Circular No. 23/2000/TT-BTC guiding the implementation of Decision No. 05/2000/QD-TTg dated January 5, 2000 of the Prime Minister on amending and supplementing Decision No. 95/1998/QD-TTg dated May 18, 1998 of the Prime Minister on handling and settling debts in phase II.

CIRCULAR

MINISTRY OF FINANCE CIRCULAR NO. 23/2000/TT-BTC dated March 27, 2000 GUIDING THE IMPLEMENTATION OF THE RESOLUTION NO. 05/2000/QĐ-TTg dated January 5, 2000 OF THE GOVERNMENT PRIME MINISTER ON AMENDMENTS AND SUPPLEMENTS TO THE RESOLUTION NO. 95/1998/QĐ-TTg dated May 18, 1998 OF THE GOVERNMENT PRIME MINISTER ON SETTLEMENT AND PAYMENT OF DEBTS IN STAGE II.

Implementing Resolution No. 05/2000/QĐ-TTg dated January 5, 2000 of the Government Prime Minister on amendments and supplements to Resolution No. 95/1998/QĐ-TTg dated May 18, 1998 of the Government Prime Minister on settlement and payment of debts in Stage II. After receiving comments from the State Bank of Vietnam in Circular No. 41/CV-TD.3 dated January 27, 2000; The Ministry of Finance guides the points of amendment and supplement regarding the settlement, payment, and accounting of debts in Stage II as follows:

I. GENERAL PROVISIONS:

- Parties with receivables or payables that have declared and confirmed debts, or have not declared but have been reconciled and confirmed by creditors and debtors according to Decision No. 277/CT dated July 29, 1992 of the Chairman of the Council of Ministers (now the Prime Minister) and the proposal for settlement of debts in Stage II are the subjects implementing this Circular.

- Settlement and payment of debts in Stage II shall be based on the provisions of the General Proposal for Debt Settlement in Stage II, Decision No. 95/1998/QĐ-TTg dated May 18, 1998, Joint Circular of the Ministry of Finance and the State Bank of Vietnam No. 102/1998/TTLT-BTC-NHNN dated July 18, 1998, and Resolution No. 05/2000/QĐ-TTg dated January 5, 2000 of the Government Prime Minister on amendments and supplements to the settlement and payment of debts in Stage II, laws at the time of debt occurrence, and this Circular.

- Creditors and debtors are responsible for settling and paying off debts within their units' Stage II debt objects.

- Debt settlement boards at all levels are responsible for urging, inspecting, and supervising the implementation of debt settlement and payment, and recommending administrative or legal measures to competent authorities against units with debts that fail to fulfill their debt settlement and payment responsibilities.

- Organizations and individuals providing guarantees or allowing enterprises, individuals, or socio-economic economic organizations to borrow funds or purchase goods on credit must bear responsibility for repaying debts on behalf of the guaranteed or permitted entities if they cannot repay the debts. The entity being repaid must return the debt to the guarantor or permitter.

II. SPECIFIC PROVISIONS

1. Basis for debt settlement.

In cases where the debt settlement file does not meet the requirements specified in Joint Circular No. 102/1998/TTLT-BTC-NHNN dated July 18, 1998 of the Ministry of Finance and the State Bank of Vietnam guiding the implementation of Decision No. 95/1998/QĐ-TTg dated May 18, 1998 of the Government Prime Minister on debt settlement and payment in Stage II, the minimum basis required shall include the following:

- A debt confirmation card (confirmed by the debtor), or a reconciliation statement confirmed by both creditor and debtor.

- An analysis report on the causes of debt formation issued by the provincial debt settlement board for enterprises under local jurisdiction, and by the ministry-level debt settlement board for enterprises under central jurisdiction.

For cases where debtors have been dissolved, bankrupted, or ceased operations and thus do not have complete files as required, the authority responsible for establishment, and the same-level debt settlement board must issue a statement confirming the lack of complete files as required, serving as the basis for debt settlement, and simultaneously notify the creditor of the dissolution decision or provide a document confirming the dissolution, bankruptcy, or cessation of operations (the date of dissolution, bankruptcy, or cessation, and the financial status of the enterprise).

- Debts ruled upon in writing by the State Economic Arbitration or civil judgment by the Court without a debt confirmation card shall be considered as the basis for payment and debt settlement.

