JOINT CIRCULAR No. 133/1998/TTLT-BTC-BGTVT GUIDING THE FINANCIAL MANAGEMENT REGIME FOR STATE ENTERPRISES ENGAGED IN PUBLIC SERVICES IN THE ROAD TRANSPORT SECTOR

CIRCULAR

JOINT CIRCULAR OF THE MINISTRY OF FINANCE AND THE MINISTRY OF TRANSPORT
NUMBER 133/1998/TTLT-BTC-BGTVT OF OCTOBER 13, 1998 GUIDING THE FINANCIAL MANAGEMENT REGIME FOR STATE ENTERPRISES ENGAGED IN PUBLIC SERVICES IN THE ROAD SECTOR

BASED ON DECREE NO. 56/CP OF OCTOBER 2, 1996 OF THE GOVERNMENT ON STATE ENTERPRISES ENGAGED IN PUBLIC SERVICES; CIRCULAR 06 TC/TCDN OF FEBRUARY 24, 1997 OF THE MINISTRY OF FINANCE GUIDING THE FINANCIAL MANAGEMENT REGIME FOR STATE ENTERPRISES ENGAGED IN PUBLIC SERVICES; CONSIDERING THE CHARACTERISTICS OF THE OPERATIONS OF STATE ENTERPRISES ENGAGED IN PUBLIC SERVICES IN THE FIELD OF ROAD MANAGEMENT AND REPAIR, THE MINISTRY OF FINANCE AND THE MINISTRY OF TRANSPORTATION ISSUE GUIDELINES ON THE FINANCIAL MANAGEMENT REGIME FOR STATE ENTERPRISES ENGAGED IN PUBLIC SERVICES IN THE ROAD SECTOR AS FOLLOWS:

I. GENERAL PROVISIONS

1. The subject of this Circular is state enterprises engaged in public services in the field of road management and repair under the Vietnam Road Administration and local Transport Departments, established by competent authorities (referred to as Public Service Road Enterprises). The Vietnam Road Administration shall assign tasks, sign contracts, place orders, supervise, inspect, and settle accounts for road bridge repair work volumes for central-managed Public Service Road Enterprises. Local Transport Departments shall assign tasks, sign contracts, place orders, supervise, inspect, and settle accounts for road bridge repair work volumes for locally-managed Public Service Road Enterprises.

2. Public Service Road Enterprises are responsible for using the capital and resources allocated by the State to perform the following tasks:

+ Managing and repairing road bridge infrastructure;

+ Managing and collecting fees for road bridges;

+ Organizing river crossing services and collecting ferry fares on the road system;

+ Producing, installing, and repairing structures, equipment, and means to ensure road traffic safety.

3. In addition to assigned public service tasks, Public Service Road Enterprises have the right to utilize land, capital, and assets managed by the enterprise and raise additional capital to organize business activities appropriate to the enterprise's capacity and market demand provided that:

- Approval by the authority deciding on enterprise establishment in writing;

- It does not affect the performance of assigned public service tasks;

- Registration of supplementary business activities according to current regulations;

- Separate accounting is maintained for non-public service business activities;

- Full tax obligations are fulfilled for additional business activities according to the law.

4. Public Service Road Enterprises implement tax policies and state budget revenues according to Circular No. 32/1998/TT-BTC dated March 17, 1998, guiding the implementation of tax policies and state budget revenues for state enterprises engaged in public services.

5. Public Service Road Enterprises are subject to financial supervision by the finance authority as the representative of the State owner regarding capital and assets at the enterprise according to the Government's authorization.

II. MANAGEMENT AND USE OF CAPITAL AND ASSETS

1. Capital Investment:

1. 1. Public Service Road Enterprises are invested with initial registered capital by the State, not less than the statutory minimum capital prescribed by the State, to construct, purchase fixed assets, and circulating assets suitable to the scale and assigned tasks.

1. 2. Public Service Road Enterprises currently operating, if lacking capital compared to the tasks assigned by the State (after mobilizing existing capital within the unit), will be supplemented by the State as follows:

- In cases of profitable operations: Tax benefits may be granted to supplement capital according to the law;

- In cases without profit or where tax benefits have been granted but the capital remains insufficient, the State will consider supplementary investment to meet the required capital.

