JOINT CIRCULAR No. 362-TDCTN ON THE IMPLEMENTATION OF DECISION No. 054-TTg dated February 19, 1959, OF THE GOVERNMENT PRIME MINISTER REGARDING STATE ENTERPRISES IN THE TRANSPORT AND POST SECTOR

CIRCULAR

Regarding the implementation of Decision No. 054-TTg dated February 19, 1959 of the Prime Minister for state-owned transport and postal enterprises

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Decision No. 054-TTg dated February 19, 1959 of the Prime Minister has established principles:

On the provision of working capital for state-owned enterprises in industry, forestry, agriculture, transport, and postal services;

On setting standards for working capital for state-owned enterprises;

On the National Bank's loans within the working capital standard.

The aforementioned Decision No. 054-TTg aims to conserve state funds as much as possible while assisting enterprises in addressing capital difficulties during plan implementation, contributing to further strengthening economic accounting systems to fulfill and exceed state plans.

This Joint Circular of the Ministry of Finance, Ministry of Transport and Posts, and the National Bank specifies the main principles and measures to guide administrative committees, state-owned transport and postal enterprises, and local branch banks in their implementation.

I. SEVERAL GENERAL PRINCIPLES APPLICABLE TO STATE-OWNED ENTERPRISES IN THE TRANSPORT AND POSTAL SECTORS REGARDING THE PROVISION OF STATE WORKING CAPITAL AND NATIONAL BANK LOANS WITHIN THE WORKING CAPITAL LIMIT.

The Ministry of Transport and Posts has six types of enterprises:

1. Transport enterprises such as: Railways, River and Sea Transport, Road Transport.

2. Port enterprises such as: Haiphong Port, Ben Thuy Port, Marine Agency Company.

3. Postal enterprises.

4. Industrial enterprises (repair and production).

5. Material supply units (railway, postal, inland waterway, road all have material supply units).

6. Contracting enterprises such as: State Shipping Department, Inland Waterway Construction Department, Railway Construction Bureau, Postal Construction Team, Highway Construction Site 136.

A. THE RATIO OF STATE CAPITAL PROVIDED AND BANK LOANS IS AS FOLLOWS:

Depending on the nature of business, inventory levels, and business conditions of each type of enterprise, after reviewing the capital, the Ministry of Transport and Posts will coordinate with the Ministry of Finance and the National Bank to determine the ratio of state-provided capital and bank loans for different types of enterprises: such as industrial production, transportation, ports, material supply units, and postal services.

For enterprises that have already been reviewed for working capital in 1959, the Ministry temporarily sets the ratio at 70% state capital provided and 30% bank loan within the limit. The temporary ratio for providing and lending working capital for these enterprises will be adjusted at the end-of-year plan adjustment. As for enterprises not yet reviewed for working capital in 1959, when they are reviewed, the Ministry of Transport and Posts will immediately set the official ratio for the bank's participation in lending to those enterprises.

The ratio of bank loans within the working capital limit is the difference between the ratio of state capital provided to the enterprise and the approved working capital level. If the state provides 70%, the bank lends 30%, but from the 70% state-provided capital, amounts of approved fixed-term debt must be deducted.

Part I ||| The State shall transfer capital to the Bank for lending according to the principle that the Bank participates in part of the working capital quota and in accordance with the short-term lending measures within the working capital quota prescribed by the National Bank.

For enterprises such as the Excavation Railway Department, Waterway Engineering Department, Railways Construction Bureau, Postal Engineering Team, and Highway Construction Site 136, which are construction enterprises related to the Construction Bank, the provision of working capital loans within the quota and the lending of reserve materials above the standard level will be handled by the Construction Bank. The Ministry of Finance and the Ministry of Transport and Posts shall establish loan regulations based on the spirit of Decision No. 054-TTg dated February 19, 1959 of the Prime Minister.

B. LOANS ABOVE THE QUOTA

In addition to the capital required within the quota, if enterprises have reserves of materials above the standard level or temporary needs, the National Bank will provide loans above the quota according to the short-term lending rules and methods issued on August 21, 1957 and November 22, 1958 for state-owned industry and state-owned transport.

C. GENERAL PRINCIPLES FOR WORKING CAPITAL QUOTAS

1. The principle for setting working capital quotas for state-owned transportation and postal enterprises is to base it on the minimum amount of working capital necessary for normal operations to determine the average annual working capital quota.

2. For seasonal business expenses, the capital should be allocated based on the lowest quarter's plan requirements during the year.

3. For materials that enterprises need to stockpile above the standard level to ensure operations during periods when supply is impossible due to weather conditions such as rain, typhoons, floods, etc., enterprises will borrow from the National Bank according to their temporary needs.

4. For shipbuilding workshops, regarding "work-in-progress," the State only provides working capital quotas for the initial production cycle; regarding "completed products," only the quota is provided for the period from product delivery to completion of debt collection procedures (invoices). If the workshop has not collected debts from customers after completing the procedures, and requires capital, the workshop will borrow from the Bank according to payment lending regulations.

5. Regarding international railway transit funds and port fees, temporarily, the State will provide capital until new regulations modify the payment forms between our country's transport agencies and friendly countries.

