Circular No. 130/2007/TT-BTC Amending and Supplementing Certain Points of Circular No. 27/2007/TT-BTC dated April 3, 2007 of the Ministry of Finance guiding the management and settlement of investment capital and operational capital with investment characteristics from state budget funds.

CIRCULAR

Amending and supplementing certain points of Circular No. 27/2007/TT-BTC dated April 3, 2007 of the Ministry of Finance guiding management and settlement of investment capital and operational capital with investment characteristics from state budget funds

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

Pursuant to the Construction Law on November 26, 2003, Government Decree No. 16/2005/NĐ-CP dated February 7, 2005 on project management for construction works, and Government Decree No. 112/2006/NĐ-CP dated September 29, 2006 amending and supplementing certain articles of Government Decree No. 16/2005/NĐ-CP dated February 7, 2005;

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

Pursuant to Government Decree No. 71/2005/NĐ-CP dated June 6, 2005 on management of special construction projects;

Pursuant to Government Decree No. 99/2007/NĐ-CP dated June 13, 2007 on management of construction investment costs;

The Ministry of Finance amends and supplements certain points of Circular No. 27/2007/TT-BTC dated April 3, 2007 of the Ministry of Finance guiding management and settlement of investment capital and operational capital with investment characteristics from state budget funds as follows:

1. Amend Clause I, Section A, Part II as follows:

"1. For planning projects: have a project outline or task approved according to authority.

2. For preparation projects: must be consistent with the approved industry development plan and territorial planning according to authority.

3. For implementation projects: must have an investment decision from a time point before October 31 of the year prior to the planned year.

4. Duration and capital allocation for implementing group B projects shall not exceed four years, and group C projects shall not exceed two years."

2. Amend Point 5, Clause II, Section A, Part II as follows:

"5. Review of capital allocation:

5.1 For projects managed by Ministries:

The Ministry of Finance reviews the capital allocation plan, provides opinions on projects lacking investment procedures and failing to meet conditions for capital allocation, and sends them to the State Treasury. Ministries are responsible for reallocating according to current regulations, sending to the Ministry of Finance and the State Treasury for disbursement and settlement. The correct reallocation plans of Ministries serve as the basis for disbursement and settlement of capital.

5.2 For projects under provincial and district management:

Based on the investment capital plan decided by the People's Committee, the Provincial Department of Finance and District Financial Planning Office review the allocation plan (if any) of sectors and units, provide opinions, report to the same-level People's Committee if the allocation does not comply with regulations, and send to the State Treasury.

5.3 The investor submits to financial authorities at all levels the capital allocation plan along with relevant documents, including:

- For planning projects: approval documents for the project outline or task and approved cost estimate for planning work.

- For preparation projects: approval documents for the cost estimate for preparation work.

- For implementation projects: construction project (or economic-technical report for projects only preparing such reports) and investment decision of the competent authority."

3. Amend Point 2, Clause III, Section A, Part II as follows:

"2. Based on the above adjustment principles, ministries, sectors, and localities implement plan adjustments, submit to the same-level financial authority and the State Treasury as the basis for disbursement and settlement."

4. Amend Point 3(3.1), Clause II, Section B, Part II as follows:

"3.1 For domestic-funded projects:

- Construction project (or economic-technical report for projects only preparing such reports) with the investment decision of the competent authority, and any project adjustment decisions (if applicable);

- Tender selection document in accordance with the Bidding Law (including bidding, direct assignment, direct purchase, competitive quotation, self-execution, and special case tender selection);

- Contract between the investor and the contractor (including all documents attached to the contract as stipulated by the Ministry of Construction);

- Budget estimate and approval decision for each work, sub-project, and project for cases of direct assignment or self-execution and works executed without contracts."

5. Amend Points 1, 2, and 3, Clause III, Section B, Part II as follows:

"1. Temporary capital advance recipients and advance amount:

1.1 For construction contracts:

- Contracts under VND 10 billion, minimum advance equals 20% of the contract value.

- Contracts from VND 10 billion to VND 50 billion, minimum advance equals 15% of the contract value.

- Contracts over VND 50 billion, minimum advance equals 10% of the contract value.

1.2 For equipment procurement contracts, the advance amount is agreed upon by the contractor and the investor based on the payment schedule in the contract but must be at least 10% of the contract value.

1.3 For EPC execution contracts:

- Advance for equipment procurement based on the supply schedule in the contract.

- Other works, minimum advance equals 15% of the work value in the contract.

1.4 For consulting contracts:

The temporary advance amount is agreed upon in the contract between the investor and the contractor but must be at least 25% of the contract value.

1.5 For land clearance works:

The advance amount is based on the progress in the land clearance plan.

1.6 For urgent projects such as dike construction and repair, flood control structures, seedling facilities, and disaster relief projects, the minimum advance equals 50% of the contract value.

