Circular No. 27/2007/TT-BTC guiding the management and settlement of investment capital and operational capital with investment characteristics from state budget funds.

CIRCULAR

Guidelines on the management and settlement of investment capital and operational capital with investment characteristics from state budget funds

having investment nature from state budget funds

_______________________

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

Pursuant to the Construction Law dated November 26, 2003, Government Decree No. 16/2005/NĐ-CP dated February 7, 2005 on Project Management for Investment Construction Works, and Government Decree No. 112/2006/NĐ-CP dated September 29, 2006 amending and supplementing certain articles of Government Decree No. 16/2005/NĐ-CP dated February 7, 2005;

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

Pursuant to Government Decree No. 71/2005/NĐ-CP dated June 6, 2005 on Management of Special Construction Investment Projects;

The Ministry of Finance issues guidelines on the management and settlement of investment capital and operational capital with investment characteristics from state budget funds (hereinafter referred to as state budget funds) as follows:

Part I

GENERAL PROVISIONS

1. These Guidelines apply to investment projects funded by development investment capital and operational capital with investment characteristics from state budget funds (hereinafter collectively referred to as projects) managed by Ministries, ministerial-level agencies, agencies under the Government, political organizations, political-social organizations, social organizations, social-professional organizations, economic groups, state-owned corporations (hereinafter collectively referred to as Ministries), provinces directly under the central government (hereinafter collectively referred to as provinces), and districts, towns, townships, and cities directly under provinces (hereinafter collectively referred to as districts).

These Guidelines do not apply to projects funded by commune budgets; investment projects of Vietnamese representative offices abroad; and projects purchasing copyright ownership.

2. State budget funds (including domestic funds at all levels of state budgets, foreign loans of the Government, and foreign aid to the Government, local authorities, and state agencies) shall only be settled for investment projects eligible to use state budget funds according to the provisions of the State Budget Law.

3. Investment projects funded by development investment capital or operational capital within the state budget estimate, investment projects using multiple sources of funding including separately allocated state budget investment funds for individual items, works, or projects using multiple sources of funding but unable to separately allocate state budget funds, where the state budget investment fund constitutes the largest proportion in the total investment cost of the project, must have complete investment and construction procedures, be included in the national annual investment plan and annual operational expenditure plan, and meet the conditions for capital settlement as stipulated in these Guidelines.

4. Financial departments at all levels shall implement financial management of investment capital and operational capital with investment characteristics from state budget funds. The State Treasury and units entrusted with the task of supervising capital settlement shall be responsible for timely, full, and accurate settlement of capital for projects when they meet the conditions for capital settlement.

Commercial banks serving projects utilizing official development assistance (ODA) funds must comply with the Ministry of Finance's guidelines on financial management of ODA projects based on their functions and assigned tasks.

Part II

SPECIFIC PROVISIONS

A. ESTABLISHING PLANS, ALLOCATING, AND REVIEWING ALLOCATION OF INVESTMENT CAPITAL.

I. Projects can only be included in the annual national investment plan when they meet the following conditions:

1. For planning projects: there must be a project outline or task description and approved planning cost estimates according to authority.

2. For preparatory investment projects: they must align with approved industry and territorial development plans; and have approved preparatory investment cost estimates according to authority.

3. For implementation investment projects: there must be an investment decision made before October 31 of the year preceding the plan year, design, estimates, and overall estimates approved according to regulations.

In cases where investment projects are included in the implementation plan but only for preparatory work, there must be an investment decision and approved preparatory work cost estimates.

For national key projects and Group A projects, if overall estimates have not been approved, construction works and components within the plan year must have approved designs and estimates, and overall estimates must be approved no later than when 30% of the construction value has been reached in the total investment amount; if national key projects and Group A projects include sub-projects or component projects, each sub-project or component project shall be managed independently as a separate project.

The time frame and capital allocation for Group B projects shall not exceed four years, and for Group C projects, it shall not exceed two years.

II. Establishing plans, allocating, and reviewing allocation of investment capital for the year:

1. Establishing plans:

- According to the State Budget Law regarding the preparation of annual state budget estimates, based on the progress and objectives of the project, the project sponsor prepares the investment capital plan for the project and submits it to the superior management agency.

- Ministries consolidate, review, and prepare the investment capital plan to submit to the Ministry of Planning and Investment and the Ministry of Finance. Provincial People's Councils prepare the provincial budget estimate for the investment capital portion and seek opinions from the Standing Committee of the Provincial People's Council before submitting to the Ministry of Planning and Investment and the Ministry of Finance.

- The Ministry of Planning and Investment and the Ministry of Finance consolidate, report to the Prime Minister for submission to the National Assembly for decision and allocation of investment capital plan targets to Ministries and provinces.

- The time for establishing, submitting, approving, and allocating the investment capital plan shall be in accordance with the State Budget Law.

2. Allocating capital:

2.1- For centrally-managed investment capital: Ministries allocate the investment capital plan for each project within their management scope that meets the prescribed conditions, ensuring alignment with the allocated total investment target; domestic and foreign capital structure; economic sector structure; level of capital for important state projects; and in accordance with the National Assembly Resolution and the Government's directives on managing the socio-economic development plan and the annual state budget estimate.

2.2 For capital investment under local management: The People's Committees at all levels shall prepare plans for allocating capital investment to be submitted to the People's Councils at the same level for decision. In accordance with the Resolution of the People's Council, the People's Committee allocates and decides to assign the capital investment plan to each project within its management scope that meets the prescribed conditions, ensuring consistency with the total investment ceiling assigned; the structure of domestic capital, foreign capital, economic sector structure; the amount of capital for important State projects, and in compliance with the National Assembly's Resolution, the Government's directives on managing the socio-economic development plan and the annual state budget estimate.

