DECREE

ON INVESTMENT IN THE FORM OF BUILD-OPERATE-TRANSFER, BUILD-TRANSFER-OPERATE OR BUILD-TRANSFER CONTRACTS

THE GOVERNMENT

Pursuant to Law No. 32/2001/QH10 of December 25, 2001, on Organization of the Government;
Pursuant to Investment Law No. 59/2005/QH11 of November 29, 2005;
Pursuant to Construction Law No. 11/2003/QH11 of November 26, 2003;
Pursuant to Enterprise Law No. 60/2005/QH11 of November 29, 2005;
At the proposal of the Minister of Planning and Investment,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1.- Scope of regulation

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2. The Government shall decide on the application of other similar forms of contract.

Article 2.- Interpretation of terms

In this Decree, the terms below are construed as follows:

1. Build-Operate-Transfer contract (below referred to as BOT contract for short) means a contract signed between a competent state agency and an investor in order to build and operate an infrastructure work in a certain period of time; upon the end of this period, the investor shall transfer without compensation the work to the State of Vietnam.

2. Build-Transfer-Operate contract (below referred to as BTO contract for short) means a contract signed between a competent state agency and an investor in order to build an infrastructure work; after completing construction, the investor shall transfer the work to the State of Vietnam; the Government shall grant the investor the right to operate that work in a certain period in order to recover investment capital and earn profits.

3. Build-Transfer contract (below referred to as BT contract for short) means a contract signed between a competent state agency and an investor in order to build an infrastructure work; after completing construction, the investor shall transfer the work to the State of Vietnam; the Government shall create conditions for the investor to execute other projects in order to recover investment capital and earn profits or shall make payment to the investor as agreed in the BT contract.

4. "Project contract" means a BOT, BTO or BT contract.

5. "State agencies competent to conclude project contracts" (below collectively referred to as competent state agencies) are ministries, ministerial-level agencies, government-attached agencies, People's Committees of provinces or centrally run cities (below collectively referred to as provincial-level People's Committees) or their attached agencies which are authorized to conclude project contracts.

6. "Investors" means organizations or individuals that invest capital in the execution of projects, including:

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b/ Business households or individuals;

c/ Cooperatives or unions of cooperatives set up under the Cooperative Law;

d/ Foreign-invested enterprises set up and operating in Vietnam;

e/ State enterprises set up before the effective date of the 2005 Enterprise Law;

f/ Foreign organizations and individuals, overseas Vietnamese and foreigners residing in Vietnam.

7. "Project" means a combination of proposals related to the investment of capital in the building and operation of new infrastructure works or in the improvement, expansion, modernization, operation and management of existing works in the form of BOT, BTO or BT contracts defined in this Decree.

8. "Infrastructure works" means works encouraged for execution under the provisions of Article 3 of this Decree.

9. "Other projects" means projects executed by an investor to recover investment capital and earn profits simultaneously with or after the completion of infrastructure works defined in Clause 3 of this Article. Other projects are executed in accordance with the investment law and eligible for incentives provided for in this Decree or agreed upon in project contracts.

10. "BOT enterprise", "BTO enterprise" or "BT enterprise" (below collectively referred to as project enterprise) means an enterprise set up by an investor under Vietnamese law in order to manage the operation of a project. BOT or BTO enterprises may directly manage and operate project works or hire other management organizations but shall bear all responsibilities of those organizations.

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1. The Government encourages the execution of projects on building and operation of new infrastructure works or improvement, expansion, modernization, operation and management of the following works:

a/ Roads, bridges, tunnels and related works and facilities;

b/ Railways, tramways;

c/ Airports, seaports, river ports, ferry landings;

d/ Water supply plants; water drainage, wastewater and waste treatment systems;

e/ Power plants, power transmission lines;

f/ Other infrastructure works as decided by the Prime Minister.

2. The Government shall protect the ownership right and other lawful interests of investors executing projects in accordance with this Decree and relevant laws.

3. Investors and project enterprises may recover investment capital and earn profits as agreed upon in project contracts.

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1. Investors or project enterprises shall, as agreed upon in project contracts, arrange by themselves capital sources for the execution of projects. The Government encourages investors with financial, technical and managerial capabilities to jointly mobilize capital for the execution of projects.

