Decree No. 52/1999/ND-CP of July 8, 1999, promulgating the regulation on investment and construction management

THE GOVERNMENT 
——-

SOCIALIST REPUBLIC OF VIET NAM
Independence – Freedom – Happiness
————

No: 52/1999/ND-CP

Hanoi, July 8, 1999

DECREE

PROMULGATING THE REGULATION ON INVESTMENT AND CONSTRUCTION MANAGEMENT

THE GOVERNMENT

Pursuant to the Law on Organization of the Government of September 30, 1992;
At the proposals of the Minister of Construction, Minister of Finance and Minister of Planning and Investment,

DECREES:

Article 1.- To promulgate together with this Decree the Regulation on Investment and Construction Management which shall replace the Regulation on Investment and Construction Management issued together with Decree No. 42/CP of July 16, 1996 and Decree No. 92/CP of August 23, 1997 of the Government.

Article 2.- This Decree takes effect 15 days after its signing.

Article 3.- The Minister of Construction shall assume the prime responsibility and coordinate with the Ministry of Planning and Investment, the Ministry of Finance, the State Bank of Vietnam and concerned ministries as well as branches in guiding and inspecting the implementation of the Regulation on Investment and Construction Management issued together with this Decree.

Article 4.- The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government, the presidents of the Peoples Committees of the provinces and centrally-run cities, the Managing Boards of the State corporations and concerned organizations shall have to implement this Decree.

 

 

ON BEHALF OF THE GOVERNMENT
PRIME MINISTER

Phan Van Khai

REGULATION

ON INVESTMENT AND CONSTRUCTION MANAGEMENT

(Issued together with Decree No. 52/1999/ND-CP of July 8, 1999 of the Government)

Chapter I

GENERAL PROVISIONS

Article 1.- Purposes and requirements of the investment and construction management

1. To encourage various economic sectors to invest in production and business in conformity with the strategy and planning for national socio-economic development in each period in order to restructure the economy along the direction of industrialization and modernization, to boost the economic growth rate and raise the material and spiritual life of the people.

2. To use the State-managed investment capital sources with optimal efficiency against corruption and waste.

3. To ensure that the construction is carried out according to the construction and architectural planning and satisfies the requirements of durability, beautiful looks and ecological environment protection; to create environment for healthy competition in construction; to apply advanced technologies, to ensure the construction quality and time-table with reasonable costs, to provide warranty for construction works.

Article 2.- Basic principles in the investment and construction management

1. To clearly define the States management function and assign the responsibility for investment and construction management in conformity with each kind of investment capital source and investors. To manage the investment and construction according to projects, planning and law.

2. Investment projects financed by State-budget capital, State-guaranteed credit capital, the States development investment credit capital and the State enterprises investment capital must be strictly managed according to the investment and construction order prescribed for each kind of capital.

3. With regard to investment and construction activities of people, the State shall only manage the planning, architecture and ecological environment.

4. To clearly define the responsibilities and powers of State management bodies, investors, consulting organizations and contractors in the investment and construction process.

Article 3.- Objects and scope governed by the Regulation on Investment and Construction Management

1. The objects of investment and construction management shall include:

a) Investment projects for construction, renovation, overhaul or upgrading of already invested and built projects;

b) Investment projects for the procurement of assets including equipment and machinery not to be installed and new scientific and technological products;

c) Projects using State-budget capital for the planned development of regions and territories, the planned development of branches as well as the planned urban and rural construction;

d) Construction works using State-budget capital but without having to elaborate the investment projects;

e) Investment and construction objects without using the State capital.

2. Scope of regulation:

a) For investment projects of State bodies or State enterprises, which use the State-budget capital, the State-guaranteed credit capital, the development investment credit capital of the State and/or the investment capital of the State enterprises, the State shall manage the investment and construction through its decision on investment after such projects are appraised in term of branch development plans, urban and rural construction plans, construction norms and standards, the use of land and resources, the ecological environment protection (depending on requirements for each type of project), as well as in term of financial plans, prices and investment efficiency of the projects;

b) For investment projects of enterprises, which use the States development investment credit capital, the States regulations on development investment credits shall apply. For investment projects using investment credit capital not guaranteed by the State, the investors shall themselves be responsible for the investment efficiency; the capital-lending organizations shall have to scrutinize the projects and decide the capital loans for investment;

c) For investment projects of enterprises, which use other sources of capital, the State shall manage through business registration and construction licensing (if investment projects involve construction) as prescribed in Article 13 of this Regulation;

d) For projects on planned development of regions, territories or branches as well as planned urban and rural construction, the State shall manage the use of budget capital for the execution of such projects and at the same time manage the mobilization of capital from other sources for elaboration and implementation of detailed planning projects;

e) For investment projects of Vietnamese missions overseas; security and defense projects which require confidentiality; projects on purchase of copyrights, the elaboration of such investment projects shall comply with this Regulation; the project appraisal, investment decision and project execution management shall comply with the Governments separate regulations;

f) For investment projects of overseas Vietnamese who make investment in Vietnam and of foreigners permanently residing in Vietnam, which are executed under the legislation on domestic investment promotion, the management of the construction thereof shall comply with this Regulation.

Article 4.- Investment and construction order

1. Investment and construction order shall comprise 3 phrases:

a) Investment preparation;

b) Investment execution;

c) Completion of construction and putting projects into exploitation and use.

2. Work in the phrases of investment execution and construction completion with projects being put into exploitation and use may be carried out according to order, successively or alternately, depending on the concrete conditions of each project, which shall be decided by persons competent to decide the investment.

3. For projects where capital must be recovered, the investors shall have to retrieve the capital and refund the investment capital.

Article 5.- Term interpretation

In this Regulation, the following terms shall be construed as follows:

1. “Investment project” means an assortment of proposals concerning the disbursement of capital to create, expand or renovate given material bases in order to achieve the quantitative growth or maintain, improve or raise the quality of products or services within a given period of time (including only direct investment activities).

2. “Construction works” means the products of construction and installation technologies, closely attached to land (including air space, water surface, sea surface and continental shelf) and created by construction materials, equipment and labor.

Construction works comprises one or several installation in the synchronous and complete technological chains (even produced through cooperation) to turn out products mentioned in the projects.

3. “Constructions incident” means damage, collapse of construction structure, construction item(s) or the entire constructions, which reduce or arrest the constructions bearing capacity, causing unsafety to surrounding works.

4. “Branch-managing ministry” means the ministry, the ministerial-level agency or the agency attached to the Government, which has the function of managing a branch throughout the country in accordance with the Law on Organization of the Government.

5. “Persons competent to decide the investment” mean the representatives at law of organizations, State bodies or enterprises, depending on the investment capital sources prescribed in Articles 10, 11, 12 and 13 of this Regulation.

6. “Investor” means the person who owns capital or borrows capital or the person who is assigned the responsibility to directly manage and use capital to effect the investment according to the provisions of law.

7. “The total investment” means the total expenditure on investment and construction (including capital for initial production) and the projects maximum expenditure limit which is determined in the investment decision and can only be readjusted according to the provisions in Article 25 of this Regulation.

8. “The total cost estimate” means the total expenditure needed for the construction investment (expenses for investment preparation, expenses for investment execution including the procurement of equipment, and other expenses of the project), which is calculated in detail at the stage of construction technical design and must not exceed the approved total investment.

9. “The investment capital to be settled” means the total lawful expenditure made in the investment process in order to put the project into exploitation and use. The lawful expenditure means the expenditure made in strict accordance with the signed contract and the approved estimate design as well as with the criteria, norms, unit prices, financial-accounting regime and current relevant stipulations of the State. The investment capital shall be settled within the total investment limit already approved or readjusted (if any).

10. “Construction criteria” mean the technical criteria set for carrying out the survey, designing, construction and installation, test operation upon completion to ensure the construction quality, applicable to each specialized construction work, which are promulgated by the State or ministries with specialized construction function.

11. “Construction norms” mean documents defining the minimum technical requirements which must be met by all construction activities as well as measures and construction criteria applied to satisfy such requirements, which are promulgated by the Ministry of Construction.

12. “New urban area” means a concentrated area newly built according to an investment project for the development of complete and synchronous technical infrastructure and the housing development of the entire area, linked to an existing city or a new city being formulated with boundary and function being determined as compatible with the urban construction planning approved by the competent State body.

13. “Urban technical infrastructure development project” means an investment project for the construction of technical infrastructures in service of the new urban area or for the modification and upgrading of the existing urban area.

14. “New urban area development project” means an investment project for the construction of synchronous technical infrastructure and management of housing development for the entire new urban area according to the approved planning.

Article 6.- Classification of investment projects

1. Depending on projects nature and investment scale, domestic investment projects are classified into three groups: A, B and C for division of management responsibility. The characteristics of each group is specified in the Appendix attached to this Regulation.

2. For the Group A project which comprises many constituent projects (or mini- projects) in which if each constituent project (mini-project) can operate independently, be exploited and executed according to investment phase inscribed in the written ratification of the pre-feasibility study report by the competent person, each constituent project (mini-project) shall be entitled to the execution of investment preparation stage (from the making of pre-feasibility study report) and the execution of investment according the order like an independent project, and the submission for approval and management shall comply with the regulations for Group A projects.

3. Important national projects mean the projects approved by the National Assembly which also decides the policy for investment in accordance with the provisions of Resolution No. 05/1997/QH10 of December 12, 1997 of the National Assembly of the Socialist Republic of Vietnam.

Article 7.- The responsibility for investment and construction management

1. The Ministry of Planning and Investment:

a) To study and develop mechanisms and policies for investment as well as for the State management of domestic investment, foreign investment in Vietnam and overseas investment by Vietnamese;

b) To identify orientation and structure for investment capital in order to ensure the balance between the domestic investment and foreign investment, then submit them to the Government for decision;

c) To submit to the Government draft laws, ordinances and legal documents concerning the economic management mechanisms and policies, the promotion of domestic and foreign investment in order to achieve an economic structure suitable to the strategies, planning and plans for socio-economic stability and development;

d) To issue investment licenses and guide foreign-invested enterprises to make the investment preparation in accordance with the Law on Foreign Investment in Vietnam and relevant provisions of this Regulation;

e) To organize the appraisal of Group A investment projects and submit them to the Prime Minister for considering and deciding the investment or agreeing to let the Ministry issue the business registration certificates to Group A projects not funded by State capital; to monitor the process of investment in investment projects under the State plans;

f) To synthesize and submit to the Prime Minister the annual and five-year plans on development investment. To coordinate with the Ministry of Finance in inspecting and supervising the implementation of investment plans funded by State-managed capital sources;

g) To assume the prime responsibility and coordinate with the Ministry of Construction, the Ministry of Trade, the Ministry of Finance and other ministries, branches as well as localities in guiding and inspecting the implementation of the Bidding Regulation;

h) To perform the State management over the elaboration, examination, consideration and approval and the implementation of projects on planned socio-economic development.

