Circular No. 148/1998/TT-BTC guides the determination of exchange rates and payment for exported goods and services to repay foreign debts.

CIRCULAR

MINISTRY OF FINANCE DECREE NO. 148/1998/TT-BTC OF NOVEMBER 16, 1998 GUIDING THE DETERMINATION OF EXCHANGE RATES AND PAYMENT FOR EXPORT GOODS AND SERVICES TO REPAY FOREIGN DEBTS

Pursuant to Decree No. 40/CP dated July 3, 1995 of the Government on repaying foreign debts with goods and services that generate foreign currency, and Directive No. 4125/KTTH dated July 31, 1995 of the Prime Minister, the Ministry of Finance issued Circular No. 87-TC/TCĐN dated November 23, 1995 guiding specifically the examination and determination of exchange rates and payment for export goods and services to repay foreign debts. To align with practical circumstances and the need to strengthen financial management, the Ministry of Finance amends the guidance on determining exchange rates and payments for exported goods and services to repay foreign debts as follows:

I. PRINCIPLES AND PROCEDURES FOR EXAMINING AND DECIDING EXCHANGE RATES FOR PAYMENT

1. General principles

The exchange rate for payment of export goods and services to repay foreign debts shall be determined appropriately according to each debt repayment method, specifically as follows:

1.1. The examination and decision on the exchange rate for payment of export goods and services to repay foreign debts shall only apply to goods and services for debt repayment carried out under the quota allocation method, following the examination and decision procedure outlined in Point 2 below.

1.2. For export goods and services for debt repayment carried out through bidding, the applicable payment exchange rate shall be based on the winning bid exchange rate in accordance with the bidding regulations issued by the Ministry of Finance.

1.3. For export goods and services for debt repayment carried out under normal commercial conditions where foreign partners have the freedom to choose their counterparties and the goods for debt repayment from Vietnam, the payment exchange rate shall be implemented according to the separate payment mechanism for each country approved by the Government.

2. Examination and Decision Procedure for Exchange Rates

2.1. For types of goods, groups of goods, and services that have been exported to repay debts and have had their payment exchange rates determined in the previous year, if domestic prices or international prices increase/decrease within 5% compared to the previous year, the Ministry of Finance will examine and decide to use the previous year's payment exchange rate as the quota exchange rate for the next planning year after signing the Debt Repayment Protocol or Agreement with foreign creditors.

2.2. For cases where there is insufficient basis to implement the quota exchange rate as specified in Item 2.1 above, based on the allocated debt repayment quota, enterprises designated as key exporters for debt repayment shall prepare exchange rate calculation plans and submit them to the Ministry of Finance for examination and decision on the payment exchange rate for the goods, group of goods, or service for debt repayment. The specific exchange rate will be examined and decided upon for each group of goods or goods exported for debt repayment according to the annual quota. In special cases involving seasonal production and export goods, the examination and decision on the payment exchange rate may be conducted for each specific consignment or shipment.

- Within no more than ten days from receiving all plans and detailed explanatory documents, the Ministry of Finance will organize the examination and decision on the payment exchange rate. For certain special cases requiring additional opinions from relevant Ministries or sectors or a re-evaluation of the basis for calculating the enterprise's proposed exchange rate plan, the Ministry of Finance will notify the specific examination and decision plan for the relevant key enterprises to coordinate accordingly.

- The exchange rate calculation plan shall be based on a reasonable and valid cost and production expense plan of the enterprise and savings for the State budget. The external price (export and service) shall be based on the principles for determining prices stipulated in the Debt Repayment Protocols or Agreements signed by the Government with foreign parties, taking into account past implementation prices, fluctuations in international market prices at the time of the exchange rate review, or based on previously signed commercial contracts with foreign counterparts (foreign contracts) registered with the Ministry of Finance.

2.3. During the implementation process, if there are sudden changes in domestic and international prices leading to increases/decreases exceeding 5% compared to the prices calculated in the previous exchange rate decision, the payment with the previously decided exchange rate is no longer appropriate and needs to be adjusted. Based on the enterprise's proposal, the Ministry of Finance will examine and decide to amend the previously announced exchange rate.

2.4. The examination and announcement of exchange rates for payment in bidding cases for export goods and services to repay debts; adjustment of winning bid exchange rates... shall be carried out in accordance with the bidding regulations issued by the Ministry of Finance.

II. ORDERING OF GOODS

The order form is a document signed between the Ministry of Finance and the enterprise and serves solely as the basis for payment to domestic enterprises exporting goods or services to repay foreign debts on behalf of the State to ensure appropriate debt repayment to foreign countries and the State budget plan.