1. 3. Procedures and processes for capital investment in construction and circulating capital for Public Service Road Enterprises are carried out according to current laws.

2. Capital Mobilization:

2. 1. Public Service Road Enterprises have the right to raise capital through all forms to develop business activities according to the law, but must not change the form of ownership of the enterprise.

The enterprise must prepare a specific capital-raising plan to submit to the establishment authority and the finance authority. After agreement with the finance authority, the establishment authority decides to implement it.

2. 2. When organizing business activities outside the assigned tasks, Public Service Road Enterprises are permitted to borrow from credit organizations (commercial banks, financial companies...), other enterprises, individuals (including employees within the enterprise) to supplement operational capital, but must comply with legal regulations.

2. 3. Interest rates on raised capital must be recorded in production and service costs and cannot exceed the maximum lending rate published by the State Bank of Vietnam at the time of capital raising for each industry.

2. 4. When raising capital, the enterprise must carefully calculate economic efficiency, ensuring the proper and effective use of raised capital and not using short-term loans for construction investment.

The enterprise must repay principal and interest according to the commitments made when raising capital.

The enterprise must organize separate accounting for capital raised for public service activities, business activities, and allocate costs separately for each type to determine the effectiveness of each activity.

The Director of Public Service Road Enterprises is responsible to the State for improper and ineffective use of capital leading to losses.

3. Investment outside the enterprise:

3. 1. When there is a need to use capital, assets, or land value rights to invest outside the enterprise, Public Service Road Enterprises must prepare a capital contribution plan or explain joint venture projects to the establishment authority and the finance authority. After agreement with the finance authority, the establishment authority decides to implement it.

3. 2. Investments outside the enterprise shall not affect the assigned public service tasks, must comply with legal regulations, ensure efficiency, capital preservation and development, and increase income. When using land use rights to invest outside the enterprise, the provisions of the Land Law must be implemented.

3. 3. The Public Service Road Enterprise shall not use state investment funds for financial activities such as purchasing bonds, bills, savings deposits, etc.

3. 4. The Public Service Road Enterprise shall not be permitted to invest in enterprises not owned by the state where the managers, operators, or main owners are the spouse, parents, or children of the General Director of the Public Service Road Enterprise.

4. The Public Service Road Enterprise has the responsibility to maintain accounting records to accurately track all assets and current capital according to the accounting system; truthfully and promptly reflect changes in assets and capital during operations.

5. Transfer, liquidation, leasing, mortgage, pledge of assets

5. 1. The Public Service Road Enterprise may sell or liquidate unused or obsolete technical assets to recover capital for more effective business purposes.

When selling or liquidating assets, the enterprise must establish a technical evaluation board, appraise asset value, and organize auctions in accordance with the law. The difference between the proceeds from the sale or liquidation compared to the remaining book value and the costs of sale or liquidation shall be accounted for in the business results. The recovered value from the sale or liquidation of state-owned assets shall be included in the enterprise's reinvestment capital.

5. 2. The transfer, lease, mortgage, pledge of assets generally, and the liquidation of major machinery and equipment essential to the operation of the Public Service Road Enterprise must be approved by the agency that established the enterprise after written agreement with the financial authority.

The liquidation of other assets shall be carried out in accordance with the regulations for state-owned enterprises engaged in commercial activities.

5. 3. Assets leased for operation to enhance utilization efficiency and increase income, the Public Service Road Enterprise must still depreciate according to regulations, monitor, and recover the assets upon expiration of the lease term.

5. 4. Assets pledged or mortgaged to borrow from credit organizations must follow the procedures and formalities prescribed by law. The Public Service Road Enterprise shall not pledge, mortgage, or lease borrowed, rented, held-in-custody, or pledged assets from other enterprises without the consent of the owners of those assets.

6. Capital allocation, responsibility for capital preservation, asset revaluation, loss handling plans, and management of receivables and payables shall be conducted as stipulated for state-owned enterprises engaged in production and business activities.

7. Depreciation and use of fixed assets.

The Public Service Road Enterprise shall implement the management, use, and depreciation of fixed assets as prescribed by Decision No. 1062/TC/QĐ/CSTC dated November 14, 1996, of the Minister of Finance, and Circular No. 24/1998/TT-BTC dated February 26, 1998, of the Ministry of Finance on guiding the management and use of reinvestment capital in state-owned enterprises.