2. The Ministry of Construction:

a) To perform the function of State management over construction, to study mechanisms and policies on management of construction as well as urban and rural construction plans then submit them to the Prime Minister for promulgation or to be authorized by the Prime Minister to promulgate them;

b) To promulgate construction criteria, standards, norms, designing process, regulations on construction works quality control, norm system, construction economic-technical indices, investment and construction consultancy expense norms; to agree to let the ministries having specialized construction promulgate their standards, norms, criteria and regulations for the control of the quality of specialized construction works;

c) To assume the prime responsibility together with ministries in charge of specialized techniques for organizing the appraisal of the technical designs and total cost estimates of Group A investment and construction projects for ratification by the competent authorities. To exercise the unified State management over the construction quality, to monitor, examine and detect matters related to the quality of construction works and propose handling measures, particularly the quality of Group A construction projects;

d) To guide the activities of construction consultancy enterprises, construction enterprises and organizations managing the execution of investment and construction projects;

e) To assume together with the Ministry of Planning and Investment, the Ministry of Finance, the State Bank of Vietnam and other ministries, branches and localities the prime responsibility for guiding and inspecting the observance of the Regulation on Investment and Construction Management.

3. The Ministry of Finance:

a) To study policies and regimes for mobilization of investment capital from various sources and the management of investment capital in order to submit them to the Prime Minister for promulgation or to promulgate them according to its competence;

b) To coordinate with the Ministry of Planning and Investment in planning the allocation of investment capital to ministries, localities and important State projects funded by the State-budget capital;

c) To exercise the unified management of loan capital and aids reserved for development investment by the Government;

d) To provide the Government guaranty for foreign capital borrowings by enterprises (except for credit institutions) according to the Governments stipulations;

e) To conduct financial inspection and examination of projects of organizations and units which use the States investment capital sources; to guide and inspect the balance of accounts of investment capital for investment projects funded by the State capital and make the balance of accounts of investment capital for Group A projects funded by the State capital;

f) To guide the allocation of State-budget capital for investment, non-business capital of investment and construction nature for projects and programs according to investment plans and under the Prime Ministers direction.

4. The State Bank of Vietnam:

a) To study the mechanisms and policies for the State management of bank money and credits in investment and construction then submit them to the Prime Minister for promulgation or promulgate them according to its competence;

b) To supervise the credit institutions and other financial or credit organizations in performing the following duties:

– Mobilizing capital from various sources at home and abroad in order to provide long- , medium- and short-term loans for investment projects on production and business development;

– Providing loan capital for efficient production and business projects which are feasible and can repay debts; to coordinate with and create favorable conditions for enterprises to borrow capital for materialization of efficient investment opportunities;

– To provide loan, payment, performance and bidding security as well as other forms of banking security as prescribed by law;

c) To provide guaranty for foreign capital borrowings by credit institutions for investment and construction.

5. Other relevant ministries and branches:

a) The ministries, the ministerial-level agencies and the agencies attached to the Government shall perform the State management function according to their respective functions, tasks and powers. The ministries having the function of managing the specialized construction projects shall promulgate construction-related regulations, standards and economic-technical norms after getting the consent of the Ministry of Construction;

b) The branch-managing ministries and bodies relating to land, natural resources, biology, technologies, environment, trade, the maintenance and conservation of historical relics, cultural heritages, picturesque landscapes, national defense, security, fire prevention and fight shall have to consider and give written comments on matters related to investment projects within the prescribed time limits. Past such time limits, if no replies are received from the relevant branch-managing ministries, such ministries, branches and agencies are considered to have agreed with the written proposals.

6. The provincial-level Peoples Committees (of the provinces and centrally-run cities):

The provincial-level Peoples Committees shall, within their functions and powers, perform their responsibility of State management over all organizations and individuals executing investment projects in their respective localities as prescribed by law.

Article 8.- Management of planning projects

1. The Ministry of Planning and Investment shall be the body managing projects on regional and inter-provincial socio-economic development overall planning throughout the country.

2 The Ministry of Construction shall exercise the State management over the urban and rural construction planning as well as key area construction planning.

3. The provincial-level Peoples Committees shall manage projects on socio-economic development overall planning and the urban and rural construction planning under the local management as assigned by the Government.

4. The ministries and centrally-run branches shall manage projects on branch development overall planning as prescribed by the Government.

5. Projects on socio-economic development overall planning, specialized branch development planning as well as urban and rural construction planning, when studied for construction, must be widely commented by concerned ministries, branches and localities. The urban and rural construction planning, when studied for project elaboration, must be publicized for comments by people and the Peoples Councils in areas under the planning. The construction planning projects (both the overall planning and the detailed planning) already approved by competent levels must be made public regularly at the offices of local administration at all levels and public places in the planning area for implementation and inspection of the implementation thereof by the people.

Article 9.- Management of capital for planning projects

1. Capital for elaboration of planning projects shall include the capital for investigation, surveys, studies and elaboration of planning projects.

2. Capital for elaboration of projects on regional and territorial socio-economic development overall planning, branch development planning, urban and rural construction overall planning, the detailed planning on central cities and on land use may be taken from the State budget and included into the States annual investment plans.

3. Capital for elaboration of projects on detailed planning for the construction of functional urban and rural areas, detailed planning for industrial zones and the construction of new urban areas, detailed planning for specialized branches (tourism, physical training and sports, services,) may be taken from capital mobilized from investment projects and accounted into the costs of execution of investment projects.

4. The Ministry of Planning and Investment and the Ministry of Finance shall have to manage and allocate annual capital for the work of investigation, surveys and elaboration of overall planning for regional and territorial socio-economic development, branch development planning as well as urban and rural construction planning, and to guide ministries and localities in organizing the implementation thereof.

5. The plans on annual capital for the elaboration of regional construction planning, urban and rural construction planning shall be elaborated by localities, the Ministry of Planning and Investment shall consult the Ministry of Finance and the Ministry of Construction so as to submit them to the Prime Minister for ratification. The management of the use of this capital source shall comply with the division of responsibilities as prescribed by the legislation on the State budget.

Article 10.- Management of projects funded by State-budget capital

1. The projects funded by State-budget capital shall include:

a) Projects on socio-economic, defense or security infrastructures, incapable of recovering capital and the use of their capital is managed according to the division of responsibility for State budget expenditure on development investment;

b) Support for enterprises projects on investment in fields that require the States participation as prescribed by law;

c) Expenses for the work of investigation, surveys and elaboration of projects for regional and territorial socio-economic development overall planning, urban and rural construction planning permitted by the Prime Minister;

d) The Governments loans for development investment;

e) Basic depreciation capital and other State revenues left for State enterprises to make investment.

2. The competence to decide the investment in projects funded by State-budget capital:

a) The Prime Minister shall decide or authorize others to decide the investment in Group A projects;

b) The ministers, the heads of the ministerial-level agencies, agencies attached to the Government, financial management bodies of the Party Central Committee, the central committees of political organizations, socio-political organizations (defined in the State Budget Law), and the presidents of the provincial-level Peoples Committees shall decide the investment in Group B and C projects.

– For Group B and C projects, the agencies deciding the investment therein shall have to base themselves on branch development planning, local socio-economic development planning and the approved State-budget capital plan to decide the investment and take responsibility for the investment efficiency.

– Particularly for Group C projects, the agencies deciding the investment therein shall have to ensure the investment capital balance for the execution of projects for not more than two years;

c) General directors of General Departments under the ministries may be authorized by the ministers to decide the investment in Group C projects;

d) The presidents of the Peoples Committees of Hanoi and Ho Chi Minh City may authorize the directors of the municipal Planning and Investment Services to decide the investment in projects capitalized at less than 2 billion VNdong. For other provinces and cities, the presidents of the provincial-level Peoples Committees may authorize the directors of the provincial/municipal Planning and Investment Services to decide the investment in projects capitalized at less than 500 million VNdong;

e) The presidents of the district- or commune-level Peoples Committees may decide the investment in projects financed by State budget capital according to the assignment by the provincial-level Peoples Councils.

District-level investment projects financed by State-budget capital must be approved by the provincial-level Peoples Committees and tightly controlled in term of their planning and socio-economic development objectives.

Commune-level projects using State-budget capital for investment and construction of irrigation canals, rural roads, schools, clinics, cultural works, after being approved by the commune-level Peoples Councils, must be ratified by the district-level Peoples Committees in term of investment objectives and planning.

For commune-level projects on the construction of canals, animal farms and stables, rural roads and/or schools, financed by peoples contributions, the commune-level Peoples Committees shall have to organize the implementation of investment and construction according to the Regulation on the mobilization, management and use of voluntary contributions by people for construction of infrastructures of communes and district townships, issued together with Decree No. 24/1999/ND-CP of April 16, 1999 of the Government;

f) Persons competent to decide the investment must not use the non-business capital sources for investment in new constructions. For a renovation and expansion project, if the non-business capital source is used for investment at the level of one billion VNdong or more, the investment preparation and implementation procedures must be carried out according to the provisions of this Regulation.

Article 11.- Management of investment projects financed by State-guaranteed credit capital or the development investment credit capital of the State

1. Production and/or business projects of individuals or economic organizations not belonging to the State enterprises shall comply with Clause 1, Article 13 of this Regulation.

2. Investors of projects of the State enterprises using State-guaranteed credit capital and/or the development investment credit capital of the State shall have to take responsibility for the investment efficiency and repay borrowed capital on time; the lending organizations shall have to appraise the financial plans as well as the debt payment plans, to supply capital, supervise the use of borrowed capital for the right purposes and to recover the lent capital. For projects using foreign loan capital guaranteed by the State, the investors shall also have to fulfill their commitments made when they borrowed the capital according to the provisions of law.

3. The competence to decide investment in projects of State enterprises using State-guaranteed capital and/or the development investment credit capital of the State shall comply with the provisions in Clause 2, Article 10 of this Regulation.

The Managing Boards of the State corporations may decide investment in Group C projects. Particularly the State corporations directly managed by the Prime Minister, their Managing Boards may decide investment in Group B and C projects.

4. Investors of Group C projects financed by capital sources prescribed in Clause 2, this Article, may approve the bidding plans, bidding results, bid hand-over and reception contracts, inspect the quality, test and accept projects and make final settlement of investment capital according to current regimes and policies of the State within the limit of the total investment and contents inscribed in the investment decision, technical designs and total cost estimates already approved by persons competent to decide the investment. The capital-lending organizations shall monitor and inspect the investment execution under the investment decisions and make the final settlement of investment capital.

The process of investment in Group A and B projects shall comply with the provisions prescribed for projects financed by State-budget capital.

Article 12.- Management of projects using development investment capital of State enterprises

The competence to decide the investment and the investment execution shall be stipulated as follows:

1. For Group A projects, the competence to decide investment and the investment execution shall comply with the provisions prescribed for projects financed by State-budget capital;

2. For Group B and C projects, the State enterprises shall base themselves on the branch development planning already determined to decide the investment; the process of investment execution shall be undertaken by enterprises themselves, based on the proper implementation of the States current regimes and policies on investment and construction management in term of norms, unit prices and Bidding Regulation. The organizations managing the enterprises capital and organizations providing capital support for projects shall have to inspect the execution of the investment decisions and make the final settlement of investment capital.

Article 13.- Management of investment projects financed by other sources of capital

1. For production and/or business projects of individuals and economic organizations other than State enterprises, the investors shall have to take responsibility for their business efficiency. The business operation must comply with the provisions of law. If a project involves construction, the investor shall have to compile a dossier and submit it to the competent authority for licensing the construction according to this Regulation.

2. Projects of diplomatic missions, international organizations and other foreign agencies involved in investment and construction on Vietnamese soil shall be managed according to treaties or agreements signed with the Vietnamese Government, and the investors shall have to compile dossiers applying for the construction permits as provided for in this Regulation.

