Regulations on the use of public property for commercial purposes in Vietnam

Regulations on the use of public property for commercial purposes in Vietnam (Internet image)

1. What is public property?

According to Clause 1, Article 3 of the Law on Management and use of public property 2017, public property is property under public ownership and managed by the State, including:

- Public property serving management, provision of public services, maintenance of national security for organizations and individuals;

- Infrastructural property serving national and public interests;

- Property established under public ownership;

- Public property of enterprise;

- Money in state budget, non-state budget financial funds, foreign exchange reserves;

- Land and other resources.

2. Cases of use of public property for commercial purposes in Vietnam

According to Clause 1, Article 56 of the Law on Management and use of public property 2017, public service provider is entitled to use public property for commercial purposes if:

- The property is distributed, invested in construction or purchased to perform tasks assigned by the State but it has not been used at full capacity;

- The property is invested in construction or purchased in accordance with a project approved by a competent authority for commercial purposes that is not funded by the state budget.

3. Power to approve plans for using property for commercial purposes in Vietnam

Clause 2, Article 56 of the Law on Management and use of public property 2017 stipulates the power to approve plans for using property for commercial purposes as follows

- Ministers, heads of central authorities and chairmen of People’s Committees of provinces shall approve plans towards property which is public service facilities; other property with high value as prescribed by the Government;

- Management councils or heads of public service providers shall approve plans towards property that is not specified above.

4. Requirements for the use of public property for commercial purposes in Vietnam

According to Clause 2, Article 55 of the Law on Management and use of public property 2017, the use of public property for commercial purposes, for lease or joint venture purposes shall satisfy the following requirements:

- Being granted permission by the competent authorities specified in Clause 2 Article 56, Clause 2 Article 57 and Clause 2 Article 58 herein;

- Not affecting the performance of functions and tasks assigned by the State;

- Not losing the public property ownership; preserving and developing capital and property distributed by the State;

- Using the property for the right purposes assigned and purposes of construction investment, purchase; fulfilling functions and tasks of public services providers;

- Increasing capacity and efficiency of using the property;

- Ensuring the depreciation of fixed assets, fulfilling obligations on tax, fees, charges and other state financial obligations;

- The State shall not provide funding for maintenance or repair of public property that is used for commercial purposes, for lease or for joint venture purposes only; public service providers shall use proceeds earned from business, lease or joint ventures to maintain or repair public property;

- Ensuring the market mechanism and complying with regulations of relevant law.

5. Managing revenue from using public property for commercial purposes in Vietnam

The proceeds earned from business, lease or joint ventures shall be aggregated separately and kept all accounts as prescribed in regulations of law on accounting and shall be managed and used as follows:

- Making payment for relevant costs;

- Making repayment for loans or mobilized capital (if any);

- Fulfilling state financial obligations;

- Managing and using the remaining proceeds according to regulations of the Government.

(Clause 5, Article 55 of the Law on Management and use of public property 2017)

Van Trong

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