2. An investor's equity capital for the execution of a project is mobilized according to the schedule agreed in the project contract and must reach the following minimum rate:

a/ Not lower than 30% of the total investment capital of the project, for projects with total investment capital of under VND 75 billion each;

b/ Not lower than 20% of the total investment capital of the project, for projects with total investment capital of between VND 75 billion and under VND 1,500 billion each;

c/ Not lower than 10% of the total investment capital of the project, for projects with total investment capital of VND 1,500 billion or more each.

3. As agreed upon in a project contract, the investor or project enterprise shall mobilize investment capital for the execution of the project strictly according to the schedule committed in the project contract and shall take all responsibilities for any change in the total investment capital, except for force majeure cases and other cases defined in the project contract.

Article 5.- Use of state capital for contribution to, or support of the execution of, projects

1. State capital may, on a case-by-case basis, be used for contribution to, or support of the execution of, projects in the following forms:

a/ A state enterprise contributes capital to the execution of a project at a rate not exceeding 49% of the investor's equity capital prescribed in Clause 2, Article 4 of this Decree;

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2. The use of state capital in support of a project according to the provisions of Point b, Clause 1 of this Article shall be effected under a separate project which is independent from the BOT, BTO or BT project, and in accordance with the regulations on investment management and use of state capital.

3. State budget capital sources for activities falling under responsibilities of competent state agencies or other duties defined in project contracts shall be used under the guidance of the Finance Ministry.

Article 6.- Inter-branch working groups

1. Based on the requirements of negotiation and execution of projects, competent state agencies may set up inter-branch working groups in charge of BOT, BTO or BT projects (below referred to as inter-branch working groups), each consisting of:

a/ A representative of the competent state agency, acting as the group head;

b/ Representatives of central agencies and local agencies in localities where the project is to be executed or which are related to the project;

c/ Several independent legal, technical and financial experts as decided by the competent state agency.

2. An inter-branch working group has the following tasks:

a/ To consider criteria for selection of investors to negotiate the project contract under the provisions of Articles 10, 11 and 12 of this Decree;

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c/ To participate in the handling of issues arising in the course of the execution of the project;

d/ To perform other tasks at the request of the competent state agency.

3. The operation duration of an inter-branch working group is decided by the competent state agency based on the requirements of the execution of a project.

4. The funds for operation of an inter-branch working group, including the fund for the performance of the competent state agency's obligations agreed upon in the project contract shall be allocated from the state budget on the basis of the estimates approved by a competent authority.

Chapter II

MAKING AND ANNOUNCEMENT OF LISTS OF PROJECTS

Article 7.- Making of lists of projects

1. Based on socio-economic development plannings and orientations in each period and the provisions of Article 3 of this Decree, ministries, ministerial-level agencies, government-attached agencies (below collectively referred to as line ministries) and provincial-level People's Committees shall make and approve lists of projects of their respective branches or localities, calling for investment capital in the form of BOT, BTO or BT contracts. A list of projects has the following main contents:

a/ Names of projects;

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c/ Expected places of execution of projects;

d/ Major technical parameters and estimated total investment capital for the execution of projects;

e/ Names, addresses, telephone numbers and fax numbers of competent state agencies.

2. Lists of projects mentioned in Clause 1 of this Article shall be sent to the Ministry of Planning and Investment, concerned ministries and branches and provincial-level People's Committees of localities where the projects are to be executed, for comment.

3. A written request for comments of the agencies mentioned in Clause 2 of this Article must state the necessity, objectives, place, designed capacity, estimated investment capital, and minimum technical and financial requirements of the project, proposals to competent state agencies and forms of selection of investors for negotiation of the project contract.

4. Within 30 working days after receiving lists of projects, the Ministry of Planning and Investment, concerned ministries and branches and provincial-level People's Committees in localities where the projects are to be executed shall give their comments on the projects and issues mentioned in Clause 3 of this Article.

Article 8.- Announcement of lists of projects

1. After reaching agreement with concerned agencies mentioned in Clause 4, Article 7, ministries, branches and provincial-level People's Committees shall post the lists of projects on their websites and concurrently publish them on three consecutive issues of central and local dailies.

2. Lists of projects shall be announced once every year and must have principal contents defined in Clause 1, Article 7 of this Decree.

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Article 9.- Making, approval of project proposals

1. Based on the lists of projects announced under Article 8, competent state agencies shall appoint domestic or foreign contractors to make project proposals and bidding dossiers in order to select investors for negotiation of project contracts.

