Circular No. 35/2012/TT-BTC guiding certain provisions of Government Decree No. 75/2011/NĐ-CP dated August 30, 2011 on state investment credit and export credit

CIRCULAR

Guidelines for certain provisions of Decree No. 75/2011/NĐ-CP dated August 30, 2011 of the Government on state investment credit and export credit.

The Government promulgates this Decree to supplement Decree No. 75/2011/NĐ-CP dated August 30, 2011 of the Government on state investment credit and export credit,

_____________________________

Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 75/2011/NĐ-CP dated August 30, 2011 of the Government on state investment credit and export credit (hereinafter referred to as Decree No. 75/2011/NĐ-CP of the Government);

The Ministry of Finance guides the implementation of the following contents:

Article 1. Scope of application

The subjects to which this Circular applies include the Vietnam Development Bank (hereinafter referred to as the Development Bank) and other organizations and individuals related to the implementation of state investment credit and export credit in accordance with the provisions of Decree No. 75/2011/NĐ-CP of the Government.

Article 2. State Investment Credit and Export Credit Plan

1. At the time of preparing the annual state budget estimate, the Development Bank shall prepare and report to the Ministry of Finance and the Ministry of Planning and Investment on the annual state investment credit and export credit plan. The Ministry of Finance shall be responsible for reviewing the state investment credit and export credit plan prepared by the Development Bank and send it to the Ministry of Planning and Investment for consolidation and submission to the Prime Minister for decision-making within the national socio-economic development plan.

2. The annual state investment credit and export credit plan prepared by the Development Bank includes:

a) Evaluation of the implementation of the state investment credit and export credit plan in the current year (the year prior to the planning year).

b) Total credit growth rate, including detailed figures for state investment credit and export credit and other assigned tasks.

c) Sources of funds to implement the overall credit growth plan, including detailed information on each type of source, namely:

- Funds recovered from loans taken for state investment credit and export credit.

- Funds raised from domestic and foreign organizations and individuals, including detailed information on funds raised through bond issuance and other loans guaranteed by the government in accordance with the law.

- Additional state budget funds allocated to increase the charter capital (if any) or to implement the state investment credit and export credit program.

- Funds for post-investment support activities.

d) State budget funds allocated to cover interest rate differences.

3. Based on the state investment credit and export credit growth plan, the funding plan, the interest rate subsidy plan, and the post-investment support plan approved by the competent authority, the Development Bank may proactively manage and allocate specific credit growth rates for each area of state investment credit and export credit and for each project in various industries, fields, and regions according to the principle:

a) Ensuring that the credit growth plan does not exceed the announced interest rate subsidy plan.

b) Prioritizing projects, export contracts, and import contracts under urgent government investment programs that have signed credit contracts with the Development Bank.

c) Adequately allocating funds to repay maturing debt-raising commitments in accordance with agreements and legal regulations.

4. In cases where there are changes or significant fluctuations in the demand for state investment credit and export credit during the year affecting the sources of funds, the Development Bank shall report to the Ministry of Finance, which will coordinate with the Ministry of Planning and Investment to submit to the Prime Minister for consideration of adjusting the plan accordingly.

Article 3. Limit on Loan Amounts

1. The outstanding loan balance for determining the limit on the loan capital amount for each project investor, exporter, and foreign importer shall not exceed 15% of the actual paid-in capital of the Development Bank, including:

a) The outstanding loan balance for investment credit (including loans under targeted credit programs using foreign capital).

b) The outstanding loan balance for export credit.

c) Other loan amounts (excluding loan amounts from entrusted funds received by the Development Bank to re-lend).

2. The outstanding loan balance for determining the loan limit includes both current debt, extended debt, overdue debt, and written-off debt.

3. For borrowers who have already taken out loans, the Development Bank will determine the loan capital amount for each specific case based on the outstanding loan balance and the remaining disbursement amount according to signed credit contracts at the Development Bank, ensuring that it does not exceed the maximum loan capital amount for a single project investor, exporter, or foreign importer as stipulated in Decree No. 75/2011/NĐ-CP.

