Chapter III

MOBILIZATION OF FINANCIAL SOURCES FOR INVESTMENT IN DEVELOPMENT OF HO CHI MINH CITY

Article 8. Domestic funds for developmental investment purposes

1. The Government prefers investing budget and other financial sources for socio-economic development purposes in order for the city to play its role as the regional and nationwide socio-economic center.

2. If certain important and large-scale investment projects or construction works in the environment, transportation or irrigation field that fall under the authority of Ho Chi Minh city exceed the city’s budget balancing capability, Ho Chi Minh city People's Committee shall file its budget proposal and petition to the Ministry of Planning and Investment and the Ministry of Finance that make a consolidated report to the Government to petition the National Assembly to approve central budget subsidies to the city’s budget for the purpose of implementation of these projects or construction works. 

3. In order to promote effective use of city-managed land supplies, Ho Chi Minh city People’s Committee shall be entitled to receive advances derived from the city's budget or borrowed funds as required by laws for infrastructure projects specified in the budget's investment plan in order to conduct a land use right auction. After completion of a land use right auction, it shall repay advanced or borrowed funds.

Article 9. Official Development Assistance (ODA) funds and concessional loans obtained from foreign sponsors

1. The Government shall prefer allocating ODA funds and concessional loans to Ho Chi Minh city for urban infrastructure, environment investment and construction projects or programs, and any program or project that is capable of recovering investment capital.

2. Allocation of investment funds for programs or projects financed by ODA funds and concessional loans within the city shall be carried out according to the following principles:

a) As for programs or projects falling within the scope of Ho Chi Minh city’s budget of expenditures, the Government shall allow the city to have access to its on-lent funds or partial allocations derived from such budget in accordance with applicable laws.    The city shall bear responsibility for arranging the counterpart fund from its budget to ensure it will use and repay principal debts and loan interest on on-lent funds in a due and timely manner in accordance with laws;

b) City-controlled enterprises shall be entitled to receive funds on-lent by the city to invest in programs or projects that are capable of recovering a part or whole of borrowed funds.  City-controlled enterprises shall be obliged to pay loan principal and interest by the stipulated due date.

3. The specified amount of ODA funds or concessional loans that the Government may allocate Ho Chi Minh city for implementation of its programs or projects shall be subject to Point a Clause 2 of this Article, based on the request of the city, opinions of the Ministry of Planning and Investment, and the Ministry of Finance, shall be balanced in the Government's annual proposed budget presented to the National Assembly for its approval in accordance with the Law on State Budget and the Law on Public Investment.

4. Ho Chi Minh city People's Committee shall be vested with the right to decide to receive non-refundable aids, regardless of the amount of such aids and shall be subject to the Prime Minister’s decision in order to receive aids used for religious, national defence and security purposes in particular. The Chairman of Ho Chi Minh city People’s Committee shall take charge of keeping, managing and using such aids in an effective manner, implementing bookkeeping and accounting regimes in accordance with laws, making a periodic report to the Ministry of Finance and the Ministry of Planning and Investment for their examination, supervision and preparation of another consolidated report to the Prime Minister.

Article 10. Principles of application for developmental investment loans

1. Ho Chi Minh city shall be allowed to take out domestic investment loans by means of issuance of local government’s bonds or in other capital mobilization form in accordance with applicable laws. In this case, Ho Chi Minh city is obliged to arrange its local budget for payment of loan principal and interest owed as well as other related costs that may arise.

2. Ho Chi Minh city shall be entitled to on-lent foreign borrowed funds for its infrastructure investment and development projects or programs specified in the city’s budget of expenditures according to the following processes: Ho Chi Minh city People's Committee draws up the loan proposal, collects opinions on such proposal from the Ministry of Finance, the Ministry of Planning and Investment, the State Bank of Vietnam, make a report to the Ministry of Finance and the Ministry of Planning and Investment that then jointly submit it to petition the Prime Minister to consider making his decision based on the Government's policy on on-lending the Government's borrowed funds to the city for implementation of programs or projects proposed by Ho Chi Minh city People's Committee. The city shall be responsible for arranging its budget for payment of loan principal and interest owed in accordance with applicable laws.

3. When wishing to take out loans for investment purposes, Ho Chi Minh city People's Committee shall draw up the plan to use these loans to make up for its local budget deficit and prepare the annual proposed budget for submission to the Ministry of Finance for preparation of a consolidated report sent to a competent authority for its verification and decision.

4. In order to get borrowed funds used for investing in the city’s programs or projects, the city must conform to the following requirements: these programs or projects must use borrowed funds in an effective manner in terms of socio-economic aspects; these programs or projects have been defined in the mid-term (5-year) public investment scheme approved by Ho Chi Minh city People's Council; construction or investment projects have been licensed by the investment decision issued by a competent authority; the city must arrange its local budget for full repayment of debts (including principal, interest and related costs) by the stipulated due date.

Article 11. Mobilization of non-state budget funds

1. In addition to funds mobilized for programs or projects that are financed by the state budget as referred to in Article 9 hereof, with respect to other projects having capital recovery capability or projects that are capable of recovering a part of investment capital, Ho Chi Minh city People's Committee shall make or petition a competent authority to make a legal decision on mobilization of investment capital in the following public-private partnership (PPP) forms as required by laws, e.g. BOT (build – operate – transfer), BTO (build – transfer – operate), BT (build – transfer), BOO (build – own – operate), BTL (build – transfer – lease), BLT (build – lease – transfer), O&M (operation and maintenance). 

2. Based on the local budget balancing capability, the city shall get involved in PPP projects by performing the following activities: Making capital contributions as support for execution of projects that serve business purposes or collect fees from users but from which revenues generated are not adequate to recover investment capital and gain profits; making payments to investors providing services under BTL or BLT agreements; providing assistance in developing and completing auxiliary projects, paying compensations, carrying out site clearance and residential resettlement activities.

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