Nghị định 177-CP

DECREE

ON THE PROMULGATION OF THE REGULATION ON THE MANAGEMENT OF INVESTMENT AND CONSTRUCTION

THE GOVERNMENT

Pursuant to the Law on Organization of the Government on the 30th of September, 1992;
At the proposals of the Minister of Construction, the Minister of Finance and the Minister-Chairman of the State Planning Committee:

DECREES:

Article 1.- To issue together with this Decree the Regulation on the Management of Investment and Construction in replacement of the Regulation on the Management of Capital Construction issued together with Decree No. 385-HDBT on the 7th of November 1990, and the Regulation on the Drawing up, Inspection and Approval of Construction Designs issued together with Decree No. 237-HDBT on the 19th of September 1985 by the Council of Ministers.

Article 2.- This Decree takes effect on the date of its signing.

Article 3.- The Minister-Chairman of the State Planning Committee, the Minister of Construction and the Minister of Finance shall have to direct the detailed implementation of the Regulation on the Management of Investment and Construction issued together with this Decree.

Article 4.- The Ministers, the Heads of ministerial-level agencies, the agencies attached to the Government and the Presidents of the People's Committees of the provinces and cities directly under the Central Government shall have to implement this Decree.

REGULATION

ON THE MANAGEMENT OF INVESTMENT AND CONSTRUCTION (ISSUED TOGETHER WITH DECREE No. 177-CP OF THE GOVERNMENT ON THE 20th OF OCTOBER, 1994)

Chapter I

GENERAL PROVISIONS

Article 1.- Definition:

In this Regulation, the following terms are understood as follows:

1. Management of investment and construction: To manage investment and construction is to exercise State management of the process of investment and construction from the determination of the investment project to the implementation of the investment and also of the process of putting the project into operation and use according to the set objective.

2. Investment project: An investment project is an assortment of suggestions concerning the disbursement of capital to create, expand or transform given objects aimed at realizing an increment in quality or an improvement or upgrading of the quality of a certain product or services in a given period.

3. Construction projects: A construction project is a product of the construction and assembly technology associated with land (including water area, the sea and the continental shelf) created by construction materials, equipment and labor.

A construction project may consist of one or many installations in a synchronous technological chain (this may include cooperation in production) in order to produce the end-product stated in the project.

4. Investor: The investor is the owner of the capital. An investor may be an organization or an individual who contributes the whole or part of the capital and takes responsibility for mobilizing the remaining part of the capital to invest as prescribed by law.

In case the investment capital of the project is chiefly owned by the State, the investor is the one who is granted the decision on investment right from the moment the project is drawn up and who is given the responsibility of directly using the capital.

5. Total investment: Total investment is the investment projected to be spent on the whole process of investment aimed at achieving the objective of investment in order to put the project into operation and use according to the requirement of the project (including allowance made for an increase of prices).

6. Total estimated cost of the project: Total estimated cost is the total expenditures necessary for the investment in the project which is minutely calculated in the stage of technocal designing. This total estimated cost comprises expenditures related to the survey, designing, construction, purchase of equipment; expenditures in the use of the land on which compensation is to be made for the displacement of former constructions or for clearing the ground; expenditures on out-houses, working offices, the temporary dwelling of the construction workers in large-scale constructions; and other expenditures, including reserve expenditures (including allowance made for an increase of prices).

7. Statement of accounts concerning the investment capital: An investment capital account is the whole of lawful expenditures already made in the process of investment aimed at putting the project into operation or use (not counting the expenditures to overcome consequences of natural disasters and enemy sabotage and unreasonable and unlawful expenditures).

8. Construction norms: The construction norms are the legal documents concerning the regulations on technical conditions which must be used in the designing of the project construction, the management of civil and industrial projects.

9. Construction criteria: Construction criteria are prescribed technical norms in the carrying out of survey, designing, assembly and construction and test operation on completion, in order to ensure the quality of the project. They differ from one branch of construction to another and are issued by the State or the managing board of the controlling ministries of the specialized construction services.

Article 2.- Fundamental requirements in the management of investment and construction:

1. To ensure strict implementation of the objectives of the socio-economic development strategy in each period along the socialist orientation. To achieve economic restructuring along the line of industrialization-modernization, to accelerate the economic growth rate, and to improve the material and cultural life of the people.

2. To mobilize and make the most effective use of domestic and foreign sources of investment in Vietnam, to make good use of the natural resources, labor and land potentials and all other potentials while protecting the ecological environment.

3. All construction must comply with the approved plans, have rational advanced and beautiful designs and apply advanced construction technology. The construction and assembly must conform to the schedule, achieve high quality with reasonable expenditures and adopt the system of construction guaranty.

Article 3.- Fundamental principles of the management of investment and construction:

1. The management of investment and construction must ensure the creation of products and services accepted by the society and market in terms of prices and quality and meeting the objectives of socio-economic development in each period.

2. Realization of unified State management in terms of mechanism, policies and economic and technical norms for the whole process of investment and construction from general planning and planning to the mobilization and utilization of capital, selection of technology, architecture and design solutions, technical design, assembly, insurance and guaranty of the project.

3. Strict compliance with the order of investment and construction.

4. Clear delineation of the function of State management from the management of production and business. Clear definition of the responsibilities of the State management agencies, the investors, the consultancy organizations, the construction businesses, and the material and equipment supply businesses in the process of investment and construction.

Article 4.- Order in investment and construction:

All investments and constructions shall have to follow this three-period order:

1. Preparation for investment;

2. Carrying out of investment;

3. Completion of construction and putting the product into operation or use.

Article 5.- Classification of investment projects:

Depending on their character and scale, the investment projects are divided into three groups, A, B and C. The characteristics of each group are defined in the Appendix issued together with this Regulation (except for the projects using direct foreign investments which shall have a separate regulation).

Article 6.- State managerial responsibility in investment and construction:

1. The Government exercises unified management of investment and construction by all economic sectors according to law and in conformity with the strategy for socio-economic development, defense and security and with the set general program and plan. The Government shall promulgate policies on the management of investment and construction policies to encourage investment in different areas and sectors of the economy, and preferential policies in investment as well as in the mechanism of capital mobilization and retrieval.

