Circular No. 110/2006/TT-BTC guiding the disbursement, payment of capital and recovery of loans under the Credit Agreement between the Government of the Socialist Republic of Vietnam and the Government of the Kingdom of Cambodia VC-01 signed on October 10, 2005.

CIRCULAR

Guidelines for disbursement, payment of capital and recovery of loans under the credit agreement between the Government of the Socialist Republic of Vietnam and the Government of the Kingdom of Cambodia VC-01 signed on October 10, 2005

Between the Government of the Socialist Republic of Vietnam and the Government of the Kingdom of Cambodia VC-01 signed on October 10, 2005 regarding the provision by the Government of Vietnam to the Government of the Kingdom of Cambodia a concessional loan amounting to no more than 25.8 million US dollars;

Pursuant to the credit agreement between the Government of the Socialist Republic of Vietnam and the Government of the Kingdom of Cambodia VC-01 signed on October 10, 2005 concerning the provision by the Government of Vietnam to the Government of the Kingdom of Cambodia a concessional loan amounting to no more than 25.8 million US dollars for investment in upgrading National Highway 78 (from Banlung Km 126 to O Yadav Km195+577);

_________________________

Pursuant to Decree No. 77/2003/NĐ-CP dated July 1, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

The Ministry of Finance hereby guides the implementation of disbursement, debt recovery, and settlement of the concessional loan as follows.

1. Purpose and scope of use of the concessional loan:

I. GENERAL PROVISIONS

The concessional loan under the credit agreement VC-01 between the Government of the Socialist Republic of Vietnam and the Government of the Kingdom of Cambodia shall be used to finance the costs listed in Annex I of the credit agreement for the investment in upgrading National Highway 78 (from Banlung Km 126 to O Yadav Km195+577), including:

- Costs for the Vietnamese consulting company (Transport Engineering Design Joint Stock Company, abbreviated as TEDI) to design and prepare tender documents. Financial and technical proposals by TEDI for this content must be agreed upon by the Cambodian side (Ministry of Public Works and Transport and Ministry of Economy and Finance) based on international practices;

- Investment construction and upgrade costs for National Highway 78 (from Banlung Km 126 to O Yadav Km195+577);

- Costs for the Cambodian supervisory consulting company;

- Other costs (if any) approved by the Ministry of Finance of Vietnam and the Ministry of Economy and Finance of Cambodia.

"Credit Agreement" refers to the agreement signed between the Government of the Socialist Republic of Vietnam and the Government of the Kingdom of Cambodia No. VC-01 dated October 10, 2005 regarding the provision by the Government of Vietnam to the Government of the Kingdom of Cambodia a concessional loan amounting to no more than 25.8 million US dollars for investment in constructing and upgrading National Highway 78.

2. Explanation of Terms:

In this Circular, the following terms are understood as follows:

"National Highway 78" refers to the road located within the territory of Cambodia (from Banlung Km 126 to O Yadav Km195+577) adjacent to the border with Vietnam.

"Lender" is the Government of the Socialist Republic of Vietnam represented by the Ministry of Finance of Vietnam (MOF).

"Borrower" is the Government of the Kingdom of Cambodia represented by the Ministry of Economy and Finance of Cambodia (MEF).

"Vietnam Development Bank" (formerly known as the Vietnam Support Fund and now renamed as the Vietnam Development Bank) is the agency authorized by the Lender to mobilize funds, make payments, and directly recover loans from the Borrower.

"Project Owner" is the Government of the Kingdom of Cambodia or an entity authorized by the Government of the Kingdom of Cambodia.

"Contractor" refers to Vietnamese economic units and Vietnam-Cambodia joint ventures that sign economic contracts for construction, supply of goods, and services to the Project Owner to implement the National Highway 78 project in Cambodia.

"Economic Contract" is the contract signed between the Cambodian Project Owner and the Contractor in accordance with the conditions set forth in Article 3 of the Credit Agreement.

1. Capital Disbursement and Payment:

II. SPECIFIC PROVISIONS

1.1 Legal Documents:

a/ A document authorizing the Vietnam Development Bank to mobilize funds, make payments, and recover debts according to the content of the Credit Agreement, with the State budget compensating for interest rate differences as stipulated in this Circular.

b/ Copies of the Credit Agreement and related documents concerning disbursement from the Cambodian side (if any) sent by the Ministry of Finance of Vietnam to the Vietnam Development Bank as the basis for disbursing and paying to Contractors.

c/ A sample signature registration form of the representative of the Cambodian Ministry of Economy and Finance authorized to sign the Payment Request Form (Form No. 01) of the Credit Agreement, sent to the Vietnam Development Bank to facilitate the disbursement and payment process for Contractors.