6. Regarding freight payments, unfinished and completed products, the Ministry of Transport and Posts will study and supplement payment regulations to review the provision of working capital quotas for unfinished and completed products, especially for the working capital quotas for the four shipbuilding workshops in Haiphong.

II. SOME ISSUES RELATED TO CAPITAL PROVISION AND LOANS FOR STATE ENTERPRISES

1. For the Railway General Corporation and the Postal General Corporation and units operating under independent economic accounting, the Ministry of Transport and Posts will base the transfer of capital on the overall approved capital ratio according to the Decision of

2. For enterprises currently operating with more working capital than the approved amount in the planned year, these enterprises must transfer capital through two methods:

a) The portion of capital contributed by the Bank for lending within the quota, the enterprise will submit a document to the local Bank to transfer to the Central Bank.

b) The excess capital will be submitted to the competent ministry for reallocation elsewhere, or deposited into the State budget under the "capital recovery" account.

3. The Ministry of Transport and Posts or the General Corporation will issue a Decision for each enterprise, simultaneously sending it to the Ministry of Finance, the Central Bank, and the local Bank to implement the withdrawal of enterprise capital as described above. This will be carried out as follows:

- If the enterprise has sufficient funds, the local Bank will collect the Bank's contribution and transfer it to the Central Bank to record in Account 1-07 "capital provided for lending to enterprises within the standard working capital quota." Subsequently, if the enterprise needs to borrow within the quota, the local Bank will lend according to the approved plan.

- If the enterprise does not have enough money to pay because the funds are still tied up in undistributed materials, the enterprise will go to the local Bank to apply for a loan for the amount needed (the amount decided by the Ministry of Transport and Posts to transfer to the Bank), then immediately deposit it into the Bank so that the local Bank branch can transfer it to the Central Bank. Both borrowing and depositing must be done simultaneously to rationalize the Bank's accounting procedures. This is merely a paper transaction, but from this point onward, the enterprise will owe the local Bank, and the enterprise will gradually repay according to the agreement between the enterprise and the local Bank in the promissory note. When there is a need, the enterprise will again borrow within the Bank's participation in the working capital quota.

4. Excess or shortage of enterprise capital will be handled as follows:

a) After the Ministry of Transport and Posts approves the capital ratio, enterprises with excess capital must obtain cash and usable assets to meet the approved capital ratio set by the State for the enterprise. If the excess is in cash, the enterprise will submit it to the Ministry for reallocation as previously mentioned. If the excess is in assets, it needs to be divided into two categories:

- Unutilized category, recorded in a separate account, treated as purchased and the purchase price submitted to the Ministry. - Unused surplus category, proposed by the competent ministry to allocate elsewhere. This category also needs to be recorded in a separate sub-account for monitoring.

b) For state enterprises lacking capital, after the level of capital has been approved according to the ratio, the remaining capital will be supplemented by the Ministry of Transport and Posts to meet the State-allocated circulating capital ratio for the enterprise. The additional capital provided to the enterprise may be in the form of money or usable assets to meet the State's allocated capital ratio for the enterprise. Additionally, the loan portion within the standard will be provided in cash and transferred to the Central Bank to be recorded in account 01-07 "capital granted for the enterprise to borrow within the standard circulating capital." If the supervising ministry fails to supplement the State-provided capital for the enterprise and the bank's lending participation, then the Ministry of Finance will provide the additional amount.

III. SOME POINTS TO NOTE IN IMPLEMENTATION

1. State enterprises under the Ministry of Transport and Posts, and local branches of the Bank need to closely cooperate, organize the study of this Circular, actively develop implementation plans under the strict leadership of the Party Committee and Local Government. The establishment of credit relations between the Bank and enterprises with approved income and expenditure plans must fundamentally be completed in the third quarter of 1959.

2. Work in a mass line manner, relying on workers and the enterprise Party Committee, disseminate and explain to the worker masses and cadres to thoroughly understand the policy of saving State capital to effectively implement the new Decision regarding the National Bank's loans within the standard circulating capital quota; recognize the directorship role of the National Bank through good service in lending, non-cash payment, and cash management operations, resolving the capital difficulties of enterprises, ensuring the completion and overfulfillment of enterprise business plans.

3. Avoid bureaucratic practices, failing to understand the operational and financial situation of enterprises. The relationship between enterprises, economic agencies, and the State is a socialist mutual assistance relationship. It is necessary to promote a spirit of serving enterprises, prioritizing production and commodity circulation needs, delving deeply and closely, striving to simplify procedures and documents. Enterprises should fully support Bank cadres in their lending work and understanding of business conditions. Enterprises should submit documents such as balance sheets, monthly and quarterly reports directly to the local branch of the Bank providing loans; Ministries and General Departments should send them to the Central Bank for monitoring and contributing opinions to strengthen economic accounting systems. This Circular only outlines major points with principle characteristics. Each Ministry will concretize additional details and contents of this Circular for its own sector as needed.

Enterprises should submit documents such as balance sheets, monthly and quarterly reports directly to the local branch of the Bank providing loans; Ministries and General Departments should send them to the Central Bank for monitoring and contributing opinions to strengthen economic accounting systems.

This Circular only outlines major points with principle characteristics. Each Ministry will concretize additional details and contents of this Circular for its own sector as needed.