Circular No. 03/2017/TT-BTNMT guiding preferential interest rate loans and post-investment interest rate support from the Vietnam Environment Protection Fund

CIRCULAR

Guidelines for lending at preferential interest rates and post-investment interest rate support from the Vietnam Environment Protection Fund

From the Vietnam Environment Protection Fund 

Pursuant to the Environmental Protection Law on June 23, 2014;

Pursuant to Decree No. 21/2013/NĐ-CP dated March 4, 2013, promulgated by the Government, stipulating the functions, tasks, powers, and organizational structure of the Ministry of Natural Resources and Environment;

Pursuant to Decree No. 19/2015/NĐ-CP dated February 14, 2015 of the Government detailing the implementation of certain provisions of the Law on Environmental Protection;

Pursuant to Decision No. 78/2014/QĐ-TTg dated December 26, 2014 of the Prime Minister on the organization and operation of the Vietnam Environment Protection Fund;

At the proposal of the Director of the Finance Department and the Director of the Legal Department;

The Minister of Natural Resources and Environment issues this Circularguiding lending at preferential interest rates and post-investment interest rate support from the Vietnam Environment Protection Fund.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular guides lending with preferential interest rates and post-investment interest rate support from the Vietnam Environment Protection Fund (hereinafter referred to as the Vietnam Environment Protection Fund - Quỹ BVMTVN).

Article 2. Applicability

1. Project investors as stipulated in Clause 1, Article 42 of Decree No. 19/2015/NĐ-CP dated February 14, 2015 of the Government detailing implementation of certain provisions of the Law on Environmental Protection (hereinafter referred to as Decree No. 19/2015/NĐ-CP).

2. The Vietnam Environment Protection Fund and organizations and individuals involved in lending activities and post-investment interest rate support from the Vietnam Environment Protection Fund.

Article 3. Explanation of Terms

In this Circular, the following terms shall be understood as follows:

1. Investor means an organization or individual that owns capital or an organization or individual directly managing and using capital to implement environmental protection projects.

2. Lending at preferential interest rates means a form of financial support provided by the State through the Vietnam Environment Protection Fund to investors for borrowing capital at preferential interest rates to implement environmental protection projects in Vietnam.

3. Post-investment interest rate support (loan interest rate support) means a non-repayable form of financial support provided by the State through the Vietnam Environment Protection Fund to partially cover the interest rate for investors who have implemented environmental protection projects using borrowed capital from credit institutions permitted to operate in Vietnam.

4. Loan term means the period from when the investor receives the first loan to the agreed time for fully repaying the loan principal as stipulated in the environmental protection investment credit contract.

5. Repayment period means the agreed periods within the loan term during which the borrower must repay part or all of the principal and interest to the Vietnam Environment Protection Fund.

6. Grace period means the period from the first withdrawal of funds until the project begins repayment of principal, determined in accordance with the construction period of the project. During the grace period, the borrower does not need to repay the principal but must repay the interest.

7. Overdue debt means a portion or all of the principal and/or interest due at the end of the repayment period that the borrower has not fulfilled their obligation towards the Vietnam Environment Protection Fund.

8. Adjustment of repayment periods means the agreement between the Vietnam Environment Protection Fund and the borrower to change the previously agreed repayment periods in the environmental protection investment credit contract.

9. Extension of loan repayment means the Vietnam Environment Protection Fund's approval to extend the repayment period for principal and/or interest beyond the originally agreed loan term in the environmental protection investment credit contract.

10. Debt freeze means the Vietnam Environment Protection Fund does not collect the debt from the borrower and does not accrue interest on the loan during the frozen period.

11. Debt write-off (principal, interest) means the Vietnam Environment Protection Fund does not collect a portion or all of the outstanding principal and/or interest owed by the borrower at the Vietnam Environment Protection Fund.

12. Risk reserve means the amount of money set aside by the Vietnam Environment Protection Fund from its expenses to prepare for potential losses arising from customers failing to fulfill their repayment obligations as committed. Risk reserves include specific risk reserves and general risk reserves.

Article 4. Principles for borrowing at preferential interest rates and post-investment interest rate support

1. Utilize borrowed funds for purposes agreed upon in the investment credit protection environment loan contract.

2. Fully repay borrowed funds according to the time frame stipulated in the investment credit protection environment loan contract.

3. The project investor may only receive post-investment interest rate support once for the amount of investment borrowing (excluding overdue debts) within the total investment limit of a project approved by competent authorities.

Article 5. Currency for lending, repayment, and post-investment interest rate support

The currency for lending at preferential interest rates, repayment, and post-investment interest rate support shall be the Vietnamese Dong.

Chapter II

BORROWING AT PREFERENTIAL INTEREST RATES

Article 6. Amount of borrowing, purpose of using borrowed funds

1. Project investors implementing environmental protection investment projects may borrow funds at preferential interest rates up to the maximum level prescribed in Clause 1, Article 42 of Decree No. 19/2015/NĐ-CP.

2. The amount of funding provided for a single project shall not exceed 5% of the actual paid-up capital of the Environmental Protection Fund at the time of lending.