1.2 Opening and Using the Loan Account:

a/ The Vietnam Development Bank opens an account named "Cambodia's Government Highway 78 Credit" (shortened as Credit Account VC-01) for the Borrower to record and monitor the disbursement and debt recovery process for this loan.

b/ The Credit Account VC-01 is recorded in US dollars (USD). In cases where the actual payment currency is Vietnamese dong or Cambodian riel, the conversion to US dollars will be based on the average exchange rate between the buying and selling rates at the time of payment, specifically:

+ The exchange rate between Vietnamese dong and US dollar is determined by the Vietcombank (VCB) in cases of payment in Vietnamese dong;

+ The exchange rate between Cambodian riel and US dollar is determined by the National Bank of Cambodia in cases of payment in Cambodian riel.

c/ The date when the Vietnam Development Bank records the loan account debit and starts charging interest to the Government of the Kingdom of Cambodia is the date when the Vietnam Development Bank disburses and pays to the Contractors.

1.3 Currency for Withdrawal and Payment:

a/ The currency stated on the Payment Request Form and recorded as debt for the Cambodian side is US dollars.

b/ Based on the request of the Borrower and the requirement to purchase goods and services, and based on the value of the currency stated in the Economic Contract between the Project Owner (Cambodia) and the Contractor, approved by the Ministry of Finance of Vietnam and the Ministry of Economy and Finance of Cambodia, the Vietnam Development Bank will consider and make payments in Vietnamese dong (VND), Cambodian riel, or partially in US dollars for valid project items.

1.4 Total Amount, Time of Disbursement and Payment:

The total amount of disbursement and payment under the Credit Agreement shall not exceed 25.8 million USD. The last day of disbursement and payment to the Borrower is October 10, 2009, unless otherwise agreed by both the Borrower and the Lender.

1.5 Approval of Economic Contracts:

1. Approve economic contracts:

All economic contracts must be submitted to the Cambodian Ministry of Economy and Finance for approval procedures; the approval of the Cambodian Ministry of Economy and Finance shall be sent to the Vietnamese Ministry of Finance for review, if it complies with the provisions of the credit agreement, the Vietnamese Ministry of Finance will notify the confirmation of the contract to the Cambodian Ministry of Economy and Finance, and at the same time issue a letter of approval to the Vietnam Development Bank.

1. 6 Conditions for capital disbursement:

a/ For the entire Agreement, the conditions for receiving capital must include:

- A specimen signature registration form of the authorized signatory of the Borrower's Payment Request Form, sent by the Cambodian Ministry of Economy and Finance to the Vietnamese Ministry of Finance.

- In case a bank or an agency of the Kingdom of Cambodia is authorized to implement disbursements, the Cambodian Ministry of Economy and Finance will send to the Vietnamese Ministry of Finance an official document regarding this authorization.

b/ For each economic contract, the conditions for receiving capital must include:

- A copy of the economic contract certified by the Contractor and presented with the original for verification.

- The original Letter of Contract Approval from the Cambodian Ministry of Economy and Finance specifying the value of the loanable amount of the contract.

- A copy of the contract confirmation notice and the approval letter from the Vietnamese Ministry of Finance.

These documents must be submitted to the Vietnamese Ministry of Finance and the Vietnam Development Bank.

c/ For each disbursement, the following must be included:

- A payment request form signed by the authorized representative of the Borrower registered with the Lender in English (as specified in the VC-01 Credit Agreement).

- A disbursement request form prepared by the Contractor/Supplier and sent to the Project Owner in English (as specified in the VC-01 Credit Agreement).

- Various invoices or other necessary documents:

* For payment of goods and equipment:

+ Commercial invoice for supplied goods;

+ Set of shipping documents including: invoice, transport documents, insurance certificate, origin certificate, packing list, pre-delivery inspection certificate.

+ Goods delivery receipt, equipment handover record, warehouse entry slip.

+ Other documents (if any) as stipulated in the economic contract.

* For payment of services:

+ Invoice or payment request from the Consultant unit;

+ Progress report on the implementation of the consulting contract by the Project Owner.

+ Other documents (if any) as stipulated in the economic contract.

* For construction payment:

+ Disbursement request form of the Contractor according to the model in the Credit Agreement.

+ Quantity acceptance certificate confirmed by the Supervising Consultant and the Project Owner.

