Directive 13/CT-TTg increasing the use of domestically produced supplies and commodities

THE PRIME MINISTER

Directive No. 13/CT-TTg dated April 04, 2017 of the Prime Minister onincreasing the use of domestically produced supplies and commodities during the bidding process for state-funded capital investment projects and recurring purchase

Over 5 years of implementing the Directive No. 494/CT-TTg dated April 20, 2010 of the Prime Minister, the use of domestically produced supplies and commodities during the bidding process for state-funded capital investment projects has recorded positive results in promoting the production and business of enterprises, developing domestic production, thus contributing to reducing the trade deficit and increasing the competitiveness of Vietnamese commodities. However, there remained difficulties and problems arising from the implementation of the Directive No. 494 / CT-TTg by ministries, departments and local authorities, such as: (1) There are no technical safeguards to protect the domestically produced commodities, especially for machinery products; (2) The propaganda campaign for implementation of the regulatory policy on enhancing the use of domestically produced supplies and commodities during the bidding procedure is still limited; (3) The perception as well as the capacity and experience of the investor and the bid solicitor in respect of implementation of this policy are limited and insufficient. The competitiveness of domestic producers is poor in terms of technical qualifications of workforce, price and quality of goods and services. (4) The investor, the bid solicitor do not have sufficient information on domestically produced supplies and commodities as these items have not been updated regularly; (5) there is still a limitation on domestically produced goods in the invitation for bid or request for proposal.

In order to promote the production and consumption of domestically produced supplies and commodities, encourage the "Vietnamese people use Vietnamese products” campaign of the Politburo, help businesses, domestically produced goods and services enhance their competitiveness against integration pressure when implementing international commitments, the Prime Minister gives the following directive opinions:

I. THE BIDDING PROCESS

The Ministers, heads of ministerial-level agencies, heads of governmental agencies, Chairman of People’s Committees of provinces, chairpersons of Boards of Directors and chairpersons of Members’ Councils of state economic groups and corporations shall, according to their respective functions, tasks and scope of management, review and direct the performance of the following contents:

1.The slicing of bid packages

The slicing of bid packages under state-funded projects, schemes, programs (hereinafter referred to as projects) or cost estimates for state-funded recurring purchase must comply with the principle of slicing of bid packages according to the law on bidding, correspond to the capacity of domestic contractors and ensure maximum competitive conditions for domestic enterprises to win contracts and create jobs for domestic laborers.

The slicing of a procurement project or plan into different bid packages in contravention of the law on bidding for the purpose of restricting domestic contractors to bid is strictly prohibited. In case of detecting the slicing of bid packages in contravention of the law on bidding, organizations and individuals violating such provisions (investor, bid solicitor, consultant for selection of contractors, unit or organization for assessment of contractors selecting plan) is prohibited from participating in the bidding according to Clause 3 Article 122 of Decree No. 63/2014/ND-CP; stricter penalties for serious violations are recommended.

2.Implementation of incentives in the bidding process

When making the invitation for bid or request for proposal, it is required to comply with stipulated subjects matters of incentives (i.e. criteria, calculation of incentive value and evident documents) according to the law on bidding. During assessing the invitation for bid or request for proposal, the professionals should closely follow the criteria prescribed in the invitation for bid or request for proposal on such incentive subject matters. It is strictly prohibited to intentionally exclude contractors from access to these incentives.

When making the invitation for bid or request for proposal, the incentive subject matters must be specified to ensure the participation of contractors, domestic enterprises having products included in the list of innovative and creative products or list of national product in effect since 2012 in the Program of development of national products by 2020 according to the Prime Minister’s Decision No. 439/QD-TTg dated April 16, 2012.

3.International bidding

a) Conduct an international bidding

International bidding may be held only when domestic producers are unable to manufacture or able to do so but fail to conform to the specified requirements of quality, quantity and price of commodities, supplies and equipment or the request of donors on procurement of these items for contracts as part of projects financed by official development assistance and concessional loans from donors (ODA). If a product is a common good, has already been imported and offered for sale in Vietnam, an international bidding is not allowed to take place.

International bidding may be organized only when procurements of providing consulting service, non-consulting service, construction and installation, mixture provision which domestic contractors are not able to satisfy requirements of procurement performance or the request of donors on bidding projects financed by ODA.

If the procurement is under the international bidding procedure, the invitation for bid shall specify: the foreign contractor must have a partnership with a domestic contractor or sub-contractor, unless the domestic contractor does not have full capability to participate in any part of procurement; the contractor may include in the request for proposal the tasks to be performed by Vietnamese sub-contractors (without specifying their names and no agreement or contract with the subcontractor is required); as the same time submit a commitment to hire Vietnamese subcontractors to do such tasks if awarded the contract along with the dossier.

