Circular No. 116 TC/DT GUIDING THE MANAGEMENT AND USE OF LOANS FROM THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA FOR INVESTMENT IN BASIC CONSTRUCTION IN VIETNAM

CIRCULAR

GUIDELINES FOR THE MANAGEMENT AND USE OF LOANS FROM THE PEOPLE'S REPUBLIC OF CHINA FOR BASIC INVESTMENT AND CONSTRUCTION

- Pursuant to Decree No. 177-CP dated October 20, 1994 of the Government promulgating the Charter for Investment Management and Construction.

- Pursuant to Decree No. 58/CP dated August 30, 1993 of the Government promulgating the regulations on loan management and foreign debt repayment; Circular No. 18 TC/TCĐN dated March 5, 1994 of the Ministry of Finance guiding the implementation of Decree No. 58/CP;

- Pursuant to the credit agreement signed on December 2, 1992 between representatives of the Socialist Republic of Vietnam and the People's Republic of China.

After reaching consensus with relevant agencies, the Ministry of Finance provides guidelines for the management and use of loans from the Chinese government for basic investment and construction as follows:

II- SUPPORT MEASURES FOR STATE-OWNED AGRICULTURAL FARMS AND FORESTRY COMPANIES IN THE FIELD OF SCIENCE AND TECHNOLOGY

1- The entire loan amount from China shall be recorded as revenue in the State Budget for allocation or relending to project sponsors. The Ministry of Finance will allocate funds to repay debts according to the annual plan.

2- The objects eligible to use the loan funds:

- A portion of the loan will be used to relend to the Ha Bac Fertilizer Plant (Heavy Industry Ministry) and the 8/3 Textile Plant (Light Industry Ministry) to settle contracts for importing machinery and equipment signed with Chinese companies.

- The remaining loan funds will be allocated for water supply projects and small hydropower plants in mountainous provinces as planned annually.

3- Each year, the competent authorities responsible for investment must prepare and defend plans for using loan funds and repaying loans with the Ministry of Finance and the State Planning Commission, and bear responsibility for the effective use of loan funds.

4- The exchange rate between the Vietnamese Dong and the Chinese Yuan applied during the execution of the loan agreement shall be announced by the State Bank at the time of capital disbursement and payment.

II - SPECIFIC PROVISIONS

a/ For the loan amount intended for relending

1- The Investment Development General Department receives funds from the State Budget for relending to project sponsors, is responsible for collecting debts to repay the State Budget on schedule and earns fees.

2- The Investment Development General Department submits to the Ministry of Finance the selected commercial bank to authorize the withdrawal of the loan from China under the signed credit agreement. Immediately upon receiving the loan, the selected commercial bank sends a copy of the loan receipt to the Ministry of Finance for recording as central budget revenue, while simultaneously recording the transfer of funds to the Investment Development General Department for relending to project sponsors.

3- The Investment Development General Department lends to project sponsors at the preferential investment loan interest rate of 4.0% per annum, including a fee of 0.3% per year (including transaction fees for international payment operations). The Investment Development General Department is responsible for guiding lending procedures for project sponsors, compiling loan demand reports to the Ministry of Finance, relending to project sponsors, and collecting debts including principal and interest (interest minus fees) to repay the State Budget.

4- Project sponsors must repay loans to the Investment Development General Department system under the current preferential credit terms; within five days of the sponsor repaying the loan, the Investment Development General Department system must repay the State Budget.

b/ For the loan amount intended for direct allocation

- For loan funds in the form of goods (including machinery and equipment and consumer goods), the Ministry of Finance coordinates with the competent authority and the Ministry of Trade to select import units to entrust the importation, with the import unit earning a fee according to the current regulations.

- For goods not belonging to specific projects, they are entrusted to units to sell, with proceeds from sales deposited into the Central Budget. The Ministry of Finance, based on the progress of sales proceeds deposited into the budget and the annual investment and construction plan for water supply projects and small hydropower plants (funded by Chinese loans), transfers funds to the Investment Development General Department for direct allocation to projects according to current regulations.

- For loan funds in the form of machinery and equipment for specific projects directly contracted for import by localities with Chinese companies (if applicable), the import unit is responsible for delivering goods directly to project sponsors according to the distribution plan of the Provincial People's Committees. After delivering goods to project sponsors, the import unit compiles a summary list attached with delivery receipts and sends it to the Ministry of Finance for recording as central budget revenue and allocating funds for local projects through the Investment Development General Department system.

III- IMPLEMENTATION PROVISIONS

This circular takes effect from the date of issuance. Any difficulties encountered during implementation should be promptly reported to the Ministry of Finance for study and resolution.