III. PRODUCTION - TECHNICAL - FINANCIAL PLAN, FINANCIAL RESULTS AND FINANCIAL RESULT HANDLING OF THE PUBLIC SERVICE ROAD ENTERPRISE

A. PRODUCTION - TECHNICAL - FINANCIAL PLAN

Annually, based on assigned tasks and financial authorities' guidelines, the Public Service Road Enterprise shall prepare production plans, financial revenue and expenditure budgets, subsidy forecasts, report to the establishment decision-making body and the same-level financial authority. The establishment decision-making body is responsible for approving, consolidating reports to the financial authority and related agencies.

Within the financial plan and annual budget subsidy forecast approved, the head of the establishment decision-making body assigns plans to public service road enterprises and sends them to the same-level financial authority for coordination.

B. FINANCIAL RESULTS

1. Revenue of the Public Service Road Enterprise includes: revenue from public service activities, revenue from business activities, and other activities.

Revenue from public service road activities includes:

+ Revenue from managing and repairing bridge and road construction projects is the completed value of the managed and repaired quantities of bridge and road construction projects;

+ Revenue from producing, installing, and repairing traffic safety structures and equipment is the completed product and service value handed over;

+ Revenue from ferry crossing activities is the fare collected from passengers and transport vehicles crossing the river;

+ Revenue from toll collection on road bridges is the toll revenue from road bridges enjoyed according to the regulations of the State as stipulated in Circular No. 57/1998/TT-BTC dated April 27, 1998, of the Ministry of Finance regarding the collection of tolls on state roads and bridges.

2. Expenses of the Public Service Road Enterprise include: expenses for public service activities, business activities, and other activities.

Contents of public service road activity expenses include:

2. 1. Raw material, material, fuel, energy expenses used in public service activities;

2. 2. Wages, salaries, meal allowances, and other items with wage and salary nature according to the prescribed regime;

2. 3. Depreciation of fixed assets, subject and rate of extraction implemented according to Decision No. 1062/TC/QĐ/CSTC dated November 14, 1996, of the Ministry of Finance;

2. 4. Research and development expenses, scientific and technological innovation, education and health support, labor training according to the prescribed regime;

2. 5. External service expenses: electricity, water, telephone, fixed asset repair services; rental fees for fixed assets, auditing; insurance for assets; payment for technical documentation usage, patents, technology licenses not included in fixed assets; technical services; advertising and safety reminder poster expenses.

2. 6. Expenditures for female workers as prescribed by law, expenditures for labor protection, expenditures for protecting business premises, contributions to social insurance funds, health insurance funds, trade union fees, and allocations for forming management costs for higher levels (if any);

2. 7. Management expenses:

+ Interest payments on loans for bank operations and other entities;

+ Provisions as prescribed by regulations;

+ Severance pay for employees;

+ Payment of taxes, fees, and land rental fees;

+ Administrative management expenses: Purchase of tools, office supplies; printing costs for documents, receipts, ferry tickets, bridge and road tolls;

+ Travel expenses, conference fees, ceremonial expenses, transaction fees, foreign affairs expenses, etc.;

The above expenses must be carried out with a spirit of thrift, compliance with price systems and cost standards (if any), and must have valid invoices and supporting documents according to current regulations.

3. Revenue and expenses from business activities and other activities shall be determined according to current regulations applicable to state-owned enterprises engaged in production and business activities.

4. Public service enterprises on roads may use revenue to offset expenses, including:

Revenue from public service activities is used to offset public service activity expenses and other revenues as prescribed by law (excluding income tax).

Revenue from business activities and other activities is used to offset business activity expenses and other activities, taxes, and other revenues of the State as prescribed by law (excluding income tax).

Public service enterprises on roads must ensure profitability in their business operations in principle and may not use profits from public service activities to cover losses in business activities.

C. DISPOSITION OF FINANCIAL RESULTS.

The financial results of public service enterprises on roads include:

1. Public service activities

a) Enterprises only responsible for managing and collecting fees for bridges and roads: Shall comply with the provisions of Circular No. 57/1998/TT-BTC dated April 27, 1998, and Circular No. 75/1998/TT-BTC dated June 2, 1998, issued by the Ministry of Finance.

b) Enterprises perform the following tasks:

+ Managing and repairing road bridge works;

+ Producing, installing, and repairing works, equipment, and means serving road traffic safety;

+ Organizing river crossings and managing works and means serving river crossings.

