Circular No. 107/2005/TT-BTC guiding the establishment, management, and use of local employment resolution funds and management fees for the national employment fund.

CIRCULAR

Guidelines for Establishing, Managing, and Using Local Employment Resolution Funds and Administrative Costs of the National Employment Fund

locality and the management经费的国家就业基金

Pursuant to Decree No. 39/2003/NĐ-CP dated April 18, 2003 of the Government detailing and guiding the implementation of certain provisions of the Labor Code on employment;

Pursuant to Decision No. 71/2005/QĐ-TTg dated April 5, 2005 of the Prime Minister on the management and operation mechanism of the capital for lending by the National Employment Fund (referred to as the Employment Loan Fund);

After receiving comments from the Ministry of Labor - Invalids and Social Affairs, the Ministry of Planning and Investment, the Social Policy Bank, and the Ministry of Finance, guidelines for implementing certain aspects regarding the establishment, management, and use of local employment resolution funds and administrative costs of the national employment fund are hereby issued as follows:

I. Establishment, Management, and Use of Local Employment Resolution Funds:

1. Establishment of Local Employment Resolution Funds:

a) The local employment resolution fund (hereinafter referred to as the local employment fund) is formed from the following sources:

- Local budget decided by the People's Council of provinces and centrally-administered cities.

- Support from organizations and individuals both within and outside the country.

- Other sources of support.

b) Annually, the People's Committee of provinces and centrally-administered cities (collectively referred to as provinces) shall allocate a portion of the local budget based on the local financial capacity, employment resolution needs, and socio-economic development tasks, to establish the local employment fund, and submit it to the People's Council of provinces and centrally-administered cities for approval.

2. Management and Use of the Fund:

a) Management of the Fund: The fund is established by decision of the Chairman of the People's Committee of the province and entrusted to the Director of the Department of Finance as the account holder.

The portion of capital for lending is entrusted through branches of the Social Policy Bank, with the entrustment regulations determined by the Chairman of the People's Committee of the province.

b) Use of the Fund:

The local employment fund is used as capital for lending to resolve employment issues according to the local employment resolution program's objectives. Based on the approved annual new loan capital plan, quarterly, the Department of Finance transfers capital to the Social Policy Bank to serve as the source of lending capital. The use of the local employment fund is carried out as follows:

- Regarding the borrowing entity: Based on the provisions of Article 5 of Decision No. 71/2005/QĐ-TTg dated April 5, 2005 of the Prime Minister on the management and operation mechanism of the capital for lending by the National Employment Fund (hereinafter referred to as Decision No. 71/2005/QĐ-TTg) and the actual situation of the locality, the People's Committee of the province decides on the borrowing entities of the fund that align with the local employment resolution program's objectives.

- Regarding the conditions for borrowing, purpose of using borrowed capital, amount of capital, term, and interest rate on loans, project construction, and procedures for appraisal, disbursement, recovery of capital, and handling overdue debts are applied according to Decision No. 71/2005/QĐ-TTg and the implementing guidance documents of the Ministries of Labor - Invalids and Social Affairs, Finance, Planning and Investment, and the Social Policy Bank.

- Regarding risk handling due to force majeure: The entities subject to consideration for debt risk handling; objective reasons causing direct damage to the capital and assets of customers; measures for handling; legal documentation for considering debt risk handling are applied according to Decision No. 69/2005/QĐ-TTg dated April 6, 2005 of the Prime Minister on the issuance of the Regulation on Handling Debts Subject to Risk of the Social Policy Bank and Circular No. 65/2005/TT-BTC dated August 16, 2005 of the Ministry of Finance guiding the implementation of Decision No. 69/2005/QĐ-TTg. The authority to consider debt risk handling is decided by the Chairman of the People's Committee of the province. The capital for handling debt risks is sourced from the local risk reserve fund.

The distribution and use of the actual interest income from lending by the local employment fund are carried out as follows:

+ Allocate 40% to cover the agency fees for the Social Policy Bank system to manage, lend, and collect debts. The use of agency fees follows the regulations of the Social Policy Bank.

+ Allocate 30% to cover the costs of guidance, appraisal, organization, implementation, and management of projects at the grassroots level (commune, ward, project owner) up to the county and provincial steering committees; payment to agencies involved in recovering difficult-to-collect debts. Based on the interest income received, the capital managed, and the results of lending and debt collection by units, the Department of Labor, Invalids, and Social Affairs decides on the allocation to units. The content and level of expenditure follow the provisions at Point 3, Section II of this Circular.

+ Allocate 30% to establish a local risk reserve fund to offset losses of capital lent from the local employment fund due to force majeure, which is decided by the People's Committee of the province to write off debts and to supplement the local employment fund.

Based on the above regulations and the actual situation of the locality, the People's Committee of the province promulgates the Management and Use Regulations for the local employment fund.

