Circular Joint No. 07-TT/TC/LN Regarding the Delegation to the Administrative Committees of the Thai-Meo Autonomous Region and Provinces to Direct and Supervise the Financial Management of Business Units under the Forestry General Department

 CIRCULAR
Regarding the delegation of authority to the Administrative Committees of the Thai-Meo Autonomous Region and provinces to direct and oversee the management of financial affairs of business establishments under the Forestry General Administration
Currently, enterprises under the Forestry sector (Forestry Department, Forest Development Branches, etc.) are still central enterprises directly managed by the central government (Forestry General Administration). National economic plans as well as financial revenue and expenditure plans are reviewed and approved by the central government, and all capital investments and profits or losses are borne by the central budget.
However, these enterprises are scattered throughout many areas, with some forestry units and exploitation zones deep within forests where production volumes are increasing, investment and accumulated capital are growing, making direct leadership from the central government increasingly difficult. Furthermore, the Forestry Departments manage various tasks: production and business operations, basic construction, and public services, each with its own funding sources and management methods. Particularly, basic construction and public service tasks are managed by both central and local governments, funded by different sources: the central budget and the local budget. Additionally, the success of planning and implementing production, basic construction, and public service plans for central forestry enterprises depends significantly on the development and implementation of other local economic plans, especially labor plans and agricultural production plans.

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Given these reasons, the Ministry and the Forestry General Administration recognize that the direct guidance and active support of the Administrative Committees of regions and provinces for enterprises under the Forestry General Administration are very necessary and urgent at this time. The study of decentralizing comprehensive management of forestry enterprises to the Administrative Committees is underway. While awaiting the full implementation of this decentralization, and to create favorable conditions for future decentralized management, as well as to address current financial shortcomings such as inaccurate cost plans, insufficient working capital plans, delayed profit and depreciation payments, etc., the Ministry and the Forestry General Administration decide to delegate authority to the Administrative Committees of regions and provinces to represent the Ministry and the Forestry General Administration in directing and overseeing the entire economic and financial management of the Forestry General Administration's establishments located in their respective regions and provinces, covering production and business operations, basic construction, and public services according to the following principles:

A. SOME MAJOR PRINCIPLES FOR THE FORMULATION AND MANAGEMENT OF PLANS

In terms of plan formulation: generally, types of plans regarding production volume, cost, profit and loss, capital, as well as basic construction and central public service budgets will be reviewed and decided by the central government (for certain basic construction projects below the quota, the Forestry General Administration will consider delegating authority to the Administrative Committees of regions and provinces to review designs and design estimates on behalf of the General Administration; specific regulations will be issued separately regarding this matter).

During the process of annual plan formulation and mid-year adjustments by forestry enterprises, the Administrative Committees of regions and provinces will directly guide these enterprises (Forestry Departments, Forest Development Branches, etc.) to formulate plans that meet central requirements while being closely aligned with local conditions, proposing necessary measures to complete and exceed the plan targets. The central government will base its approval of plans on the comments of the Administrative Committees of regions and provinces.

In terms of plan management and implementation, the Administrative Committees of regions and provinces will monitor, guide, and assist the enterprise establishments. During implementation, if the Forestry sector encounters difficulties, the Administrative Committees of regions and provinces will provide advice or appropriate measures, mobilizing necessary resources to resolve issues. Regarding quarterly and annual work results of the Forestry sector, the Administrative Committees of regions and provinces will provide comments to help the central government assess accurately and appropriately. Therefore, balance sheets and quarterly and annual settlement statements will only be reviewed by the central government after receiving comments from the Administrative Committees.

Specifically regarding public service tasks, the Ministry and the Forestry General Administration fully delegate authority to the Administrative Committees of regions and provinces to oversee disbursement and approve settlements instead of the Forestry General Administration.

B. SOME IMPLEMENTATION MEASURES

To fulfill these tasks, the Administrative Committees of regions and provinces need to utilize surrounding agencies to assist, particularly the Regional and Provincial Planning Committees, Financial Departments, branches and sub-branches of the State Bank, Construction Banks, etc.

1. Formulation and Approval of Plans:

- Annual Plans and Mid-Year Adjustments:

During the plan formulation process, which includes production, basic construction, and public service aspects of forestry establishments, the Administrative Committees of regions and provinces should utilize the above agencies to coordinate research, participate in discussions to serve the concentrated leadership of the Administrative Committees. If there are differing opinions among departments, they should promptly report to the Administrative Committees for resolution. If there are differing opinions between the Administrative Committees and forestry establishments, those opinions will be reported to the central government for review.

During participation in discussions, it is necessary to thoroughly understand the previous year's implementation situation, including advantages and difficulties, comparing them with the current year's plan, to have a basis for specific observations and calculations, ensuring the plan is accurate and always more advanced than previous years.

- Quarterly Plans:

Trong quá trình tham gia ý kiến, cần nắm vững tình hình thực hiện năm trước, bao gồm thuận lợi và khó khăn, so sánh với kế hoạch năm nay, để có cơ sở đánh giá và tính toán cụ thể, nhằm đảm bảo kế hoạch sát đúng và luôn luôn tiến bộ hơn các năm trước.