After signing the foreign contract, enterprises named in the foreign contract shall come to the Ministry of Finance (Department of Foreign Financial Affairs) to sign the order form (according to the model attached to this circular).

The Ministry of Finance will sign the order form with the enterprise immediately after the enterprise presents to the Ministry of Finance (Department of Foreign Financial Affairs) copies of the foreign contract and contract accessories signed with foreign countries (if any), certified as "true copy" by the Director or General Director. In cases of export through intermediaries, the intermediary enterprise must also present the export agency contract signed with enterprises allocated debt repayment quotas.

Each order form has validity only for delivery within the delivery period stated in the order form. Beyond this period, the enterprise can continue to deliver and pay the order form to the Ministry of Finance only after obtaining written approval for extension from the Ministry of Finance.

III. REGULATIONS ON MANAGEMENT AND PAYMENT FOR EXPORT GOODS AND SERVICES TO REPAY DEBTS

The provisions on management and settlement of export goods and debt repayment services set forth in this Section shall apply uniformly to all methods of debt repayment with goods and services (the allocation method, the bidding method, and the debt repayment method under normal commercial conditions as stipulated in Section I).

1. After exporting goods and providing services to foreign countries to repay debts to the State pursuant to Orders signed with the Ministry of Finance, enterprises must submit to the Ministry of Finance (Department of Foreign Finance) a dossier comprising the following documents as prescribed below for monitoring the debt repayment process:

1.1. For enterprises producing export goods:

- The original Order signed with the Ministry of Finance.

- The original Export Invoice accompanied by the confirmation from the Vietnam Bank for Foreign Trade stating that "the export shipment or service provision documents for debt repayment are appropriate and have been sent abroad by the Vietnam Bank for Foreign Trade for debt repayment procedures" or "the export shipment (service) documents have been cleared abroad."

- A copy of the Export Declaration Form confirmed by the customs office at the port of export, accompanied by a confirmation of "true copy" by the Director or General Manager.

- A copy of the Certificate of Origin (C/O) of the goods issued by the Vietnam Chamber of Commerce and Industry, with a confirmation of "true copy" by the Director or General Manager.

- A copy of the complete set of export documents in accordance with the payment methods specified in the Banking Agreements signed with each country and agreed upon with the Buyer regarding payment terms, confirmed by the Director or General Manager as "true copy."

- A copy of the Export Permit if the goods require such a permit according to the regulations of the Ministry of Trade, confirmed by the Director or General Manager as "true copy."

In the following specific cases, enterprises must also present additional documents:

a. In the case of debt repayment in freely convertible foreign currency:

- The exchange rate table between the Vietnamese Dong and freely convertible foreign currencies published by the Vietnam Bank for Foreign Trade on the day when the foreign bank reports credit for Letter of Credit (L/C) transactions, or on the day when the Vietnam Bank for Foreign Trade confirms that "appropriate documents have been sent abroad for debt repayment procedures" for Collection transactions.

b. In the case where the enterprise requests refund of export tax paid according to current regulations:

- The tax receipt for export tax together with a mandate for transfer (or payment voucher) in the format issued by the Ministry of Finance (original or certified true copy).

- A certificate confirming tax payment to the State Budget (original or certified true copy) bearing the stamp and signature of the National Treasury accountant where the payment was made.

c. In the case where Vietnam re-exports goods for debt repayment to a third country, the enterprise must present:

- A letter requesting re-exportation from the foreign creditor (or stated in the foreign contract or ancillary agreement signed between both parties), specifying the address and name of the recipient of the re-exported goods.

1.2. For enterprises providing service for debt repayment:

- The original Order signed with the Ministry of Finance.

- The original Service Invoice accompanied by the confirmation from the Vietnam Bank for Foreign Trade that the creditor bank has reported credit - debt repayment for Vietnam.

- Appropriate documents as specified in the agreements between authorized banks (original confirmation by the Embassy, trade representative office of the creditor country...).

2. Settlement

2.1. Based on the Order and the original Export Invoice, service invoice, along with the confirmation from the Vietnam Bank for Foreign Trade as stipulated in point 1 above, the Ministry of Finance will pay Vietnamese Dong to enterprises exporting goods or providing service for debt repayment based on the actual turnover and exchange rate specified in the Order signed between the Ministry of Finance and the enterprise, specifically as follows:

a) In the case of payment through L/C: Pay 100% of the invoice value immediately if the Vietnam Bank for Foreign Trade confirms "debt has been repaid abroad" (credit reported).

b) In the case of payment through Collection: Pay 90% of the invoice value if the Vietnam Bank for Foreign Trade confirms "appropriate documents have been sent abroad for debt repayment procedures." The remaining 10% will be paid by the Ministry of Finance when the foreign bank reports credit for debt repayment.