2. A project proposal has the following main contents:

a/ The necessity of investment in the building of the work, favorable conditions and difficulties;

b/ The projected capacity, place, construction area, work items and land use demand;

c/ An analysis and preliminary selection of technologies, techniques, conditions on the supply of materials, equipment, energy, services, technical infrastructures, plans on ground clearance and population resettlement (if any), the project's impacts on the ecological environment, fire prevention and fighting, and security;

d/ A preliminary determination of the project's total investment capital, execution duration and capital mobilization plan, based on the progress and socio-economic efficiency of the project.

3. Competent state agencies shall consider project proposals and make decisions to approve them.

4. The funds for making project proposals and bidding dossiers shall be allocated from the state budget. Annually, ministries, branches and provincial-level People's Committees shall estimate funds for the performance of the tasks mentioned in this Article.

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SELECTION OF INVESTORS FOR NEGOTIATION OF PROJECT CONTRACTS

Article 10.- Bidding for selection of investors for negotiation of project contracts

1. Except for cases defined in Articles 11 and 12 of this Decree, competent state agencies shall organize domestic or international public bidding in order to select investors to negotiate project contracts.

2. A bidding dossier has the following contents:

a/ Instructions for contractors;

b/ Minimum technical, commercial and financial requirements of the project, assessment criteria, conditions for incentives, taxes, and other conditions;

c/ The project proposal;

d/ The draft project contract, with contents specified in Article 15;

e/ Other related documents as decided by the competent state agency.

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4. The Ministry of Planning and Investment shall specify bidding dossiers, modes, order and procedures for selection of investors for negotiation of project contracts.

Article 11.- Appointment of investors to directly negotiate project contracts

Appointment of investors to directly negotiate project contracts may be effected only when one of the following conditions is met:

1. The competent state agency has conducted the pre-qualification of investors for negotiation of the project contract but only one investor meets the pre-qualification requirements.

2. The project needs to be executed to meet an urgent demand for the use of an infrastructure work or to ensure continuity in the use of a product or service and, therefore, the bidding for selection of investors for negotiation of the project contract cannot be carried out.

3. Other cases as decided by the Prime Minister.

Article 12.- Projects proposed by investors

1. Investors may take the initiative in proposing projects outside the lists of projects announced under the provisions of Article 8 of this Decree and shall make project proposals.

2. A dossier proposing a project submitted to the competent state agency has the following contents:

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b/ The document certifying the legal status and financial and technical capabilities of the investor;

c/ Other relevant documents explaining the project proposal.

3. If a project proposal is conformable with the planning approved by a competent authority, the competent state agency shall gather comments of concerned agencies and decide on the approval of the project proposal according to the order defined in Clauses 2, 3 and 4, Article 7 of this Decree. If a project proposal falls outside the approved planning, the competent state agency shall submit it to the line ministry for consideration and addition to the planning according to its competence or to the Prime Minister for approval of its addition to the planning.

4. Within 45 working days after receiving a valid dossier, the competent state agency shall consider and decide to approve the project proposal according to the provisions of Clause 2 of this Article and notify in writing the investor of its approval or disapproval. When approving the project proposal, the competent state agency shall organize the negotiation of the project contract with the investor under the provisions of Chapter IV of this Decree.

5. Where two or more investors propose to execute the same project, the competent state agency shall organize a bidding to select one investor for negotiation of the project contract in accordance with Article 10 of this Decree.

Chapter IV

NEGOTIATION, CONCLUSION OF PROJECT CONTRACTS

Article 13.- Formulation, approval of investment projects on the construction of works

1. After obtaining a decision to select an investor for negotiation of a project contract under the provisions of Article 10, 11 or 12 of this Decree, the competent state agency shall direct the investor to formulate an investment project on the construction of a work as a basis for negotiation.

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Article 14.- Negotiation, conclusion of project contracts and related contracts

1. Competent state agencies shall preside over the negotiation of project contracts and government guarantee agreements (if any) with the selected investors. For projects requiring government guarantees, before negotiating project contracts, competent state agencies shall submit guarantee requirements to the Prime Minister for consideration and approval.

2. Contracts on land lease, construction, installation of machine or equipment, consultancy and assessment services, purchase of materials, sale of products or services, provision of technical services, borrowing of capital, asset pledge or mortgage and other contracts may be negotiated together with project contracts. Competent state agencies shall urge the negotiation of related contracts to ensure their conformity with project contracts.

