Policies on management and use of public property of public service providers in Vietnam

by hà ngọc

Vietnam law has regulations on policies on management and use of public property of public service providers. Let’s find out this issue with Lawyer X through the following situation: “Dear Lawyer! I want to ask what is the form of public property of public service providers in Vietnam? What are regulations on investment in construction of public service facilities? Thanks for answering me!”

  • 2017 Vietnam Law on Management and Use of Public Property

The form of public property of public service providers

– Sources to form public property of a public service provider shall include:

+ Public property in kind distributed by the State to the state authorities specified in Article 29 herein;

+ Property that is built or purchased by provision of the state budget, public service development funds, property depreciation funds or other funding as prescribed in regulations of law;

+ Property formed from loans, mobilized capital, joint venture with organizations or individuals.

– The form of public property of public service providers shall conform to the rules specified in Clause 2 Article 28 herein.

– For the form of public property specified in Point c Clause 1 this Article, apart from conforming to the rules stipulated in Clause 2 Article 28 herein, it is required that the following provisions be applied:

+ There shall be projects on joint venture; methods of loan borrowing, mobilization and refund that are approved by a competent authority;

+ Public service providers shall refund debts and other relevant costs; take responsibility for efficiency of loan borrowing and mobilization or joint venture.

Investment in construction of public service facilities

– The investment in construction of public service facilities, including the use of borrowed capital, mobilized capital and joint ventures shall be carried out when the following requirements are fully satisfied:

+ There is no public service facility or a public service facility whose area is inadequate compared to criteria and norms;

+ The State has no property to distribute and has the public service facility is not for lease.

– Investment in construction of public service facilities shall comply with regulations of law on public investment, law on construction and relevant law.

– There is no allocation of public investments or state budget to invest in construction of new property that is used for commercial purposes, for lease or for joint venture purposes only.

– Investment in construction of public service facilities in the form of public-private partnerships shall apply to investment in construction of workplaces of state authorities as specified in Clause 5 Article 30 herein.

Purchase of public property serving operation of public service facilities

– Purchase of a public service facilities and other property shall be made when the following requirements are fully met:

+ There is lack of property compared to criteria and norms;

+ The State has no property to distribute and the public service facility is not either for lease or provided fixed funding for using property.

– There is no allocation of state budget to purchase public property that is used for commercial purposes, for lease or for joint venture purposes only.

– Forms of purchasing public property and methods of selecting contractor providing property serving the operation of public service providers shall comply with provisions of Clauses 2, 3 and 4 Article 31 herein.

Lease of property and provision of fixed funding for the use of public property of public service providers

Lease of property and provision of fixed funding for the use of public property of public service providers shall conform to regulations of Article 32 and Article 33 herein.

Use and operations management of public property of public service providers

– Use of public property shall conform to the rules specified in Article 6 herein.

– Lending or using public property for private purposes shall be banned.

– Use of public property for commercial purposes, for lease or for joint venture purposes shall comply with regulations of Articles 55, 56, 57 and 58 herein.

– Public service providers are entitled to use official-duty houses, intellectual property rights, application software, database and other public property to operate in accordance with provisions of 2017 Vietnam Law on Management and Use of Public Property and relevant law; management and use of proceeds shall comply with regulations of law.

– Public service providers are not permitted to use public property for mortgage or take measures for ensuring the fulfillment of other civil obligations if:

+ The public property is distributed by the State;

+ The public property is built or purchased by provision of the state budget;

+ Land use rights, except for land use rights used for commercial purposes, for lease or for joint venture purposes and the land rental has been paid in lump sum without origin from the state budget after ministers or heads of central authorities grant permission to central-affiliated public service providers and chairmen of People’s Committees of provinces grant permission to public service providers of provinces.

– Operations management, preparation and management of documents on public property of public service providers shall apply to the state authorities specified in Article 35 and Article 37 herein.

General provisions on use of public property of public service providers for commercial purposes, for lease and for joint venture purposes

– Public service providers are entitled to use public property for commercial purposes, for lease and for joint venture purposes in the cases specified in Clause 1 Article 56, Clause 1 Article 57 and Clause 1 Article 58 herein.

-Use of public property for commercial purposes, for lease or joint venture purposes shall satisfy the following requirements:

+ Being granted permission by the competent authorities specified in Clause 2 Article 56, Clause 2 Article 57 and Clause 2 Article 58 herein;

Policies on management and use of public property of public service providers in Vietnam
Policies on management and use of public property of public service providers in Vietnam

+ Not affecting the performance of functions and tasks assigned by the State;

+ Not losing the public property ownership; preserving and developing capital and property distributed by the State;

+ Using the property for the right purposes assigned and purposes of construction investment, purchase; fulfilling functions and tasks of public services providers;

+ Increasing capacity and efficiency of using the property;

+ Ensuring the depreciation of fixed assets, fulfilling obligations on tax, fees, charges and other state financial obligations;

+ The State shall not provide funding for maintenance or repair of public property that is used for commercial purposes, for lease or for joint venture purposes only; public service providers shall use proceeds earned from business, lease or joint ventures to maintain or repair public property;

+ Ensuring the market mechanism and complying with regulations of relevant law.