1.7 For large prefabricated components and materials that need to be produced in advance to ensure construction progress and seasonal material reserves, the advance amount is based on the necessary requirements and agreed upon by the investor and the contractor."

1.8 Advance funding for the aforementioned types of contracts shall be the responsibility of the project owner and must be clearly stipulated in the construction contract. The advance funding shall be implemented after the contract becomes effective; in cases where the project owner and contractor agree to provide a guarantee for the advance payment in the contract, the contractor must provide a guarantee for the advance payment amount. The level of advance funding shall not exceed the annual capital plan allocated for the tender package. For ODA projects, if the annual capital plan is lower than the foreign capital source, the level of advance funding shall not exceed the foreign capital source.

2. Recovery of advance funding:

2.1 The advance funding for the works mentioned in Section 1 above shall be recovered through payments for completed quantities of the contract, starting from the first payment and being fully recovered when the cumulative completion value reaches 80% of the contract value. The recovery amount for each payment shall be agreed upon by the project owner and the contractor.

For land clearance work:

- For compensation and support work: after disbursing funds to beneficiaries, the project owner shall collect supporting documents, process payment procedures, and recover the advance funding within the latest period of 30 working days from the date of disbursement to beneficiaries.

- For purchasing resettlement housing and other land clearance work: the advance funding shall be recovered through periodic payments for completed quantities and shall be fully recovered once the land clearance work is completed.

2.2 The project owner shall be responsible for calculating reasonable advance funding amounts, strictly managing, using the advance funding for its intended purpose, ensuring it is used effectively and on target, and ensuring full repayment of the advance funding when the cumulative completion value reaches 80% of the contract value.

In cases where the advance funding has not been recovered but is unused or used for other purposes, the project owner shall be responsible for recovering and returning the full amount to the state budget. It is strictly prohibited to make advance funding without using it or using it for purposes other than those intended.

2.3 If the advance funding has not been fully recovered by the end of the planned year due to the contract not reaching the specified payment ratio, recovery shall continue in the following year's plan without deducting from the next year's investment payment plan.

3. Advance funding documentation:

In addition to the project basis documents as prescribed, when applying for advance funding, the project owner shall submit the following documents to the State Treasury:

- A payment request for investment capital;

- Payment transfer documents;

- Contractor’s guarantee for the advance payment (if the project owner and contractor agree to provide a guarantee for the advance payment in the contract).

6. Amend Points 1, 2, 3, 4, 5, 6, 7, 8 of Clause IV, Section B, Part II as follows:

"1. For works carried out through construction contracts, contract payment shall be consistent with each type of contract, contract price, and conditions stipulated in the contract. The number of payments, payment stages, and payment conditions must be clearly stated in the contract.

1.1 For lump-sum contract prices:

Payment shall be made according to a percentage of the contract price or the completed project or component price corresponding to the payment stages specified in the contract. After completing the contract and receiving acceptance, the contracting party shall pay the contractor the entire signed contract price and any adjusted price amounts (if applicable).

1.2 For fixed unit price contract prices:

Payment shall be based on the quantity of completed works (including approved additional quantities, if any) accepted during the payment stage and the corresponding unit prices recorded in the contract or supplementary contract annexes. After completing the contract and receiving acceptance, the contracting party shall pay the contractor the entire signed contract price and any adjusted price amounts (if applicable).

1.3 For adjustable price contract prices:

Payment shall be based on the quantity of completed works (including approved additional quantities, if any) accepted during the payment stage and the adjusted unit prices as stipulated in the contract. If the conditions for adjusting unit prices have not been met at the payment stage, the provisional unit prices at the time of signing the contract shall be used for payment, and the payment value shall be adjusted when the actual adjusted unit prices become available according to the contract provisions. After completing the contract and receiving acceptance, the contracting party shall pay the contractor the entire signed contract price and any adjusted price amounts (if applicable).

1.4 For combined contract prices:

Payment shall be made in accordance with the payment regulations set forth in Clauses 1.1, 1.2, and 1.3 above.

1.5 For additional work quantities outside the contract:

- For additional work quantities up to 20% of the corresponding work quantities in the contract and with unit prices already provided in the contract, the additional work quantities shall be paid according to the unit prices recorded in the contract.

- For additional work quantities exceeding 20% of the corresponding work quantities in the contract or without unit prices in the contract, the additional work quantities shall be paid according to the unit prices approved by the project owner in accordance with the regulations.

- For additional work quantities beyond the scope of work defined in the contract, the supplementary value shall be prepared as a supplementary contract value, and both parties shall agree and sign a supplementary contract for this additional value.

1.6 Payment documentation:

When there are completed quantities accepted according to the payment stages and conditions in the contract, the project owner shall prepare a payment request document to send to the State Treasury, including:

- A table determining the value of completed work quantities according to the contract (as prescribed 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 any supplementary document replacing it, if applicable);

- A payment request for investment capital;

- Transfer documents.

