Circular No. 120/2008/TT-BTC guiding payment and settlement of investment capital for construction projects of Vietnamese agencies abroad.

CIRCULAR

Guidelines on payment and settlement of investment capital

for construction projects of Vietnamese representative offices abroad

and other Vietnamese agencies abroad of Vietnam abroad

____________________

 

Pursuant to the State Budget Law No. 01/2002/QH11 dated December 16, 2002;

Pursuant to the Construction Law No. 16/2003/QH11 dated November 26, 2003;

Pursuant to Decree No. 52/1999/NĐ-CP dated July 8, 1999 of the Government on the issuance of the Investment Management and Construction Regulation, Decree No. 12/2000/NĐ-CP dated May 5, 2000 and Decree No. 07/2003/NĐ-CP dated January 30, 2003 of the Government amending and supplementing certain provisions of the Investment Management and Construction Regulation issued together with Decree No. 52/1999/NĐ-CP dated July 8, 1999 of the Government;

Pursuant to Decree No. 16/2005/NĐ-CP dated February 7, 2005 of the Government on Project Management for Construction Projects and Decree No. 112/2006/NĐ-CP dated September 29, 2006 of the Government amending and supplementing certain provisions of Decree No. 16/2005/NĐ-CP dated February 7, 2005;

Pursuant to Decree No. 99/2007/NĐ-CP dated June 13, 2007 of the Government on the Management of Construction Project Investment Costs;

Pursuant to Decision No. 02/2008/QĐ-TTg dated January 7, 2008 of the Prime Minister on the issuance of the Regulation on the Management of Construction Projects of Vietnamese Representative Offices Abroad and Other Vietnamese Agencies Abroad.

The Ministry of Finance issues guidelines on the management of payment and settlement of investment capital for construction projects of Vietnamese representative offices abroad and other Vietnamese agencies abroad (hereinafter referred to collectively as Vietnamese agencies abroad) as follows:

I. GENERAL PROVISIONS

1. Scope and objects regulated:

These Circulars provide guidance on payment and settlement of investment capital for construction projects of Vietnamese agencies abroad, including new construction projects and renovation and upgrading projects at existing office premises; investment projects for purchasing houses, land for building office premises and housing for staff funded by state budget funds or funds derived from state budget sources.

2. Management regime:

- The management, payment, and settlement of investment capital for Vietnamese agencies abroad shall be carried out in accordance with current regulations governing the management, payment, and settlement of investment capital sourced from state budget funds. This Circular only provides additional guidance on certain points that differ from current regulations to suit the specific characteristics of construction projects of Vietnamese agencies abroad.

- Due to the special nature of these projects, the management, payment, and settlement of investment capital must comply with both Vietnamese laws and the laws of the host country and international practices. In cases where Vietnamese regulations conflict with the laws of the host country and international practices, the laws of the host country and international practices shall prevail.

- Projects meeting the conditions for investment shall complete necessary investment procedures and commence investment immediately within the year.

- The managing ministry (hereinafter referred to collectively as the Managing Ministry) shall perform the function of expenditure control; in cases where the investor is located abroad, it shall act on behalf of the investor to transact payments of investment capital with the State Treasury. The State Treasury shall make payments to projects based on the Managing Ministry's proposals.

- The annual budget plan allocated to a project may only be paid within the time limit specified in the State Budget Law for the planning year. Extensions of implementation and payment periods shall be carried out in accordance with current regulations (currently, this is stipulated in Decision No. 1067/TTg-KHTH dated August 3, 2007 of the Prime Minister and Circular No. 13107/BTC-ĐT dated September 28, 2007 of the Ministry of Finance regarding the extension of implementation and payment periods for basic construction investment).

II. SPECIFIC PROVISIONS

1. Allocation of annual investment plan and review of investment capital allocation.

1.1- Capital allocation:

Based on the Prime Minister's decision allocating the state budget for the year, the Managing Ministry allocates the investment capital plan for each Vietnamese agency abroad under its jurisdiction to the Ministry of Planning and Investment and the Ministry of Finance.

(The form for allocating the investment capital plan is attached as Appendix No. 01 to this Circular).

1.2. Allocation of capital to investors:

After the Ministry of Finance reviews and approves the capital allocation plan, the Managing Ministries allocate the investment capital plan indices to the investors for implementation, and simultaneously send them to the State Treasury branch where the project account is opened for monitoring purposes and as the basis for inspection and payment.

