Circular No. 12-TC/ĐTXD guides the establishment, management, and utilization of self-owned capital for basic construction investment for production and business organizations under state-owned economic sector. The document stipulates the ratio of extraction from depreciation fund, production development encouragement fund, and welfare fund to establish self-owned capital, as well as the methods of managing and utilizing this source of funds.
Scope of application
Production and business organizations under state-owned economic sector
Key points
- Production and business organizations meeting the conditions are entitled to establish self-owned capital for basic construction investment (Article I).
- Self-owned capital from depreciation fund, production development encouragement fund, and welfare fund with a minimum ratio of 40% for the production development encouragement fund and a maximum ratio of 20% for the welfare fund (Point 2, Article II).
- Units must develop annual plans for self-owned capital for basic construction investment, the procedures for establishing and managing the use of this source of funds are specified in detail (Article III).
- Self-owned capital can only be used for replacing equipment, new construction, renovation, and expansion of small and medium-sized production and business facilities or constructing housing and other welfare facilities of the unit that have been approved (Point 3, Article III).
- Organizations have the right to adjust self-owned capital for basic construction investment within the scope of the approved basic construction investment plan (Article III).
🌐 Social impact of this document
- Enhance the management and effective utilization of basic construction investment capital for state-owned production and business organizations.
- Help units have autonomous sources of capital to implement investment projects, improve and upgrade infrastructure.
- Organizations not meeting the conditions for establishing self-owned capital will face difficulties in accessing investment capital.
- Investment construction banks have additional tasks of lending and recovering debts from the self-owned capital of the unit.
❓ Frequently asked questions
Which organizations are eligible to establish self-owned capital for basic construction investment?
Production and business organizations under state-owned economic sector meeting the prescribed conditions.
What is the minimum ratio of extraction from the production development encouragement fund?
Minimum 40%.
For what purposes can self-owned capital be used?
Replacing equipment, new construction, renovation, and expansion of small and medium-sized production and business facilities or constructing housing and other welfare facilities.
How must units develop plans for self-owned capital for basic construction investment?
Annually, concurrently with developing production, business, technical, and financial plans, each unit must develop a self-owned capital plan according to Form No. 1 KH-VTC.
Within what scope do organizations have the right to adjust self-owned capital?
Within the scope of the approved basic construction investment plan of the association or corporation.
Full text
CIRCULAR
OF THE MINISTRY OF FINANCE NO. 12-TC/DTXD ON MARCH 10, 1985 GUIDING THE WITHDRAWAL, MANAGEMENT AND USE OF OWN CAPITAL FOR BASIC CONSTRUCTION INVESTMENT OF ORGANIZATIONS
ENGAGED IN PRODUCTION
BELONGING TO THE STATE ECONOMIC SECTOR
Pursuant to Article 36, Chapter 5 of the Regulations on Construction Management issued together with Decree No. 232-CP dated June 6, 1981 of the Council of Ministers (which has been detailed by Circular Joint No. 6-TT/LB dated July 14, 1983 of the Ministry of Finance and the State Bank); Resolutions No. 156-HĐBT dated November 30, 1984 and No. 166-HĐBT dated December 15, 1984 of the Council of Ministers on some issues to improve management of state-owned industry and basic construction. The Ministry of Finance guides the withdrawal, management and use of own capital for basic construction investment of production and business organizations under the state economic sector as follows:
I. SUBJECTS ELIGIBLE FOR WITHDRAWAL OF OWN CAPITAL
FOR BASIC CONSTRUCTION INVESTMENT
Production and business organizations (state-owned and joint public-private enterprises) in all sectors of the national economy (irrespective of administrative level) that meet the following conditions will be eligible to withdraw own capital for basic construction investment:
1. Having full legal personality and independently accounting for economic activities.
2. Have been permitted to implement the depreciation deduction system and to establish various funds according to current regulations.
