Circular No. 185/2009/TT-BTC guides the mobilization and management, payment, settlement of investment capital for Projects in phase 2 under the Program of building clusters, residential lines, and housing in flood-prone areas in the Mekong Delta.

CIRCULAR

Guidelines for mobilizing and managing, settling, and finalizing investment capital for Projects (Phase 2) under the Program for Building Clusters and Residential Lines and Housing in Flood-prone Areas in the Mekong Delta

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Pursuant to the State Budget Law No. 01/2002/QH11 dated December 16, 2002;

Pursuant to the Construction Law No. 16/2003/QH11 dated November 26, 2003;

Pursuant to Decree No. 12/2009/NĐ-CP dated February 12, 2009 of the Government on project management for construction works

Pursuant to Decree No. 52/1999/NĐ-CP dated July 8, 1999 of the Government on the issuance of the Investment Management and Construction Regulation, Decree No. 12/2000/NĐ-CP dated May 5, 2000, and Decree No. 07/2003/NĐ-CP dated January 30, 2003 of the Government amending and supplementing certain provisions of the Investment Management and Construction Regulation issued together with Decree No. 52/1999/NĐ-CP dated July 8, 1999 of the Government;

Pursuant to Decree No. 99/2007/NĐ-CP dated June 13, 2007 of the Government on management of construction project costs;

Implementing Decision No. 1151/QĐ-TTg dated August 26, 2008 of the Prime Minister approving additional Projects (Phase 2) under the Program for Building Clusters and Residential Lines and Housing in Flood-prone Areas in the Mekong Delta and other Decisions of the Prime Minister regarding mechanisms and policies of the Program for Building Clusters and Residential Lines and Housing in Flood-prone Areas in Phase 1;

The Ministry of Finance guides the mobilization and management, settlement, and finalization of investment capital for Projects (Phase 2) under the Program for Building Clusters and Residential Lines and Housing in Flood-prone Areas in the Mekong Delta as follows:

PART I
GENERAL PROVISIONS

Article 1. The subject of this Circular is Projects (Phase 2) under the Program for Building Clusters and Residential Lines and Housing in Flood-prone Areas in the Mekong Delta located in eight provinces and cities of Long An, Dong Thap, An Giang, Kien Giang, Tien Giang, Vinh Long, Hau Giang, Can Tho according to Decision No. 1151/QĐ-TTg dated August 26, 2008 of the Prime Minister and additional cluster and residential line projects approved by the Prime Minister to apply the mechanisms and policies stipulated in Decision No. 1151/QĐ-TTg dated August 26, 2008 (hereinafter referred to as Phase 2 Projects); excluding housing for households moving into clusters and residential lines.

Article 2. Phase 2 Projects are funded by state budget capital (including central government budget capital, local government budget capital, and integrated capital sources), loans from the Vietnam Development Bank, and other legally raised capital.

Article 3. Capital for Phase 2 Projects must be managed and utilized for their intended purposes, in accordance with regulations, economically, and effectively; it shall not be used for other purposes.

Article 4. The management, settlement, and finalization of investment capital for Phase 2 Projects shall be carried out in accordance with current State regulations and the provisions of this Circular.

Chapter II
SPECIFIC PROVISIONS

Article 5. Construction works and sub-works within clusters and residential lines that utilize investment capital as prescribed in this Circular include:

1. Raising the ground level for the area of construction of social infrastructure and technical infrastructure works;

2. Raising the ground level for the area of construction of housing;

3. Constructing embankments;

4. Constructing waste collection facilities and anti-erosion works along clusters and residential lines;

5. Constructing essential technical infrastructure works within clusters and residential lines (including internal transportation works, potable water supply, and drainage works).

Article 6. Structure of investment capital and purpose of use.

1. Central government budget capital for raising the ground level for the area of construction of social infrastructure and technical infrastructure works; 80% of the cost of constructing embankments and 50% of the cost of constructing essential technical infrastructure works within clusters and residential lines.

2. Local government budget capital; revenue from selling profitable land plots in clusters and residential lines; integrated capital sources, and other legally raised capital ensuring 20% of the cost of constructing embankments and 50% of the cost of constructing essential technical infrastructure works within clusters and residential lines.

In addition to allocating capital in the annual local government budget balance, the People's Committee of the province or centrally governed city (collectively referred to as the Provincial People's Committee) actively integrates target programs for investment such as the Rural Clean Water and Environmental Sanitation Program, the Canal Reinforcement Program, and the Rural Road Development Program within clusters and residential lines under its jurisdiction; mobilizes contributions from beneficiaries of the Program (such as monetary contributions and labor contributions) and other legally raised capital.