2. Regarding foreign currency exchange rates.

- Enterprises issuing foreign currency usage demand cards confirmed by debtors; if previously debtors had fully paid the equivalent amount according to the internal settlement rate set by the state, it shall be deemed as having settled the debt to the creditor.

- Foreign currency exchange rates for payment are defined as of the debt declaration date April 30, 1991 as follows:

+ US Dollar: 7,900 VND/USD.

+ Gold: 373,000 VND/tael.

+ Yen: 76 VND/Yen.

+ Franc: 1,420 VND/Franc.

+ Renminbi: 886 VND/RMB.

+ Ruble: 4,000 VND/Ruble.

Other foreign currencies are converted into US Dollars (USD) based on the exchange rate at the debt declaration date (April 30, 1991).

3. Authority to decide on debt settlement.

a. For state-owned enterprise debts, the Board of Directors or General Director (for enterprises without a Board of Directors) shall be responsible for debt settlement according to the following principles:

For receivables of enterprises where debtors have been dissolved, bankrupted, ceased operations, or still exist but are unable to pay... these debts shall be recorded in the financial reserve fund, and if insufficient, recorded in the enterprise's production and business results.

For payable debts without a counterparty to pay, enterprises may record them as extraordinary income.

For small receivables where the cost of collection (based on budget) exceeds the value of the receivable, these debts shall be recorded in the financial reserve fund, and if insufficient, recorded in the enterprise's production and business results, and the enterprise shall bear the responsibility without needing to report to state management agencies. When settling such debts, enterprises must continue to track them off-balance sheet and continue to collect debts, recording collected debts as extraordinary income of the enterprise.

b. For receivables of state-owned commercial banks that have been included in the payment system and confirmed by the local debt settlement board (amount of confirmed debt, financial status, payment capacity), these commercial banks may settle debts according to the regulations stipulated in point a above and report to the State Bank of Vietnam. Debts transferred from bank loans to state budget capital shall be reported by commercial banks to the State Bank of Vietnam to report to the Ministry of Finance for consideration to reduce capital provided to commercial banks and increase capital for enterprises whose loans have been converted to state budget capital.

Monthly, State-owned Commercial Banks must report the progress in handling debts to the Central Committee for Comprehensive Debt Settlement, Ministry of Finance for consolidation and reporting to the Prime Minister.

c) For debts owed by enterprises to the State Budget that are handled by the same-level financial authority in accordance with Circular Joint Circular No. 102/1998/TTLT-BTC-NHNN dated July 18, 1998 of the Ministry of Finance - State Bank (the Ministry of Finance handles debts owed by enterprises to the Central State Budget and the Provincial Financial Departments handle debts owed by enterprises to the Local State Budget), or submit to the competent authority for decision-making.

d) For debts owed by enterprises to the National Reserve Fund, which are handled by the National Reserve Fund Management Agency. Prior to handling, there must be participation from the Local Debt Settlement Committee based on the established debt settlement regulations. The National Reserve Fund Management Agency must consolidate the amount of debt settled and report to the Central Committee for Comprehensive Debt Settlement, Ministry of Finance for the Ministry of Finance to issue a decision to reduce capital for the National Reserve Fund Management Agency. Monthly, the National Reserve Fund Management Agency reports the progress in handling to the Central Committee for Comprehensive Debt Settlement, Ministry of Finance.

đ) For debts guaranteed by Ministries, sectors, localities, or debts incurred by enterprises through loans, purchases of materials, goods under deferred payment terms abroad, these shall be implemented in accordance with Clause 4, Article 1 of Decision No. 05/2000/QĐ-TTg dated January 5, 2000 of the Prime Minister regarding amendments and supplements to Decision No. 95/1998/QĐ-TTg dated May 18, 1998 of the Prime Minister on debt settlement and clearance during Phase II.

4. For debts receivable due to subjective reasons, after identifying the person responsible for compensation, a specific decision on the amount of material compensation must be made. The difference between the amount of debt receivable and the amount compensated will be recorded in the financial reserve fund. If insufficient, it will be recorded in the enterprise's production and business results.

