Circular No. 132/2011/TT-BTC guides the method for determining the value of rubber plantations when corporatizing.

CIRCULAR

Guidelines for determining the value of rubber plantations when corporatizing

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Pursuant to Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government on the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 59/2011/NĐ-CP dated July 19, 2011 of the Government on converting state-owned enterprises with 100% state capital into joint-stock companies;

Implementing Circular No. 442/TTg-ĐMDN dated March 15, 2010 of the Prime Minister on corporatizing rubber plantations and forests attached to processing facilities;

The Ministry of Finance issues guidelines for determining the value of rubber plantations when corporatizing, as follows:

PART I

GENERAL PROVISIONS

Article 1. Purpose and requirements for determining the value of rubber plantations when corporatizing:

- Ensuring accurate and comprehensive calculation of investment costs for rubber plantations, future estimated recovery values of firewood and timber based on market prices and factors influenced by weather and climate conditions.

- Ensuring harmonization of interests among the state, the corporatizing entity owning rubber plantations, investors, and employees within the enterprise.

- For other assets outside rubber plantations, the corporatization of the company shall be carried out in accordance with Decree No. 59/2011/NĐ-CP dated July 18, 2011 of the Government on converting state-owned enterprises with 100% state capital into joint-stock companies and the Circular guiding the implementation of Decree No. 59/2011/NĐ-CP dated July 18, 2011 of the Government.

Article 4. Scope of Application:

A limited liability company wholly owned by the state (including dependent units) that has rubber plantations and has received a decision on corporatizing the company from the competent authority includes: Limited liability companies established by ministers, provincial People's Committee chairmen; Parent companies and subsidiaries within parent-subsidiary groups under state economic groups and state corporations established by the Prime Minister, ministers, and provincial/municipal People's Committee chairmen (hereinafter referred to as the company).

Article 3. Scope of Regulation:

Rubber plantations to be valued during the corporatization of the company include: Construction rubber plantations and business rubber plantations.

Determination of the value of rubber plantations for pilot corporatization linked to processing facilities shall be carried out according to the plan approved by the Prime Minister.

Rubber plantations that have been decided to be liquidated by the competent authority but have not yet been liquidated at the time of valuation of the enterprise shall not be re-evaluated for inclusion in the enterprise's value. After announcing the enterprise's value, the company is responsible for managing and organizing the liquidation and sale of unliquidated plantations according to current regulations. At the time of transferring capital and assets from a wholly state-owned limited liability company to a joint-stock company, if the liquidation has not been organized, the company is responsible for transferring unliquidated rubber plantations to the parent company or the owner of the enterprise's capital according to regulations.

Chapter II

SPECIFIC PROVISIONS

Article 4. Requirements for Inventory and Classification of Plantations:

- Classify the area of construction rubber plantations and business rubber plantations by hectares (ha) and age of the plantation.

- Classify the area of construction rubber plantations and business rubber plantations by investment form: New planting, replanting (newly planted rubber trees on land where old rubber trees have been cleared).

- Classify construction rubber plantations and business rubber plantations into types A, B, C, D corresponding to coefficients A = 1; B = 0.95; C = 0.9; D = 0.8. Criteria for classification of plantations are issued by the competent authority, specifically:

+ For state-owned companies with 100% charter capital belonging to state economic groups and state corporations established by the Prime Minister, the criteria are issued by the Board of Directors of these groups and corporations.

+ For state-owned companies with 100% charter capital established by ministries, the criteria are issued by ministry heads.

+ For state-owned companies with 100% charter capital established by provincial/municipal People's Committees, the criteria are issued by provincial/municipal People's Committee chairmen.

Article 5. Determining the value of rubber plantations:

1. Determining the value of basic construction rubber plantations G(xdcb):

The value of basic construction rubber plantations is based on the agricultural investment cost including: Land clearance or rehabilitation costs; Plantation construction costs; New planting costs; Care costs for the plantation during the basic construction period and other basic construction costs issued by the competent authority (as stipulated in Article 4 of this Circular) for each company at the time of determining the enterprise value for privatization.