1.3- Review of investment capital allocation:

- The Ministry of Finance reviews the capital allocation plan, provides comments on projects lacking investment procedures and failing to meet the conditions for capital allocation, and sends the information to the State Treasury. The Managing Ministry is responsible for reallocating according to current regulations, sending it to the Ministry of Finance and the State Treasury for payment. The capital allocation plan and reallocation plan of the ministries in compliance with regulations serve as the basis for payment.

- The Managing Ministry sends the project documents included in the plan to the Ministry of Finance for review of capital allocation (these documents are sent only once until the end of the project, except in cases requiring supplementation or adjustment), including:

+ For preparatory investment projects: approval documents for the cost estimate for preparatory work.

+ For ongoing investment projects: construction project proposal (or economic-technical report for projects that only prepare an economic-technical report) accompanied by the investment decision of the competent authority.

2. Advance payments and capital payments.

2.1- Opening accounts:

The Managing Ministry (or the investor if the investor is domestic) opens an account at the State Treasury for capital payments for the project.

2.2- Project foundation documents:

To facilitate management and capital payment, the investor or the Managing Ministry sends the project foundation documents to the State Treasury branch where the payment account is opened (these documents are original or certified true copies stamped by the Managing Ministry, sent only once until the end of the project, except in cases requiring supplementation or adjustment), including:

2.2.1- For preparatory investment capital:

- Approved budget estimate for investment preparation work;

- Tender selection document;

- Contract between the investor and the contractor.

2.2.2- For ongoing investment capital:

a)- New construction and repair projects:

- Construction project proposal (or economic-technical report for projects that only prepare an economic-technical report) accompanied by the investment decision of the competent authority, and any project adjustment decisions (if applicable);

- Tender selection document;

- Contract between the project investor and the contractor;

- Budget estimate and decision approving the budget estimate for each work item, sub-project, or project in cases of direct award or self-execution and works carried out without using contracts.

b) Real estate purchase projects for office premises and housing:

- Investment project (or economic-technical report for projects only preparing economic-technical reports) accompanied by investment decision of the competent authority, and adjustment decisions on the project (if any);

- Agreement on the principle of purchasing real estate as the basis for paying earnest money (if any);

- Purchase and sale contract - Earnest money guarantee letter (if the contract stipulates the need to pay earnest money).

c) For projects including both real estate purchase and new construction or repair and renovation, the basic documents include those of both types of projects mentioned above.

2.3 Advance payments and recovery of advance payments:

Advance payments and recovery of advance payments shall be implemented in accordance with the regulations of the Ministry of Finance on advance payments and recovery of advance payments from state budget funds (currently Circular No. 27/2007/TT-BTC dated April 3, 2007 and Circular No. 130/2007/TT-BTC dated November 2, 2007 amending and supplementing certain points of Circular No. 27/2007/TT-BTC dated April 3, 2007 guiding the management and settlement of investment capital and public service capital with investment characteristics from state budget funds).

For specific cases with special characteristics, the State Treasury implements advance payments according to the proposal of the managing ministry but not exceeding the annual plan of the project.

The managing ministry issues a document requesting advance payment for each work item (specifying the amount, account number, beneficiary unit).

2.4 Capital Settlement:

2.4.1 When there is a need to settle investment capital, the project investor submits to the managing ministry a settlement request file, including:

a) For new construction or repair and renovation projects:

- Table determining the value of completed work volume according to the contract (currently stipulated in Appendix 2 attached to Circular No. 06/2007/TT-BXD dated July 25, 2007 of the Ministry of Construction on guiding contracts in construction activities or supplementary documents replacing it, if any).

- Investor's payment request letter;

- If there is additional work volume outside the contract, the investor and the contractor must have a supplementary contract appendix, specifying any other agreed terms different from the original contract (if any), the value of the additional work volume; budget estimate and decision approving the budget estimate of the additional work volume as the basis for settlement. The investor sends the table determining the value of the additional work volume outside the contract (currently stipulated in Appendix 4 attached to Circular No. 06/2007/TT-BXD dated July 25, 2007 of the Ministry of Construction on guiding contracts in construction activities).

b) For real estate purchase projects: Payment (including payment of earnest money, if any) is carried out according to the real estate purchase and sale contract. The investor submits to the managing ministry the investor's payment request letter.

c) For projects including both real estate purchase and new construction or repair and renovation, the settlement file includes those of both types of projects mentioned above.

