Joint circular No. 210/2013/TTLT-BTC-BXD-BTTTT dated December 30, 2013, guiding the mechanism and principle of control of rents and method to determine rent rates of common technical infrastructure facilities

JOINT CIRCULAR

GUIDING THE MECHANISM AND PRINCIPLE OF CONTROLOF RENTS AND METHOD TO DETERMINE RENT RATES OF COMMON TECHNICAL INFRASTRUCTURE FACILITIES

Pursuant to the Government’s Decree No. 72/2012/ND-CP dated September 24, 2012,on the management and common use of technical infrastructure facilities;

Pursuant to the Government’s Decree No. 25/2011/ND-CP datedApril 06, 2011, detailing and guiding implementation of a number of articles of the Law on Telecommunications;

Pursuant to the Government’sDecree No. 177/2013/ND-CPdated November 14, 2013, detailing and guiding implementation of a number of articles of the Law on Price;

Pursuant to the Government’s Decree No. 118/2008/ND-CP dated November 27, 2008, defining thefunctions, tasks, powers and organizational structure of the Ministry Finance;

Pursuantto the Government’s Decree No. 62/2013/ND-CPdated June 25, 2013, defining the functions,tasks, powersand organizational structure of the Ministry of Construction;

Pursuant to the Government’s Decree No. 132/2013/ND-CPdated October 16, 2013, defining the functions,tasks, powersand organizational structure of the Ministry of Information and Communications;

The Minister ofFinance, the Minister of Construction and the Minister ofInformation and Communications promulgate the Joint Circular guiding the mechanism and principleof control of rents and method to determine rent rates of common technical infrastructure facilities.

Chapter 1.

GENERAL PROVISIONS

Article 1. Scope of regulation and subjects of application

1. This Joint Circular guides the mechanism and principle of controlling rentsand method to determine rent rates of common technical infrastructure facilities in urban centersand public technical infrastructure facilities (hereinafter referred to as common technical infrastructure facilities); and provides the exemption from or reduction of rents of facilities used for non-business activities involving national defense or security.

For common technical infrastructure facilities outside urban centers, organizations and individuals are encouraged to apply the mechanism and principle of price control and method to determine rent rates prescribed in this Joint Circular according to manner similar to common technical infrastructure facilities in urban centers.

2. Subjects of application: Owners prescribed in Article 10 of the Government’s Decree No. 72/2012/ND-CP dated September 24, 2012, on the management andcommon use of technical infrastructure facilities, and agencies, units, organizations and individuals engaged in the investment in, management and signing of contracts for use of common technical infrastructure facilities.

Article 2. Provisions on common technical infrastructure facilities

1. Common use of technical infrastructure facilities means the arrangementand installation by organizations and individuals of telecommunications, power or public lighting lines and cables (collectively referred to as lines and cables); water supply or drainage and energy supply pipelines (collectively referred to as pipelines) in common technical infrastructure facilities.

2. Common technical infrastructure facilities mean those built for the arrangement and installation of lines, cables and pipelines, including: antenna masts; cable (conductors) utility poles; cable culverts; technical ditches and tunnels; urban roads and road tunnels; railway tunnels; underground ditches; road and railway bridges.

3. The use of common technical infrastructure facilities shall comply withthe Government’s Decree No. 25/2011/ND-CP dated April 06, 2011, detailing andguiding a number of articles of the Law on Telecommunications, and Government’s Decree No. 72/2012/ND-CP dated September 24, 2012, on management and common use of technical infrastructure facilities.

Article 3. Principlesin and bases for determination of rent rates of common-use technical infrastructure facilities

1. Principlesin determination of rent rates

a) Rent rates of common technical infrastructure facilities must accurately and fully cover construction investment costs; management, operation and maintenance and repair expenses; and other expenses as prescribed by law, and associated with service quality and conform with regulations, policies, economic-technical norms and expense norms promulgated by competent agencies.

b)In case where organizations or individuals invest in construction of common technical infrastructure facilities for lease, rent rates shall be determined on the basis of costs under regulations and reasonable profits.

2. Bases for determination of rent rates

a)Costs for production and service provision suitable to service quality.

b) Supply-demand relation, market prices.

c) Price fluctuations and changes in mechanisms and policies of the State; roadmap of adjustment of rent rates approved by competent authorities (if any).

d) Local socio-economic development conditions which affect rent rates.

Chapter 2.