3. The amount of funding provided for a single investor shall not exceed 10% of the actual paid-up capital of the Environmental Protection Fund at the time of lending, except for cases involving loans from entrusted or authorized sources of the Government, organizations, and individuals.

4. Borrowed funds must be used for investment in project components and works, with priority given to investments in construction, equipment, and technology.

Article 7. Loan amount based on collateral, pledge, and guarantee value

The Environmental Protection Fund bases the loan amount on the appraised value of the collateral, pledge, or guarantee. The maximum loan amount is 70% of the appraised value of the collateral, pledge, and guarantee recorded in the environmental protection investment project credit contract. In cases where the borrower guarantees the loan through a bank guarantee, the maximum loan amount is 100% of the guarantee value.

Article 8. Loan term, grace period

1. The loan term is determined based on the ability to recover funds, aligning with the production and business cycle and the borrower's debt repayment capacity, but shall not exceed 10 years and shall not exceed the operational period of the enterprise.

2. The grace period for a project shall not exceed two years.

Article 9. Interest Rate

1. The interest rate for borrowing is set by the Environmental Protection Fund but shall not exceed 50% of the State's investment credit interest rate published by the competent authority at the time of lending.

2. For a single project, the interest rate for borrowing is determined at the time of signing the environmental protection investment credit contract and remains fixed throughout the borrowing period.

3. The interest rate for overdue debt is 150% of the interest rate for timely payment recorded in the environmental protection investment credit contract, calculated on the principal and unpaid interest.

Customers borrowing funds pursuant to this Decision are not required to provide loan guarantees.

1. The Environmental Protection Fund applies security measures for loans in accordance with regulations of the State Bank of Vietnam.

2. A loan may be secured by multiple assets.

Article 11. Loan Application Documents

1. Legal Documents

a) One original copy of the loan application form according to Model No. 01 issued together with this Circular;

b) One copy of the Business Registration Certificate or Investment Certificate;

c) One copy or Decision on Appointment and identification documents of the legal representative and Chief Accountant;

d) One copy of the Charter of Organizational Operations (if applicable);

đ) One copy of the Establishment Decision (if applicable);

e) Other related documents (if any).

2. Financial Documents

a) One copy of the financial statements for the last three years. For projects with borrowing amounts of five billion dong or more, audited financial statements are required;

b) One original copy of the business plan of the borrower corresponding to the loan period;

c) Other related documents (if applicable).

3. Project Documents

a) One original copy of the environmental protection project as prescribed in Point a, Clause 1, Article 42 of Decree No. 19/2015/NĐ-CP;

b) Certified copy of the Decision approving the environmental impact assessment report or environmental protection plan or detailed environmental protection proposal or simple environmental protection proposal by the competent state agency;

c) One original copy of the Decision approving the Total Project Investment Limit;

d) One copy of the Construction Permit (if applicable);

đ) Other documents related to the project (if applicable).

4. Security Documents for Loans

a) Documents related to collateral accompanied by a list (documents proving ownership, usage rights of the asset...);

b) Confirmation letter from the guarantor in case of third-party guarantee.

Article 12. Acceptance and Processing of Loan Application Files

1. The Project Investor shall submit one set of application files in accordance with Article 11 of this Circular directly or through postal services, or online public services (if available) to the BVMVN Fund.

2. Immediately upon receipt of the loan application file, the BVMVN Fund will check the completeness of the file. Within seven working days, the BVMVN Fund will notify the Project Investor of the results of the file review.

Article 13. Examination of Loan Application Files

The BVMTVN Fund will organize the examination of loan application files within forty working days from the date of receiving complete and valid files. For complex investment projects, the examination period may be extended but not exceeding fifty-five working days.

1. Examination of Project Application Files

a) Checking and evaluating the completeness, legality, validity, and accuracy of the content and data in project-related documents and materials and the Project Investor;

b) Verifying the completion of investment procedures in accordance with laws on investment management and construction of the Project;

c) Reviewing and assessing the sequence of implementation and authority for issuing related documents and materials according to regulations.

2. Examination of the Project Investor's Capacity

a) The Project Investor's capacity and experience in managing production and business operations and directing the Project;

b) The Project Investor's financial capability and ability to repay loans within the commitment period stated in the loan application;

c) The Project Investor's creditworthiness in credit relations with the Fund and other lending organizations.

3. Examination of Financial Plans and Repayment Plans for Borrowed Capital

a) Reviewing and assessing the market conditions for input factors and output products of the Project;

b) Analyzing and evaluating the economic and financial calculation conditions of the Project;

c) Investment location, scale, design capacity - output, technology equipment, and investment form;

d) Total investment amount, capital utilization schedule, and factors affecting the total investment amount;

đ) Feasibility of sources of capital participating in the Project investment;

e) The Project Investor's equity participation in the Project, with a minimum of twenty percent;

g) Financial income and expenditure of the Project.

