision.

Article 5. Bidding for construction works and auctioning land to generate capital for constructing infrastructure.

According to Articles 49, 50, 51, 52, and 53 of Decree No. 88/1999/NĐ-CP dated September 1, 1999 of the Government on issuing the Tendering Regulations, the agency (person) authorized to approve the investment project shall be responsible for directing and organizing the bidding for the project.

1- In the case of bidding for infrastructure construction works of the project:

a- Organizing bidding to select investors to implement the project in accordance with the current laws on bidding.

b- Determine the land price to be transferred to the winning bidder for the construction project to settle the value of the construction project. In this case, the land transfer price with land use fee payment is the price calculated based on the new intended use. This price must be the price of transferring land use rights according to the new intended use of the area for infrastructure capital formation.

Based on the above principle, the land price for calculating the land use fee of the area for infrastructure capital formation shall be determined in accordance with the actual land transfer price of adjacent land (nearest) having the same intended use as the new intended use of the area for infrastructure capital formation; while also taking into account:

- The land price for compensation when reclaiming the land fund used for infrastructure capital formation;

- The land price according to the new intended use of the area for infrastructure capital formation issued by the Provincial People's Committee in accordance with the Government's regulations;

- The location of the area for infrastructure capital formation and conditions regarding infrastructure;

- Other factors related to the land price.

c- The winning bidder for constructing the infrastructure project is allocated land. The settlement value is determined as follows:

- The bid price for constructing the infrastructure project;

- The land price determined in accordance with point b Clause 1 of this Article.

2- In the case of land auction:

a- The value of the infrastructure project used to settle the land fund is the approved budget estimate of the investment project for constructing the infrastructure project in accordance with current regulations on basic construction management.

b- The land price used to settle the construction project is the auction-winning land price.

3- The winning bidder for the infrastructure construction project or the highest bidder at the land auction is the investor who offers the lowest bid price for constructing the infrastructure project or the highest bid price for the land auction.

4- In the case of implementing the use of land funds for common infrastructure construction as stipulated in point d Clause 4 Article 1 of this Decision, land auctions shall be conducted. All proceeds from land use fees collected must be managed in accordance with the State Budget Law. Before conducting the land auction, if there is a need for land improvement or construction of infrastructure projects and related works, such activities must comply with current regulations on basic construction management.

Article 6. Conditions for land auction for infrastructure capital formation.

1- Land for infrastructure capital formation is land that has been planned for land use or detailed construction planning approved by competent authorities;

2- Land used for residential purposes or production, business, service purposes, and other purposes as prescribed by law.

Article 7. Selection of investors participating in infrastructure construction project bidding or land auction.

1- The subjects participating in infrastructure construction project bidding or land auction are organizations and individuals (as stipulated in Article 2 of this Decision) who have a demand for using and operating real estate, meet the financial and technical requirements, and have experience in implementing investment projects.

2- Investors participating in infrastructure construction project bidding or land auction must submit to the project owner or the authority approving the investment project, decision on land auction (in cases where land funds are used for common infrastructure construction) an application to participate in bidding or auction, including:

- Business registration certificate with appropriate business activities for the investment project, accompanied by self-introduction documents proving professional, financial, technical capabilities, and experience in implementing the project;

- Financial reports of the last three years;

- Implementation plan for the infrastructure investment project, the project using the allocated land fund;

- A request to participate in the bidding or auction.

In the case of individuals applying to participate in land auctions as stipulated in point d Clause 4 Article 1 of this Decision, only a request to participate in the auction and a proposed use of the allocated land fund is required.

3- Conditions for selecting economic organizations and individuals participating in infrastructure construction project bidding or land auction:

- Possess a business registration certificate suitable for implementing the investment project;

- Meet the financial and technical requirements as prescribed by law;

- Have an implementation plan for the infrastructure investment project, effectively utilizing the allocated land fund;

- An organization may only participate in one bidding unit in one tender package. If a Group Company (Company) participates in the bidding under its name, its subsidiaries and affiliated units are not allowed to participate independently as contractors.

In the case of land auctions as stipulated in point d Clause 4 Article 1 of this Decision, where the land for auction has been divided into plots (lots) for individual household or personal housing construction, individuals participating in the auction only need to provide proof of financial capability.

Article 8. Organizing land auctions.

Land auctions are organized as follows:

- At least 30 days before the auction, the Auction Committee (the organizing body) publicly announces the auction lots (plots) at least twice within two weeks through mass media such as local radio, television, newspapers, and other media outlets, and posted at the auction venue, district, county, town, city under provincial government offices where the land auction takes place.

