Laws of the People's Republic of China

The Ministry of Foreign Trade And Economic Cooperation

Circular of the Ministry of Foreign Trade and Economic Cooperation Concerning Absorption of Foreign Investment by Means of BOT

WaiJingMaoFaHan [1994] No.89

January 16, 1994

Foreign economic and trade commissions (departments) of all provinces, autonomous regions, municipalities directly under the Central Government and municipalities separately listed on the State plan:

Since the 1980s, many developing countries have successively adopted BOT to attract foreign capital to such projects as highway, railway, power station, and sewage treatment, which all turned out to be quite effective. At present, our country is also discussing how to attract foreign capital to infrastructure building by means of BOT. To standardize and govern the promotion, examination and approval of projects of this kind, related issues are now notified as follows:

1.

BOT has its specialty in some way, but it should still be included into the existing legal and examination and approval framework governing enterprises with foreign investment. Foreign investors may set up BOT project companies (hereinafter referred to as project companies) by means of cooperation, joint venture or sole investment. After the approval of project proposal and the feasibility study report, the foreign trade and economic authorities should examine and approve the contract and statute of the project company in accordance with existing laws and procedures of examination and approval governing foreign capital utilization. In light of the fact that BOT is still at a stage of trial and pilot use, projects of the coastal areas with an investment worth over 30 million US dollars and projects of the inland areas with an investment worth over 10 million US dollars should be examined and approved by the Central Government (The project proposals and feasibility study reports should be submitted to the State Development Planning Commission; the contract and the statute to the Ministry of Foreign Trade and Economic Cooperation) if no specific provisions are given by the State Council.

2.

The attraction of foreign capital by means of BOT shall comply with the state's laws and industrial policies on foreign capital utilization for infrastructure building. At the negotiation stage of the project, foreign investors with strong financial standing and technological capacity, good reputation and rich experience in BOT projects should be selected for cooperation.

3.

Generally, government agencies should not provide guarantee or commitment of any kind (guarantee of foreign exchange conversion, guarantee of loans, etc.). If a guarantee is really a necessity for the project, the consent of competent state authorities should first be obtained in order to make the commitment.

4.

Every local authority should do what it is capable of in the process of foreign capital absorption by means of BOT, taking into account all local factors, for example, the matching capital situation.

Each local authority is expected to strengthen its examination and approval as well as administration of its BOT projects, study the encountered problems and summarize the experience, and constantly feedback the related information.