Circular No. 09/2009/TT-BKH guiding the implementation of the Specialized Credit Program from the loan capital of the Japan International Cooperation Agency (JICA)

 

CIRCULAR

Guidelines for Implementing Specialized Credit Programs Funded by

Loans from the Japan International Cooperation Agency (JICA)

Pursuant to Decree No. 116/2008/ND-CP dated November 14, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Planning and Investment;

Pursuant to Decree No. 131/2006/NĐ-CP dated November 9, 2006 of the Government on the management and use of official development assistance;

Pursuant to the terms of the specialized credit agreements (hereinafter referred to as the Agreement) signed between the Government of the Socialist Republic of Vietnam and the Japan Bank for International Cooperation (JBIC), now known as the Japan International Cooperation Agency (hereinafter referred to as JICA),

The Ministry of Planning and Investment hereby provides guidelines for implementing projects under the specialized credit programs as follows:

Part 1

GENERAL PROVISIONS

1. The specialized credit program (hereinafter referred to as the Program) defined in this Circular is a program utilizing JICA loans to implement infrastructure poverty reduction projects in localities throughout the country within the fields specified in the Agreement.

2. The loan funds under the Program shall be allocated to the state budget and disbursed as investment development funds to localities for infrastructure construction with the aim of improving living standards and reducing poverty.

3. Organizations managing and implementing projects under the Program must comply with current regulations of the Vietnamese Government regarding budget decentralization, investment management and construction, tendering, investment supervision, community monitoring, and other provisions in the Agreement.

4. Payment of JICA funds for projects shall be made according to actual progress based on acceptance, confirmation of volume and value in accordance with the current domestic procedures for basic construction payment, without dependence on annual capital plans.

5. JICA loan funds may only be used to pay for the following items:

a. Payment of the value of construction work and procurement of domestic materials and equipment for the project.

b. Importation of goods and equipment not domestically produced for the projects.

c. Consulting fees for the Program.

d. Foreign bank fees and JICA loan withdrawal fees.

Clause (c) will be announced by the Program Management Board to the Project Management Boards and Project Owners for accounting and settlement after the completion of the agreement withdrawal process.

The JICA funding level announced for each project is the maximum withdrawal limit. Any additional expenses during implementation shall be borne by the local budget. The use of surplus funds after tendering for each project must be carried out as if it were a new project.

6. JICA loan funds may not be used for the following purposes:

a. Taxes payable.

b. Land acquisition and clearance costs.

c. Project management costs, including provincial project management board costs.

d. Other indirect costs.

These costs shall be paid from the counterpart funds. Counterpart funds shall be sourced from the local budget or other sources to ensure that the project is implemented according to the schedule determined when the project was assigned.

Part 2

ORGANIZATIONAL MANAGEMENT AND RESPONSIBILITIES OF RELEVANT AUTHORITIES

1. The Ministry of Planning and Investment:

- Ensuring investment decisions for the Program comply with legal regulations based on meeting objectives and aligning with planning and development plans.

- Notifying the People's Committee of the province about the list of projects and specific project funding levels for implementation.

- Approving contents related to the selection of consulting contractors during the bidding process in accordance with current legal regulations.

- Organizing inspections and supervision of Program implementation. Ensuring necessary resources for tracking, managing, and supervising the Program.

- Developing and implementing measures as prescribed by law to prevent and combat corruption, waste, and misuse of funds affecting the Program's objectives.

- Being responsible under current legal regulations for violations of authority during the supervision of Program implementation.

- Being responsible under current legal regulations for delays or malpractices during Program implementation causing losses, waste, and corruption.

- Cooperating with JICA to review and decide on changes to selected projects based on proposals from the People's Committee of the province.

- Cooperating with JICA to review and decide on the use of surplus Program funds.

2. Ministry of Finance:

- Processing payment acceptance procedures for projects in accordance with regulations.

- Promptly recording income and expenditure for the Provincial Department of Finance to account for in the local budget.

- Promptly supplementing funds into the special account.

- Repaying principal and interest in accordance with the Agreement.

- Cooperating with the Program Management Board and JICA in monitoring and evaluating the Program.

3. Vietcombank (Commercial Joint Stock Bank for Foreign Trade of Vietnam):

- Implementing payments according to the withdrawal methods stipulated in the JICA loan agreements at the request of the Ministry of Finance and sending notifications as prescribed in the Circular guiding the mechanism for managing loan funds for JICA specialized credit programs.

