Joint Circular No. 04/1998/TTLT-BTS-BKHĐT-BTC-NHNN guiding the management and use of credit investment capital according to the state plan for projects constructing new fishing vessels and service vessels for distant-water fisheries.

JOINT CIRCULAR

Guidelines on the management and use of credit investment capital according to the state plan for projects constructing new fishing vessels and service vessels for distant-water fisheries

national plan for new construction and conversion projects of fishing vessels and distant-water fisheries service vessels

and distant-water fisheries service vessels

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Pursuant to Decision 393/TTg dated June 9, 1997 of the Prime Minister on the regulations for managing and using credit investment capital according to the state plan for projects constructing new fishing vessels and service vessels for distant-water fisheries; Decision 159/1998/QĐ-TTg dated September 3, 1998 of the Prime Minister amending and supplementing certain provisions of Decision 393/TTg dated June 9, 1997 of the Prime Minister, the Joint Ministries of Aquatic Resources - Planning and Investment - Finance - State Bank of Vietnam issue guidelines on implementing the following points:

1. On Organization at Local Levels:

Establish Steering Committees for the Distant-Water Fisheries Program in provinces and centrally-administered cities with many projects (where there are few projects, it is not necessary to organize them), assisting provincial People's Committees and the National Steering Committee for the Distant-Water Fisheries Program, headed by a Deputy Chairman of the Provincial People's Committee. The Steering Committee has the responsibility to direct, inspect, urge implementation of this program; guide and assist economic units and fishermen in building investment projects.

Members of the Steering Committee include Directors of Departments of Aquatic Resources, Planning and Investment, Finance, Directors of Branches of the State Bank, Directors of Branches of the Development Bank, and Heads of the Investment and Development Department.

All levels of People's Committees have the responsibility to direct to ensure coordination between lending organizations and related departments at the local level to guide, manage, inspect, and urge units and fishermen borrowing capital within their jurisdiction to use borrowed funds for the intended purpose, operate vessels effectively, repay investment loans (principal and interest) according to the loan agreement.

2. On Borrowers:

- In accordance with Article 6 of the regulations issued together with Decision 393/TTg dated June 9, 1997 of the Prime Minister, borrowers for investment in distant-water fishing vessels and service vessels are economic units registered for fishing and service activities, including state-owned enterprises, economic units of the military, private businesses, joint-stock companies, limited liability companies, cooperatives, cooperative groups, and individual fishermen.

- Borrowers must have experience at sea and organizing distant-water fishing activities, possess sufficient self-funded capital as stipulated in Section 4 of this Circular, understand the management of fishing vessels, preservation techniques, be registered for fishing activities at their place of residence, or hold a distant-water fishing permit issued by the aquatic resource protection agency. The names of the Captain and Chief Engineer must be registered in the loan contract.

3. On Collateral for Loans and Insurance Purchase:

a. On Collateral for Loans:

Projects borrowing credit investment capital for distant-water fishing vessels and service vessels according to the state plan shall use assets formed from borrowed capital as collateral for loans. During the period when the loan is not fully repaid, investors (project sponsors) may not transfer, sell, or mortgage assets financed by state-planned credit investment.

b. Insurance Purchase:

- Investors constructing distant-water fishing vessels and service vessels must compulsorily purchase crew insurance and hull and machinery insurance (excluding the value of fishing gear and other equipment for daily use).

- Investors must purchase insurance annually and are not required to purchase insurance for two or three years at once. Each year, if an investor does not purchase insurance and does not have safety equipment, they will not be granted a distant-water fishing permit.

- In cases where risks occur within the scope of insurance coverage, investors must use the insurance compensation to repay the loan principal to the lender. If the insurance compensation is insufficient to cover the shortfall, it will be referred to the Prime Minister for decision.

4. Some Provisions on Interest Rates, Loan Terms, Repayment, and Self-Funded Capital Ratio:

- Loan interest rates shall be implemented according to the regulations of the Prime Minister.

- The maximum loan term shall not exceed seven years, with interest calculated from the date the loan debt arises.

- Interest repayment begins one month after the vessel officially enters production (as recorded in the approved project), and principal repayment begins twelve months later. Specific repayment terms are agreed upon in the loan contract between the lending organization and the borrower. Early repayment of principal and interest is encouraged. If a borrower delays repayment beyond the due date, penalties for overdue loans will be applied according to the lender's regulations, and legal action may be initiated if necessary.

- Borrowers must contribute at least 15% of the total project investment as self-funded capital.

5. On Advance Loans and Payment of Completed Work for Projects Borrowing Credit for Vessel Construction:

- Advance loans and payment for completed work shall be made according to contracts signed between the borrower and shipbuilding units and equipment suppliers. To ensure that advance loans are used for their intended purpose, conditions for advance loans include a loan agreement, shipbuilding contract, approved design budget, and payment documents such as invoices for materials (wood, steel...) and equipment (marine engines...). The advance loan amount shall not exceed 25% of the total project investment and can be advanced multiple times within the specified limit, directly transferred to shipbuilding units and equipment suppliers based on the borrower's request.

- Payment for completed work shall be made according to the volume of work completed and accepted at each stage. The acceptance certificate for completed work must be confirmed by the technical department of the ship inspection agency.

