VietnameseDecree No. 87-CP dated November 23, 1993 of the Government on investments in the form of build-operate-transfer contracts(BOT)
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Decree No. 87-CP dated November 23, 1993 of the Government on investments in the form of build-operate-transfer contracts(BOT)
| Issuing body: | Government | Effective date: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Official number: | 87-CP | Signer: | Vo Van Kiet |
| Type: | Decree | Expiry date: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Issuing date: | 23/11/1993 | Effect status: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Fields: | Investment |
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THE GOVERNMENT ------- | SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness ---------- |
No. 87-CP | Hanoi,November 22, 1993. |
DECREE
ON INVESTMENTS IN THE FORM OF BUILD-OPERATE-TRANSFER CONTRACTS
THE GOVERNMENT
Pursuant to the Law on the Organization of the Government dated 30 September, 1992.
Pursuant to the Law on Foreign Investment in Vietnam dated 29 December, 1987, the Laws on Amendment to and Addition to a Number of Articles to the Law on Foreign Investment dated 30 June, 1990 and 23 December, 1992 In order to encourage investment in construction and development of infrastructures in Vietnam
Following recommendations from the Minister - Chairman of the State Committee for Cooperation and Investment
DECREES:
Article 1.
To issue with this Decree the Regulations on Investments in the Form of Build - Operate - Transfer Contracts (abbreviated as BOT).
Article 2.
All ministers, heads of ministerial equivalent bodies and. bodies of the Government, and Chairmen of People's Committee of provinces and cities shall be responsible for the implementation of this Decree.
Article 3.
This Decree shall be of full force and effect as of the Date of issue.
FOR THE GOVERNMENT PRIME MINISTER Vo Van Kiet |
REGULATIONS
ON INVESTMENT IN THE FORM OF BUILD-OPERATE-TRANSFER CONTRACTS
Chapter I
GENERAL PROVISIONS
Article 1.
In these Regulations, the following shall have the meanings ascribed to them thereunder:
1. "Build - Operate - Transfer project" ( abbreviated as BOT) means any project approved by the Government to be implementation in accordance with these Regulations for the purpose of constructing (including expanding, upgrading, and modernizing) and commercially operating infrastructure projects and other projects which are permitted by the Government to be carried out on the basis of a BOT contract in a certain duration and at the end of the duration, the project shall be transferred, without compensation, to the Vietnamese Government.
2. "BOT company" means any company with foreign owned capital which is established in accordance with the Vietnamese legislation for the purpose of carrying out a BOT project.
3. "State Body which is authorized to entered into a contract with the BOT company" means any administrative State body nominated by the Government to be a party of the contract.
4. "BOT contract" means any contract which is entered into between a BOT company and a State body with the power to carry out the BOT project.
5. "Ancillary contract" means any contract entered into between the BOT company and ancillary contractors for matters relating to the implementation of the BOT project.
6. "Ancillary contractors" mean any foreign or Vietnamese constructors, suppliers, users, financiers, insurers, consultants or investors... who enter into ancillary contracts with the BOT company for the purpose of participating in the BOT projects.
7. "Separate legal documents" mean any legal documents issued by an authored State body to regulate specific matters of BOT projects.
Article 2.
1. The Government of Vietnam encourages all foreign organizations and individuals to invest capital and technology in the form of BOT contract. The Government shall protect the right of ownership of invested capital and ensure other legal rights of foreign organizations and individuals. It shall create favorable conditions and simple procedures for foreign organizations and individuals to invest into BOT projects in Vietnam.
2. The Government has established a regime of preferential treatment for BOT companies and foreign ancillary contractors in accordance with the provisions of Chapter II of these Regulations.
Chapter II
PREFERENTIAL TREATMENT AND INVESTMENT GUARANTEE
Article 3.
1. BOT company shall be subject to the following taxes and tax rates:
+ Profits tax at the rate of 10% on all profits. The BOT company shall be exempted from payment of profits tax for a period of 4 years as from the first profit making year and a 60% tax reduction for a further period of 4 successive years.
+ With holding tax at the rate of 5% on all profits transferred abroad.
+ Turnover tax at the most preferential rate in the tariff and/or to possible reduction of or exemption from turnover tax depending on the Prime Minister's decision in each particular contract.
2. Foreign ancillary contractors participating in a BOT project shall be subject to taxes which are applicable to foreign contractors and/ or to reduction of or exemption from taxes depending in the Prime Minister's decision in each particular contract.