3. Project contracts and related contracts shall be examined together with the investment appraisal and grant of investment certificates under the provisions of Article 17 of this Decree.

Article 15.- Contents of project contracts

1. A project contract must contain the following principal contents:

- Names, addresses and authorized representatives of the parties to the contract;

- Objectives and scope of operation of the project and other projects; mode and schedule of payment of investment capital for work construction (for BT projects);

- Capital sources, financial capability, total investment capital, and schedule of execution of the project;

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- Provisions on monitoring and inspection of the work quality;

- Provisions on protection of natural resources and the environment;

- Conditions on the use of land, infrastructures, and auxiliary works necessary for the building and operation of the work;

- Work construction schedule, operation duration of the project enterprise and time for the transfer of the work;

- Rights and duties of the involved parties and guarantee commitments, sharing of risks among parties to the contract, measures to handle risks arising due to the fault of one of the parties;

- Provisions on prices, charges and revenues (including price, charge and revenue determination methods; conditions for adjustment of price, charge and revenue rates);

- Duties to maintain the normal operation of the work;

- Provisions on consultancy, assessment of designs, equipment, construction, take-over, operation and maintenance of the work;

- Technical conditions, operational status, and the quality of the work before transfer; principles for valuation of the work and the transfer procedures;

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- Cases of termination of the project contract ahead of time and conditions for transfer of the project contract;

- Mode of settlement of disputes between the parties to the project contract;

- Handling of breaches of obligations defined in the project contract;

- Force majeure circumstances and handling principles;

- Provisions on support and commitments of government agencies;

- Responsibilities of the investor and the project enterprise in technology transfer, training in skills and techniques for the management and operation of the work after transfer;

- Effect of the project contract.

2. The rights and obligations of a project enterprise and the relationship between a project enterprise and an investor shall be agreed upon by the involved parties in the project contract. For certification of their issues, the involved parties may agree in the project contract on the application of one of the following modes while still ensuring compliance with all terms of the project contract:

a/ The project enterprise, which is set up under Article 20 of this Decree, concludes the project contract in order to join the investor in forming a party to that contract;

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3. Parties to a project contract may reach agreement in the contract on other contents, including the lender's right to take on some or all of the rights and obligations of the project enterprise (below called the project take-on right) in case the project enterprise or the investor fails to perform their obligations under the project contract or the loan contract, provided that the lender shall fulfill all corresponding obligations of the project enterprise or the investor specified in the project contract. The conditions, procedures for, and contents of, the exercise of the project take-on right of the lender must be stipulated in the loan contract, the loan guarantee document or another written agreement signed between the project enterprise or the investor and the lender and must be approved by the competent state agency.

Article 16.- Application of foreign laws to govern relations arising from project contracts

With regard to foreign investment projects, the parties to the project contracts, parties to contracts with the contract performance obligations guaranteed by competent state agencies stated in Article 38 of this Decree, and parties to other project-related contracts may agree in their project contracts on the application of foreign laws provided that such agreement does not contravene the basic principles of Vietnamese law.

Article 17.- Appraisal and grant of investment certificates

1. The Ministry of Planning and Investment shall coordinate the investment appraisal and grant of investment certificates to projects.

2. Procedures for investment appraisal and grant of an investment certificate are as follows:

a/ The investor submits to the Ministry of Planning and Investment 10 dossier sets, including at least 01 original, for the latter to organize the appraisal and grant of an investment certificate. The project dossier comprises:

- The project contract;

- The investment project on the construction of a work and other projects (for BT projects);

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- The initialed contracts related to the execution of the project or preliminary agreements on the purchase of materials and sale of products (if any).

b/ Within 03 working days after receiving a valid dossier prescribed at Point a, Clause 1 of this Article, the Ministry of Planning and Investment shall consult concerned ministries, branches and provincial-level People's Committees;

c/ Within 15 working days after receiving a valid dossier, the agencies mentioned at Point b, Clause 1 of this Article shall give their written comments on the project;

d/ Within 15 working days after receiving written comments of concerned agencies, the Ministry of Planning and Investment shall grant an investment certificate to the project.

Article 18.- Contents of investment certificates

An investment certificate has the following main contents:

- Names and addresses of the investor and the project enterprise;

- The number and date of grant of the business registration certificate (for investors that have established economic entities);

- The project objectives and execution place;

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- Investment incentives and government guarantee (if any) which are conformable with the project contract.