- Monitoring and notifying the Ministry of Finance and the Program Management Board of the balance of the special account after each payment and fund withdrawal.

4. People's Committee of the Province:

- Ensuring project investment decisions meet objectives, align with planning and schedules, comply with laws, and are effective; ensuring sufficient counterpart funds to implement the project according to the schedule specified in the Agreement.

- Approving contents related to the selection of contractors for projects in accordance with current legal regulations on bidding.

- Organizing inspections and supervision of project implementation by project owners.

- Developing and implementing measures as prescribed by law to prevent and combat corruption, waste, and misuse of funds affecting the project's objectives.

- Being responsible under current legal regulations for violations of authority during the supervision of project implementation.

- Being responsible under current legal regulations for delays or malpractices during project implementation causing losses, waste, and corruption.

- Shall be responsible for reporting and explaining to the Ministry of Planning and Investment and JICA on any changes to the project compared to the previously announced list before September each year.

5. Organizational structure and tasks of the Program Management Board at various levels:

5.1. The JICA Specialized Credit Program Management Board (hereinafter referred to as the Management Board):

Is a unit under the Ministry of Planning and Investment, established by a decision of the Minister of Planning and Investment.

Tasks of the Management Board:

a. Develop implementation plans for the Program:

- Coordinate with JICA to review, update, and adjust (if necessary) the overall implementation plan of the Program. In this process, determine the volume of work completed in each phase, including some activities that can be carried out before the Agreement takes effect.

- Coordinate with JICA to develop annual plans to implement the Program.

b. Tasks related to tendering and contract management:

- For the consultancy package of the Program: conduct consultancy tenders in accordance with current Vietnamese tendering regulations and the signed Agreement. Monitor and evaluate the performance and results of the contractor. Promptly resolve any issues arising during the implementation of the consultancy contract. Organize final settlement of the contract in accordance with the law.

- For contracts of projects under the Program:

+ Aggregate and supervise tendering activities in localities;

+ Aggregate the results of contractor selection and contract lists of projects reported by the provincial Project Management Board. Within seven working days from the date of receipt of the provincial document, the Management Board shall notify the contract list to the Ministry of Finance for disbursement purposes.

c. Financial management, asset management, and disbursement tasks:

- Manage finances, assets, and perform disbursement tasks in accordance with the law and JICA regulations.

- Review payment request files jointly submitted by the provincial JICA Project Management Boards (as stipulated in Clause 2.3, Part III of this Circular). If any violations are detected, the Management Board will inform the Ministry of Finance and propose measures to address the violations.

- Collect documents to submit to the Ministry of Finance for supplementary fund withdrawal procedures.

d. Administrative, coordination, and accountability tasks:

- Organize and manage personnel of the Management Board.

- Collaborate with foreign consultants to establish an information system (MIS) to monitor the implementation of projects, update issues encountered during the implementation process. Guide project management boards to use, update, exploit, and exchange information on this system.

- Archive original documents related to the Program in accordance with the law.

- Inspect and urge the implementation of projects under the Program signed with JICA to ensure timely progress, quality, and effectiveness.

- Serve as the point of contact for transactions with provincial project management boards, project management boards, foreign consultants, and JICA regarding matters related to the Program.

- Coordinate the provision of information about the Program to inspection and audit agencies and JICA within the scope of assigned responsibilities and tasks.

e. Tasks related to monitoring, evaluation, and reporting on the implementation of the Program:

- Regularly quarterly or ad hoc, the Management Board organizes inspections of the management and implementation of projects in localities. If improper use of funds, violations in basic construction investment, tendering, or disbursement are discovered, the transferred funds will be recovered or temporarily suspended to take appropriate measures.

- For cases violating the reporting regime prescribed in this Circular, the Management Board will take measures such as reminders, reprimands, or recommend the Ministry of Finance to suspend disbursements for projects that continue to violate despite being reminded.

- Prepare reports on the implementation of the Program in accordance with ODA management regulations and the signed Agreement.

- Conduct evaluations of the Program in accordance with the Agreement. Be responsible for compiling implementation status reports and final reports on the Program in accordance with current regulations on the management and use of official development assistance in Vietnam and provisions in the Agreement.

g. Prepare consolidated final accounts reports for the Program in accordance with regulations.

5.2. Provincial JICA Project Management Board (hereinafter referred to as the Provincial Management Board):

Is a unit under the Provincial Department of Planning and Investment, established by a decision of the competent authority of the province.

