Decision No. 120/NH-QĐ Issuing Rules for Loans and Advance Payments for Investment Preparation

Pursuant to …;

OF THE STATE BANK NUMBER 120/NH-QĐ OCTOBER 20, 1983
ISSUING REGULATIONS ON LOANS AND TEMPORARY ADVANCES FOR PREPARATION
INVESTMENT

CHAIRMAN OF THE STATE BANK OF VIETNAM

Pursuant to Decision No. 35-CP dated February 9, 1981 of the Council of Ministers stipulating the tasks, powers, responsibilities of the Minister and functions of the Ministry in certain areas of state management;

Pursuant to Decision No. 163-CP dated June 16, 1977 of the Council of Ministers on the organizational structure of the State Bank;

Pursuant to Decision No. 259-CP dated June 24, 1981 of the Council of Ministers on the establishment of the Vietnam Investment and Construction Bank under the State Bank of Vietnam;

Pursuant to the Regulations on Construction Management issued pursuant to Decision No. 232-CP dated June 6, 1981 of the Council of Ministers and Circular No. 6-TT/LB dated July 14, 1983 of the Ministry of Finance and the State Bank of Vietnam on the issuance, lending, and settlement in basic construction investment;

Pursuant to …;

Article 1. - Issuing with this decision the Regulations on Loans and Temporary Advances for Preparation.

Article 2. - These regulations shall take effect from January 1, 1984.

Article 3. - The Director of the Vietnam Investment and Construction Bank is responsible for guiding the implementation of these regulations.

Article 4. - Comrades in charge of the Office Directors of specialized banks, Heads of the Economic Planning Department, Heads of the Accounting and Budget Management Department, Directors of provincial, municipal, and central special zone banks, and Branch Directors of county, district, and city banks within their scope of responsibility are responsible for organizing the implementation of these regulations.

 RULES

LOANS AND TEMPORARY ADVANCES FOR PREPARATION

(issued together with Decision No. 120-NH/QD dated October 20, 1983
of the Governor of the State Bank of Vietnam)

I. GENERAL PROVISIONS

Article 1. - Preparation for investment is the initial stage of the investment construction process, starting from the time of conducting surveys to prepare economic and technical justifications and ending when such justifications are approved and there is a decision on the investment policy. All projects intended for basic construction investment must be thoroughly prepared according to the contents of the preparation work specified in the Construction Management Regulations.

Article 2. -

1. Investment preparation work must be planned.

The investment manager bases on the long-term socio-economic development plan, relying on industry and territorial development planning, determines the needs, prepares the investment preparation plan, and formulates the annual investment preparation plan. The contents of the annual investment preparation work must be recorded in the national investment preparation plan.

2. The capital planning for providing capital for investment preparation work shall be carried out in accordance with the provisions of the State Bank of Vietnam.

Article 3. - When a project is included in the national investment preparation plan, the investment manager must immediately appoint an investor to carry out the investment preparation work. The investor is a person with full legal capacity, directly responsible for managing the capital and the effectiveness of its use for investment preparation.

In case of change in the investor, the new person appointed shall be responsible for inheriting all the preparation work and the financial relationship with the bank.

Article 4. - The Vietnam Investment and Construction Bank shall undertake:

a) Providing loans for investment preparation according to the state plan for production and business projects.

b) Granting temporary advances for investment preparation according to the state plan for non-production and non-business projects.

Article 5. -

1. The source of funds for the Vietnam Investment and Construction Bank to grant temporary advances and provide loans for investment preparation according to the state plan is the budgetary funds transferred from the finance authority (the Ministry of Finance for centrally managed projects and the Provincial Finance Departments for locally managed projects).

Central budget funds transferred to the bank are centrally managed at the Central Vietnam Investment and Construction Bank; local budget funds transferred to the bank are centrally managed at the provincial, municipal, and central special zone branches of the Vietnam Investment and Construction Bank.

2. The Vietnam Investment and Construction Bank organizes the granting of temporary advances and provision of loans for investment preparation within the amount of funds transferred from the finance authority.

3. The Vietnam Investment and Construction Bank implements annual capital settlements with the finance authority based on:

- The amount of funds transferred from the state finance authority to the bank,

- The amount of funds the Vietnam Investment and Construction Bank has provided as loans and temporary advances for investment preparation,

- The amount of recovered temporary advances and loan repayments made previously,

- The amount of investment preparation costs approved by the state for cancellation.