The Department of Finance is responsible for jointly with the Department of Planning and Investment to propose the allocation of capital investment for each project managed by the province before reporting to the provincial People's Committee for decision.

The District Financial Planning Office is responsible for jointly with the district functional agencies to advise the district People's Committee on allocating capital investment for each project managed by the district.

Specifically, for projects invested using sources of capital left over according to the National Assembly's Resolution and the Prime Minister's Decision, and supplementary targeted capital from the central budget to the local budget, they must comply with regulations regarding the target of investment and the purpose of use for each source of investment capital.

2.3 Principles for allocating capital for projects in the annual plan:

- Ensuring the conditions for projects to be allocated capital investment plans as stipulated in Section I Clause A Part II of this Circular.

- Ensuring as provided in points 2.1 and 2.2 above.

- Allocating sufficient capital to settle accounts for projects that have been put into use and have been approved for final settlement of investment capital but still lack capital; allocating capital to cover auditing, review, and approval costs for final settlement of completed projects that have not yet been settled due to lack of final settlement approval.

- In cases where projects are allocated capital in the implementation plan only for preparatory work, it should be clearly noted in the capital allocation plan.

(Model form of the annual investment capital plan attached as Appendix No. 01).

3After allocating investment capital, Ministries and Provincial People's Committees send the investment capital plan to the Ministry of Finance; districts send the investment capital plan to the Department of Finance.

4. Assigning capital plans to investors:

After the capital allocation has been reviewed and approved by the financial agency, Ministries and Provincial People's Committees assign the capital plan indicators to investors for implementation, simultaneously sending them to the State Treasury where the project account is opened for monitoring, serving as the basis for controlling and settling capital.

5. Reviewing and announcing the list of projects and investment capital:

5.1 For projects managed by Ministries:

- The Ministry of Finance reviews the capital allocation plan according to point 2.3 above, announces the list and capital of projects that have completed investment procedures and meet the regulations on conditions for allocating capital to each Ministry, and sends to the State Treasury as the basis for controlling and settling capital.

- In cases where the allocation does not comply with regulations, the Ministry of Finance issues a document requesting the relevant Ministries to adjust accordingly.

5.2 For projects managed by provinces and districts:

- Based on the investment capital plan decided by the People's Committee, the Provincial Department of Finance and the District Financial Planning Office examine the construction investment procedures of the projects, announce and send the list to relevant sectors in the province and district, and send to the State Treasury as the basis for controlling and settling capital.

- In cases where projects do not have complete construction investment procedures or the allocation plan does not comply with regulations, the Provincial Department of Finance and the District Financial Planning Office issue a report to the same-level People's Committee to instruct the completion of procedures in accordance with regulations.

5.3 Investors must submit to the financial agencies at all levels the basic documents of projects in the plan for review and announcement of the list of projects to be settled with capital (these documents are only sent once until the end of the project, except when supplementation or adjustment is required), including:

- For planning projects: approval documents for the project outline or task and cost estimates for planning work.

- For preparation projects: approval documents for cost estimates for preparation work.

- For implementation projects: investment construction project (or economic-technical report for projects that only prepare an economic-technical report) along with the investment decision of the competent authority, project adjustment decisions (if any), technical design approval decision (for three-step design projects) or construction drawing design approval decision (for one-step and two-step design projects) and total estimate approval decision.

III. Adjusting the annual investment capital plan:

1. Principles:

- Periodically, Ministries and localities review the progress and investment objectives of projects in the year to adjust the investment capital plan within their authority or request the Prime Minister to adjust the investment capital plan, transferring capital from projects unable to implement to projects exceeding progress, having outstanding volumes, and projects capable of completing ahead of schedule in the year.

- Before submitting the adjusted capital investment plan for each project to the financial agency, Ministries and localities work with the State Treasury to determine the amount of capital already paid out from the annual plan for the project, the surplus capital due to non-implementation, ensuring that the adjusted project plan is not lower than the capital paid out by the State Treasury.

- If there is still surplus capital after adjustment compared to the assigned plan, the surplus capital will be reallocated to other units according to the decision of the competent authority.

2. Financial agencies at all levels review and announce the list and capital of adjusted projects as stipulated above.

3. The deadline for adjusting the annual investment capital plan ends no later than December 31 of the planning year.

(Model form of the adjusted annual investment capital plan attached as Appendix No. 02).

B. SETTLEMENT OF INVESTMENT CAPITAL

I. OPENING ACCOUNTS:

1. For domestic capital:

Investors may open an account at the State Treasury where it is convenient for monitoring and settling payments and for the investor's transactions.

2. For foreign capital:

Investors may open an account at a bank in accordance with the guidance of the Ministry of Finance and the bank.

II. BASE DOCUMENTS OF THE PROJECT:

To serve management and control of investment capital disbursement, the project sponsor must submit to the State Treasury where the payment account is opened the base documents of the project (these documents are either originals or certified true copies, only submitted once until the end of the project, except for cases requiring supplementation or adjustment), including:

1. For planning projects:

- The document from the competent authority approving the outline or assignment of the planning project;

- The approved budget estimate for planning work;

- The tender selection document in accordance with the Bidding Law;

- The contract between the Project Owner and the contractor.

2. For preparatory investment projects:

- Approved budget estimate for investment preparation work;

- The tender selection document in accordance with the Bidding Law;

- The contract between the Project Owner and the contractor.