Tasks of the Provincial Management Board:

a. Serve as the lead agency in planning, managing, and reporting on the implementation of projects in the locality.

b. Develop plans, submit to the People's Committee of the province for approval, allocate counterpart funds for projects in the province and operating expenses of the Provincial Management Board.

c. Supervision tasks related to tendering and contract management:

- Inspect and supervise the tendering process, signing procurement contracts for goods, materials, equipment (if any), and construction between the Provincial Management Board and contractors.

- Within ten working days from the tender results, the Provincial Management Board aggregates and sends to the Management Board:

+ Tender plan (original or certified copy)

+ Contractor selection results (original or certified copy)

+ Contract lists of projects to the Management Board (in the format attached as Appendix 1 to this Circular).

d. Financial management, asset management, and disbursement tasks:

- Manage finances in accordance with the law and JICA regulations.

- Serve as the focal point for aggregating, inspecting files, and conducting disbursement procedures for projects using JICA funds in the province in accordance with regulations and be responsible for managing these funds before the Management Board. Be responsible for the results of file reviews; collect and store original files and documents on disbursements and final settlements.

- Provide documents as stipulated in Clause 2.3, Part III of this Circular to the Management Board for supplementary fund withdrawals.

e. Administrative and coordination tasks and accountability:

- Organize and manage personnel of the Provincial Management Board.

- Prepare the annual budget estimate for the Provincial Management Board in accordance with current regulations, submit to the People's Committee of the province for approval.

- Coordinate with specialized management agencies of localities to guide and supervise Project Management Boards in implementing projects. Be responsible for inspecting compliance with current regulations of the Government of Vietnam on investment management, construction works, and bidding.

- Provide information about projects in the locality to inspection and audit agencies and JICA within the scope of assigned responsibilities and tasks.

g. Tasks of monitoring, evaluating, and reporting:

- Monitor and regularly update the disbursement status of projects.

- Within ten days after the end of each quarter, the Provincial Project Management Board is responsible for compiling and reporting the progress of projects in the province to the Central Project Management Board (according to the model attached as Appendix 2 to this Circular).

- No later than fifteen days after receiving the final account report from the Project Management Board (or the Project Owner in case the Project Management Board has been dissolved), the Provincial Project Management Board compiles and reports the final account to the Central Project Management Board. In the final account report, in addition to tables of data, there must be a detailed explanation regarding:

+ Favorable conditions, difficulties, and obstacles encountered during project implementation (guidance documents, disbursement procedures, acceptance of materials and equipment, etc.).

+ Economic and social outcomes and recommendations (if any).

+ Additional capacity of the entire project or individual components resulting from the investment.

5.3. Project Management Board (hereinafter referred to as PMB):

The PMB shall be established by the Project Owner.

Responsibilities of the PMB:

a. Develop plans for project implementation:

- Draft plans for project implementation (disbursement plan, expenditure plan, bidding plan, etc.), specifying the volume of work completed at each stage.

- Legally responsible for managing and using the allocated JICA funds according to their intended purpose and principles.

b. Tasks related to tendering and contract management:

- Responsible for organizing project implementation in accordance with current regulations of the Government of Vietnam on investment management and construction works, and bidding. For domestic goods, materials, and equipment procurement packages under the VN X-3 Special Credit Program or the VN XIII-8 Special Credit Program and subsequent JICA Special Credit Programs, with values exceeding 0.3 billion Japanese Yen (converted to Vietnamese Dong based on the exchange rate published by Vietcombank at the time of signing the contract) or 0.5 billion Japanese Yen respectively, in addition to complying with the aforementioned regulations of the Government of Vietnam, they must also comply with JICA's regulations and obtain JICA's approval for the contract.

- Manage the fulfillment of obligations stipulated in contracts signed with contractors (regarding schedule, quantity, quality, labor safety, environmental hygiene, etc.). Monitor, supervise, and evaluate contractor activities and results. Promptly resolve any issues arising during contract implementation.

- No later than fifteen days after signing the contract, the PMB shall submit once the project management file to the Provincial PMB, including:

+ Decision approving the investment project (original or certified copy).

+ Decision approving design and total budget estimate (original or certified copy).

+ Notification of capital allocation by the People's Committee of the province (original or certified copy).

+ Bidding plan (original or certified copy).

+ Approval of contractor selection results (original or certified copy).

+ Contract signed between the PMB and the contractor, clearly stating the JICA portion (original).