2. The Prime Minister shall decide the investment projects in Group A and empowers the ministers, the heads of ministerial-level agencies, and the Presidents of the People's Committees in the provinces and cities directly under the Central Government to decide the investment in the projects of Group B and Group C as prescribed by this Regulation. With regard to the projects in Group B, before the investment decision is made, thy must have the approval of the Minister-Chairman of the State Committee. With regard to the investment projects of the agencies attached to the Government or the organizations and agencies attached to the Central Government, the Prime Minister shall empower the heads of these agencies to decide on the investment in the projects in Group C. The Prime Minister shall empower the Minister-Chairman of the State Planning Committee to decide on the investment in the projects in Group B.

3. The State Planning Committee:

The State Planning Committee shall have to study the mechanism and policies on the management of investment, work out the strategic aims and the socio-economic development plans in each region and territory, determine the investment structures and the list of priority projects and submit them to the Prime Minister for examination, approval and promulgation, or it may be empowered by the Prime Minister to promulgate them. The Committee shall have to balance the resources to ensure the needs of investment according to the development targets and the economic structure; direct the elaboration of the projects, preside over the expertise of the investment projects in Group A and submit them to the Prime Minister for decision to invest; inspect and supervise the implementation of the investment plan funded by sources under State management; ensure the necessary factors for the realization of the plan of putting part by part the results of investment into operation.

4. The Ministry of Construction:

The Ministry of Construction shall have to study the mechanism and polcies on the management of construction and the plan for rural and urban construction and submit them to the Prime Minister for approval and promulgation. It may also have to issue or agree with specialized construction services to issue the norms, rules and regulations on the management of quality of construction and the construction economics (the system of economic and technical norms and targets, the general unit price) it shall also preside over the expertise the total estimate of expenditures of projects in Group A and submit them to the Prime Minister for examination before empowering the Minister of the controlling ministry to approve it. The Ministry of Construction shall exercise unified State management of consultancy work in construction investment and the business of construction and assembly, and the management and guidance for the organization of bidding and selection of consultants in bidders in construction and assembly.

5. The Ministry of Finance:

The Ministry of Finance shall have to study the mechanism of managing the investment capital sources, the distribution of the total capital from the annual State investment budget and the measures to ensure its balance, then submit them to the Prime Minister for examination and promulgation or it may be empowered by the Prime Minister to promulgate them. The Ministry of Finance shall manage and allocate the State investment budget and preferential credits from the State investment budget and preferential credits from the State budget to the projects and program targets defined by the Government or re-loan to the businesses through the chosen bank. It shall inform the investors of the plan of annual budget allocation with regard to the projects which meet the conditions currently prescribed. The Ministry shall also ensure the State budget capital and preferential credits for the projects already registered in the investment plan, control the use of investment capital, direct the drawing up of the final statement of accounts when the project (or part of the project or installation) is completed and put into operation, and inspect the balance of accounts before the investment management agency's approval.

6. The Vietnam State Bank:

- The Vietnam State Bank shall have to study the mechanism and policy on State management of money and bank credits in investment and construction and submit them of the Prime Minister for promulgation, or it may be empowered by the Prime Minister to promulgate them. It shall also guide the banks to mobilize capital inside the country and from outside the country to lend to the investors and to lend floating capital to the construction and assembly businesses. The banks shall have to decide themselves the loans and retrieval of debts from the investment projects at the market interest rates.

- The Vietnam State Bank shall coordinate with the Ministry of Finance in the selection of the appropriate bank to provide the projects with capital borrowed from international credit organizations with the accreditation of the Ministry of Finance.

7. The State Committee for Cooperation and Investment shall have to study the mechanism and polices of drawing direct foreign investments and submit them to the Prime Minister for promulgation, or it may be empowered by the Prime Minister to promulgate them. The Committee shall also issue investment licenses and direct the enterprises having foreign investments to carry out the investment and construction according to the Law on Foreign investment in Vietnam and the regulations related to this Regulation and cooperate with the concerned services and echelons in conducting regular inspection of the operations of the businesses as stipulated in the investment licenses and other legal documents of the State.

8. The other concerned ministries:

- The ministries with State functions in the management of land, natural resources, technology, environment, commerce, museums and cultural relics conservation, preservation of landscapes, national defense and political security and social order shall have to direct the investors in matters related to the drawing up of the investment projects within no more than thirty days after receiving the written proposal of the investor. They are entitled, depending on the concrete requirement of each project, to effect their managerial functions in the process of investment and construction and may ask for the suspension of unlawful investments and construction activities.

- The ministries in charge of service management shall have to give concrete guidance for the implementation of the mechanism and policies on development investment of their services and shall exercise State management of the investment projects in their services.

- The ministries with specialized construction service (industrial and civil construction, projects in transport, water conservancy, mining, power transmission and transformers, posts, agriculture, forestry and fisheries) shall provide concrete guidance for the realization of the mechanism and policies on construction in a way compatible to the characteristics of the specialized services; study and issue as prescribed by Government assignment the norms, order and technical rules of construction; work out the specialized economic and technical norms, and promulgate them with the consent of the Ministry of Construction.

9. The People's Committees in the provinces and cities directly under the Central Government:

The People's Committees in the provinces and cities directly under the Central Government shall have to exercise State administrative management of all the organizations and individuals in carrying out investment projects on their territories in accordance with law.

Article 7.- Responsibility of the investors and the consultancy organizations in construction and the supply of equipment and assembly:

1. Investors:

- The investor shall have to carry out or hire consultancy organizations and the construction and assembly businesses having legal entity, or it shall have to expertize the projects drawn up by other consultancy firms. It also has to manage the project, and carry out the investment project through the economic contract as prescribed by current law.

- The investor may use different sources of capital as prescribed in this Regulation in order to carry out the project and has to take overall and continuous responsibility for managing the use of these investment sources of capital right from the moment the project is drawn up, till it is carried out and put into operation as required in the approved project.

- The investor has the responsibility to repay the loans as well as the mobilized capital on schedule and in conformity with other commitments made during the capital mobilization.

- In case of a change of the investor, the successor must take the responsibility of inheriting the whole investment work of his predecessor and the responsibility of the investment work conducted during his incumbency.

- If the investor is a business of all forms of ownership, in case of bankruptcy, the investment already achieved by the investor shall be handled in accordance with the Law on Bankruptcy.

- When drawing up the dossier on pre-feasibility and feasibility study, the investor has the duty and right to ask the concerned agencies of the State to provide guidance on questions related to the project such as land, natural resources, water and electric supply, comminations and transport, ecological environment, fire prevention, protection of cultural and historical relics, defense and security.

