Circular No. 18/2019/TT-BXD: Vietnam’s regulations on details about conversion of construction investment capital

According to Article 4 of Circular No. 18/2019/TT-BXD of the Ministry of Construction of Vietnam, conversion of construction investment capital is the act of converting cost-related accounts and items, including compensation, support and resettlement (if any); construction; equipment; project management; construction investment counsel and others. Specifically, details about conversion of construction investment capital specified in this Circular include:

- Compensation, support and resettlement costs realized each year can be converted due to variation in components of compensation or construction costs or costs associated with cash flows and other related components to those costs falling on a price level determined at the date of transfer and operation of investment and construction projects or works.

- Convertible construction cost is the gross construction cost realized each year of a construction project (project item) which is converted owing to variance in components of construction costs (including building materials, labor, machinery and other cost-related items or accounts constituting construction costs, e.g. indirect costs and estimated taxable income) under the guidance of the Ministry of Construction on determination and administration of construction investment expenses that is provided at the date of commissioning, transfer and operation of an investment and construction project.

- Convertible equipment cost is the gross cost, including costs of purchase of building and technological equipment; administrative costs for purchase of building equipment of a contractor; costs of purchase of copyrights of software used for building and technological equipment in an investment and construction project; costs of training and technology transfer; costs of manufacture and production of non-standard equipment (if any); costs of installation, testing and calibration; costs of test runs on equipment conforming to technical requirements; costs of transport and insurance; taxes and other fees or charges realized each year, which is converted due to any fluctuation in both domestic and foreign currency) cash flow and other related factors to the gross cost falling on a price level determined at the date of transfer, handover and operation of an investment and construction project.

- Convertible project administration cost is the gross cost of project management realized each year which is converted due to any variation in factors of construction costs and other related components into the one falling on a price level determined at the date of transfer and operation of an investment and construction project or work.

- Convertible investment and construction counseling cost is the gross cost of investment and construction consulting activities realized each year which is converted due to any variation in factors of construction costs and costs associated with cash flow and other related factors into the one falling on a price level determined at the date of transfer and operation of an investment and construction project or work.

- Convertible other cost is the gross other cost realized each year which is converted due to any variation in factors of construction costs and costs associated with cash flow and other related factors into the one falling on a price level determined at the date of transfer and operation of an investment and construction project or work.

View more details at Circular No. 18/2019/TT-BXD of the Ministry of Construction of Vietnam, effective from February 15, 2020.

Thu Ba

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