3. Loans from the Vietnam Development Bank include:

- Interest-free loans for raising the ground level for the area of construction of housing (excluding the area of profitable land plots sold to generate capital);

- Loans at the prevailing interest rate for constructing waste collection facilities and anti-erosion works along clusters and residential lines.

4. Local government budget capital and other legally raised capital for raising the ground level for the area of profitable land plots sold to generate capital for constructing essential technical infrastructure works within clusters and residential lines.

Article 7. Mechanism for borrowing capital and managing borrowed capital from the Vietnam Development Bank.

1. Based on the loan amount as decided by the Prime Minister and the disbursement plan announced by the Vietnam Development Bank, the Provincial People's Committee authorizes the Department of Finance to sign loan contracts with the Branch of the Vietnam Development Bank.

2. Credit conditions:

2.1. For loans for raising the ground level for the area of construction of housing:

- Interest rate for the loan is zero (0%); overdue interest rate is 150% of the State investment credit interest rate at the time of overdue debt occurrence;

- Maximum loan term is ten years (120 months) from the date of receipt of the first loan installment until full repayment;

- Grace period is five years (60 months) from the date of receipt of the first loan installment;

- Principal repayment term: Start repaying principal from the sixth month after receiving the first loan installment; repay principal evenly quarterly.

2.2. For loans for constructing waste collection facilities and anti-erosion works along clusters and residential lines:

- Loan interest rate is the prevailing loan interest rate at the time of signing the credit agreement; overdue interest rate is 150% of the loan interest rate within the term at the time of overdue debt occurrence;

- Maximum loan term is two years (24 months) from the date of receipt of the first loan installment until full repayment;

- Principal repayment period: Principal repayment begins from the 13th month following the date of receipt of the first loan disbursement; principal is repaid evenly on a quarterly basis.

- Interest on the loan is paid evenly on a quarterly basis based on the outstanding loan balance, concurrently with the principal repayment period.

3. Loan capital transfer method: Based on the signed loan agreement and the project implementation progress, the Department of Finance requests the Vietnam Development Bank Branch to transfer funds to the provincial budget. The Vietnam Development Bank Branch transfers the loan capital to the provincial budget immediately upon receiving the request from the Department of Finance.

4. After being transferred to the provincial budget, the State Treasury implements payment control for the Vietnam Development Bank loan capital for phase 2 projects according to regulations applicable to state budget investment funds.

5. Sources of loan repayment: Proceeds from selling land plots to households purchasing residential land plots (after completing the construction foundation for housing for residents), including proceeds from selling profitable land plots within residential clusters; local government budgets and other lawful sources.

6. The Vietnam Development Bank is entitled to a management fee of 0.5% per annum on the outstanding balance of interest-free loans; the central government will cover the interest rate differential and management fees according to prescribed regulations.

7. Budget accounting for Vietnam Development Bank loan capital:

- When receiving loan capital transferred by the Vietnam Development Bank Branch to the provincial budget, the Department of Finance records it as local government revenue (Chapter 560, Type 340, Item 345, Subitem 0800, Minor Item 0814).

- When repaying loan capital using local government funds, record it as local government expenditure (Chapter 560, Type 340, Item 345, Subitem 0800, Minor Item 0814).

- When households repay their loans, record it as local government revenue (Chapter 560, Type 340, Item 369, Subitem 4900, Minor Item 4949).

Article 8. Mobilizing and managing proceeds from selling profitable land plots.

1. Provincial People's Committees consider and decide on the sale of up to 30% of the area of profitable land plots within residential clusters to supplement funding for essential infrastructure projects, but must ensure sufficient area to accommodate all poor households in the residential clusters.

2. Determining the price of profitable land plots within residential clusters shall be carried out in accordance with laws on land.

3. Provincial People's Committees may proactively allocate proceeds from selling profitable land plots within residential clusters from areas with favorable conditions (where many sales occur) to areas with less favorable conditions (where few or no sales occur).

4. All proceeds from selling profitable land plots must be deposited into the state budget for investment in phase 2 projects and to repay Vietnam Development Bank loans. The State Treasury will implement payment control according to regulations applicable to state budget investment funds.

5. Budget accounting for proceeds from selling profitable land plots:

- Proceeds from selling profitable land plots are recorded under the "land use fee revenue" subitem corresponding to the relevant chapter, type, item, and minor item.

- When collecting proceeds from selling land plots to buyers, use land use fee receipts.