3. For implementation investment projects:

3.1- For domestic-funded projects:

- The construction investment project (or economic-technical report for projects that only prepare an economic-technical report) accompanied by the investment decision of the competent authority, and decisions adjusting the project (if any);

- The decision approving the technical design (for three-stage design projects) or the decision approving the construction drawing design (for one-stage and two-stage design projects) and the decision approving the total budget estimate accompanied by the total budget estimate;

- The tender selection document in accordance with the Bidding Law (including bidding, direct award, direct purchase, competitive quotation, self-execution, and tenderer selection in special cases);

- The contract between the project sponsor and the contractor (including accompanying documents of the contract: the forecast of the tender invitation document; the forecast of the bid price calculation accompanied by the detailed price list of the contractor and conditions for price changes (if any), general and specific conditions of the contract);

- The approved detailed budget estimate for each work and sub-project for direct award contracts and self-execution contracts.

3.2- For ODA projects: in addition to the documents specified above, the following are required:

+ The Vietnamese translation signed and stamped by the project sponsor of: the credit agreement, disbursement handbook (if any). Specifically, the contract between the project sponsor and the contractor must be a Vietnamese document or a Vietnamese translation signed and stamped by the project sponsor;

+ Temporary advance guarantee (if any) according to the specific provisions of the Contract (including cases of domestic-funded projects but implemented by foreign contractors).

4. For preparatory investment work funded within the implementation investment plan, the approved budget estimate for preparatory investment work is required.

5. For preparatory work for project implementation funded within the implementation investment plan:

- The construction investment project (or economic-technical report for projects that only prepare an economic-technical report) accompanied by the investment decision of the competent authority;

- The approved budget estimate for preparatory work for project implementation; specifically, land clearance must be accompanied by the land clearance plan approved by the competent authority.

- The tender selection document in accordance with the Bidding Law;

- The contract between the Project Owner and the contractor.

III. TEMPORARY ADVANCE AND RECOVERY OF TEMPORARY ADVANCE:

1. OBJECTS ELIGIBLE FOR TEMPORARY ADVANCE AND AMOUNT OF TEMPORARY ADVANCE:

1.1- For construction works tender packages:

- Tender package value under VND 10 billion, temporary advance amount equals 20% of the contract value.

- Tender package value from VND 10 billion to under VND 50 billion, temporary advance amount equals 15% of the contract value.

- Tender package value VND 50 billion or more, temporary advance amount equals 10% of the contract value.

1.2- For equipment procurement tender packages (including imported equipment and domestically purchased equipment):

The temporary advance amount is agreed upon by the contractor and the project sponsor based on the payment schedule stipulated in the contract, but not less than 10% of the tender package value.

 The temporary advance amount is paid according to the payment schedule of the project sponsor to the contractor as stipulated in the contract and continues until the equipment has been warehoused by the project sponsor (for equipment that does not require installation) or has been installed and accepted (for equipment that requires installation).

1.3- For tender packages or projects implemented under EPC contracts:

- Temporary advance for equipment procurement based on the supply schedule stipulated in the contract (as specified for equipment).

- Other works, the temporary advance amount is 15% of the contract value.

1.4- For consulting and planning contracts:

The temporary advance amount is agreed upon in the contract between the project sponsor and the contractor, but not less than 25% of the contract value.

1.5- For land clearance compensation work: temporary advance funding is provided, the temporary advance amount is based on the progress of implementation but does not exceed the annual capital plan already allocated. In cases of constructing new resettlement areas or new facilities for compensation purposes, temporary advance is handled as for construction projects or construction tender packages.

1.6- For urgent projects such as dike construction and repair, flood control structures, drainage structures, seedling projects, disaster relief projects, the temporary advance amount is 50% of the capital plan decided by the competent authority.

1.7- For certain large prefabricated components and specialized materials that need to be produced in advance to ensure construction progress and materials that need to be stored seasonally, if necessary, the temporary advance amount may exceed the prescribed limit, but it should meet the needs of production, import, and storage of these materials without exceeding the annual capital plan.

1.8- The temporary advance amount as stipulated in Section 1 above shall not exceed the annual capital plan allocated for the tender package. If the temporary advance amount is insufficient due to a lower annual capital allocation than the temporary advance amount, the project can continue to receive temporary advances in the following year's plan until the prescribed temporary advance ratio is reached.

2. RECOVERY OF TEMPORARY ADVANCE:

2.1- For construction works tender packages: the temporary advance is gradually recovered when the completed volume is settled according to the following schedule:

- Start recovery time:

+ Tender packages valued under VND 10 billion: when settlement reaches 30% of the contract value.

+ Tender packages valued from VND 10 billion to under VND 50 billion: when settlement reaches 25% of the contract value.

+ Tender packages valued VND 50 billion or more: when settlement reaches 20% of the contract value.

- The temporary advance is fully recovered when the completed volume settlement reaches 80% of the contract value.

- In cases where the advance payment has not been fully recovered due to the contract package not being paid up to the prescribed percentage but the project is not continued in the plan or is suspended, the investor must explain to the State Treasury about the situation of using the unrecovered advance payment, and at the same time report to the competent authority for handling.

- In cases where an advance payment has been made but the contract package is not implemented according to the time limit specified in the contract, the investor must explain to the State Treasury and be responsible for returning the advance payment amount.

2.2- For equipment procurement contract packages: the advance payment is recovered with each payment for completed equipment volume.

- For equipment that does not require installation, when the equipment has been inspected and stored in the investor's warehouse, the investor is responsible for sending documents to the State Treasury to process the payment for completed equipment volume and recover the entire advance payment.

