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CHAPTER 3: ORGANIZING PROJECT APPRAISAL

3.1. Project appraisal basis documents

3.2. Forms of project appraisal organizing

3.3. Project appraisal authority

3.4. Dossier for appraisal of investment projects

3.5. Time of appraisal projects

3.6. Appraisal project fee

PROJECT APPRAISAL BASIS DOCUMENTS

Project
profile

Legal
basis

Investigation
information
and
experience
Forms of project appraisal
organizing 1 Project appraisal council

1
Specialized agency/department
2 2 for appraisal
3

3 Advisory
 APPRAISAL COUNCIL
 Appraisal Council is a council set up by a competent agency or organization
to consider, evaluate and give written opinions for professional advice on a
particular issue before the project is approved.
 Project appraisal council is a form of appraisal organization in which the
heads of agencies and organizations competent to decide on investment
establish a project appraisal council.
 The project appraisal council can be established at the central level (the State
appraisal council), at the local level (the provincial appraisal council) or at
the appraisal council set up by agencies and organizations. .
 Appraisal Council is set up consisting of experts from ministries,
departments, related departments, together to review and evaluate all aspects
of the project or just an important content of the project in a thorough way to
help make investment decisions correctly.
 APPRAISAL COUNCIL

 Advantages of the project appraisal council

– The project appraisal council is a collection of experts with professional
knowledge and understanding of the project
– The contents of the project are evaluated in a complete, detailed and
comprehensive way

* Disadvantages of the project appraisal council

- Long appraisal time
– Expensive appraisal cost
– Many conflicts arise during the appraisal process
 State Appraisal council

 The State Appraisal Council established by decision of the Prime Minister for
each project has the task of organizing the appraisal of important national
projects (pre-feasibility study report or feasibility study report) to submit to the
National Assembly for decision or approval the investment policy, or report to
the Prime Minister for investment decision.
 The State Appraisal Council consists of the Chairman of the Council, the Vice
Chairman of the Council and other members of the Council. The Chairman of the
State Appraisal Council is the Minister of Planning and Investment; The Vice
Chairman and other members of the Council are representatives of leading
ministries, branches and relevant agencies decided by the Prime Minister at the
proposal of the Ministry of Planning and Investment.
 Specialized agency/department for appraisal

 This is a form of appraisal organizing in which the person who has

responsibility of deciding on investment will use a specialized agency with
the function of investment appraisal or the agency managing investment
activities of his/her unit to conduct the appraisal.
 These specialized agencies can be departments, specialized appraisal
departments in Ministries, Departments, People's Committees at all levels or
in companies.
 Specialized agency/department for appraisal

 Advantages:
• Project appraisal is specialized.
• Appraisal activities are implemented quickly when needed

 Disadvantages
• Appraisal conclusions can be pressured and dominated by upper
management.
 Advisory

 Advisory is a form of appraisal organization in which the person who has

responsibility of deciding on investment will select professional
consulting organizations to appraise an aspect of the project.
 Advisory means a domestic, foreign organization or individual or a
domestic and foreign joint venture (hereinafter referred to as verification
consultant or consultant) hired by the State Appraisal Council to perform
some parts of the content of national important project appraisal.
 Advisory
 Advantages
- Highly specialized due diligence
- The appraisal results have relatively high accuracy due to the selection
of consultants who are knowledgeable about the investment field of the
project.
- Reasonable appraisal costs for choosing a suitable consultant

 Disadvantages: In the case of inappropriate selection of consulting

organizations, it may lead to inaccurate appraisal results.
 Authority to decide on investment policies on projects

PUBLIC INVESTMENT PROJECTS OTHER PROJECTS

The National Assembly The National Assembly

The Government The Prime Minister
The Prime Minister
The People’s Councils
Heads of ministries and central agencies

