Vietnam legal Document pageVietnam legal Document page
The State Committee for THE SOCIALIST REPUBLIC Of VIETNAM
Cooperation and Investment Independence-freedom-Happiness.
No. 333 UB/LXT htmlhtmlhtml-
htmlhtml---
Hanoi, february 28, 1994.
I. GENERAL PROVISIONS
1. Investors entering into BOT contracts with authorized State bodies shall be foreign individuals or organizations who implement BOT projects as a person being directly responsible for organizing the implementation of the BOT project, namely, designing, construction, equipment supply, completion, operation, maintenance and transfer of the project to the Vietnamese Government. In order to be able to negotiate with the State body, the investor shall prove its technical, financial standing and experience f or ensuring the implementation of the BOT project.
The investor shall provide enough proof of his authority to sign BOT contract, evidence of his financial, technical ability as well as his professional experience required for the implementation of the BOT project.
In the event that the investors are Vietnamese entrepreneurs who implement the BOT project by themselves, special procedures shall apply.
2. In order to conduct a BOT project, any concerned investor must establish a BOT company subject to the law of Vietnam. A BOT company shall enjoy the status of Vietnamese juridical person and its operation shall be allowed after obtaining investment lic ense and certificate of registration of its Charter issued by the SCCI. The BOT Company's activities shall be in accordance with the BOT contract, the Investment License, the Company Charter and other relevant laws of Vietnam.
3. The BOT Company shall be directly responsible for fulfilling the commitments made by investors in the BOT contract subject to the authorization of the investor with the scope of power and obligations agreed by the Company and the investor, in accord ance with the BOT contract, and clearly defined in the Company Charter and the Investment License.
4. The transfer of a BOT project shall be made by either the BOT company or the investor, subject to the agreement between the company and the investor, being approved by the State body which has the power to enter into a BOT contract, but in any case, th e investor shall still be the one fully responsible for the whole project as regulated in point (1).
5. The State body having the power to enter into a contract is responsible for supervision and investigation of the implementation of the project, commissioning the project in accordance with the contents, conditions and schedule specified in the BOT cont ract. During the implementation period of a BOT project from the building, the operation to the transfer of the project, the State body having power to enter into a contract can remind the BOT Company and the State Committee for Cooperation and Investment of any problems occurred (if any) and if necessary, can jointly with the investor work out the solution to handle these problems.
In carrying out the functions of supervision, investigation and commissioning, the State body having power to enter into a contract can invite local or foreign experts, organizations who are experienced in specific areas to give comment and advice. It the investor uses an independent specialized organization to supervise and commission the project, it must be approved by the State body having a power to enter into a contract.
6. The State body which having power to enter into a contract with the BOT company includes Ministries, General Department or Department, People's Committee of Province or City.
7. Sub-contractors as regulated in Article 6.1. of the Regulation are allowed to participate in the bid and being awarded a part of work of a BOT Company.
Sub-contractors, including local ones, after signing contract with a BOT Company, must register its operation at the State body having power to enter into a contract and are allowed to operate only after having completed the registration procedures.
II. PREfERENTIAL TREATMENT AND INVESTMENT GUARANTEE
1. Preferential treatment in respect of taxation
(1.1) The BOT Company shall be entitled to pay tax as stipulated in Article 3 of the Regulations.
In respect of BOT projects implemented in mountainous region and areas where cultural, social and economic conditions are difficult, the BOT company may enjoy other preferential treatment stated to in the Investment License.
(1.2.) foreign sub-contractors participating in the BOT project on the basis of the sub-contract signed with the BOT company (including sub-contractors established in the form of consortium with Vietnamese enterprises shall be subject to taxes which are a pplicable to foreign contractors according to Circular No 30 TC/TCT dated 19 July 1992 of the Ministry of finance.
Vietnamese sub-contractors participating in BOT projects shall fulfill their tax obligations in accordance with the stipulations applicable to Vietnamese enterprises.
(1.3.) BOT Company and sub-contractors carrying out the BOT project shall be exempted from payment of import duty in respect of equipment, machinery, accessories, materials, supplies (including transportation facilities) imported into Vietnam for the pur poses of investigation, designing, construction, maintenance and operation of the BOT project. If commercial conditions are similar, priority will be given to local purchase instead of importation of the above items.
In the event that the BOT Company, the sub-contractors sell the equipment and supplies referred to in Clause 1.3. in the Vietnamese market, permission of the Ministry of Trade shall be required import duty and turnover tax shall be paid.