When there are additional quantities outside the contract, the project owner shall submit a table determining the value of additional quantities outside the contract (as prescribed 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 or any supplementary document replacing it, if applicable).

2. For works carried out without through construction contracts (such as self-execution, project management tasks directly implemented by the investor,...), payment shall be appropriate to each type of work based on reports of completed work volumes and approved estimates for each work.

3. Principles of payment control by the State Treasury:

Based on the payment request documents submitted by the investor, the State Treasury shall make payments according to the payment terms stipulated in the contract (number of payments, payment stages, payment time points, and payment conditions) and the value of each payment. The investor shall bear full responsibility for the accuracy and legality of the executed volume, norms, unit prices, various types of work estimates, quality of the works, and the State Treasury shall not be responsible for these issues. The State Treasury shall process payments based on the payment documents and in accordance with the contract.

4. Payment deadlines and forms:

4.1 Within seven working days from the date of receipt of complete payment request documents as prescribed by the investor, based on the contract (or approved estimate for works carried out without a contract) and the amount requested for payment by the investor, the State Treasury shall control and provide capital for the project, and at the request of the investor, act on behalf of the investor to directly pay contractors, recover advance payments according to regulations.

The State Treasury shall implement payment controls according to the principle of pre-payment and post-acceptance for each payment and pre-control and post-payment for the final payment of the tender package or contract. Based on this principle, the State Treasury shall guide specific methods of payment control to ensure favorable conditions for investors and contractors and comply with state regulations.

4.2 The annual capital plan allocated for the project shall only be paid for completed volumes accepted up to December 31, with the payment deadline (including advance payments and payment for completed volumes) ending on January 31 of the following year (except for projects permitted by competent authorities to extend implementation and payment periods).

5. Projects using official development assistance (ODA) funds, if international agreements signed by authorized agencies or organizations of the Socialist Republic of Vietnam have provisions on financial management and settlement different from those stipulated in this Circular, such provisions shall be followed.

6. Investors must allocate sufficient funds annually to purchase construction project insurance as prescribed. The State will not reimburse investors for losses or risks covered by insurance if they fail to purchase construction project insurance as currently regulated.

7. The amount paid for each work item, sub-project, or project shall not exceed the approved estimate or the tender price; the total amount paid for the project shall not exceed the approved total investment.

The amount paid for the project in a year (including advance payments and payment for completed volumes) shall not exceed the annual capital plan allocated for the project. For ODA projects, if the allocated capital plan is lower than external funding sources, the payment amount shall be based on external funding sources.

7. Amend Point 2, Clause II, Section C, Part II as follows:

“2. Advance payments and capital payments:

2.1 Advance payments:

a) Documents for advance payments include:

- Decision on urgent construction issued by the authorized person;

- A payment request for investment capital;

- Transfer documents.

- Contractor's guarantee for the advance payment (if the investor and contractor agree on an advance payment guarantee in the contract);

b) Level of advance payment and recovery of advance payment:

- Minimum level of advance payment equal to 50% of the contract price or approved estimate for the project component.

- Advance payment shall be gradually recovered during subsequent payment periods for completed volumes and fully recovered when payment reaches 80% of the contract price or approved estimate.

c) Management of advance payments shall be carried out as prescribed in Section 5 above.

2.2 Capital payments:

Control and payment of capital shall be carried out as prescribed in Section 6 above.”

8. Amend Point 2, Clause III, Section C, Part II as follows:

“2. Advance payments and capital payments:

Management of advance payments and capital payments for temporary works shall be carried out as prescribed in Sections 5 and 6 above and supplemented as follows:

- In cases where payments are made according to the quota specified in Circular No. 04/2005/TT-BXD dated April 1, 2005 of the Ministry of Construction, it shall be recorded in the account for completed volumes of the project; in addition to project documents, payment documents include: payment request form for investment capital, transfer vouchers.

- In cases of large and complex projects where costs for temporary housing at the site for living and managing construction are included in the estimate, payment control shall be conducted according to the approved estimate; in addition to project documents, payment documents include: decision approving the estimate, completed volume value statement, payment request form for investment capital, transfer vouchers.”

9. Amend Point 3 (3.2, 3.3), Section D, Part II as follows:

“3.2 Advance payments:

- For projects with a total capital of one billion dong or more, the level of advance payment and recovery of advance payment shall be carried out as for projects funded by development investment capital.

- For projects with a total capital under one billion dong, the minimum level of advance payment shall be 30% of the contract value or approved estimate. Advance payment shall be gradually recovered during subsequent payment periods for completed volumes and fully recovered when payment reaches 80% of the contract value or approved estimate.

