CIRCULAR No.4/1998/TT-BKH OF MAY 18, 1998 GUIDING THE MAKING OF REPORTS ON FINAL SETTLEMENT OF INVESTMENT CAPITAL BY FOREIGN-INVESTED ENTERPRISES AND PARTIES TO BUSINESS COOPERATION CONTRACTS IN VIETNAM

Pursuant to the Law on Foreign Investment in Vietnam of November 12, 1996;

Pursuant to Decree No. 12-CP of February 18, 1997 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam;

Pursuant to Decree No. 75-CP of November 1st, 1995 of the Government defining the functions, tasks and organizational structure of the Ministry of Planning and Investment;

The Ministry of Planning and Investment issues this Circular to guide the making of reports on final settlement of investment capital by foreign-invested enterprises and parties to business cooperation contracts.

Part I

GENERAL PROVISIONS

1. Joint venture enterprises, enterprises with 100% foreign-invested capital, parties to business cooperation contracts and BOT, BT, BTO enterprises (hereafter referred to as the enterprises) shall, after completing the construction of their projects or project units and put them into operation, have to make reports on final settlement of disbursed investment capital in accordance with the provisions of this Circular.

2. The enterprises' reports on final settlement of investment capital must fully and accurately state the investment capital disbursed for each year, from each source of contributed or borrowed capital; and the total investment capital for construction of the projects already put into operation.

3. Basing themselves on the enterprises' reports on final settlement of investment capital and the expertize results as stipulated in this Circular, the investment-licensing agencies shall consider the granting of certificates of registration of disbursed investment capital.

Part II

REPORTS ON FINAL SETTLEMENT OF DISBURSED INVESTMENT CAPITAL

In order to be granted certificates of registration of disbursed investment capital the enterprises shall, within six months from the date of completing the construction of their projects and putting them into operation, have to send to the investment licensing agencies dossiers of report on final settlement of investment capital according to the following contents and requirements:

I. CONTENTS OF THE REPORTS ON FINAL SETTLEMENT OF INVESTMENT CAPITAL

The reports on final settlement of investment capital must reflect all investment costs; Such a report shall include the following contents:

1. Total investment capital disbursed for project implementation, including:

1.1. The value of machinery, equipment and cost of their assembly and installation;

1.2. Project construction costs:

- Expenses for subterranean work (dismantling foundations, and underground facilities);

- Expenses for construction and perfection;

- Expenses for indoor facilities;

- Expenses for construction of the surrounding scenery (playground, flower gardens, ornamental trees...);

- Expenses for environmental protection, fire prevention and combat;

- Construction insurance.

1.3. Other expenses: loan interests, expenses for ground leveling compensation, for project formulation consultancy, designing, supervision, management, expertize, auditing and other reasonable expenses in accordance with current regulations.

Fines on violations of the State's regulations shall not be accounted into the final settlement of investment capital.

2. The total disbursed investment capital shall be calculated according to each year from the investment preparation stage to the time the project is completed and put into operation; and according to each source of contributed and/or borrowed capital.

For investment projects with phased construction and commercial operation as stated in their investment licenses, the reports on final settlement of investment capital shall be made according to each stage of the project.

The expenses mentioned in Items (1.1), (1.2) and (1.3) above in a report on final settlement of investment capital must be enclosed with relevant expertize or auditing certificates according to the requirements prescribed in Part III of this Circular.

II. DOSSIERS OF REPORT ON FINAL SETTLEMENT OF INVESTMENT CAPITAL

A dossier of report on final settlement of investment capital includes:

1. The enterprise' s report on final settlement of disbursed investment capital must be made according to a set form.

For joint venture enterprises, the report must be unanimously approved by the Managing Board and signed by the General Director.

For enterprises with 100% foreign-invested capital, the report must be signed by the General Director

For business cooperation contracts, the report must be signed by the authorized representatives of the business cooperation parties.

2. An expertize certificate, a report on the result of the expertize of imported machinery and equipment of the project.

3. A report on the result of the auditing or the evaluation of construction costs and other expenses.

Part III

ON EXPERTIZING MACHINERY AND EQUIPMENT AND EVALUATING CONSTRUCTION COSTS

The value of machinery and equipment, the project construction costs and other expenses in the reports on final settlement of investment capital must be expertized, evaluated or audited according to the following provisions:

I. EXPERTIZE OF IMPORTED EQUIPMENT AND MACHINERY

1. Equipment and machinery imported into Vietnam for the execution of investment projects must be expertized in terms of their value and quality prior to their importation or installation.

Equipment and machinery which have been imported through bidding shall not be subject to the expertize stipulated by this Circular.

2. For used equipment and machinery, the enterprises shall have to comply with not only the provisions in this Circular and their investment licenses but also the regulations of the Ministry of Science, Technology and Environment on the import of used equipment.

3. Unless otherwise provided for in the investment licenses and/or other specific regulations on import, the equipment and machinery in complete units of an investment project capitalized at three million USD or more shall be subject to the expertize stipulated in this Circular.