Article 19.- Security for project contract performance obligation

1. Investors shall take measures to secure the performance of their obligations under project contracts in the form of bank guarantee or other obligation security measures provided for by the civil law. The amount of money to secure the project contract performance obligation must be at least equal to:

a/ 1% of the total investment capital of the project, for projects with total investment capital of VND 1,500 billion or more;

b/ 2% of the total investment capital of the project, for projects with total investment capital of between VND 75 billion and under VND 1,500 billion;

c/ 3% of the total investment capital of the project, for projects with total investment capital of under VND 75 billion.

2. A security for project contract performance obligation is valid from the date of official signing of the contract to the date of completion of the construction work.

Chapter V

EXECUTION OF PROJECTS

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1. For projects using domestic investment capital, after carrying out procedures defined in Article 17 of this Decree, investors shall make business registration in order to set up project enterprises or supplement business registration certificates (for investors that have set up economic entities). Dossiers, order and procedures for business registration or additional business registration comply with the provisions of the Enterprise Law.

2. Investment certificates granted to foreign investors under the provisions of Article 17 of this Decree are concurrently business registration certificates of project enterprises.

3. The structure of the managerial apparatus, powers and responsibilities of project enterprises shall be decided by investors in accordance with the Enterprise Law, the Investment Law and relevant laws.

Article 21.- Conditions for the execution of projects

Competent state agencies and investors shall agree in project contracts on conditions for the execution of projects.

Article 22.- Signing of contracts for execution of projects

Project enterprises may themselves decide on the selection of consultancy, procurement, construction and installation contractors and sign other contracts for the execution of projects. The contractor selection results must be notified to competent state agencies.

Article 23.- Preparation of construction ground

1. Project enterprises shall assume the prime responsibility for, and coordinate with competent state agencies and provincial-level People's Committees of localities where projects are to be executed in, setting up construction ground clearance councils according to plans stated in the approved investment projects on the construction of works. Special cases shall be decided by the Prime Minister.

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3. Compensation and ground clearance expenses shall be incurred by project enterprises and accounted into the total investment capital of projects, except for cases where compensation and ground clearance is funded with state budget under the provisions of Point b, Clause 1, Article 5 of this Decree and unless otherwise provided for in project contracts.

Article 24.- Formulation of technical designs and construction of works

Project enterprises shall formulate technical designs of works in accordance with the construction law and send them to competent state agencies for monitoring and inspection. If technical designs are incompatible with the approved basic designs, project enterprises shall submit them to competent state agencies for consideration and decision.

Article 25.- Monitoring of construction and take-over test of works

1. Project enterprises may themselves monitor or hire independent consultancy organizations to monitor construction and take over work items and the whole works after test against the approved designs.

2. The hired consultancy organizations are accountable before project enterprises and before law for the quality of project works.

Article 26.- Management and operation of works

BOT or BTO enterprises or management organi-zations mentioned in Clause 10, Article 2 of this Decree shall manage and operate the whole works under conditions agreed upon in project contracts.

Article 27.- Prices and service charges

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2. Conditions for the increase of prices, charges and revenues must be agreed upon and defined in project contracts. When adjusting prices, charges and revenues, project enterprises shall notify competent state agencies 30 days in advance. The adjustment of prices and charges of products and services managed by the State or of revenues falling outside the scope of project contracts is subject to approval of competent state agencies.

Article 28.- Support for collection of service charges

Project enterprises are given all favorable conditions to properly and fully collect service charges and other lawful revenues from the operation of project works. When necessary, project enterprises may request competent state agencies to support the collection of charges and other revenues from the operation of project works.

Article 29.- Obligations related to the provision of services and operation of works

Project enterprises are obliged to:

1. Treat equally all lawful users of products or services they provide. They are prohibited from abusing their right to operate project works to discriminate against users or refuse to provide services.

2. Provide regular maintenance and repair of works under project contracts, ensuring that the works operate according to their designs.

3. Supply products and services with sufficient quantities and of proper quality as agreed upon in project contracts throughout the operation duration till the works are transferred.

4. Maintain the use of the works under the conditions stipulated in project contracts.

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TRANSFER OF WORKS AND TERMINATION OF PROJECT CONTRACTS

Article 30.- Transfer of project works

1. For a BOT project, at the end of the operation duration of the project work defined in the BOT contract, the investor shall transfer without compensation the work and documents related to the process of its exploitation and operation to the State. Transferred assets do not include arising debts of the project enterprise. All project-related financial liabilities of the investor and the project enterprise towards to the State must be fulfilled before the transfer of the work.