4. Examination of Other Related Factors Affecting the Implementation, Management, and Operation of the Project.

5. Examination of Project Efficiency Indicators and Repayment Plans for Borrowed Capital

a) Main indicators of the Project's economic and financial efficiency (Net Present Value - NPV, Internal Rate of Return - IRR, discounted payback period);

b) Ability to recover invested capital;

c) Ability and repayment plan for borrowed capital: sources of funds that can be used to repay debts in balance with the requirements of each source of borrowed capital, feasibility of the repayment plan;

d) Reviewing and assessing the urgency, economic, social, and environmental efficiency of the Project.

6. Analysis of Risk Factors Affecting the Feasibility of Calculation Methods.

7. Examination of the Project Investor's Compliance with Legal Guarantees for Loans According to Laws on Secured Transactions and Related Laws.

8. On-site Inspection of the Project Site

a) Comparing the loan application file with the original file kept at the unit;

b) Discussing issues related to the loan application file;

c) Examining the suitability of the project site.

9. Based on the comprehensive examination results of the entire project, within ten working days, the BVMTVN Fund will decide on granting the loan and notify the Project Investor in writing. In cases where the loan is refused, the BVMTVN Fund will notify the Project Investor in writing, stating the reasons, and report to the Ministry of Natural Resources and Environment.

Article 14. Environmental Protection Investment Credit Contract

The environmental protection investment credit contract shall be signed between the Vietnam Environmental Protection Fund and the project investor. The contents of the environmental protection investment credit contract must reflect the rights and obligations of the parties as well as other commitments agreed upon by the parties in accordance with the provisions of the law.

Article 15. Disbursement of Advance Loan Funds

1. The disbursement of loan funds shall be carried out according to the agreement in the signed environmental protection investment credit contract, in line with the progress and capital usage needs of the Project Investor. The Project Investor shall directly send or through postal services, or online public services (if available) to the Vietnam Environmental Protection Fund a request for disbursement of advance loan funds on form number 02 issued together with this Circular along with the documents stipulated in Clause 4 and Clause 5 of this Article for the disbursement of advance loan funds.

2. The Project Investor may have advance loan funds disbursed in the following cases:

a) The project implements bidding (or direct award) according to the contract signed between the Project Investor and the contractor;

b) Purchase of equipment and technology (including imported equipment and domestically purchased equipment).

3. The maximum amount of advance loan funds is defined as follows:

a) For construction contracts: 20% of the amount borrowed;

b) For supply of equipment and technology contracts, design and construction contracts (EC); Design and supply of equipment and technology contracts (EP); Supply of equipment and technology and construction contracts (PC); Design-supply of equipment and technology and construction contracts (EPC); Turnkey contracts and other types of construction contracts: 10% of the amount borrowed;

c) For procurement of equipment: The amount of advance funds is the amount that the Project Investor must pay to the equipment supplier unit, equipment transportation unit (if any) under the economic contract, but not exceeding 30% of the loan amount.

4. Documents for the disbursement of advance loan funds for projects implementing bidding (or direct award) according to the contract signed between the Project Investor and the contractor

a) One copy of the approval document for the bidding results (or direct award) from the competent state agency;

b) One copy of the Economic Contract between the Project Investor and the contractor;

c) One copy of the Performance Guarantee Letter of the contractor.

5. Documents for the disbursement of advance loan funds for procurement of equipment (including imported equipment and domestically purchased equipment)

a) One copy of the Economic Contract between the Project Investor and the equipment supply and manufacturing unit;

b) One copy of the Approval Document for the contract according to current regulations (if any);

c) One copy of the Import and Export Business License of the Project Investor (if the Project Investor directly imports);

d) One copy of the Entrusted Import Contract and the Import and Export Business License of the entrusted import unit (in case of entrusted import);

đ) One copy of the Equipment Deposit Guarantee Letter issued by the bank of the importing unit (in case of borrowing advance funds for equipment deposit).

Article 16. Disbursement of Payment Loan Funds

The disbursement of loan funds shall be carried out according to the agreement in the signed environmental protection investment credit contract, in line with the progress and capital usage needs of the Project Investor. The Project Investor shall directly send or through postal services, or online public services (if available) to the Vietnam Environmental Protection Fund a request for disbursement of payment loan funds on form number 03 issued together with this Circular and the documents stipulated in Clauses 1, 2, and 3 of this Article to the Vietnam Environmental Protection Fund for the disbursement of payment loan funds.

1. Documents for the disbursement of payment loan funds for construction works volume

a) One copy of the valid Direct Award Decision of the competent state agency (if any);

b) One copy of the Bidding Result Approval Document, Bid Budget Estimate, and Adjustment Record of the tendered contract (if any);

c) One copy of the Detailed Project Cost Estimate;

d) One copy of the Design and Cost Estimate Approval Document;

đ) One copy of the Economic Contract between the Project Investor and the contractor;

e) One copy of the Completion Acceptance Record of the construction work volume accompanied by the calculation of the accepted volume value;

g) One copy of the Financial Invoice;

h) One copy of other valid payment documents in accordance with the provisions of the law;

i) Any additional volumes outside the bid price must have a copy of the supplementary bid result approval document (if the additional volume is bid) or approved supplementary budget (if the additional volume is directly awarded).

