Joint Circular No. 210/2013/TTLT-BTC-BXD-BTTTT dated December 30, 2013 of the Ministry of Finance, the Ministry of Construction and the Ministry of Information and Communications guiding the mechanism and principle of controlling and method of determining rent rates of common technical infrastructure facilities

JOINT CIRCULAR

Guiding the mechanism and principle of controlling and method of determining rent rates of common technical infrastructure facilities[1]

Pursuant to the Government’s Decree No. 72/2012/ND-CP of September 24, 2012, on the management and common use of technical infrastructure facilities;

Pursuant to the Government’s Decree No. 25/2011/ND-CP of April 6, 2011, detailing and guiding a number of articles of the Law on Telecommunications;

Pursuant to the Government’s Decree No. 177/2013/ND-CP of November 14, 2013, detailing and guiding a number of articles of the Law on Price;

Pursuant to the Government’s Decree No. 118/2008/ND-CP of November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry Finance;

Pursuant to the Government’s Decree No. 62/2013/ND-CP of June 25, 2013, defining the functions, tasks, powers and organizational structure of the Ministry of Construction;

Pursuant to the Government’s Decree No. 132/2013/ND-CP of October 16, 2013, defining the functions, tasks, powers and organizational structure of the Ministry of Information and Communications;

The Minister of Finance, the Minister of Construction and the Minister of Information and Communications jointly promulgate the Joint Circular to guide the mechanism and principle of controlling and methods of determining rent rates of common technical infrastructure facilities.

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation and subjects of application

1. This Joint Circular guides the mechanism and principle of controlling and methods of determining rent rates of common technical infrastructure facilities in urban centers and public technical infrastructure facilities (below referred to as common technical infrastructure facilities); and provides the exemption from or reduction of rents of facilities used for national defense or security activities.

For common technical infrastructure facilities outside urban centers, organizations and individuals are encouraged to apply the mechanism and principle of controlling and method of determining rent rates prescribed in this Joint Circular like common technical infrastructure facilities in urban centers.

2. Subjects of application: Owners defined in Article 10 of the Government’s Decree No. 72/2012/ND-CP of September 24, 2012, on the management and common use of technical infrastructure facilities, and agencies, units, organizations and individuals involved in the investment in, management and signing of contracts for use of, common technical infrastructure facilities.

Article 2.Provisions on common technical infrastructure facilities

1. Common use of technical infrastructure facilities means the arrangement and installation by organizations and individuals of telecommunications, power or public lighting lines and cables (below collectively referred to as lines and cables); water supply or drainage and energy supply pipelines (below collectively referred to as pipelines) in common technical infrastructure facilities.

2. Common technical infrastructure facilities means those built for the arrangement and installation of lines, cables and pipelines, including: antenna masts; cable utility poles; cable culverts; technical ditches and tunnels; urban roads and road tunnels; railway tunnels; blind ditches; road and railway bridges.

3. The use of common technical infrastructure facilities must comply with the Government’s Decree No. 25/2011/ND-CP of April 6, 2011, detailing and guiding a number of articles of the Law on Telecommunications, and Decree No. 72/2012/ND-CP of September 24, 2012, on the management and common use of technical infrastructure facilities.

Article 3.Principle of and bases for determination of rent rates of common-use technical infrastructure facilities

1. Principle of determination of rent rates

a/ Rent rates of common technical infrastructure facilities must accurately and fully cover construction investment costs; management, operation and maintenance and repair expenses; and other expenses prescribed by law, and suit service quality and conform with regulations, policies, econo-technical norms and expense limits promulgated by competent agencies.

b/ In case organizations or individuals invest in the construction of common technical infrastructure facilities for lease, rent rates shall be determined on the basis of prescribed costs and expenses and reasonable profits.

2. Bases for determination of rent rates

a/ Production costs and service provision expenses suitable to service quality.

b/ Supply-demand relationship and market prices.

c/ Price fluctuations and changes in relevant mechanisms and policies of the State; roadmap of adjustment of rent rates approved by competent authorities (if any).

d/ Local socio-economic development conditions which affect rent rates.

Chapter II

SPECIFIC CONDITIONS

Section 1

MECHANISM AND PRINCIPLE OF CONTROLLING RENT RATES OF COMMON TECHNICAL INFRASTRUCTURE FACILITIES

Article 4.Mechanism and principle of controlling rent rates of common technical infrastructure facilities

1. The State manages prices under the state-regulated market mechanism; respects the right to self-pricing and price competition of investors in the construction of common technical infrastructure facilities in accordance with law.