Article 6. - For projects proposed by the factory director and approved for investment using self-funded capital, the investor must deposit their own capital into the Vietnam Investment and Construction Bank. In this case, all expenses related to investment preparation for the project will be paid directly from the account of the investor's self-funded capital. The investor must ensure sufficient self-funded capital to settle investment preparation expenses.

Article 7. -

1. The Vietnam Investment and Construction Bank shall only allocate capital plans for temporary advances or loans to proceed with investment preparation for projects meeting the following conditions:

a) Having a decision on investment preparation and being recorded in the annual state investment preparation plan.

b) Receiving capital transfer from the state finance authority for the Vietnam Investment and Construction Bank to lend or grant temporary advances; or having self-funded capital of the investor.

2. Ministries (for centrally managed projects) and management bodies (for locally managed projects) must submit to the Central Vietnam Investment and Construction Bank and the provincial, municipal, and central special zone branches of the Vietnam Investment and Construction Bank the following documents:

a) The decision of the competent authority allowing the commencement of investment preparation.

b) The total preliminary budget for all investment preparation work and the progress schedule for investment preparation divided annually, approved by the competent authority.

c) The annual investment preparation plan and the financial preparation plan for each project.

d) Projects preparing for investment cooperation with foreign countries must also include the investment project proposal and relevant documents signed with foreign countries concerning investment preparation.

3. Based on the above documents, the Central Vietnam Investment and Construction Bank or the provincial, municipal, and central special zone branches of the Vietnam Investment and Construction Bank, according to the division of authority, shall proceed:

a) Determine and notify the investment and construction bank branches about:

- The total amount of loans or advances for preparing investment for each project.

- The loan period or advance period for preparing investment for each project.

b) Forward the notification to the investment and construction bank branches regarding the annual preparation investment plan for each project.

c) Notify the investment and construction bank branches about the annual capital preparation investment plan.

Article 8. - All costs for the preparatory work for investment, including bank interest (for projects borrowing funds), shall be included in the basic construction investment capital of the project.

II. FORMS OF LOAN GRANTING, DEBT COLLECTION AND INTEREST ON LOANS

Article 9. - To obtain a loan, the project sponsor must submit the following documents to the investment and construction bank branch where the sponsor has its headquarters:

a) A loan application and loan agreement for preparing investment.

b) The decision of the competent authority allowing the commencement of preparatory work for the project.

c) The approved annual preparatory work plan.

d) The progress schedule for preparatory work, approved by the competent authority, consistent with the preparatory work tasks in the annual plan.

đ) The total budget estimate and cost budget for each type of preparatory work.

e) Contracts on the transfer of preparatory work assignments signed by the project sponsor with the contractor organizations in accordance with economic contract regulations.

g) The sponsor's loan plan.

h) Reports on the final settlement of capital for preparatory work in the previous year (if it is a continuing project).

i) For projects involving foreign cooperation, the following additional documents must be provided:

- The approved investment project.

- Documents signed with foreign parties related to preparatory work.

Article 10. -

1. The total loan amount for each project shall not exceed the approved budget estimate for preparatory work for that project.

2. The annual loan amount for each project shall be determined based on the approved preparatory work plan for the planning year and factors of increase or decrease according to the system, and recorded in the bank's annual capital plan.

3. The loan schedule will follow the quarterly capital limit announced by the Central Investment and Construction Bank (for centrally managed projects) and by the provincial or city investment and construction bank (for locally managed projects).

Article 11. -

1. The loan term runs from the date of the first loan disbursement until the end of the preparatory work phase, including:

- The time frame approved by the competent authority for conducting preparatory work from the start to the approval of the economic and technical feasibility study.

- The waiting period according to the plan to include the project in the State's annual basic construction investment plan (for projects with approved economic and technical feasibility studies and investment policy decisions) or the waiting period according to regulations for the competent authority to approve the cancellation of preparatory work costs already incurred (for projects after completing preparatory work, but the competent authority concludes that the project is not accepted for basic construction investment).

- The waiting period according to regulations to obtain basic construction investment capital or budget capital when preparatory work costs are approved for cancellation.