Article 4. State Investment Credit Development Loans

1. The target, conditions, capital amount, term, currency, and interest rate for loans shall be implemented according to the provisions in Section 1, Chapter II of Decree No. 75/2001/NĐ-CP of the Government.

2. In cases where the Development Bank raises foreign capital to provide loans under targeted credit programs, the borrowing entities must be included in the list of projects eligible for state investment credit loans and must comply with all conditions and terms specified in Decree No. 75/2011/NĐ-CP of the Government. If foreign sponsors require different conditions and terms than those stipulated in Decree No. 75/2011/NĐ-CP, the Development Bank must report to the Prime Minister for approval before implementation.

Article 5. Post-Investment Support

1. Eligible Recipients of Post-Investment Support

a) The recipients of post-investment support shall be carried out according to the provisions of Articles 12 and 13 of Decree No. 75/2011/NĐ-CP dated August 30, 2011, of the Government regarding state investment credit and export credit.

b) Conditions for Receiving Post-Investment Support:

In addition to the conditions for receiving post-investment support stipulated in Article 13 of Decree No. 75/2011/NĐ-CP, the project must submit an audit report on completed investment projects if required by law to undergo mandatory audits. For other projects, the audit shall be conducted in accordance with the regulations of the Development Bank.

c) Projects Not Eligible for Post-Investment Support:

- Projects that have been funded by funds with origins from the state budget or have received financial support (loan costs) from the state budget at various levels.

- Projects that change their investors.

- Projects that borrow funds under targeted foreign capital usage programs of other credit institutions.

2. Principles for Determining and Providing Post-Investment Support

a) The level of post-investment support is calculated for each project and provided to the investor after they have repaid the investment loan principal (principal debt) to the lending institution. Based on the principal repayment amount of the investor, the Development Bank provides post-investment support to the investor a maximum of once per quarter during the year.

b) The level of post-investment support is calculated based on the total principal actually repaid according to the signed credit contract but shall not exceed 70% of the total fixed asset investment capital of the project as decided by the competent authority for final settlement.

c) For pre-maturely repaid loans, the level of post-investment support is calculated based on the actual loan period of that loan according to the signed credit contract.

d) For projects with written-off debts, the write-off period shall not be counted towards the actual loan period for calculating post-investment support, and the maximum support period equals the loan term recorded in the initial signed credit contract.

đ) Investors shall not receive post-investment support for overdue principal debts or debts repaid during the extended repayment period.

e) Post-investment support shall not be calculated for principal repayments made by investors to lending institutions before the Development Bank has received complete documentation as required.

3. Level of Post-Investment Support

a) Formula for Calculating the Level of Post-Investment Support

b) Method for Determining Factors in Calculating the Level of Post-Investment Support

- The interest rate differential to be supported is calculated based on the average difference between the interest rates for investment loans from state-owned commercial banks (Vietnam Agricultural and Rural Development Bank, Vietnam Investment and Development Bank, Joint Stock Commercial Bank for Foreign Trade of Vietnam, Joint Stock Commercial Bank for Industry and Trade of Vietnam) and the interest rate for state investment credit loans.

- Projects receive post-investment support according to each principal repayment by the investor to the lending institution and based on the interest rate differential published at the time of repayment.

- The actual loan period for post-investment support calculation is the duration from the date the investor receives the loan (recorded on the loan receipt) to the date the principal is repaid within the due period (recorded on the repayment receipt) to the lending institution according to the signed credit contract or amended and supplemented credit contract.

The post-investment support period is determined for cases where the disbursed capital is repaid once, disbursed capital is repaid multiple times, multiple disbursed capitals are repaid once, and multiple disbursed capitals are repaid multiple times. The Development Bank will provide detailed guidance on the actual loan period of the project based on the signed credit contract between the investor and the lending institution.

