Joint Circular No. 05-LB/TC/NL stipulates sources of funds and types of capital used in the forestry sector.

CIRCULAR
Regulations on sources of capital and types of capital used in the forestry sector

According to the Prime Minister's Directive No. 335-TTg dated September 8, 1959, principles for improving the organizational structure of forestry at all levels into comprehensive business entities regarding forests have been outlined. Given the new tasks of the Forestry Sector in the construction and development of the Northern region towards socialism with a comprehensive business approach based on forest resources owned by the entire people, the State-owned Forestry Departments in provinces are no longer merely technical leadership bodies or simple commercial buyers of forest products, but have become comprehensive forest business units tasked with ensuring short-term and long-term supply while enhancing the protective function of the forest, based on continuously increasing the volume and quality of forest tree capital, implementing the principle of expanded reproduction in Forestry.

To facilitate the coordination of indicators between provinces with different forest resources and the distribution of forest products between production and consumption areas, the Joint Ministry is studying to uniformly define that the current State-owned Forestry Departments in localities (excluding the Forestry Departments under the Autonomous Region of Vietnam) belong to central enterprises. In line with the current situation, the Joint Ministry will also study and define issues related to delegating part of the management authority to localities concerning production and business activities.

While awaiting the formal decision, the Joint Ministry outlines several financial management issues as follows:

The State-owned Forestry Departments will have two sources of capital for operation:

- Capital provided and managed by the central government,

- Capital provided and managed by localities. Central government-provided and managed capital includes:

1. Production capital including:

- Working capital for trading or purchasing state-regulated forest products.

- Basic construction capital directly serving production such as building houses, warehouses, machinery, transportation equipment, etc.

2. Operating expenses including:

- Expenses for forest investigation, improvement, and maintenance

- Construction expenses with a public service nature such as afforestation and forest improvement.

Central operating expenses include forestry public service works with broad scope and long-term characteristics.

Local government-provided capital only includes local forestry operating expenses, specifically expenses for:

- Providing seedlings or establishing nurseries to assist part of the population or cooperatives in afforestation.

- Planting roadside trees, protecting dikes and public places in the province

- Purchasing fire prevention equipment

- Publicizing and training village cadres

- Local exhibitions.

Previously, local government expenses such as administrative costs, road construction, and blasting are now considered working capital allocated to the cost of forest product production.

Additionally, there is revenue from the sale of long-term forest product quotas, which has been a fixed budget item for localities. Now, recognizing the forest as a resource owned by the entire people, closely related to the national economy and the livelihoods of each locality, the Joint Ministry is studying the conversion of the fixed budget quota for localities' forest product sales into a variable income for localities. Pending government review, provinces will continue to prepare budgets for 1960 as before.

This Circular shall take effect from January 1, 1960.

The Forest Service will research and issue specific directives to State-owned Forestry Departments on planning financial revenues and expenditures for 1960 concerning central government matters.

Financial Departments in regions and provinces will temporarily continue preparing provincial budgets as discussed in the recent finance conference, adjustments will be made later.

Any difficulties encountered during implementation should be reported to the Joint Ministry for further study and supplementation.