- For equipment requiring installation, when the equipment installation is complete, the investor sends documents to the State Treasury to process the payment for completed equipment volume and recover the entire advance payment.

In cases where an advance payment has been made but the equipment has not been received within the time limit specified in the contract, the investor must explain to the State Treasury and be responsible for returning the advance payment amount.

2.3- For EPC contract packages or projects: the advance payment for works is recovered as stipulated for recovering advance payments for corresponding works.

2.4- For consulting and planning contracts:

The advance payment is recovered with each payment for completed consulting and planning work volume according to the principle:

- The recovery period starts when the completed volume is paid.

- The amount recovered equals the payment amount multiplied by (x) the advance payment ratio.

2.5- For land clearance and compensation work, the advance payment is recovered during the payment period for completed work volume.

2.6- For urgent projects such as dike construction and repair, flood control structures, drainage structures, seedling projects, disaster relief projects, the advance payment is recovered when the payment reaches 30% of the annual plan and is fully recovered when the payment reaches 80% of the annual plan.

2.7- For certain large components, semi-finished products in construction that need to be produced in advance to ensure construction progress and certain special materials that need to be stored seasonally, the advance payment is recovered upon completion payment and is fully recovered when the completion payment reaches 80% of the contract value.

2.8- The level of advance payment recovery for various types of contracts may be higher than the above regulations if the investor and contractor agree to propose it.

2.9- In cases where advance payments for certain works (such as land clearance and compensation, etc.) have not been paid out due to force majeure, the investor must deposit the money at the State Treasury or financial institutions, and if interest accrues, the entire accrued interest must be paid into the State Budget.

2.10- In cases where the advance payment has not been fully recovered by the end of the budget year due to the contract package not being paid up to the prescribed percentage, it will continue to be recovered in the following year's plan without being deducted from the next year's investment payment plan.

3. Regarding advance payment documents:

In addition to the basic documents as stipulated in Section II above, the investor sends the State Treasury the Investment Payment Request Form and the Investment Withdrawal Form.

For certain large components, semi-finished products in construction that need to be produced in advance to ensure construction progress and certain special materials that need to be stored seasonally, additional documents are required: the contractor's contract with the manufacturing or importing unit for components and materials, or a confirmation record between the investor and the contractor regarding components, semi-finished products, special materials, and seasonal materials already assembled on site.

4. Advance payment shall be made within the payment period of the capital plan and can be made once or multiple times based on the need for advance payment but shall not exceed the advance payment amount specified above.

IV. Payment for completed volume.

1- Payment for completed construction volume:

1.1- Completed construction volume under direct award or self-execution form is paid as the value of the volume accepted according to the signed contract and meets the following conditions:

- The accepted volume must comply with the approved construction drawings and be included in the assigned annual investment plan;

- There must be a detailed estimate approved according to the current national regulations on cost norms.

1.2- Completed construction volume under tendering or EPC contract form is paid as the volume completed and accepted according to the schedule, included in the signed contract, and included in the assigned annual investment plan.

Based on the contract execution time and nature, payment is made according to the following methods:

- Lump sum payment: the investor pays the contractor the lump sum price in the contract when the contractor fulfills all obligations according to the contract.

- Fixed unit price payment: the investor pays the contractor for completed work according to the fixed unit price determined in the contract.

- Adjustable price payment: applicable to contracts where at the time of signing, the quantity and volume cannot be accurately determined or there is significant price fluctuation due to state changes and the contract duration exceeds 12 months.

In cases where the volume increases or decreases compared to the contract volume but within the tender documentation and not due to the contractor's fault, the increased or decreased volume must comply with specific conditions stipulated in the contract, approved in writing, and calculated according to the contract unit price. The adjusted contract value shall not exceed the estimate, total estimate, or tender package price approved, except with permission from the authorized person.

Volumes arising beyond or outside the contract, outside the scope of the tender documentation must have approval documents (if the volume arises from a tendered process) or approved supplementary estimates (if the volume arises from a designated tender process) from the competent authority regarding both quantity and unit price.

Based on the accepted volumes, the project owner and contractor shall determine the implementation schedule according to the contract to request payment.

1.3- When completed volumes are accepted, the project owner shall prepare a payment proposal document to send to the State Treasury, including:

- The completion acceptance record for a portion of the construction works, construction phase or completion acceptance record for a component or the entire project to be put into use, accompanied by the valuation of the accepted volume.

- A payment request for investment capital;

- Payment proposal for advance investment capital (if there is advance payment).

- Investment capital withdrawal document.

For completed construction project volumes under a tendering process, the State Treasury shall base its payment on the implementation progress determined by the project owner and contractor based on the contract and the accepted volume.

2. Payment for completed equipment volumes:

2.1- Completed equipment volumes eligible for payment must meet the following conditions:

- The equipment list must be consistent with the investment decision and included in the assigned investment plan;

- Included in the contract between the project owner and the contractor;

- Already warehoused by the project owner (for non-installation equipment) or fully installed and accepted (for installation equipment).

2.2- When completed volumes are accepted, the project owner shall prepare a payment proposal document to send to the State Treasury, including:

- Acceptance record as prescribed. In cases where equipment does not require installation, send the acceptance record between the project owner and the contractor according to the contract;

- Invoice (for domestically purchased equipment) in the case of a designated tender (a certified copy with the signature and stamp of the project owner);

- Transport, insurance, tax, storage fee documents (in cases not included in the equipment price);

- A payment request for investment capital;

- Payment proposal for advance investment capital (if there is advance payment).