The public announcement includes: location, area, dimensions, current intended use, land use planning, registration deadline, auction date, and other relevant information.

- Conduct registration procedures for participants in the auction.

- Introduce the lot, land use planning, and construction planning of the auctioned land area.

- Organize the auction according to direct auction principles, in accordance with the auction rules approved by the Chairman of the Provincial People's Committee, consistent with current auction laws.

Article 9. Registering to participate in land auctions.

1- Participants selected in accordance with Article 7 of this Decision must complete registration and registration procedures no later than two days before the auction date.

2- After the application is approved by the Committee, the organization or individual registered for the land auction must pay:

a- The deposit (guarantee money - advance payment) shall be decided by the Provincial People's Committee for each auction but not exceeding 5% of the land value calculated based on the price of land with similar infrastructure conditions nearby (the nearest) issued by the Provincial People's Committee. The successful bidder shall have the deposit deducted from the land use fee to be paid (for settlement purposes). Those who do not win the auction shall be refunded immediately after the auction ends. In cases where organizations or individuals have registered to participate in the auction, have paid the deposit, but do not participate in the auction or win the auction but refuse to implement the project or withdraw their bid, they shall not be refunded the deposit, which shall be submitted to the State Budget.

b- Auction participation fees; this amount shall be paid when registering to participate in the auction and shall not be refunded to organizations or individuals who have registered to participate in the auction.. Specific levels of participation fees shall be determined by the Provincial People's Council in accordance with the actual situation at the local level as stipulated by current laws on auctions.

Article 10. Determining the starting price for the auction.

The starting price shall be determined by the Auction Board. The starting price shall be set according to point b, Clause 1, Article 5 of this Decision and shall not be lower than the price of land with similar infrastructure conditions nearby (the nearest) issued by the Provincial People's Committee as prescribed by the Government.

Article 11. Conducting the land auction.

1- Auction opening procedures:

- Introducing members of the Auction Board, the auctioneer, and assistants (if any).

- Taking attendance of those who have registered to participate in the auction and those who meet the conditions to participate in the auction.

- Providing all relevant information about the lot being auctioned, answering questions from participants; distributing bidding forms to each organization or individual participating in the auction; completing other necessary procedures.

2- Form and procedure of the auction: Following the principle of sealed bid direct auction, the ballots shall be issued by the Auction Board.

- After the first round of bidding (round one) ends, the Auction Board shall announce the starting price.

- Conducting each round continuously until the final round, which is the round after the Auction Board announces the highest bid but there are no more bids. The person with the highest bid in this round is the successful bidder - the person entitled to the right to use the land.

In cases where the auction of land funds for constructing common infrastructure facilities of the locality as stipulated in point d, Clause 4, Article 1 of this Decision includes multiple lots (plots) of land, the Provincial People's Committee shall specify the form and procedure in accordance with the provisions of the law.

Article 12. Reviewing and approving the tender results or auction results.

Based on the tender results for construction projects or auction results for land, the project owner shall submit to the Chairman of the competent Provincial People's Committee for approval of the investment project, approval of the tender results for construction projects, or approval of the auction results for land of the project. In cases where the auction of land for creating capital to build common infrastructure facilities for the locality as stipulated in point d, Clause 4, Article 1 of this Decision, the Auction Board shall submit to the Chairman of the Provincial People's Committee for approval of the auction results.

Article 13. In cases where only one investor requests to implement the project.

In cases where only one investor requests to implement the project then:

- The value of the infrastructure construction works to settle the land fund is the budget estimate of the investment project for constructing infrastructure works approved by the competent authority in accordance with the current regulations on investment management.

- The land price used to determine the value of the land fund transferred to the investor to settle the value of the construction of infrastructure works is the land price determined according to point b, Clause 1, Article 5 of this Decision.

Article 14. Signing the contract.

Based on the approval of the tender (auction) results by the competent state agency, the project owner and the successful bidder for the construction of infrastructure works or the successful bidder for the land auction shall sign the contract. The contract must comply fully with the provisions of the law on economic contracts and the regulations on investment management.

Article 15. Settlement, accounting, and management of funds received from land funds for investment in infrastructure construction.

1- After transferring land to the successful bidder for the tender or the land auction, the Department of Finance and Prices shall record the land use fee equal to the value of the land fund transferred to the investor to implement the infrastructure construction project, while recording the settlement of the investment capital for the construction of infrastructure works of the project.

