Circular No. 76/2003/TT-BTC dated August 04, 2003 of the Ministry of Finance providing guidelines on insurance in investment and construction

CIRCULAR

PROVIDING GUIDELINES ON INSURANCE IN INVESTMENT AND CONSTRUCTION

Pursuant to the Law on Insurance Business dated 9 December 2000;

Pursuant to Decree 42/2001/ND-CP of the Government dated 1 August 2001 providing guidelines for implementation of a number of articles of the Law on Insurance Business;

Pursuant to Decree 52/1999/ND-CP of the Government dated 8 July 1999 issuing Regulations on Management of Investment and Construction; Decree 07/2003/ND-CP of the Government dated 30 January 2003 on amendment of and addition to a number of articles of the Regulations on Management of Investment and Construction issued with Decree 52/1999/ND-CP dated 8 July 1999 and Decree 12/2000/ND-CP of the Government dated 5 May 2000;

The Ministry of Finance hereby provides the following guidelines on insurance in investment and construction:

I. GENERAL PROVISIONS

1. When carrying out investment and construction under investment projects, relevant organizations and individuals (including foreign organizations and individuals engaged in investment and construction consultancy and in construction and installation of works in Vietnam) shall purchase insurance in accordance with this Circular to cover damage arising from unpredictable and unforeseeable risks or faults, omissions or negligence of organizations or individuals during the course of investment and construction.

Insurance in investment and construction for foreign direct investment projects shall be procured in accordance with the provisions of the laws on foreign investment in Vietnam.

2. Organizations and individuals must purchase insurance in investment and construction from an insurance enterprise operating in Vietnam.

3. Regulations, terms and conditions and scales of premiums for insurance in investment and construction shall apply in accordance with the applicable regulations of the Ministry of Finance.

II. SPECIFIC PROVISIONS

1. Products of insurance in investment and construction include:

1.1 Professional insurance for investment and construction consultancy;

1.2 Insurance for construction works;

1.3 Insurance for materials, equipment, premises used in construction;

1.4 Insurance for employee accidents;

1.5 Insurance for third party civil liability.

2. Applicability of compulsory insurance:

2.1 Insurance for construction works shall be procured in respect of investment projects funded by capital from the State Budget, credit capital guaranteed by the State, State owned credit capital for investment and development, and capital for investment and development of State owned enterprises.

In the case of investment projects funded from other capital sources, the State encourages the purchase of insurance for construction works.

2.2 Professional liability insurance for investment and construction consultancy; insurance for materials, equipment, premises used in construction; insurance for employee accidents; insurance for third party civil liability shall be compulsory insurance for organizations andindividuals engaged in investment and construction consultancy and in construction and installation of works irrespective of investment capital sources.

3. Purchasers of insurance include: investors (or project management boards), investment and construction consultancy organizations (or individuals) and construction enterprises.

3.1 In the case of professional insurance for investment and construction consultancy, the purchaser of insurance shall beinvestment and construction consultancy organizations (or individuals).

3.2 In the case of insurance for construction works, the purchaser of insurance shall be investors (or project management boards). Where insurance costs have been included in the successful bid price, the contractor shall purchase insurance.

3.3 In the case of insurance for materials, equipment, premises used in construction; employee accidents; or third party civil liability, the purchaser of insurance shall be construction enterprises.

4. Accounting of insurance costs:

4.1 In the case of professional insurance for investment and construction consultancy, insurance costs shall be included in the cost of the consultancy product.

4.2 In the case of insurance for construction works, insurance costs shall constitute a part of the investment capital of the project and shall be included in the approved total estimated budget (estimated budget) of the works. Insurance costs shall be calculated as a percentage of the value of the works.

4.3 In the case of insurance for materials, equipment, premises used in construction; employee accidents; or third party civil liability, insurance costs shall be included in production and business expenses of a construction enterprise.

5. Upon occurrence of an incident covered by insurance, the insurance company must compensate the purchaser of insurance strictly in accordance with the terms and conditions of the insurance policy.

III. IMPLEMENTING PROVISIONS

This Circular shall be of full force and effect after fifteen (15) days from the date of publication in the Official Gazette and shall replace Circular 137/1999/TT-BTC of the Ministry of Finance dated 19 November 1999 providing guidelines on construction work insurance.

If any problems arise during the course of implementation, they should be reported promptly to the Ministry of Finance for consideration and resolution.