- Investment capital withdrawal document.

3. Payment for completed consultancy work volumes:

3.1- Completed consultancy work volumes eligible for payment are those that have been accepted and are included in the contract and the assigned annual investment plan.

3.2- When completed volumes are accepted, the project owner shall prepare a payment proposal document to send to the State Treasury, including:

- Acceptance record or handover record for completed consultancy work volume or report on completed results. In cases where the contract pays according to time, include a cost statement prepared by the project owner.

- A payment request for investment capital;

- Payment proposal for advance investment capital (if there is advance payment).

- Investment capital withdrawal document.

4. Payment for other completed volumes:

Apart from consultancy services, other types of work are paid when sufficient evidence proving the work has been carried out is available as follows:

- For land construction fees, land transfer taxes: valid invoices and receipts from the revenue collection agency must be provided.

- For compensation and land clearance costs: confirmation of the amount of compensation implemented, contracts, and handover records for houses (in cases of house purchases for relocation due to land clearance). Special compensation costs for organizing land clearance must be based on approved budgets.

For land clearance activities involving construction (including construction for relocated residents): advance payments and settlements are handled like construction projects or construction tenders.

- Costs for groundbreaking, acceptance, trial operation, and inauguration: authorization documents from the competent authority (except for trial operations), approved budgets, and cost statements prepared by the project owner must be provided.

- Expert, technical worker training, and production management staff costs: contracts, approved cost budgets, and cost statements prepared by the project owner must be provided.

- For construction project insurance costs: insurance contracts must be provided.

- For project management costs:

+ Costs at a percentage rate, settled according to prescribed standards.

+ Costs under contracts (including cases of hiring project management consultants), settled according to contract provisions.

+ Costs must be prepared according to budgets and settled according to approved budgets.

- For costs in planning, investment preparation, and project implementation preparation work: approved budgets, contracts, and acceptance records for work volumes or reports on completed work results must be provided.

- For settlement audit costs: If auditing is hired, contracts must be provided; if specialized agencies conduct audits, approved budgets must be provided.

5. Payment deadlines and forms:

- Based on the payment proposal documents submitted by the project owner, within seven working days from receiving complete and valid documents, the State Treasury shall control and provide funds to the project owner, and upon the project owner's request, directly pay contractors on behalf of the project owner, recovering advance payments according to regulations.

- Annual plans allocated for projects can only be settled within the stipulated planning year according to the State Budget Law. Beyond the settlement deadline, completed volumes not yet settled must be arranged in the next year's plan for settlement.

6. Projects with foreign capital or international tender packages where the credit agreement signed between the Government of Vietnam and the financier specifies advance payment conditions (eligible recipients, conditions, and amounts of advance payment, recovery of advance payment) and other payment methods different from the above provisions shall be implemented according to the agreement.

7. Project owners must allocate sufficient funds annually to purchase construction project insurance. The State will not reimburse project owners for losses and risks covered by insurance if they fail to purchase construction project insurance as per current regulations.

8. The total payment amount for each work item, component, or project cannot exceed the budget estimate or winning bid price; the total payment amount for the project cannot exceed the approved total investment amount.

The amount of capital paid for the project in a year (including advance payments and payments for completed work volume) shall not exceed the annual capital plan allocated for the project.

9. For certain particularly important projects that require different advance payment and capital payment mechanisms from those stipulated above, after obtaining the opinion of the competent authority, the Ministry of Finance will issue separate guidance documents.

10. Management, payment, recovery, and final settlement of pre-budgeted capital advances for projects for the following year shall be carried out as follows:

10.1- For projects managed by Ministries:

- Pre-payment shall be carried out in accordance with Clause 3, Article 57 of the State Budget Law No. 01/2002/QH11 dated December 16, 2002, and Article 61 of Decree No. 60/2003/NĐ-CP dated June 6, 2003, detailing and guiding the implementation of the State Budget Law.

- After the competent authority permits pre-payment, the Ministry of Finance shall notify the managing ministry about the total pre-payment amount, source of pre-payment capital, budget period for pre-payment and recovery, and simultaneously send this information to the State Treasury; it shall also notify the State Treasury about the pre-investment capital amount to be transferred for project payment.

- Payment deadline: the pre-payment capital of a given plan year shall be synchronized with the investment capital payment deadline of that plan year. Upon expiration of the payment deadline, the State Treasury shall process the cancellation of unused pre-payment capital.

- Recovery: ministries are responsible for allocating capital plans for projects in the next year's budget estimate to repay pre-paid capital. When announcing the list of projects and planned investment capital annually, the Ministry of Finance shall simultaneously announce the recovery of pre-paid capital, which should equal the pre-paid capital amount. In cases where ministries do not allocate or allocate insufficient amounts for recovery, the Ministry of Finance shall recover the pre-paid capital by deducting it from the allocated investment expenditure budget of the ministry and issuing a notification to inform the ministry for coordination.

- Final settlement of capital: pre-payment capital of a given plan year shall be settled in the budget period of that year, not in the period when pre-payment occurred. In cases where state secret projects recover pre-paid capital over several years, the recovered capital of a given plan year shall be settled in the budget period of that year, and the capital already paid but not allocated for recovery shall be transferred to the next year for appropriate settlement in line with the recovery plan.