3. The BOT company and foreign ancillary contractors carrying out the BOT project shall be exempted from payment of import duty in respect of equipment, machinery's, accessories, manufacturing and operational equipment (including transportation vehicles), and materials imported into Vietnam for the purpose of constructing and operating the project. If these commodities are assigned or sold in Vietnam, it must be permitted by the Ministry of Trade and import duty, turnover tax and other taxes as provided by Vietnamese laws, must be paid.
4. Where the BOT company or ancillary contractors receive a profit from an assignment of contract, it shall be subject to tax at a rate of 25% of that profit.
The assignment of the contract must be accepted by the State Committee for Cooperation and Investment.
Article 4.
The BOT company shall be permitted to open bank accounts at banks in foreign countries in cases where the lending party requests so and the State Bank of Vietnam so accepted, in order for the BOT company to borrow capital, repay and discharge the loan, Other provisions stipulated in article 80 of Decree 18-CP dated 16 April, 1993 of the Government, which regulate in details the implementation of the Law on Foreign Investment, shall apply to the BOT company.
Article 5.
The Government shall ensure that the revenue received by the BOT company during its period of operation be converted from Vietnamese currency into foreign currencies, in accordance with the contract. The amount converted must fully satisfy the repayment requirements for loans (including interests) in relation to loan capital, all expenditure requiring foreign currency, and the shared profits of foreign investors which are transferred abroad. At the proposal of the BOT company and on the basis of recommendations from the State Bank and the Ministry of Trade, the State Committee for Cooperation and Investment shall make a decision to permit the BOT company to use its other lawful income in Vietnamese currency for settlement by way of products of value in the market, purchase of export goods and payment of other expenses in foreign currency if such payment required by Vietnamese regulations.
Article 6.
1. When required, the BOT company shall be permitted to mortgage assets of the company provided that the authorized State body, who is party to the BOT contract, approves.The assets which can be mortgage or use as securities include:
a/ Factories, buildings, equipment, architecture's, and otherreal estate properties.
b/ Other assets which the BOT company has ownership to.
c/ The right to use the land in accordance with Vietnamese laws.
d/ Other rights in accordance with the contract which has economical value.
2. The mortgage of those assets and rights of the BOT company must be used for purposes which continue on the performance of the BOT project in accordance with the provisions of the BOT contract.
Article 7.
The Government shall ensure, for the BOT company, the rights to use land, roads, and other supporting public facilities in order for the BOT company to carry out the project on the basis of the detailed plan stated in the BOT contract. The right to use land, which is necessary for the implementation of the project, shall be exempted from payment of rent.
Article 8.
1. A Vietnamese enterprises, which enters into an ancillary contract with the BOT company for participation in the BOT project must be accepted by a State body which has the authority to the BOT contract.
2. When necessary, the Government may nominate a Vietnamese bank or financial institution to act as guarantor for the performance of financial obligations by Vietnamese enterprises stated in the contract.
Article 9.
The proposed charges or fees for the use of the BOT project must be stipulated in the BOT project. Where an increase or reduction in fees or charges is foreshadowed and provided for in one of the agreed terms of the BOT contract, the BOT company shall be required to notify the
State Committee for Cooperation and Investment of the increase or reduction no later than 30 days prior to its implementation. In the event that there is a need for and increase in fees or charges, not foreshadowed and provided for in one of the agreed terms of the BOT contract, the BOT company shall prepare a proposal and submit it to the State Committee for Cooperation and Investment for approval.
Article 10.
Provisions on entry, exit, residency, travel, labour, wages, accounting standards, transfer of technology, any other provisions of the current regulations on foreign investment shall apply to the BOT project.
Chapter III
METHODS FOR CARRYING OUT BOT PROJECTS
Article 11.
1. Pursuant to the objective of socio-economic development, the State Committee for Cooperation and Investment shall coordinate with the State Planning Committee, relevant Ministries and government agencies, and People's Committee of provinces and cities under the central authority in establishing plans and a list of BOT projects for foreign investment attraction. The State Committee for Cooperation and Investment shall coordinate with the State Planning Committee, relevant Ministries and government agencies, and People's Committees of provinces and cities under the central authority, where BOT projects are being carried out, to manage and direct the implementation of the BOT projects. A proposed BOT projects of a foreign investor, which is not in the list, may be carried out, provided that the approval of the Government is obtained.
2. Depending on the nature and scale of the project, the Government shall decide from one of the following, which method is suitable for the implementation of the BOT project: a tender, a selection of contractor, or direct negotiation with the investors of the project.
3. The State Committee for Cooperation and Investment, after the consultation with relevant State administrative bodies, shall set provisions on the formalities for the tender, selection, or direct negotiation with foreign investors for each particular BOT project.