2. Consultancy organizations on construction and equipment supply and assembly:

The consultancy organizations on investment and construction (survey, designing, management of the implementation of the project) on the supply of equipment and materials, construction and assembly shall have to fully implement the economic contract signed with the investor or the managing director of the project and shall be accountable before law on the result of the implementation of the contract.

Article 8.- Principles on the management of the use of the sources of investment capital:

1. The State budgetary capital shall be used for investment according to the State plan in the projects of construction of economic infrastructures; the headwater afforestation projects; the planting of protection forests, national parks, nature preserves; the construction of cultural, social and public utility projects; the State management projects and projects on science, technique, defense and security and other key projects of the State which are decided by the Government and which are not capable of direct capital retrieval.

2. The preferential credits from the State Budget shall be used to invest in economic infrastructure projects, job generation production centers, key projects of the State in each period (electricity, cement, iron and steel, water supply and drainage...), and a number of other projects of different services capable of capital retrieval already listed in the State plan. The Government shall decide on the investment in each of these project in different periods of the plan.

3. The Official Development Aid (ODA) of various international organizations and governments as direct aid to the Vietnam Government shall be placed under unified management in accordance with Decree No. 20/CP on the 15th of March 1994 of the Government.

4. The commercial credits shall be used to invest in new constructions and in the transformation, expansion and technological renewal at the production, business and service establishments which are economically effective, which are capable of capital retrieval and which meet the conditions for loans as required by the regulations in force. The use of this capital shall conform to the mechanism of self-borrowing and self-repayment and full implementation of the investment procedures and conditions for capital borrowing and repayment.

5. Capital mobilized by the State businesses shall be used to invest in developing production and business and in improving the quality and competitiveness of products. The business shall have to use this capital in accordance with current regimes of management of investment capital. The controlling organization of the business shall have the responsibility to closely control the use of capital in order to ensure that it is used effectively for the right purpose.

6. The capital of a cooperative venture or join venture between State businesses and foreign partners according to the Law on Foreign Investment in Vietnam.

In case a State business is allowed to contribute to the capital of a joint venture with foreigners with the right to use land, water surface, sea area, workshops and working space, equipment and other installations owned by the State, it must have the permission of the authorized echelon and must fill the procedures to receive capital and has the responsibility to return the capital to the State according to current regulations.

7. Contributions of the population in cash, materials or labor to the investment projects shall be used chiefly for the construction of public utility projects for direct benefits to the contributors under the terms of the commitments made during the mobilization.

8. With regard to investments made by non-State population, the investor must fill in the procedures and submit them to the authorized agency, which shall consider and examine them and issue business or construction permits.

9. The management of direct foreign investments is effected according to Decree No.18/CP on the 16th of April 1993 of the Government providing details for the implementation of the Law on Foreign Investment in Vietnam.

10. The investment capital of diplomatic offices, international organizations and other foreign agencies which are allowed to build on Vietnamese land shall be managed according to the treaties or agreements signed between the Vietnam Government and the governments of the concerned countries or with the concerned foreign organizations and agencies.

11. One investment project may use different sources of capital but not in contravention of the regulations on the use of capital stipulated in this Regulation. It is not entitled to use the administrative source of capital to invest in new constructions, except for the infrastructure works under the target programs defined by the Government. No services nor localities are allowed to transfer on their own initiative the capital allocated or loaned under plan from one project to another pending the permission of the Prime Minister or the empowered agency (the State Planning Committee or the Ministry of Finance).

Article 9.- Planning of investment:

1. The investment plan must reflect all sources of investment capital of various economic sectors, first of all the investment projects owned by the State.

2. The implementation of the investment plan must comply with the approved projects. The State investment capital shall be approved once and for all for the projects based on the total investment stipulated in the investment decision. Any readjustment leading to the prolongation of the implementation of the project must have the permission of the authorized level which decides the investment.

3. The investment for the projects and the administrative sources devoted to construction purposes must be registered in the State plan and shall be managed according to this Regulation.

4. Order and conditions to register investment plans:

a/ The investment plan is to follow this order:

- The plan of capital procurement for the survey and prospection, for service and territorial planning, and for urban and rural planning.

- The plan for preparations of investment including the investment capital to be used in the drafting of the project (including prospection and survey).

- The plan of preparation to implement the project must assure enough capital to conduct survey and technical designing, drafting of the estimated total cost, the dossier for bidding, building the support sector, appendant constructions, the temporary dwellings of construction workers with regard to the projects requiring the permission of the authorized level and expenditures for the preparations of the implementation of other related projects.

- The plan of implementation of the project comprises the investment capital for the purchase of equipment, construction and assembly and other expenditures related to the putting of the project into operation or use.

b/ Conditions for registering the project in the investment plan:

- All projects registered in the plan of preparation for investment must lie within the service and territorial development program.

- The projects registered in the plans for preparation for implementation of the project must have the investment license conforming to the prescriptions of this Regulation.

- With regard to the investment projects, including constructions registered in the plan of implementation of the project, they must have the technical design and the total cost estimate, or the technical design and cost estimate according to each phase and each part of the project which has stated construction (concerning large-scale projects built over a long period) and has been approved by the authorized level.

Chapter II

PREPARATIONS OF INVESTMENT

Article 10.- Work involved in the preparation for investment:

The preparations of investment involve the following:

1. Study of the necessity of investment and the size of investment.

2. Contacting and exploring the market in the country and abroad in order to find the source of supply of material and equipment and the marketing of products. Examining the possibility of mobilizing different sources of capital for investment and choosing the forms of investment.

3. Prospection, survey and selection of the site of construction.

4. Drawing up the investment project.

5. Examining the project to decide on the investment.

Article 11.- Drawing up the investment project:

The drawing up of an investment project shall proceed by the following steps:

- To determine the investment project.

- To make pre-feasibility and feasibility studies.

- With regard to the projects in Group A and the projects using ODA capital, there must be two steps: pre-feasibility study and feasibility study.

- The other projects shall proceed with only a feasibility study.

Article 12.- Main contents of the report on pre-feasibility study:

1. Preliminary results of the study on the necessity of investment and favorable conditions for investment (legal foundations, natural conditions, natural resources, investment opportunity, market forecasts, etc.)

2. Projected size of the investment, factors and possibilities to ensure operation of the project, and a comparison of different forms of investment.

