Laws of Vietnam

On the 20th of October 1994, the Government signed Decree No.177-CP promulgating the Statute on the Management of Investment and Construction (Statute on the Management of Investment and Construction 177-CP for short) as a substitute for the Statute on Capital Construction issued together with Decree No.385-HDBT on the 7th of November 1990 (Statute on Capital Construction 385-HDBT for short), and the Statute on the Drawing Up, Examination and Approval of the Designs of Construction Projects issued together with Decree No.237-HDBT on the 19th of September 1985 of the Council of Ministers.

In execution of Article 3 of the Decree, and Article 59 of the Statute on the Management of Investment and Construction 177-CP, the Ministry of Construction, the State Planning Committee and the Ministry of Finance hereunder guide the implementation of some main issues (outside the guidance on separate issues for the concerned ministries):

1. Scope of regulation of the Statute on the Management of Investment and Construction 177-CP comprises:

- Investment projects for branch development;

- Investment projects for regional and territorial development;

- Investment projects for socio-economic development;

- Programs of investment and construction involving one or many projects (such as target program, job-generation program, clean water program...)

Depending on the ownership nature of the investment project, the scope of regulation of the Statute on the Management of Investment and Construction 177-CP is defined as follows:

+ With regard to the investment projects not under State ownership, the State shall manage only the construction plan, the architectural plan, the technology, the utilization of land and natural resources, the protection of the ecological environment, and the social aspects of the project.

+ With regard to the investment projects under State ownership, besides the management of the same aspects as in the investment projects of the non-State economic sector, the State shall also manage the commercial and financial aspects, and the economic efficiency of the project.

The State-owned investment projects comprise all the projects of which the investor (or his representative) is appointed by the competent authorities of the State, to manage the whole or part of the investment capital of the project raised from whatever source.

+ The following investment projects shall come under separate guidance of the Ministries in charge of the branches after reaching agreement with the Ministry of Construction, the State Planning Committee and the Ministry of Finance:

- The investment projects of Vietnamese representations abroad;

- Some investment projects involving national secrets of the security and national defense services.

2. On the classification of projects and the assignment of powers to decide on investment:

2.1 In the appendix on the classification of projects issued together with the Statute on the Management of Investment and Construction 177-CP, the total investment of the projects does not include the rent for the right to use land, water surface, sea area, continental shelf and airspace.

2.2. The investment projects of less than 500 million VND shall not have to draw up their feasibility reports, but can directly draw up the technical designs and general cost estimate, and submit them to the competent authorities for consideration and decision to invest.

2.3. Assignment of powers to decide on investment:

The assignment of powers to decide on investment shall be effected according to Article 6 of the Statute on Management of Investment and Construction 177-CP. The authorities, which are assigned by the Prime Minister the authority to decide on the investment, shall not reassign this power to its lower level to decide on the investment.

3. Management of the utilization of the sources of investment capital:

The management of the utilization of the sources of investment capital shall be effected under Article 8 of the Statute on Management of Investment and Construction. It consists of the following:

3.1 The preferential credit fund coming from the State budget used for investment includes domestic capital and outside capital in the form of State loans. It is integrated in the common sources of the budget, for repayment when the debt is due.

3.2 The capital raised by the State businesses for investment comprises the capital deducted from the funds of the businesses, the loans in the form of the issue of bonds, stocks, depreciation charge from the fixed assets formed by the supplementary capital procured by the businesses themselves..., including the existing assets of the State businesses. The investor has the responsibility to comply with all the regulations concerning State management stipulated in the Statute on the Management of Investment and Construction.

3.3 The service capital of a capital construction character, such as the capital for maintenance, upgrading, repair and transformation, must be used for the right purpose and must be recorded in the annual State plan. The drawing up and submission for approval of the project, technical design, total cost estimate, capital allowances, and accounts and final settlement of accounts in regard to this source of capital, must comply with the Statute on the Management of Investment and Construction 177-CP and the various guidance documents of the State.

It is forbidden to use the service capital without a capital construction character to invest in new constructions or in expansion.

4. On the planning of prospection, survey and planning work:

4.1 The plan of capital allocation for the prospection, survey and planning of socio-economic development in different territorial regions shall be presided over by the State Planning of socio-economic development in different territorial regions shall be presided over by the State Planning Committee which shall also manage the fund for realization.

In case the State assigns a ministry or branch to organize the implementation, the State Planning Committee shall allocate the fund for this ministry or branch from the annual budget plan.