10.2- For projects managed by localities:

- Pre-payment of the budget estimate at various levels of local government authorities shall be decided by the Chairman of the People's Committee of provinces and centrally-administered cities within their respective jurisdictions, in accordance with the State Budget Law No. 01/2002/QH11 dated December 16, 2002, Decree No. 60/2003/NĐ-CP dated June 6, 2003, detailing and guiding the implementation of the State Budget Law, and Circular No. 59/TT-BTC dated June 23, 2003, guiding the implementation of Decree No. 60/2003/NĐ-CP dated June 6, 2003.

- Management, payment, recovery, and final settlement of pre-payment capital shall be implemented similarly to the provisions set forth in point 10.1 above.

C. MANAGEMENT AND PAYMENT OF CAPITAL FOR SPECIAL CONSTRUCTION PROJECTS

I. State Secrets Construction Projects:

1. Types of state secrets construction projects as defined in Article 2 of Decree No. 71/2005/NĐ-CP dated June 6, 2005, on the management of investment and construction of special projects.

Management of investment and construction of state secrets construction projects shall be carried out in accordance with Decree No. 71/2005/NĐ-CP dated June 6, 2005, on the management of investment and construction of special projects.

Planning, allocation, and notification of investment capital; control, payment, and final settlement of investment capital for state secrets construction projects shall be carried out according to regulations applicable to state budget investment capital. Specifically, for state secrets projects managed by the Ministry of Public Security and the Ministry of National Defense, the Ministry of Finance shall transfer capital directly to the Ministry of Public Security and the Ministry of National Defense for receipt, management, distribution, and final settlement of investment capital for these projects.

2. Planning, Allocation, and Notification of Investment Capital:

- Planning, allocation, and notification of investment capital shall be carried out according to regulations applicable to state budget investment capital, clearly distinguishing the lists and capital of state secrets projects.

- For state secrets projects managed by the Ministry of Public Security and the Ministry of National Defense, the Ministry of Finance shall review the allocation and notify the lists and capital of projects that meet the conditions to the Ministry of Public Security and the Ministry of National Defense for management, control, and payment of capital for these projects.

3. Transfer, Distribution, and Payment of Capital:

- Transfer, distribution, and payment of investment capital shall be carried out according to regulations applicable to state budget investment capital. For state secrets projects managed by the Ministry of Public Security and the Ministry of National Defense, the Ministry of Public Security and the Ministry of National Defense shall open deposit accounts at the State Treasury Exchange to receive transferred capital from the Ministry of Finance.

- Based on the annual capital plan and the progress of projects, the Ministry of Finance shall transfer capital to the Ministry of Public Security and the Ministry of National Defense through payment orders. Each batch of transferred capital shall be based on the progress report of the projects and the request for capital transfer from the Ministry of Public Security and the Ministry of National Defense. By January 31 of the following year, any remaining balance on the deposit account must be repaid to the state budget.

- The Ministry of Public Security and the Ministry of National Defense shall organize the control and payment of capital for state secrets projects in accordance with regulations on the control and payment of investment capital.

- For state secrets projects managed by other ministries, sectors, and provinces, the State Treasury shall only accept withdrawal vouchers and transfer funds upon the request of the project owner without reviewing the content. The project owner shall bear full responsibility for the content of the payment.

- At the end of the plan year, the Ministry of Public Security and the Ministry of National Defense shall report on the implementation of the plan, the reception and use of capital; confirm the amount of capital paid during the year, cumulative capital paid from the start of construction to the end of the state budget period for each project; comment on the implementation of the investment plan and compliance with financial policies and regulations.

II. Construction Projects Under Emergency Orders:

1. Types of construction projects under emergency orders as defined in Article 2 of Decree No. 71/2005/NĐ-CP dated June 6, 2005, on the management of investment and construction of special projects.

Management of investment and construction of construction projects under emergency orders shall be carried out in accordance with Decree No. 71/2005/NĐ-CP dated June 6, 2005, on the management of investment and construction of special projects.

2. Advance payments and capital settlement:

2.1 Advance payment of capital:

- Documents for advance payment of capital include:

+ Decision on urgent construction projects by the competent authority;

+ Application for capital disbursement;

+ Capital withdrawal certificate.

- The amount of advance payment and recovery of advance payment:

+ The amount of advance payment is 50% of the assigned investment capital plan.

+ The advance payment will be gradually recovered during the settlement periods of completed work volumes and fully recovered upon completion of the project.

2.2 Settlement of completed work volumes:

The control and settlement of capital shall be carried out according to current norms and unit prices. Settlement documents include:

- Approved budget estimate.

- Completion acceptance record for construction phase or part of the construction project accompanied by the valuation of accepted work volume.

- A payment request for investment capital;

- Payment proposal for advance investment capital (if there is advance payment).

- Investment capital withdrawal document.

Each settlement, the State Treasury shall implement according to the proposal of the person responsible for managing and implementing urgent projects but within the value of the accepted completed work volume and not exceeding the assigned capital plan.

III. Temporary Projects:

1. Types of temporary projects as stipulated in Article 2 of Decree No. 71/2005/NĐ-CP dated June 6, 2005 of the Government on Management of Special Construction Investment Projects.

2. Management, advance payment, and capital settlement:

The management, advance payment, and capital settlement for temporary projects shall be implemented according to the provisions in Part B of this Circular and supplemented as follows:

- In cases where settlement is made according to the quota prescribed in Circular No. 04/2005/TT-BXD dated April 1, 2005 of the Ministry of Construction, it shall be recorded in the account for completed work volume settlement of the project; in addition to the project documents, settlement documents include: Application for capital disbursement, Capital withdrawal certificate.