2. When the loan term expires and the project sponsor cannot repay the loan, the outstanding loan becomes overdue debt.

Article 12. - The interest rate on preparatory work loans follows the current interest rate table established by the General Director of the State Bank of Vietnam.

Article 13. -

1. Loans for preparatory work are granted through a simple loan account opened for each project.

2. The bank disburses the loan to the project sponsor to:

a) Directly pay the contractor based on:

- The completion certificate for the volume of work performed by the contractor.

- The payment voucher according to the approved budget and recorded in the contract.

b) The project sponsor covers the expenses for preparatory work they undertake according to the approved plan and budget.

3. The investment and construction bank terminates the loan when the economic and technical feasibility study is approved.

4. The project sponsor must use the capital for its intended purpose, according to the plan, standards, norms, unit prices, and prices, and save resources. If the project sponsor does not conduct preparatory work as planned, or uses materials and funds wastefully, they will not be granted additional funding beyond the approved budget (the approved budget includes any supplementary approvals) and must bear responsibility for all losses caused.

The project sponsor is responsible for annual settlement and final settlement of preparatory work capital according to the State's final settlement regulations for basic construction investment capital.

Article 14. - The project sponsor is responsible for repaying the entire loan and interest in one lump sum when:

1. The economic and technical feasibility study is approved and the project is included in the State's annual basic construction plan. The source for repaying the loan and interest is the project's basic construction investment capital.

In this case, the project sponsor requests the allocation of basic construction investment capital according to the regulations for allocating basic construction investment capital to repay the loan and interest.

2. After completing preparatory work, but the competent authority decides not to accept the project for basic construction investment and approves the cancellation of preparatory work costs.

In this case, the project sponsor must request the State budget to allocate capital to repay the loan and interest. The allocation is carried out through annual capital settlements between the financial agency and the bank.

3. During preparatory work, if natural disasters or enemy threats occur, the project sponsor must request the competent authority and the financial agency to approve the cancellation of preparatory work costs.

4. If preparatory work has ended or is not yet completed but is suspended according to the competent authority's decision, the project sponsor must request the financial agency to allocate special capital for suspended projects to repay the loan and interest. The allocation is carried out through annual capital settlements between the financial agency and the bank.

III. PROCEDURES FOR ADVANCE PAYMENTS AND RECOVERY OF ADVANCES

Article 15. -

1. To be eligible for a provisional advance for investment preparation, the project sponsor must submit to the branch of the investment and construction bank located at the sponsor's headquarters the documents specified in Article 9 (excluding Point a) above.

2. The amount of the provisional advance shall be determined similarly to the loan amount stipulated in Article 10 above.

Article 16. -

1. The provisional advance shall be recorded in a separate disbursement account for each project and shall be used for payment as prescribed in Article 13 regarding investment preparation activities.

2. The project sponsor is responsible for repaying the entire provisional advance with the project's investment capital when the economic and technical feasibility study is approved and the project is included in the basic construction investment plan, or with the budgeted preparation costs that have been canceled or with special funds similar to loan repayment as stipulated in Article 14 above.

Article 17. - The project sponsor must use the provisional advance for its intended purpose, according to the plan, within the prescribed regulations, standards, norms, unit prices, prices, and economically. If the sponsor fails to complete the volume of work within the time frame set out in the plan, uses capital and materials wastefully, exceeds the budget, etc., the sponsor will not be granted further provisional advances and will bear full responsibility for any losses caused by their actions.

IV. BANK INSPECTION

Article 18. - The investment and construction bank conducts regular or surprise inspections of the economic activities and capital usage of organizations involved in the investment preparation process to ensure compliance with the investment preparation plan, economic and technical requirements, and approved budgets.

The inspection covers the following areas:

1. Verifying the validity, accuracy, and completeness of the documents submitted by the project sponsor to the bank as required, particularly checking the budget preparation based on national economic and technical standards and approved work volumes.

2. Verifying the use of capital to ensure it adheres to the plan, intended purpose, regulations, rules, and basic construction management charter, and complies with the approved and audited budget.

3. Verifying the results of investment preparation activities.

4. Verifying materials to ensure adequate debt coverage.

5. Verifying financial accounting and management.

Article 19.- Based on the inspection, the investment and construction bank will take measures to encourage organizations to improve their strengths and address weaknesses and deficiencies. Violations will be handled according to the current state regulations.