Joint Circular No. 152/1998/TTLT-TC-NN guides the financial management mechanism for the project "Enhancing Forest Recovery through Agroforestry Methods in Northern Vietnam" funded by the Government of Japan.

 CIRCULAR

JOINT CIRCULAR NO. 152/1998/TTLT-TC-NN OF THE MINISTRY OF FINANCE AND THE MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT ON NOVEMBER 26, 1998 GUIDING THE MANAGEMENT MECHANISM FOR THE PROJECT "STRENGTHENING FOREST RECOVERY THROUGH AGROFORESTRY IN NORTHWEST VIETNAM" FUNDED BY JAPAN GOVERNMENT GRANT ASSISTANCE

Pursuant to Decree No. 87/CP dated August 5, 1997 of the Government on the issuance of regulations for managing and using official development assistance funds;

Pursuant to Decision No. 703/TTg dated October 30, 1995 of the Prime Minister approving the project "Strengthening forest recovery through agroforestry in Northwest Vietnam";

Pursuant to the objectives and contents of the diplomatic exchange letters signed between the Government of Japan and the Government of Vietnam on February 1, 1996 regarding the grant aid for the project "Strengthening forest recovery through agroforestry in Northwest Vietnam";

Pursuant to the nature, characteristics, and management requirements of the project "Strengthening forest recovery through agroforestry in Northwest Vietnam";

The Ministry of Finance and the Ministry of Agriculture and Rural Development hereby guide the financial management mechanism for the project "Strengthening forest recovery through agroforestry in Northwest Vietnam" as follows:

I. GENERAL PROVISIONS:

1. The non-reimbursable grant of 1,375,000,000 Japanese Yen from the Government of Japan to the Government of Vietnam is a state budget capital investment for the project "Strengthening forest recovery through agroforestry in Northwest Vietnam" and must be managed in accordance with the State Budget Law and the current regime for managing construction investment capital.

2. The People's Committees of Son La and Lai Chau Provinces shall perform their state management functions for the part of the project within their respective localities and have the responsibility to guide the project "Strengthening forest recovery through agroforestry in Northwest Vietnam" in managing and utilizing this capital in accordance with the provisions set out in Circular No. 30/TC-VT dated June 12, 1997 of the Ministry of Finance on guiding the state financial management system for non-reimbursable grants.

3. The non-reimbursable grant of 1,375,000,000 Japanese Yen allocated for purchasing and transporting equipment to the district centers of Son La and Lai Chau Provinces must be used strictly according to the agreed targets and beneficiaries as committed to the Government of Japan, as reflected in the project documentation.

II. SPECIFIC PROVISIONS:

1. Due to the nature of the project which mainly involves providing small equipment to farmers in the project area to enhance production, improve living standards, and reduce deforestation, the project equipment list is diverse, including the following groups:

* Vehicle group.

* Road construction equipment group.

* Forest product processing equipment group.

* Agricultural product processing equipment group.

* Water sector materials and equipment group.

* Electrical sector materials and equipment group.

* Office materials and equipment group.

* Other materials and equipment group.

Beneficiaries of the projects:

* State agencies.

* State-owned enterprises.

* Private organizations.

* Community residents (villages, hamlets, groups of households...).

* Individual household residents.

This is direct assistance to the provincial budgets and is considered direct revenue of the provincial budgets, therefore, the Departments of Finance of Son La and Lai Chau Provinces shall be responsible for recording the revenue through the provincial budgets in accordance with the provisions of this Circular.

2. Based on the classification of machinery and equipment for users in each locality as agreed with the donor, the reflection of grant receipts and expenditures through the budget will be handled in the following forms:

2.1 Distribution under the form of recording receipts and expenditures in the state budget for groups of materials and equipment provided to users who are state management agencies participating in implementing the project and community residents benefiting from the project, including office equipment, electrical equipment, testing equipment, transportation means, water supply system materials, and daily electricity supply materials.

2.2 Distribution under the form of recording receipts and expenditures in the state budget for types of materials and equipment such as rice hullers, animal feed grinders, water pumps, manual plows, grain dryers, etc., according to the principle that the beneficiary contributes a portion of the cost to establish a counterpart fund serving the project area for collective economic organizations, private organizations, and groups of households and individual households.

