What is the concept of a build-transfer contract under Resolution 98? Is Ho Chi Minh City allowed to apply BT contracts?
- What is the concept of a build-transfer contract in Vietnam under Resolution 98?
- Is Ho Chi Minh City allowed to apply BT contracts?
- Regarding projects applying BT contracts concluded before January 1, 2021 that have yet to be fully paid to investors, what are the regulations on the use of land funds for payment?
What is the concept of a build-transfer contract in Vietnam under Resolution 98?
Pursuant to Resolution 98/2023/QH15 on the pilot implementation of particular policies for the development of Ho Chi Minh City issued by the National Assembly of Vietnam as follows:
The concept of "build-transfer contract" (hereinafter referred to as "BT contract") is defined as follows:
Build-transfer contract (BT contract) refers to a contract concluded between a competent agency and an investor and project enterprise (if any) to construct infrastructure works. After the completion of the works, the investor transfers them to the competent agency and receives payment from the state budget to recover investment capital and profits according to agreements in such a contract.
Thus, a build-transfer contract (BT contract) refers to a contract concluded between a competent agency and an investor and project enterprise (if any) to construct infrastructure works..
After the completion of the works, the investor transfers them to the competent agency and receives payment from the state budget to recover investment capital and profits according to agreements in such a BT contract.
Is Ho Chi Minh City allowed to apply BT contracts?
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 is allowed to apply BT contracts in project implementation.
The competence and procedures for selecting investors of projects under BT contracts shall be performed as for those applying to projects with public investment funding.
Regarding projects applying BT contracts concluded before January 1, 2021 that have yet to be fully paid to investors, what are the regulations on the use of land funds for payment?
Pursuant to the provisions of Clause 7 Article 6 of Resolution 98/2023/QH15 as follows:
Management of urban areas, natural resources, and environment
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7. Regarding projects applying BT contracts concluded in compliance with laws before the effective date of the Law on Public-Private Partnership Investment that have yet to be fully paid to investors, the use of land funds managed by the State in cases of re-arrangement and handling of public property for payments to investors is as follows:
a) The People’s Committee of the City shall expropriate land included in the land funds managed by the State in cases of re-arrangement and handling of public property determined in BT contracts;
b) The People’s Committee of the City shall decide and perform investment procedures, construction planning procedures, and land allocation or lease procedures under concluded BT contracts and land use planning approved by competent authorities. The time of land allocation or lease for payments shall be based on the construction volume of works under projects applying BT contracts completed by the progress tested by competent state agencies and shall be audited. Prices for land use and land lease shall be determined at the time of decisions on land allocation and lease.
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Thus, regarding projects applying BT contracts concluded before January 1, 2021 that have yet to be fully paid to investors, the use of land funds managed by the State in cases of re-arrangement and handling of public property for payments to investors shall comply with the above contents.
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