- The actual value of basic construction rubber plantations is determined for each area (hectare) of the plantation and according to age (i) with the agricultural investment cost of the plantation by age (i) multiplied (x) by the classification coefficient of basic construction rubber plantations by age (i) at the time of determining the enterprise value for privatization, where the classification coefficient of basic construction rubber plantations is based on criteria regarding the density of grafted trees/hectare and the average trunk circumference to evaluate and classify. The actual classification coefficient of the plantation is determined based on inventory and assessment according to the classification criteria decided by the competent authority at the time of determining the enterprise value for privatization of the company, specifically:

Gi(xdcb) = Dt(xdcb) x Siđt x HSi(xdcb)

Where:

+ Gi(xdcb) is the value of basic construction rubber plantation age i;

+ Dt(xdcb): Area of basic construction plantation;

+ Siđt is the agricultural investment cost of basic construction rubber plantation age i;

+ HSi(xdcb) is the classification coefficient of basic construction rubber plantation age i.

* Value of basic construction plantation G(xdcb) = ∑Gi(xdcb)

2. Determining the value of operating rubber plantations G(kd):

2.1. The actual value of operating rubber plantations, determined for each area (hectare) of the plantation according to age (i), specifically:

The actual value of the hectare of rubber plantation age i Gi (kd) = (Adjusted remaining value of rubber plantation age i x Actual classification coefficient of plantation age i) + Present value of the liquidation value of operating rubber plantation age i, where:

a. Adjusted remaining value of rubber plantation:

Adjusted remaining value of rubber plantation age i = Revalued original cost of the plantation - Accumulated depreciation up to the valuation date for enterprise privatization, where:

+ Revalued original cost of rubber plantation: Determined according to the annual agricultural investment cost approved by the competent authority for the company or by region at the time of determining the enterprise value for privatization.

+ Accumulated depreciation: Calculated from the year the plantation begins exploitation to the valuation date based on the revalued original cost of the rubber plantation and the annual depreciation rate prescribed by the competent authority.

b. Classification coefficient of the plantation: Based on criteria regarding the density of tapping trees, tapping surface condition, and quality of bark to evaluate and classify operating plantations. The actual classification coefficient of the plantation is determined based on inventory and assessment of the plantation according to the classification criteria decided by the competent authority at the time of determining the enterprise value for privatization of the company.

c. Present value of the liquidation value of operating rubber plantation: The present value of the liquidation value of operating rubber plantation that has not yet reached the end of its exploitation period must be converted to present value and recorded as an increase in the enterprise value for privatization, specifically:

Where:

- B = Liquidation value/tree x Actual number of rubber trees liquidated x (1 - average breakage rate)^(n+m-i), including:

+ Liquidation value/tree: Determined according to the weighted average method of the valuation date for enterprise privatization of the company, according to the formula:

+ Actual number of rubber trees liquidated: The actual number of rubber trees liquidated of the rubber plantation calculated at current price at the time of determining the enterprise value for privatization of the company.

+ Average breakage rate (broken trees/total effective trees): According to actual statistics of each company over the three consecutive years immediately preceding the valuation date for enterprise privatization (excluding trees broken or dead due to natural disasters such as typhoons, hailstorms, fires, or enemy attacks) with a maximum rate not exceeding 1.5%.

- k: Interest rate of a five-year government bond published by the Ministry of Finance at the nearest date to the valuation date for enterprise privatization of the company.

- i is the actual age of the rubber plantation.

- m is the number of years of basic construction of the plantation (7 years).

- n is the exploitation period of the rubber plantation (20 years).

d. Recording original cost and depreciation of the present value of the liquidation value of operating rubber plantation:

- The present value of the liquidation value of operating rubber plantation is recorded as an intangible fixed asset.

- The present value of the liquidation value of operating rubber plantation does not undergo depreciation during the use period of the operating rubber plantation and will be depreciated once at the time of liquidation of the rubber plantation.

2.2. Value of operating plantation G(kd) = ∑Gi (kd)

3. Value of rubber plantation for privatization:

Value of rubber plantation for privatization (G) = Value of basic construction plantation G(xdcb) + value of operating rubber plantation G(kd).

Article 6. Effectiveness

This Circular takes effect from November 15, 2011.

In the course of implementation, if there are difficulties or obstacles, please report to the Ministry of Finance for study and amendment./.