5. For debts showing signs of violation of laws, if the creditor confirms that the debt cannot be recovered, the creditor transfers the file to the police for investigation within six months. The investigative agency must provide a conclusion and transfer the file to the Economic Court for trial. After the trial, the court informs the creditor and relevant agencies about the recoverable debt amount and non-recoverable debt amounts. Non-recovered debts will be covered by the financial reserve fund, if insufficient, they will be recorded in the enterprise's production and business results (if the debt belongs to the enterprise) or handled by reducing the National Reserve Fund capital and writing off the debt to the State Budget (if the debt belongs to the National Reserve Fund and the State Budget). Any recovered debt value will be calculated and recorded as extraordinary income of the enterprise (if the debt belongs to the enterprise) or submitted to the local State Budget (if the debt belongs to the National Reserve Fund and the State Budget).

6. For debts with decisions from the Court or rulings from the State Economic Arbitration, the creditor must demand repayment; if the debtor still has the ability to pay, the creditor requests the enforcement agency to enforce collection according to Circular Joint Circular No. 05/TTLN dated August 21, 1992 of the Supreme People's Court, the Supreme People's Procuracy, the Ministry of Home Affairs, the Ministry of Justice, and the State Economic Arbitration guiding the resolution of certain issues related to comprehensive debt settlement. The difference between the amount receivable and the actual amount received will be recorded in the financial reserve fund, if insufficient, it will be recorded in the enterprise's production and business results.

7. State-owned enterprises may process uncollectible debts into the financial reserve fund once or multiple times, but not exceeding five years. If processing into annual production and business results causes the enterprise to decrease profits or increase losses corresponding to the uncollectible debt amount, the enterprise still enjoys the following rights:

- Continuing to borrow from banks for production and business operations if other conditions comply with the regulations of State-owned Commercial Banks.

- Enjoying the salary fund as before recording the uncollectible debt into production and business results.

- Maintaining the existing enterprise classification level.

- Extracting bonus funds and welfare funds as before handling the debt according to current regulations.

8. For two state-owned enterprises operating and owing each other (confirmed), if direct settlement is not possible, the enterprise reports to the same-level financial authority to adjust state capital for the debtor enterprise and reduce state capital for the creditor enterprise (the reduction in capital of the creditor enterprise shall not exceed the state capital at the enterprise). The Provincial Price and Finance Department reports to the Provincial People's Committee to issue a decision to adjust capital for enterprises managed by the locality, and the Ministry of Finance issues a decision to adjust capital for enterprises managed centrally.

III. IMPLEMENTATION.

1. The Ministers, heads of ministerial-level agencies, and provincial/municipal people's committees directly under the central government are responsible for directing creditors and debtors under their management to promptly analyze, classify, and resolve comprehensively the debt settlement and clearance during Phase II as stipulated above. Cases not specified in this Circular shall be handled according to current regulations.

2. Debt Settlement Committees at all levels (headed by financial authorities) urge and inspect the handling of debts by enterprises that have declared debts during Phase II and recommend disciplinary action against directors of enterprises who fail to implement debt settlement and clearance.

For debts exceeding the authority of enterprises to handle, the Debt Settlement Committee is responsible for reviewing the debt handling plan when the enterprise submits to the competent authority for decision-making.

All organizations and individuals who forge documents, take advantage of debt settlement and clearance to embezzle state assets for personal gain will be dealt with according to current laws.

Each month, the debt settlement committees at all levels shall report the results of debt settlement for phase II to the Central Committee for Comprehensive Debt Settlement no later than the fifth day of the following month for consolidation and reporting to the Prime Minister.

3. In addition to the provisions set forth in this Circular, the handling and settlement of debts for phase II shall still be carried out in accordance with Joint Circular No. 102/1998/TTLT-BTC-NHNN dated July 18, 1998, issued by the Ministry of Finance and the State Bank of Vietnam, guiding the implementation of Decision No. 95/1998/QĐ-TTg dated May 18, 1998, of the Prime Minister regarding the handling and settlement of debts for phase II.

This Circular shall take effect from the date on which Decision No. 05/2000/QĐ-TTg dated January 5, 2000, of the Prime Minister concerning amendments and supplements to Decision No. 95/1998/QĐ-TTg dated May 18, 1998, of the Prime Minister on the handling and settlement of debts for phase II comes into force.

During the implementation process, any issues encountered should be promptly reflected to the Ministry of Finance, the State Bank of Vietnam, and the Central Committee for Comprehensive Debt Settlement for study and resolution.