2.2. The time for determining the exchange rate for payment: In the case of debt repayment in freely convertible foreign currency, the payment exchange rate is determined as a percentage of the buying rate published by the Vietnam Bank for Foreign Trade on the day when the foreign bank reports credit for L/C transactions, or the day when the Vietnam Bank for Foreign Trade confirms that "appropriate documents have been sent abroad for debt repayment procedures" for Collection transactions.

3. Responsibilities of the Ministry of Finance:

The Ministry of Finance is responsible for timely and full payment to enterprises producing export goods and providing service for debt repayment on behalf of the State immediately after receiving confirmation from the Vietnam Bank for Foreign Trade according to the provisions of Section 2 of Part III of this Circular. If the Ministry of Finance delays payment for one month or more, it must pay interest on the unpaid amount to the enterprise at the loan interest rate of the bank for the actual number of days delayed. In cases of delay due to objective reasons, the Ministry of Finance will report to the Prime Minister for measures to resolve the issue.

4. Responsibilities of enterprises:

- Enterprises producing export goods and providing service for debt repayment on behalf of the State are responsible for negotiating and signing foreign contracts in accordance with the regulations of the Ministry of Trade as applicable to regular commercial contracts and consistent with international trade practices. These contracts must include payment terms incorporated into debt repayment under the Government's Debt Repayment Agreement.

- Export enterprises and service repayment businesses shall be fully responsible for the accuracy and legality of the documents and certificates provided as stipulated in Section 1, Part III of this Circular. In case the enterprise fails to comply with the terms of the foreign contract leading to the refusal of debt settlement by foreign parties, it shall bear full material responsibility for the resulting losses (including interest penalties due to late delivery if applicable) and must refund the State Budget the amount already paid. Enterprises shall resolve disputes regarding contracts and payment documents in accordance with Vietnamese laws and international trade practices.

5. Responsibilities of the Vietnam Foreign Trade Bank

- To carry out foreign exchange transactions at the request of enterprises; to check the payment documents to ensure they conform to the payment procedures agreed upon with foreign banks and stipulated in the foreign contracts between enterprises. In case discrepancies are found in the documents, the Bank may only proceed with the debt settlement process after the enterprise has corrected the errors or provided a written commitment to bear full responsibility for them.

- To promptly inform the Ministry of Finance about the dispatch of payment documents for debt settlement procedures, or about the completion of debt settlement by foreign banks (confirmation received), as well as cases where the documents are partially or wholly rejected so that the Ministry of Finance can base its payments to the enterprises accordingly.

- To regularly reconcile figures and urge foreign banks to settle debts for Vietnam in a timely manner.

IV. IMPLEMENTATION PROVISIONS

This Circular shall take effect fifteen days from the date of signature and shall replace Circular No. 87-TC/TCĐN dated November 23, 1995 issued by the Ministry of Finance. All previous regulations contrary to this Circular are hereby abolished.

During the implementation of this Circular, if any difficulties arise, relevant ministries, sectors, and enterprises are requested to report them promptly to the Ministry of Finance for resolution.

                                                                                Le Thi Bang Tam

                                                                                (Signed)

ORDER FORM

EXPORT (OR SERVICE) TO REPAY FOREIGN DEBT

For:...tonnage in 199...

Registration Number:...

Date: …

Based on the plan to repay foreign debt for...in 199...

Decree No. 30/1998/NĐ-CP

Publicized auction results on...

Indicators announced by the Ministry of Planning and Investment

number..., date...

Foreign contract number..., date...

signed between...

The Ministry of Finance agrees to sign the Order Form to repay debt with...

......................................................................................................

(hereinafter referred to as the Enterprise) to repay debt for...

according to...signed on...

according to the specific terms and conditions set forth below:

1. Export goods (or services) to repay debt: …

2. Value of the Order Form:...

3. Final delivery date:...

4. Exchange rate for payment: ...

5. Advance payment or guarantee for performance of the Order Form (if any):

Number..., date..., issued by...

Value of money:...

6. Payment provisions for export goods and service repayment: The Ministry of Finance and the Enterprise commit to comply strictly with the guidelines set forth in Section III of Circular No..../1998/TT/BTC dated...issued by the Ministry of Finance.

7. Account for receiving payment of the Enterprise:

- Account number:...

- At:...

8. During the execution of this Order Form, if necessary, both parties may sign additional supplementary appendices.