JOINT CIRCULAR No. 18/TT-LB GUIDING THE MANAGEMENT AND USE OF CAPITAL FOR CIRCULATING FERTILIZER RESERVES

CIRCULAR

JOINT MINISTRY OF FINANCE, AGRICULTURE AND RURAL DEVELOPMENT

GUIDELINES FOR THE MANAGEMENT AND USE OF CAPITAL FOR UREA FERTILIZER RESERVES

In accordance with Decision No. 6842/KTTH dated December 6, 1994 of the Prime Minister on the management to ensure demand and stabilize urea fertilizer prices, the Joint Ministry of Finance and Agriculture and Rural Development hereby provides guidelines for the management and use of capital for urea fertilizer reserves as follows:

I. GENERAL PROVISIONS

1. The Central Agricultural Supplies and Marketing Corporation under the Ministry of Agriculture and Rural Development (hereinafter referred to as the Corporation) is assigned by the State to reserve UREA fertilizer for sale when necessary to contribute to stabilizing fertilizer prices and protecting farmers' interests. The quantity reserved shall be 10% of the annual UREA fertilizer demand.

2. To fulfill this task, the Corporation is allocated circulation reserve capital from the State budget corresponding to its assigned tasks. Circulation reserve capital refers to working capital specifically used to continuously reserve and circulate a certain amount of UREA fertilizer ready for sale to stabilize fertilizer prices. This capital can only be used for the purpose of reserving and circulating UREA fertilizer, not for other purposes.

3. The Corporation is responsible for managing and using the allocated capital effectively, ensuring its preservation at the value of US dollars as stipulated in Point 3 of Circular No. 6842/KTTH mentioned above.

II. SPECIFIC REGULATIONS

1. Annually, based on production targets, importation, and supply of chemical fertilizers for agricultural production decided by the Government, the Ministry of Agriculture and Rural Development, together with the Ministry of Finance and the State Planning Commission, will determine the quantity of UREA fertilizer needed to be reserved, which is 10% of the plan to contribute to stabilizing prices. Based on the required quantity of fertilizer and the average import price over the previous two years, the corresponding capital needs and the additional capital required will be determined. If the circulation reserve capital requirement increases or decreases by more than 5% compared to the previously determined amount, the Joint Ministry will consider supplementing or recovering it for the State budget.

2. In addition to the annual allocation, the Ministry of Finance will consult with the Ministry of Agriculture and Rural Development to submit

3. Regarding the importation and reservation of UREA fertilizer. Based on the annual fertilizer import plan assigned by the State, the Corporation must proactively study and forecast market conditions to import sufficient fertilizer according to the assigned plan and the quantity to be included in circulation reserves. If other sectors or localities fail to meet their assigned quotas, the Corporation must report to the Joint Ministry of Trade and Agriculture and Rural Development to import supplementary fertilizer, preventing shortages that could cause sudden price increases and harm agricultural producers; while also avoiding excessive imports that could harm fertilizer trading enterprises. Circulating reserve fertilizer must meet quality standards and suit producer preferences. The Corporation may independently decide on purchases and sales, selling to maintain the quality of reserve fertilizer and reduce circulation costs, but must ensure the principle: During peak agricultural seasons or when fertilizer prices suddenly increase, there must be sufficient fertilizer corresponding to the allocated circulation reserve capital. The UREA fertilizer price sold to farmers by the Corporation should be close to market prices, following the principle: Not to incur losses, not to take excessive profits from farmers, and not to create loopholes for exploitation. Ensuring timely supply of UREA fertilizer to meet regional and seasonal production needs contributes to keeping market prices moving in line with state-guided prices, maintaining a reasonable relationship with rice prices. In cases where world fertilizer prices rise excessively, causing domestic fertilizer prices to exceed state-guided levels, disrupting the relationship with rice prices and harming agricultural production, the Ministry of Agriculture and Rural Development, along with the Government Price Control Board and the Ministry of Finance, will submit

4. Regarding the preservation of capital

a. To preserve circulation reserve capital in US dollars, the Corporation will determine the amount to be preserved as follows:

Converted circulation reserve capital amount

Foreign currency (USD) amount based on exchange rate Exchange rate for purchase

(VND) announced by the Vietnam Bank for Foreign Exchange on December 31, 1993 and the date of additional allocation in subsequent years

to be preserved = purchase rate announced by the Vietnam Bank for Foreign Exchange

at year-end December 31, 1993 and the date of additional allocation

in subsequent years

All existing working capital at the Corporation shall also be used for importing and reserving fertilizers and must be preserved according to the above principle.

b. Sources for preserving capital include: Differences in fertilizer prices and inventory goods. Exchange rate differences. Reserve fund If these sources are insufficient to preserve the capital, the Corporation will record the shortfall in the cost of goods sold for the year. If the recording results in a loss, the Corporation must cover it in subsequent years according to current regulations.

5. Regarding the reserve fund Given that fertilizers need to be stored for a relatively long time and are significantly affected by the global market, they are prone to risks and losses. Therefore, annually, the Corporation is allowed to set aside 10% of remaining profits (after paying taxes as prescribed by law) as a reserve fund. The Corporation can only use this fund to offset losses and price reductions due to external factors, subject to approval by the Joint Ministry of Finance and Agriculture and Rural Development. When there is no immediate need to use it, the reserve fund can only be used for circulating reserve fertilizer.

6. Quarterly and during periods of sudden fertilizer price increases, the Corporation must report the capital situation and stock quantities to the Joint Ministry of Finance and Agriculture and Rural Development, the State Planning Commission, and the Government Price Control Board for review and reporting.

1. This circular takes effect from January 1, 1995. However, the preservation of capital must be implemented immediately from 1994. Any previous regulations conflicting with this circular are abolished.

2. During implementation, if any difficulties arise, the Corporation must promptly report them to the Joint Ministry for consideration and resolution.

(Issued together with Decision No. 206/1998/QĐ-NHNN6 dated June 11, 1998 of the Governor of the State Bank of Vietnam)

1. This Circular takes effect from January 1, 1995. Specifically, capital preservation must be implemented starting from 1994. All previous provisions contrary to this Circular are hereby abolished.

2. During the implementation process, if any difficulties arise, the总公司应及时向联部报告以便审查处理。||| 2 ||| 2. During the implementation process, if any difficulties arise, the General Corporation shall promptly report to the Joint Ministry for review and resolution.

ON BEHALF OF THE PEOPLE'S COMMITTEE OF GIA LAI PROVINCE
CHAIRMAN
(Signed)

TRAN VAN DANG