2. Documents for the disbursement of payment loan funds for equipment volume

a) One copy of the valid Direct Award Decision of the competent state agency (if any);

b) One copy of the Bidding Result Approval Document with Bid Budget Estimate and Adjustment Record of the tendered contract (if any);

c) One copy of the Economic Contract between the Project Investor and the equipment supplier;

d) One copy of the Financial Invoice (for domestically purchased equipment);

e) One copy of the import documentation set (for imported equipment) including: Import Contract, Commercial Invoice, Transport Bill, Insurance Documentation, Packing List, Quality Certificate, Origin Certificate, Customs Declaration for Import, Tax Notification or Warehouse Release Invoice of the entrusted importer;

g) One copy of the Warehouse Receipt or Completion Acceptance Record of the installed equipment volume;

h) One copy attached with the original for comparison of related documents concerning equipment costs (transportation, storage, insurance, taxes, warehousing fees, etc.);

i) One copy of other valid payment documents in accordance with the provisions of the law.

3. Documents for the disbursement of payment loan funds for consultancy work volume

a) One copy of the Consultancy Contract between the Project Investor and the consultant;

b) One original of the Completion Acceptance Record of the consultancy work volume;

c) One copy of the payment document according to the current legal regulations on consultancy activities.

Article 17. Disbursement Process of Loan Capital

1. Within no more than thirty working days from the date of receiving all documents of the Project Owner in accordance with Articles 15 and 16 of this Circular, the VNEMF shall be responsible for reviewing and disbursing loan capital to the Project Owner.

2. Each time receiving loan capital, the Project Owner must sign a promissory note and commit to repay the debt. The original promissory note shall be kept solely at the VNEMF.

3. For investment projects with foreign capital or international bidding packages where the agreement signed between sponsors, co-sponsors and the Government of Vietnam stipulates separate payment disbursements, such provisions shall be implemented according to the terms of the signed agreement.

Article 18. Debt Collection

1. The Project Owner who borrows capital may repay the debt ahead of schedule to the VNEMF.

2. The VNEMF shall transfer overdue debts for the principal balance that the Project Owner fails to repay on time as agreed, unless the Fund approves restructuring of the repayment period, and simultaneously notify the Project Owner about the transfer of overdue debts. The notification shall include the overdue principal balance, the date of transferring overdue debts, and the interest rate applicable to the overdue debt.

3. The VNEMF and the Project Owner shall agree on the order of recovering the principal and interest of the loan. For overdue loans, the VNEMF shall recover the principal first and then the interest.

4. The VNEMF has the right to dispose of collateral assets to recover debts in accordance with the law.

Article 19. Classification of Debts

Quarterly, the VNEMF shall conduct debt classification in accordance with the regulations of the State Bank of Vietnam.

Article 20. Provisioning

1. Specific provisioning refers to the amount of money set aside based on the specific classification of debts to prepare for potential losses.

The specific amount of money to be provisioned for each Project Owner shall be calculated using the following formula:

R = max {0, (A - C)} x r

Where:

R: the amount of specific provision required

A: the value of the loan

C: value of the collateral asset (the deductible value of the collateral asset)

r: specific provisioning ratio to address credit risk for that debt.

2. The specific provisioning ratio (r) for each group of debts is as follows:

a) Group 1: 0%;

b) Group 2: 5%;

c) Group 3: 20%;

d) Group 4: 50%;

đ) Group 5: 100%.

3. The collateral asset to be deducted when calculating the specific provisioning amount (R) as stipulated in Clause 1 of this Article must meet the following conditions:

a) The VNEMF has the right to dispose of the collateral asset in accordance with the law when the Project Owner fails to fulfill its obligations as committed.

b) The collateral asset must meet all conditions prescribed by the law on secured transactions.

c) Collateral assets valued at 200 billion VND or more as specified in Point c Clause 5 of this Article must be appraised by an organization authorized to appraise values under the law.

In cases where the organization authorized to appraise values lacks the capacity to appraise or there is no such organization to appraise the collateral assets as stipulated in this clause, the VNEMF shall appraise the collateral assets in accordance with the law on collateral assets to determine the deductible value of the collateral asset when calculating the specific provisioning amount. If the collateral asset does not meet all the conditions specified in Points a, b, c, and d of this clause, the deductible value of the collateral asset shall be considered zero.

4. The deductible value of the collateral asset shall be determined by multiplying the value of the collateral asset as specified in Clause 5 of this Article with the deduction ratio for each type of collateral asset as specified in Clause 6 of this Article.

The VNEMF shall determine the deduction ratio for each type of collateral asset based on the assessment of the recovery ability when disposing of the collateral asset but shall not exceed the maximum deduction ratio for each type of collateral asset as prescribed.

5. The value of the collateral asset shall be determined as follows:

a) The amount committed to guarantee on the bank's guarantee certificate;

b) Government bonds listed on the Stock Exchange. Reference price at the Stock Exchange at the end of the day before the specific provisioning date or the nearest time point before the specific provisioning date (if there is no reference price at the end of the day before the specific provisioning date).

c) Securities issued by enterprises listed on the Stock Exchange. Reference price at the Stock Exchange at the end of the day before the specific provisioning date or the nearest time point before the specific provisioning date (if there is no reference price at the end of the day before the specific provisioning date).