(1.4.) Where the parties to the BOT Company, foreign sub-contractors conduct any assignment of capital, they shall be subject to an assignment tax as stipulated in Clause 4, Article 3 of the Regulations.
The assignment by the parties in the BOT Company shall be subject to the approval of the State Committee for Cooperation and Investment.
2. Opening and operation of accounts ; ensuring foreign exchange balance
(2.1.) The opening of bank accounts (including the opening of bank accounts for loan capital at overseas banks) by the BOT Company shall be in accordance with Circular No 06/TT-NH 7 dated 18 September 1993 of the State Bank.
foreign sub-contractors participating in a BOT project may open bank account in foreign currencies or Vietnamese currency at Vietnamese banks or joint venture banks or foreign bank branches operating in Vietnam.
Where revenues and expenses occur to foreign sub-contractors participating in BOT projects in Vietnam, accounts shall be required to be opened at banks in Vietnam.
(2.2.) In accordance with Article 5 of the Regulations, the Government shall ensure the conversion of the revenue received by the BOT Company from Vietnamese currency into foreign currencies for the purpose of repaying the loan capital, expenditures and p rofit repatriation.
Where the BOT Company wants to remit abroad additional profit in exceed of the profits obtained as stated in the contract and at the point of time when Vietnam faces to difficulties in respect of foreign exchange, upon the proposal of the BOT Company and , in consultation with the State Bank and the Ministry of Trade, the State Committee for Cooperation and Investment shall consider the possibility to approve such remittance in the forms of buying exported goods of equivalent value and/or being able to pa y in Vietnamese dong for other expenses in Vietnam which should be paid in foreign currencies under the law.
3. Mortgage on assets and the right to use the land
(3.1.) Assets of the BOT Company which are used for securing the loans towards the mortgagee shall be under the ownership of the BOT, including plants, buildings architectural works and other premises. The mortgagee on properties with the right to use the land on which construction works erected, must be approved by the State body having power to enter into a contract.
Where the BOT Company fails to fulfill its obligations contemplated in the loan agreement with mortgaged assets, the mortgaged assets shall be treated in a way agreed by the parties but the mortgagee must use the mortgaged assets to continue the implement ation of the project. If it is impossible to continue the implementation of the project, then the mortgaged assets shall be auctioned and those who buy these assets must continue the implementation of the project. If the mortgaged assets are planned to be used for other purpose, it must be approved by the State body having power to enter into a contract.
Where the BOT Company fails to fulfill its obligations as contemplated in the mortgage contract and/or being dissolved prior to the expiry date, after wages, salaries, insurance, taxes having been paid, then loans (including interests) which are secured b y the mortgaged assets shall be given priority to be paid out of proceeds achieved from liquidation of the assets against other liabilities.
(3.2) The mortgage in a form of land use right (without any construction) for securing loan by BOT Company shall only be applied if required and it must be approved by the State body having power to enter into a contract.
Where the BOT Company fails to fulfill its obligations as contemplated in the loan agreement, the mortgagee or a third party appointed by the mortgagee shall be able to takeover the land use right but it must be used for the purpose of the project. If the land use right is planned to be used for other purpose, it shall be approved by the State body having power to enter into a contract.
Where the BOT company fails to fulfill its obligations as contemplated in the loan agreement and/or being dissolved prior to the expiry date, after wages, salaries , endurance, taxes having been paid , then loans (including interests) which are mortgag ed by the land use right ,shall be given priority to be paid out of proceeds achieved from liquidation of the construction against other liabilities.
(3.3) Property and the land use right having been mortgaged for the implementation of a BOT Contract, are managed and utilized by the BOT Company, but not permitted to be sold, gifted, leased, borrowed and mortgaged for other loans. The property and land use right shall be mortgaged in conformity with the operation term of the BOT Company and has to be recorded in writing, clearly stating the type, quantity, quality, value, term and method of settlement. The mortgage document is prepared in accordance wit h Vietnamese laws; in case of the absence of Vietnamese laws, the parties may enter into an agreement subject to foreign laws but not in contrary to the provisions of this Article 3. The mortgage document must be copied to the State body having power to e nter into a contract.
4. Conditions for increasing rates, fees and other revenues of the BOT Company.
During the course of operation of the BOT project, any increase in prices, fee and other revenues within the range stipulated in the BOT contract must be notified to the State body having power to enter into contract one month prior to the date or commenc ement of implementation.
Where the increase in prices, fees, and other revenues of the BOT Company is higher than the proposed and agreed ceiling level in the BOT contract , the BOT company shall negotiate with the State body having power to enter into a contract and subject to the approval of the State Committee for Cooperation and Investment.