2. The State controls rent rates of common technical infrastructure facilities in order to protect the lawful rights and interests of lessors and lessees and public interests in accordance with law and this Joint Circular.

3. The control of rent rates of common technical infrastructure facilities (below referred to as rent rates) shall be conducted by the modes and based on the method of determination of rent rates prescribed in this Joint Circular.

Article 5.Modes of rent rate control

1. Announcement of rent rate registration.

2. Consultation on rent rates.

3. Display of rent rates.

4. Examination of components of rent rates.

Article 6.Announcement of registration of rent rates of common technical infrastructure facilities

1. Organizations and individuals shall base themselves on the provisions of Article 3 and the method of determination of rent rates prescribed in this Joint Circular to set rent rates of technical infrastructure facilities in which they have invested (with funds outside the state budget) and reach agreement with prospective users; and at the same time announce rent rates for registration with competent agencies specified in Clause 4, Article 14 this Joint Circular. In case the parties cannot reach agreement on rent rates, competent agencies shall organize consultations on rent rates under Article 7 of this Joint Circular.

2. An announcement of rent rates contains the following:

a/ The rent rates calculated under Article 3 by the method of determination of rent rates prescribed in this Joint Circular based on quality and main economic and technical specifications;

b/ Information on components of the rent rates compared with rent rates of facilities of the same or similar type in the locality (if any);

c/ Conditions to be applied as grounds for reaching agreement with customers on a specific rent rate, such as cases eligible for incentives or discount for customers that rent a large number of facilities or pay the rent in advance; and specific discount level;

d/ Duration of application of the rent rates;

dd/ Form of rent rate announcement for registration provided in the Appendix to this Joint Circular.

3. The registering organization or individual shall send directly or by post or email (with its/his/her digital signature) one (1) written announcement of rent rates for registration to the competent agency specified in Clause 4, Article 14 of this Joint Circular.

4. In case of a change in the components of the rent rate and the State’s regulations or policies affecting the rent rate or when the organization or individual adjusts the rent rate, it/he/she shall make an announcement for re-registration of the adjusted rent rate under Clause 2 of this Clause.

Article 7.Consultation on rent rates of common-use technical infrastructure facilities

1. Consultation is conducted only on rent rates of common technical infrastructure facilities falling under the pricing competence of organizations and individuals.

2. Contents and procedure of consultation on rent rates comply with the current law on price management.

Article 8.Display of rent rates of common technical infrastructure facilities

1. Organizations and individuals shall display rent rates of common technical infrastructure facilities in Vietnam dong at transaction places for easy observation and identification by customers and competent state agencies; the display of rent rates must be clear and cause no confusion to customers.

2. For common technical infrastructure facilities subject to rent rate determination by the State, the display of their rent rates must be decided by competent state agencies based on their quality and main econo-technical specifications. The displayed rent rates must be strictly observed.

In addition to the form of public display at transaction places, organizations and individuals may choose one or several additional forms like press conference, publication in the mass media or other appropriate forms.

3. For common technical infrastructure facilities subject to rent rate determination by organizations or individuals, such organizations or individuals shall display rent rates already announced for registration with competent agencies based on their quality and main econo-technical specifications and conditions for application of rent rates, and may not lease them at rent rates higher than the displayed ones.

Article 9.Examination of components of rent rates of common-use technical infrastructure facilities

1. The examination of components of rent rates shall be conducted in the following cases:

a/ Competent state agencies determine rent rates of common technical infrastructure facilities constructed with funds from the state budget;

b/ Rent rates abnormally fluctuate and the Prime Minister, or ministers, heads of ministerial-level agencies, chairpersons of provincial-level People’s Committees so request.

2. In case the Prime Minister requests examination of components of rent rates of common technical infrastructure facilities, ministers or heads of ministerial-level agencies shall organize such examination.

3. Provincial-level People’s Committees shall organize the examination of components of rent rates of common technical infrastructure facilities under their pricing competence.

4. Contents and procedure of examination of components of rent rates must comply with the current law on price management.

Article 10.Exemption from or reduction of rents of common technical infrastructure facilities used for national defense or security activities

1. National defense or security activities are eligible for exemption from or reduction of rents of common technical infrastructure facilities in accordance with law.

