Decision No. 28/2004/QD-TTg On restructuring production and implementing certain measures to address difficulties for sugar factories and Companies

Pursuant to …;

Regarding the restructuring of production and implementation of certain measures to address difficulties for sugar factories and companies

factory and Sugar Company

PRIME MINISTER

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to Resolution No. 3 of the 9th Plenary Session of the Central Committee of the Communist Party of Vietnam on continuing the reorganization, renovation, development, and enhancement of state-owned enterprises and Resolution No. 5 of the 9th Plenary Session of the Central Committee of the Communist Party of Vietnam on industrialization and modernization of agriculture and rural areas;

Considering the proposals of the Ministers of the Ministry of Planning and Investment, the Ministry of Agriculture and Rural Development, the Ministry of Finance, and the Governor of the State Bank of Vietnam, and the General Director of the Support Development Fund,

Pursuant to …;

Article 1. Restructuring production and implementing certain measures to address difficulties for sugar factories and companies (referred to collectively as "Factories" in this Decision) with the aim of creating conditions for the sugar industry to continue developing, achieving the target of one million tons of sugar, contributing to the restructuring of the economic structure, solving employment issues, and promoting the process of agricultural industrialization and modernization of rural areas.

Article 2. Based on the current situation regarding technology, raw material supply capacity, and financial status, implement the classification of sugar factories into three groups as follows:

Group 1: Factories currently operating effectively that need to maintain their current status and have supportive policies to develop further;

Group 2: Factories that must undergo reorganization, implement shareholding (the state does not necessarily need to retain shares) or pilot programs such as selling, contracting operations, and leasing businesses;

Group 3: Factories that must relocate to new sites or cease production. The specific list of classified factories in each group is detailed in the annex attached to this Decision.

Article 3. Implement measures to address difficulties for Factories after classification.

1. For Factories belonging to Group 1:

a/ Write off tax arrears to the State budget but not yet paid from value-added tax arising from 2001-2003 for sugar products and products using by-products and waste recovered from sugar production. The amount of debt write-off shall not exceed the cumulative losses accrued up to December 31, 2003 of the Factory.

b/ For Factories that are joint-stock companies borrowing credit funds to invest in building factories or Factories under state-owned enterprises borrowing domestic credit organizations' funds to contribute statutory capital in joint ventures producing and processing sugar, in addition to writing off tax arrears mentioned above, they shall also be subject to the current interest rate of state investment development credit from January 1, 2004 for domestic loans (Development Support Fund, commercial banks) with different interest rates during various periods up to December 31, 2003.

The state budget shall subsidize the difference between commercial interest rates and the adjusted interest rates for lending organizations according to the guidance of the Ministry of Finance.

2. For Factories belonging to Group 2: When implementing shareholding, selling, contracting operations, or leasing businesses, in addition to existing measures to handle existing issues and financial support according to current state regulations, the following support measures shall be applied:

a/. Apply the current interest rate of state investment development credit from January 1, 2004 for domestic loans (Development Support Fund, commercial banks) with different interest rates during various periods up to December 31, 2003, including loans received compulsorily after January 1, 2004 for factory construction projects.

For foreign currency loans from sources outside the country (ODA, trade loans) for equipment imports, basic construction investments, and raw material development for sugar factories, permission is granted to convert them into domestic currency loans from January 1, 2004; the exchange rate for conversion shall be carried out according to the guidance of the Ministry of Finance. Adjusting interest rates after converting to domestic currency loans for each source of foreign currency loans of sugar factories shall follow the principle of not exceeding the current interest rate of state investment development credit.

Re-determine the loan term for loans after adjusting interest rates and converting foreign currency loans to domestic currency loans, with a maximum term of 15 years from January 1, 2004; if the loan period in signed credit contracts exceeds 15 years, it shall be implemented according to the period specified in the signed credit contracts.

The state budget shall subsidize the difference between commercial interest rates and the adjusted interest rates for lending organizations according to the guidance of the Ministry of Finance.

b/ Write off interest on domestic loans, fees for guarantees, and re-guarantee fees arising from foreign loans (in foreign currencies, import equipment loans) guaranteed by domestic credit organizations for sugar factories up to December 31, 2003. The Ministry of Finance shall guide accounting and handling of these debt write-offs according to financial regulations and corporate income tax laws for credit organizations.

c/ Write off tax arrears to the State budget but not yet paid from value-added tax arising from 2001-2003 for sugar products and products using by-products and waste recovered from sugar production. The amount of debt write-off shall not exceed the cumulative losses accrued up to December 31, 2003 of the Factory.

d/ Subsidize the difference in foreign currency exchange rates for imported equipment loans (including deferred payment import equipment loans) arising up to December 31, 2003 but not yet processed. The Ministry of Finance shall base its resolution on specific data from each sugar factory.

đ/ Losses of Factories when implementing shareholding or pilot sales, contracting operations, and leasing businesses shall be handled according to government regulations for state-owned enterprises undergoing shareholding and ownership conversion. For Factories that have completed ownership registration under the Enterprise Law, losses arising from the valuation date to the date of conversion to a joint-stock company shall be adjusted by reducing state capital at the enterprise.

e/ For the volume of basic construction works under factory investment projects that have been completed and approved for settlement by competent authorities according to current state regulations but have not yet been financed to pay contractors, the Development Support Fund shall provide loans at the current interest rate of state investment development credit. The loan term shall be implemented according to point a, clause 2, Article 3 of this Decision.