3. Selection of the area and site of construction and projected need in land area.

4. Preliminary analysis in terms of technology, technique and construction, selection of the various options in the finding of sources, conditions for the supply of materials and equipment, and the conditions in the supply of raw materials, energy, services and infrastructures.

5. Financial analysis: Preliminary determination of the total investment, the various possibilities and conditions to mobilize various sources of capital, estimated cost of production and possibility of capital retrieval, debt payment and expected profits.

6. Preliminary estimate of the efficiency of the investment in the project in economic and social terms.

Article 13.- Main contents of the report on feasibility study:

1. Foundations to determine the necessity of investment.

2. Selection of the form of investment.

3. The production program and the conditions which are to be met.

4. Various options on a concrete site (or a system of constructions).

5. Analysis of the selection of the technological and technical option.

6. The construction options and solutions.

7. The organization for managing the use of labor.

8. Financial and economic analysis.

The detailed report on the feasibility study shall be made with the guidance of the State Planning Committee and the Ministry of Construction.

Article 14.- Expertise of the investment project:

1. The pre-feasibility study report approved in writing by the investment deciding level shall be the basis for drawing the feasibility study report or for the continued sounding, negotiations and signing of agreements among the partners before the feasibility study report is drawn up. Depending on the level of complexity and the significance of each project and before approving the report on pre-feasibility study, the investment deciding authority may ask the concerned agencies to give their opinions or submit to the Expertise Council. The time-limit for the approval in writing shall not exceed twenty days after the full dossier in due form is received (including the cases which necessitate the approval of the Expertise Council).

2. Report on feasibility study:

- The projects in Group A must go through the State Expertise Council before the decision to invest is taken.

- The President of the State Expertise Council may select a consultant organization or expert to expertize each aspect of the project or the whole project before submitting it to the Council for examination. The Expertise Council shall take responsibility before law on the results of the expertise.

- The projects in Group B and C: The investment deciding level may use qualified specialized agencies directly under its control or set up the Expertise Council, or select a consultant organization to expertize the project before deciding to invest.

3. The expertise of the direct foreign investment projects shall follow a special regulation.

Article 15.- Requirement for expertise of projects:

1. All investment projects involving constructions belonging to whatever source of capital and economic sector must be expertized in terms of construction planning and in terms of architecture, technology, land use, environmental and ecological protection, and its social impact.

2. With regard to the investment projects using State capital, they must also be expertized on their financial option and their economic efficiency.

3. The investment projects using ODA fund shall have to comply with the requirements of the State and international practice.

Article 16.- Expertise Council at various levels:

The Expertise Council at various levels is constituted as follows:

1. The Expertise Council at the State level shall be headed by the Chairman of the State Planning Committee. Its standing members are the Ministry of Construction, the Ministry of Finance, the Ministry of Science, Technology and Environment, and the Office of the Government. A number of other members may be invited in by the Council Chairman, depending on the character of the project. With regard to the direct foreign investment projects, the State Committee for Cooperation and Investment shall be the standing member.

2. The Expertise Council at ministerial level shall be headed by a Vice Minister. The standing members of the Council are the heads of departments in charge of capital construction, planning, finance and accountancy, economy, science and technology.

3. The Expertise Council at provincial level shall be headed by a Vice-President of the provincial People's Committee. The standing members are the head of the planning committee of the province, the director of the construction service and the directors of the specialized construction service, of the finance pricing service, the science and technology service, and the chief architect in the city.

Article 17.- Time limit for the expertise of the project:

1. With regard to the investment projects in Group A, the time-limit for expertise shall not exceed forty five days after receiving the full and duly compiled dossier.

2. With regard to the projects in Group B, the time-limit shall not exceed thirty days after receiving the full and duly compiled dossier.

3. With regard to projects in Group C, the time-limit shall not exceed twenty days after receiving the full and duly compiled dossier.

Article 18.- Decision to invest:

1. All the investment projects covered by State capital must have a decision to invest issued by the authorized level before investment can be carried out.

2. Contents of the decision to invest:

a/ Determination of the investor and the form of carrying out the project.

b/ Determination of the location and the land area to be used.

c/ The design capacity.

d/ Total investment and sources of capital mobilization.

e/ Modalities for bidding, selection or appointment of the contractor.

f/ Duration of construction and the main time-limits of the construction tempo.

Article 19.- Changing the contents of the project:

1. Any change in the contents of the project must have the written consent of the authorized level which has approved the project or decided the investment.

2. When the need arises to change the contents of the approved project, the reason for the change must be given and the contents of the changes specified, and the expertise and decision must be done as prescribed by this Regulation.

3. The project may be suspended or cancelled in the following conditions:

- The investor does not begin implementing the project without the consent of the authorized level twelve months after the decision to invest is made.

- The objective of the project is changed without the approval of the authorized level.

- The implementation of the project is prolonged for more than six months compared with the time limits stipulated in the investment decision (or investment permit) without plausible reason.

Article 20.- Expenditures in the drawing up of the projects and in the expertise of the project:

1. The expenditures in the drawing up and expertise of a project shall be accounted for in the source of capital to which the project belongs. In case the source of capital is not yet determined, the investor may use his legal capital or borrow from the Bank and shall repay after the official source of funding has been determined.

2. The levels of the expenditures for the consultancy in the drawing up and expertise of the project shall be set by the Ministry of Construction in consultation with the State Planning Committee and the Ministry of Finance.

Chapter III

IMPLEMENTATION OF THE INVESTMENT PROJECT

Article 21.- The implementation of an investment project involving construction shall comprise the following:

1. Application for a certificate of land use right (including water surface, sea area and continental shelf).

2. Leveling the ground for construction.

3. Organizing bidding for consultancy in survey, designing, and expertise of technique and project quality.

4. Expertise of project design.

5. Organizing bidding for the purchase of equipment, construction and assembly.

6. Application for construction permit and a permit for the exploitation of natural resources (if any).

7. Signing contracts with concerned organizations and individuals to implement the project.

8. Construction and assembly of the project.

9. Monitoring and inspecting the implementation of the contracts.

Article 22.- Delivering and taking delivery of construction land:

1. The investor who needs the use of land has to draw up a dossier to apply for land allocation as prescribed by the State.

2. The time for considering and settling an application for land allocation and deciding to allocate land by the authorized agency shall not exceed twenty five days after receiving the full and duly compiled dossier.