2.3 Distribution under the form of recording receipts and expenditures in the state budget for equipment provided to recipients who are state-owned enterprises to participate in implementing the project, treated as a temporary advance of construction investment capital for enterprises. Upon completion of the works, acceptance, evaluation, and transfer of capital to the enterprise for management and use according to current regulations will be carried out.

The specific allocation of equipment, materials, and transportation means into the three aforementioned groups shall be decided by the Project Management Board Chairperson upon submission to the Chairman of the Provincial People's Committee.

2.4 The value of materials, equipment, and transportation means recorded in the budget is the CIF (or CFR) price of these materials and equipment multiplied by the exchange rate published by the Ministry of Finance, clearly stated on the goods invoice or grant confirmation letter.

2.5 The contribution level of the beneficiary to establish a counterpart fund is determined for each type of material and equipment based on the beneficiary's ability to contribute. The Chairman of the Provincial People's Committee shall decide the specific contribution level for each type of material, equipment, and transportation means based on the proposal of the Advisory Council chaired by the Project Management Board Chairperson and some members comprising representatives with authority from the following agencies:

* Department of Finance and Price Control.

* Department of Agriculture and Rural Development.

* Department of Planning and Investment.

* Relevant departments and industries for each type of main material and equipment (for example, the Electricity Company for electrical materials and equipment, the Department of Transportation and Public Works for road construction equipment and water sector materials and equipment, etc.).

The establishment of the Advisory Council and its operational regulations shall be drafted by the Project Management Board Chairperson and submitted to the Chairman of the Provincial People's Committee for approval and issuance.

The Advisory Council shall be responsible for:

* Determine the contribution level of beneficiaries based on the value of materials and equipment received and the living standards of residents in each region and area, and specify the form and method of collection (one-time or multiple collections, in cash or by check).

* Based on the project documentation, establish management and usage conditions for each type of equipment provided as aid, requiring recipients to commit to compliance.

3. In accordance with the decision of the Provincial People's Committee and the results of the allocation of equipment from the project to users, the Department of Finance and Prices and the Project Management Board shall carry out necessary procedures and formalities for users of aid materials and equipment as follows:

3.1 Carry out the procedures for recording income and expenditure through the provincial state budget for the value of materials and equipment belonging to state administrative agencies, community groups, and state-owned enterprises (if any).

3.2 Sign transfer agreements for the management and use rights and collect contributions to establish counterpart funds for beneficiaries listed in Point 2.2, Section 2, Part II of this Circular. The agreement must clearly define the value of the materials and equipment received, the form and method of collecting contributions. Contributions from beneficiaries must be recorded as income and expenditure through the budget and used for the intended purpose of the counterpart funds specified in the agreement.

3.3 For construction projects funded by the project, upon completion of the works, final settlement and handover to the managing user entity shall be carried out in accordance with the Investment and Construction Management Regulations issued together with Decree No. 42/CP dated July 16, 1997, and subsequent supplementary and guiding documents.

In cases where the entity receiving the handover of construction works for operation and management is a state-owned enterprise, alongside the physical handover, the Department of Finance and Prices will coordinate with relevant agencies to complete the procedures for transferring state budget funds to the receiving enterprise according to the value of the works (including both domestic and foreign capital) recorded in the final settlement documents.

4. Annually and quarterly during the year, the Project Leader is responsible for compiling the situation and results of the project implementation and reporting to the Provincial People's Committee, the Ministry of Agriculture and Rural Development, and the Ministry of Finance. Upon completion of the project, the People's Committees of Son La and Lai Chau are responsible for reporting comprehensively and in detail in accordance with current regulations on project reporting and settlement, and sending them to the Ministry of Finance and the Ministry of Agriculture and Rural Development.

III. IMPLEMENTATION PROVISIONS:

This Circular takes effect fifteen days after its issuance and applies to activities under the project "Enhancing Forest Recovery through Agroforestry Integration in Northern Vietnam." It ceases to be effective when the project concludes. During implementation, if any issues arise, the People's Committees of the provinces, the Project Leader, and related agencies must promptly report to the relevant ministries for resolution.