SPECIFIC PROVISIONS

SECTION 1. MECHANISM AND PRINCIPLES OF CONTROLLINGRENT RATES OF COMMON TECHNICAL INFRASTRUCTUREFACILITIES

Article 4. Mechanism and principles of controlling rent rates of common technical infrastructure facilities

1. The State manages prices according to the state-regulated market mechanism; respects the right of self-pricing and price competition of organizations and individuals investing in the construction of common technical infrastructure facilities as prescribed by law.

2. The State controls rent rates of common technical infrastructure facilitieswith the aim to protect the lawful rights and interests of the lessee, the lessor and publicinterests as prescribed by law and this Joint Circular.

3. The control of rent rates of common technical infrastructure facilities(hereinafter referred to as rent rates) shall be conducted by the modes of rent rate control and based on themethod of determination of rent rates specified in this Joint Circular.

Article 5. Modes of rent rate control

1. Announcement of rent rate registration.

2. Consultation on rent rates.

3. Posting up of rent rates.

4. Examination of components of rent rates.

Article 6. Announcement of rent rate registration of common technical infrastructure facilities

1. Organizations and individuals shall base provisions of Article 3 and method to determine rent rates in this Joint Circular to set rent rates of commontechnical infrastructure facilities in which they have invested (with funds outside the state budget) and reach agreement with organizations and individuals wish to use such facilities; and at the same time conduct rent rate registration with competent agencies defined in Clause 4, Article 14 of this Joint Circular according to form of announcement of rent rate registration. In case where the parties cannot reach agreement on rent rates, competent agencies shall organize consultations on rent rates as prescribed in Article 7 of this Joint Circular.

2. An announcement of rent rate registrationincludes the following contents:

a) The rent rates calculated according to Article 3 and by the method to determine rent rates specified in this Joint Circular in association with quality and main economic and technical specifications;

b)Information on components of the rent rates; comparison with rent rates of facilities of the same or similar type in the locality (if any);

c)Providing conditions for application serving as grounds for reaching agreement with customers on a specific rent rate, such as cases eligible for incentives or discount for customers that rent a large number of facilities or pay the rent in advance,etc; and specific discount percentage or level;

d)Duration of application of the rent rates;

e) Form of announcement for rent rate registration in the Appendix enclosed to this Joint Circular.

3. The registering organization or individual shall send directly or by post or email (with its/his/her digital signature) one (1) written announcement of rent rate registration to the competent agency as prescribed in Clause 4, Article 14 of this Joint Circular.

4. In case of a change in components of the rent rate and the State’s regulations or policies affecting the rent rates or when the organization or individualadjusts the rent rates, it/he/she shall make an announcement for re-registration of theadjusted rent rate according to Clause 2 of this Clause.

Article 7. Consultation on rent rates of common-use technical infrastructure facilities

1. Consultation on rent rate is conducted only on rent rates of common technical infrastructure facilities that fall in the pricing competence of organizations and individuals.

2. Contents and order of consultation on rent rates shall comply with the current law on price management.

Article 8. Posting up of rent rates of common technical infrastructure facilities

1. Organizations and individuals mustpost up rent rates of commontechnical infrastructure facilities in Vietnam dong at transaction places so as to facilitate observation andidentification by customers and competent state agencies; the posting up of rent rates must be clear and not cause confusion to customers.

2. For common technical infrastructure facilities subject to the pricing of rents by the State, the posting up of their rent rates must be decided by competent state agencies in association with their quality and main economic-technicalspecifications. The posting up with proper rent rates must be strictly observed.

Apart from posting up publicly at transaction places, organizations and individuals may select one or several additional forms such as press conference, publication in the mass media or other appropriate forms.

3. For common technical infrastructure facilities subject to the pricing of rents by organizations or individuals, such organizations or individuals shall post up rent rates after they have already announced for rent rate registration with competent agencies in association with their quality and main economic-technical specifications and conditions for application of rent rates, and lease at rent rates higher than the posted ones is prohibited.

Article 9. Examination over components of rent rates of common-use technical infrastructure facilities

1. The examination over components of rent rates is conducted in the followingcases:

a)Competent state agencies determine rent rates of common technical infrastructurefacilities invested by state budget;

b) Rent rates abnormally fluctuate and the Prime Minister, or ministers, heads of ministerial-level agencies, chairpersons of People’s Committees of provinces and centrally-run cities (hereinafter referred to asprovincial People’s Committees) so request.

2. As requested by the Prime Minister, ministers or heads of ministerial-level agencies shall organize such examination.

3. ProvincialPeople’sCommitteesshallorganizetheexaminationover components of rent rates of common technical infrastructure facilities under their pricing competence.