4.2 The plan for capital allocation for the investment prospection, survey, planning and drawing up of plan for branch development shall be provided with capital for realization by the State Planning Committee on the basis of comparing it with the plans of other branches.

4.3 The plan of capital allocation for the urban prospection, survey and planning shall be proposed by the locality to the Ministry of Construction, so that it can incorporate into the common program in the country. The State Planning Committee shall make the overall fund allocation and allocate the powers of management according to the following regulation:

4.3.1. In the prospection and survey for general urban planning from the provincial capital upward, the State Planning Committee shall directly allocate budget fund to the Ministry of Construction and communicate it to the localities.

4.3.2. The prospection, survey and detail planning in the urban centers from the Category 2 upward, and the urban centers crossed by national communication lines, shall be placed under the management of the Ministry of Construction, and shall be allocated funds from the annual State budget for realization.

4.3.3. The prospection, survey and planning for general and detailed planning of urban area centers under the provincial capital level, and detailed planning for the urban centers and provincial capitals under Category 2, shall be managed and realized by the localities themselves and provided with the annual budget sources.

4.4. In the prospection, survey and planning and for the drawing up of rural plans and programs through the State level programs and plans, the State Planning Committee shall allocate funds for realization to the ministries and branches which are a signed by the State to preside over these programs and projects.

5. On the construction of the auxiliary quarter and the temporary dwellings of construction workers:

The necessity to build and auxiliary quarter or the temporary dwellings of the construction workers must be clearly set forth in the feasibility report of the project for the competent authority to approve when deciding to invest. This shall comply with the following regulations:

5.1 In case the project is offered for tender or selection of contractor, the expenses for this construction are also considered one of the items offered for bidding or selection of contractor together with the main works of the project.

5.2. In case of assignment of contractor, the authority deciding the investment shall authorize the construction of the auxiliary quarter and temporary dwellings of workers, but there must be a detailed expenditure plan and a package contract on these expenditures.

5.3. With regard to the expenditures in the construction of temporary dwellings of the construction workers, the projected expenditures should not exceed 2% of the estimated construction and assembly cost, and should apply only to the newly started constructions far from population centers and to those constructions built along roads or communication lines (such as roads, main canals, power lines, forestry tracks). They shall not apply to the constructions in the cities, towns, townships and other population centers.

5.4. These expenditures shall be allocated by installments during the period of preparation for the construction in the package contract mode. The construction and assembly unit is allowed to use this allocation according to the set purpose. The saving from the construction expenditures of the temporary dwellings of the construction workers can be incorporated into the welfare fund of the unit. The savings from the construction fund for the auxiliary units quarter can be incorporated into the fund for production development of the unit.

6. Expenditures for formulation and evaluation of investment projects:

6.1. The level of allocation for consultancy in the formulation and evaluation of the project shall be decided by the Ministry of Construction after consulting the State Planning Committee and the Ministry of Finance. For the time being, the allocation for project evaluation shall represent 5% of the designing cost.

6.2. If after evaluation the project cannot be realized, the expenditures for consultancy and in project formulation and evaluation shall be deducted from the production development fund of the investor unit (if the project belongs to a business), or covered by the budget (if the project belongs to an administrative or public service agency).

7. Bidding, selection of contractor, assignment of contractor:

7.1. The projects of which the State is the investor must organize bidding or selection of contractor according to the regulations issued by the State.

7.2. The Ministry of Construction has the responsibility to manage and guide the bidding, the selection of contractor, selection of construction and assembly consultant, as stipulated in Item 4, Article 6 of the Statute on the Management of Investment and Construction 177-CP: With regard to the projects in Group A, the State Bidding Examination Council shall expertise the bidding results of the ministries and localities, and submit them to the Prime Minister for ratification.

7.3. The authority which decides the investment shall also decide the assignment of contractor for the following projects:

+ Projects of a research or experimental character,

+ Projects of an urgent character due to natural calamities or enemy sabotage;

+ Projects of small value under 500 million VND (including the value of equipment and construction and assembly... within the already approved total investment of the project);

+ With regard to a number of projects of a special character and belonging to some branches, they must get the permission of the Prime Minister for each project before the assignment of contractor can be effected.

7.4. With regard to the projects of cooperation and joint ventures with foreign countries undertaken by the State-owned businesses, they must also organize bidding or selection of contractor according to the regulations of the State or international practice, with consideration for the practical conditions of Vietnam. The bidding shall be organized in Vietnam.