The EPC form shall not be applied in the case where it is impossible to divide the package into smaller packages including engineering (E), procurement of goods (P), and construction (C) or including engineering and procurement of goods (EP) and construction (C) so as to enable domestic enterprises to participate in bidding and carry out the package.

b) Currency used in bidding

For domestic costs involving implementation of international bidding, the invitation for bid or request for proposal must stipulate that the contractor must have a bid quotation in Vietnam dong.

c) Labor

Investors and bid solicitors arc prohibited from compiling invitation for bid or request for proposal that allow employment of foreign workers when domestic workers are capable of meeting the requirements of bid package implementation, especially manual jobs. In the implementation of the contract, investors and bid solicitors allowing employment of foreign workers when domestic workers are capable of meeting the requirement shall be prohibited from participating in the bidding under the regulations specified in Clause 4 Article 122 of the Decree No. 63/2014/ND-CP; stricter penalties for serious violations are recommended.

4.Domestic bidding

Requirements on the use of domestically produced supplies and commodities

It is prohibited to make the invitation for bid or request for proposal that request the contractor to offer imported goods when domestic produced or assembled goods are capable of meeting the requirements of quality, quantity and price.

The list of domestically produced machinery, equipment, raw materials, drugs and medical supplies promulgated by competent authority must specify the name of items, specification symbol, and technical description and classify into intended users for such materials and supplies.

b) Brand and origin in the invitation for bid or request for proposal

It is prohibited to specify origin, brand and catalog of specific goods for reference or illustration in the invitation for bid or request for proposal when it is possible to give the detailed description of their technical features, technology design and technology standard. In case where it is impossible to describe the good specifications according to its technical features, technology design, technology standards, trademark or catalog of a specific good may be defined for reference or illustration for such technical specifications as long as enclose with “or equivalent” right after the trademark or catalog and clearly define the “equivalent” meaning in terms of technical features, performance, technology standards and other conditions (if any) to create favorable conditions for the contractor when making the bidding dossiers.

c) Imported medicines

The invitation for bid or request for proposal must specify that contractors must not offer imported medicines that fall into the same categories with domestically manufactured medicines satisfying treatment published by the Ministry of Health.

5.Responsibilities of investor, bid solicitor and bid consultancy unit

The invitation for bid or request for proposal shall be made in accordance with the list of domestically produced machinery, equipment, raw materials, drugs and medical supplies posted on the website of the relevant Ministers to adhere to Point a Section 4 of this document. The centralized procurement must comply with Decision No. 08/2016/QD-TTg dated February, 26, 2016 of the Prime Minister prescribing the centralized procurement of state property.

Give feedback to competent authorities for consideration and handling if domestic machinery, equipment and raw materials fail to ensure the quality as already certified and announced in the implementation of the contract.

6.Implementation of international commitment

In case of procurements under the scope of free trade agreements (FTA) with state procurement content, they shall follow the roadmap on which Vietnam has given its commitment under those agreements.

II. COMMUNICATION

1.Domestic press and media agencies shall intensify propaganda campaign and raise awareness of investors and bid solicitors on the implementation in a strict manner of the use of domestic machinery, equipment and raw materials in the bidding; enterprises shall be aware of their roles and responsibilities in improving the quality and competitiveness of products, commodities and services; implement the commitments on consumer interest protection and build national brands for Vietnamese products and commodities.

Vietnam Television and local television stations must build a separate program to publicly broadcast regulatory policies and exemplary persons showing strict compliance with such policies. Concurrently, they should also devote more time to promote the domestically produced machinery, equipment and raw materials, especially innovative and creative ones or technological products invented after the scientific research of local individuals, organizations and enterprises.

2.The list of domestically produced machinery, equipment, raw materials, drugs and medical supplies must be updated on a regular manner on the website of the competent authority issuing the list such as the Ministry of Industry and Trade, the Ministry of Health, the Ministry of Agriculture and Rural Development, …  The aforesaid complete list must be posted on the website of the Government, website of the Ministry of Planning and Investment, Electronic Government procurement system (http://muasamcong.mpi.gov.vn) and website of the Vietnam Chamber of Commerce and Industry.

3.Domestic enterprises should proactively advertise and communicate their products through mass media and any other means of communication to target customers.

4.In case, after inspection, the competent authority has found that the domestically produced machinery, equipment, raw materials, drugs and medical supplies fail to conform to the quality standards specified in the quality certificate, the names and producers of such products must be posted on the Vietnam Public Procurement Review Journal, specialized journal, the website of the Government, website of the Ministry of Planning and Investment, Electronic Government procurement system (http://muasamcong.mpi.gov.vn) and website of the Vietnam Chamber of Commerce and Industry.

5.In case organization and individuals violate the brand and origin regulations in the invitation for bid, the competent person shall issue the decision on banning participation in bidding activities in respect of projects, estimates under his/her management; in case of serious violation, (s)he may suggest the Ministers, Heads of ministerial-level agencies, Chairpersons of the People’s Committee at central-affiliated cities and provinces to issue the decision on banning participation in bidding activities within the management of Ministries, departments and local authorities or suggest the Minister of Ministry of Planning and Investment to issue the decision on banning participation in bidding activities across Vietnam. The Decision concerning the said violations must be sent to the Ministry of Planning and Investment responsible for monitoring, synthesizing and publishing them on the Vietnam Public Procurement Review Journal and the Electronic Government procurement system (http://muasamcong.mpi.gov.vn).