- For large and complex projects where the cost of temporary housing at the site for living and construction management is included in the budget estimate, settlement shall be controlled according to the approved budget estimate; in addition to the project documents, settlement documents include: Decision approving the budget estimate, Completion acceptance record with attached valuation table of accepted work volume, Application for capital disbursement, Application for advance capital disbursement (if there is advance payment), Capital withdrawal certificate.

D. MANAGEMENT AND SETTLEMENT OF CAPITAL FOR PUBLIC SERVICE PROJECTS WITH INVESTMENT CHARACTERISTICS

1. Use of capital:

Public service capital with investment characteristics in the state budget of administrative and public service units can only be used for cases of improving, expanding, and upgrading existing facilities (including new construction of project components within existing facilities of administrative and public service units). New investment projects shall not be allocated public service capital.

2. Planning, allocation, and notification of capital:

The planning, allocation, verification, and notification of capital shall be carried out in accordance with the State Budget Law and the guidelines of the Ministry of Finance for public service capital.

3. Advance payment and capital settlement:

3.1 Basis documents:

- For projects with a capital amount of 1 billion VND or more, the basis documents are the same as those for projects funded by development investment capital.

- For projects with a capital amount below 1 billion VND, the basis documents include:

+ Budget estimate and decision approving design-budget estimate;

+ Tender selection document in accordance with the Bidding Law;

+ Contract between the investor and the contractor.

3.2 Advance payment of capital:

- For projects with a total capital amount of 1 billion VND or more, the advance payment amount and recovery of advance payment shall be implemented as for projects funded by development investment capital.

- For projects with a total capital amount below 1 billion VND, the advance payment amount is 30% of the annual plan already assigned. The advance payment shall be gradually recovered during each settlement period of completed work volume and fully recovered within the annual plan. The amount of advance payment recovered each period equals the amount of settlement multiplied by the advance payment ratio.

- Documents for advance payment of capital include: Application for capital disbursement, Capital withdrawal certificate.

3.3 Capital settlement:

- The state budget transfers public service capital with investment characteristics to the State Treasury for settlement according to the regulations on management and issuance of public service expenditure capital.

- For projects with a total capital amount of 1 billion VND or more, the settlement of completed work volume shall be carried out according to the capital settlement system for state budget-funded investment capital.

- For projects with a total capital amount below 1 billion VND, when there is a completed work volume that has been accepted, the investor shall prepare a settlement application to send to the State Treasury, including:

+ Completion acceptance record for work volume with attached valuation table of settlement work volume;

+ Application for capital disbursement;

+ Application for advance capital disbursement (if there is advance payment);

+ Capital withdrawal certificate.

E. REPORTING SYSTEM, FINALIZATION, AND INSPECTION

I. Reporting:

1. For project sponsors:

- Quarterly, on the 5th day of the first month, the investor is responsible for reporting the implementation of investment and capital settlement of the project to the investment decision-making authority, State Treasury, and the finance department at the same level (for projects under local management). For national key projects and group A projects, the investor sends reports on the 20th of each month to the Ministry or Provincial People's Committee, Ministry of Planning and Investment, and Ministry of Finance for compilation and reporting to the Prime Minister.

(Model form according to Appendix No. 03 attached).

- At the end of the plan year, the investor shall prepare a report on investment capital implementation in the year to send to the investment decision-making authority, State Treasury, and the finance department at the same level (for projects under local management) on February 10 of the following year.

(Model form according to Appendix No. 04 attached).

The annual investment capital implementation report must analyze and evaluate the implementation of the plan, investment results in the year, existing issues, and propose solutions.

- At the end of the plan year, the investor shall prepare a reconciliation table of capital settlement figures for each project showing the settlement amount in the year, cumulative settlement from commencement to the end of the state budget fiscal year, and submit to the State Treasury for confirmation.

(Model form according to Appendix No. 07 attached).

2. For Ministries and Provinces:

- On the 15th of the first month of each quarter, Ministries and Provincial People's Committees are responsible for compiling the implementation of the investment plan and capital settlement situation of projects under their management to send to the Ministry of Finance, Ministry of Planning and Investment, and Ministry of Construction as prescribed.

(Model form according to Appendix No. 05 attached).

||| At the end of the planning year, ministries and provincial people's committees shall compile and submit reports on the implementation of investment capital for that year to the Ministry of Finance, the Ministry of Planning and Investment, and the Ministry of Construction by February 20th of the following year.

||| (Model form according to Appendix No. 06 attached hereto).

||| The report on the implementation of investment capital for the year must analyze and evaluate the situation of plan implementation, investment results for the year (physical indicators), existing issues, and propose solutions.

||| 3\. For the State Treasury:

||| - Implement the information reporting system as prescribed by the Ministry of Finance.

||| - At the end of the planning year, the State Treasury shall settle accounts with the corresponding financial authority regarding the use of investment capital in accordance with the regulations on state budget settlement.

||| - By the end of the planning year, the State Treasury shall confirm the amount paid out during the year, cumulatively from the start of construction to the end of the state budget fiscal year, for each project established by the investor.

||| II\. Settlement of Investment Capital:

||| Annual settlement of investment capital and settlement upon completion shall be carried out in accordance with the guidelines of the Ministry of Finance on the settlement system for investment capital.

||| In cases where the settlement has been approved, if the settled capital amount is lower than the amount already paid to the project, the investor shall be responsible for recovering the excess payment from the contractor to refund it to the State; if the settled capital amount is higher than the amount already paid, the investor shall be responsible for making additional payments or allocating funds in the next year's plan to pay the contractor.