+ Other documents (if any) as stipulated in the economic contract.

* For advance payment:

+ Advance payment request form of the Contractor according to the contract;

+ Advance payment guarantee letter issued by the Contractor's bank. The above invoices and documents must be submitted to the Vietnam Development Bank.

1. 7 Method of Capital Disbursement:

a/ Payment to Beneficiary:

- After receiving complete and valid disbursement documents, within a maximum of five working days, the Vietnam Development Bank will check and directly disburse funds to the Beneficiary as requested by the Borrower. If the Vietnam Development Bank does not approve partial or full payment, it must inform the Borrower clearly and report to the Vietnamese Ministry of Finance for resolution.

- In cases where payments are made to Contractors into accounts opened at Vietnamese banks, they shall be carried out in accordance with current regulations in Vietnam.

b/ Notification of Disbursement Results and Repayment Schedule:

- After each disbursement, the Vietnam Development Bank is responsible for issuing a notification to the Borrower and the Ministry of Finance detailing: Beneficiary; amount; exchange rate; date of payment; cumulative disbursement amount; interest due.

- Quarterly, the Vietnam Development Bank sends a statement of account balance (Account Statement) for the VC-01 Credit Account to the Ministry of Finance.

- Upon expiration of the disbursement period or when the full agreed amount has been disbursed without further disbursement notifications from the Borrower and Lender, the Vietnam Development Bank will prepare a consolidated repayment schedule corresponding to the total disbursed amount to notify the Borrower and the Ministry of Finance.

2. PRINCIPAL AND INTEREST REPAYMENT:

2. 1 Principal:

- The principal is repaid over eight years in sixteen installments, on May 20th and November 20th each year, strictly according to the repayment schedule recorded in Appendix III, with the first principal repayment due on November 20, 2012.

- The Vietnam Development Bank may collect the principal ahead of schedule upon written request from the Borrower, with deductions made from the end of the repayment period.

2. 2 Interest:

- Interest is paid semi-annually on May 20th and November 20th each year starting from November 20, 2006. If the interest payment date coincides with a public holiday or weekend, the payment will be made on the first working day after the holiday.

- The interest rate on the loan is 1.5% per annum on the actual outstanding balance (recorded in USD) during the interest calculation period. The overdue interest rate is 3% per annum (one year is considered as 360 days).

2. 3 Repayment Procedure:

When receiving a debt payment, the Vietnam Development Bank will deduct the debt in the following priority order:

- Overdue interest;

- Overdue principal;

- Due interest;

- Due principal.

3. DEBT RECOVERY METHODS:

3. 1 Debt Recovery:

- Thirty days before each repayment deadline, the Vietnam Development Bank will notify the Borrower and the Ministry of Finance about the principal and interest due for that period.

- When the Borrower uses USD to repay the debt, the Vietnam Development Bank will proceed with the debt recovery procedures according to the provisions of the Credit Agreement and the regulations set forth in this Circular, while issuing a credit advice notice reducing the loan balance accordingly (Credit Advice) to the Borrower and informing the Ministry of Finance for monitoring purposes.

3. 2 Overdue Debt:

- If the Vietnam Development Bank has not received the repayment amount by the due date, the amount will be recorded in the Borrower's overdue account and the overdue interest rate will be applied from the due date until the Borrower fully pays off the overdue principal and interest according to the Agreement.

- The Vietnam Development Bank shall notify the Borrower and the Ministry of Finance of the overdue principal and interest debt at the overdue interest rate stipulated in the Agreement, which is 3% per annum.

- In cases where the Borrower is unable to repay the principal and interest debt as stipulated in Article 7 of the Credit Agreement and such debts remain outstanding for a prolonged period, the Vietnam Development Bank shall notify the Ministry of Finance to jointly discuss measures for resolution, and if necessary, report on the matter.

3.3 Liquidation of loans:

Upon completion of the Borrower's obligation to repay debt under the Agreement, the Vietnam Development Bank shall settle and close all related accounts, and simultaneously notify both the Borrower and the Ministry of Finance.

4. Interest Rate Subsidy:

The difference between the deposit interest rate of the Vietnam Development Bank and the lending interest rate under the Credit Agreement shall be subsidized annually by the Ministry of Finance together with other interest rate subsidies authorized by the Government for the Vietnam Development Bank to mobilize capital and provide loans under State credit programs.

III. IMPLEMENTATION

This Circular takes effect fifteen days after its publication in the Official Gazette and applies to the implementation of the contents of the VC-01 Credit Agreement signed on October 10, 2005.

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