Article 14.- Investors, their responsibilities and powers

1. Investors:

a) For investment projects of State enterprises, bodies or organizations, using State-budget capital, State-guaranteed credit capital and/or development investment credit capital of the State, the investors and forms of project management shall be decided by the persons competent to decide the investment;

b) The persons competent to decide the investment shall not concurrently act as investors; administrative and non-business agencies shall only be the investors of projects for construction of material and technical foundations of such agencies;

c) For investment projects of companies or cooperatives, the investors shall be the representatives at law of such companies or cooperatives;

d) For private investment projects, the investors shall be the owners of the investment capital;

e) For projects on development of urban technical infrastructure or projects on development of new urban areas, the investors shall be decided by the Peoples Committees of the provinces and centrally- run cities according to the following principles:

– The investors are organizations or enterprises assigned or leased land by the State for the implementation of projects;

– The selection of investor in cases where many organizations and/or enterprises want to invest in a project shall comply with the Bidding Regulation.

2. The investors shall have the responsibilities and powers:

a) To organize the elaboration of investment projects, clearly determine the capital sources, fill in investment procedures and submit them to the competent authorities for approval according to the provisions in Articles 10, 11, 12 and 13 of this Regulation;

b) To organize the investment execution, including: the organization of bidding to select contractors, signing contracts and performing contracts already signed with the contractors as prescribed by law;

c) For investment projects using capital from one or several different sources, the investors shall bear all-round and continuous responsibilities for the management of the use of such capital sources from the time of investment preparation, investment execution to the time of putting projects into exploitation and use, recovering and refunding the investment capital;

d) To repay the borrowed capital on time and fulfill all terms committed when mobilizing capital;

e) In case of replacement of investors, the new investors shall have to fully inherit the investment work of the previous investors;

f) Where investors directly manage the projects, there must be apparatus fully capable of managing the projects and being registered at the competent agencies;

g) Investors may request concerned State bodies publicize provisions relating to investment such as construction planning, land, resources, water and electricity supply, communications and transport, ecological environment, fire and explosion prevention and combat, the protection of cultural and historical relics, security and defense, so that they are aware of and implement them.

Article 15.- Investment and construction consultancy organizations

1. The investment and construction consultancy organizations are professional organizations of various economic sectors, have the legal person status and register their investment and construction consultancy business according to the provisions of law.

2. The contents of investment and construction consultancy:

To provide information on legal documents, mechanism as well as policies regarding investment and construction, to elaborate and manage investment projects, to design and compile bidding dossiers, to supervise and manage the construction and installation process, to manage expenses for construction, test and accept projects;

An investment and construction consultancy organization may sign a subcontract with another investment and construction consultancy organization for the performance of part of the consultancy task.

3. The responsibilities of investment and construction consultancy organizations:

a) To register investment and construction consultancy activities with the competent bodies according to the provisions of law;

b) To be answerable before law and to investors for the commitments made in the contracts, including the quantity, quality and duration of performance, the accuracy of products and the quality of their consultancy products;

c) To implement the regime of professional insurance for investment and construction consultancy as prescribed by law. To widely supply information on operation capability of enterprises so that investors may know and select.

Article 16.- Construction enterprises

1. Construction enterprises are enterprises of all economic sectors, which are established according to law and have registered their construction business.

2. Responsibilities of construction enterprises:

a) To register construction activities at the competent agencies as prescribed by law;

b) To be answerable before law and to the investors for their commitments made in the contracts, including the quantity, quality and precision of products, the time for performance of contracts, with stipulations and instructions on the use of construction works before the hand-over, to provide warranty for their construction products and works according to the provisions in Article 54 of this Regulation;

c) To implement the regime of insurance for construction works, take responsibility before law for all matters related to the safety of nearby works and projects being under construction, to effect the labor safety and ecological environment protection in the course of construction. To provide information on the operation capacity of enterprises so that investors know and make the selection thereof.

Article 17.- Investment plans of the management bodies at different levels and of State enterprises.

1. To synthesize and balance the investment plans:

a) The Ministry of Planning and Investment shall synthesize the investment capital of all economic sectors in the national economy so as to forecast the macro-balances, in which the investment belonging to State-budget capital, including State-budget investment capital, State-guaranteed investment capital, development investment credit capital of the State and development investment capital of State enterprises, shall be included in plans on the basis of the provisions in Articles 10, 11 and 12 of this Regulation; the capital for branch and territorial development planning as well as urban and rural construction planning;

b) The plans for investment in the provinces and centrally- run cities shall be synthesized by the provincial/municipal Planning and Investment Services to reflect the entire investment activities of all economic sectors in the localities;

c) The plans for investment from State-budget capital at different levels must be worked out in conformity with the available capital plans and the approved project execution time-table;

d) The investment plans of State enterprises must be balanced and fully reflect the sources of basic depreciation capital, the after-tax profit accumulation, capital mobilized at home and abroad, the States investment credit capital and the State budget support capital (if any).

2. Execution of investment plans:

a) The State directly manages the execution of investment plans financed by State-budget investment capital, development investment credit capital of the State and State-guaranteed credit capital;

b) The national programs and national important projects in the annual plans and each period of economic development shall be decided by the National Assembly; the Prime Minister shall ratify their objectives, time schedule, total investment capital and investment capital sources as basis for assignment of annual plans to ministries and localities for implementation;

c) For other economic development programs using the non-business capital and the States investment capital, based on the programs objectives, annually, the Ministry of Planning and Investment shall balance and distribute the investment capital and the Ministry of Finance shall balance and distribute the non-business capital for each program and notify this to the program-managing bodies;

d) The financial bodies at all levels shall have to adequately supply capital for the approved projects according to the State plans and the tempo of project execution.

Article 18.- Contents of investment plans

1. The capital plans for investigation, surveys and elaboration of branch and territorial planning, urban and rural construction planning.

2. Expenses for investment preparation, including capital for carrying out investigation, surveys, making pre-feasibility and feasibility study reports on the projects, the project evaluation and investment decision. The investment preparation plan shall include the list of projects and capital for investment preparation of each project.

3. The plan on preparation for project execution shall include the capital for carrying out surveys, technical design, preparation for the construction and other expenses related to the preparation for the execution of investment project.

4. The plan on investment execution shall include the investment capital for the procurement of supplies and equipment, construction and expenses related to bidding and the putting of projects to exploitation and use.

5. For the States development investment credit capital, the Governments stipulations shall apply.

Article 19.- Conditions for projects to be included in annual investment plans

1. Projects to be included in investment preparation plans must conform to the approved branch and territorial development planning.

2. Projects to be included in plans on preparation for investment execution or on investment execution must have their investment decisions compatible with the provisions of this Regulation by October before the plan year.

3. Group A and B projects, of which the technical designs and total cost estimates have not been approved yet but their investment decisions have already defined the capital level for each project item as well as the designs and cost estimates of the items to be constructed in the year, shall be included in the investment plans; Group C projects must have their technical designs and total cost estimates approved.

For projects concluded with foreign countries, which comprise many mini-projects, each mini-project to be constructed in the year must have its technical design and cost estimate approved by the competent authority.

4. Report on the implementation of investment projects:

a) The ministries, the ministerial-level agencies, the agencies attached to the Government, the State corporations and the provincial-level Peoples Committees shall report the situation on the plan execution every quarter, six months, 9 months and every year in the first week of the last month of the quarter to the Ministry of Planning and Investment, the Ministry of Finance, the Ministry of Construction and the General Department of Statistics regarding the mobilization of various capital sources, the construction volume, the project quality and incident (if any), allocation, settlement, project completion, newly mobilized capability according to form set by the General Department of Statistics;

b) For Group A projects and national important projects, the investors shall have to report the situation on the execution of the investment plans on the 20th of every month so that the Ministry of Planning and Investment synthesize and report them to the Prime Minister and recommend measures to organize the implementation of investment plans according to schedule.

Article 20.- Investment expertise

1. Projects with investment decided by the competent State bodies shall be subject to the investment expertise.

2. Investment expertise means the inspection, supervision, analysis and evaluation of each stage or the entire process of investment and construction, made by decisions of the competent authorities defined in Clause 4, this Article.

3. Investment expertise contents:

a) Expertise of the issuance of investment decisions;

b) Expertise of the arrangement of plans and capital disbursement for investment projects;

c) Expertise of the process of organizing the implementation of projects in conformity with the investment decision;

d) Proposing the investment-deciding bodies to reconsider the investment undertaking (cancellation, suspension, readjustment of investment decisions);

e) Re-evaluating the investment decisions upon the completion of the investment process.

4. The investment expertise shall be implemented at the levels of the Prime Minister, branch and locality:

a) The Prime Minister shall decide the organization of investment expertise of projects under his/her competence to decide the investment;

b) The ministers managing branches and the presidents of the provincial-level Peoples Committees shall decide the organization of investment expertise of projects under the deciding competence of branches and localities.

5. When the investment-expertising organizations proposals are ratified by authorities competent to decide the investment, the concerned organizations and agencies shall have to implement them.

6. Organizations conducting the investment expertise shall be answerable before law for their expertise conclusions as well as proposals made to the competent authorities on handling of investment projects.

7. The Ministry of Planning and Investment shall coordinate with the Ministry of Construction and the Ministry of Finance in providing detailed guidance on the investment expertise.

Chapter II

INVESTMENT PREPARATION

Article 21.- The contents of investment preparation

The investment preparation contents shall include:

1. The study on the necessity to make investment and the investment scale;

2. Establishing contacts and probing domestic and foreign markets in order to determine the demand for and the competitiveness of products, seeking suppliers of equipment and materials for production; considering the investment capital capability and selecting the investment forms;

3. Conducting prospections and surveys and selecting the site for construction;

4. Elaborating investment project;

5. Forwarding the project dossiers and explanation documents to persons competent to decide the investment, the investment capital-lending organizations and the investment project-expertising agencies.

Article 22.- Elaboration of investment projects

1. The investors shall have to make or hire consulting organizations to make pre-feasibility study reports, feasibility study reports or investment reports.

2. For Group A projects, the investors shall have to make the pre-feasibility study reports and the feasibility study reports. Where the projects have already been decided by the National Assembly or the Government in term of investment undertaking, only the feasibility study reports shall be made.

a) For Group A projects which have been approved by the Prime Minister in term of their pre-feasibility study reports and allowed to be divided into constituent projects (mini-projects), such constituent projects (mini-projects) shall have their feasibility study reports made like independent investment projects, thereby the submission for approval and management of the projects must comply with the regulations prescribed for Group A projects.

b) For Group B projects, the investors shall make the feasibility study reports; if the pre-feasibility study reports are deemed necessary, the persons competent to decide the investment shall consider, decide and request it in writing.

3. For Group C projects capitalized at one billion VNdong or more each, the investors shall have to make the feasibility study reports.

For projects capitalized at under one billion VNdong, repair and/or conservation projects financed by non-business capital sources and branches projects with model designs and technical standards already approved by branch-managing ministries on the basis of the overall planning for each region, separate feasibility study report for each project is not required but only the investment report. The content of the investment report shall be guided in detail by the Ministry of Planning and Investment.

The feasibility study report is the basic document, through which the investors have studied, compared and selected the investment options to be sent to the investment expertising agencies and submitted to the persons competent to decide the investment for consideration and decision.

Article 23.- Main contents of the pre-feasibility study report

1. Studying the necessity to make the investment, advantages and disadvantages.

2. Projected investment scale and forms.

3. Selecting the area and site for construction and estimating the land area to be used on the basis of minimizing the land use as well as environmental and social impacts and resettlement (with detailed analysis and evaluation).