Unlisted securities, other negotiable instruments issued by enterprises (including credit institutions): par value.

d) Chattels, real estate, and other types of collateral assets: The value of the collateral asset shall be appraised by an organization authorized to appraise values as stipulated in Point d Clause 3 of this Article or the value of the collateral asset shall be appraised according to the VNEMF's regulations. If there is no appraisal document for the collateral asset, the value of the collateral asset shall be considered zero.

đ) Financial lease assets (the value of financial lease assets according to the lease contract minus the lease payments due): the remaining lease payment according to the contract at the time of specific provisioning or the valuation of the organization authorized to appraise values according to the law.

6. Maximum Deduction Ratio for Collateral Assets

a) Gold bars, except gold bars specified in Point i Clause of this Article; foreign currency deposits of the Project Owner: 95%.

b) Government bonds, transferable instruments, negotiable instruments issued by credit institutions; savings certificates, deposit certificates, bills, discount bills issued by credit institutions, branches of foreign banks according to the following regulations:

Remaining term less than one year: 95%.

Remaining term from one year to five years: 85%.

Remaining term over five years: 80%.

c) Securities issued by other credit institutions listed on the Stock Exchange: 70%.

d) Guarantees of commercial banks: 70%.

đ) Securities issued by other enterprises listed on the Stock Exchange: 65%.

e) Securities not listed on the Stock Exchange, negotiable instruments, except for those specified in Point c Clause of this Article, issued by credit institutions that have registered to list securities on the Stock Exchange: 50%;

Securities not listed on the Stock Exchange, negotiable instruments, except for those specified in Point c Clause of this Article, issued by credit institutions that have not registered to list securities on the Stock Exchange: 30%;

g) Securities not listed on the Stock Exchange, negotiable instruments issued by enterprises that have registered to list securities on the Stock Exchange: 30%;

Securities not listed on the Stock Exchange, negotiable instruments issued by enterprises that have not registered to list securities on the Stock Exchange: 10%;

Real estate: 50%;

i) Unlisted gold bars, other types of gold, and other collateral assets: 30%;

7. General provision is the amount of money set aside to provide for undetermined losses during the process of classifying debts and establishing specific provisions, and in cases where the Environmental Protection Fund (EPF) encounters financial difficulties when the quality of its debts deteriorates.

8. The amount of general provision to be established is determined at 0.5% of the total balance of debts from Group 1 to Group 4 as stipulated in Clause 2 of this Article.

a) In the case where the remaining specific provision and general provision of the previous quarter is less than the specific provision and general provision required to be established in the current quarter, the EPF must establish additional provisions to cover the shortfall.

b) In the case where the remaining specific provision and general provision of the previous quarter exceeds the specific provision and general provision required to be established in the current quarter, the EPF must reverse the excess portion.

Article 21. Risk Management

1. Measures to manage risks

In the event that the Project Investor cannot repay the principal and interest according to the time limit specified in the Environmental Protection Investment Credit Contract, the EPF will apply measures including: adjusting repayment terms, extending loans; setting aside non-performing loans; writing off debts.

a) Adjusting repayment terms: If the Project Investor is unable to repay the principal and/or interest within the agreed loan term and the EPF assesses that the investor has the ability to repay in subsequent periods, the EPF may consider adjusting the repayment terms for the principal and/or interest.

b) Extending loans: If the Project Investor is unable to fully repay the principal and/or interest within the agreed loan term and the EPF assesses that the investor can repay within a certain period after the loan term, the EPF may consider extending the loan. During the extension period, the borrower must still pay interest on the loan. The maximum extension period shall not exceed half of the original loan term.

c) Setting aside non-performing loans: The Project Investor may be considered for setting aside non-performing loans if they meet the following conditions:

The Project Investor's loan is at risk due to reasons such as natural disasters, enemy attacks, fires, epidemics causing direct damage to capital and assets of the project or customers; changes in state policies directly affecting the production and business activities of the Project Investor (such as lack of raw materials supply; prohibited products...). The maximum period for setting aside non-performing loans is three years from the date the Project Investor encounters the risk.

Upon expiration of the non-performing loan period, if the Project Investor still faces difficulties and is unable to repay the debt, they may be considered for further non-performing loan setting with a maximum period not exceeding the previously set non-performing loan period according to the decision of the competent authority.

d) Writing off debts: The Project Investor may have their debt written off under one of the following circumstances:

- The Project Investor's loan is at risk due to reasons specified in Point c, Clause 1 of this Article but even after the non-performing loan period (including extended non-performing loan periods) they are still unable to repay. The EPF has exhausted all possible sources of repayment.

- The Project Investor's loan has been dissolved or declared bankrupt according to the law and there is no legal entity or assets left to repay the EPF, and the EPF has exhausted all possible sources of repayment.

- The individual has died or gone missing.

2. Documentation for managing risks in the case of adjusting repayment terms. The Project Investor sends directly or through postal service to the EPF a request for adjustment of repayment terms clearly stating the inability to repay on time; repayment capacity; proposed adjustment period.

