Land of opportunity for a range of new projects

Investors who want to bid for land-using projects in Vietnam will be subject to some new conditions.

The Ministry of Planning and Investment (MPI) is drafting a circular guiding the selection of investors to conduct such projects. This circular will oust the MPI’s existing Circular 03/2009/TT-BKH dated April 16, 2009.

The new circular will be applicable for state-owned agencies and enterprises, local and foreign investors with such projects prescribed in this circular as investing in production and business establishments, hotel complexes, office buildings, commercial centres, cultural centres, education, vocational training, health care and sports centres.

One of the new circular’s highlights is that in order to bid for a project, investors are required to have equity capital which is not less than 15 per cent of projected total invested capital for a project using less than 20 hectares. This percentage is at least 20 per cent for the project using land of more than 20ha.

“In case of resorting to loans, the investor must ensure its capacity in capital and resource mobilisation via loan-giving commitments by banks or financial and credit organisations. In case of its own capital, it must prove the source of this capital,” the draft circular stated.

Particularly, “the investor is required to vow in written form affirming that its business is not getting bogged down in bankruptcy or insolvency, and that his business is not dissolving or concluded by authorised agencies to have weak financial health and that its business is not under any punishment under the law,” it stated.

The MPI said that the investor would also be subject to new conditions in bid security. Under the existing regulation, bid security would be between 1 to 3 per cent of the proposed price in the bidding dossiers or request dossiers. Contract performance security would be equal to 5 to 10 per cent of total invested capital of the winning investor.

However, the darft circular specifically stipulates that with a project having total investment capital of VND1.5 trillion ($75 million), the bid security value will be 1 per cent of the project’s total investment capital, under the bidding dossiers or request dossiers. With a project having total investment capital of over VND1.5 trillion ($75 million), the bid security value will be only 0.5 per cent-less than 1 per cent of the project’s total investment capital, under the bidding dossiers or request dossiers.

According to the MPI, the new circular also underlines risks for investors, if they fail to meet requirements by authorised bodies.

It said the investor would not be able to carry out the project, while having the investment certificate revoked if it failed to design and implement the project, transfer the project when the project’s construction remained unfinished.

Especially, the same punishments would also be imposed on the investor if it made dishonest report and could not manage the project’s land given by the state, and built works which were not listed in the state construction planning. The investor would also face such punishments “if he fails to use the land within 12 months or his speed of using land is lower than 24 months, as compared to the speed prescribed in the project’s report.” – VIR

Tags: Vietnam Property market, vietnam real estate market