4. Analysis and preliminary selection of technologies and techniques (including both cultivated crops and reared animals, if any) and terms for the supply of equipment, raw materials, fuels, services, infrastructure.

5. Analysis and preliminary selection of construction options.

6. Preliminary determination of the total investment, plans for capital mobilization, capability to refund the capital, repay debts and earn profits.

7. Preliminary calculation of the investment efficiency in term of the socio-economic aspects of the project.

8. Determination of the operation and exploitation independence of the constituent projects or mini-projects (if any).

For projects on procurement of equipment and machinery without installation, the contents of the pre-feasibility study report shall only comply with Clauses 1, 2, 4, 6, 7 and 8 of this Article.

Article 24.- Main contents of the feasibility study report.

1. Grounds to determine the necessity of investment.

2. The selection of investment form.

3. Production program and conditions to be met (for projects involving production).

4. Options for specific site (or site area, constructions line) compatible with the construction planning (including documents on site selection with proposed measures to minimize the environmental and social impacts).

5. Plans for ground clearance, resettlement plans (if any).

6. Analysis and selection of technical and technological options (including cultivated crops and reared animals, if any).

7. Architectural options, construction solutions, preliminary designs of plans proposed for selection, solutions for management and protection of environment.

8. Clear determination of capital sources (or types), financial capability, total investment amount and demand for capital according to tempo. Plans to refund the investment capital (for projects requiring the recovery of investment capital).

9. Plans on management of the project exploitation and labor employment.

10. Analysis of investment efficiency.

11. Major time targets for investment execution. Group C projects require immediate elaboration of bidding plans. For Group A and B projects, the bidding plans may be drawn up after the issuance of investment decisions (depending on specific conditions of projects). The time to start the construction (at the latest), the time for completion and putting projects into exploitation and use (at the latest).

12. Proposing forms of managing the project execution.

13. Identification of investors.

14. Relationships and responsibilities of agencies involved in the projects.

For projects on procurement of equipment and machinery without installation, the contents of the feasibility study report shall only comply with Clauses 1, 2, 6, 8, 9, 10, 11, 12, 13 and 14 of this Article.

Article 25.- The total investment

1. The total investment shall include expenses for investment preparation, expenses for investment execution preparation, expenses for investment and construction implementation, expenses for production preparation, interests on bank loans by investors during the time of investment execution, initial floating capital for production (for production projects), insurance premiums, reserve expenses.

For Group A projects and a number of projects with special requirements permitted by the Prime Minister, the total investment shall also include expenses for scientific and technological studies related to the projects.

2. The total investment may be adjusted only in the following cases:

a) The State promulgates new regulations with changes to the investment and construction price levels;

b) It is due to a change in the exchange rate between Vietnam dong and the foreign currency used for the part of the project (if in the total investment, the foreign currency amount to be used was not inscribed).

c) It is due to force majeure circumstances.

3. For national important projects approved and decided by the National Assembly in term of policy, the total investment shall be officially determined after the feasibility study report is appraised by the competent body and approved by the persons competent to decide the investment.

4. The Ministry of Planning and Investment shall guide the detailed content of the total investment.

Article 26.- Appraisal of investment projects

1. The investment projects financed by State-budget capital, State-guaranteed credit capital, development investment credit capital of the State and investment capital of State enterprises must be appraised. The appraisal of investment projects must be conducted by the States competent functional bodies and State-run credit institutions (for projects financed by credit capital).

The investors shall have to submit their feasibility study reports to persons competent to decide the investment and at the same time to bodies with appraisal function as provided for in Clause 6, this Article.

2. With regard to pre-feasibility study reports on Group A projects, the investors shall directly submit them to the Prime Minister and at the same time to the Ministry of Planning and Investment, the Ministry of Finance as well as the branch-managing ministry for consideration before reporting them to the Prime Minister. Only when the Prime Ministers written approval is obtained can they make the feasibility study reports or continue to probe, negotiate and sign agreements among the investment partners before making the feasibility study reports.

For national important projects passed and decided in term of investment policy by the National Assembly, the Ministry of Planning and Investment shall have to appraise the pre-feasibility study reports and report them to the Government for submission to the National Assembly.

3. Projects entitled to the elaboration of investment reports shall not be appraised. The investors shall have to submit to the persons competent to decide the investment the investment report for consideration before deciding the investment.

4. For new urban area projects (or constituent projects) which are in line with the detailed planning and infrastructure development projects already approved by the competent State bodies, only the feasibility study reports are appraised.

5. The Ministry of Planning and Investment provides guidance on the dossiers of investment project appraisal.

6. Competence to appraise investment projects:

a) For Group A projects:

The Ministry of Planning and Investment which assumes the prime responsibility for the appraisal shall have to gather comments of the branch-managing ministry as well as concerned ministries and localities. Depending on the specific requirements of each project, the Ministry of Planning and Investment may invite consulting organizations and experts from concerned ministries to take part in the appraisal of projects.

For projects financed by development investment credit capital of the State, the capital-lending organizations shall appraise the financial plans and the debt payment plans before submitting them to the persons competent to decide the investment.

b) For Group B and C projects financed by State-budget capital, State-guaranteed credit capital or development investment credit capital of the State:

– The persons competent to decide the investment shall use their qualified professional bodies to organize the appraisal, or may invite professional bodies from concerned ministries and branches to appraise the projects.

– For projects under the provincial-level management, the provincial/municipal Planning and Investment Services, acting as the coordinator for organizing the project appraisal, shall have to gather comments from concerned bodies.

– The capital-lending organizations shall appraise the financial plans and debt payment plans and agree to provide loans before submitting them to the persons competent to decide the investment.

Article 27.- Contents of the investment project appraisal

1. Investment projects financed by State-budget capital, State-guaranteed credit capital, development investment credit capital of the State or investment capital of State enterprises must be appraised in term of:

a) The compatibility with the planning on branch and/or territorial development, the planning on urban and rural construction;

b) The regime on national resources exploitation and use (if any);

c) The States preferences and/or support which may be enjoyed by investment projects under the common regimes;

d) Technological options and production scale, usage capacity;

e) Architectural options, the application of construction criteria and standards;

f) The use of land and natural resources, the protection of ecological environment, the plan on resettlement (if any);

g) Fire and explosion prevention and combat, labor safety and social aspects of the projects;

h) The projects risks which may happen in the course of implementation, thus affecting the investment activities;

i) The overall assessment of the projects feasibility.

2. Projects using State budget capital, the States investment credit capital, and/or State-guaranteed credit capital must also have their financial conditions, prices, investment efficiency and debt-repayment plans appraised.

Article 28.- The State Council for Appraisal of Investment Projects

The State Council for Appraisal of Investment Projects shall be set up by the Prime Ministers decision in order to appraise investment projects.

Depending on the size, nature and necessity of each project, the Prime Minister shall request the State Council for Appraisal of Investment Projects to appraise or reappraise the project before deciding the investment.

Article 29.- Time-limit for appraisal of investment projects after receipt of full and valid dossiers

1. For Group A investment projects: The appraisal time-limit shall not exceed 60 days.

2. For Group B investment projects: The appraisal time-limit shall not exceed 30 days.

3. For Group C investment projects: The appraisal time-limit shall not exceed 20 days.

Article 30.- The contents of investment decisions

The contents of an investment decision shall include:

1. The investment objectives;

2. Determination of investor;

3. Form of project management;

4. Location, the land area in use, environmental protection options and resettlement and rehabilitation plans (if any);

5. Technology(ies), designed capacity, architectural options, technical standards and grade of the project;

6. The national resources exploitation and use regime (if any);

7. The total investment;

8. Investment capital sources, financial capability and capital plan of the project;

9. The States preferences and support which may be enjoyed by the project according to the common regulations;

10. Mode of project implementation. The principle for division of bid packages and form of selection of contractors. Group C projects require immediate elaboration of bidding plans, while for Group A and B projects, the bidding plan may be drawn up after the issuance of investment decisions;

11. The time for construction and major time targets for the project execution. The time for starting the construction (at the latest), the time of completion and putting the project to exploitation and use (at the latest);

12. The relationships and responsibilities of the concerned ministries, branches and localities (if any). The implementation effect.

Article 31.- Change of investment project contents

1. The investment projects with the investment therein having already been decided may have their contents changed only in special cases. When the change of contents is needed, the concerned investors shall have to explain the reasons therefor and the to be-changed contents for submission to the persons competent to decide the investment for consideration and decision.

2. Only after the change of the project contents is permitted in writing by the competent persons can the project be re-appraised and re-submitted in accordance with the regulation. The investment scale must not be altered when the project is yet put into exploitation and use.

3. A project shall be suspended, postponed or cancelled in the following cases:

a) 12 months after the issuance of the investment decision, the investor fails to execute the project without a written approval of the competent person;

b) The projects objectives have been changed without the written permission of the competent person;

c) The project execution prolongs for more than 12 months as compared to the time schedules stated in the investment decision without any sound reasons and without the approval of the competent person.

4. The persons competent to decide the suspension, postponement or cancellation of investment projects must clearly determine the reasons and be answerable before law for their decisions. Investors who let their investment projects be suspended or postponed without any sound reasons shall have to bear the responsibility before law for the damage caused thereto.

Article 32.- Fund for elaboration and appraisal of investment projects

1. Investment projects financed by any sources of capital shall have fund from such sources for project elaboration and appraisal. For projects without sources of investment capital being identified yet, including projects to be supported by the States investment credits, the investors shall use their own lawful capital sources or borrow bank capital for execution of their projects, which shall be refunded after the official capital sources are determined.

2. The fund for project elaboration consultancy, the project appraisal fee and the costs of hiring experts for the project appraisal shall be included in the investment capital of the project. The Ministry of Construction shall reach an agreement with the Ministry of Planning and Investment and the Ministry of Finance to provide detailed guidance on the expenses for hiring appraisal experts.

The Ministry of Finance shall reach an agreement with the Ministry of Planning and Investment and the Ministry of Construction to promulgate the investment project appraisal fees.

3. After being appraised, if a project is not allowed to be executed, the expenses for project elaboration and appraisal shall be deducted from the capital source of the enterprise or from non-business fund of the non-business administrative agency or from State-budget capital already allocated in the plan to the project.

Chapter III

INVESTMENT EXECUTION

Article 33.- The contents of investment project execution

The contents of execution of an investment project shall include:

1. Applying for land assignment or lease (for project involving the use of land);

2. Applying for the construction permit (if so required) and the natural resource exploitation permit (if the resource exploitation is involved);

3. Making compensation for ground clearance, carrying out the plan for resettlement and rehabilitation (for projects requiring resettlement and rehabilitation), preparing ground for construction (if any);

4. Procuring equipment and technology;

5. Conducting construction survey and design;

6. Appraising and approving the design and total cost estimates for the project;

7. Conducting the construction and installation;

8. Examining and performing contracts;

9. Controlling the equipment technique and quality and the construction quality;

10. Test-running and acceptance, making the final settlement of investment capital, product hand-over and warranty.

The selection of contractor to perform the tasks defined in this Article shall comply with the projects investment decision and the bidding regulation.

Article 34.- Land assignment and receipt

1. Investors wishing to use land shall have to compile dossiers applying for land allotment or lease according to the provisions of law.

2. The competent State bodies shall consider and settle the dossiers of application for land allotment or lease within 25 days after receiving complete and valid dossiers.

3. The recovery of land and the hand-over and reception of land on the site shall comply with the provisions of land legislation.