4. Contents and order of examination over components of rent rates shall comply with the current law on price management.

Article 10. Exemption from or reduction of rents of common technical infrastructure facilities used for non-business activities involving national defense or security

1. Non-business activities serving national defense or security are eligible for exemption from or reduction of rents of common technical infrastructure facilities as prescribed by law.

2. Cases of rent rate exemption or reduction; and specific plans on rent rate exemption or reduction for each lessee shall comply with regulations of competent authorities.

3. The financial mechanism for cases of rent rate exemption or reduction for national defense or security activities shall comply with the current law on production and supply of public-utility products or services.

Section 2. METHODS TO DETERMINE RENT RATES OF COMMON TECHNICAL INFRASTRUCTUREFACILITIES

Article 11. Methods to determine rent rates

1. Methods to determine rent rates of common technical infrastructure facilities specified in this Joint Circular include cost-based method and comparison method.

2. Basing on particular features of common technical infrastructure facilitiesand market situation, organizations and individuals may select a method to determine rent rates suitable to the facilities subject to the pricing of rents.

Article 12. Cost-based method

1. Components oftherentrate ofacommontechnicalinfrastructure facility:

a)Cost for facilityconstructioninvestment;

b)Cost for operation management (ifany);

c) Cost for maintenance and repair;

d)Other costs asprescribedbylaw(ifany);

e)Tentativeprofit.

2. Formulato determinerentrate

In which: Gt means annual rent rate (VND/rent rate calculation unit/year). Monthly rent rate equals annual rent rate divided by 12 months.

a) CPdt means costs for investment in construction of common technical infrastructure facility (VND/year) which are determined to be equal (=)to total cost for constructioninvestment of the facility divided (:) by the number of years of depreciation of the facility.

- Total costs for construction investment of the facility means all reasonable and lawful costs for the facility construction investment and putting the facility into operation and useaccording to current regulationson management of work construction investment costs and with the investment capital settlement approved by the competent authority by the time of handover of the facility for putting into operation and use. In case where the facility needs to be put into use but the competent authority has not yet approved the investment capital settlement, the total construction investment costs may be temporarily calculated according to the settlement report of investor;after the investment capital of the facility is settled by the competent authority, the construction investment costs of the facility must be adjusted according to the settled data.

- The number of years of depreciation shall be calculated according to regulations of the Ministry of Finance on management, use and depreciation of fixed assets.

For common technical infrastructure facilities which are subject only to wear-out monitoring in accounting books, CPdt means cost for process and installation of items related to the common technical infrastructure facility (VND/year).

b) CPvh means annual operation management cost (VND/year), including:

- Salaries, allowances, costs for social insurance and health insurance and other deductions fromthesalaryfundfor the apparatus of unit managing and operating the facility.Cost for salaries isdeterminedon the basis of payrolls of officials and employees and salary ranksandallowancesandotherdeductions from the salary fund according to current regulations oftheState;

- Costs for stationery, working office furniture, tools and perishable objectsof the operation management unit;

- Costs for electricity and water for daily operation of the working apparatus of the operation management unit; and other costs related to the operation management;

- Cost for depreciation of fixed assets of the operation management unit. The management and use of fixed asset depreciation shall comply with regulations of the Ministry of Finance.

In case where organizations and individuals investing in common technical infrastructure facilities directly manage the operation of these facilities and establish no separate operation management apparatus, costs for operation management shall be determined according to reasonable actual costs serving the management of operation of such facilities.

c) CPbtbd means annual average maintenance and repair costs (VND/year) of the facility, including all costs for regular maintenance, periodicaland extraordinary repairaccording to the economic-technical norms and legislations on maintenance and repair in order to ensurethe normal operation and safe use of the facility.

d) CPk means other reasonable actual expenses, if any, as prescribed by law (VND/year) directly related to rent rates but not yet specified at Points a, b and c, Clause 2 of this Article.

e) LNdkmeans the tentative reasonable profit included in the rent rate (VND/year) determined to be up to 10% of the total costs specified at Points a thru d, Clause 2 of this Article.

f) SLg means the output for rent rate calculation determined on basis of the design capacity of the facility and actual use capacity and suitable to the market reality. The calculation unit of the output for rent rate calculation is rope or cable; or pipeline; or pole; or length of the facility; or rented area of the facility or another calculation unit suitable to the characteristics of each facility, such as line, cable or pipeline per a unit of length of the facility, etc.