3. The allocation and taking delivery of land at the site shall be carried out only after the investor has fully paid the tax on land use, the cadastre fee and filled out the procedures for making compensations for damages as prescribed by the State.

Article 23.- Leveling the ground:

1. The investor shall take the main responsibility for paying compensations and leveling the construction ground before delivering the ground to the construction unit. The investor may sign a contract with an organization specializing in compensation work and ground leveling in the locality in the discharge of this task.

2. Compensation work and ground leveling shall be carried out according to the prescriptions of the State.

Article 24.- Bidding for consultancy in survey, designing and technical expertise and of technique and project quality:

The bidding for construction consultancy shall be carried out according to the Regulation of the State. In case of bidding for international consultancy, it shall be done according to international practice with consideration for the concrete conditions of Vietnam.

Article 25.- Designing of the project:

1. Lawful documents used in designing:

All documents on the prospection and survey of the terrain geology, hydrology and meteorology and other documents used in designing the construction of projects must be compiled by specialized organizations with a legal entity according to the construction criteria, rules and technical norms for construction issued by the State. In case the foreign modalities and construction norms are applied, they must have the approval of the Ministry of Construction.

2. Order in designing:

Depending on the technical complexity of the project, designing shall be conducted in one or two steps.

- With regard to projects with high technical requirements and complicated geology and hydrology conditions of foundation, two step designing shall apply: technical designing and construction blueprint designing;

- With regard to simple projects requiring simple technique or provided with model designs and requiring no complicated techniques in the building of the foundations, only one step is required: designing of construction technique;

- The designing organization must draw up the total cost estimate suited to the technical design or the design for construction technique;

- The contents of designing work in each step shall be effected according to the prescriptions of the Ministry of Construction.

Article 26.- Expertise and approval of design:

All construction investment projects of any source of capital and economic sector must have their designs expertized.

1. With regard to the construction investment projects owned by the State:

- The technical designs of the projects in Group A shall be expertized and approved by the controlling Minister of the service concerned after expertise by the specialized agency.

- The technical designs of the other projects shall be expertized and approved by the Head of the agency with authority to decide the investment after it is expertized by the specialized agency. The technical designs of the projects in Group B owned by the agencies attached to the Government or the organizations and associations directly under the Center shall be expertized and approved by the Minister of Construction.

2. The expertise of the projects involving direct foreign investments shall follow a specific instruction.

3. With regard to the non-State economic sectors, the Ministry of Construction shall direct the People's Committees in the provinces and cities directly under the Central Government to assign the power to approve the designs in conformity with the local conditions.

Article 27.- Construction permit:

1. Exemptions from construction permits:

- The construction belonging to projects in Group A which the Prime Minister has decided to invest and of which the Minister of the controlling ministry has approved the technical designs.

- Transport works and water conservancy works belonging to Group B and Group C which have been approved for their technical designs, which do not cross and urban center and which have won the approval of the President of the provincial People's Committee.

- Repairs which do not lead to the change in the structure or architecture of street-front construction or to civil disputes.

2. Competence in issuing construction permits:

The Minister of Construction shall issue construction permits to the inter-provincial construction investment projects on the basis of the certification by the concerned localities that the projects meet the conditions for the issue of construction permits.

- The issue of permits for new constructions, transformations and repairs of constructions on urban land shall be effected in accordance with Decree No. 91/CP issued by the Government on the 17th of August 1994.

- The Director of the Construction Service shall issue permits for construction investment projects outside urban land.

- The Presidents of the districts and provincial towns shall issue construction permits for signing dwelling houses and new constructions capitalized at less than 500 million Dong.

3. The dossier to apply for construction (or repair) permit consists of:

- An application for construction (or repair),

- The dossier on the project design,

- The certificate of lawful right to land use,

- The certificate of the lawful right to use the house (in case of repair or transformation of a house).

4. Validity of construction permit:

If twelve months after the issue of the construction permit the investor still has not begun construction, the construction permit shall cease to be valid.

5. Changes and supplements to construction permit:

- If the need arises to change or make additions to the construction permit, the investor must make a written proposal to the level authorized to issue construction permits for consideration.

- Only the agency authorized to issue construction permits shall have the right to change or amend the construction permits.

Article 28.- Permit for exploitation of natural resources:

In case the investment project is aimed at exploiting natural resources, the investor must ask for the permit to exploit natural resources as stipulated in Decree No.95/HDBT of the Council of Ministers (now the Government) issued on the 23rd of March 1992 on the implementation of the Ordinance on Mineral Resources.

Article 29.- Bidding for construction:

1. All investment projects owned by the State shall have to organize bidding or selection of contractors according to the regulations issued by the State (including bidding and selection of contractor, purchase of equipment, construction and assembly, and consultancy). But the following projects shall apply the mode of designation of contractor:

- Projects of a research or experimental character,

- Projects of an emergency character necessitated by natural disasters and acts of sabotage,

- Projects of small value of less than 500 million Dong,

- Projects of a specific character owned by a number of branches licensed by the Prime Minister.

The financial and banking organizations at all levels shall not supply funds or loans to the projects which the investor arbitrarily assigns to the contractors contrarity to the above stipulations. At the same time they have to handle the related issues depending on the extent of the violations by the investor.

2. Depending on the size, character and categories of the projects, and the practical conditions of each project, the bidding or selection of contractor may be done for the whole project or each construction or each installation in the construction or each job involving a big volume of work.

3. The international bidding for the above projects mentioned above shall be held in Vietnam.

Article 30.- Economic contract on consultancy, purchase of equipment and construction and assembly:

The consultancy work, purchase of equipment and construction and assembly shall be effected through the contract between the investor (or his legal representative) and the organizations for consultancy, equipment dealers and construction and assembly businesses with legal entity operating in the lines stipulated in their licenses. Before signing such a contract, the investor (or his legal representative) must base himself on the realization tempo to prepare conditions for organizing the bidding or selection of the contractor in accordance with State regulations or international practice, depending on the source of investment of the project.

Article 31.- Conditions to start the construction:

Before starting their operations all constructions must meet the following conditions:

- They must have a construction permit (for projects requiring such a permit).

- They must have a technical design (for the constructions owned by the State, they must have a total cost estimate approved by the authorized level). Large-scale construction projects with long construction time which cannot yet make a total cost estimate, must procure a technical design and cost estimate approved for each period or for each part of the projects which have started construction.

- They must have a duly made delivery and receipt contract.