Article 35.- Preparing ground for construction

1. The investors shall have to effect the compensation for ground clearance and clear the construction ground according to schedule, then hand over the construction ground to the construction contractor. The investors may by themselves or hire specialized organizations in the localities to make the compensation for ground clearance.

2. The Peoples Committees of all levels shall have to support or organize the ground clearance, the establishment of common resettlement zones and effect the resettlement when so requested.

Article 36.- Project construction design

1. Lawful documents used for designing:

Documents on topographic, geological, hydrographic, meteorological exploration or surveys and other documents, which are used for designing the construction of projects, must be supplied by organizations with legal status in the above-mentioned domains. The construction designing shall have to comply with the construction standards and technical criteria set by the State. If foreign construction standards and technical criteria are applied, the written approval of the Ministry of Construction is required.

2. Designing order:

a) In the feasibility study report, the step of preliminary designing shall be implemented on the basis of the temporary technological option, the project scale and architecture;

b) After the investment decision is issued for the project and the technological designing is provided by the equipment supplier, the project construction designing shall comply with the following regulations:

– For projects with high technical requirements and complicated geological structure, the technical designing (implementation designing) must be made before the construction blueprint designing (detail designing);

– For projects with technical simplicity or with model design, unsophisticated treatment of foundation, only technical-construction design is required.

The technical design must be made on the basis of investment objectives and requirements stated in the investment decision, the technical standards and criteria to be applied.

c) In special cases where the contents defined in Points a and b of this Clause must be altered, the feasibility study report must be resubmitted and approved by the persons competent to decide the investment.

d) The designing organization shall have to draw up the total cost estimate for the technical design or the technical-construction design. The total cost estimate must not be larger than the total investment already approved; if it is larger, the designing organization shall have to recalculate it for conformity therewith.

The Ministry of Construction shall define the contents of the designing dossiers.

3. Designing organizations:

a) The designing must be carried out by specialized organizations and/or individuals. Depending on the specific conditions of projects, the investors may sign contracts with designing consultancy organizations or the construction contractors shall undertake the designing according to the steps prescribed in this Article;

b) The designing organizations or individuals, when making designs, shall have to register their consultancy activities at the competent offices and take full responsibility before law for the design quality, calculation results, the structure safety and stability of the projects (including the accuracy of anticipation and estimates);

c) Each designing blueprint must have the chief designer, big designing blueprints (Group A or B projects) must have the managers, the chief designers or the designing blueprint managers shall have to take personal responsibility for the quality and accuracy of the design blueprint, the technical solutions and design anticipation;

d) The designing organization shall have to supervise the copyrighting throughout the process of construction and installation, completion, test and acceptance of the project;

e) The designing organization is forbidden to undertake the designing beyond their registered scope or under the name of other designing organizations in any form.

Article 37.- The contents of appraising the technical designs and total cost estimate

Investment projects involving the construction financed by State-budget capital, development investment credit capital of the State, and/or State-guaranteed credit capital must have their technical designs and total cost estimates approved by the competent bodies before they are opened for bidding. The bodies appraising the technical designs and the total cost estimates for approval shall be the ones assigned the function of managing the construction.

The investors shall have to submit the technical designs and total cost estimates to bodies competent to approve them, and at the same time to send the dossiers to the technical design – and total cost estimate- appraising bodies. The appraisal and approval of technical designs and total cost estimates must fully comply with the regulations on procedures and technical orders in order to ensure the quality of the designs and total cost estimates.

The contents of technical design appraisal shall include:

a) The compatibility of the technical designs with the contents already approved in the investment decisions, in terms of scales, technologies, capacity, economic and technical indices, planning, architecture, standards and technical criteria to be applied.

a) The ecological environment protection, fire and explosion prevention and fight, labor safety, industrial sanitation;

c) The rationality of the technical design solution;

d) The legal status of designing organizations and individuals.

2. The contents of the total cost estimate appraisal shall include:

a) Examining the rightness of norms, unit prices and application of norms, unit prices as well as relevant regimes and policies and expenditure items prescribed by the State;

b) The conformity between the technical design volume and the total cost estimate;

c) Determining the value of the total cost estimate, including equipment for comparison with the approved total investment.

3. The technical design- and total cost estimate-appraising bodies shall have to take responsibility before law for the appraised contents defined at Points a, b and c of Clause 1 and Points a and b of Clause 2 of this Article. When necessary, the technical design- and total cost estimate- appraising bodies may hire experts and/or specialized consultancy organizations to join the appraisal (the designing consultancy organizations may not participate in the appraisal of their designing products). The expenses for hiring the appraising experts shall be calculated into the total investment and cost estimate of the project. The Ministry of Construction shall reach agreement with the Ministry of Planning and Investment and the Ministry of Finance to provide detailed guidance on the expense for hiring appraising experts.

4. The time limits for appraisal of technical designs and total cost estimates are stipulated as follows: not more than 45 days for a Group A project, not more than 30 days for a Group B project, and not more than 20 days for a Group C project, from the date of receiving complete dossiers.

5. The Ministry of Finance shall promulgate technical design- and total cost estimate- appraising fees after reaching agreement with the Ministry of Construction and the Ministry of Planning and Investment.

Article 38.- Approving technical designs and total cost estimates

1. Bases for approving a technical design and total cost estimate:

a) The overall explanation and blueprint of the technical design;

b) The total cost estimate and the general time schedule (for projects requiring the approval of the total cost estimates and the general time schedule);

c) Documents on appraisal of the technical design and total cost estimate by the bodies having the function to manage the construction, which are assigned to make the appraisal.

2. The contents of a decision approving the technical design and total cost estimate:

a) Approving the major contents of the technical design:

– Name, location and size of the project, technology, capacity, main economic and technical indices, grade of the project, planning, architecture, standards and criteria to be applied;

– Techniques for ecological environment protection, fire and explosion prevention and fight, labor safety and industrial sanitation;

– The rationality of the technical-construction design solutions.

b) Approving technical design supplements as compared to the preliminary design, which do not alter the contents stated in the investment decision;

c) Approving the total cost estimate, the general time schedule (for projects requiring the approval of the total cost estimate and the general time schedule):

– The rationality of norms, unit prices, relevant regimes and policies and other expenses according to the States regulations, which have been applied.

– The value of the total cost estimate, including equipment in line with the investment decision.

d) The contents required for the completion of the dossiers (if any).

3. The competence to approve the technical designs and total cost estimates:

3.1. For construction investment projects using State-budget capital, investment credit capital of the State or State-guaranteed credit capital:

a) The technical designs and total cost estimates of Group A projects shall be approved by the ministers, the heads of the ministerial-level agencies or agencies attached to the Government, the Managing Boards of State corporations under the Prime Ministers direct management, the presidents of the provincial-level Peoples Committees in localities with the investment projects after they are appraised under the arrangement by the Ministry of Construction;

b) The technical designs and total cost estimates of Group B and C projects of ministries, branches, central agencies and State corporations shall be approved by the persons competent to decide the investment after they are appraised by the construction-managing agencies of the investment-deciding level;

c) The technical designs and total cost estimates of Group B and C projects under the local management, shall be approved by the presidents of the provincial-level Peoples Committees after they are appraised by the provincial/municipal Construction or Specialized Construction Services (depending on the characteristics of the projects).

The presidents of the provincial-level Peoples Committees may authorize the directors of the provincial/municipal Construction or Specialized Construction Services to approve the technical designs and total cost estimates of Group C projects under the provincial management;

d) The investors are permitted to approve detailed designs and cost estimates for auxiliary project items (fence, reception rooms) valued under 100 million VNdong, which do not affect the already approved technical designs and total cost estimates of the projects.

3.2. For construction investment projects using development investment capital of State enterprises, capital mobilized by enterprises themselves and/or commercial credit capital not guaranteed by the State:

a) For Group A projects, the appraisal and approval of their technical designs and total cost estimates shall comply with the provisions at Point a, Clause 3.1, this Article;

b) For Group B and C projects, the persons competent to decide the investment of the enterprises shall approve the technical designs and total cost estimates after they are appraised by the enterprises bodies with function to manage the construction.

4. For production and/or business investment projects of individuals and non-State economic organizations, the investors shall have to organize the appraisal and approval of the designs. The contents of appraisal by the State functional bodies defined in Clause 1, Article 37, shall be effected by the construction licensing agencies when granting the project construction permits.

5. The persons competent to approve the technical designs and total cost estimates shall take responsibility before law for the approved contents according to the provisions in Clause 2 of this Article and other provisions of law.

Article 39.- Construction permit

1. For all new construction, renovation, expansion, overhaul, preservation or upgrading projects, before being executed, the investors shall have to apply for the construction permits except for the following projects which are exempt from the construction permits:

a) Projects with investment decided by the Prime Minister and projects in direct service of national security and defense;

b) Projects for guarding of borders or islands, with investment decided by the Defense Minister or the Minister of Public Security;

c) Specialized technical projects without running through urban areas, which have had the investment decisions and their technical designs as well as total cost estimates approved by the competent bodies;

d) Projects in national parks and nature preservation areas, projects for irrigation and water supply for population in rural, highland or deep-lying areas; projects in service of afforestation or forest fire prevention and combat, with decision on construction investment being already issued;

e) Makeshifts for temporary use during the project construction in the ground areas of the projects which have gone through all construction and investment procedures;

f) Cases of renovation, upgrading, overhaul, technical equipment installation within the projects premise, without affecting the surrounding architecture and environment;

g) Structures of projects financed with foreign direct investment capital (FDI), constructions in industrial parks and works of BOT projects;

h) Infrastructure development projects, new urban area development projects and constituent projects in new urban areas, with technical designs and total cost estimates being already approved in strict accordance with the provisions of law;

i) Investment projects of Groups B and C which have had investment decisions issued by competent authorities and their technical designs as well as total cost estimates being already approved after the issuance of written appraisal by the agency with construction management function of the body competent to decide the investment or the provincial/municipal Construction or Specialized Construction Services.

2. Construction permit-exempt projects defined at Points a, g, h and i of Clause 1, this Article, before starting the construction, the investors shall have to send the approved technical design dossiers to the bodies competent to issue the construction permits for inspection and monitoring the construction and archival purposes.

3. For the construction of peoples dwelling houses.

a) The construction of new separate dwelling houses of people is subject to the State management only in term of the planning, architecture and environment. The concerned State bodies shall have to publicize conditions regarding the above aspects so that people base on such conditions to compile dossiers of application for construction permits;

b) Cases exempt from the construction permits:

– Dwelling houses built on residential land, with 3 storeys or less and the total flooring space of under 200 m2 in rural and mountain areas or beyond the planning boundaries of district towns or commune centers, except for dwelling houses built along national highways, provincial roads or district roads;

– Urban dwelling houses built within the premises of housing development projects, which have been given the lawful land use certificates and detailed planning approved by the competent authorities and have had infrastructure (intra-project roads, power supply stations, water supply and drainage systems);

– Cases of minor repairs such as wall pasting, mending or painting, roof retiling, ceiling repair, flooring, door replacement, interior decoration, renovation, repair or installation of household appliances, equipment, which do not adversely affect the structures of adjacent houses.

Article 40.- Dossiers of application for construction permits

The dossier of application for a construction permit shall include:

1. The construction permit application (made according to set form);

2. The business registration certificate (if the construction project is owned by an enterprise);

3. The valid paper on land use right as prescribed by law;

4. Project designing documents, including site plan, elevation drawing, cross-sectional drawing and foundation drawing.

Article 41.- Competence to grant the construction permits

1. The presidents of the provincial-level Peoples Committees shall grant the construction permits to projects in the territories under their management at the proposal of the directors of the provincial/municipal Construction Services.