3. In case the costs constituting the rent rate stated in Clause 2 of this Article are related to many other products or services, they must be allocated to such products or services according to appropriate criteria.

4. Costs already paid by the state budget; wear-out of assets recorded in accounting books of assets of units; incentives of land use levy, land rent and other tax incentives as prescribed by law; and costs already included in the cost prices or sale prices of other products or services of the enterprise, must not be accounted into the rent rate of the common technical infrastructure facility.

Article 13. Method of comparison

1. Definition

Method of comparison means a method of determination of rent rates through analysis and comparison of rent rates in association with economic-technical characteristics of facilities of the same type or similar facilities sold on local markets (if any) or other localities in the country.

2. Facilities of the same type with facilities subject to rent rate calculation are identical in the following aspects:

a) Economic-technical characteristics of facilities (such as component materials, main economic-technical specifications, functions, use purposes, use duration, mechanical-physico­chemical properties and other related criteria);

b) Specifications and quality of facilities;

c) Locations of facilities.

3. Facilities similar to facilities subject to rent rate determination have identical basic features, including:

a) The same function and use purpose; similar economic-technical characteristics (such as made of equivalent materials, raw materials); and similar main economic-technical specifications;

b)Equivalent specifications and quality;

c) Similar locations.

4. When use the comparison method, it must be based on elements withconsiderable effects on the value of facilities subject to rent rate determination,including:

a) Currently applied rent rates in association with the quality of facilities;

b) Rent conditions (duration, payment method and other relevant criteria);

c) Basic features of facilities, such as characteristics of assets, main technical specifications and elements of output costs;

d) Locations of facilities, quality of facilities and use duration;

e) Other related criteria.

Chapter 3.

ORGANIZATION OF IMPLEMENTATION AND PROVISIONS OF IMPLEMENTATION

Article 14. Responsibilities of agencies, organizations and individuals

1. The Ministry of Finance shall

a)Coordinate with the Ministry of Construction, the Ministry of Information and Communications, relevant ministries and sectors and provincial People’s Committees in guiding, monitoring and inspecting the implementation of this Joint Circular and relevant legal documents.

b)Assume the prime responsibility for organizing the consultations on rent rates as prescribed by current laws.

2. TheMinistryofConstructionandtheMinistryofInformationand Communications shall:

a) Depending on their functions and tasks, assume the prime responsibility for, and coordinate with the Ministry of Finance, relevant agencies and provincial People’s Committees in, guiding, monitoring and inspecting the implementation of this Joint Circular and relevant legal documents.

b)Coordinate with the agency assuming the prime responsibility for organizing consultations on rent ratesas prescribed by law.

3. Ministries and ministerial-level agencies shall, within the scope of theirtasks and powers, coordinate with one another in guiding, monitoring andinspecting the implementation of this Joint Circular and relevant legal documents.

4. Provincial People’s Committees and professional agencies of provincial People’s Committees

a)ProvincialPeople’s Committeesshall assign specific tasks to their professional agencies to carry out this Joint Circular and relevant legal documents.

b)Provincial Finance Departments shall assume the prime responsibility for receiving written announcements of rent rateregistration from organizations and individuals investing in common technical infrastructure facilities in urban centers in their localities; assume the prime responsibility for, and coordinate with specialized management departments in, considering and examining the reasonability and legality of announcements of rent rate registration. Then they shall send 01 copy of each announcement of rent rate registration to the Ministry of Finance (the Price Management Department), the Ministry of Construction (the Technical Infrastructure Department and the Construction Economics Department), and the Ministry of Information and Communications (the Telecommunications Department).

c)ProvincialFinance Departments,Information and Communications Departments and Construction Departments shall, within their functions and tasks, assume the prime responsibility or coordinate with relevant agencies in, organizing consultations on rent rate; and inspect the implementation of provision on management of rent rates in this Joint Circular and relevant legal documents.

5. Organizations and individuals shall

a)Observe provisions on management of rent rates of common technical infrastructure facilities stated in this Joint Circular, legislations on price management and relevant legal documents.

b)Fully and promptly provide documents and information related to rent rates as requested in writing by state agencies; to take responsibility before law for the accuracy, reasonability and validity of the reported data and documents.

Article 15. Effect

1. This Joint Circular takes effect on March 01, 2014.

2. During the course of implementation, any problems arising should be promptly reported to the Ministry of Finance, the Ministry of Construction and the Ministry of Information and Communications for consideration and settlement.