The People’s Councils

The People’s Committee
 The National Assembly has the authority to decide on investment policies on
National important project.
 The Government has the authority to decide on investment policies on target
programs financed by funds derived from the State budget, government bonds,
local authority bonds, ODA, overseas 10 concessional loans, the government
credit for investment and development purposes, state budget revenues retained
but not recorded in the state budget balance.
 The Prime Minister has the authority to decide on investment policies on public
investment programs and projects below:
a) Group-A projects;
b) Projects financed by funds derived from the state budget, managed by the Central
Committee of the Vietnam Fatherland Front, socio-economic organizations and other
competent agencies.
c) Emergency projects financed by the state budget;
d) Projects financed by funds derived from ODA and overseas concessional loans,
- Heads of ministries and central agencies have the authority to decide on investment
policies on the following projects:
Group-B and Group-C projects financed by investment funds derived from the State
budget, government bonds, local authority bonds, ODA, overseas concessional loans, the
government credit for investment and development purposes, state budget revenues
b) Projects financed by funds derived from ODA and overseas concessional loans under
their administration
- The People’s Councils at all administrative levels have the authority to decide on
investment policies on public investment programs and projects below:
Group-B projects and Group-C priority projects under their administration. Group-C
priority projects located in local areas shall be decided by provincial People’s Councils in
alignment with objectives, developmental orientation, financial competence and particular
characteristics of these areas.
- The People’s Committee at all administrative levels has the authority to decide on
investment policies under their administration
 Dossier for appraisal of a public investment projects without
construction components
na/ A written proposal for appraisal specifying the necessity of investment in the
project; objectives and principal contents of the feasibility study report of the
project; proposal for competent authorities to decide on the project;
nb/ The feasibility study report of the project

nc/ The reports of the Vietnam Fatherland Front Committees at all levels

summarizing opinions of residents in the place where the project is to be

implemented;
nd/ Other relevant documents serving the appraisal of public investment

programs and projects.

 Dossier for appraisal of other investment projects

Proposal for project implementation

Documents proving the investor's legal status

Project proposal
Dossier

Documents proving the financial capacity of the investor

Documents proving land use right

Explanation of the project's use of technology

BCC contract (for investment projects in the form of BCC)

 Time of decision on investment policy on projects

The time of decision on investment policy on a program or project, counting from the
date an authority competent to decide on investment policy receives a complete and
valid dossier, is prescribed as follows:

a/ For national important projects: 30 days at most;

b/ For group-A projects: 30 days at most;

c/ For group-B and group-C projects: 20 days at most.

 Time of appraisal projects

The time of appraisal of public investment programs and projects without construction
components, counting from the date the appraisal agency receives a complete and valid
dossier, is prescribed as follows:

a/ For national important projects: 90 days;

b/ For group-A projects: 40 days;
c/ For group-B projects: 30 days;
d/ For group-C projects: 20 days.
 Time of appraisal projects of banks

Jobs Time of decision

Credit profile review 15 days

Collateral property appraisal 5 days

Re-appraisal 5 days

Credit department ‘s manager checking 3 days

Approval decision of the credit committee 5 days

Approval decision of the credit board 10 days

Check and handle loans Once 3 months

 PROJECT APPRAISAL FEE

a. Case 1: The total approved investment amount matches the value in the
fee schedule
Construction
Total approved
investment
= investment x Rate
project appraisal
capital
fee
b. The total approved investment does not match the value stated in the fee
schedule. The level of revenue is determined by the formula :

Nib - Nia
Nit = Nib - { ---------------- x ( Git - Gib ) }
Gia - Gib
 + Nit is the appraisal fee for the ith project group according to the scale of the value to be
calculated (unit: %).
 + Git is the value of the ith project group that needs to be charged for investment appraisal (unit:
work value).
 + Gia is the scale of the marginal value above the value to be charged for appraisal (calculation
unit: work value).
 + Gib is the scale of the value below the scale of the value to be charged for appraisal (calculation
unit: work value).
 + Nia is the appraisal fee for the ith project group corresponding to Gia (unit: %).
 + Nib is the appraisal fee for the ith project group corresponding to Gib (unit: %).

* Note: Fees for appraisal of construction investment projects must not exceed 150,000,000
VND/project.
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INVESTMENT PROJECT APPRAISAL FEES SCHEDULE

(Circular 209/2016/TT-BTC)

Total <15 25 50 100 200 500 1.000 2.000 5.000 ≥10.000

investment
(billion VND)

Rate % 0,0190 0,0170 0,0150 0,0125 0,0100 0,0075 0,0047 0,0025 0,0020 0,0010
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INVESTMENT PROJECT APPRAISAL FEES SCHEDULE

(Circular 209/2016/TT-BTC)

1. Fee = 50.000.000.000 x 0.015/100 = 7.500.000 VNĐ

2. Rate = 0,01 – (0.01 – 0.0075)/(500 – 200) x (250 – 200) = 0.0096 %

Fee = 250 b VND x 0.0096% = 24 tr

3. Rate = 0.0075 – (0.0075 – 0.0047)/ (1000 – 500) x (570 -500) = 0.0071%

Fee = 570 b VND x 0.0071% = 40,5 tr

Nib - Nia
Nit = Nib - { ---------------- x ( Git - Gib ) }
Gia - Gib