- The determination of the level of post-investment support for projects borrowing in foreign currencies is done in the original currency. On this basis, referring to the average transaction exchange rate USD/VND in the inter-bank foreign exchange market or the cross-exchange rate for foreign currencies/VND announced by the State Bank of Vietnam at the time of providing the support money, to determine the level of post-investment support in Vietnamese Dong for the project.

Article 6. Export Credit

1. The objects, forms, conditions, capital amount, term, currency, interest rate for loans, disbursement, and debt collection shall be carried out in accordance with the provisions of Chapter III of Decree No. 75/2011/NĐ-CP of the Government. Exporters and foreign importers must mobilize sufficient sources of capital under specific credit conditions to implement export contracts outside the portion of export credit loan capital from the Development Bank.

2. Forms of disbursement

a) The Development Bank directly disburses funds to exporters or foreign importers based on the export credit loan agreement between the Development Bank and the exporter and foreign importer.

b) The Development Bank may entrust financial and credit organizations operating legally both domestically and internationally to disburse export credit loans to exporters or foreign importers.

3. Forms of debt collection

a) The Development Bank directly collects debts (principal and interest) from exporters and foreign importers.

b) The Development Bank may entrust financial and credit organizations operating legally both domestically and internationally to collect debts (principal and interest) from exporters and foreign importers based on the export credit loan agreement between the Development Bank and the exporter and foreign importer.

c) The Development Bank has the right to collect debts from exporters and foreign importers in foreign currency from export proceeds. The Development Bank implements foreign exchange transactions and purchases and sales of foreign currencies with authorized foreign exchange credit institutions to convert foreign currency receipts into Vietnamese Dong or vice versa according to the regulations on foreign exchange management.

d) Entrusted disbursement and debt collection are carried out based on the entrustment contract between the Development Bank and the entrusted financial and credit organizations within and outside the country, clearly stipulating the obligations and rights of the parties in disbursement and debt collection, and complying with the regulations on entrusting and accepting entrusted loans of credit institutions.

Article 7. Interest Rates for State Investment Credit and Export Credit

1. At the end of each quarter and year, the Development Bank calculates and determines the average interest rates of various sources of capital and operational costs, and proposes the interest rate for state investment credit and export credit according to the provisions of the Prime Minister's Decision on the financial management mechanism for the Development Bank and guiding documents to report to the Ministry of Finance.

2. Based on the Development Bank's report on calculating the average interest rates of various sources of capital and operational costs and proposing the interest rate for state investment credit and export credit, and based on market lending interest rates and the announced subsidy interest rate plan, the Ministry of Finance considers and decides on the interest rate for state investment credit and export credit.

3. In cases where the average interest rate for capital mobilization on the market and at the Development Bank fluctuates by more than 10% compared to the previous interest calculation period, the Development Bank recalculates the average interest rates of various sources of capital and operational costs and proposes the interest rate for state investment credit and export credit to report to the Ministry of Finance for consideration and decision on interest rate adjustments.

Article 8. Guarantee for Loan

1. When borrowing state investment credit (including loans under targeted foreign capital utilization programs) and state export credit, investors and exporters must implement security measures for borrowed funds at the Development Bank in accordance with the law on secured transactions. Security measures for borrowed funds include collateral, mortgage, future assets, and other security measures (if any) as prescribed by the law on secured transactions.

The Development Bank bases its decision on the capacity and financial situation of the investor and exporter, the loan project, financial plans, repayment plans, and the creditworthiness of the investor and exporter to determine specific security measures and the minimum level of security for borrowed funds.

Foreign importers when borrowing state export credit must have their borrowing guaranteed by the government or central bank or financial organizations performing investment credit and export credit functions of the importing country, in accordance with Clause 5, Article 17 of Decree No. 75/2011/NĐ-CP.

2. During the period before all debts are repaid, investors and exporters may not transfer, sell, lease, lend, or mortgage or pledge collateral without the consent of the Development Bank.