2. For a BTO or BT project, after building, the investor shall transfer the work to the State under the conditions set in the BTO or BT contract and the provisions of Articles 32 and 33 of this Decree.

Apart from the conditions specified in this Clause, the transfer of works of BT projects must comply with the provisions of Clauses 5 and 6, Article 31 of this Decree.

Article 31.- Procedures for the transfer of works of BOT projects

1. One year before the transfer of works to the State, investors shall publish on central and local dailies such transfer and the order, procedures and time limit for the liquidation of contracts and settlement of debts.

2. One year before the transfer deadline defined in project contracts, competent state agencies shall organize the assessment of the quality of works in order to determine damage (if any) and request project enterprises to conduct the repair or maintain the works.

3. Competent state agencies shall accept the transfer only when works and equipment and assets related to their operation have been maintained and repaired as agreed upon in project contracts.

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5. Investors and project enterprises shall ensure that transferred assets are not used as guarantees for the performance of financial obligations or as pledges or mortgages to secure other obligations of project enterprises which arise before the transfer.

6. Project enterprises are responsible for transferring technology and providing necessary professional training and guidance for the units assigned by the State to sustain the operation of works.

7. Project enterprises are responsible for performing periodical warranty and maintenance obligations so as to ensure normal technical conditions for the operation of works according to the requirements of project contracts.

Article 32.- Conditions for the delivery of works

Upon the delivery of a work, the competent state agency and the investor shall consider its satisfaction of the transfer conditions specified in the project contract, including the following issues:

1. The state of the work upon transfer;

2. The list of assets transferred, including documents related to the survey, designing, construction, installation, operation, maintenance and management of the work;

3. The document on the appraisal of the value and quality of the work;

4. Responsibilities of concerned parties for the continued operation of the work;

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6. Environmental protection conditions;

7. Relevant contracts and other necessary conditions for the maintenance and operation of the work after its transfer.

Article 33.- Acceptance and use of works after delivery

1. Competent state agencies shall accept the transfer of works under the conditions stipulated in project contracts and arrange personnel to ensure the normal operation of works after their transfer.

2. Competent state agencies may assign works to an enterprise with adequate managerial and technical capacity for continued management and operation of the works.

Article 34.- Effect of project contracts

1. A project contract ceases to be effective upon the expiration of its term agreed in the contract.

2. A project shall be forced to terminate operation and the investor shall take all responsibilities under the project contract if construction of the work fails to start within the agreed upon time limit, unless otherwise agreed upon in the project contract.

Chapter VII

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Article 35.- Tax incentives

1. BOT and BTO enterprises are entitled to enterprise income tax incentives applicable to projects on the list of those in the domains eligible for special investment incentives. These enterprises enjoy enterprise income tax rate incentives throughout the execution duration of their projects.

2. Project enterprises and subcontractors are exempted from import tax for the execution of projects in accordance with the import tax and export tax law.

3. Industrial property objects under protection, technical know-hows, technological processes and technical services for the execution of projects are exempt from taxes related to technology transfer and incomes from royalties.

4. Besides the tax incentives mentioned in Clauses 1, 2 and 3 of this Article, investors and project enterprises shall pay other taxes in accordance with law.

5. Tax incentives for other projects executed by investors to recover capital from BT works shall be applied under the provisions of this Article or as agreed upon in project contracts in accordance with the bidding law and relevant laws, taking into account the capital recovery duration of the BT works and the profitability of other projects.

Article 36.- Taxes for contractors participating in the execution of projects

1. Foreign contractors (if any) participating in the execution of projects shall pay taxes and enjoy tax exemption or reduction under the provisions of the tax law applicable to foreign contractors.

2. Vietnamese contractors shall perform tax obligations under the provisions of the tax law applicable to Vietnamese enterprises.

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Project enterprises are exempted from land use levies for the whole land areas assigned by the State or from land rents throughout the execution duration of projects.

Article 38.- Guarantees for obligations of investors, project enterprises and other enterprises

When necessary, depending on the nature of projects, the Government shall designate competent agencies to provide guarantees on its behalf for loans, materials supply, product consumption and other contractual obligations of investors, project enterprises or other enterprises participating in the execution of projects, which are defined in project contracts, and to provide guarantees for obligations of state enterprises with exclusive rights to sell raw materials to and purchase products and services of project enterprises.

