Decree 24 Amending BOT Regulations

Article by Dao Nguyen , Kevin B. Hawkins and Thinh Phu Dan

Originally published 26 April 2011

Keywords: Decree 24, BOT regulations

On 5 April 2011, the Vietnamese Government issued Decree 24/2011/ND-CP (Decree 24) amending a number of articles of Decree 108/2009/ND-CP (Decree 108) dated 27 November 2009 on investment on the basis of BOT (Build-Operate-Transfer) contracts, BTO (Build-Transfer-Operate) contracts and BT (Build-Transfer) contracts.

Decree 24 makes four changes to Decree 108 as discussed below.

1. Decree 24 expands the types of projects in Decree 108 that are "encouraged" for investment in BOT, BTO and BT forms by specifying the development of infrastructure facilities in the following additional sectors:
   
   
   • medical health
   • education and training
   • occupational training
   • culture
   • sports
   • offices of State bodies
     
     
2. Decree 24 also amends Article 8 of Decree 108 in that the use of State funds to cover the costs for project proposals is no longer permitted. Proposals for projects are no longer to be funded by the State budget but the costs of formulating and evaluating feasibility reports of projects, including costs relevant to preparation of the "other projects", are still to be funded by State funds.
3. Articles 11 and 12 of Decree 108 have been amended by Decree 24 to better manage the preparation and review of both project proposals and feasibility reports.
   
   Project proposals under Article 11 must now comply with relevant construction law requirements for a "pre-feasibility report" in addition to including the items agreed for a feasibility report under the revised Article 12.
   
   The project proposal requirements have now been incorporated into the feasibility report requirements.
   
   The content requirements for a feasibility report are not different from what were previously required for a project proposal, except that a few specific proposal requirements have now been removed (from nine requirements down to only five requirements).
4. Another important change introduced by Decree 24 is the amendment of Article 12.5 of Decree 108 regarding authority of both the Prime Minister and other Government bodies to approve feasibility reports and proposals.
   
   Because of the harmonised criteria for evaluating proposals and feasibility reports as mentioned in point 3 above, only feasibility reports are now reviewed and approved.
   
   The Prime Minister only approves feasibility reports for projects of national importance as decided by the National Assembly. This is not a change from prior provisions in Decree 108. The change is that under the new provision, the Prime Minister is no longer required to approve feasibility reports for projects which:
   
   
   1. need to use 200 or more hectares of land; or
   2. are in Group A and have a total investment capital of VND 1,500 billion or more.
      
      
   This means that approval responsibility for all Group A, B, C projects now resides with the relevant State bodies as set out in Decree 108.
   
   Note however that if a Government guarantees or State funds are required to assist with implementation of the project, a report must still be submitted to the Prime Minister for his consideration and decision prior to approval of any feasibility report.

Decree 24 will take effect as from 20 May 2011.

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