3. The Development Bank may handle the collateral in the following cases:

a) Upon maturity of the obligation to repay the debt, if the investor or exporter does not fulfill or fulfills incorrectly the obligation;

b) The investor or exporter must fulfill the obligation to repay the debt ahead of schedule due to breach of agreement or violation of the law;

c) The law requires the collateral to be handled for the guarantor to fulfill another obligation;

d) Other cases agreed upon by the Development Bank and the investor or exporter in the loan guarantee contract or as prescribed by the law.

4. Based on the current legal provisions on secured transactions, the Development Bank issues detailed guidelines on procedures and formalities for receiving collateral, signing loan guarantee contracts, registering secured transactions, clearly stipulating the rights and responsibilities of the parties to ensure uniform implementation throughout the system.

Article 9. Risk Management.

In cases where the project investor, exporter, foreign importer encounters unforeseeable risks leading to inability to repay debts as stipulated in Point a, Clause 1, Article 26 of Decree No. 75/2011/NĐ-CP; state-owned joint stock companies with 100% state ownership encountering financial difficulties when transitioning to a multi-shareholder model as prescribed; and other risks determined by the Prime Minister, risk management shall be handled according to the State's credit investment and export credit risk management regulations at the Development Bank as specified by the Prime Minister and implemented in accordance with guidelines from the Ministry of Finance.

Article 10. Reporting System

1. Annually during the time of drafting the state budget, the Development Bank is responsible for preparing and reporting to the Ministry of Finance and the Ministry of Planning and Investment on the state’s credit investment and export credit plans as prescribed in Article 2 of this Circular.

2. Quarterly (before the 15th day of the first month of each quarter) and annually (before January 30 of the following year), the Development Bank is responsible for preparing and submitting reports with explanations to the Ministry of Finance, the Ministry of Planning and Investment, the State Bank of Vietnam, and the General Statistics Office:

- Report on capital sources and capital usage (Form No. 01/BC-VDB).

- Report on state credit investment lending (Form No. 02/BC-VDB).

- Report on state export credit lending (Form No. 03/BC-VDB).

- Post-investment support report (Form No. 04/BC-VDB).

- Report on investment lending through entrusted funds (Form No. 05/BC-VDB).

3. Special topic or specific program reports.

Article 11. Implementation Organization

1. This Circular takes effect from April 20, 2012, and applies to projects and loans signed under state credit investment, export credit, and post-investment support agreements from the date Decree No. 75/2011/NĐ-CP of the Government on state credit investment and export credit comes into force (August 30, 2011).

2. This Circular replaces Circulars No. 69/2007/TT-BTC dated June 25, 2007, issued by the Ministry of Finance guiding certain provisions of Decree No. 151/2006/NĐ-CP dated December 20, 2006, of the Government; and No. 16/2009/TT-BTC dated January 22, 2009, issued by the Ministry of Finance amending Circular No. 69/2007/TT-BTC.

3. For projects and loan contracts for state credit investment (including loans under targeted credit programs using foreign capital), state export credit, post-investment support, investment credit guarantees, export credit guarantees, tender guarantees, and contract performance guarantees signed with the Development Bank before the effective date of Decree No. 75/2011/NĐ-CP, implementation shall follow the commitments made in the signed credit contracts.

4. Responsibilities of the project investor, exporter, and foreign importer.

In addition to complying with the provisions of Article 38 of Decree No. 75/2011/NĐ-CP, the project investor, exporter, and foreign importer have the responsibility to:

- Provide accurate, complete, and timely financial documents related to business operations and production activities as required by the Development Bank.

- Accept supervision by the Development Bank regarding the proper and efficient use of borrowed funds and the preservation of capital.

5. The Development Bank may access customer data, export commodity information from tax and customs authorities as provided by law to serve management, lending, and debt recovery purposes.

6. The Development Bank, entrusted financial institutions, and the project investor, exporter, and foreign importer involved in state credit investment and export credit projects are responsible for implementing this Circular.

7. During implementation, if there are difficulties or obstacles, agencies and units are requested to report to the Ministry of Finance for study, amendment, and supplementation./.