Article 9. Establishing annual investment capital plans, allocating and reviewing investment capital allocations.

1. Plan establishment:

1.1. Project investors base on the project implementation situation to establish an annual investment capital plan for the project, which is sent to the Department of Planning and Investment, the Department of Finance, and the Department of Construction; detailing the following sources:

- Central government budget capital;

- Interest-free loans from the Vietnam Development Bank;

- Loans from the Vietnam Development Bank at current interest rates;

- Local government budget capital;

- Proceeds from selling profitable land plots within residential clusters;

- Integrated capital;

- Other legally raised capital.

(According to Form 01/KHĐT attached to this Circular)

1.2. The Department of Planning and Investment leads the consolidation and reports to the Provincial People's Committee.

2. Capital allocation: Based on the annual plan assigned by the Prime Minister, the notification of the Vietnam Development Bank's disbursement plan, and the plan for raising other sources of capital, the Provincial People's Committee assigns the Department of Planning and Investment to coordinate with the Department of Finance and the Department of Construction to propose capital allocation for each eligible project (in detail according to sources), to be decided by the Provincial People's Committee. After allocating investment capital, the Provincial People's Committee sends the investment capital plan to the Ministry of Planning and Investment, the Ministry of Finance, and the Ministry of Construction for consolidation and monitoring; sends to the State Treasury (province, city) for control and payment.

(According to Form 02/KHĐT attached to this Circular)

3. Reviewing investment capital allocation: During participation with the Department of Planning and Investment and the Department of Construction in the annual investment capital plan, the Department of Finance simultaneously performs the task of reviewing the capital allocation plan to be decided by the Provincial People's Committee. Based on the decision on the investment capital plan of the Provincial People's Committee, the State Treasury implements payment control according to regulations. In cases where projects lack necessary investment procedures or do not meet the conditions for capital allocation, the State Treasury will not make payments and notify the Department of Finance to handle the matter.

Article 10. Payment of investment capital.

1. For central government budget capital, local government budget capital, loans from the Vietnam Development Bank (after transferring to the provincial budget), and proceeds from selling profitable land plots for investment in phase 2 projects.

1.1. Central government budget capital, local government budget capital, loans from the Vietnam Development Bank (after transferring to the provincial budget), and proceeds from selling profitable land plots for investment in phase 2 projects can have extended implementation and payment periods; if unused by the end of the planning year, they can be carried over to the next year for implementation.

1.2. Opening accounts:

Phase 2 project investors are allowed to open accounts at the State Treasury location convenient for payment control and investor transactions.

1.3. Project documentation:

To implement management, control, and settlement of investment capital, the project sponsor shall submit to the State Treasury where the payment account is opened the foundational documents of the project (these documents are original or certified true copies, only submitted once until the end of the project, except for cases requiring supplementation or adjustment):

a. For preparatory investment capital:

- Approved budget estimate for investment preparation work;

- Tender selection document;

- Contract between the project sponsor and the contractor.

b. For implementation investment capital:

- Budget estimate and decision approving the budget estimate for each work, sub-project, and project;

- Tender selection document;

- Contract between the project sponsor and the contractor.

1.4. Advance payments and recovery of advance payments; payment of completed volume:

Implemented according to the guidelines of the Ministry of Finance in Circular No. 27/2007/TT-BTC dated April 3, 2007 on management and settlement of investment capital and public service capital with investment characteristics from state budget funds; Circular No. 130/2007/TT-BTC dated November 2, 2007 amending and supplementing certain points of Circular No. 27/2007/TT-BTC dated April 3, 2007 and other amended, supplemented, or replaced documents (if any).

2. For other sources of capital: Implemented according to current regulations corresponding to each source of capital.

Article 11. Final settlement of investment capital.

1. For central government budget capital, local government budget capital, loans from the Vietnam Development Bank, and capital raised from selling profitable land plots.

1.1. Annual final settlement of investment capital:

Implemented according to the provisions of the State Budget Law and the guidelines of the Ministry of Finance in Circular No. 53/2005/TT-BTC dated June 23, 2005 on preparation and review of annual investment capital final settlement reports for basic construction projects from state budget funds; Circular No. 108/2008/TT-BTC dated November 18, 2008 on year-end budget processing and preparation of annual state budget final settlement reports and other amended, supplemented, or replaced documents (if any).