Article 12.
The Committee which appraises the BOT project shall be a State Committee which appraises projects, established in accordance with the provisions of Decree No.366-HDBT dated 7 November, 1991 of the Council of Ministers (presently the Government).
Article 13.
1. The duration of the BOT project shall be stated in the contract and stipulated in the investment license, pursuant to Article 15 of the Law on Foreign Investment in Vietnam.
2. The BOT company must ensure that the operation of the BOT projects is in accordance with the terms of the contracts, including terms relating to the transfer of technology for the usage and operation of the project up until the time when it is transferred to the Vietnamese Government.
3. At the end of the duration, the BOT company shall transfer to the Vietnamese Government, without compensation, the whole of the BOT project in its normal operational state.
Chapter IV
BOT CONTRACT, ANCILLARY CONTRACT, AND BOT INVESTMENT LICENSE.
Article 14.
1. The BOT contract shall be in writing and shall include the following main details:
+ All matters relating to the planning of the BOT project.
+ The procedures for submitting and checking the planning.
+ The commitment to accurately construct the project following the approved plan.
+ The right to use land, roads, and other supporting facilities which are necessary for the implementation of the project.
+ The rights and obligations of parties in relation to the operation of the project.
+ The provisions in relation to the collection of fees and other charges from the operation of the project.
+ The duty to maintain the normal operation of the project.
+ The operational duration of the project.
+ The consultation, examination and approval of the details of plans and equipment, supervision of the construction and acceptance,operation, maintenance and transfer of the project.
+ The share of risks between the BOT company and the Government or other bodies of the Government.
+ Measures to be taken where the BOT company ceases its operation prior to the expire of the duration of the operation.
+ Provisions on the assignment of contract.
2. To carry out the project, the BOT company may enter into the following contracts:
+ Contract for the right to use the land.
+ Contract for the construction.
+ Contract for the provision of appraisal and consultation services.
+ Contract for the supply of goods and provision of technical services.
+ Loan contract and other forms of finance.
+ Contract of mortgage.
+ Labour contract.
3. In respect of issues which are not regulated by the Laws of Vietnam, the parties may, when drawing up a contract, apply foreign laws, provided that the approval from the State Committee for Cooperation and Investment must be obtained.
Article 15.
1. Disputes relating to the performance of ancillary contract entered into by the BOT company and ancillary contractors shall first be resolved by way of negotiation and conciliation. Where the dispute remains unresolved by after negotiation, then an the basis of an agreement between the parties, the dispute shall be referred to an international arbitration body of Vietnam, an arbitration council agreed to be set up by the parties, an arbitration body of a third country or an international arbitration body.
2. Disputes between the State body which is authorized to enter into a BOT contract and the BOT company in respect of the performance of the contract shall be resolved through negotiation and conciliation.
Where the dispute is not resolved by way of negotiation and conciliation, the parties to the dispute shall refer it to an arbitration council agreed to be established by the parties, for resolution. The procedures carried out by the arbitrator shall be determined by both parties.
3. The parties of the dispute shall reach an agreement on the governing laws.
4. The decision of the arbitrator shall be dully implemented in accordance with Vietnamese laws.
Article 16.
1. On the basis of a decision of the Prime Minister of the Government approving the BOT contract, the State Committee for Cooperation and Investment shall issue a BOT investment license.
2. The investment license shall include the following details:
+ The main terms of the contract commitments of the Government and other relevant State bodies.
+ The duration of the project, and requirements relating to the state of the project and to its normal operation prior to its transfer to the Government of Vietnam.
+ Tax and financial obligations which the BOT project subject to.
+ The right to use land and other supporting facilities.
+ The fees and other charges to be collected by the BOT company during the period of operation of the project.
+ Conditions of the Government which ensure the conversion of the Vietnamese currency into foreign currency.
+ Conditions relating to the export and import of equipment, machinery's, and goods.
Chapter V
PROVISIONS ON IMPLEMENTATION
Article 17.
Investment project similar to the form of BOT shall be carried out on the basis of the principles stipulated in these Regulations.
Article 18.
The Minister Chairman of the State Committee for Cooperation and Investment, the Minister Chairman of the State Planning Committee, the Minister of Energy, of Heavy Industry, of Transportation, and Communication, of Construction, of Finance, of Trade, of Science, Technology and Environment, the GovernorGeneral of the State Bank, the Director General of the General Department for Land Management and other bodies of the Government, within their competence and powers, shall be responsible for the promulgation of provisions on the guidance of the implementation of these Regulations.
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