The presidents of the provincial-level Peoples Committees may authorize the directors of the provincial/municipal Construction Services to grant the construction permits to projects under their jurisdiction.

2. When authorized to grant the construction permits, the directors of the provincial/municipal Construction Services shall have to draw up plans for organizing the granting of construction permits, classifying and delimiting areas and locations with projects to be granted the construction permits for the presidents of the provincial-level Peoples Committees to decide, to carry out administrative procedures prescribed by law and to regularly report to the presidents of the provincial-level Peoples Committees on the situation of granting the construction permits in their respective localities.

3. The presidents of the district-level Peoples Committees shall grant construction permits to separate dwelling houses under the private ownership and small-scale projects according to the assignment of responsibility by the presidents of the provincial-level Peoples Committees. The granting of construction permits to projects of these categories shall be subject to the professional guidance by the provincial/municipal Construction Services.

4. For Hanoi and Ho Chi Minh City, the regulations on construction permit granting (including the classification and delimitation of areas for construction permit granting) shall be promulgated by the presidents of the municipal Peoples Committees after consulting the Ministry of Construction, which must conform with the provisions in Articles 39,40 and 41 of this Regulation.

5. The process of granting construction permits shall be as follows:

The construction permit applicant shall compile a dossier according to the provision in Article 40 and directly file the dossier to the construction-licensing agency; the construction-licensing agency shall have to appoint professional personnel to check and receive the dossier who shall have to issue the receipt of the valid dossier and guide the applicant to supplement the dossier if it is not valid; 30 days after receiving the complete and valid dossier and issuing a receipt thereof, the construction-licensing agency shall have to grant or refuse to grant the construction permit; in case of refusal, it shall have to make a written reply clearly stating the reasons therefor. Where no written reply is made, the projects shall go ahead with next steps after informing the ward-level Peoples Committee of the date of commencing the construction and the construction-licensing agency shall have to grant the construction permit;

Agencies and individuals authorized to grant construction permits are strictly forbidden to cause difficulties to or compel the construction permit applicants to use their design drawings or hire designs according to their suggestion;

The Ministry of Construction shall guide the form and contents of the designing dossier as well as the construction-licensing procedures. The General Land Administration shall guide the regulations on valid papers on the land use right when applying for the construction permits. The Ministry of Finance shall prescribe the construction-licensing fee.

Article 42.- Permits for natural resource and mineral exploitation

If an investment project requires natural resource exploitation, the investor shall have to apply for a natural resource exploitation permit and to abide by the provisions of law on natural resources and minerals.

Article 43.- The principle for bidding management and bidder designation in investment and construction

1. The State encourages bidding for all projects on investment and construction of production and business or socio-cultural works, regardless of their capital sources.

2. Projects with investors being State enterprises or State agencies or organizations using State-budget capital, State-guaranteed credit capital, development investment credit capital of the State, development investment capital of State enterprises must be opened for bidding, except for the following projects which are entitled to bidder designation:

a) Projects of State secrets, security secrets and/or defense secrets;

b) Emergency projects necessitated by natural calamities or acts of sabotage;

c) Projects of study or experimental nature.

Bidding packages entitled to bidder designation, upon the negotiation and signing contracts therefor, upon liquidation and settlement of contracts as well as the final settlement of their investment capital, must ensure their compatibility with the contents of the investment decisions, as well as their approved technical designs and total cost estimates.

3. The organization of bidding must comply with the Bidding Regulation, ensuring its openness and fairness to all contractors participating in the bidding.

4. Contractors participating in the bidding for construction and installation must have the legal person status, have their construction operation registered at the competent agencies, have full technical and financial capabilities and experiences, and meet the requirements of the bidding dossiers.

A foreign contractor participating in an international bidding for construction and installation in Vietnam must enter into partnership with at least one fully capable Vietnamese contractor and clearly determine the contents of commitment regarding the scope of work and prices in their bids. When winning the bids, if the foreign contractors fail to fulfill such commitments, the investors shall cancel the bidding results.

5. Bid-winning units are strictly forbidden from reselling bids to other organizations or individuals for performance thereof in any form.

Article 44.- Contracts for consultancy, supplies and equipment procurement and for construction and installation.

1. In contracts for consultancy, supplies and equipment procurement and for construction and installation, the investors and contractors must be bound together in full obligations and responsibilities.

The construction and installation contracts must be guaranteed with compensation for ground clearance so that the contractors may perform the contracts according to the prescribed time-tables.

2. Before submitting the bidding results for approval by the competent authorities, investors shall have to clarify the contractual contents with contractors proposed to be the bid winners.

After obtaining the written approval of bidding results from the competent authorities, the investors shall negotiate to complete the contracts for signing on the basis of contents already committed and the approved bidding results. For international contracts, their contents must be approved by the competent authorities. The contents of international contracts and domestic contracts with big bidding packages for Group A projects and the bidding results being approved by the Prime Minister must be approved by the competent authorities (ministers, presidents of provincial-level Peoples Committees, Managing Boards of State corporations under the direct management by the Prime Minister). The investors shall have to perform the contracts and take responsibility before law for the signed contracts.

3. In case of bidder designation, the investors shall have to base themselves on the approved technical designs and total cost estimates to negotiate and sign contracts according to the provisions of legislation on contracts.

Article 45.- Conditions for starting a project

All projects, before getting started, must fully satisfy the following conditions:

1. Having the construction permit (for projects requiring the construction permits).

2. Having the lawful contract on assignment and acceptance of construction and installation bid.

3. Having completed the compensation, the ground clearance and hand-over of land ground for use as prescribed by law.

4. Ensuring capital for payment according to the contract performance tempo.

5. For projects using State-budget capital, State-guaranteed credit capital, development investment credit capital of the State and/or development investment capital of State enterprises, if they have just completed only the contents prescribed in Clause 1, this Article, but need to start their construction, there must be the technical designs and cost estimates of items with construction to start, which have been approved by competent persons, as well as the lawful contracts on bid assignment and acceptance.

Article 46.- Controlling the quality of construction works

1. Responsibilities of investors:

The investors shall have to control the quality of construction works right from the stage of investment preparation and execution till the completion of construction and putting the projects into exploitation and use. The investors responsibilities to control the construction quality are stipulated as follows:

a) To strictly abide by the States current regulations on the elaboration, appraisal and submission for approval of pre-feasibility study reports, feasibility study reports, technical designs and total cost estimates, and on organization of bidding or bid selection;

b) To select organizations for consultancy, materials and equipment supply and construction as well as installation, which have the legal person status and full and suitable capability to undertake the work of investment preparation, technical designing and total cost estimates, materials and equipment supply, construction and installation and supervision of the construction quality;

c) To inspect the quality of materials, construction structures and installation equipment in strict accordance with the requirements of the approved designs and technical standards;

d) To be entitled to request the organizations which provide consultancy, supply materials and equipment and undertake the construction and installation bidding to explain the quality of the materials, equipment and services they have provided and performed. For works which fail to achieve the prescribed quality according to the technical designs and standards, the investors shall be entitled to request the repair and/or replacement thereof or refuse to accept them.

2. Responsibilities of the investment and construction consultancy organizations:

The investment and construction consultancy organizations shall take responsibility before the investors and law for the strict observance of investment and construction procedures, for the quality of their consultancy products in the pre-feasibility and feasibility study reports, survey dossiers, technical designs and total cost estimates, as well as other consultancy contents; be subject to regular inspection by investors and agencies exercising the State management over the investment and construction.

3. Responsibilities of the construction contractors:

a) To be allowed only to contract the construction of projects in strict accordance with investment and construction procedures and suitability to their financial capabilities; to construct in strict accordance with the approved designs; to correctly apply the prescribed construction technical criteria and be subject to the regular supervision and inspection of the project quality by the investors, the designing organizations and the State appraisal bodies according to their respective assigned responsibilities for control of quality of construction works;

b) To take responsibility before the investors and law for the quality of the project construction and installation, including work performed by subcontractors, as prescribed by the contracts on construction and installation bid assignment and acceptance;

c) Materials and construction structures used in the projects must be evidenced with quality certificates being sent to the investors for inspection before they are used according to the regulations;

d) To organize the project quality control system in order to control the construction products during the process of construction.

4. Responsibilities of the State management bodies in charge of construction quality control:

a) The Ministry of Construction shall exercise the unified State control of the construction works quality nationwide, having the responsibilities:

– To promulgate regulations and guiding documents on ensuring the quality of construction works;

– To guide the inspection of the application of process of controlling the construction quality, construction technical criteria and certify the construction quality under the States standards;

– To organize regular and irregular inspection of quality of constructions throughout the country, particularly the quality of Group A projects, promptly reorganize the work of construction quality control upon detection of any mistakes. Biannually, the Ministry of Construction shall have to report to the Prime Minister on the quality of constructions and projects under construction in order to work out timely handling measures and to ensure safety for production and users as well as the investment efficiency;

b) The provincial/municipal Construction Services are agencies of the Peoples Committees of the provinces and centrally-run cities to exercise the State control of the quality of constructions in their respective provinces and cities, which shall also take responsibility for the quality of Group B and C construction projects in the localities.

Article 47.- Test on completion and acceptance of construction projects

1. The test on completion and acceptance of projects shall be carried out in phases after fulfilling the volume of work on hidden constructions, bearing structures, project components or items and entire projects.

2. The test on completion and acceptance of part or whole of a construction project shall be carried out by the investor with the participation of consultancy, designing, construction and installation organizations as well as equipment supplier (if any) and quality expertising agency according to the assigned responsibility.

For project sections and items or important projects which require fire and explosion prevention and combat or which, when being put to exploitation and use, cause adverse impacts on the environment, there must be written approval of the above-said requirements by the concerned State management bodies when they are tested on completion and accepted before being put into use.

3. For a number of projects which are important or require complicated techniques and technologies, the Prime Minister shall decide the establishment of the State Council for Test on Completion and Acceptance at the request of the Minister of Construction or heads of the ministries with projects to inspect the performance of the test on completion and acceptance work by investors. The grassroots Councils for Test on Completion and Acceptance set up by investors shall have to assist the State Council for Test on Completion and Acceptance to organize the project test on completion and acceptance as prescribed.

4. The Ministry of Construction shall provide detailed guidance on the work of quality control, test on completion and acceptance of construction projects.

Article 48.- Handling of project incidents

1. In the course of project construction, warranty and use, if any incident occurs, the investors, the project users and the local administration shall have to protect the scenes, promptly report and declare the incident to the competent State bodies.

2. The contents of the handling of project incidents shall be guided jointly by the Ministry of Construction and the Ministry of Justice.

Article 49.- Granting and payment of investment capital

1. For construction and installation projects or bidding packages implemented in the form of bidder designation, the investment capital payment shall be based on the value of performed work volume checked and accepted monthly according to the signed contracts.

The investors, financial organizations or banks (depending on the investment capital sources of the projects) shall have to make the payment to the contractors according to the provisions in this Clause.

