Decree No. 124/2004/ND-CP on certain special financial mechanisms for Ho Chi Minh City

DECREE

Regulations on Certain Special Financial Mechanisms for the City of Ho Chi Minhwith Ho Chi Minh City

____________________________

THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to Article 75 of the State Budget Law No. 01/2002/QH11 dated December 16, 2002;

Pursuant to Circular No. 212/NQ-UBTVQH11 dated March 22, 2004 of the Standing Committee of the National Assembly;

At the proposal of the Minister of Finance,

DECREE:

PART I

ON THE MANAGEMENT OF THE BUDGET OF HO CHI MINH CITY

Article 1.

1. The revenue sources and expenditure responsibilities of the Ho Chi Minh City budget shall be allocated according to the provisions of the State Budget Law. The People's Committee of Ho Chi Minh City shall submit to the People's Council of the city for decision on the allocation of revenue sources and expenditure responsibilities between budgets at various levels within the city (city, district, county, ward, commune) in accordance with the provisions of the State Budget Law, taking into account the actual situation and requirements for economic and social development and ensuring national defense, security, and social order and safety of the city. For the commune and town budgets, they shall be implemented in accordance with point b, Clause 1, Article 34 of the State Budget Law.

The State prioritizes investment from the budget and other financial resources for the economic and social development of the city to enable it to fulfill its role as the central economic and social hub of the region and the country.

2. Annually, based on the state budget estimate assigned by the Prime Minister and the guidance of the Ministry of Finance, the People's Committee of Ho Chi Minh City shall submit to the People's Council of the city for decision: the revenue and expenditure estimates of the city budget; the allocation of revenue and expenditure tasks to each agency and unit under the city budget; the amount of supplementary funding from the city budget to lower-level budgets in line with the requirements for economic and social development of the city; while ensuring the implementation of the overall direction of the state budget.

3. To effectively utilize land funds managed by the city, the People's Committee of the city may temporarily allocate from the city budget or from sources raised in accordance with prescribed regulations for infrastructure construction projects under the city's investment tasks, organize land use rights auctions, and upon completion of the auction, recover and return the funds to the budget or return the raised capital.

Article 2. The percentage ratio (%) for dividing revenues between the central budget and the city budget shall be decided by the Government upon submission to the Standing Committee of the National Assembly; the duration of stability for this percentage ratio shall be decided by the Government upon submission to the National Assembly.

Article 3.

1. Annually, in cases where there is an increase in central government budget revenue compared to the estimate assigned by the Prime Minister from revenues divided between the central budget and the city budget as stipulated in Clause 2, Article 30 of the State Budget Law, the city budget shall be rewarded with 30% of this revenue increase, but not exceeding the revenue increase compared to the previous year's actual performance.

2. The central government budget shall provide targeted supplementary funding to the city budget corresponding to 70% of the remaining portion of the revenue increase of the central government budget compared to the estimate assigned by the Prime Minister from revenues divided between the central budget and the city budget (after implementing the excess revenue reward as stipulated in Clause 1 of this Article) and corresponding to 30% of the revenue surplus from revenues that the central government budget enjoys 100% on the territory, excluding revenues such as value-added tax on imported goods; revenues that do not arise on the territory of the city but are only recorded and paid in the city; revenues recorded and expenditures recorded and revenues retained by units under management through the state budget in accordance with the law.

3. Based on the reward amount and the targeted supplementary funding from the revenue increase stipulated in Clauses 1 and 2 of this Article, the People's Committee of the city shall submit to the People's Council of the city for decision: investment in constructing infrastructure projects; repayment of raised capital; implementation of important tasks aimed at economic and social development, ensuring national defense, security, social order, and safety of the city, and rewarding lower-level budgets.

Chapter II

ON RAISING FINANCIAL RESOURCES FOR

INVESTMENT AND DEVELOPMENT OF HO CHI MINH CITY

Article 4.

1. The Government shall prioritize allocating official development assistance (ODA) capital for Ho Chi Minh City to invest in programs and projects to build urban technical infrastructure systems, environment, and public welfare.

2. The allocation of capital for projects using ODA capital shall be carried out according to the following principles:

a) For ODA projects funded by the state budget:

- For projects and works where the central ministry or agency is the project owner, the allocation of capital (including counterpart capital) shall be guaranteed by the central budget.