Article 32.- Management of construction technique and quality:

1. The survey and designing organizations must assure close examination of details of each project. Every designing project must have a project director who takes personal responsibility before law for the project's quality and efficiency. These organizations must effect the regime of supervision of the author, and the project director must closely cooperate with the investor and the construction business to settle in time the issues arising in the process of construction in order to ensure the quality.

2. The construction business shall take responsibility before the State and the investor for the construction technique and quality of the project. The construction business must set up a section for technical and quality control in order to manage the construction technique and quality. Together with the investor, the design organization and the supervising organization, it must draw up the dossier on test on completion and inspect the quality of each work, each construction and the whole project.

3. The investor shall have to carry out by himself or to hire a consultancy organization to expertize the construction quality during the process of construction.

4. The Ministry of Construction is the agency having the function of exercising unified State management of the quality of construction projects and cooperates with the specialized ministries in issuing or assigning responsibilities in issuing the regulations on management of quality of specialized construction projects.

5. The Construction Service is the agency to assist the People's Committees in the provinces and cities directly under the Central Government in exercising unified State management of the quality of construction projects in the territory of the province or city. It shall have to coordinate with the specialized services in directing and organizing the State inspection, control and State expertise of the quality of construction projects in the provinces and cities.

Article 33.- Test on completion:

Test on completion shall have to be conducted phase by phase right after completion of the volumes of work concerning hidden installations, weight-bearing structures, parts or the whole installation, or the whole project.

Article 34.- Fund allocation and payment:

1. The fund allocation, loans and payment of the fund for the projects in which the contractors are designated shall be based on the value of the volume achieved and tested on completion every month, but they must lie within the plan for annual investment capital and must be registered in the economic contract and also in the total cost estimate already approved.

With regard to the construction projects which apply the modalities of bidding and selection f contractors, the advance funding and the modalities of payment shall be effected in accordance with the regulation on bidding and selection of contractors.

With regard to the contracts on construction consultancy, they shall be given advance funding representing at least 25% of the value of the contract.

2. In the ending year of the project the investor shall be allocated or loaned not more than 95% of the value of the volume in the plan-year. The remaining 5% is to be paid by the investor immediately after the final balance of accounts is approved.

3. The expenditures for the transformation and repair of works and target programs decided by the Government shall be taken from the administrative fund having the character of capital construction from the State budget. It shall also apply the mechanism of allocation and payment according to the provisions of this Regulation.

Article 35.- Balance of accounts:

1. Each year the investor shall have to report the investment capital already used to the allocating or lending agency. On completion of the project (the whole project or part of the project), the investor shall have to send a report on the final balance of accounts on the investment capital to the allocating or lending agency and also to the agency which decides the investment.

2. If the investment project is financed by different sources of capital, the report must deal separately and distinctively with each source.

3. With regard to the projects the construction of which stretches over many years, when making the final balance of accounts, the investor must convert the investment capital already achieved to the price platform at the time of delivery and operation of the project in order to determine the value of the newly added value of the fixed assets and the valued of the assets on delivery.

The Ministry of Construction shall have to guide the unified method of conversion in each period for the uniform conversion by the investors during the drawing up of the final balance of accounts.

4. One month at the latest after the conclusion of the plan-year, the investor shall have to complete his report on the investment capital already achieved in the previous year to the Ministry or the People's Committee of the province or the city directly under the Central Government. Six months at the latest after the investment project is completed and put into operation, the investor shall have to complete the report on the final statement of accounts of the investment capital and send it to the allocating or lending agency and the agencies of the ministry or province entrusted with examining the final statement of accounts and the agency authorized to approve the final statement of accounts.

5. The Ministry of Finance shall have to give guidance on the time for making the final statement of accounts, the contents of the report on statement, the contents of the inspection and approval of the statement of accounts of the projects owned by the State.

Article 36.- Inspecting and approving the final statement of accounts:

1. Before approving the final statement of accounts of the project on completion, inspection shall be made of the following:

- The Ministry of Finance shall have to preside over the inspection with regard to the projects in Group A.

- The ministries or the provinces shall organize the inspection with regard to the remaining projects.

The financial agency shall have to carry out inspection and make its observation in writing before the authorized agency approves the final statement of accounts.

2. Approving the final statement of accounts:

- On completion of an investment project (or one construction or one installation) the person authorized to decide on the investment is also the person who approves the final statement of accounts. With regard to the projects in Group A, their final statement of accounts shall be approved by the Minister of Finance with the accreditation of the Prime Minister.

- With regard to the investment capital to be carried out yearly, the allocating or lending agency shall inspect the capital already used according to the approved plan.

3. The cost of inspection and approval of the final statement of accounts shall be taken from the investment capital of the project to be defined by the Ministry of Finance.

Chapter IV

CONCLUSION OF CONSTRUCTION AND PUTTING THE PROJECT INTO OPERATION OR USE

Article 37.- Contents of the work in the concluding period of construction and putting the project into operation or use:

1. Hand-over of the construction.

2. Conclusion of the construction.

3. Providing maintenance services,

4. Putting the project into operation.

Article 38.- Handing over the project:

1. The project can be handed over to the user only after it has been completely built according to the approved design and the quality of the construction certified as up to standard (including the completion of the project's interior and exterior decorations and the clearance of waster matters).

2. The dossier concerning the completion of the project and related issues must be handed over together with the project.

3. The dossiers on the construction of the project must be handed in for safe keeping as archives in accordance with State regulations on archives.

Article 39.- Completion of construction:

1. The construction work ends as soon as the project is handed over to the investor.

2. After handing over the project, the builder must dispose of or move all his properties from the construction site and return the land borrowed or rented for the construction of the project as stipulated by the contract.

3. The obligation defined by the construction contract will cease completely as soon as the warranty period expires.

Article 40.- Warranty of project:

1. The suppliers of documents, survey statistics (including copies, drawing and tests) for the design, construction, test on completion, expertise of the project; the chairman of the design project; the contractor of the construction; the supplier of materials and equipment for the construction, and the supervisor of the construction must bear full responsibility before law for the quality of the project or the results of their work.

2. The warranty period, the privileges and obligation of the sides, the procedure of exercising those privileges and obligations, and litigations about them are defined by the competent State institution:

- The Ministry of Construction sets regulations for the survey, design and construction of the project.

- The Ministry of Science, Technology and Environment sets regulations for industrial products such as materials and equipment.