- Kế hoạch và dự toán hàng quý:

Annually, forestry establishments must prepare plans for interest payments and depreciation, basic construction limit plans, and quarterly public service budgets, to be submitted to the central authority for review. While preparing these plans and before submitting them to the central authority, forestry establishments must go through the Administrative Committee, which will seek assistance from relevant departments to study the specific situation of the forestry establishment to provide opinions on these plans. In terms of production, it is necessary to delve into the implementation of cost plans, grasp the ability to implement production plans, consumption plans, and cost plans for that quarter, to provide specific opinions on interest payment and depreciation levels. Regarding basic construction, it is necessary to grasp the situation to implement the volume of projects and remaining limits from the previous quarter and the ability to construct during that quarter, to provide opinions on the amount of limits needed to be proposed.

Specifically regarding budget estimates, public servicethe Administrative Committee will review and approve them officially. The General Department will base its disbursements on the approval records of the Administrative Committee.

- Other expenses serving the research and drafting of legislative projects.

Working capital and basic construction funds are both disbursed by the General Department of Forestry, with working capital through the State Bank and basic construction funds through the Construction Bank as usual. These fund disbursements are all reported to the Administrative Committee.

As for public service expenses, the General Department of Forestry will gradually transfer monthly amounts based on the quarterly budget approved by the Administrative Committee to the Regional Finance Departments and Provincial Finance Departments. The Regional Finance Departments and Provincial Finance Departments will then gradually allocate these funds to forestry establishments according to their needs.

In cases where there is excess working capital or public service expenses, the Administrative Committee must promptly report to the General Department and the Ministry of Finance to study and adjust within the forestry sector.

3. Management and Implementation Supervision:

During the implementation and management of plans, relevant departments around the Administrative Committee will assist the Regional and Provincial Administrative Committees and forestry establishments to monitor and promptly identify issues that need resolution. Attention should be paid to the following matters:

a) On the production front:

- Management and implementation of cost plans:

The Administrative Committee and financial authorities need to pay attention to monitoring the implementation of cost factors for each type of product, comparing them with the plan and the actual implementation of each quarter, tracking the reduction ratio of costs for comparable products, while researching and proposing necessary measures to further reduce costs at stages that can still be reduced, making actual costs continuously decrease.

- Revenue collection supervision: Based on the implementation of production volume plans, consumption plans, and profit and loss, and relying on the quarterly revenue submission plans approved by the General Department of Forestry, Regional and Provincial Financial Departments and Branches of the State Bank will urge forestry enterprises to submit sufficient and timely revenues to the central authority in accordance with the spirit and content of Decree No. 45-CP dated September 25, 1960 of the Council of Ministers. Each time forestry establishments make submissions, they must inform the Administrative Committee (sending an additional copy to the Provincial Financial Department in addition to the four copies specified in Decree No. 45-CP mentioned above).

- Working capital management: Financial and State Bank departments at the regional and provincial levels will help the Administrative Committee to monitor the implementation of various working capital standards, taking measures to assist forestry establishments in adhering to these standards (such as paying attention to resolving overdue debts, accumulated products, etc.), aiming to achieve the principle of "less capital, more production."

b) On the basic construction and public service front:

Regional and Provincial Financial Departments and Construction Branches will assist the Administrative Committee in monitoring the implementation of project volume targets and public service work targets according to the approved plans and budgets, avoiding situations of exceeding plans and budgets. Additionally, they will oversee the implementation of unit prices and standard norms, creating conditions for progressively establishing advanced indicators, ensuring the allocation of basic construction funds according to project volumes and the management of public service funds according to standard norms.

4. Reporting and Settlement.

Annual plans and budgets, as well as adjusted mid-year and quarterly plans and budgets (including national economic plans and financial matters covering production, basic construction, and public services), prepared as described above, will be submitted to the General Department through the Regional and Provincial Administrative Committees. The General Department of Forestry will promptly grasp the situation. Local forestry agencies may directly send annual, quarterly, and monthly reports and settlements as stipulated to the General Department, while also sending a copy to the Regional and Provincial Administrative Committees. The Administrative Committee will study and propose opinions, and within a short period, send these comments back to the General Department of Forestry, simultaneously copying the Ministry of Finance. Key units will continue to send plans and reports to the General Department and the Ministry of Finance as before.

Specifically, public service settlement reports will not be sent directly to the General Department but must be reviewed by the Administrative Committee first. After official review, the Administrative Committee will forward them to the General Department.

Financial reports for the year, quarter, and month will be additionally sent to the State Bank Branch and Provincial Financial Departments.

Quarterly, Regional and Provincial Financial Departments will prepare reports on the economic activities and financial management of the forestry sector, including analysis and comments on various aspects, to be reviewed by the Administrative Committee and sent to the Ministry of Finance and the General Department of Forestry according to a model to be provided later.

To further strengthen the management of plans and finances at local forestry establishments, it is hoped that Regional Administrative Committees, Provincial Financial Departments, and Branches will urgently implement this circular from January 1, 1961.

The Ministry and the General Department are confident that with the guidance and supervision as prescribed in this circular, local forestry establishments will have favorable conditions for financial operations as well as production and work. At the same time, the Ministry and the General Department hope that the Administrative Committee will pay attention to coordinating guidance to meet requirements to avoid possible delays, especially during the initial application of this circular.