Circular No. 25/2005/TT-BTC guiding the issuance of National Construction Bonds for 2005 - Educational Bonds

 CIRCULAR

Guidelines for the issuance of National Construction Bonds

for 2005 - Education Bonds

Implementing Decree No. 42/2005/NĐ-CP dated March 29, 2005 of the Government on the issuance of National Construction Bonds for 2005 - Education Bonds, the Ministry of Finance guides implementation as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. The Government will issue National Construction Bonds for 2005 named Education Bonds to continue raising capital to support provinces in mountainous areas, Central Highlands, and provinces with many difficulties in implementing the goal of eliminating three-shift classrooms, temporary classrooms made of bamboo and palm leaves, and reinforcing school buildings according to Resolution No. 09/2002/QH11 dated November 28, 2002 of the National Assembly.

2. Education Bonds for 2005 shall be issued and settled at the State Treasury system throughout the country.

3. Organizations and individuals purchasing Education Bonds shall follow the principle of voluntariness. The State encourages organizations and individuals to actively participate in purchasing bonds through propaganda work and setting targets for mobilizing bond purchases.

On the basis of targets for mobilizing bond purchases, provinces and centrally-administered cities organize the implementation of targeted mobilization efforts down to each organization and individual to ensure that the assigned capital-raising targets are met.

II. SPECIFIC PROVISIONS

1. Quantity, term, and time of issuance of bonds

Education Bonds will be issued and settled in Vietnamese dong. The total amount to be issued in 2005 is 1,500 billion VND (one thousand five hundred billion VND).

Education Bonds have a term of 5 years and will begin issuance from May 19, 2005.

The end date for bond issuance will be determined by the Minister of Finance based on the results of bond issuance at State Treasury units.

2. Interest rate on Education Bonds

The interest rate recorded on Education Bonds for 2005 is 8.2% per annum. This interest rate includes both the annual inflation rate and the actual interest rate that bond purchasers receive, which is 1.5% per annum.

The total interest rate on Education Bonds over 5 years is 41%.

In case the actual inflation rate over 5 years plus the actual interest rate received by bondholders over 5 years (7.5%) exceeds 41%, the State will compensate the difference to bondholders. The difference will be determined and publicly announced by the Ministry of Finance at the time of bond settlement based on the inflation index published by the General Statistics Office.

In case the actual inflation rate over 5 years plus the actual interest rate received by bondholders over 5 years (7.5%) is lower than 41%, bondholders will still receive an interest rate of 41% as recorded on the issued bonds.

3. Form and denomination of bonds

3.1. Education Bonds will be issued in two forms:

a) Non-named certificates printed with denominations in advance (hereinafter referred to as unnamed bonds) including 11 types: 50,000 VND, 100,000 VND, 200,000 VND, 500,000 VND, 1,000,000 VND, 2,000,000 VND, 5,000,000 VND, 10,000,000 VND, 20,000,000 VND, 50,000,000 VND, 100,000,000 VND.

b) Named certificates not printed with denominations in advance (hereinafter referred to as named bonds): Used for individuals and organizations purchasing bonds with a value of 50,000,000 VND (fifty million VND) or more. The maximum denomination recorded on the named bond certificate is 10,000,000,000 VND (ten billion VND).

3.2. Bond certificates will have dimensions of 270 mm x 100 mm, consisting of two parts: The main body given to the bond purchaser measuring 180 mm x 100 mm; The stub retained at the issuing State Treasury measuring 90 mm x 100 mm.

Characteristics of color and technical standards of bond certificates:

a) Unnamed bonds:

- Front side:

+ Pink background on both sides, separated by a yellow background and yellow pattern in the middle. All yellow colors fluoresce under ultraviolet light.

+ The floral patterns on both sides and the embedded CT letters fluoresce under ultraviolet light.

+ The main body of the bond certificate has two series of numbers (top right corner and bottom left corner), each starting with two letters and seven digits. The bond series is red, fluorescing under ultraviolet light.

+ The front side of the bond certificate bears a wooden stamp with the phrase "Education Bonds".

The State Treasury may use the wooden stamps "Education Bonds" engraved in 2003 and additional ones where necessary.

- Back side: Red background, frame and text in dark red.

- Paper: Bond certificates are printed on special paper with anti-counterfeiting properties.

- Ink: Bond certificates are printed with ink that cannot be erased, using fluorescent ink to prevent counterfeiting.

- Signature of the authorized person: The Minister of Finance signs on the bond certificate.

b) Named bonds:

- Front side: Blue background on both sides, separated by a yellow background and yellow pattern in the middle.

- Back side: Blue background, frame and text in dark blue.

The printing paper, ink, signature of the authorized person, and other elements of named bonds are implemented similarly to unnamed bonds.

3.3. The State Treasury is responsible for organizing the printing, storage, and provision of bond certificates to State Treasury units throughout the system. Management, handover, transportation, and storage of bond certificates are carried out like cash and valuable seals.