2. For construction and installation projects or bidding packages opened for bidding, the payment can be made in advance and according to the volume of performed work under the following regulations:

a) Advance of capital:

– For bidding packages valued at 50 billion VNdong or more each, the advance level shall be equal to 10 of the contract value but shall not exceed the annual capital plan of the bidding package;

– For bidding packages valued at from 10 to under 50 billion VN dong, the advance level shall be equal to 15 of the contract value but shall not exceed the annual capital plan of the bidding package;

– For bidding packages valued at under 10 billion VN dong, the advance level shall be equal to 20 of the contract value but shall not exceed the annual capital plan of the bidding package;

The advance of capital shall be made immediately after the contracts take effect.

b) Recovery of advance capital:

– The time for recovering the advance capital will begin when the bidding package receives payment for the completed work volume achieving 20-30 of the work volume value;

– The advance capital shall be gradually recovered in every period of payment for the completed work volume and completely recovered when the bidding package receives the payment for the completed work volume reaching 80 of the work volume value.

3. For the procurement of equipment, the advance capital shall be allocated according to the schedule of payment by the investors to the equipment suppliers or manufacturers as prescribed in the economic contracts and the advance is made until the equipment are put into the warehouses of the investors (for equipment requiring no installation) or are completely installed, test-run and accepted (for technological equipment requiring installation).

4. For consultancy contracts, the minimum advance level is equal to 25 of the value of the bidding package, but shall not exceed the amount allocated from the whole years capital plan for hired consultancy.

5. The maximum capital amount advanced for ground clearance shall not exceed the annual capital plan and be recovered when the ground clearance compensation is completed.

6. The Ministry of Finance shall have to consider and decide the capital advance on a case-by-case basis for a number of construction structures or semi-finished products of great value, which must be manufactured in advance in order to keep the investment tempo, and materials of a number of special types or materials to be seasonally reserved as well as a number of other activities of other expenditure categories when necessary.

7. For projects financed by foreign capital or bidding packages opened for international bidding with the advance of capital and other payments being stipulated in the credit agreements signed with the Vietnamese Government, such agreements shall apply.

8. If in the year the construction is completed or the project items or projects are put into exploitation and use, the full payment for the volume of construction and installation of such project items or projects in that year shall be made only when the final settlement of projects is made with the investors; for foreign contractors, the temporary withholding of capital and payment shall comply with the international practices.

9. The investment capital shall be paid according to schedule and bid winning price (for package contracts) or bid winning unit price and specific terms written in the contracts (for contracts with article on price adjustment), based on the test-running and acceptance of project volume and quality in each period of payment. Upon the completion of the project, the settlement of bidding packages must not exceed the total cost estimate and the total investment already approved by the persons competent to decide the investment.

10. In the course of project execution, if the investor delays the payment for the completed work volume, he/she shall have to pay the bank loan interests to the contractor for such volume of late payment, including even the bidding and bidder appointment or other forms of bid hand-over. On the contrary, if the contractor fails to fulfill the commitments made in the contract, thus causing economic loss to the project, the investor shall apply the regime of fine as prescribed by law.

11. The above stipulations shall also apply to contracts between the main contractors and the subcontractors; the main contractors, the subcontractors and the investors shall have to fully implement them.

12. For non-business capital used for construction and capital for branch and territorial development planning as well as urban and rural construction planning, the settlement of investment capital shall be guided by the Ministry of Finance after consulting the Ministry of Planning and Investment and the Ministry of Construction.

Chapter IV

COMPLETION OF CONSTRUCTION AND PUTTING PROJECTS INTO EXPLOITATION AND USE

Article 50.- Completion of construction and putting projects into exploitation and use

Work to be performed upon the completion of construction shall include:

1. Test-running, accepting and handing over the projects.

2. Effecting the completion of project construction.

3. Operating the projects and guiding the use of the projects.

4. Providing warranty for the projects

5. Making final settlement of the investment capital.

6. Approving the final settlement.

Article 51.- Test-running, accepting and handing over the projects

1. A construction project shall only be fully handed over to the investor when its construction and installation is completed according to the approved design, it operates in accordance with the technical requirements and the test-running and acceptance meet the quality requirements (including the completion of the project interior and exterior and the ground cleaning).

Depending on specific conditions of each project, in the course of construction, parts and items of the project or constituent projects may be temporarily handed over for exploitation in order to create sources of capital for accelerating the completion of the entire project.

2. When the entire project is handed over, the dossiers on the project completion, documents on matters related to the project hand-over and all documents of instructions on the use, management and maintenance of the project.

All dossiers on project construction must be submitted for archival purposes according to the provisions of legislation on State archive.

The record on the general project test-running, acceptance and hand-over shall serve as a legal document for the investor to put the project to exploitation and use and for the final settlement of investment capital.

3. For new urban area projects, upon the completion of infrastructure development projects or new urban area development projects, the investors shall have to compile the dossiers on the project completion and hand over the management of the exploitation and use of the entire infrastructure works on the land area of the project to the provincial-level Peoples Committee for exploitation and use management.

One month before the project hand-over is organized, the investor and the provincial-level Peoples Committee shall have to complete the inventory of the public property, revaluate the fixed assets, maintain and repair infrastructures, complete the documents of instructions on the use, management and maintenance of the project before the hand-over.

The provincial-level Peoples Committee shall have to organize the acceptance of infrastructure works and hand them over to the specialized organizations for management, exploitation and use, and at the same time fill in the procedures for the establishment of new administrative unit as prescribed by law.

4. For infrastructure development projects and new urban area development projects which must be built for many years, the hand-over may be organized in various phases according to the project investment phasing plan already approved by the competent State bodies.

Article 52.- Termination of the project construction

1. The construction activities shall end when the entire project is handed over to the investor.

2. After the hand-over of the project, the construction contractor shall have to liquidate or remove all of his/her property from the project construction area and return the land borrowed or rented in service of the construction according to the contract, and shall have to monitor and repair the project damage until the expiry of the project warranty duration.

3. The construction and installation contract shall only terminate completely and be fully liquidated and settled after the expiry of the project warranty duration.

4. The tested and accepted construction projects must be registered by the investors as their assets according to the provisions of law. The dossiers for asset registration shall be the general project test, acceptance and hand-over record.

Article 53.- Operating projects

1. After accepting a project, the investor shall have to exploit its capacity, synchronize the production, business and service organization, improve the organization and management method in order to bring into full play the economic and technical norms set in the project.

2. The investor or the organization assigned to manage and use the project shall have to maintain it.

3. The Ministry of Construction shall guide and stipulate the regime of project maintenance.

Article 54.- Construction project warranty

1. The minimum project warranty duration.

The minimum project warranty duration shall be calculated from the date the contractor hand over the to be- guaranteed project or project items to the investor and is stipulated as follows:

a) The 24-month warranty for important works of the State and works of Group A projects;

b) The 12-month warranty for other works.

2. The minimum amount of money for project warranty:

The minimum amount of money for project warranty is calculated in percentage () of the value of the construction and installation volume of project items in the warranty duration is stipulated as follows:

– For projects with the minimum warranty period of 24 months, it is 3;

– For projects with the minimum warranty period of 12 months, it is 5;

– The construction warranty money shall bear interests like bank deposits;

– Work or contracts performed by foreign contractors shall be calculated according to the international practices.

Article 55.- Construction works insurance

1. When conducting investment and construction, the investor shall have to buy insurance for the construction works at an insurance company operating lawfully in Vietnam.

2. The expense for the insurance of the construction works is part of the investment capital of the project, calculated into the total cost estimate (cost estimate) for the construction works, which has been approved. The insurance expense is calculated in percentage () of the value of the construction work.

3. The consultancy organizations and construction and installation contractors shall have to buy insurance for the supplies, equipment and houses and workshops in service of the construction, buy accident insurance for the laborers, the civil liability insurance for the third entity, insurance for surveying and designing products in the course of project execution. The insurance premiums shall be calculated into the production cost.

4. The insurance terms, the rights and obligations of the parties involved in the insurance shall be agreed upon by parties but must not contravene the provisions of Vietnamese laws or international practices.

5. When incidents occur, the insurance company shall have to promptly make the compensation for damage incurred according to the provisions of legislation on insurance.

6. The Ministry of Finance shall provide detailed guidance on the regime of insurance for construction works.

Article 56.- Final settlement of investment capital

1. All investment projects of the State bodies and State enterprises must have their investment capital finally settled when they are completed and put into exploitation and use. The investors shall have to make the final settlement of account of the investment capital.

2. Within 6 months after a project is completed and put into operation, the investor shall have to complete the report on the final settlement of investment capital for submission to the person competent to decide the investment.

3. Investment projects using capital from different sources must have each capital source clearly analyzed in the final settlement reports.

4. The report on the final settlement of investment capital must determine fully and accurately the investment capital allocated annually, the total capital invested in the execution of the project; the value of asset handed over for production and use. For investment projects lasting for many years, when making the final settlement of accounts, the investors shall have to convert the investment capital already allocated into base value at the time of hand-over and putting the project into operation in order to determine the new increase of the fixed asset and the value of assets handed over.

5. The Ministry of Construction shall coordinate with the Ministry of Finance and the Ministry of Planning and Investment in guiding the unified capital conversion method for application by the investors in making the final settlement.

6. The Ministry of Finance shall provide guidance on the time for making the final settlement, on the contents of the final settlement report, the examination and ratification of the final settlement of investment capital of the projects funded by State-budget capital, investment credit capital of the State, credit capital guaranteed by the State, and/or capital mobilized by State enterprises for development investment.

Article 57.- Examination and ratification of final settlement of investment capital

All investment projects using State-budget capital, State-guaranteed credit capital and/or development investment credit capital of the State must have the final settlement of their investment capital examined and ratified according to the following provisions:

1. Examination of final settlement of investment capital:

Before the final settlement of investment capital is ratified, all reports on the final settlement must be examined. The person competent to ratify the final settlement shall decide form of organizing the examination of final settlement of accounts according to the regulations:

a) The examination of the final settlement shall be organized by the functional agency of the level competent to ratify the final settlement or by a hired auditing organization;

b) Responsibility for examination of final settlement:

– For projects with their final settlement being examined by the functional agency of the level competent to ratify the final settlement of account, the examination agency shall bear responsibility for the examination results;

– For projects examined by the auditing organization, the auditing organization shall bear full responsibility for the examination results; the functional examination agency shall have to bear the responsibility for the re-examined contents.

2. Ratification of the final settlement of investment capital:

a) The Minister of Finance shall ratify the final settlement of investment capital of Group A projects of the State under the Prime Ministers authorization;

b) For the remaining projects, the persons competent to decide the investment shall ratify the final settlement of investment capital.

3. The expense for examination and ratification of final settlement of investment capital shall be accounted into the approved total cost estimate. The Ministry of Finance shall guide the management of the expenses for examination and ratification of final settlement of investment capital.

Article 58.- Refunding the investment capital

1. The recovery of investment capital is a compulsory principle for all investment projects which require the capital recovery as prescribed.

2. For investment projects financed by State-budget capital, State-guaranteed credit capital, development investment credit capital of the State and/or investment capital of enterprises whose investors shall have to refund the capital or repay the borrowed capital, the sources of capital to be recovered shall include the total basic depreciation amount, part of the profits and other capital sources (if any).

Where the capital cannot be fully recovered and repaid, the investors shall have to bear responsibility according to the provisions of law.

3. For investment projects financed by capital borrowed directly by the investors from foreign countries with the State guaranty or borrowed commercial capital with the State guaranty, the investors shall have to reach agreement with the guaranteeing agency on the plan for the repayment of borrowed capital under the capital-borrowing contracts and the provisions of law.

