Joint Circular No. 04/1998/TTLT/TS-KHDT-TC-NHNNVN guides 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, and vessel conversion.

CIRCULAR

JOINT CIRCULAR OF THE MINISTRY OF AQUATIC RESOURCES, THE MINISTRY OF PLANNING AND INVESTMENT, THE MINISTRY OF FINANCE AND THE STATE BANK OF VIETNAM NO. 04/1998/TTLT/TS-KHĐT-TC-NHNN VN GUIDING ON THE MANAGEMENT AND USE OF LOAN CAPITAL FOR INVESTMENT ACCORDING TO THE NATIONAL PLAN FOR NEW BUILDING AND MODERNIZATION OF FISHING VESSELS AND SERVICE VESSELS FOR FISHERIES FAR FROM SHORE

Pursuant to Decision 393/TTg dated June 9, 1997 of the Prime Minister on the Regulation on the Management and Use of Loan Capital for Investment According to the National Plan for New Building and Modernization of Fishing Vessels and Service Vessels for Fisheries Far from Shore; 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 guide the implementation of the following points:

1. On Organization at Local Levels:

Establish Steering Committees for the Offshore Fisheries Program in provinces and centrally-administered cities with many projects (where there are few projects, it is not advisable to organize them), assisting provincial People's Committees and the National Steering Committee for the Offshore Fisheries Program, headed by a Deputy Chairman of the Provincial People's Committee. The Steering Committee shall be responsible for directing, inspecting, urging the implementation of this program; guiding and helping economic units and fishermen to build investment projects.

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

All levels of People's Committees shall be responsible for directing to ensure coordination between lending organizations and relevant sectors at local level to guide, manage, inspect, 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 terms.

2. On Borrowers:

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

- Borrowers must have experience at sea and organizing offshore fishing operations, possess sufficient self-funded capital as stipulated in Section 4 of this Circular, understand management of fishing vessels, preservation techniques, and be registered for fishing activities at their place of residence or hold a permit for offshore fishing issued by the fisheries 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 for investment in offshore fishing vessels and service vessels according to the national plan shall use assets formed with borrowed capital as collateral for loans. During the period when the loan has not been fully repaid, investors (project sponsors) may not transfer, sell, or mortgage assets financed by planned state credit.

b. On Insurance Purchase:

- Investors constructing offshore 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 lacks safety equipment, they will not be granted a permit for offshore fishing activities.

- In case of risks covered by insurance, investors must use the insurance compensation to repay the loan principal to the lender. If the insurance payment is insufficient to cover the shortfall, it shall 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 in accordance with 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 per the approved project schedule), and principal repayment starts twelve months thereafter. Specific repayment terms shall be agreed upon in the loan agreement between the lending organization and the borrower. Early repayment of principal and interest is encouraged. In case of overdue non-repayment, penalties for overdue loans shall apply, and legal action may be initiated if necessary.

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

5. On Advance Loan Disbursement and Payment Based on Completed Work for Projects Borrowing Credit for Vessel Construction:

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

- Payment based on 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 inspection authority.

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 local traditional vessel models, but such selection must be confirmed by the ship inspection authority regarding technical safety.

- Marine engines:

Besides 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 calculation must ensure technical requirements and economic efficiency, and it is not advisable to use too many types.

Compliance with general directives should be observed; used marine engines or marine engines repurposed from land-based engines should not be utilized for constructing distant-water fishing vessels.

b. Shipbuilding facilities:

To reduce administrative procedures and enhance the responsibility of relevant sectors and localities, the Chairmen of Provincial People's Committees directly under the Central Government and the heads of Ministries and Sectors with projects shall 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 its tasks for reviewing investment projects for shipbuilding distant-water fishing vessels shall be implemented in accordance with Article 1, Clause 5 of Decision No. 159/1998/QĐ-TTg dated September 3, 1998 of the Prime Minister.

The content of the review of investment projects for distant-water fishing vessels 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 to 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 fish products within their jurisdiction to serve as the basis for implementing tax exemption and reduction policies as stipulated by current state regulations.

Procedures required as the 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 is based on the ship inspection period allowed, 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, using fishermen's equipment and exploitation methods to organize training and issue captain and engineer certificates, ensuring 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 they can take over and put the vessel into use right after construction completion. 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 fisheries sector schools or these schools organizing classes in project locations, utilizing training funds allocated annually by the State for the distant-water fishing program.

10. On consolidation and allocation of plans:

Annually, Provincial People's Committees directly under the Central Government and the leading Ministries and Sectors shall identify the entities as project proponents as per Item 2 of this Circular. Direct the proponents 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 submit to the Ministry of Planning and Investment for coordination and submission to the Government the planned investment capital for distant-water fishing vessels for each province, centrally-administered city, and participating ministries and sectors.

- Based on the approved plan by the Prime Minister, the Ministry of Planning and Investment shall allocate the planned capital limit to Provincial People's Committees, centrally-administered cities, and project-related ministries and sectors, and organize loans.

Provincial People's Committees and project-related ministries and sectors 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-related loan capital allocation plans to the Ministry of Planning and Investment and the Ministry of Fisheries.

- Localities and project-related ministries and sectors 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 compilation 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, timely feedback should be provided to relevant ministries and sectors for consideration and supplementation or amendment.