Vietnam: In 2020, conversion of construction investment capital must fully reflect recognized investment costs

According to Circular No. 18/2019/TT-BXD of the Ministry of Construction of Vietnam, conversion of construction investment capital means the act of converting investment costs qualified to be settled into costs falling on a price level determined at the date of commissioning, transfer and operation of an investment and construction project. Especially, conversion of construction investment capital must fully reflect recognized investment costs of investment and construction projects at the date of conversion. In cases where post-conversion value is less than realized investment value qualified to be settled, the first shall be used as investment costs qualified to be settled. If investment and construction projects incur loan interest costs during the investment period, these costs shall remain unchanged and be accepted as post-conversion value of an investment and construction project.

This is also one of the important principles of conversion of construction investment capital. Other principles specified in Circular No. 18/2019/TT-BXD are as follows:

- Project owners shall consult instructions given herein to convert construction investment capital in projects or construction works that are completed for the duration of greater than 02 years (from the commencement date to the pre-operation commissioning date).

- Reports on conversion of construction investment capital, enclosing final settlement documentation, shall be submitted to persons making investment decisions to seek their approval no more than 9 months from the date of signing of reports on commissioning, transfer and operation of investment and construction projects.

- Project owners shall be authorized to hire cost management advisory bodies that meet competency requirements in accordance with regulations laid down in Government's Decrees on administration of investment and construction projects in order to convert construction investment capital. These advisory bodies shall be selected in compliance with regulations.

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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