4. The expertize of equipment and machinery already installed prior to the effective date of this Circular shall be decided by the Ministry of Planning and Investment if it deems necessary.

5. The border gate customs authorities shall base themselves on the import plans already approved by the Ministry of Trade to allow the import of equipment and machinery without requiring the concerned enterprises to produce expertize certificates for their imported equipment and machinery.

6. After completing the expertize, the expertizing organizations shall have to issue expertize certificates. Such an expertize certificate must contain the following contents:

- The name of the expertizing organization;

- The place and time of the expertize;

- The names, codes, specifications, manufacturing years, manufacturing countries, manufacturers, quantity, status, quality, unit prices and value of the equipment and machinery;

- Conclusions on the value and quality of the equipment and machinery;

- Certification of the legal responsibility of the expertizing organization: its seal and signature.

II. EVALUATION OR AUDITING OF PROJECT CONSTRUCTION COSTS

1. In cases where the project construction is not conducted through bidding, the enterprises shall have their construction costs evaluated or audited. The evaluation or auditing of construction costs shall include the following contents:

- The legality of the already signed economic contracts;

- The volume of construction and installation already completed for each project unit;

- The compatibility of the unit prices applicable to each type of work;

- Increase or decrease in the work volume and costs as compared to the expenditure plan of the project;

- Other expenses (expenses for ground clearance compensation, interests on borrowed capital...) of the project;

- Evaluation and conclusions on the actual construction costs of the projects put into operation.

2. After completing the evaluation or auditing, the evaluating or auditing organization shall have to issue reports on the evaluation of construction costs to investors.

III. ORGANIZING THE EXPERTIZE

AND/OR EVALUATION

1. Organizations that expertize imported equipment and machinery under this Circular are Vietnamese or foreign expertizing companies licensed to operate in Vietnam and State organizations with the expertizing function in Vietnam; and expertizing companies in foreign countries with regard to the expertize of equipment and machinery before their importation.

Organizations that evaluate or audit construction costs are Vietnamese evaluating or auditing companies or foreign evaluating or auditing companies licensed to operate in Vietnam; and State organizations with the function of evaluating construction costs.

2. The expertizing/evaluating organizations shall conduct the expertize or evaluation on the basis of the contracts with the enterprises, take responsibility for the result of their expertize/evaluation. If any connivance or fraud act is detected in the expertize/evaluation, the concerned expertizing/evaluating organization shall be dealt with according to law.

3. The expertize/evaluation fee shall be paid by the enterprises and accounted into the project investment costs.

4. The quality and technical expertize of construction projects shall comply with current regulations.

5. In cases where the evaluation result is not compatible with the contents of the sale and purchase vouchers or is lower than the value declared by the concerned enterprise, the enterprise shall have to readjust the value according to the evaluation result.

IV. RE-EVALUATION

1. In case of necessity, the investment licensing agencies or the Ministry of Planning and Investment may request another evaluating organization to re-evaluate all or some of the costs already evaluated in the enterprises' reports on final settlement of investment capital.

2. The re-evaluation result shall be regarded as being alike if the difference between the re-evaluated value and the value evaluated in the final settlement report of the enterprise does not exceed 5% of the investment capital amount of each project and does not exceed 500,000 USD

3. Enterprises shall be entitled to request explanation or comparison if the re-evaluation result is different in value from the costs already evaluated in the their final settlement reports but still have to abide by the decisions of the agencies that grant certificates of investment capital registration. All complaints and disputes over evaluation and re-evaluation shall be dealt with in accordance with the provisions of law.

4. If the re-evaluation result is confirmed to be precise, the organization that conducted the previous evaluation shall have to pay for the re-evaluation cost.

If the re-evaluation result is different from the evaluation result which is confirmed to be precise, the concerned enterprise shall have to pay for the re-evaluation cost.

Part IV

GRANTING CERTIFICATES OF DISBURSED INVESTMENT CAPITAL REGISTRATION

1. Within 30 days from the date of receipt of the full and proper dossiers of report on final settlement of investment capital submitted by the enterprises, the investment-licensing agencies shall have to consider and grant certificates of registration of the disbursed investment capital of the projects according to a set form.

2. Within 10 days from the date the certificates of registration of the project's disbursed investment capital are granted, the investment-licensing agencies shall, with regard to projects decentralized by the Government and authorized by the Ministry of Planning and Investment, have to send the original certificates of registration of the projects' disbursed investment capital to the Ministry of Planning and Investment and the Ministry of Finance.

3. The regime of reporting on the granting of certificates of registration of the projects' disbursed investment capital shall comply with the regulations on the granting of investment licenses.

Part V

IMPLEMENTATION PROVISIONS

1. This Circular takes effect 15 days after its signing.

2. This Circular replaces Circular No.2163/UB-QL of October 4, 1995 of the State Committee for Cooperation and Investment, now the Ministry of Planning and Investment.

3. The Ministry of Planning and Investment and the investment-licensing agencies shall directly guide and deal with projects with the completion of the equipment and machinery assembly and/or installation and the project construction before the effective date of this Circular.

Minister of Planning and Investment

TRAN XUAN GIA