Responded by units: The Ministry of Construction; The Ministry of Finance; The Ministry of Industry and Trade

Official letter: 10274/BTC - CST; 1862/BXD - PC, dated: 2017-08-03

Responded contents:

1.  Regarding the proposal that the investor retains 5% of the value of the invoice for waiting for a settlement

• Article 29 of the Government's Decree No. 32/2015 / ND-CP of March 25, 2015 on the management of construction investment expenses has provided for the settlement of work construction investment capital, as follows:  Capital investment in constructions funded by state budget and external-source state capital must be stated after the constructions are completed..

2. The investment stated is every legitimate cost incurred during the investment process to put the project into operation. Legitimate cost is every cost within the scope of the project, design, and estimate that are approved; concluded contracts including revisions thereto that are approved intra vires. With regard to projects funded by state budget capital, the costs stated must not exceed the total investment that is approved or adjusted in accordance with law.

3. The investor shall prepare capital statement documents and convert capital investment after the construction is completed, transferred, and put into operation, submit them to the investment decider for approval within 09 months (for projects of national importance and projects of group A) or 6 months (for projects of group B) or 3 months (for projects of group c) from the day on which the construction is completed and put into operation. Within 06 months from the issuance of the decision to approve the capital statement, the investor shall settle the debts and project accounts at the capital-providing body.

With regard to independent works and work items of the project that are completed, put into operation, and need immediate settlement, the investor shall request the investment decider to consider.

4. With regard to projects funded by state budget, after the end of the fiscal year, the investor shall make an annual capital statement as prescribed by the Ministry of Finance.

• Clause 3, Article 19 of the Government's Decree No. 37/2015 / ND-CP of April 22, 2015, details the construction contract, which has stipulated the payment of construction contracts as follows: The transfer must fully pay (100%) of each payment to the contractor after the advance payment has been made, the contractor shall execute the contract as agreed in the contract, except there is other agreement. "

Based on the above provisions, the construction contract between the contractor and the investor shall at the end of the contract, have to make the final statement as the basis for the valuation of the investment certificate to be paid to the contractor. Minimum rate of retained pending calculation. The pending regulation is based on the negotiation of a contract between the investor and the contractor in order to determine the responsibility of the collector in finalizing the dossier in service of the project's completion of the project. Therefore, on the basis of the completed tender documents for the settlement work, the construction contractor is requested to work as the Song Da Corporation to work with the investor being the Electricity of Vietnam (EVN) The agreement on the form, mode of guarantee and performance guarantee in the preparation and completion of the dossier of payment and settlement of construction works must comply with the provisions of law and the economic contract between both sides.

• Recommend that the Owner retain 3% of invoice value awaiting warranty

In Item 6, Clause 7, Article 35 of the Government's In Item 6, Clause 7, Article 35 of the Government's Decree No. 46/2015 / ND-CP dated May 12, 2015, the requirements for warranty of construction works shall be as follows

The investor shall negotiate in the construction contract with the construction contractors about the rights and responsibilities of the parties in the warranty of construction works; warranty duration of construction works, construction equipment, technological equipment; warranty deposit; the retention, use and refund of warranty deposit and the replacement of warranty money with the warranty guarantee letter from the bank that has equal value. The contractors mentioned above shall have the warranty deposit refunded or have the guarantee letter annulled only when the warranty period expires and   the investor confirms the completion of warranty.

7. Regarding the works using state capital, the minimum warranty deposit is specified as follows:

a) 3% of contract value, applicable to special grade and grade I works;

b) 5% of contract value, applicable to other works;

c) Warranty deposit for construction works using other capital may be determined referring from the minimum rates specified in Points a and b of this Clause.

Thus, for large projects such as Son La Hydropower Plant and Lai Chau Hydropower Plant are special construction works, so keeping 3% of the contract value is in accordance with the law. Therefore, the Song Da Corporation would like to recommend the Ministry of Construction to study, finalize and evaluate to submit to the Government for consideration and adjustment of the provisions in the Decree No. 46/2015 / ND-CP. The amount of the construction works shall be calculated as the basis for implementation.

Ministry of Construction:

 The mechanism for payment of construction contracts is specified in Article 19 of Decree No. 37/2015 / ND-CP dated April 22, 2015.

- The use of any form of payment depends on the subject matter of the contract, the conditions of the investor, the source of funds used ... Therefore, it is not possible to stipulate using only one form of payment (open LC ) as recommended by the business. In order to avoid arrears in construction, Decree 17 of the Decision 37/2015 / ND-CP provided for the payment guarantee for the principal.

- To overcome the outstanding debt state in the construction capital, the Law on Public Investment has prohibited activities in public investment, including acts requiring organizations and individuals to invest themselves when the investment policy of the project has not yet been decided, the plan has not yet been approved or the construction budget has been disbursed. At the same time, the Law on Public Investment has provided for the formulation, appraisal, approval and delivery of public investment plans, including medium-term investment plans and annual investment plans.

In addition, Clause 4, Article 51 of the Construction Law 2014 and Article 5 of the Government's Decree No. 37/2015 / ND-CP have stipulated that the project must have capital to implement the project and sign the contract.