2. Cases of rent exemption or reduction and specific rent exemption or reduction plans for each lessee comply with regulations of competent authorities.

3. The financial mechanism for cases of rent exemption or reduction for national defense or security activities complies with the current law on production and supply of public-utility products or provision of public-utility services.

Section 2

METHODS OF DETERMINATION OF RENT RATES OF COMMON TECHNICAL INFRASTRUCTURE FACILITIES

Article 11.Methods of determination of rent rates

1. Methods of determination of rent rates of common technical infrastructure facilities specified in this Joint Circular include expense-based method and comparison method.

2. Based on particular features of common technical infrastructure facilities and market reality, organizations and individuals may choose a method of determination of rent rates appropriate to the facilities subject to rent rate determination.

Article 12.Expense-based method

1. Components of the rent rate of a common technical infrastructure facility:

a/ Facility construction investment expenses;

b/ Operation management expenses (if any);

c/ Maintenance and repair expenses;

d/ Other expenses prescribed by law (if any);

dd/ Expected profit.

2. Formula for determination of rent rate

In which: G_tmeans annual rent rate (VND/rent rate unit/year). Monthly rent rate equals annual rent rate divided by 12 months.

a/ CP_dtmeans expenses for investment in the construction of the common technical infrastructure facility (VND/year) which are determined to be equal (=) to total construction investment expense of the facility divided (:) by the number of years of depreciation of the facility.

- Total construction investment expenses of the facility means all reasonable and lawful expenses for the construction and commissioning of the facility under current regulations on management of work construction investment expenses and with the investment capital settlement approved by the competent authority by the time of handover of the facility for commissioning. In case the facility needs to be commissioned but the competent authority has not yet approved the investment capital settlement, the total construction investment expenses may be temporarily calculated according to the investor’s settlement report. After the investment capital is settled by the competent authority, the construction investment expenses must be adjusted according to the settled data.

- The number of years of depreciation shall be calculated according to the Ministry of Finance’s regulations on management, use and depreciation of fixed assets.

For common technical infrastructure facilities which are subject only to wear-out monitoring in accounting books, CP_dtmeans expense for making and installation of items related to the common technical infrastructure facility (VND/year).

b/ CP_vhmeans annual operation management expenses (VND/year), including:

- Salaries, allowances, social and health insurance premiums and other deductions from the salary fund for the apparatus of the facility operation management unit. Salaries are determined on the basis of payrolls of officials and employees and salary ranks and allowances and other deductions from the salary fund under current regulations of the State;

- Expenses for stationery, working office furniture, tools and perishable things of the operation management unit;

- Expenses for electricity and water for daily operation of the working apparatus of the operation management unit; and other expenses related to the operation management;

- Expense for depreciation of fixed assets of the operation management unit. The management and use of fixed asset depreciation comply with the regulations of the Ministry of Finance.

In case investors of common technical infrastructure facilities directly manage the operation of these facilities and establish no separate operation management apparatus, operation management expenses shall be determined according to reasonable expenses actually paid for the management of operation of such facilities.

c/ CP_btbdmeans annual maintenance and repair expenses (VND/year) of the facility, including all expenses for regular maintenance, periodical and extraordinary repair according to econo-technical norms and regulations on maintenance and repair to ensure normal and safe operation of the facility.

d/ CP_kmeans other reasonable expenses (if any) prescribed by law (VND/year) directly related to rent rates but not yet specified at Points a, b and c, Clause 2 of this Article.

dd/ LN_dkmeans the expected reasonable profit from the rent rate (VND/year) determined to be up to 10% of the total expenses specified at Points a thru d, Clause 2 of this Article.

e/ SL_gmeans the output for rent rate calculation determined based on the design capacity of the facility and actual use capacity and suitable to the market reality. The unit of calculation of the output for rent rate calculation is meter of line or cable; or pipeline; or pole; or length of the facility; or rented area of the facility or another unit of calculation suitable to the characteristics of each facility, such as line, cable or pipeline per unit of length of the facility, etc.

3. In case the expenses constituting the rent rate specified in Clause 2 of this Article are related to many other products or services, they shall be allocated to such products or services according to appropriate criteria.

