Circular No 8 regulates the principles regarding price adjustments. Price adjustments can only be possible during the implementation of the signed contract, including the extended period as agreed in the contract; the project owner is entitled to approve the adjusted price if the new price does not exceed the approved total invested capital. Otherwise, it will be decided by the person who has the power to make such investment.
Price adjustment methods are also stipulated in the details of the Circular. For instance, for lump sums and percentage based contracts, price adjustments are permitted only in respect to quantity beyond which the parties have agreed to. In these circumstances, the parties must sign an appendix which specifies additional works and the respective unit prices. Regarding lump sum contracts, the parties shall determine the new unit prices for additional works in the absence of prior agreement; otherwise the agreed unit prices shall be applied.
Lending ODA funds
On 14 July 2010, the Government issued Decree No 78/2010/CP on relending foreign loans, which will come into force on 30 August 2010 and abrogates Decision No 181/2007/QD-TTg.
Decree 78 stipulates some noteworthy provisions as follows: (i) Foreign loans eligible to relending are ODA loans, foreign commercial loans and foreign preferential loans; (ii) Borrowers may select Vietnamese currency (Viet Nam dong) or the original foreign loan currency as the relending currency, subject to the purpose of the loan and credibility of the borrower; (iii) The relending interest rate is the foreign loan interest applicable to the Government in case of foreign commercial loans and foreign preferential loans. For ODA loans, interest shall be determined on case-by-case basis depending on the credit-worthiness of the domestic borrower, kind of projects and the currency used for the loan; and (iv) The Ministry of Finance or the financial organisation or credit institution authorised by Ministry of Finance shall be responsible for the evaluation and decision on relending.
by Lawyers of Bizconsult Law Firm