- For projects and works where the city people's committee is the project owner, the city shall be responsible for allocating from local budget sources to ensure the counterpart capital of the project.

b) For ODA loans repaid to borrowers, priority shall be given to projects and works with the ability to recover capital, and production projects of exportable goods with high competitiveness in the international market.

3. Specific levels of support regarding ODA capital, capital for implementing programs and projects for the city, based on the city's proposal and the opinions of the Ministry of Planning and Investment and the Ministry of Finance, the Government shall balance within the annual state budget estimate submitted to the National Assembly for decision in accordance with the State Budget Law.

Article 5.

1. Ho Chi Minh City is allowed to raise domestic investment capital through the issuance of local government bonds and other forms of raising capital in accordance with the law; the city budget shall be responsible for paying principal, interest, and related costs.

2. The city may mobilize foreign loans for investment in infrastructure development within its budgetary responsibilities according to the principle that the city shall develop loan schemes, proactively seek loan sources, solicit opinions from the Ministry of Finance, the Ministry of Planning and Investment, and the State Bank of Vietnam before submitting to the Prime Minister for consideration and decision under the mechanism whereby the Government borrows and then lends back to the city to implement projects and works as proposed by the People's Committee of the city. The city is responsible for allocating funds from the local budget to repay principal and interest in accordance with the law.

3. The total outstanding debt from mobilized capital for investment in projects and works within the investment tasks from the city’s budget as stipulated in Clause 1 and Clause 2 of this Article shall not exceed 100% of the total basic construction investment capital of the city’s budget as decided annually by the Municipal People's Council (excluding capital mobilized for investment in projects as prescribed by law, and investment capital from supplementary targeted but unstable sources from the central government budget to the city’s budget, if any).

Article 6. Mobilization of capital for constructing infrastructure within the scope of the city’s budget as provided for in Article 5 of this Decree shall be carried out as follows:

1. Based on the need for capital mobilization, the People's Committee of the city shall prepare a plan to report to the Municipal People's Council for decision in accordance with the law.

2. Capital mobilization for projects and works must ensure the principles that: projects and works using mobilized capital for investment must ensure economic and social efficiency; projects and works for investment must be included in the five-year investment plan already decided by the Municipal People's Council; projects and works must have an investment decision from the competent authority; the city must allocate the local budget to fully repay the debt when due.

Article 7. In addition to the capital mobilized for projects and works funded from the budget as prescribed in Article 5 of this Decree, for projects in the field of investment with the potential to recover capital, the People's Committee of the city shall decide or submit to the competent authority for decision on investment mobilization through forms such as BOT (build-operate-transfer), BTO (build-transfer-operate), BT (build-transfer), and other forms. Financial measures such as interest rate subsidies for investment loans and partial compensation for the difference between costs and service prices as prescribed by law shall be implemented.

Article 8. The People's Committee of the city has the right to decide on accepting non-repayable aid for the city without regard to the scale of the aid; however, for aid related to religion, national defense, and security, it must report to the Prime Minister for decision. The Chairman of the People's Committee of the city is responsible for implementing the acceptance, management, and effective use of such aid, complying with accounting and settlement regulations as prescribed by law; periodically reporting to the Ministry of Finance and the Ministry of Planning and Investment for monitoring and supervision, and compiling reports to the Prime Minister.

Article 9. The People's Committee of Ho Chi Minh City is responsible for continuing to consolidate and develop the "Urban Development Investment Fund" and other financial funds as prescribed by law to mobilize contributions from various economic sectors, organizations, and individuals for the city’s budget, thereby enhancing the ability to attract capital for the city’s development.

Chapter III

IMPLEMENTATION

Article 10.

1. The Minister of Finance shall guide the implementation of this Decree.

2. Ministers, heads of ministerial-level agencies, heads of agencies under the Government, Chairmen of People's Councils, and Chairmen of People's Committees of Ho Chi Minh City shall be responsible for enforcing this Decree.

Article 11.

1. Matters concerning the implementation of the state budget not specified in this Decree shall be carried out in accordance with the Law on State Budget and Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government detailing and guiding the implementation of the Law on State Budget.

2. This Decree takes effect fifteen days after its publication in the Official Gazette; Articles 17, 18, and 19 of Decree No. 93/2001/NĐ-CP dated December 12, 2001 of the Government on decentralizing management in certain fields to Ho Chi Minh City are hereby repealed./.