Profits realized in the year (including both business and other activity profits) shall be distributed as follows:

+ Pay corporate income tax as prescribed by law;

+ Deduct fines for violating budget submission discipline, contract breaches, overdue debt penalties, and legitimate expenses not deducted when determining taxable profit;

+ Deduct losses not deducted from pre-tax profit;

+ The remaining profit after deducting the aforementioned items shall be allocated to various funds at the following rates and limits:

- Development Investment Fund: minimum allocation rate of 50%;

- Financial Reserve Fund: allocate 10%, the balance of this fund shall not exceed 25% of the registered capital;

- Allocate two reward and welfare funds up to three months' actual salary if the annual tax payment exceeds the previous year, and up to two months' actual salary if the annual tax payment is equal to or less than the previous year.

After allocating the development investment fund, the financial reserve fund, and the reward and welfare funds, any remaining profit shall be transferred entirely to the development investment fund; if the remaining profit is insufficient to allocate the reward and welfare funds up to two months' actual salary, the enterprise shall be provided with the shortfall by the State.

c) Enterprises that manage and maintain bridges and roads while also managing and collecting fees for bridges and roads: Financial results shall be handled as prescribed for enterprises under point (b). However, the management and use of bridge and road fee collections must be recorded separately and implemented as prescribed for enterprises under point (a).

2. Business activities:

Profits from business activities and other activities shall be distributed as follows:

+ Pay taxes as prescribed by law;

+ Post-tax profits shall be distributed according to the regulations applicable to state-owned enterprises engaged in business activities, but the total amount allocated to each fund from all sources (including public service activities) shall not exceed the maximum limit prescribed for state-owned enterprises engaged in business activities.

Procedures, timing for establishing funds, and purposes of using funds shall be implemented as prescribed for state-owned enterprises engaged in production and business activities.

IV. ACCOUNTING AUDITS, FINANCIAL REPORTS, AND FINANCIAL TRANSPARENCY

1. Preparing financial reports.

- Quarterly and annually, public service enterprises on roads are responsible for preparing financial reports according to current regulations. The General Director of the enterprise shall be responsible before the State and the law for the accuracy and truthfulness of the financial reports.

- Quarterly and annual financial reports must be submitted to the agency deciding the establishment of the enterprise, the financial agency (State Capital and Asset Management at the enterprise), the Tax Agency, and the Statistical Agency.

2. Accounting audits and financial reports

- Quarterly and annually, public service enterprises on roads shall conduct self-audits of accounting and financial reports.

- The agency deciding the establishment of the enterprise, together with the financial agency, shall organize the audit and approval of the annual financial report of public service enterprises on roads.

- The financial agency has the responsibility to inspect the implementation of financial systems, accounting disciplines, and budget submission discipline of public service enterprises on roads.

- Violations of accounting systems, financial income and expenditure systems, revenue discipline, and the establishment and use of enterprise funds shall be subject to administrative and economic penalties as prescribed by law.

3. Public disclosure of annual financial reports.

- Based on the annual financial report approved by the competent authority, public service enterprises on roads shall publicly disclose certain financial indicators at the meeting of workers and staff of the enterprise.

- The content of the disclosed indicators shall follow the model attached to this Circular.

V. IMPLEMENTATION PROVISIONS

In addition to the provisions mentioned above, public service enterprises on roads shall fulfill all other legal requirements applicable to state-owned enterprises.

2. This Circular shall take effect fifteen days from the date of issuance and shall apply to public utility road enterprises established in 1997 and 1998. All previous regulations conflicting with this Circular shall be abolished.

3. In the course of implementation, any difficulties should be promptly reported by public utility road enterprises to the Ministry of Transport and the Ministry of Finance for study and appropriate amendments.

SOCIALIST REPUBLIC OF VIET NAM

Independence - Freedom - Happiness

_________________

Date...Month...Year 199...

PUBLIC ANNOUNCEMENT OF THE FINANCIAL REPORT FOR THE YEAR

Unit of account: VND

 

The enterprise is responsible for the accuracy and truthfulness of this report.

 

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