7.5. Annually, on the 31st of December at the latest, the Ministries and the People's Committees in the provinces and cities must have a written report on the implementation of the bidding, the selection of contractors and assignment of contractors within the years from their Ministries or localities to the Ministry of Construction so that it can draw up a general report to the Prime Minister.

8. Management of construction technique and quality and test on completion.

8.1. The management of the construction techniques and quality shall be effected according to the regulations of the Statute on Management of Construction Project Quality issued by the Minister of Construction.

8.2. The test on completion of a construction project shall be effected under the "Statute on Test on Completion of Construction Projects" issued by the Ministry of Construction.

9. Fund allocation and payment:

9.1. With regard to the bidding projects or selection of contractor, the fund allocation and payment shall be effected through the regulations in the current Statute on Bidding or Selection of Contractor of the State.

9.2. In case of assignment of contractor, the allocation of fund and payment shall be effected according to the current regulations of the State, and according to the contracts signed between A and B.

In the ending year of the project, the investor can allocate or loan at most 95% of the value of the volume already realized under the yearly plan. The remaining 5% must be repaid immediately after the investor has accomplished his duty of warranting the project, as stipulated by the Ministry of Construction.

10. Checking and ratifying the final statement of accounts:

The checking and ratification of the final statement of accounts must be effected according to Article 36 of the Statute on the Management of Investment and Construction 177-CP and the guiding circular of the Ministry of Finance. The checking and ratification shall be based on the following grounds:

- In case of bidding or selection of contractor, this must be based on the price of the winning bid and the terms in the contract.

- In case of assignment of contractor, payment shall be based on the minutes of test on completion of the volume and the approved estimated cost, according to the Circular guiding the formulation and management of the prices of the investment projects of the Ministry of Construction, and the related regimes and policies applicable to the project (construction).

11. On the regime of account reporting and statistics:

In the process of the realization of investment, the investors of all economic sectors must observe the regime of accounts report issued by the Ministry of Finance, and the statistics report issued by the General Statistics Department.

12. They must handle the issues of changing from the application of the Statute on Capital Construction 385-HDBT to the application of the Statute of the Management of Investment and Construction 177-CP.

12.1. Elaboration and submission of investment projects for ratification:

12.1.1. With regard to the projects accompanied by the economic and technical feasibility study, or economic and technical report which have been submitted for ratification prior to the 20th of October 1994 (including those pending ratification), there is no need to write the feasibility study as stipulated in the Statute on the Management of Investment and Construction 177-CP, but the assignment of powers to decide on investment (with regard to the economic and technical blueprint, the economic and technical reports which have been submitted but not yet ratified), and the subsequent steps such as survey, technical design and total cost estimate still have to be effected as stipulated in the Statute on the Management of Investment and Construction 177-CP.

12.1.2. After October 20, 1994 all investment projects must formulate these documents and submit them for ratification to the authority deciding on investment, as stipulated in the Statute on the Management of Investment and Construction 177-CP.

12.2. On the expertise and ratification of design and total cost estimate:

12.2.1. All the dossiers on technical design, total cost estimate and detailed estimates which have been formulated and submitted for ratification prior to October 20 1994 (whether already ratified or not yet ratified) there is no need to reformulate as stipulated in the Statute on the Management of Investment and Construction 177-CP, but the assignment of powers for ratification with regard to the dossiers not yet ratified shall be effected according to the Statute on the Management of Investment and Construction 177-CP.

12.2.2. The expertise and ratification of the technical designs of the projects submitted for ratification after the 20th of October 1994 shall have to be effected according to the Statute on the Management of Investment and Construction 177-CP stipulated in Articles 25 and 26 concerning the management of designs, which stipulates that the authority shall ratify the technical design only after expertise by the specialized agency. This agency shall be selected by the ratifying authority which may be the Design Expertise Council composed of qualified experts for the expertise of each aspect or the whole of the design blueprint, or a qualified consultant agency may be picked to expertise the project as provided for by the Ministry of Construction.

12.2.3. The expertise and ratification of the total cost estimate of the projects under State ownership and which are submitted for ratification after the 20th of October 1994 shall be effected according to the Statute on the Management of Investment and Construction 177-CP stipulated in Article 51 (on the management of the total cost estimates of State-owned projects), which stipulates that the authority shall ratify the total cost estimate only after expertise by the specialized agency. With regard to the projects in Group A, the Ministry of Construction shall sponsor the expertise of the total cost estimate and submit it to the Prime Minister shall empower the Minister of the controlling branch to ratify it. With regard to the projects in Groups B and C, the specialized agency assigned by the ratifying authority must be an agency having the function of State management, or the Expertise Council for total cost estimates.

