Joint Circular No. 08/1998/TTLT guiding the implementation mechanism for investment projects under enterprises of the Party according to Directive No. 31-CT/TW dated April 2, 1998 of the Politburo.

CIRCULAR

JOINT CIRCULAR NO. 08/1998/TT-LT DATED DECEMBER 1, 1998 ISSUED BY THE MINISTRY OF PLANNING AND INVESTMENT-CENTRAL FINANCE AND ADMINISTRATION BOARD-MINISTRY OF FINANCE-NATIONAL BANK GUIDING THE IMPLEMENTATION OF THE MECHANISM FOR INVESTMENT IN PROJECTS BELONGING TO ENTERPRISES UNDER THE PARTY'S MANAGEMENT PURSUANT TO DIRECTIVE NO. 31 CT/TW DATED APRIL 2, 1998 OF THE POLITICAL BUREAU

To implement Directive No. 31 CT/TW dated April 2, 1998 of the Political Bureau on production and business activities to supplement the Party's budget, and the guidance of the Prime Minister in Document No. 795/CP-KTTH dated July 15, 1998, the Ministry of Planning and Investment, Central Finance and Administration Board, Ministry of Finance, and National Bank jointly provide detailed guidance on Point 3 regarding the investment mechanism for projects belonging to enterprises under the Party's management as follows:

I. APPLICABLE OBJECTS:

This Circular applies to investment projects belonging to enterprises under the Party's management, including:

1. Projects that have been invested with capital pursuant to Decision No. 247/CT dated July 2, 1992 of the Chairman of the Council of Ministers (now the Prime Minister).

2. New investment projects.

3. Investment projects not having a production and business nature.

II. GENERAL PRINCIPLES:

1. Investment projects for production and business activities of provincial and municipal party committees (including projects invested with capital pursuant to Decision No. 247/CT dated July 2, 1992 and new investment projects) if they are effective and capable of recovering capital will be eligible to borrow investment credit according to the State plan and implement the borrowing-repayment mechanism (both principal and interest) in accordance with current State regulations.

2. Investment projects not having a production and business nature such as construction of office buildings, printing houses for Party newspapers, if truly necessary, will be balanced for investment using State budget funds within the annual investment plan of the province or city.

III. SPECIFIC PROVISIONS:

1. Projects invested with capital pursuant to Decision No. 247/CT dated July 2, 1992 of the Chairman of the Council of Ministers (now the Prime Minister) shall be handled as follows:

1.1. For completed investment projects still owing due to loans from banks or other sources at high interest rates which have not yet been fully repaid, they are divided into two categories:

- Projects currently operating effectively in production and business activities, capable of repaying debts, will be prioritized to receive sufficient preferential loan capital to repay debts to previously borrowed sources; the maximum amount of capital that can be borrowed equals the value of the final settlement of the project approved by the competent authority, including accrued interest during the construction period in accordance with the interest rate set by the State Bank at the time of borrowing, minus the capital already provided under Decision No. 247/CP dated July 2, 1992. Project owners must repay loans to lenders according to the signed contracts.

Project owners in this category do not need to re-establish investment projects but must prepare and submit for approval by the competent authority the final settlement report of the completed project in accordance with current State regulations. At the same time, they must prepare all loan contracts with banks or temporary mobilization confirmed by the direct supervisory authority and the lending institution to report to the People's Committee of the province or city.

The People's Committee of the province or city will consider and, if the investment project is effective and capable of repaying debts, allocate capital for each project within the total amount of State investment credit allocated for enterprises under the Party's management in the annual State investment credit plan.

- Projects without effectiveness, unable to repay debts or requiring more than ten years to repay debts must be reorganized according to Point 2 of Directive No. 31/CTTW. On this basis, project owners must develop new production and business plans and feasible debt repayment plans, which must be reviewed and approved by the competent authority before further consideration for loans.