3. Documentation for managing risks in the case of extending loans and setting aside non-performing loans. The Project Investor sends directly or through postal service to the EPF one set of documentation including:

a) One request for loan extension or non-performing loan setting clearly stating the cause of loss; extent of loss to capital and assets; repayment capacity; outstanding principal and interest owed to the EPF; requested extension or non-performing loan amount.

b) One report confirming the extent of loss to capital and assets caused by the Project Investor, certified by authorized individuals or organizations.

c) One financial statement for the two most recent years (for legal entities).

d) One plan to restore production and business operations.

4. Documentation for managing risks in the case of writing off debts

The Project Investor sends directly or through postal service to the EPF one set of documentation including:

a) One request for debt write-off clearly stating the cause of risk leading to inability to repay; extent of loss to capital and assets; repayment capacity; outstanding principal and interest owed to the EPF; requested write-off amount.

b) One decision of the competent state authority or court declaration and related documents regarding asset liquidation for the case where the borrower is a legal entity or economic organization that has declared bankruptcy or dissolution.

c) One certified copy of death certificate, confirmation of disappearance, or declaration of disappearance according to the law for the case where the Project Investor is an individual who has died or gone missing.

d) Other related documents (if any).

5. Authority and responsibility for managing risks

a) The Director of the EPF considers and decides on adjustments to repayment terms and loan extensions.

b) The Chairman of the Management Board of the EPF decides on setting aside non-performing loans; waiving or reducing interest on loans.

c) The Chairman of the Management Board of the Vietnam Environmental Protection Fund (VEPF) shall submit to the Minister of Natural Resources and Environment for consideration and decision on the write-off of principal debts where the scale of the debt write-off does not exceed the risk reserve fund at the VEPF;

d) The Chairman of the Management Board of the VEPF shall submit to the Minister of Natural Resources and Environment for consideration and submission to the competent state agency for approval to write off the principal debt for the Project Owner when the scale of the debt write-off exceeds the risk reserve fund at the VEPF as prescribed by law;

Article 22. Use of the Risk Reserve Fund

1. Objectives of using the Risk Reserve Fund

a) Project Owners with projects that have loans and encounter natural disasters, enemy attacks, fires, epidemics causing direct damage to the capital and assets of the project;

b) The State changes policies directly affecting the production and business activities of the Project Owner;

c) Project Owners who are organizations dissolved or declared bankrupt according to the law, individuals who die or go missing;

d) Debts classified into Category 5 as prescribed in Clause 2, Article 20 of this Circular;

2. Principles for using the Risk Reserve Fund

a) Use specific reserves established to address risks associated with debts;

b) Proceed with the sale of collateral assets in accordance with agreements with the Project Owner and as stipulated by law to recover debts;

c) For debts guaranteed by banks: request the bank to fulfill its guarantee obligations;

d) In cases where the use of specific reserves and the proceeds from the sale of collateral assets and guarantees are insufficient to cover the risks of the debt, the general reserve must be used to address the risks;

3. Decision on Using the Risk Reserve Fund

When it is necessary to use the risk reserve fund, the VEPF shall establish a Council to decide on the use of the risk reserve fund. The Council shall be chaired by the Chairman of the Management Board of the Fund and members including the Director of the Fund, Head of the Supervisory Board, Chief Accountant, head of the credit department, and other members decided by the Chairman of the Management Board;

4. Responsibilities of the Council in Handling Risks

a) Approve the consolidated report on the results of debt recovery using the risk reserve fund, including the results of handling collateral assets and clearly stating the basis for approval;

b) Decide or approve the classification of debts, off-balance sheet commitments, provision establishment, and use of provisions to address risks;

c) Decide or approve measures to recover debts that have been addressed through provisions, including the handling of collateral assets;

5. Responsibilities of the VEPF in Handling Risks

a) The use of the risk reserve fund to address risks and record related debts in off-balance sheet accounts, as well as monitoring, urging, and recovering debts, is an internal matter of the VEPF and does not change the obligation of the Project Owner to repay the debt that has been addressed for risks. After addressing the risks, the VEPF must take comprehensive and thorough measures to recover the debt and continue to monitor and recover the debt according to the loan agreement and commitments agreed upon with the Project Owner;

b) After a minimum period of five years from the date of using the provision to address risks and implementing all recovery measures decided by the risk management council but failing to recover the debt, the VEPF may decide to remove the debt that has been addressed for risks from off-balance sheet accounting after reporting and obtaining written approval from the Ministry of Natural Resources and Environment;

The removal of debts that have been addressed for risks from off-balance sheet accounting can only be carried out when there is sufficient documentation proving that all recovery measures have been implemented but the debt could not be recovered;

Documentation for debts that have been removed from off-balance sheet accounting must be retained in accordance with the law, including documentation on risk handling and all evidence proving that the VEPF has implemented all measures to recover the debt but failed to do so;

6. Handling the Amount Recovered from Debts Addressed for Risks

The amount recovered from debts addressed for risks, including the amount recovered from the sale of collateral assets, shall be considered as other income in the accounting period of the VEPF;

Chapter III

INTEREST RATE SUPPORT AFTER INVESTMENT

Article 23. Post-investment interest rate support level

1. The Environmental Protection Fund shall approve the annual post-investment interest rate support level and the maximum level shall not exceed the positive difference between the State's investment credit interest rate and the preferential loan interest rate applied by the Environmental Protection Fund in that year.