Within 30 days from the date of receipt of the proposal from the BOT Company, the State Committee for Cooperation and Investment shall reply in writing.
5. Technology Transfer and Ecological and Environmental Protection
Any technology transfer in a BOT Project shall comply with regulations on technology transfer of Vietnam.
The term of technology transfer may be longer than that stipulated in the regulations on technology transfer, depending on stipulated in the regulations on technology transfer, depending on the nature of specific contracts, and shall be approved by the Mi nistry of Science, Technology and Environment.
BOT Projects shall be conducted in compliance with all regulations on ecological and environmental protection of Vietnam. In case of absence of the Vietnamese laws, the BOT contract shall clearly define measures for ecological and environment protection w hich must be approved by the Ministry of Science, Technology and Environment.
III. STATE MANAGEMENT Of THE BOT PROJECTS
(1) The State body having power to enter into a BOT contract shall have the following responsibilities :
- To determine the method of implementing the project, suitable to the nature, scope and specific conditions of each BOT project.
- To cooperate with Ministries, Branches and local governments concerned, in the preparation of the feasibility study of a BOT project, tender documents and in the organization of bid and selection of the winning bidder.
- To negotiate and sign BOT contract.
- To be the focal point for handling investors' requirements in relation with the implementation of the project.
- To supervise, inspect and organize the commissioning of the project during the course of implementation and completion of the project in accordance with the provisions specified in the BOT project.
(2) The State Committee for Cooperation and Investment shall have the following responsibilities :
- To grant Investment License and certificate of registration of the BOT Company Charter.
- To supervise and inspect the implementation of the BOT contract and the operation of the BOT Company.
- To be the local point for handling issues relating to obligations of the BOT Company and to ensure all Commitments made by the Government of Vietnam in respect of the implementation of the BOT project.
(3) The technical - economic specialized ministries and branches shall have the following responsibilities :
To give their comments to the State body having power to enter into a contract during the course of the implementation of a BOT project; to perform the State management function within the area assigned.
(4) Investment License, Charter of the BOT Company.
(4.1.) Investment license shall be issued by the State Committee for Cooperation and Investment to the investors on the basis of the BOT contract. The details of the Investment license are contemplated in Article 16 of the Regulations and also includes th e followings :
- Approval of the BOT contract entered into between the State body having power to enter into a contract and the investor.
- Some other provisions that the investor or the State Committee for Cooperation and Investment find necessary to be included in the Investment License.
- Approval of the establishment of the BOT Company and the BOT Company Charter.
(4.2.) A BOT Company Charter includes the following details :
- Capital structure and contribution of the parties to the company.
- Prescribed capital, investment capital.
- Provisions relating to the sale, purchase and assignment of capital.
- Organization and management of the BOT Company.
- Power and responsibilities of the Board of Management, Board of Directors.
- Procedures and meetings of the Board of Management.
- Cases and procedures of dissolution and liquidation of the Company.
- Dispute settlement.
- Rights and obligations of the BOT Company and the investor.
- Procedures in respect of amendment of the Company Charter.
IV. DISPUTE SETTLEMENT AND OTHER PROVISIONS
1. Dispute settlement
In implementing the BOT project, the disputes shall be resolved in accordance with Article 15 of the Regulations.
Where the Vietnamese Government signs an agreement on investment promotion and protection with the investor's government, the dispute settlement shall be subject to the provisions of the agreement.
2. Infringement settlement
The BOT companies, foreign sub-contractors, Vietnamese sub-contractors, Vietnamese business entities participating in a BOT project shall strictly observe the provisions of the contracts, the Investment License and the laws of Vietnam. Any infringement sh all be settled and prosecuted for contractual obligations, civil liabilities, administrative responsibilities of criminal responsibility, depending on the degree of seriousness of the infringement.
In order to ensure the commitment to implement a BOT project, upon the granting of the Investment License, the investor has to make a deposit decided by the State body having power to enter into a contract on the contract-by-contract basis. This amount wi ll be refunded when the BOT project is put into full operation.
3. Other provisions
The labour recruitment, industrial property protection, insurance, auditing, accounting, statistics, customs, entry, exit, residency and other provisions not referred to in the Regulations and this Circular, shall be applied in accordance with Decree 18/C P dated April 16, 1993 and other related legal documents.
This Circular shall be of full force and effect from the date of its signing. During the course of implementation, if any issues required to be guided, amended or adjusted, Ministries shall provide timely guidance or keep the State Committee for Cooperati on and Investment informed for solution.
for the State Committee for Co-operation and Investment
Minister - Chairman
DAU NGOC XUAN (Signed)