II. Administrative Costs of the Employment Loan Fund (National Employment Fund)

1. For State Management Agencies: Administrative costs for managing the employment loan fund of state management agencies at all levels are allocated in the annual administrative management expenditure budget of the agencies according to the current budget classification. Specifically:

- At the central level: The Ministry of Labor - Invalids and Social Affairs, based on assigned tasks, prepares the budget for operational expenses of the fund management board in the annual administrative management expenditure budget and sends it to the Ministry of Finance as the basis for allocating funds.

- At the local level: The Labor - Invalids and Social Affairs agency, based on assigned tasks for managing lending activities, prepares the budget for operational expenses of the steering committee in the annual administrative management expenditure budget and sends it to the finance department at the same level as the basis for allocating funds.

In 2005, the level of expenditure and sources for funding the management costs of the Fund shall be implemented according to Decision No. 97/2001/QĐ-BTC dated October 2, 2001 of the Minister of Finance on the issuance of the Regulation on the distribution and use of interest from loans from the National Employment Support Fund.

2. For agencies implementing programs at the central and local levels (at the local level including People's Committees of communes and wards, associations, political-social organizations...): Shall enjoy fees paid by the Social Policy Bank. The amount of fees depends on the quantity and quality of outstanding loans; the payment of fees shall be applied uniformly like the mechanism for paying agency fees for lending to poor households but not exceeding 0.1% per month calculated based on the outstanding loan balance that has earned interest. Agencies implementing the program shall use the fee income received to cover costs for project appraisal, approval, inspection, evaluation, and reporting on the implementation of employment loan disbursement. The content and level of expenditure shall be carried out in accordance with Point 3, Section II of this Circular.

3. Management funds for employment loan provision and local employment funds shall be used for the following purposes:

- Expenditure on office supplies and printing materials for training sessions and guidance on building projects, reviewing and appraising projects, compiling comprehensive reports on loan situations;

- Expenditure on business guidance, mid-term review meetings, final summary meetings, and seminars related to employment loan activities;

- Expenditure on publicity and guidance through mass media;

- Expenditure on overtime work and travel expenses for staff directly involved in project appraisal, monitoring, and management, preparing files for risk loan handling, rechecking files for interest reduction and debt cancellation requests for projects affected by force majeure, and other related tasks concerning loan disbursement and collection of loan repayments from the employment loan fund;

- Salary expenditure for contracted staff directly engaged in project appraisal, monitoring, and management tasks according to the salary stipulated in their contracts in compliance with state regulations;

- Expenditure on purchasing and repairing office equipment and facilities serving management of employment loan provision;

- Expenditure on labor market surveys, employment situation assessments, and program evaluations; support for policy research, development, and improvement, drafting, and issuing guiding documents for program implementation;

- Expenditure on awards for units and individuals (including project owners) who have made significant achievements in employment loan management and job creation. The maximum expenditure for units is 400,000 VND per year, and for individuals is 200,000 VND per year. For provinces with overdue loan rates below 3% and idle capital rates below 5%, the maximum expenditure for units is 1,000,000 VND per year, and for individuals is 500,000 VND per year.

The preparation of budgets, settlement, and expenditure levels for the above items shall be carried out in accordance with current state regulations.

III. Implementation Organization

1. Departments of Labor, Invalids, and Social Affairs of provinces and centrally governed cities shall be responsible for preparing annual local budget supplements for local employment funds, managing the annual supplementary budget sources for the Fund; the concentrated capital at the Social Policy Bank and interest income from local employment fund loans; preparing the budget for the operation expenses of the Steering Committee within the annual administrative management budget and submitting it to the finance department at the same level for reporting to the provincial People's Council for decision-making on the allocation of funds within the local budget.

2. Departments of Finance of provinces and centrally governed cities shall be responsible for allocating management funds for the Fund within the annual administrative management budget of labor, invalids, and social affairs departments according to the current budget hierarchy; guiding, managing, and inspecting the use of management and operational funds for employment loan provision by local state management agencies; coordinating with Departments of Planning and Investment and Departments of Labor, Invalids, and Social Affairs to prepare annual local budget supplements for local employment funds and report them to the provincial People's Council for consideration and decision.

3. The Social Policy Bank shall base its results of loan disbursements and collections from the employment loan fund capital assigned to agencies implementing the program to pay management fees to central and local agencies implementing the program according to regulations.

4. Agencies implementing the program (central and local), which enjoy fees paid by the Social Policy Bank, shall be responsible for using the funds in accordance with state regulations and annually consolidating them into other sources of revenue for settlement with the finance department at the same level according to regulations.

This Circular shall take effect fifteen days from the date of publication in the Official Gazette. Any difficulties encountered during implementation should be promptly reported to the Ministry of Finance for examination and resolution.

Any difficulties encountered during implementation should be promptly reported to the Ministry of Finance for examination and resolution./.