Joint Circular No. 11-TT/LB provides guidance on implementing Decision No. 264-CT dated July 22, 1992, of the Council of Ministers regarding policies to encourage investment in forest development.

CIRCULARJOINT

NATIONAL PLANNING COMMITTEE - NATIONAL BANK -
MINISTRY OF FINANCE - MINISTRY OF FORESTRY  No. 11-TT/LB dated June 10, 1993
GUIDELINES FOR IMPLEMENTATION OF DECISION NO. 264-CT DATED JULY 22, 1992
OF THE CHAIRMAN OF THE STATE COUNCIL ON POLICIES
TO ENCOURAGE INVESTMENT IN FOREST DEVELOPMENT.

Implementing Decision No. 264/CT dated July 22, 1992 of the Chairman of the State Council of Ministers (now Prime Minister) on policies to encourage investment in forest development. The Joint Ministry of National Planning Committee - National Bank of Vietnam - Ministry of Finance - Ministry of Forestry hereby provides guidelines for implementation as follows:

PART I

GENERAL PROVISIONS

1. The State budget invests in protective forests, special-use forests, national seedling forests, large timber forests, precious wood forests with production cycles over 20 years, and supports investments for families living in highland areas, vacant lands, barren hills, and ethnic groups in designated settlement areas to plant forests and establish forests.

2. The State provides preferential credit for developing forests to create raw material regions for concentrated industries such as paper, pulp, firewood, sawdust, particleboard, artificial boards, pine resin, etc.

3. Investment in forest development according to economic and technical justifications (or economic and technical reports, projects) approved by competent authorities and assigned by competent authorities to manage, protect, and develop forests.

Annual investment in forest development is decided and approved by the State for the forestry sector (including both central and local management).

PART II
CONTENTS AND OBJECTIVES OF FOREST DEVELOPMENT INVESTMENT

A. INVESTORS ARE ORGANIZATIONS AND INDIVIDUALS WITH LEGAL PERSON STATUS IN FORESTRY PRODUCTION AND BUSINESS.

1. State-owned units include state enterprises such as state-owned forest farms, management boards for protective and special-use forests, research and application centers for forestry production, state-owned agricultural farms, military, police, educational, and training units, etc.

2. In addition to state-owned entities, forestry cooperatives, agricultural cooperatives, cooperative groups, households, individuals, etc., participate in forestry production.

3. Investors must have economic and technical justifications (or economic and technical reports, projects) in accordance with current regulations of the State. They must form a suitable forest structure according to the function of each type of forest, particularly production forests which must closely integrate forestry with agriculture, processing industries, and markets to form commodity production regions, stabilize populations, and attract new labor.

- The scale of economic and technical justifications (or economic and technical reports, projects) is determined based on appropriate scales (according to Circular No. 155-TTLB dated October 29, 1986 of the State Basic Construction Management Committee and the Ministry of Forestry).

- Projects and sub-projects within economic and technical justifications (reports, projects) must have designs and budgets approved by competent authorities.

B. CONTENTS AND METHODS OF FOREST DEVELOPMENT INVESTMENT

I. Forest development investment using state budget funds.

1. Investment in protective forests:

a) The goal is to establish protective forests in vulnerable areas (in accordance with regulations and standards for protective forests issued by the Ministry of Forestry). Protective forests in vulnerable areas are constructed and protected for the long term.

b) Investment in protective forests in vulnerable areas is carried out in two main stages: creating new forests from planting to canopy closure and managing, caring for, and protecting them for the long term.

- Investment in creating new forests:

+ For areas where natural vegetation can regenerate to become forests, investment is made to encircle and promote regeneration until canopy closure.

+ Investment in planting new forests from seedling cultivation, ground preparation, planting, care, and management until canopy closure.

- Investment in managing, caring for, and protecting protective forests after canopy closure (including naturally occurring protective forests, newly planted protective forests, and regenerated protective forests that have taken shape). Continuous investment in this stage ensures the protective functions of the forests are maintained without degradation or destruction.

c) The list of vulnerable protective forests is developed by the Ministry of Forestry and submitted to the Government for approval.

d) Investment support for seedlings for households living in vulnerable protective forest areas to build forest gardens.

2. Investment in special-use forests:

a) Investment targets include national parks, nature reserves, cultural and social forests, experimental and research forests.

b) Investment content is based on approved economic and technical justifications (excluding commercial tourism components, which must be financed through state loans).

c) Investment period: Investment in special-use forests is determined from planning to completion according to approved economic and technical justifications. For buffer zones (if any), the State invests budget funds to plant forests and construct infrastructure to serve forest planting and population stabilization.

d) The list of special-use forests is developed by the Ministry of Forestry and submitted to the Government for approval.

3. Investment in national seedling forests:

a) The goal is to establish a national seedling forest system and major forest plant species according to ecological regions under central management.

b) Seedling forests and national seed reserves include:

- Conversion from planted forests and natural forests.

- Seedling nurseries: Hybridization, origin research (including imported plants)...

- Planting seedling forests...

c) Investment time for seedling forests is based on approved economic and technical justifications (reports, projects) and continues until seed products are available for planting.

4. Investment in large timber and precious wood forests:

a) The State invests budget funds in planting large timber and precious wood forests with production cycles over 20 years (Annex 1) to create regions for commodity products according to approved economic and technical justifications (projects, economic and technical reports) and to serve the national economy for the long term.

b) Investment period: The State budget invests in planting large timber and precious wood forests according to the growth cycle of each tree species and region, fully funding each cycle according to approved designs and budgets (see Annex 2).

For collective bodies, households, and individuals receiving land for planting forest trees for over twenty years, the State shall provide seedlings, technical guidance, and two-end services (if necessary). The portion provided by the State shall not be reclaimed for capital.

c) Reclaim investment capital for large timber production forests and precious wood forests.

