JOINT CIRCULAR No. 15/VGNN-TC/TT ON TEMPORARY GUIDELINES FOR HANDLING SUBSTANDARD GOODS, LONG-STANDING SURPLUS INVENTORY, AND OBSOLETE GOODS

JOINT CIRCULAR

Interim Guidelines on the Handling of Substandard Goods, Long-Standing Surplus Stocks, and Outdated Goods

Relative to Market Demand

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Article 15. - The temporary regulations of the Council of Ministers regarding the autonomy of grassroots economic units in pricing matters (issued with Decision No. 76/HDBT dated June 26, 1986 of the Council of Ministers) have stipulated that grassroots economic units have the right to propose prices for substandard goods, long-standing surplus stocks, and outdated goods relative to market demand (confirmed by competent authorities) to the agency responsible for setting product prices. For fresh food products, they must report to their immediate superiors for prompt resolution. The State Committee for Prices and the Ministry of Finance provide interim guidelines on handling the prices of inventory, surplus stocks, substandard goods, and outdated goods as follows:

1. All types of materials and goods referred to as substandard goods, long-standing surplus stocks, and outdated goods relative to market demand (for fresh food products, specific provisions will be made below) must be reviewed by the inter-ministerial council and proposed to the competent authority for decision-making on quality, pricing, and price reduction measures. The composition of the inter-ministerial council includes:

- Members: Representatives from financial agencies, price control agencies, standardization and measurement-quality agencies at the same level (if necessary)

If the opinions of the members of the inter-ministerial council differ, the Chairman of the council must report to the superior management agency of the grassroots economic unit for resolution.

2. Raw materials, components, spare parts, machinery, or consumer goods belonging to current assets, fixed assets, and other sources of capital that remain intact or partially used, with good or substandard quality, or not in line with market demand... which grassroots economic units do not plan to use in the current planning year and reserve for use in the following year (for production units) or have not been consumed within two years (for circulation units), if confirmed by the inter-ministerial council according to the provisions in Point 1 of this Circular, may be allowed to reduce prices to accelerate capital turnover and improve economic efficiency in production and business operations.

3. Principles for determining prices for substandard goods, long-standing surplus stocks, and outdated goods relative to technology and market demand are as follows:

a) The price of substandard materials and goods, outdated relative to technology and market demand, and long-standing surplus stocks... must not exceed the price of similar materials and goods of good quality. For materials and equipment classified as surplus but still of good quality, sales shall follow state directives.

b) The price reduction for substandard goods, outdated relative to technology and market demand must correspond to the quality reduction, and the reduction rate must be calculated based on the current directive price of similar goods of good quality.

All substandard materials and goods, outdated relative to technology and market demand, and long-standing surplus stocks... when sold between state-owned enterprises or to collective economic units must comply with guidance or distribution by the management agency and must be used for the intended purpose. Absolutely, they cannot be sold to each other to benefit from price differences.

Authority to decide on price reductions is delegated as follows:

B1- Materials and goods listed in the state pricing directory:

+ Sale to state-owned enterprises

- Price reduction under 20% is decided by the director of independent companies, joint enterprises, general corporations, or companies upon proposal by the inter-ministerial council.

- Price reduction from 20% to 50% is decided by the inter-ministerial council upon proposal by the ministry in charge or provincial/municipal people's committees.

- Price reduction of 50% or more is decided by the inter-ministerial council upon proposal by the competent price control agency responsible for pricing these materials and goods.

+ Sale to collective economic units

If substandard materials and goods, outdated relative to technology and market demand, and long-standing surplus stocks are permitted by the competent authority or the head of the management agency to be sold to collective economic units, the prices are set as follows:

- Price reduction under 20% is decided by the direct management agency of the unit holding the materials upon proposal by the inter-ministerial council.

- Price reduction over 20% is decided by the competent price control agency responsible for pricing these materials and goods upon proposal by the inter-ministerial council.

B2- Materials and goods outside the state pricing directory are decided by the director of enterprises, joint enterprises, general corporations, or companies following guidance from provincial/municipal people's committees (for local units) or the ministry in charge (for central units).

C. For fresh food products that are substandard or have lost quality, they must be resolved promptly for consumption. The price reduction for this category of goods is determined by the ministry in charge (for central units) and provincial/municipal people's committees. Within their authority, ministries and provincial people's committees can delegate decision-making on price reductions to subordinate units.

4. Financial treatment of revenue loss due to price reductions is handled as follows:

The loss due to reduced prices for low-quality materials and goods, outdated goods in terms of technology and market demand, and surplus goods... the basic unit must bear the financial responsibility, and shall not deduct this loss from the amount paid to the State budget or request additional funding from the State for this loss.

In special cases where heavy losses are caused by objective reasons (natural disasters, enemy sabotage, etc.), the inter-ministerial council shall recommend that the competent authority consider and decide.

This Circular takes effect from the date of signature. Previous regulations of the State Price Commission and the Ministry of Finance that conflict with the content of this Circular are no longer effective.

The Joint Ministries request all ministries, general departments, People's Committees of provinces, cities, and centrally governed municipalities to disseminate this Circular to their subordinate economic units. By the end of 1986, they should report on the implementation to the Joint Ministries for supplementation, amendment, and formal issuance.