What is the guarantee rate for the execution of investment projects by investors in Vietnam?

What is the guarantee rate for the execution of investment projects by investors in Vietnam? (Internet image) 

Regarding this issue, LawNet would like to answer as follows:

1. Contents of project execution guarantee agreement in Vietnam

According to Clause 1, Article 26 of Decree 31/2021/ND-CP, the obligation to guarantee investment project execution specified in Clause 1 Article 25 of Decree 31/2021/ND-CP shall be fulfilled on the basis of a written agreement between the investment registration authority and the investor.  The project execution guarantee agreement shall contain at least:

- The investment project’s name, objectives, location, scale, investment capital, progress and duration specified in the decision on approval for investment guidelines, decision on approval for both investment guidelines and investor or investment registration certificate;

- Measures for guaranteeing investment project execution (deposit payment or guarantee for deposit payment obligation specified in Clause 1 Article 25 of Decree 31/2021/ND-CP);

- The amount of guarantee for project execution (hereinafter referred to as “the guarantee amount”) determined as specified in Clauses 2, 3 and 4 of Article 26 of Decree 31/2021/ND-CP;

- Time and duration of guaranteeing project execution specified in Clauses 5, 6 and 7 of Article 26 of Decree 31/2021/ND-CP;

- Conditions for refund and adjustment of guarantee amounts, and termination of obligation to guarantee project execution specified in Clause 9 of Article 26 of Decree 31/2021/ND-CP;

- Handling measures in the case specified in Clause 10 of Article 26 of Decree 31/2021/ND-CP;

- Rights, obligations and other responsibilities of parties related to the contents mentioned in Points a, b, c, d, dd and e of Clause 1, Article 26 of Decree 31/2021/ND-CP;

- Other contents which are agreed upon by the parties but not contrary to the regulations laid down in the Law on Investment, Decree 31/2021/ND-CP and relevant regulations of law.

2. What is the guarantee rate for the execution of investment projects by investors in Vietnam?

According to Clause 2, Article 26 of Decree 31/2021/ND-CP, the guarantee rate is expressed as a percentage of the investment capital of the investment project on the progressive principle. To be specific:

- For a capital portion of up to VND 300 billion, the guarantee rate is 3%;

- For a capital portion of over VND 300 billion to VND 1,000 billion, the guarantee rate is 2%;

- For a capital portion of over VND 1,000 billion, the guarantee rate is 1%.

3. Time and duration of guaranteeing project execution in Vietnam

According to Clause 5, Article 26 of Decree 31/2021/ND-CP, time and duration of guaranteeing project execution are as follows:

- The investor shall pay the deposit or submit the credit institution’s guarantee certificate after being issued with the decision on approval for both investment guidelines and investor or decision on investor approval or decision on approval for bidding result and prior to implementing the compensation, assistance and relocation plan approved by a competent authority (if the investor does not advance the payment for compensation, assistance or relocation)

Or by the time of issuing the decision on land allocation or land lease or land repurposing (if the investor does not advance compensation, assistance or relocation payments or the investor is selected to execute the project through a land use right auction and is leased out land by the State and pays land rents on an annual basis);

- The duration of guaranteeing project execution begins from the time of fulfilling the obligation as specified in Point a of this Clause to the time when the deposit is refunded to the investor or paid to the state budget or to the time of invalidating the guarantee.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE