Is Ho Chi Minh City allowed to maintain the application of build-transfer contracts under Resolution 98 on particular policies?
- Can Ho Chi Minh City continue to apply build-transfer contracts under Resolution 98 on particular policies?
- Shall build-operate-transfer contracts be applied to construction investment projects for existing road works in Ho Chi Minh City?
- From what date does Resolution 98/2023/QH15 in Vietnam come into force?
Can Ho Chi Minh City continue to apply build-transfer contracts under Resolution 98 on particular policies?
On June 24, 2023, the National Assembly of Vietnam officially approved Resolution 98/2023/QH15 on the pilot implementation of particular policies for the development of Ho Chi Minh City.
According to the Resolution, Ho Chi Minh City can continue to apply build-transfer contracts from August 1, 2023. Specifically, this content is defined at Point d, Clause 5, Article 4 of Resolution 98/2023/QH15 as follows:
Investment management
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5. Regarding public-private partnership investment projects (hereinafter referred to as “PPP projects”):
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d) The City may apply BT contracts.
Competence and procedures for preparing, appraising, approving, and managing projects, investment costs, construction quality, and projects applying BT contracts shall be performed as for those applying to projects with public investment funding according to laws on public investment and construction. Projects’ investment guidelines may only be decided when capital resources and capital balance capacity are determined. The total investment in projects applying BT contracts is determined similarly to the determination of total investment in projects with public investment funding according to laws on construction; reasonable loan interests after construction time and profits are included in the total project investment.
Competence and procedures for selecting investors for projects applying BT contracts shall be performed as for those applying to PPP projects according to laws on PPP investment. The selection of investors for projects applying BT contracts shall be performed after the design for construction implementation (after the base design) is approved.
The People’s Committee of the City shall stipulate the standards on the assessment of qualifications, experience, techniques, and finance of investors for projects.
The People’s Council of the City shall decide on the use of budget capital of the City, allocate capital for investment preparation and annual budget estimates, allocate public investment capital in annual and medium-term public investment plans of the City to pay investors after works or work items operated independently are tested and audited, and supervise the implementation based on the value and progress prescribed in BT contracts, ensuring compliance with laws.
The Government of Vietnam shall stipulate reasonable loan interests and profits, payment methods, and settlement of the implementation of projects applying BT contracts.
Thus, according to the above-mentioned contents, Ho Chi Minh City may continue to apply build-transfer contracts in project implementation.
The competence and procedures for selecting investors of projects under build-transfer contracts shall be performed as for those applying to projects with public investment funding.
Shall build-operate-transfer contracts be applied to construction investment projects for existing road works in Ho Chi Minh City?
Pursuant to the provisions of Point c, Clause 5, Article 4 of Resolution 98/2023/QH15 as follows:
Investment management
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5. Regarding public-private partnership investment projects (hereinafter referred to as “PPP projects”):
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c) The City may apply build-operate-transfer contracts (hereinafter referred to as “BOT contracts”) to construction investment projects for upgrading, expanding, and modernizing existing road works in conformity with the approved planning for urban main streets and overpasses.
Criteria, principles, conditions, and procedures for selecting projects and investors shall comply with laws on PPP investment.
The People’s Council of the City shall promulgate the list of projects specified in this Clause. The People’s Committee of the City shall transparently and adequately disclose information on projects to create favorable conditions for the people to supervise.
If the cost of the indemnification for ground clearance accounts for more than 50% of the total investment of the project and the preliminary financial plan of the PPP project fails to ensure the break-even capacity, the People’s Committee of the City may consider deciding to increase the percentage of state capital in the PPP project, but it shall account for more than 70% of the total investment of the project;
Thus, according to Resolution 98/2023/QH15, Ho Chi Minh City is also allowed to apply build-operate-transfer contracts to construction investment projects for upgrading, expanding, and modernizing existing road works.
The list of projects to which the build-operate-transfer contract is applied will be issued by the People’s Council of the City.
If the cost of the indemnification for ground clearance accounts for more than 50% of the total investment of the project and the preliminary financial plan of the PPP project fails to ensure the break-even capacity, the People’s Committee of the City may consider deciding to increase the percentage of state capital in the PPP project, but it shall account for more than 70% of the total investment of the project;
From what date does Resolution 98/2023/QH15 in Vietnam come into force?
Pursuant to Article 12 of Resolution 98/2023/QH15 on the implementation provisions as follows:
Implementation provisions
1. This Resolution comes into force as of August 1, 2023.
Resolution No. 54/2017/QH14 dated November 24, 2017 of the National Assembly of Vietnam expires as of the effective date of this Resolution.
Accordingly, Resolution 98/2023/QH15 comes into force from August 1, 2023, replacing Resolution 54/2017/QH14.
See the details of Resolution 98/2023/NQ15 here
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