6. On Vessel Models, Marine Engines, and Shipbuilding Facilities:

a. Regarding Vessel Models and Marine Engines:

- Vessel Models:

In addition to vessels constructed according to the first batch of design models issued by the Ministry of Fisheries pursuant to Decision 268/QĐ-KHCN dated June 10, 1997, the project proponent is permitted to select vessel models based on local customs, but such selections must be confirmed by the ship inspection authority regarding technical safety.

- Marine engines:

Besides using the four types of marine engines already guided in Circular No. 2214/CV-KHĐT dated September 23, 1997 of the Ministry of Fisheries, other types of marine engines may be expanded, but careful calculations must ensure technical requirements and economic efficiency, and it is not advisable to use too many types.

Compliance with general directives is required; used marine engines or auxiliary engines replacing marine engines should not be utilized for constructing distant-water fishing vessels.

b. Shipbuilding facilities:

To reduce administrative procedures, enhance the responsibility of relevant sectors and localities, the Chairpersons of People's Committees of provinces and centrally-administered cities and heads of Ministries and Sectors with projects shall directly examine and permit shipbuilding facilities that meet the necessary conditions (technical, material infrastructure, and experience) to participate in constructing distant-water fishing vessels.

7. On project establishment and review:

The content of investment projects and the organization of project reviews shall be carried out in accordance with Circular No. 09/BKH-VPTĐ dated September 21, 1996 of the Ministry of Planning and Investment guiding the establishment and review of investment projects and investment decisions.

The Review Board and the tasks of the Review Board for shipbuilding investment projects shall be implemented in accordance with Article 1, Point 5 of Decision No. 159/1998/QĐ-TTg dated September 3, 1998 of the Prime Minister.

The content of the review of distant-water fishing vessel investment projects needs to focus on the following aspects:

- Technical issues: Vessel model, engine, equipment, profession, fishing grounds, season.

- Financial issues: Production efficiency, investment capital, sources of capital, investment capital structure, revenue, costs, profit, loan repayment period, loan repayment term.

8. On issuing operation permits for distant-water fishing:

The Fisheries Resource Protection Department of the Ministry of Fisheries is responsible for directly managing distant-water fishing activities and related services, and is the competent authority to issue operation permits for distant-water fishing vessel owners.

Provincial Fisheries Resource Protection Agencies shall implement the issuance and extension of distant-water fishing operation permits for local vessel owners. They shall confirm distant-water caught seafood from their regions to have a basis for implementing tax exemption and reduction policies as stipulated by current state regulations.

Procedures required as a basis for issuing distant-water fishing operation permits:

- Vessel registration book.

- Proof of purchasing crew insurance, hull insurance, and engine insurance.

- Adequate safety equipment.

The duration of operation specified in the distant-water fishing operation permit shall be based on the vessel's inspection validity period, type of profession, fishing ground, season, and target marine species requested by the project proponent, but shall not exceed 12 months at maximum. Upon expiration of the permitted operational period, the vessel owner must apply to the resource protection agency for renewal of the operation permit and it must align with the insurance period.

9. On training:

Combining systematic training and maritime experience, utilizing fishermen's equipment and exploitation methods to organize training and issue captain and engineer certificates to ensure quantity and quality. Implementing the principle of joint effort between the State and the people.

Immediately after the project is approved, the investor shall plan for the training of captains, engineers, and crews so that upon completion of the vessel construction, they can take over and put it into use. Captain and engineer certificates for vessels are issued by secondary and higher education institutions under the fisheries sector.

Training combines various forms, including centralized training at sectoral educational institutions or these institutions organizing classes in project locations, using training funds allocated annually by the state for distant-water fishing programs.

10. On consolidation and allocation of plans:

Annually, provincial People's Committees and central ministries and sectors shall identify the entities as project investors as per Item 2 of this circular. Direct the investors to establish projects, compile project lists, and submit investment capital requirements for distant-water fishing vessels to the Ministry of Planning and Investment and the Ministry of Fisheries for consolidation and plan coordination.

- Based on development planning, actual management capacity, local proposals, and project-related ministries' suggestions, the Ministry of Fisheries shall send the Ministry of Planning and Investment to coordinate and propose the investment plan capital for distant-water fishing vessels for each province and centrally-administered city and participating ministries and sectors to the Government.

- Based on the plan approved by the Prime Minister, the Ministry of Planning and Investment shall allocate the plan capital limit to provincial People's Committees, centrally-administered city People's Committees, and ministries and sectors with projects, and organize loans.

Provincial People's Committees and ministries and sectors with projects shall be responsible for allocating capital for each project within the total amount allocated by the Ministry of Planning and Investment, registering with lending organizations, and simultaneously submitting consolidated reports on local and ministry/project loan capital allocation plans to the Ministry of Planning and Investment and the Ministry of Fisheries.

- Localities and ministries and sectors with projects shall prepare monthly and quarterly reports on project implementation and submit them to the Ministry of Fisheries, the Ministry of Planning and Investment, and lending organizations for consolidation and reporting to the Prime Minister.

This circular takes effect 15 days from the date of signature. During implementation, if there are difficulties or obstacles, they should be promptly reflected to relevant ministries and sectors for consideration and supplementation or amendment.