III. IMPROVEMENT OF QUALITY OF DOMESTICALLY PRODUCED SUPPLIES AND COMMODITIES

Domestic enterprises and units must increase intensive investment, innovate technology, conduct researches to increase adherence to the market to constantly improve the quality of goods, diversify product designs, develop the production capacity to provide machinery and equipment in conformity with quality, technical standards and with the competitive price to meet requirements of the market and implementation of projects and contracts.

IV. IMPLEMENTATION

1.The Ministry of Industry and Trade, the Ministry of Health, the Ministry of Agriculture and Rural Development and relevant Ministries shall continue to issue and regularly update domestically produced goods to the list of domestically produced machinery, equipment, raw materials, drugs and medical supplies and enhances liaison and cooperation with domestic manufacturers and consumers of these products.

2.The Ministry of Industry and Trade shall play a central role and coordinate with relevant Ministries and sector in researching and updating market information to promptly issue appropriate technical and economic norms of machinery products over periods of time.

3.The Ministry of Finance shall play a central role and coordinate with relevant Ministries and sector in researching and improving incentive policies for domestic producers of machinery and equipment, especially the policies related to taxes and fees for the purpose of promoting mechanical engineering development to raise the rate of domestic content in investment projects.

4.The Ministry of Industry and Trade shall play a central role and coordinate with relevant Ministries and sector in researching and updating the market information to build technical safeguards applicable to control the importation of machinery, equipment and raw materials that can be domestically manufactured.

5.The Ministry of Education and Training shall play a central role, cooperate with the Ministry of Labour, War Invalids and Social Affairs and relevant Ministries in promulgating priority policies on high-quality human resources for social needs, help Vietnam gradually approach and master the modern technologies of the world.

6.The Ministry of Information and Communications shall strengthen and enhance communication activities to raise awareness and consensus among businesses and consumers on preference for domestic products. Broadly and intensively communicate the production capacity and quality of products of domestic enterprises to people of different classes.

7.The Ministry of Health shall take charge of and update the list of domestically produced medicines, medical equipment and supplies which meet the requirements of treatment, medicine, vaccines, supplies, equipment and capacity of supplying issued together with Circular No. 10/2016/TT-BYT dated May 5, 2016 and intensify the application of centralized procurement of medicines on the list in order to encourage lower prices and raise the quality requirements, thereby raise the capacity of supplying domestically produced medicines, vaccines, medical supplies and equipment.

8.The Ministry of Planning and Investment shall take charge and cooperate with other ministries and departments in monitoring, urging, examining and inspecting investors and bid solicitors in properly implementing this Directive; annually report to the Prime Minister on results of the implementation; if detecting violations, they shall make timely recommendations and request the Prime Minister to strictly handle according to effective regulations. Continue to regularly update, synthesize from relevant ministries and departments to issue the List of domestically produced machinery, equipment, replacement parts, special-use transportation means, raw materials, materials, components and semi-finished products.

9.Ministries, departments and local authorities shall increase the use of domestically produced supplies and commodities during the bidding process for state-funded capital investment projects and recurring purchase, work out plans on investment and development of domestic goods in replacement of imported goods; develop demand for imports in the following year for implemented or to-be-implemented projects, review with the list of domestically produced machinery, equipment, raw materials, medicines, vaccines, medical supplies and equipment, direct the reasonable import in order to not cause backlog or use for other purposes. Concurrently, provide the most advantage for industries, new materials and automation to develop (with special attention paid to high technology industries) in order to innovate production methods and create momentum for  domestic manufacturing industry to develop. Specifically, it is necessary to seriously and thoroughly study and comply with this Directive in the process of negotiating projects funded by Official Development Assistance, concessional loans from investors in order to maximize the use of domestically produced materials and goods in the bidding.

10.Industry associations: Regularly report to competent persons on the status of the investors, the bid solicitor making the request or the orientation of the imported goods when there are domestically produced or assembled replacements that meet the quality requirements and price; support the promotion and inform the domestically produced goods to domestic and international markets.

11.Ministries, departments, local authorities, enterprises, trade and professional associations are responsible for studying the proposal of mechanisms and specific policies in order to support domestic manufacturing businesses to study and produce goods that cannot be domestically manufactured and are currently imported to reduce trade deficit, expand domestic production and improve national competitiveness.

12.Press and media agencies; Vietnam Television, local television; Vietnam Public Procurement Review Journal and specialized journal shall build specific plans which serve as a basis for the implementation of the communication tasks specified in section II of this Directive./.

The Prime Minister

Nguyen Xuan Phuc