In exceptional urgent cases requiring settlement before the investor has all the required documents in the settlement file, the managing ministry temporarily advances the settled amount; when the necessary procedures are complete, the managing ministry will settle the advance payment, and the managing ministry bears responsibility for its decision.

2.4.2 The managing ministry performs the function of controlling expenditures, prepares the settlement request file to send to the State Treasury, including:

- Document requesting capital settlement of the managing ministry for each work item (specifying the amount, account number, beneficiary unit);

- When settling in domestic currency (VND): The managing ministry prepares the Investment Withdrawal Letter (according to the model prescribed by the State Treasury).

- When settling in foreign currency, the managing ministry prepares the Foreign Currency Budget Estimate Withdrawal Letter (according to the model prescribed by the State Treasury).

- Other transfer payment vouchers (if any).

- Advance payment settlement request letter for cases of recovering advance payments.

2.4.3 Checking and settlement at the State Treasury:

Based on the settlement request file of the managing ministry, based on the project's capital plan in the allocated state budget estimate; based on the project's files and documents, within seven working days from receiving the complete file, the State Treasury settles the capital for the project. The total amount of settlement does not exceed the annual capital plan of the project.

2.4.4 Settlement in foreign currency:

If the project investor needs to settle with the contractor or seller of real estate in foreign currency, it shall be carried out as follows:

- In cases where foreign currency is not paid from the centralized foreign exchange fund of the State, the managing ministry or the investor proactively uses the amount temporarily advanced and settled by the State Treasury to buy foreign currency from banks for settlement to the beneficiary unit. If buying foreign currency from commercial banks, the State Treasury temporarily advances and settles the transfer of funds into the account of the commercial bank that the managing ministry has contracted with to buy foreign currency for the project.

- In cases where foreign currency needs to be paid from the centralized foreign exchange fund of the State:

+ On the basis of the capital plan and the need for foreign currency expenditure in the year of projects under its management, the managing ministry prepares a summary table allocating the annual state budget estimate in Vietnamese dong converted to US dollars according to the exchange rate specified by the Ministry of Finance at the time of allocation and not exceeding the annual capital plan assigned, and sends it to the Ministry of Finance and the State Treasury.

(Model form for foreign currency expenditure plan as per Appendix 02 issued together with this circular).

+ When settling in foreign currency, the managing ministry prepares the Foreign Currency Budget Estimate Withdrawal Letter and sends it to the State Treasury (according to the model prescribed by the State Treasury).

||| Specifically, for the Ministry of Foreign Affairs, the Ministry of Finance authorizes management and use of the temporary holding fund of the state budget at Vietnamese representative offices abroad to settle capital. When it is necessary to spend foreign currency from this fund, two copies of the Request for Withdrawal from the Temporary Holding Fund of the State Budget at Vietnamese Representative Offices Abroad (Form No. 7 attached to Circular No. 27/2008/TT-BTC dated April 1, 2008 of the Ministry of Finance on guiding financial management systems for Vietnamese agencies abroad) shall be prepared, and simultaneously, two copies of the Request for Collection of the State Budget (Form No. 8 attached to Circular No. 27/2008/TT-BTC dated April 1, 2008 of the Ministry of Finance on guiding financial management systems for Vietnamese agencies abroad) shall be sent to the State Treasury.

||| - The State Treasury will issue foreign currency according to the request of the managing ministry, specifically:

||| + In the case of spending from the centralized foreign currency fund of the state: The State Treasury will base on the annual budget estimate in Vietnamese dong converted to US dollars sent by the managing ministry at the beginning of the year and the budget withdrawal request in foreign currency of the managing ministry as stipulated above, to withdraw the centralized foreign currency fund for payment.

||| + In the case of using the temporary holding fund of the state budget abroad: The State Treasury will base on the annual budget estimate in Vietnamese dong converted to US dollars sent by the managing ministry at the beginning of the year and the related documents that the Ministry of Foreign Affairs has sent according to the above regulations, to conduct checks on the factors, sign on the related documents, and handle as follows: use copy number 1 of the "Request for Recording Revenue to the State Budget" to record revenue to the state budget "Fees for Consular Services or Other Income Abroad"; simultaneously, use copy number 1 of the "Request for Withdrawal from the Temporary Holding Fund of the State Budget at Vietnamese Representative Offices Abroad" to account for and record expenditure for the Ministry of Foreign Affairs (corresponding to chapters, clauses, sections, sub-sections of the State Budget Register). The remaining copies will be returned to the Ministry of Foreign Affairs for the Ministry of Foreign Affairs to account for and notify (by encrypted telegraph) the Vietnamese representative offices abroad to draw from the temporary holding fund of the state budget abroad for use.