+ Decision approving the contract (for contracts requiring approval according to the current bidding regulations of Vietnam and JICA regulations) (original or certified copy).

- Organize contract settlement in accordance with the law.

c. Financial management, asset management, and disbursement tasks:

- Manage finances, assets, and perform disbursement tasks in accordance with the law and JICA regulations.

- Organize final acceptance, determine the volume of basic construction completed eligible for payment according to current regulations and the correct payment provisions of the Program, to the correct recipients, from the correct sources, and send to the local State Treasury for confirmation.

- Collect all disbursement application files as prescribed in Clause 2.2, Part III of this Circular and submit them to the Provincial PMB to process disbursement for the project.

d. Administrative, coordination, and reporting tasks:

- Organize and manage personnel of the PMB.

- Regularly provide information and update data for the Program's information system (MIS). Timely identify and report any difficulties and obstacles arising beyond the authority to handle to the Provincial PMB and the Central PMB.

- Regularly monitor the project implementation status in terms of schedule, quantity, quality, cost, fluctuations, etc., and promptly adjust the plan.

- Provide information related to the project within the scope of assigned responsibilities and tasks.

- No later than five days after the end of each quarter, the PMB is responsible for reporting the project progress to the Provincial PMB (according to the model attached as Appendix 2 to this Circular).

e. Final acceptance, handover, and project settlement tasks:

- Prepare for the Project Owner to accept and hand over the project to the receiving unit for operation and utilization according to regulations.

- Legally responsible for settling the project according to current regulations of the Government on investment management and construction works. No later than three months after final acceptance and handover of the works, the PMB must submit the final account report to the Provincial PMB.

Part 3

WITHDRAWAL OF FUNDS FOR PAYMENT AND SUPPLEMENTARY FUNDS INTO A SPECIAL ACCOUNT

1. Withdrawal of funds for consulting fees payments shall be carried out by the Central PMB in accordance with Circular No. 132/2008/TT-BTC dated December 29, 2008, issued by the Ministry of Finance guiding the mechanism for managing loan funds for JICA Special Credit Programs.

2. Payment in Vietnamese Dong to domestic construction contractors, suppliers of goods, and service providers:

2.1. Principles of payment:

a. Payments shall only be made for projects utilizing JICA funds listed in the directory announced by the Ministry of Planning and Investment for each locality.

b. Payments shall only be made within the JICA fund limit announced for each project.

c. Payments shall only be made for completed volumes confirmed by the PMB and the local State Treasury.

d. Only pay to contractors listed in the award decision or designation decision in accordance with the current bidding regulations.

e. Only pay for contracts included in the list announced by the Project Management Board to the Ministry of Finance.

g. Only pay for projects that have submitted progress reports on project implementation as stipulated in Clause 5.3.d, Part II of this Circular.

2.2. The JICA disbursement proposal documents prepared by the Project Management Board and sent to the Provincial Project Management Board include:

a. A completion quantity acceptance certificate, accompanied by a valuation calculation based on the accepted quantities (original or certified copy).

b. Payment valuation form for completed basic construction works (two original copies).

c. Contractor's payment request, confirmed by the Project Management Board (two original copies).

For advance payment withdrawals, in addition to the above documents, a bank guarantee for the advance payment from a commercial bank is also required.

2.3. The payment process for domestic contractors shall be carried out in accordance with the provisions of the Circular guiding the management mechanism for JICA loan funds for specialized credit programs issued by the Ministry of Finance. To facilitate monitoring and managing disbursements and additional fund withdrawals, the Provincial Project Management Board shall also send a letter requesting the Ministry of Finance to make payments along with copies of the following documents:

- Summary table of projects requesting payment (in the format attached as Appendix 3 to this Circular)

- Payment valuation form for completed basic construction works

- Contractor's payment request

- Bank transfer notification form (to be sent after receipt from Vietcombank)

3. Additional fund withdrawal into the special account:

Based on the disbursement schedule, the Project Management Board requests the Ministry of Finance to proceed with the additional fund withdrawal into the special account according to the Agreement's provisions. The additional fund withdrawal process follows the Circular guiding the management mechanism for JICA loan funds for specialized credit programs issued by the Ministry of Finance.

Part 4

IMPLEMENTING PROVISIONS

1. This Circular replaces Circular No. 06/2003/TT-BKH dated September 9, 2003, and takes effect 45 days from the date of signature.

2. In the course of implementation, if there are any difficulties, please notify the Ministry of Planning and Investment for prompt resolution./.