The State Treasury may use the bond seals printed in 1999 (excluding the 20,000 VND denomination) and in 2003 but not fully issued, and print additional ones as needed for the issuance of Education Bonds in 2005.

4. Purchasers of bonds

4.1. Purchasers of Education Bonds include:

a) Vietnamese citizens within and outside the country;

b) Overseas Vietnamese;

c) Foreigners working and residing in Vietnam;

d) Administrative agencies, public institutions;

đ) Political organizations, political-social organizations, political-professional social organizations, social organizations, social-professional organizations;

e) Enterprises of all economic sectors;

f) Foreign organizations operating in the territory of Vietnam.

Entities specified in points d, đ, and e are not allowed to use state budget funds to purchase bonds.

Overseas Vietnamese can purchase bonds through representatives in Vietnam.

4.2. Organizations and individuals may purchase government securities in cash or by bank transfer without any quantity limit.

4.3. Based on the income level of residents and the financial capacity of enterprises and organizations, the Ministry of Finance shall allocate targets for mobilizing the purchase of government securities to provinces, centrally-administered cities, and organizations. For organizations facing financial difficulties, extremely poor communes, and low-income residents, the Ministry of Finance shall not allocate targets for mobilizing the purchase of government securities.

5. Repayment of principal and interest on government securities

5.1. Repayment of government securities upon maturity

a) The principal of government securities shall be repaid in one lump sum upon maturity (after 60 months).

b) The interest on government securities shall be repaid in one lump sum together with the principal upon maturity.

c) Place of repayment of government securities:

- Government securities without name registration can be repaid at any State Treasury unit nationwide according to the request of the owner of the securities.

- Government securities with name registration can be repaid at the State Treasury where they were issued.

d) When repaying government securities, the owner of the securities may receive cash or request the State Treasury to transfer the entire amount of principal and interest into their account. The fee for transferring the principal and interest of government securities is equivalent to the bank transaction fee.

đ) In case the owner of the securities has not come to repay the principal and interest upon maturity, the State Treasury will retain the amounts in a separate account and return them when requested by the owner; no compound interest will be calculated during the period of delay in repayment.

5.2. Early repayment of government securities

a) Owners of government securities who face special difficulties or force majeure risks (natural disasters, fires, etc.) confirmed by the direct management agency or commune, ward, town authorities will be allowed to repay the securities before the due date by the State Treasury.

b) The interest rate for early repayment of government securities is calculated as follows:

- If the time from purchasing the securities is less than 12 months, no interest will be paid.

- If the time from purchasing the securities is from 12 to under 24 months, the interest rate is 8.2%.

- If the time from purchasing the securities is from 24 to under 36 months, the interest rate is 16.4%.

- If the time from purchasing the securities is from 36 to under 48 months, the interest rate is 24.6%.

- If the time from purchasing the securities is from 48 to under 60 months, the interest rate is 32.8%.

The interest rate for early repayment is fixed and does not depend on inflation fluctuations.

c) Place of repayment of government securities:

Early repayment of government securities shall be processed at the State Treasury where they were issued (applicable to both unregistered and registered securities).

6. Handling cases of loss or damage to government securities

6.1. Unregistered government securities that are lost, erased, altered, torn, damaged, and no longer maintain their original form and content shall not be repaid.

6.2. Registered government securities that are lost or damaged, the owner must immediately report in writing to the State Treasury where they were issued. The head of the State Treasury unit shall check, if the security has not been misused to withdraw money, then confirm and process repayment upon maturity. If the security has been misused to withdraw money, the head of the State Treasury unit shall determine the cause and take appropriate measures in accordance with the law.

7. Transfer and pledge of government securities

7.1. For unregistered government securities:

a) The transfer of ownership rights of government securities (through purchase, sale, gift, inheritance) does not require registration with the State Treasury.

b) The State Treasury does not confirm ownership rights for unregistered government securities in any circumstances.

7.2. For registered government securities:

The transfer of ownership rights of government securities or confirmation of ownership rights shall be carried out at the State Treasury where they were issued.

8. Rights and responsibilities of the owner of government securities

8.1. Guaranteed by the Government for full and timely repayment of principal and interest on government securities upon maturity. In special cases, the right to request early repayment as stipulated in Clause 5.2, Point 5, Part II of this Circular.

8.2. The owner of government securities has the right to sell, give, donate, leave by inheritance, or pledge government securities.

An owner of government securities who is a credit organization may trade government securities in the money market, discount, rediscount, and pledge to borrow funds from the State Bank in accordance with the law.

8.3. Individual owners of government securities are exempt from income tax on interest from government securities and gains from buying and selling government securities.

8.4. Corporate owners of government securities are exempt from corporate income tax on the interest received from the first purchase of government securities issued by the State Treasury.

The use of capital to purchase government securities for the first time, accounting for interest earned on government securities, and the trading of government securities by permitted organizations shall be carried out in accordance with Circular No. 46/2003/TT-BTC dated May 15, 2003, of the Ministry of Finance guiding participation in the first purchase of government securities and trading activities of permitted organizations.