2. Principles for determining post-investment interest rate support for a project

a) The post-investment interest rate support level is calculated for each project and granted to the project investor.

b) The post-investment interest rate support level is calculated based on the total principal actually repaid according to the signed credit contract with the financial institution but shall not exceed 70% of the total fixed asset investment capital as approved by the project settlement.

c) Post-investment interest rate support shall only be provided for the amount of borrowed capital that the investor repays to the financial institution from the date of the approval document for the project investment capital settlement issued by the competent authority.

d) Post-investment interest rate support shall only be provided for projects that have been completed, put into use, and partially or fully repaid the borrowed capital to legitimate financial institutions operating in Vietnam.

đ) Post-investment interest rate support shall only be provided for projects that have not received preferential interest rate loans or grants and co-funding from the Environmental Protection Fund's operational capital.

e) Post-investment interest rate support shall only be provided for projects that have not benefited from the State’s preferential credit policies.

g) For early repayment loans, the post-investment interest rate support level is calculated based on the actual borrowing period of that loan according to the signed credit contract.

h) For projects with debt write-offs, the write-off period shall not be included in the actual borrowing period for calculating post-investment interest rate support.

i) The maximum period for calculating post-investment interest rate support equals the loan term recorded in the initial signed credit contract.

k) Post-investment interest rate support shall not be provided for overdue repayments or repayments during extended periods.

l) Post-investment interest rate support shall not be provided for borrowed capital used to pay interest on loans from financial institutions, repay working capital loans, pay VAT, invest in project components or work volumes not included in the approved investment project.

m) Post-investment interest rate support shall not be provided for projects where the Investor has changed.

3. Method for determining the post-investment interest rate support level for a project as follows:

a) Post-investment interest rate support level for the entire project

The total post-investment interest rate support level for the entire project is equal to the sum of the annual post-investment interest rate support levels for the project; the annual post-investment interest rate support level is equal to the sum of the post-investment interest rate support levels for each repayment in the year.

b) Post-investment interest rate support level for each repayment in the year is calculated as follows:

The actual principal repaid for each repayment eligible for post-investment interest rate support is determined based on the actual principal repaid according to the credit contract meeting the conditions for post-investment interest rate support.

The actual borrowing period for calculating post-investment interest rate support is the time period (converted to years) from the date of receiving the loan to the date when the principal within the due period is repaid to the financial institution according to the initial signed credit contract. The actual borrowing period is assumed: 1 month = 30 days; 1 year = 360 days.

The interest rate for calculating post-investment interest rate support is determined based on the annual interest rate for loan support approved by the Environmental Protection Fund.

c) Determining the actual borrowing period is based on the date of receiving the debt recorded on the Disbursement Capital Statement of the financial institution and the date of repaying the principal recorded on the Repayment Capital Statement between the project investor and the lending financial institution (converted to years). The number of days of actual borrowing of the first principal repayment is calculated by comparing the disbursement date of the first loan with the first repayment date of the principal within the due period, and this is used to determine the subsequent actual borrowing periods.

Determining the post-investment interest rate support level for projects borrowing in foreign currency is done in the original currency. At the time of providing post-investment interest rate support, based on the average USD/VND exchange rate in the inter-bank foreign exchange market or the cross-exchange rate for other foreign currencies/VND published by the State Bank of Vietnam, to determine the post-investment interest rate support level in Vietnamese dong for the project.

Article 25. Documents for post-investment interest rate support

1. Legal Documents

a) One copy of the Business Registration Certificate or establishment decision;

b) One copy of the Company's Articles of Operation;

c) One copy of the Decision appointing the General Director and Chief Accountant.

2. Financial Documents

a) One copy of the Credit Agreement;

b) One original Investment Capital Settlement Report of the project;

c) One original Table of disbursed capital by the credit institution;

d) One original Debt Repayment Confirmation Form from lending institutions for the project applying for post-investment interest rate support;

đ) One copy of relevant documents related to disbursement and repayment for the credit agreement concerning the project applying for post-investment interest rate support.

2. Project documents

a) One original Application for Post-Investment Interest Rate Support according to Model No. 04 issued together with this Circular;

b) One copy of the Approved Investment Project;

c) One original Decision Approving the Project;

d) One original Decision Approving Technical Design and Detailed Budget Estimate for Project Components;

đ) One copy of the Project Implementation Contract: Construction and Installation Contract, Equipment Purchase Contract...;

e) One copy of the environmental protection confirmation document as prescribed (if applicable);

g) One copy of the Invoice as prescribed; set of copies of import documents for equipment imported or entrusted by the project owner;

h) One copy of the Acceptance Documents for Project Components;

i) One copy of the Final Settlement Documents for the Approved Investment Project.

Article 26. Receiving and Processing Post-Investment Interest Rate Support Documents

1. Project owners eligible for post-investment interest rate support shall submit a complete set of documents as stipulated in Article 25 of this Circular directly or through postal services or online public services (if available) to the VNEMF.

