THE GOVERNMENT
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No: 78/2007/ND-CP
Hanoi , May 11, 2007
 
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,

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DECREES:
Chapter I
GENERAL PROVISIONS
Article 1.- Scope of regulation
1. This Decree provides domains, conditions, order, procedures and incentives for investment projects on infrastructure development, which are executed in the form of Build-Operate-Transfer, Build-Transfer-Operate or Build-Transfer contracts.
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.

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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:
a/ Enterprises of all economic sectors, which are set up under the 2005 Enterprise Law;
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.

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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.
Article 3.- Project execution domains
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;

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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.
Article 4.- Capital sources for the execution of projects
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.

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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;
b/ A competent state agency builds auxiliary works or organizes compensation and ground clearance to support the execution of a project. This support capital shall not be included in capital sources for the execution of projects specified in Article 4 of this Decree.
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;

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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;
b/ To assist the competent state agency in negotiating the project contract and performing the tasks defined in this Decree;
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.
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