8.5. The owner of government securities is responsible for preserving and protecting their securities. If needed, the owner of government securities may deposit them at the State Treasury for safekeeping and storage free of charge.

8.6. Government securities may not be used to replace circulating currency, pay taxes, or fulfill other financial obligations to the State.

8.7. Purchased government securities (including re-purchased ones) shall be managed like other assets of the entity. In cases of dissolution, bankruptcy, merger, consolidation, division, or cessation of operations, the asset of government securities shall be handled in accordance with the law.

III. MANAGEMENT OF REVENUE SOURCES AND PRINCIPAL AND INTEREST PAYMENT SOURCES AND EXPENSES FOR THE ISSUE AND REPAYMENT OF GOVERNMENT SECURITIES

1. Management of revenue from issuing government securities

1.1. All proceeds from the issuance of government securities shall be recorded as central budget revenue at the State Treasury where they were issued under Chapter 160A, Type 10, Clause 05, Section 086, Subsection 03.

1.2. Revenue from the issuance of Educational Bonds in 2005 shall only be used for the purpose of eliminating classrooms with three shifts, eliminating makeshift classrooms made of bamboo and palm leaves, and reinforcing schools according to Resolution No. 09/2002/QH11 dated November 28, 2002 of the National Assembly; it shall not be used for other purposes.

2. Sources for principal and interest payments on bonds

2.1. The sources for principal and interest payments on bonds and for compensating price index differences (if any) shall be guaranteed by the central budget.

2.2. The State Treasury shall advance funds from the State Treasury account to make payments (before maturity, at maturity, or after maturity) to bondholders. Monthly, the State Treasury shall compile the amount paid to request the Ministry of Finance to reimburse the temporarily advanced amount.

3. Costs for issuing and paying off bonds

Costs for issuing and paying off bonds shall be guaranteed by the central budget, including:

3.1. Costs for printing bond certificates under contracts with printing agencies.

3.2. Costs for issuing and paying off bonds within the State Treasury system shall be determined as follows:

a) For the portion sold to Social Insurance: The State Treasury shall receive a fee of 0.2% of the value of issued bonds.

b) For the remaining entities: The State Treasury shall receive a fee of 0.5% of the value of issued bonds.

IV. REWARDS AND SANCTIONS FOR VIOLATIONS

1. Organizations and individuals who have achievements in purchasing Educational Bonds, in mobilizing purchases of bonds, and organizing the issuance of bonds shall be rewarded by the State in accordance with the provisions of the law.

Funds for rewards and the amount of monetary rewards shall be implemented in accordance with Circular No. 25/2001/TT-BTC dated April 16, 2001 of the Ministry of Finance guiding financial management work to implement the reward system for outstanding achievements in economic and social tasks and national defense.

2. Organizations and individuals who violate laws on bonds shall be dealt with in accordance with the provisions of the Bond Law for Building the Nation and current legal regulations.

V. RESPONSIBILITIES OF RELATED AUTHORITIES

1. Ministries, ministerial-level agencies, government-affiliated agencies, People's Committees of provinces and centrally-administered cities; Vietnam Television, Voice of Vietnam Radio, Vietnam News Agency, and other news agencies and press organizations shall be responsible for mobilizing and organizing propaganda work regarding the issuance of Educational Bonds in 2005 so that all strata of the people understand and actively participate.

The General Statistics Office shall be responsible for calculating and announcing the rate of price inflation as a basis for bond payment when due.

2. Provincial Departments of Finance shall assist the People's Committees of provinces and centrally-administered cities in implementing propaganda and mobilization work for bond issuance in these provinces and cities.

3. The State Treasury shall be responsible for:

3.1. Calculating and planning the printing of bond coupons according to a reasonable denomination structure, providing them fully to State Treasury units for issuance.

3.2. Organizing fixed and mobile sales counters for bonds; simplifying administrative procedures to create favorable conditions for bond buyers.

3.3. Accounting for revenue and principal and interest payments on bonds in accordance with legal provisions.

3.4. Guiding bondholders to exercise their rights in accordance with established regulations.

3.5. Monitoring and reporting to the Ministry of Finance the results of mobilizing bond purchases in provinces and centrally-administered cities and organizations, and proposing rewards for collectives and individuals with high levels of bond purchases.

VI. IMPLEMENTATION

This Circular shall take effect fifteen days after its publication in the Official Gazette.

Ministers, heads of ministerial-level agencies, and government-affiliated agencies, Chairmen of People's Committees of provinces and centrally-administered cities are responsible for implementing this Circular.

The Director-General of the State Treasury, heads of related units under and affiliated with the Ministry of Finance; Directors of Provincial Departments of Finance, Directors of State Treasuries of provinces and centrally-administered cities are tasked with guiding and organizing the implementation of this Circular./.