4. Expenses already paid by the state budget; wear-out of assets recorded in accounting books; land use levy, land rent and tax incentives provided by law; and expenses already included in the costs or sale prices of other products or services of the enterprise, must not be accounted into the rent rate of the common technical infrastructure facility.

Article 13.Comparison method

1. Definition

Comparison method means a method of determination of rent rates through analysis and comparison of rent rates based on econo-technical characteristics of facilities of the same type or similar facilities with transactions on local markets (if any) or other localities in the country.

2. Facilities of the same type with facilities subject to rent rate calculation are identical in the following aspects:

a/ Econo-technical characteristics of facilities (such as component materials, main econo-technical specifications, functions, use purposes, use duration, mechano-physico-chemical properties and other related criteria);

b/ Specifications and quality of facilities;

c/ Locations of facilities.

3. Facilities similar to facilities subject to rent rate calculation share identical basic features, including:

a/ The same function and use purpose; similar econo-technical characteristics; and similar main econo-technical specifications;

b/  Equivalent specifications and quality;

c/ Similar locations.

4. The use of the comparison method must be based on factors with considerable effects on the value of facilities subject to rent rate determination, including:

a/ Currently applied rent rates associated with the quality of facilities;

b/ Rent conditions (duration, payment method and other related criteria);

c/ Basic features of facilities, such as characteristics of assets, main technical specifications and output expenses;

d/ Locations and quality of facilities and use duration;

dd/ Other related criteria.

Chapter III

ORGANIZATION OF IMPLEMENTATION AND IMPLEMENTATION PROVISIONS

Article 14.Responsibilities of agencies, organizations and individuals

1. The Ministry of Finance

a/ To coordinate with the Ministry of Construction, the Ministry of Information and Communications, related ministries and sectors and provincial-level People’s Committees in guiding, monitoring and inspecting the implementation of this Joint Circular and relevant legal documents.

b/ To assume the prime responsibility for organizing rent rate consultations in accordance with current laws.

2. The Ministry of Construction and the Ministry of Information and Communications

a/ Depending on its functions and tasks, to assume the prime responsibility for, and coordinate with the Ministry of Finance, related agencies and provincial-level People’s Committees in, guiding, monitoring and inspecting the implementation of this Joint Circular and relevant legal documents.

b/ To coordinate with the agency assuming the prime responsibility for organizing rent rate consultations in accordance with law.

3. Ministries and ministerial-level agencies shall, within the ambit of their tasks and powers, coordinate with one another in guiding, monitoring and inspecting the implementation of this Joint Circular and relevant legal documents.

4. Provincial-level People’s Committees and professional agencies of provincial-level People’s Committees

a/ Provincial-level People’s Committees shall assign specific tasks to their professional agencies to organize the implementation of this Joint Circular and relevant legal documents.

b/ Provincial-level Finance Departments shall assume the prime responsibility for receiving written announcements of rent rates for registration from investors of common technical infrastructure facilities in urban centers in their localities; assume the prime responsibility for, and coordinate with specialized management departments in, examining and checking the reasonability and legality of such announcements. Subsequently, they shall send one copy of each rent rate announcement to the Ministry of Finance (the Price Management Department), the Ministry of Construction (the Technical Infrastructure Department and the Construction Economics Department), and the Ministry of Information and Communications (the Telecommunications Department).

c/ Provincial-level Finance Departments, Information and Communications Departments and Construction Departments shall, within the ambit of their functions and tasks, assume the prime responsibility or coordinate with related agencies in, organizing rent rate consultations; and inspect the implementation of this Joint Circular’s provisions on rent rate management and relevant legal documents.

5. Organizations and individuals

a/ To observe this Joint Circular’s provisions on management of rent rates of common technical infrastructure facilities, regulations on price management and relevant legal documents.

b/ To fully and promptly provide documents and information related to rent rates when so requested in writing by state agencies; to take responsibility before law for the accuracy, reasonability and validity of these data and documents.

Article 15.Effect

1. This Joint Circular takes effect on March 1, 2014.

2. Any problems arising in the course of implementation should be promptly reported to the Ministry of Finance, the Ministry of Construction and the Ministry of Information and Communications for consideration and settlement.-

For the Minister of Information and Communications
Deputy Minister
LE NAM THANG

For the Minister of Construction
Deputy Minister
CAO LAI QUANG

For the Minister of Finance
Deputy Minister
TRAN VAN HIEU