Article 39.- Right to mortgage assets

1. In the course of the execution of a project, the project enterprise may pledge or mortgage its assets and land use rights in accordance with law.

2. The pledge or mortgage of assets of project enterprises must be approved by competent state agencies, not affect the projects' objectives, progress and operations defined in project contracts, and comply with the provisions of law.

Article 40.- Right to buy foreign currencies

1. In the course of building and operating a work, the investor and project enterprise may buy foreign currencies at credit institutions licensed to conduct foreign exchange operations for their current transactions, capital transactions and other transactions under the provisions of law on foreign exchange management, including:

a/ Payment of rentals of equipment and machines hired from outside;

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c/ Payment of foreign debts (both principal and interest);

d/ Payment of bank loans in foreign currencies (both principal and interest) for the import of machines, equipment and other products and services for the execution of the project.

e/ Transfer abroad of capital, profits, investment liquidation amounts and amounts paid for the supply of techniques, services, intellectual property, and other lawful revenues (applicable to foreign investors).

2. The Government shall ensure or support foreign currencies for energy, traffic works construction and waste treatment projects.

Article 41.- Assurance of the provision of public services

1. Project enterprises may use land, roads and other auxiliary works to execute projects in accordance with law.

2. In case of scarcity of public services or restrictions on users of public services, project enterprises shall be prioritized in the provision of services or the use of public works for the execution of projects.

3. Competent state agencies are responsible for supporting project enterprises in carrying out procedures and making necessary dossiers to enjoy priority in the use of public services and public works.

Article 42.- Settlement of disputes

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2. All disputes related to foreign investment projects must be first settled through negotiation or conciliation. If they cannot settle their disputes through negotiation or conciliation, involved parties may settle them according to the following provisions:

a/ Disputes between competent state agencies and foreigners or project enterprises shall be settled by Vietnamese arbitration or courts, unless otherwise agreed upon in project contracts;

b/ Disputes between project enterprises and foreign organizations or individuals or Vietnamese economic organizations or disputes between foreign investors shall be settled under the provisions of Clause 3, Article 12 of the Investment Law.

Article 43.- Assurance of capital and assets

1. Investment capital and lawful assets of investors shall not be nationalized or confiscated through administrative measures.

2. When it is necessary to purchase or requisition assets of investors under Article 6 of the Investment Law, the State shall ensure payment or compensation for their assets and capital at market prices or in other forms as agreed upon.

Chapter VIII

IMPLEMENTATION PROVISIONS

Article 44.- Implementation effect

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1. The Government's Decree No. 77/CP of June 18, 1997, promulgating the Regulation on investment in the form of Build-Operate-Transfer (BOT) contracts, applicable to domestic investment.

2. The Government's Decree No. 62/1998/ND-CP of August 15, 1998, promulgating the Regulation on investment in the form of Build-Operate-Transfer (BOT), Build-Transfer-Operate (BTO) or Build-Transfer (BT) contracts, applicable to foreign investment in Vietnam.

3. The Government's Decree No. 02/1999/ND-CP of January 27, 1999, amending and supplementing a number of articles of the Regulation on investment in the form of Build-Operate-Transfer (BOT), Build-Transfer-Operate (BTO) or Build-Transfer (BT) contracts, applicable to foreign investment in Vietnam.

Article 45.- Transitional provisions

1. Project enterprises using domestic investment capital and set up before the effective date of this Decree need not re-register their business.

2. Foreign-invested project enterprises set up before the effective date of this Decree may re-register or need not re-register their business under the provisions of Clause 2, Article 170 of the Enterprise Law and relevant regulations. Re-registration must not affect commitments in project contracts.

3. Projects that are granted investment licenses before the effective date of this Decree need not go through procedures for the re-grant of investment certificates, unless it is required by investors.

4. Investors that have signed project contracts before the effective date of this Decree but have not yet been granted investment licenses or investment certificates need not adjust the project contracts but shall carry out procedures for the grant of investment certificates in accordance with this Decree.

Article 46.- Organization of implementation

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2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies and presidents of provincial/municipal People's Committees shall, within the ambit of their functions and tasks, implement this Decree.

ON BEHALF THE GOVERNMENT
PRIME MINISTER




Nguyen Tan Dung