||| III\. Inspection:

||| Ministries, provincial people's committees, financial authorities, and the State Treasury shall periodically or unexpectedly inspect investors and contractors participating in projects regarding the use of advance capital, payment of completed work volume, and compliance with the State's financial development policies and systems.

||| Financial authorities at all levels shall periodically or unexpectedly inspect the State Treasury regarding the implementation of the capital payment system.

||| F\. RESPONSIBILITIES AND LIMITS OF RELATED AUTHORITIES

||| I\. For Investors:

||| - Fulfill the functions and tasks assigned in accordance with regulations. Receive and use capital for the intended purpose, for the intended recipients, economically and effectively. Adhere strictly to the legal provisions on the management system for financial development investment.

||| - Bear responsibility for the quality of works, the correctness and legality of the project volume or progress when making payments; ensure the accuracy, honesty, and legality of data and documents provided to the State Treasury and relevant state agencies.

||| - When there is sufficient volume according to the contract conditions, promptly conduct acceptance, prepare complete payment files, and request payment from the contractor within the stipulated time limit.

||| - Timely and fully report to the investment decision-making agency and related state agencies as required; provide complete files and information as required to the State Treasury and financial authority to serve management and capital payment; accept inspection by the financial authority and the investment decision-making agency regarding the use of investment capital and compliance with the State's financial development policies and systems.

||| - Conduct accounting for the investor unit; settle investment capital in accordance with current regulations.

||| - Request payment of capital when conditions are met and ask the State Treasury to respond and explain any unsatisfactory points in the capital payment process.

||| II\. For Ministries and Provincial People's Committees:

||| - Guide, inspect, and urge investors under their jurisdiction to implement investment plans, receive and use investment capital for the intended purpose and in accordance with state regulations.

||| - Within the scope of their authorized powers, bear responsibility before the Government and national laws for their decisions.

||| III\. For Financial Authorities at All Levels:

||| - Report on the implementation of investment plans as prescribed.

||| - Ensure adequate funding sources as prescribed by the Ministry of Finance for the State Treasury to pay for projects.

||| - Carry out the settlement of investment capital in accordance with the State Budget Law.

||| - Coordinate with functional agencies to guide and inspect investors, the State Treasury, and contractors implementing projects regarding compliance with financial development policies and systems, management and use of investment capital, and capital payment situations to address violations and issue decisions to recover improperly allocated funds or expenditures.

||| - Have the right to request the State Treasury and investors to provide necessary documents and information to serve state management of financial development investment, including documents for project feasibility studies and annual investment capital allocation plans, reports on plan implementation and investment capital use as required by the information reporting system, and documents for auditing investment capital settlements as prescribed.

||| IV\. For the State Treasury:

||| - Issue a uniform payment procedure for investment capital nationwide.

||| - Guide investors to open accounts for advance payments and capital payments.

||| - Control and make timely and full payments to projects when conditions are met and within the specified time frame.

||| - Provide clear written opinions to investors regarding reduced or refused payments, and respond to investors' queries about capital payments.

||| - If discovering that decisions by competent authorities violate current regulations, they must submit a written request for reconsideration and clearly state their recommendations. If not answered within the specified timeframe, they may proceed based on their own recommendations; if answered but found unsatisfactory, they still follow the opinion of the competent authority while simultaneously reporting to a higher authority and the financial authority for review and handling.

||| - Urge investors to settle debts completely when projects have been settled and accounts closed.

||| - Implement the information reporting and settlement system for investment capital and public service capital with investment characteristics from state budget funds in accordance with the State Budget Law and guidelines from the Ministry of Finance.

- Has the right to request the project investor to provide files, documents, and information according to the prescribed regulations for the purpose of serving capital disbursement control. When necessary, it can grasp the actual situation at the site.

- Periodically and unexpectedly inspect project investors on the implementation status of projects, compliance with financial investment development policies, capital management and usage; Is authorized to temporarily suspend capital disbursement or recover the amount of capital that the investor has misused for purposes, objects, or contrary to state financial management regulations, while reporting to the Ministry of Finance for handling.

- Does not participate in acceptance boards of construction works and projects.

- Organizes capital control and disbursement work according to a unified business procedure, simplifying administrative procedures but ensuring strict capital management, timely, full, and convenient disbursement for project investors.

- At the end of the plan year, confirms the amount disbursed in the year, accumulates the amount disbursed from the start of construction to the end of the fiscal year for each project, comments on compliance with capital management systems, quota unit prices, and other policies and regulations.

- Bears responsibility before the Minister of Finance and national laws regarding the receipt, use of state budget capital, and disbursements in construction investments.

Part III

IMPLEMENTING PROVISIONS

1. This Circular takes effect fifteen days after its publication in the Official Gazette and replaces Circular No. 44/2003/TT-BTC dated May 15, 2003 of the Ministry of Finance guiding the management and disbursement of investment capital and operational capital with investment characteristics from state budget funds, Circular No. 45/2004/TT-BTC dated May 21, 2004 of the Ministry of Finance supplementing and amending certain points of Circular No. 44/2003/TT-BTC dated May 15, 2003, and Circular No. 96/2004/TT-BTC dated October 13, 2004 of the Ministry of Finance guiding the management, disbursement, recovery, and settlement of advance budget estimates for the following year for basic construction investment projects.

2. For other development expenditures from the state budget (state reserve expenditures, working capital support for enterprises, equity participation contributions for joint ventures, expenditures for foreign loans and foreign aid, expenditures for development support funds), they shall be implemented according to separate guidance documents for each type of expenditure.

3. For investment projects from other sources of state funds outside the state budget, the principles of disbursement stipulated in this Circular shall also be applied./.