- Documents for advance payments include: payment request form for investment capital, transfer vouchers, contractor's guarantee for the advance payment (if the investor and contractor agree on an advance payment guarantee in the contract).

- Management of advance payments shall be carried out as prescribed in Section 5 above.

3.3 Capital payments:

- The state budget shall transfer funds for public services with investment characteristics to the State Treasury for payment according to regulations on fund management and disbursement for public services.”

- The control and settlement of capital shall be carried out in accordance with the regulations applicable to state budget-funded investment projects.

10. Amend Clause I, Section E, Part II as follows:

“I. Report:

1. For project sponsors, ministries, and provinces: implement the reporting regime as prescribed in Decision No. 52/2007/QD-TTg dated April 16, 2007 of the Prime Minister on the Reporting System for the Implementation of State Investment Capital Plans, Circular No. 05/2007/TT-BKH dated August 9, 2007 of the Ministry of Planning and Investment on the issuance of reporting forms and guidelines for implementing Decision No. 52/2007/QD-TTg dated April 16, 2007; Decision No. 803/2007/QD-BKH dated July 30, 2007 of the Ministry of Planning and Investment on the issuance of the reporting system for the implementation of ODA programs and projects.

2. For the State Treasury:

- Implement the information reporting system as prescribed by the Ministry of Finance.

- At the end of the fiscal year, the State Treasury settles the use of investment capital with the corresponding financial authority according to the regulations on state budget settlement.

- By the end of the fiscal year, the State Treasury confirms the amount paid during the year and accumulates the total amount paid from the start of construction to the end of the fiscal year for each project as established by the sponsor.

11. Amend Clause I and Clause IV, Section F, Part II as follows:

“I. For project sponsors:

- Fulfill the assigned functions and responsibilities as prescribed. Receive and use capital for the intended purpose, for the intended beneficiaries, economically and effectively. Adhere to the legal provisions on financial management systems for development investment.

- Conduct quantity acceptance, prepare payment files, and request payment from contractors according to the time stipulated in the contract.

- Bear full responsibility for the accuracy and legality of the actual quantities performed, norms, unit prices, budgets for various works, quality of the project, and the value proposed for payment; ensure the accuracy, honesty, and legality of all data and documents provided to the State Treasury and relevant state agencies in the submitted files.

- Timely and fully report to the investment decision-making agency and related state agencies as prescribed; provide complete files, documents, and situations as prescribed to the State Treasury and financial authorities to serve management and capital payment; be subject to inspection by financial authorities and the investment decision-making agency regarding the use of investment capital and compliance with national financial policies and systems for development investment.

- Implement accounting for the project sponsor unit; settle investment capital according to current regulations.

- Request payment when all conditions are met and request the State Treasury to respond and explain any unsatisfactory aspects in the payment process.

IV. For the State Treasury:

- Issue a uniform payment procedure for investment capital nationwide.

- Guide project sponsors to open accounts for provisional advances and payments.

- Timely and fully pay capital to projects when all conditions are met and within the prescribed timeframe.

- Provide clear written opinions to project sponsors regarding reduced or refused payments and respond to their queries about capital payments.

- The State Treasury will only monitor and settle payments based on the documents provided by the project sponsor and according to the prescribed payment principles, without bearing responsibility for the accuracy of the quantities, norms, unit prices, and quality of the project. In cases where decisions made by authorized levels are found to contravene current regulations, a written request for reconsideration must be made along with detailed proposals. If no response is received within the prescribed timeframe, the State Treasury may proceed according to its own proposal; if the response is deemed unsatisfactory, it must still follow the opinion of the authorized level while simultaneously reporting to a higher authority and the financial authority for review and handling.

- Urge project sponsors to settle debts completely when projects have been settled and all accounts closed.

- Implement the information reporting and settlement system for investment capital and operational funds with investment characteristics from state budget sources according to the State Budget Law and the guidance of the Ministry of Finance.

- Have the right to request project sponsors to provide files, documents, and information according to the prescribed system to facilitate capital monitoring and settlement work.

- Regularly and urgently inspect project sponsors on the implementation of projects, compliance with financial policies and systems for development investment, management and use of investment capital; have the authority to temporarily suspend capital payments or recover capital misused by project sponsors, and report to the Ministry of Finance for handling.

- Not participate in acceptance boards at construction sites and projects.

- Organize capital monitoring and settlement work according to a unified and simplified administrative procedure but ensuring strict capital management, timely and full payment, and convenience for project sponsors.

- By the end of the fiscal year, confirm the amount paid during the year and accumulate the total amount paid from the start of construction to the end of the fiscal year for each project, comment on compliance with management systems, norms, unit prices, and policies and systems as prescribed.

- Be responsible before the Minister of Finance and national laws for receiving, using state budget capital, and making payments in construction investment.

12. Effective date: This Circular takes effect fifteen days from the date of publication in the Official Gazette./.