Article 41.- Operating the project:

After taking delivery of the project, the investor is obliged to make use of the project's capacity and arrange a uniform organization of production, trade and services and to perfect the organization and the method of management in order to bring into full play the economic and technical norms set by the project.

Article 42.- Repaying the investment capital:

1. It is compulsory for all investment projects to retrieve investment capital if they have such capabilities.

2. With regard to projects invested with State budget allocations, low-interest loans, bank loans and investment capital of those businesses whose investors are obliged to return the capital or to repay the debt, the sources of capital to draw from and to repay the debt include all the depreciation fund, part of the profit gained and other sources of capital (if any).

In case the investor fails to retrieve his capital and to repay his debt, he must bear the responsibility for it in accordance with current law.

3. With regard to those projects invested with capital borrowed by a business from foreign partners with the guarantee of the State, the business concerned must repay the debt in accordance with the loan contract. In case the business fails to repay fully the debt which is due, the guarantor is obliged to repay the debt, an at the same time, has the right to sell the property of the business as stipulated by the Law on Insolvency.

Chapter V

THE FORMS OF ORGANIZING MANAGEMENT IN IMPLEMENTING PROJECTS

Article 43.- The forms of organizing management in the implementation of projects:

The following forms of management can be applied depending on the specific conditions of each project:

- The investor directly manages the implementation of the project,

- The Chairman manages the project,

- Turnkey project,

- Self-implementation.

Article 44.- Direct management of the implementation of the project by the investor:

The investor organizes a bidding for contractors and directly signs a contract with one or more consultancy organizations to carry out the survey and designing of the projects, compile the dossier for the bidding, organize the bidding or select the contractor. After the investor signs a contract with the winner of the bidding for the construction, the task of supervising and managing the construction, and ensuring the tempo and quality of the construction continues to be undertaken by the selected consultancy organization.

Article 45.- Management of the project by the chairman:

1. The investor organizes a bidding for contractors and signs a contract with a consultancy organization to act as manager of the project by contacting and signing contracts on his behalf with survey and design organizations and suppliers of materials and equipment for the construction to implement the projects, and at the same time, to assume the responsibility of supervising and managing the whole process of implementing the project.

2. This form applies only to large-scale projects involving complicated technical matters and a long time of construction.

Article 46.- Turnkey project:

1. The investor organizes a bidding for the project to select a contractor (chief construction contractor) to carry out the whole project (designing, buying materials and equipment, building...). The investor only submits for approval the technical design and total cost estimate, checks the quality of the project and takes delivery of it when the project is completed and put into operation. The chief construction contractor can sub-contract to other contractors the survey, design and purchase of equipment or part of the construction.

2. This form usually applies to the construction of dwelling houses, civil projects and production and business projects which have a small scale and require simple technical solutions. This form can also apply to those constructions (projects) which meet these conditions.

Article 47.- Self-implementation:

1. The investor uses his workforce licensed as builders to build the project.

2. This form applies only to small-scale repair and renovation projects, and projects of a specialized branch (agro-forestry projects...).

Article 48.- Consultancy on investment and construction:

Providing consultancy on investment and construction are professional consultancy companies of different economic sectors which are founded on and operate in accordance with law; the research institutions which have a legal status and are licensed to practice consultancy organizations can in their capabilities plan or supervise the planning of projects (pre-feasibility, feasibility); make the design and a total cost estimate, compile a dossier inviting bidders, organize the bidding, supervise and manage the process of construction, and check the quality of the project. They can also sub-contract to other consultancy organizations to carry out part of the consultancy work.

Chapter VI

MANAGEMENT OF CONSTRUCTION COST

Article 49.- The principle for setting and managing construction costs:

1. The State exercises its management of construction cost by issuing pricing policies, the principle and method of making cost estimates and the basic date (economic and technical norms, construction cost per unit, allocation of investment capital...) in order to set the total estimated investment of the construction and cost estimate of the construction (or project) and the cost estimates of different construction items.

2. All projects owned by the State must compile the necessary documents on the cost estimates stating the necessary expenses of the project and the construction cost of the installations. The investors and consultancy organizations must base themselves on the State regulations on the management of construction costs to compile, check and submit the total cost estimates and estimates of different construction items to the competent institution for approval and use them as a basis for selecting contractors of the projects owned by the State. The businesses winning a construction contract shall base themselves on the State regulations on the management of construction costs as a reference to determine their bidding price.

3. The cost to be paid for the construction (or project) is the cost of the winning bid and the conditions written in the contract between the investor and construction businesses.

Article 50.- State management of construction cost:

The Ministry of Construction shall sponsor and, together with the State managing offices concerned, exercise unified control of the construction cost (economic-technical norms, unit price, standard price, suggested price: survey, design, planning, construction design), and directly manage norms, for the unit price of State-owned projects in Group A and use them as a basis for determining the minimum bidding price (at a bidding or for selecting the contractor) and the paid unit price (if the State designates the contractor).

Article 51.- Managing the total cost estimates of State-owned projects:

1. The Ministry of Construction chairs the expertise of the total cost estimate of group-A projects, submits it to the Prime Minister for consideration, and empowers the Minister concerned to approve it.

2. The director of the authorized agency decides the level of investment in projects of groups B and C, and ratifies the total cost estimate after expertise by the professional institution concerned.

As for the total cost estimate for group B projects of government institutions and economic and mass organizations under the Central Government, they shall be approved by the Ministry of Construction.

3. With regard to projects offered for bidding, the winning price shall not exceed the total cost estimate already approved.

4. With regard to those projects where contractor is designated, the paid price even in cases of absolute necessity shall not exceed 5% of the total cost estimate already approved and it must be approved by the institution that is authorized to ratify the total cost estimate.

5. In case the total cost estimate changes from group B to group A, or from group C to group B, the investor must re-submit the feasibility study to the agency which has authority to decide the investment.

Article 52.- Insuring construction projects:

1. In making an investment for construction, the investor must buy insurance for the project from an Insurance Company which is licensed to operate in Vietnam. With regard to foreign invested projects, the investor must buy insurance in accordance with the Law on Foreign Investment in Vietnam.

2. The expense for the insurance of the project is part of the investment capital of the project. The insurance expense is calculated in percentage of the project's value.

3. The construction contractors and consultancy organizations buy insurance for the materials, equipment and workshop used in construction, against labor accidents, for the responsibility of the third party, and for the survey and design in the process of implementing the project. The insurance expense is added to the production cost.