1.2. For ongoing construction projects:

Ongoing construction projects halted due to lack of capital, if there are no changes, project owners only need to supplement the economic-financial plan explanation and solutions for full repayment of both principal and interest; however, if the content of the project and the total investment capital must be changed, it is essential to resubmit the project for approval by the competent authority to continue investment according to the State plan.

1.3. New investment projects:

The People's Committee of the province or city compiles new investment projects of enterprises under the Party's management (eligible for annual preferential State investment credit) into their local investment credit plan. The Central Finance and Administration Board compiles projects of companies directly under its jurisdiction to implement the annual State investment credit planning mechanism.

1.4. Joint venture investment projects with foreign entities:

Joint venture projects with foreign entities shall be implemented in accordance with the guidance of the Prime Minister in Document No. 795/CP-KTTH dated July 15, 1998.

2. Investment projects with a production and business nature such as construction of office buildings, printing houses for Party newspapers, will be resolved using State investment capital as specified below:

2.1. Projects that have been invested with capital pursuant to Decision No. 247/CT dated July 2, 1992 of the Chairman of the Council of Ministers (now the Prime Minister):

The People's Committee of the province or city and the Central Finance and Administration Board compile and announce a list of completed projects still owing capital (accompanied by final settlement reports of the projects approved by the competent authority, clearly explaining the capital provided and confirmed by the funding and direct supervisory authorities) and ongoing construction projects. The Ministry of Planning and Investment submits to the Prime Minister for supplementary investment capital to settle completed work volumes or continue construction from the State budget within the annual investment plan.

2.2. New investment projects:

In 1999 and subsequent years, only truly necessary and urgent new construction projects will be considered, primarily those in newly divided provinces that need to be relocated. If they meet the planning criteria, they will be balanced with state budget capital including concentrated investment funds and local budget revenues retained for investment according to the Resolution of the National Assembly, and this amount will be balanced within the local budget revenue-expenditure plan assigned by the Prime Minister to the People's Committees of the provinces and cities.

IV. ON ORGANIZATION AND IMPLEMENTATION:

1. Investment procedures:

- The aforementioned investment projects must comply with the current state investment and construction management regulations.

- Investment credit projects under the state plan shall be implemented according to the annual investment credit mechanism decided by the Prime Minister and the guidance on implementation provided by relevant ministries and sectors.

- New headquarters construction projects: initially, they shall be carried out in accordance with Circular No. 5584/BKH-CSHT dated August 10, 1998, issued by the Ministry of Planning and Investment regarding the guidelines for constructing new headquarters in 1998-1999.

2. Planning mechanism:

The Financial Management Board, the Economic Financial Board, the Financial Board, and the Provincial Offices shall aggregate investment projects (including state budget-funded projects and investment credit loan projects), seek the opinions of the Provincial Party Committee Standing Delegation and the City Party Committee Standing Delegation, and submit them to the People's Committees of the provinces and cities for inclusion in the annual investment plan of the locality.

The People's Committees of the provinces and cities are responsible for aggregating, reporting plans, and allocating funds to each project group B and C for investment credit funds and group C for state budget allocations within the national plan indicators assigned and directing investors to prepare all required procedures for loan registration and fund disbursement according to current regulations.

The Central Financial Management Board is responsible for aggregating, reporting plans, and allocating funds to each project group B and C for investment credit funds and group C for state budget allocations of subordinate units within the national plan indicators assigned and directing investors to prepare all required procedures for loans and fund disbursements according to current regulations.

To strictly implement Directive No. 31 CT/TW of the Politburo, the People's Committees of the centrally governed cities and provinces and the Central Financial Management Board shall compile data according to the contents of Appendix No. 1 and No. 2 attached to this Circular and send it to the Ministry of Planning and Investment and the Ministry of Finance no later than September 30 each year for consolidation and submission to the Prime Minister for decision when assigning the annual plan.

4. This Circular takes effect 15 days after its date of issuance.

During the implementation process, if there are any difficulties or suggestions, the People's Committees of the provinces and cities should report to the Central Financial Management Board and the Ministry of Planning and Investment for timely coordination and research to resolve them.