2- If the value of the land fund transferred to the investor exceeds the value of the project, the investor must pay the difference in cash to the local state budget. If the value of the land fund transferred to the investor is less than the value of the project, the local state budget shall pay the difference to the investor; the payment shall be carried out in accordance with the legal regulations on the procedures for allocating investment capital for basic construction.

3- The land use fee obtained from the land fund for investment in common infrastructure construction of the locality as stipulated in point d, Clause 4, Article 1 and Clause 4, Article 5 of this Decision, the difference between the value of the land fund for investment and the value of the construction of infrastructure works of each project (if any) shall be submitted to the State Budget in accordance with the legal regulations on the State Budget. This amount can only be used to invest in building infrastructure works of the locality according to the approved project.

Article 16. Registering the right to use land.

The successful auction document, the successful tender document for construction works under the project using the land fund for investment in infrastructure construction, together with other related documents as prescribed by law, shall serve as the basis for transferring land to the successful bidder for land or the successful tenderer for construction works settled by the land fund. The successful auction document or the successful tender document for construction works, the decision on land transfer by the competent state agency, and other related documents shall serve as the basis for the land recipient to register the right to use land.

Article 17. Rights and obligations of the successful bidder for construction works and the land recipient.

The successful bidder for land must use it according to the purpose stated in the project already approved by the competent state agency. Violation will result in recovery according to the law on land.

The successful bidder who is awarded land or wins the tender for construction of infrastructure projects shall have the rights of a person to whom the State grants land with payment of land use fees as prescribed by current laws.

The investor who wins the tender for construction of infrastructure projects shall strictly fulfill the contract signed with the project owner, ensuring progress, quantity, and the construction of committed works. If violated, they will be dealt with according to the law on economic contracts.

Article 18. Responsibilities of state agencies.

1- The provincial People's Committee shall be responsible for:

- Issuing regulations and directing the organization of land auctions, directing tenders for construction of infrastructure projects;

- Deciding on tenders for construction of infrastructure projects or land auctions for each specific case;

- Determining the land price for payment to investors in cases of tendered construction projects;

- Approving the results of land auctions and tenders for construction of infrastructure projects;

- Inspecting and supervising the implementation of financial mechanisms in the use of land funds to build infrastructure projects as stipulated in this Decision.

2- The Department of Finance - Price Control shall take the lead in coordinating with relevant sectors:

- Timely monitoring the formation and fluctuations of actual land transfer prices in the locality as a basis for determining land prices for land use fees in cases of tendered construction projects or setting initial prices for land auctions;

- Submitting to the provincial People's Committee for approval of land prices in cases of land valuation and tendered construction projects. In this case, before submitting to the provincial People's Committee for approval of land prices, the Department of Finance - Price Control must seek the appraisal opinion of the land and real estate valuation agency (if available);

- Submitting to the provincial People's Committee for approval of land prices to determine the value of land funds paid to investors;

- Participating in the Land Auction Council, tender selection, and choosing investors for construction of infrastructure projects;

- Preparing budget estimates and finalizing budgets regarding the use of land funds to build infrastructure projects in accordance with the State Budget Law;

- Implementing the recording of State Budget revenues from land use fees of land funds for infrastructure construction, and recording State Budget expenditures for basic construction investment;

- Assisting the provincial People's Committee in guiding, inspecting, and supervising the implementation of this Decision;

Article 19. Implementation clause.

1- The provisions on land auctions in this Decision also apply to the following cases:

- Granting land with payment of land use fees through auction methods;

- Agencies, public service units, people's armed forces units, political organizations, political-social organizations, social organizations, social-professional organizations, economic organizations permitted by competent state authorities to transfer land use rights or sell buildings along with transferring land use rights;

- Granting land to economic organizations to construct houses for sale or lease (excluding cases of converting state-owned enterprises to joint stock companies and changing from leasing land to granting land with payment of land use fees);

- Other cases as prescribed by law.

2- This Decision shall take effect fifteen days after its signing. All financial mechanism regulations using land funds to build infrastructure projects that contradict this Decision shall be abolished.

For ongoing projects, they shall be implemented according to the decision of the competent state authority approving them.

For projects not yet commenced, they must be implemented according to this Decision.

Article 20. Ministers of Ministries, Heads of ministerial-level agencies, agencies under the Government, Chairmen of provincial People's Committees directly under the Central Government shall, based on their functions, tasks, and powers, be responsible for directing related units to implement this Decision.

During the implementation process, if there are difficulties, ministries, sectors, and localities are requested to report to the Ministry of Finance for timely consideration and resolution.