2. Upon receipt of the application for post-investment interest rate support, the VNEMF will check the completeness of the documents. Within seven working days, the VNEMF will notify the Project Owner of the result of the document review for post-investment interest rate support.

Article 27. Review of Post-Investment Interest Rate Support Documents

The VNEMF will organize the review of post-investment interest rate support documents within twenty-five working days from the date of receiving complete and valid documents. For complex investment projects, the review period may be extended but not exceeding fifty-five working days. The content of the document review includes:

1. Review of the eligibility for post-investment interest rate support.

2. Review of the completeness, legality, validity; the consistency of content, data, issuance procedures of documents in the post-investment interest rate support project documents.

a) Documents in the post-investment interest rate support documents must be consistent, appropriate, chronological order, project name, investment content;

b) Documents in the file must be complete with numbers, codes as prescribed; date, stamp; signature; title, name of authorized signatory; official seal must match the authority of the signer;

c) Documents in the file must be originals or copies in accordance with current laws on issuing copies from original certified documents, certifying signatures. Copies of documents consisting of two pages or more must be stamped across the fold.

Article 28. Decision on Post-Investment Interest Rate Support

Based on the comprehensive review results of the project, within thirty working days, the VNEMF will decide on interest rate support and notify the Project Owner in writing. In cases where interest rate support is denied, the VNEMF will notify the Project Owner in writing, stating the reasons, and report to the Ministry of Natural Resources and Environment at the same time.

Article 29. Disbursement of post-investment interest rate support capital

1. The disbursement of post-investment interest rate support capital shall be carried out once a year based on the principal amount that the Project Owner has repaid to the financial institution in accordance with the loan contract during the year.

2. Documents for disbursement of post-investment interest rate support capital

a) One original copy of the Acceptance Certificate for the completion and handover of the project or completed project component put into use;

b) One copy of the Post-Investment Interest Rate Support Contract; the Promissory Note of the Project Owner with the lending financial institution outside the VN Environmental Protection Fund;

c) One copy of the Payment Receipts of the Project Owner to the lending financial institution within the year.

Chapter IV

RIGHTS AND OBLIGATIONS OF THE VN ENVIRONMENTAL PROTECTION FUND AND THE PROJECT OWNER

Article 30. Rights and Obligations of the VN Environmental Protection Fund

1. Requesting the Project Owner to provide documents proving that the investment project aligns with the purpose as stipulated by the VN Environmental Protection Fund; the feasibility, economic, environmental, and social effectiveness of the project; the financial capability of the Project Owner according to the requirements of each form of pre-investment financial support before deciding to support environmental investment projects.

2. Reviewing applications, deciding or rejecting loans and post-investment interest rate support.

3. Implementing preferential interest rate loans and post-investment interest rate support in accordance with the provisions set forth in this Circular.

4. Fulfilling agreements in contracts.

5. Monitoring the process of preferential interest rate loans, post-investment interest rate support, usage of borrowed funds, and repayment by the Project Owner; inspecting collateral assets and guarantee assets when necessary.

6. Terminating preferential interest rate loans and post-investment interest rate support, recovering loans ahead of schedule upon discovering that the Project Owner has provided false information or violated signed contracts.

7. Handling collateral assets in accordance with the provisions of the Law.

8. Initiating legal proceedings against the Project Owner for breach of contract.

9. Retaining and preserving loan application files, collateral files, and post-investment interest rate support files in compliance with legal regulations.

Article 31. Rights and Obligations of the Project Owner

1. Providing complete, timely, and truthful information and documents related to preferential interest rate loans, post-investment interest rate support, and usage of borrowed funds to the VN Environmental Protection Fund and bearing legal responsibility for the accuracy and legality of the provided information and documents. Creating conditions for the VN Environmental Protection Fund to conduct inspections before, during, and after lending, committing to and submitting quarterly and annual production and financial reports to the VN Environmental Protection Fund throughout the period until all loans are fully repaid.

2. Refusing requests from the VN Environmental Protection Fund that do not comply with legal regulations and contractual agreements.

3. Requesting disbursement of preferential loans and post-investment interest rate support capital when disbursement conditions are met; being responsible for using the borrowed funds and interest rate support for their intended purposes effectively.

4. Repaying the loan principal in accordance with the terms of the environmental protection investment credit contract.

5. Bearing legal responsibility if failing to fulfill the agreed repayment terms and performing the committed loan guarantee obligations as stipulated in the contract.

6. Filing complaints or initiating legal proceedings for breach of contract in accordance with legal regulations.

Chapter V

IMPLEMENTING PROVISIONS

Article 32. Transitional Provisions

For preferential interest rate loans and post-investment interest rate support contracts signed prior to the effective date of this Circular, they shall continue to be implemented according to the signed agreements until their expiration and termination. Any amendments to the contents of these Contracts from the effective date of this Circular can only be made if the amended content complies with the provisions of this Circular.

Article 33. Effective Date

1. This Circular takes effect from May 5, 2017

2. During implementation, if there are difficulties or obstacles, it is recommended that agencies, organizations, and individuals promptly report to the Ministry of Natural Resources and Environment for research, consideration, and resolution./.