12.3. On the control and ratification of final statement of accounts:

12.3.1. All the projects accompanied by dossiers of control and ratification of final statement of accounts which were controlled and ratified before the 20th of October 1994 (including already ratified dossiers), shall not have to observe the stipulations on the contents and the assignment of powers for ratification, as provided for in the Statute on the Management of Investment and Construction 177-CP.

12.3.2. After the 20th of October 1994, all the constructions of all types of projects (including those already submitted but not yet ratified) must conduct the control and ratification of the final statement of accounts as provided for in Article 36, while the projects which started after the 20th of October 1994 must make the final statement of the investment capital, and the control and ratification of this statement, as stipulated in the Statute on Management of Investment and Construction 177-CP, and the guiding circular of the Ministry of Finance.

12.4. On the change to the forms of organization for management in the realization of the projects defined in Chapter V (from Article 43 to Article 48) of the Statute on the Management of Investment and Construction 177-CP:

The Managing Boards of the projects which have changed to the following forms of organization of management of the realization of the projects:

12.4.1. With regard to the Managing Boards of independent projects or projects of a size equivalent to those in Group A and B, and the Managing Boards of the present regional projects, the authority deciding the investment shall have to be reorganized into the form of "Chief Manager of Project" stipulated in Article 45 of the Statute on the Management of Investment and Construction 177-CP.

The form of "Chief Manager of Project" is the form which determines clearly individual responsibility throughout the process of investment and construction.

The Chief Manager of Project is assisted by a Project Managing Board.

This Board must have a small and effective personnel able to act as the center in the organization, formulation, elaboration and submission for ratification of investment, technical design and total cost estimate; in the management of the process of implementation of investment until test on completion, hand-over, and payment and final statement of accounts of the project, through the signing of contracts with the agencies of consultancy, material and equipment supply and construction organizations, aimed at specializing each domain and job ensuring the quality and efficiency of the process of investment and construction. The Project Managing Board shall not directly replace the function of the consultant organization.

The Chief Manager of Project and the Project Managing Board shall be appointed by the authority deciding the investment.

12.4.2. The Managing Boards of projects of a size equivalent to projects in Group C belonging to State-owned businesses, shall be reorganized by the authority deciding the investment, in order to change to the form of "direct management of the implementation of the project by the investor" as stipulated in Article 44 of the Statute on the Management of Investment and Construction 177-CP.

In this form, there is no need to set up separate managing apparatus, but the investor shall use his existing apparatus to carry out the signing of contracts with the consultant organizations, construction companies, and material and equipment supply agencies, and also the payment and statement of accounts, on the basis of the certification by the consultant agencies supervising and managing the construction of the project.

12.4.3. The Managing Boards of projects of a size equivalent to projects in Group C of the administrative and public service units, shall change to the following forms:

In the localities, the People's Committees of the provinces and cities directly under the Central Government shall have to reorganize in order to change to the form of "Chief Manager of Project" in each region.

In the ministries having investment projects to be built on the same site in a province or city, if a Project Managing Board has been set up for each project, they must be reorganized in order to change to the form of "Chief Manager of Project" according to each area.

In case the projects lie scattered in the same province or city, a Project Managing Board shall be set up to change to the form of "direct management of the project implementation by the investor".

12.4.4. The allocations of fund for the activities of all the forms of management of project implementation shall comply with the guidance of the Ministry of Construction.

- The deadline for the completion of the reorganization of the Project. Managing Boards mentioned above shall not be later than the end of the third quarter of 1995.

12.4.5. With regard to the projects which are in the process of hand-over, or payment or final statement of accounts, or which shall as scheduled be completed before the third quarter of 1995, the existing Managing Boards shall continue to discharge their responsibilities until all the assigned tasks have been accomplished.

In the process of the reorganization of the Managing Boards of the projects, the Ministries, localities and units have the responsibility to send reports on the situation of the implementation to the Ministry of Construction for the compilation of a general report to the Prime Minister.

Minister of Construction

NGO XUAN LOC

Minister-Chairman of State Planning Committee

DO QUOC SAM

Minister of Finance

HO TE