The investor shall be invested with State budget capital for operating large timber and precious wood forests when harvesting main products according to the approved exploitation design and must repay the capital to the State and pay taxes as prescribed by law upon product consumption.

5. Investment in management, protection, and nurturing rare animals:

(Article 4 - Decree No. 18-HĐBT dated January 17, 1992 of the Council of Ministers, now the Government) based on economic and technical justification (or economic and technical report) approved by the competent authority.

II. Preferential interest rate credit investment for forest development.

1. Objectives: The State shall invest preferential credit for forest development to create raw material areas for concentrated industries such as paper, pulp, fire-resistant wood, sawdust, particleboard, artificial board, specialty products, resin, etc., to ensure sufficient raw materials for developing industrial facilities and achieving high efficiency. Periodically, based on the demand for supplying raw materials for centralized processing industries, the Ministry of Forestry will announce a list of tree types, business cycles, investment costs, and investment area scales according to projects approved by the competent authority.

2. Investment period: Preferential credit investment for the first cycle of afforestation ensures two stages of afforestation (Annex 2) until the forest reaches technological maturity according to each type of planted tree and each region (Annex 1) as per the approved budget and design.

3. Interest rates and objects of preferential credit investment:

Preferential interest rates are 30%-50% of normal interest rates (currently 0.70% per month).

Preferential interest rates and capital recovery periods are determined based on:

- Long or short investment cycles, longer investment cycles with harvestable products when they mature will have higher preferential rates.

- Tree species that contribute to soil improvement are encouraged for investment (for example, acacia mangium, acacia auriculiformis).

3.1. Afforestation for industrial raw materials (paper or fire-resistant wood, artificial board, etc.). Based on economic and technical justification (economic and technical report, project) approved by the competent authority.

a) Central region, Northeast, North Central, Central Highlands:

- White poplar interest rate is 30% of the normal interest rate.

- Acacia mangium, Acacia auriculiformis: interest rate is 40% of the normal interest rate.

- Bồ đề: interest rate is 30% of the normal interest rate.

- Mỡ: interest rate is 30% of the normal interest rate.

- Phyllanthus emblica: interest rate is 30% of the normal interest rate.

- Bamboo, Mother, Luong: interest rate is 40% of the normal interest rate.

- Pine: interest rate is 30% of the normal interest rate.

b) South Central region:

- White poplar, Acacia auriculiformis: interest rate is 50% of the normal interest rate.

- Phyllanthus emblica: interest rate is 40% of the normal interest rate.

c) Southeast region, Mekong Delta:

- White poplar: interest rate is 50% of the normal interest rate.

- Phyllanthus emblica, various acacias: interest rate is 40% of the normal interest rate.

3.2. Planting resin pine and specialty trees:

a) Northwest, Northeast, Central regions:

- Coconut, Khiết, Bamboo: interest rate is 40% of the normal interest rate.

- Resin pine, Cinnamon: interest rate is 30% of the normal interest rate.

b) North Central, Central Highlands regions:

- Resin pine, Cinnamon: interest rate is 30% of the normal interest rate.

- Walnut: interest rate is 50% of the normal interest rate.

c) South Central, Southeast regions:

- Walnut: interest rate is 50% of the normal interest rate.

- Laurel, Cinnamon: interest rate is 40% of the normal interest rate.

4. Interest rates applicable to mountainous and island areas:

- Interest rates applicable to mountainous and island areas are announced periodically by the Governor of the State Bank of Vietnam (currently reduced by 15% of the investment interest rate according to the State plan).

- Objects eligible to use interest rates applicable to mountainous and island areas include industrial afforestation cycles of two or more, plantation crops, fruit trees, and agroforestry combined for household economies.

5. Households in difficult areas within protective zones and designated settlement areas outside the State's investment policies, if households need loans to develop production, plant industrial crops, and fruit trees, they will be granted interest-free loans by the State.

6. Transitional works and investment methods:

a) Projects and components of projects for developing productive forests that were funded from the State budget but not yet completed, now transitioning to preferential credit investment phases if needed and recorded in the State plan.

b) Projects and components of projects that have been invested with credit according to the State planning and current interest rates for industrial raw material forests.

- Projects and components of projects that have completed the investment phase but still have outstanding debts before reaching the harvesting period. Upon harvesting main products according to the approved exploitation process and selling the products, the principal and loan interest must be repaid in one lump sum (without compound interest) and monthly interest will not be collected.

- Projects and components of projects that have not completed the investment phase, if continued to be recorded in the State plan, will continue to be invested until technological maturity (as per Section B of this Circular).

7. Capital repayment and loan interest payment terms:

All forest owners who have borrowed from the State must repay the State according to the agreed terms at the time of borrowing.

a) For industrial raw material afforestation: Upon harvesting main products according to the approved exploitation process and selling the products, the bank must be repaid the principal and interest in one lump sum (without compound interest) and monthly interest will not be collected.

b) For resin pine and specialty tree afforestation: Upon harvesting main products according to the approved exploitation process and selling the products, the bank must be repaid the principal and loan interest in one lump sum (without compound interest) corresponding to the value of the annually harvested products, but the repayment term shall not exceed five years.

Projects and components of projects that have reached the repayment period but have not repaid the debt and interest (or have not fully repaid the debt) may be transferred to overdue loan status by the bank.

PART III

IMPLEMENTING PROVISIONS

 1. This Circular takes effect from January 1, 1993. Previous documents inconsistent with this Circular are null and void.

2. During the implementation process, any new developments shall be reported to the Ministry of Forestry for timely resolution in coordination with relevant sectors.