||| 3. Finalizing investment capital.

||| 3.1. Annual finalization of investment capital:

||| The annual finalization of investment capital shall be carried out in accordance with the provisions of the State Budget Law and the guidance of the Ministry of Finance (currently Circular No. 53/2005/TT-BTC dated June 23, 2005 guiding the preparation and review of the finalization report of construction investment capital under the state budget for the annual fiscal year).

||| 3.2. Finalization of investment capital for completed projects:

||| The finalization of investment capital for completed projects shall be carried out in accordance with the guidance of the Ministry of Finance (currently Circular No. 33/2007/TT-BTC dated April 9, 2007 guiding the finalization of completed projects under state capital; Circular No. 98/2007/TT-BTC amending and supplementing certain points of Circular No. 33/2007/TT-BTC dated April 9, 2007).

||| 3.2.1. For projects with total investment capital (converted to foreign currency) of 10 million US dollars or more, it is mandatory to audit the finalization report. It is encouraged to audit the finalization report for the remaining projects, subject to the decision of the managing ministry.

||| 3.2.2. Documents for finalizing investment capital:

a) For new construction or repair and renovation projects:

||| - Finalization report on investment capital, accompanied by explanatory notes;

||| - Acceptance and handover certificate of the building;

||| - Report on quantity and value of new assets;

||| - Inventory list of assets;

||| - Document requesting approval of the finalization of investment capital for completed projects.

||| b) For projects purchasing houses and land:

||| - Finalization report on investment capital, accompanied by explanatory notes;

||| - Acceptance and handover certificate of the project;

||| - Report on quantity and value of new assets;

||| - Document requesting approval of the finalization of investment capital for completed projects.

||| c) For projects including both house and land purchases and new construction or repair, the finalization documents include both types of projects mentioned above.

||| 3.3 - For projects where the approved finalization completion capital is lower than the allocated plan capital, the excess plan capital after finalization can be adjusted to cover the shortfall of other projects. For projects that still lack capital after finalization, the managing ministry is responsible for allocating capital for the project to settle accounts.

||| 4. Reporting system:

||| 4.1. For project sponsors and managing ministries: implement reporting systems as prescribed in Decision No. 52/2007/QĐ-TTg dated April 16, 2007 of the Prime Minister on the Reporting System for the Implementation of National Investment Capital Plans, Circular No. 05/2007/TT-BKH dated August 9, 2007 of the Ministry of Planning and Investment on issuing reporting forms and guidelines for implementing Decision No. 52/2007/QĐ-TTg dated April 16, 2007.

||| 4.2. For the State Treasury: Implement information reporting systems as prescribed by the Ministry of Finance; at the end of the plan year, confirm the amount paid during the year, cumulative payments from the start of construction to the end of the fiscal year for each project.

||| 5. Responsibilities of managing ministries and project sponsors:

||| - The managing ministry performs the function of controlling expenditures, bearing full responsibility for the received capital (advance payments, settlements) to settle accounts for projects under its management.

||| - Bear responsibility for the legality of project documents, files, and certificates. Foreign language documents, when submitted to the finance agency and the State Treasury, must be translated into Vietnamese, either original or certified true copies with the seal of the managing ministry confirming authenticity. In urgent cases where translation into Vietnamese cannot be done in time, there must be signatures and seals of the managing ministry confirming the accuracy and legality of the documents.

||| - Bear responsibility for the accuracy and legality of the volume of work performed, norms, unit prices, budgets for various tasks, quality of works; the State Treasury does not bear responsibility for supervising these contents.

III. IMPLEMENTATION PROVISIONS

||| This Circular takes effect fifteen days after its publication in the Official Gazette.

||| During implementation, if any difficulties arise, relevant agencies, units, and sponsors should promptly reflect them to the Ministry of Finance for appropriate amendments and supplements./.

DEPUTY MINISTER

DEPUTY MINISTER

(signed)

Nguyen Cong Nghiep