Circular No. 48/2004/TT-BTC guiding the financial mechanism for the transfer and handling of loans for investment in assets such as roads, power systems, irrigation works, schools, and health stations from forestry and farm enterprises to local management and the Vietnam Electricity Corporation.

CIRCULAR

Guidelines on the financial mechanism for implementing the transfer and handling of investment loans for assets such as roads, power systems, irrigation works, schools, and health stations of agricultural and forestry farms to local authorities and the Vietnam Electricity Corporation
roads, power systems, irrigation works, schools, health stations of agriculture, and forestry farms under the management of local authorities and the Vietnam Electricity Corporation
||| managed by the local authorities and the Vietnam Electricity Corporation

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Implementing Decision No. 255/2003/QĐ-TTg dated December 1, 2003 of the Prime Minister regarding the transfer of roads, power systems, irrigation works, schools, and health stations of agricultural and forestry farms to local authorities for management, the Ministry of Finance provides guidance on the implementation of Point 1, Article 4 of this Decision as follows:

1. The assets to be transferred include:

- Road infrastructure including: roads serving common activities for production and business operations of agricultural and forestry farms and residents in the area.

- Irrigation facilities including: dams, water reservoirs, canals serving common activities for production and business operations of agricultural and forestry farms and residents in the area.

- Schools including: kindergartens, primary schools, junior high schools, and secondary schools supported by the state with operating funds according to current regulations (excluding specialized training institutions).

- Health stations are medical units established by authorized agencies and provided with operational funding to serve staff, workers, and residents in the area.

- Power systems including: medium and low voltage power lines, substations, metering systems up to individual households, and power generation stations previously invested in by agricultural and forestry farms to serve common production and business operations and residents in the area.

2. Parties involved in the asset transfer:

- Party transferring: The Director of agricultural and forestry farms, enterprises currently managing the assets to be transferred (referred to as the Transferor).

- The Recipient: Units authorized to receive the transferred assets (referred to as the Recipient) include:

+ For transportation, irrigation, education, and healthcare sectors, the Directors of specialized units authorized by provincial People's Committees.

+ For the electricity sector, the Directors of electricity units authorized by the Vietnam Electricity Corporation.

- The main authority responsible for the asset transfer: Provincial People's Committees; Provincial People's Committees may authorize the Department of Finance to oversee the asset transfer.

3. Principles of the transfer:

The transfer shall be made in the original condition based on the asset and capital records in the books of the Transferor at the time of transfer.

The Transferor: Shall record the reduction in original cost, depreciation, and capital for the transferred assets.

For assets invested using borrowed funds:

- Loans (bank loans, Development Fund loans, loans from employees, other loans);

- Raised funds (from residents, employees with repayment agreements);

- Utilized Welfare Funds for investment;

If the Transferor has complete documentation proving the loan amounts, raised funds, and utilization of Welfare Funds for investment, and if the outstanding debt is reflected in the accounting records and confirmed by a reconciliation statement, then the State budget will consider providing partial funding to settle the remaining debt.

Transferee: Receive the assets, record the increase in original cost and capital based on the results of the transfer, and manage and utilize the assets according to the nature of the unit's activities, whether it is a production and business entity, a revenue-generating public service entity, or an administrative public service entity.

4. Documentation for the asset transfer includes:

- Investment decisions, approved budgets, completion certificates for construction projects, and final accounts approved by competent authorities.

- Documentation related to determining the original cost, depreciation of fixed assets, and residual value of the transferred assets.

- Loan agreements, loan contracts, and fundraising documents with banks, the Development Fund, employees, and other economic organizations.

Reconciliation statements confirming debts with banks, the Development Fund, or lenders; accounting records reflecting paid and unpaid debts at the time of transfer.

In cases where the Transferor does not have complete documentation as required, the Transferor and Recipient still proceed with the transfer; the Department of Finance, along with both parties, must clarify and explain the reasons and propose measures to address any remaining debts.

5. Handling of investment loan support:

a.) Support level: The amount of funding to settle investment debts for transferred assets shall not exceed the residual value of the assets recorded in the books at the time of transfer after utilizing the depreciation reserve and Development Fund to repay debts. The support amount shall not exceed the outstanding loan balance at the time of transfer. Investment loan support is only provided to the Transferor.

b.) Method of support:

- For enterprises managed by local authorities, the local Department of Finance is responsible for coordinating with the Department of Planning and Investment to report to the provincial People's Committee to request the People's Council to allocate funds from the local budget in 2005. In cases where localities face difficulties in handling investment loans at the time of transfer, the provincial People's Committee is responsible for compiling and reporting to the Ministry of Finance. The Ministry of Finance will base its recommendations on the national budget's capacity and submit them to the Prime Minister for consideration and decision to provide partial support from the central budget to local budgets.

- For enterprises managed centrally: The Ministry of Planning and Investment will coordinate with the Ministry of Finance to allocate funds from the central budget in 2005 to handle support for investment loan debts for centrally-managed agricultural and forestry farms.

c.) Procedures for support:

Based on the transfer certificate, the Transferor prepares a request for support funding to settle investment loans and submits it to the local Department of Finance (for locally-managed enterprises) or the Ministry of Finance (for centrally-managed enterprises). The application includes:

+ A letter requesting support from the enterprise;

+ The transfer certificate;

+ The 2003 financial report;

+ A reconciliation statement of debts with confirmation from the bank, the Development Fund, or the lender.

6. Responsibilities of the Transferor, Recipient, and relevant agencies:

- Party transferring:

+ Prepare the files and documents for transfer as set out in Point 4 of this Circular.

+ Send a letter requesting the People's Committee of the province/city or Vietnam Electricity Corporation to delegate authority to the specialized unit to receive assets and the Department of Finance in the locality to organize the asset transfer.

+ Repay the loan after receiving financial support from the State Budget.

- The recipient:

+ Receive assets, related files, and documents transferred by the transferring party.

+ Record the increase in assets, manage and utilize the assets after the transfer in accordance with current regulations of the State.

- The Departments of Finance of provinces and centrally-administered cities shall take the lead and guide the transferring and receiving parties to carry out the asset transfer in accordance with the guidelines of this Circular and prepare the Asset Transfer Certificate (Form No. 1); By the end of 2004, compile the results of asset transfers by enterprises in their localities (Form No. 2) and report to the People's Committee of the province/city and the Ministry of Finance for consolidation and reporting to the Prime Minister.

- The People's Committees of provinces and centrally-administered cities shall issue authorization letters and provide guidance and supervision to units authorized in the locality to receive and manage assets in accordance with the regulations.

- Vietnam Electricity Corporation shall send a letter authorizing provincial electricity companies to implement the receipt and management of assets and coordinate with the Department of Finance in the locality to guide and monitor the implementation of the transfer.

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

In the course of implementation, if any difficulties arise, please report them to the People's Committees of the provinces/cities directly under the Central Government, the electricity sector, and forestry and logging enterprises with assets to be transferred for the Ministry of Finance to study and resolve./.