1.2. Final settlement of investment capital for completed projects:

Implemented according to the guidelines of the Ministry of Finance in Circular No. 33/2007/TT-BTC dated April 9, 2007 on final settlement of completed projects from state budget funds; Circular No. 98/2007/TT-BTC dated August 9, 2007 amending and supplementing certain points of Circular No. 33/2007/TT-BTC dated April 9, 2007 and other amended, supplemented, or replaced documents (if any).

2. For other sources of capital: Implemented according to current regulations corresponding to each source of capital.

Article 12. Reporting system.

1. For project sponsors:

Timely and fully report according to regulations to the investment decision-making agency and relevant state agencies; provide complete files, documents, and situations as required to the State Treasury and financial agency to serve management and settlement of investment capital.

2. For Provincial Departments of Finance:

Implement the reporting system on investment capital of phase 2 projects according to the regulations of the Ministry of Finance in Decision No. 1869/QD-BTC dated June 6, 2005 on issuing the Regulation on information reporting on investment capital for basic construction projects from state budget funds within the finance sector and other amended, supplemented, or replaced documents (if any).

3. For the State Treasury:

- Implement the reporting system on investment capital of phase 2 projects according to the regulations of the Ministry of Finance in Decision No. 1869/QD-BTC dated June 6, 2005 on issuing the Regulation on information reporting on investment capital for basic construction projects from state budget funds within the finance sector and other amended, supplemented, or replaced documents (if any).

- At the end of the plan year, confirm the amount paid in the year, cumulatively the amount paid from commencement to the end of the state budget year for each project.

4. For People's Committees of provinces:

Implement the reporting system on the implementation of investment capital plans for phase 2 projects according to Decision No. 52/2007/QĐ-TTg dated April 16, 2007 of the Prime Minister on the Reporting System on the Implementation of National Investment Capital Plans, Circular No. 05/2007/TT-BKH dated August 9, 2007 of the Ministry of Planning and Investment on issuing reporting forms and guidance on implementing Decision No. 52/2007/QĐ-TTg dated April 16, 2007 and other amended, supplemented, or replaced documents (if any).

The agencies receiving reports include: the Ministry of Planning and Investment, the Ministry of Finance, and the Ministry of Construction.

Article 13. Responsibilities of related agencies.

1. Provincial People's Committees shall be responsible for:

- Direct functional sectors to aggregate and determine the need for investment capital for phase 2 projects and the ability of available funding sources to ensure; allocate local government budget capital to implement the Program; decide on the allocation of investment capital to projects meeting the conditions.

- Direct the preparation of plans and actively adjust funds received from selling profitable land plots in residential clusters from areas with favorable conditions (many sold) to less favorable areas (unsold or few sold).

- Direct the borrowing and repayment of loans from the Vietnam Development Bank; organize the collection of individual household debts and allocate local government budget capital to repay Vietnam Development Bank loans.

- Direct the management of investment capital for phase 2 projects according to current state regulations and guidelines in this Circular.

2. Provincial Departments of Finance are responsible for:

- Cooperating with Provincial Departments of Planning and Investment and Provincial Construction Departments to propose the allocation of investment capital to projects meeting the conditions; perform the task of reviewing the investment capital allocation plan to be submitted to the People's Committee of the province for decision.

- Prepare plans to adjust funds received from selling profitable land plots in residential clusters from areas with favorable conditions (many sold) to less favorable areas (unsold or few sold) to be submitted to the People's Committee of the province for decision.

- Implement borrowing and repayment of Vietnam Development Bank loans according to the decision of the People's Committee of the province.

3. The Vietnam Development Bank is responsible for:

- Signing loan contracts, transferring loan funds, and collecting debts according to signed contracts.

- Calculating the need for interest subsidy and management fee for the Vietnam Development Bank according to Decision No. 44/2007/QĐ-TTg dated March 30, 2007 of the Prime Minister on issuing the Financial Management Regulation for the Vietnam Development Bank and according to current regulations.

4. The State Treasury is responsible for organizing the control and settlement of investment capital for projects and reporting on the settlement of investment capital according to regulations.

5. Project sponsors are responsible for:

- Managing and using investment capital for its intended purpose and effectively according to current state regulations and guidelines in this Circular.

- Prepare the annual investment capital plan and submit it to relevant agencies as prescribed in this Circular.

- Fully and promptly settle the investment capital according to the regulations.

- Report on the implementation situation as prescribed.

Article 14. Implementing organization.

This Circular takes effect 45 days from the date of issuance. The provisions set forth in this Circular shall be applied from the 2009 budget year. During the implementation period, if there are difficulties or obstacles, units are requested to promptly reflect them so that the Ministry of Finance can study and make appropriate amendments and supplements./.