Chapter V

FORMS OF MANAGEMENT OF PROJECT EXECUTION

Article 59.- Forms of management of project execution

Depending on the scale and nature of projects and their financial capabilities, the investors shall opt for one of the following forms of management of project execution:

1. The investor shall directly manage the project execution;

2. The manager shall run the project;

3. Turn-key project;

4. Self-execution of the project.

For projects funded by State budget capital, States investment credit capital and/or State-guaranteed credit capital, the investors shall have to submit to the persons competent to decide the investment the form of management of the project execution for decision.

The Ministry of Construction shall prescribe the expenses for the management of project execution after consulting the Ministry of Finance and the Ministry of Planning and Investment.

Article 60.- Form of direct management of project execution by the investor

1. The investor must have a fully capable project management apparatus or set up a project management board to manage the project.

2. The investor or the project management board shall have to register his/her or its operation at the competent agency.

Article 61.- The form of management of project by the manager

1. If the investor has no conditions to directly manage the project execution, he/she shall have to hire a specialized body or to assign the specialized management board to act as manager of the project; the investor shall have to report the project management organization to the person competent to decide the investment for approval.

2. The project manager shall be a legal person having the investment and construction consultancy capability and registration.

3. The project manager shall have the responsibility:

a) To directly sign contracts and settle contracts (if so assigned by the investor) or establish contacts for the investor to sign and settle contracts with surveying, designing, materials and equipment-supplying, construction and installation organizations and settle contracts with contractors based on the confirmation by the project manager;

b) To act on behalf of the investor to supervise and manage the entire process of project execution;

c) To take responsibility before the investor and law for the management of the project from the process of investment execution till the completion of the construction and putting the project into exploitation and use as well as for other relevant matters stated in the contract.

Article 62.- Form of turn-key

1. The form of turn-key shall apply when the investor is allowed to organize bidding to select the general contractor for the execution of the entire project from the surveying, designing, procurement of supplies and equipment, construction and installation till the project is handed over and put into exploitation and use.

The general contractor for the project execution may subcontract the surveying, designing or part of the construction and installation volume to subcontractors.

2. For projects using capital sources defined in Articles 10 and 11 of this Regulation, the turn-key form shall only apply to Group C projects; for other cases, the Prime Ministers permission is required.

3. The investor shall have to organize the test-running and acceptance of the project when it is completed and put to use.

Article 63.- Form of self-execution of project

1. Investors who are fully capable of carrying out production and construction activities suitable to the projects requirements may apply the form of self-execution of the project.

The form of self-execution of project shall only apply to projects using the lawful capital of the investor him/herself (own capital, borrowed capital, capital mobilized from other sources).

2. When applying the form of self-execution of project (self-production, self-construction), the investor shall have to strictly supervise the production and construction and take responsibility before law for the quality of the product and the quality of the construction works.

The Ministry of Construction shall provide detailed guidance on forms of project management.

Chapter VI

CONSTRUCTION COST

Article 64.- Principles for elaborating construction cost estimates

1. Projects using State-budget capital, State-guaranteed capital and/or development investment credit capital must draw up all documents on estimate of necessary cost of the construction work.

2. The investor and the consultancy organization shall have to base themselves on the States regulations on management of construction costs to elaborate and submit to the competent person for ratification the total cost estimate and construction item cost estimates, which shall serve as basis for organizing the construction and installation bidding and the cost management after the bidding.

3. The construction and installation contractor shall base on the States regulations on management of construction costs as reference when elaborating the price offered in the bid for construction works.

Article 65.- Management of construction costs

1. The State shall manage the construction costs through the promulgation of regimes and policies, principles and methods for elaborating unit prices and estimates; technical and economic norms; norms for investment and construction consultancy expenses; the investment capital ratio so as to determine the total investment of the project, the total cost estimate, the construction cost estimate.

2. The Ministry of Construction shall, together with the concerned ministries and State management bodies at different levels, have to manage the construction costs, based on the above-mentioned principles.

3. The provincial/municipal Construction Services shall work together with concerned bodies in elaborating the construction unit prices in their respective localities and submit them to the provincial-level Peoples Committee for promulgation and application to the construction works of the State or State enterprises in the provinces and cities.

4. The Ministry of Construction shall guide the elaboration and management of construction costs.

Article 66.- The total cost estimate, construction item cost estimates

1. The total project cost estimate shall serve as basis for the management of construction costs, including costs of surveying, designing, construction and installation, equipment procurement, land use, compensation for ground clearance, resettlement of population, construction work insurance premiums, taxes, other expenses including those for relevant scientific and technological studies with regard to Group A projects and a number of other projects with special requirements, permitted by the persons competent to decide the investment, and 10 reserve expense (including inflation rate and newly arising volume).

2. For construction and investment projects of State enterprises, the construction cost in all forms of bidding, bidder designation or self-execution must not exceed the total construction cost estimate of construction item cost estimates, which have already been ratified. Where due to force majeure reasons, the arising cost exceeds the ratified total construction cost estimate or construction item cost estimate, the appraisal thereof must be conducted and reported to the persons competent to decide the investment for consideration and decision.

Chapter VII

INSPECTION, EXAMINATION AND HANDLING OF VIOLATIONS

Article 67.- Inspection and examination of investment and construction activities

1. All investment and construction activities by organizations and individuals, including foreigners and overseas Vietnamese operating on the Vietnamese territory shall be subject to inspection and examination by the functional State bodies according to each field of management, with distinction of projects using State-budget capital, State-guaranteed credit capital, development investment credit capital of the State and/or investment capital of State enterprises, joint-venture enterprises or people.

2. Depending on specific conditions of each investment project, the inspection and examination can be conducted for each or all stages of the investment and construction process.

3. The inspection and examination of investment and construction activities must be based on the provisions of legislation on inspection and examination.

Article 68.- Handling of violations.

1. Any organizations or individuals, including foreigners and overseas Vietnamese, conducting investment and construction activities on the Vietnamese territory that breach the provisions of this Regulation shall, depending on the nature and seriousness of their breaches, be administratively sanctioned or examined for penal liability; if they cause damage they shall have to compensate therefor as prescribed by law.

2. The functional State bodies as well as State officials and employees performing the State management over investment and construction, that fail to fulfill their assigned tasks, set by themselves the procedures or requirements beyond the regulations, delay the settlement of requirements of individuals, enterprises, agencies as well as investment and construction agencies even when they have satisfied all prescribed conditions, shall, depending on the nature and seriousness of the violations, be disciplined or examined for penal liability; if damage is caused, the compensation shall be made therefor according to the provisions of law.

Chapter VIII

IMPLEMENTATION PROVISIONS

Article 69.- The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government, the presidents of the Peoples Committees of provinces and centrally-run cities and the Managing Boards of the State Corporations shall have to organize the implementation of this Regulation and shall not promulgate separate guiding documents for each ministry, branch and locality (except for the ministries so assigned by the Government as stated in this Regulation).

The Minister of Construction shall, together with the Ministry of Planning and Investment and the Ministry of Finance, coordinate with other concerned branch-managing ministries in monitoring and inspecting the implementation of the Regulation on Investment and Construction Management.

Article 70.- This Regulation takes effect 15 days after its signing and shall apply to all economic sectors throughout the country.

 

 

ON BEHALF OF THE GOVERNMENT
PRIME MINISTER

Phan Van Khai

APPENDIX

CLASSIFICATION OF INVESTMENT PROJECTS UNDER THE REGULATION
ON INVESTMENT AND CONSTRUCTION MANAGEMENT

(Issued together with Decree No. 52/1999/ND-CP of July 8, 1999 of the Government)

The investment projects (excluding foreign direct investment projects) are classified into 3 groups A, B and C according to the following regulations:

ORDINAL CLASS OF INVESTMENT PROJECTS TOTAL INVESTMENT NUMBER CAPITAL

I. GROUP A

1 Projects on protection of national security and defense, which are of Unlimited State secrets, projects of important socio-political significance, establishing and building new industrial park infrastructure

2 Projects on production of noxious substances, explosives regardless Unlimited f investment capital scale

3 Projects on: power industry; oil and gas exploitation, processing of oil Over 400 billion and gas, chemicals, fertilizers, machine building (including ship VNdong urchase and building, car assembly), cement, metallurgy, minerals exploitation and processing; traffic projects: bridges, seaports, river ports, airports, railways, national highways

4 Projects on: irrigation, traffic (other than those mentioned in I.3 above), water Over 200 billion supply and drainage, technical infrastructure electric technology, production VNdong f information, electronic, informatics, chemo-pharmaceutical, medical equipment, other mechanical engineering structures, production of materials, post and telecommunication, domestic BOT, construction of living quarters, intra-city roads in urban areas with detail planning already ratified

5 Projects on: technical infrastructure of new urban areas; projects on light indus- Over 100 billion rial production, chinaware, porcelain, glassware, printing; national parks, nature VNdong onservation zones, construction equipment procurement, agricultural and fores- trial production, aquaculture, agricultural and forestrial products processing.

6 Projects on: healthcare, culture, education, radio, television, civil construction, Over 75 billion arehouse, tourism, physical training and sports, scientific research and VNdong ther projects

II. GROUP B

1 Projects on: power industry, petroleum, chemicals, fertilizers, machine- From 30 to 400 building (including ship purchase and building, car assembly), cement, billion VNdong etallurgy, minerals exploitation and processing; traffic projects: bridges, seaports airport, railways, national highways

2 Projects on: irrigation, traffic (other than those defined in point II.1); water supply From 20 to 200
and drainage, technical infrastructure, electric technique, production of billion VNdong nformation, electronic, informatic, chemo-pharmaceutical, medical equipment, other mechanical engineering structures, production of materials; construction of living quarters, general education schools, intra-city roads in urban areas with detailed planning already ratified

3 Technical infrastructure projects of new urban areas; projects on light industry, From 15 to 100 chinaware, porcelain, glassware, printing; national parks, nature conservation billion VNdong ones, construction equipment, agricultural and forestrial production, aquaculture, agricultural and forestrial products processing

4 Projects on: healthcare, culture, education, radio, television, civil building, ware- From 7 to 75 ouses, tourism, physical training and sports, scientific research, and other billion VNdong rojects

III. GROUP C

1 Projects on: power industry, petroleum, chemicals, fertilizers, machine Under 30 billion uilding (including ship purchase and building, car assembly), cement, VNdong etallurgy, mineral exploitation and processing; traffic projects: bridges, seaports, airports, railways, national highways, general education schools in the planning (regardless of capital level)

2 Projects on: irrigation, communications (other than those defined at Point Under 20 billion II.1), water supply and drainage, technical infrastructures, electric VNdong echnique, electronics, informatics, chemo-pharmaceuticals, medical equipment, other mechanical engineering works, materials production, post and telecommunications, domestic BOT, construction of residential house quarters, general education schools, intra-city traffic roads of urban areas having detailed planning already approved

3 Projects on: technical infrastructure of new urban areas; projects on light Under 15 billion industry, chinaware, porcelain, glassware, printing, national parks, nature VNdong onservation zones, construction equipment, agricultural and forestrial production, aquaculture, agricultural and forestrial product processing

4 Projects on: Healthcare, culture, education, radio, television, civil construction Under 7 billion warehouses, tourism, physical training and sports, scientific research and VNdong other projects

Notes:

1. Group A projects on railways or land roads must be phased out according to the length and grades of railways or roads as well as bridges under the guidance of the Ministry of Communications and Transport after consulting the Ministry of Planning and Investment.

2. Projects on the construction of working offices and buildings of State bodies must be implemented under the Prime Minister’s decisions.-

 

 

ON BEHALF OF THE GOVERNMENT
PRIME MINISTER

Phan Van Khai

 

 

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