– Public service providers using public property for commercial purposes, for lease or joint venture purposes shall:

+ Make plans for using public property for commercial purposes, for lease or joint venture purposes to submit them to a competent authority for approval;

+ Implement approved plans;

+ Update information about the use of public property for commercial purposes, for lease or for joint venture purposes to the national database on public property;

+ Fulfill all requirements specified in Clause 2 this Article.

– Authorities assigned to manage public property specified in Clauses 1, 2 and 3 Article 19 herein shall:

+ Assess and submit plans for using public property for commercial purposes, for lease and for joint venture purposes to competent authorities specified in Clause 2 Article 56, Clause 2 Article 57 and Clause 2 Article 58 herein or make a request for such plans according to the Ministry of Finance’s guidelines;

+ Receive, manage and publish information about the use of public property for commercial purposes, for lease or for joint venture purposes.

– The proceeds earned from business, lease or joint ventures shall be aggregated separately and kept all accounts as prescribed in regulations of law on accounting and shall be managed and used as follows:

+ Making payment for relevant costs;

+ Making repayment for loans or mobilized capital (if any);

+ Fulfilling state financial obligations;

+ Managing and using the remaining proceeds according to regulations of the Government.

Use of public property of public service providers for commercial purposes

– A public service provider is entitled to use public property for commercial purposes if:

+ The property is distributed, invested in construction or purchased to perform tasks assigned by the State but it has not been used at full capacity;

+ The property is invested in construction or purchased in accordance with a project approved by a competent authority for commercial purposes that is not funded by the state budget.

– Power to approve plans for using property for commercial purposes:

+ Ministers, heads of central authorities and chairmen of People’s Committees of provinces shall approve plans towards property which is public service facilities; other property with high value as prescribed by the Government;

+ Management councils or heads of public service providers shall approve plans towards property that is not specified in Point a of this Clause.

Use of public property of public service providers for lease

– A public service provider is entitled to lease out public property if:

+ The property is distributed, invested in construction or purchased to perform tasks assigned by the State but it has not been used at full capacity;

+ The property is invested in construction or purchased in accordance with a project approved by a competent authority for lease that is not funded by the state budget.

– Power to approve plans for the lease of public property of public service providers:

+ Ministers, heads of central authorities and chairmen of People’s Committees of provinces shall approve plans towards property which is public service facilities; other property with high value as prescribed by the Government;

+ Management councils or heads of public service providers shall approve plans towards property that is not specified in Point a of this Clause.

– Form of lease and property rental:

+ The property which is a public service facility and other property with high value as prescribed by the Government shall be leased out in the form of an auction; property rental shall be the final bid;

+ The property that is not specified in Point a this Clause shall be leased out by negotiation; property rental shall be negotiated by and between the lessor and the lessee according to the rental listed on the market of the property with the same type or the property having the same specification, quality or origin.

Use of public property of public service providers for joint venture purposes

– A public service provider is entitled to use public property to associate with a foreign or domestic entity if:

+ The property is distributed, invested in construction or purchased to perform tasks assigned by the State but it has not been used at full capacity;

+ The property is invested in construction or purchased in accordance with a project approved by a competent authority for joint venture purposes that is not funded by the state budget;

+ Use of public property for joint venture purposes brings in greater efficiency in providing public services according to assigned functions and tasks.

– Ministers or heads of central authorities shall approve plans for using of property of public service providers within scope of their management for joint venture purposes after a written opinion of the Ministry of Finance is given; chairmen of People’s Committees of provinces shall approve plans for using property of public service providers within their power for joint venture purposes after written opinions of Standing Committee of People’s Councils of provinces are given.

– In the cases where the property is treated as contributed capital when carrying out joint venture according to regulations of law, the value of the property shall be determined as follows:

+ If the property is the use right of the land subject to capital contribution as prescribed in regulations of law on land, the value of land use right shall be determined according to the market price from the day on which the capital is contributed for joint venture;

+ If the property pertains to the land subject to capital contribution as prescribed in regulations of law on land and relevant law, the value of the property shall be determined according to the remaining actual value as a result of re-evaluation from the day on which the capital is contributed for joint venture;

+ If the property is a brand of a public service provider, the value of such brand to contribute capital for joint venture shall be determined according to Vietnam’s valuation standards, law on intellectual property and relevant law;

+ If the property is not specified in Points a, b and c this Clause, the value of property shall be determined according to the market price on the date of carrying out joint venture of the property with the same type or property having the same specifications, quality or origin.

Maintenance and repair of public property of public service providers

– Maintenance and repair of public property of public service providers shall comply with regulations of Clause 1 and Clause 3 Article 39 herein.

– Funding for maintenance and repair of public property of public service providers shall be guaranteed by their funding that is permitted to use; the public property used for commercial purposes, for lease or for joint venture purposes shall apply to provisions of Point g Clause 2 Article 55 herein.

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Frequently asked questions

Shall investment in construction of public service facilities comply with regulations of law on public investment, law on construction and relevant law?

 Investment in construction of public service facilities shall comply with regulations of law on public investment, law on construction and relevant law.

Is there allocation of public investments or state budget to invest in construction of new property that is used for commercial purposes?

There is no allocation of public investments or state budget to invest in construction of new property that is used for commercial purposes, for lease or for joint venture purposes only.

When shall purchase of a public service facilities and other property be made?

Purchase of a public service facilities and other property shall be made when the following requirements are fully met:
+ There is lack of property compared to criteria and norms;
+ The State has no property to distribute and the public service facility is not either for lease or provided fixed funding for using property.

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