4. The conditions and stipulations for insuring the interests and obligations of the insured parties shall be mutually agreed upon, but they must not contravene Vietnam's laws, international practice, and the instructions of the Ministry of Finance.

Chapter VII

INSPECTION, CONTROL AND HANDLING OF VIOLATIONS

Article 53.- Inspection and supervision of investment and construction activities:

1. All investment and construction activities of every organization concerned must be subject to the inspection and control of the authorized State agency in each sphere of management.

2. According to the specific conditions of each investment project, a part or all parts of the process of investment and construction can be inspected and controlled.

Article 54.- Handling violations by investors:

1. The investor must strictly observe the State's regulations on the management of investment projects as defined in these Regulations, any violation by them will be fined, or prosecuted, depending on extent of the violation.

2. If the investor fails to fulfill his responsibilities as defined in the economic contract with the contractor organizations (consultancy, equipment supply, construction), he must pay fines to the contractor organizations for violating the contract, and if it causes losses, he must compensate also for the losses in accordance with the Ordinance on Economic Contracts.

3. If the investor seriously violates the stipulations written in the construction permit, causing pollution to the surrounding environment, putting the adjacent buildings in danger of collapse as verified by a technical control agency, he will have his construction permit revoked and shall be fined for the violation.

Article 55.- Handling violations by organizations (individuals) who supervise the project, design, total cost estimates and final statement of accounts:

The supervisory organization (individual) is responsible before the investor institution for the accuracy of the documents, statistics and conclusion in its report on the results of the expertise. In case the competent person decides that it is wrong (causing accident and waster or having no economic or social efficiency) due to the inaccuracy of the documents, statistics and conclusion of the expertise organizations (individuals), the latter shall be fined or can be investigated for penal liability.

If the authorized person makes a wrong decision on investment and the location of construction, etc., causing serious economic, social and environmental consequences, the person who signs the decision is responsible for it before the law.

Article 56.- Handling violations by the consultancy organizations, the suppliers of equipment and construction organizations:

1. In case labor safety in construction is found to be in jeopardy or the construction organizations have repeatedly violated the regulations on labor safety, the institutions for management of construction and inspection of construction safety can suspend the construction temporarily.

The temporary suspension of the construction shall be lifted after the construction units have taken measures to eliminate the danger or stop such a violation.

2. Any major technical mistake made by the consultancy organization or the construction organization which seriously affects the quality of the project (construction), causing collapse or damage, even after the project (construction) has been put into operation, the consultancy organization and the chairman of the project design or the construction unit must compensate for the damage and shall be prosecuted before law.

3. If the consultancy organization and the organization supplying construction equipment fail to comply with the contract's terms on the quality and tempo of construction, they must compensate for all the losses and shall be fined. The fine (not including expenses for compensation and repair of the damage...) is to be mutually agreed upon and written in the economic contract, but its total shall not exceed 10% of the expenditure for the consultancy work or 5% of the value of the defective volume of work. The fine is drawn from the profit of the unit concerned after it has paid tax to the State.

Article 57.- Individual responsibility:

Regarding violations by individuals in the investor organization, consultancy organizations, organizations supplying equipment and materials for the construction, and the managing offices concerned, they are liable to fines, compensations or prosecution depending on the extent of the violation.

Chapter VIII

IMPLEMENTATION PROVISIONS

Article 58.- These Regulations are issued in replacement of the Regulations on the Management of Capital Construction issued together with Decree No.385-HDBT on the 7th of November 1990 and the Regulations on the Drawing up, Inspection and Approval of Construction Designs issued together with Decree No.237-HDBT on the 19th of September 1985 of the Council of Ministers.

Article 59.- The Ministers, the Heads of agencies of ministerial level and agencies attached to the Government, and the Presidents of the People's Committees of provinces and cities directly under the Central Government are responsible for fully implementing this Regulation.

The Minister of Construction and other Ministers concerned shall have to submit the necessary documents to the Government for promulgation together with this Regulation and are responsible for guiding, supervising and inspecting the implementation of this Regulation.

Article 60.- This Regulation takes effect as from the date of its issue and is applicable to all economic sectors throughout the country.

APPENDIX

CLASSIFICATION OF INVESTMENT PROJECTS

(issued together with the Regulation on the Management of Investment and Construction issued together with Decree No.177-CP on the 20th of October 1994 of the Government)

Investment projects (not including foreign invested projects) are classified into three groups - A, B and C - according to the following definitions:

1. Projects of group A are those that have one of the following conditions:

1.1. New investment projects of whatever size of investment which are classified as national secrets or have vital political or social significance, and investment projects in these branches: production of toxics and explosives, exploitation and processing of precious minerals (gold, silver, gemstone, rare earth).

1.2. Investment projects of which the total investment exceeds the following levels:

a/ Over 200 billion Vietnamese Dong (VND) or over 20 million USD for the following branches:

- Electricity, mining, metallurgy, machine building, fuel, cement.

- Transport, irrigation, supply and drainage of water in urban areas.

b/ Over 100 billion VND or over 10 million USD for the following branches:

- Heavy industry: technologies of electricity, electronics, chemicals, fertilizer, engineering, construction materials.

- Light industry: pottery, porcelain, glass, paper, textiles, leather, garments.

- Posts.

- Pharmaco-chemistry, medicines, the processing of agro-forestry products, foods, aquaproducts, agricultural production (not including supply stations, farms), aquaculture.

c/ Over 50 billion VND or over 5 million USD for the remaining branches.

1.3. Restoration, upgrading and expansion projects and projects for renewing technology which have a total investment equal to 70% of the investment level stipulated at point 1.2.

2. Projects of group B are those which have one of the following conditions:

2.1. Investment projects stipulated at point 1.2.a which have a total investment of 25 billion VND to 200 billion VND or 2.5 million USD to 20 million USD.

2.2. Investment projects stipulated at point 1.2.b which have a total investment of 15 billion VND to 100 billion VND or 1.5 million USD to 10 million USD.

2.3. Investment projects stipulated at point 1.2.c which have a total investment of 5 billion VND to 50 billion VND or 0.5 million USD to 5 million USD.

2.4. Projects stipulated at point 1.3. which have a total investment equal to 70% of the investment level stipulated at points 2.1., 2.2. and 2.3.

3. Projects of group C are those not mentioned above.-