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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.
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