CIRCULAR

Guidelines on certain financial issues implementing Decision No. 80/2002/QD-TTg dated June 24, 2002 of the Prime Minister on policies to encourage consumption of agricultural products through contracts through contracts

------------------

Implementing Decision No. 80/2002/QD-TTg dated June 24, 2002 of the Prime Minister on policies to encourage consumption of agricultural products through contracts; the Ministry of Finance provides guidelines on certain financial issues as follows:

I - GENERAL PROVISIONS

1/ The subjects to which this circular applies are enterprises belonging to various economic sectors that enter into contracts for the consumption of agricultural products with cooperative unions, cooperatives, farming households, farm owners, and representatives of farming households (hereinafter referred to as producers).

2/ Contracts for the consumption of agricultural products between enterprises and producers shall be implemented in accordance with the forms prescribed in Point 2 of Article 2 of Decision No. 80/2002/QD-TTg dated June 24, 2002 of the Prime Minister and Circular No. 77/2002/TT-BNN dated August 28, 2002 of the Ministry of Agriculture and Rural Development regarding model contracts for the consumption of agricultural products.

II - SPECIFIC PROVISIONS

1. On investment and support for infrastructure construction:

In concentrated raw material production areas linked with processing and consumption facilities for agricultural products, projects for investment and construction of infrastructure such as roads, irrigation, electricity, wholesale markets, storage facilities, market information networks, quality inspection facilities, after mobilizing the capital of the people and producers, if insufficient, will be considered for additional support from the provincial People's Committee from local budgets to implement the project.

For mountainous provinces and provinces with limited retained revenue for investment, the central budget will provide partial support through the annual basic construction plan of the locality.

In addition to these sources of capital, projects for rural road development, aquaculture infrastructure, and village industry infrastructure in rural areas can borrow from state credit investment funds at zero interest rates and be included in the annual plan. Support from local budgets, borrowing, and repayment of borrowed funds for the aforementioned projects shall be carried out in accordance with Decision No. 132/2001/QD-TTg dated September 7, 2001 of the Prime Minister.

2. On state investment credit for development.

- Producers and enterprises entering into contracts for the consumption of agricultural products with projects for agricultural production, long-term crop planting, large-scale livestock breeding, fishing and aquaculture, salt production, and export-oriented agricultural product processing shall benefit from state investment forms from the Development Support Fund as stipulated in Decree No. 43/1999/ND-CP dated June 29, 1999 on state investment credit for development and Decision No. 02/2001/QD-TTg dated January 2, 2001 of the Prime Minister on support policies from the Development Support Fund for export-oriented production and processing projects and agricultural production projects.

- Post-investment interest rate support: Enterprises entering into contracts for the consumption of agricultural products with producers, having joint venture projects or directly producing, processing, and manufacturing agricultural products for export, borrowing from legitimate credit organizations in Vietnam, shall be supported with the difference in interest rates between the lending organization's rate and the Development Support Fund's rate at the same time according to Circular No. 76/2001/TT-BTC dated September 25, 2001 of the Ministry of Finance on Export Credit Regulations.

- Parties signing contracts shall agree to handle risks due to natural disasters, sudden changes in market prices, and other force majeure factors according to the principle of sharing risks and the State shall consider part of the losses in accordance with the law.

3. Short-term state credit:

Enterprises entering into contracts for the consumption of agricultural products with producers, having projects for export-oriented production and business, may borrow from the Development Support Fund in accordance with Decision No. 133/2001/QD-TTg dated September 10, 2001 of the Prime Minister and Circular No. 76/2001/TT-BTC dated September 25, 2001 of the Ministry of Finance on Export Credit Regulations;

- In cases where enterprises enter into contracts for the consumption of agricultural products with producers for export purposes, under the form where enterprises must advance capital or materials or sell materials to purchase agricultural products and directly consume agricultural products for producers, they may borrow from the Development Support Fund.

- Enterprises consuming agricultural products for export with seasonal nature may borrow from the Development Support Fund under the form of pledge or collateral with assets formed from borrowed capital.

4. Financial support for difficult regions:

For remote, border, and island areas with investment projects for production, processing, and consumption of agricultural products, the following applies:

+ Borrowing from the Development Support Fund at an interest rate of 3% per annum.

+ When state-owned enterprises implement such projects, upon commencement of operations, the state budget shall provide sufficient working capital of 30%.

Procedures, formalities, and documentation for providing working capital shall be carried out in accordance with current regulations.

5. Support for technology transfer and technological advancement:

Based on the annual budget plan assigned, the Ministry of Agriculture and Rural Development, the Ministry of Fisheries, and the People's Committees of provinces and centrally-administered cities shall prioritize the implementation of support for agricultural extension work, forestry extension work, and fisheries extension work in concentrated production areas with consumption contracts while the state budget allocates funds to support enterprises and producers with consumption contracts in the following cases: - Supporting part of the cost for importing new seeds, implementing, applying, and rapidly popularizing new seed varieties.

- Supporting part of the cost for purchasing seeds for projects to adjust crop and livestock structures, apply new technological advancements, and provide market price information to producers and enterprises.

- Supporting part of the cost for new investments, renovations, and upgrades of seed production facilities for crops and livestock.

- Provide partial funding support for new investments, renovation, and upgrading of production facilities for plant seedling cultivation and animal breeding.

Based on specific conditions of each sector and the effectiveness of the aforementioned technology transfer and technological projects, the Ministry of Agriculture and Rural Development and the Ministry of Fisheries shall coordinate with the Ministry of Finance to decide on support for enterprises established by the Government and central ministries and sectors.

The People's Committees of provinces and centrally governed cities shall decide on support for enterprises established by localities.

6. Export Support and Trade Promotion:

Enterprises that enter into contracts for the sale of agricultural products with producers for export, in addition to current financial support policies such as export turnover bonuses, interest rate subsidies for temporary storage loans, trade promotion to develop markets, and compensation for losses due to force majeure, shall be prioritized for consideration for exporting agricultural products under commercial export contracts signed by the Government of Vietnam with foreign countries.

7. Tax Policies:

Enterprises belonging to various economic components and producers who have contracts for the sale of commodity agricultural products shall implement current tax policies encouraging production, processing, and consumption of commodity agricultural products as prescribed by Law.

III - IMPLEMENTATION PROVISIONS

This Circular takes effect from the date of issuance of Decision No. 80/2002/QĐ-TTg on policies for the sale of commodity agricultural products through contracts.

In the course of implementation, if there are difficulties or obstacles, agencies, enterprises, and producers are requested to report to the Ministry of Finance for study and resolution.