3. For Factories belonging to Group 3:

a/ The Ministry of Agriculture and Rural Development decides to relocate the Quang Binh Sugar Factory and the Quang Nam Sugar Factory to new locations that are consistent with the planning for the development of the sugarcane and sugar industry and the raw material areas. The relocation of the factories must be based on investment projects for factory relocation, financial plans, and business restructuring schemes approved by competent authorities.

The Ministry of Agriculture and Rural Development directs the two sugar factories to establish investment relocation projects, support policies, and debt resolution plans for the factories and raw material areas. On this basis, the Ministry of Agriculture and Rural Development reports to the Prime Minister for consideration and decision.

b/ Cease production and processing of sugar at Viet Tri Alcohol and Sugar Company (now Vietger Beer and Alcohol Company). Implement financial and labor measures as follows:

- Liquidate and sell assets according to the current financial regulations applicable to state-owned enterprises.

- For losses and difficult-to-collect receivables arising before the cessation of sugar production, use enterprise restructuring costs to address them. For outstanding bank loans for sugar production and processing investments, implement debt resolution plans according to the project for resolving non-performing debts of commercial banks approved by the Prime Minister.

For loans from the Enterprise Development Fund, instruct the Development Fund to develop plans to resolve debts for factory construction and raw material areas, to be submitted to the Prime Minister for consideration and decision.

- Support mechanisms for surplus labor after ceasing production shall be applied according to Decree No. 41/2002/NĐ-CP dated April 11, 2002, of the Government regarding workers.

Other state-owned enterprises engaged in sugar production and processing must cease production to restructure and change their business sectors and shall also have their financial issues and surplus worker policies resolved according to the provisions of point b of this clause.

Article 4. Regarding solutions for developing raw material areas.

1. People's Committees of provinces with sugar factories must focus on directing the development of sugarcane raw material areas in the following directions: planting sufficient area according to the plan, rapidly expanding the area of high-yield, high-sucrose-content new sugarcane varieties; intensifying cultivation, especially applying irrigation methods to increase yield. From 2006, the average sugarcane yield must reach over 60 tons/hectare, sucrose content over 10 CCS for coastal central provinces, the Central Highlands, and northern regions, and yield over 90 tons/hectare, sucrose content over 8 CCS for southern provinces, ensuring sufficient raw materials for sugar mills to achieve designed capacity.

Direct sugar factories to establish investment projects for developing sugarcane varieties, developing infrastructure (irrigation, transportation) in raw material areas, and submit them to competent authorities for approval.

2. After being approved by competent authorities, projects for developing raw material areas may borrow state credit for investment and development guided and handled specifically by the Development Fund. If borrowing commercial credit for investment and development of raw material areas, interest rate support mechanisms after investment shall be applied according to current regulations. The state budget will support: importing and developing new varieties; investing in water reservoirs, major irrigation works (primary and secondary channels) and transportation within raw material areas. Provincial People's Committees should plan to use local government budgets to invest in infrastructure outside the factories and raw material areas.

Factories must have plans and measures to develop sugarcane raw material areas and sign sales contracts with sugarcane growers according to Decision No. 80/2002/QĐ-TTg dated June 24, 2002, of the Prime Minister on the sale of agricultural products through contracts. Factories implementing sales contracts with sugarcane growers shall apply preferential policies stipulated in the Decision on encouraging the sale of agricultural products through contracts.

1. The Ministry of Agriculture and Rural Development: take the lead in coordinating with relevant ministries, industries, and provincial people's committees to review and reassess the overall program planning for sugarcane and sugar, maintaining current production levels of 1 million tons of sugar; expansion and increased capacity of sugar factories must be considered on a case-by-case basis.

- Guide localities in measures to support farmers in crop structure transformation and employment solutions in areas where factories must cease production or relocate.

- Coordinate with relevant ministries, industries, and the Vietnam Sugarcane and Sugar Association to establish and issue regulations on cooperation among sugar factories nationwide in the production and sale of sugarcane raw materials and sugar, addressing the issue of market price undercutting and competition that harms factories and sugarcane growers.

2. The Ministry of Finance takes the lead in coordinating with the Ministries of Agriculture and Rural Development, Planning and Investment, and the State Bank of Vietnam, and provincial people's committees to guide the handling of financial difficulties and related content for sugar factories according to this Decision.

3. Provincial People's Committees with sugar factories and the Ministry of Agriculture and Rural Development direct and guide sugar factories to develop restructuring plans and approve restructuring and ownership transfer plans for sugar factories according to the content of this Decision, to be completed by June 30, 2004.

4. The Ministry of Planning and Investment is responsible for supervising the implementation and leading coordination with relevant ministries, industries, and provincial people's committees with sugar factories to compile results, implement this Decision, and report periodically every six months to the Prime Minister.

5. The Steering Committee for Enterprise Reform and Development coordinates with the Ministry of Agriculture and Rural Development and provincial people's committees to direct the implementation of restructuring and ownership transfer plans for sugar factories.

6. The implementation and completion of the restructuring and ownership transfer of sugar factories will be carried out over the period of 2004-2005.

Article 6. This Decision shall take effect fifteen days from the date of publication in the Official Gazette.

Article 7. The Ministers of Finance, Planning and Investment, Agriculture and Rural Development, the Governor of the State Bank of Vietnam, the General Directors of the Development Support Fund, the Vietnam Development Bank, the Vietnam Agricultural and Rural Development Bank, the Vietnam Industrial and Commercial Bank, and the Chairpersons of the People's Committees of provinces with factories shall be responsible for implementing this Decision.