II. SOURCES AND RATES OF WITHDRAWAL OF OWN CAPITAL
FOR BASIC CONSTRUCTION INVESTMENT
1. Sources of annual withdrawal of own capital for basic construction investment of production and business organizations include the depreciation fund, the fund for encouraging production development, and the welfare fund.
2. The rates of withdrawal from these funds to establish own capital for basic construction investment of units are specified as follows:
- The depreciation fund is withdrawn at the rate prescribed in Circular No. 13-TC/DTXD dated March 10, 1985 of the Ministry of Finance.
- The fund for encouraging production development is at least 40%.
- The welfare fund is up to 20%.
3. The method of calculation for withdrawing own capital for basic construction investment is the percentage rate as stipulated in Point 2 above multiplied by (X) the amount deducted from each fund in the year according to the current depreciation of fixed assets and profit distribution regulations.
III. PLANNING, MANAGEMENT AND USE OF OWN CAPITAL
FOR BASIC CONSTRUCTION INVESTMENT
1. Planning own capital for basic construction investment.
Annually, along with the preparation of production, business, technical, and financial plans, each unit must prepare a plan for own capital for basic construction investment. This plan must reflect the amount of own capital already withdrawn from previous years but not yet used, up to the end of the reporting year, the amount expected to be withdrawn from the funds during the planning year, and the amount expected to be used during the planning year (prepared according to Form No. 1 KH-VTC).
The procedure for preparing, reporting, and reviewing the plan for own capital for basic construction investment is carried out in accordance with the procedure for preparing and reviewing the production, business, technical, and financial plans of the unit.
2. Procedure for implementing the withdrawal of own capital for basic construction investment during the year.
- During the year, simultaneously with each time implementing the withdrawal of funds (depreciation of fixed assets, encouragement of production development, welfare fund), the unit proceeds to temporarily withdraw from each fund (according to the provisions in Section II of this Circular) to supplement the source of own capital for basic construction investment and immediately deposit it into the account for own capital for basic construction investment opened at the Construction Investment Bank where the unit is located.
- At the end of each year, based on the results of the withdrawal of funds (according to the current depreciation of fixed assets and profit distribution regulations) and the rates specified in Section II of this Circular, the unit must accurately calculate the amount withdrawn from each fund to establish own capital for basic construction investment.
If the amount temporarily withdrawn from each fund during the year is less than the amount that can be withdrawn, additional withdrawals will be made to make up the difference; if it is more, procedures will be followed to refund the excess withdrawn from each fund.
3. Management and use of own capital for basic construction investment.
The source of own capital for basic construction investment of units may only be used for replacing equipment, building new facilities, renovating, and expanding small and medium-sized production and business establishments (with a capital recovery period of less than five years) or constructing housing and other welfare facilities of the unit itself (for the portion of capital withdrawn from the welfare fund) which have been approved by economic and technical arguments and recorded in the annual basic construction investment plan.
All construction projects funded through own capital must comply with the construction procedures and management systems in basic construction as stipulated in current regulations and balanced by the State in construction requirements.
During the implementation of basic construction investments using own capital, if there is a shortage of capital, the unit may borrow from the Construction Investment Bank. The source of capital to repay the loan is the subsequent own capital for basic construction investment withdrawn.
Joint enterprises and holding companies (organizations operating according to the Joint Enterprise Regulations) have the right to adjust the own capital for basic construction investment of units under their management (after obtaining agreement from the units) to serve common investment needs within the approved basic construction investment plan of the joint enterprise or holding company. At the same time, they must inform the higher-level supervisory authority, the finance department, and the Construction Investment Bank at the same level.
Units permitted to withdraw and use own capital for basic construction investment must maintain accounting books and accounts to record, monitor the process of withdrawal, management, use, and results of construction projects funded by this type of capital according to the unified accounting system of the State.
IV. IMPLEMENTATION PROVISIONS
This Circular takes effect from January 1, 1985. Previous regulations contrary to this Circular are no longer effective. In the course of implementation, any difficulties should be promptly reported to the Ministry of Finance for study and resolution.
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